Prakash Pandya’s eBook

Annotated text of Bare Act on

Companies Act 2013
With Rules, Notifications, Circulars and Orders

[including amendment by the Eleventh Schedule to the Insolvency and Bankruptcy

Code, 2016; the Companies (Amendment) Act 2017 and the Companies (Amendment)
Ordinance 2018]

Updated Rules upto 28th August 2019; Notifications upto 28th August 2019;
Circulars upto Circular no. 09/2019 of 21st August 2019; the Special Companies
(Furnishing of information about payment to micro and small enterprise
suppliers) Order 2019 of 22nd January 2019;

[excluding notifications on jurisdiction of Registrar of Companies u/s.396; Accounting

Standards, IndAS; Rules relating to SFIO and Inspection; and the Rules of NCLT and
NCLAT]

[Except Sections 2(67)(ix), 132 (6) to (9) , 230(11) & (12) and 465(so far as it relate to the
repeal of the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961)) and Section
92 as modified by the Companies (Amendment) Act 2017, the entire Companies Act 2013
is brough to force.]

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II
INDEX

Table of Contents
INDEX ...................................................................................................................................................... I
THE COMPANIES ACT, 2013 ................................................................................................................. 1
CHAPTER I PRELIMINARY .................................................................................................................... 1
1. SHORT TITLE, EXTENT, COMMENCEMENT AND APPLICATION. .................................................................... 1
2. DEFINITIONS. ..................................................................................................................................... 1
2(1) abridged prospectus................................................................................................................. 1
2(2) accounting standards ............................................................................................................... 1
2(3) alter or alteration ...................................................................................................................... 1
2(4) Appellate Tribunal .................................................................................................................... 1
2(5) articles ..................................................................................................................................... 2
2(6) associate company .................................................................................................................. 2
2(7) auditing standards .................................................................................................................... 2
2(8) authorised capital or nominal capital ......................................................................................... 3
2(9) banking company ..................................................................................................................... 3
2(10) Board of Directors or Board .................................................................................................... 3
2(11) body corporate or corporation................................................................................................. 3
2(12) book and paper and book or paper ......................................................................................... 4
2(13) books of account .................................................................................................................... 4
2(14) branch office .......................................................................................................................... 4
2(15) called-up capital ..................................................................................................................... 4
2(16) Charge ................................................................................................................................... 5
2(17) chartered accountant.............................................................................................................. 5
2(18) Chief Executive Officer ........................................................................................................... 5
2(19) Chief Financial Officer ............................................................................................................ 5
2(20) company ................................................................................................................................ 5
2(21) company limited by guarantee ................................................................................................ 6
2(22) company limited by shares ..................................................................................................... 6
2(23) Company Liquidator ............................................................................................................... 6
2(24) company secretary or secretary.............................................................................................. 6
2(25) company secretary in practice ................................................................................................ 7
2(26) contributory ............................................................................................................................ 7
2(27) control .................................................................................................................................... 7
2(28) cost accountant ...................................................................................................................... 8
2(29) court ...................................................................................................................................... 8
2(30) debenture............................................................................................................................... 9
2(31) deposit ................................................................................................................................... 9
2(32) depository .............................................................................................................................. 9
2(33) derivative ............................................................................................................................. 10
2(34) director................................................................................................................................. 10
2(35) dividend ............................................................................................................................... 10
2(36) document ............................................................................................................................. 10
2(37) employees’ stock option ....................................................................................................... 10
2(38) expert .................................................................................................................................. 11
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2(39) financial institution ................................................................................................................ 11
2(40) financial statement ............................................................................................................... 12
2(41) financial year ........................................................................................................................ 12
2(42) foreign company .................................................................................................................. 14
2(43) free reserves ........................................................................................................................ 14
2(44) Global Depository Receipt .................................................................................................... 15
2(45) Government company .......................................................................................................... 15
2(46) holding company .................................................................................................................. 15
2(47) independent director ............................................................................................................ 15
2(48) Indian Depository Receipt .................................................................................................... 16
2(49) [omitted] interested director .................................................................................................. 16
2(50) issued capital ....................................................................................................................... 16
2(51) key managerial personnel .................................................................................................... 16
2(52) listed company ..................................................................................................................... 17
2(53) manager .............................................................................................................................. 17
2(54) managing director ................................................................................................................ 17
2(55) member ............................................................................................................................... 18
2(56) memorandum ....................................................................................................................... 18
2(57) net worth .............................................................................................................................. 18
2(58) notification............................................................................................................................ 19
2(59) officer................................................................................................................................... 19
2(60) officer who is in default ......................................................................................................... 19
2(61) Official Liquidator ................................................................................................................. 20
2(62) One Person Company .......................................................................................................... 20
2(63) ordinary or special resolution ................................................................................................ 20
2(64) paid-up share capital or share capital paid-up ....................................................................... 21
2(65) postal ballot .......................................................................................................................... 21
2(66) prescribed ............................................................................................................................ 21
2(67) previous company law .......................................................................................................... 21
2(68) private company................................................................................................................... 22
2(69) promoter .............................................................................................................................. 23
2(70) prospectus ........................................................................................................................... 23
2(71) public company .................................................................................................................... 23
2(72) public financial institution ...................................................................................................... 24
2(73) recognised stock exchange .................................................................................................. 25
2(74) register of companies ........................................................................................................... 25
2(75) Registrar .............................................................................................................................. 25
2(76) related party ......................................................................................................................... 25
2(77) relative ................................................................................................................................. 26
2(78) remuneration ........................................................................................................................ 27
2(79) Schedule .............................................................................................................................. 27
2(80) scheduled bank .................................................................................................................... 27
2(81) securities ............................................................................................................................. 28
2(82) Securities and Exchange Board............................................................................................ 28
2(83) Serious Fraud Investigation Office ........................................................................................ 28
2(84) share ................................................................................................................................... 28
2(85) small company ..................................................................................................................... 29
2(86) subscribed capital ................................................................................................................ 30
2(87) subsidiary company or subsidiary ......................................................................................... 30
2(88) sweat equity shares ............................................................................................................. 31
2(89) total voting power ................................................................................................................. 31
2(90) Tribunal................................................................................................................................ 31
2(91) turnover ............................................................................................................................... 31
2(92) unlimited company ............................................................................................................... 32

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 2(93) voting right ........................................................................................................................... 32
2(94) whole-time director ............................................................................................................... 32
[(94A) winding up .......................................................................................................................... 33
2(95) ............................................................................................................................................. 33
CHAPTER II INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO ................. 34
3. FORMATION OF COMPANY. ................................................................................................................ 34
4. MEMORANDUM. ............................................................................................................................... 36
5. ARTICLES. ....................................................................................................................................... 40
6. ACT TO OVER-RIDE MEMORANDUM, ARTICLES, ETC. ............................................................................. 42
7. INCORPORATION OF COMPANY. .......................................................................................................... 43
8. FORMATION OF COMPANIES WITH CHARITABLE OBJECTS, ETC. ............................................................... 46
9. EFFECT OF REGISTRATION. ............................................................................................................... 49
10. EFFECT OF MEMORANDUM AND ARTICLES. ........................................................................................ 50
[10A. COMMENCEMENT OF BUSINESS, ETC. ............................................................................................ 51
[11. COMMENCEMENT OF BUSINESS, ETC. -OMITTED ............................................................................... 52
12. REGISTERED OFFICE OF COMPANY. .................................................................................................. 53
13. ALTERATION OF MEMORANDUM. ....................................................................................................... 57
14. ALTERATION OF ARTICLES. .............................................................................................................. 59
15. ALTERATION OF MEMORANDUM OR ARTICLES TO BE NOTED IN EVERY COPY. ......................................... 61
16. RECTIFICATION OF NAME OF COMPANY. ............................................................................................ 62
17. COPIES OF MEMORANDUM, ARTICLES, ETC., TO BE GIVEN TO MEMBERS. ............................................... 63
18. CONVERSION OF COMPANIES ALREADY REGISTERED. ......................................................................... 64
19. SUBSIDIARY COMPANY NOT TO HOLD SHARES IN ITS HOLDING COMPANY. .............................................. 65
20. SERVICE OF DOCUMENTS. ............................................................................................................... 66
21. AUTHENTICATION OF DOCUMENTS, PROCEEDINGS AND CONTRACTS. .................................................... 67
22. EXECUTION OF BILLS OF EXCHANGE, ETC. ......................................................................................... 68
CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES...................................................... 69
PART I.—PUBLIC OFFER .................................................................................................................... 69
23. PUBLIC OFFER AND PRIVATE PLACEMENT. ......................................................................................... 69
24. POWER OF SECURITIES AND EXCHANGE BOARD TO REGULATE ISSUE AND TRANSFER OF SECURITIES, ETC.
......................................................................................................................................................... 71
25. DOCUMENT CONTAINING OFFER OF SECURITIES FOR SALE TO BE DEEMED PROSPECTUS. ........................ 72
26. MATTERS TO BE STATED IN PROSPECTUS. ......................................................................................... 73
27. VARIATION IN TERMS OF CONTRACT OR OBJECTS IN PROSPECTUS........................................................ 77
28. OFFER OF SALE OF SHARES BY CERTAIN MEMBERS OF COMPANY. ........................................................ 78
29. PUBLIC OFFER OF SECURITIES TO BE IN DEMATERIALISED FORM. ......................................................... 79
30. ADVERTISEMENT OF PROSPECTUS. .................................................................................................. 80
31. SHELF PROSPECTUS. ..................................................................................................................... 81
32. RED HERRING PROSPECTUS. ........................................................................................................... 82
33. ISSUE OF APPLICATION FORMS FOR SECURITIES. ................................................................................ 83
34. CRIMINAL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS. ................................................................ 84
35. CIVIL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS. ...................................................................... 85
36. PUNISHMENT FOR FRAUDULENTLY INDUCING PERSONS TO INVEST MONEY. ........................................... 87
37. ACTION BY AFFECTED PERSONS. ...................................................................................................... 88
38. PUNISHMENT FOR PERSONATION FOR ACQUISITION, ETC ., OF SECURITIES............................................. 89
39. ALLOTMENT OF SECURITIES BY COMPANY. ........................................................................................ 90
40. SECURITIES TO BE DEALT WITH IN STOCK EXCHANGES. ....................................................................... 91
41. GLOBAL DEPOSITORY RECEIPT. ....................................................................................................... 92
PART II.—PRIVATE PLACEMENT ....................................................................................................... 93
[42. ISSUE OF SHARES ON PRIVATE PLACEMENT BASIS. ............................................................................ 93

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CHAPTER IV SHARE CAPITAL AND DEBENTURES .......................................................................... 98
43. KINDS OF SHARE CAPITAL................................................................................................................ 98
44. NATURE OF SHARES OR DEBENTURES. ........................................................................................... 100
45. NUMBERING OF SHARES................................................................................................................ 101
46. CERTIFICATE OF SHARES. ............................................................................................................. 102
47. VOTING RIGHTS. .......................................................................................................................... 103
48. VARIATION OF SHAREHOLDERS’ RIGHTS. ......................................................................................... 105
49. CALLS ON SHARES OF SAME CLASS TO BE MADE ON UNIFORM BASIS. .................................................. 106
50. COMPANY TO ACCEPT UNPAID SHARE CAPITAL, ALTHOUGH NOT CALLED UP. ........................................ 107
51. PAYMENT OF DIVIDEND IN PROPORTION TO AMOUNT PAID-UP............................................................. 108
52. APPLICATION OF PREMIUMS RECEIVED ON ISSUE OF SHARES. ............................................................ 109
53. PROHIBITION ON ISSUE OF SHARES AT DISCOUNT. ............................................................................ 110
54. ISSUE OF SWEAT EQUITY SHARES. .................................................................................................. 111
55. ISSUE AND REDEMPTION OF PREFERENCE SHARES. .......................................................................... 112
56. TRANSFER AND TRANSMISSION OF SECURITIES. ............................................................................... 114
57. PUNISHMENT FOR PERSONATION OF SHAREHOLDER. ........................................................................ 117
58. REFUSAL OF REGISTRATION AND APPEAL AGAINST REFUSAL. ............................................................ 118
59. RECTIFICATION OF REGISTER OF MEMBERS. .................................................................................... 120
60. PUBLICATION OF AUTHORISED, SUBSCRIBED AND PAID-UP CAPITAL. ................................................... 121
61. POWER OF LIMITED COMPANY TO ALTER ITS SHARE CAPITAL.............................................................. 122
62. FURTHER ISSUE OF SHARE CAPITAL. ............................................................................................... 123
63. ISSUE OF BONUS SHARES. ............................................................................................................. 127
64. NOTICE TO BE GIVEN TO REGISTRAR FOR ALTERATION OF SHARE CAPITAL. ......................................... 128
65. UNLIMITED COMPANY TO PROVIDE FOR RESERVE SHARE CAPITAL ON CONVERSION INTO LIMITED COMPANY.
....................................................................................................................................................... 129
66. REDUCTION OF SHARE CAPITAL. .................................................................................................... 130
67. RESTRICTIONS ON PURCHASE BY COMPANY OR GIVING OF LOANS BY IT FOR PURCHASE OF ITS SHARES. 133
68. POWER OF COMPANY TO PURCHASE ITS OWN SECURITIES. ............................................................... 135
69. TRANSFER OF CERTAIN SUMS TO CAPITAL REDEMPTION RESERVE ACCOUNT. ...................................... 138
70. PROHIBITION FOR BUY-BACK IN CERTAIN CIRCUMSTANCES. ............................................................... 139
71. DEBENTURES. ............................................................................................................................. 140
72. POWER TO NOMINATE. .................................................................................................................. 142
CHAPTER V ACCEPTANCE OF DEPOSITS BY COMPANIES .......................................................... 143
73. PROHIBITION ON ACCEPTANCE OF DEPOSITS FROM PUBLIC. .............................................................. 143
74. REPAYMENT OF DEPOSITS, ETC., ACCEPTED BEFORE COMMENCEMENT OF THIS ACT. ........................... 146
75. DAMAGES FOR FRAUD. ................................................................................................................. 148
76. ACCEPTANCE OF DEPOSITS FROM PUBLIC BY CERTAIN COMPANIES. ................................................... 149
[76A. PUNISHMENT FOR CONTRA-VENTION OF SECTION 73 OR SECTION 76. ............................................ 150
CHAPTER VI REGISTRATION OF CHARGES ................................................................................... 151
77. DUTY TO REGISTER CHARGES, ETC. ............................................................................................... 151
78. APPLICATION FOR REGISTRATION OF CHARGE. ................................................................................ 153
79. SECTION 77 TO APPLY IN CERTAIN MATTERS. .................................................................................. 154
80. DATE OF NOTICE OF CHARGE. ........................................................................................................ 155
81. REGISTER OF CHARGES TO BE KEPT BY REGISTRAR. ........................................................................ 156
82. COMPANY TO REPORT SATISFACTION OF CHARGE. ........................................................................... 157
83. POWER OF REGISTRAR TO MAKE ENTRIES OF SATISFACTION AND RELEASE IN ABSENCE OF INTIMATION
FROM COMPANY. ............................................................................................................................... 159
84. INTIMATION OF APPOINTMENT OF RECEIVER OR MANAGER. ................................................................ 160
85. COMPANY’S REGISTER OF CHARGES............................................................................................... 161
86. PUNISHMENT FOR CONTRAVENTION................................................................................................ 162
[87. RECTIFICATION BY CENTRAL GOVERNMENT IN REGISTER OF CHARGES. ............................................ 163

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CHAPTER VII MANAGEMENT AND ADMINISTRATION .................................................................... 165
88. REGISTER OF MEMBERS, ETC. ....................................................................................................... 165
89. DECLARATION IN RESPECT OF BENEFICIAL INTEREST IN ANY SHARE. ................................................... 166
[90. REGISTER OF SIGNIFICANT BENEFICIAL OWNERS IN A COMPANY. ....................................................... 169
91. POWER TO CLOSE REGISTER OF MEMBERS OR DEBENTURE-HOLDERS OR OTHER SECURITY HOLDERS. ... 173
92. ANNUAL RETURN. ......................................................................................................................... 174
[93. OMITTED - RETURN TO BE FILED WITH REGISTRAR IN CASE PROMOTERS’ STAKE CHANGES.] ................ 178
94. PLACE OF KEEPING AND INSPECTION OF REGISTERS, RETURNS, ETC. ................................................. 179
95. REGISTERS, ETC., TO BE EVIDENCE. ............................................................................................... 181
96. ANNUAL GENERAL MEETING. .......................................................................................................... 182
97. POWER OF TRIBUNAL TO CALL ANNUAL GENERAL MEETING. .............................................................. 184
98. POWER OF TRIBUNAL TO CALL MEETINGS OF MEMBERS, ETC. ............................................................ 185
99. PUNISHMENT FOR DEFAULT IN COMPLYING WITH PROVISIONS OF SECTIONS 96 TO 98........................... 186
100. CALLING OF EXTRAORDINARY GENERAL MEETING. .......................................................................... 187
101. NOTICE OF MEETING. .................................................................................................................. 189
102. STATEMENT TO BE ANNEXED TO NOTICE. ...................................................................................... 191
103. QUORUM FOR MEETINGS. ............................................................................................................ 193
104. CHAIRMAN OF MEETINGS. ............................................................................................................ 195
105. PROXIES. .................................................................................................................................. 196
106. RESTRICTION ON VOTING RIGHTS. ................................................................................................ 199
107. VOTING BY SHOW OF HANDS. ....................................................................................................... 200
108. VOTING THROUGH ELECTRONIC MEANS. ........................................................................................ 201
109. DEMAND FOR POLL. .................................................................................................................... 202
110. POSTAL BALLOT. ........................................................................................................................ 204
111. CIRCULATION OF MEMBERS’ RESOLUTION...................................................................................... 205
112. REPRESENTATION OF PRESIDENT AND GOVERNORS IN MEETINGS. .................................................. 207
113. REPRESENTATION OF CORPORATIONS AT MEETING OF COMPANIES AND OF CREDITORS. ..................... 208
114. ORDINARY AND SPECIAL RESOLUTIONS. ........................................................................................ 209
115. RESOLUTIONS REQUIRING SPECIAL NOTICE. .................................................................................. 210
116. RESOLUTIONS PASSED AT ADJOURNED MEETING. ........................................................................... 211
117. RESOLUTIONS AND AGREEMENTS TO BE FILED. .............................................................................. 212
118. MINUTES OF PROCEEDINGS OF GENERAL MEETING, MEETING OF BOARD OF DIRECTORS AND OTHER
MEETING AND RESOLUTIONS PASSED BY POSTAL BALLOT. ....................................................................... 215
119. INSPECTION OF MINUTE-BOOKS OF GENERAL MEETING.................................................................... 218
120. MAINTENANCE AND INSPECTION OF DOCUMENTS IN ELECTRONIC FORM. ........................................... 219
121. REPORT ON ANNUAL GENERAL MEETING. ...................................................................................... 220
122. APPLICABILITY OF THIS CHAPTER TO ONE PERSON COMPANY. ........................................................ 221
CHAPTER VIII DECLARATION AND PAYMENT OF DIVIDEND......................................................... 222
123. DECLARATION OF DIVIDEND. ........................................................................................................ 222
124. UNPAID DIVIDEND ACCOUNT. ...................................................................................................... 225
125. INVESTOR EDUCATION AND PROTECTION FUND. ............................................................................ 227
126. RIGHT TO DIVIDEND, RIGHTS SHARES AND BONUS SHARES TO BE HELD IN ABEYANCE PENDING
REGISTRATION OF TRANSFER OF SHARES. ............................................................................................ 230
127. PUNISHMENT FOR FAILURE TO DISTRIBUTE DIVIDENDS. ................................................................... 231
CHAPTER IX ACCOUNTS OF COMPANIES ...................................................................................... 232
128. BOOKS OF ACCOUNT, ETC., TO BE KEPT BY COMPANY. .................................................................... 232
129. FINANCIAL STATEMENT. .............................................................................................................. 234
130. RE-OPENING OF ACCOUNTS ON COURT’S OR TRIBUNAL’S ORDERS. .................................................. 237
131. VOLUNTARY REVISION OF FINANCIAL STATEMENTS OR BOARD’S REPORT. ......................................... 239
132. CONSTITUTION OF NATIONAL FINANCIAL REPORTING AUTHORITY. ................................................... 240
133. CENTRAL GOVERNMENT TO PRESCRIBE ACCOUNTING STANDARDS. ................................................. 245
134. FINANCIAL STATEMENT, BOARD’S REPORT, ETC. ............................................................................ 246
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 135. CORPORATE SOCIAL RESPONSIBILITY. ......................................................................................... 251
136. RIGHT OF MEMBER TO COPIES OF AUDITED FINANCIAL STATEMENT. .................................................. 254
137. COPY OF FINANCIAL STATEMENT TO BE FILED WITH REGISTRAR. ...................................................... 257
138. INTERNAL AUDIT. ........................................................................................................................ 260
CHAPTER X AUDIT AND AUDITORS ................................................................................................ 261
139. APPOINTMENT OF AUDITORS. ....................................................................................................... 261
140. REMOVAL, RESIGNATION OF AUDITOR AND GIVING OF SPECIAL NOTICE.............................................. 265
141. ELIGIBILITY, QUALIFICATIONS AND DISQUALIFICATIONS OF AUDITORS. ............................................... 268
142. REMUNERATION OF AUDITORS. .................................................................................................... 270
143. POWERS AND DUTIES OF AUDITORS AND AUDITING STANDARDS. ...................................................... 271
144. AUDITOR NOT TO RENDER CERTAIN SERVICES. .............................................................................. 277
145. AUDITOR TO SIGN AUDIT REPORTS, ETC. ....................................................................................... 278
146. AUDITORS TO ATTEND GENERAL MEETING. .................................................................................... 279
147. PUNISHMENT FOR CONTRAVENTION.............................................................................................. 280
148. CENTRAL GOVERNMENT TO SPECIFY AUDIT OF ITEMS OF COST IN RESPECT OF CERTAIN COMPANIES. .. 282
CHAPTER XI APPOINTMENT AND QUALIFICATIONS OF DIRECTORS .......................................... 284
149. COMPANY TO HAVE BOARD OF DIRECTORS. .................................................................................. 284
150. MANNER OF SELECTION OF INDEPENDENT DIRECTORS AND MAINTENANCE OF DATABANK OF INDEPENDENT
DIRECTORS. ...................................................................................................................................... 292
151. APPOINTMENT OF DIRECTOR ELECTED BY SMALL SHAREHOLDERS. ................................................... 293
152. APPOINTMENT OF DIRECTORS. ..................................................................................................... 294
153. APPLICATION FOR ALLOTMENT OF DIRECTOR IDENTIFICATION NUMBER. ........................................... 298
154. ALLOTMENT OF DIRECTOR IDENTIFICATION NUMBER. ..................................................................... 299
155. PROHIBITION TO OBTAIN MORE THAN ONE DIRECTOR IDENTIFICATION NUMBER. ................................ 300
156. DIRECTOR TO INTIMATE DIRECTOR IDENTIFICATION NUMBER. ......................................................... 301
157. COMPANY TO INFORM DIRECTOR IDENTIFICATION NUMBER TO REGISTRAR. ...................................... 302
158. OBLIGATION TO INDICATE DIRECTOR IDENTIFICATION NUMBER. ....................................................... 303
[159. PENALTY FOR DEFAULT OF CERTAIN PROVISIONS. ......................................................................... 304
160. RIGHT OF PERSONS OTHER THAN RETIRING DIRECTORS TO STAND FOR DIRECTORSHIP....................... 305
161. APPOINTMENT OF ADDITIONAL DIRECTOR, ALTERNATE DIRECTOR AND NOMINEE DIRECTOR. ................ 307
162. APPOINTMENT OF DIRECTORS TO BE VOTED INDIVIDUALLY. ............................................................. 309
163. OPTION TO ADOPT PRINCIPLE OF PROPORTIONAL REPRESENTATION FOR APPOINTMENT OF DIRECTORS.
....................................................................................................................................................... 310
164. DISQUALIFICATIONS FOR APPOINTMENT OF DIRECTOR. ................................................................... 311
165. NUMBER OF DIRECTORSHIPS. ...................................................................................................... 314
166. DUTIES OF DIRECTORS. .............................................................................................................. 316
167. VACATION OF OFFICE OF DIRECTOR. ............................................................................................. 317
168. RESIGNATION OF DIRECTOR. ....................................................................................................... 319
169. REMOVAL OF DIRECTORS. ........................................................................................................... 320
170. REGISTER OF DIRECTORS AND KEY MANAGERIAL PERSONNEL AND THEIR SHAREHOLDING. .................. 322
171. MEMBERS’ RIGHT TO INSPECT. ..................................................................................................... 323
172. PUNISHMENT. ............................................................................................................................ 324
CHAPTER XII MEETINGS OF BOARD AND ITS POWERS ................................................................ 325
173. MEETINGS OF BOARD. ................................................................................................................ 325
174. QUORUM FOR MEETINGS OF BOARD. ............................................................................................ 328
175. PASSING OF RESOLUTION BY CIRCULATION.................................................................................... 330
176. DEFECTS IN APPOINTMENT OF DIRECTORS NOT TO INVALIDATE ACTIONS TAKEN. ................................ 331
177. AUDIT COMMITTEE. .................................................................................................................... 332
178. NOMINATION AND REMUNERATION COMMITTEE AND STAKEHOLDERS RELATIONSHIP COMMITTEE. ...... 335
179. POWERS OF BOARD. .................................................................................................................. 338
180. RESTRICTIONS ON POWERS OF BOARD. ........................................................................................ 341

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 181. COMPANY TO CONTRIBUTE TO BONA FIDE AND CHARITABLE FUNDS, ETC. .......................................... 344
182. PROHIBITIONS AND RESTRICTIONS REGARDING POLITICAL CONTRIBUTIONS. ...................................... 345
183. POWER OF BOARD AND OTHER PERSONS TO MAKE CONTRIBUTIONS TO NATIONAL DEFENCE FUND, ETC.
....................................................................................................................................................... 347
184. DISCLOSURE OF INTEREST BY DIRECTOR. ..................................................................................... 348
[185. LOAN TO DIRECTORS, ETC. ......................................................................................................... 350
186. LOAN AND INVESTMENT BY COMPANY. .......................................................................................... 354
187. INVESTMENTS OF COMPANY TO BE HELD IN ITS OWN NAME. ............................................................. 359
188. RELATED PARTY TRANSACTIONS. ................................................................................................. 361
189. REGISTER OF CONTRACTS OR ARRANGEMENTS IN WHICH DIRECTORS ARE INTERESTED. ..................... 365
190. CONTRACT OF EMPLOYMENT WITH MANAGING OR WHOLE-TIME DIRECTORS....................................... 367
191. PAYMENT TO DIRECTOR FOR LOSS OF OFFICE, ETC., IN CONNECTION WITH TRANSFER OF UNDERTAKING,
PROPERTY OR SHARES. ...................................................................................................................... 368
192. RESTRICTION ON NON-CASH TRANSACTIONS INVOLVING DIRECTORS. ............................................... 370
193. CONTRACT BY ONE PERSON COMPANY. ....................................................................................... 371
194. [OMITTED] PROHIBITION ON FORWARD DEALINGS IN SECURITIES OF COMPANY BY DIRECTOR OR KEY
MANAGERIAL PERSONNEL. .................................................................................................................. 372
195. [OMITTED] PROHIBITION ON INSIDER TRADING OF SECURITIES. ........................................................ 373
CHAPTER XIII APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL ................ 374
196. APPOINTMENT OF MANAGING DIRECTOR, WHOLE-TIME DIRECTOR OR MANAGER. ................................ 374
197. OVERALL MAXIMUM MANAGERIAL REMUNERATION AND MANAGERIAL REMUNERATION IN CASE OF ABSENCE
OR INADEQUACY OF PROFITS. .............................................................................................................. 377
198. CALCULATION OF PROFITS. ......................................................................................................... 383
199. RECOVERY OF REMUNERATION IN CERTAIN CASES. ........................................................................ 386
200. CENTRAL GOVERNMENT OR COMPANY TO FIX LIMIT WITH REGARD TO REMUNERATION. ...................... 387
201. FORMS OF, AND PROCEDURE IN RELATION TO, CERTAIN APPLICATIONS. ............................................ 388
202. COMPENSATION FOR LOSS OF OFFICE OF MANAGING OR WHOLE-TIME DIRECTOR OR MANAGER. .......... 389
203. APPOINTMENT OF KEY MANAGERIAL PERSONNEL............................................................................ 391
204. SECRETARIAL AUDIT FOR BIGGER COMPANIES. .............................................................................. 393
205. FUNCTIONS OF COMPANY SECRETARY. ......................................................................................... 394
CHAPTER XIV INSPECTION, INQUIRY AND INVESTIGATION ......................................................... 395
206. POWER TO CALL FOR INFORMATION, INSPECT BOOKS AND CONDUCT INQUIRIES. ................................ 395
207. CONDUCT OF INSPECTION AND INQUIRY. ....................................................................................... 397
208. REPORT ON INSPECTION MADE. ................................................................................................... 398
209. SEARCH AND SEIZURE. ............................................................................................................... 399
210. INVESTIGATION INTO AFFAIRS OF COMPANY. .................................................................................. 400
211. ESTABLISHMENT OF SERIOUS FRAUD INVESTIGATION OFFICE. ........................................................ 401
212. INVESTIGATION INTO AFFAIRS OF COMPANY BY SERIOUS FRAUD INVESTIGATION OFFICE.................... 403
213. INVESTIGATION INTO COMPANY’S AFFAIRS IN OTHER CASES. ............................................................ 408
214. SECURITY FOR PAYMENT OF COSTS AND EXPENSES OF INVESTIGATION. ........................................... 409
215. FIRM, BODY CORPORATE OR ASSOCIATION NOT TO BE APPOINTED AS INSPECTOR. ............................. 410
216. INVESTIGATION OF OWNERSHIP OF COMPANY. ............................................................................... 411
217. PROCEDURE, POWERS, ETC., OF INSPECTORS. .............................................................................. 412
218. PROTECTION OF EMPLOYEES DURING INVESTIGATION. .................................................................... 415
219. POWER OF INSPECTOR TO CONDUCT INVESTIGATION INTO AFFAIRS OF RELATED COMPANIES, ETC. ...... 416
220. SEIZURE OF DOCUMENTS BY INSPECTOR. ...................................................................................... 417
221. FREEZING OF ASSETS OF COMPANY ON INQUIRY AND INVESTIGATION. .............................................. 418
222. IMPOSITION OF RESTRICTIONS UPON SECURITIES. .......................................................................... 419
223. INSPECTOR’S REPORT................................................................................................................. 420
224. ACTIONS TO BE TAKEN IN PURSUANCE OF INSPECTOR’S REPORT. ..................................................... 421
225. EXPENSES OF INVESTIGATION. ..................................................................................................... 423
226. VOLUNTARY WINDING UP OF COMPANY, ETC., NOT TO STOP INVESTIGATION PROCEEDINGS. ................ 424

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 227. LEGAL ADVISERS AND BANKERS NOT TO DISCLOSE CERTAIN INFORMATION. ....................................... 425
228. INVESTIGATION, ETC., OF FOREIGN COMPANIES.............................................................................. 426
229. PENALTY FOR FURNISHING FALSE STATEMENT, MUTILATION, DESTRUCTION OF DOCUMENTS. .............. 427
CHAPTER XV COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS ................................. 428
230. POWER TO COMPROMISE OR MAKE ARRANGEMENTS WITH CREDITORS AND MEMBERS. ....................... 428
231. POWER OF TRIBUNAL TO ENFORCE COMPROMISE OR ARRANGEMENT. .............................................. 432
232. MERGER AND AMALGAMATION OF COMPANIES. .............................................................................. 433
233. MERGER OR AMALGAMATION OF CERTAIN COMPANIES. ................................................................... 437
234. MERGER OR AMALGAMATION OF COMPANY WITH FOREIGN COMPANY................................................ 440
235. POWER TO ACQUIRE SHARES OF SHAREHOLDERS DISSENTING FROM SCHEME OR CONTRACT APPROVED BY
MAJORITY. ........................................................................................................................................ 441
236. PURCHASE OF MINORITY SHAREHOLDING. ..................................................................................... 443
237. POWER OF CENTRAL GOVERNMENT TO PROVIDE FOR AMALGAMATION OF COMPANIES IN PUBLIC INTEREST.
....................................................................................................................................................... 446
238. REGISTRATION OF OFFER OF SCHEMES INVOLVING TRANSFER OF SHARES. ....................................... 448
239. PRESERVATION OF BOOKS AND PAPERS OF AMALGAMATED COMPANIES. ........................................... 449
240. LIABILITY OF OFFICERS IN RESPECT OF OFFENCES COMMITTED PRIOR TO MERGER, AMALGAMATION, ETC.
....................................................................................................................................................... 450
CHAPTER XVI PREVENTION OF OPPRESSION AND MISMANAGEMENT ...................................... 451
241. APPLICATION TO TRIBUNAL FOR RELIEF IN CASES OF OPPRESSION, ETC............................................ 451
242. POWERS OF TRIBUNAL................................................................................................................ 453
243. CONSEQUENCE OF TERMINATION OR MODIFICATION OF CERTAIN AGREEMENTS. ................................ 456
244. RIGHT TO APPLY UNDER SECTION 241. ......................................................................................... 458
245. CLASS ACTION. .......................................................................................................................... 459
246. APPLICATION OF CERTAIN PROVISIONS TO PROCEEDINGS UNDER SECTION 241 OR SECTION 245......... 462
CHAPTER XVII REGISTERED VALUERS .......................................................................................... 463
247. VALUATION BY REGISTERED VALUERS. .......................................................................................... 463
CHAPTER XVIII REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES 465
248. POWER OF REGISTRAR TO REMOVE NAME OF COMPANY FROM REGISTER OF COMPANIES. .................. 465
249. RESTRICTIONS ON MAKING APPLICATION UNDER SECTION 248 IN CERTAIN SITUATIONS. ...................... 468
250. EFFECT OF COMPANY NOTIFIED AS DISSOLVED. ............................................................................. 469
251. FRAUDULENT APPLICATION FOR REMOVAL OF NAME. ...................................................................... 470
252. APPEAL TO TRIBUNAL. ................................................................................................................ 471
OMITTED CHAPTER XIX REVIVAL AND REHABILITATION OF SICK COMPANIES ........................ 472
253 TO 269 OMITTED ......................................................................................................................... 472
CHAPTER XX WINDING UP ............................................................................................................... 478
[270. WINDING UP BY TRIBUNAL. ......................................................................................................... 478
PART I.—WINDING UP BY THE TRIBUNAL ...................................................................................... 479
271. CIRCUMSTANCES IN WHICH COMPANY MAY BE WOUND UP BY TRIBUNAL. ........................................... 479
[272. PETITION FOR WINDING UP. ........................................................................................................ 481
273. POWERS OF TRIBUNAL................................................................................................................ 484
274. DIRECTIONS FOR FILING STATEMENT OF AFFAIRS. .......................................................................... 485
275. COMPANY LIQUIDATORS AND THEIR APPOINTMENTS. ...................................................................... 486
276. REMOVAL AND REPLACEMENT OF LIQUIDATOR. .............................................................................. 488
277. INTIMATION TO COMPANY LIQUIDATOR, PROVISIONAL LIQUIDATOR AND REGISTRAR. .......................... 489
278. EFFECT OF WINDING UP ORDER. .................................................................................................. 491
279. STAY OF SUITS, ETC., ON WINDING UP ORDER. ............................................................................... 492
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 280. JURISDICTION OF TRIBUNAL......................................................................................................... 493
281. SUBMISSION OF REPORT BY COMPANY LIQUIDATOR. ...................................................................... 494
282. DIRECTIONS OF TRIBUNAL ON REPORT OF COMPANY LIQUIDATOR. .................................................. 496
283. CUSTODY OF COMPANY'S PROPERTIES. ........................................................................................ 497
284. PROMOTERS, DIRECTORS, ETC., TO COOPERATE WITH COMPANY LIQUIDATOR. ................................. 498
285. SETTLEMENT OF LIST OF CONTRIBUTORIES AND APPLICATION OF ASSETS. ........................................ 499
286. OBLIGATIONS OF DIRECTORS AND MANAGERS. .............................................................................. 500
287. ADVISORY COMMITTEE. ............................................................................................................... 501
288. SUBMISSION OF PERIODICAL REPORTS TO TRIBUNAL. ..................................................................... 502
[289. OMITTED - POWER OF TRIBUNAL ON APPLICATION FOR STAY OF WINDING UP. ................................... 503
290. POWERS AND DUTIES OF COMPANY LIQUIDATOR. .......................................................................... 504
291. PROVISION FOR PROFESSIONAL ASSISTANCE TO COMPANY LIQUIDATOR........................................... 506
292. EXERCISE AND CONTROL OF COMPANY LIQUIDATOR'S POWERS. ...................................................... 507
293. BOOKS TO BE KEPT BY COMPANY LIQUIDATOR. ............................................................................. 508
294. AUDIT OF COMPANY LIQUIDATOR'S ACCOUNTS. ............................................................................. 509
295. PAYMENT OF DEBTS BY CONTRIBUTORY AND EXTENT OF SET-OFF. ................................................... 510
296. POWER OF TRIBUNAL TO MAKE CALLS........................................................................................... 511
297. ADJUSTMENT OF RIGHTS OF CONTRIBUTORIES. .............................................................................. 512
298. POWER TO ORDER COSTS. .......................................................................................................... 513
299. POWER TO SUMMON PERSONS SUSPECTED OF HAVING PROPERTY OF COMPANY, ETC. ....................... 514
300. POWER TO ORDER EXAMINATION OF PROMOTERS, DIRECTORS, ETC. ................................................ 516
301. ARREST OF PERSON TRYING TO LEAVE INDIA OR ABSCOND.............................................................. 518
302. DISSOLUTION OF COMPANY BY TRIBUNAL. ..................................................................................... 519
303. APPEALS FROM ORDERS MADE BEFORE COMMENCEMENT OF ACT. ................................................... 520
[OMITTED - PART II.—VOLUNTARY WINDING UP] .......................................................................... 521
PART III.—PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP ................................... 527
324. DEBTS OF ALL DESCRIPTIONS TO BE ADMITTED TO PROOF. .............................................................. 527
325. OMITTED ................................................................................................................................... 528
326. OVERRIDING PREFERENTIAL PAYMENTS. ....................................................................................... 529
327. PREFERENTIAL PAYMENTS. ......................................................................................................... 532
328. FRAUDULENT PREFERENCE. ........................................................................................................ 535
329. TRANSFERS NOT IN GOOD FAITH TO BE VOID. ................................................................................. 536
330. CERTAIN TRANSFERS TO BE VOID. ................................................................................................ 537
331. LIABILITIES AND RIGHTS OF CERTAIN PERSONS FRAUDULENTLY PREFERRED. ..................................... 538
332. EFFECT OF FLOATING CHARGE. .................................................................................................... 539
333. DISCLAIMER OF ONEROUS PROPERTY. .......................................................................................... 540
334. TRANSFERS, ETC., AFTER COMMENCEMENT OF WINDING UP TO BE VOID. .......................................... 542
335. CERTAIN ATTACHMENTS, EXECUTIONS, ETC., IN WINDING UP BY TRIBUNAL TO BE VOID. ...................... 543
336. OFFENCES BY OFFICERS OF COMPANIES IN LIQUIDATION. ................................................................ 544
337. PENALTY FOR FRAUDS BY OFFICERS. ............................................................................................ 547
338. LIABILITY WHERE PROPER ACCOUNTS NOT KEPT. ........................................................................... 548
339. LIABILITY FOR FRAUDULENT CONDUCT OF BUSINESS. ...................................................................... 549
340. POWER OF TRIBUNAL TO ASSESS DAMAGES AGAINST DELINQUENT DIRECTORS, ETC. ......................... 551
341. LIABILITY UNDER SECTIONS 339 AND 340 TO EXTEND TO PARTNERS OR DIRECTORS IN FIRMS OR
COMPANIES. ...................................................................................................................................... 552
342. PROSECUTION OF DELINQUENT OFFICERS AND MEMBERS OF COMPANY. ........................................... 553
343. COMPANY LIQUIDATOR TO EXERCISE CERTAIN POWERS SUBJECT TO SANCTION. ............................... 555
344. STATEMENT THAT COMPANY IS IN LIQUIDATION. ............................................................................. 557
345. BOOKS AND PAPERS OF COMPANY TO BE EVIDENCE. ...................................................................... 558
346. INSPECTION OF BOOKS AND PAPERS BY CREDITORS AND CONTRIBUTORIES. ...................................... 559
347. DISPOSAL OF BOOKS AND PAPERS OF COMPANY. ........................................................................... 560
348. INFORMATION AS TO PENDING LIQUIDATIONS. ................................................................................ 562
349. OFFICIAL LIQUIDATOR TO MAKE PAYMENTS INTO PUBLIC ACCOUNT OF INDIA. ..................................... 564
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 350. COMPANY LIQUIDATOR TO DEPOSIT MONIES INTO SCHEDULED BANK. ............................................... 565
351. LIQUIDATOR NOT TO DEPOSIT MONIES INTO PRIVATE BANKING ACCOUNT. .......................................... 566
352. COMPANY LIQUIDATION DIVIDEND AND UNDISTRIBUTED ASSETS ACCOUNT. ..................................... 567
353. LIQUIDATOR TO MAKE RETURNS, ETC. ........................................................................................... 569
354. MEETINGS TO ASCERTAIN WISHES OF CREDITORS OR CONTRIBUTORIES. .......................................... 570
355. COURT, TRIBUNAL OR PERSON, ETC., BEFORE WHOM AFFIDAVIT MAY BE SWORN. ............................... 571
356. POWERS OF TRIBUNAL TO DECLARE DISSOLUTION OF COMPANY VOID. ............................................. 572
357. COMMENCEMENT OF WINDING UP BY TRIBUNAL. ............................................................................ 573
358. EXCLUSION OF CERTAIN TIME IN COMPUTING PERIOD OF LIMITATION. ................................................ 574
PART IV.—OFFICIAL LIQUIDATORS................................................................................................. 575
359. APPOINTMENT OF OFFICIAL LIQUIDATOR. ...................................................................................... 575
360. POWERS AND FUNCTIONS OF OFFICIAL LIQUIDATOR. ...................................................................... 576
361. SUMMARY PROCEDURE FOR LIQUIDATION...................................................................................... 577
362. SALE OF ASSETS AND RECOVERY OF DEBTS DUE TO COMPANY. ....................................................... 578
363. SETTLEMENT OF CLAIMS OF CREDITORS BY OFFICIAL LIQUIDATOR. .................................................. 579
364. APPEAL BY CREDITOR. ................................................................................................................ 580
365. ORDER OF DISSOLUTION OF COMPANY. ......................................................................................... 581
CHAPTER XXI .................................................................................................................................... 582
PART I.— COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT ....................................... 582
366. COMPANIES CAPABLE OF BEING REGISTERED. ............................................................................... 582
367. CERTIFICATE OF REGISTRATION OF EXISTING COMPANIES. .............................................................. 584
368. VESTING OF PROPERTY ON REGISTRATION. ................................................................................... 585
369. SAVING OF EXISTING LIABILITIES................................................................................................... 586
370. CONTINUATION OF PENDING LEGAL PROCEEDINGS. ........................................................................ 587
371. EFFECT OF REGISTRATION UNDER THIS PART. ............................................................................... 588
372. POWER OF COURT TO STAY OR RESTRAIN PROCEEDINGS. .............................................................. 590
373. SUITS STAYED ON WINDING UP ORDER. ......................................................................................... 591
374. OBLIGATIONS OF COMPANIES REGISTERING UNDER THIS PART. ....................................................... 592
PART II.—WINDING UP OF UNREGISTERED COMPANIES ............................................................. 593
375. WINDING UP OF UNREGISTERED COMPANIES. ................................................................................ 593
376. POWER TO WIND UP FOREIGN COMPANIES, ALTHOUGH DISSOLVED. .................................................. 595
377. PROVISIONS OF CHAPTER CUMULATIVE. ....................................................................................... 596
378. SAVING AND CONSTRUCTION OF ENACTMENTS CONFERRING POWER TO WIND UP PARTNERSHIP FIRM,
ASSOCIATION OR COMPANY, ETC., IN CERTAIN CASES. ............................................................................ 597

CHAPTER XXII COMPANIES INCORPORATED OUTSIDE INDIA ..................................................... 598

379. APPLICATION OF ACT TO FOREIGN COMPANIES. ............................................................................. 598
380. DOCUMENTS, ETC., TO BE DELIVERED TO REGISTRAR BY FOREIGN COMPANIES. ................................ 599
381. ACCOUNTS OF FOREIGN COMPANY. .............................................................................................. 600
382. DISPLAY OF NAME, ETC., OF FOREIGN COMPANY. ........................................................................... 601
383. SERVICE ON FOREIGN COMPANY. ................................................................................................. 602
384. DEBENTURES, ANNUAL RETURN, REGISTRATION OF CHARGES, BOOKS OF ACCOUNT AND THEIR
INSPECTION. ..................................................................................................................................... 603
385. FEE FOR REGISTRATION OF DOCUMENTS....................................................................................... 605
386. INTERPRETATION. ...................................................................................................................... 606
387. DATING OF PROSPECTUS AND PARTICULARS TO BE CONTAINED THEREIN. ......................................... 607
388. PROVISIONS AS TO EXPERT’S CONSENT AND ALLOTMENT. ............................................................... 609
389. REGISTRATION OF PROSPECTUS. ................................................................................................. 610
390. OFFER OF INDIAN DEPOSITORY RECEIPTS. ................................................................................... 611
391. APPLICATION OF SECTIONS 34 TO 36 AND CHAPTER XX. ................................................................ 612
392. PUNISHMENT FOR CONTRAVENTION.............................................................................................. 613
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 393. COMPANY'S FAILURE TO COMPLY WITH PROVISIONS OF THIS CHAPTER NOT TO AFFECT VALIDITY OF
CONTRACTS, ETC. .............................................................................................................................. 614

CHAPTER XXIII GOVERNMENT COMPANIES .................................................................................. 615

394. ANNUAL REPORTS ON GOVERNMENT COMPANIES. ......................................................................... 615
395. ANNUAL REPORTS WHERE ONE OR MORE STATE GOVERNMENTS ARE MEMBERS OF COMPANIES. ........ 616
CHAPTER XXIV REGISTRATION OFFICES AND FEES .................................................................... 617
396. REGISTRATION OFFICES. ............................................................................................................. 617
397. ADMISSIBILITY OF CERTAIN DOCUMENTS AS EVIDENCE. ................................................................... 618
398. PROVISIONS RELATING TO FILING OF APPLICATIONS, DOCUMENTS, INSPECTION, ETC., IN ELECTRONIC
FORM. .............................................................................................................................................. 619
399. INSPECTION, PRODUCTION AND EVIDENCE OF DOCUMENTS KEPT BY REGISTRAR. .............................. 621
400. ELECTRONIC FORM TO BE EXCLUSIVE, ALTERNATIVE OR IN ADDITION TO PHYSICAL FORM. ................... 622
401. PROVISION OF VALUE ADDED SERVICES THROUGH ELECTRONIC FORM. ............................................. 623
402. APPLICATION OF PROVISIONS OF INFORMATION TECHNOLOGY ACT, 2000. ....................................... 624
403. FEE FOR FILING, ETC. ................................................................................................................. 625
404. FEES, ETC., TO BE CREDITED INTO PUBLIC ACCOUNT. ..................................................................... 627
CHAPTER XXV COMPANIES TO FURNISH INFORMATION OR STATISTICS .................................. 628
405. POWER OF CENTRAL GOVERNMENT TO DIRECT COMPANIES TO FURNISH INFORMATION OR STATISTICS.628
CHAPTER XXVI NIDHIS ..................................................................................................................... 629
406. POWER TO MODIFY ACT IN ITS APPLICATION TO NIDHIS. .................................................................. 629
CHAPTER XXVII NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL ............... 630
407. DEFINITIONS. ............................................................................................................................. 630
408. CONSTITUTION OF NATIONAL COMPANY LAW TRIBUNAL. ................................................................ 631
409. QUALIFICATION OF PRESIDENT AND MEMBERS OF TRIBUNAL. .......................................................... 632
410. CONSTITUTION OF APPELLATE TRIBUNAL. ..................................................................................... 633
411. QUALIFICATIONS OF CHAIRPERSON AND MEMBERS OF APPELLATE TRIBUNAL. ................................... 634
412. SELECTION OF MEMBERS OF TRIBUNAL AND APPELLATE TRIBUNAL. ................................................ 635
413. TERM OF OFFICE OF PRESIDENT, CHAIRPERSON AND OTHER MEMBERS. ........................................... 636
414. SALARY, ALLOWANCES AND OTHER TERMS AND CONDITIONS OF SERVICE OF MEMBERS. .................... 637
415. ACTING PRESIDENT AND CHAIRPERSON OF TRIBUNAL OR APPELLATE TRIBUNAL. .............................. 638
416. RESIGNATION OF MEMBERS. ....................................................................................................... 639
417. REMOVAL OF MEMBERS. ............................................................................................................. 640
418. STAFF OF TRIBUNAL AND APPELLATE TRIBUNAL. ........................................................................... 641
419. BENCHES OF TRIBUNAL. ............................................................................................................. 642
420. ORDERS OF TRIBUNAL. ............................................................................................................... 644
421. APPEAL FROM ORDERS OF TRIBUNAL. .......................................................................................... 645
422. EXPEDITIOUS DISPOSAL BY TRIBUNAL AND APPELLATE TRIBUNAL. ................................................... 646
423. APPEAL TO SUPREME COURT. ..................................................................................................... 647
424. PROCEDURE BEFORE TRIBUNAL AND APPELLATE TRIBUNAL. ........................................................... 648
425. POWER TO PUNISH FOR CONTEMPT. ............................................................................................. 650
426. DELEGATION OF POWERS. ........................................................................................................... 651
427. PRESIDENT, MEMBERS, OFFICERS, ETC., TO BE PUBLIC SERVANTS................................................... 652
428. PROTECTION OF ACTION TAKEN IN GOOD FAITH. ............................................................................. 653
429. POWER TO SEEK ASSISTANCE OF CHIEF METROPOLITAN MAGISTRATE, ETC...................................... 654
430. CIVIL COURT NOT TO HAVE JURISDICTION. ..................................................................................... 655
431. VACANCY IN TRIBUNAL OR APPELLATE TRIBUNAL NOT TO INVALIDATE ACTS OR PROCEEDINGS. ........... 656
432. RIGHT TO LEGAL REPRESENTATION. ............................................................................................. 657
433. LIMITATION. ............................................................................................................................... 658
434. TRANSFER OF CERTAIN PENDING PROCEEDINGS. ........................................................................... 659
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CHAPTER XXVIII SPECIAL COURTS ................................................................................................ 662
435. ESTABLISHMENT OF SPECIAL COURTS. ......................................................................................... 662
436. OFFENCES TRIABLE BY SPECIAL COURTS. .................................................................................... 664
437. APPEAL AND REVISION. ............................................................................................................... 666
438. APPLICATION OF CODE TO PROCEEDINGS BEFORE SPECIAL COURT. ................................................ 667
439. OFFENCES TO BE NON-COGNIZABLE. ............................................................................................ 668
440. TRANSITIONAL PROVISIONS. ........................................................................................................ 670
441. COMPOUNDING OF CERTAIN OFFENCES. ....................................................................................... 671
442. MEDIATION AND CONCILIATION PANEL. ......................................................................................... 674
443. POWER OF CENTRAL GOVERNMENT TO APPOINT COMPANY PROSECUTORS. ..................................... 675
444. APPEAL AGAINST ACQUITTAL. ...................................................................................................... 676
445. COMPENSATION FOR ACCUSATION WITHOUT REASONABLE CAUSE.................................................... 677
446. APPLICATION OF FINES. .............................................................................................................. 678
[446A. FACTORS FOR DETERMINING LEVEL OF PUNISHMENT. .................................................................. 679
[446B. LESSER PENALTIES FOR ONE PERSON COMPANIES OR SMALL COMPANIES. ................................... 680
CHAPTER XXIX MISCELLANEOUS ................................................................................................... 681
447. PUNISHMENT FOR FRAUD. ........................................................................................................... 681
448. PUNISHMENT FOR FALSE STATEMENT. .......................................................................................... 683
449. PUNISHMENT FOR FALSE EVIDENCE. ............................................................................................. 684
450. PUNISHMENT WHERE NO SPECIFIC PENALTY OR PUNISHMENT IS PROVIDED. ...................................... 685
451. PUNISHMENT IN CASE OF REPEATED DEFAULT. .............................................................................. 686
452. PUNISHMENT FOR WRONGFUL WITHHOLDING OF PROPERTY. ........................................................... 687
453. PUNISHMENT FOR IMPROPER USE OF “LIMITED” OR “PRIVATE LIMITED”. ............................................ 688
454. ADJUDICATION OF PENALTIES. ..................................................................................................... 689
[454A. PENALTY FOR REPEATED DEFAULT. ........................................................................................... 691
455. DORMANT COMPANY................................................................................................................... 692
456. PROTECTION OF ACTION TAKEN IN GOOD FAITH. ............................................................................. 694
457. NON-DISCLOSURE OF INFORMATION IN CERTAIN CASES. ................................................................. 695
458. DELEGATION BY CENTRAL GOVERNMENT OF ITS POWERS AND FUNCTIONS. ...................................... 696
459. POWERS OF CENTRAL GOVERNMENT OR TRIBUNAL TO ACCORD APPROVAL, ETC., SUBJECT TO
CONDITIONS AND TO PRESCRIBE FEES ON APPLICATIONS. ....................................................................... 697
460. CONDONATION OF DELAY IN CERTAIN CASES. ................................................................................ 698
461. ANNUAL REPORT BY CENTRAL GOVERNMENT. ............................................................................... 699
462. POWER TO EXEMPT CLASS OR CLASSES OF COMPANIES FROM PROVISIONS OF THIS ACT. ................... 700
463. POWER OF COURT TO GRANT RELIEF IN CERTAIN CASES. ................................................................ 701
464. PROHIBITION OF ASSOCIATION OR PARTNERSHIP OF PERSONS EXCEEDING CERTAIN NUMBER. ............. 702
465. REPEAL OF CERTAIN ENACTMENTS AND SAVINGS. .......................................................................... 703
466. DISSOLUTION OF COMPANY LAW BOARD AND CONSEQUENTIAL PROVISIONS. .................................... 705
467. POWER OF CENTRAL GOVERNMENT TO AMEND SCHEDULES. .......................................................... 707
468. POWERS OF CENTRAL GOVERNMENT TO MAKE RULES RELATING TO WINDING UP. .............................. 708
469. POWER OF CENTRAL GOVERNMENT TO MAKE RULES...................................................................... 710
470. POWER TO REMOVE DIFFICULTIES. ............................................................................................... 711
SCHEDULE I....................................................................................................................................... 712
TABLE-A MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES .................. 712
TABLE-B MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT
HAVING A SHARE CAPITAL ........................................................................................................... 714
TABLE-C MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND
HAVING A SHARE CAPITAL ........................................................................................................... 716
TABLE-D MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT HAVING
SHARE CAPITAL ............................................................................................................................ 718
TABLE-E MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND HAVING SHARE
CAPITAL ......................................................................................................................................... 720
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 TABLE-F ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY SHARES ........................... 722
TABLE-G ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND HAVING A
SHARE CAPITAL ............................................................................................................................ 740
TABLE-H ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT
HAVING SHARE CAPITAL .............................................................................................................. 741
TABLE-I ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND HAVING A SHARE
CAPITAL ......................................................................................................................................... 747
TABLE-J ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT HAVING SHARE
CAPITAL ......................................................................................................................................... 748
SCHEDULE II USEFUL LIVES TO COMPUTE DEPRECIATION ........................................................ 749
PART ‘A’ ......................................................................................................................................... 749
PART ‘B’ ......................................................................................................................................... 751
PART ‘C’ ......................................................................................................................................... 751
NOTES.— ......................................................................................................................................... 756
SCHEDULE III INSTRUCTIONS TO PREPARE BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT .......................................................................................................................................... 758
[DIVISION I ........................................................................................................................................ 758
PART I — BALANCE SHEET ...................................................................................................... 759
PART II — STATEMENT OF PROFIT AND LOSS....................................................................... 771
[DIVISION II ....................................................................................................................................... 777
GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A
COMPANY REQUIRED TO COMPLY WITH Ind AS.................................................................... 777
PART I - BALANCE SHEET ........................................................................................................ 779
PART II - STATEMENT OF PROFIT AND LOSS ......................................................................... 801
PART III ...................................................................................................................................... 806
[DIVISION III ...................................................................................................................................... 808
GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A NON-
BANKING FINANCIAL COMPANY (NBFC) THAT IS REQUIRED TO COMPLY WITH INDIAN
ACCOUNTING STANDARDS (Ind AS) ........................................................................................ 809
PART I -BALANCE SHEET ......................................................................................................... 811
PART II - STATEMENT OF PROFIT AND LOSS ......................................................................... 830
PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED FINANCIAL
STATEMENTS ............................................................................................................................ 836
SCHEDULE IV CODE FOR INDEPENDENT DIRECTORS.................................................................. 839
SCHEDULE V CONDITIONS FOR APPOINTMENT AND PAYMENT OF REMUNERATION OF
MANAGERIAL PERSONNEL ............................................................................................................. 844
PART I ............................................................................................................................................ 844
PART II ........................................................................................................................................... 846
Section I.— Remuneration payable by companies having profits: ................................................ 846
[Section II.— Remuneration payable by companies having no profit or inadequate profit [omitted]:
................................................................................................................................................... 846
Section III.— Remuneration payable by companies having no profit or inadequate profit [omitted]
approval in certain special circumstances: ................................................................................... 851
Section IV.— Perquisites not included in managerial remuneration: ............................................. 853
Section V. —Remuneration payable to a managerial person in two companies: ........................... 855
PART III .......................................................................................................................................... 855
PART IV .......................................................................................................................................... 855
SCHEDULE VI INFRASTRUCTURE PROJECTS AND FACILITIES ................................................... 856
SCHEDULE VII CSR POLICY ............................................................................................................. 859

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RULES UNDER THE COMPANIES ACT, 2013 ................................................................................... 861
CHAPTER I: THE COMPANIES (SPECIFICATION OF DEFINITIONS DETAILS) RULES, 2014 ......... 862
1. SHORT TITLE AND COMMENCEMENT.— ............................................................................................. 862
2. DEFINITIONS.— ............................................................................................................................. 862
3. RELATED PARTY.- .......................................................................................................................... 864
4. LIST OF RELATIVES IN TERMS OF CLAUSE (77) OF SECTION 2.- ............................................................. 865
CHAPTER I: THE COMPANIES (RESTRICTION ON NUMBER OF LAYERS) RULES, 2017 .............. 866
1. Short title and Commencement.— ........................................................................................... 866
2. Restriction on number of layers for certain classes of holding companies.— ............................ 866
Form CRL-1 ................................................................................................................................ 867
CHAPTER II: THE COMPANIES (INCORPORATION) RULES, 2014.................................................. 869
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................... 869
2. DEFINITIONS.- ............................................................................................................................... 869
3. ONE PERSON COMPANY.- ............................................................................................................... 870
4. NOMINATION BY THE SUBSCRIBER OR MEMBER OF ONE PERSON COMPANY.-........................................ 871
[5. PENALTY.- OMITTED BY NOTIFICATION NUMBER G.S.R. 349(E) DATED 01ST MAY 2015]....................... 873
6. ONE PERSON COMPANY TO CONVERT ITSELF INTO A PUBLIC COMPANY OR A PRIVATE COMPANY IN CERTAIN
CASES.- ............................................................................................................................................ 873
7. CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY.- ................................................... 874
[7A. PENALTY.- ................................................................................................................................ 875
[8. NAMES WHICH RESEMBLE TOO NEARLY WITH NAME OF EXISTING COMPANY.- ........................................ 875
8A. UNDESIRABLE NAMES.-................................................................................................................. 877
8B. WORD OR EXPRESSION WHICH CAN BE USED ONLY AFTER OBTAINING PREVIOUS APPROVAL OF CENTRAL
GOVERNMENT. .................................................................................................................................. 880
[9. RESERVATION OF NAME.- ............................................................................................................... 884
10. WHERE ARTICLES CONTAIN ENTRENCHMENT PROVISION ................................................................... 885
11. MODEL ARTICLES ......................................................................................................................... 885
[12. APPLICATION FOR INCORPORATION OF COMPANIES.- ....................................................................... 885
13. SIGNING OF MEMORANDUM AND ARTICLES.- .................................................................................... 886
14. DECLARATION BY PROFESSIONALS.- ............................................................................................... 887
[15. DECLARATION FROM SUBSCRIBERS AND FIRST DIRECTORS.- ........................................................... 888
16. PARTICULARS OF EVERY SUBSCRIBER TO BE FILED WITH THE REGISTRAR AT THE TIME OF INCORPORATION.
....................................................................................................................................................... 888
17. PARTICULARS OF FIRST DIRECTORS OF THE COMPANY AND THEIR CONSENT TO ACT AS SUCH.- ............. 891
18. CERTIFICATE OF INCORPORATION.- ................................................................................................ 891
19. LICENSE UNDER SECTION 8 FOR NEW COMPANIES WITH CHARITABLE OBJECTS ETC.-............................ 891
20. LICENSE FOR EXISTING COMPANIES.-.............................................................................................. 892
21. CONDITIONS FOR CONVERSION OF A COMPANY REGISTERED UNDER SECTION 8 INTO A COMPANY OF ANY
OTHER KIND. ..................................................................................................................................... 893
22. OTHER CONDITIONS TO BE COMPLIED WITH BY COMPANIES REGISTERED UNDER SECTION 8 SEEKING
CONVERSION INTO ANY OTHER KIND.- ................................................................................................... 894
23. INTIMATION TO REGISTRAR OF REVOCATION OF LICENCE ISSUED UNDER SECTION 8.-........................... 896
[23A. DECLARATION AT THE TIME OF COMMENCEMENT OF BUSINESS.- ..................................................... 897
24. [OMITTED ….DECLARATION AT THE TIME OF COMMENCEMENT OF BUSINESS.- ] ................................... 897
25. VERIFICATION OF REGISTERED OFFICE.- ......................................................................................... 897
[25A. ACTIVE COMPANY TAGGING IDENTITIES AND VERIFICATION (ACTIVE).- ......................................... 898
26. PUBLICATION OF NAME BY COMPANY.- ............................................................................................ 899
27. NOTICE AND VERIFICATION OF CHANGE OF SITUATION OF THE REGISTERED OFFICE.-............................ 899
[28. SHIFTING OF REGISTERED OFFICE WITHIN THE SAME STATE.- ........................................................... 899
29. ALTERATION OF MEMORANDUM BY CHANGE OF NAME.- .................................................................... 900
[30. SHIFTING OF REGISTERED OFFICE FROM ONE STATE OR UNION TERRITORY TO ANOTHER STATE.- ........ 901

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 31. CERTIFIED COPY OF THE ORDER OF THE CENTRAL GOVERNMENT ...................................................... 904
32. CHANGE OF OBJECTS FOR WHICH MONEY IS RAISED THROUGH PROSPECTUS. ..................................... 905
33. ALTERATION OF ARTICLES.- ........................................................................................................... 905
34. COPIES OF MEMORANDUM AND ARTICLES, ETC. TO BE GIVEN TO MEMBERS ON REQUEST BEING MADE BY
THEM.- ............................................................................................................................................. 906
35. SERVICE OF DOCUMENTS.- ............................................................................................................ 906
[36. OMITTED] ................................................................................................................................... 907
[37. CONVERSION OF UNLIMITED LIABILITY COMPANY INTO A LIMITED LIABILITY COMPANY BY SHARES OR
GUARANTEE.- .................................................................................................................................... 908
[38. SIMPLIFIED PROFORMA FOR INCORPORATING COMPANY ELECTRONICALLY (SPICE) .......................... 911
[38A. APPLICATION FOR REGISTRATION OF THE GOODS AND SERVICE TAX IDENTIFICATIO NUMBER (GSTIN),
EMPLOYEES’ SERVICE INSURNACE CORPORATION (ESIC) REGISTRATION AND EMPLOYEES’ PROVIDENT FUND
ORGANISATION (EPFO) REGISTRATION ............................................................................................... 913
[39. CONVERSION OF A COMPANY LIMITED BY GUARANTEE INTO A COMPANY LIMITED BY SHARES ................ 913
[40.APPLICATION UNDER SUB-SECTION (41) OF SECTION 2 FOR CHANGE IN FINANCIAL YEAR ...................... 914
[41. APPLICATION UNDER SECTION 14 FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY. ..... 915
FORMS NOTIFIED ............................................................................................................................. 918
Form No. INC-8........................................................................................................................... 919
Form No. INC-9........................................................................................................................... 919
Form No. INC-10 ......................................................................................................................... 920
Form No. INC-11 ......................................................................................................................... 921
Form No. INC-11A ...................................................................................................................... 922
[Form No. INC-13 ........................................................................................................................ 922
Form No. INC-14 ......................................................................................................................... 925
Form No. INC-15 ......................................................................................................................... 925
[Form No. INC-16 ........................................................................................................................ 926
Form No. INC-17 ......................................................................................................................... 927
Form No. INC-19 ......................................................................................................................... 928
[Form No. INC-20 ........................................................................................................................ 929
Form No. INC-25 ......................................................................................................................... 929
[Form No. INC-25A...................................................................................................................... 930
[Form No. INC-26 ........................................................................................................................ 930
Form No. INC-27A ...................................................................................................................... 932
CHAPTER III: THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014
............................................................................................................................................................ 933
1. SHORT TITLE AND COMMENCEMENT.— ............................................................................................. 933
2. DEFINITIONS.— ............................................................................................................................. 933
[3. OMITTED] ..................................................................................................................................... 934
[4. OMITTED] ..................................................................................................................................... 936
[5. OMITTED] ..................................................................................................................................... 937
[6. OMITTED] ..................................................................................................................................... 940
7. VARIATION IN TERMS OF CONTRACTS REFERRED TO IN THE PROSPECTUS OR OBJECTS FOR WHICH
PROSPECTUS WAS ISSUED.— .............................................................................................................. 940
8. OFFER OF SALE BY MEMBERS.— .................................................................................................... 941
9. DEMATERIALISATION OF SECURITIES.— ............................................................................................ 941
[9A. ISSUE OF SECURITIES IN DEMATERIALISED FORM BY UNLISTED PUBLIC COMPANIES.- ........................... 941
10. SHELF PROSPECTUS AND INFORMATION MEMORANDUM.— ............................................................... 943
11. REFUND OF APPLICATION MONEY.—.............................................................................................. 943
12. RETURN OF ALLOTMENT.- ............................................................................................................. 944
13. PAYMENT OF COMMISSION.— ........................................................................................................ 945
[14. PRIVATE PLACEMENT.-................................................................................................................. 945
FORMS NOTIFIED ............................................................................................................................. 949
Form PAS-1 ................................................................................................................................ 950

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 Form PAS-5 ................................................................................................................................ 951
Form PAS–6 ............................................................................................................................... 951
CHAPTER III: THE COMPANIES (ISSUE OF GLOBAL DEPOSITORY RECEIPTS) RULES, 2014 .... 955
1. SHORT TITLE AND COMMENCEMENT. – .............................................................................................. 955
2. DEFINITIONS. ................................................................................................................................. 955
3. ELIGIBILITY TO ISSUE DEPOSITORY RECEIPTS. – ................................................................................. 955
4. CONDITIONS FOR ISSUE OF DEPOSITORY RECEIPTS. – ........................................................................ 956
5. MANNER AND FORM OF DEPOSITORY RECEIPTS. –.............................................................................. 956
6. VOTING RIGHTS. – .......................................................................................................................... 957
7. PROCEEDS OF ISSUE. – .................................................................................................................. 957
8. DEPOSITORY RECEIPTS PRIOR TO COMMENCEMENT. – ....................................................................... 957
9. NON APPLICABILITY OF CERTAIN PROVISIONS OF THE ACT. – ............................................................... 957
NO FORMS ARE PRESCRIBED IN THE RULES. ......................................................................................... 958
CHAPTER IV: THE COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014 ................ 959
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................... 959
2. DEFINITIONS.- ............................................................................................................................... 959
3. APPLICATION.- ............................................................................................................................... 960
4. EQUITY SHARES WITH DIFFERENTIAL RIGHTS.- ................................................................................... 960
5. CERTIFICATE OF SHARES (WHERE SHARES ARE NOT IN DEMAT FORM).- ................................................ 963
6. ISSUE OF RENEWED OR DUPLICATE SHARE CERTIFICATE.- ................................................................... 965
7. MAINTENANCE OF SHARE CERTIFICATE FORMS AND RELATED BOOKS AND DOCUMENTS.- ........................ 967
8. ISSUE OF SWEAT EQUITY SHARES.- .................................................................................................. 967
9. ISSUE AND REDEMPTION OF PREFERENCE SHARES.-........................................................................... 971
10. ISSUE AND REDEMPTION OF PREFERENCE SHARES BY COMPANY IN INFRASTRUCTURAL PROJECTS.- ...... 972
11. INSTRUMENT OF TRANSFER.- ......................................................................................................... 972
12. ISSUE OF EMPLOYEE STOCK OPTIONS.- ........................................................................................... 973
13. ISSUE OF SHARES ON PREFERENTIAL BASIS.- ................................................................................... 976
14. ISSUE OF BONUS SHARES.- ........................................................................................................... 980
15. NOTICE TO REGISTRAR FOR ALTERATION OF SHARE CAPITAL.- .......................................................... 981
16. PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES
FOR THE BENEFIT OF EMPLOYEES.- ...................................................................................................... 981
17. BUY-BACK OF SHARES OR OTHER SECURITIES.- ............................................................................... 982
18. DEBENTURES.- ............................................................................................................................ 986
19. NOMINATION BY SECURITIES HOLDERS.— ....................................................................................... 994
FORMS NOTIFIED ............................................................................................................................. 995
Form No. SH-1 ............................................................................................................................ 997
Form No. SH-2 ............................................................................................................................ 997
Form No. SH-3 ............................................................................................................................ 999
Form No. SH-4 ............................................................................................................................ 999
Form No. SH-5 .......................................................................................................................... 1001
Form No. SH-6 .......................................................................................................................... 1002
Form No. SH-10 ........................................................................................................................ 1003
Form No. SH-12 ........................................................................................................................ 1004
Form No. SH-13 ........................................................................................................................ 1007
Form No. SH-14 ........................................................................................................................ 1008
Form No. SH-15 ........................................................................................................................ 1009
CHAPTER V: THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULES, 2014 ............................ 1011
1. SHORT TITLE, COMMENCEMENT AND APPLICATION.- ......................................................................... 1011
2. DEFINITIONS.- ............................................................................................................................. 1012
3. TERMS AND CONDITIONS OF ACCEPTANCE OF DEPOSITS BY COMPANIES.- ........................................... 1018
4. FORM AND PARTICULARS OF ADVERTISEMENTS OR CIRCULARS.- ....................................................... 1021

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 [5. OMITTED- MANNER AND EXTENT OF DEPOSIT INSURANCE.- .............................................................. 1023
6. CREATION OF SECURITY.- ............................................................................................................. 1024
7. APPOINTMENT OF TRUSTEE FOR DEPOSITORS.- ............................................................................... 1025
8. DUTIES OF TRUSTEES.- ................................................................................................................. 1025
9. MEETING OF DEPOSITORS.- ........................................................................................................... 1026
10. FORM OF APPLICATION FOR DEPOSITS.- ........................................................................................ 1026
11. POWER TO NOMINATE.- ............................................................................................................... 1026
12. FURNISHING OF DEPOSIT RECEIPTS TO DEPOSITORS.- .................................................................... 1026
13. MAINTENANCE OF LIQUID ASSETS AND CREATION OF DEPOSIT REPAYMENT RESERVE ACCOUNT.- ........ 1027
14. REGISTERS OF DEPOSITS.- .......................................................................................................... 1027
15. GENERAL PROVISIONS REGARDING PREMATURE REPAYMENT OF DEPOSITS.-..................................... 1028
16. RETURN OF DEPOSITS TO BE FILED WITH THE REGISTRAR.- ............................................................. 1029
[16A. DISCLOSURES IN THE FINANCIAL STATEMENT.- ........................................................................... 1029
17. PENAL RATE OF INTEREST.- ......................................................................................................... 1030
18. POWER OF CENTRAL GOVERNMENT TO DECIDE CERTAIN QUESTIONS.-............................................. 1030
19. APPLICABILITY OF SECTIONS 73 AND 74 TO ELIGIBLE COMPANIES.- .................................................. 1030
20. STATEMENT REGARDING DEPOSITS EXISTING AS ON THE DATE OF COMMENCEMENT OF THE ACT.- ....... 1030
21. PUNISHMENT FOR CONTRAVENTION.- ........................................................................................... 1030
FORMS NOTIFIED ........................................................................................................................... 1031
Form DPT-1 .............................................................................................................................. 1031
Form DPT-2 .............................................................................................................................. 1033
[Form DPT-3 ............................................................................................................................. 1035
Form DPT-4 .............................................................................................................................. 1043
CHAPTER VI: THE COMPANIES (REGISTRATION OF CHARGES) RULES, 2014 ......................... 1045
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1045
2. DEFINITIONS.- ............................................................................................................................. 1045
3. REGISTRATION OF CREATION OR MODIFICATION OF CHARGE. ............................................................ 1046
[4. APPLICATION TO REGISTRAR.- ...................................................................................................... 1047
5. APPLICATION OF RULES IN CERTAIN MATTERS.-................................................................................ 1047
6. CERTIFICATE OF REGISTRATION. – ................................................................................................. 1048
7. REGISTER OF CHARGES TO BE KEPT BY THE REGISTRAR.- ................................................................ 1048
8. SATISFACTION OF CHARGE.-.......................................................................................................... 1048
9. INTIMATION OF APPOINTMENT OF RECEIVER OR MANAGER.- ............................................................. 1048
10. COMPANY’S REGISTER OF CHARGES.- .......................................................................................... 1049
11. REGISTER OPEN FOR INSPECTION.- .............................................................................................. 1049
[12. RECTIFICATION IN REGISTER OF CHARGES ON ACCOUNT OF OMISSION OR MISSTATEMENT OF PARTICULARS
IN CHARGE PREVIOUSLY RECORDED AND EXTENSION OF TIME IN FILING OF SATISFACTION OF CHARGE. - .... 1049
FORMS NOTIFIED ........................................................................................................................... 1050
CHAPTER VII: THE COMPANIES (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2018 .............. 1051
1. SHORT TITLE AND COMMENCEMENT.–............................................................................................. 1051
2. DEFINITIONS.- ............................................................................................................................. 1051
[2A. DUTY OF THE REPORTING COMPANY.- ......................................................................................... 1054
3. DECLARATION OF SIGNIFICANT BENEFICIAL OWNERSHIP UNDER SECTION 90.- ..................................... 1055
4. RETURN OF SIGNIFICANT BENEFICIAL OWNERS IN SHARES.-............................................................... 1056
5. REGISTER OF SIGNIFICANT BENEFICIAL OWNERS.- ............................................................................ 1056
6. NOTICE SEEKING INFORMATION ABOUT SIGNIFICANT BENEFICIAL OWNERS.- ........................................ 1056
[7. APPLICATION TO THE TRIBUNAL.- .................................................................................................. 1056
8. NON-APPLICABILITY.- ................................................................................................................... 1057
Form No. BEN-1........................................................................................................................ 1058
Form No. BEN-2........................................................................................................................ 1060
From No. BEN-3........................................................................................................................ 1063
Form no. BEN-4 ........................................................................................................................ 1064

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CHAPTER VII: THE COMPANIES (MANAGEMENT AND ADMINISTRATION) RULES, 2014 .......... 1066
CHAPTER VIII: IEPF (APPOINTMENT OF CHAIRPERSON AND MEMBERS …) RULES, 2016 ... 1085
1. SHORT TITLE, EXTENT AND COMMENCEMENT.-- ........................................................................... 1085
2. DEFINITIONS.- ......................................................................................................................... 1085
3. ESTABLISHMENT OF THE AUTHORITY.- ....................................................................................... 1086
3A. ................................................................................................................................................ 1086
4. COMPOSITION OF THE AUTHORITY.- .......................................................................................... 1086
5. CHAIRPERSON OF THE AUTHORITY.- .......................................................................................... 1086
6. CHIEF EXECUTIVE OFFICER OF THE AUTHORITY.- ....................................................................... 1087
7. MEMBERS OF THE AUTHORITY.- ................................................................................................ 1087
8. THE TERM OF OFFICE OF MEMBERS OF THE AUTHORITY.- ............................................................. 1087
9. THE NUMBER OF OFFICERS AND EMPLOYEES OF THE AUTHORITY.- ................................................ 1088
10. FUNCTIONS OF THE AUTHORITY.- .......................................................................................... 1088
11. MEETINGS.- ........................................................................................................................ 1089
12. MEMBER NOT TO PARTICIPATE IN MEETINGS IN CERTAINCASES.- ............................................... 1089
13. VACANCIES, ETC., NOT TO INVALIDATE PROCEEDINGS OF AUTHORITY.-....................................... 1090
14. PROTECTION OF ACTION TAKEN IN GOOD FAITH.- ..................................................................... 1090
SCHEDULE I .................................................................................................................................... 1090
SCHEDULE II ................................................................................................................................... 1090
CHAPTER VIII: IEPF AUTHORITY (ACCOUNTING, AUDIT, TRANSFER AND REFUND) RULES, 2016
.......................................................................................................................................................... 1093
1. SHORT TITLE, EXTENT AND COMMENCEMENT.-- ............................................................................... 1093
2. DEFINITIONS.- ............................................................................................................................. 1093
3. FUND.- ....................................................................................................................................... 1094
4. ACCOUNTS AND AUDIT.- ................................................................................................................ 1096
5. STATEMENT TO BE FURNISHED TO THE FUND.- ................................................................................ 1096
[6. MANNER OF TRANSFER OF SHARES UNDER SUB-SECTION (6) OF SECTION 124 TO THE FUND. - ............ 1097
7. REFUNDS TO CLAIMANTS FROM FUND. – ......................................................................................... 1101
8. POWER TO DIRECT PAYMENT OF AMOUNT DUE TO THE FUND. – ......................................................... 1104
9. TRANSFER OF ASSETS, LIABILITIES, ETC., OF THE EXISTING IEPF TO THE AUTHORITY.- ........................ 1104
10. RETURNS AND REPORTS.- ........................................................................................................... 1104
11. PROTECTION OF ACTION TAKEN IN GOOD FAITH.- ........................................................................... 1105
12. REPEAL AND SAVINGS. – ............................................................................................................. 1105
SCHEDULE .................................................................................................................................. 1105
FORMS NOTIFIED ............................................................................................................................. 1105
CHAPTER VIII: IEPF AUTHORITY (RECRUITMENT, SALARY AND OTHER TERMS AND CONDITIONS
OF SERVICE OF GENERAL MANAGER AND ASSISTANT GENERAL MANAGER) RULES, 2017 . 1106
CHAPTER IX: THE NATIONAL FINANCIAL REPORTING AUTHORITY RULES, 2018.................... 1110
1. SHORT TITLE AND COMMENCEMENT.─ ........................................................................................... 1110
2. DEFINITIONS.─ ............................................................................................................................ 1110
3. CLASSES OF COMPANIES AND BODIES CORPORATE GOVERNED BY THE AUTHORITY.─ .......................... 1111
4. FUNCTIONS AND DUTIES OF THE AUTHORITY.─ ................................................................................ 1112
5. ANNUAL RETURN. ......................................................................................................................... 1113
6. RECOMMENDING ACCOUNTING STANDARDS AND AUDITING STANDARDS.─ .......................................... 1113
7. MONITORING AND ENFORCING COMPLIANCE WITH ACCOUNTING STANDARDS.─ ................................... 1113
8. MONITORING AND ENFORCING COMPLIANCE WITH AUDITING STANDARDS.─ ......................................... 1113
9. OVERSEEING THE QUALITY OF SERVICE AND SUGGESTING MEASURES FOR IMPROVEMENT.─ ................ 1114
10. POWER TO INVESTIGATE.─ .......................................................................................................... 1115
11. DISCIPLINARY PROCEEDINGS.─ ................................................................................................... 1116
12. MANNER OF ENFORCEMENT OF ORDERS PASSED IN DISCIPLINARY PROCEEDINGS.─ ........................... 1117
13. PUNISHMENT IN CASE OF NON-COMPLIANCE.- ................................................................................ 1118
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 14. ROLE OF CHAIRPERSON AND FULL-TIME MEMBERS.─ ...................................................................... 1118
15. ADVISORY COMMITTEES, STUDY GROUPS AND TASK FORCES.─ ....................................................... 1118
16. FINANCIAL REPORTING ADVOCACY AND EDUCATION.─ .................................................................... 1118
17. CONFIDENTIALITY AND SECURITY OF INFORMATION.─ ..................................................................... 1118
18. AVOIDANCE OF CONFLICT OF INTEREST.─ ..................................................................................... 1119
19. INTERNATIONAL ASSOCIATIONS AND INTERNATIONAL ASSISTANCE.─ ................................................ 1119
CHAPTER IX: THE NATIONAL FINANCIAL REPORTING AUTHORITY (MEETING FOR
TRANSACTION OF BUSINESS) RULES, 2019 ................................................................................ 1120
1. SHORT TITLE AND COMMENCEMENT. – ............................................................................................ 1120
2. DEFINITIONS. – ............................................................................................................................ 1120
3. MEETINGS FOR TRANSACTION OF BUSINESS AND PROCEDURE THEREOF. – ......................................... 1121
4. POWER TO REGULATE PROCEDURE IN CERTAIN CIRCUMSTANCES. – ................................................... 1122
5. EFFECT OF ANY IRREGULARITIES OF PROCEDURE.- .......................................................................... 1122
CHAPTER XI: THE COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES,
2014 .................................................................................................................................................. 1123
1. SHORT TITLE AND COMMENCEMENT. – ............................................................................................ 1123
2. DEFINITIONS.- ............................................................................................................................. 1123
3. WOMAN DIRECTOR ON THE BOARD.- .............................................................................................. 1125
4. NUMBER OF INDEPENDENT DIRECTORS.-......................................................................................... 1125
5. QUALIFICATIONS OF INDEPENDENT DIRECTOR.- ............................................................................... 1126
6. CREATION AND MAINTENANCE OF DATABANK OF PERSONS OFFERING TO BECOME INDEPENDENT DIRECTORS.
– ................................................................................................................................................... 1127
7. SMALL SHAREHOLDERS’ DIRECTOR.- .............................................................................................. 1128
8. CONSENT TO ACT AS DIRECTOR.- ................................................................................................... 1130
9. [APPLICATION FOR ALLOTMENT OF DIRECTOR IDENTIFICATION NUMBER BEFORE APPOINTMENT IN AN
EXISTING COMPANY].-....................................................................................................................... 1130
10. ALLOTMENT OF DIN.- ................................................................................................................. 1131
10A. .............................................................................................................................................. 1133
11. CANCELLATION OR SURRENDER OR DEACTIVATION OF DIN.- .......................................................... 1133
12. INTIMATION OF CHANGES IN PARTICULARS SPECIFIED IN DIN APPLICATION. – .................................... 1134
[12A DIRECTORS KYC:-................................................................................................................... 1135
[12B. DIRECTORS OF COMPANY REQUIRED TO FILE E-FORM ACTIVE.- .................................................. 1136
13. NOTICE OF CANDIDATURE OF A PERSON FOR DIRECTORSHIP.- ......................................................... 1136
14. DISQUALIFICATION OF DIRECTORS’ SUB-SECTION (2) OF SECTION 164.- ........................................... 1136
15. NOTICE OF RESIGNATION OF DIRECTOR.- ...................................................................................... 1137
16. COPY OF RESIGNATION OF DIRECTOR TO BE FORWARDED BY HIM.- .................................................. 1137
17. REGISTER OF DIRECTORS AND KEY MANAGERIAL PERSONNEL.- ....................................................... 1138
18. RETURN CONTAINING THE PARTICULARS OF DIRECTORS AND THE KEY MANAGERIAL PERSONNEL. - ...... 1138
FORMS NOTIFIED ........................................................................................................................... 1139
FORM DIR-2 ................................................................................................................................... 1140
FORM DIR-3A................................................................................................................................. 1141
FORM DIR-3B................................................................................................................................. 1142
FORM DIR-8 ................................................................................................................................... 1144
FORM DIR-9 ................................................................................................................................... 1144
CHAPTER XII: THE COMPANIES (MEETINGS OF BOARD AND ITS POWERS) RULES, 2014 ...... 1146
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1146
2. DEFINITIONS.- ............................................................................................................................. 1146
3. MEETINGS OF BOARD THROUGH VIDEO CONFERENCING OR OTHER AUDIO VISUAL MEANS.- ................... 1147
4. MATTERS NOT TO BE DEALT WITH IN A MEETING THROUGH VIDEO CONFERENCING OR OTHER AUDIO VISUAL
MEANS.- ......................................................................................................................................... 1150
5. PASSING OF RESOLUTION BY CIRCULATION.- ................................................................................... 1151

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 6. COMMITTEES OF THE BOARD.-....................................................................................................... 1151
[6A. OMNIBUS APPROVAL FOR RELATED PARTY TRANSACTIONS ON ANNUAL BASIS.- ................................ 1152
7. ESTABLISHMENT OF VIGIL MECHANISM.- .......................................................................................... 1153
8. POWERS OF BOARD.- ................................................................................................................... 1154
9. DISCLOSURES BY A DIRECTOR OF HIS INTEREST.- ............................................................................ 1155
[10. LOANS TO DIRECTOR ETC. UNDER SECTION 185.- OMITTED ........................................................... 1155
11. LOAN AND INVESTMENT BY A COMPANY UNDER SECTION 186 OF THE ACT.- ...................................... 1155
12. REGISTER.- ............................................................................................................................... 1156
[13. SPECIAL RESOLUTION.- ............................................................................................................. 1157
14. INVESTMENTS OF COMPANY TO BE HELD IN ITS OWN NAME.- ............................................................ 1157
15. CONTRACT OR ARRANGEMENT WITH A RELATED PARTY.- ................................................................ 1158
16. REGISTER OF CONTRACTS OR ARRANGEMENTS IN WHICH DIRECTORS ARE INTERESTED.— ................. 1161
17. PAYMENT TO DIRECTOR FOR LOSS OF OFFICE, ETC. IN CONNECTION WITH TRANSFER OF UNDERTAKING,
PROPERTY OR SHARES.—................................................................................................................. 1162
FORMS NOTIFIED ........................................................................................................................... 1163
FORM MBP-1 ................................................................................................................................. 1163
FORM MBP-2 ................................................................................................................................. 1164
FORM MBP-3 ................................................................................................................................. 1165
FORM MBP-4 ................................................................................................................................. 1166
CHAPTER XIII: THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL
PERSONNEL) RULES, 2014 ............................................................................................................ 1169
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1169
2. DEFINITIONS.- ............................................................................................................................. 1169
3. FILING OF RETURN OF APPOINTMENT.- ............................................................................................ 1170
4. SITTING FEES.- ............................................................................................................................ 1170
5. DISCLOSURE IN BOARD’S REPORT.- ............................................................................................... 1170
6. [PARAMETERS FOR CONSIDERATION OF REMUNERATION].-................................................................ 1173
7. FEES.- ........................................................................................................................................ 1173
8. APPOINTMENT OF KEY MANAGERIAL PERSONNEL.- .......................................................................... 1174
8A. APPOINTMENT OF COMPANY SECRETARIES IN COMPANIES NOT COVERED UNDER RULE 8.— .............. 1174
9. SECRETARIAL AUDIT REPORT.- ..................................................................................................... 1174
10. DUTIES OF COMPANY SECRETARY.- ............................................................................................. 1175
FORMS NOTIFIED ........................................................................................................................... 1175
FORM NO. MR-3 ............................................................................................................................. 1176
CHAPTER XV: THE COMPANIES (COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS)
RULES, 2016 .................................................................................................................................... 1179
1. SHORT TITLE AND COMMENCEMENT.— .......................................................................................... 1179
2. DEFINITIONS.— ........................................................................................................................... 1179
3. APPLICATION FOR ORDER OF A MEETING.— .................................................................................... 1179
4. DISCLOSURES IN APPLICATION MADE TO THE TRIBUNAL FOR COMPROMISE OR ARRANGEMENT.— ......... 1180
5. DIRECTIONS AT HEARING OF THE APPLICATION.— ............................................................................ 1180
6. NOTICE OF MEETING.— ................................................................................................................ 1181
7. ADVERTISEMENT OF THE NOTICE OF THE MEETING.—....................................................................... 1184
8. NOTICE TO STATUTORY AUTHORITIES.—......................................................................................... 1184
9. VOTING.— .................................................................................................................................. 1185
10. PROXIES.—............................................................................................................................... 1185
11. COPY OF COMPROMISE OR ARRANGEMENT TO BE FURNISHED BY THE COMPANY.— ........................... 1186
12. AFFIDAVIT OF SERVICE.— ........................................................................................................... 1186
13. RESULT OF THE MEETING TO BE DECIDED BY VOTING.— ................................................................. 1186
14. REPORT OF THE RESULT OF THE MEETING BY CHAIRPERSON.— ...................................................... 1186
15. PETITION FOR CONFIRMING COMPROMISE OR ARRANGEMENT.— ..................................................... 1186
16. DATE AND NOTICE OF HEARING.— ............................................................................................... 1187

xx
 17. ORDER ON PETITION.— .............................................................................................................. 1187
18. APPLICATION FOR DIRECTIONS UNDER SECTION 232 OF THE ACT.— ................................................ 1187
19. DIRECTIONS AT HEARING OF APPLICATION.— ................................................................................ 1188
20. ORDER UNDER SECTION 232 OF THE ACT.— ................................................................................. 1188
21. STATEMENT OF COMPLIANCE IN MERGERS AND AMALGAMATIONS.— ................................................ 1188
22. REPORT ON WORKING OF COMPROMISE OR ARRANGEMENT.— ........................................................ 1188
23. LIBERTY TO APPLY.— ................................................................................................................. 1188
24. LIBERTY OF THE TRIBUNAL.— ..................................................................................................... 1189
25. MERGER OR AMALGAMATION OF CERTAIN COMPANIES.— ............................................................... 1189
[25A. MERGER OR AMALGAMATION OF A FOREIGN COMPANY WITH A COMPANY AND VICE VERSA. –........... 1191
26. NOTICE TO DISSENTING SHAREHOLDERS FOR ACQUIRING THE SHARES.—......................................... 1191
27. DETERMINATION OF PRICE FOR PURCHASE OF MINORITY SHAREHOLDING.— ..................................... 1191
28. CIRCULAR CONTAINING SCHEME OF AMALGAMATION OR MERGER.— ................................................ 1192
29. APPEAL UNDER SUB-SECTION (2) OF SECTION 238 OF THE ACT.— .................................................. 1192
SCHEDULE OF FEES ................................................................................................................... 1192
ANNEXURE A .................................................................................................................................. 1193
FORM NO. CAA.1 ..................................................................................................................... 1193
FORM NO. CAA. 2 .................................................................................................................... 1193
FORM NO. CAA.3 ..................................................................................................................... 1194
FORM No. CAA. 4..................................................................................................................... 1195
FORM NO. CAA.5 ..................................................................................................................... 1196
FORM NO. CAA.6 ..................................................................................................................... 1197
FORM NO. CAA.7 ..................................................................................................................... 1198
FORM NO. CAA.8 ..................................................................................................................... 1199
FORM NO. CAA.9 ..................................................................................................................... 1200
FORM NO. CAA.10 ................................................................................................................... 1201
FORM NO.CAA.11 .................................................................................................................... 1204
FORM NO. CAA.12 ................................................................................................................... 1205
FORM NO.CAA.13 .................................................................................................................... 1205
FORM NO. CAA.14 ................................................................................................................... 1206
FORM NO.CAA.15 .................................................................................................................... 1207
[ANNEXURE B ................................................................................................................................. 1210
CHAPTER XVII: THE COMPANIES (REGISTERED VALUERS AND VALUATION) RULES, 2017 ... 1211
1. [Short title, commencement and application].─ ...................................................................... 1211
2. Definitions.─ .......................................................................................................................... 1211
3. Eligibility for registered valuers.─ ........................................................................................... 1212
4. Qualifications and experience.─ ............................................................................................ 1214
5. Valuation Examination.─ ....................................................................................................... 1215
6. Application for certificate of registration.─ .............................................................................. 1216
7. Conditions of Registration.─ .................................................................................................. 1217
8. Conduct of Valuation.─ .......................................................................................................... 1218
9. Temporary surrender.─ ......................................................................................................... 1219
10. Functions of a Valuer.─ ....................................................................................................... 1219
11. Transitional Arrangement.─ ................................................................................................. 1219
12. Eligibility for registered valuers organisations.─ ................................................................... 1220
13. Application for recognition.─ ................................................................................................ 1221
14. Conditions of Recognition.─ ................................................................................................ 1222
15. Cancellation or suspension of certificate of registration or recognition.- ................................ 1223
16. Complaint against a registered valuer or registered valuers organisation.- ........................... 1223
17. Procedure to be followed for cancellation or suspension of registration or recognition
certificate.─ ............................................................................................................................... 1223
18. Valuation Standards.─ ......................................................................................................... 1225
19. Committee to advise on valuation matters.─ ........................................................................ 1225

xxi
 20. Punishment for contravention.- ............................................................................................ 1226
21. Punishment for false statement.— ....................................................................................... 1226
ANNEXURE-I ............................................................................................................................ 1227
ANNEXURE-II ........................................................................................................................... 1229
ANNEXURE - III ........................................................................................................................ 1230
[ANNEXURE-IV........................................................................................................................ 1240
CHAPTER XXI: THE COMPANIES (AUTHORIZED TO REGISTER) RULES, 2014 .......................... 1242
1. SHORT TITLE AND COMMENCEMENT ............................................................................................... 1242
2. DEFINITIONS. ............................................................................................................................... 1242
3. RULE 3 ....................................................................................................................................... 1243
4. OBLIGATION OF COMPANIES SEEKING REGISTRATION TO MAKE PUBLICATION.- ..................................... 1249
5. OTHER OBLIGATIONS OF COMPANIES SEEKING REGISTRATION.-FOR THE PURPOSE OF CLAUSE (D) OF
SECTION 374 OF THE ACT,— ............................................................................................................ 1250
FORMS NOTIFIED ........................................................................................................................... 1252
FORM NO. URC-2 ........................................................................................................................... 1252
CHAPTER XXII: THE COMPANIES (REGISTRATION OF FOREIGN COMPANIES) RULES, 2014 .. 1254
1. SHORT TITLE AND COMMENCEMENT. – ............................................................................................ 1254
2. DEFINITIONS. ............................................................................................................................... 1254
3. PARTICULARS RELATING TO DIRECTORS AND SECRETARY TO BE FURNISHED TO THE REGISTRAR BY FOREIGN
COMPANIES.- .................................................................................................................................. 1255
4. FINANCIAL STATEMENT OF FOREIGN COMPANY.- .............................................................................. 1256
5. AUDIT OF ACCOUNTS OF FOREIGN COMPANY.- ................................................................................. 1257
6. LIST OF PLACES OF BUSINESS OF FOREIGN COMPANY.- ..................................................................... 1258
7. ANNUAL RETURN.- ....................................................................................................................... 1258
8. OFFICE WHERE DOCUMENTS TO BE DELIVERED AND FEE FOR REGISTRATION OF DOCUMENTS.- ............. 1258
9. CERTIFICATION.- .......................................................................................................................... 1258
10. AUTHENTICATION OF TRANSLATED DOCUMENTS.- .......................................................................... 1260
11. DOCUMENTS TO BE ANNEXED TO PROSPECTUS.- ........................................................................... 1260
12. ACTION FOR IMPROPER USE OR DESCRIPTION AS FOREIGN COMPANY.-............................................. 1260
13. ISSUE OF INDIAN DEPOSITORY RECEIPTS (IDRS).-......................................................................... 1261
FORMS NOTIFIED ........................................................................................................................... 1267
CHAPTER XXIV: THE COMPANIES (REGISTRATION OFFICES AND FEES) RULES, 2014 .......... 1269
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1269
2. DEFINITIONS.- ............................................................................................................................. 1269
3. BUSINESS ACTIVITY.- .................................................................................................................... 1270
4. REGISTRATION OFFICES.- ............................................................................................................. 1271
5. POWERS AND DUTIES OF REGISTRARS.- ......................................................................................... 1271
6. SEAL OF REGISTRAR.- .................................................................................................................. 1272
7. MANNER AND CONDITIONS OF FILING.- ............................................................................................ 1272
8. AUTHENTICATION OF DOCUMENTS.- ............................................................................................... 1273
9. MAINTAINING DOCUMENTS ELECTRONICALLY.- ................................................................................. 1275
10. PROCEDURE ON RECEIPT OF ANY APPLICATION OR FORM OR DOCUMENT ELECTRONICALLY.- .............. 1276
11. VACATION OR REMOVAL OF DIRECTORS.- ...................................................................................... 1277
12. FEES.- ...................................................................................................................................... 1278
13. MODE OF PAYMENT.- ................................................................................................................. 1278
14. INSPECTION, PRODUCTION AND EVIDENCE OF DOCUMENTS KEPT BY REGISTRAR.- ............................. 1278
15. INSPECTION OF DOCUMENTS.- ..................................................................................................... 1278
ANNEXURE: TABLE OF FEES ............................................................................................................. 1279
I. Fee for filings etc. under section 403 of the Companies Act, 2013........................................... 1279
II. FEE ON APPLICATIONS (including Appeal) made to Central Government under sub-section (2)
of Section 459 of the Companies Act, 2013. .............................................................................. 1289

xxii
 III. Annual Fee payable by a dormant company under sub-section (5) of section 455 of the
Companies Act, 2013. ............................................................................................................... 1290
IV. Fee for Inspection and providing certified copies of documents kept by the Registrar under
section 399 of the Act. ............................................................................................................... 1291
V. Fee for registration of documents under section 385 of the Act. ............................................. 1291
VI. Fees for Removal of Names of Companies from the Registrar of Companies under section 248
(2) of the Act. ............................................................................................................................ 1291
[VII. FEE FOR FILING e- Form DIR-3 KYC under rule 12A of the Companies (Appointment and
Qualification of Directors) Rules, 2014. ...................................................................................... 1291
[VIII. FEE FOR FILING e- Form ACTIVE under rule 25A of the Companies (Incorporation) Rules,
2014.......................................................................................................................................... 1292
FORMS NOTIFIED ............................................................................................................................. 1293
CHAPTER XXVI: NIDHI RULES........................................................................................................ 1295
1. SHORT TITLE AND COMMENCEMENT.— ........................................................................................... 1295
2. APPLICATION.— .......................................................................................................................... 1295
3. DEFINITIONS.— ........................................................................................................................... 1295
[ 3A. DECLARATION OF NIDHIS .─ ...................................................................................................... 1296
4. INCORPORATION AND INCIDENTAL MATTERS.— ................................................................................ 1297
5. REQUIREMENTS FOR MINIMUM NUMBER OF MEMBERS, NET OWNED FUND ETC.— ................................. 1297
6. GENERAL RESTRICTIONS OR PROHIBITIONS.— ................................................................................ 1298
7. SHARE CAPITAL AND ALLOTMENT.— ............................................................................................... 1299
8. MEMBERSHIP.— .......................................................................................................................... 1300
9. NET OWNED FUNDS.— ................................................................................................................. 1300
10. BRANCHES.— ........................................................................................................................... 1300
11. ACCEPTANCE OF DEPOSITS BY NIDHIS.— ..................................................................................... 1301
12. APPLICATION FORM FOR DEPOSIT.— ............................................................................................ 1301
13. DEPOSITS.— ............................................................................................................................. 1303
14. UN-ENCUMBERED TERM DEPOSITS.— .......................................................................................... 1304
15. LOANS.—.................................................................................................................................. 1304
16. RATE OF INTEREST.— ................................................................................................................ 1305
17. RULES RELATING TO DIRECTORS.— ............................................................................................. 1306
18. DIVIDEND.- ................................................................................................................................ 1306
19. AUDITOR.— .............................................................................................................................. 1306
20. PRUDENTIAL NORMS.— .............................................................................................................. 1307
21. FILING OF HALF YEARLY RETURN.— ............................................................................................. 1308
22. AUDITOR’S CERTIFICATE.— ......................................................................................................... 1308
23. POWER TO ENFORCE COMPLIANCE.— .......................................................................................... 1308
24. PENALTY FOR NON-COMPLIANCE.- ............................................................................................... 1309
FORMS NOTIFIED ........................................................................................................................... 1309
THE COMPANIES (TRANSFER OF PENDING PROCEEDINGS) RULES, 2016 ............................... 1310
1. SHORT TITLE AND COMMENCEMENT. – ........................................................................................... 1310
2. DEFINITIONS.- ............................................................................................................................. 1310
3. TRANSFER OF PENDING PROCEEDINGS RELATING TO CASES OTHER THAN WINDING UP.— .................... 1310
4. PENDING PROCEEDING RELATING TO VOLUNTARY WINDING UP: ......................................................... 1311
5. TRANSFER OF PENDING PROCEEDINGS OF WINDING UP ON THE GROUND OF INABILITY TO PAY DEBTS.— 1311
6. TRANSFER OF PENDING PROCEEDINGS OF WINDING UP MATTERS ON THE GROUNDS OTHER THAN INABILITY
TO PAY DEBTS.— ............................................................................................................................. 1312
7. TRANSFER OF RECORDS.— .......................................................................................................... 1312
8. FEES NOT TO BE PAID.—............................................................................................................... 1312
CHAPTER XXVIII: THE COMPANIES (MEDIATION AND CONCILIATION) RULES, 2016 ............... 1313
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................ 1313

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 2. DEFINITIONS.- ............................................................................................................................. 1313
3. PANEL OF MEDIATORS OR CONCILIATORS.-...................................................................................... 1313
4. QUALIFICATIONS FOR EMPANELMENT.- ........................................................................................... 1314
5. DISQUALIFICATIONS FOR EMPANELMENT.- ....................................................................................... 1315
6. APPLICATION FOR APPOINTMENT OF MEDIATOR OR CONCILIATOR AND HIS APPOINTMENT.-................... 1315
7. DELETION FROM THE PANEL.-........................................................................................................ 1316
8. WITHDRAWING NAME FROM PANEL.- .............................................................................................. 1316
9. DUTY OF MEDIATOR OR CONCILIATOR TO DISCLOSE CERTAIN FACTS.- ................................................ 1316
10. WITHDRAWAL OF APPOINTMENT.-................................................................................................. 1316
11. PROCEDURE FOR DISPOSAL OF MATTERS.- ................................................................................... 1317
12. MEDIATOR OR CONCILIATOR NOT BOUND BY THE INDIAN EVIDENCE ACT, 1872 OR THE CODE OF CIVIL
PROCEDURE, 1908.-........................................................................................................................ 1317
13. REPRESENTATION OF PARTIES.- .................................................................................................. 1318
14. CONSEQUENCES OF NON-ATTENDANCE OF PARTIES AT SESSIONS OR MEETINGS ON DUE DATES.-........ 1318
15. ADMINISTRATIVE ASSISTANCE.-.................................................................................................... 1318
16. OFFER OR SETTLEMENT BY PARTIES.-........................................................................................... 1318
17. ROLE OF MEDIATOR OR CONCILIATOR.- ........................................................................................ 1318
18. PARTIES ALONE RESPONSIBLE FOR TAKING DECISION.- ................................................................... 1319
19. TIME LIMIT FOR COMPLETION OF MEDIATION OR CONCILIATION.- ....................................................... 1319
20. PARTIES TO ACT IN GOOD FAITH.- ................................................................................................. 1319
21. CONFIDENTIALITY, DISCLOSURE AND INADMISSIBILITY OF INFORMATION.- .......................................... 1319
22. PRIVACY.- ................................................................................................................................. 1320
23. PROTECTION OF ACTION TAKEN IN GOOD FAITH.- ........................................................................... 1320
24. COMMUNICATION BETWEEN MEDIATOR OR CONCILIATOR AND THE CENTRAL GOVERNMENT OR THE
TRIBUNAL OR THE APPELLATE TRIBUNAL.- .......................................................................................... 1321
25. SETTLEMENT AGREEMENT.- ........................................................................................................ 1321
26. FIXING DATE FOR RECORDING SETTLEMENT AND PASSING ORDER.- .................................................. 1322
27. EXPENSES OF THE MEDIATION AND CONCILIATION.- ........................................................................ 1322
28. ETHICS TO BE FOLLOWED BY MEDIATOR OR CONCILIATOR.- ............................................................ 1323
29. RESORT TO ARBITRAL OR JUDICIAL PROCEEDINGS.- ....................................................................... 1323
30. MATTERS NOT TO BE REFERRED TO THE MEDIATION OR CONCILIATION.- ........................................... 1324
FORM MDC-1 ................................................................................................................................. 1324
FORM MDC-2 ............................................................................................................................... 1325
CHAPTER XXIX: THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014................... 1327
1. SHORT TITLE AND COMMENCEMENT. – ............................................................................................ 1327
2. DEFINITIONS. ............................................................................................................................... 1327
[3. ADJUDICATION OF PENALTIES.- ..................................................................................................... 1328
4. APPEAL AGAINST THE ORDER OF ADJUDICATING OFFICER. – .............................................................. 1331
5. REGISTRATION OF APPEAL.- .......................................................................................................... 1332
6. DISPOSAL OF APPEAL BY REGIONAL DIRECTOR.- ............................................................................. 1332
FORMS NOTIFIED ........................................................................................................................... 1333
CHAPTER XXIX: THE COMPANIES (REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER
OF COMPANIES) RULES, 2014 ....................................................................................................... 1334
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1334
2. DEFINITIONS.- ............................................................................................................................. 1334
3. REMOVAL OF NAME OF COMPANY FROM THE REGISTER ON SUO-MOTU BASIS.- .................................... 1334
4 . APPLICATION FOR REMOVAL OF NAME OF COMPANY.— .................................................................... 1336
5. MANNER OF FILING OF APPLICATION.– ............................................................................................ 1337
6. FORM TO BE CERTIFIED.- .............................................................................................................. 1337
7. MANNER OF PUBLICATION OF NOTICE –........................................................................................... 1338
8. MANNER OF NOTARISATION, APPOSTILISATION OR CONSULARISATION OF INDEMNITY BOND AND DECLARATION
IN CASE OF FOREIGN NATIONALS OR NON-RESIDENT INDIANS :- .............................................................. 1338

xxiv
 9. NOTICE OF STRIKING OFF AND DISSOLUTION OF COMPANY. –............................................................. 1339
10. APPLICATIONS OR FORMS PENDING BEFORE CENTRAL GOVERNMENT. –........................................... 1339
FORMS NOTIFIED ........................................................................................................................... 1339
FORM NO. STK 1 ............................................................................................................................ 1339
FORM NO. STK-2 ............................................................................................................................ 1340
FORM NO. STK - 3 .......................................................................................................................... 1340
FORM NO. STK -4 ......................................................................................................................... 1341
FORM NO. STK - 5......................................................................................................................... 1343
FORM NO. STK – 5A...................................................................................................................... 1344
FORM NO. STK – 6 ........................................................................................................................ 1344
FORM NO. STK - 7......................................................................................................................... 1345
[FORM NO. STK - 8........................................................................................................................ 1347
CHAPTER XXIX: THE COMPANIES (MISCELLANEOUS) RULES, 2014 ......................................... 1349
1. SHORT TITLE AND COMMENCEMENT.- ............................................................................................. 1349
2. DEFINITIONS. ............................................................................................................................... 1349
3. APPLICATION FOR OBTAINING STATUS OF DORMANT COMPANY.- ........................................................ 1350
4. CERTIFICATE OF STATUS OF DORMANT COMPANY.- .......................................................................... 1350
5. REGISTER OF DORMANT COMPANIES.- ............................................................................................ 1350
6. MINIMUM NUMBER OF DIRECTORS FOR DORMANT COMPANY.- ............................................................ 1351
7. RETURN OF DORMANT COMPANIES.- ............................................................................................... 1351
8. APPLICATION FOR SEEKING STATUS OF AN ACTIVE COMPANY.- .......................................................... 1351
9. FEES FOR APPLICATION TO CENTRAL GOVERNMENT.- ...................................................................... 1352
10. ASSOCIATION OR PARTNERSHIP OF PERSONS EXCEEDING CERTAIN NUMBER. – ................................. 1352
[11. APPLICATION OR FORMS PENDING BEFORE CENTRAL GOVERNMENT, REGIONAL DIRECTOR OR REGISTRAR
OF COMPANIES. ............................................................................................................................... 1353
FORMS NOTIFIED ........................................................................................................................... 1353
NOTIFICATIONS............................................................................................................................... 1354
ANNEXURE N1: NOTIFICATION 12 SEPTEMBER 2013 .................................................................. 1354
ANNEXURE N2: ELECTORAL TRUST ............................................................................................. 1357
ANNEXURE N3: NOTIFICATION FOR SECTION 135 AND SCHEDULE VII ..................................... 1358
ANNEXURE N4: NOTIFICATION 01 APRIL 2014 ............................................................................. 1359
ANNEXURE N5: DELEGATION TO RDS.......................................................................................... 1362
ANNEXURE N6: DELEGATION TO ROCS ....................................................................................... 1363
ANNEXURE N7: SECTION 74(2) AND (3) NOTIFIED ....................................................................... 1364
ANNEXURE N8: CONSTITUTION OF NATIONAL ADVISORY COMMITTEE ON ACCOUNTING
STANDARDS .................................................................................................................................... 1365
ANNEXURE N9: ROCS AS ADJUDICATING OFFICERS UNDER SECTION 454 READ WITH THE
COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 ...................................................... 1367
ANNEXURE N10: DELEGATION OF POWERS U/S. 94 (5) TO REGIONAL DIRECTORS ............... 1370
ANNEXURE N11: ICSI NOTIFIED SECRETARIAL STANDARDS .................................................... 1371
SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS ................................................ 1371
SECRETARIAL STANDARD ON GENERAL MEETINGS .............................................................................. 1396
ANNEXURE N12: THE COMPANIES (AMENDMENT) ACT, 2015 PARTIALLY NOTIFIED .............. 1431
ANNEXURE N13: EXEMPTIONS TO GOVERNMENT COMPANIES ................................................ 1432
ANNEXURE N14: EXEMPTIONS TO PRIVATE COMPANIES .......................................................... 1438
xxv
ANNEXURE N15: EXEMPTIONS TO NIDHI COMPANIES................................................................ 1440
ANNEXURE N16: EXEMPTIONS TO SECTION 8 COMPANIES ....................................................... 1443
ANNEXURE N17: ESTABLISHMENT OF SFIO ................................................................................ 1446
ANNEXURE N18: REGIONAL DIRECTOR’S OFFICE, LOCATION AND JURISDICTION ................ 1446
ANNEXURE N19: COMMENCEMENT OF SS. 13 AND 14 OF THE COMPANIES (AMENDMENT) ACT,
2015 .................................................................................................................................................. 1448
ANNEXURE N20: DELEGATION OF POWER TO RD U/S.208 ......................................................... 1449
ANNEXURE N21: SECTION 125(5) TO (7) RELATING TO IEPF ...................................................... 1450
ANNEXURE N22: NAME APPROVAL BY CENTRAL REGISTRATION CENTRE ............................ 1451
ANNEXURE N23: DEBT NETWORTH RATIO FOR BUY-BACK OF SECURITIES BY GOVT NBFCS
AND HFCS........................................................................................................................................ 1452
ANNEXURE N24: REGISTRATION OF COMPANIES BY CENTRAL REGISTRATION CENTRE ..... 1453
ANNEXURE N25: TELANGANA WITHIN SOUTH EAST RD’S POWER U/S.396 ............................. 1454
ANNEXURE N26: DELEGATION OF POWER TO APPOINT INSPECTOR TO RDS ........................ 1455
ANNEXURE N27: IEPF AUTHORITY -CONSTITUTION.................................................................... 1456
ANNEXURE N28: APPOINTMENT OF CEO OF IEPF AUTHORITY ................................................. 1458
ANNEXURE N29: SPECIAL COURTS NOTIFIED ............................................................................. 1459
ANNEXURE N30: JURISDICTION OF SPECIAL COURTS............................................................... 1460
ANNEXURE N31: NCLT CONSTITUTION ........................................................................................ 1462
ANNEXURE N32: NCLAT - CONSTITUTION.................................................................................... 1463
ANNEXURE N33: NCLT RELATED PROVISIONS BROUGHT TO FORCE FROM 01ST JUNE, 2016 1464
ANNEXURE N34: NCLT BENCH JURISDICTIONS .......................................................................... 1466
ANNEXURE N35: TRANSFER OF MATTERS FROM CLB TO NCLT W.E.F. 01 JUNE 2016............ 1470
ANNEXURE N36: APPOINTMENT OF CHAIRPERSON, NCLAT ..................................................... 1471
ANNEXURE N37: APPOINTMENT OF PRESIDENT, NCLT.............................................................. 1472
ANNEXURE N38: APPLICABILITY OF SECTION 381(1)(A) OF COMPANIES ACT, 1956 TO FOREIGN
AIRLINE COMPANY ......................................................................................................................... 1473
ANNEXURE N39: SPECIAL COURT AT DELHI ............................................................................... 1475
ANNEXURE N40: APPOINTMENT OF MEMBERS, NCLT................................................................ 1476
ANNEXURE N41: APPOINTMENT OF MEMBER, NCLAT ............................................................... 1478
ANNEXURE N42: SPECIAL COURTS – 8 NEW ............................................................................... 1479
ANNEXURE N43: SS.124 (IN PART) AND 125 NOTIFIED................................................................ 1481
ANNEXURE N44: SS. 227, 242(1)(B), 242(2)(C) AND (G), 246 AND 337 TO 341 W.E.F. 09TH
SEPTEMBER 2016 ........................................................................................................................... 1482
ANNEXURE N45: CONSTITUTION OF NATIONAL ADVISORY COMMITTEE ON ACCOUNTING
STANDARDS .................................................................................................................................... 1483
ANNEXURE N46: SPECIAL COURT AT MEGHALAYA ................................................................... 1485
ANNEXURE N47: NCLT TO EXERCISE JURISDICTION AND POWERS UNDER PART II OF IBC . 1486
xxvi
ANNEXURE N48: COMMENCEMENT OF CERTAIN PROVISIONS FROM 15TH DECEMBER, 2016 1487
ANNEXURE N49: DELEGATION OF POWERS TO RDS.................................................................. 1488
ANNEXURE N50: COMMENCEMENT OF SECTIONS 248 TO 252 .................................................. 1490
ANNEXURE N51: EXEMPTIONS TO UNLISTED PUBLIC COMPANY OPERATING FROM IFSC IN SEZ
.......................................................................................................................................................... 1491
ANNEXURE N52: EXEMPTIONS TO LICENSED PRIVATE COMPANY OPERATING FROM IFSC IN
SEZ ................................................................................................................................................... 1498
ANNEXURE N53: EXEMPTIONS TO GOVERNMENT COMPANIES ................................................ 1505
ANNEXURE N54: EXEMPTIONS TO PRIVATE COMPANIES .......................................................... 1507
ANNEXURE N55: EXEMPTIONS TO SECTION 8 COMPANIES ....................................................... 1510
ANNEXURE N56: SPECIAL COURTS – 4 NEW ............................................................................... 1512
ANNEXURE N57: SPECIAL COURTS – U.P. ................................................................................... 1513
ANNEXURE N58: SPECIAL COURT – NAGALAND, MIZORAM AND ARUNACHAL PRADESH .... 1514
ANNEXURE N59: SPECIAL COURT – MAHARASHTRA ................................................................. 1515
ORDERS........................................................................................................................................... 1516
ANNEXURE O1: CLB TO EXERCISE POWERS UNDER SECTIONS 24, 58 AND 59 UNTIL NCLT
SETUP .............................................................................................................................................. 1516
ANNEXURE O2: ORDER: AMENDMENT TO THE COMPANY LAW BOARD REGULATIONS, 1991
.......................................................................................................................................................... 1518
ANNEXURE O3: ORDER: RELATED PARTY UNDER SECTION 2(76) ............................................ 1521
ANNEXURE O4: ORDER: AMENDMENT TO SUB-SECTION (2) OF SECTION 92 .......................... 1522
ANNEXURE O5: ORDER: CLB TO EXERCISE POWERS UNDER SECTION 73(4) ......................... 1523
ANNEXURE O6: ORDER: CLB TO EXERCISE POWERS UNDER FIRST PROVISO TO SECTION 2(41)
.......................................................................................................................................................... 1524
ANNEXURE O7: ORDER: CLB TO EXERCISE POWERS UNDER SECTION 74(2) ......................... 1525
ANNEXURE O8: RELATED PARTY UNDER SECTION 2(76) .......................................................... 1526
ANNEXURE O9: ORDER: AMENDMENT TO SECTION 143 (5) ....................................................... 1527
ANNEXURE O10: ORDER: AMENDMENT TO SECTIONS 2(85) AND 186 ...................................... 1529
ANNEXURE O11: CARO, 2015......................................................................................................... 1531
ANNEXURE O12: CARO, 2016......................................................................................................... 1534
ANNEXURE O13: PROVISO INSERTED TO SECTION 143(11) ....................................................... 1538
ANNEXURE O14: PROVISO INSERTED TO SECTION 133 ............................................................. 1540
ANNEXURE O15: THIRD PROVISO TO SECTION 139(2) SUBSTITUTED....................................... 1542
ANNEXURE O16: PROVISOS INSERTED TO SECTION 434(1)(C) .................................................. 1544
ANNEXURE O17: HALF YEARLY RETURN ON MSME ................................................................... 1546
CIRCULARS ..................................................................................................................................... 1547
ANNEXURE C1: CIRCULAR 15/2013 – SS. 2(68), 102, 133 AND 180.............................................. 1547

xxvii
ANNEXURE C2: CIRCULAR 16/2013 – CA 1956 CORRESPOND TO 98 PROVISIONS, CEASE TO
HAVE EFFECT ................................................................................................................................. 1549
ANNEXURE C3: CIRCULAR 18/2013 – ON SEC.186 ....................................................................... 1550
ANNEXURE C4: CIRCULAR 19/2013 – ON SEC.182(3) ................................................................... 1551
ANNEXURE C5: CIRCULAR 20/2013 – ON SEC.2(87)..................................................................... 1552
ANNEXURE C6: CIRCULAR 1/2014 – ON S. 394A OF THE COMPANIES ACT, 1956 ..................... 1553
ANNEXURE C7: CIRCULAR 2/2014 – ON WORD ‘NATIONAL’ OR ‘BANK’ IN NAME .................... 1555
ANNEXURE C8: CIRCULAR 03/2014 – ON SEC.185 ....................................................................... 1556
ANNEXURE C9: CIRCULAR 04/2014 – ON SEC.180 ....................................................................... 1557
ANNEXURE C10: CIRCULAR 05/2014 – ON CERTIFIED COPIES................................................... 1558
ANNEXURE C11: CIRCULAR 06/2014 DATED 28 MARCH 2014 – ON FORMS ROLL OUT PLAN OF
NEW E-FORMS AND CONTINUATION OF E-FORMS UNDER COMPANIES ACT 1956.................. 1560
ANNEXURE C12: CIRCULAR 07/2014 DATED 0 APRIL 2014 – PROVISIONS OF COMPANIES ACT
1956 TO REMAIN IN FORCE ............................................................................................................ 1570
ANNEXURE C13: CIRCULAR 08/2014 – RELEVANT FINANCIAL YEAR FOR MAINTENANCE OF
BOOKS OF ACCOUNTS ETC. UNDER COMPANIES ACT 2013 ..................................................... 1583
ANNEXURE C14: CIRCULAR 09/2014 – ON NEW E-FORMS .......................................................... 1585
ANNEXURE C15: CIRCULAR 10/2014 CERTIFICATION OF E-FORMS/NON E-FORMS ................. 1587
ANNEXURE C16: CIRCULAR 11/2014 EXTENSION OF PERIOD OF NAME RESERVATION UPTO 31
MAY 2014 ......................................................................................................................................... 1589
ANNEXURE C17: CIRCULAR 12/2014 APPLICABILITY OF PAN REQUIREMENT FOR FOREIGN
NATIONALS ..................................................................................................................................... 1590
ANNEXURE C18: CIRCULAR 13/2014 EXTENSION OF PERIOD OF NAME RESERVATION UPTO 15
JUNE 2014........................................................................................................................................ 1592
ANNEXURE C19: CIRCULAR 14/2014 CLARIFICATION ON INDEPENDENT DIRECTOR .............. 1593
ANNEXURE C20: CIRCULAR 15/2014 CLARIFICATION ON REGISTER OF INVESTMENTS......... 1596
ANNEXURE C21: CIRCULAR 16/2014 PAN REQUIREMENT FOR FOREIGN NATIONALS ............ 1597
ANNEXURE C22: CIRCULAR 17/2014 FORM NO. MGT-10 ............................................................. 1599
ANNEXURE C23: CIRCULAR 18/2014 FORM NO. INC-27 – CONVERSION OF A PUBLIC COMPANY
INTO A PRIVATE COMPANY ........................................................................................................... 1600
ANNEXURE C24: CIRCULAR 19/2014 SHARE TRANSFER FORMS AND DUPLICATE SHARE
CERTIFICATES ................................................................................................................................ 1601
ANNEXURE C25: CIRCULAR 20/2014 E-VOTING ........................................................................... 1603
ANNEXURE C26: CIRCULAR 21/2014 ............................................................................................. 1606
ANNEXURE C27: CIRCULAR 22/2014 FORMAT OF AR FOR FY 2013-14 ...................................... 1612
ANNEXURE C28: CIRCULAR 23/2014 SUBSIDIARY OF A FOREIGN COMPANY .......................... 1613
ANNEXURE C29: CIRCULAR 24/2014 ASSOCIATE COMPANY AND BENEFICIAL HOLDING ...... 1614
ANNEXURE C31: CIRCULAR 26/2014 WORD ‘COMMODITY EXCHANGE’ IN NAME .................... 1616
ANNEXURE C32: CIRCULAR 27/2014 CLARIFICATION REGARDING FILING OF FORM DPT-4... 1617

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ANNEXURE C33: CIRCULAR 28/2014 CLARIFICATION ON FORM MGT-14 THROUGH STP MODE
.......................................................................................................................................................... 1618
ANNEXURE C34: CIRCULAR 29/2014 NAME OF COMPANIES IN CONSONANCE WITH EMBLEMS
ACT .................................................................................................................................................. 1619
ANNEXURE C35: CIRCULAR 30/2014 CLARIFICATIONS ON MATTERS RELATING TO RELATED
PARTY TRANSACTIONS ................................................................................................................. 1620
ANNEXURE C36: CIRCULAR 31/2014 EXTENSION OF TIME FOR FEW NAMES APPROVED ...... 1622
ANNEXURE C37: CIRCULAR 32/2014 CLARIFICATION ON TRANSITIONAL PERIOD FOR
RESOLUTIONS PASSED UNDER THE COMPANIES ACT, 1956 .................................................... 1623
ANNEXURE C38: CIRCULAR 33/2014 CLARIFICATION ON AUDITOR OF GOVERNMENT COMPANY
.......................................................................................................................................................... 1624
ANNEXURE C39: CIRCULAR 34/2014 COMPANY LAW SETTLEMENT SCHEME ......................... 1626
ANNEXURE C40: CIRCULAR 35/2014 CLARIFICATION ON AS-10 CAPITALIZATION OF COST .. 1630
ANNEXURE C41: CIRCULAR 36/2014 CLARIFICATION (IV) OF CIRCULAR 21/2014 STANDS
OMITTED .......................................................................................................................................... 1631
ANNEXURE C42: CIRCULAR 38/2014 CLARIFICATION ON REFUND OF DEPOSIT UNDER SECTION
160 BY SECTION 8 COMPANY ........................................................................................................ 1632
ANNEXURE C43: CIRCULAR 39/2014 CLARIFICATION ON NOTES TO CONSOLIDATED FINANCIAL
STATEMENT .................................................................................................................................... 1633
ANNEXURE C44: CIRCULAR 41/2014 CLARIFICATION UNDER CLSS, 2014 ON SECTION 164(2)
.......................................................................................................................................................... 1634
ANNEXURE C46: CIRCULAR 43/2014 CLARIFICATION ON APPLICABILITY OF CHAPTER III TO
ISSUE OF FCCB / FCB..................................................................................................................... 1636
ANNEXURE C47: CIRCULAR 45/2014 CLARIFICATION EXTENSION OF TIME FOR AGM FOR
COMPANIES IN J & K ...................................................................................................................... 1637
ANNEXURE C48: CIRCULAR 01/2015 CONSTITUTION OF COMMITTEE TO MONITOR
IMPLEMENTATION OF CSR POLICIES ........................................................................................... 1638
ANNEXURE C49: CIRCULAR 02/2015 EXTENSION OF TIME FOR FILING FORM CRA-2 FOR
APPOINTMENT OF COST AUDITOR ............................................................................................... 1640
ANNEXURE C50: CIRCULAR 03/2015 CLARIFICATION ON FILING OF FORM DIR-11 AND FORM
DIR-12............................................................................................................................................... 1641
ANNEXURE C51: CIRCULAR 04/2015 CLARIFICATION ON LOAN TO EMPLOYEES AND SECTION
186 .................................................................................................................................................... 1643
ANNEXURE C52 CIRCULAR 05/2015: CLARIFICATION ON AMOUNT RECEIVED BY PRIVATE
COMPANIES FROM ITS MEMBERS, DIRECTORS OR THEIR RELATIVES PRIOR TO 01 APRIL 2014
.......................................................................................................................................................... 1644
ANNEXURE C53 CIRCULAR 06/2015: CLARIFICATION UNDER SECTION 186 (7) ....................... 1646
ANNEXURE C54: CIRCULAR 07/2015 CLARIFICATION ON REMUNERATION OF MANAGERIAL
PERSON UNDER ACT OF 1956 ....................................................................................................... 1647
ANNEXURE C57: CIRCULAR 10/2015 EXTENSION OF TIME FOR FILING MGT-7 (ANNUAL RETURN)
AND AOC-4 (FINANCIAL STATEMENT) UPTO 31 OCT. 2015......................................................... 1651

xxix
ANNEXURE C58: CIRCULAR 11/2015 CIRCULATION ON CIRCULATING FINANCIAL STATEMENT
AT GENERAL MEETING WITH SHORTER NOTICE AND FILING OF UNAUDITED FINANCIALS WITH
ROC .................................................................................................................................................. 1653
ANNEXURE C59: CIRCULAR 12/2015 EXTENSION OF TIME FOR FILING COST AUDIT REPORT
UPTO 30TH SEPTEMBER, 2015 ........................................................................................................ 1655
ANNEXURE C60: CIRCULAR 14/2015 EXTENSION OF TIME FOR FILING MGT-7, AOC-4 UPTO 30TH
NOVEMBER, 2015 ............................................................................................................................ 1656
ANNEXURE C61: CIRCULAR 15/2015 EXTENSION OF TIME FOR FILING MGT-7, AOC-4 UPTO 30TH
DECEMBER, 2015 ............................................................................................................................ 1657
ANNEXURE C62: CIRCULAR 16/2015 EXTENSION OF TIME FOR FILING MGT-7, AOC-4 UPTO 30TH
JANUARY, 2016 – STATE OF TN AND UT PUDUCHERRY ............................................................. 1658
ANNEXURE C63: CIRCULAR 01/2016 FAQ ON CSR ...................................................................... 1659
ANNEXURE C64: CIRCULAR 03/2016 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
TIME FOR VARIOUS E-FORMS ....................................................................................................... 1667
ANNEXURE C65: CIRCULAR 04/2016 CLARIFICATION ON ACCOUNTING STANDARDS
AMENDMENT RULES ...................................................................................................................... 1668
ANNEXURE C66: CIRCULAR 05/2016 CLARIFICATION ON CSR................................................... 1669
ANNEXURE C67: CIRCULAR 06/2016 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
TIME FOR FILING VARIOUS E-FORMS ........................................................................................... 1670
ANNEXURE C68: CIRCULAR 07/2016 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
TIME FOR FILING VARIOUS E-FORMS ........................................................................................... 1671
ANNEXURE C69: CIRCULAR 08/206 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
TIME FOR AOC-4 AND MGT-7 ......................................................................................................... 1672
ANNEXURE C70: CIRCULAR 09/2016 ISSUE OF RUPEE BONDS TO OVERSEAS INVESTOR AND
APPLICABILITY OF CHAPTER III .................................................................................................... 1673
ANNEXURE C71: CIRCULAR 12/2016 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
LAST DATE OF FILING AOC-4 AND MGT-7 .................................................................................... 1674
ANNEXURE C72: CIRCULAR 13/2016 CLARIFICATION RE. FILING OFFLINE CHALLANS WITH IEPF
AUTHORITY ..................................................................................................................................... 1675
ANNEXURE C73: CIRCULAR 14/2016 RELAXATION OF ADDITIONAL FEES AND EXTENSION OF
LAST DATE OF FILING MGT07 AND AOC-4 IN STATE OF JAMMU AND KASHMIR ..................... 1677
ANNEXURE C74: CIRCULAR 15/2016 DUE DATE OF TRANSFER OF SHARES TO IEPF ............. 1678
ANNEXURE C75: CIRCULAR 16/2016 REMOVAL OF NAMES OF COMPANIES – AVAILABILITY OF
FORM STK ON MCA-21 PORTAL .................................................................................................... 1679
ANNEXURE C76: CIRCULAR 01/2017 SEC.391 CLOSURE OF BUSINESS BY FOREIGN COMPANY
.......................................................................................................................................................... 1680
ANNEXURE C77: CIRCULAR 02/2017 FOR COMPANIES TRANSFERRED AMOUNT TO IEPF PRIOR
TO 15.12.2016, THROUGH CHALLANS NOT GENERATED ON MCA-21 PORTAL ........................ 1681
ANNEXURE C78: CIRCULAR 03/2017 TRANSFER OF SHARES TO IEPF AUTHORITY ................ 1683
ANNEXURE C79: CIRCULAR 04/2017 APPLICABILITY OF SEC.16(1)(A) ...................................... 1685
ANNEXURE C80: CIRCULAR 05/2017 TRANSFER OF SHARES TO IEPF AUTHORITY ................ 1686

xxx
ANNEXURE C81: CIRCULAR 06/2017 CLARIFICATION ON DUE DATE OF TRANSFER OF SHARES
TO IEPF AUTHORITY ....................................................................................................................... 1687
ANNEXURE C82: CIRCULAR 07/2017 CLARIFICATION ON TRANSMISSION OF SECURITIES BY
OPERATION OF LAW ...................................................................................................................... 1688
ANNEXURE C83: CIRCULAR 08/2017 CLARIFICATION REGARDING APPLICABILITY OF
EXEMPTION GIVEN TO CERTAIN PRIVATE COMPANIES UNDER SECTION 143(3)(I) OF THE
COMPANIES ACT, 2013 ................................................................................................................... 1689
ANNEXURE C84: CIRCULAR 09/2017 EXEMPTIONS GIVEN TO CERTAIN UNLISTED PUBLIC
COMPANIES FROM THE APPOINTMENT OF INDEPENDENT DIRECTORS .................................. 1690
ANNEXURE C85: CIRCULAR 10/2017 OBLIGATION TO COMPLY WITH THE IND AS- PAYMENT
BANKS, SMALL FINANCE BANKS WHICH ARE SUBSIDIARIES OF CORPORATES .................... 1691
ANNEXURE C86: CIRCULAR 11/2017 CLARIFICATION REGARDING THE TIMELINES FOR MAKING
APPLICABLE/AVAILABLE NEW FORM DPT-3 ............................................................................... 1692
ANNEXURE C87: CIRCULAR 12/2017 TRANSFER OF SHARES TO IEPF AUTHORITY ................ 1693
ANNEXURE C88: CIRCULAR 13/2017 RELAXATION FOR FILING AOC-4 XBRL........................... 1695
ANNEXURE C89: CIRCULAR 14/2017 RELAXATION FOR FILING AOC-4 AND AOC-4 XBRL ...... 1696
ANNEXURE C90: CIRCULAR 15/2017 RELAXATION FOR FILING CRA-4 ..................................... 1697
ANNEXURE C91: CIRCULAR 16/2017 CODS 2018 ......................................................................... 1698
ANNEXURE C92: CIRCULAR 01/2018 RELAXATION FOR FILING AOC-4 XBRL........................... 1701
ANNEXURE C93: CIRCULAR 02/2018 CODS 2018 ......................................................................... 1702
ANNEXURE C94: CIRCULAR 04/2018 RELAXING ADDITIONAL FEES AND EXTENSION OF TIME
FOR FILING AOC-4 XBRL USING IND AS ....................................................................................... 1703
ANNEXURE C96: CIRCULAR 04/2019 EXTENSION OF TIME FOR FILING FORM CRA-2.............. 1705
ANNEXURE C97: CIRCULAR 05/2019 FILING OF ONE-TIME RETURN IN DPT-3 .......................... 1706
ANNEXURE C98: CIRCULAR 06/2019 CLARIFICATION ON ADT-1 FILED THROUGH GML-2 ...... 1707
ANNEXURE C99: CIRCULAR 07/2019 FILING DIR-3 KYC .............................................................. 1708
ANNEXURE C100: CIRCULAR 09/2019 FILING DIR-3 KYC ............................................................ 1709
VALUE ADDITIONS .......................................................................................................................... 1711
ANNEXURE 1: MAPPING OF E-FORMS UNDER NEW ACT WITH OLD E-FORMS ........................ 1711
ANNEXURE 2: MATTERS REQUIRING APPROVAL OF THE BOARD BY RESOLUTION AT THE
MEETING OF THE BOARD .............................................................................................................. 1716
ANNEXURE 3: MATTERS REQUIRING CONSENT OF MEMBERS BY POSTAL BALLOT ............. 1719
ANNEXURE 4: COMPANIES ACT 2013 VIS-À-VIS COMPANIES ACT 1956 ................................... 1722
ANNEXURE 5: PROVISIONS OF THE COMPANIES ACT, 1956 STILL IN FORCE .......................... 1762

xxxi
 S. 1 - Chapter I [Ss. 1 and 2]

MINISTRY OF LAW AND JUSTICE

(Legislative Department)
Published in the Gazette of India on the 30th August, 2013/Bhadrapada 8, 1935 (Saka).
The following Act of Parliament received the assent of the President on the 29th August,
2013, and is hereby published for general information:—

THE COMPANIES ACT, 2013

(NO. 18 OF 2013)
[29th August, 2013.]
An Act to consolidate and amend the law relating to companies.
BE it enacted by Parliament in the Sixty-fourth Year of the Republic of India as
follows:—

CHAPTER I PRELIMINARY

1. Short title, extent, commencement and application.

[Corresponding Sections 1 and 616 of the Companies Act, 1956]

1. (1) This Act may be called the Companies Act, 2013.

(2) It extends to the whole of India.
[The Registration of Companies (Sikkim) Act, 1961 continues to apply to State of Sikkim. Section 465 (which
provides for repeal of the Companies Act, 1956 as well as other legislations and a savings clause) is not
yet brought to force. Hence, the Companies Act 1956 continues to apply! However, MCA has clarified
(under which provision of law is not clear) that the corresponding provisions of the Companies Act, 1956
shall not apply. For clarification, refer Circular 16/2013 dated 18 September 2013.]

(3) This section shall come into force at once and the remaining provisions of this Act
shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint and different dates may be appointed for different provisions of
this Act and any reference in any provision to the commencement of this Act shall be
construed as a reference to the coming into force of that provision.
[MCA has issued notifications under section 1(3) for bringing to force
(i) 98 provisions from 12 September 2013 vide notification number S.O. 2754(E) dated 12th
September 2013,
(ii) section 135 and schedule VII from 01 April 2014 vide notification number S.O. 582(E) dated
27th February 2014.
(iii) 183 provisions from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.
(iv) Section 74(2) and (3) brought to force from 06th June 2014 vide notification number S.O.
1459(E) dated 06th June, 2014.
(v) Section 125(5), (6) and (7) brought to force from 13th January 2016 vide notification number
S.O. 125(E) dated 13th January, 2016.
(vi) 5 provisions related to Special Court with effect from 18th May, 2016 vide notification number
S.O. 1795(E) dated 18th May, 2016.
(vii) 51 provisions related to NCLT with effect from 01st June, 2016 vide notification no. S.O. 1934(E)
dated 01st June 2016.

Page 1
 S. 1 - Chapter I [Ss. 1 and 2]

(viii) Notified Ss.124 and 125 with effect from 07th September 2016 vide notification number S.O.
2866(E) dated 05th September, 2016.
(ix) Notified Ss. 227, 242(1)(b), 242(2)(c) and (g), 246 and 337 to 341 with effect from 09th
September 2016 vide notification number S.O. 2912(E) dated 09th September, 2016
(x) 95 provisions from 15th December 2016, vide notification number S.O. 3677(E) dated 07th
December, 2016.
(xi) 5 provisions from 26th December 2016, vide notification number S.O. 4167(E) dated 26th
December, 2016.
(xii) Section 234 brought to force from 13th April, 2017 vide notification number S.O. 1182(E) dated
13th April, 2017.

[Thus, 448 provisions of the Act are brought to force. Chapter XVII i.e. Section 247 on
registered valuers and Sections 417A and 465 are not yet brought to force. It is relevant to note
that the Insolvency and Bankruptcy Code, 2016 deals with winding-up of companies and the
Sick Industrial Companies (Special Provisions) Act, 1985 stands repealed. Certain provisions
of the Act are amended by the Insolvency and Bankruptcy Code, 2016, including omission of
provisions relating to (a) voluntary winding-up and (b) sick companies.]

(4) The provisions of this Act shall apply to—

(a) companies incorporated under this Act or under any previous company law;
(b) insurance companies, except in so far as the said provisions are inconsistent with
the provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory
and Development Authority Act, 1999 (41 of 1999);
(c) banking companies, except in so far as the said provisions are inconsistent with
the provisions of the Banking Regulation Act, 1949 (10 of 1949);
(d) companies engaged in the generation or supply of electricity, except in so far as
the said provisions are inconsistent with the provisions of the Electricity Act, 2003
(36 of 2003);
(e) any other company governed by any special Act for the time being in force, except
in so far as the said provisions are inconsistent with the provisions of such special
Act; and
(f) such body corporate, incorporated by any Act for the time being in force, as the
Central Government may, by notification, specify in this behalf, subject to such
exceptions, modifications or adaptation, as may be specified in the notification.

Page 2
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2. Definitions.

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

2(1) abridged prospectus

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.2 (1) of the Companies Act, 1956]
[Refer section 33]

(1) “abridged prospectus” means a memorandum containing such salient features of a

prospectus as may be specified by the Securities and Exchange Board by making
regulations in this behalf;

2(2) accounting standards

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.211 (3C) of the Companies Act, 1956]
[Refer section 133]

(2) “accounting standards” means the standards of accounting or any addendum thereto
for companies or class of companies referred to in section 133;

2(3) alter or alteration

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (1A) of the Companies Act, 1956]

(3) “alter” or “alteration” includes the making of additions, omissions and substitutions;

2(4) Appellate Tribunal

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (1B) of the Companies Act, 1956]

(4) “Appellate Tribunal” means the National Company Law Appellate Tribunal constituted
under section 410;

Page 1
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(5) articles

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (2) of the Companies Act, 1956]

(5) “articles” means the articles of association of a company as originally framed or as

altered from time to time or applied in pursuance of any previous company law or of
this Act;

2(6) associate company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(6) “associate company”, in relation to another company, means a company in which that
other company has a significant influence, but which is not a subsidiary company of the
company having such influence and includes a joint venture company.
1
[Explanation. – For the purposes of this clause,-
(a) the expression “significant influence” means control of at least twenty per cent. of
total voting power, or control of or participation in business decisions under an agreement;
(b) the expression “joint venture” means a joint arrangement whereby the parties that
have joint control of the management have rights to the net assets of the arrangement;]
[Term ‘total share capital’ means aggregate of the (a) paid-up equity share capital and (b) convertible
preference share capital – as per Rule 2(1) (r) of the Companies (Specification of definitions details) Rules,
2014.]
[It is clarified that the shares held by a company in another company in a 'fiduciary capacity' shall not be
counted for the purpose of determining the relationship of 'associate company'. Refer Circular 24/2014
dated 25 June 2014.]
[Though the term ‘joint venture company’ is used, the same is not defined. It may be noted that for preparing
consolidated financial statement, the term ‘subsidiary’ used in section 129(3) includes associate company
and joint venture company – per explanation to Section 129(3)]

2(7) auditing standards

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]

1
The explanation to Section 2(6) of the principal Act substituted by Section 2(i) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to
substitution, the explanation read as ‘Explanation.-For the purposes of this clause, "significant influence"
means control of at least twenty per cent. of total share capital, or of business decisions under an
agreement;’.

Page 2
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

(7) “auditing standards” means the standards of auditing or any addendum thereto for
companies or class of companies referred to in sub-section (10) of section 143;

2(8) authorised capital or nominal capital

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(8) “authorised capital” or “nominal capital” means such capital as is authorized by the
memorandum of a company to be the maximum amount of share capital of the
company;

2(9) banking company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (5) of the Companies Act, 1956]

(9) “banking company” means a banking company as defined in clause (c) of section 5 of
the Banking Regulation Act, 1949 (10 of 1949);

[As per section 5 (b) of the Banking Regulation Act, 1949 "banking" means the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on demand or
otherwise, and withdrawal by cheque, draft, order or otherwise;]
[As per section 5 (c) of the Banking Regulation Act, 1949 "banking company" means any company
which transacts the business of banking in India;
Explanation. — Any company which is engaged in the manufacture of goods or carries on any
trade and which accepts deposits of money from the public merely for the purpose of financing its
business as such manufacturer or trader shall not be deemed to transact the business of banking
within the meaning of this clause;]

2(10) Board of Directors or Board

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (6) and S.252 (3) of the Companies Act, 1956]

(10) “Board of Directors” or “Board”, in relation to a company, means the collective body
of the directors of the company;

2(11) body corporate or corporation

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (7) of the Companies Act, 1956]

Page 3
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

(11) “body corporate” or “corporation” includes a company incorporated outside India, but
does not include—
(i) a co-operative society registered under any law relating to co-operative societies;
and
(ii) any other body corporate (not being a company as defined in this Act), which the
Central Government may, by notification, specify in this behalf;

2(12) book and paper and book or paper

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (8) of the Companies Act, 1956]

(12) “book and paper” and “book or paper” include books of account, deeds, vouchers,
writings, documents, minutes and registers maintained on paper or in electronic form;

2(13) books of account

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.209 (1) of the Companies Act, 1956]

(13) “books of account” includes records maintained in respect of—

(i) all sums of money received and expended by a company and matters in relation to
which the receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed under section 148 in the case of a company
which belongs to any class of companies specified under that section;

2(14) branch office

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (9) of the Companies Act, 1956]

(14) “branch office”, in relation to a company, means any establishment described as

such by the company;

2(15) called-up capital

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(15) “called-up capital” means such part of the capital, which has been called for payment;

Page 4
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(16) Charge

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.124 of the Companies Act, 1956]

(16) “charge” means an interest or lien created on the property or assets of a company
or any of its undertakings or both as security and includes a mortgage;

2(17) chartered accountant

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding to explanation to Sec.33 of the Companies Act, 1956]

(17) “chartered accountant” means a chartered accountant as defined in clause (b) of

sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who
holds a valid certificate of practice under sub-section (1) of section 6 of that Act;

2(18) Chief Executive Officer

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(18) “Chief Executive Officer” means an officer of a company, who has been designated
as such by it;

2(19) Chief Financial Officer

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(19) “Chief Financial Officer” means a person appointed as the Chief Financial Officer of
a company;

2(20) company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (10) of the Companies Act, 1956]

(20) “company” means a company incorporated under this Act or under any previous
company law;

Page 5
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(21) company limited by guarantee

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.12 (2) (b) of the Companies Act, 1956]

(21) “company limited by guarantee” means a company having the liability of its members
limited by the memorandum to such amount as the members may respectively
undertake to contribute to the assets of the company in the event of its being wound
up;

2(22) company limited by shares

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.12 (2) (a) of the Companies Act, 1956]

(22) “company limited by shares” means a company having the liability of its members
limited by the memorandum to the amount, if any, unpaid on the shares respectively
held by them;

2(23) Company Liquidator

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[No Corresponding provision under the Companies Act, 1956]

2
[(23 ) "Company Liquidator" means a person appointed by the Tribunal as the Company
Liquidator in accordance with the provisions of section 275 for the winding up of a
company under this Act;]

2(24) company secretary or secretary

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (45) of the Companies Act, 1956]

2
Section 2(23) substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the
clause (1) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number
S.O 3453(E) dated 15th November, 2016. Prior to substitution it read s “ ‘Company Liquidator’, in so far as
it relates to the winding up of a company, means a person appointed by- (a) the Tribunal in case of winding
up by the Tribunal; or (b) the company or creditors in case of voluntary winding up”

Page 6
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

3
(24) “company secretary” or “secretary” means a company secretary as defined in clause
(c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980)
who is appointed by a company to perform the functions of a company secretary under
this Act;

2(25) company secretary in practice

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (45A) of the Companies Act, 1956]

(25) “company secretary in practice” means a company secretary who is deemed to be

in practice under sub-section (2) of section 2 of the Company Secretaries Act, 1980
(56 of 1980);

2(26) contributory

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.428 of the Companies Act, 1956]

(26) “contributory” means a person liable to contribute towards the assets of the company
in the event of its being wound up.
Explanation.—For the purposes of this clause, it is hereby clarified that a person
holding fully paid-up shares in a company shall be considered as a contributory but shall
have no liabilities of a contributory under the Act whilst retaining rights of such a
contributory;

2(27) control

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(27) “control” shall include the right to appoint majority of the directors or to control the
management or policy decisions exercisable by a person or persons acting individually
or in concert, directly or indirectly, including by virtue of their shareholding or

3
Section 2(24) shall not apply to section 8 company vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar., vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 7
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management rights or shareholders agreements or voting agreements or in any other

manner;

2(28) cost accountant

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.233B (1) of the Companies Act, 1956]

4
[(28) "Cost Accountant" means a cost accountant as defined in clause (b) of sub-section
(1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds a valid
certificate of practice under sub-section (1) of section 6 of that Act;]

2(29) court

[Except sub-clause (iv), brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[sub-clause (iv), brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[Corresponding Sections 2(11), 2(14) and 10 of the Companies Act, 1956]

(29) “court” means—

(i) 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 under sub-clause (ii);
(ii) the district court, in cases where the Central Government has, by notification,
empowered any district court to exercise all or any of the jurisdictions conferred
upon the High Court, within the scope of its jurisdiction in respect of a company
whose registered office is situate in the district;
(iii) the Court of Session having jurisdiction to try any offence under this Act or under
any previous company law;
(iv) the Special Court established under section 435;
(v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having
jurisdiction to try any offence under this Act or under any previous company law;

4
Section 2(28) of the principal Act substituted by Section 2(ii) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to substitution it read as ‘(28)
"cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the
Cost and Works Accountants Act, 1959 (23 of 1959);’.

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2(30) debenture

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (12) of the Companies Act, 1956]

(30) “debenture” includes debenture stock, bonds or any other instrument of a company
evidencing a debt, whether constituting a charge on the assets of the company or not;
5
[Provided that—
(a) the instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934;
and
(b) such other instrument, as may be prescribed by the Central Government in
consultation with the Reserve Bank of India, issued by a company,
shall not be treated as debenture;]

2(31) deposit

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding explanation to Sec. 58A of the Companies Act, 1956]

(31) “deposit” includes any receipt of money by way of deposit or loan or in any other form
by a company, but does not include such categories of amount as may be prescribed
in consultation with the Reserve Bank of India;

[MCA has notified Companies (Acceptance of Deposits) Rules, 2014 in consultation with RBI and rule
2(1)(c) thereof prescribes categories of amount not treated as ‘deposit’.]

2(32) depository

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (12A) of the Companies Act, 1956]

(32) “depository” means a depository as defined in clause (e) of sub-section (1) of section
2 of the Depositories Act, 1996 (22 of 1996);

[As per section 2(1)(e) of the Depositories Act, 1996 "depository" means a company formed and registered
under the Companies Act, 1956 (1 of 1956) and which has been granted a certificate of registration under
sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);]

5
Proviso to 2(30) of the principal Act inserted by Section 2(iii) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

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2(33) derivative

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (12B) of the Companies Act, 1956]

(33) “derivative” means the derivative as defined in clause (ac) of section 2 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956);

[As per section 2(ac) of the Securities Contracts (Regulation) Act, 1956 “derivative” includes—
(A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument
or contract for differences or any other form of security;
(B) a contract which derives its value from the prices, or index of prices, of underlying securities;]

2(34) director

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (13) of the Companies Act, 1956]

(34) “director” means a director appointed to the Board of a company;

2(35) dividend

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (14A) of the Companies Act, 1956]
[Provisions related to dividend are under section 51 and Chapter VIII]

(35) “dividend” includes any interim dividend;

2(36) document

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (15) of the Companies Act, 1956]

(36) “document” includes summons, notice, requisition, order, declaration, form and
register, whether issued, sent or kept in pursuance of this Act or under any other law
for the time being in force or otherwise, maintained on paper or in electronic form;

2(37) employees’ stock option

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (15A) of the Companies Act, 1956]
[Refer section 62(1) (b) and section 197(7)]

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(37) “employees’ stock option” means the option given to the directors, officers or
employees of a company or of its holding company or subsidiary company or
companies, if any, which gives such directors, officers or employees, the benefit or
right to purchase, or to subscribe for, the shares of the company at a future date at a
pre-determine d price;

2(38) expert

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.59 (2) of the Companies Act, 1956]
(38) “expert” includes an engineer, a valuer, a chartered accountant, a company
secretary, a cost accountant and any other person who has the power or authority to
issue a certificate in pursuance of any law for the time being in force;

2(39) financial institution

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(39) “financial institution” includes a scheduled bank, and any other financial institution
defined or notified under the Reserve Bank of India Act, 1934 (2 of 1934);
[ Section 45-I (c) of the RBI Act, defines financial institution as under:

"Financial Institution" means any non-banking institution which carries on as its business or part of its
business any of the following activities, namely:-
(i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its
own;
(ii) the acquisition of shares, stock, bonds, debentures or securities issued by a government or local
authority or other marketable securities of a like nature;
(iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c )
of section 2 of the Hire-Purchase Act, 1972;
(iv) the carrying on of any class of insurance business;
(v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as
defined in any law which is for the time being in force in any State, or any business, which is similar
thereto;
(vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in
lump sum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other
manner and awarding prizes or gifts, whether in cash or kind, or disbursing monies in any other way, to
persons from whom monies are collected or to any other person.
But does not include any institution, which carries on as its principal business,-
(a) agricultural operations; or
(aa) industrial activity; or;
(b) the purchase or sale of any goods (other than securities) or the providing of any services; or
(c) the purchase, construction or sale, of immovable property, so however, that no portion of the income of
the institution is derive from the financing of purchases, constructions or sales of immovable property
by other persons;]

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Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(40) financial statement

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]
[Refer section 129 on contents of financial statement, section 131 for voluntary revision thereof, section
134 for signing of Financial Statement, section 136 for members’ right to copies of audited financial
statement and section 137 for filing of financial statement with ROC.]

(40) “financial statement” in relation to a company, includes—

(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not
for profit, an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in
sub-clause (i) to sub-clause (iv):
6
[Provided that the financial statement, with respect to one person company, small
company, dormant company and private company (if such private company is a start-up)
may not include the cash flow statement;

Explanation. - For the purposes of this Act, the term ''start-up'' or "start-up company"
means a private company incorporated under the Companies Act, 2013 (18 of 2013) or
the Companies Act, 1956 (1 of 1956) and recognised as start-up in accordance with the
notification issued by the Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry.]

2(41) financial year

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 2(17) of the Companies Act, 1956]

(41) “financial year”, in relation to any company or body corporate, means the period
ending on the 31st day of March every year, and where it has been incorporated on or

6
Substituted by notification number G.S.R. 583(E) dated 13th June 2017. Prior to substitution it read as
“Provided that the financial statement, with respect to One Person Company, small company and dormant
company, may not include the cash flow statement.”. The exceptions, modifications and adaptations
provided in the said notification dated 5th June 2015 shall be applicable to a private company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.

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after the 1st day of January of a year, the period ending on the 31st day of March of
the following year, in respect whereof financial statement of the company or body
corporate is made up:
7
[Provided that where a company or body corporate, which is a holding company or a
subsidiary or associate company of a company incorporated outside India and is required
to follow a different financial year for consolidation of its accounts outside India, the
8
Central Government may, on an application made by that company or body corporate in
such form and manner as may be prescribed, allow any period as its financial year,
whether or not that period is a year:
Provided further that any application pending before the Tribunal as on the date of
commencement of the Companies (Amendment) Ordinance, 2019 shall be disposed of
by the Tribunal in accordance with the provisions applicable to it before such
commencement.]
[CLB exercised powers until NCLT was setup and notified. Refer notification number S.O. 1429 (E) dated
June 2, 2014]

9
[Provided also that] a company or body corporate, existing on the commencement
of this Act, shall, within a period of two years from such commencement, align its financial
year as per the provisions of this clause;
10
[Provided also that in case of a Specified IFSC public company, which is a
subsidiary of a foreign company, the financial year of the subsidiary may be same as the
financial year of its holding company and approval of the Tribunal shall not be required.]

7
The first proviso to clause (41) of Section 2 of the principal Act substituted by Section 2(a) of the
Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November
2018. Prior to substitution, it read as “Provided that on an application made by a company or body
corporate, which is a holding company or a subsidiary 7[or associate company] of a company incorporated
outside India and is required to follow a different financial year for consolidation of its accounts outside
India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is
a year:”.

8
The Central Government (MCA) has delegated its power to the Regional Directors at Mumbai, Kolkata,
Chennai, New Delhi, Ahmedabad, Hyderabad and Shillong, vide notification number S.O. 6225(E) dated
18th December 2018. This was done as the Companies (Amendment) Ordinance, 2018 (9 of 2018) was
promulgated. However it lapsed and the Companies (Amendment) Ordinance, 2019 (3 of 2019) is
promulgated on 12th Januar 2019.

9
Substituted for the words ‘Provided further that’ in the second proviso to clause (41) of Section 2 of the
principal Act substituted by Section 2(b) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed
to have came into force from 02nd November 2018.

10
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to

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11
[Provided also that in case of a Specified IFSC private company, which is a
subsidiary of a foreign company, the financial year of the subsidiary may be same as the
financial year of its holding company and approval of the Tribunal shall not be required.]

2(42) foreign company

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 591(1) of the Companies Act, 1956. Also see explanation to section 234(2) of the
Companies Act 2013.]
[Term “electronic mode” under rule 2 (1) (h) of the Companies (Specification of definitions details) Rules,
2014]

(42) “foreign company” means any company or body corporate incorporated outside India
which—
(a) has a place of business in India whether by itself or through an agent, physically or
through electronic mode; and
(b) conducts any business activity in India in any other manner;

2(43) free reserves

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding explanation to Sec.2 (29A) and explanation (b) to sec.372A of the Companies Act, 1956]

(43) “free reserves” means such reserves which, as per the latest audited balance sheet
of a company, are available for distribution as dividend:
Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation of assets,
whether shown as a reserve or otherwise, or
(ii) any change in carrying amount of an asset or of a liability recognized in equity,
including surplus in profit and loss account on measurement of the asset or the
liability at fair value,
shall not be treated as free reserves;

an unlisted public company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in
approved multi services SEZ.

11
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
a private company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved
multi services SEZ.

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Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(44) Global Depository Receipt

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(44) “Global Depository Receipt” means any instrument in the form of a depository receipt,
by whatever name called, created by a foreign depository outside India and authorised
by a company making an issue of such depository receipts;

2(45) Government company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (18) and sec.617 of the Companies Act, 1956]

(45) “Government company” means any company in which not less than fifty-one per
cent. of the paid-up share capital is held by the Central Government, or by any State
Government or Governments, or partly by the Central Government and partly by one
or more State Governments, and includes a company which is a subsidiary company
of such a Government company;

2(46) holding company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (19) of the Companies Act, 1956]

(46) “holding company”, in relation to one or more other companies, means a company
of which such companies are subsidiary companies;
12
[Explanation.—For the purposes of this clause, the expression "company" includes
any body corporate;]

2(47) independent director

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]

(47) “independent director” means an independent director referred to in sub-section (5)

of section 149;
[The definition of “Independent Director” is given under sub-section (6) of section 149. Reference to sub-
section (5) is given in error.]

12
An explanation to Section 2(46) of the principal Act inserted by Section 2(v) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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Relevant rules: The Companies (Specification of definitions details) Rules, 2014

2(48) Indian Depository Receipt

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]

(48) “Indian Depository Receipt” means any instrument in the form of a depository receipt
created by a domestic depository in India and authorised by a company incorporated
outside India making an issue of such depository receipts;

2(49) [omitted] interested director

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

13
[Omitted]

2(50) issued capital

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(50) “issued capital” means such capital as the company issues from time to time for
subscription;

2(51) key managerial personnel

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]
[Refer section 203]

(51) “key managerial personnel”, in relation to a company, means—

(i) the Chief Executive Officer or the managing director or the manager;

13
Section 2(49) of the principal Act omitted by Section 2(vi) of the Companies (Amendment) Act, 2017 (1
of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to omission it read as ‘(49)
"interested director" means a director who is in any way, whether by himself or through any of his relatives
or firm, body corporate or other association of individuals in which he or any of his relatives is a partner,
director or a member, interested in a contract or arrangement, or proposed contract or arrangement,
entered into or to be entered into by or on behalf of a company;’.

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(ii) the Company Secretary;

(iii) the whole-time director;
(iv) the Chief Financial Officer; 14[omitted]
15
[(v) such other officer, not more than one level below the directors who is in whole-
time employment, designated as key managerial personnel by the Board; and
(vi) such other officer as may be prescribed;]
[MCA has not prescribed ‘other officer’]

2(52) listed company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (23A) of the Companies Act, 1956]

(52) “listed company” means a company which has any of its securities listed on any
recognised stock exchange;

2(53) manager

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (24) of the Companies Act, 1956]

(53) “manager” means an individual 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, whether under a
contract of service or not;

2(54) managing director

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (26) of the Companies Act, 1956]

14
The word ‘and’ at end of Section 2(51)(iv) of the principal Act omitted by Section 2(vii)(a) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

15
Section 2(51)(v) of the principal Act substituted by Section 2(vii)(b) of the Companies (Amendment) Act,
2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to
force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to its substitution it
read as ‘(v) such other officer as may be prescribed;’.

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Relevant rules: The Companies (Specification of definitions details) Rules, 2014

(54) “managing director” means a director who, by virtue of the articles of a company or
an agreement with the company or a resolution passed in its general meeting, or by
its Board of Directors, is entrusted with substantial powers of management of the
affairs of the company and includes a director occupying the position of managing
director, by whatever name called.
Explanation.—For the purposes of this clause, 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 the substantial powers of management;

2(55) member

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (27) and sec.41 of the Companies Act, 1956]

(55) “member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed to have
agreed to become member of the company, and on its registration, shall be entered
as member in its register of members;
(ii) every other person who agrees in writing to become a member of the company and
whose name is entered in the register of members of the company;
(iii) every person holding shares of the company and whose name is entered as a
beneficial owner in the records of a depository;

2(56) memorandum

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (28) of the Companies Act, 1956]

(56) “memorandum” means the memorandum of association of a company as originally

framed or as altered from time to time in pursuance of any previous company law or
of this Act;

2(57) net worth

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (29A) of the Companies Act, 1956]

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Relevant rules: The Companies (Specification of definitions details) Rules, 2014

(57) “net worth” means the aggregate value of the paid-up share capital and all reserves
created out of the profits 16[, securities premium account and debit or credit balance of
profit and balance account,] after deducting the aggregate value of the accumulated
losses, deferred expenditure and miscellaneous expenditure not written off, as per the
audited balance sheet, but does not include reserves created out of revaluation of
assets, write-back of depreciation and amalgamation;

2(58) notification

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

(58) “notification” means a notification published in the Official Gazette and the expression
“notify” shall be construed accordingly;

2(59) officer

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (30) of the Companies Act, 1956]

(59) “officer” includes any director, manager or key managerial personnel 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;

2(60) officer who is in default

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (31), read with sec.5 and sec.7 of the Companies Act, 1956]
[Refer Rule 12(3) of the Companies (Registrations Offices and Fees) Rules, 2014]
[Form No. GNL-3. Refer Circular 09/2014 dated 25 April 2014]

(60) “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 penalty or
punishment by way of imprisonment, fine or otherwise, means any of the following
officers of a company, namely:—
(i) whole-time director;
(ii) key managerial personnel;

16
Substituted for the words ‘and securities premium account’ in Section 2(57) of the principal Act by Section
2(viii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of
the same date.

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(iii) where there is no key managerial personnel, such director or directors as specified
by the Board in this behalf and who has or have given his or their consent in writing
to the Board to such specification, or all the directors, if no director is so specified;
[Form No. GNL-3]
(iv) any person who, under the immediate authority of the Board or any key managerial
personnel, is charged with any responsibility including maintenance, filing or
distribution of accounts or records, authorises, actively participates in, knowingly
permits, or knowingly fails to take active steps to prevent, any default; [Form No. GNL-
3]
(v) any person in accordance with whose advice, directions or instructions the Board
of Directors of the company is accustomed to act, other than a person who gives
advice to the Board in a professional capacity;
(vi) every director, in respect of a contravention of any of the provisions of this Act,
who is aware of such contravention by virtue of the receipt by him of any
proceedings of the Board or participation in such proceedings without objecting to
the same, or where such contravention had taken place with his consent or
connivance;
(vii) in respect of the issue or transfer of any shares of a company, the share transfer
agents, registrars and merchant bankers to the issue or transfer;

2(61) Official Liquidator

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

(61) “Official Liquidator” means an Official Liquidator appointed under sub-section (1) of
section 359;

2(62) One Person Company

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]

(62) “One Person Company” means a company which has only one person as a member;

2(63) ordinary or special resolution

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

(63) “ordinary or special resolution” means an ordinary resolution, or as the case may be,
special resolution referred to in section 114;

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2(64) paid-up share capital or share capital paid-up

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (32) of the Companies Act, 1956]
(64) “paid-up share capital” or “share capital paid-up” means such aggregate amount of
money credited as paid-up as is equivalent to the amount received as paid-up in
respect of shares issued and also includes any amount credited as paid-up in respect
of shares of the company, but does not include any other amount received in respect
of such shares, by whatever name called;

2(65) postal ballot

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding explanation to Sec.192A of the Companies Act, 1956]
[Refer section 110]

(65) “postal ballot” means voting by post or through any electronic mode;

2(66) prescribed

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (33) of the Companies Act, 1956]

(66) “prescribed” means prescribed by rules made under this Act;

2(67) previous company law

[Except sub-clause (ix) brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[Corresponding Sec.2 (34) of the Companies Act, 1956]

(67) “previous company law” means any of the laws specified below:—
(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of
1866);
(ii) the Indian Companies Act, 1866 (10 of 1866);
(iii) the Indian Companies Act, 1882 (6 of 1882);
(iv) the Indian Companies Act, 1913 (7 of 1913);
(v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942);
(vi) the Companies Act, 1956 (1 of 1956); and
(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in
force—
(A) in the merged territories or in a Part B State (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

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(B) 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), in so far as banking, insurance and financial corporations are
concerned, and before the commencement of the Central Laws (Extension to
Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are
concerned;
(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas;
and
(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961);

2(68) private company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (35) of the Companies Act, 1956]

17
(68) “private company” means a company having a minimum paid-up share capital
[omitted]18 as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two
hundred:
Provided that where two or more persons hold one or more shares in a company
jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) 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,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;

[All Regional Directors and Registrar of Companies were instructed by MCA to register Memorandum and
Articles of Association received till 11.9.2013 as per definition of ‘private company’ under the Companies
Act 1956. See Circular 15/2013 dated 13 September 2013.]

17
Requirement of having minimum paid-up share capital shall not apply to a section 8 company vide
notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and adaptations
provided in the said notification shall be applicable to a company covered under section 8 of the said Act
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar., vide notification number G.S.R. 584(E)
dated 13th June 2017.

18
Words “of one lakh rupees or such higher paid-up share capital” omitted by the Companies (Amendment)
Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number
S.O. 1440(E).

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2(69) promoter

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.62 (6) (a) of the Companies Act, 1956]

(69) “promoter” means a person—

(a) who has been named as such in a prospectus or is identified by the company in
the annual return referred to in section 92; or
(b) who has control over the affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the Board of Directors
of the company is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely
in a professional capacity;

2(70) prospectus

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (36) of the Companies Act, 1956]

(70) “prospectus” means any document described or issued as a prospectus and includes
a red herring prospectus referred to in section 32 or shelf prospectus referred to in
section 31 or any notice, circular, advertisement or other document inviting offers from
the public for the subscription or purchase of any securities of a body corporate;

2(71) public company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (37) of the Companies Act, 1956]

19
(71) “public company” means a company which—

19
Requirement of having minimum paid-up share capital shall not apply to a section 8 company vide
notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and adaptations
provided in the said notification shall be applicable to a company covered under section 8 of the said Act
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar., vide notification number G.S.R. 584(E)
dated 13th June 2017.

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(a) is not a private company; 20[and]

(b) has a minimum paid-up share capital [omitted]21, as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private
company, shall be deemed to be public company for the purposes of this Act even
where such subsidiary company continues to be a private company in its articles ;

2(72) public financial institution

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.4A of the Companies Act, 1956]

(72) “public financial institution” means—

(i) the Life Insurance Corporation of India, established under section 3 of the Life
Insurance Corporation Act, 1956 (31 of 1956);
(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi)
of sub-section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed
under section 465 of this Act;
[Section 465 is not yet notified]
(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking
and Repeal) Act, 2002 (58 of 2002);
(iv) institutions notified by the Central Government under sub-section (2) of section 4A
of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
[Section 465 is not yet notified]
(v) such other institution as may be notified by the Central Government in consultation
with the Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or State Act
22
[other than this Act or the previous company law]; or
(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled
by the Central Government or by any State Government or Governments or
partly by the Central Government and partly by one or more State Governments;

20
Word ‘and’ inserted in section 2(71)(a) by Section 2(ix) of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

21
Words “of five lakh rupees or such higher paid-up capital” omitted by the Companies (Amendment) Act,
2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).

22
Words inserted in clause (A) of the proviso to Section 2(72) by Section 2(x) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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2(73) recognised stock exchange

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (39) of the Companies Act, 1956]

(73) “recognised stock exchange” means a recognised stock exchange as defined in

clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

2(74) register of companies

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

(74) “register of companies” means the register of companies maintained by the Registrar
on paper or in any electronic mode under this Act;

2(75) Registrar

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (40) of the Companies Act, 1956]

(75) “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy

Registrar or an Assistant Registrar, having the duty of registering companies and
discharging various functions under this Act;

2(76) related party

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]
[Refer rule 3 of the Companies (Specification of Definition details) Rules, 2014]

(76) “related party”, with reference to a company, means—

(i) a director or his relative;
(ii) a key managerial personnel or his relative;
(iii) a firm, in which a director, manager or his relative is a partner;
(iv) a private company in which a director or manager [or his relative] is a member or
director;
[Words ‘or his relative’ stated in bracket after the word ‘manager’ above, is inserted by the
Companies (Removal of Difficulties) Sixth Order, 2014 vide order no. S.O.1894 (E) dated 24th July
2014. Comments: By this amendment, words ‘or his relative’ occurs in clauses (i) to (v), thus
uniformity is brought].
(v) a public company in which a director or manager is a director [and] holds along
with his relatives, more than two per cent. of its paid-up share capital;

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[Word ‘and’ stated in bracket above, is replaced for word ‘or’ by the Companies (Removal of
Difficulties) Fifth Order, 2014 vide order no. S.O.1820 (E) dated 9th July 2014. Comments: The
effect is that a public company in which a director or manager is a director ‘and’ holds along with his
relatives, more than two per cent. of its paid up share capital shall be related party.]
(vi) any body corporate whose Board of Directors, managing director or manager is
accustomed to act in accordance with the advice, directions or instructions of a
director or manager;
(vii) any person on whose advice, directions or instructions a director or manager is
accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice,
directions or instructions given in a professional capacity
23 24
[ (viii) any body corporate which is—
(A) a holding, subsidiary or an associate company of such company;
(B) a subsidiary of a holding company to which it is also a subsidiary;
or
(C) an investing company or the venturer of the company;
Explanation.—For the purpose of this clause, “the investing company or the
venturer of a company” means a body corporate whose investment in the company
would result in the company becoming an associate company of the body corporate.]

(ix) such other person as may be prescribed;

[Under clause (ix) above, a director (other than an independent director) or key managerial personnel of
the holding company or his relative with reference to a company, shall be deemed to be a related party,
per Rule 3 of the Companies (Specification of definitions details) Rules, 2014]

2(77) relative

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (41) read with sec.6 and schedule 1A of the Companies Act, 1956]
[Refer Rule 4 of the Companies (Specification of Definition details) Rules, 2014]

23
Sub-clause (viii) of Section 2(76) of the principal Act substituted by Section 2(xi) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
its substitution it read as ‘(viii) any company which is- (A) a holding, subsidiary or an associate company of
such company; or (B) a subsidiary of a holding company to which it is also a subsidiary;’.

24
Sub-clause (viii) do not apply with respect to section 188 to:-
(a) private company, vide notification number G.S.R. 464(E) dated 5th June 2015. The exceptions,
modifications and adaptations provided in the said notification dated 5th June 2015 shall be applicable to a
private company which has not committed a default in filing its financial statements under section 137 of
the said Act or annual return under section 92 of the said Act with the Registrar. Vide notification number
G.S.R. 583(E) dated 13th June 2017.
(b) an unlisted public company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in
approved multi services SEZ, as per Notification number G.S.R. 8(E) dated 04th January 2017

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(77) “relative”, with reference to any person, means any one who is related to another,
if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;
[Rule 4 of the Companies (Specification of definitions details) Rules, 2014 - A person shall be deemed
to be the relative of another, if he or she is related to another in the following manner, namely:-
(1) Father:
Provided that the term “Father” includes step-father.
(2) Mother:
Provided that the term “Mother” includes the step-mother.
(3) Son:
Provided that the term “Son” includes the step-son.
(4) Son’s wife.
(5) Daughter.
(6) Daughter’s husband.
(7) Brother:
Provided that the term “Brother” includes the step-brother;
(8) Sister:
Provided that the term “Sister” includes the step-sister.]

2(78) remuneration

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding explanation to Sec.198 of the Companies Act, 1956]

(78) “remuneration” means any money or its equivalent given or passed to any person for
services rendered by him and includes perquisites as defined under the Income-tax
Act, 1961 (43 of 1961);

2(79) Schedule

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (42) of the Companies Act, 1956]

(79) “Schedule” means a Schedule annexed to this Act;

2(80) scheduled bank

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (43) of the Companies Act, 1956]

(80) “scheduled bank” means the scheduled bank as defined in clause (e) of section 2 of
the Reserve Bank of India Act, 1934 (2 of 1934);

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2(81) securities

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (45AA) of the Companies Act, 1956]

(81) “securities” means the securities as defined in clause (h) of section 2 of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956);
[Per Section 2 (h) of SCRA, (h) “securities” include—
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature
in or of any incorporated company or other body corporate;

(ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such
schemes;

(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002;

(id) units or any other such instrument issued to the investors under any mutual fund scheme;

(ii) Government securities;

(iia) such other instruments as may be declared by the Central Government to be securities; and

(iii) rights or interest in securities;]

2(82) Securities and Exchange Board

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (45B) of the Companies Act, 1956]

(82) “Securities and Exchange Board” 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);

2(83) Serious Fraud Investigation Office

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]

(83) “Serious Fraud Investigation Office” means the office referred to in section 211;

2(84) share

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (46) of the Companies Act, 1956]

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(84) “share” means a share in the share capital of a company and includes stock;

2(85) small company

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No Corresponding provision under the Companies Act, 1956]
(85) “small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher
amount as may be prescribed which shall not be more than 25[ten crore rupees];
[and]26
(ii) turnover of which 27[as per profit and loss account for the immediately preceding
financial year] does not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than 28[one hundred crore rupees]:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
[Comments: Since there is conjunctive word ‘and’ between (i) and (ii), only if both the conditions are
satisfied, the company (other than a public company and not falling in the proviso) shall be treated as ‘small
company’.
Other provisions in the Act, specifically referring to ‘small company’ are – proviso to section 2(40); proviso
to section 92(1); and section 173(5)]

25
Substituted for the words ‘five crore rupees’ in sub-clause (i) of Section 2(85) of the principal Act by
Section 2(xii)(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

26
Word ‘and’ is substituted for the word ‘or’ by the Companies (Removal of Difficulties) Order, 2015 vide
notification number S.O. 504 (E)dated 13th February 2015.

27
Substituted for the words ‘as per its last profit and loss account’ in sub-clause (ii) of Section 2(85) of the
principal Act by Section 2(xii)(b)(A) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

28
Substituted for the words ‘twenty crore rupees’ in sub-clause (ii) of Section 2(85) of the principal Act by
Section 2(xii)(b)(B) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

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2(86) subscribed capital

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]
(86) “subscribed capital” means such part of the capital which is for the time being
subscribed by the members of a company;

2(87) subsidiary company or subsidiary

[Except proviso and explanation (d), brought to force from 12th September, 2013 vide notification number S.O.
2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (47) of the Companies Act, 1956]
[Explanation (d) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[The Proviso brought to force from 20th September 2017 vide notification number S.O. 3086(E) dated 20th
September, 2017.]
[Refer Rule 2(1) (r) of the Companies (Specification of definitions details) Rules, 2014

(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say
the holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the 29[total voting power] either at its
own or together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall
not have layers of subsidiaries beyond such numbers as may be prescribed.
[Note: Restriction on layers of investment companies is under section 186(1) of the Act.]

Explanation.—For the purposes of this clause,—

(a) a company shall be deemed to be a subsidiary company of the holding company
even if the control referred to in sub-clause (i) or sub-clause (ii) is of another
subsidiary company of the holding company;
(b) the composition of a company’s Board of Directors shall be deemed to be controlled
by another company if that other company by exercise of some power exercisable
by it at its discretion can appoint or remove all or a majority of the directors;
(c) the expression “company” includes any body corporate;
(d) “layer” in relation to a holding company means its subsidiary or subsidiaries;
[Explanation (d) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.] [The Companies (Restriction on number of layers) Rules, 2017 w.e.f. 20 September
2017]

29
Substituted for the words ‘total share capital’ in sub-clause (ii) of Section 2(87) of the principal Act by
Section 2(xiii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E)
of the same date.

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[Term ‘total share capital’ means aggregate of the (a) paid-up equity share capital and (b) convertible
preference share capital. Rule 2(1) (r) of the Companies (Specification of definitions details) Rules, 2014]
[All Regional Directors and Registrar of Companies are instructed by MCA that the shares held by a
company or power exercisable by it in another company in a 'fiduciary capacity' shall not be counted for the
purpose of determining the holding-subsidiary relationship in terms of the provision of section 2(87) of the
Companies Act, 2013. See Circular 20/2013 dated 27 December 2013.]
[An existing company, being a subsidiary of a company incorporated outside India registered under the
Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act,
will continue as a private company or public company, as the case may be, without any change in the
incorporation status of such company. Refer Circular 23/2014 dated 25 June 2014.]

2(88) sweat equity shares

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding explanation II to Sec.79A of the Companies Act, 1956]

(88) “sweat equity shares” means such equity shares as are issued by a company to its
directors or employees at a discount or for consideration, other than cash, for providing
their know-how or making available rights in the nature of intellectual property rights
or value additions, by whatever name called;

2(89) total voting power

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (48) of the Companies Act, 1956]

(89) “total voting power”, in relation to any matter, means the total number of votes which
may be cast in regard to that matter on a poll at a meeting of a company if all the
members thereof or their proxies having a right to vote on that matter are present at
the meeting and cast their votes;

2(90) Tribunal

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2 (49A) of the Companies Act, 1956]
(90) “Tribunal” means the National Company Law Tribunal constituted under section 408;

2(91) turnover

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956]

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30
[“turnover” means the gross amount of revenue recognised in the profit and loss account
from the sale, supply, or distribution of goods or on account of services rendered, or
both, by a company during a financial year;]

2(92) unlimited company

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.12 (2) (c) of the Companies Act, 1956]

(92) “unlimited company” means a company not having any limit on the liability of its
members;

2(93) voting right

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No Corresponding provision under the Companies Act, 1956] [Refer Section 47]

(93) “voting right” means the right of a member of a company to vote in any meeting of
the company or by means of postal ballot;

2(94) whole-time director

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding explanation to Sec.269 of the Companies Act, 1956]

(94) “whole-time director” includes a director in the whole-time employment of the

company;
[As per Rule 2(1)(k) of the Companies (Specification of Definitions Details) Rules, 2014 “Executive
Director” means a whole time director as defined in clause (94) of section 2 of the Act.]

30
Section 2(91) of the principal Act substituted by Section 2(xiv) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to substitution it read as ‘(91)
"turnover" means the aggregate value of the realisation of amount made from the sale, supply or distribution
of goods or on account of services rendered, or both, by the company during a financial year;’.

Page 32
 S. 2 - Chapter I [Ss. 1 and 2]

Relevant rules: The Companies (Specification of definitions details) Rules, 2014

31
[(94A) winding up

(94A) “winding up” means winding up under this Act or liquidation under the Insolvency and
Bankruptcy Code, 2016, as applicable.]

2(95)

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.2A of the Companies Act, 1956]

(95) words and expressions used and not defined in this Act but defined in the Securities
Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board
of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have
the meanings respectively assigned to them in those Acts.

31
Section 2(94A) inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the
clause (1) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number
S.O 3453(E) dated 15th November, 2016

Page 33
 S. 3 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

CHAPTER II INCORPORATION OF
COMPANY AND MATTERS INCIDENTAL
THERETO
3. Formation of company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.12 of the Companies Act, 1956]
[Refer Rules 3, 4, 5, 6 and 7 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-2, INC-3, INC-4]
[Refer regulation (27) of Table F.II in Schedule I to the Act]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

3. (1) A company may be formed for any lawful purpose by—

(a) seven or more persons, where the company to be formed is to be a public
company;
(b) two or more persons, where the company to be formed is to be a private company;
or
(c) one person, where the company to be formed is to be One Person Company that
is to say, a private company,
by subscribing their names or his name to a memorandum and complying with the
requirements of this Act in respect of registration:

Provided that the memorandum of One Person Company shall indicate the name of
the other person, with his prior written consent in the prescribed form [Form No. INC-3],
who shall, in the event of the subscriber’s death or his incapacity to contract become the
member of the company and the written consent of such person shall also be filed with
[Form No. INC-2] the Registrar at the time of incorporation of the One Person Company
along with its memorandum and articles:

Provided further that such other person may withdraw his consent in such manner
as may be prescribed:
[Refer rule 4(3), (4) and Form No. INC-4]

Provided also that the member of One Person Company may at any time change the
name of such other person by giving notice in such manner as may be prescribed:
[refer rule 4 (5) and Form No. INC-4]

Provided also that it shall be the duty of the member of One Person Company to
intimate the company the change, if any, in the name of the other person nominated by
him by indicating in the memorandum or otherwise within such time and in such manner
as may be prescribed, and the company shall intimate the Registrar any such change
within such time and in such manner as may be prescribed:

Page 34
 S. 3 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

[refer rule 4 (5) and Form No. INC-4]

Provided also that any such change in the name of the person shall not be deemed
to be an alteration of the memorandum.

(2) A company formed under sub-section (1) may be either—

(a) a company limited by shares; or
(b) a company limited by guarantee; or
(c) an unlimited company.
32
[Provided that a Specified IFSC public company shall be formed only as a company
limited by shares.]
33
[Provided that a Specified IFSC private company shall be formed only as a company
limited by shares.]

32
by Notification number G.S.R. 8(E) dated 04th January 2017 whereby provisions of the Companies Act,
2013 shall not apply or shall apply with such exceptions, modifications and adaptations to an unlisted public
company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved multi services
SEZ.

33
by Notification number G.S.R. 9(E) dated 04th January 2017 whereby provisions of the Companies Act,
2013 shall not apply or shall apply with such exceptions, modifications and adaptations to a private
company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved multi services
SEZ.

Page 35
 S. 4 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

4. Memorandum.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sections 13, 14, 15(a) and (b), 20 and 37 of the Companies Act, 1956]
[Refer Rules 8 and 9 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-1.]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]

4. (1) The memorandum of a company shall state—

34
(a) the name of the company with the last word “Limited” in the case of a public
limited company, or the last words “Private Limited” in the case of a private limited
company:

Provided that nothing in this clause shall apply to a company registered under
section 8;
35
[Provided further that a Specified IFSC public company shall have the suffix
“International Financial Service Company” or “IFSC” as part of its name.]
36
[Provided further that a Specified IFSC private company shall have the suffix
“International Financial Service Company” or “IFSC” as part of its name.]

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

34
For Government Companies, vide notification number G.S.R. 463(E) dated 5th June, 2015, it is provides
that - in section 4, in sub-section (1), in clause (a), the words 'in the case of a public limited company, or
the last words "Private Limited" in the case of a private limited company' shall be omitted. Further vide
notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that the
exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.

35
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
an unlisted public company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in
approved multi services SEZ.

36
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
a private company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved
multi services SEZ.

Page 36
 S. 4 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(c) the objects for which the company is proposed to be incorporated and any matter
considered necessary in furtherance thereof;
37
[Provided that a Specified IFSC public company shall state its objects to do
financial services activities, as permitted under the Special Economic Zones Act,
2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 and any
matter considered necessary in furtherance thereof, in accordance with license to
operate, from International Financial Services Centre located in an approved multi
services Special Economic Zone, granted by the Reserve Bank of India or the
Securities and Exchange Board of India or the Insurance Regulatory and
Development Authority of India.]
38
[Provided that a Specified IFSC private company shall state its objects to do
financial services activities, as permitted under the Special Economic Zones Act,
2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 and any
matter considered necessary in furtherance thereof, in accordance with license to
operate, from International Financial Services Centre located in an approved multi
services Special Economic Zone, granted by the Reserve Bank of India or the
Securities and Exchange Board of India or the Insurance Regulatory and
Development Authority of India.]

(d) the liability of members of the company, whether limited or unlimited, and also
state,—
(i) in the case of a company limited by shares, that liability of its members is limited
to the amount unpaid, if any, on the shares held by them; and
(ii) in the case of a company limited by guarantee, the amount up to which each
member undertakes to contribute—
(A) to the assets of the company in the event of its being wound-up while he is
a member or within one year after he ceases to be a member, for payment
of the debts and liabilities of the company or of such debts and liabilities as
may have been contracted before he ceases to be a member, as the case
may be; and
(B) to the costs, charges and expenses of winding-up and for adjustment of the
rights of the contributories among themselves;

37
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
an unlisted public company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in
approved multi services SEZ.

38
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
a private company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved
multi services SEZ.

Page 37
 S. 4 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(e) in the case of a company having a share capital,—

(i) the amount of share capital with which the company is to be registered and the
division thereof into shares of a fixed amount and the number of shares which
the subscribers to the memorandum agree to subscribe which shall not be less
than one share; and
(ii) the number of shares each subscriber to the memorandum intends to take,
indicated opposite his name;
(f) in the case of One Person Company, the name of the person who, in the event of
death of the subscriber, shall become the member of the company.

(2) The name stated in the memorandum shall not—

(a) be identical with or resemble too nearly to the name of an existing company
registered under this Act or any previous company law; or
(b) be such that its use by the company—
(i) will constitute an offence under any law for the time being in force; or
(ii) is undesirable in the opinion of the Central Government.

[Refer rule 8. Power delegated to Registrar of Companies vide notification number S.O. 1353(E)
dated 21st May 2014. Also refer Notification number S.O. 218(E) dated 22nd January, 2016 for
name approval by CRC in case of application in Form INC-29]

(3) Without prejudice to the provisions of sub-section (2), a company shall not be
registered with a name which contains—
(a) any word or expression which is likely to give the impression that the company is
in any way connected with, or having the patronage of, the Central Government,
any State Government, or any local authority, corporation or body constituted by
the Central Government or any State Government under any law for the time being
in force; or
(b) such word or expression, as may be prescribed,[ Refer rule 8.]
unless the previous approval of the Central Government has been obtained for the use
of any such word or expression.

(4) A person may make an application, in such form and manner and accompanied by
such fee, as may be prescribed, to the Registrar for the reservation of a name set out in
the application as—
(a) the name of the proposed company; or
(b) the name to which the company proposes to change its name.

[Application for reservation of name in e-Form No. INC-1] [Refer Circular 11/2014 dated 12 May
2014 and circular 13/2014 dated 23 May 2014. Also refer Notification number S.O. 218(E) dated
22nd January, 2016 for name approval by CRC in case of application in Form INC-1]

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 S. 4 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(5) 39[(i) Upon receipt of an application under sub-section (4), the Registrar may, on the
basis of information and documents furnished along with the application, reserve the
name for a period of twenty days from the date of approval or such other period as may
be prescribed:
Provided that in case of an application for reservation of name or for change of its name
by an existing company, the Registrar may reserve the name for a period of sixty days
from the date of approval.]

[Refer Circular 31/2014 dated 19 July 2014. Also refer Notification number S.O. 218(E) dated 22nd
January, 2016 for name approval by CRC in case of application in Form INC-1]
(ii) Where after reservation of name under clause (i), it is found that name was applied
by furnishing wrong or incorrect information, then,—
(a) if the company has not been incorporated, the reserved name shall be cancelled
and the person making application under sub-section (4) shall be liable to a penalty
which may extend to one lakh rupees;
(b) if the company has been incorporated, the Registrar may, after giving the company
an opportunity of being heard—
(i) either direct the company to change its name within a period of three months,
after passing an ordinary resolution;
(ii) take action for striking off the name of the company from the register of
companies; or
(iii) make a petition for winding up of the company.

(6) The memorandum of a company shall be in respective forms specified in Tables A, B,

C, D and E in Schedule I as may be applicable to such company.

(7) Any provision in the memorandum or articles, in the case of a company limited by
guarantee and not having a share capital, purporting to give any person a right to
participate in the divisible profits of the company otherwise than as a member, shall be
void.

39
Clause (i) of Section 4(5), substituted by Section 4 of the Companies (Amendment) Act 2017 (1 of 2018)
which received assent of the President of India on 03rd January 2018. It is brought to force w.e.f. 26th
January 2018 vide notification number S.O. 351(E) dated 23rd January 2018. Prior to substitution, it read
as “(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information
and documents furnished along with the application, reserve the name for a period of sixty days from the
date of the application.”.

Page 39
 S. 5 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

5. Articles.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sections 26, 27, 28, 29 and 30 of the Companies Act, 1956]
[Refer Rules 10 and 11 of the Companies (Incorporation) Rules, 2014]
[Form No. MGT-14.]

5. (1) The articles of a company shall contain the regulations for management of the
company.

(2) The articles shall also contain such matters, as may be prescribed:
Provided that nothing prescribed in this sub-section shall be deemed to prevent a
company from including such additional matters in its articles as may be considered
necessary for its management.

(3) The articles may contain provisions for entrenchment to the effect that specified
provisions of the articles may be altered only if conditions or procedures as that are more
restrictive than those applicable in the case of a special resolution, are met or complied
with.

(4) The provisions for entrenchment referred to in sub-section (3) shall only be made
either on formation of a company, or by an amendment in the articles agreed to by all the
members of the company in the case of a private company and by a special resolution in
the case of a public company.

[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(5) Where the articles contain provisions for entrenchment, whether made on formation
or by amendment, the company shall give notice to the Registrar of such provisions in
such form and manner as may be prescribed.

[Refer rule 10. For new company Form No. INC-2; for existing company Form No. MGT-14]

(6) The articles of a company shall be in respective forms specified in Tables F, G, H, I

and J in Schedule I as may be applicable to such company. [Refer rule 11]

(7) A company may adopt all or any of the regulations contained in the model articles
applicable to such company.

(8) In case of any company, which is registered after the commencement of this Act, in
so far as the registered articles of such company do not exclude or modify the regulations
contained in the model articles applicable to such company, those regulations shall, so
far as applicable, be the regulations of that company in the same manner and to the extent
as if they were contained in the duly registered articles of the company.

Page 40
 S. 5 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(9) Nothing in this section shall apply to the articles of a company registered under any
previous company law unless amended under this Act.

[Comment: Effect of sub-section (9) is that existing companies need not alter its articles of association upon
coming into force of the Companies Act, 2013. However, if it amends its articles at any time, then provisions
of Table – F becomes applicable. It is advisable to alter articles of association by existing companies and
adopt suitable provisions of Table F as well as include specific clauses where the Act envisages that ‘unless
articles provides’ etc.]

Page 41
 S. 6 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

6. Act to over-ride memorandum, articles, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.9 of the Companies Act, 1956]

6. Save as otherwise expressly provided in this 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
shall, to the extent to which it is repugnant to the provisions of this Act, become or
be void, as the case may be.

Page 42
 S. 7 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

7. Incorporation of company.

[Except Section 7(7), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Except clauses (c) and (d), Section 7(7), brought to force from 01 June 2016 vide notification number S.O.
1934(E) dated 01st June, 2016.]
[Corresponding Sec.33, sec.34 (1) and sec.35 of the Companies Act, 1956]
[Refer Rules 12, 13, 14, 15(c), 16, 17, and 18 of the Companies (Incorporation) Rules, 2014]
[Forms no. INC-2, INC-7, INC-8, INC-9, INC-10, INC-11, INC-14and Form No. DIR-12.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Registration of companies under section 7 shall be done by Central Registration Office w.e.f. 28 March
2016, vide notification number S.O. 1211(E) dated 23rd March 2016.]

7. (1) There shall be filed with the Registrar within whose jurisdiction the registered office
of a company is proposed to be situated, the following documents and information for
registration, namely:—
(a) the memorandum and articles of the company duly signed by all the subscribers to
the memorandum in such manner as may be prescribed;
(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost
accountant or company secretary in practice, who is engaged in the formation of
the company, and by a person named in the articles as a director, manager or
secretary of the company, that all the requirements of this Act and the rules made
thereunder in respect of registration and matters precedent or incidental thereto
have been complied with;
[Form No. INC-8 and for section 8 company in Form No. INC-14]

40
(c) [a declaration] from each of the subscribers to the memorandum and from
persons named as the first directors, if any, in the articles that he is not convicted
of any offence in connection with the promotion, formation or management of any
company, or that he has not been found guilty of any fraud or misfeasance or of
any breach of duty to any company under this Act or any previous company law
during the preceding five years and that all the documents filed with the Registrar
for registration of the company contain information that is correct and complete and
true to the best of his knowledge and belief; [Form No. INC-9]
(d) the address for correspondence till its registered office is established;
(e) the particulars of name, including surname or family name, residential address,
nationality and such other particulars of every subscriber to the memorandum along

40
Substituted for words ‘an affidavit’ in clause (c) of sub-section (1) of section 7 of the principal Act by
section 5 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of
India on 03rd January 2018. It is brought to force from 27th July 2018 vide notification no. S.O. 3684(E) of
the same date.

Page 43
 S. 7 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

with proof of identity, as may be prescribed, and in the case of a subscriber being
a body corporate, such particulars as may be prescribed;
(f) the particulars of the persons mentioned in the articles as the first directors of the
company, their names, including surnames or family names, the Director
Identification Number, residential address, nationality and such other particulars
including proof of identity as may be prescribed; and [Form No.INC-10]
(g) the particulars of the interests of the persons mentioned in the articles as the first
directors of the company in other firms or bodies corporate along with their consent
to act as directors of the company in such form and manner as may be prescribed.
[Form No. DIR-12]

(2) The Registrar on the basis of documents and information filed under sub-section (1)
shall register all the documents and information referred to in that sub-section in the
register and issue a certificate of incorporation in the prescribed form to the effect that the
proposed company is incorporated under this Act. [Form No. INC-11]

(3) On and from the date mentioned in the certificate of incorporation issued under sub-
section (2), the Registrar shall allot to the company a corporate identity number, which
shall be a distinct identity for the company and which shall also be included in the
certificate.

(4) The company shall maintain and preserve at its registered office copies of all
documents and information as originally filed under sub-section (1) till its dissolution under
this Act.

(5) If any person furnishes any false or incorrect particulars of any information or
suppresses any material information, of which he is aware in any of the documents filed
with the Registrar in relation to the registration of a company, he shall be liable for action
under section 447.

(6) Without prejudice to the provisions of sub-section (5) where, at any time after the
incorporation of a company, it is proved that the company has been got incorporated by
furnishing any false or incorrect information or representation or by suppressing any
material fact or information in any of the documents or declaration filed or made for
incorporating such company, or by any fraudulent action, the promoters, the persons
named as the first directors of the company and the persons making declaration under
clause (b) of sub-section (1) shall each be liable for action under section 447.
41
(7) Without prejudice to the provisions of sub-section (6), where a company has been
got incorporated by furnishing any false or incorrect information or representation or by
suppressing any material fact or information in any of the documents or declaration filed

41
Except clauses (c) and (d), Section 7(7), brought to force from 01 June 2016 vide notification number
S.O. 1934(E) dated 01st June, 2016.

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 S. 7 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

or made for incorporating such company or by any fraudulent action, the Tribunal may,
on an application made to it, on being satisfied that the situation so warrants,—
(a) pass such orders, as it may think fit, for regulation of the management of the
company including changes, if any, in its memorandum and articles, in public
interest or in the interest of the company and its members and creditors; or
(b) direct that liability of the members shall be unlimited; or
42
(c) direct removal of the name of the company from the register of companies; or
43
(d) pass an order for the winding up of the company; or
(e) pass such other orders as it may deem fit:
Provided that before making any order under this sub-section,—
(i) the company shall be given a reasonable opportunity of being heard in the
matter; and
(ii) the Tribunal shall take into consideration the transactions entered into by the
company, including the obligations, if any, contracted or payment of any liability.

42
Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.

43
Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.

Page 45
 S. 8 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

8. Formation of companies with charitable objects, etc.

[Except section 8(9), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Section 8(9) brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th
December, 2016.]
[Corresponding Sec.25 of the Companies Act, 1956]
[See proviso to section 2(85)]
[Refer Rules 3(5), 19, 20, 21, 22 and 23 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-12, INC-13, INC-14, INC-15, INC-16, INC-17, INC-18.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Registration of companies under section 8 shall be done by Central Registration Office w.e.f. 28 March
2016, vide notification number S.O. 1211(E) dated 23rd March 2016.]

8. (1) Where it is proved to the satisfaction of the Central Government that a person or an
association of persons proposed to be registered under this Act as a limited company—
(a) has in its objects the promotion of commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of environment or any such
other object;
(b) intends to apply its profits, if any, or other income in promoting its objects; and
(c) intends to prohibit the payment of any dividend to its members,
the Central Government may, by licence issued in such manner as may be prescribed,
and on such conditions as it deems fit, allow that person or association of persons to be
registered as a limited company under this section without the addition to its name of the
word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the
Registrar shall, on application, in the prescribed form, register such person or association
of persons as a company under this section.
[Application in Form No. INC-12; Memorandum in Form No. INC-13; Form No. INC-14 by professional;
Form No. INC-15 by applicant] [Licence in Form No. INC-16]
[Power delegated to Registrar of Companies. Refer Annexure N9.]

(2) The company registered under this section shall enjoy all the privileges and be subject
to all the obligations of limited companies.

(3) A firm may be a member of the company registered under this section.

(4) (i) A company registered under this section shall not alter the provisions of its
memorandum or articles except with the previous approval of the Central Government.
[Power delegated to Regional Directors at Mumbai, Kolkata, Chennai, Noida, New Delhi, Ahmedabad,
Hyderabad and Shillong for alteration of memorandum in case of conversion into another kind of company.
Refer notification number S.O. 1352(E) dated 21st May, 2014 and notification number S.O. 4090(E) dated
19th December, 2016] [Power delegated to Registrar of Companies - except for alteration of memorandum
in case of conversion into another kind of company. Refer Annexure N9.]
(ii) A company registered under this section may convert itself into company of any
other kind only after complying with such conditions as may be prescribed.

Page 46
 S. 8 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

[Form No. INC-18, Form No. INC-20; within a week of application give advertisement in Form No.
INC-26-rule 20]

(5) Where it is proved to the satisfaction of the Central Government that a limited company
registered under this Act or under any previous company law has been formed with any
of the objects specified in clause (a) of sub-section (1) and with the restrictions and
prohibitions as mentioned respectively in clauses (b) and (c) of that sub-section, it may,
by licence, allow the company to be registered under this section subject to such
conditions as the Central Government deems fit and to change its name by omitting the
word “Limited”, or as the case may be, the words “Private Limited” from its name and
thereupon the Registrar shall, on application, in the prescribed form, register such
company under this section and all the provisions of this section shall apply to that
company.

[Form No. INC-12; advertisement in Form No. INC-19] [Licence in Form No. INC-17] [Power delegated to
Registrar of Companies. Refer Annexure N9.]

(6) The Central Government may, by order, revoke the licence granted to a company
registered under this section if the company contravenes any of the requirements of this
section or any of the conditions subject to which a licence is issued or the affairs of the
company are conducted fraudulently or in a manner violative of the objects of the
company or prejudicial to public interest, and without prejudice to any other action against
the company under this Act, direct the company to convert its status and change its name
to add the word “Limited” or the words “Private Limited”, as the case may be, to its name
and thereupon the Registrar shall, without prejudice to any action that may be taken under
sub-section (7), on application, in the prescribed form, register the company accordingly:
[Power delegated to Regional Directors. Refer notification number S.O. 1352(E) dated 21st May, 2014 and
notification number S.O. 4090(E) dated 19th December, 2016].

Provided that no such order shall be made unless the company is given a reasonable
opportunity of being heard:

Provided further that a copy of every such order shall be given to the Registrar.

(7) Where a licence is revoked under sub-section (6), the Central Government may, by
order, if it is satisfied that it is essential in the public interest, direct that the company be
wound up under this Act or amalgamated with another company registered under this
section:

Provided that no such order shall be made unless the company is given a
reasonable opportunity of being heard.

(8) Where a licence is revoked under sub-section (6) and where the Central Government
is satisfied that it is essential in the public interest that the company registered under this
section should be amalgamated with another company registered under this section and

Page 47
 S. 8 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

having similar objects, then, notwithstanding anything to the contrary contained in this
Act, the Central Government may, by order, provide for such amalgamation to form a
single company with such constitution, properties, powers, rights, interest, authorities and
privileges and with such liabilities, duties and obligations as may be specified in the order.
44
(9) If on the winding up or dissolution of a company registered under this section, there
remains, after the satisfaction of its debts and liabilities, any asset, they may be
transferred to another company registered under this section and having similar objects,
subject to such conditions as the Tribunal may impose, or may be sold and proceeds
thereof credited to 45[Insolvency and Bankruptcy Fund formed under section 224 of the
Insolvency and Bankruptcy Code, 2016].

(10) A company registered under this section shall amalgamate only with another
company registered under this section and having similar objects.

(11) If a company makes any default in complying with any of the requirements laid down
in this section, the company shall, without prejudice to any other action under the
provisions of this section, be punishable with fine which shall not be less than ten lakh
rupees but which may extend to one crore rupees and the directors and every officer of
the company who is in default shall be punishable with imprisonment for a term which
may extend to three years or with fine which shall not be less than twenty-five thousand
rupees but which may extend to twenty-five lakh rupees, or with both:

Provided that when it is proved that the affairs of the company were conducted
fraudulently, every officer in default shall be liable for action under section 447.

44
Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.

45
Substituted for the words ‘the Rehabilitation and Insolvency Fund formed under section 269’ by Section
255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (2) of the Eleventh Schedule thereto,
with effect from 15th November, 2016 vide notification number S.O 3453(E) dated 15th November, 2016.

Page 48
 S. 9 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

9. Effect of registration.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.34 (2) of the Companies Act, 1956]
[Refer regulation (79) of Table F.II in Schedule I to the Act]

9. From the date of incorporation mentioned in the certificate of incorporation, such

subscribers to the memorandum and all other persons, as may, from time to time, become
members of the company, shall be a body corporate by the name contained in the
memorandum, capable of exercising all the functions of an incorporated company under
this Act and having perpetual succession [omitted]46 with power to acquire, hold and
dispose of property, both movable and immovable, tangible and intangible, to contract
and to sue and be sued, by the said name.

46
Words “and a common seal” omitted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on
26th May, 2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

Page 49
 S. 10 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

10. Effect of memorandum and articles.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.36 of the Companies Act, 1956]

10. (1) Subject to the provisions of this Act, the memorandum and articles shall, when
registered, bind the company and the members thereof to the same extent as if they
respectively had been signed by the company and by each member, and contained
covenants on its and his part to observe all the provisions of the memorandum and of the
articles.

(2) All monies payable by any member to the company under the memorandum or articles
shall be a debt due from him to the company.

Page 50
 S. 10A - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

47
[10A. Commencement of business, etc.

[Corresponding Sec.149 of the Companies Act, 1956]

10A. (1) A company incorporated after the commencement of the Companies

(Amendment) Ordinance, 2018 and having a share capital shall not commence any
business or exercise any borrowing powers unless-
(a) a declaration is filed by a director within a period of one hundred and eighty
days of the date of incorporation of the company in such form and verified in such manner
as may be prescribed, with the Registrar that every subscriber to the memorandum has
paid the value of the shares agreed to be taken by him on the date of making of such
declaration; and
(b) the company has filed with the Registrar a verification of its registered office as
provided in sub-section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the
company shall be liable to a penalty of fifty thousand rupees and every officer who is in
default shall be liable to a penalty of one thousand rupees for each day during which such
default continues but not exceeding an amount of one lakh rupees.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-
section (1) within a period of one hundred and eighty days of the date of incorporation of
the company and the Registrar has reasonable cause to believe that the company is not
carrying on any business or operations, he may, without prejudice to the provisions of
sub-section (2), initiate action for the removal of the name of the company from the
register of companies under Chapter XVIII.]

47
Section 10A is inserted by Section 3 of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to
have came into force from 02nd November 2018.

Page 51
 S. 11 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

48
[11. Commencement of business, etc. -Omitted

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.149 of the Companies Act, 1956]
[Refer Rule 24 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-21.]
[It may be noted that no Certificate of Commencement of Business is issued and only filing is taken on
record.]

11. (1) A company having a share capital shall not commence any business or exercise any borrowing
powers unless—
(a) a declaration is filed by a director in such form and verified in such manner as may be prescribed,
with the Registrar that every subscriber to the memorandum has paid the value of the shares
agreed to be taken by him and the paid-up share capital of the company is not less than five lakh
rupees in case of a public company and not less than one lakh rupees in case of a private
company on the date of making of this declaration; and [Form No. INC-21]
(b) the company has filed with the Registrar a verification of its registered office as provided in sub-
section (2) of section 12. [Form No. INC-22]
(2) If any default is made in complying with the requirements of this section, the company shall be liable
to a penalty which may extend to five thousand rupees and every officer who is in default shall be
punishable with fine which may extend to one thousand rupees for every day during which the default
continues.
(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a
period of one hundred and eighty days of the date of incorporation of the company and the Registrar has
reasonable cause to believe that the company is not carrying on any business or operations, he may,
without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the
company from the register of companies under Chapter XVIII.]

48
Section 11 omitted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E).

Page 52
 S. 12 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

12. Registered office of company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.17A, sec. 146 and sec. 147 of the Companies Act, 1956]
[Refer Rules 25, 26, 27 and 28 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-22, INC-23, Form No. MGT-14.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

12. (1) A company shall, 49[within thirty day of its incorporation] and at all times thereafter,
have a registered office capable of receiving and acknowledging all communications and
notices as may be addressed to it.
50
[Provided that a Specified IFSC public company shall have its registered office at the
International Financial Services Centre located in the approved multi services Special
Economic Zone set-up under the Special Economic Zones Act, 2005 read with the Special
Economic Zones Rules, 2006, where it is licensed to operate, at all times.]
51
[Provided that a Specified IFSC private company shall have its registered office at the
International Financial Services Centre located in the approved multi services Special
Economic Zone set-up under the Special Economic Zones Act, 2005 read with the Special
Economic Zones Rules, 2006, where it is licensed to operate, at all times.]

(2) The company shall furnish to the Registrar verification of its registered office within a
period of thirty days of its incorporation in such manner as may be prescribed.

[Form No. INC-22] [In case of an unlisted public company which is licensed to operate by RBI or SEBI or
IRDAI from IFSC located in approved multi services SEZ, verification to be submitted within sixty days as
per Notification number G.S.R. 8(E) dated 04th January 2017] [In case of a private company which is

49
Substituted for words ‘on and from the fifteenth day of its incorporation’ in sub-section (1) of section 12
of the principal Act by section 6(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 27th July 2018 vide
notification no. S.O. 3684(E) of the same date.

50
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
an unlisted public company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in
approved multi services SEZ.

51
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 whereby provisions of the
Companies Act, 2013 shall not apply or shall apply with such exceptions, modifications and adaptations to
a private company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved
multi services SEZ.

Page 53
 S. 12 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved multi services SEZ, verification
to be submitted within sixty days as per Notification number G.S.R. 9(E) dated 04th January 2017]

(3) Every company shall—

(a) paint or affix its name, and the address of its registered office, and keep the same
painted or affixed, on the outside of every office or place in which its business is
carried on, in a conspicuous position, in legible letters, and if the characters
employed therefor are not those of the language or of one of the languages in
general use in that locality, also in the characters of that language or of one of those
languages;
(b) [have its name engraved in legible characters on its seal, if any]52;
(c) get its name, address of its registered office and the Corporate Identity Number
along with telephone number, fax number, if any, e-mail and website addresses, if
any, printed in all its business letters, billheads, letter papers and in all its notices
and other official publications; and
(d) have its name printed on hundies, promissory notes, bills of exchange and such
other documents as may be prescribed:

Provided that where a company has changed its name or names during the last two
years, it shall paint or affix or print, as the case may be, along with its name, the former
name or names so changed during the last two years as required under clauses (a) and
(c): [change of name]

Provided further that the words ‘‘One Person Company’’ shall be mentioned in
brackets below the name of such company, wherever its name is printed, affixed or
engraved.

(4) Notice of every change of the situation of the registered office, verified in the manner
prescribed, after the date of incorporation of the company, shall be given to the Registrar
53
[within thirty days] of the change, who shall record the same.
[Shifting of registered office. Form No. INC-22] [In case of an unlisted public company which is licensed to
operate by RBI or SEBI or IRDAI from IFSC located in approved multi services SEZ, notice shall be given
within sixty days as per Notification number G.S.R. 8(E) dated 04th January 2017] [In case of a private
company which is licensed to operate by RBI or SEBI or IRDAI from IFSC located in approved multi services
SEZ, notice shall be given within sixty days as per Notification number G.S.R. 9(E) dated 04th January
2017]

52
Substituted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with
effect from 29th May 2015 vide notification number S.O. 1440(E). Prior to substitution it read “have its name
engraved in legible characters on its seal”.

53
Substituted for words ‘within fifteen days’ in sub-section (1) of section 12 of the principal Act by section
6(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 27th July 2018 vide notification no. S.O. 3684(E) of the
same date.

Page 54
 S. 12 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(5) Except on the authority of a special resolution passed by a company, the registered
office of the company shall not be changed,—
(a) in the case of an existing company, outside the local limits of any city, town or
village where such office is situated at the commencement of this Act or where it
may be situated later by virtue of a special resolution passed by the company; and
(b) in the case of any other company, outside the local limits of any city, town or village
where such office is first situated or where it may be situated later by virtue of a
special resolution passed by the company:
Provided that no company shall change the place of its registered office from the
jurisdiction of one Registrar to the jurisdiction of another Registrar within the same State
unless such change is confirmed by the Regional Director on an application made in this
behalf by the company in the prescribed manner. [Form No. INC-23; Form No. MGT-14]
[Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public company,
sub-section (5) shall read as under:
(5) Except on the authority of a resolution passed by the Board of Directors, the registered
office of the Specified IFSC public company shall not be changed from one place to
another within the International Financial Services Centre:
Provided that the Specified IFSC public company shall not change the place of its
registered office to any other place outside the said International Financial Services
Centre.]

[Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company, sub-section (5) shall read as under:
(5) Except on the authority of a resolution passed by the Board of Directors, the registered
office of the Specified IFSC private company shall not be changed from one place to
another within the International Financial Services Centre:
Provided that the Specified IFSC private company shall not change the place of its
registered office to any other place outside the said International Financial Services
Centre.]

(6) The confirmation referred to in sub-section (5) shall be communicated within a period
of thirty days from the date of receipt of application by the Regional Director to the
company and the company shall file the confirmation with the Registrar within a period of
sixty days of the date of confirmation who shall register the same and certify the
registration within a period of thirty days from the date of filing of such confirmation.

(7) The certificate referred to in sub-section (6) shall be conclusive evidence that all the
requirements of this Act with respect to change of registered office in pursuance of sub-
section (5) have been complied with and the change shall take effect from the date of the
certificate.

(8) If any default is made in complying with the requirements of this section, the company
and every officer who is in default shall be liable to a penalty of one thousand rupees for
every day during which the default continues but not exceeding one lakh rupees.

Page 55
 S. 12 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

54
[(9) If the Registrar has reasonable cause to believe that the company is not carrying
on any business or operations, he may cause a physical verification of the registered
office of the company in such manner as may be prescribed and if any default is found to
be made in complying with the requirements of sub-section (1), he may without prejudice
to the provisions of sub-section (8), initiate action for the removal of the name of the
company from the register of companies under Chapter XVIII.]

54
Sub-section (9) to Section 12 inserted by Section 4 of the Companies (Amendment) Act, 2019 (22 of
2019) deemed to have came into force from 02nd November 2018.

Page 56
 S. 13 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

13. Alteration of memorandum.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sections 16, 17, 18, 19, 21 and 23 of the Companies Act, 1956]
[Refer Rules 29, 30, 31 and 32 of the Companies (Incorporation) Rules, 2014]
[Form No. INC-23, Form No. INC-24, Form No. MGT-14.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

13. (1) Save as provided in section 61, a company may, by a special resolution and after
complying with the procedure specified in this section, alter the provisions of its
memorandum. [Form No. MGT-14]

(2) Any change in the name of a company shall be subject to the provisions of sub-
sections (2) and (3) of section 4 and shall not have effect except with the approval of the
Central Government in writing:
[Change of Name. Form No. INC-24] [Power delegated to Registrar of Companies. Refer Annexure N9.]

Provided that no such approval shall be necessary where the only change in the
name of the company is the deletion therefrom, or addition thereto, of the word “Private”,
consequent on the conversion of any one class of companies to another class in
accordance with the provisions of this Act.

(3) When any change in the name of a company is made under sub-section (2), the
Registrar shall enter the new name in the register of companies in place of the old name
and issue a fresh certificate of incorporation with the new name and the change in the
name shall be complete and effective only on the issue of such a certificate.
[Fresh Certificate of Incorporation in Form No. INC-25]

(4) The alteration of the memorandum relating to the place of the registered office from
one State to another shall not have any effect unless it is approved by the Central
Government on an application in such form and manner as may be prescribed.
[Per rule 30, application in Form No. INC-23, and give an advertisement in Form No. INC-26 14 days before
hearing]. [Power delegated to Regional Directors. Refer notification number S.O. 1352(E) dated 21st May,
2014 and notification number S.O. 4090(E) dated 19th December, 2016].

(5) The Central Government shall dispose of the application under sub-section (4) within
a period of sixty days and before passing its order may satisfy itself that the alteration has
the consent of the creditors, debenture-holders and other persons concerned with the
company or that the sufficient provision has been made by the company either for the
due discharge of all its debts and obligations or that adequate security has been provided
for such discharge.

[Power delegated to Regional Directors. Refer notification number S.O. 1352(E) dated 21st May, 2014 and
notification number S.O. 4090(E) dated 19th December, 2016]

Page 57
 S. 13 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

(6) Save as provided in section 64, a company shall, in relation to any alteration of its
memorandum, file with the Registrar—
(a) the special resolution passed by the company under sub-section (1);
(b) the approval of the Central Government under sub-section (2), if the alteration
involves any change in the name of the company.

(7) Where an alteration of the memorandum results in the transfer of the registered office
of a company from one State to another, a certified copy of the order of the Central
Government approving the alteration shall be filed by the company with the Registrar of
each of the States within such time and in such manner as may be prescribed, who shall
register the same, and the Registrar of the State where the registered office is being
shifted to, shall issue a fresh certificate of incorporation indicating the alteration.
[Per rule 31, file certified copy of the order in Form No. INC-28]

(8) A company, which has raised money from public through prospectus and still has any
unutilised amount out of the money so raised, shall not change its objects for which it
raised the money through prospectus unless a special resolution is passed by the
company and—
(i) the details, as may be prescribed, in respect of such resolution shall also be
published in the newspapers (one in English and one in vernacular language) which
is in circulation at the place where the registered office of the company is situated
and shall also be placed on the website of the company, if any, indicating therein
the justification for such change; [See rule 32]
(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters
and shareholders having control in accordance with regulations to be specified by
the Securities and Exchange Board.
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(9) The Registrar shall register any alteration of the memorandum with respect to the
objects of the company and certify the registration within a period of thirty days from the
date of filing of the special resolution in accordance with clause (a) of sub-section (6) of
this section.

(10) No alteration made under this section shall have any effect until it has been registered
in accordance with the provisions of this section.

(11) Any alteration of the memorandum, in the case of a company limited by guarantee
and not having a share capital, purporting to give any person a right to participate in the
divisible profits of the company otherwise than as a member, shall be void.

Page 58
 S. 14 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

14. Alteration of articles.

[Except second proviso to Section 14(1) and section 14(2), brought to force from 01 April 2014 vide
notification number S.O. 902(E) dated 26th March, 2014.]
[Second proviso to Section 14(1) and section 14(2), brought to force from 01 June 2016 vide notification
number S.O. 1934(E) dated 01st June, 2016]
[Corresponding Sec.31 of the Companies Act, 1956]
[Refer Rule 33 of the Companies (Incorporation) Rules, 2014]
[Form No. MGT-14, Form No. INC-27.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

14. (1) Subject to the provisions of this Act and the conditions contained in its
memorandum, if any, a company may, by a special resolution, alter its articles including
alterations having the effect of conversion of—
(a) a private company into a public company; or
(b) a public company into a private company:

Provided that where a company being a private company alters its articles in such a
manner that they no longer include the restrictions and limitations which are required to
be included in the articles of a private company under this Act, the company shall, as from
the date of such alteration, cease to be a private company:
55
[Provided further that any alteration having the effect of conversion of a public
company into a private company shall not be valid unless it is proved by an order of the
56
Central Government on an application made in such form and manner as may be
prescribed:
Provided also that any application pending before the Tribunal, as on the date of
commencement of the Companies (Amendment) Ordinance, 2018, shall be disposed of
by the Tribunal in accordance with the provisions applicable to it before such
commencement.]

55
Substituted the second proviso to sub-section (1) to Section 14 by Section 5(i) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “Provided further that any alteration having the effect of conversion of a public
company into a private company shall not take effect except with the approval of the Tribunal which shall
make such order as it may deem fit. [This proviso w.e.f. 01 June 2016] [Refer Circular 18/2014 dated 11
June 2014]”.

56
The Central Government (MCA) has delegated its power to the Regional Directors at Mumbai, Kolkata,
Chennai, New Delhi, Ahmedabad, Hyderabad and Shillong, vide notification number S.O. 6225(E) dated
18th December 2018. This was done as the Companies (Amendment) Ordinance, 2018 (9 of 2018) was
promulgated. However it lapsed and the Companies (Amendment) Ordinance, 2019 (3 of 2019) is
promulgated on 12th Januar 2019.

Page 59
 S. 14 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(2) Every alteration of the articles under this section and a copy of the order of the
57
[Central Government] approving the alteration as per sub-section (1) shall be filed with
the Registrar, together with a printed copy of the altered articles, within a period of fifteen
days in such manner as may be prescribed, who shall register the same.
[Section 14(2) w.e.f. 01 June 2016] [Refer Circular 18/2014 dated 11 June 2014]

(3) Any alteration of the articles registered under sub-section (2) shall, subject to the
provisions of this Act, be valid as if it were originally in the articles.

57
Substituted for the word ‘Tribunal’ under sub-section (2) to Section 14 by Section 5(ii) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.. Prior to
substitution, it read as “Provided further that any alteration having the effect of conversion of a public
company into a private company shall not take effect except with the approval of the Tribunal which shall
make such order as it may deem fit. [This proviso w.e.f. 01 June 2016] [Refer Circular 18/2014 dated 11
June 2014]”.

Page 60
 S. 15 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

15. Alteration of memorandum or articles to be noted in every copy.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.40 of the Companies Act, 1956]

15. (1) Every alteration made in the memorandum or articles of a company shall be noted
in every copy of the memorandum or articles, as the case may be.

(2) If a company makes any default in complying with the provisions of sub-section (1),
the company and every officer who is in default shall be liable to a penalty of one thousand
rupees for every copy of the memorandum or articles issued without such alteration.

Page 61
 S. 16 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

16. Rectification of name of company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.22 of the Companies Act, 1956]
[Power under this section is delegated to Regional Directors. Refer notification number S.O. 1352(E) dated
21st May, 2014 and notification number S.O. 4090(E) dated 19th December, 2016]
[It is clarified that applications that were rejected by Regional Directors under Section 22(1) (ii) (b) of the
Companies Act, 1956, on the ground that such applications were made after the requisite period of twelve
months specified therein, cannot apply afresh under Section 16 (1)(a) of the Companies Act, 2013, as the
extinguished limitation cannot be considered to be revived even if no limitation period has been
prescribed/laid down in the said section. General circular 04/2017 dated 16 May 2017]

16. (1) If, through inadvertence or otherwise, a company on its first registration or on its
registration by a new name, is registered by a name which,—
(a) in the opinion of the Central Government, is identical with or too nearly resembles
the name by which a company in existence had been previously registered,
whether under this Act or any previous company law, it may direct the company to
change its name and the company shall change its name or new name, as the case
may be, within a period of three months from the issue of such direction, after
adopting an ordinary resolution for the purpose;
(b) on an application by a registered proprietor of a trade mark that the name is
identical with or too nearly resembles to a registered trade mark of such proprietor
under the Trade Marks Act, 1999, made to the Central Government within three
years of incorporation or registration or change of name of the company, whether
under this Act or any previous company law, in the opinion of the Central
Government, is identical with or too nearly resembles to an existing trade mark, it
may direct the company to change its name and the company shall change its
name or new name, as the case may be, within a period of six months from the
issue of such direction, after adopting an ordinary resolution for the purpose.

(2) Where a company changes its name or obtains a new name under sub-section (1), it
shall within a period of fifteen days from the date of such change, give notice of the
change to the Registrar along with the order of the Central Government, who shall carry
out necessary changes in the certificate of incorporation and the memorandum.

(3) If a company makes default in complying with any direction given under sub-section
(1), the company shall be punishable with fine of one thousand rupees for every day
during which the default continues and every officer who is in default shall be punishable
with fine which shall not be less than five thousand rupees but which may extend to one
lakh rupees.

Page 62
 S. 17 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

17. Copies of memorandum, articles, etc., to be given to members.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.39 of the Companies Act, 1956]
[Refer Rule 34 of the Companies (Incorporation) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]

17. (1) A company shall, on being so requested by a member, send to him within seven
days of the request and subject to the payment of such fees as may be prescribed, a copy
of each of the following documents, namely:—
(a) the memorandum;
(b) the articles; and
(c) every agreement and every resolution referred to in sub-section (1) of section 117,
if and in so far as they have not been embodied in the memorandum or articles.

(2) If a company makes any default in complying with the provisions of this section, the
company and every officer of the company who is in default shall be liable for each default,
to a penalty of one thousand rupees for each day during which such default continues or
one lakh rupees, whichever is less.

Page 63
 S. 18 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

18. Conversion of companies already registered.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.32 of the Companies Act, 1956]
[Form No. INC-5, Form No. INC-6, Refer Rules 6, 7, 21 and 22 of the Companies (Incorporation) Rules,
2014]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

18. (1) A company of any class registered under this Act may convert itself as a company
of other class under this Act by alteration of memorandum and articles of the company in
accordance with the provisions of this Chapter.

(2) Where the conversion is required to be done under this section, the Registrar shall on
an application made by the company, after satisfying himself that the provisions of this
Chapter applicable for registration of companies have been complied with, close the
former registration of the company and after registering the documents referred to in sub-
section (1), issue a certificate of incorporation in the same manner as its first registration.

(3) The registration of a company under this section shall not affect any debts, liabilities,
obligations or contracts incurred or entered into, by or on behalf of the company before
conversion and such debts, liabilities, obligations and contracts may be enforced in the
manner as if such registration had not been done.

Page 64
 S. 19 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

19. Subsidiary company not to hold shares in its holding company.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.42 of the Companies Act, 1956]

19. (1) No company shall, either by itself or through its nominees, hold any shares in its
holding company and no holding company shall allot or transfer its shares to any of its
subsidiary companies and any such allotment or transfer of shares of a company to its
subsidiary company shall be void:
Provided that nothing in this sub-section shall apply to a case—
(a) where the subsidiary company holds such shares as the legal representative
of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it became a
subsidiary company of the holding company:
Provided further that the subsidiary company referred to in the preceding proviso
shall have a right to vote at a meeting of the holding company only in respect of the shares
held by it as a legal representative or as a trustee, as referred to in clause (a) or clause
(b) of the said proviso.

(2) The reference in this section to the shares of a holding company which is a company
limited by guarantee or an unlimited company, not having a share capital, shall be
construed as a reference to the interest of its members, whatever be the form of interest.

Page 65
 S. 20 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

20. Service of documents.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.51, 52, 53 of the Companies Act, 1956]
[Refer Rule 35 of the Companies (Incorporation) Rules, 2014]

20. (1) A document may be served on a company or an officer thereof by sending it to the
company or the officer at the registered office of the company by registered post or by
speed post or by courier service or by leaving it at its registered office or by means of
such electronic or other mode as may be prescribed:

Provided that where securities are held with a depository, the records of the
beneficial ownership may be served by such depository on the company by means of
electronic or other mode.

(2) Save as provided in this Act or the rules made thereunder for filing of documents with
the Registrar in electronic mode, a document may be served on Registrar or any member
by sending it to him by post or by registered post or by speed post or by courier or by
delivering at his office or address, or by such electronic or other mode as may be
prescribed:

Provided that a member may request for delivery of any document through a
particular mode, for which he shall pay such fees as may be determined by the company
in its annual general meeting.
Explanation.—For the purposes of this section, the term ‘‘courier’’ means a person or
agency which delivers the document and provides proof of its delivery.

[The term ‘courier’ is also defined under Rule 35(5) of the Companies (Incorporation) Rules, 2014.
Considering rule of interpretation, provision of main statute when in conflict with the Rules framed
thereunder, the provision as given in main statute shall survive.]

[For Nidhi Companies, section 20(2) shall apply subject to the modification that in the case of a Nidhi, the
document may be served only on members who hold shares of more than one thousand rupees in face
value or more than one per cent. of the total paid-up share capital of the Nidhis whichever is less.
For other shareholders, document may be served by a public notice in newspaper circulated in the district
where the Registered Office of the Nidhi is situated; and publication of the same on the notice board of the
Nidhi. Refer notification number G.S.R.465(E) dated 05 June, 2015.]

Page 66
 S. 21 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

21. Authentication of documents, proceedings and contracts.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.54 of the Companies Act, 1956]

21. Save as otherwise provided in this Act,—

(a) a document or proceeding requiring authentication by a company; or
(b) contracts made by or on behalf of a company,
may be signed by any key managerial personnel or 58 [an officer or employee of the
company] duly authorised by the Board in this behalf.
[By Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public company, for the
words “an officer” read as “an officer or any other person”].

[By Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private company, for the
words “an officer” read as “an officer or any other person”].

58
Substituted for the words ‘’an officer of the company’ by Section 7 of the Companies (Amendment) Act,
2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to
force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 67
 S. 22 - Chapter II [Ss.3 to 22]

Relevant rules: The Companies (Incorporation) Rules, 2014

22. Execution of bills of exchange, etc.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.47, 48 of the Companies Act, 1956]
[Refer regulation (64) of Table F.II in Schedule I to the Act]

22. (1) A bill of exchange, hundi or promissory note shall be deemed to have been made,
accepted, drawn or endorsed on behalf of a company if made, accepted, drawn, or
endorsed in the name of, or on behalf of or on account of, the company by any person
acting under its authority, express or implied.

(2) A company may, by writing [under its common seal, if any]59, authorise any person,
either generally or in respect of any specified matters, as its attorney to execute other
deeds on its behalf in any place either in or outside India.

[Provided that in case a company does not have a common seal, the authorisation
under this sub-section shall be made by two directors or by a director and the Company
Secretary, wherever the company has appointed a Company Secretary.]60

(3) A deed signed by such an attorney on behalf of the company and under his seal shall
bind the company [omitted]61.

59
for the words “under its common seal”, the words “under its common seal, if any,” substituted by the
Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May
2015 vide notification number S.O. 1440(E).

60
Proviso to Section 22(2) inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on
26th May, 2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

61
the words “and have the effect as if it were made under its common seal” omitted by the Companies
(Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide
notification number S.O. 1440(E).

Page 68
 S. 23 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

CHAPTER III PROSPECTUS AND

ALLOTMENT OF SECURITIES
[Report under section 208 shall be received by the Central Government (MCA) for violation of offences
under Chapter III, IV, section 127, 177 and 178 of the Act and for other provisions report shall be received by
the Regional Director if action for violation of the Act is imprisonment of less than two years - vide notification
number S.O.3557(E) dated 31st December 2015.]

PART I.—Public offer

23. Public offer and private placement.

[Except Section 23(1) (b) and Section 23(2), brought to force from 12th September, 2013 vide notification
number S.O. 2754(E) dated 12th September, 2013.]
[Section 23(1) (b) and Section 23(2) brought to force from 01 April 2014 vide notification number S.O.
902(E) dated 26th March, 2014.]
[Corresponding Sec.67 of the Companies Act, 1956]
[Refer regulation (1) of Table F.II in Schedule I to the Act]

23. (1) A public company may issue securities—

(a) to public through prospectus (herein referred to as "public offer") by complying with
the provisions of this Part; or
(b) through private placement by complying with the provisions of Part II of this
Chapter; or [Sec.23 (1) (b) w.e.f. 01 April 2014]
(c) through a rights issue or a bonus issue in accordance with the provisions of this
Act and in case of a listed company or a company which intends to get its securities
listed also with the provisions of the Securities and Exchange Board of India Act,
1992 (15 of 1992) and the rules and regulations made thereunder.

(2) A private company may issue securities—

(a) by way of rights issue or bonus issue in accordance with the provisions of this
Act; or
(b) through private placement by complying with the provisions of Part II of this
Chapter. [Sec.23 (2) w.e.f. 01 April 2014]
Explanation.—For the purposes of this Chapter, "public offer" includes initial public offer
or further public offer of securities to the public by a company, or an offer for sale of
securities to the public by an existing shareholder, through issue of a prospectus.

[Comments: Offer for sale is covered under section 28 and in some cases by section 25; Rights issue and
preferential issue is covered by section 62 and bonus issue is covered by section 63. For every allotment
of securities, file Return of allotment in Form PAS-3 under section 39. Also note that section 19 is relevant.]

[Issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds (FCBs) by Indian
companies is regulated by the Ministry of Finance's regulations contained in Issue of Foreign Currency
Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993

Page 69
 S. 23 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(Scheme) and Reserve Bank of India through its various directions/regulations. It is, accordingly, clarified
that unless otherwise provided in the said Scheme or the directions/regulations issued by Reserve Bank of
India, provisions of Chapter III of the Act shall not apply to an issue of a FCCB or FCB made exclusively to
persons resident outside India in accordance with the above mentioned regulations. See Circular 43/2014
dated 13th November, 2014.]

Page 70
 S. 24 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

24. Power of Securities and Exchange Board to regulate issue and transfer of
securities, etc.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.55A of the Companies Act, 1956]
[Refer section 23 of this Act]
[Until Tribunal (NCLT) is setup, CLB exercised power under this section. See notification number S.O.
2821(E) dated 20th September 2013 for the Companies (Removal of Difficulties) Order, 2013.
Corresponding amendment made to the CLB Regulations – see here.]

24. (1) The provisions contained in this Chapter, Chapter IV and in section 127 shall,—
(a) in so far as they relate to —
(i) issue and transfer of securities; and
(ii) non-payment of dividend,
by listed companies or those companies which intend to get their securities listed on
any recognised stock exchange in India, except as provided under this Act, be
administered by the Securities and Exchange Board by making regulations in this
behalf;
(b) in any other case, be administered by the Central Government.

Explanation.—For the removal of doubts, it is hereby declared that all powers relating to
all other matters relating to prospectus, return of allotment, redemption of preference
shares and any other matter specifically provided in this Act, shall be exercised by the
Central Government, the Tribunal or the Registrar, as the case may be.

(2) The Securities and Exchange Board shall, in respect of matters specified in sub-
section (1) and the matters delegated to it under proviso to sub-section (1) of section 458,
exercise the powers conferred upon it under sub-sections (1), (2A), (3) and (4) of section
11, sections 11A, 11B and 11D of the Securities and Exchange Board of India Act, 1992
(15 of 1992).

Page 71
 S. 25 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

25. Document containing offer of securities for sale to be deemed prospectus.

[Except Section 25(3), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 25(3) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.64 of the Companies Act, 1956]
[Refer section 23 of this Act]

25. (1) Where a company allots or agrees to allot any securities of the company with a
view to all or any of those securities being offered for sale to the public, any document by
which the offer for sale to the public is made shall, for all purposes, be deemed to be a
prospectus issued by the company; and all enactments and rules of law as to the contents
of prospectus and as to liability in respect of mis-statements, in and omissions from,
prospectus, or otherwise relating to prospectus, shall apply with the modifications
specified in sub-sections (3) and (4) and shall have effect accordingly, as if the securities
had been offered to the public for subscription and as if persons accepting the offer in
respect of any securities were subscribers for those securities, but without prejudice to
the liability, if any, of the persons by whom the offer is made in respect of mis-statements
contained in the document or otherwise in respect thereof.

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that
an allotment of, or an agreement to allot, securities was made with a view to the securities
being offered for sale to the public if it is shown—
(a) that an offer of the securities or of any of them for sale to the public was made
within six months after the allotment or agreement to allot; or
(b) that at the date when the offer was made, the whole consideration to be received
by the company in respect of the securities had not been received by it.

(3) Section 26 as applied by this section shall have effect as if —

(i) it required a prospectus to state in addition to the matters required by that section
to be stated in a prospectus—
(a) the net amount of the consideration received or to be received by the company
in respect of the securities to which the offer relates; and
(b) the time and place at which the contract where under the said securities have
been or are to be allotted may be inspected;
(ii) the persons making the offer were persons named in a prospectus as directors of
a company. [Sec.25 (3) w.e.f. 01 April 2014]

(4) Where a person making an offer to which this section relates is a company or a firm,
it shall be sufficient if the document referred to in sub-section (1) is signed on behalf of
the company or firm by two directors of the company or by not less than one-half of the
partners in the firm, as the case may be.
[Comments: For every allotment of securities, file Return of allotment in Form PAS-3 under section 39.]

Page 72
 S. 26 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

26. Matters to be stated in prospectus.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sections 55, 56, 57, 58, 59, 60 and Schedule II of the Companies Act, 1956]
[Refer section 23 of this Act and Rules 3, 4, 5 and 6 of the Companies (Prospectus and Allotment of
Securities) Rules, 2014]
[Refer SEBI (Issue and of Capital and Disclosure Requirements) Regulations, 2009, inter alia, regulations
2(1) (x), 6, 11, 57 and Schedule VIII]

26. (1) Every prospectus issued by or on behalf of a public company either with reference
to its formation or subsequently, or by or on behalf of any person who is or has been
engaged or interested in the formation of a public company, shall be dated and signed
and shall 62[state such information and set out such reports on financial information as
may be specified by the Securities and Exchange Board in consultation with the Central
Government:
Provided that until the Securities and Exchange Board specifies the information and
reports on financial information under this sub-section, the regulations made by the
Securities and Exchange Board under the Securities and Exchange Board of India Act,
1992, in respect of such financial information or reports on financial information shall
apply.]—
63
[(a), (b) and (d) omitted]

62
Inserted in sub-section (1) of Section 26 of the principal Act by section 8(i) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

63
Clauses (a), (b) and (d) in sub-section (1) of Section 26 of the principal Act omitted by section 8(ii) of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. Omission is brought to force from 07th May 2018 vide notification no. S.O.
1833(E) of the same date. Prior to its omission, it read as “(a) state the following information,
namely:—
(i) names and addresses of the registered office of the company, company secretary, Chief Financial
Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other persons
as may be prescribed;
(ii) dates of the opening and closing of the issue, and declaration about the issue of allotment letters
and refunds within the prescribed time;
(iii) a statement by the Board of Directors about the separate bank account where all monies
received out of the issue are to be transferred and disclosure of details of all monies including
utilised and unutilised monies out of the previous issue in the prescribed manner;
(iv) details about underwriting of the issue;
(v) consent of the directors, auditors, bankers to the issue, expert’s opinion, if any, and of such other
persons, as may be prescribed;
(vi) the authority for the issue and the details of the resolution passed therefor;
(vii) procedure and time schedule for allotment and issue of securities;
(viii) capital structure of the company in the prescribed manner;

Page 73
 S. 26 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(c) make a declaration about the compliance of the provisions of this Act and a
statement to the effect that nothing in the prospectus is contrary to the provisions
of this Act, the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the
Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and
regulations made thereunder; and

(2) Nothing in sub-section (1) shall apply—

(ix) main objects of public offer, terms of the present issue and such other particulars as may be
prescribed;
(x) main objects and present business of the company and its location, schedule of implementation
of the project;
(xi) particulars relating to—
(A) management perception of risk factors specific to the project;
(B) gestation period of the project;
(C) extent of progress made in the project;
(D) deadlines for completion of the project; and
(E) any litigation or legal action pending or taken by a Government Department or a statutory
body during the last five years immediately preceding the year of the issue of prospectus
against the promoter of the company;
(xii) minimum subscription, amount payable by way of premium, issue of shares otherwise than on
cash;
(xiii) details of directors including their appointments and remuneration, and such particulars of the
nature and extent of their interests in the company as may be prescribed; and
(xiv) disclosures in such manner as may be prescribed about sources of promoter’s contribution;
(b) set out the following reports for the purposes of the financial information, namely:—
(i) reports by the auditors of the company with respect to its profits and losses and assets and
liabilities and such other matters as may be prescribed;
(ii) reports relating to profits and losses for each of the five financial years immediately preceding
the financial year of the issue of prospectus including such reports of its subsidiaries and in such
manner as may be prescribed:
Provided that in case of a company with respect to which a period of five years has not
elapsed from the date of incorporation, the prospectus shall set out in such manner as may be
prescribed, the reports relating to profits and losses for each of the financial years immediately
preceding the financial year of the issue of prospectus including such reports of its subsidiaries;
(iii) reports made in the prescribed manner by the auditors upon the profits and losses of the
business of the company for each of the five financial years immediately preceding issue and
assets and liabilities of its business on the last date to which the accounts of the business were
made up, being a date not more than one hundred and eighty days before the issue of the
prospectus:
Provided that in case of a company with respect to which a period of five years has not
elapsed from the date of incorporation, the prospectus shall set out in the prescribed manner,
the reports made by the auditors upon the profits and losses of the business of the company for
all financial years from the date of its incorporation, and assets and liabilities of its business on
the last date before the issue of prospectus; and
(iv) reports about the business or transaction to which the proceeds of the securities are to be
applied directly or indirectly;
(d) state such other matters and set out such other reports, as may be prescribed.”.

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 S. 26 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(a) to the issue to existing members or debenture-holders of a company, of a

prospectus or form of application relating to shares in or debentures of the
company, whether an applicant has a right to renounce the shares or not under
sub-clause (ii) of clause (a) of sub-section (1) of section 62 in favour of any other
person; or
(b) to the issue of a prospectus or form of application relating to shares or debentures
which are, or are to be, in all respects uniform with shares or debentures previously
issued and for the time being dealt in or quoted on a recognised stock exchange.

(3) Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus
or a form of application, whether issued on or with reference to the formation of a company
or subsequently.
Explanation.—The date indicated in the prospectus shall be deemed to be the date of its
publication.

(4) No prospectus shall be issued by or on behalf of a company or in relation to an

intended company unless on or before the date of its publication, there has been delivered
to the Registrar for 64[filing], a copy thereof signed by every person who is named therein
as a director or proposed director of the company or by his duly authorised attorney.

(5) A prospectus issued under sub-section (1) shall not include a statement purporting to
be made by an expert unless the expert is a person who is not, and has not been, engaged
or interested in the formation or promotion or management, of the company and has given
his written consent to the issue of the prospectus and has not withdrawn such consent
before the delivery of a copy of the prospectus to the Registrar for 65 [filing] and a
statement to that effect shall be included in the prospectus.

(6) Every prospectus issued under sub-section (1) shall, on the face of it,—
(a) state that a copy has been delivered for 66[filing] to the Registrar as required under
sub-section (4); and

64
Substituted for the word ‘registration’ in sub-sections (4), (5) and (6) by section 6(i) of the Companies
(Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O.
2947(E) dated 14th August 2019.

65
Substituted for the word ‘registration’ in sub-sections (4), (5) and (6) by section 6(i) of the Companies
(Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O.
2947(E) dated 14th August 2019.

66
Substituted for the word ‘registration’ in sub-sections (4), (5) and (6) by section 6(i) of the Companies
(Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O.
2947(E) dated 14th August 2019.

Page 75
 S. 26 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(b) specify any documents required by this section to be attached to the copy so
delivered or refer to statements included in the prospectus which specify these
documents.
67
[(7) omitted]

(8) No prospectus shall be valid if it is issued more than ninety days after the date on
which a copy thereof is delivered to the Registrar under sub-section (4).

(9) If a prospectus is issued in contravention of the provisions of this section, the company
shall be punishable with fine which shall not be less than fifty thousand rupees but which
may extend to three lakh rupees and every person who is knowingly a party to the issue
of such prospectus shall be punishable with imprisonment for a term which may extend
to three years or with fine which shall not be less than fifty thousand rupees but which
may extend to three lakh rupees, or with both.

67
Omitted sub-section (7) by section 6(ii) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect
from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019. Prior to omission it
read as “(7) The Registrar shall not register a prospectus unless the requirements of this section with
respect to its registration are complied with and the prospectus is accompanied by the consent in writing of
all the persons named in the prospectus.”.

Page 76
 S. 27 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

27. Variation in terms of contract or objects in prospectus.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.61 of the Companies Act, 1956]
[Refer section 23 of this Act and Rule 7 of the Companies (Prospectus and Allotment of Securities) Rules,
2014]
[Form No. MGT-14, Form PAS-1.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

27. (1) A company shall not, at any time, vary the terms of a contract referred to in the
prospectus or objects for which the prospectus was issued, except subject to the approval
of, or except subject to an authority given by the company in general meeting by way of
special resolution:

Provided that the details, as may be prescribed, of the notice in respect of such
resolution to shareholders, shall also be published in the newspapers (one in English and
one in vernacular language) in the city where the registered office of the company is
situated indicating clearly the justification for such variation:
[Advertisement in Form PAS-1]

Provided further that such company shall not use any amount raised by it through
prospectus for buying, trading or otherwise dealing in equity shares of any other listed
company.
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(2) The dissenting shareholders being those shareholders who have not agreed to the
proposal to vary the terms of contracts or objects referred to in the prospectus, shall be
given an exit offer by promoters or controlling shareholders at such exit price, and in such
manner and conditions as may be specified by the Securities and Exchange Board by
making regulations in this behalf.

Page 77
 S. 28 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

28. Offer of sale of shares by certain members of company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer section 23 of this Act and Rule 8 of the Companies (Prospectus and Allotment of Securities) Rules,
2014]
[Offer of sale is treated as ‘further public offer’ and ‘initial public offer’ under Regulation 2(1) (n) and 2(1)
(p), respectively of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009]

28. (1) Where certain members of a company propose, in consultation with the Board of
Directors to offer, in accordance with the provisions of any law for the time being in force,
whole or part of their holding of shares to the public, they may do so in accordance with
such procedure as may be prescribed.

(2) Any document by which the offer of sale to the public is made shall, for all purposes,
be deemed to be a prospectus issued by the company and all laws and rules made
thereunder as to the contents of the prospectus and as to liability in respect of mis-
statements in and omission from prospectus or otherwise relating to prospectus shall
apply as if this is a prospectus issued by the company.

(3) The members, whether individuals or bodies corporate or both, whose shares are
proposed to be offered to the public, shall collectively authorise the company, whose
shares are offered for sale to the public, to take all actions in respect of offer of sale for
and on their behalf and they shall reimburse the company all expenses incurred by it on
this matter.

Page 78
 S. 29 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

29. Public offer of securities to be in dematerialised form.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.68B of the Companies Act, 1956]
[Refer section 23 of this Act and Rule 9 of the Companies (Prospectus and Allotment of Securities) Rules,
2014]

29. (1) Notwithstanding anything contained in any other provisions of this Act,—
(a) every company making public offer; and
(b) such other class or classes of 68[*] companies as may be prescribed,
shall issue the securities only in dematerialised form by complying with the provisions of
the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

[Comments: No class of companies are prescribed. Rule 9 states promoters of public company making
public offer of convertible securities to hold securities in demat form.]

69
[(1A) In case of such class or classes of unlisted companies as may be prescribed, the
securities shall be held or transferred only in dematerialised form in the manner laid down
in the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.]

(2) Any company, other than a company mentioned in sub-section (1), may convert its
securities into dematerialised form or issue its securities in physical form in accordance
with the provisions of this Act or in dematerialised form in accordance with the provisions
of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder.

68
Omitted the word “public” in clause (b) of sub-section (1) by section 7(i) of the Companies (Amendment)
Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th
August 2019.

69
Inserted sub-section (1A) by section 7(ii) of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 79
 S. 30 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

30. Advertisement of prospectus.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.66 of the Companies Act, 1956]
[Refer section 23 of this Act]

30. Where an advertisement of any prospectus of a company is published in any manner,

it shall be necessary to specify therein the contents of its memorandum as regards the
objects, the liability of members and the amount of share capital of the company, and the
names of the signatories to the memorandum and the number of shares subscribed for
by them, and its capital structure.

Page 80
 S. 32 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

31. Shelf prospectus.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.60A of the Companies Act, 1956] [See section 2(70)]
[Refer Rule 10 of the Companies (Prospectus and Allotment of Securities) Rules, 2014]
[Form PAS-2.]
[Refer section 23 of this Act and SEBI (Issue and of Capital and Disclosure Requirements) Regulations,
2009, inter alia, regulations 2(1) (x), 6, 11, 57 and Schedule VIII]

31. (1) Any class or classes of companies, as the Securities and Exchange Board may
provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the
stage of the first offer of securities included therein which shall indicate a period not
exceeding one year as the period of validity of such prospectus which shall commence
from the date of opening of the first offer of securities under that prospectus, and in
respect of a second or subsequent offer of such securities issued during the period of
validity of that prospectus, no further prospectus is required.
[Refer Regulation 6A of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 – as amended
on 31st January 2014]

(2) A company filing a shelf prospectus shall be required to file an information

memorandum containing all material facts relating to new charges created, changes in
the financial position of the company as have occurred between the first offer of securities
or the previous offer of securities and the succeeding offer of securities and such other
changes as may be prescribed, with the Registrar within the prescribed time, prior to the
issue of a second or subsequent offer of securities under the shelf prospectus:
[Format of Information Memorandum in Form PAS-2]

Provided that where a company or any other person has received applications for
the allotment of securities along with advance payments of subscription before the making
of any such change, the company or other person shall intimate the changes to such
applicants and if they express a desire to withdraw their application, the company or other
person shall refund all the monies received as subscription within fifteen days thereof.

(3) Where an information memorandum is filed, every time an offer of securities is made
under sub-section (2), such memorandum together with the shelf prospectus shall be
deemed to be a prospectus.

Explanation.—For the purposes of this section, the expression "shelf prospectus" means
a prospectus in respect of which the securities or class of securities included therein are
issued for subscription in one or more issues over a certain period without the issue of a
further prospectus.

Page 81
 S. 32 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

32. Red herring prospectus.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.60B of the Companies Act, 1956] [See section 2(70)]
[Refer section 23 of this Act and SEBI (Issue and of Capital and Disclosure Requirements) Regulations,
2009, inter alia, regulations 2(1) (x), 6, 11, 51A, 57 and Schedule VIII]

32. (1) A company proposing to make an offer of securities may issue a red herring
prospectus prior to the issue of a prospectus.

(2) A company proposing to issue a red herring prospectus under sub-section (1) shall
file it with the Registrar at least three days prior to the opening of the subscription list and
the offer.

(3) A red herring prospectus shall carry the same obligations as are applicable to a
prospectus and any variation between the red herring prospectus and a prospectus shall
be highlighted as variations in the prospectus. [See sections 26, 27, 29 and 30]

(4) Upon the closing of the offer of securities under this section, the prospectus stating
therein the total capital raised, whether by way of debt or share capital, and the closing
price of the securities and any other details as are not included in the red herring
prospectus shall be filed with the Registrar and the Securities and Exchange Board.

Explanation.—For the purposes of this section, the expression "red herring prospectus"
means a prospectus which does not include complete particulars of the quantum or price
of the securities included therein.

Page 82
 S. 33 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

33. Issue of application forms for securities.

[Except Section 33(3), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 33(3) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.56 (3) of the Companies Act, 1956]
[Refer section 23 of this Act and SEBI (Issue and of Capital and Disclosure Requirements) Regulations,
2009, inter alia, regulations 54, 58 and Schedule VIII]

33. (1) No form of application for the purchase of any of the securities of a company shall
be issued unless such form is accompanied by an abridged prospectus:
Provided that nothing in this sub-section shall apply if it is shown that the form of
application was issued—
(a) in connection with a bona fide invitation to a person to enter into an underwriting
agreement with respect to such securities; or
(b) in relation to securities which were not offered to the public.

(2) A copy of the prospectus shall, on a request being made by any person before the
closing of the subscription list and the offer, be furnished to him.

(3) If a company makes any default in complying with the provisions of this section, it shall
be liable to a penalty of fifty thousand rupees for each default. [Sec.33 (3) w.e.f. 01 April 2014]

Page 83
 S. 34 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

34. Criminal liability for mis-statements in prospectus.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.63 of the Companies Act, 1956]
[Refer section 23 and section 24 of this Act and inter alia Sections 26B and 26E of SEBI Act, 1992]

34. Where a prospectus, issued, circulated or distributed under this Chapter, includes any
statement which is untrue or misleading in form or context in which it is included or where
any inclusion or omission of any matter is likely to mislead, every person who authorises
the issue of such prospectus shall be liable under section 447:
Provided that nothing in this section shall apply to a person if he proves that such
statement or omission was immaterial or that he had reasonable grounds to believe, and
did up to the time of issue of the prospectus believe, that the statement was true or the
inclusion or omission was necessary.

Page 84
 S. 35 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

35. Civil liability for mis-statements in prospectus.

[Except Section 35(1) (e), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 35(1) (e) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.62 of the Companies Act, 1956]

35. (1) Where a person has subscribed for securities of a company acting on any
statement included, or the inclusion or omission of any matter, in the prospectus which is
misleading and has sustained any loss or damage as a consequence thereof, the
company and every person who—
(a) is a director of the company at the time of the issue of the prospectus;
(b) has authorised himself to be named and is named in the prospectus as a director
of the company, or has agreed to become such director, either immediately or after
an interval of time;
(c) is a promoter of the company;
(d) has authorised the issue of the prospectus; and
(e) is an expert referred to in sub-section (5) of section 26, [Sec.35 (1) (e) w.e.f. 01 April
2014]
shall, without prejudice to any punishment to which any person may be liable under
section 36, be liable to pay compensation to every person who has sustained such loss
or damage.

(2) No person shall be liable under sub-section (1), if he proves—

(a) that, having consented to become a director of the company, he withdrew his
consent before the issue of the prospectus, and that it was issued without his
authority or consent; or
(b) that the prospectus was issued without his knowledge or consent, and that on
becoming aware of its issue, he forthwith gave a reasonable public notice that it
was issued without his knowledge or consent.
70
[(c) that, as regards every misleading statement purported to be made by an expert
or contained in what purports to be a copy of or an extract from a report or valuation
of an expert, it was a correct and fair representation of the statement, or a correct
copy of, or a correct and fair extract from, the report or valuation; and he had
reasonable ground to believe and did up to the time of the issue of the prospectus
believe, that the person making the statement was competent to make it and that

70
Clause (c) inserted in Section 35(2) of the principal Act by Section 9 of the Companies (Amendment) Act,
2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to
force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to substitution it
read as

Page 85
 S. 35 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

the said person had given the consent required by sub-section (5) of section 26 to
the issue of the prospectus and had not withdrawn that consent before 71[filing of a
copy of the prospectus with the Registrar] or, to the defendant's knowledge, before
allotment thereunder.]

(3) Notwithstanding anything contained in this section, where it is proved that a

prospectus has been issued with intent to defraud the applicants for the securities of a
company or any other person or for any fraudulent purpose, every person referred to in
sub-section (1) shall be personally responsible, without any limitation of liability, for all or
any of the losses or damages that may have been incurred by any person who subscribed
to the securities on the basis of such prospectus.

71
Substituted for “delivery of a copy of the prospectus for registration” in clause (c) of sub-section (2) by
section 8 of the Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide
notification number S.O. 2947(E) dated 14th August 2019.

Page 86
 S. 36 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

36. Punishment for fraudulently inducing persons to invest money.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.68 of the Companies Act, 1956]

36. Any person who, either knowingly or recklessly makes any statement, promise or
forecast which is false, deceptive or misleading, or deliberately conceals any material
facts, to induce another person to enter into, or to offer to enter into,—
(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or
underwriting securities; or
(b) any agreement, the purpose or the pretended purpose of which is to secure a profit to
any of the parties from the yield of securities or by reference to fluctuations in the value
of securities; or
(c) any agreement for, or with a view to obtaining credit facilities from any bank or financial
institution,
shall be liable for action under section 447.

Page 87
 S. 37 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

37. Action by affected persons.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[No corresponding provision under the Companies Act, 1956]

37. A suit may be filed or any other action may be taken under section 34 or section 35
or section 36 by any person, group of persons or any association of persons affected by
any misleading statement or the inclusion or omission of any matter in the prospectus.

Page 88
 S. 38 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

38. Punishment for personation for acquisition, etc., of securities.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.68A of the Companies Act, 1956]

38. (1) Any person who—

(a) makes or abets making of an application in a fictitious name to a company for
acquiring, or subscribing for, its securities; or
(b) makes or abets making of multiple applications to a company in different names or
in different combinations of his name or surname for acquiring or subscribing for its
securities; or
(c) otherwise induces directly or indirectly a company to allot, or register any transfer
of, securities to him, or to any other person in a fictitious name,
shall be liable for action under section 447.

(2) The provisions of sub-section (1) shall be prominently reproduced in every prospectus
issued by a company and in every form of application for securities.

(3) Where a person has been convicted under this section, the Court may also order
disgorgement of gain, if any, made by, and seizure and disposal of the securities in
possession of, such person.

(4) The amount received through disgorgement or disposal of securities under sub-
section (3) shall be credited to the Investor Education and Protection Fund.

Page 89
 S. 39 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

39. Allotment of securities by company.

[Except section 39(4), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 39(4) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.69 and Sec.75 of the Companies Act, 1956]
[Refer section 23 and section 24 of this Act]
[Refer Rules 11 and 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form PAS-3.] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]
[Refer regulation (1) and (2) of Table F in Schedule I to the Act]
[Refer SEBI (Issue and of Capital and Disclosure Requirements) Regulations, 2009, inter alia, regulations
14, 15, 18, 26(4), 32(3)]

39. (1) No allotment of any securities of a company offered to the public for subscription
shall be made unless the amount stated in the prospectus as the minimum amount has
been subscribed and the sums payable on application for the amount so stated have been
paid to and received by the company by cheque or other instrument.

(2) The amount payable on application on every security shall not be less than five per
cent. of the nominal amount of the security or such other percentage or amount, as may
be specified by the Securities and Exchange Board by making regulations in this behalf.

(3) If the stated minimum amount has not been subscribed and the sum payable on
application is not received within a period of thirty days from the date of issue of the
prospectus, or such other period as may be specified by the Securities and Exchange
Board, the amount received under sub-section (1) shall be returned within such time and
manner as may be prescribed.

(4) Whenever a company having a share capital makes any allotment of securities, it shall
file with the Registrar a return of allotment in such manner as may be prescribed. [Sec.39
(4) w.e.f. 01 April 2014] [Return of allotment in Form PAS-3]

(5) In case of any default under sub-section (3) or sub-section (4), the company and its
officer who is in default shall be liable to a penalty, for each default, of one thousand
rupees for each day during which such default continues or one lakh rupees, whichever
is less.

Page 90
 S. 40 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

40. Securities to be dealt with in stock exchanges.

[Except section 40(6), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 40(6) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.73 and sec.76 of the Companies Act, 1956]
[Refer Rule 13 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and regulation 4(2)
(d) of SEBI (Issue and of Capital and Disclosure Requirements) Regulations, 2009]
[Refer regulation (5) of Table F.II in Schedule I to the Act]

40. (1) Every company making public offer shall, before making such offer, make an
application to one or more recognised stock exchange or exchanges and obtain
permission for the securities to be dealt with in such stock exchange or exchanges.

(2) Where a prospectus states that an application under sub-section (1) has been made,
such prospectus shall also state the name or names of the stock exchange in which the
securities shall be dealt with.

(3) All monies received on application from the public for subscription to the securities
shall be kept in a separate bank account in a scheduled bank and shall not be utilised for
any purpose other than—
(a) for adjustment against allotment of securities where the securities have been
permitted to be dealt with in the stock exchange or stock exchanges specified in
the prospectus; or
(b) for the repayment of monies within the time specified by the Securities and
Exchange Board, received from applicants in pursuance of the prospectus, where
the company is for any other reason unable to allot securities.

(4) Any condition purporting to require or bind any applicant for securities to waive
compliance with any of the requirements of this section shall be void.

(5) If a default is made in complying with the provisions of this section, the company shall
be punishable with a fine which shall not be less than five lakh rupees but which may
extend to fifty lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to one year or with fine which
shall not be less than fifty thousand rupees but which may extend to three lakh rupees,
or with both.

(6) A company may pay commission to any person in connection with the subscription to
its securities subject to such conditions as may be prescribed. [Sec.40 (6) w.e.f. 01 April 2014]
[Comments: For every allotment of securities, file Return of allotment in Form PAS-3 under section 39.]

Page 91
 S. 41 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

41. Global depository receipt.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[See Companies (Issue of Global Depository Receipts) Rules, 2014]
[Form No. MGT-14.] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
[Refer regulation (1) of Table F.II in Schedule I to the Act]
[Regulations 2(1) (z), 3, 19 and Chapter VII of SEBI (Issue and of Capital and Disclosure Requirements)
Regulations, 2009]
[Refer the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt
Mechanism) Scheme, 1993]
[Companies issuing ADR / GDR, do not require simultaneous or subsequent listing in India for two years-
vide General Circular A.P. (DIR Series) Circular 69 dated November 8, 2013 and Notification number 684
(E) dated October 11, 2013 of Ministry of Finance]
[Refer the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000 notified vide Notification number FEMA.20/2000-RB dated May 3, 2000,]

41. A company may, after passing a special resolution in its general meeting, issue
depository receipts in any foreign country in such manner, and subject to such conditions,
as may be prescribed.

[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

Page 92
 S. 42 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

PART II.—Private placement

72
[42. Issue of shares on private placement basis.

[Original section 42 was brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Corresponding Sec.67 of the Companies Act, 1956]
[Refer section 23 (1) (b) and 23(2) (b)]
[For private placement (i.e. without public offer and includes preferential allotment), refer Rule 14 of the
Companies (Prospectus and Allotment of Securities) Rules, 2014]
[For preferential allotment, refer Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form PAS-3, Form No. PAS-4, Form PAS-5.] [Documents filed with ROC can be inspected by public
(through MCA portal) as per section 399 of the Act.]
[Refer regulation (1) of Table F.II in Schedule I to the Act]

42. (1) A company may, subject to the provisions of this section, make a private placement
of securities.

(2) A private placement shall be made only to a select group of persons who have
been identified by the Board (herein referred to as "identified persons"), whose number
shall not exceed fifty or such higher number as may be prescribed [excluding the qualified
institutional buyers and employees of the company being offered securities under a
scheme of employees stock option in terms of provisions of clause (b) of sub-section (1)
of section 62], in a financial year subject to such conditions as may be prescribed.

(3) A company making private placement shall issue private placement offer and
application in such form and manner as may be prescribed to identified persons, whose
names and addresses are recorded by the company in such manner as may be
prescribed:

Provided that the private placement offer and application shall not carry any right
of renunciation.

Explanation I.—"private placement" means any offer or invitation to subscribe or

issue of securities to a select group of persons by a company (other than by way of public
offer) through private placement offer-cum-application, which satisfies the conditions
specified in this section.

Explanation II.—"qualified institutional buyer" means the qualified institutional

buyer as defined in the Securities and Exchange Board of India (Issue of Capital and

72
Substituted for section 42 of the principal Act by section 10 of the Companies (Amendment) Act, 2017 (1
of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
07th August 2018 vide notification no. S.O. 3921(E) of the same date.

Page 93
 S. 42 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

Disclosure Requirements) Regulations, 2009, as amended from time to time, made under
the Securities and Exchange Board of India Act, 1992 [15 of 1992].

Explanation III.—If a company, listed or unlisted, makes an offer to allot or invites

subscription, or allots, or enters into an agreement to allot, securities to more than the
prescribed number of persons, whether the payment for the securities has been received
or not or whether the company intends to list its securities or not on any recognised stock
exchange in or outside India, the same shall be deemed to be an offer to the public and
shall accordingly be governed by the provisions of Part I of this Chapter.

(4) Every identified person willing to subscribe to the private placement issue shall
apply in the private placement and application issued to such person alongwith
subscription money paid either by cheque or demand draft or other banking channel and
not by cash:

Provided that a company shall not utilise monies raised through private placement
unless allotment is made and the return of allotment is filed with the Registrar in
accordance with sub-section (8).

(5) No fresh offer or invitation under this section shall be made unless the
allotments with respect to any offer or invitation made earlier have been completed or that
offer or invitation has been withdrawn or abandoned by the company:

Provided that, subject to the maximum number of identified persons under sub-
section (2), a company may, at any time, make more than one issue of securities to such
class of identified persons as may be prescribed.

(6) A company making an offer or invitation under this section shall allot its
securities within sixty days from the date of receipt of the application money for such
securities and if the company is not able to allot the securities within that period, it shall
repay the application money to the subscribers within fifteen days from the expiry of sixty
days and if the company fails to repay the application money within the aforesaid period,
it shall be liable to repay that money with interest at the rate of twelve per cent. per annum
from the expiry of the sixtieth day:

Provided that monies received on application under this section shall be kept in a
separate bank account in a scheduled bank and shall not be utilised for any purpose other
than—
(a) for adjustment against allotment of securities; or
(b) for the repayment of monies where the company is unable to allot securities.

(7) No company issuing securities under this section shall release any public
advertisements or utilise any media, marketing or distribution channels or agents to inform
the public at large about such an issue.

Page 94
 S. 42 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(8) A company making any allotment of securities under this section, shall file with
the Registrar a return of allotment within fifteen days from the date of the allotment in
such manner as may be prescribed, including a complete list of all allottees, with their full
names, addresses, number of securities allotted and such other relevant information as
may be prescribed.

(9) If a company defaults in filing the return of allotment within the period prescribed
under sub-section (8), the company, its promoters and directors shall be liable to a penalty
for each default of one thousand rupees for each day during which such default continues
but not exceeding twenty-five lakh rupees.

(10) Subject to sub-section (11), if a company makes an offer or accepts monies

in contravention of this section, the company, its promoters and directors shall be liable
for a penalty which may extend to the amount raised through the private placement or
two crore rupees, whichever is lower, and the company shall also refund all monies with
interest as specified in sub-section (6) to subscribers within a period of thirty days of the
order imposing the penalty.

(11) Notwithstanding anything contained in sub-section (9) and sub-section (10),

any private placement issue not made in compliance of the provisions of sub-section (2)
shall be deemed to be a public offer and all the provisions of this Act and the Securities
Contracts (Regulation) Act, 1956 [42 of 1956] and the Securities and Exchange Board of
India Act, 1992 [15 of 1992] shall be applicable.’.

42. Offer or invitation for subscription of securities on private placement.

73
42. (1) Without prejudice to the provisions of section 26, a company may, subject to the provisions of this
section, make private placement through issue of a private placement offer letter.
[Offer letter in Form No. PAS-4]

(2) Subject to sub-section (1), the offer of securities or invitation to subscribe securities, shall be made to
such number of persons not exceeding fifty or such higher number as may be prescribed, (excluding
qualified institutional buyers and employees of the company being offered securities under a scheme of
employees stock option as per provisions of clause (b) of sub-section (1) of section 62), in a financial year
and on such conditions (including the form and manner of private placement) as may be prescribed.

Explanation I.—If a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or
enters into an agreement to allot, securities to more than the prescribed number of persons, whether the
payment for the securities has been received or not or whether the company intends to list its securities or
not on any recognised stock exchange in or outside India, the same shall be deemed to be an offer to the
public and shall accordingly be governed by the provisions of Part I of this Chapter.

Explanation II.— For the purposes of this section, the expression—

73
For nidhi companies, Section 42 shall not apply, except sub-section (1), explanation (11) to sub-section
(2), sub-sections (4), (6), (8), (9) and (10). Refer notification number G.S.R. 465(E) dated 05 June 2015.

Page 95
 S. 42 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(i) "qualified institutional buyer’’ means the qualified institutional buyer as defined in the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as
amended from time to time.
(ii) "private placement" means any offer of securities or invitation to subscribe securities to a select group
of persons by a company (other than by way of public offer) through issue of a private placement offer
letter and which satisfies the conditions specified in this section.
74
(3) No fresh offer or invitation under this section shall be made unless the allotments with respect to any
offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or
abandoned by the company.

(4) Any offer or invitation not in compliance with the provisions of this section shall be treated as a public
offer and all provisions of this Act, and the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the
Securities and Exchange Board of India Act, 1992 (15 of 1992) shall be required to be complied with.

(5) All monies payable towards subscription of securities under this section shall be paid through cheque
or demand draft or other banking channels but not by cash.
75
(6) A company making an offer or invitation under this section shall allot its securities within sixty days
from the date of receipt of the application money for such securities and if the company is not able to allot
the securities within that period, it shall repay the application money to the subscribers within fifteen days
from the date of completion of sixty days and if the company fails to repay the application money within the
aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum
from the expiry of the sixtieth day:

Provided that monies received on application under this section shall be kept in a separate bank
account in a scheduled bank and shall not be utilised for any purpose other than—
(a) for adjustment against allotment of securities; or
(b) for the repayment of monies where the company is unable to allot securities.
76
(7) All offers covered under this section shall be made only to such persons whose names are recorded
by the company prior to the invitation to subscribe, and that such persons shall receive the offer by name,
and that a complete record of such offers shall be kept by the company in such manner as may be
prescribed and complete information about such offer shall be filed with the Registrar within a period of
thirty days of circulation of relevant private placement offer letter.
[Records shall be maintained in Form PAS-5 and as per proviso to Rule 14(3) shall be filed with Form PAS-
4]

74
By Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public company, sub-
section (3) of section 42 shall not apply. And by Notification number G.S.R. 9(E) dated 04th January 2017
for a Specified IFSC private company, sub-section (3) of section 42 shall not apply

75
By Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public company, for
the words “sixty days” read as “ninety days”. And by Notification number G.S.R. 9(E) dated 04th January
2017 for a Specified IFSC private company, for the words “sixty days” read as “ninety days”.

76
By Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public company, sub-
section (7) of section 42 shall not apply. And by Notification number G.S.R. 9(E) dated 04th January 2017
for a Specified IFSC private company, sub-section (7) of section 42 shall not apply.

Page 96
 S. 42 - Chapter III [Ss.23 to 42]

Relevant rules: The Companies (Prospectus and Allotment of Securities) Rules, 2014

(8) No company offering securities under this section shall release any public advertisements or utilise any
media, marketing or distribution channels or agents to inform the public at large about such an offer.

(9) Whenever a company makes any allotment of securities under this section, it shall file with the Registrar
a return of allotment in such manner as may be prescribed, including the complete list of all security-holders,
with their full names, addresses, number of securities allotted and such other relevant information as may
be prescribed.
[Return of allotment in Form PAS-3]

(10) If a company makes an offer or accepts monies in contravention of this section, the company, its
promoters and directors shall be liable for a penalty which may extend to the amount involved in the offer
or invitation or two crore rupees, whichever is higher, and the company shall also refund all monies to
subscribers within a period of thirty days of the order imposing the penalty.

[Comments: In view of section 23(2), in case of rights issue by a private company, provisions of section 42
is not applicable. For every allotment of securities, file Return of allotment in Form PAS-3 under section
39.]

Page 97
 S. 43 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

CHAPTER IV SHARE CAPITAL AND

DEBENTURES
[Report under section 208 shall be received by the Central Government (MCA) for violation of offences
under Chapter III, IV, section 127, 177 and 178 of the Act and for other provisions report shall be received by
the Regional Director if action for violation of the Act is imprisonment of less than two years - vide notification
number S.O.3557(E) dated 31st December 2015.]

43. Kinds of share capital.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.2 (46A), Sec.85 and Sec.86 of the Companies Act, 1956]
[Refer Rules 3 and 4 of the Companies (Share Capital and Debentures) Rules, 2014]

77 78
43. The share capital of a company limited by shares shall be of two kinds, namely:—
(a) equity share capital—
(i) with voting rights; or
(ii) with differential rights as to dividend, voting or otherwise in accordance with such
rules as may be prescribed; and
(b) preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference
shareholders who are entitled to participate in the proceeds of winding up before the
commencement of this Act.

Explanation.—For the purposes of this section,—

(i) ‘‘equity share capital’’, with reference to any company limited by shares, means all
share capital which is not preference share capital;
(ii) ‘‘preference share capital’’, with reference to any company limited by shares, means
that part of the issued share capital of the company which carries or would carry a
preferential right with respect to—
(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed
rate, which may either be free of or subject to income-tax; and

77
This section shall not apply where memorandum or articles of association of the private company so
provides, vide notification number G.S.R. 464(E) dated 5th June 2015. The exceptions, modifications and
adaptations provided in the said notification dated 5th June 2015 shall be applicable to a private company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E)
dated 13th June 2017.

78
This section shall not apply to a Specified IFSC public company where memorandum or articles of
association of such company so provides, vide Notification number G.S.R. 8(E) dated 04th January 2017.

Page 98
 S. 43 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

(b) repayment, in the case of a winding up or repayment of capital, of the amount of

the share capital paid-up or deemed to have been paid-up, whether or not, there is
a preferential right to the payment of any fixed premium or premium on any fixed
scale, specified in the memorandum or articles of the company;
(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to
either or both of the following rights, namely:—
(a) that in respect of dividends, in addition to the preferential rights to the amounts
specified in sub-clause (a) of clause (ii), it has a right to participate, whether fully or
to a limited extent, with capital not entitled to the preferential right aforesaid;
(b) that in respect of capital, in addition to the preferential right to the repayment, on a
winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to
participate, whether fully or to a limited extent, with capital not entitled to that
preferential right in any surplus which may remain after the entire capital has been
repaid.

Page 99
 S. 44 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

44. Nature of shares or debentures.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.82 of the Companies Act, 1956]

44. The shares or debentures or other interest of any member in a company shall be
movable property transferable in the manner provided by the articles of the company.

Page 100
 S. 45 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

45. Numbering of shares.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.83 of the Companies Act, 1956]

45. Every share in a company having a share capital shall be distinguished by its
distinctive number:

Provided that nothing in this section shall apply to a share held by a person whose
name is entered as holder of beneficial interest in such share in the records of a
depository.

Page 101
 S. 46 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

46. Certificate of shares.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.84 of the Companies Act, 1956]
[Refer Rules 5, 6 and 7 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-1 and Form No. SH-2.]
[Refer regulation (2) and (3) of Table F.II in Schedule I to the Act]

46.(1) A certificate, [issued under the common seal, if any, of the company or signed by
two directors or by a director and the Company Secretary, wherever the company has
appointed a Company Secretary]79, specifying the shares held by any person, shall be
prima facie evidence of the title of the person to such shares.

(2) A duplicate certificate of shares may be issued, if such certificate —

(a) is proved to have been lost or destroyed; or
(b) has been defaced, mutilated or torn and is surrendered to the company.
[Refer rule 6 and regulation (3) of Table F.II in Schedule I to the Act]

(3) Notwithstanding anything contained in the articles of a company, the manner of issue
of a certificate of shares or the duplicate thereof, the form of such certificate, the
particulars to be entered in the register of members and other matters shall be such as
may be prescribed.
[Form of share certificate is prescribed as Form No. SH-1. Register of Renewed and Duplicate Share
Certificate in Form No. SH-2]

(4) Where a share is held in depository form, the record of the depository is the prima
facie evidence of the interest of the beneficial owner.

(5) If a company with intent to defraud issues a duplicate certificate of shares, the
company shall be punishable with fine which shall not be less than five times the face
value of the shares involved in the issue of the duplicate certificate but which may extend
to ten times the face value of such shares or rupees ten crores whichever is higher and
every officer of the company who is in default shall be liable for action under section 447.

79
for the words “issued under the common seal of the company”, the words “issued under the common
seal, if any, of the company or signed by two directors or by a director and the Company Secretary,
wherever the company has appointed a Company Secretary” substituted by the Companies (Amendment)
Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number
S.O. 1440(E).

Page 102
 S. 47 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

47. Voting rights.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.87 of the Companies Act, 1956] [Voting right is defined in section 2(93) and member
is defined in section 2(55)]

80 81
47.(1) Subject to the 82[provisions of section 43 and sub-section (2) of section 50 and
sub-section (1) of section 188]—
(a) every member of a company limited by shares and holding equity share capital
therein, shall have a right to vote on every resolution placed before the company;
and
83
(b) his voting right on a poll shall be in proportion to his share in the paid-up equity
share capital of the company.

(2) Every member of a company limited by shares and holding any preference share
capital therein shall, in respect of such capital, have a right to vote only on resolutions
placed before the company which directly affect the rights attached to his preference
shares and, any resolution for the winding up of the company or for the repayment or
reduction of its equity or preference share capital and his voting right on a poll shall be in
proportion to his share in the paid-up preference share capital of the company:

Provided that the proportion of the voting rights of equity shareholders to the
voting rights of the preference shareholders shall be in the same proportion as the paid-
up capital in respect of the equity shares bears to the paid-up capital in respect of the
preference shares:

80
This section shall not apply where memorandum or articles of association of the private company so
provides, vide notification number G.S.R. 464(E) dated 5th June 2015. The exceptions, modifications and
adaptations provided in the said notification dated 5th June 2015 shall be applicable to a private company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E)
dated 13th June 2017.

81
This section shall not apply to a Specified IFSC public company where memorandum or articles of
association of such company so provides, vide Notification number G.S.R. 8(E) dated 04th January 2017.

82
Wordings in Section 47(1) of the principal Act substituted by Section 11 of the Companies (Amendment)
Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought
to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to substitution it
read as “provisions of section 43 and sub-section (2) of section 50”.

83
Section 47(1)(b) shall apply to nidhi companies, subject to the modification that no member shall exercise
voting rights on poll in excess of five per cent. of total voting rights of equity shareholders. Refer notification
number G.S.R. 465(E) dated 5th June 2015.

Page 103
 S. 47 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

Provided further that where the dividend in respect of a class of preference

shares has not been paid for a period of two years or more, such class of preference
shareholders shall have a right to vote on all the resolutions placed before the company.

Page 104
 S. 48 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

48. Variation of shareholders’ rights.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.106 and sec.107 of the Companies Act, 1956, red with Rules 11, 66 of the Companies
(Court) Rules, 1959]
[Refer regulation (6) of Table F.II in Schedule I to the Act]

48. (1) Where a share capital of the company is divided into different classes of shares,
the rights attached to the shares of any class may be varied with the consent in writing of
the holders of not less than three-fourths of the issued shares of that class or by means
of a special resolution passed at a separate meeting of the holders of the issued shares
of that class,—
(a) if provision with respect to such variation is contained in the memorandum or
articles of the company; or
(b) in the absence of any such provision in the memorandum or articles, if such
variation is not prohibited by the terms of issue of the shares of that class:
Provided that if variation by one class of shareholders affects the rights of any other
class of shareholders, the consent of three-fourths of such other class of shareholders
shall also be obtained and the provisions of this section shall apply to such variation.

(2) Where the holders of not less than ten per cent. of the issued shares of a class did
not consent to such variation or vote in favour of the special resolution for the variation,
they may apply to the Tribunal to have the variation cancelled, and where any such
application is made, the variation shall not have effect unless and until it is confirmed by
the Tribunal:
Provided that an application under this section shall be made within twenty-one
days after the date on which the consent was given or the resolution was passed, as the
case may be, and may be made on behalf of the shareholders entitled to make the
application by such one or more of their number as they may appoint in writing for the
purpose.

(3) The decision of the Tribunal on any application under sub-section (2) shall be binding
on the shareholders.

(4) The company shall, within thirty days of the date of the order of the Tribunal, file a
copy thereof with the Registrar.

(5) Where any default is made in complying with the provisions of this section, the
company shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to five lakh rupees and every officer of the company who is
in default shall be punishable with imprisonment for a term which may extend to six
months or with fine which shall not be less than twenty-five thousand rupees but which
may extend to five lakh rupees, or with both.

Page 105
 S. 49 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

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

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.91 of the Companies Act, 1956]
[Refer regulation (13) to (17) of Table F.II in Schedule I to the Act]

49. Where any calls for further share capital are made on the shares of a class, such calls
shall be made on a uniform basis on all shares falling under that class.

Explanation.—For the purposes of this section, shares of the same nominal value on
which different amounts have been paid-up shall not be deemed to fall under the same
class.

Page 106
 S. 50 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

50. Company to accept unpaid share capital, although not called up.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.92 of the Companies Act, 1956]
[Refer regulation (18) of Table F.II in Schedule I to the Act]

50. (1) A company may, if so authorised by its articles, accept from any member, the
whole or a part of the amount remaining unpaid on any shares held by him, even if no
part of that amount has been called up.

(2) A member of the company limited by shares shall not be entitled to any voting rights
in respect of the amount paid by him under sub-section (1) until that amount has been
called up.

Page 107
 S. 51 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

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

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.93 of the Companies Act, 1956]

51. A company may, if so authorised by its articles, pay dividends in proportion to the
amount paid-up on each share.

Page 108
 S. 52 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

52. Application of premiums received on issue of shares.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.78 of the Companies Act, 1956]
[Refer regulation (38) (c) of Table F.II in Schedule I to the Act]

52. (1) Where a company issues shares at a premium, whether for cash or otherwise, a
sum equal to the aggregate amount of the premium received on those shares shall be
transferred to a “securities premium account” and the provisions of this Act relating to
reduction of share capital of a company shall, except as provided in this section, apply as
if the securities premium account were the paid-up share capital of the company.

(2) Notwithstanding anything contained in sub-section (1), the securities premium account
may be applied by the company—
(a) towards the issue of unissued shares of the company to the members of the
company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company;
(d) in providing for the premium payable on the redemption of any redeemable
preference shares or of any debentures of the company; or
(e) for the purchase of its own shares or other securities under section 68.

(3) The securities premium account may, notwithstanding anything contained in sub-
sections (1) and (2), be applied by such class of companies, as may be prescribed and
whose financial statement comply with the accounting standards prescribed for such
class of companies under section 133,—
(a) in paying up unissued equity shares of the company to be issued to members of
the company as fully paid bonus shares; or
(b) in writing off the expenses of or the commission paid or discount allowed on any
issue of equity shares of the company; or
(c) for the purchase of its own shares or other securities under section 68.

Page 109
 S. 53 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

53. Prohibition on issue of shares at discount.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.79 of the Companies Act, 1956]

53. (1) Except as provided in section 54, a company shall not issue shares at a discount.

(2) Any share issued by a company at a 84[discount] shall be void.

85
[(2A) Notwithstanding anything contained in sub-sections (1) and (2), a company may
issue shares at a discount to its creditors when its debt is converted into shares in
pursuance of any statutory resolution plan or debt restructuring scheme in accordance
with any guidelines or directions or regulations specified by the Reserve Bank of India
under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.]
86
[(3) Where any company fails to comply with the provisions of this section, such
company and every officer who is in default shall be liable to a penalty which may extend
to an amount equal to the amount raised through the issue of shares at a discount or five
lakh rupees, whichever is less, and the company shall also be liable to refund all monies
received with interest at the rate of twelve per cent. per annum from the date of issue of
such shares to the persons to whom such shares have been issued.]

84
Substituted for the words ‘discounted price’ in Section 53(2) of the principal Act by Section 12(i) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

85
Inserted sub-section (2A) in Section 53 of the principal Act by Section 12(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

86
Substituted for sub-section (3) to Section 53 of the principal Act by Section 9 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(3) Where a company contravenes the provisions of this section, the company shall
be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh
rupees and every officer who is in default shall be punishable with imprisonment for a term which may
extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five
lakh rupees, or with both.”.

Page 110
 S. 54 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

54. Issue of sweat equity shares.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.79A of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-3, Form No. MGT-14.] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]
[Listed companies refer SEBI (Issue of Sweat Equity) Regulations, 2002]

54. (1) Notwithstanding anything contained in section 53, a company may issue sweat
equity shares of a class of shares already issued, if the following conditions are fulfilled,
namely:—
(a) the issue is authorised by a special resolution passed by the company;
[Every special resolution is required to be filed in Form No. MGT-14 as per section
117 (3) (a)]
(b) the resolution specifies the number of shares, the current market price,
consideration, if any, and the class or classes of directors or employees to whom
such equity shares are to be issued;
87
[(c) omitted]
(d) where the equity shares of the company are listed on a recognised stock
exchange, the sweat equity shares are issued in accordance with the regulations
made by the Securities and Exchange Board in this behalf and if they are not so
listed, the sweat equity shares are issued in accordance with such rules as may be
prescribed.

(2) The rights, limitations, restrictions and provisions as are for the time being applicable
to equity shares shall be applicable to the sweat equity shares issued under this section
and the holders of such shares shall rank pari passu with other equity shareholders.
[Register of Sweat Equity Shares in Form No. SH-3. For every allotment of securities, file Return of
allotment in Form PAS-3 under section 39.]

87
Omitted clause (c) in sub-section (1) of Section 54 of the principal Act by section 13 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January
2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to its omission, it read as “(c) not less than one year has, at the date of such issue, elapsed
since the date on which the company had commenced business; and”.
[clause (c) of Section 54(1) shall not apply to a Specified IFSC public company, vide Notification
number G.S.R. 8(E) dated 04th January 2017.]
[clause (c) of Section 54(1) shall not apply to a Specified IFSC private company, vide Notification
number G.S.R. 9(E) dated 04th January 2017.]”.

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55. Issue and redemption of preference shares.

[Except section 55(3), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Section 55(3), brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.80 and 80A (except Proviso to section 80A (1) and section 80A (2)) of the Companies
Act, 1956]
[Refer Rules 9 and 10 of the Companies (Share Capital and Debentures) Rules, 2014]
[Refer regulation (8) of Table F.II in Schedule I to the Act]
[Listed companies, also refer to SEBI (Issue and Listing of Non-Convertible Redeemable Preference
Shares) Regulations, 2013]

55. (1) No company limited by shares shall, after the commencement of this Act, issue
any preference shares which are irredeemable.

(2) A company limited by shares may, if so authorised by its articles, issue preference
shares which are liable to be redeemed within a period not exceeding twenty years from
the date of their issue subject to such conditions as may be prescribed:

Provided that a company may issue preference shares for a period exceeding
twenty years for infrastructure projects, subject to the redemption of such percentage of
shares as may be prescribed on an annual basis at the option of such preferential
shareholders:

Provided further that—

(a) no such shares shall be redeemed except out of the profits of the company which
would otherwise be available for dividend or out of the proceeds of a fresh issue of
shares made for the purposes of such redemption;
(b) no such shares shall be redeemed unless they are fully paid;
(c) where such shares are proposed to be redeemed out of the profits of the company,
there shall, out of such profits, be transferred, a sum equal to the nominal amount
of the shares to be redeemed, to a reserve, to be called the Capital Redemption
Reserve Account, and the provisions of this Act relating to reduction of share capital
of a company shall, except as provided in this section, apply as if the Capital
Redemption Reserve Account were paid-up share capital of the company; and
(d) (i) in case of such class of companies, as may be prescribed and whose financial
statement comply with the accounting standards prescribed for such class of
companies under section 133, the premium, if any, payable on redemption shall be
provided for out of the profits of the company, before the shares are redeemed:

Provided also that premium, if any, payable on redemption of any preference shares
issued on or before the commencement of this Act by any such company shall be
provided for out of the profits of the company or out of the company’s securities premium
account, before such shares are redeemed.

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(ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on
redemption shall be provided for out of the profits of the company or out of the
company’s securities premium account, before such shares are redeemed.

[Section 55(3) w.e.f. 01 June 2016]

(3) Where a company is not in a position to redeem any preference shares or to pay
dividend, if any, on such shares in accordance with the terms of issue (such shares
hereinafter referred to as unredeemed preference shares), it may, with the consent of the
holders of three-fourths in value of such preference shares and with the approval of the
Tribunal on a petition made by it in this behalf, issue further redeemable preference
shares equal to the amount due, including the dividend thereon, in respect of the
unredeemed preference shares, and on the issue of such further redeemable preference
shares, the unredeemed preference shares shall be deemed to have been redeemed:

Provided that the Tribunal shall, while giving approval under this sub-section,
order the redemption forthwith of preference shares held by such persons who have not
consented to the issue of further redeemable preference shares.

Explanation.—For the removal of doubts, it is hereby declared that the issue of further
redeemable preference shares or the redemption of preference shares under this section
shall not be deemed to be an increase or, as the case may be, a reduction, in the share
capital of the company.

(4) The capital redemption reserve account may, notwithstanding anything in this section,
be applied by the company, in paying up unissued shares of the company to be issued to
members of the company as fully paid bonus shares.

Explanation.—For the purposes of sub-section (2), the term ‘‘infrastructure projects’’

means the infrastructure projects specified in Schedule VI.

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56. Transfer and transmission of securities.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.108, 108A to 108 I, 109,110,113 of the Companies Act, 1956]
[Refer Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014]
[Also refer section 212(6) and regulations 19, 20, 21, 23, 24, 25, 26 of Table F.II of Schedule I to the Act]
[Form No. SH-4 and Form No. SH-5.]

56. (1) A company shall not register a transfer of securities of the company, or the interest
of a member in the company in the case of a company having no share capital, other than
the transfer between persons both of whose names are entered as holders of beneficial
interest in the records of a depository, unless a proper instrument of transfer, in such form
as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor
and the transferee and specifying the name, address and occupation, if any, of the
transferee has been delivered to the company by the transferor or the transferee within a
period of sixty days from the date of execution, along with the certificate relating to the
securities, or if no such certificate is in existence, along with the letter of allotment of
securities:
[Securities Transfer Form as per Form No. SH-4]

Provided that where the instrument of transfer has been lost or the instrument of
transfer has not been delivered within the prescribed period, the company may register
the transfer on such terms as to indemnity as the Board may think fit.
88
[Provided further that the provisions of this sub-section, in so far as it requires a
proper instrument of transfer, to be duly stamped and executed by or on behalf of the
transferor and by or on behalf of the transferee, shall not apply with respect to bonds
issued by a Government company, provided that an intimation by the transferee specifying
his name, address and occupation, if any, has been delivered to the company along with
the certificate relating to the bond; and if no such certificate is in existence, along with the
letter of allotment of the bond:

Provided also that the provisions of this sub-section shall not apply to a
Government Company in respect of securities held by nominees of the Government.]

88
Inserted vide notification number G.S.R. 463(E) dated 5th June, 2015. Vide notification number G.S.R.
582(E) dated 13th June 2017, for Government company it is provided that the exceptions, modifications and
adaptations shall be applicable to a Government company which has not committed a default in filing its
financial statements under section 137 of the said Act or annual return under section 92 of the said Act with
the Registrar

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(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on
receipt of an intimation of transmission of any right to securities by operation of law from
any person to whom such right has been transmitted.

(3) Where an application is made by the transferor alone and relates to partly paid shares,
the transfer shall not be registered, unless the company gives the notice of the application,
in such manner as may be prescribed, to the transferee and the transferee gives no
objection to the transfer within two weeks from the receipt of notice.
[Notice in Form No. SH-5]

(4) Every company shall, unless prohibited by any provision of law or any order of Court,
Tribunal or other authority, deliver the certificates of all securities allotted, transferred or
transmitted—
(a) within a period of two months from the date of incorporation, in the case of
subscribers to the memorandum;
(b) within a period of two months from the date of allotment, in the case of any allotment
of any of its shares;
(c) within a period of one month from the date of receipt by the company of the
instrument of transfer under sub-section (1) or, as the case may be, of the intimation
of transmission under sub-section (2), in the case of a transfer or transmission of
securities;
(d) within a period of six months from the date of allotment in the case of any allotment
of debenture:

Provided that where the securities are dealt with in a depository, the company shall
intimate the details of allotment of securities to depository immediately on allotment of
such securities.
89
[Provided further that a Specified IFSC public company shall deliver the certificates
of all securities to subscribers after incorporation, allotment, transfer or transmission
within a period of sixty days.]
90
[Provided further that a Specified IFSC private company shall deliver the
certificates of all securities to subscribers after incorporation, allotment, transfer or
transmission within a period of sixty days.]

(5) The transfer of any security or other interest of a deceased person in a company made
by his legal representative shall, even if the legal representative is not a holder thereof,

89
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

90
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

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be valid as if he had been the holder at the time of the execution of the instrument of
transfer.

(6) Where any default is made in complying with the provisions of sub-sections (1) to (5),
the company shall be punishable with fine which shall not be less than twenty-five
thousand rupees but which may extend to five lakh rupees and every officer of the
company who is in default shall be punishable with fine which shall not be less than ten
thousand rupees but which may extend to one lakh rupees.

(7) Without prejudice to any liability under the Depositories Act, 1996 (22 of 1996), where
any depository or depository participant, with an intention to defraud a person, has
transferred shares, it shall be liable under section 447.

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57. Punishment for personation of shareholder.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.116 of the Companies Act, 1956]

57. If any person deceitfully personates as an owner of any security or interest in a

company, or of any share warrant or coupon issued in pursuance of this Act, and thereby
obtains or attempts to obtain any such security or interest or any such share warrant or
coupon, or receives or attempts to receive any money due to any such owner, he shall
be punishable with imprisonment for a term which shall not be less than one year but
which may extend to three years and with fine which shall not be less than one lakh
rupees but which may extend to five lakh rupees.
[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

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58. Refusal of registration and appeal against refusal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.111, 111A of the Companies Act, 1956]
[Also refer regulation 20 of Table F of Schedule I to the Act]
[Until Tribunal (NCLT) is setup, CLB exercised power under this section. Refer notification number S.O.
2821(E) dated 20th September 2013 for the Companies (Removal of Difficulties) Order, 2013.
Corresponding amendment made to the CLB Regulations – see here.]

58. (1) If a private company limited by shares refuses, whether in pursuance of any power
of the company under its articles or otherwise, to register the transfer of, or the
transmission by operation of law of the right to, any securities or interest of a member in
the company, it shall within a period of thirty days from the date on which the instrument
of transfer, or the intimation of such transmission, as the case may be, was delivered to
the company, send notice of the refusal to the transferor and the transferee or to the
person giving intimation of such transmission, as the case may be, giving reasons for
such refusal.

(2) Without prejudice to sub-section (1), the securities or other interest of any member in
a public company shall be freely transferable:

Provided that any contract or arrangement between two or more persons in

respect of transfer of securities shall be enforceable as a contract.

(3) The transferee may appeal to the Tribunal against the refusal within a period of thirty
days from the date of receipt of the notice or in case no notice has been sent by the
company, within a period of sixty days from the date on which the instrument of transfer
or the intimation of transmission, as the case may be, was delivered to the company.

(4) If a public company without sufficient cause refuses to register the transfer of securities
within a period of thirty days from the date on which the instrument of transfer or the
intimation of transmission, as the case may be, is delivered to the company, the transferee
may, within a period of sixty days of such refusal or where no intimation has been received
from the company, within ninety days of the delivery of the instrument of transfer or
intimation of transmission, appeal to the Tribunal.

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or sub- section
(4), may, after hearing the parties, either dismiss the appeal, or by order—
(a) direct that the transfer or transmission shall be registered by the company and the
company shall comply with such order within a period of ten days of the receipt of
the order; or
(b) direct rectification of the register and also direct the company to pay damages, if
any, sustained by any party aggrieved.

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(6) If a person contravenes the order of the Tribunal under this section, he shall be
punishable with imprisonment for a term which shall not be less than one year but which
may extend to three years and with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees.
[It may be noted the Hon’ble Supreme Court has held that where minimum imprisonment is prescribed, the
Government cannot interfere with its power of remission or commutation under section 433-A of Criminal
Procedure Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

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59. Rectification of register of members.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.111, 111A of the Companies Act, 1956]
[Until Tribunal (NCLT) is setup, CLB exercised power under this section. Refer notification number S.O.
2821(E) dated 20th September 2013 for the Companies (Removal of Difficulties) Order, 2013.
Corresponding amendment made to the CLB Regulations – see here.]

59. (1) If the name of any person is, without sufficient cause, entered in the register of
members of a company, or after having been entered in the register, is, without sufficient
cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in
entering in the register, the fact of any person having become or ceased to be a member,
the person aggrieved, or any member of the company, or the company may appeal in
such form as may be prescribed, to the Tribunal, or to a competent court outside India,
specified by the Central Government by notification, in respect of foreign members or
debenture holders residing outside India, for rectification of the register.

(2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by
order, either dismiss the appeal or direct that the transfer or transmission shall be
registered by the company within a period of ten days of the receipt of the order or direct
rectification of the records of the depository or the register and in the latter case, direct
the company to pay damages, if any, sustained by the party aggrieved.

(3) The provisions of this section shall not restrict the right of a holder of securities, to
transfer such securities and any person acquiring such securities shall be entitled to
voting rights unless the voting rights have been suspended by an order of the Tribunal.

(4) Where the transfer of securities is in contravention of any of the provisions of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange
Board of India Act, 1992 (15 of 1992) or this Act or any other law for the time being in
force, the Tribunal may, on an application made by the depository, company, depository
participant, the holder of the securities or the Securities and Exchange Board, direct any
company or a depository to set right the contravention and rectify its register or records
concerned.

(5) If any default is made in complying with the order of the Tribunal under this section,
the company shall be punishable with fine which shall not be less than one lakh rupees
but which may extend to five lakh rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to one year
or with fine which shall not be less than one lakh rupees but which may extend to three
lakh rupees, or with both.

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60. Publication of authorised, subscribed and paid-up capital.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.148 of the Companies Act, 1956]

60. (1) Where any notice, advertisement or other official publication, or any business
letter, billhead or letter paper of a company contains a statement of the amount of the
authorised capital of the company, such notice, advertisement or other official publication,
or such letter, billhead or letter paper shall also contain a statement, in an equally
prominent position and in equally conspicuous characters, of the amount of the capital
which has been subscribed and the amount paid-up.

(2) If any default is made in complying with the requirements of sub-section (1), the
company shall be liable to pay a penalty of ten thousand rupees and every officer of the
company who is in default shall be liable to pay a penalty of five thousand rupees, for
each default.

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61. Power of limited company to alter its share capital.

[Except proviso to Section 61(1) (b), brought to force from 01 April 2014 vide notification number S.O.
902(E) dated 26th March, 2014.]
[Proviso to Section 61(1) (b), brought to force from 01 June 2016 vide notification number S.O. 1934(E)
dated 01st June, 2016]
[Corresponding Sec.94 of the Companies Act, 1956]
[Refer regulations (35), 36 and (37) of Table F.II in Schedule I to the Act]

61. (1) A limited company having a share capital may, if so authorised by its articles, alter
its memorandum in its general meeting to—
(a) increase its authorised share capital by such amount as it thinks expedient;
[Refer regulation (35) of Table F.II in Schedule I to the Act]
(b) consolidate and divide all or any of its share capital into shares of a larger amount
than its existing shares:
[Refer regulation (36) (a) of Table F.II in Schedule I to the Act]
Provided that no consolidation and division which results in changes in the
voting percentage of shareholders shall take effect unless it is approved by the
Tribunal on an application made in the prescribed manner;
[Proviso w.e.f. 01 June 2016]
(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock
into fully paid-up shares of any denomination;
[Refer regulation (36) (b) of Table F.II in Schedule I to the Act]
(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed
by the memorandum, so, however, that in the sub-division the proportion between the
amount paid and the amount, if any, unpaid on each reduced share shall be the same
as it was in the case of the share from which the reduced share is derived;
[Refer regulation (36) (c) of Table F.II in Schedule I to the Act]
(e) cancel shares which, at the date of the passing of the resolution in that behalf,
have not been taken or agreed to be taken by any person, and diminish the amount
of its share capital by the amount of the shares so cancelled.
[Refer regulation (236 (d) of Table F.II in Schedule I to the Act]

(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction
of share capital.

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62. Further issue of share capital.

[Except section 62(4) to (6), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated
26th March, 2014.]

[Section 62(4) to (6), brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st
June, 2016]

[Corresponding Sec.81 except sub-sections (4) to (7); 94A (1) of the Companies Act, 1956]

[For ESOP refer Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014]

[For preferential issue refer Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014]

[Refer Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014]

[Form No. SH-6, Form No. MGT-14.] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

[Refer regulations (1) and (7) of Table F.II in Schedule I to the Act]

[For ESOP of Listed Company, refer SEBI (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999]

[Also refer section 23 for private placement]

91
62. (1) Where at any time, a company having a share capital proposes to increase its
subscribed capital by the issue of further shares, such shares shall be offered—
(a) to persons who, at the date of the offer, are holders of equity shares of the company
in proportion, as nearly as circumstances admit, to the paid-up share capital on
those shares by sending a letter of offer subject to the following conditions,
namely:—
(i) the offer shall be made by notice specifying the number of shares offered and
limiting a time not being less than fifteen days and not exceeding thirty days
from the date of the offer within which the offer, if not accepted, shall be deemed
to have been declined;
92
[Provided that notwithstanding anything contained in this sub-clause and sub-
section (2) of this section, in case ninety per cent. of the members of a private

91
Section 62 shall not apply to nidhi companies. Refer notification number G.S.R. 465(E) dated 5th June
2015.

92
Inserted vide Notification number G.S.R. 464(E) dated 5th June, 2015. The exceptions, modifications and
adaptations provided in the said notification dated 5th June 2015 shall be applicable to a private company
which has not committed a default in filing its financial statements under section 137 of the said Act or

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company have given their consent in writing or in electronic mode, the periods
lesser than those specified in the said sub-clause or sub-section shall apply.]
(ii) unless the articles of the company otherwise provide, the offer aforesaid shall
be deemed to include a right exercisable by the person concerned to renounce
the shares offered to him or any of them in favour of any other person; and the
notice referred to in clause (i) shall contain a statement of this right;
(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of
earlier intimation from the person to whom such notice is given that he declines
to accept the shares offered, the Board of Directors may dispose of them in such
manner which is not dis-advantageous to the shareholders and the company;
93
[Provided that notwithstanding anything contained in sub-clause (i), in case of a
Specified IFSC public company, the periods lesser than those specified in the said
sub-clause shall apply if ninety per cent. of the members have given their consent
in writing or in electronic mode.]
(b) to employees under a scheme of employees’ stock option, subject to special
resolution passed by company and subject to such conditions as may be
prescribed; or
[For private companies, an ordinary resolution suffices. Notification number G.S.R.464(E) dated 5th
June, 2015. The exceptions, modifications and adaptations provided in the said notification dated
5th June 2015 shall be applicable to a private company which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the
said Act with the Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.] [For a
Specified IFSC public company, an ordinary resolution suffices, per Notification number G.S.R. 8(E)
dated 04th January 2017]
[Register of Employees Stock Option in Form No. SH-6]
(c) to any persons, if it is authorised by a special resolution, whether or not those
persons include the persons referred to in clause (a) or clause (b), either for cash
or for a consideration other than cash, if the price of such shares is determined by
the valuation report 94[ of a registered valuer, subject to the compliance with the
applicable provisions of Chapter III and any other conditions as may be prescribed].

annual return under section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E)
dated 13th June 2017.

93
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

94
Substituted for the words "of a registered valuer subject to such conditions as may be prescribed", in
clause (c) of sub-section (1) of Section 62 of the principal Act by Section 14(i) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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95
[(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be
dispatched through registered post or speed post or through electronic mode or courier
or any other mode having proof of delivery to all the existing shareholders at least three
days before the opening of the issue.]

(3) Nothing in this section shall apply to the increase of the subscribed capital of a
company caused by the exercise of an option as a term attached to the debentures issued
or loan raised by the company to convert such debentures or loans into shares in the
company:
Provided that the terms of issue of such debentures or loan containing such an
option have been approved before the issue of such debentures or the raising of loan by
a special resolution passed by the company in general meeting. [Form No. MGT-14]

[w.e.f. 01 June 2016]

(4) Notwithstanding anything contained in sub-section (3), where any debentures have
been issued, or loan has been obtained from any Government by a company, and if that
Government considers it necessary in the public interest so to do, it may, by order, direct
that such debentures or loans or any part thereof shall be converted into shares in the
company on such terms and conditions as appear to the Government to be reasonable
in the circumstances of the case even if terms of the issue of such debentures or the
raising of such loans do not include a term for providing for an option for such conversion:

Provided that where the terms and conditions of such conversion are not
acceptable to the company, it may, within sixty days from the date of communication of
such order, appeal to the Tribunal which shall after hearing the company and the
Government pass such order as it deems fit.

[w.e.f. 01 June 2016]

(5) In determining the terms and conditions of conversion under sub-section (4), the
Government shall have due regard to the financial position of the company, the terms of
issue of debentures or loans, as the case may be, the rate of interest payable on such
debentures or loans and such other matters as it may consider necessary.

[w.e.f. 01 June 2016]

(6) Where the Government has, by an order made under sub-section (4), directed that
any debenture or loan or any part thereof shall be converted into shares in a company
and where no appeal has been preferred to the Tribunal under sub-section (4) or where
such appeal has been dismissed, the memorandum of such company shall, where such

95
Sub-section (2) of Section 62 of the principal Act substituted by Section 14(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
substitution it read as “The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be
despatched through registered post or speed post or through electronic mode to all the existing
shareholders at least three days before the opening of the issue”.

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order has the effect of increasing the authorised share capital of the company, stand
altered and the authorised share capital of such company shall stand increased by an
amount equal to the amount of the value of shares which such debentures or loans or
part thereof has been converted into.
[Comments: It may be noted that rights issue is covered by section 62(1) (a) and for which no approval of
members is prescribed. However, consent of Board of Directors at their meeting is required under section
179(3) of the Act. Also, every special resolution is required to be filed in Form No. MGT-14 as per section
117 (3) (a)]

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 S. 63 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

63. Issue of bonus shares.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding proviso to Sec.205 (3) of the Companies Act, 1956]
[Refer Rule 14 of the Companies (Share Capital and Debentures) Rules, 2014]
[Refer regulations (1), (39) and (40) of Table F.II in Schedule I to the Act]

63. (1) A company may issue fully paid-up bonus shares to its members, in any manner
whatsoever, out of—
(i) its free reserves;
(ii) the securities premium account; or
(iii) the capital redemption reserve account:

Provided that no issue of bonus shares shall be made by capitalising reserves created
by the revaluation of assets.

(2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-
up bonus shares under sub-section (1), unless—
(a) it is authorised by its articles;
(b) it has, on the recommendation of the Board, been authorised in the general meeting
of the company;
(c) it has not defaulted in payment of interest or principal in respect of fixed deposits
or debt securities issued by it;
(d) it has not defaulted in respect of the payment of statutory dues of the employees,
such as, contribution to provident fund, gratuity and bonus;
(e) the partly paid-up shares, if any outstanding on the date of allotment, are made
fully paid-up;
(f) it complies with such conditions as may be prescribed.

(3) The bonus shares shall not be issued in lieu of dividend.

[Comments: For every allotment of securities, file Return of allotment in Form PAS-3 under section 39.]

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

64. Notice to be given to Registrar for alteration of share capital.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.94A (3) and Sec. 95, 97 of the Companies Act, 1956]
[Refer Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-7.] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

64. (1) Where—

(a) a company alters its share capital in any manner specified in sub-section (1) of
section 61;
(b) an order made by the Government under sub-section (4) read with sub-section (6)
of section 62 has the effect of increasing authorised capital of a company; or
(c) a company redeems any redeemable preference shares,
the company shall file a notice in the prescribed form with the Registrar within a period of
thirty days of such alteration or increase or redemption, as the case may be, along with
an altered memorandum.
[Form No. SH-7]

96
[(2) Where any company fails to comply with the provisions of sub-section (1), such
company and every officer who is in default shall be liable to a penalty of one thousand
rupees for each day during which such default continues, or five lakh rupees whichever
is less.]

96
Substituted for sub-section (2) to Section 64 of the principal Act by Section 10 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(2) If a company and any officer of the company who is in default contravenes the
provisions of sub-section (1), it or he shall be punishable with fine which may extend to one thousand
rupees for each day during which such default continues, or five lakh rupees, whichever is less.”.

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 S. 65 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

65. Unlimited company to provide for reserve share capital on conversion into
limited company.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.98 of the Companies Act, 1956]

65. An unlimited company having a share capital may, by a resolution for registration as
a limited company under this Act, do either or both of the following things, namely—
(a) increase the nominal amount of its share capital by increasing the nominal amount of
each of its shares, subject to the condition that no part of the increased capital shall
be capable of being called up except in the event and for the purposes of the company
being wound up;
(b) provide that a specified portion of its uncalled share capital shall not be capable of
being called up except in the event and for the purposes of the company being wound
up.

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 S. 66 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

66. Reduction of share capital.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sections 100 to 105 of the Companies Act, 1956 read with Rules 11, 46 to 65 of the
Companies (Court) Rules, 1959.]
[Refer regulation (38) (a) of Table F.II in Schedule I to the Act]

66. (1) Subject to confirmation by the Tribunal on an application by the company, a

company limited by shares or limited by guarantee and having a share capital may, by a
special resolution, reduce the share capital in any manner and in particular, may—
(a) extinguish or reduce the liability on any of its shares in respect of the share capital
not paid-up; or
(b) either with or without extinguishing or reducing liability on any of its shares,—
(i) cancel any paid-up share capital which is lost or is unrepresented by available
assets; or
(ii) pay off any paid-up share capital which is in excess of the wants of the company,
alter its memorandum by reducing the amount of its share capital and of its shares
accordingly:

Provided that no such reduction shall be made if the company is in arrears in the
repayment of any deposits accepted by it, either before or after the commencement of
this Act, or the interest payable thereon.

(2) The Tribunal shall give notice of every application made to it under sub-section (1) to
the Central Government, Registrar and to the Securities and Exchange Board, in the case
of listed companies, and the creditors of the company and shall take into consideration
the representations, if any, made to it by that Government, Registrar, the Securities and
Exchange Board and the creditors within a period of three months from the date of receipt
of the notice:

Provided that where no representation has been received from the Central
Government, Registrar, the Securities and Exchange Board or the creditors within the
said period, it shall be presumed that they have no objection to the reduction.

(3) The Tribunal may, if it is satisfied that the debt or claim of every creditor of the company
has been discharged or determined or has been secured or his consent is obtained, make
an order confirming the reduction of share capital on such terms and conditions as it
deems fit:

Provided that no application for reduction of share capital shall be sanctioned by

the Tribunal unless the accounting treatment, proposed by the company for such
reduction is in conformity with the accounting standards specified in section 133 or any

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

other provision of this Act and a certificate to that effect by the company’s auditor has
been filed with the Tribunal.

(4) The order of confirmation of the reduction of share capital by the Tribunal under sub-
section (3) shall be published by the company in such manner as the Tribunal may direct.

(5) The company shall deliver a certified copy of the order of the Tribunal under sub-
section (3) and of a minute approved by the Tribunal showing—
(a) the amount of share capital;
(b) the number of shares into which it is to be divided;
(c) the amount of each share; and
(d) the amount, if any, at the date of registration deemed to be paid-up on each share,
to the Registrar within thirty days of the receipt of the copy of the order, who shall register
the same and issue a certificate to that effect.

(6) Nothing in this section shall apply to buy-back of its own securities by a company
under section 68.

(7) A member of the company, past or present, shall not be liable to any call or contribution
in respect of any share held by him exceeding the amount of difference, if any, between
the amount paid on the share, or reduced amount, if any, which is to be deemed to have
been paid thereon, as the case may be, and the amount of the share as fixed by the order
of reduction.

(8) Where the name of any creditor entitled to object to the reduction of share capital
under this section is, by reason of his ignorance of the proceedings for reduction or of
their nature and effect with respect to his debt or claim, not entered on the list of creditors,
and after such reduction, the company 97[commits a default, within the meaning of section
6 of the Insolvency and Bankruptcy Code, 2016, in respect of the amount of his debt or
claim],—
(a) every person, who was a member of the company on the date of the registration
of the order for reduction by the Registrar, shall be liable to contribute to the
payment of that debt or claim, an amount not exceeding the amount which he would
have been liable to contribute if the company had commenced winding up on the
day immediately before the said date; and
(b) if the company is wound up, the Tribunal may, on the application of any such
creditor and proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons
so liable to contribute, and make and enforce calls and orders on the contributories
settled on the list, as if they were ordinary contributories in a winding up.

97
Substituted for the words ‘is unable within the meaning of sub-section (2) of section 271, to pay the
amount of his debt or claim’ by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the
clause (3) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number
S.O 3453(E) dated 15th November, 2016.

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

(9) Nothing in sub-section (8) shall affect the rights of the contributories among
themselves.

(10) If any officer of the company—

(a) knowingly conceals the name of any creditor entitled to object to the reduction;
(b) knowingly misrepresents the nature or amount of the debt or claim of any creditor;
or
(c) abets or is privy to any such concealment or misrepresentation as aforesaid,
he shall be liable under section 447.

(11) If a company fails to comply with the provisions of sub-section (4), it shall be
punishable with fine which shall not be less than five lakh rupees but which may extend
to twenty-five lakh rupees.

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 S. 67 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

67. Restrictions on purchase by company or giving of loans by it for purchase of

its shares.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.77 of the Companies Act, 1956]
[Refer Rule 16 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

[This section shall not apply to private companies -

(a) in whose share capital no other body corporate has invested any money;
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less
than twice its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company is not in default in repayment of such borrowings subsisting at the time of making
transactions under this section. Notification number G.S.R. 464(E) dated 5th June, 2015. The exceptions,
modifications and adaptations provided in the said notification dated 5th June 2015 shall be applicable to a
private company which has not committed a default in filing its financial statements under section 137 of
the said Act or annual return under section 92 of the said Act with the Registrar. Vide notification number
G.S.R. 583(E) dated 13th June 2017.]

[This section shall not apply to a Specified IFSC public company-

(a) in whose share capital no other body corporate has invested any money;
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less
than twice its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company is not in default in repayment of such borrowings subsisting at the time of making
transactions under this section, vide Notification number G.S.R. 8(E) dated 04th January 2017]

67. 98(1) No company limited by shares or by guarantee and having a share capital shall
have power to buy its own shares unless the consequent reduction of share capital is
effected under the provisions of this Act.

(2) No public company shall give, whether directly or indirectly and whether by means of
a loan, guarantee, the provision of security or otherwise, any financial assistance for the
purpose of, or in connection with, a purchase or subscription made or to be made, by any
person of or for any shares in the company or in its holding company.

(3) Nothing in sub-section (2) shall apply to—

(a) the lending of money by a banking company in the ordinary course of its business;
(b) the provision by a company of money in accordance with any scheme approved by
company through special resolution and in accordance with such requirements as
may be prescribed, for the purchase of, or subscription for, fully paid- up shares in

98
Section 67(1) shall not apply to nidhi companies, when shares are purchased by the company from a
member on his ceasing to be a depositor or borrower and it shall not be considered as reduction of capital,
under section 66 of the Companies Act, 2013. Refer notification number G.S.R. 465(E) dated 5th June
2015.

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 S. 67 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

the company or its holding company, if the purchase of, or the subscription for, the
shares held by trustees for the benefit of the employees or such shares held by the
employee of the company;
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]
(c) the giving of loans by a company to persons in the employment of the company
other than its directors or key managerial personnel, for an amount not exceeding
their salary or wages for a period of six months with a view to enabling them to
purchase or subscribe for fully paid-up shares in the company or its holding
company to be held by them by way of beneficial ownership:

Provided that disclosures in respect of voting rights not exercised directly by the
employees in respect of shares to which the scheme relates shall be made in the Board's
report in such manner as may be prescribed.

(4) Nothing in this section shall affect the right of a company to redeem any preference
shares issued by it under this Act or under any previous company law.

(5) If a company contravenes the provisions of this section, it shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to twenty-five lakh
rupees and every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to three years and with fine which shall not be
less than one lakh rupees but which may extend to twenty-five lakh rupees.

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 S. 68 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

68. Power of company to purchase its own securities.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.77A of the Companies Act, 1956]
[Refer Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-8, Form No. MGT-14, Form No. SH-9, Form No. SH-10, Form No. SH-11, Form No. SH-15]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Refer regulation (41) of Table F.II in Schedule I to the Act]

68. (1) Notwithstanding anything contained in this Act, but subject to the provisions of
sub-section (2), a company may purchase its own shares or other specified securities
(hereinafter referred to as buy-back) out of—
(a) its free reserves;
(b) the securities premium account; or
(c) the proceeds of the issue of any shares or other specified securities:

Provided that no buy-back of any kind of shares or other specified securities shall be
made out of the proceeds of an earlier issue of the same kind of shares or same kind of
other specified securities.

(2) No company shall purchase its own shares or other specified securities under sub-
section (1), unless—,
(a) the buy-back is authorised by its articles;
(b) a special resolution has been passed at a general meeting of the company
authorising the buy-back:
Provided that nothing contained in this clause shall apply to a case where—
(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free
reserves of the company; and
(ii) such buy-back has been authorised by the Board by means of a resolution
passed at its meeting;
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]
(c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and
free reserves of the company:
Provided that in respect of the buy-back of equity shares in any financial year, the
reference to twenty-five per cent. in this clause shall be construed with respect to
its total paid-up equity capital in that financial year;
(d) the ratio of the aggregate of secured and unsecured debts owed by the company
after buy-back is not more than twice the paid-up capital and its free reserves:
Provided that the Central Government may, by order, notify a higher ratio of the
debt to capital and free reserves for a class or classes of companies;
[Vide notification number S. O. 702(E) dated 10th March 2016, the debt to capital and free reserves
ratio shall be 6:1 for government companies within the meaning of clause (45) of section 2 of the
Companies Act, 2013 which carry on Non-Banking Finance Institution activities and Housing
Finance activities.]
(e) all the shares or other specified securities for buy-back are fully paid-up;

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

(f) the buy-back of the shares or other specified securities listed on any recognised
stock exchange is in accordance with the regulations made by the Securities and
Exchange Board in this behalf; and
(g) the buy-back in respect of shares or other specified securities other than those
specified in clause (f) is in accordance with such rules as may be prescribed:
Provided that no offer of buy-back under this sub-section shall be made within a
period of one year reckoned from the date of the closure of the preceding offer of
buy-back, if any.
[Letter of offer in Form No. SH-8]

(3) The notice of the meeting at which the special resolution is proposed to be passed
under clause (b) of sub-section (2) shall be accompanied by an explanatory statement
stating—
(a) a full and complete disclosure of all material facts;
(b) the necessity for the buy-back;
(c) the class of shares or securities intended to be purchased under the buy-back;
(d) the amount to be invested under the buy-back; and
(e) the time-limit for completion of buy-back.

(4) Every buy-back shall be completed within a period of one year from the date of passing
of the special resolution, or as the case may be, the resolution passed by the Board under
clause (b) of sub-section (2).

(5) The buy-back under sub-section (1) may be—

(a) from the existing shareholders or security holders on a proportionate basis;
(b) from the open market;
(c) by purchasing the securities issued to employees of the company pursuant to a
scheme of stock option or sweat equity.

(6) Where a company proposes to buy-back its own shares or other specified securities
under this section in pursuance of a special resolution under clause (b) of sub-section (2)
or a resolution under item (ii) of the proviso thereto, it shall, before making such buy-back,
file with the Registrar and the Securities and Exchange Board, a declaration of solvency
signed by at least two directors of the company, one of whom shall be the managing
director, if any, in such form as may be prescribed and verified by an affidavit to the effect
that the Board of Directors of the company has made a full inquiry into the affairs of the
company as a result of which they have formed an opinion that it is capable of meeting
its liabilities and will not be rendered insolvent within a period of one year from the date
of declaration adopted by the Board:
Provided that no declaration of solvency shall be filed with the Securities and
Exchange Board by a company whose shares are not listed on any recognised stock
exchange.
[Declaration of solvency in Form No. SH-9]

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

(7) Where a company buys back its own shares or other specified securities, it shall
extinguish and physically destroy the shares or securities so bought back within seven
days of the last date of completion of buy-back.

(8) Where a company completes a buy-back of its shares or other specified securities
under this section, it shall not make a further issue of the same kind of shares or other
securities including allotment of new shares under clause (a) of sub-section (1) of section
62 or other specified securities within a period of six months except by way of a bonus
issue or in the discharge of subsisting obligations such as conversion of warrants, stock
option schemes, sweat equity or conversion of preference shares or debentures into
equity shares.

(9) Where a company buys back its shares or other specified securities under this section,
it shall maintain a register of the shares or securities so bought, the consideration paid
for the shares or securities bought back, the date of cancellation of shares or securities,
the date of extinguishing and physically destroying the shares or securities and such other
particulars as may be prescribed.
[Register in Form No. SH-10]

(10) A company shall, after the completion of the buy-back under this section, file with the
Registrar and the Securities and Exchange Board a return containing such particulars
relating to the buy-back within thirty days of such completion, as may be prescribed:
[Form No. SH-11 and annex thereto a certificate of compliance in Form No. SH-15]
Provided that no return shall be filed with the Securities and Exchange Board by
a company whose shares are not listed on any recognised stock exchange.

(11) If a company makes any default in complying with the provisions of this section or
any regulation made by the Securities and Exchange Board, for the purposes of clause
(f) of sub-section (2), the company shall be punishable with fine which shall not be less
than one lakh rupees but which may extend to three lakh rupees and every officer of the
company who is in default shall be punishable with imprisonment for a term which may
extend to three years or with fine which shall not be less than one lakh rupees but which
may extend to three lakh rupees, or with both.

Explanation I.—For the purposes of this section and section 70, “specified securities”
includes employees’ stock option or other securities as may be notified by the Central
Government from time to time.

Explanation II.—For the purposes of this section, “free reserves” includes securities
premium account.

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 S. 69 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

69. Transfer of certain sums to capital redemption reserve account.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.77AA of the Companies Act, 1956]
[Refer regulations (38) (b) and (41) of Table F.II in Schedule I to the Act]

69. (1) Where a company purchases its own shares out of free reserves or securities
premium account, a sum equal to the nominal value of the shares so purchased shall be
transferred to the capital redemption reserve account and details of such transfer shall be
disclosed in the balance sheet.

(2) The capital redemption reserve account may be applied by the company, in paying up
unissued shares of the company to be issued to members of the company as fully paid
bonus shares.

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 S. 70 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

70. Prohibition for buy-back in certain circumstances.

[Except Section 70(2), brought to force from 12th September, 2013 vide notification number S.O. 2754(E)
dated 12th September, 2013.]
[Section 70(2), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.77B of the Companies Act, 1956]
[Refer regulation (41) of Table F.II in Schedule I to the Act]

70. (1) No company shall directly or indirectly purchase its own shares or other specified
securities—
(a) through any subsidiary company including its own subsidiary companies;
(b) through any investment company or group of investment companies; or
(c) if a default, is made by the company, in the repayment of deposits accepted
either before or after the commencement of this Act, interest payment thereon,
redemption of debentures or preference shares or payment of dividend to any
shareholder, or repayment of any term loan or interest payable thereon to any
financial institution or banking company:
Provided that the buy-back is not prohibited, if the default is remedied and a period
of three years has lapsed after such default ceased to subsist.

[Sec.70 (2) w.e.f. 01 April 2014]

(2) No company shall, directly or indirectly, purchase its own shares or other specified
securities in case such company has not complied with the provisions of sections 92, 123,
127 and section 129.

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Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

71. Debentures.

[Except section 71(9) to (11), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated
26th March, 2014.]
[Section 71(9) to (11), brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated
01st June, 2016]
[Corresponding 117,117A, 117B, 117C (except 117C (4) and (5)), 118,119,122 of the Companies Act, 1956]
[Refer Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-12; Form No. CHG-9, Form No. MGT-14]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Listed company also refer to for convertible debentures, inter alia, regulations 8(1)(d), 10(3)(b), 20, 21, 22,
23 of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and SEBI (Debenture
Trustees) Regulations, 1993; for non-convertible debenture refer to SEBI (Issue and Listing of Debt
Securities) Regulations, 2008; and for securitization company refer to SEBI (Public Offer and Listing of
Securitised Debt Instruments) Regulations, 2008 ]

71. (1) A company may issue debentures with an option to convert such debentures into
shares, either wholly or partly at the time of redemption:
Provided that the issue of debentures with an option to convert such debentures
into shares, wholly or partly, shall be approved by a special resolution passed at a general
meeting.
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(2) No company shall issue any debentures carrying any voting rights.

(3) Secured debentures may be issued by a company subject to such terms and
conditions as may be prescribed. [Rule 18 and Form No. CHG-9]

(4) Where debentures are issued by a company under this section, the company shall
create a debenture redemption reserve account out of the profits of the company available
for payment of dividend and the amount credited to such account shall not be utilised by
the company except for the redemption of debentures. [Rule 18 (7)]

(5) No company shall issue a prospectus or make an offer or invitation to the public or to
its members exceeding five hundred for the subscription of its debentures, unless the
company has, before such issue or offer, appointed one or more debenture trustees and
the conditions governing the appointment of such trustees shall be such as may be
prescribed. [Rule 18 (2) read with Rule 18(6)]

(6) A debenture trustee shall take steps to protect the interests of the debenture- holders
and redress their grievances in accordance with such rules as may be prescribed. [Rule
18 (3) and rule 18(4) read with Rule 18(6)]

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any
contract with the debenture-holders secured by a trust deed, shall be void in so far as it
would have the effect of exempting a trustee thereof from, or indemnifying him against,

Page 140
 S. 71 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

any liability for breach of trust, where he fails to show the degree of care and due diligence
required of him as a trustee, having regard to the provisions of the trust deed conferring
on him any power, authority or discretion:

Provided that the liability of the debenture trustee shall be subject to such
exemptions as may be agreed upon by a majority of debenture-holders holding not less
than three- fourths in value of the total debentures at a meeting held for the purpose.

(8) A company shall pay interest and redeem the debentures in accordance with the terms
and conditions of their issue.

[Sec.71(9) w.e.f. 01 June 2016]

(9) Where at any time the debenture trustee comes to a conclusion that the assets of the
company are insufficient or are likely to become insufficient to discharge the principal
amount as and when it becomes due, the debenture trustee may file a petition before the
Tribunal and the Tribunal may, after hearing the company and any other person interested
in the matter, by order, impose such restrictions on the incurring of any further liabilities
by the company as the Tribunal may consider necessary in the interests of the debenture-
holders. [Corresponding Section 117B(4) of the Companies Act, 1956]

[Sec.71(10) w.e.f. 01 June 2016]

(10) Where a company fails to redeem the debentures on the date of their maturity or fails
to pay interest on the debentures when it is due, the Tribunal may, on the application of
any or all of the debenture-holders, or debenture trustee and, after hearing the parties
concerned, direct, by order, the company to redeem the debentures forthwith on payment
of principal and interest due thereon. [Corresponding Section 117C(4) of the Companies Act, 1956]

[Sec.71(11) w.e.f. 01 June 2016]

(11) If any default is made in complying with the order of the Tribunal under this section,
every officer of the company who is in default shall be punishable with imprisonment for
a term which may extend to three years or with fine which shall not be less than two lakh
rupees but which may extend to five lakh rupees, or with both. [Corresponding Section 117C(5)
of the Companies Act, 1956]

(12) A contract with the company to take up and pay for any debentures of the company
may be enforced by a decree for specific performance.

(13) The Central Government may prescribe the procedure, for securing the issue of
debentures, the form of debenture trust deed, the procedure for the debenture-holders to
inspect the trust deed and to obtain copies thereof, quantum of debenture redemption
reserve required to be created and such other matters. [Rule 18 (5) read with Rule 18(6)] [Rule
18(8) for inspection of trust deed and obtain copy thereof] [Form No. SH-12]
[For every allotment of securities, file Return of allotment in Form PAS-3 under section 39.]

Page 141
 S. 72 - Chapter IV [Ss.43 to 72]

Relevant rules: The Companies (Share Capital and Debentures) Rules, 2014

72. Power to nominate.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.109A and Sec.109B of the Companies Act, 1956]
[Refer Rule 19 of the Companies (Share Capital and Debentures) Rules, 2014]
[Form No. SH-13, Form No. SH-14]

72. (1) Every holder of securities of a company may, at any time, nominate, in the
prescribed manner, any person to whom his securities shall vest in the event of his death.
[Nomination in Form No. SH-13]

(2) Where the securities of a company are held by more than one person jointly, the joint
holders may together nominate, in the prescribed manner, any person to whom all the
rights in the securities shall vest in the event of death of all the joint holders.

(3) Notwithstanding anything contained in any other law for the time being in force or in
any disposition, whether testamentary or otherwise, in respect of the securities of a
company, where a nomination made in the prescribed manner purports to confer on any
person the right to vest the securities of the company, the nominee shall, on the death of
the holder of securities or, as the case may be, on the death of the joint holders, become
entitled to all the rights in the securities, of the holder or, as the case may be, of all the
joint holders, in relation to such securities, to the exclusion of all other persons, unless
the nomination is varied or cancelled in the prescribed manner.
[Cancellation or variation of nomination in Form No. SH-14]

(4) Where the nominee is a minor, it shall be lawful for the holder of the securities, making
the nomination to appoint, in the prescribed manner, any person to become entitled to the
securities of the company, in the event of the death of the nominee during his minority.

Page 142
 S. 73 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

CHAPTER V ACCEPTANCE OF
DEPOSITS BY COMPANIES
73. Prohibition on acceptance of deposits from public.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956, though sec.58A dealt with deposits]
[Refer Rules 3(1), 3(2), 3(3), 3(6), 3(7), Rules 4(1), 4(4), 4(5), 4(6), Rule 5, 6, 7, Rule 10, 11, 12, 13, 14,
15, 16, 17, Rule 21 of the Companies (Acceptance of Deposits) Rules, 2014]
[Form DPT-1, Form DPT-2, Form DPT-3] [Documents filed with ROC can be inspected by public (through
MCA portal) as per section 399 of the Act.]

73. (1) On and after the commencement of this Act, no company shall invite, accept or
renew deposits under this Act from the public except in a manner provided under this
Chapter:
Provided that nothing in this sub-section shall apply to a banking company and
non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of
1934) and to such other company as the Central Government may, after consultation with
the Reserve Bank of India, specify in this behalf.

(2) A company may, subject to the passing of a resolution in general meeting and subject
to such rules as may be prescribed in consultation with the Reserve Bank of India, accept
deposits from its members on such terms and conditions, including the provision of
security, if any, or for the repayment of such deposits with interest, as may be agreed
upon between the company and its members, subject to the fulfilment of the following
conditions, namely:—
(a) issuance of a circular to its members including therein a statement showing the
financial position of the company, the credit rating obtained, the total number of
depositors and the amount due towards deposits in respect of any previous
deposits accepted by the company and such other particulars in such form and in
such manner as may be prescribed;
[Form DPT-1. As per rule 7(2), execute Deposit Trust Deed in Form DPT-2, at least 7 days before
circular or advertisement in lieu of circular. File with ROC, on or before the 30th day of June, of every
year, file with the Registrar, a return in Form DPT-3]
(b) filing a copy of the circular along with such statement with the Registrar within thirty
days before the date of issue of the circular;
99
[(c) depositing, on or before the thirtieth day of April each year, such sum which shall
not be less than twenty per cent. of the amount of its deposits maturing during the

99
Substituted clause (c) in sub-sections (2) of Section 73 of the principal Act by section 15(i) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 15th August 2018 vide notification no. S.O. 3300(E) dated 05th July

Page 143
 S. 73 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

following financial year and kept in a scheduled bank in a separate bank account
to be called deposit repayment reserve account;]
100
[(d) omitted ]
(e) certifying that the company has not committed any default in the repayment of
deposits accepted either before or after the commencement of this Act or payment
of interest on 101[such deposits and where a default had occurred, the company
made good the default and a period of five years had elapsed since the date of
making good the default]; and
(f) providing security, if any for the due repayment of the amount of deposit or the
interest thereon including the creation of such charge on the property or assets of
the company:

Provided that in case where a company does not secure the deposits or secures
such deposits partially, then, the deposits shall be termed as ‘‘unsecured deposits’’
and shall be so quoted in every circular, form, advertisement or in any document
related to invitation or acceptance of deposits.
[Vide notification number 583(E) dated 13th June 2017, clauses (a) to (e) of sub-section (2) of section 73
Shall not apply to a private company-
(A) which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid
up share capital, free reserves and securities premium account; or
(B) which is a start-up, for five years from the date of its incorporation; or
(C) which fulfils all of the following conditions, namely:-
(a) which is not an associate or a subsidiary company of any other company;
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less
than twice of its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of
accepting deposits under this section:
Provided that the company referred to in clauses (A), (B) or (C) shall file the details of monies accepted to
the Registrar in such manner as may be specified. The exceptions, modifications and adaptations provided
in the said notification dated 5th June 2015 shall be applicable to a private company which has not

2018. Prior to substitution, clause (c) read as “(c) depositing such sum which shall not be less than fifteen
per cent. of the amount of its deposits maturing during a financial year and the financial year next following,
and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve
account;”.

100
Omitted clause (d) in sub-sections (2) of Section 73 of the principal Act by section 15(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 15th August 2018 vide notification no. S.O. 3300(E) dated 05th July 2018. Prior to
omission, clause (d) read as “(d) providing such deposit insurance in such manner and to such extent as
may be prescribed;”.

101
Substituted for the words ‘such deposits’ in clause (e) in sub-sections (2) of Section 73 of the principal
Act by section 15(iii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 15th August 2018 vide notification no.
S.O. 3300(E) dated 05th July 2018. Prior to omission, clause (d) read as “(d) providing such deposit
insurance in such manner and to such extent as may be prescribed;”.

Page 144
 S. 73 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.]
[The aforesaid notification 583(E) of 13th June 2017 substituted the exemption to a private company granted
earlier vide Notification number G.S.R. 464(E) dated 5th June 2015. Per said notification of 5th June 2015
it was provided that clauses (a) to (e) of sub-section (2) of section 73 shall not apply to a private company
which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up
share capital and free reserves, and such company shall file the details of monies so accepted to the
Registrar in such manner as may be specified.]

[Clauses (a) to (e) of sub-section (2) of section 73 shall not apply to a Specified IFSC public company which
accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share
capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in
such manner as may be specified, per Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified
IFSC public company]

(3) Every deposit accepted by a company under sub-section (2) shall be repaid with
interest in accordance with the terms and conditions of the agreement referred to in that
sub-section.

(4) Where a company fails to repay the deposit or part thereof or any interest thereon
under sub-section (3), the depositor concerned may apply to the Tribunal for an order
directing the company to pay the sum due or for any loss or damage incurred by him as
a result of such non-payment and for such other orders as the Tribunal may deem fit.
[CLB exercised powers until NCLT was setup and notified. Refer Annexure O5]

(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2)
shall not be used by the company for any purpose other than repayment of deposits.

Page 145
 S. 74 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

74. Repayment of deposits, etc., accepted before commencement of this Act.

[Section 74(1) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Section 74(2) and (3) brought to force from 06 June 2014 vide notification number S.O. 1459(E) dated 06th
June 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 19 and Rule 20 of the Companies (Acceptance of Deposits) Rules, 2014]
[Form DPT-4] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]
[For clarification on repayment of deposits, refer general circular 09/2015 dated 18th June, 2015]

[Sec.74 (1) w.e.f. 01 April 2014]

74. (1) Where in respect of any deposit accepted by a company before the
commencement of this Act, the amount of such deposit or part thereof or any interest due
thereon remains unpaid on such commencement or becomes due at any time thereafter,
the company shall—
(a) file, within a period of three months from such commencement or from the date on
which such payments, are due, with the Registrar a statement of all the deposits
accepted by the company and sums remaining unpaid on such amount with the
interest payable thereon along with the arrangements made for such repayment,
notwithstanding anything contained in any other law for the time being in force or
under the terms and conditions subject to which the deposit was accepted or any
scheme framed under any law; and
[Form DPT-4][Date for filing Form DPT-4 extended upto 31 August 2014 by circular 27/2014 dated
30 June 2014 reproduced.]
102
[(b) repay within three years from such commencement or on or before expiry of the
period for which the deposits were accepted, whichever is earlier.
Provided that renewal of any such deposits shall be done in accordance
with the provisions of Chapter V and the rules made thereunder.]
[It is clarified by MCA that any amount received by a private company from its members, directors
or their relatives prior to 01 April 2014 shall not be treated as ‘deposit’. However, any renewal or
acceptance of such amount form said parties by a private company on or after 01 April 2014 shall
be treated as ‘deposit’. Refer Circular no. 05/2015 dated 30 March 2015.]

[Sec.74(2) w.e.f. 06 June 2016]

(2) The Tribunal may on an application made by the company, after considering the
financial condition of the company, the amount of deposit or part thereof and the interest

102
Substituted clause (b) in sub-sections (1) of Section 74 of the principal Act by section 16 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 15th August 2018 vide notification no. S.O. 3300(E) dated 05th July
2018. Prior to substitution, clause (b) read as “(d) ) repay within one year from such commencement or
from the date on which such payments are due, whichever is earlier”.

Page 146
 S. 74 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

payable thereon and such other matters, allow further time as considered reasonable to
the company to repay the deposit.
[CLB exercised powers until NCLT was setup and notified. Refer notification number S.O. 1460(E) dated
06th June 2014.]

[Sec.74(3) w.e.f. 01 June 2016]

(3) If a company fails to repay the deposit or part thereof or any interest thereon within
the time specified in sub-section (1) or such further time as may be allowed by the Tribunal
under sub-section (2), the company shall, in addition to the payment of the amount of
deposit or part thereof and the interest due, be punishable with fine which shall not be
less than one crore rupees but which may extend to ten crore rupees and every officer of
the company who is in default shall be punishable with imprisonment which may extend
to seven years or with fine which shall not be less than twenty-five lakh rupees but which
may extend to two crore rupees, or with both.

Page 147
 S. 75 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

75. Damages for fraud.

[Section 75 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[No corresponding provision under the Companies Act, 1956]

75. (1) Where a company fails to repay the deposit or part thereof or any interest thereon
referred to in section 74 within the time specified in sub-section (1) of that section or such
further time as may be allowed by the Tribunal under sub-section (2) of that section, and
it is proved that the deposits had been accepted with intent to defraud the depositors or
for any fraudulent purpose, every officer of the company who was responsible for the
acceptance of such deposit shall, without prejudice to the provisions contained in sub-
section (3) of that section and liability under section 447, be personally responsible,
without any limitation of liability, for all or any of the losses or damages that may have
been incurred by the depositors.

(2) Any suit, proceedings or other action may be taken by any person, group of persons
or any association of persons who had incurred any loss as a result of the failure of the
company to repay the deposits or part thereof or any interest thereon.

[Provision of class action suit by Depositors is provided under section 245, where the management or
conduct of affairs of the company are being conducted in a manner prejudicial to the interest of the company
or its members or depositors. Section 246 is also relevant, which is not yet brought to force.]

Page 148
 S. 76 - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

76. Acceptance of deposits from public by certain companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.58A of the Companies Act, 1956]
[Refer Rules 2(1)(d) and (e), 3(4), 3(5), 3(6), 3(7), 4(2), 4(3), 4(4), 4(5), 4(6), 5, 6, 7, 10, 11, 12, 13, 14, 15,
16, 17, 19, 21 of the Companies (Acceptance of Deposits) Rules, 2014]
[Form DPT-1 under section 73(2)] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

76. (1) Notwithstanding anything contained in section 73, a public company, having such
net worth or turnover as may be prescribed, may accept deposits from persons other than
its members subject to compliance with the requirements provided in sub-section (2) of
section 73 and subject to such rules as the Central Government may, in consultation with
the Reserve Bank of India, prescribe:

Provided that such a company shall be required to obtain the rating (including its
networth, liquidity and ability to pay its deposits on due date) from a recognised credit
rating agency for informing the public the rating given to the company at the time of
invitation of deposits from the public which ensures adequate safety and the rating shall
be obtained for every year during the tenure of deposits:

Provided further that every company accepting secured deposits from the public
shall within thirty days of such acceptance, create a charge on its assets of an amount
not less than the amount of deposits accepted in favour of the deposit holders in
accordance with such rules as may be prescribed.

(2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of
deposits from public under this section.

Page 149
 S. 76A - Chapter V [Ss.73 to 76A]

Relevant rules: The Companies (Acceptance of Deposits) Rules, 2014

103
[76A. Punishment for contra-vention of section 73 or section 76.

76A. Where a company accepts or invites or allows or causes any other person to accept
or invite on its behalf any deposit in contravention of the manner or the conditions
prescribed under section 73 or section 76 or rules made thereunder or if a company fails
to repay the deposit or part thereof or any interest due thereon within the time specified
under section 73 or section 76 or rules made thereunder or such further time as may be
allowed by the Tribunal under section 73,—
(a) the company shall, in addition to the payment of the amount of deposit or part
thereof and the interest due, be punishable with fine which shall not be less than 104[one
crore rupees or twice the amount of deposit accepted by the company, whichever is lower]
but which may extend to ten crore rupees; and
(b) every officer of the company who is in default shall be punishable with
imprisonment which may extend to 105[seven years and with fine] which shall not be less
than twenty-five lakh rupees but which may extend to two crore rupees 106[omitted]:
Provided that if it is proved that the officer of the company who is in default, has
contravened such provisions knowingly or wilfully with the intention to deceive the
company or its shareholders or depositors or creditors or tax authorities, he shall be liable
for action under section 447.]

103
Section 76A inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May,
2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

104
Substituted for the words ‘one crore rupees’ in clause (a) of section 76A of the principal Act by Section
17(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of
the same date.

105
Substituted for the words ‘seven years or with fine’ in clause (b) of section 76A of the principal Act by
Section 17(b)(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

106
Omitted words ‘or with both’ in clause (b) of section 76A of the principal Act by Section 17(b)(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

Page 150
 S. 77 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

CHAPTER VI REGISTRATION OF
CHARGES
77. Duty to register charges, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 125, 128, 129,132, 133, 145 of the Companies Act, 1956]
[Refer Rules 3, 4 and 6 of the Companies (Registration of Charges) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. CHG-1, Form No. CHG-2, Form No. CHG-9.] [Documents filed with ROC can be inspected by
public (through MCA portal) as per section 399 of the Act.]

77. (1) It shall be the duty of every company creating a charge within or outside India, on
its property or assets or any of its undertakings, whether tangible or otherwise, and
situated in or outside India, to register the particulars of the charge signed by the company
and the charge-holder together with the instruments, if any, creating such charge in such
form, on payment of such fees and in such manner as may be prescribed, with the
Registrar within thirty days of its creation:
[Form No. CHG-1 for creation or modification of charge - Form No. CHG-9 for debenture]

107
[Provided that the Registrar may, on an application by the company, allow such
registration to be made –

(a) in case of charges created before the commencement of the Companies

(Amendment) Ordinance, 2018, within a period of three hundred days of such creation;
or

(b) in case of charges created on or after the commencement of the Companies

(Amendment) Ordinance, 2018, within a period of sixty days of such creation,

on payment of such additional fees as may be prescribed:

Provided further that if the registration is not made within the period specified –

107
Substituted for the first and the second provisos to sub-section (1) to Section 77 of the principal
Act by Section 11 of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force
from 02nd November 2018. Prior to substitution, it read as “Provided that the Registrar may, on an
application by the company, allow such registration to be made within a period of three hundred days of
such creation on payment of such additional fees as may be prescribed:

Provided further that if registration is not made within a period of three hundred days of such
creation, the company shall seek extension of time in accordance with section 87: [Application for extension
in Form No. CHG-8]”.

Page 151
 S. 77 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

(a) in clause (a) to the first proviso, the registration of the charge shall be made
within six months from the date of commencement of the Companies (Amendment)
Ordinance, 2018, on payment of such additional fees as may be prescribed and different
fees may be prescribed for different classes of companies;

(b) in clause (b) to the first proviso, the Registrar may, on an application, allow
such registration to be made within a further period of sixty days after payment of such
advalorem fees as may be prescribed.]

Provided also that any subsequent registration of a charge shall not prejudice any
right acquired in respect of any property before the charge is actually registered.
108
[Provided also that this section shall not apply to such charges as may be
prescribed in consultation with the Reserve Bank of India.]

(2) Where a charge is registered with the Registrar under sub-section (1), he shall issue
a certificate of registration of such charge in such form and in such manner as may be
prescribed to the company and, as the case may be, to the person in whose favour the
charge is created. [Certificate in Form No. CHG-2]

(3) Notwithstanding anything contained in any other law for the time being in force, no
charge created by a company shall be taken into account by the liquidator 109[appointed
under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be] or any
other creditor unless it is duly registered under sub-section (1) and a certificate of
registration of such charge is given by the Registrar under sub-section (2).

(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment
of the money secured by a charge.

108
Inserted a third proviso in sub-section (1) of Section 77 of the principal Act by section 18 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

109
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (4) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 152
 S. 78 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

78. Application for registration of charge.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.134 of the Companies Act, 1956]
[Refer Rule 3 of the Companies (Registration of Charges) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. CHG-1, Form No. CHG-9] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

78. Where a company fails to 110 [register the charge within the period of thirty days
referred to in sub-section (1) of section 77], without prejudice to its liability in respect of
any offence under this Chapter, the person in whose favour the charge is created may
apply to the Registrar for registration of the charge along with the instrument created for
the charge, within such time and in such form and manner as may be prescribed and the
Registrar may, on such application, within a period of fourteen days after giving notice to
the company, unless the company itself registers the charge or shows sufficient cause
why such charge should not be registered, allow such registration on payment of such
fees, as may be prescribed:
[Form No. CHG-1 for creation or modification of charge - Form No. CHG-9]

Provided that where registration is effected on application of the person in whose

favour the charge is created, that person shall be entitled to recover from the company
the amount of any fees or additional fees paid by him to the Registrar for the purpose of
registration of charge.

110
Substituted for the words "register the charge within the period specified in section 77" in Section 78 of
the principal Act by section 19 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification
no. S.O. 1833(E) of the same date.

Page 153
 S. 79 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

79. Section 77 to apply in certain matters.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.127 and 135 of the Companies Act, 1956]
[Refer Rules 3 and 5 of the Companies (Registration of Charges) Rules, 2014]
[Form No. CHG-1, Form No. CHG-3, Form No. CHG-9] [Documents filed with ROC can be inspected by
public (through MCA portal) as per section 399 of the Act.]

79. The provisions of section 77 relating to registration of charges shall, so far as may be,
apply to—
(a) a company acquiring any property subject to a charge within the meaning of that
section; or,
(b) any modification in the terms or conditions or the extent or operation of any charge
registered under that section.

[Form No. CHG-1 for creation or modification of charge- Form No. CHG-9] [Certificate of registration on
modification of charge in Form No. CHG-3]

Page 154
 S. 80 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

80. Date of notice of charge.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.126 of the Companies Act, 1956]

80. Where any charge on any property or assets of a company or any of its undertakings
is registered under section 77, any person acquiring such property, assets, undertakings
or part thereof or any share or interest therein shall be deemed to have notice of the
charge from the date of such registration.

Page 155
 S. 81 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

81. Register of charges to be kept by Registrar.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.130 of the Companies Act, 1956]
[Refer Rule 7 of the Companies (Registration of Charges) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]

81. (1) The Registrar shall, in respect of every company, keep a register containing
particulars of the charges registered under this Chapter in such form and in such manner
as may be prescribed.

(2) A register kept in pursuance of this section shall be open to inspection by any person
on payment of such fees as may be prescribed for each inspection.

Page 156
 S. 82 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

82. Company to report satisfaction of charge.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.138 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Registration of Charges) Rules, 2014]
[Form No. CHG-4, Form No. CHG-5] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

82. (1) A company shall give intimation to the Registrar in the prescribed form, of the
payment or satisfaction in full of any charge registered under this Chapter within a period
of thirty days from the date of such payment or satisfaction 111[omitted].
[Form No. CHG-4 for satisfaction of charge]

112
[Provided that in case of a Specified IFSC public company, the Registrar may,
on an application by the company, allow such registration to be made within a period of
three hundred days of such creation on payment of such additional fees as may be
prescribed.]
113
[Provided that in case of a Specified IFSC private company, the Registrar may,
on an application by the company, allow such registration to be made within a period of
three hundred days of such creation on payment of such additional fees as may be
prescribed.]
114
[Provided that the Registrar may, on an application by the company or the
charge holder, allow such intimation of payment or satisfaction to be made within a period
of three hundred days of such payment or satisfaction on payment of such additional fees
as may be prescribed.]

(2) The Registrar shall, on receipt of intimation under sub-section (1), cause a notice to
be sent to the holder of the charge calling upon him to show cause within such time not
exceeding fourteen days, as may be specified in such notice, as to why payment or

111
Omitted words “and the provisions of sub-section (1) of section 77 shall, as far as may be, apply to an
intimation given under this section.” in sub-sections (1) of Section 82 of the principal Act by section 20(i) of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 05th July 2018 vide notification no. S.O. 3299(E) of the same date.

112
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

113
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

114
Inserted a proviso in sub-sections (1) of Section 82 of the principal Act by section 20(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 05th July 2018 vide notification no. S.O. 3299(E) of the same date.

Page 157
 S. 82 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

satisfaction in full should not be recorded as intimated to the Registrar, and if no cause is
shown, by such holder of the charge, the Registrar shall order that a memorandum of
satisfaction shall be entered in the register of charges kept by him under section 81 and
shall inform the company that he has done so:
[Memorandum of satisfaction of Charge in Form No. CHG-5]

Provided that the notice referred to in this sub-section shall not be required to be
sent, in case the intimation to the Registrar in this regard is in the specified form and
signed by the holder of charge.

(3) If any cause is shown, the Registrar shall record a note to that effect in the register of
charges and shall inform the company.

(4) Nothing in this section shall be deemed to affect the powers of the Registrar to make
an entry in the register of charges under section 83 or otherwise than on receipt of an
intimation from the company.

Page 158
 S. 83 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

83. Power of Registrar to make entries of satisfaction and release in absence of

intimation from company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.139, 140 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Registration of Charges) Rules, 2014]

83. (1) The Registrar may, on evidence being given to his satisfaction with respect to any
registered charge,—
(a) that the debt for which the charge was given has been paid or satisfied in whole or
in part; or
(b) that part of the property or undertaking charged has been released from the charge
or has ceased to form part of the company’s property or undertaking, enter in the
register of charges a memorandum of satisfaction in whole or in part, or of the fact
that part of the property or undertaking has been released from the charge or has
ceased to form part of the company’s property or undertaking, as the case may be,
notwithstanding the fact that no intimation has been received by him from the
company.

(2) The Registrar shall inform the affected parties within thirty days of making the entry in
the register of charges kept under sub-section (1) of section 81.

Page 159
 S. 84 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

84. Intimation of appointment of receiver or manager.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.137 of the Companies Act, 1956]
[Refer Rule 9 of the Companies (Registration of Charges) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. CHG-6] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

84. (1) If any person obtains an order for the appointment of a receiver of, or of a person
to manage, the property, subject to a charge, of a company or if any person appoints such
receiver or person under any power contained in any instrument, he shall, within a period
of thirty days from the date of the passing of the order or of the making of the appointment,
give notice of such appointment to the company and the Registrar along with a copy of
the order or instrument and the Registrar shall, on payment of the prescribed fees, register
particulars of the receiver, person or instrument in the register of charges.
[Notice of appointment or cessation of receiver or manager in Form No. CHG-6]

(2) Any person appointed under sub-section (1) shall, on ceasing to hold such
appointment, give to the company and the Registrar a notice to that effect and the
Registrar shall register such notice.

Page 160
 S. 85 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

85. Company’s register of charges.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 131, 136, 143, 144 of the Companies Act, 1956]
[Refer Rules 10 and 11 of the Companies (Registration of Charges) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. CHG-7]

85. (1) Every company shall keep at its registered office a register of charges in such form
and in such manner as may be prescribed, which shall include therein all charges and
floating charges affecting any property or assets of the company or any of its
undertakings, indicating in each case such particulars as may be prescribed:
[Register of charge in Form No. CHG-7]

Provided that a copy of the instrument creating the charge shall also be kept at
the registered office of the company along with the register of charges.

(2) The register of charges and instrument of charges, kept under sub-section (1) shall
be open for inspection during business hours—
(a) by any member or creditor without any payment of fees; or
(b) by any other person on payment of such fees as may be prescribed,
subject to such reasonable restrictions as the company may, by its articles, impose.

Page 161
 S. 86 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

86. Punishment for contravention.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.142 of the Companies Act, 1956]

86. 115[1] If any company contravenes any provision of this Chapter, the company shall
be punishable with fine which shall not be less than one lakh rupees but which may extend
to ten lakh rupees and every officer of the company who is in default shall be punishable
with imprisonment for a term which may extend to six months or with fine which shall not
be less than twenty-five thousand rupees but which may extend to one lakh rupees, or
with both.

116
[(2) If any person wilfully furnishes any false or incorrect information or
knowingly suppresses any material information, required to be registered in accordance
with the provisions of section 77, he shall be liable for action under section 447.]

115
Section 86 of the principal Act numbered as sub-section (1) thereof by Section 12 of the
Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November
2018.
.
116
Section 86 of the principal Act inserted new sub-section (2) by Section 12 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.

Page 162
 S. 87 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

117
[87. Rectification by Central Government in register of charges.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.141 of the Companies Act, 1956]
[Refer Rule 12 of the Companies (Registration of Charges) Rules, 2014]
[Power under this section is delegated to Regional Directors. Refer notification number S.O. 1352(E) dated
21st May, 2014 and notification number S.O. 4090(E) dated 19th December, 2016]

87. The Central Government on being satisfied that-

(a) the omission to give intimation to the Registrar of the payment or satisfaction
of a charge, within the time required under this Chapter; or

(b) the omission or misstatement of any particulars with respect to any such charge
or modification or with respect to any memorandum of satisfaction or other entry made in
pursuance of section 82 or section 83,

was accidental or due to inadvertence or some other sufficient cause or it is not of a nature
to prejudice the position of creditors or shareholders of the company, it may, on the
application of the company or any person interested and on such terms and conditions
as the Central Government deems just and expedient, direct that the time for the giving

117
Substituted Section 87 of the principal Act by Section 13 of the Companies (Amendment) Act, 2019 (22
of 2019) deemed to have came into force from 02nd November 2018. Prior to substitution it read as “(1) The
Central Government on being satisfied that—
(i) (a) the omission to file with the Registrar the particulars of any charge created by a company or any
charge subject to which any property has been acquired by a company or any modification of such
charge; or
(b) the omission to register any charge within the time required under this Chapter or the omission
to give intimation to the Registrar of the payment or the satisfaction of a charge, within the time
required under this Chapter; or
(c) the omission or mis-statement of any particular with respect to any such charge or modification
or with respect to any memorandum of satisfaction or other entry made in pursuance of section
82 or section 83,
was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to
prejudice the position of creditors or shareholders of the company; or
(ii) on any other grounds, it is just and equitable to grant relief,
it may on the application of the company or any person interested and on such terms and
conditions as it may seem to the Central Government just and expedient, direct that the time
for the filing of the particulars or for the registration of the charge or for the giving of intimation
of payment or satisfaction shall be extended or, as the case may require, that the omission or
mis-statement shall be rectified.
[Application for extension in Form No. CHG-8]

(2) Where the Central Government extends the time for the registration of a charge, the order shall not
prejudice any rights acquired in respect of the property concerned before the charge is actually registered.”.
.

Page 163
 S. 87 - Chapter VI [Ss.77 to 87]

Relevant rules: The Companies (Registration of Charges) Rules, 2014

of intimation of payment or satisfaction shall be extended or, as the case may require,
that the omission or misstatement shall be rectified.]

Page 164
 S. 88 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

CHAPTER VII MANAGEMENT AND

ADMINISTRATION
88. Register of members, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 150, 151, 152, 152A, 153, 153A, 153B, 157, 158 of the Companies Act, 1956]
[Refer Rules 3, 4, 5, 6, 7, 8, 15 and 28 of the Companies (Management and Administration) Rules, 2014]
[Form No. MGT-1, Form No. MGT-2, Form No. MGT-3]
[Refer regulation (63) of Table F.II in Schedule I to the Act]

88. (1) Every company shall keep and maintain the following registers in such form and
in such manner as may be prescribed, namely:—
(a) register of members indicating separately for each class of equity and preference
shares held by each member residing in or outside India; [Form No. MGT-1]
(b) register of debenture-holders; and
[Form No. MGT-2]
(c) register of any other security holders. [Form No. MGT-2]

(2) Every register maintained under sub-section (1) shall include an index of the names
included therein.

(3) The register and index of beneficial owners maintained by a depository under section
11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding
register and index for the purposes of this Act.

(4) A company may, if so authorised by its articles, keep in any country outside India, in
such manner as may be prescribed, a part of the register referred to in sub-section (1),
called “foreign register” containing the names and particulars of the members, debenture-
holders, other security holders or beneficial owners residing outside India.
[Form No. MGT-3]

(5) If a company does not maintain a register of members or debenture-holders or other

security holders or fails to maintain them in accordance with the provisions of sub-section
(1) or sub-section (2), the company and every officer of the company who is in default
shall be punishable with fine which shall not be less than fifty thousand rupees but which
may extend to three lakh rupees and where the failure is a continuing one, with a further
fine which may extend to one thousand rupees for every day, after the first during which
the failure continues.

Page 165
 S. 89 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

89. Declaration in respect of beneficial interest in any share.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.187C of the Companies Act, 1956]
[Refer Rule 9 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. MGT.4, Form No. MGT-5, Form No. MGT-6] [Documents filed with ROC can be inspected by
public (through MCA portal) as per section 399 of the Act.]
[Refer regulation (4) of Table F.II in Schedule I to the Act]

118
89. (1) Where the name of a person is entered in the register of members of a company
as the holder of shares in that company but who does not hold the beneficial interest in
such shares, such person shall make a declaration within such time and in such form as
may be prescribed to the company specifying the name and other particulars of the
person who holds the beneficial interest in such shares. [Form No. MGT.4]

(2) Every person who holds or acquires a beneficial interest in share of a company shall
make a declaration to the company specifying the nature of his interest, particulars of the
person in whose name the shares stand registered in the books of the company and such
other particulars as may be prescribed. [Form No. MGT-5]

(3) Where any change occurs in the beneficial interest in such shares, the person referred
to in sub-section (1) and the beneficial owner specified in sub-section (2) shall, within a
period of thirty days from the date of such change, make a declaration to the company in
such form and containing such particulars as may be prescribed. [Form No. MGT-5]

(4) The Central Government may make rules to provide for the manner of holding and
disclosing beneficial interest and beneficial ownership under this section.

(5) If any person fails, to make a declaration as required under sub-section (1) or sub-
section (2) or sub-section (3), without any reasonable cause, he shall be punishable with
fine which may extend to fifty thousand rupees and where the failure is a continuing one,
with a further fine which may extend to one thousand rupees for every day after the first
during which the failure continues.

118
This section shall not apply to a Government Company - vide notification number G.S.R. 463(E) dated
5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.

Page 166
 S. 89 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

119
(6) Where any declaration under this section is made to a company, the company shall
make a note of such declaration in the register concerned and shall file, within thirty days
from the date of receipt of declaration by it, a return in the prescribed form with the
Registrar in respect of such declaration with such fees or additional fees as may be
prescribed, 120[omitted]. [Form No. MGT-6]

(7) If a company, required to file a return under sub-section (6), fails to do so before the
expiry of the time specified 121[therein], the company and every officer of the company
who is in default shall be punishable with fine which shall not be less than five hundred
rupees but which may extend to one thousand rupees and where the failure is a
continuing one, with a further fine which may extend to one thousand rupees for every
day after the first during which the failure continues.

(8) No right in relation to any share in respect of which a declaration is required to be

made under this section but not made by the beneficial owner, shall be enforceable by
him or by any person claiming through him.

(9) Nothing in this section shall be deemed to prejudice the obligation of a company to
pay dividend to its members under this Act and the said obligation shall, on such payment,
stand discharged.
122
[(10) For the purposes of this section and section 90, beneficial interest in a share
includes, directly or indirectly, through any contract, arrangement or otherwise, the right
or entitlement of a person alone or together with any other person to— (i) exercise or

119
In Section 89(6), for a Specified IFSC public company, words “thirty days” be read as “sixty days” in
section 89(6). Vide Notification number G.S.R. 8(E) dated 04th January 2017. And for a Specified IFSC
private company, words “thirty days” be read as “sixty days” in section 89(6). Vide Notification number
G.S.R. 9(E) dated 04th January 2017.

120
Omitted the words "within the time specified under section 403" in sub-sections (6) of Section 89 of the
principal Act by clause (i) of section 21 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide
notification no. S.O. 1833(E) of the same date.

121
Substituted for the words "under the first proviso to sub-section (1) of section 403" in sub-sections (7) of
Section 89 of the principal Act by clause (ii) of section 21 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 07th
May 2018 vide notification no. S.O. 1833(E) of the same date.

122
Inserted sub-section (10) in Section 89 of the principal Act by clause (iii) of section 21 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 13th June 2018 vide notification no. S.O. 2422(E) of the same date, read with
corrigendum notification no. S.O. 3020(E) dated 21st June 2018.

Page 167
 S. 89 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

cause to be exercised any or all of the rights attached to such share; or (ii) receive or
participate in any dividend or other distribution in respect of such share.]

Page 168
 S. 90 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

123
[90. Register of significant beneficial owners in a company.

[Original section 90 was brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Corresponding Sec.187D of the Companies Act, 1956]
[Relevant rules: the Companies (Significant Beneficial Owners) Rules, 2018]

90. (1) Every individual, who acting alone or together, or through one or more persons or
trust, including a trust and persons resident outside India, holds beneficial interests, of
not less than twenty-five per cent. or such other percentage as may be prescribed, in
shares of a company or the right to exercise, or the actual exercising of significant
influence or control as defined in clause (27) of section 2, over the company (herein
referred to as "significant beneficial owner"), shall make a declaration to the company,
specifying the nature of his interest and other particulars, in such manner and within such
period of acquisition of the beneficial interest or rights and any change thereof, as may
be prescribed:
Provided that the Central Government may prescribe a class or classes of persons
who shall not be required to make declaration under this sub-section.

(2) Every company shall maintain a register of the interest declared by individuals under
sub-section (1) and changes therein which shall include the name of individual, his date
of birth, address, details of ownership in the company and such other details as may be
prescribed.

123
Section 90 of the principal Act substituted by section 22 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 13th
June 2018 vide notification no. S.O. 2422(E) of the same date. Prior to its substitution, it read as:

“90. Investigation of beneficial ownership of shares in certain cases.

90. Where it appears to the Central Government that there are reasons so to do, it may appoint one or
more competent persons to investigate and report as to beneficial ownership with regard to any share or
class of shares and the provisions of section 216 shall, as far as may be, apply to such investigation as if it
were an investigation ordered under that section.”.

This section shall not apply to a Government Company - vide notification number G.S.R. 463(E) dated 5th
June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.

Page 169
 S. 90 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

(3) The register maintained under sub-section (2) shall be open to inspection by any
member of the company on payment of such fees as may be prescribed.

(4) Every company shall file a return of significant beneficial owners of the company and
changes therein with the Registrar containing names, addresses and other details as may
be prescribed within such time, in such form and manner as may be prescribed.
124
[(4A) Every company shall take necessary steps to identify an individual who is a
significant beneficial owner in relation to the company and require him to comply with the
provisions of this section.]

(5) A company shall give notice, in the prescribed manner, to any person (whether or not
a member of the company) whom the company knows or has reasonable cause to
believe—
(a) to be a significant beneficial owner of the company;
(b) to be having knowledge of the identity of a significant beneficial owner or
another person likely to have such knowledge; or
(c) to have been a significant beneficial owner of the company at any time during
the three years immediately preceding the date on which the notice is issued,
and who is not registered as a significant beneficial owner with the company as
required under this section.

(6) The information required by the notice under sub-section (5) shall be given by the
concerned person within a period not exceeding thirty days of the date of the notice.

(7) The company shall,—

(a) where that person fails to give the company the information required by the
notice within the time specified therein; or
(b) where the information given is not satisfactory,
apply to the Tribunal within a period of fifteen days of the expiry of the period specified in
the notice, for an order directing that the shares in question be subject to restrictions with
regard to transfer of interest, suspension of all rights attached to the shares and such
other matters as may be prescribed.

(8) On any application made under sub-section (7), the Tribunal may, after giving an
opportunity of being heard to the parties concerned, make such order restricting the rights
attached with the shares within a period of sixty days of receipt of application or such
other period as may be prescribed.

124
Sub-section (4A) inserted by section 14(i) of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 170
 S. 90 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

125
[(9) The company or the person aggrieved by the order of the Tribunal may make an
application to the Tribunal for relaxation or lifting of the restrictions placed under sub-
section (8), within a period of one year from the date of such order :

Provided that if no such application has been filed within a period of one year from
the date of the order under sub-section (8), such shares shall be transferred to the
authority constituted under sub-section (5) of section 125, in such manner as may be
prescribed;]
126
[(9A) The Central Government may make rules for the purposes of this section.]

(10) If any person fails to make a declaration as required under sub-section (1), he shall
be punishable 127[with imprisonment for a term which may extend to one year or] with fine
which shall not be less than one lakh rupees but which may extend to ten lakh rupees
128
[or with both] and where the failure is a continuing one, with a further fine which may
extend to one thousand rupees for every day after the first during which the failure
continues.

(11) If a company, required to maintain register under sub-section (2) and file the
information under sub-section (4) 129 [or required to take necessary steps under sub-
section (4A)], fails to do so or denies inspection as provided therein, the company and
every officer of the company who is in default shall be punishable with fine which shall
not be less than ten lakh rupees but which may extend to fifty lakh rupees and where the

125
Substituted sub-section (9) of section 90 of the principal Act by Section 14(ii) of the of the
Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November
2018. Prior to substitution it read as “(9) The company or the person aggrieved by the order of the Tribunal
may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section
(8).”.
.

126
Sub-section (9A) inserted by section 14(iii) of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

127
Inserted words in sub-section (10) of section 90 of the principal Act by Section 11(ii)(a) of the
Companies (Amendment) Ordinance, 2019 (3 of 2019) which was promulgated by the President of India
on 12th January 2019 and deemed to have came into force from 02nd November 2018.
.
128
Inserted words in sub-section (10) of section 90 of the principal Act by Section 11(ii)(b) of the
Companies (Amendment) Ordinance, 2019 (3 of 2019) which was promulgated by the President of India
on 12th January 2019 and deemed to have came into force from 02nd November 2018.
.

129
Inserted in sub-section (11) by section 14(iv) of the Companies (Amendment) Act, 2019 (22 of 2019)
with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

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failure is a continuing one, with a further fine which may extend to one thousand rupees
for every day after the first during which the failure continues.

(12) If any person wilfully furnishes any false or incorrect information or suppresses any
material information of which he is aware in the declaration made under this section, he
shall be liable to action under section 447.

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 S. 91 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

91. Power to close register of members or debenture-holders or other security

holders.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.154 of the Companies Act, 1956]
[Refer Rule 10 of the Companies (Management and Administration) Rules, 2014]
[Refer regulation (22) of Table F.II in Schedule I to the Act]

91. (1) A company may close the register of members or the register of debenture- holders
or the register of other security holders for any period or periods not exceeding in the
aggregate forty-five days in each year, but not exceeding thirty days at any one time,
subject to giving of previous notice of at least seven days or such lesser period as may
be specified by Securities and Exchange Board for listed companies or the companies
which intend to get their securities listed, in such manner as may be prescribed.

(2) If the register of members or of debenture-holders or of other security holders is closed

without giving the notice as provided in sub-section (1), or after giving shorter notice than
that so provided, or for a continuous or an aggregate period in excess of the limits
specified in that sub-section, the company and every officer of the company who is in
default shall be liable to a penalty of five thousand rupees for every day subject to a
maximum of one lakh rupees during which the register is kept closed.

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 S. 92 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

92. Annual return.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 159, 160, 161, 162 and Schedule V of the Companies Act, 1956] [See section 2(69)]
[Refer Rules 11, 12 and 15 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. MGT-7, Form No. MGT-8, Form No. MGT-9] [Documents filed with ROC can be inspected by
public (through MCA portal) as per section 399 of the Act.]
[For Company Law Settlement Scheme, 2014 [CLSS-2014] notified vide Circular 34/2014 dated 12 August
2014 refer Annexure C39.]

92. (1) Every company shall prepare a return (hereinafter referred to as the annual return)
in the prescribed form containing the particulars as they stood on the close of the financial
year regarding—
(a) its registered office, principal business activities, particulars of its holding,
subsidiary and associate companies;
(b) its shares, debentures and other securities and shareholding pattern;
130
[ (c) omitted;]
(d) its members and debenture-holders along with changes therein since the close of
the previous financial year;
(e) its promoters, directors, key managerial personnel along with changes therein
since the close of the previous financial year;
(f) meetings of members or a class thereof, Board and its various committees along
with attendance details;
131
(g) remuneration of directors and key managerial personnel;
(h) penalty or punishment imposed on the company, its directors or officers and details
of compounding of offences and appeals made against such penalty or
punishment;
(i) matters relating to certification of compliances, disclosures as may be prescribed;

130
Omitted clause (c) of sub-section (1) of Section 92 of the principal Act by clause (i)(a) of section 23 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from ….. vide notification no. S.O. …(E) of the same date. Prior to its
omission it read as “(c ) its indebtedness;”.

131
Vide notification number G.S.R. 583(E) dated 13th June 2017, section 92(1)(g) Shall apply to private
companies which are small companies, namely:- "(g) aggregate amount of remuneration drawn by
directors;". The exceptions, modifications and adaptations provided in the said notification dated 5th June
2015 shall be applicable to a private company which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.

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(j) details, as may be prescribed, in respect of shares held by or on behalf of the

Foreign Institutional Investors 132[omitted]; and
(k) such other matters as may be prescribed,
and signed by a director and the company secretary, or where there is no company
secretary, by a company secretary in practice:
133
[Provided that in relation to One Person Company, small company and private
company (if such private company is a start-up), the annual return shall be signed by the
company secretary, or where there is no company secretary, by the director of the
company.]
134
[Provided further that the Central Government may prescribe abridged form of
annual return for "One Person Company, small company and such other class or classes
of companies as may be prescribed".]
[Form No. MGT-7] [It is, clarified that Form MGT-7 shall not apply to annual returns in respect of
companies whose financial year ended on or before 1 st April, 2014 and for annual returns pertaining to
earlier years. Refer Circular 22/2014 dated 25 June 2014.]
[Annual Return for every company is required to be signed by one of the Directors and Company Secretary
of the Company. Where there is no Company Secretary, annual return shall be signed by Practising
Company Secretary, except in case of OPC and small company.]

(2) The annual return, filed by a listed company or, by a company having such
paid-up capital [or] turnover as may be prescribed, shall be certified by a company
secretary in practice in the prescribed form, stating that the annual return discloses the
facts correctly and adequately and that the company has complied with all the provisions
of this Act. [Form No. MGT-8]
[Word ‘or’ stated in bracket above, is replaced for word ‘and’. See Annexure O4. Limits prescribed are - A
company (private or public) having paid-up share capital of Rs. 10 crore or more; or turnover of Rs.50 crore
or more]

132
Omitted words ‘indicating their names, addresses, countries of incorporation, registration and
percentage of shareholding held by them’ in clause (j) of sub-section (1) of Section 92 of the principal Act
by clause (i)(b) of section 23 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from ….. vide notification no. S.O.
…(E) of the same date. Prior to its omission it read as “(c ) its indebtedness;”.

133
Proviso substituted vide notification number G.S.R. 583(E) date 13th June 2017. Prior to substitution it
read as “Provided that in relation to One Person Company and small company, the annual return shall be
signed by the company secretary, or where there is no company secretary, by the director of the company.”.
The exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall
be applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.

134
Inserted a second proviso to sub-section (1) of Section 92 of the principal Act by clause (i)(c) of section
23 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from ….. vide notification no. S.O. …(E) of the same date. Prior
to its omission it read as “(c ) its indebtedness;”.

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 S. 92 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

135
[ (3) Every company shall place a copy of the annual return on the website of
the company, if any, and the web-link of such annual return shall be disclosed in the
Board's report.] [Form No. MGT-9]
[Section 92(3) shall not apply to a Specified IFSC public company, vide Notification number G.S.R. 8(E) dated
04th January 2017.]
[Section 92(3) shall not apply to a Specified IFSC private company, vide Notification number G.S.R. 9(E) dated
04th January 2017.]

(4) Every company shall file with the Registrar a copy of the annual return, within
sixty days from the date on which the annual general meeting is held or where no annual
general meeting is held in any year within sixty days from the date on which the annual
general meeting should have been held together with the statement specifying the
reasons for not holding the annual general meeting, with such fees or additional fees as
may be prescribed, 136[omitted].
137
[(5) If any company fails to file its annual return under sub-section (4), before
the expiry of the period specified therein, such company and its every officer who is in
default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure,
with further penalty of one hundred rupees for each day during which such failure
continues, subject to a maximum of five lakh rupees.]
[For OPC and small companies, lesser penalty u/s. 446B applicable w.e.f. 09 February 2018]

135
Substituted sub-section (3) of Section 92 of the principal Act by clause (ii) of section 23 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from …. vide notification no. S.O. ….(E) of the same date. Prior to its substitution, it
read as ‘An extract of the annual return in such form as may be prescribed shall form part of the Board’s
report.’.

136
Omitted the words "within the time specified under section 403" in sub-sections (4) of Section 92 of the
principal Act by clauses (iii) of section 23 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018
vide notification no. S.O. 1833(E) of the same date.

137
Substituted sub-section (5) of section 92 of the principal Act by Section 15 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution it read as “(5) If a company fails to file its annual return under sub-section (4), before the expiry
of the period specified [therein], the company shall be punishable with fine which shall not be less than fifty
thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to six months or with fine which
shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.”. Words
‘therein’ substituted for the words "under section 403 with additional fee" in sub-sections (5) of Section 92
of the principal Act by clause (iv) of section 23 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018
vide notification no. S.O. 1833(E) of the same date.
.

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 S. 92 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

(6) If a company secretary in practice certifies the annual return otherwise than in
conformity with the requirements of this section or the rules made thereunder, he shall be
punishable with fine which shall not be less than fifty thousand rupees but which may
extend to five lakh rupees.

Page 177
 S. 93 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

138
[93. Omitted - Return to be filed with Registrar in case promoters’ stake changes.]

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 13 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. MGT-10 – for change of 2% or more] [Refer Circular 17/2014 dated 11 June 2014.]
[Document filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

138
Omitted Section 93 of the principal Act by section 24 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 13th
June 2018 vide notification no. S.O. 2422(E) of the same date. Prior to omission, it read as “93. Every listed
company shall file a return in the prescribed form with the Registrar with respect to change in the number
of shares held by promoters and top ten shareholders of such company, within fifteen days of such
change.”.

Page 178
 S. 94 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

94. Place of keeping and inspection of registers, returns, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.163 of the Companies Act, 1956]
[Refer Rules 14, 15 and 16 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

94. (1) The registers required to be kept and maintained by a company under section 88
and copies of the annual return filed under section 92 shall be kept at the registered office
of the company:

Provided that such registers or copies of return may also be kept at any other
place in India in which more than one-tenth of the total number of members entered in
the register of members reside, if approved by a special resolution passed at a general
meeting of the company 139[omitted]:
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)].

Provided further that the period for which the registers, returns and records are
required to be kept shall be such as may be prescribed.

(2) The registers and their indices, except when they are closed under the provisions of
this Act, and the copies of all the returns shall be open for inspection by any member,
debenture-holder, other security holder or beneficial owner, during business hours without
payment of any fees and by any other person on payment of such fees as may be
prescribed.

(3) Any such member, debenture-holder, other security holder or beneficial owner or any
other person may—
(a) take extracts from any register, or index or return without payment of any fee; or
(b) require a copy of any such register or entries therein or return on payment of such
fees as may be prescribed.

139
Omitted the words "and the Registrar has been given a copy of the proposed special resolution in
advance" in sub-sections (1) of Section 94 of the principal Act by clauses (i) of section 25 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 13th June 2018 vide notification no. S.O. 2422(E) of the same date.

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 S. 94 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

140
[Provided that such particulars of the register or index or return as may be prescribed
shall not be available for inspection under sub-section (2) or for taking extracts or copies
under this sub-section.]

(4) If any inspection or the making of any extract or copy required under this section is
refused, the company and every officer of the company who is in default shall be liable,
for each such default, to a penalty of one thousand rupees for every day subject to a
maximum of one lakh rupees during which the refusal or default continues.

(5) The Central Government may also, by order, direct an immediate inspection of the
document, or direct that the extract required shall forthwith be allowed to be taken by the
person requiring it.
[The Central Government has delegated the powers and functions vested in it under sub-section (5) of
section 94 to the Regional Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad, Hyderabad and
Shillong, subject to the condition that the Central Government may revoke such delegation of powers or
may itself exercise the powers under the said sub-section, if in its opinion such a course of action is
necessary in the public interest. Vide notification number S.O. 891(E) dated 31st March 2015]

[Comments: In the absence of provisions similar to proviso to section 163(1) of the Companies Act 1956,
every company is required to keep register of members and index and annual returns at its registered office.
Any person seeking copies of register of members or its index or annual return, need to first take inspection
and then make application to the company and also need to pay the prescribed charges as stated in sub-
section(3)(b).]

140
Inserted a proviso in sub-sections (3) of Section 94 of the principal Act by clauses (ii) of section 25 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 13th June 2018 vide notification no. S.O. 2422(E) of the same date.

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 S. 95 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

95. Registers, etc., to be evidence.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.164 of the Companies Act, 1956]

95. The registers, their indices and copies of annual returns maintained under sections
88 and 94 shall be prima facie evidence of any matter directed or authorised to be inserted
therein by or under this Act.

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 S. 96 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

96. Annual general meeting.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.165, 166, 170 of the Companies Act, 1956]

96. (1) Every company other than a One Person Company shall in each year hold in
addition to any other meetings, a general meeting as its annual general meeting and shall
specify the meeting as such in the notices calling it, and not more than fifteen months
shall elapse between the date of one annual general meeting of a company and that of
the next:

Provided that in case of the first annual general meeting, it shall be held within a
period of nine months from the date of closing of the first financial year of the company
and in any other case, within a period of six months, from the date of closing of the
financial year:

Provided further that if a company holds its first annual general meeting as
aforesaid, it shall not be necessary for the company to hold any annual general meeting
in the year of its incorporation:

Provided also that the Registrar may, for any special reason, extend the time
within which any annual general meeting, other than the first annual general meeting,
shall be held, by a period not exceeding three months.
[Form GNL-1. Refer Circular 9/2014]
[The State of Jammu and Kashmir faced unprecedented floods, particularly in the Kashmir valley in
September 2014. In view of the exceptional circumstances, Registrar of Companies Jammu and
Kashmir was advised to exercise powers conferred on him under the th ird proviso to section 96(1)
of the Companies Act, 2013 to grant extension of time upto 31/12/2014 to those companies
registered in the State of Jammu and Kashmir who could not hold their AGMs (other than first AGM)
for the financial year 2013-14 within the stipulated time. See Circular 45/2014 dated 18th November
2014.]

(2) Every annual general meeting shall be called during business hours, that is, between
9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the
registered office of the company or at some other place within the city, town or village in
which the registered office of the company is situate:
141
[Provided that annual general meeting of an unlisted company may be held at
any place in India if consent is given in writing or by electronic mode by all the members
in advance:

141
Substituted for the words ‘Provided that’ in the proviso to sub-sections (2) of Section 96 of the principal
Act by section 26 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the

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 S. 96 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

Provided further that] the Central Government may exempt any company from the
provisions of this sub-section subject to such conditions as it may impose.
142
[In respect of section 8 companies, a proviso is inserted vide notification number
G.S.R. 466(E) dated 5th June, 2015 - Provided further that the time, date and place of
each annual general meeting are decided upon before-hand by the board of directors
having regard to the directions, if any, given in this regard by the company in its general
meeting.]

Explanation.—For the purposes of this sub-section, “National Holiday” means and

includes a day declared as National Holiday by the Central Government.
[For Government Company, it is provided vide notification number G.S.R. 463(E) dated 5th June, 2015,that
- in sub-section (2), for the words "some other place within the city, town or village in which the registered
office of the company is situate", the words "such other place as the Central Government may approve in this
behalf' shall be substituted.
For Government Company, by Notification number G.S.R. 582(E) dated 13th June, 2017, principal notification
number G.S.R. 463(E) dated 5th June, 2015 has been amended and words “the words "such other place as
the Central Government may approve in this behalf' are substituted with the words “such other place within
the city, town or village in which the registered office of the company is situate or such other place as the
Central Government may approve in this behalf”. Further vide notification number G.S.R. 582(E) dated 13th
June 2017, for Government company it is provided that the exceptions, modifications and adaptations shall
be applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

President of India on 03rd January 2018. It is brought to force from 13th June 2018 vide notification no. S.O.
2422(E) of the same date.

142
The exceptions, modifications and adaptations provided in the said notification shall be applicable to a
company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar., vide notification number G.S.R. 584(E) dated 13th June 2017.

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 S. 97 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

97. Power of Tribunal to call annual general meeting.

[Section 97 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]

[Corresponding Sec.167 of the Companies Act, 1956]

97. (1) If any default is made in holding the annual general meeting of a company under
section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles
of the company, on the application of any member of the company, call, or direct the
calling of, an annual general meeting of the company and give such ancillary or
consequential directions as the Tribunal thinks expedient:

Provided that such directions may include a direction that one member of the
company present in person or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions
of the Tribunal, be deemed to be an annual general meeting of the company under this
Act.

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 S. 98 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

98. Power of Tribunal to call meetings of members, etc.

[Section 98 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.186 of the Companies Act, 1956]

98. (1) If for any reason it is impracticable to call a meeting of a company, other than an
annual general meeting, in any manner in which meetings of the company may be called,
or to hold or conduct the meeting of the company in the manner prescribed by this Act or
the articles of the company, the Tribunal may, either suo motu or on the application of
any director or member of the company who would be entitled to vote at the meeting,—
(a) order a meeting of the company to be called, held and conducted in such manner
as the Tribunal thinks fit; and
(b) give such ancillary or consequential directions as the Tribunal thinks expedient,
including directions modifying or supplementing in relation to the calling, holding
and conducting of the meeting, the operation of the provisions of this Act or articles
of the company:

Provided that such directions may include a direction that one member of the
company present in person or by proxy shall be deemed to constitute a meeting.

(2) Any meeting called, held and conducted in accordance with any order made under
sub-section (1) shall, for all purposes, be deemed to be a meeting of the company duly
called, held and conducted.

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 S. 99 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

99. Punishment for default in complying with provisions of sections 96 to 98.

[Section 99 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.168 of the Companies Act, 1956]

99. If any default is made in holding a meeting of the company in accordance with section
96 or section 97 or section 98 or in complying with any directions of the Tribunal, the
company and every officer of the company who is in default shall be punishable with fine
which may extend to one lakh rupees and in the case of a continuing default, with a further
fine which may extend to five thousand rupees for every day during which such default
continues.

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 S. 100 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

100. Calling of extraordinary general meeting.

[Except section 100(6), brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[Section 100(6) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.169 (9) of the Companies Act, 1956]
[Refer Rule 17 of the Companies (Management and Administration) Rules, 2014]
[Corresponding Sec.163 of the Companies Act, 1956]
[Refer regulations (42) and (43) of Table F.II in Schedule I to the Act]

100. (1) The Board may, whenever it deems fit, call an extraordinary general meeting of
the company.
143
[Provided that in case of a Specified IFSC public company, the Board may subject to
the consent of all the shareholders, convene its extraordinary general meeting at any
place within or outside India.]
144
[Provided that in case of a Specified IFSC private company, the Board may subject to
the consent of all the shareholders, convene its extraordinary general meeting at any
place within or outside India.]
145
[Provided that an extraordinary general meeting of the company, other than of the
wholly owned subsidiary of a company incorporated outside India, shall be held at a place
within India.]

(2) The Board shall, at the requisition made by,—

(a) in the case of a company having a share capital, such number of members who
hold, on the date of the receipt of the requisition, not less than one-tenth of such of
the paid-up share capital of the company as on that date carries the right of voting;
(b) in the case of a company not having a share capital, such number of members who
have, on the date of receipt of the requisition, not less than one-tenth of the total
voting power of all the members having on the said date a right to vote,

143
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

144
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

145
Inserted a proviso to sub-section (1) of Section 100 of the principal Act by Section 27 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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 S. 100 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

call an extraordinary general meeting of the company within the period specified in sub-
section (4).

(3) The requisition made under sub-section (2) shall set out the matters for the
consideration of which the meeting is to be called and shall be signed by the requisitionists
and sent to the registered office of the company.

(4) If the Board does not, within twenty-one days from the date of receipt of a valid
requisition in regard to any matter, proceed to call a meeting for the consideration of that
matter on a day not later than forty-five days from the date of receipt of such requisition,
the meeting may be called and held by the requisitonists themselves within a period of
three months from the date of the requisition.

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in the
same manner in which the meeting is called and held by the Board.

[Sec.100 (6) w.e.f. 01 April 2014]

(6) Any reasonable expenses incurred by the requisitionists in calling a meeting under
sub-section (4) shall be reimbursed to the requisitionists by the company and the sums
so paid shall be deducted from any fee or other remuneration under section 197 payable
to such of the directors who were in default in calling the meeting.

Page 188
 S. 101 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

101. Notice of meeting.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.171, 172 of the Companies Act, 1956]
[Refer Rule 18 of the Companies (Management and Administration) Rules, 2014]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

101. 146(1) A general meeting of a company may be called by giving not less than clear
twenty-one days’ notice either in writing or through electronic mode in such manner as
may be prescribed:
147
[ Provided that a general meeting may be called after giving shorter notice than
that specified in this sub-section if consent, in writing or by electronic mode, is accorded
thereto—
(i) in the case of an annual general meeting, by not less than ninety-five per cent.
of the members entitled to vote thereat; and
(ii) in the case of any other general meeting, by members of the company—
(a) holding, if the company has a share capital, majority in number of
members entitled to vote and who represent not less than ninety-five per cent. of
such part of the paid-up share capital of the company as gives a right to vote at
the meeting; or
(b) having, if the company has no share capital, not less than ninety-five per
cent. of the total voting power exercisable at that meeting:

146
For section 8 company, in sub-section(1), for the words “twenty one days”, the words “fourteen days”
shall be substituted, vide notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions,
modifications and adaptations provided in the said notification shall be applicable to a company covered
under section 8 of the said Act which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar., vide
notification number G.S.R. 584(E) dated 13th June 2017.

147
Substituted a proviso to sub-section (1) of Section 101 of the principal Act by Section 28 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date. Prior to substitution it read as ‘’Provided that a general meeting may be called after giving a shorter
notice if consent is given in writing or by electronic mode by not less than ninety-five per cent. of the
members entitled to vote at such meeting.”.

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 S. 101 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

Provided further that where any member of a company is entitled to vote only on
some resolution or resolutions to be moved at a meeting and not on the others, those
members shall be taken into account for the purposes of this sub-section in respect of the
former resolution or resolutions and not in respect of the latter.]
[It is clarified that a company holding a general meeting after giving a shorter notice as provided under
section 101 of the Act may also circulate financial statements (to be laid/considered in the same general
meeting) at such shorter notice. Refer general circular no. 11/2015 dated 21st July 2015.]

(2) Every notice of a meeting shall specify the place, date, day and the hour of the meeting
and shall contain a statement of the business to be transacted at such meeting.

(3) The notice of every meeting of the company shall be given to—
(a) every member of the company, legal representative of any deceased member or
the assignee of an insolvent member;
(b) the auditor or auditors of the company; and
(c) every director of the company.

(4) Any accidental omission to give notice to, or the non-receipt of such notice by, any
member or other person who is entitled to such notice for any meeting shall not invalidate
the proceedings of the meeting.

Page 190
 S. 102 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

102. Statement to be annexed to notice.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.173 of the Companies Act, 1956]
[All Regional Directors and Registrar of Companies were instructed by MCA that all companies which have
issued notices of general meeting on or after 12.9.2013, the statement to be annexed to the shall comply
with additional requirements as prescribed in section 102 of the Act. Refer Circular 15/2013 dated 13
September 2013.]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

102. (1) A statement setting out the following material facts concerning each item of
special business to be transacted at a general meeting, shall be annexed to the notice
calling such meeting, namely:—
(a) the nature of concern or interest, financial or otherwise, if any, in respect of each
items of—
(i) every director and the manager, if any;
(ii) every other key managerial personnel; and
(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);
(b) any other information and facts that may enable members to understand the
meaning, scope and implications of the items of business and to take decision
thereon.

(2) For the purposes of sub-section (1),—

(a) in the case of an annual general meeting, all business to be transacted thereat shall
be deemed special, other than—
(i) the consideration of financial statements and the reports of the Board of Directors
and auditors;
(ii) the declaration of any dividend;
(iii) the appointment of directors in place of those retiring;
(iv) the appointment of, and the fixing of the remuneration of, the auditors; and
(b) in the case of any other meeting, all business shall be deemed to be special:
Provided that where any item of special business to be transacted at a meeting of
the company relates to or affects any other company, the extent of shareholding
interest in that other company of every promoter, director, manager, if any, and of every
other key managerial personnel of the first mentioned company shall, if the extent of
such shareholding is not less than two per cent. of the paid-up share capital of that
company, also be set out in the statement.

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 S. 102 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

(3) Where any item of business refers to any document, which is to be considered at the
meeting, the time and place where such document can be inspected shall be specified in
the statement under sub-section (1).

(4) Where as a result of the non-disclosure or insufficient disclosure in any statement

referred to in sub-section (1), being made by a promoter, director, manager, if any, or
other key managerial personnel, any benefit which accrues to such promoter, director,
manager or other key managerial personnel or their relatives, either directly or indirectly,
the promoter, director, manager or other key managerial personnel, as the case may be,
shall hold such benefit in trust for the company, and shall, without prejudice to any other
action being taken against him under this Act or under any other law for the time being in
force, be liable to compensate the company to the extent of the benefit received by him.
148
[(5) Without prejudice to the provisions of sub-section (4), if any default is made in
complying with the provisions of this section, every promoter, director, manager or other
key managerial personnel of the company who is in default shall be liable to a penalty of
fifty thousand rupees or five times the amount of benefit accruing to the promoter, director,
manager or other key managerial personnel or any of his relatives, whichever is higher.]

148
Substituted sub-section (5) of section 102 of the principal Act by Section 16 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution it read as “(5) If any default is made in complying with the provisions of this section, every
promoter, director, manager or other key managerial personnel who is in default shall be punishable with
fine which may extend to fifty thousand rupees or five times the amount of benefit accruing to the promoter,
director, manager or other key managerial personnel or any of his relatives, whichever is more.“.
.

Page 192
 S. 103 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

103. Quorum for meetings.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.174 of the Companies Act, 1956]
[Refer regulations (44) and (49) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

103. (1) Unless the articles of the company provide for a larger number,—
(a) in case of a public company,—
(i) five members personally present if the number of members as on the date of
meeting is not more than one thousand;
(ii) fifteen members personally present if the number of members as on the date of
meeting is more than one thousand but up to five thousand;
(iii) thirty members personally present if the number of members as on the date of
the meeting exceeds five thousand;
(b) in the case of a private company, two members personally present, shall be the
quorum for a meeting of the company.

(2) If the quorum is not present within half-an-hour from the time appointed for holding a
meeting of the company—
(a) the meeting shall stand adjourned to the same day in the next week at the same
time and place, or to such other date and such other time and place as the Board may
determine; or
(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

Provided that in case of an adjourned meeting or of a change of day, time or place of

meeting under clause (a), the company shall give not less than three days notice to the
members either individually or by publishing an advertisement in the newspapers (one in
English and one in vernacular language) which is in circulation at the place where the
registered office of the company is situated.
[Refer regulation (49) of Table F.II in Schedule I to the Act]

(3) If at the adjourned meeting also, a quorum is not present within half-an-hour from the
time appointed for holding meeting, the members present shall be the quorum.
[Refer regulation (49) of Table F.II in Schedule I to the Act]
[Comments: As per FAQ of ICSI, one person cannot form quorum of an adjourned meeting. Please refer to
Department of Company Affairs’ (now Ministry of Company Affairs) Letter No. 8/16(1)/61-PR dated May 19,

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 S. 103 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

1961 wherein the views of the Department on this issue are also that a single person cannot by himself
constitute a quorum at the adjourned AGM.]

Page 194
 S. 104 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

104. Chairman of meetings.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.175 of the Companies Act, 1956]
[Refer regulations (45), (46) and (47) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

104. (1) Unless the articles of the company otherwise provide, the members personally
present at the meeting shall elect one of themselves to be the Chairman thereof on a
show of hands.

(2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in
accordance with the provisions of this Act and the Chairman elected on a show of hands
under sub-section (1) shall continue to be the Chairman of the meeting until some other
person is elected as Chairman as a result of the poll, and such other person shall be the
Chairman for the rest of the meeting.

Page 195
 S. 105 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

105. Proxies.

[Except third and fourth proviso of section 105(1) and Section 105(7), brought to force from 12th September,
2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Third and fourth proviso of Section 105(1) and Section 105(7) brought to force from 01 April 2014 vide
notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.176 and Schedule IX of the Companies Act, 1956]
[Refer Rule 19 of the Companies (Management and Administration) Rules, 2014]
[Form No. MGT-11]
[Refer regulations (57), (58) and (59) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]
105. (1) Any member of a company entitled to attend and vote at a meeting of the
company shall be entitled to appoint another person as a proxy to attend and vote at the
meeting on his behalf:

Provided that a proxy shall not have the right to speak at such meeting and shall
not be entitled to vote except on a poll:

Provided further that, unless the articles of a company otherwise provide, this
sub- section shall not apply in the case of a company not having a share capital:

[Third proviso w.e.f. 01 April 2014]

Provided also that the Central Government may prescribe a class or classes of
companies whose members shall not be entitled to appoint another person as a proxy:

[This proviso w.e.f. 01 April 2014]

Provided also that a person appointed as proxy shall act on behalf of such
member or number of members not exceeding fifty and such number of shares as may
be prescribed.

(2) In every notice calling a meeting of a company which has a share capital, or the articles
of which provide for voting by proxy at the meeting, there shall appear with reasonable
prominence a statement that a member entitled to attend and vote is entitled to appoint a
proxy, or, where that is allowed, one or more proxies, to attend and vote instead of
himself, and that a proxy need not be a member.

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 S. 105 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

(3) If default is made in complying with sub-section (2), every officer of the company who
is in default shall be 149[liable to a penalty of five thousand rupees].

(4) Any provision contained in the articles of a company which specifies or requires a
longer period than forty-eight hours before a meeting of the company, for depositing with
the company or any other person any instrument appointing a proxy or any other
document necessary to show the validity or otherwise relating to the appointment of a
proxy in order that the appointment may be effective at such meeting, shall have effect
as if a period of forty-eight hours had been specified in or required by such provision for
such deposit.

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person
or one of a number of persons specified in the invitations are issued at the company’s
expense to any member entitled to have a notice of the meeting sent to him and to vote
thereat by proxy, every officer of the company who knowingly issues the invitations as
aforesaid or wilfully authorises or permits their issue shall be punishable with fine which
may extend to one lakh rupees:

Provided that an officer shall not be punishable under this sub-section by reason
only of the issue to a member at his request in writing of a form of appointment naming
the proxy, or of a list of persons willing to act as proxies, if the form or list is available on
request in writing to every member entitled to vote at the meeting by proxy.

(6) The instrument appointing a proxy shall—

(a) be in writing; and
(b) be signed by the appointer or his attorney duly authorised in writing or, if the
appointer is a body corporate, be under its seal or be signed by an officer or an
attorney duly authorised by it.
[Form No. MGT-11]

[Sec.105 (7) w.e.f. 01 April 2014]

(7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be
questioned on the ground that it fails to comply with any special requirements specified
for such instrument by the articles of a company.

(8) Every member entitled to vote at a meeting of the company, or on any resolution to
be moved thereat, shall be entitled during the period beginning twenty-four hours before
the time fixed for the commencement of the meeting and ending with the conclusion of
the meeting, to inspect the proxies lodged, at any time during the business hours of the

149
Substituted for the words ‘punishable with fine which may extend to five thousand rupees ‘ in sub-section
(3) of section 105 of the principal Act by Section 17 of the Companies (Amendment) Act, 2019 (22 of 2019)
deemed to have came into force from 02nd November 2018.
.

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 S. 105 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

company, provided not less than three days’ notice in writing of the intention so to inspect
is given to the company.
[Comments: As per FAQ of ICSI, Proxy is a facility given to the members to exercise his voting rights in
case the member is unable to attend and vote himself. The provision for electronic voting is a platform
facilitating the members to vote on their own. Hence if a member himself votes electronically, the concept
of appointment and voting by proxy becomes irrelevant.
Personal comments: Though first proviso to sub-section (1) provides that proxy can vote only on poll,
where company has provided e-voting facility at general meeting, proxy shall be entitled to vote, as e-
voting is an alternative to poll. It may be noted that such option is available under proviso to clause (viii) of
sub-rule (4) of Rule 20 of the Companies (Management and Administration) Rules, 2014.]

Page 198
 S. 106 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

106. Restriction on voting rights.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.181, 182, 183 of the Companies Act, 1956]
[Refer regulations (9) to (12), (52), (55) and (56) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

106. (1) Notwithstanding anything contained in this Act, the articles of a company may
provide that no member shall exercise any voting right in respect of any shares registered
in his name on which any calls or other sums presently payable by him have not been
paid, or in regard to which the company has exercised any right of lien.

(2) A company shall not, except on the grounds specified in sub-section (1), prohibit any
member from exercising his voting right on any other ground.

(3) On a poll taken at a meeting of a company, a member entitled to more than one vote,
or his proxy, where allowed, or other person entitled to vote for him, as the case may be,
need not, if he votes, use all his votes or cast in the same way all the votes he uses.

Page 199
 S. 107 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

107. Voting by show of hands.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.177, 178 of the Companies Act, 1956]
[Refer regulations (50) (a) and (53) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

107. (1) At any general meeting, a resolution put to the vote of the meeting shall, unless
a poll is demanded under section 109 or the voting is carried out electronically, be decided
on a show of hands.

(2) A declaration by the Chairman of the meeting of the passing of a resolution or

otherwise by show of hands under sub-section (1) and an entry to that effect in the books
containing the minutes of the meeting of the company shall be conclusive evidence of the
fact of passing of such resolution or otherwise.

[It is clarified by MCA that voting by show of hands would not be allowable in cases where rule 20 of
Companies (Management and Administration) Rules, 2014 is applicable. Refer Circular 20/2014 dated 17
June 2014.]

Page 200
 S. 108 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

108. Voting through electronic means.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 20 read with Rule 18, Rule 19 and Rule 22 of the Companies (Management and
Administration) Rules, 2014]
[Refer regulations (51) and (53) of Table F.II in Schedule I to the Act]

108. The Central Government may prescribe the class or classes of companies and
manner in which a member may exercise his right to vote by the electronic means.

[Note: Under rule 20, every company whose equity is listed on stock exchange (other than on MSME
platform) or company having 1000 or more members shall provide e-voting facility for every general
meeting.]
[MCA has decided not to treat Section 108 and rule 20 as mandatory till 31st December, 2014. Refer
Circular 20/2014 dated 17 June 2014.]

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 S. 109 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

109. Demand for poll.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 179, 180, 184, 185 of the Companies Act, 1956]
[Refer Rule 21 of the Companies (Management and Administration) Rules, 2014]
[Form No. MGT-12, Form No. MGT-13]
[Refer regulation (50) (b), (53) and (54) of Table F.II in Schedule I to the Act]
[This section shall apply to a private company unless otherwise specified in respective sections or the
articles of the company provide otherwise Notification number G.S.R. 464(E) dated 5th June 2015. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Sections 101 to 107 and 109 shall apply in case of a Specified IFSC public company, unless otherwise
specified in the articles of the company. Vide Notification number G.S.R. 8(E) dated 04th January 2017 for
a Specified IFSC public company.]

109. (1) Before or on the declaration of the result of the voting on any resolution on show
of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own
motion, and shall be ordered to be taken by him on a demand made in that behalf,—
(a) in the case a company having a share capital, by the members present in person
or by proxy, where allowed, and having not less than one-tenth of the total voting
power or holding shares on which an aggregate sum of not less than five lakh
rupees or such higher amount as may be prescribed has been paid-up; and
(b) in the case of any other company, by any member or members present in person
or by proxy, where allowed, and having not less than one-tenth of the total voting
power.

(2) The demand for a poll may be withdrawn at any time by the persons who made the
demand.

(3) A poll demanded for adjournment of the meeting or appointment of Chairman of the
meeting shall be taken forthwith.

(4) A poll demanded on any question other than adjournment of the meeting or
appointment of Chairman shall be taken at such time, not being later than forty-eight hours
from the time when the demand was made, as the Chairman of the meeting may direct.

(5) Where a poll is to be taken, the Chairman of the meeting shall appoint such number
of persons, as he deems necessary, to scrutinise the poll process and votes given on the
poll and to report thereon to him in the manner as may be prescribed.
[Polling Paper in Form No. MGT-12 and report of scrutinizer in Form No. MGT-13]

(6) Subject to the provisions of this section, the Chairman of the meeting shall have power
to regulate the manner in which the poll shall be taken.

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Relevant rules: The Companies (Management and Administration) Rules, 2014

(7) The result of the poll shall be deemed to be the decision of the meeting on the
resolution on which the poll was taken.
[MCA has clarified that in case of companies which are covered under section 108 read with rule 20, the
provisions relating to demand for poll would not be relevant. Refer Circular 20/2014 dated 17 June 2014]

Page 203
 S. 110 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

110. Postal ballot.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.192A of the Companies Act, 1956]
[Refer Rule 22 of the Companies (Management and Administration) Rules, 2014]

110. (1) Notwithstanding anything contained in this Act, a company—

(a) shall, in respect of such items of business as the Central Government may, by
notification, declare to be transacted only by means of postal ballot; and
(b) may, in respect of any item of business, other than ordinary business and any
business in respect of which directors or auditors have a right to be heard at any
meeting, transact by means of postal ballot,
in such manner as may be prescribed, instead of transacting such business at a general
meeting.
150
[Provided that any item of business required to be transacted by means of postal
ballot under clause (a), may be transacted at a general meeting by a company which is
required to provide the facility to members to vote by electronic means under section 108,
in the manner provided in that section.]

(2) If a resolution is assented to by the requisite majority of the shareholders by means of

postal ballot, it shall be deemed to have been duly passed at a general meeting convened
in that behalf.

[Ordinary business is given under section 102(2) (a) of the Act. Right to be heard at general meeting- for
director is under section 169 and for auditor under proviso to sub-section (1) of section 140 and section
146.]

150
Inserted a proviso to sub-section (1) of Section 110 of the principal Act by Section 29 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 204
 S. 111 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

111. Circulation of members’ resolution.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
Refer notification number S.O. 1352(E) dated 21st May, 2014 and notification number S.O. 4090(E) dated
19th December, 2016]
[Corresponding Sec.188 of the Companies Act, 1956]

111. (1) A company shall, on requisition in writing of such number of members, as

required in section 100,—
(a) give notice to members of any resolution which may properly be moved and is
intended to be moved at a meeting; and
(b) circulate to members any statement with respect to the matters referred to in
proposed resolution or business to be dealt with at that meeting.

(2) A company shall not be bound under this section to give notice of any resolution or to
circulate any statement unless—
(a) a copy of the requisition signed by the requisitionists (or two or more copies which,
between them, contain the signatures of all the requisitionists) is deposited at the
registered office of the company,—
(i) in the case of a requisition requiring notice of a resolution, not less than six weeks
before the meeting;
(ii) in the case of any other requisition, not less than two weeks before the meeting;
and
(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to
meet the company’s expenses in giving effect thereto:

Provided that if, after a copy of a requisition requiring notice of a resolution has been
deposited at the registered office of the company, an annual general meeting is called on
a date within six weeks after the copy has been deposited, the copy, although not
deposited within the time required by this sub-section, shall be deemed to have been
properly deposited for the purposes thereof.

(3) The company shall not be bound to circulate any statement as required by clause (b)
of sub-section (1), if on the application either of the company or of any other person who
claims to be aggrieved, the Central Government, by order, declares that the rights
conferred by this section are being abused to secure needless publicity for defamatory
matter.
[Power delegated to Regional Directors. Refer Annexure N8.]

(4) An order made under sub-section (3) may also direct that the cost incurred by the
company by virtue of this section shall be paid to the company by the requisitionists,
notwithstanding that they are not parties to the application.

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Relevant rules: The Companies (Management and Administration) Rules, 2014

(5) If any default is made in complying with the provisions of this section, the company
and every officer of the company who is in default shall be liable to a penalty of twenty-
five thousand rupees.

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 S. 112 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

112. Representation of President and Governors in meetings.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.187A, 187B of the Companies Act, 1956]

112. (1) The President of India or the Governor of a State, if he is a member of a company,
may appoint such person as he thinks fit to act as his representative at any meeting of
the company or at any meeting of any class of members of the company.

(2) A person appointed to act under sub-section (1) shall, for the purposes of this Act, be
deemed to be a member of such a company and shall be entitled to exercise the same
rights and powers, including the right to vote by proxy and postal ballot, as the President
or, as the case may be, the Governor could exercise as a member of the company.

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 S. 113 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

113. Representation of corporations at meeting of companies and of creditors.

[Section 113 (1) (b), [Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th
September, 2013.]
[Section 113 (1) (b) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Corresponding Sec.187 of the Companies Act, 1956]

113. (1) A body corporate, whether a company within the meaning of this Act or not, may,
—
(a) if it is a member of a company within the meaning of this Act, by resolution of its
Board of Directors or other governing body, authorise such person as it thinks fit to
act as its representative at any meeting of the company, or at any meeting of any
class of members of the company;

[Sec.113 (1) (b) w.e.f. 01 April 2014]

(b) if it is a creditor, including a holder of debentures, of a company within the meaning
of this Act, by resolution of its directors or other governing body, authorise such
person as it thinks fit to act as its representative at any meeting of any creditors of
the company held in pursuance of this Act or of any rules made thereunder, or in
pursuance of the provisions contained in any debenture or trust deed, as the case
may be.

(2) A person authorised by resolution under sub-section (1) shall be entitled to exercise
the same rights and powers, including the right to vote by proxy and by postal ballot, on
behalf of the body corporate which he represents as that body could exercise if it were an
individual member, creditor or holder of debentures of the company.

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Relevant rules: The Companies (Management and Administration) Rules, 2014

114. Ordinary and special resolutions.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.189 of the Companies Act, 1956][See section 2(63)]

114. (1) A resolution shall be an ordinary resolution if the notice required under this Act
has been duly given and it is required to be passed by the votes cast, whether on a show
of hands, or electronically or on a poll, as the case may be, in favour of the resolution,
including the casting vote, if any, of the Chairman, by members who, being entitled so to
do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the
votes, if any, cast against the resolution by members, so entitled and voting.

(2) A resolution shall be a special resolution when—

(a) the intention to propose the resolution as a special resolution has been duly
specified in the notice calling the general meeting or other intimation given to
the members of the resolution;
(b) the notice required under this Act has been duly given; and
(c) the votes cast in favour of the resolution, whether on a show of hands, or
electronically or on a poll, as the case may be, by members who, being entitled
so to do, vote in person or by proxy or by postal ballot, are required to be not
less than three times the number of the votes, if any, cast against the resolution
by members so entitled and voting.

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 S. 115 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

115. Resolutions requiring special notice.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.190 of the Companies Act, 1956]
[Refer Rule 23 of the Companies (Management and Administration) Rules, 2014]

115. Where, by any provision contained in this Act or in the articles of a company, special
notice is required of any resolution, notice of the intention to move such resolution shall
be given to the company by such number of members holding not less than one per cent.
of total voting power or holding shares on which such aggregate sum not exceeding five
lakh rupees, as may be prescribed, has been paid-up and the company shall give its
members notice of the resolution in such manner as may be prescribed.

Page 210
 S. 116 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

116. Resolutions passed at adjourned meeting.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.191 of the Companies Act, 1956]

116. Where a resolution is passed at an adjourned meeting of—

(a) a company; or
(b) the holders of any class of shares in a company; or
(c) the Board of Directors of a company,
the resolution shall, for all purposes, be treated as having been passed on the date on
which it was in fact passed, and shall not be deemed to have been passed on any earlier
date.

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 S. 117 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

117. Resolutions and agreements to be filed.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.192 of the Companies Act, 1956]
[Refer Rule 24 of the Companies (Management and Administration) Rules, 2014]
[Form MGT-14. Form MGT-14 under STP, refer Circular 28/2014 dated 09 July 2014. For filing fees, refer
Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules, 2014]
[Resolutions and agreements filed under this section can be inspected from ROC (through MCA portal) as
per section 399 of the Act.]

117. (1) A copy of every resolution or any agreement, in respect of matters specified in
sub-section (3) together with the explanatory statement under section 102, if any,
annexed to the notice calling the meeting in which the resolution is proposed, shall be
filed with the Registrar within thirty days of the passing or making thereof in such manner
and with such fees as may be prescribed 151[omitted]: [Form No. MGT-14]
[In case of a Specified IFSC public company, for the words “thirty days” be read as “sixty days”, Vide
Notification number G.S.R. 8(E) dated 04th January 2017.]
[In case of a Specified IFSC private company, for the words “thirty days” be read as “sixty days”, Vide
Notification number G.S.R. 9(E) dated 04th January 2017.]

Provided that the copy of every resolution which has the effect of altering the
articles and the copy of every agreement referred to in sub-section (3) shall be embodied
in or annexed to every copy of the articles issued after passing of the resolution or making
of the agreement.
152
[(2) If any company fails to file the resolution or the agreement under subsection (1)
before the expiry of the period specified therein, such company shall be liable to a penalty

151
Omitted the words "within the time specified under section 403" in sub-sections (1) of Section 117 of the
principal Act by clause (i) of section 30 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide
notification no. S.O. 1833(E) of the same date.

152
Substituted sub-section (2) of section 117 of the principal Act by Section 18 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution it read as “(2) If a company fails to file the resolution or the agreement under sub-section (1)
before the expiry of the period specified [therein], the company shall be punishable with fine which shall
152
[not be less than one lakh rupees] but which may extend to twenty-five lakh rupees and every officer of
the company who is in default, including liquidator of the company, if any, shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to five lakh rupees.”. Substituted ‘therein’
for the words ‘under section 403 with additional fee’ in sub-sections (2) of Section 117 of the principal Act
by clause (ii)(a) of section 30 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification
no. S.O. 1833(E) of the same date. Substituted for the words ‘not be less than five lakh rupees’ in sub-
sections (2) of Section 117 of the principal Act by clause (ii)(b) of section 30 of the Companies (Amendment)
Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought
to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

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Relevant rules: The Companies (Management and Administration) Rules, 2014

of one lakh rupees and in case of continuing failure, with further penalty of five hundred
rupees for each day after the first during which such failure continues, subject to a
maximum of twenty-five lakh rupees and every officer of the company who is in default
including liquidator of the company, if any, shall be liable to a penalty of fifty thousand
rupees and in case of continuing failure, with further penalty of five hundred rupees for
each day after the first during which such failure continues, subject to a maximum of five
lakh rupees.]
[For OPC and small companies, lesser penalty u/s. 446B applicable w.e.f. 09 February 2018]

(3) The provisions of this section shall apply to—

(a) special resolutions;
(b) resolutions which have been agreed to by all the members of a company, but which,
if not so agreed to, would not have been effective for their purpose unless they had
been passed as special resolutions;
(c) any resolution of the Board of Directors of a company or agreement executed by a
company, relating to the appointment, re-appointment or renewal of the appointment,
or variation of the terms of appointment, of a managing director;
(d) resolutions or agreements which have been agreed to by any class of members but
which, if not so agreed to, would not have been effective for their purpose unless they
had been passed by a specified majority or otherwise in some particular manner; and
all resolutions or agreements which effectively bind such class of members though not
agreed to by all those members;
153
[ (e)]
(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of
154
[section 59 of the Insolvency and Bankruptcy Code, 2016];
(g) resolutions passed in pursuance of sub-section (3) of section 179; 155 [omitted]

153
Omitted clause (e) in sub-sections (3) of Section 117 of the principal Act by clause (iii)(a) of section 30
of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on
03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same
date. Prior to its omission, it read as “(e) resolutions passed by a company according consent to the exercise
by its Board of Directors of any of the powers under clause (a) and clause (c) of sub-section (1) of section
180;”.

154
Substituted for the words ‘section 304’ by Section 255 of the Insolvency and Bankruptcy Code, 2016
read with the clause (5) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide
notification number S.O 3453(E) dated 15th November, 2016.

155
Word ‘and’ omitted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E).

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Relevant rules: The Companies (Management and Administration) Rules, 2014

156
[Provided that no person shall be entitled under section 399 to inspect or obtain copies
of such resolutions; 157[
Provided further that nothing contained in this clause shall apply to a banking company
in respect of a resolution passed to grant loans, or give guarantee or provide security in
respect of loans under clause (f) of sub-section (3) of section 179 in the ordinary course
of its business; and]
[Clause (g) of sub-section (3) of section 117 shall not apply to a private company. Notification number
G.S.R. 464(E) dated 5th June, 2015. The exceptions, modifications and adaptations provided in the said
notification dated 5th June 2015 shall be applicable to a private company which has not committed a default
in filing its financial statements under section 137 of the said Act or annual return under section 92 of the
said Act with the Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.]
[Clause (g) of sub-section (3) of section 117 shall not apply to a Specified IFSC public company, vide
Notification number G.S.R. 8(E) dated 04th January 2017.]

(h) any other resolution or agreement as may be prescribed and placed in the public
domain.

156
Proviso inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E).

157
Omitted the word ‘and’ from the proviso to sub-section (3) of section 117 of the principal Act and inserted
a second proviso therein by clause (iii)(b) of section 30 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 07th
May 2018 vide notification no. S.O. 1833(E) of the same date.

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 S. 118 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

118. Minutes of proceedings of general meeting, meeting of Board of Directors and

other meeting and resolutions passed by postal ballot.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 193, 194, 195, 197 of the Companies Act, 1956]
[Refer Rule 25 of the Companies (Management and Administration) Rules, 2014]
[Refer regulation (76) of Table F.II in Schedule I to the Act]

158
118. (1) Every company shall cause minutes of the proceedings of every general
meeting of any class of shareholders or creditors, and every resolution passed by postal
ballot and every meeting of its Board of Directors or of every committee of the Board, to
be prepared and signed in such manner as may be prescribed and kept within thirty days
of the conclusion of every such meeting concerned, or passing of resolution by postal
ballot in books kept for that purpose with their pages consecutively numbered.
159
[Provided that in case of a Specified IFSC public company, the minutes of every
meeting of its Board of Directors or of every committee of the Board, to be prepared and
signed in the manner as may be prescribed under sub-section (1) at or before the next
Board meeting or committee meeting, as the case may be and kept in the books kept for
that purpose.]
160
[Provided that in case of a Specified IFSC private company, the minutes of every
meeting of its Board of Directors or of every committee of the Board, to be prepared and
signed in the manner as may be prescribed under sub-section (1) at or before the next
Board meeting or committee meeting, as the case may be and kept in the books kept for
that purpose.]

(2) The minutes of each meeting shall contain a fair and correct summary of the
proceedings thereat.

158
The section shall not apply as a whole to section 8 companies except that minutes may be recorded
within thirty days of the conclusion of every meeting in case of companies where the articles of association
provide for confirmation of minutes by circulation. Refer notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar., vide notification number G.S.R. 584(E) dated 13th June 2017.

159
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

160
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

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 S. 118 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

(3) All appointments made at any of the meetings aforesaid shall be included in the
minutes of the meeting.

(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the
minutes shall also contain—
(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the directors,
if any, dissenting from, or not concurring with the resolution.

(5) There shall not be included in the minutes, any matter which, in the opinion of the
Chairman of the meeting,—
(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.

(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-
inclusion of any matter in the minutes on the grounds specified in sub-section (5).

(7) The minutes kept in accordance with the provisions of this section shall be evidence
of the proceedings recorded therein.

(8) Where the minutes have been kept in accordance with sub-section (1) then, until the
contrary is proved, the meeting shall be deemed to have been duly called and held, and
all proceedings thereat to have duly taken place, and the resolutions passed by postal
ballot to have been duly passed and in particular, all appointments of directors, key
managerial personnel, auditors or company secretary in practice, shall be deemed to be
valid.

(9) No document purporting to be a report of the proceedings of any general meeting of

a company shall be circulated or advertised at the expense of the company, unless it
includes the matters required by this section to be contained in the minutes of the
proceedings of such meeting.

(10) Every company shall observe secretarial standards with respect to general and
Board meetings specified by the Institute of Company Secretaries of India constituted
under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as
such by the Central Government.

[Upon receipt of approval of MCA on 10th April 2015, ICSI has notified two secretarial standards viz. SS-1:
Meetings of the Board of Directors and SS-2: General meetings vide notification ICSI No.1(SS) of 2015
dated 23 April 2015.]
[Vide Notification number G.S.R. 8(E) dated 04th January 2017 section 118(10) shall not apply to a Specified
IFSC public company.]
[Vide Notification number G.S.R. 9(E) dated 04th January 2017 section 118(10) shall not apply to a
Specified IFSC private company.]

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Relevant rules: The Companies (Management and Administration) Rules, 2014

(11) If any default is made in complying with the provisions of this section in respect of
any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and
every officer of the company who is in default shall be liable to a penalty of five thousand
rupees.

(12) If a person is found guilty of tampering with the minutes of the proceedings of
meeting, he shall be punishable with imprisonment for a term which may extend to two
years and with fine which shall not be less than twenty-five thousand rupees but which
may extend to one lakh rupees.

Page 217
 S. 119 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

119. Inspection of minute-books of general meeting.

[Except section 119(4), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Section 119(4) brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.196 of the Companies Act, 1956]
[Refer Rule 25 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]

119. (1) The books containing the minutes of the proceedings of any general meeting of
a company or of a resolution passed by postal ballot, shall—
(a) be kept at the registered office of the company; and
(b) be open, during business hours, to the inspection by any member without charge,
subject to such reasonable restrictions as the company may, by its articles or in
general meeting, impose, so, however, that not less than two hours in each
business day are allowed for inspection.

(2) Any member shall be entitled to be furnished, within seven working days after he has
made a request in that behalf to the company, and on payment of such fees as may be
prescribed, with a copy of any minutes referred to in sub-section (1).

(3) If any inspection under sub-section (1) is refused, or if any copy required under sub-
section (2) is not furnished within the time specified therein, the company shall be liable
to a penalty of twenty-five thousand rupees and every officer of the company who is in
default shall be liable to a penalty of five thousand rupees for each such refusal or default,
as the case may be.

[w.e.f. 01 June 2016]

(4) In the case of any such refusal or default, the Tribunal may, without prejudice to any
action being taken under sub-section (3), by order, direct an immediate inspection of the
minute-books or direct that the copy required shall forthwith be sent to the person
requiring it.

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 S. 120 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

120. Maintenance and inspection of documents in electronic form.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rules 27, 28, 29 and 30 of the Companies (Management and Administration) Rules, 2014]

120. Without prejudice to any other provisions of this Act, any document, record, register,
minutes, etc.,—
(a) required to be kept by a company; or
(b) allowed to be inspected or copies to be given to any person by a company under this
Act, may be kept or inspected or copies given, as the case may be, in electronic form
in such form and manner as may be prescribed.

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 S. 121 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

121. Report on annual general meeting.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 31 of the Companies (Management and Administration) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Form No. MGT-15]

121. (1) Every listed public company shall prepare in the prescribed manner a report on
each annual general meeting including the confirmation to the effect that the meeting was
convened, held and conducted as per the provisions of this Act and the rules made
thereunder.

(2) The company shall file with the Registrar a copy of the report referred to in sub-
section (1) within thirty days of the conclusion of the annual general meeting with such
fees as may be prescribed, or with such additional fees as may be prescribed, 161[within
the time as specified, under section 403]. [Form No. MGT-15]
162
[(3) If the company fails to file the report under subsection (2) before the expiry
of the period specified therein, such company shall be liable to a penalty of one lakh
rupees and in case of continuing failure, with further penalty of five hundred rupees for
each day after the first during which such failure continues, subject to a maximum of five
lakh rupees and every officer of the company who is in default shall be liable to a penalty
which shall not be less than twenty-five thousand rupees and in case of continuing failure,
with further penalty of five hundred rupees for each day after the first during which such
failure continues, subject to a maximum of one lakh rupees.]

161
Omitted the words ‘within the time as specified, under section 403’ from sub-section (2) of section 121
of the principal Act by clause (i) of section 31 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018
vide notification no. S.O. 1833(E) of the same date.

162
Substituted sub-section (3) of section 121 of the principal Act by Section 19 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
its substitution, it read as “If the company fails to file the report under sub-section (2) before the expiry of
the period specified 162[therein], the company shall be punishable with fine which shall not be less than one
lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default
shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend
to one lakh rupees.”. Word ‘therein’ was substituted for the words ‘under section 403 with additional fee’ in
sub-section (3) of section 121 of the principal Act by clause (ii) of section 31 of the Companies (Amendment)
Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought
to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
.

Page 220
 S. 122 - Chapter VII [Ss.88 to 122]

Relevant rules: The Companies (Management and Administration) Rules, 2014

122. Applicability of this Chapter to One Person Company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 6 of the Companies (Incorporation) Rules, 2014]
[Refer regulation (48) of Table F.II in Schedule I to the Act]

122. (1) The provisions of section 98 and sections 100 to 111 (both inclusive) shall not
apply to a One Person Company.

(2) The ordinary businesses as mentioned under clause (a) of sub-section (2) of
section 102 which a company, other than a One Person Company, is required to transact
at its annual general meeting, shall be transacted, in case of One Person Company, as
provided in sub-section (3).

(3) For the purposes of section 114, any business which is required to be
transacted at an annual general meeting or other general meeting of a company by means
of an ordinary or special resolution, it shall be sufficient if, in case of One Person
Company, the resolution is communicated by the member to the company and entered in
the minutes-book required to be maintained under section 118 and signed and dated by
the member and such date shall be deemed to be the date of the meeting for all the
purposes under this Act.

(4) Notwithstanding anything in this Act, where there is only one director on the
Board of Director of a One Person Company, any business which is required to be
transacted at the meeting of the Board of Directors of a company, it shall be sufficient if,
in case of such One Person Company, the resolution by such director is entered in the
minutes-book required to be maintained under section 118 and signed and dated by such
director and such date shall be deemed to be the date of the meeting of the Board of
Directors for all the purposes under this Act.

Page 221
 S. 123 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

CHAPTER VIII DECLARATION AND

PAYMENT OF DIVIDEND
123. Declaration of dividend.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.205, 205A (3), 206 of the Companies Act, 1956]
[Refer Rule 3 of the Companies (Declaration and Payments of Dividend) Rules, 2014]
[Refer regulations (80) to (88) of Table F.II in Schedule I to the Act]

123. (1) No dividend shall be declared or paid by a company for any financial year
except—
(a) out of the profits of the company for that year arrived at after providing for
depreciation in accordance with the provisions of sub-section (2), or out of the
profits of the company for any previous financial year or years arrived at after
providing for depreciation in accordance with the provisions of that sub-section and
remaining undistributed, or out of 163[both:]
164
[Provided that in computing profits any amount representing unrealised gains,
notional gains or revaluation of assets and any change in carrying amount of an
asset or of a liability on measurement of the asset or the liability at fair value shall
be excluded; or]
(b) out of money provided by the Central Government or a State Government for the
payment of dividend by the company in pursuance of a guarantee given by that
Government:
Provided that a company may, before the declaration of any dividend in any financial
year, transfer such percentage of its profits for that financial year as it may consider
appropriate to the reserves of the company:

Provided further that where, owing to inadequacy or absence of profits in any

financial year, any company proposes to declare dividend out of the accumulated profits

163
Substituted for the words ‘both; or’ in clause (a) of sub-section (1) of Section 123 of the principal Act by
Section 32(a)(i)(A) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

164
Inserted a proviso to clause (a) of sub-section (1) of Section 123 of the principal Act by Section
32(a)(i)(B) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of
India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E)
of the same date.

Page 222
 S. 123 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

earned by it in previous years and 165[transferred by the company to the free reserves],
such declaration of dividend shall not be made except in accordance with such rules as
may be prescribed in this behalf:
[It is provided vide notification number G.S.R. 463(E) dated 5th June, 2015, that second proviso shall not
apply to a Government Company in which the entire paid up share capital is held by the Central Government,
or by any State Government or Governments or by the Central Government and one or more State
Governments. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.]

Provided also that no dividend shall be declared or paid by a company from its
reserves other than free reserves.
[Provided also that no company shall declare dividend unless carried over
previous losses and depreciation not provided in previous year or years are set off against
profit of the company for the current year.]166

(2) For the purposes of clause (a) of sub-section (1), depreciation shall be provided in
accordance with the provisions of Schedule II.
167
[(3) The Board of Directors of a company may declare interim dividend during any
financial year or at any time during the period from closure of financial year till holding of
the annual general meeting out of the surplus in the profit and loss account or out of profits
of the financial year for which such interim dividend is sought to be declared or out of
profits generated in the financial year till the quarter preceding the date of declaration of
the interim dividend:

165
Substituted for the words ‘transferred by the company to the reserves’ in the second proviso of sub-
section (1) of Section 123 of the principal Act by Section 32(a)(ii) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

166
Fourth proviso inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May,
2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

167
Sub-section (3) of Section 123 of the principal Act is substituted by Section 32(b) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
substitution it read as ‘The Board of Directors of a company may declare interim dividend during any
financial year out of the surplus in the profit and loss account and out of profits of the financial year in which
such interim dividend is sought to be declared:

Provided that in case the company has incurred loss during the current financial year up to the end of the
quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not
be declared at a rate higher than the average dividends declared by the company during the immediately
preceding three financial years.’.

Page 223
 S. 123 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

Provided that in case the company has incurred loss during the current financial
year up to the end of the quarter immediately preceding the date of declaration of interim
dividend, such interim dividend shall not be declared at a rate higher than the average
dividends declared by the company during immediately preceding three financial years.]

(4) The amount of the dividend, including interim dividend, shall be deposited in a
scheduled bank in a separate account within five days from the date of declaration of
such dividend.
[It is provided vide notification number G.S.R. 463(E) dated 5th June, 2015, that sub-section (4) hall not
apply to a Government Company in which the entire paid up share capital is held by the Central Government,
or by any State Government or Governments or by the Central Government and one or more State
Governments. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.]

(5) No dividend shall be paid by a company in respect of any share therein except to the
registered shareholder of such share or to his order or to his banker and shall not be
payable except in cash:

Provided that nothing in this sub-section shall be deemed to prohibit the

capitalisation of profits or reserves of a company for the purpose of issuing fully paid-up
bonus shares or paying up any amount for the time being unpaid on any shares held by
the members of the company:

Provided further that any dividend payable in cash may be paid by cheque or
warrant or in any electronic mode to the shareholder entitled to the payment of the
dividend.

[Section 123 (5) shall apply to nidhi companies, subject to the modification that any dividend payable in
cash may be paid by crediting the same to the account of the member, if the dividend is not claimed within
30 days from the date of declaration of the dividend. Refer notification number G.S.R. 465(E) dated 5th
June 2015.]

(6) A company which fails to comply with the provisions of sections 73 and 74 shall not,
so long as such failure continues, declare any dividend on its equity shares.

Page 224
 S. 124 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

124. Unpaid Dividend Account.

[Brought to force from 07th September, 2016 vide notification number S.O. 2866(E) dated 05th September
2016]
[Corresponding Sec.205A, 205B of the Companies Act, 1956]

124. (1) Where a dividend has been declared by a company but has not been paid or
claimed within thirty days from the date of the declaration to any shareholder entitled to
the payment of the dividend, the company shall, within seven days from the date of expiry
of the said period of thirty days, transfer the total amount of dividend which remains
unpaid or unclaimed to a special account to be opened by the company in that behalf in
any scheduled bank to be called the Unpaid Dividend Account.

(2) The company shall, within a period of ninety days of making any transfer of an amount
under sub-section (1) to the Unpaid Dividend Account, prepare a statement containing
the names, their last known addresses and the unpaid dividend to be paid to each person
and place it on the website of the company, if any, and also on any other website
approved by the Central Government for this purpose, in such form, manner and other
particulars as may be prescribed.

(3) If any default is made in transferring the total amount referred to in sub-section (1) or
any part thereof to the Unpaid Dividend Account of the company, it shall pay, from the
date of such default, interest on so much of the amount as has not been transferred to
the said account, at the rate of twelve per cent. per annum and the interest accruing on
such amount shall enure to the benefit of the members of the company in proportion to
the amount remaining unpaid to them.

(4) Any person claiming to be entitled to any money transferred under sub-section (1) to
the Unpaid Dividend Account of the company may apply to the company for payment of
the money claimed.

(5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of
this section which remains unpaid or unclaimed for a period of seven years from the date
of such transfer shall be transferred by the company along with interest accrued, if any,
thereon to the Fund established under sub-section (1) of section 125 and the company
shall send a statement in the prescribed form of the details of such transfer to the authority
which administers the said Fund and that authority shall issue a receipt to the company
as evidence of such transfer.

Page 225
 S. 124 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

(6) All shares in respect of which [dividend has not been paid or claimed for seven
consecutive years or more shall be]168 transferred by the company in the name of Investor
Education and Protection Fund along with a statement containing such details as may be
prescribed:
Provided that any claimant of shares transferred above shall be entitled to claim
the transfer of shares from Investor Education and Protection Fund in accordance with
such procedure and on submission of such documents as may be prescribed.

[Explanation.—For the removal of doubts, it is hereby clarified that in case any

dividend is paid or claimed for any year during the said period of seven consecutive years,
the share shall not be transferred to Investor Education and Protection Fund.] 169

(7) If a company fails to comply with any of the requirements of this section, the company
shall be punishable with fine which shall not be less than five lakh rupees but which may
extend to twenty-five lakh rupees and every officer of the company who is in default shall
be punishable with fine which shall not be less than one lakh rupees but which may extend
to five lakh rupees.

168
for the words, brackets and figure “unpaid or unclaimed dividend has been transferred under sub-section
(5) shall also be”, the words “dividend has not been paid or claimed for seven consecutive years or more
shall be” substituted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E).

169
Explanation inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May,
2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

Page 226
 S. 125 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

125. Investor Education and Protection Fund.

[Section 125(5), (6) and (7) brought to force w.e.f. 13th January 2016 except with respect to manner of
administration of IEPF vide notification number S.O. 125(E) dated 13th January 2016]
[Sub-sections (1) to (4) (6) [with respect to the matter of administration of the Investor Education and
Protection Fund] and (8) to (11) brought to force from 07th September, 2016 vide notification number S.O.
2866(E) dated 05th September 2016]
[Corresponding Sec.205C of the Companies Act, 1956]
[CEO to IEPF Authority appointed by Notification number S.O.1648(E) dated 02nd May, 2016]
[IEPF Authority constituted by Notification number S.O.1647(E) dated 05th May, 2016]
[IEPF Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices
and officers) Rules, 2016]
[IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 with effect from 07th September,
2016.]
[IEPF Authority (Recruitment, Salary and other Terms and Conditions of Service of General Manager and
Assistant General Manager) Rules, 2017]

125. (1) The Central Government shall establish a Fund to be called the Investor
Education and Protection Fund (herein referred to as the Fund).

(2) There shall be credited to the Fund—

(a) the amount given by the Central Government by way of grants after due
appropriation made by Parliament by law in this behalf for being utilised for the
purposes of the Fund;
(b) donations given to the Fund by the Central Government, State Governments,
companies or any other institution for the purposes of the Fund;
(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund
under sub-section (5) of section 124;
(d) the amount in the general revenue account of the Central Government which had
been transferred to that account under sub-section (5) of section 205A of the
Companies Act, 1956 (1 of 1956), as it stood immediately before the
commencement of the Companies (Amendment) Act, 1999 (21 of 1999), and
remaining unpaid or unclaimed on the commencement of this Act;
(e) the amount lying in the Investor Education and Protection Fund under section 205C
of the Companies Act, 1956 (1 of 1956);
(f) the interest or other income received out of investments made from the Fund;
(g) the amount received under sub-section (4) of section 38;
(h) the application money received by companies for allotment of any securities and
due for refund;
(i) matured deposits with companies other than banking companies;
(j) matured debentures with companies;
(k) interest accrued on the amounts referred to in clauses (h) to (j);
(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger
and amalgamation for seven or more years;
(m) redemption amount of preference shares remaining unpaid or unclaimed for seven
or more years; and
Page 227
 S. 125 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

(n) such other amount as may be prescribed:

Provided that no such amount referred to in clauses (h) to (j) shall form part of the
Fund unless such amount has remained unclaimed and unpaid for a period of seven
years from the date it became due for payment.

(3) The Fund shall be utilised for—

(a) the refund in respect of unclaimed dividends, matured deposits, matured
debentures, the application money due for refund and interest thereon;
(b) promotion of investors’ education, awareness and protection;
(c) distribution of any disgorged amount among eligible and identifiable applicants for
shares or debentures, shareholders, debenture-holders or depositors who have
suffered losses due to wrong actions by any person, in accordance with the orders
made by the Court which had ordered disgorgement;
(d) reimbursement of legal expenses incurred in pursuing class action suits under
sections 37 and 245 by members, debenture-holders or depositors as may be
sanctioned by the Tribunal; and
(e) any other purpose incidental thereto, in accordance with such rules as may be
prescribed:

Provided that the person whose amounts referred to in clauses (a) to (d) of sub-
section (2) of section 205C transferred to Investor Education and Protection Fund, after
the expiry of the period of seven years as per provisions of the Companies Act, 1956 (1
of 1956), shall be entitled to get refund out of the Fund in respect of such claims in
accordance with rules made under this section.

Explanation.—The disgorged amount refers to the amount received through

disgorgement or disposal of securities.

(4) Any person claiming to be entitled to the amount referred in sub-section (2) may apply
to the authority constituted under sub-section (5) for the payment of the money claimed.
170
[(5) The Central Government shall constitute, by notification, an authority for
administration of the Fund consisting of a chairperson and such other members, not
exceeding seven and a chief executive officer, as the Central Government may appoint.

(6) The manner of administration of the Fund, appointment of chairperson, members and
chief executive officer, holding of meetings of the authority shall be in accordance with
such rules as may be prescribed.

170
Section 125(5), (6) and (7) brought to force w.e.f. 13th January 2016 except with respect to manner of
administration of IEPF vide notification number S.O. 125(E) dated 13th January 2016.

Page 228
 S. 125 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

(7) The Central Government may provide to the authority such offices, officers,
employees and other resources in accordance with such rules as may be prescribed.]

(8) The authority shall administer the Fund and maintain separate accounts and other
relevant records in relation to the Fund in such form as may be prescribed after
consultation with the Comptroller and Auditor-General of India.

(9) It shall be competent for the authority constituted under sub-section (5) to spend
money out of the Fund for carrying out the objects specified in sub-section (3).

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor- General
of India at such intervals as may be specified by him and such audited accounts together
with the audit report thereon shall be forwarded annually by the authority to the Central
Government.

(11) The authority shall prepare in such form and at such time for each financial year as
may be prescribed its annual report giving a full account of its activities during the financial
year and forward a copy thereof to the Central Government and the Central Government
shall cause the annual report and the audit report given by the Comptroller and Auditor-
General of India to be laid before each House of Parliament.

Page 229
 S. 126 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

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

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.206A of the Companies Act, 1956]

126. Where any instrument of transfer of shares has been delivered to any company for
registration and the transfer of such shares has not been registered by the company, it
shall, notwithstanding anything contained in any other provision of this Act,—
(a) transfer the dividend in relation to such shares to the Unpaid Dividend Account
referred to in section 124 unless the company is authorised by the registered holder
of such shares in writing to pay such dividend to the transferee specified in such
instrument of transfer; and
(b) keep in abeyance in relation to such shares, any offer of rights shares under clause
(a) of sub-section (1) of section 62 and any issue of fully paid-up bonus shares in
pursuance of first proviso to sub-section (5) of section 123.

Page 230
 S. 127 - Chapter VIII [Ss.123 to 127]

Relevant rules: The Companies (Declaration and Payment of Dividend) Rules, 2014

127. Punishment for failure to distribute dividends.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.207 of the Companies Act, 1956]
[This section shall apply to nidhi companies, subject to the modification that where the dividend payable to
a member is one hundred rupees or less, it shall be sufficient compliance of the provisions of the section,
if the declaration of dividend is announced in the local language in one local newspaper of wide circulation
and announcement of the said declaration is also displayed on the notice board of the Nidhis for at least
three months. Refer notification number G.S.R. 465(E) dated 5th June 2015.]
[Report under section 208 shall be received by the Central Government (MCA) for violation of offences
under Chapter III, IV, section 127, 177 and 178 of the Act and for other provisions report shall be received
by the Regional Director if action for violation of the Act is imprisonment of less than two years - vide
notification number S.O.3557(E) dated 31st December 2015.]

127. Where a dividend has been declared by a company but has not been paid or the
warrant in respect thereof has not been posted within thirty days from the date of
declaration to any shareholder entitled to the payment of the dividend, every director of
the company shall, if he is knowingly a party to the default, be punishable with
imprisonment which may extend to two years and with fine which shall not be less than
one thousand rupees for every day during which such default continues and the company
shall be liable to pay simple interest at the rate of eighteen per cent. per annum during
the period for which such default continues:

Provided that no offence under this section shall be deemed to have been committed:—
(a) where the dividend could not be paid by reason of the operation of any law;
(b) where a shareholder has given directions to the company regarding the
payment of the dividend and those directions cannot be complied with and the
same has been communicated to him;
(c) where there is a dispute regarding the right to receive the dividend;
(d) where the dividend has been lawfully adjusted by the company against any sum
due to it from the shareholder; or
(e) where, for any other reason, the failure to pay the dividend or to post the warrant
within the period under this section was not due to any default on the part of the
company.

Page 231
 S. 128 - Chapter IX [Ss.128 to 138]

Relevant rules: The Companies (Accounts) Rules, 2014

CHAPTER IX ACCOUNTS OF
COMPANIES
128. Books of account, etc., to be kept by company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.209, 214 of the Companies Act, 1956]
[Refer Rules 2A, 3 and 4 of the Companies (Accounts) Rules, 2014]
[Refer regulation (89) of Table F.II in Schedule I to the Act]

128. (1) Every company shall prepare and keep at its registered office books of account
and other relevant books and papers and financial statement for every financial year
which give a true and fair view of the state of the affairs of the company, including that of
its branch office or offices, if any, and explain the transactions effected both at the
registered office and its branches and such books shall be kept on accrual basis and
according to the double entry system of accounting:

Provided that all or any of the books of account aforesaid and other relevant
papers may be kept at such other place in India as the Board of Directors may decide
and where such a decision is taken, the company shall, within seven days thereof, file
with the Registrar a notice in writing giving the full address of that other place:
[Notice in Form AOC-5 vide Rule 2A.]

Provided further that the company may keep such books of account or other
relevant papers in electronic mode in such manner as may be prescribed.

(2) Where a company has a branch office in India or outside India, it shall be deemed to
have complied with the provisions of sub-section (1), if proper books of account relating
to the transactions effected at the branch office are kept at that office and proper
summarised returns periodically are sent by the branch office to the company at its
registered office or the other place referred to in sub-section (1).

(3) The books of account and other books and papers maintained by the company within
India shall be open for inspection at the registered office of the company or at such other
place in India by any director during business hours, and in the case of financial
information, if any, maintained outside the country, copies of such financial information
shall be maintained and produced for inspection by any director subject to such conditions
as may be prescribed:

Provided that the inspection in respect of any subsidiary of the company shall be
done only by the person authorised in this behalf by a resolution of the Board of Directors.

Page 232
 S. 128 - Chapter IX [Ss.128 to 138]

Relevant rules: The Companies (Accounts) Rules, 2014

(4) Where an inspection is made under sub-section (3), the officers and other employees
of the company shall give to the person making such inspection all assistance in
connection with the inspection which the company may reasonably be expected to give.

(5) The books of account of every company relating to a period of not less than eight
financial years immediately preceding a financial year, or where the company had been
in existence for a period less than eight years, in respect of all the preceding years
together with the vouchers relevant to any entry in such books of account shall be kept in
good order:

Provided that where an investigation has been ordered in respect of the company
under Chapter XIV, the Central Government may direct that the books of account may be
kept for such longer period as it may deem fit.

(6) If the managing director, the whole-time director in charge of finance, the Chief
Financial Officer or any other person of a company charged by the Board with the duty of
complying with the provisions of this section, contravenes such provisions, such
managing director, whole-time director in charge of finance, Chief Financial officer or such
other person of the company shall be punishable with imprisonment for a term which may
extend to one year or with fine which shall not be less than fifty thousand rupees but which
may extend to five lakh rupees or with both.

Page 233
 S. 129 - Chapter IX [Ss.128 to 138]

Relevant rules: The Companies (Accounts) Rules, 2014

129. Financial statement.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 210, 211, 212, 213, 221, 222, 223 of the Companies Act, 1956 and Table F of
Schedule 1 thereto.]
[Refer Rules 5 and 6 of the Companies (Accounts) Rules, 2014]
[Where specified securities of an entity are listed on stock exchange: Also, Regulation 33 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015]
[Form AOC-1.]
[It is clarified by MCA that the financial statements (and documents required to be attached thereto),
auditors report and Board's report in respect of financial years that commenced earlier than 1st April,
2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act, 1956. Refer
Circular 8/2014 dated 04 April 2014.]
[It is provided vide notification number G.S.R. 463(E) dated 5th June, 2015, that this section not apply to
the extent of application of Accounting Standard 17 (Segment Reporting) to the companies engaged in
defence production. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.]

129. (1) The financial statements shall give a true and fair view of the state of affairs of
the company or companies, comply with the accounting standards notified under section
133 and shall be in the form or forms as may be provided for different class or classes of
companies in Schedule III:

Provided that the items contained in such financial statements shall be in

accordance with the accounting standards:

Provided further that nothing contained in this sub-section shall apply to any
insurance or banking company or any company engaged in the generation or supply of
electricity, or to any other class of company for which a form of financial statement has
been specified in or under the Act governing such class of company:

Provided also that the financial statements shall not be treated as not disclosing a
true and fair view of the state of affairs of the company, merely by reason of the fact that
they do not disclose—-
(a) in the case of an insurance company, any matters which are not required to be
disclosed by the Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and
Development Authority Act, 1999 (41 of 1999);
(b) in the case of a banking company, any matters which are not required to be disclosed
by the Banking Regulation Act, 1949 (10 of 1949);
(c) in the case of a company engaged in the generation or supply of electricity, any
matters which are not required to be disclosed by the Electricity Act, 2003 (36 of 2003);
(d) in the case of a company governed by any other law for the time being in force, any
matters which are not required to be disclosed by that law.

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(2) At every annual general meeting of a company, the Board of Directors of the company
shall lay before such meeting financial statements for the financial year.
171
[(3) Where a company has one or more subsidiaries or associate companies, it shall,
in addition to financial statements provided under sub-section (2), prepare a consolidated
financial statement of the company and of all the subsidiaries and associate companies
in the same form and manner as that of its own and in accordance with applicable
accounting standards, which shall also be laid before the annual general meeting of the
company along with the laying of its financial statement under sub-section (2):
Provided that the company shall also attach along with its financial statement, a
separate statement containing the salient features of the financial statement of its
subsidiary or subsidiaries and associate company or companies in such form as may be
prescribed: [Form AOC-1]
Provided further that the Central Government may provide for the consolidation of
accounts of companies in such manner as may be prescribed.]

[It is clarified that Schedule III to the Act, read with the applicable Accounting Standards does not envisage
that a company while preparing its Consolidated Financial Statement (CFS) merely repeats the disclosures
made by it under stand-alone accounts being consolidated. In the CFS, the company would need to give
all disclosures relevant for CFS only. See Circular 39/2014 dated 14 October 2014]

(4) The provisions of this Act applicable to the preparation, adoption and audit of the
financial statements of a holding company shall, mutatis mutandis, apply to the
consolidated financial statements referred to in sub-section (3).

(5) Without prejudice to sub-section (1), where the financial statements of a company do
not comply with the accounting standards referred to in sub-section (1), the company shall
disclose in its financial statements, the deviation from the accounting standards, the
reasons for such deviation and the financial effects, if any, arising out of such deviation.

(6) The Central Government may, on its own or on an application by a class or classes of
companies, by notification, exempt any class or classes of companies from complying
with any of the requirements of this section or the rules made thereunder, if it is

171
Substituted sub-section (3) of section 129 of the principal Act by section 33 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to its
substitution, it read as “(3) Where a company has one or more subsidiaries, it shall, in addition to financial
statements provided under sub-section (2), prepare a consolidated financial statement of the company and
of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the
annual general meeting of the company along with the laying of its financial statement under sub-section
(2):Provided that the company shall also attach along with its financial statement, a separate statement
containing the salient features of the financial statement of its subsidiary or subsidiaries in such form as
may be prescribed: Provided further that the Central Government may provide for the consolidation of
accounts of companies in such manner as may be prescribed. Explanation.—For the purposes of this sub-
section, the word “subsidiary” shall include associate company and joint venture.”.

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considered necessary to grant such exemption in the public interest and any such
exemption may be granted either unconditionally or subject to such conditions as may be
specified in the notification.
[In exercise of power u/s. 129(6) MCA has notified that- Provisions of Accounting Standards 22
or Indian Accounting Standard 12 relating to deferred tax asset or deferred tax liability shall not
apply to following with effect from 01 st April 2017 - Vide notification no. S.O.529(E) dated 05th
February 2018:
Government company which-
(a) is a public financial institution under sub-clause (iv) of clause (72) of section 2 of the
Companies Act, 2013;
(b) is a Non-Banking Financial Company registered with the Reserve Bank of India under section
45-IA of the Reserve bank of India Act, 1934; and
(c) is engaged in the business of infrastructure finance leasing with not less than seventy five per
cent. of its total revenue being generated from such business with Government companies or
other entities owned or controlled by Government.
Said notification gave exemption for seven years. However, by another notification (S.O. 1465(E)
dt. 02nd April 2018) reference of seven years is omitted thus exemption is infinite.]

(7) If a company contravenes the provisions of this section, the managing director, the
whole-time director in charge of finance, the Chief Financial Officer or any other person
charged by the Board with the duty of complying with the requirements of this section and
in the absence of any of the officers mentioned above, all the directors shall be punishable
with imprisonment for a term which may extend to one year or with fine which shall not
be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

Explanation.—For the purposes of this section, except where the context otherwise
requires, any reference to the financial statement shall include any notes annexed to or
forming part of such financial statement, giving information required to be given and
allowed to be given in the form of such notes under this Act.

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130. Re-opening of accounts on court’s or Tribunal’s orders.

[Section 130 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[No corresponding provision under the Companies Act, 1956]

130. (1) A company shall not re-open its books of account and not recast its financial
statements, unless an application in this regard is made by the Central Government, the
Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory
body or authority or any person concerned and an order is made by a court of competent
jurisdiction or the Tribunal to the effect that—
(i) the relevant earlier accounts were prepared in a fraudulent manner; or
(ii) the affairs of the company were mismanaged during the relevant period, casting a
doubt on the reliability of financial statements:

Provided that the court or the Tribunal, as the case may be, shall give notice to
the Central Government, the Income-tax authorities, the Securities and Exchange Board
or any other statutory regulatory body or authority concerned 172 [or any other person
concerned] and shall take into consideration the representations, if any, made by that
Government or the authorities, Securities and Exchange Board or the body or authority
concerned 173[or the other person concerned] before passing any order under this section.

(2) Without prejudice to the provisions contained in this Act the accounts so revised or re-
cast under sub-section (1) shall be final.

174
[(3) No order shall be made under sub-section (1) in respect of re-opening of books of
account relating to a period earlier than eight financial years immediately preceding the
current financial year:

172
Inserted in the proviso to sub-section (1) of Section 130 of the principal Act by Section 34(i)(a) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

173
Inserted in the proviso to sub-section (1) of Section 130 of the principal Act by Section 34(i)(b) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

174
Inserted sub-section (3) to Section 130 of the principal Act by Section 34(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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Provided that where a direction has been issued by the Central Government under
the proviso to sub-section (5) of section 128 for keeping of books of account for a period
longer than eight years, the books of account may be ordered to be re-opened within such
longer period.]

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131. Voluntary revision of financial statements or Board’s report.

[Section 131 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[No corresponding provision under the Companies Act, 1956]

131. (1) If it appears to the directors of a company that—

(a) the financial statement of the company; or
(b) the report of the Board,
do not comply with the provisions of section 129 or section 134 they may prepare revised
financial statement or a revised report in respect of any of the three preceding financial
years after obtaining approval of the Tribunal on an application made by the company in
such form and manner as may be prescribed and a copy of the order passed by the
Tribunal shall be filed with the Registrar:

Provided that the Tribunal shall give notice to the Central Government and the
Income- tax authorities and shall take into consideration the representations, if any, made
by that Government or the authorities before passing any order under this section:

Provided further that such revised financial statement or report shall not be
prepared or filed more than once in a financial year:

Provided also that the detailed reasons for revision of such financial statement or
report shall also be disclosed in the Board's report in the relevant financial year in which
such revision is being made.

(2) Where copies of the previous financial statement or report have been sent out to
members or delivered to the Registrar or laid before the company in general meeting, the
revisions must be confined to—
(a) the correction in respect of which the previous financial statement or report do not
comply with the provisions of section 129 or section 134; and
(b) the making of any necessary consequential alternation.

(3) The Central Government may make rules as to the application of the provisions of this
Act in relation to revised financial statement or a revised director's report and such rules
may, in particular—
(a) make different provisions according to which the previous financial statement or report
are replaced or are supplemented by a document indicating the corrections to be
made;
(b) make provisions with respect to the functions of the company's auditor in relation to
the revised financial statement or report;
(c) require the directors to take such steps as may be prescribed.

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132. Constitution of National Financial Reporting Authority.

[Corresponding Sec.210A of the Companies Act, 1956]

[Refer notification number S.O. 2425(E) dated 18 September 2014 on constitution of National Advisory
Committee on Accounting Standards]
[Sub-sections (3) and (11) of Section 137 of the principal Act brought to force with effect from 21st March
2018 vide notification no. S.O. 1316(E) dated 21st March 2018.]
[The National Finacial Reporting Authority Rules, 2018 and the NFRA (Meeting fro Transaction of Business)
Rules 2019]

132. 175(1) The Central Government may, by notification, constitute a National Financial
Reporting Authority to provide for matters relating to accounting and auditing standards
under this Act.
176
[(1A) The National Financial Reporting Authority shall perform its functions through
such divisions as may be prescribed.]
177
(2) Notwithstanding anything contained in any other law for the time being in force, the
National Financial Reporting Authority shall—
(a) make recommendations to the Central Government on the formulation and laying
down of accounting and auditing policies and standards for adoption by companies or
class of companies or their auditors, as the case may be;
(b) monitor and enforce the compliance with accounting standards and auditing standards
in such manner as may be prescribed;
(c) oversee the quality of service of the professions associated with ensuring compliance
with such standards, and suggest measures required for improvement in quality of
service and such other related matters as may be prescribed; and
(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

175
Sub-sections (1) and (12) to section 132 of the principal Act is brought to force from 01st October 2018
vide notification no. S.O. 5098 (E) of the same date. And the Central Government appointed the 01st
October 2018 as the date of constitution of National Financial Reporting Authority vide notification no. S.O.
5099 (E) dated 01st October 2018.

176
Sub-section (1A) inserted by section 20(a) of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

177
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

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178
(3) The National Financial Reporting Authority shall consist of a chairperson, who shall
be a person of eminence and having expertise in accountancy, auditing, finance or law to
be appointed by the Central Government and such other members not exceeding fifteen
consisting of part-time and full-time members as may be prescribed:

Provided that the terms and conditions and the manner of appointment of the
chairperson and members shall be such as may be prescribed:

Provided further that the chairperson and members shall make a declaration to
the Central Government in the prescribed form regarding no conflict of interest or lack of
independence in respect of his or their appointment:

Provided also that the chairperson and members, who are in full-time employment
with National Financial Reporting Authority shall not be associated with any audit firm
(including related consultancy firms) during the course of their appointment and two years
after ceasing to hold such appointment.
179
[(3A) Each division of the National Financial Reporting Authority shall be presided over
by the Chairperson or a full-time Member authorised by the Chairperson.

(3B) There shall be an executive body of the National Financial Reporting Authority
consisting of the Chairperson and full-time Members of such Authority for efficient
discharge of its functions under sub-section (2) [other than clause (a)] and sub-section
(4).]
180
(4) Notwithstanding anything contained in any other law for the time being in force, the
National Financial Reporting Authority shall—
(a) have the power to investigate, either suo motu or on a reference made to it by the
Central Government, for such class of bodies corporate or persons, in such manner
as may be prescribed into the matters of professional or other misconduct
committed by any member or firm of chartered accountants, registered under the
Chartered Accountants Act, 1949 (38 of 1949):

178
Sub-sections (3) and (11) of Section 132 of the principal Act brought to force with effect from 21st March
2018 vide notification no. S.O. 1316(E) dated 21st March 2018.

179
Sub-sections (3A) and (3B) inserted by section 20(b) of the Companies (Amendment) Act, 2019 (22 of
2019) with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

180
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

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Relevant rules: The Companies (Accounts) Rules, 2014

Provided that no other institute or body shall initiate or continue any

proceedings in such matters of misconduct where the National Financial Reporting
Authority has initiated an investigation under this section;
(b) have the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters,
namely:—
(i) discovery and production of books of account and other documents, at such
place and at such time as may be specified by the National Financial Reporting
Authority;
(ii) summoning and enforcing the attendance of persons and examining them on
oath;
(iii) inspection of any books, registers and other documents of any person referred
to in clause (b) at any place;
(iv) issuing commissions for examination of witnesses or documents;
(c) where professional or other misconduct is proved, have the power to make order
for—
(A) imposing penalty of—
(I) not less than one lakh rupees, but which may extend to five times of the fees
received, in case of individuals; and
(II) not less than 181[five lakh rupees], but which may extend to ten times of the
fees received, in case of firms;
182
[(B) debarring the member or the firm from—
I. being appointed as an auditor or internal auditor or undertaking any audit in
respect of financial statements or internal audit of the functions and activities
of any company or body corporate; or
II. performing any valuation as provided under section 247,
for a minimum period of six months or such higher period not exceeding ten years
as may be determined by the National Financial Reporting Authority.]

181
Substituted for the words ‘ten lakh rupees’ in item (II) of sub-clause (A) of clause (c) of sub-section (4),
of Section 132 of the principal Act by Section 35(i) of the Companies (Amendment) Act, 2017 (1 of 2018)
which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

182
Sub-clause (B) of clause (c) of Sub-section (4) substituted by section 20(c) of the Companies
(Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O.
2947(E) dated 14th August 2019. Prior to substitution it read as “(B) debarring the member or the firm from
engaging himself or itself from practice as member of the Institute of Chartered Accountant of India referred
to in clause (e) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) for a
minimum period of six months or for such higher period not exceeding ten years as may be decided by the
National Financial Reporting Authority.”.

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Relevant rules: The Companies (Accounts) Rules, 2014

Explanation.—For the purposes of his sub-section, the expression "professional or other

misconduct" shall have the same meaning assigned to it under section 22 of the
Chartered Accountants Act, 1949 (38 of 1949).
183
(5) Any person aggrieved by any order of the National Financial Reporting Authority
issued under clause (c) of sub-section (4), may prefer an appeal before 184[the Appellate
Tribunal in such manner and on payment of such fees as may be prescribed].

(6) The Central Government may, by notification, constitute, with effect from such date as
may be specified therein, an Appellate Authority consisting of a chairperson and not more
than two other members, to be appointed by the Central Government, for hearing appeals
arising out of the orders of the National Financial Reporting Authority.

(7) The qualifications for appointment of the chairperson and members of the Appellate
Authority, the manner of selection, the terms and conditions of their service and the
requirement of the supporting staff and procedure (including places of hearing the
appeals, form and manner in which the appeals shall be filed) to be followed by the
Appellate Authority shall be such as may be prescribed.

(8) The fee for filing the appeal shall be such as may be prescribed.

(9) The officer authorised by the Appellate Authority shall prepare in such form and at
such time as may be prescribed its annual report giving a full account of its activities and
forward a copy thereof to the Central Government and the Central Government shall
cause the annual report to be laid before each House of Parliament.
185
(10) The National Financial Reporting Authority shall meet at such times and places
and shall observe such rules of procedure in regard to the transaction of business at its
meetings in such manner as may be prescribed.

183
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

184
Substituted for the words ‘the Appellate Authority constituted under sub-section (6) in such manner as
may be prescribed’ in sub-section (5) of Section 132 of the principal Act by Section 34(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

185
Sub-section (10) to section 132 of the principal Act is brought to force from 24th October 2018 vide
notification no. S.O. 5385 (E) of the same date.

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186
(11) The Central Government may appoint a secretary and such other employees as it
may consider necessary for the efficient performance of functions by the National
Financial Reporting Authority under this Act and the terms and conditions of service of
the secretary and employees shall be such as may be prescribed.
187
(12) The head office of the National Financial Reporting Authority shall be at New Delhi
and the National Financial Reporting Authority may, meet at such other places in India as
it deems fit.
188
(13) The National Financial Reporting Authority shall cause to be maintained such
books of account and other books in relation to its accounts in such form and in such
manner as the Central Government may, in consultation with the Comptroller and Auditor-
General of India prescribe.
189
(14) The accounts of the National Financial Reporting Authority shall be audited by the
Comptroller and Auditor-General of India at such intervals as may be specified by him
and such accounts as certified by the Comptroller and Auditor-General of India together
with the audit report thereon shall be forwarded annually to the Central Government by
the National Financial Reporting Authority.
190
(15) The National Financial Reporting Authority shall prepare in such form and at such
time for each financial year as may be prescribed its annual report giving a full account
of its activities during the financial year and forward a copy thereof to the Central
Government and the Central Government shall cause the annual report and the audit
report given by the Comptroller and Auditor-General of India to be laid before each House
of Parliament.

186
Sub-sections (3) and (11) of Section 137 of the principal Act brought to force with effect from 21st March
2018 vide notification no. S.O. 1316(E) dated 21st March 2018.

187
Sub-sections (1) and (12) to section 132 of the principal Act is brought to force from 01st October 2018
vide notification no. S.O. 5098 (E) of the same date.

188
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

189
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

190
Sub-sections (2), (4), (5), (10), (13), (14) and (15) to section 132 of the principal Act is brought to force
from 24th October 2018 vide notification no. S.O. 5385 (E) of the same date.

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133. Central Government to prescribe accounting standards.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.211 (3C) of the Companies Act, 1956][See section 2(2)]
[Refer Rule 7 of the Companies (Accounts) Rules, 2014]
[All Regional Directors and Registrar of Companies are instructed by MCA that till the Standards of
Accounting or any addendum thereto are prescribed by Central Government in consultation and
recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified
under the Companies Act, 1956 shall continue to apply. Refer Circular 15/2013 dated 13 September 2013.]
[National Advisory Committee on Accounting Standard constituted vide notification no. S.o. 3118(E) dated
03 Oct. 2016.]

133. The Central Government may prescribe the standards of accounting or any
addendum thereto, as recommended by the Institute of Chartered Accountants of India,
constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in
consultation with and after examination of the recommendations made by the National
Financial Reporting Authority.
191
[Provided that until the National Financial Reporting Authority is constituted under
section 132 of the Companies Act, 2013 (18 of 2013), the Central Government may
prescribe the standards of accounting or any addendum thereto, as recommended by the
Institute of Chartered Accountants of India, constituted under section 3 of the Chartered
Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the
recommendations made by National Advisory Committee on Accounting Standards
constituted under section 210 A of the Companies Act, 1956.]

[Re. clarification on applicability of accounting standards 10 and 16 to power projects, refer Circular 35/2014
dated 27 August 2014.]

191
Inserted by the Companies (Removal of Difficulties) Second Order, 2016 vide notification S.O. 1227(E)
dated 29th March, 2016. Refer Annexure O14 for the order.

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134. Financial statement, Board’s report, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 215, 216, 217, 218 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Accounts) Rules, 2014]
[Form AOC-2] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]
[It is clarified by MCA that the financial statements (and documents required to be attached thereto),
auditors report and Board's report in respect of financial years that commenced earlier than 1st April,
2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act, 1956. Refer
Circular 08/2014 dated 04 April 2014]

134. 192[(1) The financial statement, including consolidated financial statement, if any,
shall be approved by the Board of Directors before they are signed on behalf of the Board
by the chairperson of the company where he is authorised by the Board or by two directors
out of which one shall be managing director, if any, and the Chief Executive Officer, the
Chief Financial Officer and the company secretary of the company, wherever they are
appointed, or in the case of One Person Company, only by one director, for submission
to the auditor for his report thereon.]

(2) The auditors’ report shall be attached to every financial statement.

(3) There shall be attached to statements laid before a company in general meeting, a
report by its Board of Directors, which shall include—
193
[(a) the web address, if any, where annual report referred to in sub-section (3) of
section 92 has been placed;]
(b) number of meetings of the Board;
(c) Directors’ Responsibility Statement;

192
Substituted sub-section (1) of section 134 of the principal Act by clause (a) of section 36 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 31st July 2018 vide notification no. S.O. 3838(E) of the same date.
Prior to its substitution, it read as “(1) The financial statement, including consolidated financial statement, if
any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by
the chairperson of the company where he is authorised by the Board or by two directors out of which one
shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief
Financial Officer and the company secretary of the company, wherever they are appointed, or in the case
of a One Person Company, only by one director, for submission to the auditor for his report thereon.“.

193
Substituted clause (a) of sub-section (3) of section 134 of the principal Act by clause (b)(i) of section 36
of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on
03rd January 2018. It is brought to force from 31st July 2018 vide notification no. S.O. 3838(E) of the same
date. Prior to its substitution, it read as “(a) the extract of the annual return as provided under sub-section
93) of section 92;”.

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194
[(ca) details in respect of frauds reported by auditors under sub-section (12) of
section 143 other than those which are reportable to the Central Government;]
(d) a statement on declaration given by independent directors under sub-section (6)
of section 149;
(e) in case of a company covered under sub-section (1) of section 178, company’s
policy on directors’ appointment and remuneration including criteria for determining
qualifications, positive attributes, independence of a director and other matters
provided under sub-section (3) of section 178;
(f) explanations or comments by the Board on every qualification, reservation or
adverse remark or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
(g) particulars of loans, guarantees or investments under section 186;
(h) particulars of contracts or arrangements with related parties referred to in sub-
section (1) of section 188 in the prescribed form; [Form AOC-2]
(i) the state of the company’s affairs;
(j) the amounts, if any, which it proposes to carry to any reserves;
(k) the amount, if any, which it recommends should be paid by way of dividend;
(l) material changes and commitments, if any, affecting the financial position of the
company which have occurred between the end of the financial year of the
company to which the financial statements relate and the date of the report;
(m) the conservation of energy, technology absorption, foreign exchange earnings and
outgo, in such manner as may be prescribed;
(n) a statement indicating development and implementation of a risk management
policy for the company including identification therein of elements of risk, if any,
which in the opinion of the Board may threaten the existence of the company;
(o) the details about the policy developed and implemented by the company on
corporate social responsibility initiatives taken during the year;
(p) in case of a listed company and every other public company having such paid-up
share capital as may be prescribed, a statement indicating the manner in which
formal 195[annual evaluation of the performance of the Board, its committees and
of individual directors has been made];
(q) such other matters as may be prescribed.

194
Inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect
from 29th May 2015 vide notification number S.O. 1440(E).

195
Substituted for the words ‘annual evaluation has been made by the Board of its own performance and
that of its committees and individual directors’ in clause (p) of sub-section (3) of section 134 of the principal
Act by clause (b)(ii) of section 36 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 31st July 2018 vide
notification no. S.O. 3838(E) of the same date. Prior to its substitution, it read as “(a) the extract of the
annual return as provided under sub-section 93) of section 92;”.

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196
[Provided that where disclosures referred to in this sub-section have been included
in the financial statements, such disclosures shall be referred to instead of being
repeated in the Board's report:
Provided further that where the policy referred to in clause (e) or clause (o) is made
available on company's website, if any, it shall be sufficient compliance of the
requirements under such clauses if the salient features of the policy and any
change therein are specified in brief in the Board's report and the web-address is
indicated therein at which the complete policy is available.]
197
[Provided that in case of a Specified IFSC public company, if any information is listed
in this sub-section is provided in the financial statement, the company may not include
such information in the report of the Board of Directors.]
198
[Provided that in case of a Specified IFSC private company, if any information is listed
in this sub-section is provided in the financial statement, the company may not include
such information in the report of the Board of Directors.]
[It is provided vide notification number G.S.R. 463(E) dated 5th June, 2015, that clause (e) of sub-section
(3) of section 134 shall not apply to a Government Company. It is also provided therein that clause (p) ibid,
shall not apply to a Government company in case the directors are evaluated by the Ministry or Department
of the Central Government which is administratively in charge of the company, or, as the case may be, the
State Government, as per its own evaluation methodology. Further vide notification number G.S.R. 582(E)
dated 13th June 2017, for Government company it is provided that the exceptions, modifications and
adaptations shall be applicable to a Government company which has not committed a default in filing its
financial statements under section 137 of the said Act or annual return under section 92 of the said Act with
the Registrar.]

199
[(3A) The Central Government may prescribe an abridged Board's report, for the
purpose of compliance with this section by One Person Company or small company.]

196
Inserted sub-section (3A) in section 134 of the principal Act by clause (c) of section 36 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 31st July 2018 vide notification no. S.O. 3838(E) of the same date.

197
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

198
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

199
Inserted provisos in sub-section (3) of section 134 of the principal Act by clause (b)(iii) of section 36 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 31st July 2018 vide notification no. S.O. 3838(E) of the same date.
Prior to its substitution, it read as “(a) the extract of the annual return as provided under sub-section (3) of
section 92;”.

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(4) The report of the Board of Directors to be attached to the financial statement under
this section shall, in case of a One Person Company, mean a report containing
explanations or comments by the Board on every qualification, reservation or adverse
remark or disclaimer made by the auditor in his report.

(5) The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3)
shall state that—
(a) in the preparation of the annual accounts, the applicable accounting standards had
been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company at the end of the financial
year and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding
the assets of the company and for preventing and detecting fraud and other
irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, in the case of a listed company, had laid down internal financial
controls to be followed by the company and that such internal financial controls are
adequate and were operating effectively.
Explanation.—For the purposes of this clause, the term “internal financial controls”
means the policies and procedures adopted by the company for ensuring the
orderly and efficient conduct of its business, including adherence to company’s
policies, the safeguarding of its assets, the prevention and detection of frauds and
errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information;
(f) the directors had devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating
effectively.

(6) The Board’s report and any annexures thereto under sub-section (3) shall be signed
by its chairperson of the company if he is authorised by the Board and where he is not so
authorised, shall be signed by at least two directors, one of whom shall be a managing
director, or by the director where there is one director.

(7) A signed copy of every financial statement, including consolidated financial statement,
if any, shall be issued, circulated or published along with a copy each of—
(a) any notes annexed to or forming part of such financial statement;
(b) the auditor’s report; and
(c) the Board’s report referred to in sub-section (3).

(8) If a company contravenes the provisions of this section, the company shall be
punishable with fine which shall not be less than fifty thousand rupees but which may
extend to twenty-five lakh rupees and every officer of the company who is in default shall

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be punishable with imprisonment for a term which may extend to three years or with fine
which shall not be less than fifty thousand rupees but which may extend to five lakh
rupees, or with both.

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135. Corporate Social Responsibility.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Section 135 shall not apply for a period of five years from the commencement of business
of a Specified IFSC public company, vide Notification number G.S.R. 8(E) dated 04th January 2017.]
[Section 135 shall not apply for a period of five years from the commencement of business
of a Specified IFSC private company, vide Notification number G.S.R. 9(E) dated 04th January 2017.]
[Refer Schedule VII for activities that may be included in CSR Policy]
[Refer the Companies (Corporate Social Responsibility) Rules, 2014 AND
Rule 9 of the Companies (Accounts) Rules, 2014.]
[Refer Circular 21/2014 dated 18 June 2014,
Circular 36/2014 dated 17 September 2014,
Circular 01/2015 dated 03 February, 2015,
Circular 01/2016 dated 12 January 2016; and
Circular 05/2016 dated 16th May 2016.]
[Refer regulations (72) and (73) of Table F.II in Schedule I to the Act]

135. (1) Every company having net worth of rupees five hundred crore or more, or
turnover of rupees one thousand crore or more or a net profit of rupees five crore or more
during 200[the immediately preceding financial year] shall constitute a Corporate Social
Responsibility Committee of the Board consisting of three or more directors, out of which
at least one director shall be an independent director.
201
[Provided that where a company is not required to appoint an independent director
under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility
Committee two or more directors.]
[Under rule 5 of the Companies (Corporate Social Responsibility) Rules, 2014 – it is clarified that a private
company need not have an independent director. The correct method of correcting this would have been
amending section 135(1) by use of power under section 462.]

(2) The Board's report under sub-section (3) of section 134 shall disclose the composition
of the Corporate Social Responsibility Committee.

200
Substituted for the words ‘any financial year’ in sub-section (1) of section 135 of the principal Act by
clause (i)(a) of section 37 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of
the President of India on 03rd January 2018. It is brought to force from 19th September 2018 vide notification
no. S.O. 4907 (E) of the same date.

201
Inserted a proviso in sub-section (1) of section 135 of the principal Act by clause (i)(b) of section 37 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 19th September 2018 vide notification no. S.O. 4907(E) of the
same date.

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(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy
which shall indicate the activities to be undertaken by the company 202[in areas or
subject, specified in Schedule VII];
(b) recommend the amount of expenditure to be incurred on the activities referred to
in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to
time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social
Responsibility Committee, approve the Corporate Social Responsibility Policy for
the company and disclose contents of such Policy in its report and also place it on
the company's website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy
of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the
company spends, in every financial year, at least two per cent. of the average net profits
of the company made during the three immediately preceding financial years, in
pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas
around it where it operates, for spending the amount earmarked for Corporate Social
Responsibility activities:
[By general circular no.05/2018 dated 28th May 2018, MCA has clarified that the first proviso has
to be followed in letter and spirit.]

Provided further that if the company fails to spend such amount, the Board shall,
in its report made under clause (o) of sub-section (3) of section 134, specify the reasons
for not spending the amount.
203
[Explanation.— For the purposes of this section "net profit" shall not include such sums
as may be prescribed, and shall be calculated in accordance with the provisions of section
198.]

202
Substituted for the words ‘as specified in schedule VII’ in sub-section (1) of section 135 of the principal
Act by clause (ii) of section 37 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 19th September 2018 vide
notification no. S.O. 4907 (E) of the same date.

203
Substituted Explanation to section 135 of the principal Act by clause (iii) of section 37 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 19th September 2018 vide notification no. S.O. 4907 (E) of the same date. Prior

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[Comments: As per FAQ of ICSI, on question of consequence for non-compliance of CSR provisions, the
concept of CSR is based on the principle ‘comply or explain’. Section 135 of the Act does not lay down
any penal provisions in case a company fails to spend the desired amount. However, sub-section 8 of
section 134 provides that in case the company fails to spend such amount, the Board shall in its report
specify the reasons for not spending the amount. In case the company does not disclose the reasons in
the Board’s report, the company shall be punishable under section 134(8). This view of ICSI seems to be
for the reason of provision of section 134(3) (o).]

to its substitution, it read as “Explanation- For the purposes of this section “average net profit” shall be
calculated in accordance with the provisions of section 198.”.

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136. Right of member to copies of audited financial statement.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.219 of the Companies Act, 1956]
[Refer Rules 10 and 11 of the Companies (Accounts) Rules, 2014]
[Form AOC-3]
[It is clarified that a company holding a general meeting after giving a shorter notice as provided under
section 101 of the Act may also circulate financial statements (to be laid/considered in the same general
meeting) at such shorter notice. Refer general circular no. 11/2015 dated 21st July 2015.]

136. 204 205 (1) 206 [omitted] a copy of the financial statements, including consolidated
financial statements, if any, auditor’s report and every other document required by law to
be annexed or attached to the financial statements, which are to be laid before a company
in its general meeting, shall be sent to every member of the company, to every trustee for
the debenture-holder of any debentures issued by the company, and to all persons other
than such member or trustee, being the person so entitled, not less than twenty-one days
before the date of the meeting:
207
[Provided that if the copies of the documents are sent less than twenty-one days
before the date of the meeting, they shall, notwithstanding that fact, be deemed to have

204
Section 136 (1) shall apply to nidhi companies, subject to the modification that, in the case of members
who do not individually or jointly hold shares of more than one thousand rupees in face value or more than
one per cent. of the total paid-up share capital whichever is less, it shall be sufficient compliance with the
provisions of the section if an intimation is sent by public notice in newspaper circulated in the district in
which the Registered Office of the Nidhi is situated stating the date, time and venue of Annual General
Meeting and the financial statement with its enclosures can be inspected at the registered office of the
company, and the financial statement with enclosures are affixed in the Notice Board of the company and
a member is entitled to vote either in person or through proxy. Refer notification number G.S.R. 465(E)
dated 5th June, 2015.

205
In respect of section 8 companies, in sub-section (1), for the words "twenty one days", the words
"fourteen days" shall be substituted vide notification number G.S.R. 466(E) dated 5th June, 2015. Further
exceptions, modifications and adaptations provided in the said notification shall be applicable to a company
covered under section 8 of the said Act which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar., vide
notification number G.S.R. 584(E) dated 13th June 2017.

206
Omitted words ‘Without prejudice to the provisions of section 101,’ from sub-section (1) of section 136
of the principal Act by Section 38(i)(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

207
A new first proviso inserted by substituting words ‘Provided that’ of the first proviso to sub-section (1) of
section 136 of the principal Act by Section 38(i)(b) of the Companies (Amendment) Act, 2017 (1 of 2018)

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been duly sent if it is so agreed by members— (a) holding, if the company has a share
capital, majority in number entitled to vote and who represent not less than ninety-five per
cent. of such part of the paid-up share capital of the company as gives a right to vote at
the meeting; or (b) having, if the company has no share capital, not less than ninetyfive
per cent. of the total voting power exercisable at the meeting:
Provided further that] in the case of a listed company, the provisions of this sub-
section shall be deemed to be complied with, if the copies of the documents are made
available for inspection at its registered office during working hours for a period of twenty-
one days before the date of the meeting and a statement containing the salient features
of such documents in the prescribed form or copies of the documents, as the company
may deem fit, is sent to every member of the company and to every trustee for the holders
of any debentures issued by the company not less than twenty-one days before the date
of the meeting unless the shareholders ask for full financial statements:[Form AOC-3]
208
[Provided also] that the Central Government may prescribe the manner of
circulation of financial statements of companies having such net worth and turnover as
may be prescribed:

Provided also that a listed company shall also place its financial statements
including consolidated financial statements, if any, and all other documents required to
be attached thereto, on its website, which is maintained by or on behalf of the company:
209
[Provided also that every listed company having a subsidiary or subsidiaries shall
place separate audited accounts in respect of each of subsidiary on its website, if any:
Provided also that a listed company which has a subsidiary incorporated outside
India (herein referred to as "foreign subsidiary")—
(a) where such foreign subsidiary is statutorily required to prepare consolidated
financial statement under any law of the country of its incorporation, the

which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

208
Substituted for the words ‘Provided further’ in the second proviso to sub-section (1) of section 136 of the
principal Act by Section 38(i)(c) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

209
Fourth proviso to sub-section (1) of section136 of the principal Act substituted by Section 38(i)(d) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date. Prior to substitution it read as “Provided also that every company having a subsidiary or subsidiaries
shall,— (a) place separate audited accounts in respect of each of its subsidiary on its website, if any; (b)
provide a copy of separate audited financial statements in respect of each of its subsidiary, to any
shareholder of the company who asks for it.”.

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requirement of this proviso shall be met if consolidated financial statement of such

foreign subsidiary is placed on the website of the listed company;
(b) where such foreign subsidiary is not required to get its financial statement
audited under any law of the country of its incorporation and which does not get
such financial statement audited, the holding Indian listed company may place such
unaudited financial statement on its website and where such financial statement is
in a language other than English, a translated copy of the financial statement in
English shall also be placed on the website.]
[It is clarified that in case of a foreign subsidiary, which is not required to get its accounts audited as per
legal requirements prevalent in the country of its incorporation and which does not get such accounts
audited, the holding/parent Indian may place/file such unaudited accounts to comply with requirements of
Section 136(1) and 137(1) as applicable. These, however, would need to be translated in English, if the
original accounts are not in English. Further, the format of accounts of foreign subsidiaries should be, as
far as possible, in accordance with requirements under Companies Act, 2013. In case this is not possible,
a statement indicating the reasons for deviation may be placed/filed along with such accounts. Refer
general circular no. 11/2015 dated 21st July 2015.]

(2) A company shall allow every member or trustee of the holder of any debentures issued
by the company to inspect the documents stated under sub-section (1) at its registered
office during business hours.
210
[Provided that every company having a subsidiary or subsidiaries shall provide
a copy of separate audited or unaudited financial statements, as the case may be, as
prepared in respect of each of its subsidiary to any member of the company who asks for
it.]

(3) If any default is made in complying with the provisions of this section, the company
shall be liable to a penalty of twenty-five thousand rupees and every officer of the
company who is in default shall be liable to a penalty of five thousand rupees.

210
Inserted a proviso to sub-section (2) of Section 136 of the principal Act by Section 38(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

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137. Copy of financial statement to be filed with Registrar.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.220 of the Companies Act, 1956]
[Rule 12 of the Companies (Accounts) Rules, 2014. As per Rule 3 of the Companies (Filing of Documents
and Forms in Extensible Business Reporting Language) Rules, 2015, (i) listed companies and their
subsidiaries, (ii) companies with paid-up share capital of Rs. 5 crore or more, (iii) companies with turnover
of Rs.100 crore or more need to file financial statements in AOC-4 XBRL, (except companies in banking,
insurance, power sector, non-banking financial companies and housing finance companies need not file
financial statements in AOC-4 XBRL).]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form AOC-4 / AOC-4 XBRL]
[For Company Law Settlement Scheme, 2014 [CLSS-2014] notified vide Circular 34/2014 dated 12 August
2014.]
[Financial statement filed with ROC can be inspected by public (through MCA portal) as per section 399 of
the Act.]

[MCA Circulars extending filing dates:

MCA vide general circular no. 13/2017 dated 26.10.2017 extended the last date for filing of AOC-4 XBRL without
additional fee till 31st March, 2018 for all those companies required to prepare or voluntarily preparing their financial
statements in XBRL format in accordance with Companies (Indian Accounting Standards) Rules, 2015 for financial
year 2016-2017. And MCA vide general circular no. 01/2018 dated 28.03.2018 further extended the last date for filing
of AOC-4 XBRL for all eligible companies required to prepare or voluntarily prepare their financial statements in
accordance with Companies (Indian Accounting Standards) Rules, 2015 for the financial year 2016-17, without
additional fee till 30th April, 2018

MCA vide general circular no. 14/2017 dated 27.10.2017, extended the time for filing e-forms AOC-4 and AOC-4 (XBRL
non-IndAS) and the corresponding AOC-4 CFC e-forms upto 28.11.2017 without levying additional fee.]

137. (1) A copy of the financial statements, including consolidated financial statement, if
any, along with all the documents which are required to be or attached to such financial
statements under this Act, duly adopted at the annual general meeting of the company,
shall be filed with the Registrar within thirty days of the date of annual general meeting in
such manner, with such fees or additional fees as may be prescribed 211[omitted]: [Form
AOC-4 / AOC-4 XBRL]

Provided that where the financial statements under sub-section (1) are not
adopted at annual general meeting or adjourned annual general meeting, such unadopted
financial statements along with the required documents under sub-section (1) shall be
filed with the Registrar within thirty days of the date of annual general meeting and the

211
Omitted words ‘within the time specified under section 403’ from sub-section (1) of Section 137 of the
principal Act by Section 39(i)(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide
notification no. S.O. 1833(E) of the same date.

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Registrar shall take them in his records as provisional till the financial statements are filed
with him after their adoption in the adjourned annual general meeting for that purpose:

Provided further that financial statements adopted in the adjourned annual

general meeting shall be filed with the Registrar within thirty days of the date of such
adjourned annual general meeting with such fees or such additional fees as may be
prescribed 212[omitted]:

Provided also that a One Person Company shall file a copy of the financial
statements duly adopted by its member, along with all the documents which are required
to be attached to such financial statements, within one hundred eighty days from the
closure of the financial year:

Provided also that a company shall, along with its financial statements to be filed
with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been
incorporated outside India and which have not established their place of business in India.
213
[Provided also that in the case of a subsidiary which has been incorporated
outside India (herein referred to as "foreign subsidiary"), which is not required to get its
financial statement audited under any law of the country of its incorporation and which
does not get such financial statement audited, the requirements of the fourth proviso shall
be met if the holding Indian company files such unaudited financial statement along with
a declaration to this effect and where such financial statement is in a language other than
English, along with a translated copy of the financial statement in English.]

(2) Where the annual general meeting of a company for any year has not been
held, the financial statements along with the documents required to be attached under
sub-section (1), duly signed along with the statement of facts and reasons for not holding
the annual general meeting shall be filed with the Registrar within thirty days of the last
date before which the annual general meeting should have been held and in such
manner, with such fees or additional fees as may be prescribed 214[omitted].

212
Omitted words ‘within the time specified under section 403’ from the second proviso in sub-section (1)
of Section 137 of the principal Act by Section 39(i)(b) of the Companies (Amendment) Act, 2017 (1 of 2018)
which received assent of the President of India on 03rd January 2018. It is brought to force from 07th May
2018 vide notification no. S.O. 1833(E) of the same date.

213
Inserted a fifth proviso in sub-section (1) of Section 137 of the principal Act by Section 39(i)(c) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

214
Omitted words ‘within the time specified, under section 403’ from sub-section (2) of Section 137 of the
principal Act by Section 39(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent

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(3) If a company fails to file the copy of the financial statements under sub-section
(1) or sub-section (2), as the case may be, before the expiry of the period specified
215
[therein], the company shall be 216[liable to a penalty] of one thousand rupees for every
day during which the failure continues but which shall not be more than ten lakh rupees,
and the managing director and the Chief Financial Officer of the company, if any, and, in
the absence of the managing director and the Chief Financial Officer, any other director
who is charged by the Board with the responsibility of complying with the provisions of
this section, and, in the absence of any such director, all the directors of the company,
shall be 217[shall be liable to a penalty of one lakh rupees and in case of continuing failure,
with further penalty of one hundred rupees for each day after the first during which such
failure continues, subject to a maximum of five lakh rupees].
[For OPC and small companies, lesser penalty u/s. 446B applicable w.e.f. 09 February 2018]

of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification
no. S.O. 1833(E) of the same date.

215
Substituted for the words ‘in section 403’ from sub-section (3) of Section 137 of the principal Act by
Section 39(iii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E)
of the same date.

216
Substituted for the words ‘punishable with fine’ in sub-section (3) of section 137 of the principal Act by
Section 22(a) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from
02nd November 2018.
.
217
Substituted for the words ‘punishable with imprisonment for a term which may extend to six months or
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with
both’ in sub-section (3) of section 137 of the principal Act by Section 22(b) of the Companies (Amendment)
Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.
.

Page 259
 S. 138 - Chapter IX [Ss.128 to 138]

Relevant rules: The Companies (Accounts) Rules, 2014

138. Internal audit.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Section 138 shall apply if the articles of a Specified IFSC public company provides for the same, vide
Notification number G.S.R. 8(E) dated 04th January 2017.]
[Section 138 shall apply if the articles of a Specified IFSC private company provides for the same, vide
Notification number G.S.R. 9(E) dated 04th January 2017.]
[Refer Rule 13 of the Companies (Accounts) Rules, 2014]

138. (1) Such class or classes of companies as may be prescribed shall be required to
appoint an internal auditor, who shall either be a chartered accountant or a cost
accountant, or such other professional as may be decided by the Board to conduct
internal audit of the functions and activities of the company.

(2) The Central Government may, by rules, prescribe the manner and the intervals
in which the internal audit shall be conducted and reported to the Board.

[Note: As per Rule 13, companies required to appoint internal auditor are:
Listed companies, and the following:
Any one of the criteria Private companies Unlisted public companies
paid up share capital during the No such criteria Rs. 50 crore or more
preceding financial year
outstanding deposits at any No such criteria Rs. 25 crore or more
point of time during the
preceding financial year
outstanding loans or Rs. 100 crore or more Rs. 100 crore or more
borrowings from banks or
financial institutions, at any
point of time during preceding
financial year
Turnover during the Rs. 200 crore or more Rs. 100 crore or more
preceding financial year
]

Page 260
 S. 139 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

CHAPTER X AUDIT AND AUDITORS

139. Appointment of auditors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 224 (except 224(8)), 224A, 619, 619B of the Companies Act, 1956]
[Refer Rules 3, 4, 5 and 6 of the Companies (Audit and Auditors) Rules, 2014]
[Form ADT-1 available w.e.f. 20 October 2014. Prior to 20th October 2014, it was required to be filed as
attachment to E-form GNL-2. Refer Circular 09/2014 dated 25 April 2014.] [Documents filed with ROC can
be inspected by public (through MCA portal) as per section 399 of the Act.]

139. (1) Subject to the provisions of this Chapter, every company shall, at the first annual
general meeting, appoint an individual or a firm as an auditor who shall hold office from
the conclusion of that meeting till the conclusion of its sixth annual general meeting and
thereafter till the conclusion of every sixth meeting and the manner and procedure of
selection of auditors by the members of the company at such meeting shall be such as
may be prescribed:
218
[omitted]

Provided further that before such appointment is made, the written consent of the
auditor to such appointment, and a certificate from him or it that the appointment, if made,
shall be in accordance with the conditions as may be prescribed, shall be obtained from
the auditor:

Provided also that the certificate shall also indicate whether the auditor satisfies
the criteria provided in section 141:

Provided also that the company shall inform the auditor concerned of his or its
appointment, and also file a notice of such appointment with the Registrar within fifteen
days of the meeting in which the auditor is appointed. [Form ADT-1]

Explanation.—For the purposes of this Chapter, “appointment” includes re- appointment.

[For a Specified IFSC public company, words “fifteen days” be read as “thirty days”, vide Notification number
G.S.R. 8(E) dated 04th January 2017.]

[For a Specified IFSC private company, words “fifteen days” be read as “thirty days”, vide Notification number
G.S.R. 9(E) dated 04th January 2017.]

218
Omitted the first proviso in sub-section (1) of Section 139 of the principal Act by Section 40 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to omission, the first proviso read as ‘Provided that the company shall place the matter relating to
such appointment for ratification by members at every annual general meeting:’.

Page 261
 S. 139 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

(2) No listed company or a company belonging to such class or classes of companies as

may be prescribed, shall appoint or re-appoint—
(a) an individual as auditor for more than one term of five consecutive years; and
(b) an audit firm as auditor for more than two terms of five consecutive years:

Provided that—
(i) an individual auditor who has completed his term under clause (a) shall not be
eligible for re-appointment as auditor in the same company for five years from the
completion of his term;
(ii) an audit firm which has completed its term under clause (b), shall not be eligible for
re-appointment as auditor in the same company for five years from the completion
of such term:

Provided further that as on the date of appointment no audit firm having a common
partner or partners to the other audit firm, whose tenure has expired in a company
immediately preceding the financial year, shall be appointed as auditor of the same
company for a period of five years:
219
[Provided also that every company, existing on or before the commencement of
this Act which is required to comply with the provisions of this sub-section, shall comply
with requirements of this sub-section within a period which shall not be later than the date
of the first annual general meeting of the company held, within the period specified under
sub-section (1) of section 96, after three years from the date of commencement of this
Act.]

Provided also that, nothing contained in this sub-section shall prejudice the right of
the company to remove an auditor or the right of the auditor to resign from such office of
the company.

[All provisos to Section 139(2) shall not apply to a Specified IFSC public company, vide Notification number
G.S.R. 8(E) dated 04th January 2017.]
[All provisos to Section 139(2) shall not apply to a Specified IFSC private company, vide Notification number
G.S.R. 9(E) dated 04th January 2017.]
[Note: Class of companies referred in sub-section (2) of section 139 are prescribed under Rule 5.
Accordingly rotation of auditor is applicable, besides listed companies, to companies (public or private) with
borrowings from financial institutions, banks or public deposits of Rs.50 crore or more OR private companies with
paid up share capital of Rs. 20 crore or more; or unlisted public companies with paid up share capital of Rs. 10
crore or more.]

219
Third proviso to sub-section (2) of Section 139 substituted by the Companies (Removal of Difficulties)
Third Order, 2016 with effect from 30th June, 2016. Prior to substitution it read as: “Provided also that every
company, existing on or before the commencement of this Act which is required to comply with provisions
of this sub-section, shall comply with the requirements of this sub-section within three years from the date
of commencement of this Act:”.

Page 262
 S. 139 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

(3) Subject to the provisions of this Act, members of a company may resolve to provide
that—
(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated
at such intervals as may be resolved by members; or
(b) the audit shall be conducted by more than one auditor.

(4) The Central Government may, by rules, prescribe the manner in which the companies
shall rotate their auditors in pursuance of sub-section (2).

Explanation.—For the purposes of this Chapter, the word “firm” shall include a limited
liability partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of
2009).

(5) Notwithstanding anything contained in sub-section (1), in the case of a Government

company or any other company owned or controlled, directly or indirectly, by the Central
Government, or by any State Government or Governments, or partly by the Central
Government and partly by one or more State Governments, the Comptroller and Auditor-
General of India shall, in respect of a financial year, appoint an auditor duly qualified to
be appointed as an auditor of companies under this Act, within a period of one hundred
and eighty days from the commencement of the financial year, who shall hold office till
the conclusion of the annual general meeting.
[Refer General Circular 33/2014 dated 31 July 2014]

(6) Notwithstanding anything contained in sub-section (1), the first auditor of a company,
other than a Government company, shall be appointed by the Board of Directors within
thirty days from the date of registration of the company and in the case of failure of the
Board to appoint such auditor, it shall inform the members of the company, who shall
within ninety days at an extraordinary general meeting appoint such auditor and such
auditor shall hold office till the conclusion of the first annual general meeting.

(7) Notwithstanding anything contained in sub-section (1) or sub-section (5), in the case
of a Government company or any other company owned or controlled, directly or
indirectly, by the Central Government, or by any State Government, or Governments, or
partly by the Central Government and partly by one or more State Governments, the first
auditor shall be appointed by the Comptroller and Auditor-General of India within sixty
days from the date of registration of the company and in case the Comptroller and Auditor-
General of India does not appoint such auditor within the said period, the Board of
Directors of the company shall appoint such auditor within the next thirty days; and in the
case of failure of the Board to appoint such auditor within the next thirty days, it shall
inform the members of the company who shall appoint such auditor within the sixty days
at an extraordinary general meeting, who shall hold office till the conclusion of the first
annual general meeting.
[Refer General Circular 33/2014 dated 31 July 2014]

(8) Any casual vacancy in the office of an auditor shall—

Page 263
 S. 139 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

(i) in the case of a company other than a company whose accounts are subject to audit
by an auditor appointed by the Comptroller and Auditor-General of India, be filled
by the Board of Directors within thirty days, but if such casual vacancy is as a result
of the resignation of an auditor, such appointment shall also be approved by the
company at a general meeting convened within three months of the
recommendation of the Board and he shall hold the office till the conclusion of the
next annual general meeting;
(ii) in the case of a company whose accounts are subject to audit by an auditor
appointed by the Comptroller and Auditor-General of India, be filled by the
Comptroller and Auditor-General of India within thirty days:

Provided that in case the Comptroller and Auditor-General of India does not fill the
vacancy within the said period, the Board of Directors shall fill the vacancy within next
thirty days.

(9) Subject to the provisions of sub-section (1) and the rules made thereunder, a retiring
auditor may be re-appointed at an annual general meeting, if—
(a) he is not disqualified for re-appointment;
(b) he has not given the company a notice in writing of his unwillingness to be re-
appointed; and
(c) a special resolution has not been passed at that meeting appointing some other
auditor or providing expressly that he shall not be re-appointed.

(10) Where at any annual general meeting, no auditor is appointed or re-appointed, the
existing auditor shall continue to be the auditor of the company.

(11) Where a company is required to constitute an Audit Committee under section 177,
all appointments, including the filling of a casual vacancy of an auditor under this section
shall be made after taking into account the recommendations of such committee.

Page 264
 S. 140 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

140. Removal, resignation of auditor and giving of special notice.

[Except second proviso to section 140(4) and section 140(5), brought to force from 01 April 2014 vide
notification number S.O. 902(E) dated 26th March, 2014.]
[Second proviso to Section 140(4) and section 140(5) brought to force from 01 June 2016 vide notification
number S.O. 1934(E) dated 01st June, 2016]
[Corresponding Sec. 225 (except 225(3)), 619 of the Companies Act, 1956]
[Refer Rules 7 and 8 of the Companies (Audit and Auditors) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form ADT-2. Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

140.(1) The auditor appointed under section 139 may be removed from his office before
the expiry of his term only by a special resolution of the company, after obtaining the
previous approval of the Central Government in that behalf in the prescribed manner:
[Form ADT-2] [Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3)
(a)] [Power delegated to Regional Directors. Refer notification number S.O. 1352(E) dated 21st May, 2014
and notification number S.O. 4090(E) dated 19th December, 2016]

Provided that before taking any action under this sub-section, the auditor
concerned shall be given a reasonable opportunity of being heard.
220
[Provided further that in case of a Specified IFSC public company, where,
within a period of sixty days from the date of submission of the application to the Central
Government under this sub-section, no decision is communicated by the Central
Government to the company, it would be deemed that the Central Government has
approved the application and the company shall appoint new auditor at a general meeting
convened within three months from the date of expiry of sixty days period.]
221
[Provided further that in case of a Specified IFSC private company, where,
within a period of sixty days from the date of submission of the application to the Central
Government under this sub-section, no decision is communicated by the Central
Government to the company, it would be deemed that the Central Government has
approved the application and the company shall appoint new auditor at a general meeting
convened within three months from the date of expiry of sixty days period.]

220
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017 for a Specified IFSC public
company.

221
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017 for a Specified IFSC private
company.

Page 265
 S. 140 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

(2) The auditor who has resigned from the company shall file within a period of
thirty days from the date of resignation, a statement in the prescribed form with the
company and the Registrar, and in case of companies referred to in sub-section (5) of
section 139, the auditor shall also file such statement with the Comptroller and Auditor-
General of India, indicating the reasons and other facts as may be relevant with regard to
his resignation. [Form ADT-3]
222
[(3) If the auditor does not comply with the provisions of sub-section (2), he or it
shall be liable to a penalty of fifty thousand rupees or an amount equal to the remuneration
of the auditor, whichever is less, and in case of continuing failure, with further penalty of
five hundred rupees for each day after the first during which such failure continues,
subject to a maximum of five lakh rupees.]

(4)(i) Special notice shall be required for a resolution at an annual general meeting
appointing as auditor a person other than a retiring auditor, or providing expressly that a
retiring auditor shall not be re-appointed, except where the retiring auditor has completed
a consecutive tenure of five years or, as the case may be, ten years, as provided under
sub-section (2) of section 139.
(ii) On receipt of notice of such a resolution, the company shall forthwith send a copy
thereof to the retiring auditor.
(iii) Where notice is given of such a resolution and the retiring auditor makes with respect
thereto representation in writing to the company (not exceeding a reasonable length)
and requests its notification to members of the company, the company shall, unless
the representation is received by it too late for it to do so,—
(a) in any notice of the resolution given to members of the company, state the fact of
the representation having been made; and
(b) send a copy of the representation to every member of the company to whom notice
of the meeting is sent, whether before or after the receipt of the representation by the
company,
and if a copy of the representation is not sent as aforesaid because it was received too
late or because of the company’s default, the auditor may (without prejudice to his
right to be heard orally) require that the representation shall be read out at the meeting:

Provided that if a copy of representation is not sent as aforesaid, a copy thereof shall
be filed with the Registrar:

222
Substituted sub-section (3) of section 140 of the principal Act by Section 23 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(3) If the auditor does not comply with sub-section (2), he or it shall be punishable
with fine which shall not be less than *[fifty thousand rupees or the remuneration of the auditor, whichever
is less,] but which may extend to five lakh rupees”. *Prior to the substitution by the Companies (Amendment)
Ordinance, 2019 (3 of 2019), substituted for the words ‘fifty thousand rupees’ in sub-section (3) of section
140 of the principal Act by Section 41 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

Page 266
 S. 140 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

[second proviso to Section 140(4) w.e.f. 01 June 2016]

Provided further that if the Tribunal is satisfied on an application either of the
company or of any other aggrieved person that the rights conferred by this sub-section
are being abused by the auditor, then, the copy of the representation may not be sent
and the representation need not be read out at the meeting.

[Section 140(5) w.e.f. 01 June 2016]

(5) Without prejudice to any action under the provisions of this Act or any other law
for the time being in force, the Tribunal either suo motu or on an application made to it by
the Central Government or by any person concerned, if it is satisfied that the auditor of a
company has, whether directly or directly, acted in a fraudulent manner or abetted or
colluded in any fraud by, or in relation to, the company or its directors or officers, it may,
by order, direct the company to change its auditors:

Provided that if the application is made by the Central Government and the
Tribunal is satisfied that any change of the auditor is required, it shall within fifteen days
of receipt of such application, make an order that he shall not function as an auditor and
the Central Government may appoint another auditor in his place:

Provided further that an auditor, whether individual or firm, against whom final
order has been passed by the Tribunal under this section shall not be eligible to be
appointed as an auditor of any company for a period of five years from the date of passing
of the order and the auditor shall also be liable for action under section 447.

Explanation I.—It is hereby clarified that the case of a firm, the liability shall be of the firm
and that of every partner or partners who acted in a fraudulent manner or abetted or
colluded in any fraud by, or in relation to, the company or its director or officers.
Explanation II.—For the purposes of this Chapter the word “auditor” includes a firm of
auditors.

Page 267
 S. 141 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

141. Eligibility, qualifications and disqualifications of auditors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.226, 619 of the Companies Act, 1956]
[Refer Rule 10 of the Companies (Audit and Auditors) Rules, 2014]

141. (1) A person shall be eligible for appointment as an auditor of a company only if he
is a chartered accountant:

Provided that a firm whereof majority of partners practising in India are qualified
for appointment as aforesaid may be appointed by its firm name to be auditor of a
company.

(2) Where a firm including a limited liability partnership is appointed as an auditor of a

company, only the partners who are chartered accountants shall be authorised to act and
sign on behalf of the firm.

(3) The following persons shall not be eligible for appointment as an auditor of a company,
namely:—
(a) a body corporate other than a limited liability partnership registered under the
Limited Liability Partnership Act, 2008 (6 of 2009);
(b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employment, of an officer or employee
of the company;
(d) a person who, or his relative or partner—
(i) is holding any security of or interest in the company or its subsidiary, or of its
holding or associate company or a subsidiary of such holding company:
Provided that the relative may hold security or interest in the company of face
value not exceeding one thousand rupees or such sum as may be prescribed;
(ii) is indebted to the company, or its subsidiary, or its holding or associate company
or a subsidiary of such holding company, in excess of such amount as may be
prescribed; or
(iii) has given a guarantee or provided any security in connection with the
indebtedness of any third person to the company, or its subsidiary, or its holding
or associate company or a subsidiary of such holding company, for such amount
as may be prescribed;
(e) a person or a firm who, whether directly or indirectly, has business relationship with
the company, or its subsidiary, or its holding or associate company or subsidiary of
such holding company or associate company of such nature as may be prescribed;
(f) a person whose relative is a director or is in the employment of the company as a
director or key managerial personnel;
(g) a person who is in full time employment elsewhere or a person or a partner of a
firm holding appointment as its auditor, if such persons or partner is at the date of
such appointment or reappointment holding appointment as auditor of more than

Page 268
 S. 141 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

twenty companies 223[other than one person companies, dormant companies, small
companies and private companies having paid-up share capital less than one
hundred crore rupees];
(h) a person who has been convicted by a court of an offence involving fraud and a
period of ten years has not elapsed from the date of such conviction;
224
[(i) a person who, directly or indirectly, renders any service referred to in section 144
to the company or its holding company or its subsidiary company.
Explanation.—For the purposes of this clause, the term "directly or indirectly" shall
have the meaning assigned to it in the Explanation to section 144.’]

(4) Where a person appointed as an auditor of a company incurs any of the

disqualifications mentioned in sub-section (3) after his appointment, he shall vacate his
office as such auditor and such vacation shall be deemed to be a casual vacancy in the
office of the auditor.

223
Inserted vide Notification number G.S.R. 464(E) dated 5th June, 2015. The exceptions, modifications
and adaptations provided in the said notification dated 5th June 2015 shall be applicable to a private
company which has not committed a default in filing its financial statements under section 137 of the said
Act or annual return under section 92 of the said Act with the Registrar. Vide notification number G.S.R.
583(E) dated 13th June 2017.

224
Substituted clause (i) of sub-section (3) of section 141 of the principal Act by Section 42 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date. Prior to substitution, it read as ‘any person whose subsidiary or associate company or any other form
of entity, is engaged as on the date of appointment in consulting and specialised services as provided in
section 144.’.

Page 269
 S. 142 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

142. Remuneration of auditors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Section 224 (8), 619 of the Companies Act, 1956]

142. (1) The remuneration of the auditor of a company shall be fixed in its general meeting
or in such manner as may be determined therein:

Provided that the Board may fix remuneration of the first auditor appointed by it.

(2) The remuneration under sub-section (1) shall, in addition to the fee payable to an
auditor, include the expenses, if any, incurred by the auditor in connection with the audit
of the company and any facility extended to him but does not include any remuneration
paid to him for any other service rendered by him at the request of the company.

Page 270
 S. 143 - Chapter X [Ss.139 to 148]

Relevant rules: The Companies (Audit and Auditors) Rules, 2014

143. Powers and duties of auditors and auditing standards.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.227, 228, 619 of the Companies Act, 1956]
[Refer Rules 11, 12 and 13 of the Companies (Audit and Auditors) Rules, 2014]
[Form ADT-4]

143.(1) Every auditor of a company shall have a right of access at all times to the books
of account and vouchers of the company, whether kept at the registered office of the
company or at any other place and shall be entitled to require from the officers of the
company such information and explanation as he may consider necessary for the
performance of his duties as auditor and amongst other matters inquire into the following
matters, namely:—
(a) whether loans and advances made by the company on the basis of security have
been properly secured and whether the terms on which they have been made are
prejudicial to the interests of the company or its members;
(b) whether transactions of the company which are represented merely by book entries
are prejudicial to the interests of the company;
(c) where the company not being an investment company or a banking company,
whether so much of the assets of the company as consist of shares, debentures
and other securities have been sold at a price less than that at which they were
purchased by the company;
(d) whether loans and advances made by the company have been shown as deposits;
(e) whether personal expenses have been charged to revenue account;
(f) where it is stated in the books and documents of the company that any shares have
been allotted for cash, whether cash has actually been received in respect of such
allotment, and if no cash has actually been so received, whether the position as
stated in the account books and the balance sheet is correct, regular and not
misleading:

Provided that the auditor of a company which is a holding company shall also have
the right of access to the records of all 225[its subsidiaries and associate companies] in so
far as it relates to the consolidation of its financial statements with that of [its subsidiaries
and associate companies].

(2) The auditor shall make a report to the members of the company on the accounts
examined by him and on every financial statements which are required by or under this

225
Substituted for the words ‘its subsidiaries’, in the proviso to sub-section (1) of Section 143 of the principal
Act by Section 43(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

Act to be laid before the company in general meeting and the report shall after taking into
account the provisions of this Act, the accounting and auditing standards and matters
which are required to be included in the audit report under the provisions of this Act or
any rules made thereunder or under any order made under sub-section (11) and to the
best of his information and knowledge, the said accounts, financial statements give a true
and fair view of the state of the company’s affairs as at the end of its financial year and
profit or loss and cash flow for the year and such other matters as may be prescribed.

(3) The auditor’s report shall also state—

(a) whether he has sought and obtained all the information and explanations which to
the best of his knowledge and belief were necessary for the purpose of his audit
and if not, the details thereof and the effect of such information on the financial
statements;
(b) whether, in his opinion, proper books of account as required by law have been kept
by the company so far as appears from his examination of those books and proper
returns adequate for the purposes of his audit have been received from branches
not visited by him;
(c) whether the report on the accounts of any branch office of the company audited
under sub-section (8) by a person other than the company’s auditor has been sent
to him under the proviso to that sub-section and the manner in which he has dealt
with it in preparing his report;
(d) whether the company’s balance sheet and profit and loss account dealt with in the
report are in agreement with the books of account and returns;
(e) whether, in his opinion, the financial statements comply with the accounting
standards;
(f) the observations or comments of the auditors on financial transactions or matters
which have any adverse effect on the functioning of the company;
(g) whether any director is disqualified from being appointed as a director under sub-
section (2) of section 164;
(h) any qualification, reservation or adverse remark relating to the maintenance of
accounts and other matters connected therewith;

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226
(i) whether the company has adequate 227[internal financial controls with reference
to financial statements] in place and the operating effectiveness of such controls;
(j) such other matters as may be prescribed.

(4) Where any of the matters required to be included in the audit report under this section
is answered in the negative or with a qualification, the report shall state the reasons
therefor.

(5) 1[In the case of a Government company or any other company owned or controlled,
directly or indirectly, by the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly by one or more State
Governments, the Comptroller and Auditor-General of India shall appoint the auditor
under sub-section (5) or sub-section (7) of section 139 and direct such auditor the manner
in which the accounts of the company are required to be audited and] thereupon the
auditor so appointed shall submit a copy of the audit report to the Comptroller and Auditor-
General of India which, among other things, include the directions, if any, issued by the
Comptroller and Auditor-General of India, the action taken thereon and its impact on the
accounts and financial statement of the company.
1
[Replaced for “In the case of a Government company, the Comptroller and Auditor-General of India shall
appoint the auditor under sub-section (5) or sub-section (7) of section 139 and direct such auditor the
manner in which the accounts of the Government company are required to be audited and” by the
Companies (Removal of Difficulties) Seventh Order, 2014 vide Notification S.O. 2226(E) dated 04
September 2014]

(6) The Comptroller and Auditor-General of India shall within sixty days from the date of
receipt of the audit report under sub-section (5) have a right to,—
(a) conduct a supplementary audit of the financial statement of the company by such
person or persons as he may authorise in this behalf; and for the purposes of such

226
Clause (i) of Section 143(3) shall not apply to a private company:- (i) which is a one person company or
a small company; or (ii) which has turnover less than rupees fifty crores as per latest audited financial
statement AND which has aggregate borrowings from banks or financial institutions or any body corporate
at any point of time during the financial year less than rupees twenty five crore. Vide notification number
G.S.R. 583(E) dated 13th June 2017 read with notification number S.O. 2218(RE) dated 13th July 2017. The
exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall be
applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017. FURTHER, it is clarified by a general circular
8/2017 dated 25th July 2017 that the exemption shall be applicable for those audit reports in respect of
financial statements pertaining to financial years commencing on or after 1st April, 2016, which are made
on or after the date of the said notification.

227
Substituted for the words ‘internal financial controls system’ in clause (i) of sub-section (3) of Section
143 of the principal Act by Section 43(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 09th February
2018 vide notification no. S.O. 630(E) of the same date

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audit, require information or additional information to be furnished to any person or

persons, so authorised, on such matters, by such person or persons, and in such
form, as the Comptroller and Auditor-General of India may direct; and
(b) comment upon or supplement such audit report:

Provided that any comments given by the Comptroller and Auditor-General of India
upon, or supplement to, the audit report shall be sent by the company to every person
entitled to copies of audited financial statements under sub section (1) of section 136 and
also be placed before the annual general meeting of the company at the same time and
in the same manner as the audit report.

(7) Without prejudice to the provisions of this Chapter, the Comptroller and Auditor-
General of India may, in case of any company covered under sub-section (5) or sub-
section (7) of section 139, if he considers necessary, by an order, cause test audit to be
conducted of the accounts of such company and the provisions of section 19A of the
Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971
(56 of 1971), shall apply to the report of such test audit.

(8) Where a company has a branch office, the accounts of that office shall be audited
either by the auditor appointed for the company (herein referred to as the company’s
auditor) under this Act or by any other person qualified for appointment as an auditor of
the company under this Act and appointed as such under section 139, or where the
branch office is situated in a country outside India, the accounts of the branch office shall
be audited either by the company’s auditor or by an accountant or by any other person
duly qualified to act as an auditor of the accounts of the branch office in accordance with
the laws of that country and the duties and powers of the company’s auditor with reference
to the audit of the branch and the branch auditor, if any, shall be such as may be
prescribed:

Provided that the branch auditor shall prepare a report on the accounts of the
branch examined by him and send it to the auditor of the company who shall deal with it
in his report in such manner as he considers necessary.

(9) Every auditor shall comply with the auditing standards.

(10) The Central Government may prescribe the standards of auditing or any addendum
thereto, as recommended by the Institute of Chartered Accountants of India, constituted
under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with
and after examination of the recommendations made by the National Financial Reporting
Authority:

Provided that until any auditing standards are notified, any standard or standards
of auditing specified by the Institute of Chartered Accountants of India shall be deemed
to be the auditing standards. [See section 2(7)]

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(11) The Central Government may, in consultation with the National Financial Reporting
Authority, by general or special order, direct, in respect of such class or description of
companies, as may be specified in the order, that the auditor’s report shall also include a
statement on such matters as may be specified therein.
[MCA has notified CARO, 2016 vide Notification number S.O. 1228(E) dated 29th March 2016. MCA had
earlier notified CARO, 2015 vide Notification number S.O. 990(E) dated 10 April 2015.]

228
[Provided that until the National Financial Reporting Authority is constituted under
section 132, the Central Government may hold consultation required under this sub-
section with the Committee chaired by an officer of the rank of Joint Secretary or
equivalent in the Ministry of Corporate Affairs and the Committee shall have the
representatives from the Institute of Chartered Accountants of India and Industry
Chambers and also special invitees from the National Advisory Committee on Accounting
Standards and the office of the Comptroller and Auditor-General].

[(12) Notwithstanding anything contained in this section, if an auditor of a company in the

course of the performance of his duties as auditor, has reason to believe that an offence
of fraud involving such amount or amounts as may be prescribed, is being or has been
committed in the company by its officers or employees, the auditor shall report the matter
to the Central Government within such time and in such manner as may be prescribed:
Provided that in case of a fraud involving lesser than the specified amount, the auditor
shall report the matter to the audit committee constituted under section 177 or to the
Board in other cases within such time and in such manner as may be prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-
section to the audit committee or the Board but not reported to the Central Government,
shall disclose the details about such frauds in the Board's report in such manner as may
be prescribed.]229 [Form ADT-4]

(13) No duty to which an auditor of a company may be subject to shall be regarded as

having been contravened by reason of his reporting the matter referred to in sub-section
(12) if it is done in good faith.

(14) The provisions of this section shall mutatis mutandis apply to—

228
Inserted by notification number S.O.1226(E) dated 29th March 2016 w.e.f. 10th April 2015.

229
Sub-section (12) substituted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th
May, 2015, with effect from 14th December 2015 (vide notification number S.O. 3388(E) dated 14th
December 2015). Prior to substitution, it read as “(12) Notwithstanding anything contained in this section,
if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe
that an offence involving fraud is being or has been committed against the company by officers or
employees of the company, he shall immediately report the matter to the Central Government within such
time and in such manner as may be prescribed.”

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(a) the 230[cost accountant ] conducting cost audit under section 148; or
(b) the company secretary in practice conducting secretarial audit under section 204.

(15) If any auditor, cost accountant or company secretary in practice do not comply with
the provisions of sub-section (12), he shall be punishable with fine which shall not be less
than one lakh rupees but which may extend to twenty-five lakh rupees.

230
Substituted for the words ‘cost accountant in practice’ in clause (a) of sub-section (14) of Section 143 of
the principal Act by Section 43(iii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

144. Auditor not to render certain services.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

144. An auditor appointed under this Act shall provide to the company only such other
services as are approved by the Board of Directors or the audit committee, as the case
may be, but which shall not include any of the following services (whether such services
are rendered directly or indirectly to the company or its holding company or subsidiary
company, namely:—
(a) accounting and book keeping services;
(b) internal audit;
(c) design and implementation of any financial information system;
(d) actuarial services;
(e) investment advisory services;
(f) investment banking services;
(g) rendering of outsourced financial services;
(h) management services; and
(i) any other kind of services as may be prescribed:

Provided that an auditor or audit firm who or which has been performing any non-
audit services on or before the commencement of this Act shall comply with the provisions
of this section before the closure of the first financial year after the date of such
commencement.

Explanation.—For the purposes of this sub-section, the term “directly or indirectly” shall
include rendering of services by the auditor,—
(i) in case of auditor being an individual, either himself or through his relative or any
other person connected or associated with such individual or through any other
entity, whatsoever, in which such individual has significant influence or control, or
whose name or trade mark or brand is used by such individual;
(ii) in case of auditor being a firm, either itself or through any of its partners or through
its parent, subsidiary or associate entity or through any other entity, whatsoever, in
which the firm or any partner of the firm has significant influence or control, or
whose name or trade mark or brand is used by the firm or any of its partners.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

145. Auditor to sign audit reports, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 229, 230, 619 of the Companies Act, 1956]

145. The person appointed as an auditor of the company shall sign the auditor’s report or
sign or certify any other document of the company in accordance with the provisions of
sub-section (2) of section 141, and the qualifications, observations or comments on
financial transactions or matters, which have any adverse effect on the functioning of the
company mentioned in the auditor’s report shall be read before the company in general
meeting and shall be open to inspection by any member of the company.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

146. Auditors to attend general meeting.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.231, 619 of the Companies Act, 1956]

146. All notices of, and other communications relating to, any general meeting shall be
forwarded to the auditor of the company, and the auditor shall, unless otherwise
exempted by the company, attend either by himself or through his authorised
representative, who shall also be qualified to be an auditor, any general meeting and shall
have right to be heard at such meeting on any part of the business which concerns him
as the auditor.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

147. Punishment for contravention.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 232, 233, 233A, 619 of the Companies Act, 1956]
[Refer Rule 9 of the Companies (Audit and Auditors) Rules, 2014]

147. (1) If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the
company shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to five lakh rupees and every officer of the company who is
in default shall be punishable with imprisonment for a term which may extend to one year
or with fine which shall not be less than ten thousand rupees but which may extend to
one lakh rupees, or with both.

(2) If an auditor of a company contravenes any of the provisions of sections 139, section
143, section 144 or section 145, the auditor shall be punishable with fine which shall not
be less than twenty-five thousand rupees but which may extend to five lakh rupees 231[or
four time the remuneration of the auditor, whichever is less]:

Provided that if an auditor has contravened such provisions knowingly or wilfully

with the intention to deceive the company or its shareholders or creditors or tax
authorities, he shall be punishable with imprisonment for a term which may extend to one
year 232[and with fine which shall not be less than fifty thousand rupees but which may
extend to twenty-five lakh rupees or eight times the remuneration of the auditor,
whichever is less].

(3) Where an auditor has been convicted under sub-section (2), he shall be liable to—
(i) refund the remuneration received by him to the company; and
(ii) pay for damages to the company, statutory bodies or authorities 233[or to members
or creditors of the company] for loss arising out of incorrect or misleading
statements of particulars made in his audit report.

231
Inserted in sub-section (2) of Section 147 of the principal Act by Section 44(i)(a) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

232
Substituted for the words ‘and with fine which shall not be less than one lakh rupees but which may
extend to twenty-five lakh rupees’ in the proviso to sub-section (2) of Section 147 of the principal Act by
Section 44(i)(b) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

233
Substituted for the words 'or to any other persons' in clause (ii) of sub-section (3) of Section 147 of the
principal Act by Section 44(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

(4) The Central Government shall, by notification, specify any statutory body or authority
or an officer for ensuring prompt payment of damages to the company or the persons
under clause (ii) of sub-section (3) and such body, authority or officer shall after payment
of damages to such company or persons file a report with the Central Government in
respect of making such damages in such manner as may be specified in the said
notification.

(5) Where, in case of audit of a company being conducted by an audit firm, it is proved
that the partner or partners of the audit firm has or have acted in a fraudulent manner or
abetted or colluded in any fraud by, or in relation to or by, the company or its directors or
officers, the liability, whether civil or criminal as provided in this Act or in any other law for
the time being in force, for such act shall be of the partner or partners concerned of the
audit firm and of the firm jointly and severally.
234
[Provided that in case of criminal liability of an audit firm, in respect of liability other
than fine, the concerned partner or partners, who acted in a fraudulent manner or abetted
or, as the case may be, colluded in any fraud shall only be liable.]

of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

234
Proviso inserted to sub-section (5) of Section 147 of the principal Act by Section 44(iii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

148. Central Government to specify audit of items of cost in respect of certain

companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.233B of the Companies Act, 1956] [See section 2(13)]
[Refer Rule 14 of the Companies (Audit and Auditors) Rules, 2014]
[Refer the Companies (Cost Records and Audit) Rules, 2014]
[Form CRA-1, Form CRA-2, form CRA-3 and Cost Audit Report in Form CRA-4 using XBRL taxonomy as
per Rule 4 of the Companies (Filing of Documents and Forms in Extensible Business Reporting Language)
Rules, 2015]

148. (1) Notwithstanding anything contained in this Chapter, the Central Government
may, by order, in respect of such class of companies engaged in the production of such
goods or providing such services as may be prescribed, direct that particulars relating to
the utilisation of material or labour or to other items of cost as may be prescribed shall
also be included in the books of account kept by that class of companies: [form CRA-1]

Provided that the Central Government shall, before issuing such order in respect
of any class of companies regulated under a special Act, consult the regulatory body
constituted or established under such special Act.

(2) If the Central Government is of the opinion, that it is necessary to do so, it may, by
order, direct that the audit of cost records of class of companies, which are covered under
sub-section (1) and which have a net worth of such amount as may be prescribed or a
turnover of such amount as may be prescribed, shall be conducted in the manner
specified in the order.

(3) The audit under sub-section (2) shall be conducted by a 235[Cost Accountant] who
shall be appointed by the Board on such remuneration as may be determined by the
members in such manner as may be prescribed:

Provided that no person appointed under section 139 as an auditor of the

company shall be appointed for conducting the audit of cost records:

Provided further that the auditor conducting the cost audit shall comply with the
cost auditing standards.

235
Substituted for the words ‘Cost Accountant in practice’ in sub-section (3) of Section 148 of the principal
Act by Section 45(i)(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

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Relevant rules: The Companies (Audit and Auditors) Rules, 2014

Explanation.—For the purposes of this sub-section, the expression “cost auditing

standards” mean such standards as are issued by the 236[Institute of Cost Accountants of
India], constituted under the Cost and Works Accountants Act, 1959 (23 of 1959), with
the approval of the Central Government.

(4) An audit conducted under this section shall be in addition to the audit conducted under
section 143.
[Cost audit report in form CRA-3 per Rule 6(4) of the Companies (Cost Records and Audit) Rules, 2014]

(5) The qualifications, disqualifications, rights, duties and obligations applicable to

auditors under this Chapter shall, so far as may be applicable, apply to a cost auditor
appointed under this section and it shall be the duty of the company to give all assistance
and facilities to the cost auditor appointed under this section for auditing the cost records
of the company:
Provided that the report on the audit of cost records shall be submitted by the
237
[cost accountant] to the Board of Directors of the company.

(6) A company shall within thirty days from the date of receipt of a copy of the cost audit
report prepared in pursuance of a direction under sub-section (2) furnish the Central
Government with such report along with full information and explanation on every
reservation or qualification contained therein.
[Submit in Form CRA-4 per Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014]

(7) If, after considering the cost audit report referred to under this section and the
information and explanation furnished by the company under sub-section (6), the Central
Government is of the opinion that any further information or explanation is necessary, it
may call for such further information and explanation and the company shall furnish the
same within such time as may be specified by that Government.

(8) If any default is made in complying with the provisions of this section,—
(a) the company and every officer of the company who is in default shall be punishable in
the manner as provided in sub-section (1) of section 147;
(b) the cost auditor of the company who is in default shall be punishable in the manner
as provided in sub-sections (2) to (4) of section 147.

236
Substituted for the words ‘Institute of Cost and Works Accountants of India’ in the Explanation to sub-
section (3) of Section 148 of the principal Act by Section 45(i)(b) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

237
Substituted for the words ‘Cost Accountant in practice’ in the proviso to sub-section (5) of Section 148
of the principal Act by Section 45(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

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 S. 149 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

CHAPTER XI APPOINTMENT AND

QUALIFICATIONS OF DIRECTORS
149. Company to have Board of Directors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sections 252 (except proviso to section 252(1)), 253, 258, 259 of the Companies Act, 1956]
[See section 2 (47)]
[Refer Rule 2 (1) (k) of the Companies (Specification of definition details) Rules 2014; Rules 3, 4 and 5 of
the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

149. (1) Every company shall have a Board of Directors consisting of individuals as
directors and shall have—
(a) a minimum number of three directors in the case of a public company, two directors
in the case of a private company, and one director in the case of a One Person
Company; and
238 239
(b) a maximum of fifteen directors:
240
Provided that a company may appoint more than fifteen directors after passing a
special resolution:
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

238
Section 149(1)(b) and first proviso thereto shall not apply to a section 8 company, vide notification
number G.S.R. 584(E) dated 13th June 2017. Prior to that entire sub-section (1) of Section 149 and first
proviso thereto was not applicable to a section 8 company vide notification number G.S.R. 466(E) dated
5th June, 2015. Further exceptions, modifications and adaptations provided in the said notification shall be
applicable to a company covered under section 8 of the said Act which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the said Act
with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

239
S.149(1)(b) is not applicable to a Government Company - vide notification number G.S.R. 463(E) dated
5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.

240
First proviso to S.149(1) is not applicable to a Government Company - vide notification number G.S.R.
463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for
Government company it is provided that the exceptions, modifications and adaptations shall be applicable
to a Government company which has not committed a default in filing its financial statements under section
137 of the said Act or annual return under section 92 of the said Act with the Registrar.

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Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

Provided further that such class or classes of companies as may be prescribed,

shall have at least one woman director.
[Refer Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014][The second
proviso to Section 149(1) shall not apply to a Specified IFSC public company, vide Notification number G.S.R.
8(E) dated 04th January 2017.]

(2) Every company existing on or before the date of commencement of this Act shall within
one year from such commencement comply with the requirements of the provisions of
sub-section (1).
241
[(3) Every company shall have at least one director who stays in India for a total period
of not less than one hundred and eighty-two days during the financial year:
Provided that in case of a newly incorporated company the requirement under this sub-
section shall apply proportionately at the end of the financial year in which it is
incorporated.]

[For stay in India in calendar year 2014, and appointment on or after 01 October 2014 of a resident director,
refer Circular 25/2014 dated 26 June 2014]

242
[Provided that this sub-section shall apply to a Specified IFSC public company
in respect of financial years other than the first financial year from the date of its
incorporation.]
243
[Provided that this sub-section shall apply to a Specified IFSC private company
in respect of financial years other than the first financial year from the date of its
incorporation.]
244
(4) Every listed public company shall have at least one-third of the total number of
directors as independent directors and the Central Government may prescribe the

241
Substituted sub-section (3) of Section 149 of the principal Act by clause (i) of Section 46 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to substitution, it read as ‘Every company shall have at least one director who has stayed in India for
a total period of not less than one hundred and eighty-two days in the previous calendar year.’.

242
Inserted by Notification number G.S.R. 8(E) dated 04th January 2017.

243
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017.

244
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial

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Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

minimum number of independent directors in case of any class or classes of public

companies.
[Refer Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014]

Explanation.—For the purposes of this sub-section, any fraction contained in such one-
third number shall be rounded off as one.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

245
(5) Every company existing on or before the date of commencement of this Act shall,
within one year from such commencement or from the date of notification of the rules in
this regard as may be applicable, comply with the requirements of the provisions of sub-
section (4).
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]
[Query: if Independent Directors appointed prior to April 1, 2014 may continue and complete their remaining
tenure, under the provisions of the Companies Act, 1956 or they should demit office and be re-appointed
(should the company so decide) in accordance with the provisions of the new Act. It is clarified that it would
be necessary that if it is intended to appoint existing 'IDs' under the new Act, such appointment shall
be made expressly under section 149(10)/ (11) read with Schedule IV of the Act within one year from
1st April, 2014, subject to compliance with eligibility and other prescribed conditions. Refer para (ii) of
Circular 14/2014 dated 09 June 2014.]

246
(6) An independent director in relation to a company, means a director other than a
managing director or a whole-time director or a nominee director,—
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant
expertise and experience;
[For a Government Company, in section 149(6)(a) - for the word "Board", the words "Ministry or
Department of the Central Government which is administratively in charge of the company, or, as the
case may be, the State Government" shall be substituted - vide notification number G.S.R. 463(E)

statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

245
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

246
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 286
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Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for
Government company it is provided that the exceptions, modifications and adaptations shall be
applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]
(b)(i) who is or was not a promoter of the company or its holding, subsidiary or
associate company;
(ii) who is not related to promoters or directors in the company, its holding,
subsidiary or associate company;
(c) who has or had no 247[pecuniary relationship, other than remuneration as such
director or having transaction not exceeding ten per cent. of his total income or
such amount as may be prescribed] with the company, its holding, subsidiary or
associate company, or their promoters, or directors, during the two immediately
preceding financial years or during the current financial year;
[S.149(6)(c) is not applicable to a Government Company - vide notification number G.S.R. 463(E)
dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for
Government company it is provided that the exceptions, modifications and adaptations shall be
applicable to a Government company which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with
the Registrar.]
[Query: whether a transaction entered into by an 'ID' with the company concerned at par with
any member of the general public and at the same price as is payable/paid by such member of
public would attract the bar of 'pecuniary relationship' under section 149(6)(c). It is clarified that
in view of the provisions of section 188 which take away transactions in the ordinary course of
business at arm's length price from the purview of related party transactions, an Independent
Director will not be said to have 'pecuniary relationship' under section 149(6)(c) in such cases.
Refer para (i) of Annexure C19.]
248
[(d) none of whose relatives—
(i) is holding any security of or interest in the company, its holding, subsidiary
or associate company during the two immediately preceding financial
years or during the current financial year: Provided that the relative may
hold security or interest in the company of face value not exceeding fifty
lakh rupees or two per cent. of the paid-up capital of the company, its
holding, subsidiary or associate company or such higher sum as may be
prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company
or their promoters, or directors, in excess of such amount as may be

247
Substituted for words ‘pecuniary relationship’ in clause (c ) of sub-section (6) of Section 149 of
the principal Act by clause (ii)(a) of Section 46 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018
vide notification no. S.O. 1833(E) of the same date.
248
Substituted for clause (d) of sub-section (6) of Section 149 of the principal Act by clause (ii)(b)
of Section 46 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E)
of the same date. Prior to substitution, it read as ‘none of whose relatives has or had pecuniary relationship
or transaction with the company, its holding, subsidiary or associate company, or their promoters, or
directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or
such higher amount as may be prescribed, whichever is lower, during the two immediately preceding
financial years or during the current financial year;’.

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 S. 149 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

prescribed during the two immediately preceding financial years or during

the current financial year;
(iii) has given a guarantee or provided any security in connection with the
indebtedness of any third person to the company, its holding, subsidiary
or associate company or their promoters, or directors of such holding
company, for such amount as may be prescribed during the two
immediately preceding financial years or during the current financial year;
or
(iv) has any other pecuniary transaction or relationship with the company, or
its subsidiary, or its holding or associate company amounting to two per
cent. or more of its gross turnover or total income singly or in combination
with the transactions referred to in sub-clause (i), (ii) or (iii);]
(e) who, neither himself nor any of his relatives—
(i) holds or has held the position of a key managerial personnel or is or has
been employee of the company or its holding, subsidiary or associate
company in any of the three financial years immediately preceding the
financial year in which he is proposed to be appointed;
249
[Provided that in case of a relative who is an employee, the
restriction under this clause shall not apply for his employment during
preceding three financial years.]
(ii) is or has been an employee or proprietor or a partner, in any of the three
financial years immediately preceding the financial year in which he is
proposed to be appointed, of—
(A) a firm of auditors or company secretaries in practice or cost auditors
of the company or its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the
company, its holding, subsidiary or associate company amounting to
ten per cent. or more of the gross turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting
power of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-
profit organisation that receives twenty-five per cent. or more of its
receipts from the company, any of its promoters, directors or its holding,
subsidiary or associate company or that holds two per cent. or more of
the total voting power of the company; or
(f) who possesses such other qualifications as may be prescribed.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

249
Inserted a proviso to sub-clause (i) of clause (e) of sub-section (6) of Section 149 of the principal
Act by clause (ii)(c) of Section 46 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide
notification no. S.O. 1833(E) of the same date.

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250
(7) Every independent director shall at the first meeting of the Board in which he
participates as a director and thereafter at the first meeting of the Board in every financial
year or whenever there is any change in the circumstances which may affect his status
as an independent director, give a declaration that he meets the criteria of independence
as provided in sub-section (6).

Explanation.—For the purposes of this section, “nominee director” means a director

nominated by any financial institution in pursuance of the provisions of any law for the
time being in force, or of any agreement, or appointed by any Government, or any other
person to represent its interests.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

251
(8) The company and independent directors shall abide by the provisions specified in
Schedule IV.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

252
(9) Notwithstanding anything contained in any other provision of this Act, but subject to
the provisions of sections 197 and 198, an independent director shall not be entitled to
any stock option and may receive remuneration by way of fee provided under sub-section
(5) of section 197, reimbursement of expenses for participation in the Board and other
meetings and profit related commission as may be approved by the members.

250
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

251
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

252
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 289
 S. 149 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

253
(10) Subject to the provisions of section 152, an independent director shall hold office
for a term up to five consecutive years on the Board of a company, but shall be eligible
for re- appointment on passing of a special resolution by the company and disclosure of
such appointment in the Board's report.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]
[Query: whether it would be possible to appoint an individual as an ID for a period less than five years.
It is clarified that section 149(10) of the Act provides for a term of "upto five consecutive years" for an
'ID'. As such while appointment of an 'ID' for a term of less than five years would be permissible,
appointment for any term (whether for five years or less) is to be treated as a one term under section
149(10) of the Act. Further, under section 149(11) of the Act, no person can hold office of 'ID' for mo re
than two consecutive terms'. Such a person shall have to demit office after two consecutive terms
even if the total number of years of his appointment in such two consecutive terms is less than 10
years. In such a case the person completing 'consecutive terms of less than ten years’ shall be eligible
for appointment only after the expiry of the requisite cooling-off period of three years. Refer para (iii) of
Circular 14/2014 dated 09 June 2014.]

254
(11) Notwithstanding anything contained in sub-section (10), no independent director
shall hold office for more than two consecutive terms, but such independent director shall
be eligible for appointment after the expiration of three years of ceasing to become an
independent director:

Provided that an independent director shall not, during the said period of three
years, be appointed in or be associated with the company in any other capacity, either
directly or indirectly.

253
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

254
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

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 S. 149 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

Explanation.—For the purposes of sub-sections (10) and (11), any tenure of an

independent director on the date of commencement of this Act shall not be counted as a
term under those sub-sections.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

(12) Notwithstanding anything contained in this Act,—

255
(i) an independent director;
(ii) a non-executive director not being promoter or key managerial personnel,
shall be held liable, only in respect of such acts of omission or commission by a company
which had occurred with his knowledge, attributable through Board processes, and with
his consent or connivance or where he had not acted diligently.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

256
(13) The provisions of sub-sections (6) and (7) of section 152 in respect of retirement
of directors by rotation shall not be applicable to appointment of independent directors.
[Section 149(4) to (11), 12(i) and (13) shall not apply to a Specified IFSC public company vide Notification
number G.S.R. 8(E) dated 04th January 2017.]
[As per FAQ of ICSI, an Independent Director of a Company can be appointed as Independent Director of
its Associate/sister concern. Also, as per clause 49 III. (i) of the listing agreement, at least one independent
director on the Board of Directors of the holding company shall be a director on the Board of Directors of a
material non listed Indian subsidiary company.]

255
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

256
Sub-sections (4), (5), (6), (7), (8), (9), (10), (11), clause (i) of sub-section (12) and sub-section (13) of
section 149 shall not apply to section 8 companies, vide notification number G.S.R. 466(E) dated 5th June,
2015. Further exceptions, modifications and adaptations provided in the said notification shall be applicable
to a company covered under section 8 of the said Act which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 291
 S. 150 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

150. Manner of selection of independent directors and maintenance of databank of

independent directors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form DIR-1]

257
150. (1) Subject to the provisions contained in sub-section (5) of section 149, an
independent director may be selected from a data bank containing names, addresses
and qualifications of persons who are eligible and willing to act as independent directors,
maintained by any body, institute or association, as may be notified by the Central
Government, having expertise in creation and maintenance of such data bank and put on
their website for the use by the company making the appointment of such directors:

Provided that responsibility of exercising due diligence before selecting a person

from the data bank referred to above, as an independent director shall lie with the
company making such appointment.

(2) The appointment of independent director shall be approved by the company in general
meeting as provided in sub-section (2) of section 152 and the explanatory statement
annexed to the notice of the general meeting called to consider the said appointment shall
indicate the justification for choosing the appointee for appointment as independent
director.

(3) The data bank referred to in sub-section (1), shall create and maintain data of persons
willing to act as independent director in accordance with such rules as may be prescribed.
[Form DIR-1]

(4) The Central Government may prescribe the manner and procedure of selection of
independent directors who fulfil the qualifications and requirements specified under
section 149.

257
Section 150 shall not apply to a section 8 company vide notification number G.S.R. 466(E) dated 5th
June, 2015. Further exceptions, modifications and adaptations provided in the said notification shall be
applicable to a company covered under section 8 of the said Act which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the said Act
with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 292
 S. 151 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

151. Appointment of director elected by small shareholders.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Proviso to sub- section (1) of section 252 of the Companies Act, 1956]
[Refer Rule 7 of the Companies (Appointment and Qualification of Directors) Rules, 2014]

151. A listed company may have one director elected by such small shareholders in such
manner and with such terms and conditions as may be prescribed.

Explanation.—For the purposes of this section “small shareholders” means a shareholder

holding shares of nominal value of not more than twenty thousand rupees or such other
sum as may be prescribed.

Page 293
 S. 152 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

152. Appointment of directors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 254, 255, 256, 264 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form DIR-2, Form DIR-12][If DIR-12 relates to Managing Director, Whole-time director or manager, even
form MR-1 is required to be filed.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]
[Refer regulation (60) of Table F.II in Schedule I to the Act]

152. (1) Where no provision is made in the articles of a company for the appointment of
the first director, the subscribers to the memorandum who are individuals shall be deemed
to be the first directors of the company until the directors are duly appointed and in case
of a One Person Company an individual being member shall be deemed to be its first
director until the director or directors are duly appointed by the member in accordance
with the provisions of this section.

(2) Save as otherwise expressly provided in this Act, every director shall be
appointed by the company in general meeting.

(3) No person shall be appointed as a director of a company unless he has been

allotted the Director Identification Number under section 154 258[or any other number as
may be prescribed under section 153].

(4) Every person proposed to be appointed as a director by the company in general

meeting or otherwise, shall furnish his Director Identification Number 259[or such other
number as may be prescribed under section 153] and a declaration that he is not
disqualified to become a director under this Act.

(5) A person appointed as a director shall not act as a director unless he gives his
consent to hold the office as director and such consent has been filed with the Registrar
within thirty days of his appointment in such manner as may be prescribed:

258
Inserted in sub-section (3) of Section 152 of the principal Act by Section 47(a) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

259
Inserted in sub-section (4) of Section 152 of the principal Act by Section 47(b) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 294
 S. 152 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

[Consent by proposed director in Form DIR-2 and company to file Form DIR-12. Also note u/s. 164(2)
proposed director / director need to give declaration in Form DIR-8 to the Company.]

260
Provided that in the case of appointment of an independent director in the
general meeting, an explanatory statement for such appointment, annexed to the notice
for the general meeting, shall include a statement that in the opinion of the Board, he
fulfils the conditions specified in this Act for such an appointment.
[Section 152 (5) shall not apply where appointment of such director is done by the Central Government or
State Government, as the case may be. - vide notification number G.S.R. 463(E) dated 5th June, 2015.
Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is
provided that the exceptions, modifications and adaptations shall be applicable to a Government company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar.]
[In Section 152 (5), for a Specified IFSC public company, words “thirty days” be read as “sixty days” vide
Notification number G.S.R. 8(E) dated 04th January 2017.]

(6) (a) Unless the articles provide for the retirement of all directors at every annual
general meeting, not less than two-thirds of the total number of directors of a public
company shall—
(i) be persons whose period of office is liable to determination by retirement of directors
by rotation; and
(ii) save as otherwise expressly provided in this Act, be appointed by the company in
general meeting.
(b) The remaining directors in the case of any such company shall, in default of, and
subject to any regulations in the articles of the company, also be appointed by the
company in general meeting.
(c) At the first annual general meeting of a public company held next after the date of the
general meeting at which the first directors are appointed in accordance with clauses
(a) and (b) and at every subsequent annual general meeting, one-third of such of the
directors for the time being as are liable to retire by rotation, or if their number is neither
three nor a multiple of three, then, the number nearest to one-third, shall retire from
office.
(d) The directors to retire by rotation at every annual general meeting shall be those who
have been longest in office since their last appointment, but as between persons who
became directors on the same day, those who are to retire shall, in default of and
subject to any agreement among themselves, be determined by lot.
(e) At the annual general meeting at which a director retires as aforesaid, the company
may fill up the vacancy by appointing the retiring director or some other person thereto.

260
Proviso to section 152(5) shall not apply to a section 8 company vide notification number G.S.R. 466(E)
dated 5th June, 2015. Further exceptions, modifications and adaptations provided in the said notification
shall be applicable to a company covered under section 8 of the said Act which has not committed a default
in filing its financial statements under section 137 of the said Act or annual return under section 92 of the
said Act with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

Page 295
 S. 152 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

Explanation.—For the purposes of this sub-section, “total number of directors” shall

not include independent directors, whether appointed under this Act or any other law
for the time being in force, on the Board of a company.

[Section 152 (6) and (7) shall not apply to -- (a) a Government Company in which the entire paid up share
capital is held by the Central Government, or by any State Government or Governments or by the Central
Government and one or more State Governments; (b) a subsidiary of a Government company, referred to
in (a) above, in which the entire paid up share capital is held by that Government company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Said notification number G.S.R. 463(E) dated 5th June 2015
is amended by new notification number G.S.R. 582(E) dated 13th June 2017 and accordingly Section 152(6)
and (7) Shall not apply to - (a) a Government company, which is not a listed company, in which not less
than fifty-one per cent. of paid up share capital is held by the Central Government, or by any State
Government or Governments or by the Central Government and one or more State Governments; (b) a
subsidiary of a Government company, referred to in (a) above. Further vide said notification number G.S.R.
582(E) dated 13th June 2017, for Government company it is provided that the exceptions, modifications and
adaptations shall be applicable to a Government company which has not committed a default in filing its
financial statements under section 137 of the said Act or annual return under section 92 of the said Act with
the Registrar.]

[Section 152 (6) and (7) shall not apply to a Specified IFSC public company vide Notification number G.S.R.
8(E) dated 04th January 2017.]

(7) (a) If the vacancy of the retiring director is not so filled-up and the meeting has not
expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same
day in the next week, at the same time and place, or if that day is a national holiday, till
the next succeeding day which is not a holiday, at the same time and place.
(b) If at the adjourned meeting also, the vacancy of the retiring director is not filled up and
that meeting also has not expressly resolved not to fill the vacancy, the retiring director
shall be deemed to have been re-appointed at the adjourned meeting, unless—
(i) at that meeting or at the previous meeting a resolution for the re-appointment of
such director has been put to the meeting and lost;
(ii) the retiring director has, by a notice in writing addressed to the company or its
Board of directors, expressed his unwillingness to be so re-appointed;
(iii) he is not qualified or is disqualified for appointment;
(iv) a resolution, whether special or ordinary, is required for his appointment or re-
appointment by virtue of any provisions of this Act; or
(v) section 162 is applicable to the case.

Explanation.—For the purposes of this section and section 160, the expression “retiring
director” means a director retiring by rotation.
[Section 152 (6) and (7) shall not apply to -- (a) a Government Company in which the entire paid up share
capital is held by the Central Government, or by any State Government or Governments or by the Central
Government and one or more State Governments; (b) a subsidiary of a Government company, referred to
in (a) above, in which the entire paid up share capital is held by that Government company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Said notification number G.S.R. 463(E) dated 5th June 2015
is amended by new notification number G.S.R. 582(E) dated 13th June 2017 and accordingly Section 152(6)
and (7) Shall not apply to - (a) a Government company, which is not a listed company, in which not less
than fifty-one per cent. of paid up share capital is held by the Central Government, or by any State
Government or Governments or by the Central Government and one or more State Governments; (b) a
subsidiary of a Government company, referred to in (a) above.]

Page 296
 S. 152 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

[Section 152 (6) and (7) shall not apply to a Specified IFSC public company vide Notification number G.S.R.
8(E) dated 04th January 2017.]
[Comment: Non-compliance of sub-section (3) leads to disqualification u/s.164 and vacation of office of
director u/s.167 of the Act.]

[Penalty for contravention of section 152 is under section 159]

Page 297
 S. 153 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

153. Application for allotment of Director Identification Number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266A of the Companies Act, 1956]
[For definition of DIN, refer Rule 2 (1) (e) of the Companies (Specification of definitions details) Rules, 2014]
[Refer Rule 2 (1) (e) of the Companies (Specification of definition details) Rules 2014; Rule 9 and Rule 12
of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form DIR-3, Form DIR-3A, Form DIR-4, Form DIR-6 and Form DIR-7.]

153. Every individual intending to be appointed as director of a company shall make an

application for allotment of Director Identification Number to the Central Government in
such form and manner and along with such fees as may be prescribed.
261
[ Provided that the Central Government may prescribe any identification number which
shall be treated as Director Identification Number for the purposes of this Act and in case
any individual holds or acquires such identification number, the requirement of this section
shall not apply or apply in such manner as may be prescribed.]

[Power delegated to Regional Director, Noida vide notification number S.O.1354(E) dated 21st May, 2014.]
[Application for DIN in Form DIR-3; Verification of applicant in Form DIR-4. Intimate change in particulars
of Directors in Form DIR-6 and verification in Form DIR-7.]

261
Proviso to section 153 of the principal Act inserted by Section 48 of the Companies (Amendment) Act,
2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to
force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 298
 S. 154 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

154. Allotment of Director Identification Number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266B of the Companies Act, 1956]
[Refer Rule 10 of the Companies (Appointment and Qualification of Directors) Rules, 2014]

154. The Central Government shall, within one month from the receipt of the application
under section 153, allot a Director Identification Number to an applicant in such manner
as may be prescribed.

[Power delegated to Regional Director, Noida vide notification number S.O.1354(E) dated 21st May, 2014.]

Page 299
 S. 155 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

155. Prohibition to obtain more than one Director Identification Number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266C of the Companies Act, 1956]
[Refer Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form DIR-5]

155. No individual, who has already been allotted a Director Identification Number under
section 154, shall apply for, obtain or possess another Director Identification Number.
[Surrender DIN in Form DIR-5]
[MCA has authorised following officers of Regional Director (North) at Noida for filing complaint under
section 159 in respect of offences under section 155 - Vide notification S.O. 129 (E) dated 9th January,
2015:
Dr. Raj Singh, Shri A. M. Singh, Ms. P. Sheela, Shri R. K. Tiwari all Joint Directors and Shri Ch. Jaganadh
Reddy, Assistant Director.]

[Penalty for contravention of section 155 is under section 159]

Page 300
 S. 156 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

156. Director to intimate Director Identification Number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266D of the Companies Act, 1956]
[Rule 10A of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form DIR-3B]

156. Every existing director shall, within one month of the receipt of Director Identification
Number from the Central Government, intimate his Director Identification Number to the
company or all companies wherein he is a director.
[No form is prescribed. Director may intimate company in writing and obtain acknowledgement as a proof
of compliance.]

[Penalty for contravention of section 156 is under section 159]

Page 301
 S. 157 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

157. Company to inform Director Identification Number to Registrar.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266E of the Companies Act, 1956]
[Refer Rule 10A, Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form DIR-3C] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]

157. (1) Every company shall, within fifteen days of the receipt of intimation under section
156, furnish the Director Identification Number of all its directors to the Registrar or any
other officer or authority as may be specified by the Central Government with such fees
as may be prescribed or with such additional fees as may be prescribed 262[omitted] and
every such intimation shall be furnished in such form and manner as may be prescribed.
[No Form was prescribed until 14 October 2014 and hence Form GNL-2 was used. From 14 October 2014
Form DIR-3C is prescribed.]

263
[(2) If any company fails to furnish the Director Identification Number under sub-
section (1), such company shall be liable to a penalty of twenty five thousand rupees and
in case of continuing failure, with further penalty of one hundred rupees for each day after
the first during which such failure continues, subject to a maximum of one lakh rupees,
and every officer of the company who is in default shall be liable to a penalty of not less
than twenty-five thousand rupees and in case of continuing failure, with further penalty of
one hundred rupees for each day after the first during which such failure continues,
subject to a maximum of one lakh rupees.]

262
Omitted words ‘within the time specified under section 403’ from sub-section (1) of Section 157
of the principal Act by clause (i) of Section 49 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 07th May 2018
vide notification no. S.O. 1833(E) of the same date.

263
Substituted sub-section (2) of section 157 of the principal Act by Section 24 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(2) If a company fails to furnish Director Identification Number under sub-section
(1), *[omitted], the company shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees and every officer of the company who is in default shall
be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to
one lakh rupees”. *Prior to the substitution by the Companies (Amendment) Ordinance, 2019 (3 of 2019),
omitted words ‘before the expiry of the period specified under section 403 with additional fee’ from sub-
section (2) of Section 157 of the principal Act by clause (ii) of Section 49 of the Companies (Amendment)
Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought
to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

Page 302
 S. 158 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

158. Obligation to indicate Director Identification Number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266F of the Companies Act, 1956]

158. Every person or company, while furnishing any return, information or particulars as
are required to be furnished under this Act, shall mention the Director Identification
Number in such return, information or particulars in case such return, information or
particulars relate to the director or contain any reference of any director.

Page 303
 S. 159 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

264
[159. Penalty for default of certain provisions.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.266G of the Companies Act, 1956]

159. If any individual or director of a company makes any default in complying with
any of the provisions of section 152, section 155 and section 156, such individual or
director of the company shall be liable to a penalty which may extend to fifty thousand
rupees and where the default is a continuing one, with a further penalty which may extend
to five hundred rupees for each day after the first during which such default continues.]

264
Substituted section 159 of the principal Act by Section 25 of the Companies (Amendment) Act, 2019
(22 of 2019) deemed to have came into force from 02nd November 2018. Prior to substitution, it read as
“159. Punishment for contravention. If any individual or director of a company, contravenes any of the
provisions of section 152, section 155 and section 156, such individual or director of the company shall be
punishable with imprisonment for a term which may extend to six months or with fine which may extend to
fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend
to five hundred rupees for every day after the first during which the contravention continues.”.

Page 304
 S. 160 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

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

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.257 of the Companies Act, 1956]
[Refer Rule 13 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[This section shall not apply to -- (a) a Government Company in which the entire paid up share capital is
held by the Central Government, or by any State Government or Governments or by the Central
Government and one or more State Governments; (b) a subsidiary of a Government company, referred to
in (a) above, in which the entire paid up share capital is held by that Government company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th
June 2017, for Government company it is provided that the exceptions, modifications and adaptations shall
be applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]
[This section shall not apply to private companies. Notification number G.S.R. 464(E) dated 5th June, 2015.
The exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall
be applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[This section shall not apply to section 8 companies whose articles provide for election of directors by ballot,
vide notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and
adaptations provided in the said notification shall be applicable to a company covered under section 8 of
the said Act which has not committed a default in filing its financial statements under section 137 of the said
Act or annual return under section 92 of the said Act with the Registrar, vide notification number G.S.R.
584(E) dated 13th June 2017.]
[Section 160 shall apply to a Specified IFSC public company as per the articles framed by it, vide Notification
number G.S.R. 8(E) dated 04th January 2017.]

160. (1) A person who is not a retiring director in terms of section 152 shall, subject to the
provisions of this Act, be eligible for appointment to the office of a director at any general
meeting, if he, or some member intending to propose him as a director, has, not less than
fourteen days before the meeting, left at the registered office of the company, a notice in
writing under his hand signifying his candidature as a director or, as the case may be, the
intention of such member to propose him as a candidate for that office, along with the
deposit of one lakh rupees or such higher amount as may be prescribed which shall be
refunded to such person or, as the case may be, to the member, if the person proposed
gets elected as a director or gets more than twenty-five per cent. of total valid votes cast
either on show of hands or on poll on such resolution.
265
[Provided that requirements of deposit of amount shall not apply in case of appointment
of an independent director or a director recommended by the Nomination and
Remuneration Committee, if any, constituted under sub-section (1) of section 178 or a

265
Proviso to sub-section (1) of section 160 of the principal Act inserted by Section 50 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 305
 S. 160 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

director recommended by the Board of Directors of the Company, in the case of a

company not required to constitute Nomination and Remuneration Committee.]

[For nidhi companies, in sub-section (1) above, for the words "one lakh rupees", the words "ten thousand
rupees" shall be substituted. Refer notification number G.S.R. 465(E) dated 5th June, 2015.]

(2) The company shall inform its members of the candidature of a person for the office of
director under sub-section (1) in such manner as may be prescribed.
[Per explanation to section 152, the expression “retiring director” under this section means a director retiring
by rotation.]
[It is clarified that Board of Directors of companies registered under section 8 may decide either to forfeit
the deposit received under this section upon failure of the person to secure minimum 25% of the valid votes
or to refund the same. See Circular 38/2014 dated 14 October 2014.]

Page 306
 S. 161 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

161. Appointment of additional director, alternate director and nominee director.

[Except section 161(2), brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[Section 161(2) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.260, 262, 313 of the Companies Act, 1956]
[Refer regulation (66) of Table F.II in Schedule I to the Act]

161. (1) The articles of a company may confer on its Board of Directors the power to
appoint any person, other than a person who fails to get appointed as a director in a
general meeting, as an additional director at any time who shall hold office up to the date
of the next annual general meeting or the last date on which the annual general meeting
should have been held, whichever is earlier.

[Section 161 (2) w.e.f. 01 April 2014]

(2) The Board of Directors of a company may, if so authorised by its articles or by a
resolution passed by the company in general meeting, appoint a person, not being a
person holding any alternate directorship for any other director in the company 266 [or
holding directorship in the same company], to act as an alternate director for a director
during his absence for a period of not less than three months from India:

Provided that no person shall be appointed as an alternate director for an

independent director unless he is qualified to be appointed as an independent director
under the provisions of this Act:

Provided further that an alternate director shall not hold office for a period longer
than that permissible to the director in whose place he has been appointed and shall
vacate the office if and when the director in whose place he has been appointed returns
to India:

Provided also that if the term of office of the original director is determined before
he so returns to India, any provision for the automatic re-appointment of retiring directors
in default of another appointment shall apply to the original, and not to the alternate
director.

(3) Subject to the articles of a company, the Board may appoint any person as a director
nominated by any institution in pursuance of the provisions of any law for the time being

266
Words inserted in sub-section (2) of section 161 of the principal Act by Section 51(i) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 307
 S. 161 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

in force or of any agreement or by the Central Government or the State Government by

virtue of its shareholding in a Government company.
267
[Provided that in case of a Specified IFSC public company, the Board may appoint,
any person nominated by any institution or company or body corporate as a director in
pursuance of the provisions of any law for the time being in force or of any agreement or
by the Central Government or the State Government by virtue of its shareholding in a
Government company.]
268
[Provided that in case of a Specified IFSC private company, the Board may appoint,
any person nominated by any institution or company or body corporate as a director in
pursuance of the provisions of any law for the time being in force or of any agreement or
by the Central Government or the State Government by virtue of its shareholding in a
Government company.]

(4) 269[omitted] if the office of any director appointed by the company in general meeting
is vacated before his term of office expires in the normal course, the resulting casual
vacancy may, in default of and subject to any regulations in the articles of the company,
be filled by the Board of Directors at a meeting of the Board 270 [which shall be
subsequently approved by members in the immediate next general meeting]:

Provided that any person so appointed shall hold office only up to the date up to
which the director in whose place he is appointed would have held office if it had not been
vacated.
[As per FAQ of ICSI, on the question: Whether alternate director vacates office when the original director
joins video conference at a Board meeting even though he does not return to India? It is stated by ICSI that
the office of Alternate Director is nowhere related to the attendance of the Original Director in the Board
Meeting (also refer MCA Letter No. 6/16/(313)/68-PR, dated 5-2-1963). The office of Alternate Director shall
be terminated if and when the director in whose place he has been appointed returns to India. Therefore,
joining meeting by video conferencing by the original director will not vacate the office of the alternate
director.]

267
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017.

268
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017.

269
Omitted words ‘In the case of a public company,’ from sub-section (4) of section 161 of the principal Act
by Section 51(ii)(a) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

270
Inserted in sub-section (4) of section 161 of the principal Act inserted by Section 51(ii)(b) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

Page 308
 S. 162 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

162. Appointment of directors to be voted individually.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.263 of the Companies Act, 1956]
[This section shall not apply to -- (a) a Government Company in which the entire paid up share capital is
held by the Central Government, or by any State Government or Governments or by the Central
Government and one or more State Governments; (b) a subsidiary of a Government company, referred to
in (a) above, in which the entire paid up share capital is held by that Government company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th
June 2017, for Government company it is provided that the exceptions, modifications and adaptations shall
be applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

[This section shall not apply to private companies. Notification number G.S.R. 464(E) dated 5th June, 2015.
The exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall
be applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]

[Section 162 shall not apply to a Specified IFSC public company vide Notification number G.S.R. 8(E) dated
04th January 2017.]

162. (1) At a general meeting of a company, a motion for the appointment of two or more
persons as directors of the company by a single resolution shall not be moved unless a
proposal to move such a motion has first been agreed to at the meeting without any vote
being cast against it.

(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not
any objection was taken when it was moved.

(3) A motion for approving a person for appointment, or for nominating a person for
appointment as a director, shall be treated as a motion for his appointment.

Page 309
 S. 163 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

163. Option to adopt principle of proportional representation for appointment of

directors.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.265 of the Companies Act, 1956]
[This section shall not apply to -- (a) a Government Company in which the entire paid up share capital is
held by the Central Government, or by any State Government or Governments or by the Central
Government and one or more State Governments; (b) a subsidiary of a Government company, referred to
in (a) above, in which the entire paid up share capital is held by that Government company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th
June 2017, for Government company it is provided that the exceptions, modifications and adaptations shall
be applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.

163. Notwithstanding anything contained in this Act, the articles of a company may
provide for the appointment of not less than two-thirds of the total number of the directors
of a company in accordance with the principle of proportional representation, whether by
the single transferable vote or by a system of cumulative voting or otherwise and such
appointments may be made once in every three years and casual vacancies of such
directors shall be filled as provided in sub-section (4) of section 161.

Page 310
 S. 164 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

164. Disqualifications for appointment of director.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.202, 274 of the Companies Act, 1956]
[Refer Rule 2 (1) (s) of the Companies (Specification of definitions details) Rules, 2014 and
Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Form DIR-8, Form DIR-9 and Form DIR-10]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

164. (1) A person shall not be eligible for appointment as a director of a company, if —
(a) he is of unsound mind and stands so declared by a competent court;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his application is pending;
(d) he has been convicted by a court of any offence, whether involving moral turpitude
or otherwise, and sentenced in respect thereof to imprisonment for not less than
six months and a period of five years has not elapsed from the date of expiry of the
sentence:
Provided that if a person has been convicted of any offence and sentenced in respect
thereof to imprisonment for a period of seven years or more, he shall not be eligible to be
appointed as a director in any company;
[Word “or otherwise” in clause (d) above, means any offence in respect of which he has been convicted
by a Court under this Act or the Companies Act, 1956. Rule 2 (1) (s) of the Companies (Specification of
definitions details) Rules, 2014]
(e) an order disqualifying him for appointment as a director has been passed by a court
or Tribunal and the order is in force;
(f) he has not paid any calls in respect of any shares of the company held by him,
whether alone or jointly with others, and six months have elapsed from the last day
fixed for the payment of the call;
(g) he has been convicted of the offence dealing with related party transactions under
section 188 at any time during the last preceding five years; or
(h) he has not complied with sub-section (3) of section 152.
271
[(i) he has not complied with the provisions of sub-section (1) of section 165.]

(2) No person who is or has been a director of a company which—

(a) has not filed financial statements or annual returns for any continuous period of
three financial years; or
(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem
any debentures on the due date or pay interest due thereon or pay any dividend
declared and such failure to pay or redeem continues for one year or more,

271
Inserted clause (i) in sub-section (1) of section 164 of the principal Act by Section 26 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.

Page 311
 S. 164 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

shall be eligible to be re-appointed as a director of that company or appointed in other

company for a period of five years from the date on which the said company fails to
do so.
272
[Provided that where a person is appointed as a director of a company which is in
default of clause (a) or clause (b), he shall not incur the disqualification for a period of six
months from the date of his appointment.]
[Besides consent of proposed director in Form DIR-2, he is required to intimate to the Company in Form
DIR-8 u/s. 152 before appointment or re-appointment as a Director.
Whenever a company fails to file the financial statements or annual returns, or fails to repay any deposit,
interest, dividend, or fails to redeem its debentures, as specified in section 164(2) above, the company
shall immediately file Form DIR-9.
An application for removal of disqualification of directors shall be made in Form DIR-10]
[For Company Law Settlement Scheme, 2014 [CLSS-2014] notified vide Circular 34/2014 dated 12 August
2014 refer Annexure C39. Also see Circular 41/2014 dated 15 October, 2014.]

[Section 164 (2) shall not apply to a Government Company, vide notification number G.S.R. 463(E) dated
5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government
company it is provided that the exceptions, modifications and adaptations shall be applicable to a
Government company which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar.

(3) A private company may by its articles provide for any disqualifications for
appointment as a director in addition to those specified in sub-sections (1) and (2):
273
[Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-
section (1) shall continue to apply even if the appeal or petition has been filed against the
order of conviction or disqualification.]

[Comments: Disqualification under this section, leads to vacation of office under section 167 (1) (a). A
clarification from MCA is required with respect to private companies, which has not filed its financial
statements or annual returns for three consecutive years prior to 01 April 2014 (date of coming into force

272
Inserted a proviso to sub-section (2) of section 164 of the principal Act by Section 52(i) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

273
Second proviso to sub-section (2) of section 164 of the principal Act substituted by Section 52(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to substitution it read as “Provided that the disqualifications referred to in clauses (d), (e) and (g) of
sub-section (1) shall not take effect— (i) for thirty days from the date of conviction or order of disqualification;
(ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting
in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed
off; or (iii) where any further appeal or petition is preferred against order or sentence within seven days,
until such further appeal or petition is disposed off.”.

Page 312
 S. 164 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

of this section), as to whether directors of such private companies becomes disqualified and section 167
gets attracted or that provisions of section 164 (2) is prospective.]

Page 313
 S. 165 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

165. Number of directorships.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 275, 276, 277, 278, 279 of the Companies Act, 1956]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

165. 274(1) No person, after the commencement of this Act, shall hold office as a director,
including any alternate directorship, in more than twenty companies at the same time:

Provided that the maximum number of public companies in which a person can
be appointed as a director shall not exceed ten.
275
[Explanation I.]— For reckoning the limit of public companies in which a person can be
appointed as director, directorship in private companies that are either holding or
subsidiary company of a public company shall be included.
276
[Explanation II.—For reckoning the limit of directorships of twenty companies, the
directorship in a dormant company shall not be included.]

(2) Subject to the provisions of sub-section (1), the members of a company may,
by special resolution, specify any lesser number of companies in which a director of the
company may act as directors.
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

(3) Any person holding office as director in companies more than the limits as
specified in sub-section (1), immediately before the commencement of this Act shall,
within a period of one year from such commencement,—

274
Section 165(1) shall not apply to a section 8 company, vide notification number G.S.R. 466(E) dated 5th
June, 2015. Further exceptions, modifications and adaptations provided in the said notification shall be
applicable to a company covered under section 8 of the said Act which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the said Act
with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

275
Explanation in sub-section (1) of section 165 of the principal Act re-numbered as ‘Explanation I’ and
inserted Explanation II thereunder by Section 53 of the Companies (Amendment) Act, 2017 (1 of 2018)
which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

276
Explanation II inserted to sub-section (1) of section 165 of the principal Act by Section 53 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

Page 314
 S. 165 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

(a) choose not more than the specified limit of those companies, as companies in
which he wishes to continue to hold the office of director;
(b) resign his office as director in the other remaining companies; and
(c) intimate the choice made by him under clause (a), to each of the companies in
which he was holding the office of director before such commencement and to
the Registrar having jurisdiction in respect of each such company.

(4) Any resignation made in pursuance of clause (b) of sub-section (3) shall
become effective immediately on the despatch thereof to the company concerned.

(5) No such person shall act as director in more than the specified number of
companies,—
(a) after despatching the resignation of his office as director or non-executive director
thereof, in pursuance of clause of sub-section (3);
(b) after the expiry of one year from the commencement of this Act, whichever is
earlier.

(6) If a person accepts an appointment as a director in contravention of sub-section

(1), he shall be 277[liable to a penalty of five thousand rupees for each day after the first
during which such contravention continues].

[Comments: Where a public limited company obtained certificate of commencement of business, prior to
01 April 2014 (Commencement of this provision), it is required to hold statutory general meeting under
section 165 of the Companies Act, 1956. This view is also expressed in FAQ of ICSI.]

277
Substituted for the words ‘punishable with fine which shall not be less than five thousand rupees but
which may extend to twenty-five thousand rupees for every day after the first during which the contravention
continues’ in sub-section (6) of section 165 of the principal Act by Section 27 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.

Page 315
 S. 166 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

166. Duties of directors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Section 312 of the Companies Act, 1956]
[Refer regulation (78) of Table F.II in Schedule I to the Act]

166. (1) Subject to the provisions of this Act, a director of a company shall act in
accordance with the articles of the company.

(2) A director of a company shall act in good faith in order to promote the objects of the
company for the benefit of its members as a whole, and in the best interests of the
company, its employees, the shareholders, the community and for the protection of
environment.

(3) A director of a company shall exercise his duties with due and reasonable care, skill
and diligence and shall exercise independent judgment.

(4) A director of a company shall not involve in a situation in which he may have a direct
or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

(5) A director of a company shall not achieve or attempt to achieve any undue gain or
advantage either to himself or to his relatives, partners, or associates and if such director
is found guilty of making any undue gain, he shall be liable to pay an amount equal to that
gain to the company.

(6) A director of a company shall not assign his office and any assignment so made shall
be void.

(7) If a director of the company contravenes the provisions of this section such director
shall be punishable with fine which shall not be less than one lakh rupees but which may
extend to five lakh rupees.

Page 316
 S. 167 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

167. Vacation of office of director.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.283 of the Companies Act, 1956]
[Refer Rule 2 (1) (s) of the Companies (Specification of definitions details) Rules, 2014]
[Under Section 217(6)(ii), officer or director of a company, upon conviction for violation of section 217,
vacates the office in the company and alsp gets disqualified to hold office in any other company.]

167. (1) The office of a director shall become vacant in case—

(a) he incurs any of the disqualifications specified in section 164;
278
[Provided that where he incurs disqualification under sub-section (2) of
section 164, the office of the director shall become vacant in all the companies,
other than the company which is in default under that sub-section.]
(b) he absents himself from all the meetings of the Board of Directors held during
a period of twelve months with or without seeking leave of absence of the Board;
(c) he acts in contravention of the provisions of section 184 relating to entering into
contracts or arrangements in which he is directly or indirectly interested;
(d) he fails to disclose his interest in any contract or arrangement in which he is
directly or indirectly interested, in contravention of the provisions of section 184;
(e) he becomes disqualified by an order of a court or the Tribunal;
(f) he is convicted by a court of any offence, whether involving moral turpitude or
otherwise and sentenced in respect thereof to imprisonment for not less than
six months:
279
[ Provided that the office shall not be vacated by the director in case of orders
referred to in clauses (e) and (f)— (i) for thirty days from the date of conviction or
order of disqualification; (ii) where an appeal or petition is preferred within thirty
days as aforesaid against the conviction resulting in sentence or order, until expiry
of seven days from the date on which such appeal or petition is disposed of; or (iii)
where any further appeal or petition is preferred against order or sentence within
seven days, until such further appeal or petition is disposed of.]

278
Inserted a proviso to clause (a) of sub-section (1) of section 167 of the principal Act by Section 54(i) of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

279
Substituted a proviso to clause (f) of sub-section (1) of section 167 of the principal Act by Section 54(ii)
of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on
03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same
date. Prior to substitution it read as “Provided that the office shall be vacated by the director even if he has
filed an appeal against the order of such court; (g) he is removed in pursuance of the provisions of this Act;
(h) he, having been appointed a director by virtue of his holding any office or other employment in the
holding, subsidiary or associate company, ceases to hold such office or other employment in that
company.”.

Page 317
 S. 167 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

(2) If a person, functions as a director even when he knows that the office of director held
by him has become vacant on account of any of the disqualifications specified in sub-
section (1), he shall be punishable with imprisonment for a term which may extend to one
year or with fine which shall not be less than one lakh rupees but which may extend to
five lakh rupees, or with both.

(3) Where all the directors of a company vacate their offices under any of the
disqualifications specified in sub-section (1), the promoter or, in his absence, the Central
Government shall appoint the required number of directors who shall hold office till the
directors are appointed by the company in the general meeting.

(4) A private company may, by its articles, provide any other ground for the vacation of
the office of a director in addition to those specified in sub-section (1).

Page 318
 S. 168 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

168. Resignation of director.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rules 15 and 16 of the Companies (Appointment and Qualification of Directors) Rules, 2014 AND
Circular 03/2015 dated 03 March 2015]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. DIR-11, Form No. DIR-12] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

168. (1) A director may resign from his office by giving a notice in writing to the company
and the Board shall on receipt of such notice take note of the same and the company
shall intimate the Registrar in such manner, within such time and in such form as may be
prescribed and shall also place the fact of such resignation in the report of directors laid
in the immediately following general meeting by the company:
[Form No. DIR-12]

Provided that a 280[director may also forward] a copy of his resignation along with
detailed reasons for the resignation to the Registrar within thirty days of resignation in
such manner as may be prescribed.
[Form No. DIR-11]
[In respect of a Specified IFSC public company word “shall” be read as “may” vide Notification number
G.S.R. 8(E) dated 04th January 2017.]
[In respect of a Specified IFSC private company word “shall” be read as “may” vide Notification number
G.S.R. 9(E) dated 04th January 2017.]

(2) The resignation of a director shall take effect from the date on which the notice is
received by the company or the date, if any, specified by the director in the notice,
whichever is later:

Provided that the director who has resigned shall be liable even after his
resignation for the offences which occurred during his tenure.

(3) Where all the directors of a company resign from their offices, or vacate their offices
under section 167, the promoter or, in his absence, the Central Government shall appoint
the required number of directors who shall hold office till the directors are appointed by
the company in general meeting.

280
Substituted for the words ‘director shall also forward’ in the proviso of sub-section (1) of section 168 of
the principal Act by Section 55 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification
no. S.O. 1833(E) of the same date.

Page 319
 S. 169 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

169. Removal of directors.

[Except section 169(4), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Section 169(4) brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.284 of the Companies Act, 1956]

169. (1) A company may, by ordinary resolution, remove a director, not being a director
appointed by the Tribunal under section 242, before the expiry of the period of his office
after giving him a reasonable opportunity of being heard:
281
[

Provided that nothing contained in this sub-section shall apply where the company
has availed itself of the option given to it under section 163 to appoint not less than two-
thirds of the total number of directors according to the principle of proportional
representation.

(2) A special notice shall be required of any resolution, to remove a director under this
section, or to appoint somebody in place of a director so removed, at the meeting at which
he is removed.

(3) On receipt of notice of a resolution to remove a director under this section, the
company shall forthwith send a copy thereof to the director concerned, and the director,
whether or not he is a member of the company, shall be entitled to be heard on the
resolution at the meeting.

[section 169(4) w.e.f. 01 June 2016]

(4) Where notice has been given of a resolution to remove a director under this section
and the director concerned makes with respect thereto representation in writing to the
company and requests its notification to members of the company, the company shall, if
the time permits it to do so,—
(a) in any notice of the resolution given to members of the company, state the fact of
the representation having been made; and
(b) send a copy of the representation to every member of the company to whom notice
of the meeting is sent (whether before or after receipt of the representation by the
company),

281
Inserted a proviso before the first proviso in sub-section (1) of Section 169 of the principal Act by the
Companies (Removal of Difficulties) Order, 2018 by notification number S.O. 768(E) dated 21st February
2018 w.e.f. 22nd February 2018.

Page 320
 S. 169 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

and if a copy of the representation is not sent as aforesaid due to insufficient time or for
the company’s default, the director may without prejudice to his right to be heard orally
require that the representation shall be read out at the meeting:

Provided that copy of the representation need not be sent out and the representation
need not be read out at the meeting if, on the application either of the company or of any
other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred
by this sub-section are being abused to secure needless publicity for defamatory matter;
and the Tribunal may order the company’s costs on the application to be paid in whole or
in part by the director notwithstanding that he is not a party to it.

(5) A vacancy created by the removal of a director under this section may, if he had been
appointed by the company in general meeting or by the Board, be filled by the
appointment of another director in his place at the meeting at which he is removed,
provided special notice of the intended appointment has been given under sub-section
(2).

(6) A director so appointed shall hold office till the date up to which his predecessor would
have held office if he had not been removed.

(7) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy
in accordance with the provisions of this Act:

Provided that the director who was removed from office shall not be re-appointed
as a director by the Board of Directors.

(8) Nothing in this section shall be taken—

(a) as depriving a person removed under this section of any compensation or damages
payable to him in respect of the termination of his appointment as director as per the
terms of contract or terms of his appointment as director, or of any other appointment
terminating with that as director; or
(b) as derogating from any power to remove a director under other provisions of this Act.

Page 321
 S. 170 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

170. Register of directors and key managerial personnel and their shareholding.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.303, 307 of the Companies Act, 1956]
[Refer Rules 17 and 18 of the Companies (Appointment and Qualification of Directors) Rules, 2014]
[Refer Rule 12 of and Table to fees annexed to the Companies (Registrations Offices and Fees) Rules,
2014]
[Form No. DIR-12] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
[This section shall not apply to a Government Company in which the entire paid up share capital is held by
the Central Government, or by any State Government or Governments or by the Central Government and
one or more State Governments, vide notification number G.S.R. 463(E) dated 5th June, 2015. Further
vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that
the exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.]

170. (1) Every company shall keep at its registered office a register containing such
particulars of its directors and key managerial personnel as may be prescribed, which
shall include the details of securities held by each of them in the company or its holding,
subsidiary, subsidiary of company’s holding company or associate companies.

(2) A return containing such particulars and documents as may be prescribed, of the
directors and the key managerial personnel shall be filed with the Registrar within thirty
days from the appointment of every director and key managerial personnel, as the case
may be, and within thirty days of any change taking place.
[Form No. DIR-12]
[In respect of a Specified IFSC public company, words “thirty days” be read as “sixty days” at both places,
vide Notification number G.S.R. 8(E) dated 04th January 2017.]
[In respect of a Specified IFSC private company, words “thirty days” be read as “sixty days” at both places,
vide Notification number G.S.R. 9(E) dated 04th January 2017.]
[Comments: As per FAQ prepared by ICSI, after 1st April 2014 all the registers of Directors and KMP shall
be prepared as per the provisions of the section 170 of the Companies Act, 2013. The register of directors
& director’s shareholding maintained before 1 April, 2014 as per the provisions of the companies Act, 1956
needs not to be converted as per the provisions of the section 170 of Companies Act, 2013.]

Page 322
 S. 171 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

171. Members’ right to inspect.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.304 of the Companies Act, 1956]
[This section shall not apply to a Government Company in which the entire paid up share capital is held by
the Central Government, or by any State Government or Governments or by the Central Government and
one or more State Governments, vide notification number G.S.R. 463(E) dated 5th June, 2015. Further vide
notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that the
exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.]

171. (1) The register kept under sub-section (1) of section 170,—
(a) shall be open for inspection during business hours and the members shall have a
right to take extracts therefrom and copies thereof, on a request by the members,
be provided to them free of cost within thirty days; and
(b) shall also be kept open for inspection at every annual general meeting of the
company and shall be made accessible to any person attending the meeting.

(2) If any inspection as provided in clause (a) of sub-section (1) is refused, or if any copy
required under that clause is not sent within thirty days from the date of receipt of such
request, the Registrar shall on an application made to him order immediate inspection
and supply of copies required thereunder.

Page 323
 S. 172 - Chapter XI [Ss.149 to 172]

Relevant rules: The Companies (Appointment and Qualification of Directors) Rules, 2014

172. Punishment.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

172. If a company contravenes any of the provisions of this Chapter and for which no
specific punishment is provided therein, the company and every officer of the company
who is in default shall be punishable with fine which shall not be less than fifty thousand
rupees but which may extend to five lakh rupees.

Page 324
 S. 173 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

CHAPTER XII MEETINGS OF BOARD

AND ITS POWERS
173. Meetings of Board.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.285, 286 of the Companies Act, 1956]
[Refer Rule 3 and Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Refer regulations (65), (67), (68) and (70) of Table F.II in Schedule I to the Act]

173. 282(1) Every company shall hold the first meeting of the Board of Directors within
thirty days of the date of its incorporation and thereafter hold a minimum number of four
meetings of its Board of Directors every year in such a manner that not more than one
hundred and twenty days shall intervene between two consecutive meetings of the Board:

Provided that the Central Government may, by notification, direct that the
provisions of this sub-section shall not apply in relation to any class or description of
companies or shall apply subject to such exceptions, modifications or conditions as may
be specified in the notification.
283
[Provided further that a Specified IFSC public company shall hold the first
meeting of the Board of Directors within sixty days of its incorporation and thereafter hold
atleast one meeting of the Board of Directors in each half of a calendar year.]
284
[Provided further that a Specified IFSC private company shall hold the first
meeting of the Board of Directors within sixty days of its incorporation and thereafter hold
atleast one meeting of the Board of Directors in each half of a calendar year.]

(2) The participation of directors in a meeting of the Board may be either in person or
through video conferencing or other audio visual means, as may be prescribed, which are

282
Section 173(1) shall apply to a section 8 company only to the extent that the Board of Director of such
company shall hold ate last one meeting within every six months, vide notification number G.S.R. 466(E)
dated 5th June, 2015. Further exceptions, modifications and adaptations provided in the said notification
shall be applicable to a company covered under section 8 of the said Act which has not committed a default
in filing its financial statements under section 137 of the said Act or annual return under section 92 of the
said Act with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

283
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017.

284
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017.

Page 325
 S. 173 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

capable of recording and recognising the participation of the directors and of recording
and storing the proceedings of such meetings along with date and time:

Provided that the Central Government may, by notification, specify such matters
which shall not be dealt with in a meeting through video conferencing or other audio visual
means.
[Refer Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014]
285
[Provided further that where there is quorum in a meeting through physical presence
of directors, any other director may participate through video conferencing or other audio
visual means in such meeting on any matter specified under the first proviso.]

(3) A meeting of the Board shall be called by giving not less than seven days’ notice in
writing to every director at his address registered with the company and such notice shall
be sent by hand delivery or by post or by electronic means:

Provided that a meeting of the Board may be called at shorter notice to transact
urgent business subject to the condition that at least one independent director, if any,
shall be present at the meeting:

Provided further that in case of absence of independent directors from such a

meeting of the Board, decisions taken at such a meeting shall be circulated to all the
directors and shall be final only on ratification thereof by at least one independent director,
if any.

(4) Every officer of the company whose duty is to give notice under this section and who
fails to do so shall be liable to a penalty of twenty-five thousand rupees.
286
[(5) A One Person Company, small company, dormant company and a private
company (if such private company is a start-up) shall be deemed to have complied with
the provisions of this section if at least one meeting of the Board of Directors has been

285
Inserted the second proviso in sub-section (2) of section 173 of the principal Act by Section 56 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

286
Section 173(5) substituted by notification number G.S.R. 583(E) dated 13th June 2017. Prior to
substitution it read as “(5) A One Person Company, small company and dormant company shall be deemed
to have complied with the provisions of this section if at least one meeting of the Board of Directors has
been conducted in each half of a calendar year and the gap between the two meetings is not less than
ninety days: Provided that nothing contained in this sub-section and in section 174 shall apply to One
Person Company in which there is only one director on its Board of Directors.”. The exceptions,
modifications and adaptations provided in the said notification dated 5th June 2015 shall be applicable to a
private company which has not committed a default in filing its financial statements under section 137 of
the said Act or annual return under section 92 of the said Act with the Registrar. Vide notification number
G.S.R. 583(E) dated 13th June 2017.

Page 326
 S. 173 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

conducted in each half of a calendar year and the gap between the two meetings is not
less than ninety days:
Provided that nothing contained in this sub-section and in section 174 shall apply to One
Person Company in which there is only one director on its Board of Directors.]

[Comment: If a director absents himself from all the meetings of the Board held during twelve months, with
or without seeking leave of absence of the Board, it leads to vacation of office of director u/s.167 of the Act.]

Page 327
 S. 174 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

174. Quorum for meetings of Board.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.287, 288 of the Companies Act, 1956]
[Refer regulation (69) of Table F.II in Schedule I to the Act]

174. (1) The quorum for a meeting of the Board of Directors of a company shall be one-
third of its total strength or two directors, whichever is higher, and the participation of the
directors by video conferencing or by other audio visual means shall also be counted for
the purposes of quorum under this sub-section.
287
[In respect of section 8 companies, in sub-section (1),---
(a) for the words "one-third of its total strength or two directors, whichever is higher", the
words "either eight members or twenty five per cent. of its total strength whichever is less"
shall be substituted;
(b) the following proviso shall be inserted, namely:-
"Provided that the quorum shall not be less than two members".]

(2) The continuing directors may act notwithstanding any vacancy in the Board; but, if and
so long as their number is reduced below the quorum fixed by the Act for a meeting of
the Board, the continuing directors or director may act for the purpose of increasing the
number of directors to that fixed for the quorum, or of summoning a general meeting of
the company and for no other purpose.
288289290
(3) Where at any time the number of interested directors exceeds or is equal to
two- thirds of the total strength of the Board of Directors, the number of directors who are

287
For section 8 company, vide notification number G.S.R. 466(E) dated 5th June, 2015. Further
exceptions, modifications and adaptations provided in the said notification shall be applicable to a company
covered under section 8 of the said Act which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide
notification number G.S.R. 584(E) dated 13th June 2017.

288
Section 174(3) shall apply to a Specified IFSC private company with the exception that interested
director may participate in such meeting provided the disclosure of interest is made by the concerned
director either prior or at the meeting. Vide Notification number G.S.R. 9(E) dated 04th January 2017.

289
Section 174(3) shall apply to a Specified IFSC public company with the exception that interested director
may participate in such meeting provided the disclosure of interest is made by the concerned director either
prior or at the meeting. Vide Notification number G.S.R. 8(E) dated 04th January 2017.

290
Section 174(3) shall apply to a private company with the exception that the interested director may also
be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184. Vide

Page 328
 S. 174 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

not interested directors and present at the meeting, being not less than two, shall be the
quorum during such time.

Explanation.—For the purposes of this sub-section, “interested director” means a director

within the meaning of sub-section (2) of section 184.

(4) Where a meeting of the Board could not be held for want of quorum, then, unless the
articles of the company otherwise provide, the meeting shall automatically stand
adjourned to the same day at the same time and place in the next week or if that day is a
national holiday, till the next succeeding day, which is not a national holiday, at the same
time and place.

Explanation.—For the purposes of this section,—

(i) any fraction of a number shall be rounded off as one;
(ii) “total strength” shall not include directors whose places are vacant.

notification number G.S.R. 583(E) dated 13th June 2017. The exceptions, modifications and adaptations
provided in the said notification dated 5th June 2015 shall be applicable to a private company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.

Page 329
 S. 175 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

175. Passing of resolution by circulation.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.289 of the Companies Act, 1956]
[Refer Rule 5 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Refer regulation (75) of Table F.II in Schedule I to the Act]

175. (1) No resolution shall be deemed to have been duly passed by the Board or by a
committee thereof by circulation, unless the resolution has been circulated in draft,
together with the necessary papers, if any, to all the directors, or members of the
committee, as the case may be, at their addresses registered with the company in India
by hand delivery or by post or by courier, or through such electronic means as may be
prescribed and has been approved by a majority of the directors or members, who are
entitled to vote on the resolution:

Provided that, where not less than one-third of the total number of directors of the
company for the time being require that any resolution under circulation must be decided
at a meeting, the chairperson shall put the resolution to be decided at a meeting of the
Board.

(2) A resolution under sub-section (1) shall be noted at a subsequent meeting of the Board
or the committee thereof, as the case may be, and made part of the minutes of such
meeting.

Page 330
 S. 176 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

176. Defects in appointment of directors not to invalidate actions taken.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.290 of the Companies Act, 1956]
[Refer regulation (74) of Table F.II in Schedule I to the Act]

176. No act done by a person as a director shall be deemed to be invalid, notwithstanding

that it was subsequently noticed that his appointment was invalid by reason of any defect
or disqualification or had terminated by virtue of any provision contained in this Act or in
the articles of the company:

Provided that nothing in this section shall be deemed to give validity to any act
done by the director after his appointment has been noticed by the company to be invalid
or to have terminated.

Page 331
 S. 177 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

177. Audit Committee.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.292A of the Companies Act, 1956]
[Section 177 shall not apply to a Specified IFSC public company, vide Notification number G.S.R. 8(E) dated 04th
January 2017.]
[Refer Rules 6 and 7 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Refer regulations (72) and (73) of Table F.II in Schedule I to the Act]
[Report under section 208 shall be received by the Central Government (MCA) for violation of offences
under Chapter III, IV, section 127, 177 and 178 of the Act and for other provisions report shall be received by
the Regional Director if action for violation of the Act is imprisonment of less than two years - vide notification
number S.O.3557(E) dated 31st December 2015.]

177. (1) The Board of Directors of 291[every listed public company] and such other class
or classes of companies, as may be prescribed, shall constitute an Audit Committee.
292
(2) The Audit Committee shall consist of a minimum of three directors with independent
directors forming a majority:

Provided that majority of members of Audit Committee including its Chairperson

shall be persons with ability to read and understand, the financial statement.

(3) Every Audit Committee of a company existing immediately before the commencement
of this Act shall, within one year of such commencement, be reconstituted in accordance
with sub-section (2).

(4) Every Audit Committee shall act in accordance with the terms of reference specified
in writing by the Board which shall, inter alia, include,—
(i) the recommendation for appointment, remuneration and terms of appointment of
auditors of the company;
[For Government Company, in section 177(4)(i), for the words "recommendation for appointment,
remuneration and terms of appointment" the words "recommendation for remuneration" shall be

291
Substituted for the words ‘every listed company’ in sub-section (1) of section 177 of the principal Act by
Section 57(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E)
of the same date.

292
For section 8 company, the words “with independent directors forming a majority” shall be omitted vide
notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and adaptations
provided in the said notification shall be applicable to a company covered under section 8 of the said Act
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar, vide notification number G.S.R. 584(E)
dated 13th June 2017.

Page 332
 S. 177 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

substituted. vide notification number G.S.R. 463(E) dated 5th June, 2015. Further vide notification
number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that the
exceptions, modifications and adaptations shall be applicable to a Government company which has
not committed a default in filing its financial statements under section 137 of the said Act or annual
return under section 92 of the said Act with the Registrar.]
(ii) review and monitor the auditor’s independence and performance, and effectiveness
of audit process;
(iii) examination of the financial statement and the auditors’ report thereon;
(iv) approval or any subsequent modification of transactions of the company with
related parties;
293
[Provided that the Audit Committee may make omnibus approval for related
party transactions proposed to be entered into by the company subject to such
conditions as may be prescribed;]
294
[Provided further that in case of transaction, other than transactions referred to
in section 188, and where Audit Committee does not approve the transaction, it
shall make its recommendations to the Board:
Provided also that in case any transaction involving any amount not exceeding
one crore rupees is entered into by a director or officer of the company without
obtaining the approval of the Audit Committee and it is not ratified by the Audit
Committee within three months from the date of the transaction, such transaction
shall be voidable at the option of the Audit Committee and if the transaction is with
the related party to any director or is authorised by any other director, the director
concerned shall indemnify the company against any loss incurred by it:
Provided also that the provisions of this clause shall not apply to a transaction,
other than a transaction referred to in section 188, between a holding company and
its wholly owned subsidiary company.]

[This provision may be read with ‘related party’ as per section 2(76) and section 188 and rule 15(3)
Companies (Meetings of Board and its Powers) Rules, 2014. Though section 177 (4) (iv) does not
prescribe prior approval of ALL related party transactions, when the same is of the nature covered
by section 188 (1), prior approval of audit committee is desirable.]
(v) scrutiny of inter-corporate loans and investments;
[Refer sections 179, 180, 185, 186]
(vi) valuation of undertakings or assets of the company, wherever it is necessary;
(vii) evaluation of internal financial controls and risk management systems;
(viii) monitoring the end use of funds raised through public offers and related matters.

293
Proviso inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 14th December 2015 (vide notification number S.O. 3388(E) dated 14th December 2015).

294
Inserted the provisos, after the first proviso, in clause (iv) of sub-section (4) of section 177 of the principal
Act by Section 57(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O.
1833(E) of the same date.

Page 333
 S. 177 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(5) The Audit Committee may call for the comments of the auditors about internal control
systems, the scope of audit, including the observations of the auditors and review of
financial statement before their submission to the Board and may also discuss any related
issues with the internal and statutory auditors and the management of the company.

(6) The Audit Committee shall have authority to investigate into any matter in relation to
the items specified in sub-section (4) or referred to it by the Board and for this purpose
shall have power to obtain professional advice from external sources and have full access
to information contained in the records of the company.

(7) The auditors of a company and the key managerial personnel shall have a right to be
heard in the meetings of the Audit Committee when it considers the auditor’s report but
shall not have the right to vote.

(8) The Board’s report under sub-section (3) of section 134 shall disclose the composition
of an Audit Committee and where the Board had not accepted any recommendation of
the Audit Committee, the same shall be disclosed in such report along with the reasons
therefor.

(9) Every listed company or such class or classes of companies, as may be prescribed,
shall establish a vigil mechanism for directors and employees to report genuine concerns
in such manner as may be prescribed.

(10) The vigil mechanism under sub-section (9) shall provide for adequate safeguards
against victimisation of persons who use such mechanism and make provision for direct
access to the chairperson of the Audit Committee in appropriate or exceptional cases:

Provided that the details of establishment of such mechanism shall be disclosed

by the company on its website, if any, and in the Board’s report.

Page 334
 S. 178 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

178. Nomination and Remuneration Committee and Stakeholders Relationship

Committee.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Part II of Schedule XIII, read with Explanation IV thereto of the Companies Act, 1956]
[Refer Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Refer regulations (72) and (73) of Table F.II in Schedule I to the Act]
[Section 178 shall not apply to a Specified IFSC public company vide Notification number G.S.R. 8(E) dated
04th January 2017.]
[Report under section 208 shall be received by the Central Government (MCA) for violation of offences
under Chapter III, IV, section 127, 177 and 178 of the Act and for other provisions report shall be received by
the Regional Director if action for violation of the Act is imprisonment of less than two years - vide notification
number S.O.3557(E) dated 31st December 2015.]

295
178. (1) The Board of Directors of 296[every listed public company] and such other class
or classes of companies, as may be prescribed shall constitute the Nomination and
Remuneration Committee consisting of three or more non-executive directors out of which
not less than one-half shall be independent directors:

Provided that the chairperson of the company (whether executive or non-

executive) may be appointed as a member of the Nomination and Remuneration
Committee but shall not chair such Committee.

(2) The Nomination and Remuneration Committee shall identify persons who are qualified
to become directors and who may be appointed in senior management in accordance
with the criteria laid down, recommend to the Board their appointment and removal and
297
[shall specify the manner for effective evaluation of performance of Board, its
committees and individual directors to be carried out either by the Board, by the

295
Section 178 shall not apply to a section 8 company vide notification number G.S.R. 466(E) dated 5th
June, 2015. Further exceptions, modifications and adaptations provided in the said notification shall be
applicable to a company covered under section 8 of the said Act which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the said Act
with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.

296
Substituted for the words ‘every listed company’ in sub-section (1) of section 178 of the principal Act by
Section 58(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E)
of the same date.

297
Substituted for the words ‘shall carry out evaluation of every director’s performance’ in sub-section (2)
of section 178 of the principal Act by Section 58(ii) of the Companies (Amendment) Act, 2017 (1 of 2018)
which received assent of the President of India on 03rd January 2018. It is brought to force from 07th May
2018 vide notification no. S.O. 1833(E) of the same date.

Page 335
 S. 178 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

Nomination and Remuneration Committee or by an independent external agency and

review its implementation and compliance].
[Section 178(2), (3) and (4) shall not apply to Government company except with regard to appointment of
'senior management' and other employees, vide notification number G.S.R. 463(E) dated 5th June, 2015.
Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is
provided that the exceptions, modifications and adaptations shall be applicable to a Government company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar.]

(3) The Nomination and Remuneration Committee shall formulate the criteria for
determining qualifications, positive attributes and independence of a director and
recommend to the Board a policy, relating to the remuneration for the directors, key
managerial personnel and other employees.
[Section 178(2), (3) and (4) shall not apply to Government company except with regard to appointment of
'senior management' and other employees, vide notification number G.S.R. 463(E) dated 5th June, 2015.
Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is
provided that the exceptions, modifications and adaptations shall be applicable to a Government company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar.]

(4) The Nomination and Remuneration Committee shall, while formulating the policy
under sub-section (3) ensure that—
(a) the level and composition of remuneration is reasonable and sufficient to attract,
retain and motivate directors of the quality required to run the company
successfully;
(b) relationship of remuneration to performance is clear and meets appropriate
performance benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management
involves a balance between fixed and incentive pay reflecting short and long-term
performance objectives appropriate to the working of the company and its goals:
298
[Provided that such policy shall be placed on the website of the company, if any,
and the salient features of the policy and changes therein, if any, along with the
web address of the policy, if any, shall be disclosed in the Board's report.]

[Section 178(2), (3) and (4) shall not apply to Government company except with regard to appointment of
'senior management' and other employees, vide notification number G.S.R. 463(E) dated 5th June, 2015.
Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is
provided that the exceptions, modifications and adaptations shall be applicable to a Government company
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar.]

298
Substituted the proviso in sub-section (4) of section 178 of the principal Act by Section 58(iii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to substitution, it read as ‘Provided that such policy shall be disclosed in the Board’s report’.

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 S. 178 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(5) The Board of Directors of a company which consists of more than one thousand
shareholders, debenture-holders, deposit-holders and any other security holders at any
time during a financial year shall constitute a Stakeholders Relationship Committee
consisting of a chairperson who shall be a non-executive director and such other
members as may be decided by the Board.

(6) The Stakeholders Relationship Committee shall consider and resolve the grievances
of security holders of the company.

(7) The chairperson of each of the committees constituted under this section or, in his
absence, any other member of the committee authorised by him in this behalf shall attend
the general meetings of the company.

(8) In case of any contravention of the provisions of section 177 and this section, the
company shall be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees and every officer of the company who is in default
shall be punishable with imprisonment for a term which may extend to one year or with
fine which shall not be less than twenty-five thousand rupees but which may extend to
one lakh rupees, or with both:

Provided that 299 [inability to resolve or consider any grievance] by the

Stakeholders Relationship Committee in good faith shall not constitute a contravention of
this section.

Explanation.—The expression ‘‘senior management’’ means personnel of the company

who are members of its core management team excluding Board of Directors comprising
all members of management one level below the executive directors, including the
functional heads.

299
Substituted for the words ‘non-consideration of resolution of any grievance’ in the proviso to sub-section
(8) of section 178 of the principal Act by Section 58(iv) of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 07th
May 2018 vide notification no. S.O. 1833(E) of the same date.

Page 337
 S. 179 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

179. Powers of Board.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.291, 292 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Form No. MGT-14]
[Refer regulations (28) to (34), (62), (71), (72) and (73) of Table F.II in Schedule I to the Act]
[Resolutions under sub-section (3) of Section 179, cannot be inspected from ROC (through MCA portal) as
per section 399 of the Act, per proviso inserted to section 117(1)(g) by the Companies (Amendment) Act, 2015
(21 of 2015), notified on 26th May, 2015 and the proviso brought to force from 29th May 2015 vide notification S.O.
1440(E).]

179. (1) The Board of Directors of a company shall be entitled to exercise all such powers,
and to do all such acts and things, as the company is authorised to exercise and do:

Provided that in exercising such power or doing such act or thing, the Board shall
be subject to the provisions contained in that behalf in this Act, or in the memorandum or
articles, or in any regulations not inconsistent therewith and duly made thereunder,
including regulations made by the company in general meeting:

Provided further that the Board shall not exercise any power or do any act or
thing which is directed or required, whether under this Act or by the memorandum or
articles of the company or otherwise, to be exercised or done by the company in general
meeting.

(2) No regulation made by the company in general meeting shall invalidate any prior act
of the Board which would have been valid if that regulation had not been made.

(3) The Board of Directors of a company shall exercise the following powers on behalf of
the company by means of resolutions passed at meetings of the Board, namely:—
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
[Refer sections 177, 186 and 188 (section 188 because it covers purchase of property of any kind);
and where investment of compensation received on merger or amalgamation otherwise than in trust
securities, also refer section 180.]
(f) to grant loans or give guarantee or provide security in respect of loans;
[Refer sections 177, 185, 186]
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another
company;

Page 338
 S. 179 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(k) any other matter which may be prescribed: [Refer Rule 8 of the Companies (Meetings of
Board and its Powers) Rules, 2014]
[In respect of section 8 companies, matters referred to in clauses (d), (e) and (f) of sub-section (3) may be
decided by the Board by circulation instead of at a meeting, vide notification number G.S.R. 466(E) dated
5th June, 2015. Further exceptions, modifications and adaptations provided in the said notification shall be
applicable to a company covered under section 8 of the said Act which has not committed a default in filing
its financial statements under section 137 of the said Act or annual return under section 92 of the said Act
with the Registrar, vide notification number G.S.R. 584(E) dated 13th June 2017.]

Provided that the Board may, by a resolution passed at a meeting, delegate to any
committee of directors, the managing director, the manager or any other principal officer
of the company or in the case of a branch office of the company, the principal officer of
the branch office, the powers specified in clauses (d) to (f) on such conditions as it may
specify:

Provided further that the acceptance by a banking company in the ordinary course
of its business of deposits of money from the public repayable on demand or otherwise
and withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit
by a banking company with another banking company on such conditions as the Board
may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be,
a making of loans by a banking company within the meaning of this section.
300
[Provided also that in case of a Specified IFSC public company, the Board can
exercise the powers by means of resolutions passed at the meetings of the Board or
through resolutions passed by circulation.]
301
[Provided also that in case of a Specified IFSC private company, the Board can
exercise the powers by means of resolutions passed at the meetings of the Board or
through resolutions passed by circulation.]

Explanation I.—Nothing in clause (d) shall apply to borrowings by a banking company

from other banking companies or from the Reserve Bank of India, the State Bank of India
or any other banks established by or under any Act.

Explanation II.—In respect of dealings between a company and its bankers, the exercise
by the company of the power specified in clause (d) shall mean the arrangement made
by the company with its bankers for the borrowing of money by way of overdraft or cash
credit or otherwise and not the actual day-to-day operation on overdraft, cash credit or
other accounts by means of which the arrangement so made is actually availed of.
[For matters under section 179(3), Form no. MGT-14 is required to be filed as per section 117 (3) (g)]

300
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017.

301
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017.

Page 339
 S. 179 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(4) Nothing in this section shall be deemed to affect the right of the company in general
meeting to impose restrictions and conditions on the exercise by the Board of any of the
powers specified in this section.

[Comments: Power to issue securities under clause (c) of sub-section (3) is different from issue of share
certificate. Meaning of ‘issue of securities’ may be compared with issued, subscribed and paid-up share
capital to better understand the concept. A company may have issued, say 10000 shares but subscription
could be less than issued share capital. However, it is misunderstood by some as issue of ‘share
certificate’. It may be noted that for issue of ‘share certificate’ separate provision is made under section 46.
Nevertheless, MCA has clarified (surprisingly referring to section 179) that a committee of directors may
exercise such powers, subject to any regulations imposed by the Board in this regard. Refer Circular
19/2014 dated 12 June 2014.
Considering circular 08/2014 dated 04 April 2014, there was no obligation on the part of the Company
under 1956 Act to file the resolution for approving the financial statement. So is there any need to file the
resolution with ROC in MGT-14 for approval of financial statement of 2013-14? FAQ of ICSI has clarified
this point as “It is clarified by the ministry that the financial statements are to be prepared under the
provisions of Companies Act, 1956. Section 117 says that every resolution passed under the section 179(3)
of the Companies Act, 2013 is required to be filed by the company with ROC in MGT-14. Here the board
is not preparing the financial statement, the board is approving it and approval of audited financial
statement whether quarterly, half yearly or annual by the board falls under the purview of section 179(3)
of the Companies Act, 2013 and accordingly form MGT-14 is required to be filed.”
In case the board delegates its powers to borrow to one of its committee, is the company required to file
Form no. MGT-14 for delegation its power to Committee and also each time the committee exercises the
power which is delegated to it? FAQ of ICSI has clarified this as "The Company is required to file e-form
MGT 14 with the ROC only when the board delegates its power to its committee to borrow and no MGT -
14 is required to be filed each time the committee exercise its power to borrow money within the limits
authorized by the board."]

Page 340
 S. 180 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

180. Restrictions on powers of Board.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.293 of the Companies Act, 1956]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
[All Regional Directors and Registrar of Companies were instructed by MCA that if notice for any such
general meeting was issued prior to 12.9.2013, then such resolution may be passed in accordance with the
requirement of the Companies Act 1956. See Circular 15/2013 dated 13 September 2013.]
[The resolution passed under section 293 of the Companies Act, 1956 prior to 12.09.2013 with reference
to borrowings (subject to the limits prescribed) and / or creation of security on assets of the company will
be regarded as sufficient compliance of the requirements of section 180 of the Companies Act, 2013 for a
period of one year from the date of notification of section 180 of the Act. Refer circular 04/2014 dated 25
March 2014.]
[This section shall not apply to private companies. Notification number G.S.R. 464(E) dated 5th June, 2015.
The exceptions, modifications and adaptations provided in the said notification dated 5th June 2015 shall
be applicable to a private company which has not committed a default in filing its financial statements under
section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Section 180 shall apply to a Specified IFSC public company, unless the articles of the company provides
otherwise vide Notification number G.S.R. 8(E) dated 04th January 2017.]

180. (1) The Board of Directors of a company shall exercise the following powers only
with the consent of the company by a special resolution, namely:—
(a) to sell, lease or otherwise dispose of the whole or substantially the whole of the
undertaking of the company or where the company owns more than one
undertaking, of the whole or substantially the whole of any of such undertakings.
Explanation.—For the purposes of this clause,—
(i) “undertaking” shall mean an undertaking in which the investment of the company
exceeds twenty per cent. of its net worth as per the audited balance sheet of the
preceding financial year or an undertaking which generates twenty per cent. of
the total income of the company during the previous financial year;
(ii) the expression “substantially the whole of the undertaking” in any financial year
shall mean twenty per cent. or more of the value of the undertaking as per the
audited balance sheet of the preceding financial year;
[For above matter in clause (a), Form no. MGT-14 is required to be filed under section 117 (3) (e)]
(b) to invest otherwise in trust securities the amount of compensation received by it as
a result of any merger or amalgamation;
[Refer sections 177, 179, 186, 188]
[Every special resolution is required to be filed in Form No. MGT-14 as per section 117 (3) (a)]

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 S. 180 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(c) to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its 302[paid-up share
capital, free reserves and securities premium] apart from temporary loans obtained
from the company’s bankers in the ordinary course of business:

Provided that the acceptance by a banking company, in the ordinary course of its
business, of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a
borrowing of monies by the banking company within the meaning of this clause.

Explanation.—For the purposes of this clause, the expression “temporary loans”

means loans repayable on demand or within six months from the date of the loan such
as short-term, cash credit arrangements, the discounting of bills and the issue of other
short-term loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;
[For above matter in clause (c), Form no. MGT-14 is required to be filed under section 117 (3) (e)]
(d) to remit, or give time for the repayment of, any debt due from a director.
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]

(2) Every special resolution passed by the company in general meeting in relation to the
exercise of the powers referred to in clause (c) of sub-section (1) shall specify the total
amount up to which monies may be borrowed by the Board of Directors.

(3) Nothing contained in clause (a) of sub-section (1) shall affect—

(a) the title of a buyer or other person who buys or takes on lease any property,
investment or undertaking as is referred to in that clause, in good faith; or
(b) the sale or lease of any property of the company where the ordinary business of
the company consists of, or comprises, such selling or leasing.

(4) Any special resolution passed by the company consenting to the transaction as is
referred to in clause (a) of sub-section (1) may stipulate such conditions as may be
specified in such resolution, including conditions regarding the use, disposal or
investment of the sale proceeds which may result from the transactions:

Provided that this sub-section shall not be deemed to authorise the company to
effect any reduction in its capital except in accordance with the provisions contained in
this Act.

302
Substituted for the words ‘paid-up share capital and free reserves’ clause (c) of sub-section (1) of section
180 of the principal Act by Section 59 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

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 S. 180 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(5) No debt incurred by the company in excess of the limit imposed by clause (c) of sub-
section (1) shall be valid or effectual, unless the lender proves that he advanced the loan
in good faith and without knowledge that the limit imposed by that clause had been
exceeded.

Page 343
 S. 181 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

181. Company to contribute to bona fide and charitable funds, etc.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

181. The Board of Directors of a company may contribute to bona fide charitable and
other funds:

Provided that prior permission of the company in general meeting shall be

required for such contribution in case any amount the aggregate of which, in any financial
year, exceed five per cent. of its average net profits for the three immediately preceding
financial years.

Page 344
 S. 182 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

182. Prohibitions and restrictions regarding political contributions.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.293A of the Companies Act, 1956]

182. (1) Notwithstanding anything contained in any other provision of this Act, a company,
other than a Government company and a company which has been in existence for less
than three financial years, may contribute any amount directly or indirectly to any political
party:

Provided that the amount referred to in sub-section (1) or, as the case may be,
the aggregate of the amount which may be so contributed by the company in any financial
year shall not exceed seven and a half per cent. of its average net profits during the three
immediately preceding financial years:

Provided further that no such contribution shall be made by a company unless a

resolution authorising the making of such contribution is passed at a meeting of the Board
of Directors and such resolution shall, subject to the other provisions of this section, be
deemed to be justification in law for the making and the acceptance of the contribution
authorised by it.
[Companies incorporated with expression ‘Electoral trust’ and registered under section 25 of the Companies
Act, 1956 is exempted from section 182(1) of the Act. For notification see Annexure N2.]

(2) Without prejudice to the generality of the provisions of sub-section (1),—

(a) a donation or subscription or payment caused to be given by a company on its
behalf or on its account to a person who, to its knowledge, is carrying on any activity
which, at the time at which such donation or subscription or payment was given or
made, can reasonably be regarded as likely to affect public support for a political
party shall also be deemed to be contribution of the amount of such donation,
subscription or payment to such person for a political purpose;
(b) the amount of expenditure incurred, directly or indirectly, by a company on an
advertisement in any publication, being a publication in the nature of a souvenir,
brochure, tract, pamphlet or the like, shall also be deemed,—
(i) where such publication is by or on behalf of a political party, to be a contribution
of such amount to such political party, and
(ii) where such publication is not by or on behalf of, but for the advantage of a
political party, to be a contribution for a political purpose.

(3) Every company shall disclose in its profit and loss account any amount or amounts
contributed by it to any political party during the financial year to which that account
relates, giving particulars of the total amount contributed and the name of the party to
which such amount has been contributed.
[All Regional Directors and Registrar of Companies were instructed by MCA about disclosure under section
182(3) of the Companies Act, 2013 is notified. Refer Circular 19/2013 dated 10 December 2013.]

Page 345
 S. 182 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(4) If a company makes any contribution in contravention of the provisions of this section,
the company shall be punishable with fine which may extend to five times the amount so
contributed and every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to six months and with fine which may extend
to five times the amount so contributed.

Explanation.—For the purposes of this section, “political party” means a political party
registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).

Page 346
 S. 183 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

183. Power of Board and other persons to make contributions to national defence
fund, etc.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.293B of the Companies Act, 1956]

183. (1) The Board of Directors of any company or any person or authority exercising the
powers of the Board of Directors of a company, or of the company in general meeting,
may, notwithstanding anything contained in sections 180, 181 and section 182 or any
other provision of this Act or in the memorandum, articles or any other instrument relating
to the company, contribute such amount as it thinks fit to the National Defence Fund or
any other Fund approved by the Central Government for the purpose of national defence.

(2) Every company shall disclose in its profits and loss account the total amount or
amounts contributed by it to the Fund referred to in sub-section (1) during the financial
year to which the amount relates.

Page 347
 S. 184 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

184. Disclosure of interest by director.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.299, 305 of the Companies Act, 1956]
[Refer Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Also relevant is section 189(2)]
[Form MBP-1]

184. (1) Every director shall at the first meeting of the Board in which he participates as
a director and thereafter at the first meeting of the Board in every financial year or
whenever there is any change in the disclosures already made, then at the first Board
meeting held after such change, disclose his concern or interest in any company or
companies or bodies corporate, firms, or other association of individuals which shall
include the shareholding, in such manner as may be prescribed. [Form MBP-1]
303
(2) Every director of a company who is in any way, whether directly or indirectly,
concerned or interested in a contract or arrangement or proposed contract or
arrangement entered into or to be entered into—
(a) with a body corporate in which such director or such director in association with
any other director, holds more than two per cent. shareholding of that body
corporate, or is a promoter, manager, Chief Executive Officer of that body
corporate; or
(b) with a firm or other entity in which, such director is a partner, owner or member, as
the case may be,
shall disclose the nature of his concern or interest at the meeting of the Board in which
the contract or arrangement is discussed and shall not participate in such meeting:

Provided that where any director who is not so concerned or interested at the time of
entering into such contract or arrangement, he shall, if he becomes concerned or
interested after the contract or arrangement is entered into, disclose his concern or
interest forthwith when he becomes concerned or interested or at the first meeting of the
Board held after he becomes so concerned or interested.
[Section 184(2) shall apply to private companies with the exception that the interested director may
participate in such meeting after disclosure of his interest. Notification number G.S.R. 464(E) dated 5th
June, 2015. The exceptions, modifications and adaptations provided in the said notification dated 5th June
2015 shall be applicable to a private company which has not committed a default in filing its financial

303
Section 184(2) shall apply to a section 8 company only if the transaction with reference to section 188
on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees, vide
notification number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and adaptations
provided in the said notification shall be applicable to a company covered under section 8 of the said Act
which has not committed a default in filing its financial statements under section 137 of the said Act or
annual return under section 92 of the said Act with the Registrar, vide notification number G.S.R. 584(E)
dated 13th June 2017.

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 S. 184 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.]
[Section 184(2) shall apply to a Specified IFSC public company with the exception that interested director
may participate in such meeting provided the disclosure of his interest is made by the concerned director
either prior or at the meeting. Vide Notification number G.S.R. 8(E) dated 04th January 2017.]
[Section 174 refers to section 184(2). Term ‘interested director’ is defined under section 2(49) FAQ of ICSI
on the Companies Act, 2013 also states so.
It may be noted that though section 184(2) states interested director shall not participate ‘in such meeting’,
it is intended that only for the business item in which director is interested, shall not take part in the
discussion of such item only.]

(3) A contract or arrangement entered into by the company without disclosure under sub-
section (2) or with participation by a director who is concerned or interested in any way,
directly or indirectly, in the contract or arrangement, shall be voidable at the option of the
company.

(4) If a director of the company contravenes the provisions of sub-section (1) or sub-
section (2), such director shall be punishable with imprisonment for a term which may
extend to one year or with fine which 304[Omitted] may extend to one lakh rupees, or with
both.

(5) Nothing in this section—

(a) shall be taken to prejudice the operation of any rule of law restricting a director of a
company from having any concern or interest in any contract or arrangement with the
company;
305
[(b) shall apply to any contract or arrangement entered into or to be entered into
between two companies or between one or more companies and one or more bodies
corporate where any of the directors of the one company or body corporate or two or
more of them together holds or hold not more than two per cent. of the paid-up share
capital in the other company or the body corporate.]

[Comment: If a director acts in contravention of this section relating to entering into contract or arrangement
in which he is directly or indirectly interested or fails to disclose his interest therein, it leads to vacation of
office of director u/s.167 of the Act.]

304
Omitted words ‘shall not be less than fifty thousand rupees but which’ in sub-section (4) of section 184
of the principal Act by Section 60(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

305
Substituted clause (b) of sub-section (5) of section 184 of the principal Act by Section 60(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date. Prior to substitution it read as ‘(b) shall apply to any contract or arrangement entered into or to be
entered into between two companies where any of the directors of the one company or two or more of them
together holds or hold not more than two per cent. of the paid-up share capital in the other company’.

Page 349
 S. 185 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

306
[185. Loan to directors, etc.

306
Substituted for section 185 of the principal Act by Section 61 of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to substitution, it read as:

“185. (1) Save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan,
including any loan represented by a book debt, to any of its directors or to any other person in whom the
director is interested or give any guarantee or provide any security in connection with any loan taken by
him or such other person:

Provided that nothing contained in this sub-section shall apply to—

(a) the giving of any loan to a managing or whole-time director—
(i) as a part of the conditions of service extended by the company to all its employees; or
(ii) pursuant to any scheme approved by the members by a special resolution; or
(b) a company which in the ordinary course of its business provides loans or gives guarantees or
securities for the due repayment of any loan and in respect of such loans an interest is charged at
a rate not less than the bank rate declared by the Reserve Bank of India.
306
[(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee
given or security provided by a holding company in respect of any loan made to its wholly owned
subsidiary company; or
(d) any guarantee given or security provided by a holding company in respect of loan made by any bank
or financial institution to its subsidiary company:

Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its
principal business activities.]

Explanation.—For the purposes of this section, the expression “to any other person in whom director is
interested” means—
(a) any director of the lending company, or of a company which is its holding company or any
partner or relative of any such director;
(b) any firm in which any such director or relative is a partner;
306
[(c) any private company of which any director is a director or member in which director of the
lending company do not have direct or indirect shareholding through themselves or through
their relatives and a special resolution is passed to this effect;]
(d) any body corporate at a general meeting of which not less than twenty- five per cent. of the total
voting power may be exercised or controlled by any such director, or by two or more such
directors, together; or
(e) any body corporate, the Board of directors, managing director or manager, whereof is
accustomed to act in accordance with the directions or instructions of the Board, or of any
director or directors, of the lending company.

(2) If any loan is advanced or a guarantee or security is given or provided in contravention of the provisions
of sub-section (1), the company shall be punishable with fine which shall not be less than five lakh rupees
but which may extend to twenty-five lakh rupees, and the director or the other person to whom any loan is
advanced or guarantee or security is given or provided in connection with any loan taken by him or the

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 S. 185 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

[Original section 185 was brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[Corresponding Sec.295, 296 of the Companies Act, 1956]
[Also refer sections 177, 179, 186]
[Refer Rule 10 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
[All Stakeholders, Regional Directors and Registrar of Companies were instructed by MCA that any
guarantee given or security provided by a holding company in respect of loans made by a bank or financial
institution to its subsidiary company, exemption as provided in clause (d) of sub-section (8) of section 372A
of the Companies Act, 1956 shall be applicable till section 186 of the Companies Act, 2013 is notified. This
clarification will, however, be applicable to cases where loans so obtained are exclusively utilized by the
subsidiary for its principal business activities. Refer Circular 03/2014 dated 14 February 2014.]
[This section shall not apply to a Government Company in case such company obtains approval of the
Ministry of Department of the Central Government which is administratively in charge of the company, or,
as the case may be, the State Government before making any loan or giving any guarantee or providing
any security under the section, vide notification number G.S.R. 463(E) dated 5th June, 2015. Further vide
notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that the
exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.]
[This section shall not apply to private companies -
(a) in whose share capital no other body corporate has invested any money;
(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less
than twice of its paid up share capital or fifty crore rupees, whichever is lower; and
(c) such a company has no default in repayment of such borrowings subsisting at the time of making
transactions under this section. Notification number G.S.R. 464(E) dated 5th June, 2015. The exceptions,
modifications and adaptations provided in the said notification dated 5th June 2015 shall be applicable to a
private company which has not committed a default in filing its financial statements under section 137 of
the said Act or annual return under section 92 of the said Act with the Registrar. Vide notification number
G.S.R. 583(E) dated 13th June 2017.]

[This section shall not apply to nidhi companies, provided the loan is given to a director or his relative in
their capacity as members and such transaction is disclosed in the annual accounts by a note. Refer
notification number G.S.R. 465(E) dated 5th June, 2015.]

185. (1) No company shall, directly or indirectly, advance any loan, including any loan
represented by a book debt to, or give any guarantee or provide any security in connection
with any loan taken by,—
(a) any director of company, or of a company which is its holding company or any partner
or relative of any such director; or
(b) any firm in which any such director or relative is a partner.

(2) A company may advance any loan including any loan represented by a book debt, or
give any guarantee or provide any security in connection with any loan taken by any

other person, shall be punishable with imprisonment which may extend to six months or with fine which
shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or with both.”.

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 S. 185 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

person in whom any of the director of the company is interested, subject to the condition
that—
(a) a special resolution is passed by the company in general meeting: Provided that the
explanatory statement to the notice for the relevant general meeting shall disclose the full
particulars of the loans given, or guarantee given or security provided and the purpose
for which the loan or guarantee or security is proposed to be utilised by the recipient of
the loan or guarantee or security and any other relevant fact; and
(b) the loans are utilised by the borrowing company for its principal business activities.

Explanation.—For the purposes of this sub-section, the expression "any person in whom
any of the director of the company is interested" means—
(a) any private company of which any such director is a director or member;
(b) any body corporate at a general meeting of which not less than twenty-five per cent.
of the total voting power may be exercised or controlled by any such director, or by two
or more such directors, together; or
(c) any body corporate, the Board of directors, managing director or manager, whereof is
accustomed to act in accordance with the directions or instructions of the Board, or of any
director or directors, of the lending company.

(3) Nothing contained in sub-sections (1) and (2) shall apply to—
(a) the giving of any loan to a managing or whole-time director—
(i) as a part of the conditions of service extended by the company to all its
employees; or
(ii) pursuant to any scheme approved by the members by a special resolution; or
(b) a company which in the ordinary course of its business provides loans or gives
guarantees or securities for the due repayment of any loan and in respect of such loans
an interest is charged at a rate not less than the rate of prevailing yield of one year, three
years, five years or ten years Government security closest to the tenor of the loan; or
(c) any loan made by a holding company to its wholly owned subsidiary company or any
guarantee given or security provided by a holding company in respect of any loan made
to its wholly owned subsidiary company; or
(d) any guarantee given or security provided by a holding company in respect of loan
made by any bank or financial institution to its subsidiary company:
Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary
company for its principal business activities.

(4) If any loan is advanced or a guarantee or security is given or provided or utilised in

contravention of the provisions of this section,—
(i) the company shall be punishable with fine which shall not be less than five lakh rupees
but which may extend to twenty-five lakh rupees;
(ii) every officer of the company who is in default shall be punishable with imprisonment
for a term which may extend to six months or with fine which shall not be less than five
lakh rupees but which may extend to twenty-five lakh rupees; and
(iii) the director or the other person to whom any loan is advanced or guarantee or security
is given or provided in connection with any loan taken by him or the other person, shall

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 S. 185 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

be punishable with imprisonment which may extend to six months or with fine which shall
not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or with
both.]

Page 353
 S. 186 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

186. Loan and investment by company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.372A of the Companies Act, 1956]
[For loan, refer sections 177, 179, 185 and for investments, refer sections 177, 179, 180, 188]
[Refer Rules 11, 12 and 13 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Register in Form MBP-2. Form No. MGT-14] [Documents filed with ROC can be inspected by public
(through MCA portal) as per section 399 of the Act.]
[All Regional Directors and Registrar of Companies were instructed by MCA that Section 372A of the
Companies Act, 1956 dealing with inter-corporate loans continue to remain in force till section 186 of the
Companies Act, 2013 is notified. Refer Circular 18/2013 dated 11 November 2013.]
[This section shall not apply to -- (a) a Government company engaged in defence production; (b) a
Government company, other than a listed company, in case such company obtains approval of the Ministry
or Department of the Central Government which is administratively in charge of the company, or, as the
case may be, the State Government before making any loan or giving any guarantee or providing any
security or making any investment under the section. vide notification number G.S.R. 463(E) dated 5th
June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company
it is provided that the exceptions, modifications and adaptations shall be applicable to a Government
company which has not committed a default in filing its financial statements under section 137 of the said
Act or annual return under section 92 of the said Act with the Registrar.]

186. (1) Without prejudice to the provisions contained in this Act, a company shall unless
otherwise prescribed, make investment through not more than two layers of investment
companies:
Provided that the provisions of this sub-section shall not affect,—
(i) a company from acquiring any other company incorporated in a country outside
India if such other company has investment subsidiaries beyond two layers as per
the laws of such country;
(ii) a subsidiary company from having any investment subsidiary for the purposes of
meeting the requirements under any law or under any rule or regulation framed
under any law for the time being in force.
[Section 186(1) shall not apply to a Specified IFSC public company. Vide Notification number G.S.R. 8(E)
dated 04th January 2017.]
[Section 186(1) shall not apply to a Specified IFSC private company. Vide Notification number G.S.R. 9(E)
dated 04th January 2017.]

(2) No company shall directly or indirectly —

(a) give any loan to any person or other body corporate;
[Comment: Word ‘person’ is wide and includes association of persons.]
(b) give any guarantee or provide security in connection with a loan to any other body
corporate or person; and
(c) acquire by way of subscription, purchase or otherwise, the securities of any other
body corporate,
exceeding sixty per cent. of its paid-up share capital, free reserves and securities
premium account or one hundred per cent. of its free reserves and securities premium
account, whichever is more.

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[Explanation.- For the purpose of this sub-section, the word “person” does not include
307

any individual who is in the employment of the company.]

[Section 186(2) and (3) shall not apply to a Specified IFSC public company if it passes a resolution either
at meeting of the Board of Directors or by circulation. Vide Notification number G.S.R. 8(E) dated 04th January
2017.]
[Section 186(2) (3) shall not apply to a Specified IFSC private company if it passes a resolution either at
meeting of the Board of Directors or by circulation. Vide Notification number G.S.R. 9(E) dated 04th January
2017.]

308
[(3) Where the aggregate of the loans and investment so far made, the amount for
which guarantee or security so far provided to or in all other bodies corporate along with
the investment, loan, guarantee or security proposed to be made or given by the Board,
exceed the limits specified under sub-section (2), no investment or loan shall be made or
guarantee shall be given or security shall be provided unless previously authorised by a
special resolution passed in a general meeting:
Provided that where a loan or guarantee is given or where a security has been provided
by a company to its wholly owned subsidiary company or a joint venture company, or
acquisition is made by a holding company, by way of subscription, purchase or otherwise
of, the securities of its wholly owned subsidiary company, the requirement of this sub-
section shall not apply:
Provided further that the company shall disclose the details of such loans or guarantee
or security or acquisition in the financial statement as provided under sub-section (4).]

[Section 186(2) and (3) shall not apply to a Specified IFSC public company if it passes a resolution either
at meeting of the Board of Directors or by circulation. Vide Notification number G.S.R. 8(E) dated 04th January
2017.]
[Section 186(2) and (3) shall not apply to a Specified IFSC private company if it passes a resolution either
at meeting of the Board of Directors or by circulation. Vide Notification number G.S.R. 9(E) dated 04th January
2017.]
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]

(4) The company shall disclose to the members in the financial statement the full
particulars of the loans given, investment made or guarantee given or security provided
and the purpose for which the loan or guarantee or security is proposed to be utilised by
the recipient of the loan or guarantee or security.

307
Inserted an explanation to sub-section (2) of section 186 of the principal Act by Section 62(i) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

308
Substituted sub-section (3) of section 186 of the principal Act by Section 62(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to
substitution, it read as ‘(3) Where the giving of any loan or guarantee or providing any security or the
acquisition under sub-section (2) exceeds the limits specified in that sub-section, prior approval by means
of a special resolution passed at a general meeting shall be necessary.’.

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(5) No investment shall be made or loan or guarantee or security given by the company
unless the resolution sanctioning it is passed at a meeting of the Board with the consent
of all the directors present at the meeting and the prior approval of the public financial
institution concerned where any term loan is subsisting, is obtained:

Provided that prior approval of a public financial institution shall not be required
where the aggregate of the loans and investments so far made, the amount for which
guarantee or security so far provided to or in all other bodies corporate, along with the
investments, loans, guarantee or security proposed to be made or given does not exceed
the limit as specified in sub-section (2), and there is no default in repayment of loan
instalments or payment of interest thereon as per the terms and conditions of such loan
to the public financial institution.
309
[Provided further that in case of a Specified IFSC public company, the Board
can exercise powers under this sub-section by means of resolutions passed at meetings
of the Board of Directors or through resolutions passed by circulation.]
310
[Provided further that in case of a Specified IFSC private company, the Board
can exercise powers under this sub-section by means of resolutions passed at meetings
of the Board of Directors or through resolutions passed by circulation.]

(6) No company, which is registered under section 12 of the Securities and Exchange
Board of India Act, 1992 (15 of 1992) and covered under such class or classes of
companies as may be prescribed, shall take inter-corporate loan or deposits exceeding
the prescribed limit and such company shall furnish in its financial statement the details
of the loan or deposits.

(7) No loan shall be given under this section at a rate of interest lower than the prevailing
yield of one year, three year, five year or ten year Government Security closest to the
tenor of the loan.
311
[Provided that nothing contained in this sub-section shall apply to a company in which
twenty-six per cent. or more of the paid-up share capital is held by the Central
Government or one or more State Governments or both, in respect of loans provided by
such company for funding Industrial Research and Development projects in furtherance
of its objects as stated in its memorandum of association.]

309
Inserted vide Notification number G.S.R. 8(E) dated 04th January 2017.

310
Inserted vide Notification number G.S.R. 9(E) dated 04th January 2017.

311
Inserted by notification number G.S.R. 584(E) dated 13th June, 2017. Further exceptions, modifications
and adaptations provided in the said notification shall be applicable to a company covered under section 8
of the said Act which has not committed a default in filing its financial statements under section 137 of the
said Act or annual return under section 92 of the said Act with the Registrar.

Page 356
 S. 186 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

[It is clarified by MCA vide General Circular 06/2015 dated 09 April 2015 that in cases where the effective
yield (effective rate of return) on tax free bonds is greater than the prevailing yield of one year, three year,
five year or ten year Government Security closest to the tenor of the loan, it will not be violation of sub-
section (7) of section 186 of the Companies Act, 2013.]

(8) No company which is in default in the repayment of any deposits accepted before or
after the commencement of this Act or in payment of interest thereon, shall give any loan
or give any guarantee or provide any security or make an acquisition till such default is
subsisting.

(9) Every company giving loan or giving a guarantee or providing security or making an
acquisition under this section shall keep a register which shall contain such particulars
and shall be maintained in such manner as may be prescribed.
[Register in Form MBP-2]
[It is clarified by MCA that registers maintained by companies pursuant to sub-section (5) of Section 372A of
Companies Act, 1956 may continue as per requirements under these provisions and the new format
prescribed vide Form MBP2 shall be used for particulars entered in such registers on and from 1.4.2014.
Refer Circular 15/2014 dated 09 June 2014.]

(10) The register referred to in sub-section (9) shall be kept at the registered office of the
company and —
(a) shall be open to inspection at such office; and
(b) extracts may be taken therefrom by any member, and copies thereof may be furnished
to any member of the company on payment of such fees as may be prescribed.
312
[(11) Nothing contained in this section, except sub-section (1), shall apply— (a) to any
loan made, any guarantee given or any security provided or any investment made by a
banking company, or an insurance company, or a housing finance company in the
ordinary course of its business, or a company established with the object of and engaged
in the business of financing industrial enterprises, or of providing infrastructural facilities;
(b) to any investment— (i) made by an investment company; (ii) made in shares allotted

312
Substituted sub-section (11) of section 186 of the principal Act by Section 62(iii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to
substitution, it read as ‘(11) Nothing contained in this section, except sub-section (1), shall apply—
(a) to a loan made, guarantee given or security provided by a banking company or an insurance
company or a housing finance company in the ordinary course of its business or a company
engaged in the business of financing of companies or of providing infrastructural facilities;
(b) to any acquisition—
(i) made by a non-banking financial company registered under Chapter IIIB of the Reserve Bank of
India Act, 1934 (2 of 1934) and whose principal business is acquisition of securities:
Provided that exemption to non-banking financial company shall be in respect of its investment
and lending activities;
(ii) made by a company whose principal business is the acquisition of securities;
(iii) of shares allotted in pursuance of clause (a) of sub-section (1) of section 62.
312
[(iv) made by a banking company or an insurance company or a housing finance company,
making acquisition of securities in the ordinary course of its business.].’.

Page 357
 S. 186 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

in pursuance of clause (a) of sub-section (1) of section 62 or in shares allotted in

pursuance of rights issues made by a body corporate; (iii) made, in respect of investment
or lending activities, by a non-banking financial company registered under Chapter III-B
of the Reserve Bank of India Act, 1934 and whose principal business is acquisition of
securities.]

(12) The Central Government may make rules for the purposes of this section.

(13) If a company contravenes the provisions of this section, the company shall be
punishable with fine which shall not be less than twenty-five thousand rupees but which
may extend to five lakh rupees and every officer of the company who is in default shall
be punishable with imprisonment for a term which may extend to two years and with fine
which shall not be less than twenty-five thousand rupees but which may extend to one
lakh rupees.

Explanation.—For the purposes of this section,—

(a) the expression “investment company” means a company whose principal business is
the acquisition of shares, debentures or other securities 313[and a company will be
deemed to be principally engaged in the business of acquisition of shares, debentures
or other securities, if its assets in the form of investment in shares, debentures or other
securities constitute not less than fifty per cent. of its total assets, or if its income
derived from investment business constitutes not less than fifty per cent. as a
proportion of its gross income.];
(b) the expression “infrastructure facilities” means the facilities specified in Schedule VI.

[MCA vide General Circular no. 04/2015 dated 10 March 2015 has clarified that loans and/or advances
made by the companies to their employees, other than the managing or whole time directors (which is
governed by section 185) are not governed by section 186 of the Act if such loans/advances to employees
are in accordance with the conditions of service applicable to employees and are also in accordance with
the remuneration policy, in cases where such policy is required to be formulated.]

313
Inserted in clause (a) of the explanation to section 186 of the principal Act by Section 62(iv) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

Page 358
 S. 187 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

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

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.49 of the Companies Act, 1956]
[Refer Rule 14 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Register in Form MBP-3]

187. (1) All investments made or held by a company in any property, security or other
asset shall be made and held by it in its own name:

Provided that the company may hold any shares in its subsidiary company in the
name of any nominee or nominees of the company, if it is necessary to do so, to ensure
that the number of members of the subsidiary company is not reduced below the statutory
limit.

(2) Nothing in this section shall be deemed to prevent a company—

(a) from depositing with a bank, being the bankers of the company, any shares or
securities for the collection of any dividend or interest payable thereon; or
(b) from depositing with, or transferring to, or holding in the name of, the State Bank
of India or a scheduled bank, being the bankers of the company, shares or
securities, in order to facilitate the transfer thereof:
Provided that if within a period of six months from the date on which the shares or
securities are transferred by the company to, or are first held by the company in the
name of, the State Bank of India or a scheduled bank as aforesaid, no transfer of such
shares or securities takes place, the company shall, as soon as practicable after the
expiry of that period, have the shares or securities re-transferred to it from the State
Bank of India or the scheduled bank or, as the case may be, again hold the shares or
securities in its own name; or
(c) from depositing with, or transferring to, any person any shares or securities, by way
of security for the repayment of any loan advanced to the company or the
performance of any obligation undertaken by it;
(d) from holding investments in the name of a depository when such investments are
in the form of securities held by the company as a beneficial owner.

(3) Where in pursuance of clause (d) of sub-section (2), any shares or securities in which
investments have been made by a company are not held by it in its own name, the
company shall maintain a register which shall contain such particulars as may be
prescribed and such register shall be open to inspection by any member or debenture-
holder of the company without any charge during business hours subject to such
reasonable restrictions as the company may by its articles or in general meeting impose.
[Register in Form MBP-3]

(4) If a company contravenes the provisions of this section, the company shall be
punishable with fine which shall not be less than twenty-five thousand rupees but which
may extend to twenty-five lakh rupees and every officer of the company who is in default

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 S. 187 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

shall be punishable with imprisonment for a term which may extend to six months or with
fine which shall not be less than twenty-five thousand rupees but which may extend to
one lakh rupees, or with both.

Page 360
 S. 188 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

188. Related party transactions.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 294, 294A, 294AA, 297, 314 of the Companies Act, 1956]
[Refer Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Form No. MGT-14] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]

188. (1) Except with the consent of the Board of Directors given by a resolution at a
meeting of the Board and subject to such conditions as may be prescribed, no company
shall enter into any contract or arrangement with a related party with respect to—
(a) sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying, property of any kind;
[Property includes movable, immovable and intangible properties and hence one
may ensure compliance of other related provisions i.e. sections 177, 179, 180, 186]
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of goods, materials, services or
property;
(f) such related party's appointment to any office or place of profit in the company, its
subsidiary company or associate company; and
(g) underwriting the subscription of any securities or derivatives thereof, of the
company:

Provided that no contract or arrangement, in the case of a company having a paid-up

share capital of not less than such amount, or transactions not exceeding such sums, as
may be prescribed, shall be entered into except with the prior approval of the company
by a [resolution]314:

Provided further that no member of the company shall vote on such [resolution]315,
to approve any contract or arrangement which may be entered into by the company, if
such member is a related party:
[Second proviso shall not apply to private companies. Notification number G.S.R. 464(E) dated 5th June,
2015. The exceptions, modifications and adaptations provided in the said notification dated 5th June 2015
shall be applicable to a private company which has not committed a default in filing its financial statements

314
Word ‘resolution’ substituted for words ‘special resolution’ by the Companies (Amendment) Act, 2015
(21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).

315
Word ‘resolution’ substituted for words ‘special resolution’ by the Companies (Amendment) Act, 2015
(21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).

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 S. 188 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. Vide
notification number G.S.R. 583(E) dated 13th June 2017.]
[Second proviso shall not apply to a Specified IFSC public company vide Notification number G.S.R.
8(E) dated 04th January 2017.]
[It is clarified that `related party' referred to in the second proviso has to be construed with reference only
to the contract or arrangement for which the said resolution is being passed. Thus, the term 'related party'
in the above context refers only to such related party as may be a related party in the context of the contract
or arrangement for which the said resolution is being passed. Refer Circular 30/2014 dated 17 July 2014.
Though the said circular refers to ‘special resolution’ the same be read as ordinary resolution in view of
amendment to the Act.]
[First and second proviso shall not apply to -- (a) a Government company in respect of contracts or
arrangements entered into by it with any other Government company; (b) a Government company, other
than a listed company, in respect of contracts or arrangements other than those referred to in clause (a), in
case such company obtains approval of the Ministry or Department of the Central Government which is
administratively in charge of the company, or, as the case may be, the State Government before entering
into such contract or arrangement. vide notification number G.S.R. 463(E) dated 5th June, 2015. Further
vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that
the exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.]

316
[Provided also that nothing contained in the second proviso shall apply to a
company in which ninety per cent. or more members, in number, are relatives of
promoters or are related parties:]

Provided also that nothing in this sub-section shall apply to any transactions entered
into by the company in its ordinary course of business other than transactions which are
not on an arm’s length basis.
317
[Provided also that the requirement of passing the resolution under first proviso
shall not be applicable for transactions entered into between a holding company and its
wholly owned subsidiary whose accounts are consolidated with such holding company
and placed before the shareholders at the general meeting for approval.]

Explanation.— In this sub-section,—

(a) the expression “office or place of profit” means any office or place—
(i) where such office or place is held by a director, if the director holding it receives
from the company anything by way of remuneration over and above the
remuneration to which he is entitled as director, by way of salary, fee,
commission, perquisites, any rent-free accommodation, or otherwise;

316
Third proviso inserted in sub-section (1) of section 188 of the principal Act by Section 63(i) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

317
Fourth proviso inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May,
2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

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 S. 188 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(ii) where such office or place is held by an individual other than a director or by
any firm, private company or other body corporate, if the individual, firm, private
company or body corporate holding it receives from the company anything by
way of remuneration, salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise;
(b) the expression “arm’s length transaction” means a transaction between two related
parties that is conducted as if they were unrelated, so that there is no conflict of
interest.

(2) Every contract or arrangement entered into under sub-section (1) shall be referred to
in the Board’s report to the shareholders along with the justification for entering into such
contract or arrangement.

(3) Where any contract or arrangement is entered into by a director or any other
employee, without obtaining the consent of the Board or approval by a [resolution]318 in
the general meeting under sub-section (1) and if it is not ratified by the Board or, as the
case may be, by the shareholders at a meeting within three months from the date on
which such contract or arrangement was entered into, such contract or arrangement
319
[shall be voidable at the option of the Board or, as the case may be, of the shareholders]
and if the contract or arrangement is with a related party to any director, or is authorised
by any other director, the directors concerned shall indemnify the company against any
loss incurred by it.

(4) Without prejudice to anything contained in sub-section (3), it shall be open to the
company to proceed against a director or any other employee who had entered into such
contract or arrangement in contravention of the provisions of this section for recovery of
any loss sustained by it as a result of such contract or arrangement.

(5) Any director or any other employee of a company, who had entered into or authorised
the contract or arrangement in violation of the provisions of this section shall,—
(i) in case of listed company, be punishable with imprisonment for a term which may
extend to one year or with fine which shall not be less than twenty-five thousand
rupees but which may extend to five lakh rupees, or with both; and
(ii) in case of any other company, be punishable with fine which shall not be less than
twenty-five thousand rupees but which may extend to five lakh rupees.

318
Word ‘resolution’ substituted for words ‘special resolution’ by the Companies (Amendment) Act, 2015
(21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).

319
Substituted for the words “shall be void at the option of the Board” in sub-section (3) of section 188 of
the principal Act by Section 63(ii) of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

Page 363
 S. 188 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

[It is clarified that transactions arising out of Compromises, Arrangements and Amalgamations dealt with
under specific provisions of the Companies Act, 1956/Companies Act, 2013, will not attract the
requirements of section 188 of the Companies Act, 2013. Refer Circular 30/2014 dated 17 July 2014.
It is also clarified that contracts entered into by companies, after making necessary compliances under
Section 297 of the Companies Act, 1956, which already came into effect before the commencement of
Section 188 of the Companies Act, 2013, will not require fresh approval under the said section 188 till the
expiry of the original term of such contracts. Thus, if any modification in such contract is made on or after
1st April, 2014, the requirements under section 188 will have to be complied with. Refer Circular 30/2014
dated 17 July 2014.
Comments: To attract provisions of this section, firstly, transaction should be with a ‘related party’ as
clarified by MCA above. Secondly, there should be ‘contract or arrangement’ (which can be oral or in writing)
of the nature specified in (a) to (g) of sub-section (1). If both criteria are met, then check if it is qualifying for
exemption under third proviso to sub-section (1). If it does, then entire section is not applicable, though
words ‘this sub-section’ is used in that proviso.
Non-compliance of this section leads to disqualification of concerned director / employee u/s.164 and
vacation of office of director u/s.167 of the Act. For non-compliance concerned director or employee
becomes liable and not the company, as specified in Section 188(5) supra. In case of unlisted companies,
offence can be compounded by concerned director or employee under section 441.]

Page 364
 S. 189 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

189. Register of contracts or arrangements in which directors are interested.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.301 of the Companies Act, 1956]
[Refer Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014]
[Register in Form MBP-4]

320
189. (1) Every company shall keep one or more registers giving separately the
particulars of all contracts or arrangements to which sub-section (2) of section 184 or
section 188 applies, in such manner and containing such particulars as may be prescribed
and after entering the particulars, such register or registers shall be placed before the
next meeting of the Board and signed by all the directors present at the meeting.
[Register in Form MBP-4]

(2) Every director or key managerial personnel shall, within a period of thirty days of his
appointment, or relinquishment of his office, as the case may be, disclose to the company
the particulars specified in sub-section (1) of section 184 relating to his concern or interest
in the other associations which are required to be included in the register under that sub-
section or such other information relating to himself as may be prescribed.

(3) The register referred to in sub-section (1) shall be kept at the registered office of the
company and it shall be open for inspection at such office during business hours and
extracts may be taken therefrom, and copies thereof as may be required by any member
of the company shall be furnished by the company to such extent, in such manner, and
on payment of such fees as may be prescribed.
[As per Rule 16(4) fee as may be specified in the articles of the company but not exceeding ten rupees per
page]

(4) The register to be kept under this section shall also be produced at the
commencement of every annual general meeting of the company and shall remain open
and accessible during the continuance of the meeting to any person having the right to
attend the meeting.

(5) Nothing contained in sub-section (1) shall apply to any contract or arrangement—

320
Section 189 shall apply to a section 8 company only if the transaction with reference to section 188 on
the basis of terms and conditions of contract or arrangement exceeds one lakh rupees, vide notification
number G.S.R. 466(E) dated 5th June, 2015. Further exceptions, modifications and adaptations provided
in the said notification shall be applicable to a company covered under section 8 of the said Act which has
not committed a default in filing its financial statements under section 137 of the said Act or annual return
under section 92 of the said Act with the Registrar, vide notification number G.S.R. 584(E) dated 13th June
2017.

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 S. 189 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

(a) for the sale, purchase or supply of any goods, materials or services if the value of
such goods and materials or the cost of such services does not exceed five lakh
rupees in the aggregate in any year; or
(b) by a banking company for the collection of bills in the ordinary course of its
business.

(6) Every director who fails to comply with the provisions of this section and the rules
made thereunder shall be liable to a penalty of twenty-five thousand rupees.

Page 366
 S. 190 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

190. Contract of employment with managing or whole-time directors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.302 of the Companies Act, 1956]

190. (1) Every company shall keep at its registered office,—

(a) where a contract of service with a managing or whole-time director is in writing, a
copy of the contract; or
(b) where such a contract is not in writing, a written memorandum setting out its terms.

(2) The copies of the contract or the memorandum kept under sub-section (1) shall be
open to inspection by any member of the company without payment of fee.

(3) If any default is made in complying with the provisions of sub-section (1) or sub-section
(2), the company shall be liable to a penalty of twenty-five thousand rupees and every
officer of the company who is in default shall be liable to a penalty of five thousand rupees
for each default.

(4) The provisions of this section shall not apply to a private company.

Page 367
 S. 191 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

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

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.319, 320, 321 of the Companies Act, 1956]
[Refer Rule 17 of the Companies (Meetings of Board and its Powers) Rules, 2014]

191. (1) No director of a company shall, in connection with—

(a) the transfer of the whole or any part of any undertaking or property of the company;
or
(b) the transfer to any person of all or any of the shares in a company being a transfer
resulting from—
(i) an offer made to the general body of shareholders;
(ii) an offer made by or on behalf of some other body corporate with a view to a
company becoming a subsidiary company of such body corporate or a
subsidiary company of its holding company;
(iii) an offer made by or on behalf of an individual with a view to his obtaining the
right to exercise, or control the exercise of, not less than one-third of the total
voting power at any general meeting of the company; or
(iv) any other offer which is conditional on acceptance to a given extent, receive
any payment by way of compensation for loss of office or as consideration for
retirement from office, or in connection with such loss or retirement from such
company or from the transferee of such undertaking or property, or from the
transferees of shares or from any other person, not being such company, unless
particulars as may be prescribed with respect to the payment proposed to be
made by such transferee or person, including the amount thereof, have been
disclosed to the members of the company and the proposal has been approved
by the company in general meeting.

(2) Nothing in sub-section (1) shall affect any payment made by a company to a
managing director or whole-time director or manager of the company by way of
compensation for loss of office or as consideration for retirement from office or in
connection with such loss or retirement subject to limits or priorities, as may be
prescribed.

(3) If the payment under sub-section (1) or sub-section (2) is not approved for want
of quorum either in a meeting or an adjourned meeting, the proposal shall not be deemed
to have been approved.

(4) Where a director of a company receives payment of any amount in

contravention of sub-section (1) or the proposed payment is made before it is approved
in the meeting, the amount so received by the director shall be deemed to have been
received by him in trust for the company.

Page 368
 S. 191 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

321
[(5) If a director of the company makes any default in complying with the
provisions of this section, such director shall be liable to a penalty of one lakh rupees.].

(6) Nothing in this section shall be taken to prejudice the operation of any law
requiring disclosure to be made with respect to any payment received under this section
or such other like payments made to a director.

321
Substituted sub-section (5) of section 191 of the principal Act by Section 28 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(5) If a director of the company contravenes the provisions of this section, such
director shall be punishable with fine which shall not be less than twenty-five thousand rupees but which
may extend to one lakh rupees”.

Page 369
 S. 192 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

192. Restriction on non-cash transactions involving directors.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

192. (1) No company shall enter into an arrangement by which—

(a) a director of the company or its holding, subsidiary or associate company or a
person connected with him acquires or is to acquire assets for consideration other
than cash, from the company; or
(b) the company acquires or is to acquire assets for consideration other than cash,
from such director or person so connected,
unless prior approval for such arrangement is accorded by a resolution of the company
in general meeting and if the director or connected person is a director of its holding
company, approval under this sub-section shall also be required to be obtained by
passing a resolution in general meeting of the holding company.

(2) The notice for approval of the resolution by the company or holding company in
general meeting under sub-section (1) shall include the particulars of the arrangement
along with the value of the assets involved in such arrangement duly calculated by a
registered valuer.

(3) Any arrangement entered into by a company or its holding company in contravention
of the provisions of this section shall be voidable at the instance of the company unless—
(a) the restitution of any money or other consideration which is the subject- matter of
the arrangement is no longer possible and the company has been indemnified by
any other person for any loss or damage caused to it; or
(b) any rights are acquired bona fide for value and without notice of the contravention
of the provisions of this section by any other person.

Page 370
 S. 193 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

193. Contract by One Person Company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

193. (1) Where One Person company limited by shares or by guarantee enters into a
contract with the sole member of the company who is also the director of the company,
the company shall, unless the contract is in writing, ensure that the terms of the contract
or offer are contained in a memorandum or are recorded in the minutes of the first meeting
of the Board of Directors of the company held next after entering into contract:

Provided that nothing in this sub-section shall apply to contracts entered into by
the company in the ordinary course of its business.

(2) The company shall inform the Registrar about every contract entered into by the
company and recorded in the minutes of the meeting of its Board of Directors under sub-
section (1) within a period of fifteen days of the date of approval by the Board of Directors.

Page 371
 S. 194 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

194. [Omitted] Prohibition on forward dealings in securities of company by director

or key managerial personnel.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

322
[194. (1) No director of a company or any of its key managerial personnel shall buy in the company, or in its holding,
subsidiary or associate company—
(a) a right to call for delivery or a right to make delivery at a specified price and within a specified time, of a specified
number of relevant shares or a specified amount of relevant debentures; or
(b) a right, as he may elect, to call for delivery or to make delivery at a specified price and within a specified time,
of a specified number of relevant shares or a specified amount of relevant debentures.

(2) If a director or any key managerial personnel of the company contravenes the provisions of sub-section (1), such
director or key managerial personnel shall be punishable with imprisonment for a term which may extend to two years
or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

(3) Where a director or other key managerial personnel acquires any securities in contravention of sub-section (1), he
shall, subject to the provisions contained in sub-section (2), be liable to surrender the same to the company and the
company shall not register the securities so acquired in his name in the register, and if they are in dematerialised form,
it shall inform the depository not to record such acquisition and such securities, in both the cases, shall continue to
remain in the names of the transferors.

Explanation.—For the purposes of this section, ‘‘relevant shares’’ and ‘‘relevant debentures’’ mean shares and
debentures of the company in which the concerned person is a whole-time director or other key managerial personnel
or shares and debentures of its holding and subsidiary companies.]

322
Section 194 of the principal Act is omitted by Section 64 of the Companies (Amendment) Act, 2017 (1
of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 372
 S. 195 - Chapter XII [Ss.173 to 195]

Relevant rules: The Companies (Meetings of Board and its Powers) Rules, 2014

195. [Omitted] Prohibition on insider trading of securities.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

323
[195. (1) No person including any director or key managerial personnel of a company shall enter into insider trading:

Provided that nothing contained in this sub-section shall apply to any communication required in the ordinary
course of business or profession or employment or under any law.

Explanation.—For the purposes of this section,—

(a) “insider trading” means—
(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in any securities by any
director or key managerial personnel or any other officer of a company either as principal or agent if such
director or key managerial personnel or any other officer of the company is reasonably expected to have access
to any non-public price sensitive information in respect of securities of company; or
(ii) an act of counselling about procuring or communicating directly or indirectly any non-public price-sensitive
information to any person;
(b) “price-sensitive information” means any information which relates, directly or indirectly, to a company and which
if published is likely to materially affect the price of securities of the company.

(2) If any person contravenes the provisions of this section, he shall be punishable with imprisonment for a term which
may extend to five years or with fine which shall not be less than five lakh rupees but which may extend to twenty-five
crore rupees or three times the amount of profits made out of insider trading, whichever is higher, or with both.]

323
Section 195 of the principal Act is omitted by Section 65 of the Companies (Amendment) Act, 2017 (1
of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

Page 373
 S. 196 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

CHAPTER XIII APPOINTMENT AND

REMUNERATION OF MANAGERIAL
PERSONNEL
196. Appointment of managing director, whole-time director or manager.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 197A, 267, 311, 317, 384, 385, 388 of the Companies Act, 1956]
[Refer Rule 3 of the Companies (Appointment and Remuneration of Managerial Remuneration) Rules,
2014]
[Form No. MR-1, Form No. MGT-14] [Where Form No. MR-1 is filed, even Form No. DIR-12 under section
152 is required to be filed.]
[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the Act.]

196. (1) No company shall appoint or employ at the same time a managing director and
a manager.

(2) No company shall appoint or re-appoint any person as its managing director, whole-
time director or manager for a term exceeding five years at a time:

Provided that no re-appointment shall be made earlier than one year before the
expiry of his term.
[Section 196 (2), (4) and (5) shall not apply to a Government Company, vide notification number G.S.R.
463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for
Government company it is provided that the exceptions, modifications and adaptations shall be applicable
to a Government company which has not committed a default in filing its financial statements under section
137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

(3) No company shall appoint or continue the employment of any person as managing
director, whole-time director or manager who —
(a) is below the age of twenty-one years or has attained the age of seventy years:
Provided that appointment of a person who has attained the age of seventy years
may be made by passing a special resolution in which case the explanatory statement
annexed to the notice for such motion shall indicate the justification for appointing such
person;
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]
(b) is an undischarged insolvent or has at any time been adjudged as an insolvent;
(c) has at any time suspended payment to his creditors or makes, or has at any time
made, a composition with them; or
(d) has at any time been convicted by a court of an offence and sentenced for a period
of more than six months.

Page 374
 S. 196 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

324
[Provided further that where no such special resolution is passed but votes cast
in favour of the motion exceed the votes, if any, cast against the motion and the Central
Government is satisfied, on an application made by the Board, that such appointment is
most beneficial to the company, the appointment of the person who has attained the age
of seventy years may be made.]

(4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-
time director or manager shall be appointed and the terms and conditions of such
appointment and remuneration payable be approved by the Board of Directors at a
meeting which shall be subject to approval by a resolution at the next general meeting of
the company and by the Central Government in case such appointment is at variance to
the conditions 325[specified in Part I of that Schedule]:
[Application to Central Government in Form no. MR-2]

Provided that a notice convening Board or general meeting for considering such
appointment shall include the terms and conditions of such appointment, remuneration
payable and such other matters including interest, of a director or directors in such
appointments, if any:

Provided further that a return in the prescribed form shall be filed within sixty days
of such appointment with the Registrar.
[Form no. MR-1]
[sub-section (4) shall not apply to a Specified IFSC public company vide Notification number G.S.R. 8(E)
dated 04th January 2017.]
[Sub-sections (4) and (5) shall not apply to private companies. Notification number G.S.R. 464(E) dated 5th
June, 2015. The exceptions, modifications and adaptations provided in the said notification dated 5th June
2015 shall be applicable to a private company which has not committed a default in filing its financial
statements under section 137 of the said Act or annual return under section 92 of the said Act with the
Registrar. Vide notification number G.S.R. 583(E) dated 13th June 2017.].
[Section 196 (2), (4) and (5) shall not apply to Government Companies. vide notification number G.S.R.
463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for
Government company it is provided that the exceptions, modifications and adaptations shall be applicable
to a Government company which has not committed a default in filing its financial statements under section
137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

324
Inserted second proviso to sub-section (3) of Section 196 of the principal Act by clause (a) of section 66
of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on
03rd January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

325
Inserted second proviso to sub-section (3) of Section 196 of the principal Act by clause (b) of section 66
of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on
03rd January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

Page 375
 S. 196 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

[For any resolution of the Board of Directors of a company or agreement executed by a company, relating
to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment,
of a managing director, Form no. MGT-14 is required to be filed under section 117 (3) (c)]

(5) Subject to the provisions of this Act, where an appointment of a managing director,
whole-time director or manager is not approved by the company at a general meeting,
any act done by him before such approval shall not be deemed to be invalid.
[Sub-sections (4) and (5) shall not apply to a private company. Notification number G.S.R. 464(E) dated
5th June 2015]. [Section 196 (2), (4) and (5) shall not apply to a Government Company. vide notification
number G.S.R. 463(E) dated 5th June, 2015. Further vide notification number G.S.R. 582(E) dated 13th
June 2017, for Government company it is provided that the exceptions, modifications and adaptations shall
be applicable to a Government company which has not committed a default in filing its financial statements
under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

Page 376
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

197. Overall maximum managerial remuneration and managerial remuneration in

case of absence or inadequacy of profits.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 198, 201, 309, 310, 387 of the Companies Act, 1956]
[Refer Rule 4 (sitting fees), Rule 5 (disclosure in Board’s report) and Rule 7(2) (unlisted public company
need not apply for Central Government approval if conditions fulfilled) of the Companies (Appointment and
Remuneration of Managerial Remuneration) Rules, 2014]
[Earlier for seeking approval of Central Govt. application in Form No. MR-2 was required.]
[Refer regulations (61) and (91) of Table F.II in Schedule I to the Act]
[This section shall not apply to a Government Company, vide notification number G.S.R. 463(E) dated 5th
June, 2015. Further vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company
it is provided that the exceptions, modifications and adaptations shall be applicable to a Government
company which has not committed a default in filing its financial statements under section 137 of the said
Act or annual return under section 92 of the said Act with the Registrar.]
[This section shall not apply to a Specified IFSC public company vide Notification number G.S.R. 8(E) dated
04th January 2017.]

197. (1) The total managerial remuneration payable by a public company, to its directors,
including managing director and whole-time director, and its manager in respect of any
financial year shall not exceed eleven per cent. of the net profits of that company for that
financial year computed in the manner laid down in section 198 except that the
remuneration of the directors shall not be deducted from the gross profits:

Provided that the company in general meeting may, 326[omitted], authorise the
payment of remuneration exceeding eleven per cent. of the net profits of the company,
subject to the provisions of Schedule V:

Provided further that, except with the approval of the company in general meeting
327
[by a special resolution],—
(i) the remuneration payable to any one managing director; or whole-time director or
manager shall not exceed five per cent. of the net profits of the company and if
there is more than one such director remuneration shall not exceed ten per cent. of
the net profits to all such directors and manager taken together;

326
Omitted words ‘with the approval of the Central Government’ from the first proviso to sub-section (1) of
Section 197 of the principal Act by sub-clause (i) of clause (a) of section 67 of the Companies (Amendment)
Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought
to force from 12th September 2018 vide notification no. S.O. 4823(E) of the same date.

327
Inserted words ‘by a special resolution’ to second proviso to sub-section (1) of Section 197 of the
principal Act by sub-clause (ii) of clause (a) of section 67 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 12th
September 2018 vide notification no. S.O. 4823(E) of the same date.

Page 377
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(ii) the remuneration payable to directors who are neither managing directors nor
whole-time directors shall not exceed,—
(A) one per cent. of the net profits of the company, if there is a managing or whole-
time director or manager;
(B) three per cent. of the net profits in any other case.
[Aforesaid second proviso, shall apply to nidhi companies with the modification that the remuneration of a
director who is neither managing director nor whole-time director or manager for performing special services
to the Nidhis specified in the articles of association may be paid by way of monthly payment subject to the
approval of the company in general meeting and also to the provisions of section 197:
Provided 'that no approval of the company in general meeting shall be required where,—
(a) Nidhi does not have a managing director or a whole-time director or a manager;
(b) the remuneration payable during a financial year to all the directors of the Nidhi does not exceed ten
per cent. of the net profits of such Nidhi or fifteen lakh rupees, whichever is less; and
(c) a remuneration payable under clause (b) is approved by a special resolution passed in this behalf by
the Nidhi. Refer notification number G.S.R. 465(E) dated 5th June, 2015.]

328
[Provided also that, where the company has defaulted in payment of dues to any
bank or public financial institution or non-convertible debenture holders or any other
secured creditor, the prior approval of the bank or public financial institution concerned or
the non-convertible debenture holders or other secured creditor, as the case may be,
shall be obtained by the company before obtaining the approval in the general meeting.]

(2) The percentages aforesaid shall be exclusive of any fees payable to directors
under sub-section (5).

(3) Notwithstanding anything contained in sub-sections (1) and (2), but subject to
the provisions of Schedule V, if, in any financial year, a company has no profits or its
profits are inadequate, the company shall not pay to its directors, including any managing
or whole-time director or manager, by way of remuneration any sum exclusive of any fees
payable to directors under sub-section (5) hereunder except in accordance with the
provisions of Schedule V 329[omitted].
[It was clarified by MCA vide Circular 07/2015 dated 10th April 2015 that where listed companies and their
subsidiaries have agreed to pay remuneration to managerial person, without approval of Central
Government, in excess of limits specified in para II Para (C) of Schedule XIII of the Companies Act, 1956
(read with MCA's Circular number 14/ 11/2012-CL-VII dated 16th August, 2012), and if the tenure of such
managerial person is remaining on coming into force of Companies Act 2013 i.e. on 01 April 2014, then

328
Inserted third proviso to sub-section (1) of Section 197 of the principal Act by sub-clause (iii) of clause
(a) of section 67 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 12th September 2018 vide notification
no. S.O. 4823(E) of the same date.

329
Omitted words ‘and if it is not able to comply with such provisions, with the previous approval of the
Central Government’ in sub-section (3) of Section 197 of the principal Act by clause (b) of section 67 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

Page 378
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

such companies may continue to pay such managerial person remuneration for his remaining term in
accordance with terms and conditions approved by company as per relevant provisions of Schedule XIII of
earlier Act even if the part of his/her tenure falls after 1st April, 2014.]

(4) The remuneration payable to the directors of a company, including any

managing or whole-time director or manager, shall be determined, in accordance with
and subject to the provisions of this section, either by the articles of the company, or by
a resolution or, if the articles so require, by a special resolution, passed by the company
in general meeting and the remuneration payable to a director determined aforesaid shall
be inclusive of the remuneration payable to him for the services rendered by him in any
other capacity:
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]

Provided that any remuneration for services rendered by any such director in other
capacity shall not be so included if—
(a) the services rendered are of a professional nature; and
(b) in the opinion of the Nomination and Remuneration Committee, if the company is
covered under sub-section (1) of section 178, or the Board of Directors in other
cases, the director possesses the requisite qualification for the practice of the
profession.

(5) A director may receive remuneration by way of fee for attending meetings of the
Board or Committee thereof or for any other purpose whatsoever as may be decided by
the Board:

Provided that the amount of such fees shall not exceed the amount as may be
prescribed:
Provided further that different fees for different classes of companies and fees in
respect of independent director may be such as may be prescribed.

(6) A director or manager may be paid remuneration either by way of a monthly

payment or at a specified percentage of the net profits of the company or partly by one
way and partly by the other.
330
[(7) omitted.]

330
Omitted sub-section (7) of section 197 of the principal Act by Section 29(a) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
omission, it read as “(7) Notwithstanding anything contained in any other provision of this Act but subject
to the provisions of this section, an independent director shall not be entitled to any stock option and may
receive remuneration by way of fees provided under sub-section (5), reimbursement of expenses for
participation in the Board and other meetings and profit related commission as may be approved by the
members”.

Page 379
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

[Comments: Where stock option granted to Independent Directors prior to commencement of section 197,
the same can be exercised by independent directors even after commencement of section 197. FAQ of
ICSI also confirms this.]

(8) The net profits for the purposes of this section shall be computed in the manner
referred to in section 198.
331
[(9) If any director draws or receives, directly or indirectly, by way of
remuneration any such sums in excess of the limit prescribed by this section or without
approval required under this section, he shall refund such sums to the company, within
two years or such lesser period as may be allowed by the company, and until such sum
is refunded, hold it in trust for the company.]

(10) The company shall not waive the recovery of any sum refundable to it under
sub-section (9) unless 332[approved by the company by special resolution within two years
from the date the sum becomes refundable].
333
[Provided that where the company has defaulted in payment of dues to any bank
or public financial institution or non-convertible debenture holders or any other secured
creditor, the prior approval of the bank or public financial institution concerned or the non-
convertible debenture holders or other secured creditor, as the case may be, shall be
obtained by the company before obtaining approval of such waiver.]

(11) In cases where Schedule V is applicable on grounds of no profits or

inadequate profits, any provision relating to the remuneration of any director which
purports to increase or has the effect of increasing the amount thereof, whether the
provision be contained in the company’s memorandum or articles, or in an agreement

331
Substituted sub-section (9) of Section 197 of the principal Act by clause (c) of section 67 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date. Prior to substitution, it read as “(9) If any director draws or receives, directly or indirectly, by
way of remuneration any such sums in excess of the limit prescribed by this section or without the prior
sanction of the Central Government, where it is required, he shall refund such sums to the company and
until such sum is refunded, hold it in trust for the company.”.

332
Words ‘permitted by the Central Government’ in sub-section (10) of Section 197 of the principal Act by
sub-clause (i) of clause (d) of section 67 of the Companies (Amendment) Act, 2017 (1 of 2018) which
received assent of the President of India on 03rd January 2018. It is brought to force from 12th September
2018 vide notification no. S.O. 4823(E) of the same date.

333
Proviso inserted in sub-section (10) of Section 197 of the principal Act by sub-clause (ii) of clause (d) of
section 67 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of
India on 03rd January 2018. It is brought to force from 12th September 2018 vide notification no. S.O.
4823(E) of the same date.

Page 380
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

entered into by it, or in any resolution passed by the company in general meeting or its
Board, shall not have any effect unless such increase is in accordance with the conditions
specified in that Schedule 334[omitted].

(12) Every listed company shall disclose in the Board’s report, the ratio of the
remuneration of each director to the median employee’s remuneration and such other
details as may be prescribed.

(13) Where any insurance is taken by a company on behalf of its managing

director, whole-time director, manager, Chief Executive Officer, Chief Financial Officer or
company secretary for indemnifying any of them against any liability in respect of any
negligence, default, misfeasance, breach of duty or breach of trust for which they may be
guilty in relation to the company, the premium paid on such insurance shall not be treated
as part of the remuneration payable to any such personnel:

Provided that if such person is proved to be guilty, the premium paid on such
insurance shall be treated as part of the remuneration.
[Refer regulation (91) of Table F.II in Schedule I to the Act]

(14) Subject to the provisions of this section, any director who is in receipt of any
commission from the company and who is a managing or whole-time director of the
company shall not be disqualified from receiving any remuneration or commission from
any holding company or subsidiary company of such company subject to its disclosure
by the company in the Board’s report.
335
[(15) If any person makes any default in complying with the provisions of this
section, he shall be liable to a penalty of one lakh rupees and where any default has been
made by a company, the company shall be liable to a penalty of five lakh rupees.].
336
[(16) The auditor of the company shall, in his report under section 143, make a
statement as to whether the remuneration paid by the company to its directors is in

334
Omitted words ‘and if such conditions are not being complied, the approval of the Central Government
had been obtained’ in sub-section (11) of Section 197 of the principal Act by clause (e) of section 67 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

335
Substituted sub-section (15) of section 197 of the principal Act by Section 29(b) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
omission, it read as “(15) If any person contravenes the provisions of this section, he shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.”.

336
Inserted sub-sections (16) and (17) in Section 197 of the principal Act by clause (f) of section 67 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd

Page 381
 S. 197 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

accordance with the provisions of this section, whether remuneration paid to any director
is in excess of the limit laid down under this section and give such other details as may
be prescribed.

(17) On and from the commencement of the Companies (Amendment) Act, 2017,
any application made to the Central Government under the provisions of this section [as
it stood before such commencement], which is pending with that Government shall abate,
and the company shall, within one year of such commencement, obtain the approval in
accordance with the provisions of this section, as so amended.]

January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

Page 382
 S. 198 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

198. Calculation of profits.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.349 of the Companies Act, 1956]

198. (1) In computing the net profits of a company in any financial year for the purpose of
section 197,—
(a) credit shall be given for the sums specified in sub-section(2), and credit shall not
be given for those specified in sub-section(3); and
(b) the sums specified in sub-section (4) shall be deducted, and those specified in sub-
section (5) shall not be deducted.

(2) In making the computation aforesaid, credit shall be given for the bounties and
subsidies received from any Government, or any public authority constituted or authorised
in this behalf, by any Government, unless and except in so far as the Central Government
otherwise directs.

(3) In making the computation aforesaid, credit shall not be given for the following sums,
namely:—
(a) profits, by way of premium on shares or debentures of the company, which are
issued or sold by the company 337[unless the company is an investment company
as referred to in clause (a) of the Explanation to section 186];
(b) profits on sales by the company of forfeited shares;
(c) profits of a capital nature including profits from the sale of the undertaking or any
of the undertakings of the company or of any part thereof;
(d) profits from the sale of any immovable property or fixed assets of a capital nature
comprised in the undertaking or any of the undertakings of the company, unless
the business of the company consists, whether wholly or partly, of buying and
selling any such property or assets:
Provided that where the amount for which any fixed asset is sold exceeds the
written-down value thereof, credit shall be given for so much of the excess as is not
higher than the difference between the original cost of that fixed asset and its
written- down value;

337
Inserted words ‘unless the company is an investment company as referred to in clause (a) of the
Explanation to section 186’ in clause (a) in sub-section (3) of Section 198 of the principal Act by sub-clause
(a) of clause (i) of section 68 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 12th September 2018 vide
notification no. S.O. 4823(E) of the same date.

Page 383
 S. 198 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(e) any change in carrying amount of an asset or of a liability recognised in equity

reserves including surplus in profit and loss account on measurement of the asset
or the liability at fair value.
338
[(f) any amount representing unrealised gains, notional gains or revaluation of
assets.]

(4) In making the computation aforesaid, the following sums shall be deducted, namely:—
(a) all the usual working charges;
(b) directors’ remuneration;
(c) bonus or commission paid or payable to any member of the company’s staff, or to
any engineer, technician or person employed or engaged by the company, whether
on a whole-time or on a part-time basis;
(d) any tax notified by the Central Government as being in the nature of a tax on excess
or abnormal profits;
(e) any tax on business profits imposed for special reasons or in special circumstances
and notified by the Central Government in this behalf;
(f) interest on debentures issued by the company;
(g) interest on mortgages executed by the company and on loans and advances
secured by a charge on its fixed or floating assets;
(h) interest on unsecured loans and advances;
(i) expenses on repairs, whether to immovable or to movable property, provided the
repairs are not of a capital nature;
(j) outgoings inclusive of contributions made under section 181;
(k) depreciation to the extent specified in section 123;
(l) the excess of expenditure over income, which had arisen in computing the net
profits in accordance with this section in any year 339[omitted], in so far as such
excess has not been deducted in any subsequent year preceding the year in
respect of which the net profits have to be ascertained;
(m) any compensation or damages to be paid in virtue of any legal liability including a
liability arising from a breach of contract;
(n) any sum paid by way of insurance against the risk of meeting any liability such as
is referred to in clause (m);
(o) debts considered bad and written off or adjusted during the year of account.

338
Inserted in clause (f) in sub-section (3) of Section 198 of the principal Act by sub-clause (b) of clause (i)
of section 68 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 12th September 2018 vide notification no. S.O.
4823(E) of the same date.

Omitted words ‘which begins at or after the commencement of this Act’ in clause (l) in sub-section (4) of
339

Section 198 of the principal Act by clause (ii) of section 68 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 12th
September 2018 vide notification no. S.O. 4823(E) of the same date.

Page 384
 S. 198 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(5) In making the computation aforesaid, the following sums shall not be deducted,
namely:—
(a) income-tax and super-tax payable by the company under the Income-tax Act, 1961
(43 of 1961), or any other tax on the income of the company not falling under
clauses (d) and (e) of sub-section (4);
(b) any compensation, damages or payments made voluntarily, that is to say,
otherwise than in virtue of a liability such as is referred to in clause (m) of sub-
section (4);
(c) loss of a capital nature including loss on sale of the undertaking or any of the
undertakings of the company or of any part thereof not including any excess of the
written-down value of any asset which is sold, discarded, demolished or destroyed
over its sale proceeds or its scrap value;
(d) any change in carrying amount of an asset or of a liability recognised in equity
reserves including surplus in profit and loss account on measurement of the asset
or the liability at fair value.

Page 385
 S. 199 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

199. Recovery of remuneration in certain cases.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

199. Without prejudice to any liability incurred under the provisions of this Act or any other
law for the time being in force, where a company is required to re-state its financial
statements due to fraud or non-compliance with any requirement under this Act and the
rules made thereunder, the company shall recover from any past or present managing
director or whole-time director or manager or Chief Executive Officer (by whatever name
called) who, during the period for which the financial statements are required to be re-
stated, received the remuneration (including stock option) in excess of what would have
been payable to him as per restatement of financial statements.

Page 386
 S. 200 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

200. Central Government or company to fix limit with regard to remuneration.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.637AA of the Companies Act, 1956]
[Refer Rule 6 of the Companies (Appointment and Remuneration of Managerial Remuneration) Rules,
2014]

200. Notwithstanding anything contained in this Chapter, 340[omitted] a company may,

while according its approval under section 196, to any appointment or to any
remuneration under section 197 in respect of cases where the company has inadequate
or no profits, fix the remuneration within the limits specified in this Act, at such amount or
percentage of profits of the company, as it may deem fit and while fixing the remuneration,
341
[omitted] the company shall have regard to—
(a) the financial position of the company;
(b) the remuneration or commission drawn by the individual concerned in any other
capacity;
(c) the remuneration or commission drawn by him from any other company;
(d) professional qualifications and experience of the individual concerned;
(e) such other matters as may be prescribed.

340
Omitted words ‘the Central Government or’ in Section 200 of the principal Act by section 69 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

341
Omitted words ‘the Central Government or’ in Section 200 of the principal Act by section 69 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 12th September 2018 vide notification no. S.O. 4823(E) of the
same date.

Page 387
 S. 201 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

201. Forms of, and procedure in relation to, certain applications.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.640B of the Companies Act, 1956]
[Refer Rule 7 of the Companies (Appointment and Remuneration of Managerial Remuneration) Rules,
2014]
[Form No. MR-2]

342
201. (1) Every application made to the Central Government under [section 196] shall
be in such form as may be prescribed.
[Application to Central Government in Form No. MR-2]

(2)
(a) Before any application is made by a company to the Central Government under
343
[section 196], there shall be issued by or on behalf of the company a general notice
to the members thereof, indicating the nature of the application proposed to be made.
(b) Such notice shall be published at least once in a newspaper in the principal language
of the district in which the registered office of the company is situate and circulating in
that district, and at least once in English in an English newspaper circulating in that
district.
(c) The copies of the notices, together with a certificate by the company as to the due
publication thereof, shall be attached to the application.

342
Substituted for the words ‘this Chapter’ in sub-section (1) of Section 201 of the principal Act by clause
(a) of section 70 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 12th September 2018 vide notification
no. S.O. 4823(E) of the same date.

343
Substituted for the words ‘any of the sections aforesaid’ in sub-section (2) of Section 201 of the principal
Act by clause (b) of section 70 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent
of the President of India on 03rd January 2018. It is brought to force from 12th September 2018 vide
notification no. S.O. 4823(E) of the same date.

Page 388
 S. 202 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

202. Compensation for loss of office of managing or whole-time director or

manager.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.318 of the Companies Act, 1956]

202. (1) A company may make payment to a managing or whole-time director or manager,
but not to any other director, by way of compensation for loss of office, or as consideration
for retirement from office or in connection with such loss or retirement.

(2) No payment shall be made under sub-section (1) in the following cases, namely:—
(a) where the director resigns from his office as a result of the reconstruction of the
company, or of its amalgamation with any other body corporate or bodies corporate,
and is appointed as the managing or whole-time director, manager or other officer
of the reconstructed company or of the body corporate resulting from the
amalgamation;
(b) where the director resigns from his office otherwise than on the reconstruction of
the company or its amalgamation as aforesaid;
(c) where the office of the director is vacated under sub-section (1) of section 167;
(d) where the company is being wound up, whether by an order of the Tribunal or
voluntarily, provided the winding up was due to the negligence or default of the
director;
(e) where the director has been guilty of fraud or breach of trust in relation to, or of
gross negligence in or gross mismanagement of, the conduct of the affairs of the
company or any subsidiary company or holding company thereof; and
(f) where the director has instigated, or has taken part directly or indirectly in bringing
about, the termination of his office.

(3) Any payment made to a managing or whole-time director or manager in pursuance of

sub-section (1) shall not exceed the remuneration which he would have earned if he had
been in office for the remainder of his term or for three years, whichever is shorter,
calculated on the basis of the average remuneration actually earned by him during a
period of three years immediately preceding the date on which he ceased to hold office,
or where he held the office for a lesser period than three years, during such period:

Provided that no such payment shall be made to the director in the event of the
commencement of the winding up of the company, whether before or at any time within
twelve months after, the date on which he ceased to hold office, if the assets of the
company on the winding up, after deducting the expenses thereof, are not sufficient to
repay to the shareholders the share capital, including the premiums, if any, contributed
by them.

Page 389
 S. 202 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(4) Nothing in this section shall be deemed to prohibit the payment to a managing or
whole-time director, or manager, of any remuneration for services rendered by him to the
company in any other capacity.

Page 390
 S. 203 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

203. Appointment of key managerial personnel.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 269, 316, 386 of the Companies Act, 1956]
[Refer Rule 8 of the Companies (Appointment and Remuneration of Managerial Remuneration) Rules,
2014]
[Refer regulations (77) and (78) of Table F.II in Schedule I to the Act]

203. (1) Every company belonging to such class or classes of companies as may be
prescribed shall have the following whole-time key managerial personnel,—
(i) managing director, or Chief Executive Officer or manager and in their absence, a
whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer :

Provided that an individual shall not be appointed or reappointed as the chairperson

of the company, in pursuance of the articles of the company, as well as the managing
director or Chief Executive Officer of the company at the same time after the date of
commencement of this Act unless,—
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:

Provided further that nothing contained in the first proviso shall apply to such class
of companies engaged in multiple businesses and which has appointed one or more Chief
Executive Officers for each such business as may be notified by the Central Government.

(2) Every whole-time key managerial personnel of a company shall be appointed by

means of a resolution of the Board containing the terms and conditions of the appointment
including the remuneration.

(3) A whole-time key managerial personnel shall not hold office in more than one
company except in its subsidiary company at the same time:

Provided that nothing contained in this sub-section shall disentitle a key

managerial personnel from being a director of any company with the permission of the
Board:

Provided further that whole-time key managerial personnel holding office in more
than one company at the same time on the date of commencement of this Act, shall,
within a period of six months from such commencement, choose one company, in which
he wishes to continue to hold the office of key managerial personnel:

Provided also that a company may appoint or employ a person as its managing
director, if he is the managing director or manager of one, and of not more than one, other

Page 391
 S. 203 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

company and such appointment or employment is made or approved by a resolution

passed at a meeting of the Board with the consent of all the directors present at the
meeting and of which meeting, and of the resolution to be moved thereat, specific notice
has been given to all the directors then in India.
[Can the KMP of Holding Co. be appointed in only one subsidiary or in all subsidiaries of holding company
at the same time? FAQ of ICSI states that ideally he may be appointed in only one subsidiary.]

(4) If the office of any whole-time key managerial personnel is vacated, the
resulting vacancy shall be filled-up by the Board at a meeting of the Board within a
period of six months from the date of such vacancy.
344
[(4A) The provisions of sub-sections (1), (2), (3) and (4) of this section shall not
apply to a managing director or Chief Executive Officer or manager and in their absence,
a whole-time director of the Government Company.]
[ Vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that
the exceptions, modifications and adaptations shall be applicable to a Government company vide
notification number G.S.R. 463(E) dated 5th June 2015 which has not committed a default in filing its
financial statements under section 137 of the said Act or annual return under section 92 of the said Act with
the Registrar.]

345
[(5) If any company makes any default in complying with the provisions of this
section, such company shall be liable to a penalty of five lakh rupees and every director
and key managerial personnel of the company who is in default shall be liable to a penalty
of fifty thousand rupees and where the default is a continuing one, with a further penalty
of one thousand rupees for each day after the first during which such default continues
but not exceeding five lakh rupees.]

344
Inserted vide notification number G.S.R. 463(E) dated 5th June, 2015,

345
Substituted sub-section (5) of section 203 of the principal Act by Section 30 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
omission, it read as “(5) If a company contravenes the provisions of this section, the company shall be
punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees
and every director and key managerial personnel of the company who is in default shall be punishable with
fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a
further fine which may extend to one thousand rupees for every day after the first during which the
contravention continues.”.

Page 392
 S. 204 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

204. Secretarial audit for bigger companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rules 9 and 10 of the Companies (Appointment and Remuneration of Managerial Remuneration)
Rules, 2014]
[Form No. MR-3]

204. (1) Every listed company and a company belonging to other class of companies as
may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of
section 134, a secretarial audit report, given by a company secretary in practice, in such
form as may be prescribed.
[Form No. MR-3]

(2) It shall be the duty of the company to give all assistance and facilities to the
company secretary in practice, for auditing the secretarial and related records of the
company.

(3) The Board of Directors, in their report made in terms of sub-section (3) of
section 134, shall explain in full any qualification or observation or other remarks made
by the company secretary in practice in his report under sub-section (1).

(4) If a company or any officer of the company or the company secretary in

practice, contravenes the provisions of this section, the company, every officer of the
company or the company secretary in practice, who is in default, shall be punishable with
fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Page 393
 S. 205 - Chapter XIII [Ss.196 to 205]

Relevant rules: The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

205. Functions of company secretary.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer regulation (78) of Table F.II in Schedule I to the Act]

205. (1) The functions of the company secretary shall include,—

(a) to report to the Board about compliance with the provisions of this Act, the rules
made thereunder and other laws applicable to the company;
(b) to ensure that the company complies with the applicable secretarial standards;
(c) to discharge such other duties as may be prescribed.

Explanation.—For the purpose of this section, the expression “secretarial standards”

means secretarial standards issued by the Institute of Company Secretaries of India
constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980) and
approved by the Central Government.

(2) The provisions contained in section 204 and section 205 shall not affect the duties
and functions of the Board of Directors, chairperson of the company, managing director
or whole-time director under this Act, or any other law for the time being in force.

Page 394
 S. 206 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

CHAPTER XIV INSPECTION, INQUIRY

AND INVESTIGATION
206. Power to call for information, inspect books and conduct inquiries.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec. 234 [except sub-section (8)] of the Companies Act, 1956]
[Power to appoint inspectors under section 206(5) has been delegated to Regional Directors vide
Notification number S.O. 1626(E) dated 29th April, 2016.]

206. (1) Where on a scrutiny of any document filed by a company or on any information
received by him, the Registrar is of the opinion that any further information or explanation
or any further documents relating to the company is necessary, he may by a written notice
require the company—
(a) to furnish in writing such information or explanation; or
(b) to produce such documents,
within such reasonable time, as may be specified in the notice.

(2) On the receipt of a notice under sub-section (1), it shall be the duty of the company
and of its officers concerned to furnish such information or explanation to the best of their
knowledge and power and to produce the documents to the Registrar within the time
specified or extended by the Registrar:

Provided that where such information or explanation relates to any past period,
the officers who had been in the employment of the company for such period, if so called
upon by the Registrar through a notice served on them in writing, shall also furnish such
information or explanation to the best of their knowledge.

(3) If no information or explanation is furnished to the Registrar within the time specified
under sub-section (1) or if the Registrar on an examination of the documents furnished is
of the opinion that the information or explanation furnished is inadequate or if the Registrar
is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs
exists in the company and does not disclose a full and fair statement of the information
required, he may, by another written notice, call on the company to produce for his
inspection such further books of account, books, papers and explanations as he may
require at such place and at such time as he may specify in the notice:

Provided that before any notice is served under this sub-section, the Registrar
shall record his reasons in writing for issuing such notice.

(4) If the Registrar is satisfied on the basis of information available with or furnished to
him or on a representation made to him by any person that the business of a company is
being carried on for a fraudulent or unlawful purpose or not in compliance with the

Page 395
 S. 206 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

provisions of this Act or if the grievances of investors are not being addressed, the
Registrar may, after informing the company of the allegations made against it by a written
order, call on the company to furnish in writing any information or explanation on matters
specified in the order within such time as he may specify therein and carry out such inquiry
as he deems fit after providing the company a reasonable opportunity of being heard:

Provided that the Central Government may, if it is satisfied that the circumstances
so warrant, direct the Registrar or an inspector appointed by it for the purpose to carry
out the inquiry under this sub-section:

Provided further that where business of a company has been or is being carried
on for a fraudulent or unlawful purpose, every officer of the company who is in default
shall be punishable for fraud in the manner as provided in section 447.

(5) Without prejudice to the foregoing provisions of this section, the Central Government
may, if it is satisfied that the circumstances so warrant, direct inspection of books and
papers of a company by an inspector appointed by it for the purpose.
[MCA, in exercise of its power under section 458(1), has delegated power to appoint Inspectors for
inspection of books and papers of a company under section 206(5) to the Regional Director. For notification
see Annexure N …]

(6) The Central Government may, having regard to the circumstances by general or
special order, authorise any statutory authority to carry out the inspection of books of
account of a company or class of companies.

(7) If a company fails to furnish any information or explanation or produce any document
required under this section, the company and every officer of the company, who is in
default shall be punishable with a fine which may extend to one lakh rupees and in the
case of a continuing failure, with an additional fine which may extend to five hundred
rupees for every day after the first during which the failure continues.

Page 396
 S. 207 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

207. Conduct of inspection and inquiry.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.209A of the Companies Act, 1956]
[Refer regulation (77) of Table F.II in Schedule I to the Act]

207. (1) Where a Registrar or inspector calls for the books of account and other books
and papers under section 206, it shall be the duty of every director, officer or other
employee of the company to produce all such documents to the Registrar or inspector
and furnish him with such statements, information or explanations in such form as the
Registrar or inspector may require and shall render all assistance to the Registrar or
inspector in connection with such inspection.

(2) The Registrar or inspector, making an inspection or inquiry under section 206 may,
during the course of such inspection or inquiry, as the case may be,—
(a) make or cause to be made copies of books of account and other books and papers;
or
(b) place or cause to be placed any marks of identification in such books in token of
the inspection having been made.

(3) Notwithstanding anything contained in any other law for the time being in force or in
any contract to the contrary, the Registrar or inspector making an inspection or inquiry
shall have all the powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit in respect of the following matters, namely:—
(a) the discovery and production of books of account and other documents, at such
place and time as may be specified by such Registrar or inspector making the
inspection or inquiry;
(b) summoning and enforcing the attendance of persons and examining them on oath;
and
(c) inspection of any books, registers and other documents of the company at any
place.

(4)
(i) If any director or officer of the company disobeys the direction issued by the Registrar
or the inspector under this section, the director or the officer shall be punishable with
imprisonment which may extend to one year and with fine which shall not be less than
twenty-five thousand rupees but which may extend to one lakh rupees.
(ii) If a director or an officer of the company has been convicted of an offence under this
section, the director or the officer shall, on and from the date on which he is so
convicted, be deemed to have vacated his office as such and on such vacation of
office, shall be disqualified from holding an office in any company.

Page 397
 S. 208 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

208. Report on inspection made.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

208. The Registrar or inspector shall, after the inspection of the books of account or an
inquiry under section 206 and other books and papers of the company under section 207,
submit a report in writing to the Central Government along with such documents, if any,
and such report may, if necessary, include a recommendation that further investigation
into the affairs of the company is necessary giving his reasons in support.

Page 398
 S. 209 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

209. Search and seizure.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.234A of the Companies Act, 1956]

209. (1) Where, upon information in his possession or otherwise, the Registrar or
inspector has reasonable ground to believe that the books and papers of a company, or
relating to the key managerial personnel or any director or auditor or company secretary
in practice if the company has not appointed a company secretary, are likely to be
destroyed, mutilated, altered, falsified or secreted, he may, after obtaining an order from
the Special Court for the seizure of such books and papers,—
(a) enter, with such assistance as may be required, and search, the place or places
where such books or papers are kept; and
(b) seize such books and papers as he considers necessary after allowing the
company to take copies of, or extracts from, such books or papers at its cost.

(2) The Registrar or inspector shall return the books and papers seized under sub- section
(1), as soon as may be, and in any case not later than one hundred and eightieth day
after such seizure, to the company from whose custody or power such books or papers
were seized:

Provided that the books and papers may be called for by the Registrar or inspector
for a further period of one hundred and eighty days by an order in writing if they are
needed again:

Provided further that the Registrar or inspector may, before returning such books
and papers as aforesaid, take copies of, or extracts from them or place identification
marks on them or any part thereof or deal with the same in such other manner as he
considers necessary.

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to
searches or seizures shall apply, mutatis mutandis, to every search and seizure made
under this section.

Page 399
 S. 210 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

210. Investigation into affairs of company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Section 235 of the Companies Act, 1956]

210. (1) Where the Central Government is of the opinion, that it is necessary to investigate
into the affairs of a company,—
(a) on the receipt of a report of the Registrar or inspector under section 208;
(b) on intimation of a special resolution passed by a company that the affairs of the
company ought to be investigated; or
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]
(c) in public interest,
it may order an investigation into the affairs of the company.

(2) Where an order is passed by a court or the Tribunal in any proceedings before it that
the affairs of a company ought to be investigated, the Central Government shall order an
investigation into the affairs of that company.

(3) For the purposes of this section, the Central Government may appoint one or more
persons as inspectors to investigate into the affairs of the company and to report thereon
in such manner as the Central Government may direct.

Page 400
 S. 211 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

211. Establishment of Serious Fraud Investigation Office.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014. SFIO
established vide notification number S.O. 2005(E) dated 21st July 2015]
[No corresponding provision under the Companies Act, 1956][See section 2(83)]
[Refer Rules 3 and 4 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014]

211. (1) The Central Government shall, by notification, establish an office to be called the
Serious Fraud Investigation Office to investigate frauds relating to a company:

Provided that until the Serious Fraud Investigation Office is established under sub-
section (1), the Serious Fraud Investigation Office set-up by the Central Government in
terms of the Government of India Resolution No. 45011/16/2003-Adm-I, dated the 2nd
July, 2003 shall be deemed to be the Serious Fraud Investigation Office for the purpose
of this section.

(2) The Serious Fraud Investigation Office shall be headed by a Director and consist of
such number of experts from the following fields to be appointed by the Central
Government from amongst persons of ability, integrity and experience in,—
(i) banking;
(ii) corporate affairs;
(iii) taxation;
(iv) forensic audit;
(v) capital market;
(vi) information technology;
(vii) law; or
(viii) such other fields as may be prescribed.

(3) The Central Government shall, by notification, appoint a Director in the Serious Fraud
Investigation Office, who shall be an officer not below the rank of a Joint Secretary to the
Government of India having knowledge and experience in dealing with matters relating to
corporate affairs.

(4) The Central Government may appoint such experts and other officers and employees
in the Serious Fraud Investigation Office as it considers necessary for the efficient
discharge of its functions under this Act.

(5) The terms and conditions of service of Director, experts, and other officers and
employees of the Serious Fraud Investigation Office shall be such as may be prescribed.

[Refer SFIO, Assistant Director (Investigation), Group 'B' Post Recruitment Rules, 2016, SFIO Asst. Director
(Law) Group ‘B’ Post Recruitment Rules, 2016, SFIO Asst. Director, Sr. Asst. Director, Dy. Director
(Banking) Recruitment Rules, 2016; SFIO Asst. Director, Sr. Asst. Director, Dy. Director (Corporate Law)
Recruitment Rules, 2016; SFIO Asst. and Office Superintendent Recruitment Rules, 2016; SFIO Dy.
Director (Investigation) Group ‘A’ Post recruitment Rules, 2016; SFIO Prosecutor and Senior Prosecutor,

Page 401
 S. 211 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

Recruitment Rules, 2016; SFIO Senior Assistant Director (Customs & Central Excise) Croup 'B' Post
Recruitment Rules, 2016; SFIO Senior Assistant Director (Taxation), Group 'B' Post Recruitment Rules,
2016; SFIO Additional Director (Forensic Audit) or Joint Director (Forensic Audit) and Additional Director
(Investigation) or Joint Director (Investigation) Group 'A' Post Recruitment Rules, 2016; SFIO Assistant
Director (Forensic Audit), Senior Assistant Director (Forensic Audit) and Deputy Director (Forensic Audit)
Recruitment Rules, 2016.]

Page 402
 S. 212 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014;

the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office)
Rules, 2017

212. Investigation into affairs of Company by Serious Fraud Investigation Office.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014, except
references made in Section 212(6) to - section 66(10), section 140(5), section 213, Section 251(1), section
339(3); and section 212(8) to (10)]
[From 29th May 2015, references made in Section 212(6) to - section 66(10), section 140(5), section 213,
Section 251(1), section 339(3) are omitted]
[Section 212(8) to (10) effective from 24th August 2017 vide notification number S.O. 2751(E) dated 2th
August 2017 – thereby the Director, Additional Director or Assistant Director of SFIO is given th epower of
arrest.]
[The Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules,
2017 w.e.f. 24th August 2017]
[No corresponding provision under the Companies Act, 1956]

212. (1) Without prejudice to the provisions of section 210, where the Central Government
is of the opinion, that it is necessary to investigate into the affairs of a company by the
Serious Fraud Investigation Office—
(a) on receipt of a report of the Registrar or inspector under section 208;
(b) on intimation of a special resolution passed by a company that its affairs are
required to be investigated;
[Every special resolution is required to be filed in Form no. MGT-14 as per section
117 (3) (a)]
(c) in the public interest; or
(d) on request from any Department of the Central Government or a State
Government,
the Central Government may, by order, assign the investigation into the affairs of the said
company to the Serious Fraud Investigation Office and its Director, may designate such
number of inspectors, as he may consider necessary for the purpose of such
investigation.

(2) Where any case has been assigned by the Central Government to the Serious Fraud
Investigation Office for investigation under this Act, no other investigating agency of
Central Government or any State Government shall proceed with investigation in such
case in respect of any offence under this Act and in case any such investigation has
already been initiated, it shall not be proceeded further with and the concerned agency
shall transfer the relevant documents and records in respect of such offences under this
Act to Serious Fraud Investigation Office.
[Hon’ble Supreme Court in SFIO vs. Rahul Modi and Another etc. 2019 SCC OnLine SC 423
vide judgement dt. 27/03/2019 held that transfer of investigation u/s.212(2) is irrevocable and
cannot be recalled in any manner.]

Page 403
 S. 212 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014;

the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office)
Rules, 2017

(3) Where the investigation into the affairs of a company has been assigned by the Central
Government to Serious Fraud Investigation Office, it shall conduct the investigation in the
manner and follow the procedure provided in this Chapter; and submit its report to the
Central Government within such period as may be specified in the order.
[Hon’ble Supreme Court in SFIO vs. Rahul Modi and Another etc. 2019 SCC OnLine SC 423
vide judgement dt. 27/03/2019 held that the prescription of period within which a report has to be
submitted to the Central Government under sub-Section (3) of Section 212 is purely directory.
Even after the expiry of such stipulated period, the mandate in favour of the SFIO and the
assignment of investigation under sub-Section (1) would not come to an end. The only logical end
as contemplated is after completion of investigation when a final report or “investigation report” is
submitted in terms of sub-Section (12) of Section 212.]

(4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company
to be investigated by an Investigating Officer who shall have the power of the inspector
under section 217.

(5) The company and its officers and employees, who are or have been in employment
of the company shall be responsible to provide all information, explanation, documents
and assistance to the Investigating Officer as he may require for conduct of the
investigation.

(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of

1974), 346 [offence covered under section 447] of this Act shall be cognizable and no
person accused of any offence under those sections shall be released on bail or on his
own bond unless—
(i) the Public Prosecutor has been given an opportunity to oppose the application for
such release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that
there are reasonable grounds for believing that he is not guilty of such offence and
that he is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen years or is a woman or is
sick or infirm, may be released on bail, if the Special Court so directs:

346
for the words, brackets and figures "the offences covered under sub-sections (5) and (6) of section 7,
section 34, section 36, sub-section (1) of section 38, sub-section (5) of section 46, sub-section (7) of section
56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section
213, section 229, sub-section (1) of section 251, sub-section (3) of section 339 and section 448 which
attract the punishment for fraud provided in section 447", the words and figures "offence covered under
section 447" substituted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May,
2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

Page 404
 S. 212 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014;

the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office)
Rules, 2017

Provided further that the Special Court shall not take cognizance of any offence
referred to this sub-section except upon a complaint in writing made by—
(i) the Director, Serious Fraud Investigation Office; or
(ii) any officer of the Central Government authorised, by a general or special order in
writing in this behalf by that Government.

(7) The limitation on granting of bail specified in sub-section (6) is in addition to the
limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law
for the time being in force on granting of bail.
347
(8) 348 [If any officer not below the rank of Assistant Director] of Serious Fraud
Investigation Office authorised in this behalf by the Central Government by general or
special order, has on the basis of material in his possession reason to believe (the reason
for such belief to be recorded in writing) that any person has been guilty of any offence
punishable under sections referred to in sub-section (6), he may arrest such person and
shall, as soon as may be, inform him of the grounds for such arrest.
349
(9) 350[The officer authorised under sub-section (8) shall, immediately after arrest of
such person under such sub-section], forward a copy of the order, along with the material
in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office
in a sealed envelope, in such manner as may be prescribed and the Serious Fraud
Investigation Office shall keep such order and material for such period as may be
prescribed.

347
Section 212(8) to (10) effective from 24th August 2017 vide notification number S.O. 2751(E) dated 2th
August 2017.

348
Substituted for “If the Director, Additional Director or Assistant Director” in sub-section (8) by section
31(a) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide
notification number S.O. 2947(E) dated 14th August 2019.

349
Section 212(8) to (10) effective from 24th August 2017 vide notification number S.O. 2751(E) dated 2th
August 2017.

350
Substituted for “The Director, Additional Director or Assistant Director of Serious Fraud Investigation
Office shall, immediately after arrest of such person under sub-section (8)” in sub-section (9) by section
31(b) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide
notification number S.O. 2947(E) dated 14th August 2019.

Page 405
 S. 212 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014;

the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office)
Rules, 2017

351
(10) Every person arrested under sub-section (8) shall within twenty-four hours, be
taken to a 352[Special Court or Judicial Magistrate] or a Metropolitan Magistrate, as the
case may be, having jurisdiction:

Provided that the period of twenty-four hours shall exclude the time necessary for
the journey from the place of arrest to the 353[Special Court or Magistrate's court].

(11) The Central Government if so directs, the Serious Fraud Investigation Office shall
submit an interim report to the Central Government.

(12) On completion of the investigation, the Serious Fraud Investigation Office shall
submit the investigation report to the Central Government.

(13) Notwithstanding anything contained in this Act or in any other law for the time being
in force, a copy of the investigation report may be obtained by any person concerned by
making an application in this regard to the court.

(14) On receipt of the investigation report, the Central Government may, after examination
of the report (and after taking such legal advice, as it may think fit), direct the Serious
Fraud Investigation Office to initiate prosecution against the company and its officers or
employees, who are or have been in employment of the company or any other person
directly or indirectly connected with the affairs of the company.
354
[(14A) Where the report under sub-section (11) or sub-section (12) states that fraud
has taken place in a company and due to such fraud any director, key managerial
personnel, other officer of the company or any other person or entity, has taken undue
advantage or benefit, whether in the form of any asset, property or cash or in any other
manner, the Central Government may file an application before the Tribunal for

351
Section 212(8) to (10) effective from 24th August 2017 vide notification number S.O. 2751(E) dated 2th
August 2017.

Substituted for the words ‘Judicial Magistrate’ by section 31(c)(i) of the Companies (Amendment) Act,
352

2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August
2019.

353
Substituted for “Magistrate’s Court” in the proviso to sub-section (10) by section 31(c)(ii) of the
Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th August 2019 vide notification number
S.O. 2947(E) dated 14th August 2019.

354
Inserted sub-section (14A) by section 31(d) of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 406
 S. 212 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014;

the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office)
Rules, 2017

appropriate orders with regard to disgorgement of such asset, property or cash and also
for holding such director, key managerial personnel, other officer or any other person
liable personally without any limitation of liability.]

(15) Notwithstanding anything contained in this Act or in any other law for the time being
in force, the investigation report filed with the Special Court for framing of charges shall
be deemed to be a report filed by a police officer under section 173 of the Code of Criminal
Procedure, 1973 (2 of 1974).

(16) Notwithstanding anything contained in this Act, any investigation or other action
taken or initiated by Serious Fraud Investigation Office under the provisions of the
Companies Act, 1956 (1 of 1956) shall continue to be proceeded with under that Act as if
this Act had not been passed.

(17)
(a) In case Serious Fraud Investigation Office has been investigating any offence under
this Act, any other investigating agency, State Government, police authority, income-
tax authorities having any information or documents in respect of such offence shall
provide all such information or documents available with it to the Serious Fraud
Investigation Office;
(b) The Serious Fraud Investigation Office shall share any information or documents
available with it, with any investigating agency, State Government, police authority or
income- tax authorities, which may be relevant or useful for such investigating agency,
State Government, police authority or income-tax authorities in respect of any offence
or matter being investigated or examined by it under any other law.

Page 407
 S. 213 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

213. Investigation into company’s affairs in other cases.

[Section 213 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.237 of the Companies Act, 1956]

213. The Tribunal may,—

(a) on an application made by—
(i) not less than one hundred members or members holding not less than one-tenth of
the total voting power, in the case of a company having a share capital; or
(ii) not less than one-fifth of the persons on the company’s register of members, in the
case of a company having no share capital,
and supported by such evidence as may be necessary for the purpose of showing that
the applicants have good reasons for seeking an order for conducting an investigation
into the affairs of the company; or
(b) on an application made to it by any other person or otherwise, if it is satisfied that there
are circumstances suggesting that—
(i) the business of the company is being conducted with intent to defraud its creditors,
members or any other person or otherwise for a fraudulent or unlawful purpose, or
in a manner oppressive to any of its members or that the company was formed for
any fraudulent or unlawful purpose;
(ii) persons concerned in the formation of the company or the management of its affairs
have in connection therewith been guilty of fraud, misfeasance or other misconduct
towards the company or towards any of its members; or
(iii) the members of the company have not been given all the information with respect
to its affairs which they might reasonably expect, including information relating to
the calculation of the commission payable to a managing or other director, or the
manager, of the company,
order, after giving a reasonable opportunity of being heard to the parties concerned,
that the affairs of the company ought to be investigated by an inspector or inspectors
appointed by the Central Government and where such an order is passed, the Central
Government shall appoint one or more competent persons as inspectors to investigate
into the affairs of the company in respect of such matters and to report thereupon to it
in such manner as the Central Government may direct:

Provided that if after investigation it is proved that—

(i) the business of the company is being conducted with intent to defraud its creditors,
members or any other persons or otherwise for a fraudulent or unlawful purpose,
or that the company was formed for any fraudulent or unlawful purpose; or
(ii) any person concerned in the formation of the company or the management of its
affairs have in connection therewith been guilty of fraud,
then, every officer of the company who is in default and the person or persons
concerned in the formation of the company or the management of its affairs shall be
punishable for fraud in the manner as provided in section 447.

Page 408
 S. 214 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

214. Security for payment of costs and expenses of investigation.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.236 of the Companies Act, 1956]
[Refer Rule 5 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014]

214. Where an investigation is ordered by the Central Government in pursuance of clause

(b) of sub-section (1) of section 210, or in pursuance of an order made by the Tribunal
under section 213, the Central Government may before appointing an inspector under
sub- section (3) of section 210 or clause (b) of section 213, require the applicant to give
such security not exceeding twenty-five thousand rupees as may be prescribed, as it may
think fit, for payment of the costs and expenses of the investigation and such security
shall be refunded to the applicant if the investigation results in prosecution.

Page 409
 S. 215 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

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

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.238 of the Companies Act, 1956]

215. No firm, body corporate or other association shall be appointed as an inspector.

Page 410
 S. 216 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

216. Investigation of ownership of company.

[Except section 216(2), brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th
March, 2014.]
[Section 216(2) brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec. 247 [except sub-section 1A] of the Companies Act, 1956]

216. (1) Where it appears to the Central Government that there is a reason so to do, it
may appoint one or more inspectors to investigate and report on matters relating to the
company, and its membership for the purpose of determining the true persons—
(a) who are or have been financially interested in the success or failure, whether real
or apparent, of the company; or
(b) who are or have been able to control or to materially influence the policy of the
355
[company, or;]
356
[(c) who have or had beneficial interest in shares of a company or who are or have
been beneficial owners or significant beneficial owner of a company.]

[Sec.216(2) w.e.f. 01 June 2016]

(2) Without prejudice to its powers under sub-section (1), the Central Government shall
appoint one or more inspectors under that sub-section, if the Tribunal, in the course of
any proceeding before it, directs by an order that the affairs of the company ought to be
investigated as regards the membership of the company and other matters relating to the
company, for the purposes specified in sub-section (1).

(3) While appointing an inspector under sub-section (1), the Central Government may
define the scope of the investigation, whether as respects the matters or the period to
which it is to extend or otherwise, and in particular, may limit the investigation to matters
connected with particular shares or debentures.

(4) Subject to the terms of appointment of an inspector, his powers shall extend to the
investigation of any circumstances suggesting the existence of any arrangement or
understanding which, though not legally binding, is or was observed or is likely to be
observed in practice and which is relevant for the purposes of his investigation.

355
Substituted for the word ‘company’ in clause (b) to sub-sections (1) of Section 216 of the principal Act
by section 71(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 13th June 2018 vide notification no. S.O.
2422(E) of the same date.

356
Inserted clause (c) in sub-sections (1) of Section 216 of the principal Act by section 71(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 13th June 2018 vide notification no. S.O. 2422(E) of the same date.

Page 411
 S. 217 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

217. Procedure, powers, etc., of inspectors.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.240 of the Companies Act, 1956]
[Refer Rule 6 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014]

217. (1) It shall be the duty of all officers and other employees and agents including the
former officers, employees and agents of a company which is under investigation in
accordance with the provisions contained in this Chapter, and where the affairs of any
other body corporate or a person are investigated under section 219, of all officers and
other employees and agents including former officers, employees and agents of such
body corporate or a person—
(a) to preserve and to produce to an inspector or any person authorised by him in this
behalf all books and papers of, or relating to, the company or, as the case may be,
relating to the other body corporate or the person, which are in their custody or
power; and
(b) otherwise to give to the inspector all assistance in connection with the investigation
which they are reasonably able to give.

(2) The inspector may require any body corporate, other than a body corporate referred
to in sub-section (1), to furnish such information to, or produce such books and papers
before him or any person authorised by him in this behalf as he may consider necessary,
if the furnishing of such information or the production of such books and papers is relevant
or necessary for the purposes of his investigation.

(3) The inspector shall not keep in his custody any books and papers produced under
sub-section (1) or sub-section (2) for more than one hundred and eighty days and return
the same to the company, body corporate, firm or individual by whom or on whose behalf
the books and papers were produced:

Provided that the books and papers may be called for by the inspector if they are
needed again for a further period of one hundred and eighty days by an order in writing.

(4) An inspector may examine on oath—

(a) any of the persons referred to in sub-section (1); and
(b) with the prior approval of the Central Government, any other person,
in relation to the affairs of the company, or other body corporate or person, as the case
may be, and for that purpose may require any of those persons to appear before him
personally:

Provided that in case of an investigation under section 212, the prior approval of
Director, Serious Fraud Investigation Office shall be sufficient under clause (b).

Page 412
 S. 217 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

(5) Notwithstanding anything contained in any other law for the time being in force or in
any contract to the contrary, the inspector, being an officer of the Central Government,
making an investigation under this Chapter shall have all the powers as are vested in a
civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in
respect of the following matters, namely:—
(a) the discovery and production of books of account and other documents, at such
place and time as may be specified by such person;
(b) summoning and enforcing the attendance of persons and examining them on oath;
and
(c) inspection of any books, registers and other documents of the company at any
place.

(6)
(i) If any director or officer of the company disobeys the direction issued by the
Registrar or the inspector under this section, the director or the officer shall be
punishable with imprisonment which may extend to one year and with fine which
shall not be less than twenty-five thousand rupees but which may extend to one
lakh rupees.
(ii) If a director or an officer of the company has been convicted of an offence under
this section, the director or the officer shall, on and from the date on which he is so
convicted, be deemed to have vacated his office as such and on such vacation of
office, shall be disqualified from holding an office in any company.

(7) The notes of any examination under sub-section (4) shall be taken down in writing and
shall be read over to, or by, and signed by, the person examined, and may thereafter be
used in evidence against him.

(8) If any person fails without reasonable cause or refuses—

(a) to produce to an inspector or any person authorised by him in this behalf any book
or paper which is his duty under sub-section (1) or sub-section (2) to produce;
(b) to furnish any information which is his duty under sub-section (2) to furnish;
(c) to appear before the inspector personally when required to do so under sub- section
(4) or to answer any question which is put to him by the inspector in pursuance of
that sub-section; or
(d) to sign the notes of any examination referred to in sub-section (7),
he shall be punishable with imprisonment for a term which may extend to six months and
with fine which shall not be less than twenty-five thousand rupees but which may extend
to one lakh rupees, and also with a further fine which may extend to two thousand rupees
for every day after the first during which the failure or refusal continues.

(9) The officers of the Central Government, State Government, police or statutory
authority shall provide assistance to the inspector for the purpose of inspection, inquiry
or investigation, which the inspector may, with the prior approval of the Central
Government, require.

Page 413
 S. 217 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

(10) The Central Government may enter into an agreement with the Government of a
foreign State for reciprocal arrangements to assist in any inspection, inquiry or
investigation under this Act or under the corresponding law in force in that State and may,
by notification, render the application of this Chapter in relation to a foreign State with
which reciprocal arrangements have been made subject to such modifications,
exceptions, conditions and qualifications as may be deemed expedient for implementing
the agreement with that State.

(11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure,
1973 (2 of 1974) if, in the course of an investigation into the affairs of the company, an
application is made to the competent court in India by the inspector stating that evidence
is, or may be, available in a country or place outside India, such court may issue a letter
of request to a court or an authority in such country or place, competent to deal with such
request, to examine orally, or otherwise, any person, supposed to be acquainted with the
facts and circumstances of the case, to record his statement made in the course of such
examination and also to require such person or any other person to produce any
document or thing, which may be in his possession pertaining to the case, and to forward
all the evidence so taken or collected or the authenticated copies thereof or the things so
collected to the court in India which had issued such letter of request:

Provided that the letter of request shall be transmitted in such manner as the
Central Government may specify in this behalf:

Provided further that every statement recorded or document or thing received

under this sub-section shall be deemed to be the evidence collected during the course of
investigation.

(12) Upon receipt of a letter of request from a court or an authority in a country or place
outside India, competent to issue such letter in that country or place for the examination
of any person or production of any document or thing in relation to affairs of a company
under investigation in that country or place, the Central Government may, if it thinks fit,
forward such letter of request to the court concerned, which shall thereupon summon the
person before it and record his statement or cause any document or thing to be produced,
or send the letter to any inspector for investigation, who shall thereupon investigate into
the affairs of company in the same manner as the affairs of a company are investigated
under this Act and the inspector shall submit the report to such court within thirty days or
such extended time as the court may allow for further action:

Provided that the evidence taken or collected under this sub-section or

authenticated copies thereof or the things so collected shall be forwarded by the court, to
the Central Government for transmission, in such manner as the Central Government
may deem fit, to the court or the authority in country or place outside India which had
issued the letter of request.

Page 414
 S. 218 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

218. Protection of employees during investigation.

[Section 218 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.635B of the Companies Act, 1956]

218. (1) Notwithstanding anything contained in any other law for the time being in force,
if—
(a) during the course of any investigation of the affairs and other matters of or relating
to a company, other body corporate or person under section 210, section 212,
section 213 or section 219 or of the membership and other matters of or relating to
a company, or the ownership of shares in or debentures of a company or body
corporate, or the affairs and other matters of or relating to a company, other body
corporate or person, under section 216; or
(b) during the pendency of any proceeding against any person concerned in the
conduct and management of the affairs of a company under Chapter XVI,
such company, other body corporate or person proposes—
(i) to discharge or suspend any employee; or
(ii) to punish him, whether by dismissal, removal, reduction in rank or otherwise; or
(iii) to change the terms of employment to his disadvantage,
the company, other body corporate or person, as the case may be, shall obtain approval
of the Tribunal of the action proposed against the employee and if the Tribunal has any
objection to the action proposed, it shall send by post notice thereof in writing to the
company, other body corporate or person concerned.

(2) If the company, other body corporate or person concerned does not receive within
thirty days of making of application under sub-section (1), the approval of the Tribunal,
then and only then, the company, other body corporate or person concerned may proceed
to take against the employee, the action proposed.

(3) If the company, other body corporate or person concerned is dissatisfied with the
objection raised by the Tribunal, it may, within a period of thirty days of the receipt of the
notice of the objection, prefer an appeal to the Appellate Tribunal in such manner and on
payment of such fees as may be prescribed.

(4) The decision of the Appellate Tribunal on such appeal shall be final and binding on
the Tribunal and on the company, other body corporate or person concerned.

(5) For the removal of doubts, it is hereby declared that the provisions of this section shall
have effect without prejudice to the provisions of any other law for the time being in force.

Page 415
 S. 219 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

219. Power of inspector to conduct investigation into affairs of related companies,

etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.239 of the Companies Act, 1956]

219. If an inspector appointed under section 210 or section 212 or section 213 to
investigate into the affairs of a company considers it necessary for the purposes of the
investigation, to investigate also the affairs of—
(a) any other body corporate which is, or has at any relevant time been the company’s
subsidiary company or holding company, or a subsidiary company of its holding
company;
(b) any other body corporate which is, or has at any relevant time been managed by any
person as managing director or as manager, who is, or was, at the relevant time, the
managing director or the manager of the company;
(c) any other body corporate whose Board of Directors comprises nominees of the
company or is accustomed to act in accordance with the directions or instructions of
the company or any of its directors; or
(d) any person who is or has at any relevant time been the company’s managing director
or manager or employee,
he shall, subject to the prior approval of the Central Government, investigate into and
report on the affairs of the other body corporate or of the managing director or manager,
in so far as he considers that the results of his investigation are relevant to the
investigation of the affairs of the company for which he is appointed.

Page 416
 S. 220 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

220. Seizure of documents by inspector.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.240A of the Companies Act, 1956]

220. (1) Where in the course of an investigation under this Chapter, the inspector has
reasonable grounds to believe that the books and papers of, or relating to, any company
or other body corporate or managing director or manager of such company are likely to
be destroyed, mutilated, altered, falsified or secreted, the inspector may—
(a) enter, with such assistance as may be required, the place or places where such books
and papers are kept in such manner as may be required; and
(b) seize books and papers as he considers necessary after allowing the company to take
copies of, or extracts from, such books and papers at its cost for the purposes of his
investigation.

(2) The inspector shall keep in his custody the books and papers seized under this section
for such a period not later than the conclusion of the investigation as he considers
necessary and thereafter shall return the same to the company or the other body
corporate, or, as the case may be, to the managing director or the manager or any other
person from whose custody or power they were seized:

Provided that the inspector may, before returning such books and papers as
aforesaid, take copies of, or extracts from them or place identification marks on them or
any part thereof or deal with the same in such manner as he considers necessary.

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to
searches or seizures shall apply mutatis mutandis to every search or seizure made under
this section.

Page 417
 S. 221 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

221. Freezing of assets of company on inquiry and investigation.

[Section 221 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[No corresponding provision under the Companies Act, 1956]

221. (1) Where it appears to the Tribunal, on a reference made to it by the Central
Government or in connection with any inquiry or investigation into the affairs of a company
under this Chapter or on any complaint made by such number of members as specified
under sub-section (1) of section 244 or a creditor having one lakh amount outstanding
against the company or any other person having a reasonable ground to believe that the
removal, transfer or disposal of funds, assets, properties of the company is likely to take
place in a manner that is prejudicial to the interests of the company or its shareholders or
creditors or in public interest, it may by order direct that such transfer, removal or disposal
shall not take place during such period not exceeding three years as may be specified in
the order or may take place subject to such conditions and restrictions as the Tribunal
may deem fit.

(2) In case of any removal, transfer or disposal of funds, assets, or properties of the
company in contravention of the order of the Tribunal under sub-section (1), the company
shall be punishable with fine which shall not be less than one lakh rupees but which may
extend to twenty-five lakh rupees and every officer of the company who is in default shall
be punishable with imprisonment for a term which may extend to three years or with fine
which shall not be less than fifty thousand rupees but which may extend to five lakh
rupees, or with both.

Page 418
 S. 222 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

222. Imposition of restrictions upon securities.

[Section 222 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.250 of the Companies Act, 1956]

222. (1) Where it appears to the Tribunal, in connection with any investigation under
section 216 or on a complaint made by any person in this behalf, that there is good reason
to find out the relevant facts about any securities issued or to be issued by a company
and the Tribunal is of the opinion that such facts cannot be found out unless certain
restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the
securities shall be subject to such restrictions as it may deem fit for such period not
exceeding three years as may be specified in the order.

(2) Where securities in any company are issued or transferred or acted upon in
contravention of an order of the Tribunal under sub-section (1), the company shall be
punishable with fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to six months or with fine
which shall not be less than twenty-five thousand rupees but which may extend to five
lakh rupees, or with both.

Page 419
 S. 223 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

223. Inspector’s report.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.241, 246 of the Companies Act, 1956]

223. (1) An inspector appointed under this Chapter may, and if so directed by the Central
Government shall, submit interim reports to that Government, and on the conclusion of
the investigation, shall submit a final report to the Central Government.

(2) Every report made under sub-section (1) shall be in writing or printed as the Central
Government may direct.

(3) A copy of the report made under sub-section (1) may be obtained 357[by members,
creditors or any other person whose interest is likely to be affected] by making an
application in this regard to the Central Government.

(4) The report of any inspector appointed under this Chapter shall be authenticated
either—
(a) [by the seal, if any]358 of the company whose affairs have been investigated; or
(b) by a certificate of a public officer having the custody of the report, as provided
under section 76 of the Indian Evidence Act, 1872 (1 of 1872),
and such report shall be admissible in any legal proceeding as evidence in relation to
any matter contained in the report.

(5) Nothing in this section shall apply to the report referred to in section 212.

357
Words inserted in sub-section (3) of section 223 of the principal Act by Section 72 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

Words ‘by the seal’ substituted with the words ‘by the seal, if any’ by the Companies (Amendment) Act,
358

2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).

Page 420
 S. 224 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

224. Actions to be taken in pursuance of inspector’s report.

[Except section 224(2) and Section 224(5), brought to force from 01 April 2014 vide notification number
S.O. 902(E) dated 26th March, 2014.]
[Section 224(5) brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 224(2) brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated
07th December, 2016.]
[Corresponding Sec.242, 244 of the Companies Act, 1956]

224. (1) If, from an inspector’s report, made under section 223, it appears to the Central
Government that any person has, in relation to the company or in relation to any other
body corporate or other person whose affairs have been investigated under this Chapter
been guilty of any offence for which he is criminally liable, the Central Government may
prosecute such person for the offence and it shall be the duty of all officers and other
employees of the company or body corporate to give the Central Government the
necessary assistance in connection with the prosecution.
359
(2) If any company or other body corporate is liable to be wound up under this Act 360[or
under the Insolvency and Bankruptcy Code, 2016] and it appears to the Central
Government from any such report made under section 223 that it is expedient so to do
by reason of any such circumstances as are referred to in section 213, the Central
Government may, unless the company or body corporate is already being wound up by
the Tribunal, cause to be presented to the Tribunal by any person authorised by the
Central Government in this behalf—
(a) a petition for the winding up of the company or body corporate on the ground that
it is just and equitable that it should be wound up;
(b) an application under section 241; or
(c) both.

(3) If from any such report as aforesaid, it appears to the Central Government that
proceedings ought, in the public interest, to be brought by the company or any body
corporate whose affairs have been investigated under this Chapter—
(a) for the recovery of damages in respect of any fraud, misfeasance or other
misconduct in connection with the promotion or formation, or the management of
the affairs, of such company or body corporate; or

359
Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.

360
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (6) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 421
 S. 224 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

(b) for the recovery of any property of such company or body corporate which has
been misapplied or wrongfully retained,
the Central Government may itself bring proceedings for winding up in the name of such
company or body corporate.

(4) The Central Government, shall be indemnified by such company or body corporate
against any costs or expenses incurred by it in, or in connection with, any proceedings
brought by virtue of sub-section (3).

[Sec.224(5) w.e.f. 01 June 2016]

(5) Where the report made by an inspector states that fraud has taken place in a company
and due to such fraud any director, key managerial personnel, other officer of the
company or any other person or entity, has taken undue advantage or benefit, whether in
the form of any asset, property or cash or in any other manner, the Central Government
may file an application before the Tribunal for appropriate orders with regard to
disgorgement of such asset, property, or cash, as the case may be, and also for holding
such director, key managerial personnel, officer or other person liable personally without
any limitation of liability.

Page 422
 S. 225 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

225. Expenses of investigation.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.245 of the Companies Act, 1956]

225. (1) The expenses of, and incidental to, an investigation by an inspector appointed
by the Central Government under this Chapter other than expenses of inspection under
section 214 shall be defrayed in the first instance by the Central Government, but shall
be reimbursed by the following persons to the extent mentioned below, namely:—
(a) any person who is convicted on a prosecution instituted, or who is ordered to pay
damages or restore any property in proceedings brought, under section 224, to the
extent that he may in the same proceedings be ordered to pay the said expenses
as may be specified by the court convicting such person, or ordering him to pay
such damages or restore such property, as the case may be;
(b) any company or body corporate in whose name proceedings are brought as
aforesaid, to the extent of the amount or value of any sums or property recovered
by it as a result of such proceedings;
(c) unless, as a result of the investigation, a prosecution is instituted under section
224,—
(i) any company, body corporate, managing director or manager dealt with by the
report of the inspector; and
(ii) the applicants for the investigation, where the inspector was appointed under
section 213,
to such extent as the Central Government may direct.

(2) Any amount for which a company or body corporate is liable under clause (b) of sub-
section (1) shall be a first charge on the sums or property mentioned in that clause.

Page 423
 S. 226 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

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

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.250A of the Companies Act, 1956]

226. An investigation under this Chapter may be initiated notwithstanding, and no such
investigation shall be stopped or suspended by reason only of, the fact that—
(a) an application has been made under section 241;
(b) the company has passed a special resolution for voluntary winding up; or
(c) any other proceeding for the winding up of the company is pending before the Tribunal:

Provided that where a winding up order is passed by the Tribunal in a proceeding

referred to in clause (c), the inspector shall inform the Tribunal about the pendency of the
investigation proceedings before him and the Tribunal shall pass such order as it may
deem fit:

Provided further that nothing in the winding up order shall absolve any director or
other employee of the company from participating in the proceedings before the inspector
or any liability as a result of the finding by the inspector.

Page 424
 S. 227 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

227. Legal advisers and bankers not to disclose certain information.

[Brought to force from 09 September, 2016 vide notification number S.O.2912(E) dated 09th September,
2016]
[Corresponding Sec.251 of the Companies Act, 1956]

227. Nothing in this Chapter shall require the disclosure to the Tribunal or to the Central
Government or to the Registrar or to an inspector appointed by the Central Government—
(a) by a legal adviser, of any privileged communication made to him in that capacity,
except as respects the name and address of his client; or
(b) by the bankers of any company, body corporate, or other person, of any information
as to the affairs of any of their customers, other than such company, body corporate,
or person.

Page 425
 S. 228 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

228. Investigation, etc., of foreign companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Section 234 (8) of the Companies Act, 1956]

228. The provisions of this Chapter shall apply mutatis mutandis to inspection, inquiry or
investigation in relation to foreign companies.

Page 426
 S. 229 - Chapter XIV [Ss.206 to 229]

Relevant rules: The Companies (Inspection, Investigation and Inquiry) Rules, 2014

229. Penalty for furnishing false statement, mutilation, destruction of documents.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

229. Where a person who is required to provide an explanation or make a statement

during the course of inspection, inquiry or investigation, or an officer or other employee
of a company or other body corporate which is also under investigation,—
(a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or
is a party to the destruction, mutilation or falsification or concealment or tampering or
unauthorised removal of, documents relating to the property, assets or affairs of the
company or the body corporate;
(b) makes, or is a party to the making of, a false entry in any document concerning the
company or body corporate; or
(c) provides an explanation which is false or which he knows to be false, he shall be
punishable for fraud in the manner as provided in section 447.

Page 427
 S. 230 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

CHAPTER XV COMPROMISES,
ARRANGEMENTS AND
AMALGAMATIONS
230. Power to compromise or make arrangements with creditors and members.

[Except sub-sections (11) and (12), brought to force from 15th December 2016 vide notification number S.O.
3677(E) dated 07th December, 2016.]
[Corresponding Sections 390, 391, 393, 394A of the Companies Act, 1956 read with Rules 11, 67 to 87 of
the Companies (Court) Rules, 1959.]
[For Government company, in place of word ‘Tribunal’ wherever occurs in Section 230 to 232, the words
‘Central Government’ shall be substituted by notification number G.S.R. 582(E) dated 13th June 2017.]
[Relevant Rules: the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016]

230. (1) Where a compromise or arrangement is proposed—

(a) between a company and its creditors or any class of them; or
(b) between a company and its members or any class of them,
the Tribunal may, on the application of the company or of any creditor or member of
the company, or in the case of a company which is being wound up, of the liquidator
361
[appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case
may be], order a meeting of the creditors or class of creditors, or of the members or
class of members, as the case may be, to be called, held and conducted in such
manner as the Tribunal directs.

Explanation.—For the purposes of this sub-section, arrangement includes a

reorganisation of the company’s share capital by the consolidation of shares of
different classes or by the division of shares into shares of different classes, or by
both of those methods.
[Resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (d)]
[Rule 3: Application in Form No. NCLT-1 prescribed under NCLT Rules, 2016 along with notice of admission
in Form No. NCLT-2, affidavit in Form No. NCLT-6 and copy of the Scheme. Application shall also disclose
the basis on which each class of members or creditors identified for approval of the scheme].
[Rule 5: NCLT to give certain directions.]

(2) The company or any other person, by whom an application is made under sub- section
(1), shall disclose to the Tribunal by affidavit—

361
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (6A) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 428
 S. 230 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

(a) all material facts relating to the company, such as the latest financial position of the
company, the latest auditor’s report on the accounts of the company and the
pendency of any investigation or proceedings against the company;
(b) reduction of share capital of the company, if any, included in the compromise or
arrangement;
(c) any scheme of corporate debt restructuring consented to by not less than seventy-
five per cent. of the secured creditors in value, including—
(i) a creditor’s responsibility statement in the prescribed form; [Rule 4 Form No. CAA.
1]
(ii) safeguards for the protection of other secured and unsecured creditors;
(iii) report by the auditor that the fund requirements of the company after the
corporate debt restructuring as approved shall conform to the liquidity test based
upon the estimates provided to them by the Board;
(iv) where the company proposes to adopt the corporate debt restructuring
guidelines specified by the Reserve Bank of India, a statement to that effect;
and
(v) a valuation report in respect of the shares and the property and all assets,
tangible and intangible, movable and immovable, of the company by a
registered valuer.

(3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal

under sub-section (1), a notice of such meeting shall be sent to all the creditors or class
of creditors and to all the members or class of members and the debenture-holders of the
company, individually at the address registered with the company which shall be
accompanied by a statement disclosing the details of the compromise or arrangement, a
copy of the valuation report, if any, and explaining their effect on creditors, key managerial
personnel, promoters and non-promoter members, and the debenture-holders and the
effect of the compromise or arrangement on any material interests of the directors of the
company or the debenture trustees, and such other matters as may be prescribed:
[Rule 6: Notice to be sent individually in Form No. CAA.2]

Provided that such notice and other documents shall also be placed on the
website of the company, if any, and in case of a listed company, these documents shall
be sent to the Securities and Exchange Board and stock exchange where the securities
of the companies are listed, for placing on their website and shall also be published in
newspapers in such manner as may be prescribed: [Rule 7: Advertisement in Form No. CAA.2]

Provided further that where the notice for the meeting is also issued by way of an
advertisement, it shall indicate the time within which copies of the compromise or
arrangement shall be made available to the concerned persons free of charge from the
registered office of the company.

(4) A notice under sub-section (3) shall provide that the persons to whom the notice is
sent may vote in the meeting either themselves or through proxies or by postal ballot to
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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

the adoption of the compromise or arrangement within one month from the date of receipt
of such notice:

Provided that any objection to the compromise or arrangement shall be made only
by persons holding not less than ten per cent. of the shareholding or having outstanding
debt amounting to not less than five per cent. of the total outstanding debt as per the
latest audited financial statement.

(5) A notice under sub-section (3) along with all the documents in such form as may be
prescribed shall also be sent to the Central Government, the income-tax authorities, the
Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective
stock exchanges, the Official Liquidator, the Competition Commission of India established
under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003), if necessary,
and such other sectoral regulators or authorities which are likely to be affected by the
compromise or arrangement and shall require that representations, if any, to be made by
them shall be made within a period of thirty days from the date of receipt of such notice,
failing which, it shall be presumed that they have no representations to make on the
proposals.
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016] [Rule 5: NCLT to give, inter alia, directions for notice to be given to sectoral regulators. Rule 8: Notice
in Form No.CAA.3. Rule 15: Petition in Form No. CAA.5 and may be with prayer stated in Rule 15(2) ]

(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons

representing three-fourths in value of the creditors, or class of creditors or members or
class of members, as the case may be, voting in person or by proxy or by postal ballot,
agree to any compromise or arrangement and if such compromise or arrangement is
sanctioned by the Tribunal by an order, the same shall be binding on the company, all the
creditors, or class of creditors or members or class of members, as the case may be, or,
in case of a company being wound up, on the liquidator 362[appointed under this Act or
under the Insolvency and Bankruptcy Code, 2016, as the case may be] and the
contributories of the company.

(7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the
following matters, namely:—
(a) where the compromise or arrangement provides for conversion of preference
shares into equity shares, such preference shareholders shall be given an option
to either obtain arrears of dividend in cash or accept equity shares equal to the
value of the dividend payable;

362
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (6A) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

(b) the protection of any class of creditors;

(c) if the compromise or arrangement results in the variation of the shareholders’ rights,
it shall be given effect to under the provisions of section 48;
(d) if the compromise or arrangement is agreed to by the creditors under sub-section
(6), any proceedings pending before the Board for Industrial and Financial
Reconstruction established under section 4 of the Sick Industrial Companies
(Special Provisions) Act, 1985 (1 of 1986) shall abate;
(e) such other matters including exit offer to dissenting shareholders, if any, as are in
the opinion of the Tribunal necessary to effectively implement the terms of the
compromise or arrangement:

Provided that no compromise or arrangement shall be sanctioned by the Tribunal

unless a certificate by the company's auditor has been filed with the Tribunal to the effect
that the accounting treatment, if any, proposed in the scheme of compromise or
arrangement is in conformity with the accounting standards prescribed under section 133.

(8) The order of the Tribunal shall be filed with the Registrar by the company within a
period of thirty days of the receipt of the order.

(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors
where such creditors or class of creditors, having at least ninety per cent. value, agree
and confirm, by way of affidavit, to the scheme of compromise or arrangement.

(10) No compromise or arrangement in respect of any buy-back of securities under this

section shall be sanctioned by the Tribunal unless such buy-back is in accordance with
the provisions of section 68.

(11) Any compromise or arrangement may include takeover offer made in such manner
as may be prescribed:

Provided that in case of listed companies, takeover offer shall be as per the
regulations framed by the Securities and Exchange Board.

(12) An aggrieved party may make an application to the Tribunal in the event of any
grievances with respect to the takeover offer of companies other than listed companies
in such manner as may be prescribed and the Tribunal may, on application, pass such
order as it may deem fit.

Explanation.—For the removal of doubts, it is hereby declared that the provisions of

section 66 shall not apply to the reduction of share capital effected in pursuance of the
order of the Tribunal under this section.

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

231. Power of Tribunal to enforce compromise or arrangement.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 392 of the Companies Act, 1956]
[For Government company, in place of word ‘Tribunal’ wherever occurs in Section 230 to 232, the words
‘Central Government’ shall be substituted by notification number G.S.R. 582(E) dated 13th June 2017.]

231. (1) Where the Tribunal makes an order under section 230 sanctioning a compromise
or an arrangement in respect of a company, it—
(a) shall have power to supervise the implementation of the compromise or
arrangement; and
(b) may, at the time of making such order or at any time thereafter, give such directions
in regard to any matter or make such modifications in the compromise or
arrangement as it may consider necessary for the proper implementation of the
compromise or arrangement.

(2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under
section 230 cannot be implemented satisfactorily with or without modifications, and the
company is unable to pay its debts as per the scheme, it may make an order for winding
up the company and such an order shall be deemed to be an order made under section
273.

(3) The provisions of this section shall, so far as may be, also apply to a company in
respect of which an order has been made before the commencement of this Act
sanctioning a compromise or an arrangement.

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

232. Merger and amalgamation of companies.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 394 of the Companies Act, 1956]
[For Government company, in place of word ‘Tribunal’ wherever occurs in Section 230 to 232, the words
‘Central Government’ shall be substituted by notification number G.S.R. 582(E) dated 13th June 2017.]
[Rule 18, Rule 19 and Rule 20]

232. (1) Where an application is made to the Tribunal under section 230 for the
sanctioning of a compromise or an arrangement proposed between a company and any
such persons as are mentioned in that section, and it is shown to the Tribunal—
(a) that the compromise or arrangement has been proposed for the purposes of, or in
connection with, a scheme for the reconstruction of the company or companies
involving merger or the amalgamation of any two or more companies; and
(b) that under the scheme, the whole or any part of the undertaking, property or
liabilities of any company (hereinafter referred to as the transferor company) is
required to be transferred to another company (hereinafter referred to as the
transferee company), or is proposed to be divided among and transferred to two or
more companies,
the Tribunal may on such application, order a meeting of the creditors or class of creditors
or the members or class of members, as the case may be, to be called, held and
conducted in such manner as the Tribunal may direct and the provisions of sub-sections
(3) to (6) of section 230 shall apply mutatis mutandis.

(2) Where an order has been made by the Tribunal under sub-section (1), merging
companies or the companies in respect of which a division is proposed, shall also be
required to circulate the following for the meeting so ordered by the Tribunal, namely:—
(a) the draft of the proposed terms of the scheme drawn up and adopted by the
directors of the merging company;
(b) confirmation that a copy of the draft scheme has been filed with the Registrar;
(c) a report adopted by the directors of the merging companies explaining effect of
compromise on each class of shareholders, key managerial personnel, promotors
and non-promoter shareholders laying out in particular the share exchange ratio,
specifying any special valuation difficulties;
(d) the report of the expert with regard to valuation, if any;
(e) a supplementary accounting statement if the last annual accounts of any of the
merging company relate to a financial year ending more than six months before the
first meeting of the company summoned for the purposes of approving the scheme.

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

(3) The Tribunal, after satisfying itself that the procedure specified in sub-sections (1) and
(2) has been complied with, may, by order, sanction the compromise or arrangement or
by a subsequent order, make provision for the following matters, namely:—
(a) the transfer to the transferee company of the whole or any part of the undertaking,
property or liabilities of the transferor company from a date to be determined by the
parties unless the Tribunal, for reasons to be recorded by it in writing, decides
otherwise;
(b) the allotment or appropriation by the transferee company of any shares,
debentures, policies or other like instruments in the company which, under the
compromise or arrangement, are to be allotted or appropriated by that company to
or for any person:

Provided that a transferee company shall not, as a result of the compromise or

arrangement, hold any shares in its own name or in the name of any trust whether on
its behalf or on behalf of any of its subsidiary or associate companies and any such
shares shall be cancelled or extinguished;
(c) the continuation by or against the transferee company of any legal proceedings
pending by or against any transferor company on the date of transfer;
(d) dissolution, without winding-up, of any transferor company;
(e) the provision to be made for any persons who, within such time and in such manner
as the Tribunal directs, dissent from the compromise or arrangement;
(f) where share capital is held by any non-resident shareholder under the foreign direct
investment norms or guidelines specified by the Central Government or in
accordance with any law for the time being in force, the allotment of shares of the
transferee company to such shareholder shall be in the manner specified in the
order;
(g) the transfer of the employees of the transferor company to the transferee company;
(h) where the transferor company is a listed company and the transferee company is
an unlisted company,—
(A) the transferee company shall remain an unlisted company until it becomes a
listed company;
(B) if shareholders of the transferor company decide to opt out of the transferee
company, provision shall be made for payment of the value of shares held by
them and other benefits in accordance with a pre-determined price formula or
after a valuation is made, and the arrangements under this provision may be
made by the Tribunal:

Provided that the amount of payment or valuation under this clause for any share
shall not be less than what has been specified by the Securities and Exchange Board
under any regulations framed by it;
(i) where the transferor company is dissolved, the fee, if any, paid by the transferor
company on its authorised capital shall be set-off against any fees payable by the
transferee company on its authorised capital subsequent to the amalgamation; and

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

(j) such incidental, consequential and supplemental matters as are deemed necessary
to secure that the merger or amalgamation is fully and effectively carried out:

Provided that no compromise or arrangement shall be sanctioned by the Tribunal

unless a certificate by the company’s auditor has been filed with the Tribunal to the
effect that the accounting treatment, if any, proposed in the scheme of compromise or
arrangement is in conformity with the accounting standards prescribed under section
133.

(4) Where an order under this section provides for the transfer of any property or liabilities,
then, by virtue of the order, that property shall be transferred to the transferee company
and the liabilities shall be transferred to and become the liabilities of the transferee
company and any property may, if the order so directs, be freed from any charge which
shall by virtue of the compromise or arrangement, cease to have effect.

(5) Every company in relation to which the order is made shall cause a certified copy of
the order to be filed with the Registrar for registration within thirty days of the receipt of
certified copy of the order.

(6) The scheme under this section shall clearly indicate an appointed date from which it
shall be effective and the scheme shall be deemed to be effective from such date and not
at a date subsequent to the appointed date.
[MCA has issued a General Circular no.9/2019 on appointed date]

(7) Every company in relation to which the order is made shall, until the completion of the
scheme, file a statement in such form and within such time as may be prescribed with the
Registrar every year duly certified by a chartered accountant or a cost accountant or a
company secretary in practice indicating whether the scheme is being complied with in
accordance with the orders of the Tribunal or not. [Rule 21: Form No. CAA.8]

(8) If a transferor company or a transferee company contravenes the provisions of this

section, the transferor company or the transferee company, as the case may be, shall be
punishable with fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees and every officer of such transferor or transferee company who
is in default, shall be punishable with imprisonment for a term which may extend to one
year or with fine which shall not be less than one lakh rupees but which may extend to
three lakh rupees, or with both.

Explanation.—For the purposes of this section,—

(i) in a scheme involving a merger, where under the scheme the undertaking, property
and liabilities of one or more companies, including the company in respect of which
the compromise or arrangement is proposed, are to be transferred to another existing
company, it is a merger by absorption, or where the undertaking, property and liabilities

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

of two or more companies, including the company in respect of which the compromise
or arrangement is proposed, are to be transferred to a new company, whether or not
a public company, it is a merger by formation of a new company;
(ii) references to merging companies are in relation to a merger by absorption, to the
transferor and transferee companies, and, in relation to a merger by formation of a
new company, to the transferor companies;
(iii) a scheme involves a division, where under the scheme the undertaking, property and
liabilities of the company in respect of which the compromise or arrangement is
proposed are to be divided among and transferred to two or more companies each of
which is either an existing company or a new company; and
(iv) property includes assets, rights and interests of every description and liabilities
include debts and obligations of every description.

[Comments: For every allotment of securities, file Return of allotment in Form PAS-3 under section 39.]

Page 436
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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

233. Merger or amalgamation of certain companies.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[No corresponding provision under the Companies Act, 1956]
[Power under sections 233(2), (3), (4), (5) and (6) delegated to Regional Directors. Refer notification
number S.O. 4090(E) dated 19th December, 2016]

233. (1) Notwithstanding the provisions of section 230 and section 232, a scheme of
merger or amalgamation may be entered into between two or more small companies or
between a holding company and its wholly-owned subsidiary company or such other class
or classes of companies as may be prescribed, subject to the following, namely:—
(a) a notice of the proposed scheme inviting objections or suggestions, if any, from the
Registrar and Official Liquidators where registered office of the respective
companies are situated or persons affected by the scheme within thirty days is
issued by the transferor company or companies and the transferee company; [Rule
25(1): Form No. CAA.9]
(b) the objections and suggestions received are considered by the companies in their
respective general meetings and the scheme is approved by the respective
members or class of members at a general meeting holding at least ninety per cent.
of the total number of shares;
(c) each of the companies involved in the merger files a declaration of solvency, in the
prescribed form, with the Registrar of the place where the registered office of the
company is situated; and [Rule 25(2) and (3): Declaration of Solvency in Form No. CAA.10]
(d) the scheme is approved by majority representing nine-tenths in value of the
creditors or class of creditors of respective companies indicated in a meeting
convened by the company by giving a notice of twenty-one days along with the
scheme to its creditors for the purpose or otherwise approved in writing.

(2) The transferee company shall file a copy of the scheme so approved in the manner
as may be prescribed, with the Central Government, Registrar and the Official Liquidator
where the registered office of the company is situated. [Rule 25(4): Scheme alongwith a Report
in Form No. CAA.11]

(3) On the receipt of the scheme, if the Registrar or the Official Liquidator has no
objections or suggestions to the scheme, the Central Government shall register the same
and issue a confirmation thereof to the companies. [Rule 25(5): Form No. CAA.12]

(4) If the Registrar or Official Liquidator has any objections or suggestions, he may
communicate the same in writing to the Central Government within a period of thirty days:

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

Provided that if no such communication is made, it shall be presumed that he has

no objection to the scheme.

(5) If the Central Government after receiving the objections or suggestions or for any
reason is of the opinion that such a scheme is not in public interest or in the interest of
the creditors, it may file an application before the Tribunal within a period of sixty days of
the receipt of the scheme under sub-section (2) stating its objections and requesting that
the Tribunal may consider the scheme under section 232. [Rule 25(6): Form No. CAA.13]

(6) On receipt of an application from the Central Government or from any person, if the
Tribunal, for reasons to be recorded in writing, is of the opinion that the scheme should
be considered as per the procedure laid down in section 232, the Tribunal may direct
accordingly or it may confirm the scheme by passing such order as it deems fit:

Provided that if the Central Government does not have any objection to the
scheme or it does not file any application under this section before the Tribunal, it shall
be deemed that it has no objection to the scheme.

(7) A copy of the order under sub-section (6) confirming the scheme shall be
communicated to the Registrar having jurisdiction over the transferee company and the
persons concerned and the Registrar shall register the scheme and issue a confirmation
thereof to the companies and such confirmation shall be communicated to the Registrars
where transferor company or companies were situated.

(8) The registration of the scheme under sub-section (3) or sub-section (7) shall be
deemed to have the effect of dissolution of the transferor company without process of
winding-up.

(9) The registration of the scheme shall have the following effects, namely:—
(a) transfer of property or liabilities of the transferor company to the transferee
company so that the property becomes the property of the transferee company and
the liabilities become the liabilities of the transferee company;
(b) the charges, if any, on the property of the transferor company shall be applicable
and enforceable as if the charges were on the property of the transferee company;
(c) legal proceedings by or against the transferor company pending before any court
of law shall be continued by or against the transferee company; and
(d) where the scheme provides for purchase of shares held by the dissenting
shareholders or settlement of debt due to dissenting creditors, such amount, to the
extent it is unpaid, shall become the liability of the transferee company.

(10) A transferee company shall not on merger or amalgamation, hold any shares in its
own name or in the name of any trust either on its behalf or on behalf of any of its

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

subsidiary or associate company and all such shares shall be cancelled or extinguished
on the merger or amalgamation.

(11) The transferee company shall file an application with the Registrar along with the
scheme registered, indicating the revised authorised capital and pay the prescribed fees
due on revised capital:

Provided that the fee, if any, paid by the transferor company on its authorised
capital prior to its merger or amalgamation with the transferee company shall be set-off
against the fees payable by the transferee company on its authorised capital enhanced
by the merger or amalgamation.

(12) The provisions of this section shall mutatis mutandis apply to a company or
companies specified in sub-section (1) in respect of a scheme of compromise or
arrangement referred to in section 230 or division or transfer of a company referred to
clause (b) of sub- section (1) of section 232.

(13) The Central Government may provide for the merger or amalgamation of companies
in such manner as may be prescribed.

(14) A company covered under this section may use the provisions of section 232 for the
approval of any scheme for merger or amalgamation.

Page 439
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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

234. Merger or amalgamation of company with foreign company.

[Section 234 brought to force from 13th April 2017 vide notification number S.O. 1182(E) dated 13th April
2017]
[No corresponding provision under the Companies Act, 1956]
[Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016]

234. (1) The provisions of this Chapter unless otherwise provided under any other law for
the time being in force, shall apply mutatis mutandis to schemes of mergers and
amalgamations between companies registered under this Act and companies
incorporated in the jurisdictions of such countries as may be notified from time to time by
the Central Government:

Provided that the Central Government may make rules, in consultation with the
Reserve Bank of India, in connection with mergers and amalgamations provided under
this section.

(2) Subject to the provisions of any other law for the time being in force, a foreign
company, may with the prior approval of the Reserve Bank of India, merge into a company
registered under this Act or vice versa and the terms and conditions of the scheme of
merger may provide, among other things, for the payment of consideration to the
shareholders of the merging company in cash, or in Depository Receipts, or partly in cash
and partly in Depository Receipts, as the case may be, as per the scheme to be drawn
up for the purpose.

Explanation.—For the purposes of sub-section (2), the expression “foreign company”

means any company or body corporate incorporated outside India whether having a place
of business in India or not.

Page 440
 S. 235 - Chapter XV [Ss.230 to 240]

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

235. Power to acquire shares of shareholders dissenting from scheme or contract

approved by majority.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 395 of the Companies Act, 1956]

235. (1) Where a scheme or contract involving the transfer of shares or any class of
shares in a company (the transferor company) to another company (the transferee
company) has, within four months after making of an offer in that behalf by the transferee
company, been approved by the holders of not less than nine-tenths in value of the shares
whose transfer is involved, other than shares already held at the date of the offer by, or
by a nominee of the transferee company or its subsidiary companies, the transferee
company may, at any time within two months after the expiry of the said four months, give
notice in the prescribed manner to any dissenting shareholder that it desires to acquire
his shares. [Rule 26: Notice to dissenting shareholder(s) in Form No. CAA.14]

(2) Where a notice under sub-section (1) is given, the transferee company shall, unless
on an application made by the dissenting shareholder to the Tribunal, within one month
from the date on which the notice was given and the Tribunal thinks fit to order otherwise,
be entitled to and bound to acquire those shares on the terms on which, under the scheme
or contract, the shares of the approving shareholders are to be transferred to the
transferee company.

(3) Where a notice has been given by the transferee company under sub-section (1) and
the Tribunal has not, on an application made by the dissenting shareholder, made an
order to the contrary, the transferee company shall, on the expiry of one month from the
date on which the notice has been given, or, if an application to the Tribunal by the
dissenting shareholder is then pending, after that application has been disposed of, send
a copy of the notice to the transferor company together with an instrument of transfer, to
be executed on behalf of the shareholder by any person appointed by the transferor
company and on its own behalf by the transferee company, and pay or transfer to the
transferor company the amount or other consideration representing the price payable by
the transferee company for the shares which, by virtue of this section, that company is
entitled to acquire, and the transferor company shall—
(a) thereupon register the transferee company as the holder of those shares; and
(b) within one month of the date of such registration, inform the dissenting
shareholders of the fact of such registration and of the receipt of the amount or
other consideration representing the price payable to them by the transferee
company.

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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

(4) Any sum received by the transferor company under this section shall be paid into a
separate bank account, and any such sum and any other consideration so received shall
be held by that company in trust for the several persons entitled to the shares in respect
of which the said sum or other consideration were respectively received and shall be
disbursed to the entitled shareholders within sixty days.

(5) In relation to an offer made by a transferee company to shareholders of a transferor

company before the commencement of this Act, this section shall have effect with the
following modifications, namely:—
(a) in sub-section (1), for the words “the shares whose transfer is involved other than
shares already held at the date of the offer by, or by a nominee of, the transferee
company or its subsidiaries,”, the words “the shares affected” shall be substituted;
and
(b) in sub-section (3), the words “together with an instrument of transfer, to be
executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferor company” shall be omitted.

Explanation.—For the purposes of this section, “dissenting shareholder” includes a

shareholder who has not assented to the scheme or contract and any shareholder who
has failed or refused to transfer his shares to the transferee company in accordance with
the scheme or contract.

Page 442
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Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

236. Purchase of minority shareholding.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[No corresponding provision under the Companies Act, 1956]

236. (1) In the event of an acquirer, or a person acting in concert with such acquirer,
becoming registered holder of ninety per cent. or more of the issued equity share capital
of a company, or in the event of any person or group of persons becoming ninety per
cent. majority or holding ninety per cent. of the issued equity share capital of a company,
by virtue of an amalgamation, share exchange, conversion of securities or for any other
reason, such acquirer, person or group of persons, as the case may be, shall notify the
company of their intention to buy the remaining equity shares.

(2) The acquirer, person or group of persons under sub-section (1) shall offer to the
minority shareholders of the company for buying the equity shares held by such
shareholders at a price determined on the basis of valuation by a registered valuer in
accordance with such rules as may be prescribed. [Rule 27]

(3) Without prejudice to the provisions of sub-sections (1) and (2), the minority
shareholders of the company may offer to the majority shareholders to purchase the
minority equity shareholding of the company at the price determined in accordance with
such rules as may be prescribed under sub-section (2).

(4) The majority shareholders shall deposit an amount equal to the value of shares to be
acquired by them under sub-section (2) or sub-section (3), as the case may be, in a
separate bank account to be operated by the 363 [company whose shares are being
transferred] for at least one year for payment to the minority shareholders and such
amount shall be disbursed to the entitled shareholders within sixty days:

Provided that such disbursement shall continue to be made to the entitled share-
holders for a period of one year, who for any reason had not been made disbursement
within the said period of sixty days or if the disbursement have been made within the

363
Substituted for the words 'transferor company' in sub-section (4),(5) and (6) of section 236 of the principal
Act by Section 73 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

Page 443
 S. 236 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

aforesaid period of sixty days, fail to receive or claim payment arising out of such
disbursement.

(5) In the event of a purchase under this section, the 364[company whose shares are being
transferred] shall act as a transfer agent for receiving and paying the price to the minority
shareholders and for taking delivery of the shares and delivering such shares to the
majority, as the case may be.

(6) In the absence of a physical delivery of shares by the shareholders within the time
specified by the company, the share certificates shall be deemed to be cancelled, and the
365
[company whose shares are being transferred] shall be authorised to issue shares in
lieu of the cancelled shares and complete the transfer in accordance with law and make
payment of the price out of deposit made under sub-section (4) by the majority in advance
to the minority by despatch of such payment.

(7) In the event of a majority shareholder or shareholders requiring a full purchase and
making payment of price by deposit with the company for any shareholder or
shareholders who have died or ceased to exist, or whose heirs, successors,
administrators or assignees have not been brought on record by transmission, the right
of such shareholders to make an offer for sale of minority equity shareholding shall
continue and be available for a period of three years from the date of majority acquisition
or majority shareholding.

(8) Where the shares of minority shareholders have been acquired in pursuance of this
section and as on or prior to the date of transfer following such acquisition, the
shareholders holding seventy-five per cent. or more minority equity shareholding
negotiate or reach an understanding on a higher price for any transfer, proposed or
agreed upon, of the shares held by them without disclosing the fact or likelihood of transfer
taking place on the basis of such negotiation, understanding or agreement, the majority
shareholders shall share the additional compensation so received by them with such
minority shareholders on a pro rata basis.

364
Substituted for the words 'transferor company' in sub-section (4), (5) and (6) of section 236 of the
principal Act by Section 73 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of
the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification
no. S.O. 630(E) of the same date.

365
Substituted for the words 'transferor company' in sub-section (4),(5) and (6) of section 236 of the principal
Act by Section 73 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no.
S.O. 630(E) of the same date.

Page 444
 S. 236 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

Explanation.—For the purposes of this section, the expressions “acquirer” and “person
acting in concert” shall have the meanings respectively assigned to them in clause (b)
and clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board
of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

(9) When a shareholder or the majority equity shareholder fails to acquire full purchase
of the shares of the minority equity shareholders, then, the provisions of this section shall
continue to apply to the residual minority equity shareholders, even though,—
(a) the shares of the company of the residual minority equity shareholder had been
delisted; and
(b) the period of one year or the period specified in the regulations made by the
Securities and Exchange Board under the Securities and Exchange Board of India
Act, 1992 (15 of 1992), had elapsed.

Page 445
 S. 237 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

237. Power of Central Government to provide for amalgamation of companies in

public interest.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 396 of the Companies Act, 1956]

237. (1) Where the Central Government is satisfied that it is essential in the public interest
that two or more companies should amalgamate, the Central Government may, by order
notified in the Official Gazette, provide for the amalgamation of those companies into a
single company with such constitution, with such property, powers, rights, interests,
authorities and privileges, and with such liabilities, duties and obligations, as may be
specified in the order.

(2) The order under sub-section (1) may also provide for the continuation by or against
the transferee company of any legal proceedings pending by or against any transferor
company and such consequential, incidental and supplemental provisions as may, in the
opinion of the Central Government, be necessary to give effect to the amalgamation.

(3) Every member or creditor, including a debenture holder, of each of the transferor
companies before the amalgamation shall have, as nearly as may be, the same interest
in or rights against the transferee company as he had in the company of which he was
originally a member or creditor, and in case the interest or rights of such member or
creditor in or against the transferee company are less than his interest in or rights against
the original company, he shall be entitled to compensation to that extent, which shall be
assessed by such authority as may be prescribed and every such assessment shall be
published in the Official Gazette, and the compensation so assessed shall be paid to the
member or creditor concerned by the transferee company.

(4) Any person aggrieved by any assessment of compensation made by the prescribed
authority under sub-section (3) may, within a period of thirty days from the date of
publication of such assessment in the Official Gazette, prefer an appeal to the Tribunal
and thereupon the assessment of the compensation shall be made by the Tribunal.

(5) No order shall be made under this section unless—

(a) a copy of the proposed order has been sent in draft to each of the companies
concerned;
(b) the time for preferring an appeal under sub-section (4) has expired, or where any
such appeal has been preferred, the appeal has been finally disposed off; and
(c) the Central Government has considered, and made such modifications, if any, in
the draft order as it may deem fit in the light of suggestions and objections which
may be received by it from any such company within such period as the Central

Page 446
 S. 237 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

Government may fix in that behalf, not being less than two months from the date
on which the copy aforesaid is received by that company, or from any class of
shareholders therein, or from any creditors or any class of creditors thereof.

(6) The copies of every order made under this section shall, as soon as may be after it
has been made, be laid before each House of Parliament.

Page 447
 S. 238 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

238. Registration of offer of schemes involving transfer of shares.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[No corresponding provision under the Companies Act, 1956]

238. (1) In relation to every offer of a scheme or contract involving the transfer of shares
or any class of shares in the transferor company to the transferee company under section
235,—
(a) every circular containing such offer and recommendation to the members of the
transferor company by its directors to accept such offer shall be accompanied by
such information and in such manner as may be prescribed; [Rule 28: Form No. CAA.15]
(b) every such offer shall contain a statement by or on behalf of the transferee
company, disclosing the steps it has taken to ensure that necessary cash will be
available; and
(c) every such circular shall be presented to the Registrar for registration and no such
circular shall be issued until it is so registered:

Provided that the Registrar may refuse, for reasons to be recorded in writing, to
register any such circular which does not contain the information required to be given
under clause (a) or which sets out such information in a manner likely to give a false
impression, and communicate such refusal to the parties within thirty days of the
application.

(2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to
register any circular under sub-section (1). [Rule 29: Appeal in From No. NCLT.9]

(3) The director who issues a circular which has not been presented for registration
and registered under clause (c) of sub-section (1), shall be 366[liable to a penalty of one
lakh rupees].

366
Substituted for the words ‘punishable with fine which shall not be less than twenty-five thousand rupees
but which may extend to five lakh rupees’ in sub-section (3) of section 238 of the principal Act by Section
32 of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd
November 2018.

Page 448
 S. 239 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

239. Preservation of books and papers of amalgamated companies.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 396A of the Companies Act, 1956]

239. The books and papers of a company which has been amalgamated with, or whose
shares have been acquired by, another company under this Chapter shall not be disposed
of without the prior permission of the Central Government and before granting such
permission, that Government may appoint a person to examine the books and papers or
any of them for the purpose of ascertaining whether they contain any evidence of the
commission of an offence in connection with the promotion or formation, or the
management of the affairs, of the transferor company or its amalgamation or the
acquisition of its shares.

Page 449
 S. 240 - Chapter XV [Ss.230 to 240]

Compromise, Arrangements and Amalgamations

Relevant rules: The Companies (Compromise, Arrangements and Amalgamations) Rules, 2016

240. Liability of officers in respect of offences committed prior to merger,

amalgamation, etc.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[No corresponding provision under the Companies Act, 1956]

240. Notwithstanding anything in any other law for the time being in force, the liability in
respect of offences committed under this Act by the officers in default, of the transferor
company prior to its merger, amalgamation or acquisition shall continue after such
merger, amalgamation or acquisition.

Page 450
 S. 241 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: the National Company Law Tribunal Rules, 2016

CHAPTER XVI PREVENTION OF

OPPRESSION AND MISMANAGEMENT
241. Application to Tribunal for relief in cases of oppression, etc.

[Section 241 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec. 397 and 398(1)(b) of the Companies Act, 1956]

241. (1) Any member of a company who complains that—

(a) the affairs of the company have been or are being conducted in a manner
prejudicial to public interest or in a manner prejudicial or oppressive to him or any
other member or members or in a manner prejudicial to the interests of the
company; or
(b) the material change, not being a change brought about by, or in the interests of,
any creditors, including debenture holders or any class of shareholders of the
company, has taken place in the management or control of the company, whether
by an alteration in the Board of Directors, or manager, or in the ownership of the
company’s shares, or if it has no share capital, in its membership, or in any other
manner whatsoever, and that by reason of such change, it is likely that the affairs
of the company will be conducted in a manner prejudicial to its interests or its
members or any class of members,
may apply to the Tribunal, provided such member has a right to apply under section 244,
for an order under this Chapter.

(2) The Central Government, if it is of the opinion that the affairs of the company are being
conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for
an order under this Chapter.[Refer section 246.]
367
[ Provided that the applications under this sub-section, in respect of such
company or class of companies, as may be prescribed, shall be made before the Principal
Bench of the Tribunal which shall be dealt with by such Bench.]

367
Proviso inserted by section 33(a) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect
from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 451
 S. 241 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: the National Company Law Tribunal Rules, 2016

368
[ (3) Where in the opinion of the Central Government there exist circumstances
suggesting that--
(a) any person concerned in the conduct and management of the affairs of a company
is or has been in connection therewith guilty of fraud, misfeasance, persistent
negligence or default in carrying out his obligations and functions under the law or
of breach of trust;
b) the business of a company is not or has not been conducted and managed by such
person in accordance with sound business principles or prudent commercial
practices;
(c) a company is or has been conducted and managed by such person in a manner
which is likely to cause, or has caused, serious injury or damage to the interest of
the trade, industry or business to which such company pertains; or
(d) the business of a company is or has been conducted and managed by such person
with intent to defraud its creditors, members or any other person or otherwise for a
fraudulent or unlawful purpose or in a manner prejudicial to public interest,
the Central Government may initiate a case against such person and refer the same to
the Tribunal with a request that the Tribunal may inquire into the case and record a
decision as to whether or not such person is a fit and proper person to hold the office of
director or any other office connected with the conduct and management of any company.

(4) The person against whom a case is referred to the Tribunal under sub-section (3),
shall be joined as a respondent to the application.

(5) Every application under sub-section (3)--

(a) shall contain a concise statement of such circumstances and materials as the
Central Government may consider necessary for the purposes of the inquiry; and
(b) shall be signed and verified in the manner laid down in the Code of Civil
Procedure, 1908 (5 of 1908), for the signature and verification of a plaint in a suit
by the Central Government.]

368
Sub-sections (3), (4) and (5) inserted by section 33(b) of the Companies (Amendment) Act, 2019 (22 of
2019) with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 452
 S. 242 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

242. Powers of Tribunal.

[Section 242, except clause (b) of sub-section (1), clauses (c) and (g) of sub-section (2), brought to force
from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June, 2016]
[Clause (b) of sub-section (1) and clauses (c) and (g) of sub-section (2) of section 242 is brought to force
from 09 September, 2016 vide notification number S.O.2912(E) dated 09th September, 2016]
[Corresponding Sec. 398(1)(a) and Sec. 402 of the Companies Act, 1956]

242. (1) If, on any application made under section 241, the Tribunal is of the opinion—
(a) that the company’s affairs have been or are being conducted in a manner
prejudicial or oppressive to any member or members or prejudicial to public interest
or in a manner prejudicial to the interests of the company; and
369
(b) that to wind up the company would unfairly prejudice such member or members,
but that otherwise the facts would justify the making of a winding-up order on the
ground that it was just and equitable that the company should be wound up,
the Tribunal may, with a view to bringing to an end the matters complained of, make
such order as it thinks fit.

(2) Without prejudice to the generality of the powers under sub-section (1), an order under
that sub-section may provide for—
(a) the regulation of conduct of affairs of the company in future;
(b) the purchase of shares or interests of any members of the company by other
members thereof or by the company;
370
(c) in the case of a purchase of its shares by the company as aforesaid, the
consequent reduction of its share capital;
(d) restrictions on the transfer or allotment of the shares of the company;
(e) the termination, setting aside or modification, of any agreement, howsoever arrived
at, between the company and the managing director, any other director or manager,
upon such terms and conditions as may, in the opinion of the Tribunal, be just and
equitable in the circumstances of the case;
(f) the termination, setting aside or modification of any agreement between the
company and any person other than those referred to in clause (e):

369
Section 242(1)(b) brought to force from 09th September, 2016 vide notification number S.O.2912(E)
dated 09th September, 2016

370
Section 242(2)(c) brought to force from 09th September, 2016 vide notification number S.O.2912(E)
dated 09th September, 2016

Page 453
 S. 242 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

Provided that no such agreement shall be terminated, set aside or modified except
after due notice and after obtaining the consent of the party concerned;
371
(g) the setting aside of any transfer, delivery of goods, payment, execution or other
act relating to property made or done by or against the company within three
months before the date of the application under this section, which would, if made
or done by or against an individual, be deemed in his insolvency to be a fraudulent
preference;
(h) removal of the managing director, manager or any of the directors of the company;
(i) recovery of undue gains made by any managing director, manager or director during
the period of his appointment as such and the manner of utilisation of the recovery
including transfer to Investor Education and Protection Fund or repayment to
identifiable victims;
(j) the manner in which the managing director or manager of the company may be
appointed subsequent to an order removing the existing managing director or
manager of the company made under clause (h);
(k) appointment of such number of persons as directors, who may be required by the
Tribunal to report to the Tribunal on such matters as the Tribunal may direct;
(l) imposition of costs as may be deemed fit by the Tribunal;
(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable
that provision should be made.

(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the
company with the Registrar within thirty days of the order of the Tribunal.

(4) The Tribunal may, on the application of any party to the proceeding, make any interim
order which it thinks fit for regulating the conduct of the company’s affairs upon such terms
and conditions as appear to it to be just and equitable.
372
[ (4A) At the conclusion of the hearing of the case in respect of sub-section (3) of section
241, the Tribunal shall record its decision stating therein specifically as to whether or not
the respondent is a fit and proper person to hold the office of director or any other office
connected with the conduct and management of any company.]

(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the
memorandum or articles of a company, then, notwithstanding any other provision of this
Act, the company shall not have power, except to the extent, if any, permitted in the order,

371
Section 242(2)(g) brought to force from 09th September, 2016 vide notification number ….dated…

372
Inserted sub-section (4A) by section 34 of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 454
 S. 242 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent
with the order, either in the memorandum or in the articles.

(6) Subject to the provisions of sub-section (1), the alterations made by the order in the
memorandum or articles of a company shall, in all respects, have the same effect as if
they had been duly made by the company in accordance with the provisions of this Act
and the said provisions shall apply accordingly to the memorandum or articles so altered.

(7) A certified copy of every order altering, or giving leave to alter, a company’s
memorandum or articles, shall within thirty days after the making thereof, be filed by the
company with the Registrar who shall register the same.
(8) If a company contravenes the provisions of sub-section (5), the company shall be
punishable with fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to six months or with fine
which shall not be less than twenty-five thousand rupees but which may extend to one
lakh rupees, or with both.

Page 455
 S. 243 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

243. Consequence of termination or modification of certain agreements.

[Section 243 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec. 404 of the Companies Act, 1956]

243. (1) Where an order made under section 242 terminates, sets aside or modifies an
agreement such as is referred to in sub-section(2) of that section,—
(a) such order shall not give rise to any claims whatever against the company by any
person for damages or for compensation for loss of office or in any other respect
either in pursuance of the agreement or otherwise;
(b) no managing director or other director or manager whose agreement is so
terminated or set aside shall, for a period of five years from the date of the order
terminating or setting aside the agreement, without the leave of the Tribunal, be
appointed, or act, as the managing director or other director or manager of the
company:

Provided that the Tribunal shall not grant leave under this clause unless notice of the
intention to apply for leave has been served on the Central Government and that
Government has been given a reasonable opportunity of being heard in the matter.
373
[(1A) The person who is not a fit and proper person pursuant to sub-section (4A) of
section 242 shall not hold the office of a director or any other office connected with the
conduct and management of the affairs of any company for a period of five years from
the date of the said decision:
Provided that the Central Government may, with the leave of the Tribunal, permit
such person to hold any such office before the expiry of the said period of five years

(1B) Notwithstanding anything contained in any other provision of this Act, or any other
law for the time being in force, or any contract, memorandum or articles, on the removal
of a person from the office of a director or any other office connected with the conduct
and management of the affairs of the company, that person shall not be entitled to, or be
paid, any compensation for the loss or termination of office.]

373
Inserted by section 35(a) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th
August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 456
 S. 243 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

(2) Any person who knowingly acts as a managing director or other director or manager
of a company in contravention of clause (b) of sub-section (1) 374[or sub-section (1A)],
and every other director of the company who is knowingly a party to such contravention,
shall be punishable with imprisonment for a term which may extend to six months or with
fine which may extend to five lakh rupees, or with both.

374
Inserted by section 35(b) of the Companies (Amendment) Act, 2019 (22 of 2019) with effect from 15th
August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 457
 S. 244 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

244. Right to apply under section 241.

[Section 244 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec. 399 of the Companies Act, 1956]

244. (1) The following members of a company shall have the right to apply under section
241, namely:—
(a) in the case of a company having a share capital, not less than one hundred
members of the company or not less than one-tenth of the total number of its
members, whichever is less, or any member or members holding not less than one-
tenth of the issued share capital of the company, subject to the condition that the
applicant or applicants has or have paid all calls and other sums due on his or their
shares;
(b) in the case of a company not having a share capital, not less than one-fifth of the
total number of its members:
Provided that the Tribunal may, on an application made to it in this behalf, waive all
or any of the requirements specified in clause (a) or clause (b) so as to enable the
members to apply under section 241.

Explanation.—For the purposes of this sub-section, where any share or shares are held
by two or more persons jointly, they shall be counted only as one member.

(2) Where any members of a company are entitled to make an application under sub-
section (1), any one or more of them having obtained the consent in writing of the rest,
may make the application on behalf and for the benefit of all of them.

Page 458
 S. 245 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

245. Class action.

[Section 245 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec. 404 of the Companies Act, 1956]

245. (1) Such number of member or members, depositor or depositors or any class of
them, as the case may be, as are indicated in sub-section (2) may, if they are of the
opinion that the management or conduct of the affairs of the company are being
conducted in a manner prejudicial to the interests of the company or its members or
depositors, file an application before the Tribunal on behalf of the members or depositors
for seeking all or any of the following orders, namely:—
(a) to restrain the company from committing an act which is ultra vires the articles or
memorandum of the company;
(b) to restrain the company from committing breach of any provision of the company’s
memorandum or articles;
(c) to declare a resolution altering the memorandum or articles of the company as void
if the resolution was passed by suppression of material facts or obtained by mis-
statement to the members or depositors;
(d) to restrain the company and its directors from acting on such resolution;
(e) to restrain the company from doing an act which is contrary to the provisions of this
Act or any other law for the time being in force;
(f) to restrain the company from taking action contrary to any resolution passed by the
members;
(g) to claim damages or compensation or demand any other suitable action from or
against—
(i) the company or its directors for any fraudulent, unlawful or wrongful act or
omission or conduct or any likely act or omission or conduct on its or their part;
(ii) the auditor including audit firm of the company for any improper or misleading
statement of particulars made in his audit report or for any fraudulent, unlawful
or wrongful act or conduct; or
(iii) any expert or advisor or consultant or any other person for any incorrect or
misleading statement made to the company or for any fraudulent, unlawful or
wrongful act or conduct or any likely act or conduct on his part;
(h) to seek any other remedy as the Tribunal may deem fit.

(2) Where the members or depositors seek any damages or compensation or demand
any other suitable action from or against an audit firm, the liability shall be of the firm as
well as of each partner who was involved in making any improper or misleading statement
of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner.

(3)
Page 459
 S. 245 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

(i) The requisite number of members provided in sub-section (1) shall be as under:—
(a) in the case of a company having a share capital, not less than one hundred
members of the company or not less than such percentage of the total number of
its members as may be prescribed, whichever is less, or any member or members
holding not less than such percentage of the issued share capital of the company
as may be prescribed, subject to the condition that the applicant or applicants has
or have paid all calls and other sums due on his or their shares;
(b) in the case of a company not having a share capital, not less than one-fifth of the
total number of its members.
(ii) The requisite number of depositors provided in sub-section (1) shall not be less than
one hundred depositors or not less than such percentage of the total number of
depositors as may be prescribed, whichever is less, or any depositor or depositors to
whom the company owes such percentage of total deposits of the company as may
be prescribed.

(4) In considering an application under sub-section (1), the Tribunal shall take into
account, in particular—
(a) whether the member or depositor is acting in good faith in making the application
for seeking an order;
(b) any evidence before it as to the involvement of any person other than directors or
officers of the company on any of the matters provided in clauses (a) to (f) of sub-
section (1);
(c) whether the cause of action is one which the member or depositor could pursue in
his own right rather than through an order under this section;
(d) any evidence before it as to the views of the members or depositors of the company
who have no personal interest, direct or indirect, in the matter being proceeded
under this section;
(e) where the cause of action is an act or omission that is yet to occur, whether the act
or omission could be, and in the circumstances would be likely to be—
(i) authorised by the company before it occurs; or
(ii) ratified by the company after it occurs;
(f) where the cause of action is an act or omission that has already occurred, whether
the act or omission could be, and in the circumstances would be likely to be, ratified
by the company.

(5) If an application filed under sub-section (1) is admitted, then the Tribunal shall have
regard to the following, namely:—
(a) public notice shall be served on admission of the application to all the members or
depositors of the class in such manner as may be prescribed;
(b) all similar applications prevalent in any jurisdiction should be consolidated into a
single application and the class members or depositors should be allowed to
choose the lead applicant and in the event the members or depositors of the class

Page 460
 S. 245 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

are unable to come to a consensus, the Tribunal shall have the power to appoint a
lead applicant, who shall be in charge of the proceedings from the applicant’s side;
(c) two class action applications for the same cause of action shall not be allowed;
(d) the cost or expenses connected with the application for class action shall be
defrayed by the company or any other person responsible for any oppressive act.

(6) Any order passed by the Tribunal shall be binding on the company and all its members,
depositors and auditor including audit firm or expert or consultant or advisor or any other
person associated with the company.

(7) Any company which fails to comply with an order passed by the Tribunal under this
section shall be punishable with fine which shall not be less than five lakh rupees but
which may extend to twenty-five lakh rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to three years
and with fine which shall not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.

(8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it
shall, for reasons to be recorded in writing, reject the application and make an order that
the applicant shall pay to the opposite party such cost, not exceeding one lakh rupees,
as may be specified in the order.

(9) Nothing contained in this section shall apply to a banking company.

(10) Subject to the compliance of this section, an application may be filed or any other
action may be taken under this section by any person, group of persons or any association
of persons representing the persons affected by any act or omission, specified in sub-
section (1).
[Refer section 246.]

Page 461
 S. 246 - Chapter XVI [Ss.241 to 246]

Prevention of oppression and mismanagement

Relevant rules: The National Company Law Tribunal Rules, 2016

246. Application of certain provisions to proceedings under section 241 or section

245.

[Brought to force from 09 September, 2016 vide notification number S.O.2912(E) dated 09th September,
2016]
[Corresponding Sec. 406 of the Companies Act, 1956]

246. The provisions of sections 337 to 341 (both inclusive) shall apply mutatis mutandis,
in relation to an application made to the Tribunal under section 241 or section 245.

Page 462
 Chapter XVII [S.247]

Registered Valuers

Relevant rules: The Companies (Registered Valuers and Valuation) Rules, 2017

CHAPTER XVII REGISTERED VALUERS

247. Valuation by registered valuers.

[Brought to force with effect from 18th October, 2017 vide notification number S.O. 3393(E) dated 18th
October 2017]
[No corresponding provision under the Companies Act, 1956]
[The Companies (Registered Valuers and Valuation) Rules, 2017, w.e.f. 18th October 2017]

247. (1) Where a valuation is required to be made in respect of any property, stocks,
shares, debentures, securities or goodwill or any other assets (herein referred to as the
assets) or net worth of a company or its liabilities under the provision of this Act, it shall
be valued by 375 [a person having such qualifications and experience, registered as a
valuer and being a member of an organisation recognised, in such manner, on such terms
and conditions as may be prescribed] and appointed by the audit committee or in its
absence by the Board of Directors of that company.

(2) The valuer appointed under sub-section (1) shall,—

(a) make an impartial, true and fair valuation of any assets which may be required to
be valued;
(b) exercise due diligence while performing the functions as valuer;
(c) make the valuation in accordance with such rules as may be prescribed; and
(d) not undertake valuation of any assets in which he has a direct or indirect interest
or becomes so interested at any time 376[during a period of three years prior to his
appointment as valuer or three years after the valuation of assets was conducted
by him].

(3) If a valuer contravenes the provisions of this section or the rules made thereunder, the
valuer shall be punishable with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees:

375
Substituted for the words ‘a person having such qualifications and experience and registered as a valuer
in such manner, on such terms and conditions as may be prescribed’ in sub-section (1) of Section 247 of
the principal Act by the Companies (Removal of Difficulties) Second Order, 2017 by notification number
S.O. 3400(E) dated 23rd October 2017 w.e.f. from the same date.

376
Substituted for the words 'during or after the valuation of assets' in clause (d) of sub-section (2) of section
247 of the principal Act by Section 74 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

Page 463
 Chapter XVII [S.247]

Registered Valuers

Relevant rules: The Companies (Registered Valuers and Valuation) Rules, 2017

Provided that if the valuer has contravened such provisions with the intention to
defraud the company or its members, he shall be punishable with imprisonment for a term
which may extend to one year and with fine which shall not be less than one lakh rupees
but which may extend to five lakh rupees.
(4) Where a valuer has been convicted under sub-section (3), he shall be liable to—
(i) refund the remuneration received by him to the company; and
(ii) pay for damages to the company or to any other person for loss arising out of
incorrect or misleading statements of particulars made in his report.

Page 464
 S. 248 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

CHAPTER XVIII REMOVAL OF NAMES

OF COMPANIES FROM THE REGISTER
OF COMPANIES
248. Power of Registrar to remove name of company from register of companies.

[Brought to force with effect from 26th December, 2016 vide notification number S.O. 4167(E) dated 26th
December, 2016]
[Refer the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

248. (1) Where the Registrar has reasonable cause to believe that—
(a) a company has failed to commence its business within one year of its incorporation;
[or]377
(b) [omitted]378
(c) a company is not carrying on any business or operation for a period of two
immediately preceding financial years and has not made any application within
such period for obtaining the status of a dormant company under 379[section 455;
or]
380
[(d) the subscribers to the memorandum have not paid the subscription which they
had undertaken to pay at the time of incorporation of a company and a declaration
to this effect has not been filed within one hundred and eighty days of its
incorporation under sub-section (1) of section 10A; or

377
Word ‘or’ inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E).

378
Clause (b) omitted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015,
with effect from 29th May 2015 vide notification number S.O. 1440(E). Prior to omission it read “the
subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a
period of one hundred and eighty days from the date of incorporation of a company and a declaration under
sub-section (1) of section 11 to this effect has not been filed within one hundred and eighty days of its
incorporation; or”.

379
Substituted for the words ‘section 455’ in clause (c) of sub-section (1) of section 248 of the principal Act
by Section 36(a) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force
from 02nd November 2018.
380
Inserted clauses (d) and (e) in sub-section (1) of section 248 of the principal Act by Section 36(b) of the
Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November
2018.

Page 465
 S. 248 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

(e) the company is not carrying on any business or operations, as revealed after the
physical verification carried out under subsection (9) of section 12.]

he shall send a notice to the company and all the directors of the company, of his intention
to remove the name of the company from the register of companies and requesting them
to send their representations along with copies of the relevant documents, if any, within
a period of thirty days from the date of the notice.

(2) Without prejudice to the provisions of sub-section (1), a company may, after
extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent.
members in terms of paid-up share capital, file an application in the prescribed manner
to the Registrar for removing the name of the company from the register of companies on
all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of
such application, cause a public notice to be issued in the prescribed manner:
[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]

Provided that in the case of a company regulated under a special Act, approval of
the regulatory body constituted or established under that Act shall also be obtained and
enclosed with the application.

(3) Nothing in sub-section (2) shall apply to a company registered under section 8.

(4) A notice issued under sub-section (1) or sub-section (2) shall be published in
the prescribed manner and also in the Official Gazette for the information of the general
public.

(5) At the expiry of the time mentioned in the notice, the Registrar may, unless
cause to the contrary is shown by the company, strike off its name from the register of
companies, and shall publish notice thereof in the Official Gazette, and on the publication
in the Official Gazette of this notice, the company shall stand dissolved.

(6) The Registrar, before passing an order under sub-section (5), shall satisfy
himself that sufficient provision has been made for the realisation of all amount due to the
company and for the payment or discharge of its liabilities and obligations by the company
within a reasonable time and, if necessary, obtain necessary undertakings from the
managing director, director or other persons in charge of the management of the
company:

Provided that notwithstanding the undertakings referred to in this sub-section, the

assets of the company shall be made available for the payment or discharge of all its
liabilities and obligations even after the date of the order removing the name of the
company from the register of companies.

Page 466
 S. 248 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

(7) The liability, if any, of every director, manager or other officer who was
exercising any power of management, and of every member of the company dissolved
under sub-section (5), shall continue and may be enforced as if the company had not
been dissolved.

(8) Nothing in this section shall affect the power of the Tribunal to wind up a
company the name of which has been struck off from the register of companies.

Page 467
 S. 249 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

249. Restrictions on making application under section 248 in certain situations.

[Brought to force with effect from 26th December, 2016 vide notification number S.O. 4167(E) dated 26th
December, 2016]

249. (1) An application under sub-section (2) of section 248 on behalf of a company shall
not be made if, at any time in the previous three months, the company—
(a) has changed its name or shifted its registered office from one State to another;
(b) has made a disposal for value of property or rights held by it, immediately before
cesser of trade or otherwise carrying on of business, for the purpose of disposal for
gain in the normal course of trading or otherwise carrying on of business;
(c) has engaged in any other activity except the one which is necessary or expedient
for the purpose of making an application under that section, or deciding whether to
do so or concluding the affairs of the company, or complying with any statutory
requirement;
(d) has made an application to the Tribunal for the sanctioning of a compromise or
arrangement and the matter has not been finally concluded; or
381
[(e) is being wound up under Chapter XX of this Act or under the Insolvency and
Bankruptcy Code, 2016]

(2) If a company files an application under sub-section (2) of section 248 in violation of
sub-section (1), it shall be punishable with fine which may extend to one lakh rupees.

(3) An application filed under sub-section (2) of section 248 shall be withdrawn by the
company or rejected by the Registrar as soon as conditions under sub-section (1) are
brought to his notice.

381
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (7) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 468
 S. 250 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

250. Effect of company notified as dissolved.

[Brought to force with effect from 26th December, 2016 vide notification number S.O. 4167(E) dated 26th
December, 2016]

250. Where a company stands dissolved under section 248, it shall on and from the date
mentioned in the notice under sub-section (5) of that section cease to operate as a
company and the Certificate of Incorporation issued to it shall be deemed to have been
cancelled from such date except for the purpose of realising the amount due to the
company and for the payment or discharge of the liabilities or obligations of the company.

Page 469
 S. 251 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The Companies (Removal of Names of Companies from the Register of
Companies) Rules, 2016

251. Fraudulent application for removal of name.

[Brought to force with effect from 26th December, 2016 vide notification number S.O. 4167(E) dated 26th
December, 2016]

251. (1) Where it is found that an application by a company under sub-section (2) of
section 248 has been made with the object of evading the liabilities of the company or
with the intention to deceive the creditors or to defraud any other persons, the persons in
charge of the management of the company shall, notwithstanding that the company has
been notified as dissolved—
(a) be jointly and severally liable to any person or persons who had incurred loss or
damage as a result of the company being notified as dissolved; and
(b) be punishable for fraud in the manner as provided in section 447.

(2) Without prejudice to the provisions contained in sub-section (1), the Registrar may
also recommend prosecution of the persons responsible for the filing of an application
under sub-section (2) of section 248.

Page 470
 S. 252 - Chapter XVIII [Ss.248 to 252]

Removal of names of companies from the register of companies

Relevant rules: The National Company Law Tribunal Rules, 2016

252. Appeal to Tribunal.

[Brought to force with effect from 26th December, 2016 vide notification number S.O. 4167(E) dated 26th
December, 2016]

252. (1) Any person aggrieved by an order of the Registrar, notifying a company as
dissolved under section 248, may file an appeal to the Tribunal within a period of three
years from the date of the order of the Registrar and if the Tribunal is of the opinion that
the removal of the name of the company from the register of companies is not justified in
view of the absence of any of the grounds on which the order was passed by the
Registrar, it may order restoration of the name of the company in the register of
companies:

Provided that before passing any order under this section, the Tribunal shall give
a reasonable opportunity of making representations and of being heard to the Registrar,
the company and all the persons concerned:

Provided further that if the Registrar is satisfied, that the name of the company
has been struck off from the register of companies either inadvertently or on the basis of
incorrect information furnished by the company or its directors, which requires restoration
in the register of companies, he may within a period of three years from the date of
passing of the order dissolving the company under section 248, file an application before
the Tribunal seeking restoration of name of such company.

(2) A copy of the order passed by the Tribunal shall be filed by the company with the
Registrar within thirty days from the date of the order and on receipt of the order, the
Registrar shall cause the name of the company to be restored in the register of companies
and shall issue a fresh certificate of incorporation.

(3) If a company, or any member or creditor or workman thereof feels aggrieved by the
company having its name struck off from the register of companies, the Tribunal on an
application made by the company, member, creditor or workman before the expiry of
twenty years from the publication in the Official Gazette of the notice under sub-section
(5) of section 248 may, if satisfied that the company was, at the time of its name being
struck off, carrying on business or in operation or otherwise it is just that the name of the
company be restored to the register of companies, order the name of the company to be
restored to the register of companies, and the Tribunal may, by the order, give such other
directions and make such provisions as deemed just for placing the company and all other
persons in the same position as nearly as may be as if the name of the company had not
been struck off from the register of companies.

Page 471
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

Omitted CHAPTER XIX REVIVAL AND

REHABILITATION OF SICK COMPANIES
253 to 269 Omitted
382
[253. Determination of sickness.
253. (1) Where on a demand by the secured creditors of a company representing fifty per cent. or more of its
outstanding amount of debt, the company has failed to pay the debt within a period of thirty days of the service of
the notice of demand or to secure or compound it to the reasonable satisfaction of the creditors, any secured
creditor may file an application to the Tribunal in the prescribed manner along with the relevant evidence for such
default, non-repayment or failure to offer security or compound it, for a determination that the company be declared
as a sick company.
(2) The applicant under sub-section (1) may, along with an application under that sub- section or at any stage of the
proceedings thereafter, make an application for the stay of any proceeding for the winding up of the company or for
execution, distress or the like against any property and assets of the company or for the appointment of a receiver in
respect thereof and that no suit for the recovery of any money or for the enforcement of any security against the
company shall lie or be proceeded with.
(3) The Tribunal may pass an order in respect of an application under sub-section (2) which shall be operative for a
period of one hundred and twenty days.
(4) The company referred to in sub-section (1) may also file an application to the Tribunal on one or more of the
grounds specified in sub-sections (1) and (2) above.
(5) Without prejudice to the provisions of sub-sections (1) to (4), the Central Government or the Reserve Bank of
India or a State Government or a public financial institution or a State level institution or a scheduled bank may, if
it has sufficient reasons to believe that any company has become, for the purposes of this Act, a sick company, make
a reference in respect of such company to the Tribunal for determination of the measures which may be adopted
with respect to such company:
Provided that a reference shall not be made under this sub-section in respect of any company by—
(a) the Government of any State unless all or any of the undertakings belonging to such company are situated in
such State;
(b) a public financial institution or a State level institution or a scheduled bank unless it has, by reason of any
financial assistance or obligation rendered by it, or undertaken by it, with respect to such company, an
interest in such company.
(6) Where an application under sub-section (1) or sub-section (4) has been filed,—
(a) the company shall not dispose of or otherwise enter into any obligation with regard to, its properties or
assets except as required in the normal course of business;
(b) the Board of Directors shall not take any steps likely to prejudice the interests of the creditors.
(7) The Tribunal shall, within a period of sixty days of the receipt of an application under sub-section (1) or sub-
section (4), determine whether the company is a sick company or not:
Provided that no such determination shall be made in respect of an application under sub-section (1)
unless the company has been given notice of the application and a reasonable opportunity to reply to the notice
within thirty days of the receipt thereof.
(8) If the Tribunal is satisfied that a company has become a sick company, the Tribunal shall, after considering all
the relevant facts and circumstances of the case, decide, as soon as may be, by an order in writing, whether it is
practicable for the company to make the repayment of its debts referred to in sub-section (1) within a reasonable
time.

382
Omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (8) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 472
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

(9) If the Tribunal deems fit under sub-section (8) that it is practicable for a sick company to pay its debts referred
to in that sub-section within a reasonable time, the Tribunal shall, by order in writing and subject to such
restrictions or conditions as may be specified in the order, give such time to the company as it may deem fit to make
repayment of the debt.

254. Application for revival and rehabilitation.

254. (1) On the determination of a company as a sick company by the Tribunal under section 253, any secured
creditor of that company or the company may make an application to the Tribunal for the determination of the
measures that may be adopted with respect to the revival and rehabilitation of such company:
Provided that in case any reference had been made before the Tribunal and a scheme for revival and
rehabilitation submitted, such reference shall abate if the secured creditors representing three-fourths in value of
the amount outstanding against financial assistance disbursed to the borrower have taken measures to recover their
secured debt under sub-section (4) of section 13 of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002):
Provided further that no reference shall be made under this section if the secured creditors representing
three-fourths in value of the amount outstanding against financial assistance disbursed to the borrower have taken
measures to recover their secured debt under sub-section (4) of section 13 of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002):
Provided also that where the financial assets of the sick company had been acquired by any securitisation
company or reconstruction company under sub-section (1) of section 5 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), no such application shall be made
without the consent of securitisation company or reconstruction company which has acquired such assets.
(2) An application under sub-section (1) shall be accompanied by—
(a) audited financial statements of the company relating to the immediately preceding financial year;
(b) such particulars and documents, duly authenticated in such manner, along with such fees as may be
prescribed; and
(c) a draft scheme of revival and rehabilitation of the company in such manner as may be prescribed:
Provided that where the sick company has no draft scheme of revival and rehabilitation to offer, it shall file a
declaration to that effect along with the application.
(3) An application under sub-section (1) shall be made to the Tribunal within a period of sixty days from the date of
determination of the company as a sick company by the Tribunal under section 253.

255. Exclusion of certain time in computing period of limitation.

255. Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time
being in force, in computing the period of limitation specified for any suit or application in the name and on behalf
of a company for which an application has been made to the Tribunal under sub-section (1) of section 253, for a
determination to be declared as a sick company or at any stage thereafter, the period during which the stay order as
provided under sub-section (3) of section 253, was applicable shall be excluded.

256. Appointment of interim administrator.

256. (1) On the receipt of an application under section 254, the Tribunal shall, not later than seven days from such
receipt,—
(a) fix a date for hearing not later than ninety days from date of its receipt;
(b) appoint an interim administrator to convene a meeting of creditors of the company in accordance with the
provisions of section 257 to be held not later than forty-five days from receipt of the order of the Tribunal
appointing him to consider whether on the basis of the particulars and documents furnished with the
application made under section 254, the draft scheme, if any, filed along with such application or otherwise
and any other material available, it is possible to revive and rehabilitate the sick company and such other
matters, which the interim administrator may consider necessary for the purpose and to submit his report to
the Tribunal within sixty days from the date of the order:
Provided that where no draft scheme is filed by the company and a declaration has been made to that effect
by the Board of Directors, the Tribunal may direct the interim administrator to take over the management of the
company; and
(c) issue such other directions to the interim administrator as the Tribunal may consider necessary to protect
and preserve the assets of the sick company and for its proper management.

Page 473
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

(2) Where an interim administrator has been directed to take over the management of the company, the directors
and the management of the company shall extend all possible assistance and cooperation to the interim
administrator to manage the affairs of the company.

257. Committee of creditors.

257. (1) The interim administrator shall appoint a committee of creditors with such number of members as he may
determine, but not exceeding seven, and as far as possible a representative each of every class of creditors should be
represented in that committee.
(2) The holding of the meeting of the committee of creditors and the procedure to be followed at such meetings,
including the appointment of its chairperson, shall be decided by the interim administrator.
(3) The interim administrator may direct any promoter, director or any key managerial personnel to attend any
meeting of the committee of creditors and to furnish such information as may be considered necessary by the interim
administrator.

258. Order of Tribunal.

258. On the date of hearing fixed by the Tribunal and on consideration of the report of the interim administrator
filed under sub-section (1) of section 256, if the Tribunal is satisfied that the creditors representing three-fourths in
value of the amount outstanding against the sick company present and voting have resolved that—
(a) it is not possible to revive and rehabilitate such company, the Tribunal shall record such opinion and order that
the proceedings for the winding up of the company be initiated; or
(b) by adopting certain measures the sick company may be revived and rehabilitated, the Tribunal shall appoint a
company administrator for the company and cause such administrator to prepare a scheme of revival and
rehabilitation of the sick company:
Provided that the Tribunal may, if it thinks fit, appoint an interim administrator as the company administrator.

259. Appointment of administrator.

259. (1) The interim administrator or the company administrator, as the case may be, shall be appointed by the
Tribunal from a databank maintained by the Central Government or any institute or agency authorised by the
Central Government in a manner as may be prescribed consisting of the names of company secretaries, chartered
accountants, cost accountants and such other professionals as may, by notification, be specified by the Central
Government.
(2) The terms and conditions of the appointment of interim and company administrators shall be such as may be
ordered by the Tribunal.
(3) The Tribunal may direct the company administrator to take over the assets or management of the company and
for the purpose of assisting him in the management of the company, the company administrator may, with the
approval of the Tribunal, engage the services of suitable expert or experts.

260. Powers and duties of company administrator.

260. (1) The company administrator shall perform such functions as the Tribunal may direct.
(2) Without prejudice to the provisions of sub-section (1), the company administrator may cause to be prepared with
respect to the company—
(a) a complete inventory of—
(i) all assets and liabilities of whatever nature;
(ii) all books of account, registers, maps, plans, records, documents of title and all other documents of whatever
nature;
(b) a list of shareholders and a list of creditors showing separately in the list of creditors, the secured creditors and
unsecured creditors;
(c) a valuation report in respect of the shares and assets in order to arrive at the reserve price for the sale of any
industrial undertaking of the company or for the fixation of the lease rent or share exchange ratio;
(d) an estimate of the reserve price, lease rent or share exchange ratio;
(e) proforma accounts of the company, where no up-to-date audited accounts are available; and
(f) a list of workmen of the company and their dues referred to in sub-section (3) of section 325.

261. Scheme of revival and rehabilitation.

261. (1) The company administrator shall prepare or cause to be prepared a scheme of revival and rehabilitation of
the sick company after considering the draft scheme filed along with the application under section 254.

Page 474
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

(2) A scheme prepared in relation to any sick company under sub-section (1) may provide for any one or more of the
following measures, namely:—
(a) the financial reconstruction of the sick company;
(b) the proper management of the sick company by any change in, or by taking over, the management of such
company;
(c) the amalgamation of—
(i) the sick company with any other company; or
(ii) any other company with the sick company;
(d) takeover of the sick company by a solvent company;
(e) the sale or lease of a part or whole of any asset or business of the sick company;
(f) the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law;
(g) such other preventive, ameliorative and remedial measures as may be appropriate;
(h) repayment or rescheduling or restructuring of the debts or obligations of the sick company to any of its
creditors or class of creditors;
(i) such incidental, consequential or supplemental measures as may be necessary or expedient in connection
with or for the purposes of the measures specified in clauses (a) to (h).

262. Sanction of scheme.

262. (1) The scheme prepared by the company administrator under section 261 shall be placed before the creditors
of the sick company in a meeting convened for their approval by the company administrator within the period of
sixty days from his appointment, which may be extended by the Tribunal up to a period not exceeding one hundred
twenty days.
(2) The company administrator shall convene separate meetings of secured and unsecured creditors of the sick
company and if the scheme is approved by the unsecured creditors representing one-fourth in value of the amount
owed by the company to such creditors and the secured creditors, representing three-fourths in value of the amount
outstanding against financial assistance disbursed by such creditors to the sick company, the company
administrator shall submit the scheme before the Tribunal for sanctioning the scheme:
Provided that where the scheme relates to amalgamation of the sick company with any other company,
such scheme shall, in addition to the approval of the creditors of the sick company under this sub-section, be laid
before the general meeting of both the companies for approval by their respective shareholders and no such scheme
shall be proceeded with unless it has been approved, with or without modification, by a special resolution passed by
the shareholders of that company.
(3)
(i) The scheme prepared by the company administrator shall be examined by the Tribunal and a copy of the
scheme with modification, if any, made by the Tribunal shall be sent, in draft, to the sick company and the
company administrator and in the case of amalgamation, also to any other company concerned, and the
Tribunal may publish or cause to be published the draft scheme in brief in such daily newspapers as the
Tribunal may consider necessary, for suggestions and objections, if any, within such period as the Tribunal
may specify.
(ii) The complete draft scheme shall be kept at the place where registered office of the company is situated or at
such places as mentioned in the advertisement.
(iii) The Tribunal may make such modifications, if any, in the draft scheme as it may consider necessary in the
light of the suggestions and objections received from the sick company and the company administrator and
also from the transferee company and any other company concerned in the amalgamation and from any
shareholder or any creditors or employees of such companies.
(4) On the receipt of the scheme under sub-section (3), the Tribunal shall within sixty days therefrom, after
satisfying that the scheme had been validly approved in accordance with this section, pass an order sanctioning
such scheme.
(5) Where a sanctioned scheme provides for the transfer of any property or liability of the sick company to any other
company or person or where such scheme provides for the transfer of any property or liability of any other company
or person in favour of the sick company, then, by virtue of, and to the extent provided in, the scheme, on and from
the date of coming into operation of the sanctioned scheme or any provision thereof, the property shall be
transferred to, and vest in, and the liability shall become the liability of, such other company or person or, as the
case may be, the sick company.

Page 475
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

(6) The Tribunal may review any sanctioned scheme and make such modifications, as it may deem fit, or may by
order in writing direct company administrator, to prepare a fresh scheme providing for such measures as the
company administrator may consider necessary.
(7) The sanction accorded by the Tribunal under sub-section (4) shall be conclusive evidence that all the
requirements of the scheme relating to the reconstruction or amalgamation or any other measure specified therein
have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Tribunal to be
a true copy thereof shall in all legal proceedings be admitted as evidence.
(8) A copy of the sanctioned scheme referred to in sub-section (4) shall be filed with the Registrar by the sick
company within a period of thirty days from the date of receipt of a copy thereof.

263. Scheme to be binding.

263. On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the
scheme or such provision shall be binding on the sick company and the transferee company or, as the case may be,
the other company and also on the employees, shareholders, creditors and guarantors of the said companies.
264. Implementation of scheme.
264. (1) The Tribunal shall, for the purpose of effective implementation of the scheme, have power to enforce,
modify or terminate any contract or agreement or any obligation pursuant to such agreement or contract entered
into by the company with any other person.
(2) The Tribunal may, if it deems necessary or expedient so to do, by order in writing, authorise the company
administrator appointed under section 259 to implement a sanctioned scheme till its successful implementation on
such terms and conditions as may be specified in the order and may for that purpose require him to file periodic
reports on the implementation of the sanctioned scheme.
(3) Where the whole or substantial assets of the undertaking of the sick company are sold under a sanctioned
scheme, the sale proceeds shall be applied towards implementation of the scheme in such manner as the Tribunal
may direct:
Provided that debtors and creditors shall have the power to scrutinise and make an appeal for review of
the value before final order of fixing value.
(4) Where it is difficult to implement the scheme for any reason or the scheme fails due to non-implementation of
obligations under the scheme by the parties concerned, the company administrator authorised to implement the
scheme and where there is no such administrator, the company, the secured creditors, or the transferee company in
a case of amalgamation, may make an application before the Tribunal for modification of the scheme or to declare
the scheme as failed and that the company may be wound up.
(5) The Tribunal shall, within thirty days of presentation of an application under sub-section (4), pass an order for
modification of the scheme or, as the case may be, declaring the scheme as failed and pass an order for the winding
up of the company if three-fourths in value of the secured creditors consent to the modification of the scheme or
winding up of the company.
(6) Where an application under sub-section (4) has been made before the Tribunal and such application is pending
before it, such application shall abate, if the secured creditors representing not less than three-fourths in value of
the amount outstanding against financial assistance disbursed to the sick company have taken any measures to
recover their secured debt under sub-section (4) of section 13 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (54 of 2002).

265. Winding up of company on report of company administrator.

265. (1) If the scheme is not approved by the creditors in the manner specified in sub-section (2) of section 262, the
company administrator shall submit a report to the Tribunal within fifteen days and the Tribunal shall order for the
winding up of the sick company.
(2) On the passing of an order under sub-section (1), the Tribunal shall conduct the proceedings for winding up of
the sick company in accordance with the provisions of Chapter XX.

266. Power of Tribunal to assess damages against delinquent directors, etc.

266. (1) If, in the course of the scrutiny or implementation of any scheme or proposal including the draft scheme or
proposal, it appears to the Tribunal that any person who has taken part in the promotion, formation or management
of the sick company or its undertaking, including any director, manager, officer or employee of the sick company
who are or have been in employment of such company,—
(a) has misapplied or retained, or become liable or accountable for, any money or property of the sick
company; or

Page 476
 Ss. 253 to 269 Omitted- Chapter XIX [Ss.253 to 269]

(b) has been guilty of any misfeasance, malfeasance, non-feasance or breach of trust in relation to the sick
company,
it may, by order, direct him to repay or restore the money or property, with or without interest, as it thinks just, or to
contribute such sum to the assets of the sick company or the other person, entitled thereto by way of compensation in
respect of the misapplication, retainer, misfeasance, malfeasance, non-feasance or breach of trust as the Tribunal
thinks just and proper:
Provided that such direction by the Tribunal shall be without prejudice to any other legal action that may be
taken against the person including any punishment for fraud in the manner as provided in section 447.
(2) If the Tribunal is satisfied on the basis of the information and evidence in its possession with respect to any
person who is or was a director or an officer or other employee of the sick company, that such person by himself or
along with others had diverted the funds or other property of such company for any purpose other than the purposes
of the company or had managed the affairs of the company in a manner highly detrimental to the interests of the
company, the Tribunal shall, by order, direct the public financial institutions, scheduled banks and State level
institutions not to provide, for a maximum period of ten years from the date of the order, any financial assistance to
such person or any firm of which such person is a partner or any company or other body corporate of which such
person is a director, by whatever name called, or to disqualify the said director, promoter, manager from being
appointed as a director in any company registered under this Act for a maximum period of six years.
(3) No order shall be made by the Tribunal under this section against any person unless such person has been given
a reasonable opportunity of being heard.

267. Punishment for certain offences.

267. Whoever violates the provisions of this Chapter or any scheme, or any order, of the Tribunal or the Appellate
Tribunal or makes a false statement or gives false evidence before the Tribunal or the Appellate Tribunal or
attempts to tamper with the records of reference or appeal filed under this Act, he shall be punishable with
imprisonment for a term which may extend to seven years and with fine which may extend to ten lakh rupees.

268. Bar of jurisdiction.

268. No appeal shall lie in any court or other authority and no civil court shall have any jurisdiction in respect of
any matter in respect of which the Tribunal or the Appellate Tribunal is empowered by or under this Chapter and no
injunction shall be granted by any court or other authority in respect of any action taken or proposed to be taken in
pursuance of any power conferred by or under this Chapter.

269. Rehabilitation and Insolvency Fund.

269. (1) There shall be formed a Fund to be called the Rehabilitation and Insolvency Fund for the purposes of
rehabilitation, revival and liquidation of the sick companies.
(2) There shall be credited to the Fund—
(a) the grants made by the Central Government for the purposes of the Fund;
(b) the amount deposited by the companies as contribution to the Fund;
(c) the amount given to the Fund from any other source; and
(d) the income from investment of the amount in the Fund.
(3) A company which has contributed any amount to the Fund shall, in the event of proceedings initiated in respect
of such company under this Chapter or Chapter XX, may make an application to the Tribunal for withdrawal of
funds not exceeding the amount contributed by it, for making payments to workmen, protecting the assets of the
company or meeting the incidental costs during proceedings.
(4) The Fund shall be managed by an administrator to be appointed by the Central Government in such manner as
may be prescribed.]

Page 477
 S. 270 - Chapter XX [Ss.270 to 365]

Winding up – Ss. 271 to 288, 290 to 303 w.e.f. 15 December 2016

Ss. 304 to 323 constituting Part II Voluntary Winding up and Sec.289 has been Omitted by Section 255 of
the Insolvency and Bankruptcy Code, 2016 read with the clause (16) of the Eleventh Schedule thereto,
with effect from 15th November, 2016

Ss.324 to 365 w.e.f. 15 December 2016

Relevant rules: not notified

CHAPTER XX WINDING UP
383
[270. Winding up by Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

270. The provisions of Part I shall apply to the winding up of a company by the Tribunal
under this Act.]

383
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(9) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to substitution it read as “Mode of winding
up:- 270. (1) The winding up of a company may be either—(a) by the Tribunal; or (b) voluntary.

(2) Notwithstanding anything contained in any other Act, the provisions of this Act with respect to winding
up shall apply to the winding up of a company in any of the modes specified under sub-section (1).”

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 S. 271 - Chapter XX [Ss.270 to 365]

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PART I.—Winding up by the Tribunal

271. Circumstances in which company may be wound up by Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

384
[271. A company may, on a petition under section 272, be wound up by the Tribunal,—

(a) if the company has, by special resolution, resolved that the company be wound up by
the Tribunal;

384
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(10) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it read as “271. (1) A
company may, on a petition under section 272, be wound up by the Tribunal,—
(a) if the company is unable to pay its debts;
(b) if the company has, by special resolution, resolved that the company be wound up by the Tribunal;
(c) if the company has acted against the interests of the sovereignty and integrity of India, the security
of the State, friendly relations with foreign States, public order, decency or morality;
(d) if the Tribunal has ordered the winding up of the company under Chapter XIX;
(e) if on an application made by the Registrar or any other person authorised by the Central
Government by notification under this Act, the Tribunal is of the opinion that the affairs of the
company have been conducted in a fraudulent manner or the company was formed for fraudulent
and unlawful purpose or the persons concerned in the formation or management of its affairs have
been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that
the company be wound up;
(f) if the company has made a default in filing with the Registrar its financial statements or annual
returns for immediately preceding five consecutive financial years; or
(g) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.
(2) A company shall be deemed to be unable to pay its debts,—
(a) if a creditor, by assignment or otherwise, to whom the company is indebted for an amount exceeding
one lakh rupees then due, has served on the company, by causing it to be delivered at its registered
office, by registered post or otherwise, a demand requiring the company to pay the amount so due
and the company has failed to pay the sum within twenty-one days after the receipt of such demand
or to provide adequate security or re-structure or compound the debt to the reasonable satisfaction of
the creditor;
(b) if any execution or other process issued on a decree or order of any court or tribunal in favour of a
creditor of the company is returned unsatisfied in whole or in part; or

(c) if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and, in
determining whether a company is unable to pay its debts, the Tribunal shall take into account the
contingent and prospective liabilities of the company.”.

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 S. 271 - Chapter XX [Ss.270 to 365]

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(b) if the company has acted against the interests of the sovereignty and integrity of India,
the security of the State, friendly relations with foreign States, public order, decency or
morality;

(c) if on an application made by the Registrar or any other person authorised by the
Central Government by notification under this Act, the Tribunal is of the opinion that the
affairs of the company have been conducted in a fraudulent manner or the company was
formed for fraudulent and unlawful purpose or the persons concerned in the formation or
management of its affairs have been guilty of fraud, misfeasance or misconduct in
connection therewith and that it is proper that the company be wound up;

(d) if the company has made a default in filing with the Registrar its financial statements
or annual returns for immediately preceding five consecutive financial years; or

(e) if the Tribunal is of the opinion that it is just and equitable that the company should be
wound up.]

Page 480
 S. 272 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

385
[272. Petition for winding up.

385
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(12) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it read as “272. (1) Subject
to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented
by—
(a) the company;
(b) any creditor or creditors, including any contingent or prospective creditor or creditors;
(c) any contributory or contributories;
(d) all or any of the persons specified in clauses (a), (b) and (c) together;
(e) the Registrar;
(f) any person authorised by the Central Government in that behalf; or
(g) in a case falling under clause (c) of sub-section (1) of section 271, by the Central Government or a
State Government.
(2) A secured creditor, the holder of any debentures, whether or not any trustee or trustees have been
appointed in respect of such and other like debentures, and the trustee for the holders of debentures shall
be deemed to be creditors within the meaning of clause (b) of sub-section (1).
(3) A contributory shall be entitled to present a petition for the winding up of a company, notwithstanding
that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may
have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities,
and shares in respect of which he is a contributory or some of them were either originally allotted to him
or have been held by him, and registered in his name, for at least six months during the eighteen months
immediately before the commencement of the winding up or have devolved on him through the death of a
former holder.
(4) The Registrar shall be entitled to present a petition for winding up under sub- section (1) on any of the
grounds specified in sub-section (1) of section 271, except on the grounds specified in clause (b), clause
(d) or clause (g) of that sub-section:
Provided that the Registrar shall not present a petition on the ground that the company is unable
to pay its debts unless it appears to him either from the financial condition of the company as disclosed in
its balance sheet or from the report of an inspector appointed under section 210 that the company is
unable to pay its debts:
Provided further that the Registrar shall obtain the previous sanction of the Central Government
to the presentation of a petition:
Provided also that the Central Government shall not accord its sanction unless the company has
been given a reasonable opportunity of making representations. [Power delegated to Regional Directors.
(5) A petition presented by the company for winding up before the Tribunal shall be admitted only if
accompanied by a statement of affairs in such form and in such manner as may be prescribed.
(6) Before a petition for winding up of a company presented by a contingent or prospective creditor is
admitted, the leave of the Tribunal shall be obtained for the admission of the petition and such leave shall
not be granted, unless in the opinion of the Tribunal there is a prima facie case for the winding up of the
company and until such security for costs has been given as the Tribunal thinks reasonable.
(7) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar
shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of
receipt of such petition.”.

Page 481
 S. 272 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
272. (1) Subject to the provisions of this section, a petition to the Tribunal for the winding
up of a company shall be presented by—

(a) the company;

(b) any contributory or contributories;

(c) all or any of the persons specified in clauses (a) and (b);

(d) the Registrar;

(e) any person authorised by the Central Government in that behalf; or

(f) in a case falling under clause (b) of section 271, by the Central Government or a State
Government.

(2) A contributory shall be entitled to present a petition for the winding up of a company,
notwithstanding that he may be the holder of fully paid-up shares, or that the company
may have no assets at all or may have no surplus assets left for distribution among the
shareholders after the satisfaction of its liabilities, and shares in respect of which he is a
contributory or some of them were either originally allotted to him or have been held by
him, and registered in his name, for at least six months during the eighteen months
immediately before the commencement of the winding up or have devolved on him
through the death of a former holder.

(3) The Registrar shall be entitled to present a petition for winding up under section 271,
except on the grounds specified in clause (a) 386[of that section]or clause (e) of that sub-
section:

Provided that the Registrar shall obtain the previous sanction of the Central Government
to the presentation of a petition: [Power delegated to Regional Directors. Refer notification number
S.O. 4090(E) dated 19th December, 2016]

Provided further that the Central Government shall not accord its sanction unless the

Substituted for “or clause (e) of that sub-section” by section 37 of the Companies (Amendment) Act,
386

2019 (22 of 2019) with effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August
2019.

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 S. 272 - Chapter XX [Ss.270 to 365]

Winding up – by Tribunal w.e.f. 15 December 2016

Relevant rules: not notified

company has been given a reasonable opportunity of making representations. [Power

delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December, 2016]

(4) A petition presented by the company for winding up before the Tribunal shall be
admitted only if accompanied by a statement of affairs in such form and in such manner
as may be prescribed.

(5) A copy of the petition made under this section shall also be filed with the Registrar
and the Registrar shall, without prejudice to any other provisions, submit his views to the
Tribunal within sixty days of receipt of such petition.]

Page 483
 S. 273 - Chapter XX [Ss.270 to 365]

Winding up – by Tribunal w.e.f. 15 December 2016

Relevant rules: not notified

273. Powers of Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Also relevant Ss.275, 287, 295, 296, 298, 299, 300 and 301 and powers under Part III of this Chapter]

273. (1) The Tribunal may, on receipt of a petition for winding up under section 272 pass
any of the following orders, namely:—
(a) dismiss it, with or without costs;
(b) make any interim order as it thinks fit;
(c) appoint a provisional liquidator of the company till the making of a winding up order;
(d) make an order for the winding up of the company with or without costs; or
(e) any other order as it thinks fit:

Provided that an order under this sub-section shall be made within ninety days from the
date of presentation of the petition:

Provided further that before appointing a provisional liquidator under clause (c), the
Tribunal shall give notice to the company and afford a reasonable opportunity to it to make
its representations, if any, unless for special reasons to be recorded in writing, the
Tribunal thinks fit to dispense with such notice:

Provided also that the Tribunal shall not refuse to make a winding up order on the ground
only that the assets of the company have been mortgaged for an amount equal to or in
excess of those assets, or that the company has no assets.

(2) Where a petition is presented on the ground that it is just and equitable that the
company should be wound up, the Tribunal may refuse to make an order of winding up,
if it is of the opinion that some other remedy is available to the petitioners and that they
are acting unreasonably in seeking to have the company wound up instead of pursuing
the other remedy.

Page 484
 S. 274 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

274. Directions for filing statement of affairs.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

274. (1) Where a petition for winding up is filed before the Tribunal by any person other
than the company, the Tribunal shall, if satisfied that a prima facie case for winding up of
the company is made out, by an order direct the company to file its objections along with
a statement of its affairs within thirty days of the order in such form and in such manner
as may be prescribed:

Provided that the Tribunal may allow a further period of thirty days in a situation
of contingency or special circumstances:

Provided further that the Tribunal may direct the petitioner to deposit such
security for costs as it may consider reasonable as a precondition to issue directions to
the company.

(2) A company, which fails to file the statement of affairs as referred to in sub-section (1),
shall forfeit the right to oppose the petition and such directors and officers of the company
as found responsible for such non-compliance, shall be liable for punishment under sub-
section (4).

(3) The directors and other officers of the company, in respect of which an order for
winding up is passed by the Tribunal under clause (d) of sub-section(1) of section 273,
shall, within a period of thirty days of such order, submit, at the cost of the company, the
books of account of the company completed and audited up to the date of the order, to
such liquidator and in the manner specified by the Tribunal.

(4) If any director or officer of the company contravenes the provisions of this section, the
director or the officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to six months or with fine which shall not be
less than twenty-five thousand rupees but which may extend to five lakh rupees, or with
both.

(5) The complaint may be filed in this behalf before the Special Court by Registrar,
provisional liquidator, Company Liquidator or any person authorised by the Tribunal.

Page 485
 S. 275 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

275. Company Liquidators and their appointments.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

275. (1) For the purposes of winding up of a company by the Tribunal, the Tribunal at the
time of the passing of the order of winding up, shall appoint an Official Liquidator or a
liquidator from the panel maintained under sub-section (2) as the Company Liquidator.
387
[(2) The provisional liquidator or the Company Liquidator, as the case may be, shall be
appointed by the Tribunal from amongst the insolvency professionals registered under
the Insolvency and Bankruptcy Code, 2016.] [See section 2(23)]

(3) Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and
restrict his powers by the order appointing him or it or by a subsequent order, but
otherwise he shall have the same powers as a liquidator.

(4) The Central Government may remove the name of any person or firm or body
corporate from the panel maintained under sub-section (2) on the grounds of misconduct,
fraud, misfeasance, breach of duties or professional incompetence:

Provided that the Central Government before removing him or it from the panel
shall give him or it a reasonable opportunity of being heard.

(5) The terms and conditions of appointment of a provisional liquidator or Company

Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis
of task required to be performed, experience, qualification of such liquidator and size of
the company.

(6) On appointment as provisional liquidator or Company Liquidator, as the case may be,
such liquidator shall file a declaration within seven days from the date of appointment in
the prescribed form disclosing conflict of interest or lack of independence in respect of his

387
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (13) of
the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016. Prior to its substitution it read as “(2) The provisional liquidator or the Company Liquidator,
as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered
accountants, advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered accountants,
advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or
from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten
years’ experience in company matters.”

Page 486
 S. 275 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

appointment, if any, with the Tribunal and such obligation shall continue throughout the
term of his appointment.

(7) While passing a winding up order, the Tribunal may appoint a provisional liquidator, if
any, appointed under clause (c) of sub-section (1) of section 273, as the Company
Liquidator for the conduct of the proceedings for the winding up of the company.

Page 487
 S. 276 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

276. Removal and replacement of liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

276. (1) The Tribunal may, on a reasonable cause being shown and for reasons to be
recorded in writing, remove the provisional liquidator or the Company Liquidator, as the
case may be, as liquidator of the company on any of the following grounds, namely:—
(a) misconduct;
(b) fraud or misfeasance;
(c) professional incompetence or failure to exercise due care and diligence in
performance of the powers and functions;
(d) inability to act as provisional liquidator or as the case may be, Company Liquidator;
(e) conflict of interest or lack of independence during the term of his appointment that
would justify removal.

(2) In the event of death, resignation or removal of the provisional liquidator or as the case
may be, Company Liquidator, the Tribunal may transfer the work assigned to him or it to
another Company Liquidator for reasons to be recorded in writing.

(3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any
loss or damage to the company due to fraud or misfeasance or failure to exercise due
care and diligence in the performance of his or its powers and functions, the Tribunal may
recover or cause to be recovered such loss or damage from the liquidator and pass such
other orders as it may think fit.

(4) The Tribunal shall, before passing any order under this section, provide a reasonable
opportunity of being heard to the provisional liquidator or, as the case may be, Company
Liquidator.

Page 488
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277. Intimation to Company Liquidator, provisional liquidator and Registrar.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

277. (1) Where the Tribunal makes an order for appointment of provisional liquidator or
for the winding up of a company, it shall, within a period not exceeding seven days from
the date of passing of the order, cause intimation thereof to be sent to the Company
Liquidator or provisional liquidator, as the case may be, and the Registrar.

(2) On receipt of the copy of order of appointment of provisional liquidator or winding up

order, the Registrar shall make an endorsement to that effect in his records relating to the
company and notify in the Official Gazette that such an order has been made and in the
case of a listed company, the Registrar shall intimate about such appointment or order,
as the case may be, to the stock exchange or exchanges where the securities of the
company are listed.

(3) The winding up order shall be deemed to be a notice of discharge to the officers,
employees and workmen of the company, except when the business of the company is
continued.

(4) Within three weeks from the date of passing of winding up order, the Company
Liquidator shall make an application to the Tribunal for constitution of a winding up
committee to assist and monitor the progress of liquidation proceedings by the Company
Liquidator in carrying out the function as provided in sub-section (5) and such winding up
committee shall comprise of the following persons, namely:—
(i) Official Liquidator attached to the Tribunal;
(ii) nominee of secured creditors; and
(iii) a professional nominated by the Tribunal.

(5) The Company Liquidator shall be the convener of the meetings of the winding up
committee which shall assist and monitor the liquidation proceedings in following areas
of liquidation functions, namely:—
(i) taking over assets;
(ii) examination of the statement of affairs;
(iii) recovery of property, cash or any other assets of the company including benefits
derived therefrom;
(iv) review of audit reports and accounts of the company;
(v) sale of assets;
(vi) finalisation of list of creditors and contributories;
(vii) compromise, abandonment and settlement of claims;
(viii) payment of dividends, if any; and
(ix) any other function, as the Tribunal may direct from time to time.
Page 489
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(6) The Company Liquidator shall place before the Tribunal a report along with minutes
of the meetings of the committee on monthly basis duly signed by the members present
in the meeting for consideration till the final report for dissolution of the company is
submitted before the Tribunal.

(7) The Company Liquidator shall prepare the draft final report for consideration and
approval of the winding up committee.

(8) The final report so approved by the winding up committee shall be submitted by the
Company Liquidator before the Tribunal for passing of a dissolution order in respect of
the company.

Page 490
 S. 278 - Chapter XX [Ss.270 to 365]

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278. Effect of winding up order.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

278. The order for the winding up of a company shall operate in favour of all the creditors
and all contributories of the company as if it had been made out on the joint petition of
creditors and contributories.

Page 491
 S. 279 - Chapter XX [Ss.270 to 365]

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279. Stay of suits, etc., on winding up order.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

279. (1) When a winding up order has been passed or a provisional liquidator has been
appointed, no suit or other legal proceeding shall be commenced, or if pending at the date
of the winding up order, shall be proceeded with, by or against the company, except with
the leave of the Tribunal and subject to such terms as the Tribunal may impose:

Provided that any application to the Tribunal seeking leave under this section shall
be disposed of by the Tribunal within sixty days.

(2) Nothing in sub-section (1) shall apply to any proceeding pending in appeal before the
Supreme Court or a High Court.

Page 492
 S. 280 - Chapter XX [Ss.270 to 365]

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280. Jurisdiction of Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

388
[280. The Tribunal shall, notwithstanding anything contained in any other law for the
time being in force, have jurisdiction to entertain, or dispose of,—

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company, including claims by or against any of its
branches in India;

(c) any application made under section 233;

(d) any question of priorities or any other question whatsoever, whether of law or facts,
including those relating to assets, business, actions, rights, entitlements, privileges,
benefits, duties, responsibilities, obligations or in any matter arising out of, or in relation
to winding up of the company, whether such suit or proceeding has been instituted, or is
instituted, or such claim or question has arisen or arises or such application has been
made or is made or such scheme has been submitted, or is submitted, before or after the
order for the winding up of the company is made.]

388
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(14) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to its substitution it read as “280. The
Tribunal shall, notwithstanding anything contained in any other law for the time being in force, have
jurisdiction to entertain, or dispose of,—
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company, including claims by or against any of its branches in India;
(c) any application made under section 233;
(d) any scheme submitted under section 262;
(e) any question of priorities or any other question whatsoever, whether of law or facts, including those
relating to assets, business, actions, rights, entitlements, privileges, benefits, duties, responsibilities,
obligations or in any matter arising out of, or in relation to winding up of the company,

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen
or arises or such application has been made or is made or such scheme has been submitted, or is
submitted, before or after the order for the winding up of the company is made.”.

Page 493
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281. Submission of report by Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

281. (1) Where the Tribunal has made a winding up order or appointed a Company
Liquidator, such liquidator shall, within sixty days from the order, submit to the Tribunal,
a report containing the following particulars, namely:—
(a) the nature and details of the assets of the company including their location and
value, stating separately the cash balance in hand and in the bank, if any, and the
negotiable securities, if any, held by the company:
Provided that the valuation of the assets shall be obtained from registered valuers
for this purpose;
(b) amount of capital issued, subscribed and paid-up;
(c) the existing and contingent liabilities of the company including names, addresses
and occupations of its creditors, stating separately the amount of secured and
unsecured debts, and in the case of secured debts, particulars of the securities
given, whether by the company or an officer thereof, their value and the dates on
which they were given;
(d) the debts due to the company and the names, addresses and occupations of the
persons from whom they are due and the amount likely to be realised on account
thereof;
(e) guarantees, if any, extended by the company;
(f) list of contributories and dues, if any, payable by them and details of any unpaid
call;
(g) details of trade marks and intellectual properties, if any, owned by the company;
(h) details of subsisting contracts, joint ventures and collaborations, if any;
(i) details of holding and subsidiary companies, if any;
(j) details of legal cases filed by or against the company; and
(k) any other information which the Tribunal may direct or the Company Liquidator may
consider necessary to include.

(2) The Company Liquidator shall include in his report the manner in which the company
was promoted or formed and whether in his opinion any fraud has been committed by
any person in its promotion or formation or by any officer of the company in relation to the
company since the formation thereof and any other matters which, in his opinion, it is
desirable to bring to the notice of the Tribunal.

(3) The Company Liquidator shall also make a report on the viability of the business of
the company or the steps which, in his opinion, are necessary for maximising the value
of the assets of the company.

(4) The Company Liquidator may also, if he thinks fit, make any further report or reports.
Page 494
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(5) Any person describing himself in writing to be a creditor or a contributory of the

company shall be entitled by himself or by his agent at all reasonable times to inspect the
report submitted in accordance with this section and take copies thereof or extracts
therefrom on payment of the prescribed fees.

Page 495
 S. 282 - Chapter XX [Ss.270 to 365]

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282. Directions of Tribunal on report of Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

282. (1) The Tribunal shall, on consideration of the report of the Company Liquidator, fix
a time limit within which the entire proceedings shall be completed and the company be
dissolved:

Provided that the Tribunal may, if it is of the opinion, at any stage of the
proceedings, or on examination of the reports submitted to it by the Company Liquidator
and after hearing the Company Liquidator, creditors or contributories or any other
interested person, that it will not be advantageous or economical to continue the
proceedings, revise the time limit within which the entire proceedings shall be completed
and the company be dissolved.

(2) The Tribunal may, on examination of the reports submitted to it by the Company
Liquidator and after hearing the Company Liquidator, creditors or contributories or any
other interested person, order sale of the company as a going concern or its assets or
part thereof:

Provided that the Tribunal may, where it considers fit, appoint a sale committee
comprising such creditors, promoters and officers of the company as the Tribunal may
decide to assist the Company Liquidator in sale under this sub-section.

(3) Where a report is received from the Company Liquidator or the Central Government
or any person that a fraud has been committed in respect of the company, the Tribunal
shall, without prejudice to the process of winding up, order for investigation under section
210, and on consideration of the report of such investigation it may pass order and give
directions under sections 339 to 342 or direct the Company Liquidator to file a criminal
complaint against persons who were involved in the commission of fraud.

(4) The Tribunal may order for taking such steps and measures, as may be necessary, to
protect, preserve or enhance the value of the assets of the company.

(5) The Tribunal may pass such other order or give such other directions as it considers
fit.

Page 496
 S. 283 - Chapter XX [Ss.270 to 365]

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283. Custody of company's properties.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

283. (1) Where a winding up order has been made or where a provisional liquidator has
been appointed, the Company Liquidator or the provisional liquidator, as the case may
be, shall, on the order of the Tribunal, forthwith take into his or its custody or control all
the property, effects and actionable claims to which the company is or appears to be
entitled to and take such steps and measures, as may be necessary, to protect and
preserve the properties of the company.

(2) Notwithstanding anything contained in sub-section (1), all the property and effects of
the company shall be deemed to be in the custody of the Tribunal from the date of the
order for the winding up of the company.

(3) On an application by the Company Liquidator or otherwise, the Tribunal may, at any
time after the making of a winding up order, require any contributory for the time being on
the list of contributories, and any trustee, receiver, banker, agent, officer or other
employee of the company, to pay, deliver, surrender or transfer forthwith, or within such
time as the Tribunal directs, to the Company Liquidator, any money, property or books
and papers in his custody or under his control to which the company is or appears to be
entitled.

Page 497
 S. 284 - Chapter XX [Ss.270 to 365]

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284. Promoters, directors, etc., to cooperate with Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

284. (1) The promoters, directors, officers and employees, who are or have been in
employment of the company or acting or associated with the company shall extend full
cooperation to the Company Liquidator in discharge of his functions and duties.

(2) Where any person, without reasonable cause, fails to discharge his obligations under
sub-section (1), he shall be punishable with imprisonment which may extend to six
months or with fine which may extend to fifty thousand rupees, or with both.

Page 498
 S. 285 - Chapter XX [Ss.270 to 365]

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285. Settlement of list of contributories and application of assets.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

285. (1) As soon as may be after the passing of a winding up order by the Tribunal, the
Tribunal shall settle a list of contributories, cause rectification of register of members in
all cases where rectification is required in pursuance of this Act and shall cause the assets
of the company to be applied for the discharge of its liability:

Provided that where it appears to the Tribunal that it would not be necessary to
make calls on or adjust the rights of contributories, the Tribunal may dispense with the
settlement of a list of contributories.

(2) In settling the list of contributories, the Tribunal shall distinguish between those who
are contributories in their own right and those who are contributories as being
representatives of, or liable for the debts of, others.

(3) While settling the list of contributories, the Tribunal shall include every person, who is
or has been a member, who shall be liable to contribute to the assets of the company an
amount sufficient for payment of the debts and liabilities and the costs, charges and
expenses of winding up, and for the adjustment of the rights of the contributories among
themselves, subject to the following conditions, namely:—
(a) a person who has been a member shall not be liable to contribute if he has ceased
to be a member for the preceding one year or more before the commencement of
the winding up;
(b) a person who has been a member shall not be liable to contribute in respect of any
debt or liability of the company contracted after he ceased to be a member;
(c) no person who has been a member shall be liable to contribute unless it appears
to the Tribunal that the present members are unable to satisfy the contributions
required to be made by them in pursuance of this Act;
(d) in the case of a company limited by shares, no contribution shall be required from
any person, who is or has been a member exceeding the amount, if any, unpaid on
the shares in respect of which he is liable as such member;
(e) in the case of a company limited by guarantee, no contribution shall be required
from any person, who is or has been a member exceeding the amount undertaken
to be contributed by him to the assets of the company in the event of its being
wound up but if the company has a share capital, such member shall be liable to
contribute to the extent of any sum unpaid on any shares held by him as if the
company were a company limited by shares.

Page 499
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286. Obligations of directors and managers.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

286. In the case of a limited company, any person who is or has been a director or
manager, whose liability is unlimited under the provisions of this Act, shall, in addition to
his liability, if any, to contribute as an ordinary member, be liable to make a further
contribution as if he were at the commencement of winding up, a member of an unlimited
company:

Provided that —
(a) a person who has been a director or manager shall not be liable to make such
further contribution, if he has ceased to hold office for a year or upwards before the
commencement of the winding up;
(b) a person who has been a director or manager shall not be liable to make such
further contribution in respect of any debt or liability of the company contracted after
he ceased to hold office;
(c) subject to the articles of the company, a director or manager shall not be liable to
make such further contribution unless the Tribunal deems it necessary to require
the contribution in order to satisfy the debts and liabilities of the company, and the
costs, charges and expenses of the winding up.

Page 500
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287. Advisory committee.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

287. (1) The Tribunal may, while passing an order of winding up of a company, direct that
there shall be, an advisory committee to advise the Company Liquidator and to report to
the Tribunal on such matters as the Tribunal may direct.

(2) The advisory committee appointed by the Tribunal shall consist of not more than
twelve members, being creditors and contributories of the company or such other persons
in such proportion as the Tribunal may, keeping in view the circumstances of the company
under liquidation, direct.

(3) The Company Liquidator shall convene a meeting of creditors and contributories, as
ascertained from the books and documents, of the company within thirty days from the
date of order of winding up for enabling the Tribunal to determine the persons who may
be members of the advisory committee.

(4) The advisory committee shall have the right to inspect the books of account and other
documents, assets and properties of the company under liquidation at a reasonable time.

(5) The provisions relating to the convening of the meetings, the procedure to be followed
thereat and other matters relating to conduct of business by the advisory committee shall
be such as may be prescribed.

(6) The meeting of advisory committee shall be chaired by the Company Liquidator.

Page 501
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288. Submission of periodical reports to Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

288. (1) The Company Liquidator shall make periodical reports to the Tribunal and in any
case make a report at the end of each quarter with respect to the progress of the winding
up of the company in such form and manner as may be prescribed.

(2) The Tribunal may, on an application by the Company Liquidator, review the orders
made by it and make such modifications as it thinks fit.

Page 502
 S. 289 - Chapter XX [Ss.270 to 365]

Winding up – S. 289 Omitted

Relevant rules: not notified

389
[289. Omitted - Power of Tribunal on application for stay of winding up.

389
Omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(15) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to omission it read as “289. (1) The Tribunal
may, at any time after making a winding up order, on an application of promoter, shareholders or creditors
or any other interested person, if satisfied, make an order that it is just and fair that an opportunity to revive
and rehabilitate the company be provided staying the proceedings for such time but not exceeding one
hundred and eighty days and on such terms and conditions as it thinks fit:
Provided that an order under this sub-section shall be made by the Tribunal only when the application is
accompanied with a scheme for rehabilitation.
(2) The Tribunal may, while passing the order under sub-section (1), require the applicant to furnish such
security as to costs as it considers fit.
(3) Where an order under sub-section (1) is passed by the Tribunal, the provisions of Chapter XIX shall be
followed in respect of the consideration and sanction of the scheme of revival of the company.
(4) Without prejudice to the provisions of sub-section (1), the Tribunal may at any time after making a
winding up order, on an application of the Company Liquidator, make an order staying the winding up
proceedings or any part thereof, for such time and on such terms and conditions as it thinks fit.
(5) The Tribunal may, before making an order, under this section, require the Company Liquidator to furnish
to it a report with respect to any facts or matters which are in his opinion relevant to the application.

(6) A copy of every order made under this section shall forthwith be forwarded by the Company Liquidator
to the Registrar who shall make an endorsement of the order in his books and records relating to the
company.”.

Page 503
 S. 290 - Chapter XX [Ss.270 to 365]

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290. Powers and duties of Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

290. (1) Subject to directions by the Tribunal, if any, in this regard, the Company
Liquidator, in a winding up of a company by the Tribunal, shall have the power—
(a) to carry on the business of the company so far as may be necessary for the
beneficial winding up of the company;
(b) to do all acts and to execute, in the name and on behalf of the company, all deeds,
receipts and other documents, and for that purpose, to use, when necessary, the
company’s seal;
(c) to sell the immovable and movable property and actionable claims of the company
by public auction or private contract, with power to transfer such property to any
person or body corporate, or to sell the same in parcels;
(d) to sell the whole of the undertaking of the company as a going concern;
(e) to raise any money required on the security of the assets of the company;
(f) to institute or defend any suit, prosecution or other legal proceeding, civil or criminal,
in the name and on behalf of the company;
(g) to invite and settle claim of creditors, employees or any other claimant and
distribute sale proceeds in accordance with priorities established under this Act;
(h) to inspect the records and returns of the company on the files of the Registrar or
any other authority;
(i) to prove rank and claim in the insolvency of any contributory for any balance against
his estate, and to receive dividends in the insolvency, in respect of that balance, as
a separate debt due from the insolvent, and rateably with the other separate
creditors;
(j) to draw, accept, make and endorse any negotiable instruments including cheque,
bill of exchange, hundi or promissory note in the name and on behalf of the
company, with the same effect with respect to the liability of the company as if such
instruments had been drawn, accepted, made or endorsed by or on behalf of the
company in the course of its business;
(k) to take out, in his official name, letters of administration to any deceased
contributory, and to do in his official name any other act necessary for obtaining
payment of any money due from a contributory or his estate which cannot be
conveniently done in the name of the company, and in all such cases, the money
due shall, for the purpose of enabling the Company Liquidator to take out the letters
of administration or recover the money, be deemed to be due to the Company
Liquidator himself;
(l) to obtain any professional assistance from any person or appoint any professional,
in discharge of his duties, obligations and responsibilities and for protection of the
assets of the company, appoint an agent to do any business which the Company
Liquidator is unable to do himself;
Page 504
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(m) to take all such actions, steps, or to sign, execute and verify any paper, deed,
document, application, petition, affidavit, bond or instrument as may be
necessary,—
(i) for winding up of the company;
(ii) for distribution of assets;
(iii) in discharge of his duties and obligations and functions as Company Liquidator;
and
(n) to apply to the Tribunal for such orders or directions as may be necessary for the
winding up of the company.

(2) The exercise of powers by the Company Liquidator under sub-section (1) shall be
subject to the overall control of the Tribunal.

(3) Notwithstanding the provisions of sub-section (1), the Company Liquidator shall
perform such other duties as the Tribunal may specify in this behalf.

Page 505
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291. Provision for professional assistance to Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

291. (1) The Company Liquidator may, with the sanction of the Tribunal, appoint one or
more chartered accountants or company secretaries or cost accountants or legal
practitioners or such other professionals on such terms and conditions, as may be
necessary, to assist him in the performance of his duties and functions under this Act.

(2) Any person appointed under this section shall disclose forthwith to the Tribunal in the
prescribed form any conflict of interest or lack of independence in respect of his
appointment.

Page 506
 S. 292 - Chapter XX [Ss.270 to 365]

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292. Exercise and control of Company Liquidator's powers.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

292. (1) Subject to the provisions of this Act, the Company Liquidator shall, in the
administration of the assets of the company and the distribution thereof among its
creditors, have regard to any directions which may be given by the resolution of the
creditors or contributories at any general meeting or by the advisory committee.

(2) Any directions given by the creditors or contributories at any general meeting shall, in
case of conflict, be deemed to override any directions given by the advisory committee.

(3) The Company Liquidator—

(a) may summon meetings of the creditors or contributories, whenever he thinks fit, for
the purpose of ascertaining their wishes; and
(b) shall summon such meetings at such times, as the creditors or contributories, as
the case may be, may, by resolution, direct, or whenever requested in writing to do
so by not less than one-tenth in value of the creditors or contributories, as the case
may be.

(4) Any person aggrieved by any act or decision of the Company Liquidator may apply to
the Tribunal, and the Tribunal may confirm, reverse or modify the act or decision
complained of and make such further order as it thinks just and proper in the
circumstances.

Page 507
 S. 293 - Chapter XX [Ss.270 to 365]

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293. Books to be kept by Company Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

293. (1) The Company Liquidator shall keep proper books in such manner, as may be
prescribed, in which he shall cause entries or minutes to be made of proceedings at
meetings and of such other matters as may be prescribed.

(2) Any creditor or contributory may, subject to the control of the Tribunal, inspect any
such books, personally or through his agent.

Page 508
 S. 294 - Chapter XX [Ss.270 to 365]

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294. Audit of Company Liquidator's accounts.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

294. (1) The Company Liquidator shall maintain proper and regular books of account
including accounts of receipts and payments made by him in such form and manner as
may be prescribed.

(2) The Company Liquidator shall, at such times as may be prescribed but not less than
twice in each year during his tenure of office, present to the Tribunal an account of the
receipts and payments as such liquidator in the prescribed form in duplicate, which shall
be verified by a declaration in such form and manner as may be prescribed.

(3) The Tribunal shall cause the accounts to be audited in such manner as it thinks fit,
and for the purpose of the audit, the Company Liquidator shall furnish to the Tribunal with
such vouchers and information as the Tribunal may require, and the Tribunal may, at any
time, require the production of, and inspect, any books of account kept by the Company
Liquidator.

(4) When the accounts of the company have been audited, one copy thereof shall be filed
by the Company Liquidator with the Tribunal, and the other copy shall be delivered to the
Registrar which shall be open to inspection by any creditor, contributory or person
interested.

(5) Where an account referred to in sub-section (4) relates to a Government company,

the Company Liquidator shall forward a copy thereof—
(a) to the Central Government, if that Government is a member of the Government
company; or
(b) to any State Government, if that Government is a member of the Government
company; or
(c) to the Central Government and any State Government, if both the Governments
are members of the Government company.

(6) The Company Liquidator shall cause the accounts when audited, or a summary
thereof, to be printed, and shall send a printed copy of the accounts or summary thereof
by post to every creditor and every contributory:

Provided that the Tribunal may dispense with the compliance of the provisions of
this sub-section in any case it deems fit.

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295. Payment of debts by contributory and extent of set-off.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

295. (1) The Tribunal may, at any time after passing of a winding up order, pass an order
requiring any contributory for the time being on the list of contributories to pay, in the
manner directed by the order, any money due to the company, from him or from the estate
of the person whom he represents, exclusive of any money payable by him or the estate
by virtue of any call in pursuance of this Act.

(2) The Tribunal, in making an order, under sub-section (1), may,—

(a) in the case of an unlimited company, allow to the contributory, by way of set- off,
any money due to him or to the estate which he represents, from the company, on
any independent dealing or contract with the company, but not any money due to
him as a member of the company in respect of any dividend or profit; and
(b) in the case of a limited company, allow to any director or manager whose liability
is unlimited, or to his estate, such set-off.

(3) In the case of any company, whether limited or unlimited, when all the creditors have
been paid in full, any money due on any account whatever to a contributory from the
company may be allowed to him by way of set-off against any subsequent call.

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296. Power of Tribunal to make calls.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

296. The Tribunal may, at any time after the passing of a winding up order, and either
before or after it has ascertained the sufficiency of the assets of the company,—
(a) make calls on all or any of the contributories for the time being on the list of the
contributories, to the extent of their liability, for payment of any money which the
Tribunal considers necessary to satisfy the debts and liabilities of the company, and
the costs, charges and expenses of winding up, and for the adjustment of the rights of
the contributories among themselves; and
(b) make an order for payment of any calls so made.

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297. Adjustment of rights of contributories.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

297. The Tribunal shall adjust the rights of the contributories among themselves and
distribute any surplus among the persons entitled thereto.

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298. Power to order costs.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

298. The Tribunal may, in the event of the assets of a company being insufficient to satisfy
its liabilities, make an order for the payment out of the assets, of the costs, charges and
expenses incurred in the winding up, in such order of priority inter se as the Tribunal
thinks just and proper.

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

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

299. (1) The Tribunal may, at any time after the appointment of a provisional liquidator or
the passing of a winding up order, summon before it any officer of the company or person
known or suspected to have in his possession any property or books or papers, of the
company, or known or suspected to be indebted to the company, or any person whom
the Tribunal thinks to be capable of giving information concerning the promotion,
formation, trade, dealings, property, books or papers, or affairs of the company.

(2) The Tribunal may examine any officer or person so summoned on oath concerning
the matters aforesaid, either by word of mouth or on written interrogatories or on affidavit
and may, in the first case, reduce his answers to writing and require him to sign them.

(3) The Tribunal may require any officer or person so summoned to produce any books
and papers relating to the company in his custody or power, but, where he claims any lien
on books or papers produced by him, the production shall be without prejudice to such
lien, and the Tribunal shall have power to determine all questions relating to that lien.

(4) The Tribunal may direct the liquidator to file before it a report in respect of debt or
property of the company in possession of other persons.

(5) If the Tribunal finds that-

(a) a person is indebted to the company, the Tribunal may order him to pay to the
provisional liquidator or, as the case may be, the liquidator at such time and in such
manner as the Tribunal may consider just, the amount in which he is indebted, or
any part thereof, either in full discharge of the whole amount or not, as the Tribunal
thinks fit, with or without costs of the examination;
(b) a person is in possession of any property belonging to the company, the Tribunal
may order him to deliver to the provisional liquidator or, as the case may be, the
liquidator, that property or any part thereof, at such time, in such manner and on
such terms as the Tribunal may consider just.

(6) If any officer or person so summoned fails to appear before the Tribunal at the time
appointed without a reasonable cause, the Tribunal may impose an appropriate cost.

(7) Every order made under sub-section (5) shall be executed in the same manner as
decrees for the payment of money or for the delivery of property under the Code of Civil
Procedure, 1908 (5 of 1908).

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(8) Any person making any payment or delivery in pursuance of an order made under
sub-section (5) shall by such payment or delivery be, unless otherwise directed by such
order, discharged from all liability whatsoever in respect of such debt or property.

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 S. 300 - Chapter XX [Ss.270 to 365]

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300. Power to order examination of promoters, directors, etc.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

300. (1) Where an order has been made for the winding up of a company by the Tribunal,
and the Company Liquidator has made a report to the Tribunal under this Act, stating that
in his opinion a fraud has been committed by any person in the promotion, formation,
business or conduct of affairs of the company since its formation, the Tribunal may, after
considering the report, direct that such person or officer shall attend before the Tribunal
on a day appointed by it for that purpose, and be examined as to the promotion or
formation or the conduct of the business of the company or as to his conduct and dealings
as an officer thereof.

(2) The Company Liquidator shall take part in the examination, and for that purpose he
or it may, if specially authorised by the Tribunal in that behalf, employ such legal
assistance as may be sanctioned by the Tribunal.

(3) The person shall be examined on oath and shall answer all such questions as the
Tribunal may put, or allow to be put, to him.

(4) A person ordered to be examined under this section—

(a) shall, before his examination, be furnished at his own cost with a copy of the report
of the Company Liquidator; and
(b) may at his own cost employ chartered accountants or company secretaries or cost
accountants or legal practitioners entitled to appear before the Tribunal under
section 432, who shall be at liberty to put to him such questions as the Tribunal
may consider just for the purpose of enabling him to explain or qualify any answers
given by him.

(5) If any such person applies to the Tribunal to be exculpated from any charges made or
suggested against him, it shall be the duty of the Company Liquidator to appear on the
hearing of such application and call the attention of the Tribunal to any matters which
appear to the Company Liquidator to be relevant.

(6) If the Tribunal, after considering any evidence given or hearing witnesses called by
the Company Liquidator, allows the application made under sub-section (5), the Tribunal
may order payment to the applicant of such costs as it may think fit.

(7) Notes of the examination shall be taken down in writing, and shall be read over to or
by, and signed by, the person examined, a copy be supplied to him and may thereafter
be used in evidence against him, and shall be open to inspection by any creditor or
contributory at all reasonable times.
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(8) The Tribunal may, if it thinks fit, adjourn the examination from time to time.

(9) An examination under this section may, if the Tribunal so directs, be held before any
person or authority authorised by the Tribunal.

(10) The powers of the Tribunal under this section as to the conduct of the examination,
but not as to costs, may be exercised by the person or authority before whom the
examination is held in pursuance of sub-section (9).

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301. Arrest of person trying to leave India or abscond.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

301. At any time either before or after passing a winding up order, if the Tribunal is
satisfied that a contributory or a person having property, accounts or papers of the
company in his possession is about to leave India or otherwise to abscond, or is about to
remove or conceal any of his property, for the purpose of evading payment of calls or of
avoiding examination respecting the affairs of the company, the Tribunal may cause—
(a) the contributory to be detained until such time as the Tribunal may order; and
(b) his books and papers and movable property to be seized and safely kept until such
time as the Tribunal may order.

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302. Dissolution of company by Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

302. (1) When the affairs of a company have been completely wound up, the Company
Liquidator shall make an application to the Tribunal for dissolution of such company.

(2) The Tribunal shall on an application filed by the Company Liquidator under sub-section
(1) or when the Tribunal is of the opinion that it is just and reasonable in the circumstances
of the case that an order for the dissolution of the company should be made, make an
order that the company be dissolved from the date of the order, and the company shall
be dissolved accordingly.

(3) A copy of the order shall, within thirty days from the date thereof, be forwarded by the
Company Liquidator to the Registrar who shall record in the register relating to the
company a minute of the dissolution of the company.

(4) If the Company Liquidator makes a default in forwarding a copy of the order within the
period specified in sub-section (3), the Company Liquidator shall be punishable with fine
which may extend to five thousand rupees for every day during which the default
continues.

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303. Appeals from orders made before commencement of Act.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

303. Nothing in this Chapter shall affect the operation or enforcement of any order made
by any Court in any proceedings for the winding up of a company immediately before the
commencement of this Act and an appeal against such order shall be filed before such
authority competent to hear such appeals before such commencement.

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- Chapter XX [Ss.270 to 365]

390
Omitted - PART II.—Voluntary winding
up]
[Ss. 304 to 323 omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with
the clause (16) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide
notification number S.O 3453(E) dated 15 th November, 2016. Prior to its omission, it read as under
(It may be noted that Ss. 304 to 323 were not notified / brought to force prior to its omission):
[304. Circumstances in which company may be wound up voluntarily.
304. A company may be wound up voluntarily,—
(a) if the company in general meeting passes a resolution requiring the company to be wound up
voluntarily as a result of the expiry of the period for its duration, if any, fixed by its articles or on the
occurrence of any event in respect of which the articles provide that the company should be
dissolved; or
(b) if the company passes a special resolution that the company be wound up voluntarily.

305. Declaration of solvency in case of proposal to wind up voluntarily.

305. (1) Where it is proposed to wind up a company voluntarily, its director or directors, or in case the
company has more than two directors, the majority of its directors, shall, at a meeting of the Board, make
a declaration verified by an affidavit to the effect that they have made a full inquiry into the affairs of the
company and they have formed an opinion that the company has no debt or whether it will be able to pay
its debts in full from the proceeds of assets sold in voluntary winding up.
(2) A declaration made under sub-section (1) shall have no effect for the purposes of this Act, unless—
(a) it is made within five weeks immediately preceding the date of the passing of the resolution for
winding up the company and it is delivered to the Registrar for registration before that date;
(b) it contains a declaration that the company is not being wound up to defraud any person or
persons;
(c) it is accompanied by a copy of the report of the auditors of the company prepared in accordance
with the provisions of this Act, on the profit and loss account of the company for the period
commencing from the date up to which the last such account was prepared and ending with the
latest practicable date immediately before the making of the declaration and the balance sheet of
the company made out as on that date which would also contain a statement of the assets and
liabilities of the company on that date; and
(d) where there are any assets of the company, it is accompanied by a report of the valuation of the
assets of the company prepared by a registered valuer.
(3) Where the company is wound up in pursuance of a resolution passed within a period of five weeks
after the making of the declaration, but its debts are not paid or provided for in full, it shall be presumed,
until the contrary is shown, that the director or directors did not have reasonable grounds for his or their
opinion under sub-section (1).
(4) Any director of a company making a declaration under this section without having reasonable grounds
for the opinion that the company will be able to pay its debts in full from the proceeds of assets sold in
voluntary winding up shall be punishable with imprisonment for a term which shall not be less than three

390
Omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clauses (15A) and
(16) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O
3453(E) dated 15th November, 2016. Prior to its omission, it read as “PART II. – Voluntary Winding up”.

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- Chapter XX [Ss.270 to 365]

years but which may extend to five years or with fine which shall not be less than fifty thousand rupees
but which may extend to three lakh rupees, or with both.

306. Meeting of creditors.

306. (1) The company shall along with the calling of meeting of the company at which the resolution for
the voluntary winding up is to be proposed, cause a meeting of its creditors either on the same day or on
the next day and shall cause a notice of such meeting to be sent by registered post to the creditors with
the notice of the meeting of the company under section 304.
(2) The Board of Directors of the company shall—
(a) cause to be presented a full statement of the position of the affairs of the company together with a
list of creditors of the company, if any, copy of declaration under section 305 and the estimated
amount of the claims before such meeting; and
(b) appoint one of the directors to preside at the meeting.
(3) Where two-thirds in value of creditors of the company are of the opinion that—
(a) it is in the interest of all parties that the company be wound up voluntarily, the company shall be
wound up voluntarily; or
(b) the company may not be able to pay for its debts in full from the proceeds of assets sold in
voluntary winding up and pass a resolution that it shall be in the interest of all parties if the
company is wound up by the Tribunal in accordance with the provisions of Part I of this Chapter,
the company shall within fourteen days thereafter file an application before the Tribunal.
(4) The notice of any resolution passed at a meeting of creditors in pursuance of this section shall be
given by the company to the Registrar within ten days of the passing thereof.
(5) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and the
director of the company who is in default shall be punishable with imprisonment for a term which may
extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend
to two lakh rupees, or with both.
307. Publication of resolution to wind up voluntarily.
307. (1) Where a company has passed a resolution for voluntary winding up and a resolution under sub-
section (3) of section 306 is passed, it shall within fourteen days of the passing of the resolution give
notice of the resolution by advertisement in the Official Gazette and also in a newspaper which is in
circulation in the district where the registered office or the principal office of the company is situate.
(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the
company who is in default shall be punishable with fine which may extend to five thousand rupees for
every day during which such default continues.

308. Commencement of voluntary winding up.

308. A voluntary winding up shall be deemed to commence on the date of passing of the resolution for
voluntary winding up under section 304.

309. Effect of voluntary winding up.

309. In the case of a voluntary winding up, the company shall from the commencement of the winding up
cease to carry on its business except as far as required for the beneficial winding up of its business:
Provided that the corporate state and corporate powers of the company shall continue until it is
dissolved.
310. Appointment of Company Liquidator.
310. (1) The company in its general meeting, where a resolution of voluntary winding up is passed, shall
appoint a Company Liquidator from the panel prepared by the Central Government for the purpose of
winding up its affairs and distributing the assets of the company and recommend the fee to be paid to the
Company Liquidator.

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(2) Where the creditors have passed a resolution for winding up the company under sub-section (3) of
section 306, the appointment of the Company Liquidator under this section shall be effective only after it
is approved by the majority of creditors in value of the company:
Provided that where such creditors do not approve the appointment of such Company Liquidator,
creditors shall appoint another Company Liquidator.
(3) The creditors while approving the appointment of Company Liquidator appointed by the company or
appointing the Company Liquidator of their own choice, as the case may be, pass suitable resolution with
regard to the fee of the Company Liquidator.
(4) On appointment as Company Liquidator, such liquidator shall file a declaration in the prescribed form
within seven days of the date of appointment disclosing conflict of interest or lack of independence in
respect of his appointment, if any, with the company and the creditors and such obligation shall continue
throughout the term of his or its appointment.
311. Power to remove and fill vacancy of Company Liquidator.
311. (1) A Company Liquidator appointed under section 310 may be removed by the company where his
appointment has been made by the company and, by the creditors, where the appointment is approved or
made by such creditors.
(2) Where a Company Liquidator is sought to be removed under this section, he shall be given a notice in
writing stating the grounds of removal from his office by the company or the creditors, as the case may
be.
(3) Where three-fourth members of the company or three-fourth of creditors in value, as the case may be,
after consideration of the reply, if any, filed by the Company Liquidator, in their meeting decide to remove
the Company Liquidator, he shall vacate his office.
(4) If a vacancy occurs by death, resignation, removal or otherwise in the office of any Company
Liquidator appointed under section 310, the company or the creditors, as the case may be, fill the
vacancy in the manner specified in that section.
312. Notice of appointment of Company Liquidator to be given to Registrar.
312. (1) The company shall give notice to the Registrar of the appointment of a Company Liquidator along
with the name and particulars of the Company Liquidator, of every vacancy occurring in the office of
Company Liquidator, and of the name of the Company Liquidator appointed to fill every such vacancy
within ten days of such appointment or the occurrence of such vacancy.
(2) If a company contravenes the provisions of sub-section (1), the company and every officer of the
company who is in default shall be punishable with fine which may extend to five hundred rupees for
every day during which such default continues.

313. Cesser of Board's powers on appointment of Company Liquidator.

313. On the appointment of a Company Liquidator, all the powers of the Board of Directors and of the
managing or whole-time directors and manager, if any, shall cease, except for the purpose of giving
notice of such appointment of the Company Liquidator to the Registrar.
314. Powers and duties of Company Liquidator in voluntary winding up.
314. (1) The Company Liquidator shall perform such functions and discharge such duties as may be
determined from time to time by the company or the creditors, as the case may be.
(2) The Company Liquidator shall settle the list of contributories, which shall be prima facie evidence of
the liability of the persons named therein to be contributories.
(3) The Company Liquidator shall call general meetings of the company for the purpose of obtaining the
sanction of the company by ordinary or special resolution, as the case may require, or for any other
purpose he may consider necessary.
(4) The Company Liquidator shall maintain regular and proper books of account in such form and in such
manner as may be prescribed and the members and creditors and any officer authorised by the Central
Government may inspect such books of account.
(5) The Company Liquidator shall prepare quarterly statement of accounts in such form and manner as
may be prescribed and file such statement of accounts duly audited within thirty days from the close of

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each quarter with the Registrar, failing which the Company Liquidator shall be punishable with fine which
may extend to five thousand rupees for every day during which the failure continues.
(6) The Company Liquidator shall pay the debts of the company and shall adjust the rights of the
contributories among themselves.
(7) The Company Liquidator shall observe due care and diligence in the discharge of his duties.
(8) If the Company Liquidator fails to comply with the provisions of this section except sub-section (5) he
shall be punishable with fine which may extend to ten lakh rupees.
315. Appointment of committees.
315. Where there are no creditors of a company, such company in its general meeting and, where a
meeting of creditors is held under section 306, such creditors, as the case may be, may appoint such
committees as considered appropriate to supervise the voluntary liquidation and assist the Company
Liquidator in discharging his or its functions.
316. Company Liquidator to submit report on progress of winding up.
316. (1) The Company Liquidator shall report quarterly on the progress of winding up of the company in
such form and in such manner as may be prescribed to the members and creditors and shall also call a
meeting of the members and the creditors as and when necessary but at least one meeting each of
creditors and members in every quarter and apprise them of the progress of the winding up of the
company in such form and in such manner as may be prescribed.
(2) If the Company Liquidator fails to comply with the provisions of sub-section (1), he shall be
punishable, in respect of each such failure, with fine which may extend to ten lakh rupees.

317. Report of Company Liquidator to Tribunal for examination of persons.

317. (1) Where the Company Liquidator is of the opinion that a fraud has been committed by any person
in respect of the company, he shall immediately make a report to the Tribunal and the Tribunal shall,
without prejudice to the process of winding up, order for investigation under section 210 and on
consideration of the report of such investigation, the Tribunal may pass such order and give such
directions under this Chapter as it may consider necessary including the direction that such person shall
attend before the Tribunal on a day appointed by it for that purpose and be examined as to the promotion
or formation or the conduct of the business of the company or as to his conduct and dealings as officer
thereof or otherwise.
(2) The provisions of section 300 shall mutatis mutandis apply in relation to any examination directed
under sub-section (1).

318. Final meeting and dissolution of company.

318. (1) As soon as the affairs of a company are fully wound up, the Company Liquidator shall prepare a
report of the winding up showing that the property and assets of the company have been disposed of and
its debt fully discharged or discharged to the satisfaction of the creditors and thereafter call a general
meeting of the company for the purpose of laying the final winding up accounts before it and giving any
explanation therefor.
(2) The meeting referred to in sub-section (1) shall be called by the Company Liquidator in such form and
manner as may be prescribed.
(3) If the majority of the members of the company after considering the report of the Company Liquidator
are satisfied that the company shall be wound up, they may pass a resolution for its dissolution.
(4) Within two weeks after the meeting, the Company Liquidator shall—
(a) send to the Registrar—
(i) a copy of the final winding up accounts of the company and shall make a return in respect of
each meeting and of the date thereof; and
(ii) copies of the resolutions passed in the meetings; and
(b) file an application along with his report under sub-section (1) in such manner as may be prescribed
along with the books and papers of the company relating to the winding up, before the Tribunal for
passing an order of dissolution of the company.

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(5) If the Tribunal is satisfied, after considering the report of the Company Liquidator that the process of
winding up has been just and fair, the Tribunal shall pass an order dissolving the company within sixty
days of the receipt of the application under sub-section (4).
(6) The Company Liquidator shall file a copy of the order under sub-section (5) with the Registrar within
thirty days.
(7) The Registrar, on receiving the copy of the order passed by the Tribunal under sub- section (5), shall
forthwith publish a notice in the Official Gazette that the company is dissolved.
(8) If the Company Liquidator fails to comply with the provisions of this section, he shall be punishable
with fine which may extend to one lakh rupees.

319. Power of Company Liquidator to accept shares, etc., as consideration for sale of property of
company.
319. (1) Where a company (the transferor company) is proposed to be, or is in the course of being,
wound up voluntarily and the whole or any part of its business or property is proposed to be transferred or
sold to another company(the transferee company), the Company Liquidator of the transferor company
may, with the sanction of a special resolution of the company conferring on him either a general authority
or an authority in respect of any particular arrangement,—
(a) receive, by way of compensation wholly or in part for the transfer or sale of shares, policies, or
other like interest in the transferee company, for distribution among the members of the transferor
company; or
(b) enter into any other arrangement whereby the members of the transferor company may, in lieu of
receiving cash, shares, policies or other like interest or in addition thereto, participate in the profits
of, or receive any other benefit from, the transferee company:
Provided that no such arrangement shall be entered into without the consent of the secured creditors.
(2) Any transfer, sale or other arrangement in pursuance of this section shall be binding on the members
of the transferor company.
(3) Any member of the transferor company who did not vote in favour of the special resolution and
expresses his dissent therefrom in writing addressed to the Company Liquidator, and left at the registered
office of the company within seven days after the passing of the resolution, may require the liquidator
either—
(a) to abstain from carrying the resolution into effect; or
(b) to purchase his interest at a price to be determined by agreement or the registered valuer.
(4) If the Company Liquidator elects to purchase the member’s interest, the purchase money, raised by
him in such manner as may be determined by a special resolution, shall be paid before the company is
dissolved.

320. Distribution of property of company.

320. Subject to the provisions of this Act as to overriding preferential payments under section 326, the
assets of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu and,
subject to such application, shall, unless the articles otherwise provide, be distributed among the
members according to their rights and interests in the company.

321. Arrangement when binding on company and creditors.

321. (1) Any arrangement other than the arrangement referred to in section 319 entered into between the
company which is about to be, or is in the course of being wound up and its creditors shall be binding on
the company and on the creditors if it is sanctioned by a special resolution of the company and acceded
to by the creditors who hold three-fourths in value of the total amount due to all the creditors of the
company.
(2) Any creditor or contributory may, within three weeks from the completion of the arrangement, apply to
the Tribunal and the Tribunal may thereupon amend, vary, confirm or set aside the arrangement.

322. Power to apply to Tribunal to have questions determined, etc.

Page 525
 Ss. 304 to 323 constituting Part II Voluntary Winding up has been Omitted by Section 255 of the
Insolvency and Bankruptcy Code, 2016 read with the clause (16) of the Eleventh Schedule thereto, with
effect from 15th November, 2016

- Chapter XX [Ss.270 to 365]

322. (1) The Company Liquidator or any contributory or creditor may apply to the Tribunal—
(a) to determine any question arising in the course of the winding up of a company; or
(b) to exercise as respects the enforcing of calls, the staying of proceedings or any other matter, all or
any of the powers which the Tribunal might exercise if the company were being wound up by the
Tribunal.
(2) The Company Liquidator or any creditor or contributory may apply to the Tribunal for an order setting
aside any attachment, distress or execution put into force against the estate or effects of the company
after the commencement of the winding up.
(3) The Tribunal, if satisfied on an application under sub-section (1) or sub-section (2) that the
determination of the question or the required exercise of power or the order applied for will be just and
fair, may allow the application on such terms and conditions as it thinks fit or may make such other order
on the application as it thinks fit.
(4) A copy of an order staying the proceedings in the winding up, made under this section, shall forthwith
be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a
minute of the order in his books relating to the company.
323. Costs of voluntary winding up.
323. All costs, charges and expenses properly incurred in the winding up, including the fee of the
Company Liquidator, shall, subject to the rights of secured creditors, if any, be payable out of the assets
of the company in priority to all other claims.]

Page 526
 S. 324 - Chapter XX [Ss.270 to 365]

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PART III.—Provisions applicable to every

mode of winding up
324. Debts of all descriptions to be admitted to proof.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

324. In every winding up (subject, in the case of insolvent companies, to the application
in accordance with the provisions of this Act or of the law of insolvency), all debts payable
on a contingency, and all claims against the company, present or future, certain or
contingent, ascertained or sounding only in damages, shall be admissible to proof against
the company, a just estimate being made, so far as possible, of the value of such debts
or claims as may be subject to any contingency, or may sound only in damages, or for
some other reason may not bear a certain value.

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325. Omitted
391
[Omitted]

391
Omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (17)
of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number
S.O 3453(E) dated 15th November, 2016. Prior to its omission, it read as “Application of
insolvency rules in winding up of insolvent companies 325. (1) In the winding up of an insolvent company, the
same rules shall prevail and be observed with regard to—
(a) debts provable;
(b) the valuation of annuities and future and contingent liabilities; and
(c) the respective rights of secured and unsecured creditors,
as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent:
Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the
workmen to the extent of the workmen’s portion therein, and, where a secured creditor, instead of relinquishing his security and
proving his debts, opts to realise his security,—
(i) the liquidator shall be entitled to represent the workmen and enforce such charge;
(ii) any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of
workmen’s dues; and
(iii) so much of the debts due to such secured creditor as could not be realised by him or the amount of the workmen’s portion
in his security, whichever is less, shall rank pari passu with the workmen’s dues for the purposes of section 326.
(2) All persons under sub-section (1) shall be entitled to prove and receive dividends out of the assets of the company under winding
up, and make such claims against the company as they respectively are entitled to make by virtue of this section:
Provided that if a secured creditor, instead of relinquishing his security and proving his debts, proceeds to realise his
security, he shall be liable to pay his portion of the expenses incurred by the liquidator, including a provisional liquidato r, if any, for
the preservation of the security before its realisation by the secured creditor.
Explanation.—For the purposes of this sub-section, the portion of expenses incurred by the liquidator for the preservation of a
security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to s uch
expenses the same proportion as the workmen’s portion in relation to the security bears to the value of the security.
(3) For the purposes of this section, section 326 and section 327,—
(a) “workmen’’, in relation to a company, means the employees of the company, being workmen within the meaning of clause
(s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947);
(b) “workmen’s dues’’, in relation to a company, means the aggregate of the following sums due from the company to its
workmen, namely:—
(i) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of
commission of any workman in respect of services rendered to the company and any compensation payable to any
workman under any of the provisions of the Industrial Disputes Act, 1947 (14 of 1947);
(ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his death, to any other person in
his right on the termination of his employment before or by the effect of the winding up order or resolution;
(iii) unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with
another company or unless the company has, at the commencement of the winding up, under such a contract with
insurers as is mentioned in section 14 of the Workmen’s Compensation Act, 1923 (8 of 1923), rights capable of being
transferred to and vested in the workmen, all amount due in respect of any compensation or liability for compensation
under the said Act in respect of the death or disablement of any workman of the company;
(iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund or any other fund for the
welfare of the workmen, maintained by the company;

(c) “workmen’s portion’’, in relation to the security of any secured creditor of a company, means the amount which bears to the value
of the security the same proportion as the amount of the workmen’s dues bears to the aggregate of the amount of workmen’s dues
and the amount of the debts due to the secured creditors. Illustration The value of the security of a secured creditor of a c ompany is
Rs. 1,00,000. The total amount of the workmen’s dues is Rs. 1,00,000. The amount of the debts due from the company to its secured
creditors is Rs. 3,00,000. The aggregate of the amount of workmen’s dues and the amount of debts due to secured creditors is Rs.
4,00,000. The workmen’s portion of the security is, therefore, one-fourth of the value of the security, that is Rs. 25,000.”.

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326. Overriding preferential payments.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

392
[326. (1) In the winding up of a company under this Act, the following debts shall be
paid in priority to all other debts:—

(a) workmen's dues; and

(b) where a secured creditor has realised a secured asset, so much of the debts due to
such secured creditor as could not be realised by him or the amount of the workmen's
portion in his security (if payable under the law), whichever is less, pari passu with the
workmen's dues:

Provided that in case of the winding up of a company, the sums referred to in sub-
clauses (i) and (ii) of clause (b) of the Explanation, which are payable for a period of two
years preceding the winding up order or such other period as may be prescribed, shall be
paid in priority to all other debts (including debts due to secured creditors), within a period
of thirty days of sale of assets and shall be subject to such charge over the security of
secured creditors as may be prescribed.

392
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(18) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it read as “326. (1)
Notwithstanding anything contained in this Act or any other law for the time being in force, in the winding
up of a company,—
(a) workmen’s dues; and
(b) debts due to secured creditors to the extent such debts rank under clause (iii) of the proviso to
sub-section (1) of section 325 pari passu with such dues,
shall be paid in priority to all other debts:
Provided that in case of the winding up of a company, the sums towards wages or salary referred to
in sub-clause (i) of clause (b) of sub-section (3) of section 325, which are payable for a period of two
years preceding the winding up order or such other period as may be prescribed, shall be paid in priority
to all other debts (including debts due to secured creditors), within a period of thirty days of sale of assets
and shall be subject to such charge over the security of secured creditors as may be prescribed.

(2) The debts payable under the proviso to sub-section (1) shall be paid in full before any payment is made
to secured creditors and thereafter debts payable under that sub-section shall be paid in full, unless the
assets are insufficient to meet them, in which case they shall abate in equal proportions.”.

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(2) The debts payable under the proviso to sub-section (1) shall be paid in full before any
payment is made to secured creditors and thereafter debts payable under that subsection
shall be paid in full, unless the assets are insufficient to meet them, in which case they
shall abate in equal proportions.

Explanation .—For the purposes of this section, and section 327—

(a) "workmen'', in relation to a company, means the employees of the company, being
workmen within the meaning of clause (s) of section 2 of the Industrial Disputes Act, 1947
(14 of 1947);

(b) "workmen's dues'', in relation to a company, means the aggregate of the following
sums due from the company to its workmen, namely:—

(i) all wages or salary including wages payable for time or piece work and salary
earned wholly or in part by way of commission of any workman in respect of
services rendered to the company and any compensation payable to any workman
under any of the provisions of the Industrial Disputes Act, 1947 (14 of 1947);

(ii) all accrued holiday remuneration becoming payable to any workman or, in the
case of his death, to any other person in his right on the termination of his
employment before or by the effect of the winding up order or resolution;

(iii) unless the company is being wound up voluntarily merely for the purposes of
reconstruction or amalgamation with another company or unless the company has,
at the commencement of the winding up, under such a contract with insurers as is
mentioned in section 14 of the Workmen's Compensation Act, 1923 (19 of 1923),
rights capable of being transferred to and vested in the workmen, all amount due
in respect of any compensation or liability for compensation under the said Act in
respect of the death or disablement of any workman of the company;

(iv) all sums due to any workman from the provident fund, the pension fund, the
gratuity fund or any other fund for the welfare of the workmen, maintained by the
company;

(c) "workmen's portion'', in relation to the security of any secured creditor of a company,
means the amount which bears to the value of the security the same proportion as the
amount of the workmen's dues bears to the aggregate of the amount of workmen's dues
and the amount of the debts due to the secured creditors.

Illustration
The value of the security of a secured creditor of a company is Rs. 1,00,000. The total
amount of the workmen's dues is Rs. 1,00,000. The amount of the debts due from the

Page 530
 S. 326 - Chapter XX [Ss.270 to 365]

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company to its secured creditors is Rs.3,00,000. The aggregate of the amount of

workmen's dues and the amount of debts due to secured creditors is Rs. 4,00,000. The
workmen's portion of the security is, therefore, one-fourth of the value of the security, that
is Rs. 25,000.]

Page 531
 S. 327 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

327. Preferential payments.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

327. (1) In a winding up, subject to the provisions of section 326, there shall be paid in
priority to all other debts,—
(a) all revenues, taxes, cesses and rates due from the company to the Central
Government or a State Government or to a local authority at the relevant date, and
having become due and payable within the twelve months immediately before that
date;
(b) all wages or salary including wages payable for time or piece work and salary
earned wholly or in part by way of commission of any employee in respect of
services rendered to the company and due for a period not exceeding four months
within the twelve months immediately before the relevant date, subject to the
condition that the amount payable under this clause to any workman shall not
exceed such amount as may be notified;
(c) all accrued holiday remuneration becoming payable to any employee, or in the
case of his death, to any other person claiming under him, on the termination of his
employment before, or by the winding up order, or, as the case may be, the
dissolution of the company;
(d) unless the company is being wound up voluntarily merely for the purposes of
reconstruction or amalgamation with another company, all amount due in respect
of contributions payable during the period of twelve months immediately before the
relevant date by the company as the employer of persons under the Employees’
State Insurance Act, 1948 (34 of 1948) or any other law for the time being in force;
(e) unless the company has, at the commencement of winding up, under such a
contract with any insurer as is mentioned in section 14 of the Workmen’s
Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and
vested in the workmen, all amount due in respect of any compensation or liability
for compensation under the said Act in respect of the death or disablement of any
employee of the company:
Provided that where any compensation under the said Act is a weekly payment,
the amount payable under this clause shall be taken to be the amount of the lump sum
for which such weekly payment could, if redeemable, be redeemed, if the employer
has made an application under that Act;
(f) all sums due to any employee from the provident fund, the pension fund, the gratuity
fund or any other fund for the welfare of the employees, maintained by the
company; and
(g) the expenses of any investigation held in pursuance of sections 213 and 216, in so
far as they are payable by the company.

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 S. 327 - Chapter XX [Ss.270 to 365]

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(2) Where any payment has been made to any employee of a company on account of
wages or salary or accrued holiday remuneration, himself or, in the case of his death, to
any other person claiming through him, out of money advanced by some person for that
purpose, the person by whom the money was advanced shall, in a winding up, have a
right of priority in respect of the money so advanced and paid-up to the amount by which
the sum in respect of which the employee or other person in his right would have been
entitled to priority in the winding up has been reduced by reason of the payment having
been made.

(3) The debts enumerated in this section shall—

(a) rank equally among themselves and be paid in full, unless the assets are
insufficient to meet them, in which case they shall abate in equal proportions; and
(b) so far as the assets of the company available for payment to general creditors are
insufficient to meet them, have priority over the claims of holders of debentures
under any floating charge created by the company, and be paid accordingly out of
any property comprised in or subject to that charge.

(4) Subject to the retention of such sums as may be necessary for the costs and expenses
of the winding up, the debts under this section shall be discharged forthwith so far as the
assets are sufficient to meet them, and in the case of the debts to which priority is given
under clause (d) of sub-section (1), formal proof thereof shall not be required except in so
far as may be otherwise prescribed.

(5) In the event of a landlord or other person distraining or having distrained on any goods
or effects of the company within three months immediately before the date of a winding
up order, the debts to which priority is given under this section shall be a first charge on
the goods or effects so distrained on or the proceeds of the sale thereof:

Provided that, in respect of any money paid under any such charge, the landlord
or other person shall have the same rights of priority as the person to whom the payment
is made.

(6) Any remuneration in respect of a period of holiday or of absence from work on medical
grounds through sickness or other good cause shall be deemed to be wages in respect
of services rendered to the company during that period.
393
[(7) Sections 326 and 327 shall not be applicable in the event of liquidation under the
Insolvency and Bankruptcy Code, 2016.]

393
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (19)(a) of
the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

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Explanation.—For the purposes of this section,—

(a) the expression “accrued holiday remuneration” includes, in relation to any person, all
sums which, by virtue either of his contract of employment or of any enactment
including any order made or direction given thereunder, are payable on account of the
remuneration which would, in the ordinary course, have become payable to him in
respect of a period of holiday, had his employment with the company continued until
he became entitled to be allowed the holiday;
(b) the expression “employee” does not include a workman; and
394
[(c) the expression “relevant date” means in the case of a company being wound up by
the Tribunal, the date of appointment or first appointment of a provisional liquidator, or if
no such appointment was made, the date of the winding up order, unless, in either case,
the company had commenced to be wound up voluntarily before that date under the
Insolvency and Bankruptcy Code, 2016.]

394
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (19)(b) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E) dated
15th November, 2016. Prior to its substitution it read as “the expression “relevant date” means—
(i) in the case of a company being wound up by the Tribunal, the date of appointment or first appointment of a provisional
liquidator, or if no such appointment was made, the date of the winding up order, unless, in either case, the company had
commenced to be wound up voluntarily before that date; and
(ii) in any other case, the date of the passing of the resolution for the voluntary winding up of the company. ”.

Page 534
 S. 328 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

328. Fraudulent preference.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

328. (1) Where a company has given preference to a person who is one of the creditors
of the company or a surety or guarantor for any of the debts or other liabilities of the
company, and the company does anything or suffers anything done which has the effect
of putting that person into a position which, in the event of the company going into
liquidation, will be better than the position he would have been in if that thing had not been
done prior to six months of making winding up application, the Tribunal, if satisfied that,
such transaction is a fraudulent preference may order as it may think fit for restoring the
position to what it would have been if the company had not given that preference.

(2) If the Tribunal is satisfied that there is a preference transfer of property, movable or
immovable, or any delivery of goods, payment, execution made, taken or done by or
against a company within six months before making winding up application, the Tribunal
may order as it may think fit and may declare such transaction invalid and restore the
position.

Page 535
 S. 329 - Chapter XX [Ss.270 to 365]

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329. Transfers not in good faith to be void.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

395
[329. Any transfer of property, movable or immovable, or any delivery of goods, made
by a company, not being a transfer or delivery made in the ordinary course of its business
or in favour of a purchaser or encumbrancer in good faith and for valuable consideration,
if made within a period of one year before the presentation of a petition for winding up by
the Tribunal under this Act shall be void against the Company Liquidator.]

395
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(20) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to its substitution it read as “329. Any
transfer of property, movable or immovable, or any delivery of goods, made by a company, not being a
transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrance
in good faith and for valuable consideration, if made within a period of one year before the presentation of
a petition for winding up by the Tribunal or the passing of a resolution for voluntary winding up of the
company, shall be void against the Company Liquidator.”.

Page 536
 S. 330 - Chapter XX [Ss.270 to 365]

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330. Certain transfers to be void.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

330. Any transfer or assignment by a company of all its properties or assets to trustees
for the benefit of all its creditors shall be void.

Page 537
 S. 331 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

331. Liabilities and rights of certain persons fraudulently preferred.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

331. (1) Where a company is being wound up and anything made, taken or done after
the commencement of this Act is invalid under section 328 as a fraudulent preference of
a person interested in property mortgaged or charged to secure the company’s debt, then,
without prejudice to any rights or liabilities arising, apart from this provision, the person
preferred shall be subject to the same liabilities, and shall have the same rights, as if he
had undertaken to be personally liable as a surety for the debt, to the extent of the
mortgage or charge on the property or the value of his interest, whichever is less.

(2) The value of the interest of the person preferred under sub-section (1) shall be
determined as at the date of the transaction constituting the fraudulent preference, as if
the interest were free of all encumbrances other than those to which the mortgage or
charge for the debt of the company was then subject.

(3) On an application made to the Tribunal with respect to any payment on the ground
that the payment was a fraudulent preference of a surety or guarantor, the Tribunal shall
have jurisdiction to determine any questions with respect to the payment arising between
the person to whom the payment was made and the surety or guarantor and to grant relief
in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the
winding up, and for that purpose, may give leave to bring in the surety or guarantor as a
third party as in the case of a suit for the recovery of the sum paid.

(4) The provisions of sub-section (3) shall apply mutatis mutandis in relation to
transactions other than payment of money.

Page 538
 S. 332 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

332. Effect of floating charge.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

332. Where a company is being wound up, a floating charge on the undertaking or
property of the company created within the twelve months immediately preceding the
commencement of the winding up, shall, unless it is proved that the company immediately
after the creation of the charge was solvent, be invalid, except for the amount of any cash
paid to the company at the time of, or subsequent to the creation of, and in consideration
for, the charge, together with interest on that amount at the rate of five per cent. per
annum or such other rate as may be notified by the Central Government in this behalf.

Page 539
 S. 333 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

333. Disclaimer of onerous property.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

333. (1) Where any part of the property of a company which is being wound up consists
of—
(a) land of any tenure, burdened with onerous covenants;
(b) shares or stocks in companies;
(c) any other property which is not saleable or is not readily saleable by reason of the
possessor thereof being bound either to the performance of any onerous act or to
the payment of any sum of money; or
(d) unprofitable contracts,
the Company Liquidator may, notwithstanding that he has endeavoured to sell or has
taken possession of the property or exercised any act of ownership in relation thereto or
done anything in pursuance of the contract, with the leave of the Tribunal and subject to
the provisions of this section, by writing signed by him, at any time within twelve months
after the commencement of the winding up or such extended period as may be allowed
by the Tribunal, disclaim the property:

Provided that where the Company Liquidator had not become aware of the existence
of any such property within one month from the commencement of the winding up, the
power of disclaiming the property may be exercised at any time within twelve months after
he has become aware thereof or such extended period as may be allowed by the Tribunal.

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights,
interest and liabilities of the company in or in respect of the property disclaimed, but shall
not, except so far as is necessary for the purpose of releasing the company and the
property of the company from liability, affect the rights, interest or liabilities of any other
person.

(3) The Tribunal, before or on granting leave to disclaim, may require such notices to be
given to persons interested, and impose such terms as a condition of granting leave, and
make such other order in the matter as the Tribunal considers just and proper.

(4) The Company Liquidator shall not be entitled to disclaim any property in any case
where an application in writing has been made to him by any person interested in the
property requiring him to decide whether he will or will not disclaim and the Company
Liquidator has not, within a period of twenty-eight days after the receipt of the application
or such extended period as may be allowed by the Tribunal, give notice to the applicant
that he intends to apply to the Tribunal for leave to disclaim, and in case the property is
under a contract, if the Company Liquidator after such an application as aforesaid does
Page 540
 S. 333 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

not within the said period or extended period disclaim the contract, he shall be deemed
to have adopted it.

(5) The Tribunal may, on the application of any person who is, as against the Company
Liquidator, entitled to the benefit or subject to the burden of a contract made with the
company, make an order rescinding the contract on such terms as to payment by or to
either party of damages for the non-performance of the contract, or otherwise as the
Tribunal considers just and proper, and any damages payable under the order to any
such person may be proved by him as a debt in the winding up.

(6) The Tribunal may, on an application by any person who either claims any interest in
any disclaimed property or is under any liability not discharged under this Act in respect
of any disclaimed property, and after hearing any such persons as it thinks fit, make an
order for the vesting of the property in, or the delivery of the property to, any person
entitled thereto or to whom it may seem just that the property should be delivered by way
of compensation for such liability as aforesaid, or a trustee for him, and on such terms as
the Tribunal considers just and proper, and on any such vesting order being made, the
property comprised therein shall vest accordingly in the person named therein in that
behalf without any conveyance or assignment for the purpose:

Provided that where the property disclaimed is of a leasehold nature, the Tribunal
shall not make a vesting order in favour of any person claiming under the company,
whether as under-lessee or as mortgagee or holder of a charge by way of demise, except
upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the company was
subject under the lease in respect of the property at the commencement of the winding
up; or
(b) if the Tribunal thinks fit, subject only to the same liabilities and obligations as if the
lease had been assigned to that person at that date,
and in either event as if the lease had comprised only the property comprised in the
vesting order, and any mortgagee or under-lessee declining to accept a vesting order
upon such terms shall be excluded from all interest in, and security upon the property,
and, if there is no person claiming under the company who is willing to accept an order
upon such terms, the Tribunal shall have power to vest the estate and interest of the
company in the property in any person liable, either personally or in a representative
character, and either alone or jointly with the company, to perform the covenants of the
lessee in the lease, free and discharged from all estates, encumbrances and interests
created therein by the company.

(7) Any person affected by the operation of a disclaimer under this section shall be
deemed to be a creditor of the company to the amount of the compensation or damages
payable in respect of such effect, and may accordingly prove the amount as a debt in the
winding up.

Page 541
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334. Transfers, etc., after commencement of winding up to be void.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

396
[334. (1) In the case of a winding up by the Tribunal, any disposition of the property,
including actionable claims, of the company and any transfer of shares in the company
or alteration in the status of its members, made after the commencement of the winding
up, shall, unless the Tribunal otherwise orders, be void.]

396
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(21) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to its substitution it read as “334. (1) In the
case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with
the sanction of the Company Liquidator, and any alteration in the status of the members of the company,
made after the commencement of the winding up, shall be void.
(2) In the case of a winding up by the Tribunal, any disposition of the property, including actionable claims,
of the company, and any transfer of shares in the company or alteration in the status of its members, made
after the commencement of the winding up, shall, unless the Tribunal otherwise orders, be void.”.

Page 542
 S. 335 - Chapter XX [Ss.270 to 365]

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335. Certain attachments, executions, etc., in winding up by Tribunal to be void.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

335. (1) Where any company is being wound up by the Tribunal,—

(a) any attachment, distress or execution put in force, without leave of the Tribunal
against the estate or effects of the company, after the commencement of the
winding up; or
(b) any sale held, without leave of the Tribunal of any of the properties or effects of the
company, after such commencement, shall be void.

(2) Nothing in this section shall apply to any proceedings for the recovery of any tax or
impost or any dues payable to the Government.

Page 543
 S. 336 - Chapter XX [Ss.270 to 365]

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336. Offences by officers of companies in liquidation.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

336. (1) If any person, who is or has been an officer of a company which, at the time of
the commission of the alleged offence, is being wound up, 397[by the Tribunal under this
Act or which is subsequently ordered to be wound up by the Tribunal under this Act],—
(a) does not, to the best of his knowledge and belief, fully and truly disclose to the
Company Liquidator all the property, movable and immovable, of the company, and
how and to whom and for what consideration and when the company disposed of
any part thereof, except such part as has been disposed of in the ordinary course
of the business of the company;
(b) does not deliver up to the Company Liquidator, or as he directs, all such part of the
movable and immovable property of the company as is in his custody or under his
control and which he is required by law to deliver up;
(c) does not deliver up to the Company Liquidator, or as he directs, all such books and
papers of the company as are in his custody or under his control and which he is
required by law to deliver up;
(d) within the twelve months immediately before the commencement of the winding up
or at any time thereafter,—
(i) conceals any part of the property of the company to the value of one thousand
rupees or more, or conceals any debt due to or from the company;
(ii) fraudulently removes any part of the property of the company to the value of one
thousand rupees or more;
(iii) conceals, destroys, mutilates or falsifies, or is privy to the concealment,
destruction, mutilation or falsification of, any book or paper affecting or relating
to, the property or affairs of the company;
(iv) makes, or is privy to the making of, any false entry in any book or paper affecting
or relating to, the property or affairs of the company;
(v) fraudulently parts with, alters or makes any omission in, or is privy to the
fraudulent parting with, altering or making of any omission in, any book or paper
affecting or relating to the property or affairs of the company;

397
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (22) of
the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016. Prior to substitution it read as “whether by the Tribunal or voluntarily, or which
is subsequently ordered to be wound up by the Tribunal or which subsequently passes a resolution for
voluntary winding up”.

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(vi) by any false representation or other fraud, obtains on credit, for or on behalf of
the company, any property which the company does not subsequently pay for;
(vii) under the false pretence that the company is carrying on its business, obtains
on credit, for or on behalf of the company, any property which the company does
not subsequently pay for; or
(viii) pawns, pledges or disposes of any property of the company which has been
obtained on credit and has not been paid for, unless such pawning, pledging or
disposing of the property is in the ordinary course of business of the company;
(e) makes any material omission in any statement relating to the affairs of the
company;
(f) knowing or believing that a false debt has been proved by any person under the
winding up, fails for a period of one month to inform the Company Liquidator
thereof;
(g) after the commencement of the winding up, prevents the production of any book or
paper affecting or relating to the property or affairs of the company;
(h) after the commencement of the winding up or at any meeting of the creditors of the
company within the twelve months next before the commencement of the winding
up, attempts to account for any part of the property of the company by fictitious
losses or expenses; or
(i) is guilty of any false representation or fraud for the purpose of obtaining the consent
of the creditors of the company or any of them, to an agreement with reference to
the affairs of the company or to the winding up,
he shall be punishable with imprisonment for a term which shall not be less than three
years but which may extend to five years and with fine which shall not be less than one
lakh rupees but which may extend to three lakh rupees:

Provided that it shall be a good defence if the accused proves that he had no intent
to defraud or to conceal the true state of affairs of the company or to defeat the law.
[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

(2) Where any person pawns, pledges or disposes of any property in circumstances which
amount to an offence under sub-clause (viii) of clause (d) of sub-section (1), every person
who takes in pawn or pledge or otherwise receives the property, knowing it to be pawned,
pledged, or disposed of in such circumstances as aforesaid, shall be punishable with
imprisonment for a term which shall not be less than three years but which may extend
to five years and with fine which shall not be less than three lakh rupees but which may
extend to five lakh rupees.

Explanation.—For the purposes of this section, the expression “officer” includes any
person in accordance with whose directions or instructions the directors of the company
have been accustomed to act.

Page 545
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[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

Page 546
 S. 337 - Chapter XX [Ss.270 to 365]

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337. Penalty for frauds by officers.

[To the extent of its applicability to section 246, this section is brought to force from 09 September, 2016
vide notification number S.O.2912(E) dated 09th September, 2016]
[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 540 of the Companies Act, 1956]

337. If any person, being at the time of the commission of the alleged offence an officer
of a company which is subsequently ordered to be wound up by the Tribunal 398[under
this Act],—
(a) has, by false pretences or by means of any other fraud, induced any person to give
credit to the company;
(b) with intent to defraud creditors of the company or any other person, has made or
caused to be made any gift or transfer of, or charge on, or has caused or connived at
the levying of any execution against, the property of the company; or
(c) with intent to defraud creditors of the company, has concealed or removed any part of
the property of the company since the date of any unsatisfied judgment or order for
payment of money obtained against the company or within two months before that
date,
he shall be punishable with imprisonment for a term which shall not be less than one year
but which may extend to three years and with fine which shall not be less than one lakh
rupees but which may extend to three lakh rupees.
[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

398
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (23) of
the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016. Prior to substitution it read as “or which subsequently passes a resolution for
voluntary winding up”.

Page 547
 S. 338 - Chapter XX [Ss.270 to 365]

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338. Liability where proper accounts not kept.

[To the extent of its applicability to section 246, this section is brought to force from 09 September, 2016
vide notification number S.O.2912(E) dated 09th September, 2016]
[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 541 of the Companies Act, 1956]

338. (1) Where a company is being wound up, if it is shown that proper books of account
were not kept by the company throughout the period of two years immediately preceding
the commencement of the winding up, or the period between the incorporation of the
company and the commencement of the winding up, whichever is shorter, every officer
of the company who is in default shall, unless he shows that he acted honestly and that
in the circumstances in which the business of the company was carried on, the default
was excusable, be punishable with imprisonment for a term which shall not be less than
one year but which may extend to three years and with fine which shall not be less than
one lakh rupees but which may extend to three lakh rupees.
[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

(2) For the purposes of sub-section (1), it shall be deemed that proper books of account
have not been kept in the case of any company,—
(a) if such books of account as are necessary to exhibit and explain the transactions and
financial position of the business of the company, including books containing entries
made from day-to-day in sufficient detail of all cash received and all cash paid, have
not been kept; and
(b) where the business of the company has involved dealings in goods, statements of the
annual stock takings and, except in the case of goods sold by way of ordinary retail
trade, of all goods sold and purchased, showing the goods and the buyers and the
sellers thereof in sufficient detail to enable those goods and those buyers and sellers
to be identified, have not been kept.

Page 548
 S. 339 - Chapter XX [Ss.270 to 365]

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339. Liability for fraudulent conduct of business.

[To the extent of its applicability to section 246, this section is brought to force from 09 September, 2016
vide notification number S.O.2912(E) dated 09th September, 2016]
[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 542 of the Companies Act, 1956]

339. (1) If in the course of the winding up of a company, it appears that any business of
the company has been carried on with intent to defraud creditors of the company or any
other persons or for any fraudulent purpose, the Tribunal, on the application of the Official
Liquidator, or the Company Liquidator or any creditor or contributory of the company,
may, if it thinks it proper so to do, declare that any person, who is or has been a director,
manager, or officer of the company or any persons who were knowingly parties to the
carrying on of the business in the manner aforesaid shall be personally responsible,
without any limitation of liability, for all or any of the debts or other liabilities of the company
as the Tribunal may direct:

Provided that on the hearing of an application under this sub-section, the Official
Liquidator or the Company Liquidator, as the case may be, may himself give evidence or
call witnesses.

(2) Where the Tribunal makes any such declaration, it may give such further directions as
it thinks proper for the purpose of giving effect to that declaration and, in particular,—
(a) make provision for making the liability of any such person under the declaration a
charge on any debt or obligation due from the company to him, or on any mortgage
or charge or any interest in any mortgage or charge on any assets of the company
held by or vested in him, or any person on his behalf, or any person claiming as
assignee from or through the person liable or any person acting on his behalf;
(b) make such further order as may be necessary for the purpose of enforcing any
charge imposed under this sub-section.

(3) Where any business of a company is carried on with such intent or for such purpose
as is mentioned in sub-section (1), every person who was knowingly a party to the
carrying on of the business in the manner aforesaid, shall be liable for action under section
447.

(4) This section shall apply, notwithstanding that the person concerned may be
punishable under any other law for the time being in force in respect of the matters on the
ground of which the declaration is to be made.

Explanation.—For the purposes of this section,—

Page 549
 S. 339 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

(a) the expression “assignee” includes any person to whom or in whose favour, by the
directions of the person liable, the debt, obligation, mortgage or charge was created,
issued or transferred or the interest was created, but does not include an assignee for
valuable consideration, not including consideration by way of marriage, given in good
faith and without notice of any of the matters on the ground of which the declaration is
made;
(b) the expression “officer” includes any person in accordance with whose directions or
instructions the directors of the company have been accustomed to act.

Page 550
 S. 340 - Chapter XX [Ss.270 to 365]

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340. Power of Tribunal to assess damages against delinquent directors, etc.

[To the extent of its applicability to section 246, this section is brought to force from 09 September, 2016
vide notification number S.O.2912(E) dated 09th September, 2016]
[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 543 of the Companies Act, 1956]

340. (1) If in the course of winding up of a company, it appears that any person who has
taken part in the promotion or formation of the company, or any person, who is or has
been a director, manager, Company Liquidator or officer of the company—
(a) has misapplied, or retained, or become liable or accountable for, any money or
property of the company; or
(b) has been guilty of any misfeasance or breach of trust in relation to the company,
the Tribunal may, on the application of the Official Liquidator, or the Company Liquidator,
or of any creditor or contributory, made within the period specified in that behalf in sub-
section (2), inquire into the conduct of the person, director, manager, Company Liquidator
or officer aforesaid, and order him to repay or restore the money or property or any part
thereof respectively, with interest at such rate as the Tribunal considers just and proper,
or to contribute such sum to the assets of the company by way of compensation in respect
of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal considers
just and proper.

(2) An application under sub-section (1) shall be made within five years from the date of
the winding up order, or of the first appointment of the Company Liquidator in the winding
up, or of the misapplication, retainer, misfeasance or breach of trust, as the case may be,
whichever is longer.

(3) This section shall apply, notwithstanding that the matter is one for which the person
concerned may be criminally liable.

Page 551
 S. 341 - Chapter XX [Ss.270 to 365]

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341. Liability under sections 339 and 340 to extend to partners or directors in firms
or companies.

[To the extent of its applicability to section 246, this section is brought to force from 09 September, 2016
vide notification number S.O.2912(E) dated 09th September, 2016]
[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec. 544 of the Companies Act, 1956]

341. Where a declaration under section 339 or an order under section 340 is made in
respect of a firm or body corporate, the Tribunal shall also have power to make a
declaration under section 339, or pass an order under section 340, as the case may be,
in respect of any person who was at the relevant time a partner in that firm or a director
of that body corporate.

Page 552
 S. 342 - Chapter XX [Ss.270 to 365]

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342. Prosecution of delinquent officers and members of company.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

342. (1) If it appears to the Tribunal in the course of a winding up by the Tribunal, that any
person, who is or has been an officer, or any member, of the company has been guilty of
any offence in relation to the company, the Tribunal may, either on the application of any
person interested in the winding up or suo motu, direct the liquidator to prosecute the
offender or to refer the matter to the Registrar.
399
[Sub-sections (2), (3) and (4) omitted]

(5) When any prosecution is instituted under this section, it shall be the duty of the
liquidator and of every person, who is or has been an officer and agent of the company

399
Omitted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (24)
of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number
S.O 3453(E) dated 15th November, 2016. Prior to omission it read as “(2) If it appears to the Company
Liquidator in the course of a voluntary winding up that any person, who is or has been an officer, or any
member, of the company has been guilty of any offence in relation to the company under this Act, he shall
forthwith report the matter to the Registrar and shall furnish to him such information and give to him such
access to and facilities for inspecting and taking copies of any books and papers, being information or
books and papers in the possession or under the control of the Company Liquidator and relating to the
matter in question, as the Registrar may require.
(3) Where any report is made under sub-section (2) to the Registrar,—
(a) if he thinks fit, he may apply to the Central Government for an order to make further inquiry into the
affairs of the company by any person designated by him and for conferring on such person all the
powers of investigation as are provided under this Act;
(b) if he considers that the case is one in which a prosecution ought to be instituted, he shall report the
matter to the Central Government, and that Government may, after taking such legal advice as it
thinks fit, direct the Registrar to institute prosecution:
Provided that no report shall be made by the Registrar under this clause without first giving the accused
person a reasonable opportunity of making a statement in writing to the Registrar and of being heard
thereon.

(4) If it appears to the Tribunal in the course of a voluntary winding up that any person, who is or has been
an officer, or any member, of the company has been guilty as aforesaid, and that no report with respect to
the matter has been made by the Company Liquidator to the Registrar under sub-section (2), the Tribunal
may, on the application of any person interested in the winding up or suo motu, direct the Company
Liquidator to make such a report, and on a report being made, the provisions of this section shall have
effect as though the report had been made in pursuance of the provisions of sub-section (2).”.

Page 553
 S. 342 - Chapter XX [Ss.270 to 365]

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to give all assistance in connection with the prosecution which he is reasonably able to
give.

Explanation.—For the purposes of this sub-section, the expression “agent”, in relation to

a company, shall include any banker or legal adviser of the company and any person
employed by the company as auditor.

(6) If a person fails or neglects to give assistance required by sub-section (5), he shall be
liable to pay fine which shall not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.

Page 554
 S. 343 - Chapter XX [Ss.270 to 365]

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343. Company Liquidator to exercise certain powers subject to sanction.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

343. 400[(1) The Company Liquidator may, with the sanction of the Tribunal, when the
company is being wound up by the Tribunal,—

(i) pay any class of creditors in full;

(ii) make any compromise or arrangement with creditors or persons claiming to be

creditors, or having or alleging themselves to have any claim, present or future, certain or
contingent, against the company, or whereby the company may be rendered liable; or

(iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt,
and any claim, present or future, certain or contingent, ascertained or sounding only in
damages, subsisting or alleged to subsist between the company and a contributory or
alleged contributory or other debtor or person apprehending liability to the company, and
all questions in any way relating to or affecting the assets or liabilities or the winding up
of the company, on such terms as may be agreed, and take any security for the discharge
of any such call, debt, liability or claim, and give a complete discharge in respect thereof.]

400
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(25) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it read as “(1) The Company
Liquidator may—
(a) with the sanction of the Tribunal, when the company is being wound up by the Tribunal; and
(b) with the sanction of a special resolution of the company and prior approval of the Tribunal, in the
case of a voluntary winding up,—
(i) pay any class of creditors in full;
(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or
having or alleging themselves to have any claim, present or future, certain or contingent,
against the company, or whereby the company may be rendered liable; or

(iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim,
present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to
subsist between the company and a contributory or alleged contributory or other debtor or person
apprehending liability to the company, and all questions in any way relating to or affecting the assets or
liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the
discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.”.

Page 555
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(2) Notwithstanding anything contained in sub-section (1), in the case of a winding up by

the Tribunal, the Central Government may make rules to provide that the Company
Liquidator may, under such circumstances, if any, and subject to such conditions,
restrictions and limitations, if any, as may be prescribed, exercise any of the powers
referred to in sub- clause (ii) or sub-clause (iii) of clause (b) of sub-section (1) without the
sanction of the Tribunal.

(3) Any creditor or contributory may apply in the manner prescribed to the Tribunal with
respect to any exercise or proposed exercise of powers by the Company Liquidator under
this section, and the Tribunal shall after giving a reasonable opportunity to such applicant
and the Company Liquidator, pass such orders as it may think fit.

Page 556
 S. 344 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

344. Statement that company is in liquidation.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

344. (1) Where a company is being wound up, whether by the Tribunal or voluntarily,
every invoice, order for goods or business letter issued by or on behalf of the company
or a Company Liquidator of the company, or a receiver or manager of the property of the
company, being a document on or in which the name of the company appears, shall
contain a statement that the company is being wound up.

(2) If a company contravenes the provisions of sub-section (1), the company, and every
officer of the company, the Company Liquidator and any receiver or manager, who wilfully
authorises or permits the non-compliance, shall be punishable with fine which shall not
be less than fifty thousand rupees but which may extend to three lakh rupees.

Page 557
 S. 345 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

345. Books and papers of company to be evidence.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

345. Where a company is being wound up, all books and papers of the company and of
the Company Liquidator shall, as between the contributories of the company, be prima
facie evidence of the truth of all matters purporting to be recorded therein.

Page 558
 S. 346 - Chapter XX [Ss.270 to 365]

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346. Inspection of books and papers by creditors and contributories.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

346. (1) At any time after the making of an order for the winding up of a company by the
Tribunal, any creditor or contributory of the company may inspect the books and papers
of the company only in accordance with, and subject to such rules as may be prescribed.

(2) Nothing contained in sub-section (1) shall exclude or restrict any rights conferred by
any law for the time being in force—
(a) on the Central Government or a State Government;
(b) on any authority or officer thereof; or
(c) on any person acting under the authority of any such Government or of any such
authority or officer.

Page 559
 S. 347 - Chapter XX [Ss.270 to 365]

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347. Disposal of books and papers of company.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

347. 401[(1) If the winding up of a company is not concluded within one year after its
commencement, the Company Liquidator shall, unless he is exempted from so doing,
either wholly or in part by the Central Government, within two months of the expiry of such
year and thereafter until the winding up is concluded, at intervals of not more than one
year or at such shorter intervals, if any, as may be prescribed, file a statement in such
form containing such particulars as may be prescribed, duly audited, by a person qualified
to act as auditor of the company, with respect to the proceedings in, and position of, the
liquidation, with the Tribunal:

Provided that no such audit as is referred to in this sub-section shall be necessary where
the provisions of section 294 apply;]

[Every special resolution is required to be filed in Form no. MGT-14 as per section 117 (3) (a)]

(2) After the expiry of five years from the dissolution of the company, no responsibility
shall devolve on the company, the Company Liquidator, or any person to whom the
custody of the books and papers has been entrusted, by reason of any book or paper not
being forthcoming to any person claiming to be interested therein.

(3) The Central Government may, by rules,—

(a) prevent for such period as it thinks proper the destruction of the books and papers
of a company which has been wound up and of its Company Liquidator; and
(b) enable any creditor or contributory of the company to make representations to the
Central Government in respect of the matters specified in clause (a) and to appeal
to the Tribunal from any order which may be made by the Central Government in
the matter.

401
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(26) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to substitution it read as “(1) When the
affairs of a company have been completely wound up and it is about to be dissolved, its books and
papers and those of the Company Liquidator may be disposed of as follows:—
(a) in the case of winding up by the Tribunal, in such manner as the Tribunal directs; and

(b) in the case of voluntary winding up, in such manner as the company by special resolution with the prior
approval of the creditors direct.”.

Page 560
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(4) If any person acts in contravention of any rule framed or an order made under sub-
section (3), he shall be punishable with imprisonment for a term which may extend to six
months or with fine which may extend to fifty thousand rupees, or with both.

Page 561
 S. 348 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

348. Information as to pending liquidations.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Refer Rule 12 of the Companies (Registration of offices and Fees) Rules, 2014]

348. 402[(1) If the winding up of a company is not concluded within one year after its
commencement, the Company Liquidator shall, unless he is exempted from so doing,
either wholly or in part by the Central Government, within two months of the expiry of such
year and thereafter until the winding up is concluded, at intervals of not more than one
year or at such shorter intervals, if any, as may be prescribed, file a statement in such
form containing such particulars as may be prescribed, duly audited, by a person qualified
to act as auditor of the company, with respect to the proceedings in, and position of, the
liquidation, with the Tribunal:

Provided that no such audit as is referred to in this sub-section shall be necessary

where the provisions of section 294 apply;".]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

(2) When the statement is filed with the Tribunal under clause (a) of sub-section (1), a
copy shall simultaneously be filed with the Registrar and shall be kept by him along with
the other records of the company.

(3) Where a statement referred to in sub-section (1) relates to a Government company in

liquidation, the Company Liquidator shall forward a copy thereof—
(a) to the Central Government, if that Government is a member of the Government
company;

402
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(27) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it read as “(1) If the winding
up of a company is not concluded within one year after its commencement, the Company Liquidator shall,
unless he is exempted from so doing either wholly or in part by the Central Government, within two months
of the expiry of such year and thereafter until the winding up is concluded, at intervals of not more than one
year or at such shorter intervals, if any, as may be prescribed, file a statement in such form containing such
particulars as may be prescribed, duly audited, by a person qualified to act as auditor of the company, with
respect to the proceedings in, and position of, the liquidation,—
(a) in the case of a winding up by the Tribunal, with the Tribunal; and
(b) in the case of a voluntary winding up, with the Registrar:
Provided that no such audit as is referred to in this sub-section shall be necessary where the
provisions of section 294 apply.”.

Page 562
 S. 348 - Chapter XX [Ss.270 to 365]

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(b) to any State Government, if that Government is a member of the Government

company; or
(c) to the Central Government and any State Government, if both the Governments
are members of the Government company.

(4) Any person stating himself in writing to be a creditor or contributory of the company
shall be entitled, by himself or by his agent, at all reasonable times, on payment of the
prescribed fee, to inspect the statement referred to in sub-section (1), and to receive a
copy thereof or an extract therefrom.

(5) Any person fraudulently stating himself to be a creditor or contributory under sub-
section (4) shall be deemed to be guilty of an offence under section 182 of the Indian
Penal Code (45 of 1860), and shall, on the application of the Company Liquidator, be
punishable accordingly.

(6) If a Company Liquidator contravenes the provisions of this section, the Company
Liquidator shall be punishable with fine which may extend to five thousand rupees for
every day during which the failure continues.

(7) If a Company Liquidator makes wilful default in causing the statement referred to in
sub-section (1) audited by a person who is not qualified to act as an auditor of the
company, the Company Liquidator shall be punishable with imprisonment for a term which
may extend to six months or with fine which may extend to one lakh rupees, or with both.

Page 563
 S. 349 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

349. Official Liquidator to make payments into public account of India.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

349. Every Official Liquidator shall, in such manner and at such times as may be
prescribed, pay the monies received by him as Official Liquidator of any company, into
the public account of India in the Reserve Bank of India.

Page 564
 S. 350 - Chapter XX [Ss.270 to 365]

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350. Company Liquidator to deposit monies into scheduled bank.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

350. (1) Every Company Liquidator of a company shall, in such manner and at such times
as may be prescribed, deposit the monies received by him in his capacity as such in a
scheduled bank to the credit of a special bank account opened by him in that behalf:

Provided that if the Tribunal considers that it is advantageous for the creditors or
contributories or the company, it may permit the account to be opened in such other bank
specified by it.

(2) If any Company Liquidator at any time retains for more than ten days a sum exceeding
five thousand rupees or such other amount as the Tribunal may, on the application of the
Company Liquidator, authorise him to retain, then, unless he explains the retention to the
satisfaction of the Tribunal, he shall—
(a) pay interest on the amount so retained in excess, at the rate of twelve per cent. per
annum and also pay such penalty as may be determined by the Tribunal;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) also be liable to have all or such part of his remuneration, as the Tribunal may consider
just and proper, disallowed, or may also be removed from his office.

Page 565
 S. 351 - Chapter XX [Ss.270 to 365]

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351. Liquidator not to deposit monies into private banking account.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

351. Neither the Official Liquidator nor the Company Liquidator of a company shall deposit
any monies received by him in his capacity as such into any private banking account.

Page 566
 S. 352 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

352. Company Liquidation Dividend and Undistributed Assets Account.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

352. (1) Where any company is being wound up and the liquidator has in his hands or
under his control any money representing—
(a) dividends payable to any creditor but which had remained unpaid for six months
after the date on which they were declared; or
(b) assets refundable to any contributory which have remained undistributed for six
months after the date on which they become refundable,
the liquidator shall forthwith deposit the said money into a separate special account to be
known as the Company Liquidation Dividend and Undistributed Assets Account
maintained in a scheduled bank.

(2) The liquidator shall, on the dissolution of the company, pay into the Company
Liquidation Dividend and Undistributed Assets Account any money representing unpaid
dividends or undistributed assets in his hands at the date of dissolution.

(3) The liquidator shall, when making any payment referred to in sub-sections (1) and (2),
furnish to the Registrar, a statement in the prescribed form, setting forth, in respect of all
sums included in such payment, the nature of the sums, the names and last known
addresses of the persons entitled to participate therein, the amount to which each is
entitled and the nature of his claim thereto, and such other particulars as may be
prescribed.

(4) The liquidator shall be entitled to a receipt from the scheduled bank for any money
paid to it under sub-sections (1) and (2), and such receipt shall be an effectual discharge
of the Company Liquidator in respect thereof.

(5) Where a company is being wound up voluntarily, the Company Liquidator shall, when
filing a statement in pursuance of sub-section (1) of section 348, indicate the sum of
money which is payable under sub-sections (1) and (2) of this section during the six
months preceding the date on which the said statement is prepared, and shall, within
fourteen days of the date of filing the said statement, pay that sum into the Company
Liquidation Dividend and Undistributed Assets Account.

(6) Any person claiming to be entitled to any money paid into the Company Liquidation
Dividend and Undistributed Assets Account, whether paid in pursuance of this section or
under the provisions of any previous company law may apply to the Registrar for payment
thereof, and the Registrar, if satisfied that the person claiming is entitled, may make the
payment to that person of the sum due:
Page 567
 S. 352 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

Provided that the Registrar shall settle the claim of such person within a period of
sixty days from the date of receipt of such claim, failing which the Registrar shall make a
report to the Regional Director giving reasons of such failure.

(7) Any money paid into the Company Liquidation Dividend and Undistributed Assets
Account in pursuance of this section, which remains unclaimed thereafter for a period of
fifteen years, shall be transferred to the general revenue account of the Central
Government, but a claim to any money so transferred may be preferred under sub-section
(6) and shall be dealt with as if such transfer had not been made and the order, if any, for
payment on the claim will be treated as an order for refund of revenue.

(8) Any liquidator retaining any money which should have been paid by him into the
Company Liquidation Dividend and Undistributed Assets Account under this section
shall—
(a) pay interest on the amount so retained at the rate of twelve per cent. per annum
and also pay such penalty as may be determined by the Registrar:
Provided that the Central Government may in any proper case remit either in part
or in whole the amount of interest which the liquidator is required to pay under this
clause;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) where the winding up is by the Tribunal, also be liable to have all or such part of
his remuneration, as the Tribunal may consider just and proper, to be disallowed,
and to be removed from his office by the Tribunal.

Page 568
 S. 353 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

353. Liquidator to make returns, etc.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

353. (1) If any Company Liquidator who has made any default in filing, delivering or
making any return, account or other document, or in giving any notice which he is by law
required to file, deliver, make or give, fails to make good the default within fourteen days
after the service on him of a notice requiring him to do so, the Tribunal may, on an
application made to it by any contributory or creditor of the company or by the Registrar,
make an order directing the Company Liquidator to make good the default within such
time as may be specified in the order.

(2) Any order under sub-section (1) may provide that all costs of, and incidental to, the
application shall be borne by the Company Liquidator.

(3) Nothing in this section shall prejudice the operation of any enactment imposing
penalties on a Company Liquidator in respect of any such default as aforesaid.

Page 569
 S. 354 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

354. Meetings to ascertain wishes of creditors or contributories.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

354.(1) In all matters relating to the winding up of a company, the Tribunal may—
(a) have regard to the wishes of creditors or contributories of the company, as proved
to it by any sufficient evidence;
(b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the
creditors or contributories to be called, held and conducted in such manner as the
Tribunal may direct; and
(c) appoint a person to act as chairman of any such meeting and to report the result
thereof to the Tribunal.

(2) While ascertaining the wishes of creditors under sub-section (1), regard shall be had
to the value of each debt of the creditor.

(3) While ascertaining the wishes of contributories under sub-section (1), regard shall be
had to the number of votes which may be cast by each contributory.

Page 570
 S. 355 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

355. Court, tribunal or person, etc., before whom affidavit may be sworn.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

355. (1) Any affidavit required to be sworn under the provisions, or for the purposes, of
this Chapter may be sworn—
(a) in India before any court, tribunal, judge or person lawfully authorised to take and
receive affidavits; and
(b) in any other country before any court, judge or person lawfully authorised to take
and receive affidavits in that country or before an Indian diplomatic or consular
officer.

(2) All tribunals, judges, Justices, commissioners and persons acting judicially in India
shall take judicial notice of the seal, stamp or signature, as the case may be, of any such
court, tribunal, judge, person, diplomatic or consular officer, attached, appended or
subscribed to any such affidavit or to any other document to be used for the purposes of
this Chapter.

Page 571
 S. 356 - Chapter XX [Ss.270 to 365]

Every winding up – w.e.f. 15 December 2016

Relevant rules: not notified

356. Powers of Tribunal to declare dissolution of company void.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

356. (1) Where a company has been dissolved, whether in pursuance of this Chapter or
of section 232 or otherwise, the Tribunal may at any time within two years of the date of
the dissolution, on application by the Company Liquidator of the company or by any other
person who appears to the Tribunal to be interested, make an order, upon such terms as
the Tribunal thinks fit, declaring the dissolution to be void, and thereupon such
proceedings may be taken as if the company had not been dissolved.

(2) It shall be the duty of the Company Liquidator or the person on whose application the
order was made, within thirty days after the making of the order or such further time as
the Tribunal may allow, to file a certified copy of the order with the Registrar who shall
register the same, and if the Company Liquidator or the person fails so to do, the
Company Liquidator or the person shall be punishable with fine which may extend to ten
thousand rupees for every day during which the default continues.

Page 572
 S. 357 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

357. Commencement of winding up by Tribunal.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

403
[357. The winding up of a company by the Tribunal under this Act shall be deemed to
commence at the time of the presentation of the petition for the winding up.]

403
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(28) of the Eleventh Schedule thereto, with effect from 15 th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to substitution it read as “357. (1) Where,
before the presentation of a petition for the winding up of a company by the Tribunal, a resolution has been
passed by the company for voluntary winding up, the winding up of the company shall be deemed to have
commenced at the time of the passing of the resolution, and unless the Tribunal, on proof of fraud or
mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to
have been validly taken.
(2) In any other case, the winding up of a company by the Tribunal shall be deemed to commence at the
time of the presentation of the petition for the winding up.”.

Page 573
 S. 358 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

358. Exclusion of certain time in computing period of limitation.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

358. Notwithstanding anything in the Limitation Act, 1963 (36 of 1963), or in any other law
for the time being in force, in computing the period of limitation specified for any suit or
application in the name and on behalf of a company which is being wound up by the
Tribunal, the period from the date of commencement of the winding up of the company to
a period of one year immediately following the date of the winding up order shall be
excluded.

Page 574
 S. 359 - Chapter XX [Ss.270 to 365]

Winding up –w.e.f. 15 December 2016

Relevant rules: not notified

PART IV.—Official Liquidators

359. Appointment of Official Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

359. (1) For the purposes of this Act, so far as it relates to the winding up of companies
by the Tribunal, the Central Government may appoint as many Official Liquidators, Joint,
Deputy or Assistant Official Liquidators as it may consider necessary to discharge the
functions of the Official Liquidator.
[See section 2(61)]

(2) The liquidators appointed under sub-section (1) shall be whole-time officers of the
Central Government.

(3) The salary and other allowances of the Official Liquidator, Joint Official Liquidator,
Deputy Official Liquidator and Assistant Official Liquidator shall be paid by the Central
Government.

Page 575
 S. 360 - Chapter XX [Ss.270 to 365]

Winding up – w.e.f. 15 December 2016

Relevant rules: not notified

360. Powers and functions of Official Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

360. (1) The Official Liquidator shall exercise such powers and perform such duties as
the Central Government may prescribe.

(2) Without prejudice to the provisions of sub-section (1), the Official Liquidator may—
(a) exercise all or any of the powers as may be exercised by a Company Liquidator
under the provisions of this Act; and
(b) conduct inquiries or investigations, if directed by the Tribunal or the Central
Government, in respect of matters arising out of winding up proceedings.

Page 576
 S. 361 - Chapter XX [Ss.270 to 365]

Winding up – w.e.f. 15 December 2016

Relevant rules: not notified

361. Summary procedure for liquidation.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

361. (1) Where the company to be wound up under this Chapter, —

(i) has assets of book value not exceeding one crore rupees; and
(ii) belongs to such class or classes of companies as may be prescribed,
the Central Government may order it to be wound up by summary procedure provided
under this Part.

(2) Where an order under sub-section (1) is made, the Central Government shall appoint
the Official Liquidator as the liquidator of the company.

(3) The Official Liquidator shall forthwith take into his custody or control all assets, effects
and actionable claims to which the company is or appears to be entitled.

(4) The Official Liquidator shall, within thirty days of his appointment, submit a report to
the Central Government in such manner and form, as may be prescribed, including a
report whether in his opinion, any fraud has been committed in promotion, formation or
management of the affairs of the company or not.

(5) On receipt of the report under sub-section (4), if the Central Government is satisfied
that any fraud has been committed by the promoters, directors or any other officer of the
company, it may direct further investigation into the affairs of the company and that a
report shall be submitted within such time as may be specified.

(6) After considering the investigation report under sub-section (5), the Central
Government may order that winding up may be proceeded under Part I of this Chapter or
under the provision of this Part.

Page 577
 S. 362 - Chapter XX [Ss.270 to 365]

Winding up – w.e.f. 15 December 2016

Relevant rules: not notified

362. Sale of assets and recovery of debts due to company.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

362. (1) The Official Liquidator shall expeditiously dispose of all the assets whether
movable or immovable within sixty days of his appointment.

(2) The Official Liquidator shall serve a notice within thirty days of his appointment calling
upon the debtors of the company or the contributories, as the case may be, to deposit
within thirty days with him the amount payable to the company.

(3) Where any debtor does not deposit the amount under sub-section (2), the Central
Government may, on an application made to it by the Official Liquidator, pass such orders
as it thinks fit.

(4) The amount recovered under this section by the Official Liquidator shall be deposited
in accordance with the provisions of section 349.

Page 578
 S. 363 - Chapter XX [Ss.270 to 365]

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Relevant rules: not notified

363. Settlement of claims of creditors by Official Liquidator.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]

363. (1) The Official Liquidator within thirty days of his appointment shall call upon the
creditors of the company to prove their claims in such manner as may be prescribed,
within thirty days of the receipt of such call.

(2) The Official Liquidator shall prepare a list of claims of creditors in such manner as may
be prescribed and each creditor shall be communicated of the claims accepted or rejected
along with reasons to be recorded in writing.

Page 579
 S. 364 - Chapter XX [Ss.270 to 365]

Winding up – w.e.f. 15 December 2016

Relevant rules: not notified

364. Appeal by creditor.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

364. (1) Any creditor aggrieved by the decision of the Official Liquidator under section
363 may file an appeal before the Central Government within thirty days of such decision.

(2) The Central Government may after calling the report from the Official Liquidator either
dismiss the appeal or modify the decision of the Official Liquidator.

(3) The Official Liquidator shall make payment to the creditors whose claims have been
accepted.

(4) The Central Government may, at any stage during settlement of claims, if considers
necessary, refer the matter to the Tribunal for necessary orders.

Page 580
 S. 365 - Chapter XX [Ss.270 to 365]

Winding up – w.e.f. 15 December 2016

Relevant rules: not notified

365. Order of dissolution of company.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

365. (1) The Official Liquidator shall, if he is satisfied that the company is finally wound
up, submit a final report to—
(i) the Central Government, in case no reference was made to the Tribunal under sub-
section (4) of section 364; and
(ii) in any other case, the Central Government and the Tribunal.

(2) The Central Government, or as the case may be, the Tribunal on receipt of such report
shall order that the company be dissolved.

(3) Where an order is made under sub-section (2), the Registrar shall strike off the name
of the company from the register of companies and publish a notification to this effect.

Page 581
 S. 366 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

CHAPTER XXI
PART I.— Companies Authorised to Register
under this Act
366. Companies capable of being registered.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.565 and 566 of the Companies Act, 1956]
[Refer Rule 3 of the Companies (Authorised to Registered) Rules, 2014]
[Form No. URC-1] [Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
[Registration of companies under section 366 shall be done by Central Registration Office w.e.f. 28 March
2016, vide notification number S.O. 1211(E) dated 23rd March 2016.]

366. (1) For the purposes of this Part, the word “company” includes any partnership firm,
limited liability partnership, cooperative society, society or any other business entity
formed under any other law for the time being in force which applies for registration under
this Part.

(2) With the exceptions and subject to the provisions contained in this section, any
company formed, whether before or after the commencement of this Act, in pursuance of
any Act of Parliament other than this Act or of any other law for the time being in force or
being otherwise duly constituted according to law, and consisting of 404 [two or more
members], may at any time register under this Act as an unlimited company, or as a
company limited by shares, or as a company limited by guarantee, in such manner as
may be prescribed and the registration shall not be invalid by reason only that it has taken
place with a view to the company’s being wound up: [Form No. URC-1]

Provided that—
(i) a company registered under the Indian Companies Act, 1882 (6 of 1882) or under
the Indian Companies Act, 1913 (7 of 1913) or the Companies Act, 1956 (1 of
1956), shall not register in pursuance of this section;
(ii) a company having the liability of its members limited by any Act of Parliament other
than this Act or by any other law for the time being in force, shall not register in

404
Substituted for words ‘seven or more members’ in sub-sections (2) of Section 366 of the principal Act
by section 75(i) of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. It is brought to force from 15th August 2018 vide notification no.
S.O. 3300(E) dated 05th July 2018.

Page 582
 S. 366 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

pursuance of this section as an unlimited company or as a company limited by

guarantee;
(iii) a company shall be registered in pursuance of this section as a company limited
by shares only if it has a permanent paid-up or nominal share capital of fixed
amount divided into shares, also of fixed amount, or held and transferable as stock,
or divided and held partly in the one way and partly in the other, and formed on the
principle of having for its members the holders of those shares or that stock, and
no other persons;
(iv) a company shall not register in pursuance of this section without the assent of a
majority of such of its members as are present in person, or where proxies are
allowed, by proxy, at a general meeting summoned for the purpose;
(v) where a company not having the liability of its members limited by any Act of
Parliament or any other law for the time being in force is about to register as a
limited company, the majority required to assent as aforesaid shall consist of not
less than three-fourths of the members present in person, or where proxies are
allowed, by proxy, at the meeting;
(vi) where a company is about to register as a company limited by guarantee, the
assent to its being so registered shall be accompanied by a resolution declaring
that each member undertakes to contribute to the assets of the company, in the
event of its being wound up while he is a member, or within one year after he
ceases to be a member, for payment of the debts and liabilities of the company or
of such debts and liabilities as may have been contracted before he ceases to be
a member, and of the costs, charges and expenses of winding up, and for the
adjustment of the rights of the contributories among themselves, such amount as
may be required, not exceeding a specified amount.
405
[(vii) a company with less than seven members shall register as a private company.]

(3) In computing any majority required for the purposes of sub-section (1), when a poll is
demanded, regard shall be had to the number of votes to which each member is entitled
according to the regulations of the company.

405
Inserted clause (vii) in sub-sections (2) of Section 366 of the principal Act by section 75(ii) of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 15th August 2018 vide notification no. S.O. 3300(E) dated 05th July
2018.

Page 583
 S. 367 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

367. Certificate of registration of existing companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.574 of the Companies Act, 1956]

367. On compliance with the requirements of this Chapter with respect to registration,
and on payment of such fees, if any, as are payable under section 403, the Registrar shall
certify under his hand that the company applying for registration is incorporated as a
company under this Act, and in the case of a limited company that it is limited and
thereupon the company shall be so incorporated.

Page 584
 S. 368 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

368. Vesting of property on registration.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.575 of the Companies Act, 1956]

368. All property, movable and immovable (including actionable claims), belonging to or
vested in a company at the date of its registration in pursuance of this Part, shall, on such
registration, pass to and vest in the company as incorporated under this Act for all the
estate and interest of the company therein.

Page 585
 S. 369 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

369. Saving of existing liabilities.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.576 of the Companies Act, 1956]

369. The registration of a company in pursuance of this Part shall not affect its rights or
liabilities in respect of any debt or obligation incurred, or any contract entered into, by, to,
with, or on behalf of, the company before registration.

Page 586
 S. 370 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

370. Continuation of pending legal proceedings.

[Except proviso, brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Proviso brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th
December, 2016.]
[Corresponding Sec.577 of the Companies Act, 1956]

370. All suits and other legal proceedings taken by or against the company, or any public
officer or member thereof, which are pending at the time of the registration of a company
in pursuance of this Part, may be continued in the same manner as if the registration had
not taken place:
Provided that execution shall not issue against the property or persons of any
individual member of the company on any decree or order obtained in any such suit or
proceeding; but, in the event of the property of the company being insufficient to satisfy
the decree or order, an order may be obtained for winding up the company 406 [in
accordance with the provisions of this Act or of the Insolvency and Bankruptcy Code,
2016].

406
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (29) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 587
 S. 371 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

371. Effect of registration under this Part.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.578 and 579 of the Companies Act, 1956]

371. (1) When a company is registered in pursuance of this Part, sub-sections (2) to (7)
shall apply.

(2) All provisions contained in any Act of Parliament or any other law for the time being in
force, or other instrument constituting or regulating the company, including, in the case of
a company registered as a company limited by guarantee, the resolution declaring the
amount of the guarantee, shall be deemed to be conditions and regulations of the
company, in the same manner and with the same incidents as if so much thereof as
would, if the company had been formed under this Act, have been required to be inserted
in the memorandum, were contained in a registered memorandum, and the residue
thereof were contained in registered articles.

(3) All the provisions of this Act shall apply to the company and the members,
contributories and creditors thereof, in the same manner in all respects as if it had been
formed under this Act, subject as follows:—
(a) Table F in Schedule I shall not apply unless and except in so far as it is adopted
by special resolution;
(b) the provisions of this Act relating to the numbering of shares shall not apply to any
company whose shares are not numbered;
(c) in the event of the company being wound up, every person shall be a contributory,
in respect of the debts and liabilities of the company contracted before registration,
who is liable to pay or contribute to the payment of any debt or liability of the
company contracted before registration, or to pay or contribute to the payment of
any sum for the adjustment of the rights of the members among themselves in
respect of any such debt or liability, or to pay or contribute to the payment of the
costs, charges and expenses of winding up the company, so far as relates to such
debts or liabilities as aforesaid;
(d) in the event of the company being wound up, every contributory shall be liable to
contribute to the assets of the company, in the course of the winding up, all sums
due from him in respect of any such liability as aforesaid; and in the event of the
death or insolvency of any contributory, the provisions of this Act with respect to
the legal representatives of deceased contributories, or with respect to the
assignees of insolvent contributories, as the case may be, shall apply.

(4) The provisions of this Act with respect to—

(a) the registration of an unlimited company as a limited company;
(b) the powers of an unlimited company on registration as a limited company, to
increase the nominal amount of its share capital and to provide that a portion of its

Page 588
 S. 371 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

share capital shall not be capable of being called-up except in the event of winding
up;
(c) the power of a limited company to determine that a portion of its share capital shall
not be capable of being called-up except in the event of winding up,
shall apply, notwithstanding anything in any Act of Parliament or any other law for the
time being in force, or other instrument constituting or regulating the company.

(5) Nothing in this section shall authorise the company to alter any such provisions
contained in any instrument constituting or regulating the company as would, if the
company had originally been formed under this Act, have been required to be contained
in the memorandum and are not authorised to be altered by this Act.

(6) None of the provisions of this Act (apart from those of section 242) shall derogate from
any power of altering its constitution or regulations which may be vested in the company,
by virtue of any Act of Parliament or any other law for the time being in force, or other
instrument constituting or regulating the company.

(7) In this section, the expression “instrument” includes deed of settlement, deed of
partnership, or limited liability partnership.

Page 589
 S. 372 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

372. Power of Court to stay or restrain proceedings.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.580, 586 of the Companies Act, 1956]

372. The provisions of this Act 407[or of the Insolvency and Bankruptcy Code, 2016] with
respect to staying and restraining suits and other legal proceedings against a company
at any time after the presentation of a petition for winding up and before the making of a
winding up order, shall, in the case of a company registered in pursuance of this Part,
where the application to stay or restrain is by a creditor, extend to suits and other legal
proceedings against any contributory of the company.

407
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (30) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 590
 S. 373 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

373. Suits stayed on winding up order.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.581 and 587 of the Companies Act, 1956]

373. Where an order has been made for winding up, or a provisional liquidator has been
appointed for, a company registered in pursuance of this Part, no suit or other legal
proceeding shall be proceeded with or commenced against the company or any
contributory of the company in respect of any debt of the company, except by leave of the
Tribunal and except on such terms as the Tribunal may impose.

Page 591
 S. 374 - Chapter XXI [Ss.366 to 378]

Relevant rules: The Companies (Authorised to Registered) Rules, 2014

374. Obligations of companies registering under this Part.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rules 4 and 5 of the Companies (Authorised to Registered) Rules, 2014]
[Form No. URC-2]

374. Every company which is seeking registration under this Part shall,—
(a) ensure that secured creditors of the company, prior to its registration under this Part,
have either consented to or have given their no objection to company's registration
under this Part;
(b) publish in a newspaper, advertisement one in English and one in vernacular language
in such form as may be prescribed giving notice about registration under this Part,
seeking objections and address them suitably; [Form No. URC-2]
(c) file an affidavit, duly notarised, from all the members or partners to provide that in the
event of registration under this Part, necessary documents or papers shall be
submitted to the registering or other authority with which the company was earlier
registered, for its dissolution as partnership firm, limited liability partnership,
cooperative society, society or any other business entity, as the case may be.
(d) comply with such other conditions as may be prescribed.

408
[Provided that upon registration as a company under this Part a limited liability
partnership incorporated under the Limited Liability Partnership Act, 2008 shall be
deemed to have been dissolved under that Act without any further act or deed.]

408
Inserted proviso in Section 374 of the principal Act by section 76 of the Companies (Amendment) Act,
2017 (1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to
force from 15th August 2018 vide notification no. S.O. 3300(E) dated 05th July 2018.

Page 592
 S. 375 - Chapter XXI [Ss.366 to 378]

Winding up of unregistered companies – w.e.f. 15 December 2016

PART II.—Winding up of unregistered

companies
375. Winding up of unregistered companies.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.582 and 583 of the Companies Act, 1956]

375. (1) Subject to the provisions of this Part, any unregistered company may be wound
up under this Act, in such manner as may be prescribed, and all the provisions of this Act,
with respect to winding up shall apply to an unregistered company, with the exceptions
and additions mentioned in sub-sections (2) to (4).

(2) No unregistered company shall be wound up under this Act voluntarily.

(3) An unregistered company may be wound up under the following circumstances,

namely:—
(a) if the company is dissolved, or has ceased to carry on business, or is carrying on
business only for the purpose of winding up its affairs;
(b) if the company is unable to pay its debts;
(c) if the Tribunal is of opinion that it is just and equitable that the company should be
wound up.

(4) An unregistered company shall, for the purposes of this Act, be deemed to be unable
to pay its debts—
(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a
sum exceeding one lakh rupees then due, has served on the company, by leaving
at its principal place of business, or by delivering to the secretary, or some director,
manager or principal officer of the company, or by otherwise serving in such
manner as the Tribunal may approve or direct, a demand under his hand requiring
the company to pay the sum so due, and the company has, for three weeks after
the service of the demand, neglected to pay the sum or to secure or compound for
it to the satisfaction of the creditor;
(b) if any suit or other legal proceeding has been instituted against any member for
any debt or demand due, or claimed to be due, from the company, or from him in
his character as a member, and notice in writing of the institution of the suit or other
legal proceeding having been served on the company by leaving the same at its
principal place of business or by delivering it to the secretary, or some director,
manager or principal officer of the company or by otherwise serving the same in
such manner as the Tribunal may approve or direct, the company has not, within
ten days after service of the notice,—

Page 593
 S. 375 - Chapter XXI [Ss.366 to 378]

Winding up of unregistered companies – w.e.f. 15 December 2016

(i) paid, secured or compounded for the debt or demand;

(ii) procured the suit or other legal proceeding to be stayed; or
(iii) indemnified the defendant to his satisfaction against the suit or other legal
proceeding, and against all costs, damages and expenses to be incurred by him
by reason of the same;
(c) if execution or other process issued on a decree or order of any Court or Tribunal
in favour of a creditor against the company, or any member thereof as such, or any
person authorised to be sued as nominal defendant on behalf of the company, is
returned unsatisfied in whole or in part;
(d) if it is otherwise proved to the satisfaction of the Tribunal that the company is unable
to pay its debts.
Explanation.—For the purposes of this Part, the expression "unregistered company"—
(a) shall not include—
(i) a railway company incorporated under any Act of Parliament or other Indian law or
any Act of Parliament of the United Kingdom;
(ii) a company registered under this Act; or
(iii) a company registered under any previous companies law and not being a company
the registered office whereof was in Burma, Aden, Pakistan immediately before the
separation of that country from India; and
(b) save as aforesaid, shall include any partnership firm, limited liability partnership or
society or co-operative society, association or company consisting of more than seven
members at the time when the petition for winding up the partnership firm, limited
liability partnership or society or co-operative society, association or company, as the
case may be, is presented before the Tribunal.

Page 594
 S. 376 - Chapter XXI [Ss.366 to 378]

Winding up of unregistered companies – w.e.f. 15 December 2016

376. Power to wind up foreign companies, although dissolved.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.584 of the Companies Act, 1956]

376. Where a body corporate incorporated outside India which has been carrying on
business in India, ceases to carry on business in India, it may be wound up as an
unregistered company under this Part, notwithstanding that the body corporate has been
dissolved or otherwise ceased to exist as such under or by virtue of the laws of the country
under which it was incorporated.

Page 595
 S. 377 - Chapter XXI [Ss.366 to 378]

Winding up of unregistered companies – w.e.f. 15 December 2016

377. Provisions of Chapter cumulative.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.589 of the Companies Act, 1956]

377. (1) The provisions of this Part, with respect to unregistered companies shall be in
addition to and not in derogation of, any provisions hereinbefore in this Act contained with
respect to the winding up of companies by the Tribunal.

(2) The Tribunal or Official Liquidator may exercise any powers or do any act in the case
of unregistered companies which might be exercised or done by the Tribunal or Official
Liquidator in winding up of companies formed and registered under this Act:

Provided that an unregistered company shall not, except in the event of its being
wound up, be deemed to be a company under this Act, and then only to the extent
provided by this Part.

Page 596
 S. 378 - Chapter XXI [Ss.366 to 378]

Winding up of unregistered companies – w.e.f. 15 December 2016

378. Saving and construction of enactments conferring power to wind up

partnership firm, association or company, etc., in certain cases.

[Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.]
[Corresponding Sec.590 of the Companies Act, 1956]

378. Nothing in this Part, shall affect the operation of any enactment which provides for
any partnership firm, limited liability partnership or society or co-operative society,
association or company being wound up, or being wound up as a company or as an
unregistered company, under the Companies Act, 1956 (1 of 1956), or any Act repealed
by that Act:

Provided that references in any such enactment to any provision contained in the
Companies Act, 1956 (1 of 1956) or in any Act repealed by that Act shall be read as
references to the corresponding provision, if any, contained in this Act.

Page 597
 S. 379 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

CHAPTER XXII COMPANIES

INCORPORATED OUTSIDE INDIA
379. Application of Act to foreign companies.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.591 of the Companies Act, 1956]

379. 409[(1) Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to
all foreign companies: Provided that the Central Government may, by Order published in
the Official Gazette, exempt any class of foreign companies, specified in the Order, from
any of the provisions of sections 380 to 386 and sections 392 and 393 and a copy of
every such Order shall, as soon as may be after it is made, be laid before both Houses
of Parliament.
(2)] Where not less than fifty per cent. of the paid-up share capital, whether equity or
preference or partly equity and partly preference, of a foreign company is held by one or
more citizens of India or by one or more companies or bodies corporate incorporated in
India, or by one or more citizens of India and one or more companies or bodies corporate
incorporated in India, whether singly or in the aggregate, such company shall comply with
the provisions of this Chapter and such other provisions of this Act as may be prescribed
with regard to the business carried on by it in India as if it were a company incorporated
in India.

409
Section 379 of the principal Act renumbered as sub-section (2) and inserted sub-section (1) therein by
Section 77 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no. S.O.
630(E) of the same date.

Page 598
 S. 380 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

380. Documents, etc., to be delivered to Registrar by foreign companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.592, 593 of the Companies Act, 1956]
[Refer Rule 3, rules 8, 9, 10 and Rule 12 of the Companies (Registration of Foreign Companies) Rules,
2014]
[Form No. FC-1 and Form No. FC-2] [Documents filed with ROC can be inspected by public (through MCA
portal) as per section 399 of the Act.]

380. (1) Every foreign company shall, within thirty days of the establishment of its place
of business in India, deliver to the Registrar for registration—
(a) a certified copy of the charter, statutes or memorandum and articles, of the
company or other instrument constituting or defining the constitution of the
company and, if the instrument is not in the English language, a certified translation
thereof in the English language;
(b) the full address of the registered or principal office of the company;
(c) a list of the directors and secretary of the company containing such particulars as
may be prescribed;
(d) the name and address or the names and addresses of one or more persons
resident in India authorised to accept on behalf of the company service of process
and any notices or other documents required to be served on the company;
(e) the full address of the office of the company in India which is deemed to be its
principal place of business in India;
(f) particulars of opening and closing of a place of business in India on earlier occasion
or occasions;
(g) declaration that none of the directors of the company or the authorised
representative in India has ever been convicted or debarred from formation of
companies and management in India or abroad; and
(h) any other information as may be prescribed. [Form No. FC-1]

(2) Every foreign company existing at the commencement of this Act shall, if it has not
delivered to the Registrar before such commencement, the documents and particulars
specified in sub-section (1) of section 592 of the Companies Act, 1956 (1 of 1956),
continue to be subject to the obligation to deliver those documents and particulars in
accordance with that Act.

(3) Where any alteration is made or occurs in the documents delivered to the Registrar
under this section, the foreign company shall, within thirty days of such alteration, deliver
to the Registrar for registration, a return containing the particulars of the alteration in the
prescribed form. [Form No. FC-2]

Page 599
 S. 381 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

381. Accounts of foreign company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.594 of the Companies Act, 1956]
[Refer Rules 4, 5 and 6 of the Companies (Registration of Foreign Companies) Rules, 2014]
[In supersession of the notification number G.S.R 59, dated 06.01.1959 issued under sub-section (1) of
section 594 of the Companies Act, 1956 (1 of 1956), clause (a) of sub-section (1) of section 381 of the Act
shall apply to a foreign company which is an airlines company (hereinafter referred to as "the company")
having a share capital, subject to the exceptions and modifications specified in notification number
S.O.2463(E) dated 19th July, 2016.]
[Form No. FC-3] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]

381. (1) Every foreign company shall, in every calendar year,—

(a) make out a balance sheet and profit and loss account in such form, containing such
particulars and including or having annexed or attached thereto such documents
as may be prescribed; and [Form No. FC-3]
(b) deliver a copy of those documents to the Registrar:

Provided that the Central Government may, by notification, direct that, in the case of
any foreign company or class of foreign companies, the requirements of clause (a) shall
not apply, or shall apply subject to such exceptions and modifications as may be specified
in that notification.
[Refer notification S.O. 2463 dated 19 July 2016 for applicability of Sec.381(1)(a) to a foreign
airline company].

(2) If any such document as is mentioned in sub-section (1) is not in the English language,
there shall be annexed to it a certified translation thereof in the English language.

(3) Every foreign company shall send to the Registrar along with the documents required
to be delivered to him under sub-section (1), a copy of a list in the prescribed form of all
places of business established by the company in India as at the date with reference to
which the balance sheet referred to in sub-section (1) is made out.

Page 600
 S. 382 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

382. Display of name, etc., of foreign company.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.595 of the Companies Act, 1956]

382. Every foreign company shall—

(a) conspicuously exhibit on the outside of every office or place where it carries on
business in India, the name of the company and the country in which it is incorporated,
in letters easily legible in English characters, and also in the characters of the language
or one of the languages in general use in the locality in which the office or place is
situate;
(b) cause the name of the company and of the country in which the company is
incorporated, to be stated in legible English characters in all business letters, bill-
heads and letter paper, and in all notices, and other official publications of the
company; and
(c) if the liability of the members of the company is limited, cause notice of that fact—
(i) to be stated in every such prospectus issued and in all business letters, bill-heads,
letter paper, notices, advertisements and other official publications of the company,
in legible English characters; and
(ii) to be conspicuously exhibited on the outside of every office or place where it carries
on business in India, in legible English characters and also in legible characters of
the language or one of the languages in general use in the locality in which the
office or place is situate.

Page 601
 S. 383 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

383. Service on foreign company.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.596 of the Companies Act, 1956]

383. Any process, notice, or other document required to be served on a foreign company
shall be deemed to be sufficiently served, if addressed to any person whose name and
address have been delivered to the Registrar under section 380 and left at, or sent by
post to, the address which has been so delivered to the Registrar or by electronic mode.

Page 602
 S. 384 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

384. Debentures, annual return, registration of charges, books of account and their
inspection.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.600 of the Companies Act, 1956]
[Refer Rule 7 of the Companies (Registration of Foreign Companies) Rules, 2014]
[Form No. FC-4] [Documents filed with ROC can be inspected by public (through MCA portal) as per section
399 of the Act.]

384. (1) The provisions of section 71 shall apply mutatis mutandis to a foreign company.

(2) The provisions of section 92 410[and section 135] shall, subject to such exceptions,
modifications and adaptations as may be made therein by rules made under this Act,
apply to a foreign company as they apply to a company incorporated in India. [Annual
Return of Foreign Company in Form No. FC-4]
411
[Provided that notwithstanding anything contained in this Act, the exemptions provided
under section 92 to companies incorporated under this Act for the purpose of operating
from the International Financial Services Centre located in an approved multi services
Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005)
and the Special Economic Zones Rules, 2006, shall apply mutatis mutandis to a foreign
company registered under Chapter XXII of this Act, which has a place of business or
which conducts business activity from the International Financial Services Centre located
in an approved multi services Special Economic Zone set-up under the Special Economic
Zones Act, 2005 and the Special Economic Zones Rules, 2006.]

(3) The provisions of section 128 shall apply to a foreign company to the extent of
requiring it to keep at its principal place of business in India, the books of account referred
to in that section, with respect to monies received and spent, sales and purchases made,
and assets and liabilities, in the course of or in relation to its business in India.

(4) The provisions of Chapter VI shall apply mutatis mutandis to charges on properties
which are created or acquired by any foreign company. [Form No. CHG-1]

410
Inserted words 'and section 135' in sub-section (2) of section 384 of the principal Act by Section 78 of
the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date.

411
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017

Page 603
 S. 384 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

412
[Provided that notwithstanding anything contained in this Act, the exemptions provided
under Chapter VI to companies incorporated under this Act for the purpose of operating
from the International Financial Services Centre located in an approved multi services
Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005)
and the Special Economic Zones Rules, 2006, shall apply mutatis mutandis to a foreign
company registered under Chapter XXII of this Act, which has a place of business or
which conducts business activity from the International Financial Services Centre located
in an approved multi services Special Economic Zone set-up under the Special Economic
Zones Act, 2005 and the Special Economic Zones Rules, 2006.]

(5) The provisions of Chapter XIV shall apply mutatis mutandis to the Indian business of
a foreign company as they apply to a company incorporated in India.

412
Inserted by Notification number G.S.R. 9(E) dated 04th January 2017

Page 604
 S. 385 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

385. Fee for registration of documents.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.601 of the Companies Act, 1956]
[Refer Rule 12 of the Companies (Registration Offices and Fees) Rules, 2014]

385. There shall be paid to the Registrar for registering any document required by the
provisions of this Chapter to be registered by him, such fee, as may be prescribed.

Page 605
 S. 386 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

386. Interpretation.

[Except clause (a), brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated
12th September, 2013.]
[Clause (a) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Corresponding Sec.602 of the Companies Act, 1956]

386. For the purposes of the foregoing provisions of this Chapter,—

(a) the expression “certified” means certified in the prescribed manner to be a true copy
or a correct translation; [Section 386 (a) w.e.f. 01 April 2014]
(b) the expression “director”, in relation to a foreign company, includes any person in
accordance with whose directions or instructions the Board of Directors of the
company is accustomed to act; and
(c) the expression “place of business” includes a share transfer or registration office.

Page 606
 S. 387 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

387. Dating of prospectus and particulars to be contained therein.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.603 of the Companies Act, 1956]

387. (1) No person shall issue, circulate or distribute in India any prospectus offering to
subscribe for securities of a company incorporated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not establish,
a place of business in India, unless the prospectus is dated and signed, and—
(a) contains particulars with respect to the following matters, namely:—
(i) the instrument constituting or defining the constitution of the company;
(ii) the enactments or provisions by or under which the incorporation of the company
was effected;
(iii) address in India where the said instrument, enactments or provisions, or copies
thereof, and if the same are not in the English language, a certified translation
thereof in the English language can be inspected;
(iv) the date on which and the country in which the company would be or was
incorporated; and
(v) whether the company has established a place of business in India and, if so, the
address of its principal office in India; and
(b) states the matters specified under section 26:

Provided that sub-clauses (i), (ii) and (iii) of clause (a) of this sub-section shall not
apply in the case of a prospectus issued more than two years after the date at which the
company is entitled to commence business.

(2) Any condition requiring or binding an applicant for securities to waive compliance with
any requirement imposed by virtue of sub-section (1), or purporting to impute him with
notice of any contract, documents or matter not specifically referred to in the prospectus,
shall be void.

(3) No person shall issue to any person in India a form of application for securities of such
a company or intended company as is mentioned in sub-section (1), unless the form is
issued with a prospectus which complies with the provisions of this Chapter and such
issue does not contravene the provisions of section 388:

Provided that this sub-section shall not apply if it is shown that the form of
application was issued in connection with a bona fide invitation to a person to enter into
an underwriting agreement with respect to securities.

(4) This section —

(a) shall not apply to the issue to existing members or debenture holders of a company
of a prospectus or form of application relating to securities of the company, whether

Page 607
 S. 387 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

an applicant for securities will or will not have the right to renounce in favour of
other persons; and
(b) except in so far as it requires a prospectus to be dated, to the issue of a prospectus
relating to securities which are or are to be in all respects uniform with securities
previously issued and for the time being dealt in or quoted on a recognised stock
exchange, but, subject as aforesaid, this section shall apply to a prospectus or form
of application whether issued on or with reference to the formation of a company
or subsequently.

(5) Nothing in this section shall limit or diminish any liability which any person may incur
under any law for the time being in force in India or under this Act apart from this section.

Page 608
 S. 388 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

388. Provisions as to expert’s consent and allotment.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.604 of the Companies Act, 1956]

388. (1) No person shall issue, circulate or distribute in India any prospectus offering for
subscription in securities of a company incorporated or to be incorporated outside India,
whether the company has or has not been established, or when formed will or will not
establish, a place of business in India,—
(a) if, where the prospectus includes a statement purporting to be made by an expert,
he has not given, or has before delivery of the prospectus for registration
withdrawn, his written consent to the issue of the prospectus with the statement
included in the form and context in which it is included, or there does not appear in
the prospectus a statement that he has given and has not withdrawn his consent
as aforesaid; or
(b) if the prospectus does not have the effect, where an application is made in
pursuance thereof, of rendering all persons concerned bound by all the provisions
of sections 33 and 40, so far as applicable.

(2) For the purposes of this section, a statement shall be deemed to be included in a
prospectus, if it is contained in any report or memorandum appearing on the face thereof
or by reference incorporated therein or issued therewith.

Page 609
 S. 389 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

389. Registration of prospectus.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.605 of the Companies Act, 1956]
[Refer Rule 11 of the Companies (Registration of Foreign Companies) Rules, 2014]

389. No person shall issue, circulate or distribute in India any prospectus offering for
subscription in securities of a company incorporated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not establish,
a place of business in India, unless before the issue, circulation or distribution of the
prospectus in India, a copy thereof certified by the chairperson of the company and two
other directors of the company as having been approved by resolution of the managing
body has been delivered for registration to the Registrar and the prospectus states on the
face of it that a copy has been so delivered, and there is endorsed on or attached to the
copy, any consent to the issue of the prospectus required by section 388 and such
documents as may be prescribed.

Page 610
 S. 390 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

390. Offer of Indian Depository Receipts.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.605A of the Companies Act, 1956]
[Refer Rule 13 of the Companies (Registration of Foreign Companies) Rules, 2014]
[Form No. FC-5]

390. Notwithstanding anything contained in any other law for the time being in force, the
Central Government may make rules applicable for—
(a) the offer of Indian Depository Receipts;
(b) the requirement of disclosures in prospectus or letter of offer issued in connection with
Indian Depository Receipts;
(c) the manner in which the Indian Depository Receipts shall be dealt with in a depository
mode and by custodian and underwriters; and
(d) the manner of sale, transfer or transmission of Indian Depository Receipts,
by a company incorporated or to be incorporated outside India, whether the company has
or has not established, or will or will not establish, any place of business in India.
[Nomination by IDR Holder in Form No. FC-5]

Page 611
 S. 391 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

391. Application of sections 34 to 36 and Chapter XX.

[Section 391(1) brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March,
2014.]
[Section 391(2) brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated
07th December, 2016.]
[Corresponding Sec.607 of the Companies Act, 1956]
[Section 391(2) would apply only in case of a foreign company which has issued prospectus or IDRs pursuant to
provisions of Chapter XXII of Companies Act, 2013 – as clarified by MCA vide General Circular No.01/2017 dated
22 February 2017].

391. (1) The provisions of sections 34 to 36 (both inclusive) shall apply to—
(i) the issue of a prospectus by a company incorporated outside India under section
389 as they apply to prospectus issued by an Indian company;
(ii) the issue of Indian Depository Receipts by a foreign company. [Section 391 (1) w.e.f.
01 April 2014]

413
[(2) Subject to the provisions of section 376, the provisions of Chapter XX shall
apply mutatis mutandis for closure of the place of business of a foreign company in
India as if it were a company incorporated in India in case such foreign company has
raised monies through offer or issue of securities under this Chapter which have not
been repaid or redeemed.]

413
Sub-section (2) of section 391 of the principal Act substituted by Section 79 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
its substitution, it read as “The provisions of Chapter XX shall apply mutatis mutandis for closure of the
place of business of a foreign company in India as if it were a company incorporated in India.” and it was
brought to force from 15th December 2016 vide notification number S.O. 3677(E) dated 07th December
2016.

Page 612
 S. 392 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

392. Punishment for contravention.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.598, 606 of the Companies Act, 1956]

392. Without prejudice to the provisions of section 391, if a foreign company contravenes
the provisions of this Chapter, the foreign company shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to three lakh rupees and in
the case of a continuing offence, with an additional fine which may extend to fifty thousand
rupees for every day after the first during which the contravention continues and every
officer of the foreign company who is in default shall be punishable with imprisonment for
a term which may extend to six months or with fine which shall not be less than twenty-
five thousand rupees but which may extend to five lakh rupees, or with both.

Page 613
 S. 393 - Chapter XXII [Ss.379 to 393]

Relevant rules: The Companies (Registration of Foreign Companies) Rules, 2014

393. Company's failure to comply with provisions of this Chapter not to affect
validity of contracts, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.599 of the Companies Act, 1956]

393. Any failure by a company to comply with the provisions of this Chapter shall not
affect the validity of any contract, dealing or transaction entered into by the company or
its liability to be sued in respect thereof, but the company shall not be entitled to bring any
suit, claim any set-off, make any counter-claim or institute any legal proceeding in respect
of any such contract, dealing or transaction, until the company has complied with the
provisions of this Act applicable to it.

Page 614
 S. 394 - Chapter XXIII [Ss.394 and 395]

Relevant rules: not notified

CHAPTER XXIII GOVERNMENT

COMPANIES
394. Annual reports on Government companies.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Section 619A (1) and (2) of the Companies Act, 1956]

394. (1) Where the Central Government is a member of a Government company, the
Central Government shall cause an annual report on the working and affairs of that
company to be—
(a) prepared within three months of its annual general meeting before which the
comments given by the Comptroller and Auditor-General of India and the audit
report is placed under the proviso to sub-section (6) of section 143; and
(b) as soon as may be after such preparation, laid before both Houses of Parliament
together with a copy of the audit report and comments upon or supplement to the
audit report, made by the Comptroller and Auditor-General of India.

(2) Where in addition to the Central Government, any State Government is also a member
of a Government company, that State Government shall cause a copy of the annual report
prepared under sub-section (1) to be laid before the House or both Houses of the State
Legislature together with a copy of the audit report and the comments upon or supplement
to the audit report referred to in sub-section (1).

Page 615
 S. 395 - Chapter XXIII [Ss.394 and 395]

Relevant rules: not notified

395. Annual reports where one or more State Governments are members of
companies.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Section 619A (3) and (4) of the Companies Act, 1956]

395. (1) Where the Central Government is not a member of a Government company,
every State Government which is a member of that company, or where only one State
Government is a member of the company, that State Government shall cause an annual
report on the working and affairs of the company to be—
(a) prepared within the time specified in sub-section (1) of section 394; and
(b) as soon as may be after such preparation, laid before the House or both Houses
of the State Legislature together with a copy of the audit report and comments upon
or supplement to the audit report referred to in sub-section (1) of that section.

(2) The provisions of this section and section 394 shall, so far as may be, apply to a
Government company in liquidation as they apply to any other Government company.

Page 616
 S. 396 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

CHAPTER XXIV REGISTRATION

OFFICES AND FEES
396. Registration offices.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.609 of the Companies Act, 1956]
[Refer Rules 4, 5 and 6 of the Companies (Registration Offices and Fees) Rules, 2014]
[Refer notification number 832(E) dated 03 November, 2015 for Regional Director’s offices and jurisdiction]

396. (1) For the purposes of exercising such powers and discharging such functions as
are conferred on the Central Government by or under this Act or under the rules made
thereunder and for the purposes of registration of companies under this Act, the Central
Government shall, by notification, establish such number of offices at such places as it
thinks fit, specifying their jurisdiction.

(2) The Central Government may appoint such Registrars, Additional, Joint, Deputy and
Assistant Registrars as it considers necessary for the registration of companies and
discharge of various functions under this Act, and the powers and duties that may be
exercisable by such officers shall be such as may be prescribed.

(3) The terms and conditions of service, including the salaries payable to persons
appointed under sub-section (2), shall be such as may be prescribed.

(4) The Central Government may direct a seal or seals to be prepared for the
authentication of documents required for, or connected with, the registration of
companies.

Page 617
 S. 397 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

397. Admissibility of certain documents as evidence.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.610A of the Companies Act, 1956]

397. Notwithstanding anything contained in any other law for the time being in force, any
document reproducing or derived from returns and documents filed by a company with
the Registrar on paper or in electronic form or stored on any electronic data storage
device or computer readable media by the Registrar, and authenticated by the Registrar
or any other officer empowered by the Central Government in such manner as may be
prescribed, shall be deemed to be a document for the purposes of this Act and the rules
made thereunder and shall be admissible in any proceedings thereunder without further
proof or production of the original as evidence of any contents of the original or of any
fact stated therein of which direct evidence is admissible.

Page 618
 S. 398 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

398. Provisions relating to filing of applications, documents, inspection, etc., in

electronic form.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.610B of the Companies Act, 1956]
[Refer Rule 7, rule 11 and rule 14 of the Companies (Registration Offices and Fees) Rules, 2014]

398. (1) Notwithstanding anything to the contrary contained in this Act, and without
prejudice to the provisions contained in section 6 of the Information Technology Act, 2000
(21 of 2000), the Central Government may make rules so as to require from such date as
may be prescribed in the rules that—
(a) such applications, balance sheet, prospectus, return, declaration, memorandum,
articles, particulars of charges, or any other particulars or document as may be
required to be filed or delivered under this Act or the rules made thereunder, shall
be filed in the electronic form and authenticated in such manner as may be
prescribed;
(b) such document, notice, any communication or intimation, as may be required to be
served or delivered under this Act, in the electronic form and authenticated in such
manner as may be prescribed;
(c) such applications, balance sheet, prospectus, return, register, memorandum,
articles, particulars of charges, or any other particulars or document and return filed
under this Act or rules made thereunder shall be maintained by the Registrar in the
electronic form and registered or authenticated, as the case may be, in such
manner as may be prescribed;
(d) such inspection of the memorandum, articles, register, index, balance sheet, return
or any other particulars or document maintained in the electronic form, as is
otherwise available for inspection under this Act or the rules made thereunder, may
be made by any person through the electronic form in such manner as may be
prescribed;
(e) such fees, charges or other sums payable under this Act or the rules made
thereunder shall be paid through the electronic form and in such manner as may
be prescribed; and
(f) the Registrar shall register change of registered office, alteration of memorandum
or articles, 414[*], issue certificate of incorporation, register such document, issue
such certificate, record the notice, receive such communication as may be required
to be registered or issued or recorded or received, as the case may be, under this
Act or the rules made thereunder or perform duties or discharge functions or
exercise powers under this Act or the rules made thereunder or do any act which

414
Word ‘prospectus’ omitted by section 38 of the Companies (Amendment) Act, 2019 (22 of 2019) with
effect from 15th August 2019 vide notification number S.O. 2947(E) dated 14th August 2019.

Page 619
 S. 398 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

is by this Act directed to be performed or discharged or exercised or done by the

Registrar in the electronic form in such manner as may be prescribed.

Explanation.— For the removal of doubts, it is hereby clarified that the rules made under
this section shall not relate to imposition of fines or other pecuniary penalties or demand
or payment of fees or contravention of any of the provisions of this Act or punishment
therefor.

(2) The Central Government may, by notification, frame a scheme to carry out the
provisions of sub-section (1) through the electronic form.

Page 620
 S. 399 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

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

[Except reference of word Tribunal in section 399(2), brought to force from 01 April 2014 vide notification
number S.O. 902(E) dated 26th March, 2014.]
[Reference to word ‘Tribunal’ in Section 399(2) is brought to force from 01 June 2016 vide notification
number S.O. 1934(E) dated 01st June, 2016]
[Corresponding Sec.610 of the Companies Act, 1956]
[Refer Rule 12, rule 13 and rule 15 of the Companies (Registration Offices and Fees) Rules, 2014]
[MCA has made obtaining certified true copy of documents fully electronic. Online application can be made
with necessary provision for online payment of MCA fees (which includes court fees stamp) and Stamp
Duty for obtaining certified true copy of any documents available for inspection on MCA portal. Registrar of
Companies will send the certified copies by post to the applicant. Refer Circular 5/2014 dated 28 March
2014.]

399. (1) Save as otherwise provided elsewhere in this Act, any person may—
(a) inspect by electronic means any documents kept by the Registrar in accordance
with the rules made, being documents filed or registered by him in pursuance of
this Act, or making a record of any fact required or authorised to be recorded or
registered in pursuance of this Act, on payment for each inspection of such fees as
may be prescribed;
(b) require a certificate of the incorporation of any company, or a copy or extract of
any other document or any part of any other document to be certified by the
Registrar, on payment in advance of such fees as may be prescribed:

Provided that the rights conferred by this sub-section shall be exercisable—

(i) in relation to documents delivered to the Registrar with a prospectus in pursuance
of section 26, only during the fourteen days beginning with the date of publication
of the prospectus; and at other times, only with the permission of the Central
Government; and [Power delegated to Regional Directors. Refer notification number
S.O. 1352(E) dated 21st May, 2014 and notification number S.O. 4090(E) dated 19th December,
2016]
(ii) in relation to documents so delivered in pursuance of clause (b) of sub- section (1)
of section 388, only during the fourteen days beginning with the date of the
prospectus; and at other times, only with the permission of the Central Government.

(2) No process for compelling the production of any document kept by the Registrar shall
issue from any court or the Tribunal except with the leave of that court or the Tribunal and
any such process, if issued, shall bear thereon a statement that it is issued with the leave
of the court or the Tribunal. [provisions related to Tribunal brought to force from 01 June 2016]

(3) A copy of, or extract from, any document kept and registered at any of the offices for
the registration of companies under this Act, certified to be a true copy by the Registrar
(whose official position it shall not be necessary to prove), shall, in all legal proceedings,
be admissible in evidence as of equal validity with the original document.

Page 621
 S. 400 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

400. Electronic form to be exclusive, alternative or in addition to physical form.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]

400. The Central Government may also provide in the rules made under section 398 and
section 399 that the electronic form for the purposes specified in these sections shall be
exclusive, or in the alternative or in addition to the physical form, therefor.

Page 622
 S. 401 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

401. Provision of value added services through electronic form.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.610D of the Companies Act, 1956]

401. The Central Government may provide such value added services through the
electronic form and levy such fee thereon as may be prescribed.

Page 623
 S. 402 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

402. Application of provisions of Information Technology Act, 2000.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.610E of the Companies Act, 1956]

402. All the provisions of the Information Technology Act, 2000 (21 of 2000) relating to
the electronic records, including the manner and format in which the electronic records
shall be filed, in so far as they are not inconsistent with this Act, shall apply in relation to
the records in electronic form specified under section 398.

Page 624
 S. 403 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

403. Fee for filing, etc.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.611 and Schedule X of the Companies Act, 1956]
[Refer Rule 12 and rule 13 of the Companies (Registration Offices and Fees) Rules, 2014]
[For Nidhi Companies, this section shall apply, with the modification that the filing fees in respect of every
return of allotment under sub-section (9) of section 42 shall be calculated at the rate of one rupee for every
one hundred rupees or parts thereof on the face value of the shares included in the return but shall not
exceed the amount of normal filing fee payable. Refer notification number G.S.R. 465(E) dated 5th June,
2015.]

403. (1) Any document, required to be submitted, filed, registered or recorded, or any fact
or information required or authorised to be registered under this Act, shall be submitted,
filed, registered or recorded within the time specified in the relevant provision on payment
of such fee as may be prescribed:
415
[Provided that where any document, fact or information required to be submitted,
filed, registered or recorded, as the case may be, under section 92 or 137 is not submitted,
filed, registered or recorded, as the case may be, within the period provided in those
sections, without prejudice to any other legal action or liability under this Act, it may be
submitted, filed, registered or recorded, as the case may be, after expiry of the period so
provided in those sections, on payment of such additional fee as may be prescribed,
which shall not be less than one hundred rupees per day and different amounts may be
prescribed for different classes of companies:
Provided further that where the document, fact or information, as the case may be,
in cases other than referred to in the first proviso, is not submitted, filed, registered or
recorded, as the case may be, within the period provided in the relevant section, it may,
without prejudice to any other legal action or liability under this Act, be submitted, filed,
registered or recorded as the case may be, on payment of such additional fee as may be
prescribed and different fees may be prescribed for different classes of companies:

415
Substituted the first and second provisos to sub-section (1) of Section 403 of the principal Act by clause
(i) of section 80 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the
President of India on 03rd January 2018. The first proviso to clause (i) of section 80 of the said Companies
(Amendment) Act, 2017 (1 of 2018) is brought to force from 07th May 2018 vide notification no. S.O.
1833(E) of the same date. Prior to its substitution it read as “Provided that any document, fact or information
may be submitted, filed, registered or recorded, after the time specified in relevant provision for such
submission, filing, registering or recording, within a period of two hundred and seventy days from the date
by which it should have been submitted, filed, registered or recorded, as the case may be, on payment of
such additional fee as may be prescribed: Provided further that any such document, fact or information
may, without prejudice to any other legal action or liability under the Act, be also submitted, filed, registered
or recorded, after the first time specified in first proviso on payment of fee and additional fee specified under
this section.”.

Page 625
 S. 403 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

Provided also that where there is default on two or more occasions in submitting,
filing, registering or recording of the document, fact or information, it may, without
prejudice to any other legal action or liability under this Act, be submitted, filed, registered
or recorded, as the case may be, on payment of a higher additional fee, as may be
prescribed and which shall not be lesser than twice the additional fee provided under the
first or the second proviso as applicable.]
416
[(2) Where a company fails or commits any default to submit, file, register or record any
document, fact or information under sub-section (1) before the expiry of the period
specified in the relevant section, the company and the officers of the company who are in
default, shall, without prejudice to the liability for the payment of fee and additional fee,
be liable for the penalty or punishment provided under this Act for such failure or default.]

416
Substituted sub-section (2) of Section 403 of the principal Act by clause (i) of section 80 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.
Prior to its substitution it read as “(2) Where a company fails or commits any default to submit, file, register
or record any document, fact or information under sub-section (1) before the expiry of the period specified
in the first proviso to that sub-section with additional fee, the company and the officers of the company who
are in default, shall, without prejudice to the liability for payment of fee and additional fee, be liable for the
penalty or punishment provided under this Act for such failure or default.”.

Page 626
 S. 404 - Chapter XXIV [Ss.396 and 404]

Relevant rules: The Companies (Registration of Offices and Fees) Rules, 2014

404. Fees, etc., to be credited into public account.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.612 of the Companies Act, 1956]

404. All fees, charges and other sums received by any Registrar, Additional, Joint, Deputy
or Assistant Registrar or any other officer of the Central Government in pursuance of any
provision of this Act shall be paid into the public account of India in the Reserve Bank of
India.

Page 627
 S. 405 - Chapter XXV [S.405]

Relevant rules: not notified

CHAPTER XXV COMPANIES TO

FURNISH INFORMATION OR STATISTICS
405. Power of Central Government to direct companies to furnish information or
statistics.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.615 of the Companies Act, 1956]

405. (1) The Central Government may, by order, require companies generally, or any
class of companies, or any company, to furnish such information or statistics with regard
to their or its constitution or working, and within such time, as may be specified in the
order.

(2) Every order under sub-section (1) shall be published in the Official Gazette and may
be addressed to companies generally or to any class of companies, in such manner, as
the Central Government may think fit and the date of such publication shall be deemed
to be the date on which requirement for information or statistics is made on such
companies or class of companies, as the case may be.

(3) For the purpose of satisfying itself that any information or statistics furnished by a
company or companies in pursuance of any order under sub-section (1) is correct and
complete, the Central Government may by order require such company or companies to
produce such records or documents in its possession or allow inspection thereof by such
officer or furnish such further information as that Government may consider necessary.

(4) If any company fails to comply with an order made under sub-section (1) or sub-
section (3), or knowingly furnishes any information or statistics which is incorrect or
incomplete in any material respect, the company shall be punishable with fine which may
extend to twenty-five thousand rupees and every officer of the company who is in default,
shall be punishable with imprisonment for a term which may extend to six months or with
fine which shall not be less than twenty-five thousand rupees but which may extend to
three lakh rupees, or with both.

(5) Where a foreign company carries on business in India, all references to a company in
this section shall be deemed to include references to the foreign company in relation, and
only in relation, to such business.

Page 628
 S. 406 - Chapter XXVI [S.406]

Relevant rules: Nidhi Rules, 2014

CHAPTER XXVI NIDHIS

406. Power to modify Act in its application to Nidhis.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.620A of the Companies Act, 1956]
[Nidhi Rules, 2014]
[Form NDH-1, NDH-2, NDH-3]

406. (1) In this section, “Nidhi” means a company which has been incorporated as a Nidhi
with the object of cultivating the habit of thrift and savings amongst its members, receiving
deposits from, and lending to, its members only, for their mutual benefit, and which
complies with such rules as are prescribed by the Central Government for regulation of
such class of companies.

(2) Save as otherwise expressly provided, the Central Government may, by notification,
direct that any of the provisions of this Act shall not apply, or shall apply with such
exceptions, modifications and adaptations as may be specified in that notification, to any
Nidhi or Nidhis of any class or description as may be specified in that notification.

(3) A copy of every notification proposed to be issued under sub-section (2), shall be laid
in draft before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and
if, before the expiry of the session immediately following the session or the successive
sessions aforesaid, both Houses agree in disapproving the issue of the notification or
both Houses agree in making any modification in the notification, the notification shall not
be issued or, as the case may be, shall be issued only in such modified form as may be
agreed upon by both the Houses.

Page 629
 S. 407 - Chapter XXVII [S.407 to 434]

Relevant rules: -

CHAPTER XXVII NATIONAL COMPANY

LAW TRIBUNAL AND APPELLATE
TRIBUNAL
407. Definitions.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Explanation to section 10FD of the Companies Act, 1956 which was never brought to force]

407. In this Chapter, unless the context otherwise requires,—

(a) “Chairperson” means the Chairperson of the Appellate Tribunal;

(b) “Judicial Member” means a member of the Tribunal or the Appellate Tribunal
appointed as such and includes the President or the Chairperson, as the case may
be;
(c) “Member” means a member, whether Judicial or Technical of the Tribunal or the
Appellate Tribunal and includes the President or the Chairperson, as the case may be;

(d) “President” means the President of the Tribunal;

(e) “Technical Member” means a member of the Tribunal or the Appellate Tribunal
appointed as such.

Page 630
 S. 408 - Chapter XXVII [S.407 to 434]

Relevant rules: -

408. Constitution of National Company Law Tribunal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.10FB, 10FC of the Companies Act, 1956 which was never brought to force] [See
section 2(90)]
[NCLT constituted by notification number S.O.1932(E) dated 01 June 2016]
[President, NCLT appointed vide notification number S.O.2321(E) dated 06th July 2016 w.e.f. 01 June,
2016]
[Members, NCLT appointed for 5 years of till they attain age of 65 years, whichever is earlier vide notification
number S.O.2563(E) dated 28th July 2016 w.e.f. date of joining of members]

408. The Central Government shall, by notification, constitute, with effect from such date
as may be specified therein, a Tribunal to be known as the National Company Law
Tribunal consisting of a President and such number of Judicial and Technical members,
as the Central Government may deem necessary, to be appointed by it by notification, 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.

Page 631
 S. 409 - Chapter XXVII [S.407 to 434]

Relevant rules: -

409. Qualification of President and Members of Tribunal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.10FD of the Companies Act, 1956 which was never brought to force]

409. (1) The President shall be a person who is or has been a Judge of a High Court for
five years.

(2) A person shall not be qualified for appointment as a Judicial Member unless he—
(a) is, or has been, a judge of a High Court; or
(b) is, or has been, a District Judge for at least five years; or
(c) has, for at least ten years been an advocate of a court.

Explanation.—For the purposes of clause (c), in computing the period during which a
person has been an advocate of a court, there shall be included any period during which
the person has held judicial office or the office of a member of a tribunal or any post,
under the Union or a State, requiring special knowledge of law after he become an
advocate.

(3) A person shall not be qualified for appointment as a Technical Member unless he—
(a) has, for at least fifteen years been a member of the Indian Corporate Law
Service or Indian Legal Service 417[and has been holding the rank of Secretary
or additional Secretary of the Government of India]; or
(b) is, or has been, in practice as a chartered accountant for at least fifteen years;
or
(c) is, or has been, in practice as a cost accountant for at least fifteen years; or
(d) is, or has been, in practice as a company secretary for at least fifteen years; or
(e) is a person of proven ability, integrity and standing having special knowledge
and experience, of not less than fifteen years, in law, industrial finance,
industrial management or administration, industrial reconstruction, investment,
accountancy, labour matters, or such other disciplines related to management,
conduct of affairs, revival, rehabilitation and winding up of companies; or
(f) is, or has been, for at least five years, a presiding officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947
(14 of 1947).

417
Substituted for the words 'out of which at least three years shall be in the pay scale of Joint Secretary to
the Government of India or equivalent or above in that service' in clause (a) of Sub-section (3) of section
409 of the principal Act by Section 82 of the Companies (Amendment) Act, 2017 (1 of 2018) which received
assent of the President of India on 03rd January 2018. It is brought to force from 09th February 2018 vide
notification no. S.O. 630(E) of the same date.

Page 632
 S. 410 - Chapter XXVII [S.407 to 434]

Relevant rules: -

410. Constitution of Appellate Tribunal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Section 10FR (1) of the Companies Act, 1956 which was never brought to force] [See
section 2(4)]
[NCLAT constituted by notification number S.O.1933(E) dated 01st June, 2016]
[Chairperson, NCLAT appointed for a period of 5 years or till age of 70 years, whichever is earlier, vide
notification number S.O.2320(E) dated 06th July 2016 w.e.f. 01 June, 2016]
[Member, NCLAT appointed for 5 years or till age of 67 years, whichever is earlier vide notification number
S.O.2677(E) dated 10th August 2016 w.e.f. 01 July, 2016]

410. The Central Government shall, by notification, constitute, with effect from such date
as may be specified therein, an Appellate Tribunal to be known as the National Company
Law Appellate Tribunal consisting of a chairperson and such number of Judicial and
Technical Members, not exceeding eleven, as the Central Government may deem fit, to
be appointed by it by notification, for hearing appeals against the 418[orders of the Tribunal
or of the National Financial Reporting Authority].

418
Substituted for the words ‘orders of the Tribunal’ in Section 410 of the principal Act by section 83 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

Page 633
 S. 411 - Chapter XXVII [S.407 to 434]

Relevant rules: -

411. Qualifications of chairperson and Members of Appellate Tribunal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Section 10FR (2) and (3) of the Companies Act, 1956 which was never brought to force]

411. (1) The chairperson shall be a person who is or has been a Judge of the Supreme
Court or the Chief Justice of a High Court.

(2) A Judicial Member shall be a person who is or has been a Judge of a High Court or is
a Judicial Member of the Tribunal for five years.
419
[(3) A technical member shall be a person of proven ability, integrity and standing
having special knowledge and professional experience of not less than twenty-five years
in industrial finance, industrial management, industrial reconstruction, investment and
accountancy.]

419
Sub-section (3) of section 411 of the principal Act substituted by Section 84 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
its substitution, it read as "(3) A Technical Member shall be a person of proven ability, integrity and standing
having special knowledge and experience, of not less than twenty-five years, in law, industrial finance,
industrial management or administration, industrial reconstruction, investment, accountancy, labour
matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and
winding up of companies.".

Page 634
 S. 412 - Chapter XXVII [S.407 to 434]

Relevant rules: -

412. Selection of Members of Tribunal and Appellate Tribunal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.10FX of the Companies Act, 1956 which was never brought to force]

412. (1) The President of the Tribunal and the chairperson and Judicial Members of the
Appellate Tribunal, shall be appointed after consultation with the Chief Justice of India.
420
[(2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal
shall be appointed on the recommendation of a Selection Committee consisting of—
(a) Chief Justice of India or his nominee—Chairperson;
(b) a senior Judge of the Supreme Court or Chief Justice of High Court— Member;
(c) Secretary in the Ministry of Corporate Affairs—Member; and
(d) Secretary in the Ministry of Law and Justice—Member.

(2A) Where in a meeting of the Selection Committee, there is equality of votes on any
matter, the Chairperson shall have a casting vote.]

(3) The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection
Committee.

(4) The Selection Committee shall determine its procedure for recommending persons
under sub-section (2).

(5) No appointment of the Members of the Tribunal or the Appellate Tribunal shall be
invalid merely by reason of any vacancy or any defect in the constitution of the Selection
Committee.

420
Sub-section (2) of section 412 of the principal Act substituted by two sub-sections by Section 85 of the
Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd
January 2018. It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same
date. Prior to its substitution, it read as "(2) The Members of the Tribunal and the Technical Members of
the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of—
(a) Chief Justice of India or his nominee—Chairperson; (b) a senior Judge of the Supreme Court or a Chief
Justice of High Court— Member; (c) Secretary in the Ministry of Corporate Affairs—Member; (d) Secretary
in the Ministry of Law and Justice—Member; and (e) Secretary in the Department of Financial Services in
the Ministry of Finance— Member.".

Page 635
 S. 413 - Chapter XXVII [S.407 to 434]

Relevant rules: -

413. Term of office of President, chairperson and other Members.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.10FE, 10FT of the Companies Act, 1956 which was never brought to force]

413. (1) The President and every other Member of the Tribunal shall hold office as such
for a term of five years from the date on which he enters upon his office, but shall be
eligible for re-appointment for another term of five years.

(2) A Member of the Tribunal shall hold office as such until he attains,—
(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 that a person who has not completed fifty years of age shall not be eligible
for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry
or Department, as the case may be, while holding office as such for a period not
exceeding one year.

(3) The chairperson or a Member of the Appellate Tribunal shall hold office as such for a
term of five years from the date on which he enters upon his office, but shall be eligible
for re-appointment for another term of five years.

(4) A Member of the Appellate Tribunal shall hold office as such until he attains,—
(a) in the case of the Chairperson, the age of seventy years;
(b) in the case of any other Member, the age of sixty-seven years:

Provided that a person who has not completed fifty years of age shall not be eligible
for appointment as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry
or Department, as the case may be, while holding office as such for a period not
exceeding one year.

Page 636
 S. 414 - Chapter XXVII [S.407 to 434]

Relevant rules:

The National Company Law Tribunal (Salary, Allowance and other terms and conditions of service of
President and other Members) Rules, 2013

The National Company Law Appellate Tribunal (Salary, Allowance and other terms and conditions of
service of President and other Members) Rules, 2014

414. Salary, allowances and other terms and conditions of service of Members.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.10FG, 10FW of the Companies Act, 1956 which was never brought to force.]

414. The salary, allowances and other terms and conditions of service of the Members of
the Tribunal and the Appellate 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 Members shall be varied to their disadvantage after their appointment.

Page 637
 S. 415 - Chapter XXVII [S.407 to 434]

Relevant rules: -

415. Acting President and Chairperson of Tribunal or Appellate Tribunal.

[Section 415 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.10FH and 10FS of the Companies Act, 1956, which was never brought to force.]

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

(2) When the President or the Chairperson is unable to discharge his functions owing to
absence, illness or any other cause, the senior-most Member shall discharge the
functions of the President or the Chairperson, as the case may be, until the date on which
the President or the Chairperson resumes his duties.

Page 638
 S. 416 - Chapter XXVII [S.407 to 434]

Relevant rules: -

416. Resignation of Members.

[Section 416 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FU of the Companies Act, 1956]

416. The President, the Chairperson or any Member may, by notice in writing under his
hand addressed to the Central Government, resign from his office:

Provided that the President, the Chairperson, or the Member shall continue to
hold office until the expiry of three months from the date of receipt of such notice by the
Central Government or until a person duly appointed as his successor enters upon his
office or until the expiry of his term of office, whichever is earliest.

Page 639
 S. 417 - Chapter XXVII [S.407 to 434]

Relevant rules: -

417. Removal of Members.

[Section 416 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Sections 10FJ and 10FV of the Companies Act, 1956 which were never brought to force]

417. (1) The Central Government may, after consultation with the Chief Justice of India,
remove from office the President, Chairperson or any Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of the Central Government,
involves moral turpitude; or
(c) has become physically or mentally incapable of acting as such President, the
Chairperson, or Member; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his
functions as such President, the Chairperson or Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the
public interest:

Provided that the President, the Chairperson or the Member shall not be removed on
any of the grounds specified in clauses (b) to (e) without giving him a reasonable
opportunity of being heard.

(2) Without prejudice to the provisions of sub-section (1), the President, the Chairperson
or the Member shall not be removed from his office except by an order made by the
Central Government on the ground of proved misbehaviour or incapacity after an inquiry
made by a Judge of the Supreme Court nominated by the Chief Justice of India on a
reference made to him by the Central Government in which such President, the
Chairperson or Member had been informed of the charges against him and given a
reasonable opportunity of being heard.

(3) The Central Government may, with the concurrence of the Chief Justice of India,
suspend from office, the President, the Chairperson or Member in respect of whom
reference has been made to the Judge of the Supreme Court under sub-section (2) until
the Central Government has passed orders on receipt of the report of the Judge of the
Supreme Court on such reference.

(4) The Central Government shall, after consultation with the Supreme Court, make rules
to regulate the procedure for the inquiry on the ground of proved misbehaviour or
incapacity referred to in sub-section (2).

Page 640
 S. 418 - Chapter XXVII [S.407 to 434]

Relevant rules: -

418. Staff of Tribunal and Appellate Tribunal.

[Section 418 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GA of the Companies Act, 1956 which was never brought to force]

418. (1) The Central Government shall, in consultation with the Tribunal and the Appellate
Tribunal, provide the Tribunal and the Appellate Tribunal, as the case may be, with such
officers and other employees as may be necessary for the exercise of the powers and
discharge of the functions of the Tribunal and the Appellate Tribunal.

(2) The officers and other employees of the Tribunal and the Appellate Tribunal shall
discharge their functions under the general superintendence and control of the President,
or as the case may be, the Chairperson, or any other Member to whom powers for
exercising such superintendence and control are delegated by him.

(3) The salaries and allowances and other conditions of service of the officers and other
employees of the Tribunal and the Appellate Tribunal shall be such as may be prescribed.

Page 641
 S. 419 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016

419. Benches of Tribunal.

[Section 419 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Territorial Jurisdiction of NCLT notified vide S.O.1935(E) dated 01st June, 2016]
[Section 10FL of the Companies Act, 1956 which was never brought to force]

419. (1) There shall be constituted such number of Benches of the Tribunal, as may, by
notification, be specified by the Central Government.

(2) The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over
by the President of the Tribunal.

(3) The powers of the Tribunal shall be exercisable by Benches consisting of two
Members out of whom one shall be a Judicial Member and the other shall be a Technical
Member:

Provided that it shall be competent for the Members of the Tribunal authorised in
this behalf to function as a Bench consisting of a single Judicial Member and exercise the
powers of the Tribunal in respect of such class of cases or such matters pertaining to
such class of cases, as the President may, by general or special order, specify:

Provided further that if at any stage of the hearing of any such case or matter, it
appears to the Member that the case or matter is of such a nature that it ought to be heard
by a Bench consisting of two Members, the case or matter may be transferred by the
President, or, as the case may be, referred to him for transfer, to such Bench as the
President may deem fit.
421
[(4) The Central Government shall, by notification, establish such number of benches
of the Tribunal, as may consider necessary, to exercise the jurisdiction, powers and
authority of the Adjudicating Authority conferred on such Tribunal by or under Part II of
the Insolvency and Bankruptcy Code, 2016.]
[Vide notification no. S.O.3591 (E) dated 30 Nov. 2016, National Company Law Tribunal to
exercise jurisdiction under the Insolvency and Bankruptcy Code, 2016.]

421
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (31) of
the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016. Prior to substitution it read as “(4) The President shall, for the disposal of any case relating
to rehabilitation, restructuring, reviving [omitted], of companies, constitute one or more Special Benches consisting of three or more
Members, majority necessarily being of Judicial Members. And in the omitted sub-section (4), words ‘or winding up’ omitted by the
Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number
S.O. 1440(E).

Page 642
 S. 419 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016

(5) If the Members of a Bench differ in opinion on any point or points, it shall be decided
according to the majority, if there is a majority, but if the Members are equally divided,
they shall state the point or points on which they differ, and the case shall be referred by
the President for hearing on such point or points by one or more of the other Members of
the Tribunal and such point or points shall be decided according to the opinion of the
majority of Members who have heard the case, including those who first heard it.

Page 643
 S. 420 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016

420. Orders of Tribunal.

[Section 420 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FM of the Companies Act, 1956 which was never brought to force]

420. (1) The Tribunal may, after giving the parties to any proceeding before it, a
reasonable opportunity of being heard, pass such orders thereon as it thinks fit.

(2) The Tribunal may, at any time within two years from the date of the order, with a view
to rectifying any mistake apparent from the record, amend any order passed by it, and
shall make such amendment, if the mistake is brought to its notice by the parties:

Provided that no such amendment shall be made in respect of any order against
which an appeal has been preferred under this Act.

(3) The Tribunal shall send a copy of every order passed under this section to all the
parties concerned.

Page 644
 S. 421 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Appellate Tribunal Rules, 2016

421. Appeal from orders of Tribunal.

[Section 421 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FQ of the Companies Act, 1956 which was never brought to force]

421. (1) Any person aggrieved by an order of the Tribunal may prefer an appeal to the
Appellate Tribunal.

(2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with
the consent of parties.

(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from
the date on which a copy of the order of the Tribunal is made available to the person
aggrieved and shall be in such form, and accompanied by such fees, as may be
prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of
the said period of forty-five days from the date aforesaid, but within a further period not
exceeding forty-five days, if it is satisfied that the appellant was prevented by sufficient
cause from filing the appeal within that period.

(4) On the receipt of an appeal under sub-section (1), the Appellate Tribunal shall, after
giving the parties to the appeal a reasonable opportunity of being heard, pass such orders
thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and
the parties to appeal.

Page 645
 S. 422 - Chapter XXVII [S.407 to 434]

Relevant rules: -

422. Expeditious disposal by Tribunal and Appellate Tribunal.

[Section 422 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]

[Section 10FQ(6) of the Companies Act, 1956 which was never brought to force]

422. (1) Every application or petition presented before the Tribunal and every appeal filed
before the Appellate Tribunal shall be dealt with and disposed of by it as expeditiously as
possible and every endeavour shall be made by the Tribunal or the Appellate Tribunal,
as the case may be, for the disposal of such application or petition or appeal within three
months from the date of its presentation before the Tribunal or the filing of the appeal
before the Appellate Tribunal.

(2) Where any application or petition or appeal is not disposed of within the period
specified in sub-section (1), the Tribunal or, as the case may be, the Appellate Tribunal,
shall record the reasons for not disposing of the application or petition or the appeal, as
the case may be, within the period so specified; and the President or the Chairperson, as
the case may be, may, after taking into account the reasons so recorded, extend the
period referred to in sub-section (1) by such period not exceeding ninety days as he may
consider necessary.

Page 646
 S. 423 - Chapter XXVII [S.407 to 434]

Relevant rules: The Supreme Court Rules, 2013

423. Appeal to Supreme Court.

[Section 423 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GF of the Companies Act, 1956 which was never brought to force]

423. Any person aggrieved by any order of the Appellate Tribunal may file an appeal to
the Supreme Court within sixty days from the date of receipt of the order of the Appellate
Tribunal to him on any question of law arising out of such order:

Provided that the Supreme 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.

Page 647
 S. 424 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016 AND the National Company
Law Appellate Tribunal Rules, 2016

424. Procedure before Tribunal and Appellate Tribunal.

[Section 424 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FZA of the Companies Act, 1956 which was never brought to force]

424. (1) The Tribunal and the Appellate Tribunal shall not, while disposing of any
proceeding before it or, as the case may be, an appeal before it, be bound by the
procedure laid down in the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice, and, subject to the other provisions of this Act 422[or of
the Insolvency and Bankruptcy Code, 2016] and of any rules made thereunder, the
Tribunal and the Appellate Tribunal shall have power to regulate their own procedure.

(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging
their functions under this Act 423[or under the Insolvency and Bankruptcy Code, 2016], the
same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of
1908) while trying a suit in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on
oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872
(1 of 1872), requisitioning any public record or document or a copy of such record
or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(f) dismissing a representation for default or deciding it ex parte;
(g) setting aside any order of dismissal of any representation for default or any order
passed by it ex parte; and
(h) any other matter which may be prescribed.

(3) Any order made by the Tribunal or the Appellate Tribunal may be enforced by that
Tribunal in the same manner as if it were a decree made by a court in a suit pending
therein, and it shall be lawful for the Tribunal or the Appellate Tribunal to send for
execution of its orders to the court within the local limits of whose jurisdiction,—

422
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (32) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

423
Inserted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause (32) of the
Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification number S.O 3453(E)
dated 15th November, 2016.

Page 648
 S. 424 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016 AND the National Company
Law Appellate Tribunal Rules, 2016

(a) in the case of an order against a company, the registered office of the company is
situate; or
(b) in the case of an order against any other person, the person concerned voluntarily
resides or carries on business or personally works for gain.

(4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be
judicial proceedings within the meaning of sections 193 and 228, and for the purposes of
section 196 of the Indian Penal Code (45 of 1860), and the Tribunal and the Appellate
Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter
XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

Page 649
 S. 425 - Chapter XXVII [S.407 to 434]

Relevant rules: -

425. Power to punish for contempt.

[Section 425 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10G of the Companies Act, 1956 which was never brought to force]

425. The Tribunal and the Appellate Tribunal shall have the same jurisdiction, powers
and authority in respect of contempt of themselves as the High Court has and may
exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act,
1971 (70 of 1971), which shall have the effect subject to modifications that—
(a) the reference therein to a High Court shall be construed as including a reference to
the Tribunal and the Appellate Tribunal; and
(b) the reference to Advocate-General in section 15 of the said Act shall be construed as
a reference to such Law Officers as the Central Government may, specify in this
behalf.

Page 650
 S. 426 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016 AND the National Company
Law Appellate Tribunal Rules, 2016

426. Delegation of powers.

[Section 426 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FO of the Companies Act, 1956 which was never brought to force]

426. The Tribunal or the Appellate Tribunal may, by general or special order, direct,
subject to such conditions, if any, as may be specified in the order, any of its officers or
employees or any other person authorised by it to inquire into any matter connected with
any proceeding or, as the case may be, appeal before it and to report to it in such manner
as may be specified in the order.

Page 651
 S. 427 - Chapter XXVII [S.407 to 434]

Relevant rules: -

427. President, Members, officers, etc., to be public servants.

[Section 418 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FY of the Companies Act, 1956 which was never brought to force]

427. The President, Members, officers and other employees of the Tribunal and the
Chairperson, Members, officers and other employees of the Appellate Tribunal shall be
deemed to be public servants within the meaning of section 21 of the Indian Penal Code
(45 of 1860).

Page 652
 S. 428 - Chapter XXVII [S.407 to 434]

Relevant rules: -

428. Protection of action taken in good faith.

[Section 428 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FZ of the Companies Act, 1956 which was never brought to force]

428. No suit, prosecution or other legal proceeding shall lie against the Tribunal, the
President, Member, officer or other employee, or against the Appellate Tribunal, the
Chairperson, Member, officer or other employees thereof or liquidator or any other person
authorised by the Tribunal or the Appellate Tribunal for the discharge of any function
under this Act in respect of any loss or damage caused or likely to be caused by any act
which is in good faith done or intended to be done in pursuance of this Act.

Page 653
 S. 429 - Chapter XXVII [S.407 to 434]

Relevant rules: -

429. Power to seek assistance of Chief Metropolitan Magistrate, etc.

[Section 429 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FP of the Companies Act, 1956 which was never brought to force]

429. 424[(1) The Tribunal may, in any proceeding for winding up of a company under this
Act or in any proceedings under the Insolvency and Bankruptcy Code, 2016, in order to
take into custody or under its control all property, books of account or other documents,
request, in writing, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the
District Collector within whose jurisdiction any such property, books of account or other
documents of such company under this Act or corporate persons under the said Code,
are situate or found, to take possession thereof, and the Chief Metropolitan Magistrate,
Chief Judicial Magistrate or the District Collector, as the case may be, shall, on such
request being made to him,—
(a) take possession of such property, books of account or other documents; and
(b) cause the same to be entrusted to the Tribunal or other person authorised by it.]

(2) For the purpose of securing compliance with the provisions of sub-section (1), the
Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector may take
or cause to be taken such steps and use or cause to be used such force as may, in his
opinion, be necessary.

(3) No act of the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District
Collector done in pursuance of this section shall be called in question in any court or
before any authority on any ground whatsoever.

424
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(33) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to substitution it read as “(1) The Tribunal may,
in any proceeding relating to a sick company or winding up of any other company, in order to take into custody or under its c ontrol
all property, books of account or other documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or
the District Collector within whose jurisdiction any such property, books of account or other documents of such sick or other
company, are situate or found, to take possession thereof, and the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the
District Collector, as the case may be, shall, on such request being made to him,—
(a) take possession of such property, books of account or other documents; and
(b) cause the same to be entrusted to the Tribunal or other person authorised by it. ”.

Page 654
 S. 430 - Chapter XXVII [S.407 to 434]

Relevant rules: -

430. Civil court not to have jurisdiction.

[Section 430 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GB of the Companies Act, 1956 which was never brought to force]

430. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of
any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or
under this Act or any other law for the time being in force and no injunction shall be
granted by any court or other authority in respect of any action taken or to be taken in
pursuance of any power conferred by or under this Act or any other law for the time being
in force, by the Tribunal or the Appellate Tribunal.

Page 655
 S. 431 - Chapter XXVII [S.407 to 434]

Relevant rules: -

431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or

proceedings.

[Section 431 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GC of the Companies Act, 1956 which was never brought to force]

431. No act or proceeding of the Tribunal or the Appellate Tribunal shall be questioned
or shall be invalid merely on the ground of the existence of any vacancy or defect in the
constitution of the Tribunal or the Appellate Tribunal, as the case may be.

Page 656
 S. 432 - Chapter XXVII [S.407 to 434]

Relevant rules: The National Company Law Tribunal Rules, 2016 AND the National Company
Law Appellate Tribunal Rules, 2016

432. Right to legal representation.

[Section 432 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GD of the Companies Act, 1956 which was never brought to force]

432. A party to any proceeding or appeal before the Tribunal or the Appellate Tribunal,
as the case may be, may either appear in person or authorise one or more chartered
accountants or company secretaries or cost accountants or legal practitioners or any
other person to present his case before the Tribunal or the Appellate Tribunal, as the case
may be.

Page 657
 S. 433 - Chapter XXVII [S.407 to 434]

Relevant rules: -

433. Limitation.

[Section 433 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10GE of the Companies Act, 1956 which was never brought to force]

433. The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply
to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may
be.

Page 658
 S. 434 - Chapter XXVII [S.407 to 434]

Relevant rules: The Companies (Transfer of Pending Proceedings) Rules, 2016

434. Transfer of certain pending proceedings.

[Section 434(1)(a) and (b) and Section 434(2) brought to force from 01 June 2016 vide notification
number S.O. 1934(E) dated 01st June, 2016] [However MCA has not notified second proviso to Section
465(1)]
[Section 434(1)(c) brought to force from 15th December, 2016 vide notification number S.O. 3677(E)
dated 07th December, 2016.]
[All matters before CLB transferred to NCLT w.e.f. 01 June 2016 vide notification number S.O.1936(E)
dated 01st June, 2016]
[Refer the Companies (Transfer of Pending Proceedings) Rules, 2016]
[No corresponding provisions of the Companies Act, 1956]
425
[434. (1) On such date as may be notified by the Central Government in this behalf,—

425
Section 434 in entirety substituted by Section 255 of the Insolvency and Bankruptcy Code,
2016 read with the clause (34) of the Eleventh Schedule thereto, with effect from 15 th November,
2016 vide notification number S.O 3453(E) dated 15 th November, 2016. Prior to substitution it
read as “434. (1) On such date as may be notified by the Central Government in this behalf,—
(a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein
in this section referred to as the Company Law Board) constituted under sub-section (1) of section
10E of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred
to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance
with the provisions of this Act;
(b) any person aggrieved by any decision or order of the Company Law Board made before such date
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 an appeal within the said period, allow it to be filed within a further period not exceeding
sixty days;
(c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to
arbitration, compromise, arrangements and reconstruction and winding up of companies, pending
immediately before such date before any District Court or High Court, shall stand transferred to the
Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their
transfer.
(d) any appeal preferred to the Appellate Authority for Industrial and Financial Reconstruction or any
reference made or inquiry pending to or before the Board of Industrial and Financial Reconstruction
or any proceeding of whatever nature pending before the Appellate Authority for Industrial and
Financial Reconstruction or the Board for Industrial and Financial Reconstruction under the Sick
Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) immediately before the
commencement of this Act shall stand abated:
Provided that a company in respect of which such appeal or reference or inquiry stands abated
under this clause may make a reference to the Tribunal under this Act within one hundred and eighty
days from the commencement of this Act in accordance with the provisions of this Act:
Provided further that no fees shall be payable for making such reference under this Act by a
company whose appeal or reference or inquiry stands abated under this clause.

Page 659
 S. 434 - Chapter XXVII [S.407 to 434]

Relevant rules: The Companies (Transfer of Pending Proceedings) Rules, 2016

(a) all matters, proceedings or cases pending before the Board of Company Law
Administration (herein in this section referred to as the Company Law Board) constituted
under sub-section (1) of section 10E of the Companies Act, 1956 (1 of 1956), immediately
before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of
such matters, proceedings or cases in accordance with the provisions of this Act;

(b) any person aggrieved by any decision or order of the Company Law Board
made before such date 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 an appeal within the said period, allow it to be filed within a
further period not exceeding sixty days; and
426
(c) all proceedings under the Companies Act, 1956 (1 of 1956), including
proceedings relating to arbitration, compromise, arrangements and reconstruction and
winding up of companies, pending immediately before such date before any District Court
or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to
deal with such proceedings from the stage before their transfer:

Provided that only such proceedings relating to the winding up of companies shall
be transferred to the Tribunal that are at a stage as may be prescribed by the Central
Government.
427
[Provided further that only such proceedings relating to cases other than
winding-up, for which orders for allowing or otherwise of the proceedings are not reserved
by the High Courts shall be transferred to the Tribunal:

(2) The Central Government may make rules consistent with the provisions of this Act to ensure timely
transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the
Tribunal under this section.”.

426
Brought to force from 15th December, 2016 vide notification number S.O. 3677(E) dated 07th December,
2016.

427
Inserted by the Companies (Removal of Difficulties) Fourth Order, 2016 w.e.f. 15th December 2016 vide
notification number S.O. 3676(E) dated 07th December, 2016.

Page 660
 S. 434 - Chapter XXVII [S.407 to 434]

Relevant rules: The Companies (Transfer of Pending Proceedings) Rules, 2016

428
[Provided also that] –
(i) all proceedings under the Companies Act, 1956 other than the cases relating to
winding up of companies that are reserved for orders for allowing or otherwise
such proceedings; or
(ii) the proceedings relating to winding up of companies which have not been
transferred from the High Courts;
shall be dealt with in accordance with provisions of the Companies Act, 1956 and the
Companies (Court) Rules, 1959]
429
[Provided also that proceedings relating to cases of voluntary winding up of a
company where notice of the resolution by advertisement has been given under sub-
section (1) of section 485 of the Companies Act, 1956 but the company has not been
dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with
provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.]

(2) The Central Government may make rules consistent with the provisions of this
Act to ensure timely transfer of all matters, proceedings or cases pending before the
Company Law Board or the courts, to the Tribunal under this section.]

428
Substituted for the words ‘Provided further that’ in the third proviso to sub-section (1) of Section 434 of
the principal Act by the Companies (Removal of Difficulties) Order, 2017 by notification number S.O.
2042(E) dated 29th June 2017 w.e.f. from the same date.

429
Substituted for the words ‘Provided further that’ in the third proviso to sub-section (1) of Section 434 of
the principal Act by the Companies (Removal of Difficulties) Order, 2017 by notification number S.O.
2042(E) dated 29th June 2017 w.e.f. from the same date.

Page 661
 S. 435 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: - (Cr P C)

CHAPTER XXVIII SPECIAL COURTS

435. Establishment of Special Courts.

[Section 435 is brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[Jurisdiction of Special Courts notified as under:

(i) vide Notification number S.O.1796(E) dated 18 May 2016 (Anti-Corruption at Jammu and
Srinagar; Greater Mumbai, (Words “State of Maharashtra”, substitutued with “Whole State of
Maharashtra except Pune, Ahmednagar, Kolhapur, Solapur, Satara, Sangli, Ratnagiri and
Sindhudurg districts of the State of Maharashtra” vide notification number S.O.3119(E) dated
28th August 2019); Silvassa for Union territory of Dadra and Nagar Haveli ; Panaji, Goa;
Mirzapur, Ahmedabad for Gujarat; Gwalior for Madhya Pradesh; Port Blair for Union territory
of Andaman and Nicobar Islands; Calcutta for West Bengal)
(ii) vide notification number S.O.2554(E) dated 27th July, 2016 (Dwarka, Delhi)
(iii) vide Notification number S.O.2843 dated 01 Sept. 2016 published on 02 Sep. 2016] (Bilaspur,
Chhattisgarh; Jaipur, Rajasthan; S.A.S. Nagar, Punjab; Gurgaon, Haryana; Chandigarh;
Coimbatore for Districts of Coimbatore, Dharampuri, Dinidgul, Erode, Krishnagiri, Namakkal,
Niligiris, Salem and Tiruppur; Puducherry; Imphal East, Manipur)
(iv) vide Notification number S.O.3464(E) dated 17th Novemebr 2016 (Meghalaya)
(v) vide Notification number S.O.528(E) dated 05th February 2018 (Ernakulam, Kerala; Kavaratii,
Lakshadweep; Gauhati, Assam)
(vi) vide Notification number S.O.1710(E) dated 23rd April 2018 (Kanpur Nagar for Uttar Pradesh)
(vii) vide Notification number S.O. 4285(E) dated 5th September 2018 (Nagaland, Mizoram and
Arunachal Pradesh)
(viii) vide notification number S.O. 2564(E) dated 17th July 2019 superceded by notification number
S.O. 3120(E) dated 28th August 2019. (Pune, Ahmednagar, Kolhapur, Solapur, Sangli, Satara,
Ratnagiri and Sindhudurg districts in the State of Maharashtra). [Also there is Greater Mumbai
court notified for the State of Maharashtra per entry (i) above].

No special courts specified for U.T. Daman and Diu and States of Andhra Pradesh, Bihar, Himachal
Pradesh, Jharkhand, Karnataka, Meghalaya, Odisha, Sikkim, Tripura, Telangana and Uttarakhand –
as well as for parts of Tamil Nadu and hence Sec.440 applies in those places.

[No Corresponding provision under the Companies Act, 1956]

[See section 2(29)(iv)]

Page 662
 S. 435 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: - (Cr P C)

430
[435. (1) The Central Government may, for the purpose of providing speedy trial of
offences under this Act, by notification, establish or designate as many Special Courts as
may be necessary.

(2) A Special Court shall consist of—

(a) a single judge holding office as Session Judge or Additional Session Judge, in case
of offences punishable under this Act with imprisonment of two years or more; and
(b) a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of
other offences,

who shall be appointed by the Central Government with the concurrence of the Chief
Justice of the High Court within whose jurisdiction the judge to be appointed is working.]

430
Substituted section 435 of the principal Act by section 86 of the Companies (Amendment) Act, 2017 (1
of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
07th May 2018 vide notification no. S.O. 1833(E) of the same date. Prior to its substitution it read as:

“435. (1) The Central Government may, for the purpose of providing speedy * [trial of offences punishable
under this Act with imprisonment of two years or more], by notification, establish or designate as many
Special Courts as may be necessary.
**
[Provided that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a
Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any
previous company law.]
(2) A Special Court shall consist of a single judge who shall be appointed by the Central Government with
the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed
is working. (3) A person shall not be qualified for appointment as a judge of a Special Court unless he is,
immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions
Judge.”.
* In sub-section (1), for the words "trial of offences under this Act", the words "trial of offences punishable
under this Act with imprisonment of two years or more" substituted by the Companies (Amendment) Act,
2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E).
** Proviso to sub-section (1) inserted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on
26th May, 2015, with effect from 29th May 2015 vide notification number S.O. 1440(E).

Page 663
 S. 436 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

436. Offences triable by Special Courts.

[Section 436 is brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[No Corresponding provision under the Companies Act, 1956]

436. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974),—
(a) 431 [all offences specified under sub-section (1) of section 435] shall be triable only
by the Special Court established for the area in which the registered office of the
company in relation to which the offence is committed or where there are more
Special Courts than one for such area, by such one of them as may be specified in
this behalf by the High Court concerned;
(b) where a person accused of, or suspected of the commission of, an offence under
this Act is forwarded to a Magistrate under sub-section (2) or sub-section (2A) of
section 167 of the Code of Criminal Procedure, 1973 (2 of 1974), such Magistrate
may authorise the detention of such person in such custody as he thinks fit for a
period not exceeding fifteen days in the whole where such Magistrate is a Judicial
Magistrate and seven days in the whole where such Magistrate is an Executive
Magistrate:
Provided that where such Magistrate considers that the detention of such person
upon or before the expiry of the period of detention is unnecessary, he shall order such
person to be forwarded to the Special Court having jurisdiction;
(c) the Special Court may exercise, in relation to the person forwarded to it under
clause (b), the same power which a Magistrate having jurisdiction to try a case may
exercise under section 167 of the Code of Criminal Procedure, 1973 (2 of 1974) in
relation to an accused person who has been forwarded to him under that section;
and
(d) a Special Court may, upon perusal of the police report of the facts constituting an
offence under this Act or upon a complaint in that behalf, take cognizance of that
offence without the accused being committed to it for trial.

431
in sub-section (1), in clause (a), for the words "all offences under this Act", the words, brackets and
figures "all offences specified under sub-section (1) of section 435" substituted by the Companies
(Amendment) Act, 2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide
notification number S.O. 1440(E).

Page 664
 S. 436 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

(2) When trying an offence under this Act, a Special Court may also try an offence other
than an offence under this Act with which the accused may, under the Code of Criminal
Procedure, 1973 (2 of 1974) be charged at the same trial.

(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of

1974), the Special Court may, if it thinks fit, try in a summary way any offence under this
Act which is punishable with imprisonment for a term not exceeding three years:

Provided that in the case of any conviction in a summary trial, no sentence of

imprisonment for a term exceeding one year shall be passed:

Provided further that when at the commencement of, or in the course of, a
summary trial, it appears to the Special Court that the nature of the case is such that the
sentence of imprisonment for a term exceeding one year may have to be passed or that
it is, for any other reason, undesirable to try the case summarily, the Special Court shall,
after hearing the parties, record an order to that effect and thereafter recall any witnesses
who may have been examined and proceed to hear or rehear the case in accordance
with the procedure for the regular trial.

Page 665
 S. 437 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

437. Appeal and revision.

[Section 437 is brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[No Corresponding provision under the Companies Act, 1956]

437. The High Court may exercise, so far as may be applicable, all the powers conferred
by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974) on a
High Court, as if a Special Court within the local limits of the jurisdiction of the High Court
were a Court of Session trying cases within the local limits of the jurisdiction of the High
Court.

Page 666
 S. 438 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

438. Application of Code to proceedings before Special Court.

[Section 438 is brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[No Corresponding provision under the Companies Act, 1956]

438. Save as otherwise provided in this Act, the provisions of the Code of Criminal
Procedure, 1973 (2 of 1974) shall apply to the proceedings before a Special Court and
for the purposes of the said provisions, the Special Court shall be 432[deemed to be a
Court of Session or the Court of Metropolitan Magistrate or a Judicial Magistrate of the
First Class, as the case may be,] and the person conducting a prosecution before a
Special Court shall be deemed to be a Public Prosecutor.

432
Substituted for the words ‘deemed to be a Court of Session’ in section 438 of the principal Act by section
87 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the
same date.

Page 667
 S. 439 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

439. Offences to be non-cognizable.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.621, 624 of the Companies Act, 1956]

439. (1) Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974),
every offence under this Act except the offences referred to in sub-section (6) of section
212 shall be deemed to be non-cognizable within the meaning of the said Code.

(2) No court shall take cognizance of any offence under this Act which is alleged to have
been committed by any company or any officer thereof, except on the complaint in writing
of the Registrar, a shareholder 433[or a member] of the company, or of a person authorised
by the Central Government in that behalf:
Provided that the court may take cognizance of offences relating to issue and
transfer of securities and non-payment of dividend, on a complaint in writing, by a person
authorised by the Securities and Exchange Board of India:
Provided further that nothing in this sub-section shall apply to a prosecution by a
company of any of its officers.
[Vide notification number G.S.R. 463(E) dated 5th June 2015 it is provided that for a Government company,
from section 439(2), the words “the Registrar, a shareholder of the company or of” shall be omitted. Further
vide notification number G.S.R. 582(E) dated 13th June 2017, for Government company it is provided that
the exceptions, modifications and adaptations shall be applicable to a Government company which has not
committed a default in filing its financial statements under section 137 of the said Act or annual return under
section 92 of the said Act with the Registrar.]

(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of

1974), where the complainant under sub-section (2) is the Registrar or a person
authorised by the Central Government, the presence of such officer before the Court
trying the offences shall not be necessary unless the court requires his personal
attendance at the trial.

(4) The provisions of sub-section (2) shall not apply to any action taken by the liquidator
of a company in respect of any offence alleged to have been committed in respect of any
of the matters in Chapter XX or in any other provision of this Act relating to winding up of
companies.

433
Inserted the words in sub-section (2) section 439 of the principal Act by section 88 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the same date.

Page 668
 S. 439 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

Explanation.—The liquidator of a company shall not be deemed to be an officer of the

company within the meaning of sub-section (2).

Page 669
 S. 440 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

440. Transitional provisions.

[Section 440 is brought to force from 18th May 2016 vide notification number S.O. 1795(E) dated 18 May
2016]
[No Corresponding provision under the Companies Act, 1956]

440. Any offence committed under this Act, which is triable by a Special Court shall, until
a Special Court is established, be tried by a 434 [Court of Session or the Court of
Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be,]
exercising jurisdiction over the area, notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974):

Provided that nothing contained in this section shall affect the powers of the High
Court under section 407 of the Code to transfer any case or class of cases taken
cognizance by a 435[Court of Session or the Court of Metropolitan Magistrate or a Judicial
Magistrate of the First Class, as the case may be,] under this section.

434
Substituted for the words ‘Court of Session’ at both places in section 440 of the principal Act by section
89 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the
same date.

435
Substituted for the words ‘Court of Session’ at both places in section 440 of the principal Act by section
89 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President of India
on 03rd January 2018. It is brought to force from 07th May 2018 vide notification no. S.O. 1833(E) of the
same date.

Page 670
 S. 441 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: The National Company Law Tribunal Rules, 2016

441. Compounding of certain offences.

[Section 441 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Corresponding Sec.621A of the Companies Act, 1956]

441. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), any offence punishable under this Act (whether committed by a company or any
officer thereof) 436[not being an offence punishable with imprisonment only, or punishable
with imprisonment and also with fine], may, either before or after the institution of any
prosecution, be compounded by—
(a) the Tribunal; or
(b) where the maximum amount of fine which may be imposed for such offence
437
[does not exceed twenty-five lakh rupees], by the Regional Director or any
officer authorised by the Central Government,
on payment or credit, by the company or, as the case may be, the officer, to the Central
Government of such sum as that Tribunal or the Regional Director or any officer
authorised by the Central Government, as the case may be, may specify:

Provided that the sum so specified shall not, in any case, exceed the maximum
amount of the fine which may be imposed for the offence so compounded:

Provided further that in specifying the sum required to be paid or credited for the
compounding of an offence under this sub-section, the sum, if any, paid by way of
additional fee under sub-section (2) of section 403 shall be taken into account:

Provided also that any offence covered under this sub-section by any company or its
officer shall not be compounded if the investigation against such company has been
initiated or is pending under this Act.

(2) Nothing in sub-section (1) shall apply to an offence committed by a company or its
officer within a period of three years from the date on which a similar offence committed
by it or him was compounded under this section.

436
Substituted for the words "with fine only" in sub-section (1) of section 441 of the principal Act substituted
by Section 90 of the Companies (Amendment) Act, 2017 (1 of 2018) which received assent of the President
of India on 03rd January 2018. It is brought to force from 09th February 2018 vide notification no. S.O.
630(E) of the same date.

437
Substituted for the words ‘does not exceed five lakh rupees’ in clause (b) of sub-section (1) of section
441 of the principal Act by Section 39(a) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed
to have came into force from 02nd November 2018.

Page 671
 S. 441 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: The National Company Law Tribunal Rules, 2016

Explanation.—For the purposes of this section,—

(a) any second or subsequent offence committed after the expiry of a period of three
years from the date on which the offence was previously compounded, shall be deemed
to be a first offence;
(b) “Regional Director” means a person appointed by the Central Government as a
Regional Director for the purposes of this Act.

(3) (a) Every application for the compounding of an offence shall be made to the
Registrar who shall forward the same, together with his comments thereon, to the Tribunal
or the Regional Director or any officer authorised by the Central Government, as the case
may be.
(b) Where any offence is compounded under this section, whether before or after the
institution of any prosecution, an intimation thereof shall be given by the company to the
Registrar within seven days from the date on which the offence is so compounded.
(c) Where any offence is compounded before the institution of any prosecution, no
prosecution shall be instituted in relation to such offence, either by the Registrar or by any
shareholder of the company or by any person authorised by the Central Government
against the offender in relation to whom the offence is so compounded.
(d) Where the compounding of any offence is made after the institution of any prosecution,
such compounding shall be brought by the Registrar in writing, to the notice of the court
in which the prosecution is pending and on such notice of the compounding of the offence
being given, the company or its officer in relation to whom the offence is so compounded
shall be discharged.

(4) The Tribunal or the Regional Director or any officer authorised by the Central
Government, as the case may be, while dealing with a proposal for the compounding of
an offence for a default in compliance with any provision of this Act which requires a
company or its officer to file or register with, or deliver or send to, the Registrar any return,
account or other document, may direct, by an order, if it or he thinks fit to do so, any officer
or other employee of the company to file or register with, or on payment of the fee, and
the additional fee, required to be paid under section 403, such return, account or other
document within such time as may be specified in the order.

(5) Any officer or other employee of the company who fails to comply with any order
made by the Tribunal or the Regional Director or any officer authorised by the Central
Government under sub-section (4) shall be punishable with imprisonment for a term which
may extend to six months, or with fine not exceeding one lakh rupees, or with both.

Page 672
 S. 441 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: The National Company Law Tribunal Rules, 2016

438
[(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), any offence which is punishable under this Act with imprisonment only or with
imprisonment and also with fine shall not be compoundable.]

(7) No offence specified in this section shall be compounded except under and in
accordance with the provisions of this section.

438
Substituted sub-section (6) of section 441 of the principal Act by Section 39(b) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974),—
(a) any offence which is punishable under this Act, with imprisonment or fine, or with imprisonment or fine
or with both, shall be compoundable with the permission of the Special Court, in accordance with the
procedure laid down in that Act for compounding of offences;
(b) any offence which is punishable under this Act with imprisonment only or with imprisonment and also
with fine shall not be compoundable.”.

Page 673
 S. 442 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: The Companies (Mediation and Conciliation) Rules, 2016

442. Mediation and Conciliation Panel.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[The Companies (Mediation and Conciliation) Rules, 2016 notified vide notification number G.S.R.877(E)
dated 09th September, 2016]
[Power delegated to Regional Directors. Refer notification number S.O. 4090(E) dated 19th December,
2016]

442. (1) The Central Government shall maintain a panel of experts to be called as the
Mediation and Conciliation Panel consisting of such number of experts having such
qualifications as may be prescribed for mediation between the parties during the
pendency of any proceedings before the Central Government or the Tribunal or the
Appellate Tribunal under this Act.

(2) Any of the parties to the proceedings may, at any time during the proceedings before
the Central Government or the Tribunal or the Appellate Tribunal, apply to the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, in such form
along with such fees as may be prescribed, for referring the matter pertaining to such
proceedings to the Mediation and Conciliation Panel and the Central Government or
Tribunal or the Appellate Tribunal, as the case may be, shall appoint one or more experts
from the panel referred to in sub-section (1).

(3) The Central Government or the Tribunal or the Appellate Tribunal before which any
proceeding is pending may, suo motu, refer any matter pertaining to such proceeding to
such number of experts from the Mediation and Conciliation Panel as the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, deems fit.

(4) The fee and other terms and conditions of experts of the Mediation and Conciliation
Panel shall be such as may be prescribed.

(5) The Mediation and Conciliation Panel shall follow such procedure as may be
prescribed and dispose of the matter referred to it within a period of three months from
the date of such reference and forward its recommendations to the Central Government
or the Tribunal or the Appellate Tribunal, as the case may be.

(6) Any party aggrieved by the recommendation of the Mediation and Conciliation Panel
may file objections to the Central Government or the Tribunal or the Appellate Tribunal,
as the case may be.

Page 674
 S. 443 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

443. Power of Central Government to appoint company prosecutors.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.624A of the Companies Act, 1956]

443. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of

1974), the Central Government may appoint generally, or for any case, or in any case, or
for any specified class of cases in any local area, one or more persons, as company
prosecutors for the conduct of prosecutions arising out of this Act and the persons so
appointed as company prosecutors shall have all the powers and privileges conferred by
the Code on Public Prosecutors appointed under section 24 of the Code.

Page 675
 S. 444 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

444. Appeal against acquittal.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.624B of the Companies Act, 1956]

444. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of

1974), the Central Government may, in any case arising under this Act, direct any
company prosecutor or authorise any other person either by name or by virtue of his
office, to present an appeal from an order of acquittal passed by any court, other than a
High Court, and an appeal presented by such prosecutor or other person shall be deemed
to have been validly presented to the appellate court.

Page 676
 S. 445 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

445. Compensation for accusation without reasonable cause.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

445. The provisions of section 250 of the Code of Criminal Procedure, 1973 (2 of 1974)
shall apply mutatis mutandis to compensation for accusation without reasonable cause
before the Special Court or the Court of Session.

Page 677
 S. 446 - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

446. Application of fines.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.626 of the Companies Act, 1956]

446. The court imposing any fine under this Act may direct that the whole or any part
thereof shall be applied in or towards payment of the costs of the proceedings, or in or
towards the payment of a reward to the person on whose information the proceedings
were instituted.

Page 678
 S. 446A - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

439
[446A. Factors for determining level of punishment.

[Brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.]
[No corresponding provision under the Companies Act, 1956]

446A. The court or the Special Court, while deciding the amount of fine or imprisonment
under this Act, shall have due regard to the following factors, namely:—
(a) size of the company;
(b) nature of business carried on by the company;
(c) injury to public interest;
(d) nature of the default; and
(e) repetition of the default.]

439
Inserted new sections 446A and 446B by Section 91 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

Page 679
 S. 446B - Chapter XXVIII [S.435 to 446, 446A and S.446B]

Special Courts

Relevant rules: -

440
[446B. Lesser penalties for One Person Companies or small companies.

[Brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.]
[No corresponding provision under the Companies Act, 1956]

446B. Notwithstanding anything contained in this Act, if a One Person Company or a

small company fails to comply with the provisions of sub-section (5) of section 92, sub-
section (2) of section 117 or sub-section (3) of section 137, such company and officer in
default of such company shall be 441[liable to a penalty which shall not be more than one
half of the penalty specified in such sections.]

440
Inserted new sections 446A and 446B by Section 91 of the Companies (Amendment) Act, 2017 (1 of
2018) which received assent of the President of India on 03rd January 2018. It is brought to force from 09th
February 2018 vide notification no. S.O. 630(E) of the same date.

441
Substituted for the words ‘publishable with fine or imprisonment or fine and imprisonment, as the case
may be, which shall not be more than one-half of the fine or imprisonment or fine and imprisonment, as the
case may be, of the minimum or maximum fine or imprisonment or fine and imprisonment, as the case may
be, specified in such sections’, in section 446B of the principal Act by Section 40 of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018.
.

Page 680
 S. 447 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

CHAPTER XXIX MISCELLANEOUS

447. Punishment for fraud.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[No corresponding provision under the Companies Act, 1956]
[Refer Circular 10/2014 dated 07 May 2014]

447. Without prejudice to any liability including repayment of any debt under this Act or
any other law for the time being in force, any person who is found to be guilty of fraud
442
[involving an amount of at least ten lakh rupees or one per cent. of the turnover of the
company, whichever is lower], shall be punishable with imprisonment for a term which
shall not be less than six months but which may extend to ten years and shall also be
liable to fine which shall not be less than the amount involved in the fraud, but which may
extend to three times the amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of
imprisonment shall not be less than three years.
443
[Provided further that where the fraud involves an amount less than ten lakh
rupees or one per cent. of the turnover of the company, whichever is lower, and does not
involve public interest, any person guilty of such fraud shall be punishable with
imprisonment for a term which may extend to five years or with fine which may extend to
444
[fifty lakh rupees] or with both.]

Explanation.—For the purposes of this section—

(i) “fraud” in relation to affairs of a company or any body corporate, includes any act,
omission, concealment of any fact or abuse of position committed by any person or
any other person with the connivance in any manner, with intent to deceive, to gain
undue advantage from, or to injure the interests of, the company or its shareholders

442
Inserted in section 447 of the principal Act by Section 92(i) of the Companies (Amendment) Act, 2017
(1 of 2018) which received assent of the President of India on 03rd January 2018. It is brought to force from
09th February 2018 vide notification no. S.O. 630(E) of the same date.

443
Second proviso inserted in section 447 of the principal Act by Section 92(ii) of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date.

444
Substituted for the words ‘twenty lakh rupees’, in the second proviso to section 447 of the principal Act
by Section 41 of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from
02nd November 2018.
.

Page 681
 S. 447 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

or its creditors or any other person, whether or not there is any wrongful gain or
wrongful loss;
(ii) “wrongful gain” means the gain by unlawful means of property to which the person
gaining is not legally entitled;
(iii) “wrongful loss” means the loss by unlawful means of property to which the person
losing is legally entitled.

[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

Page 682
 S. 448 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

448. Punishment for false statement.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.628 of the Companies Act, 1956]
[Refer Circular 10/2014 dated 07 May 2014]

448. Save as otherwise provided in this Act, if in any return, report, certificate, financial
statement, prospectus, statement or other document required by, or for, the purposes of
any of the provisions of this Act or the rules made thereunder, any person makes a
statement,—
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,
he shall be liable under section 447.

Page 683
 S. 449 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

449. Punishment for false evidence.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.629 of the Companies Act, 1956]
[Refer Circular 10/2014 dated 07 May 2014]

449. Save as otherwise provided in this Act, if any person intentionally gives false
evidence—
(a) upon any examination on oath or solemn affirmation, authorised under this Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any
company under this Act, or otherwise in or about any matter arising under this Act,
he shall be punishable with imprisonment for a term which shall not be less than three
years but which may extend to seven years and with fine which may extend to ten lakh
rupees.
[It may be noted: Supreme Court held that where minimum imprisonment is prescribed, the Government
cannot interfere with its power of remission or commutation under section 433-A of Criminal Procedure
Code. See State of Rajasthan v. Jamil Khan, (2013) 10 SCC 721]

Page 684
 S. 450 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

450. Punishment where no specific penalty or punishment is provided.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.629A of the Companies Act, 1956]
[Refer Rules 5, 6 of the Companies (Incorporation) Rules, 2014]

450. If a company or any officer of a company or any other person contravenes any of
the provisions of this Act or the rules made thereunder, or any condition, limitation or
restriction subject to which any approval, sanction, consent, confirmation, recognition,
direction or exemption in relation to any matter has been accorded, given or granted, and
for which no penalty or punishment is provided elsewhere in this Act, the company and
every officer of the company who is in default or such other person shall be punishable
with fine which may extend to ten thousand rupees, and where the contravention is
continuing one, with a further fine which may extend to one thousand rupees for every
day after the first during which the contravention continues.

Page 685
 S. 451 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

451. Punishment in case of repeated default.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]
451. If a company or an officer of a company commits an offence punishable either with
fine or with imprisonment and where the same offence is committed for the second or
subsequent occasions within a period of three years, then, that company and every officer
thereof who is in default shall be punishable with twice the amount of fine for such offence
in addition to any imprisonment provided for that offence.

Page 686
 S. 452 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

452. Punishment for wrongful withholding of property.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.630A of the Companies Act, 1956]

452. (1) If any officer or employee of a company—

(a) wrongfully obtains possession of any property, including cash of the company; or
(b) having any such property including cash in his possession, wrongfully withholds it
or knowingly applies it for the purposes other than those expressed or directed in
the articles and authorised by this Act,
he shall, on the complaint of the company or of any member or creditor or contributory
thereof, be punishable with fine which shall not be less than one lakh rupees but which
may extend to five lakh rupees.

(2) The Court trying an offence under sub-section (1) may also order such officer or
employee to deliver up or refund, within a time to be fixed by it, any such property or cash
wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have
been derived from such property or cash or in default, to undergo imprisonment for a term
which may extend to two years.

Page 687
 S. 453 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

453. Punishment for improper use of “Limited” or “Private Limited”.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.631 of the Companies Act, 1956]

453. If any person or persons trade or carry on business under any name or title, of which
the word “Limited” or the words “Private Limited” or any contraction or imitation thereof is
or are the last word or words, that person or each of those persons shall, unless duly
incorporated with limited liability, or unless duly incorporated as a private company with
limited liability, as the case may be, punishable with fine which shall not be less than five
hundred rupees but may extend to two thousand rupees for every day for which that name
or title has been used.

Page 688
 S. 454 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

454. Adjudication of penalties.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer the Companies (Adjudication of Penalties) Rules, 2014. For list of ROCs designated as Adjudicating
officer and their jurisdiction, refer Notification number S.O. 831 (E) dated 24 March 2015.]
[Form No. ADJ]

454. (1) The Central Government may, by an order published in the Official Gazette,
appoint as many officers of the Central Government, not below the rank of Registrar, as
adjudicating officers for adjudging penalty under the provisions of this Act in the manner
as may be prescribed.

(2) The Central Government shall while appointing adjudicating officers, specify
their jurisdiction in the order under sub-section (1).

[(3) The adjudicating officer may, by an order –

445

(a) impose the penalty on the company, the officer who is in default, or any other
person, as the case may be, stating therein any noncompliance or default under the
relevant provisions of this Act; and
(b) direct such company, or officer who is in default, or any other person, as the
case may be, to rectify the default, wherever he considers fit.]

(4) The adjudicating officer shall, before imposing any penalty, give a reasonable
opportunity of being heard to 446[such company, the officer who is in default or any other
person].

(5) Any person aggrieved by an order made by the adjudicating officer under sub-
section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter.
[Form No. ADJ]

445
Substituted sub-section (3) of section 454 of the principal Act by Section 42(i) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “(3) The adjudicating officer may, by an order impose the penalty on the company
and the officer who is in default stating any non-compliance or default under the relevant provision of the
Act.”.

446
Substituted in sub-section (4) of section 454 of the principal Act by Section 42(ii) of the Companies
(Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November 2018. Prior to
substitution, it read as “such company and the officer who is in default”.

Page 689
 S. 454 - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

(6) Every appeal under sub-section (5) shall be filed within sixty days from the date
on which the copy of the order made by the adjudicating officer is received by the
aggrieved person and shall be in such form, manner and be accompanied by such fees
as may be prescribed.

(7) The Regional Director may, after giving the parties to the appeal an opportunity
of being heard, pass such order as he thinks fit, confirming, modifying or setting aside the
order appealed against.

(8) (i) Where company 447[fails to comply with the order made under sub-section (3) or
sub-section (7), as the case may be,] within a period of ninety days from the date of the
receipt of the copy of the order, the company shall be punishable with fine which shall not
be less than twenty- five thousand rupees but which may extend to five lakh rupees.
(ii) 448[Where an officer of a company or any other person] who is in default 449[fails to
comply with the order made under sub-section (3) or sub-section (7), as the case
may be,] within a period of ninety days from the date of the receipt of the copy of
the order, such officer shall be punishable with imprisonment which may extend to
six months or with fine which shall not be less than twenty-five thousand rupees
but which may extend to one lakh rupees, or with both.

447
Substituted for the words ‘does not pay the penalty imposed by the adjudicating officer or the Regional
Director’, in clause (i) of sub-section (8) of section 454 of the principal Act by Section 42(iii)(a) of the
Companies (Amendment) Act, 2019 (22 of 2019) deemed to have came into force from 02nd November
2018.

448
Substituted for the words ‘Where an officer of a company’, in clause (ii) of sub-section (8) of section 454
of the principal Act by Section 42(iii)(b)(i) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed
to have came into force from 02nd November 2018.

449
Substituted for the words ‘does not pay the penalty’, in clause (ii) of sub-section (8) of section 454 of the
principal Act by Section 42(iii)(b)(ii) of the Companies (Amendment) Act, 2019 (22 of 2019) deemed to have
came into force from 02nd November 2018.

Page 690
 S. 454A - Chapter XXVIII [S.447 to 470]

Relevant rules: The Companies (Adjudication of Penalties) Rules, 2014

The Companies (Miscellaneous) Rules, 2014

450
[454A. Penalty for repeated default.

[No corresponding provision under the Companies Act, 1956]

Where a company or an officer of a company or any other person having already been
subjected to penalty for default under any provisions of this Act, again commits such
default within a period of three years from the date of order imposing such penalty passed
by the adjudicating officer or the Regional Director, as the case may be, it or he shall be
liable for the second or subsequent defaults for an amount equal to twice the amount of
penalty provided for such default under the relevant provisions of this Act.]

450
Inserted section 454A to the principal Act by Section 43 of the Companies (Amendment) Act, 2019 (22
of 2019) deemed to have came into force from 02nd November 2018.

Page 691
 S. 455 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

455. Dormant company.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding provision under the Companies Act, 1956]
[Refer Rules 3, 4, 5, 6, 7 and 8 of the Companies (Miscellaneous) Rules, 2014]
[Form No. MSC-1, MSC.2, MSC-3, MSC-4 and MSC.5] [Documents filed with ROC can be inspected by
public (through MCA portal) as per section 399 of the Act.]
[For Company Law Settlement Scheme, 2014 [CLSS-2014] notified vide Circular 34/2014 dated 12 August
2014 refer Annexure C39. Though CLSS-2014 is not applicable to dormant company, an inactive company
may take advantage of it.]

455. (1) Where a company is formed and registered under this Act for a future project or
to hold an asset or intellectual property and has no significant accounting transaction,
such a company or an inactive company may make an application to the Registrar in such
manner as may be prescribed for obtaining the status of a dormant company.
[Form No. MSC-1]

Explanation.—For the purposes of this section,—

(i) “inactive company” means a company which has not been carrying on any business
or operation, or has not made any significant accounting transaction during the last
two financial years, or has not filed financial statements and annual returns during
the last two financial years;
(ii) “significant accounting transaction” means any transaction other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.

(2) The Registrar on consideration of the application shall allow the status of a dormant
company to the applicant and issue a certificate in such form as may be prescribed to
that effect.
[Form No. MSC.2]

(3) The Registrar shall maintain a register of dormant companies in such form as may be
prescribed.

(4) In case of a company which has not filed financial statements or annual returns for
two financial years consecutively, the Registrar shall issue a notice to that company and
enter the name of such company in the register maintained for dormant companies.

(5) A dormant company shall have such minimum number of directors, file such
documents and pay such annual fee as may be prescribed to the Registrar to retain its
dormant status in the register and may become an active company on an application
made in this behalf accompanied by such documents and fee as may be prescribed.

Page 692
 S. 455 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

[Return in Form No. MSC-3 and Application seeking active status in Form No. MSC-4. Certificate of active
company in Form No. MSC.5]

(6) The Registrar shall strike off the name of a dormant company from the register of
dormant companies, which has failed to comply with the requirements of this section.

Page 693
 S. 456 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

456. Protection of action taken in good faith.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.635A of the Companies Act, 1956]

456. No suit, prosecution or other legal proceeding shall lie against the Government or
any officer of the Government or any other person in respect of anything which is in good
faith done or intended to be done in pursuance of this Act or of any rules or orders made
thereunder, or in respect of the publication by or under the authority of the Government
or such officer, of any report, paper or proceedings.

Page 694
 S. 457 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

457. Non-disclosure of information in certain cases.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[Corresponding Sec.635AA of the Companies Act, 1956]

457. Notwithstanding anything contained in any other law for the time being in force, the
Registrar, any officer of the Government or any other person shall not be compelled to
disclose to any court, Tribunal or other authority, the source from where he got any
information which—
(a) has led the Central Government to order an investigation under section 210;
or
(b) is or has been material or relevant in connection with such investigation.

Page 695
 S. 458 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

458. Delegation by Central Government of its powers and functions.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.637 of the Companies Act, 1956]
[In exercise of powers under this section MCA has delegated powers, from time to time, its powers under
this Act, as under:
(i) to Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad and
Shillong under Sections 8(4)(i) for alteration of memorandum in case of conversion into another
kind of company, 8(6), 13(4) and (5), 16, 87, 111(3), 140(1) and proviso (i) to 399(1) vide
notification number S.O.1352(E) dated 21st May, 2014;
(ii) to Registrar of Companies under Sections 4(2), 8(1), 8(4)(i) except for alteration of
memorandum in case of conversion into another kind of company, 8(5) and 13(2) vide
notification number S.O.1353(E) dated 21st May, 2014;
(iii) to Regional Director, Noida for DIN related powers under sections 153 and 154 vide notification
number S.O.1354(E) dated 21st May, 2014;
(iv) to Regional Directors under section 94(5), vide notification number S.O.891(E) dated 31st
March, 2015;
(v) to Regional Directors under section 208 to receive the report from the Registrar or form the
inspector where such report recommends action for violation of the Act for which imprisonment
of less than two years is provided (except for violation under Chapter III, IV, sections 127, 177
and 178) vide notification number S.O. 3557(E) dated 31st December, 2015;
(vi) to Regional Directors under section 206(5) vide notification number S.O. 1626(E) dated 29th
April, 2016.]

458. (1) The Central Government may, by notification, and subject to such conditions,
limitations and restrictions as may be specified therein, delegate any of its powers or
functions under this Act other than the power to make rules to such authority or officer as
may be specified in the notification:
451
[A proviso omitted]

(2) A copy of every notification issued under sub-section (1) shall, as soon as may be
after it is issued, be laid before each House of Parliament.

451
Omitted proviso to sub-section (1) of Section 458 of the principal Act by Section 93 of the Companies
(Amendment) Act, 2017 (1 of 2018) which received assent of the President of India on 03rd January 2018.
It is brought to force from 09th February 2018 vide notification no. S.O. 630(E) of the same date. Prior to
its omission, it read as “Provided that the powers to enforce the provisions contained in section 194 and
section 195 relating to forward dealing and insider trading shall be delegated to Securities and Exchange
Board for listed companies or the companies which intend to get their securities listed and in such case,
any officer authorised by the Securities and Exchange Board shall have the power to file a complaint in the
court of competent jurisdiction.”.

Page 696
 S. 459 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

459. Powers of Central Government or Tribunal to accord approval, etc., subject to

conditions and to prescribe fees on applications.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.637AA of the Companies Act, 1956]
[Refer Rule 9 of the Companies (Miscellaneous) Rules, 2014]

459. (1) Where the Central Government or the Tribunal is required or authorised by any
provision of this Act—
(a) to accord approval, sanction, consent, confirmation or recognition to, or in
relation to, any matter; or
(b) to give any direction in relation to any matter; or
(c) to grant any exemption in relation to any matter,
then, the Central Government or the Tribunal may in the absence of anything to the
contrary contained in that provision or any other provision of this Act, accord, give or grant
such approval, sanction, consent, confirmation, recognition, direction or exemption,
subject to such conditions, limitations or restrictions as it may think fit to impose and may,
in the case of a contravention of any such condition, limitation or restriction, rescind or
withdraw such approval, sanction, consent, confirmation, recognition, direction or
exemption.

(2) Save as otherwise provided in this Act, every application which may be, or is required
to be, made to the Central Government or the Tribunal under any provision of this Act—
(a) in respect of any approval, sanction, consent, confirmation or recognition to be
accorded by that Government or the Tribunal to, or in relation to, any matter; or
(b) in respect of any direction or exemption to be given or granted by that Government
or the Tribunal in relation to any matter; or
(c) in respect of any other matter, shall be accompanied by such fees as may be
prescribed:
[Government has prescribed fees. refer Part II to Table of Fees annexed to the Companies (Registration
Offices & Fees) Rules, 2014. NCLT will prescribe fees separately, as per note to aforesaid Part II.]

Provided that different fees may be prescribed for applications in respect of different
matters or in case of applications by different classes of companies.

Page 697
 S. 460 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

460. Condonation of delay in certain cases.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.637B of the Companies Act, 1956]

460. Notwithstanding anything contained in this Act,—

(a) where any application required to be made to the Central Government under any
provision of this Act in respect of any matter is not made within the time specified
therein, that Government may, for reasons to be recorded in writing, condone the
delay; and
(b) where any document required to be filed with the Registrar under any provision of this
Act is not filed within the time specified therein, the Central Government may, for
reasons to be recorded in writing, condone the delay.

Page 698
 S. 461 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

461. Annual report by Central Government.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.638 of the Companies Act, 1956]

461. The Central Government shall cause a general annual report on the working and
administration of this Act to be prepared and laid before each House of Parliament within
one year of the close of the year to which the report relates.

Page 699
 S. 462 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

462. Power to exempt class or classes of companies from provisions of this Act.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

462. (1) The Central Government may in the public interest, by notification direct that any
of the provisions of this Act,—
(a) shall not apply to such class or classes of companies; or
(b) shall apply to the class or classes of companies with such exceptions,
modifications and adaptations as may be specified in the notification.
452
[(2) A copy of every notification proposed to be issued under sub-section (1), shall be
laid in draft before each House of Parliament, while it is in session, for a total period of
thirty days, and if, both Houses agree in disapproving the issue of notification or both
Houses agree in making any modification in the notification, the notification shall not be
issued or, as the case may be, shall be issued only in such modified form as may be
agreed upon by both the Houses.

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no
account shall be taken of any period during which the House referred to in sub-section
(2) is prorogued or adjourned for more than four consecutive days.

(4) The copies of every notification issued under this section shall, as soon as may be
after it has been issued, be laid before each House of Parliament.]

452
Sub-section (2) substituted with new sub-sections (2), (3) and (4) by the Companies (Amendment) Act,
2015 (21 of 2015), notified on 26th May, 2015, with effect from 29th May 2015 vide notification number S.O.
1440(E). Prior to substitution, sub-section (2) read as “(2) A copy of every notification proposed to be issued
under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a
total period of thirty days which may be comprised in one session or in two or more successive sessions,
and if, before the expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making
any modification in the notification, the notification shall not be issued or, as the case may be, shall be
issued only in such modified form as may be agreed upon by both the Houses.”.

Page 700
 S. 463 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

463. Power of court to grant relief in certain cases.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.633 of the Companies Act, 1956]

463. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or
breach of trust against an officer of a company, it appears to the court hearing the case
that he is or may be liable in respect of the negligence, default, breach of duty,
misfeasance or breach of trust, but that he has acted honestly and reasonably, and that
having regard to all the circumstances of the case, including those connected with his
appointment, he ought fairly to be excused, the court may relieve him, either wholly or
partly, from his liability on such term, as it may think fit:

Provided that in a criminal proceeding under this sub-section, the court shall have
no power to grant relief from any civil liability which may attach to an officer in respect of
such negligence, default, breach of duty, misfeasance or breach of trust.

(2) Where any such officer has reason to apprehend that any proceeding will or might be
brought against him in respect of any negligence, default, breach of duty, misfeasance or
breach of trust, he may apply to the High Court for relief and the High Court on such
application shall have the same power to relieve him as it would have had if it had been
a court before which a proceedings against that officer for negligence, default, breach of
duty, misfeasance or breach of trust had been brought under sub-section (1).

(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2)
unless it has, by notice served in the manner specified by it, required the Registrar and
such other person, if any, as it thinks necessary, to show cause why such relief should
not be granted.

Page 701
 S. 464 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

464. Prohibition of association or partnership of persons exceeding certain

number.

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Sec.11 of the Companies Act, 1956]
[Refer Rule 10 of the Companies (Miscellaneous) Rules, 2014]

464. (1) No association or partnership consisting of more than such number of persons
as may be prescribed shall be formed for the purpose of carrying on any business that
has for its object the acquisition of gain by the association or partnership or by the
individual members thereof, unless it is registered as a company under this Act or is
formed under any other law for the time being in force:

Provided that the number of persons which may be prescribed under this sub-
section shall not exceed one hundred.

(2) Nothing in sub-section (1) shall apply to—

(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals who are governed by
special Acts.

(3) Every member of an association or partnership carrying on business in contravention

of sub-section (1) shall be punishable with fine which may extend to one lakh rupees and
shall also be personally liable for all liabilities incurred in such business.

Page 702
 S. 465 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

453
465. Repeal of certain enactments and savings.

[See section 2(72)]

465. (1) The Companies Act, 1956 (1 of 1956) and the Registration of Companies (Sikkim)
Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section referred to as the repealed
enactments) shall stand repealed:

Provided that the provisions of Part IX A of the Companies Act, 1956 (1 of 1956)
shall be applicable mutatis mutandis to a Producer Company in a manner as if the
Companies Act, 1956 (1 of 1956 ) has not been repealed until a special Act is enacted
for Producer Companies:

Provided further that until a date is notified by the Central Government under sub-
section (1) of Section 434 for transfer of all matters, proceedings or cases to the Tribunal,
the provisions of the Companies Act, 1956 (1 of 1956) in regard to the jurisdiction, powers,
authority and functions of the Board of Company Law Administration and court shall
continue to apply as if the Companies Act, 1956 has not been repealed:

Provided also that provisions of the Companies Act, 1956 (1 of 1956) referred in
the notification issued under section 67 of the Limited Liability Partnership Act, 2008 (6 of
2009) shall, until the relevant notification under such section applying relevant
corresponding provisions of this Act to limited liability partnerships is issued, continue to
apply as if the Companies Act, 1956 has not been repealed.

(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments,—
(a) anything done or any action taken or purported to have been done or taken,
including any rule, notification, inspection, order or notice made or issued or any
appointment or declaration made or any operation undertaken or any direction
given or any proceeding taken or any penalty, punishment, forfeiture or fine
imposed under the repealed enactments shall, insofar as it is not inconsistent with
the provisions of this Act, be deemed to have been done or taken under the
corresponding provisions of this Act;
(b) subject to the provisions of clause (a), any order, rule, notification, regulation,
appointment, conveyance, mortgage, deed, document or agreement made, fee
directed, resolution passed, direction given, proceeding taken, instrument executed
or issued, or thing done under or in pursuance of any repealed enactment shall, if

453
Brought to force from 30th January 2019 in so far as it relates to repeal of the Companies Act, 1956 (1
of 1956), however in so far as it relate to the repeal of the Registration of Companies (Sikkim) Act, 1961
(Sikkim Act 8 of 1961) the same is not yet brought to force – vide notification no. S.O. 560(E) dated 30th
January 2019 .]

Page 703
 S. 465 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

in force at the commencement of this Act, continue to be in force, and shall have
effect as if made, directed, passed, given, taken, executed, issued or done under
or in pursuance of this Act;
(c) any principle or rule of law, or established jurisdiction, form or course of pleading,
practice or procedure or existing usage, custom, privilege, restriction or exemption
shall not be affected, notwithstanding that the same respectively may have been in
any manner affirmed or recognised or derived by, in, or from, the repealed
enactments;
(d) any person appointed to any office under or by virtue of any repealed enactment
shall be deemed to have been appointed to that office under or by virtue of this Act;
(e) any jurisdiction, custom, liability, right, title, privilege, restriction, exemption, usage,
practice, procedure or other matter or thing not in existence or in force shall not be
revised or restored;
(f) the offices existing on the commencement of this Act for the registration of
companies shall continue as if they have been established under the provisions of
this Act;
(g) the incorporation of companies registered under the repealed enactments shall
continue to be valid and the provisions of this Act shall apply to such companies as
if they were registered under this Act;
(h) all registers and all funds constituted and established under the repealed
enactments shall be deemed to be registers and funds constituted or established
under the corresponding provisions of this Act;
(i) any prosecution instituted under the repealed enactments and pending immediately
before the commencement of this Act before any Court shall, subject to the
provisions of this Act, continue to be heard and disposed of by the said Court;
(j) any inspection, investigation or inquiry ordered to be done under the Companies
Act, 1956 (1 of 1956) shall continue to be proceeded with as if such inspection,
investigation or inquiry has been ordered under the corresponding provisions of
this Act; and
(k) any matter filed with the Registrar, Regional Director or the Central Government
under the Companies Act, 1956 (1 of 1956) before the commencement of this Act
and not fully addressed at that time shall be concluded by the Registrar, Regional
Director or the Central Government, as the case may be, in terms of that Act,
despite its repeal.

(3) The mention of particular matters in sub-section (2) shall not be held to prejudice the
general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard
to the effect of repeal of the repealed enactments as if the Registration of Companies
(Sikkim) Act, 1961 (Sikkim Act 8 of 1961) were also a Central Act.

Page 704
 S. 466 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

466. Dissolution of Company Law Board and consequential provisions.

[Section 466 brought to force from 01 June 2016 vide notification number S.O. 1934(E) dated 01st June,
2016]
[Section 10FA of the Companies Act, 1956 which was never brought to force]

466. (1) Notwithstanding anything contained in section 465, the Board of Company Law
Administration constituted under the Companies Act, 1956 (1 of 1956) (hereafter in this
section referred to as the Company Law Board) shall stand dissolved on the constitution
of the Tribunal and the Appellate Tribunal:

Provided that until the Tribunal and the Appellate Tribunal is constituted, the
Chairman, Vice-Chairman and Members of the Company Law Board immediately before
the constitution of the Tribunal and the Appellate Tribunal, who fulfil the qualifications and
requirements provided under this Act regarding appointment as President or Chairperson
or Member of the Tribunal or the Appellate Tribunal, shall function as President,
Chairperson or Member of the Tribunal or the Appellate Tribunal:

Provided further that every officer or other employee, who had been appointed on
deputation basis to the Company Law Board, shall, on such dissolution,—
(i) become officer or employee of the Tribunal or the Appellate Tribunal, if he fulfils the
qualifications and requirements under this Act; and
(ii) stand reverted to his parent cadre, Ministry or Department, in any other case:

Provided also that every officer and the other employee of the Company Law Board,
employed on regular basis by that Board, shall become, on and from such dissolution the
officer and other employee, respectively, of the Tribunal or the Appellate Tribunal with the
same rights and privileges as to pension, gratuity and other like benefits as would have
been admissible to him if he had continued to serve that Board and shall continue to do
so unless and until his employment in the Tribunal or the Appellate Tribunal is duly
terminated or until his remuneration, terms and conditions of employment are duly altered
by the Tribunal or the Appellate Tribunal, as the case may be:

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, any officer or other
employee who becomes an officer or other employee of the Tribunal or the Appellate
Tribunal under the preceding proviso shall not be entitled to any compensation 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 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 who have become officers or employees of the Tribunal or the Appellate

Page 705
 S. 466 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

Tribunal shall, out of the monies standing to the credit of such provident fund,
superannuation fund, welfare fund or other fund, stand transferred to, and vest in, the
Tribunal or the Appellate Tribunal, as the case may be, and such monies which stand so
transferred shall be dealt with by the Tribunal or the Appellate Tribunal in such manner
as may be prescribed.

(2) The persons holding the offices of Chairman, Vice-Chairman and Members, and
officers and other employees of the Company Law Board immediately before the
constitution of the Tribunal and the Appellate Tribunal who are not covered under proviso
to sub-section (1) shall vacate their respective offices on such constitution and no such
Chairman, Vice- Chairman and Members and officers or other employees shall be entitled
to claim any compensation for the premature termination of the term of his office or of any
contract of service, if any.

Page 706
 S. 467 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

467. Power of Central Government to amend Schedules.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.641 of the Companies Act, 1956]

467. (1) Subject to the provisions of this section, the Central Government may, by
notification, alter any of the regulations, rules, Tables, forms and other provisions
contained in any of the Schedules to this Act.

(2) Any alteration notified under sub-section (1) shall have effect as if enacted in this Act
and shall come into force on the date of the notification, unless the notification otherwise
directs:
Provided that no such alteration in Table F of Schedule I shall apply to any
company registered before the date of such alteration.

(3) Every alteration made by the Central Government under sub-section (1) shall be laid
as soon as may be after it is made before each House of Parliament while it is in session
for a total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any
modification in the alteration, or both Houses agree that the alteration should not be made,
the alteration shall thereafter have effect only in such modified form or be of no effect, as
the case may be; so, however, that any such modification or annulment shall be without
prejudice to the validity of anything previously done in pursuance of that alteration.

Page 707
 S. 468 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

468. Powers of Central Government to make rules relating to winding up.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.643 of the Companies Act, 1956]

468. (1) The Central Government shall, make rules consistent with the Code of Civil
Procedure, 1908 (5 of 1908) providing for all matters relating to the winding up of
companies, which by this Act, are to be prescribed, and may make rules providing for all
such matters, as may be prescribed.
454
[(2) In particular, and without prejudice to the generality of the foregoing power, such
rules may provide for all or any of the following matters, namely:—
(i) as to the mode of proceedings to be held for winding up of a company by the Tribunal
under this Act;

(ii) for the holding of meetings of creditors and members in connection with proceedings
under section 230;

(iii) for giving effect to the provisions of this Act as to the reduction of the capital;

(iv) generally for all applications to be made to the Tribunal under the provisions of this
Act;

454
substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(35) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide notification
number S.O 3453(E) dated 15th November, 2016. Prior to substitution it read as “(2) In particular,
and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the
following matters, namely:—
(i) as to the mode of proceedings to be held for winding up of a company by the Tribunal;
(ii) for the voluntary winding up of companies, whether by members or by creditors;
(iii) for the holding of meetings of creditors and members in connection with proceedings under
section 230;
(iv) for giving effect to the provisions of this Act as to the reduction of the capital;
(v) generally for all applications to be made to the Tribunal under the provisions of this Act;
(vi) the holding and conducting of meetings to ascertain the wishes of creditors and contributories;
(vii) the settling of lists of contributories and the rectifying of the register of members where required,
and collecting and applying the assets;
(viii) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to
the liquidator;
(ix) the making of calls; and

(x) the fixing of a time within which debts and claims shall be proved.”.

Page 708
 S. 468 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

(v) the holding and conducting of meetings to ascertain the wishes of creditors and
contributories;

(vi) the settling of lists of contributories and the rectifying of the register of members where
required, and collecting and applying the assets;

(vii) the payment, delivery, conveyance, surrender or transfer of money, property, books
or papers to the liquidator;

(viii) the making of calls; and

(ix) the fixing of a time within which debts and claims shall be proved.]

(3) All rules made by the Supreme Court on the matters referred to in this section as it
stood immediately before the commencement of this Act and in force at such
commencement, shall continue to be in force, till such time the rules are made by the
Central Government and any reference to the High Court in relation to winding up of a
company in such rules shall be construed as a reference to the Tribunal.

Page 709
 S. 469 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

469. Power of Central Government to make rules.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September,
2013.]
[Corresponding Sec.642 of the Companies Act, 1956]

469. (1) The Central Government may, by notification, make rules for carrying out the
provisions of this Act.

(2) Without prejudice to the generality of the provisions of sub-section (1), the Central
Government may make rules for all or any of the matters which by this Act are required
to be, or may be, prescribed or in respect of which provision is to be or may be made by
rules.

(3) Any rule made under sub-section (1) may provide that a contravention thereof shall
be punishable with fine which may extend to five thousand rupees and where the
contravention is a continuing one, with a further fine which may extend to five hundred
rupees for every day after the first during which such contravention continues.

(4) Every rule made under this section and every regulation made by Securities and
Exchange Board under this Act, shall be laid, as soon as may be after it is made, before
each House of Parliament, while it is in session, for a total period of thirty days which may
be comprised in one session or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the rule or regulation or both
Houses agree that the rule or regulation should not be made, the rule or regulation shall
thereafter have effect only in such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall be without prejudice to the
validity of anything previously done under that rule or regulation.

Page 710
 S. 470 - Chapter XXVIII [S.447 to 470]

Relevant rules: -

470. Power to remove difficulties.

[Brought to force from 12th September, 2013 vide notification number S.O. 2754(E) dated 12th September, 2013.]
[No corresponding provision under the Companies Act, 1956]

470. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such provisions, not
inconsistent with the provisions of this Act, as appear to it to be necessary or expedient
for removing the difficulty:

Provided that no such order shall be made after the expiry of a period of five years
from the date of commencement of section 1 of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid
before each House of Parliament.

Page 711
 Schedule I – Table A

SCHEDULE I
Schedule I (See sections 4 and 5)

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Schedule I to the Companies Act, 1956]

TABLE-A MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES

[Corresponding Table B of Schedule I to the Companies Act, 1956]

1st The name of the company is "..............................Limited/Private Limited".

2nd The registered office of the company will be situated in the State of
.........................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
..............................................................................................................................
..............
(b) Matters which are necessary for furtherance of the objects specified in
clause 3(a) are:—
..............................................................................................................................
..............
4th The liability of the member(s) is limited and this liability is limited to the amount
unpaid, if any, on the shares held by them.
5th The share capital of the company is.................................................. rupees,
divided into ....................................... shares of....................................... rupees
each.
6th We, the several persons, whose names and addresses are subscribed, are
desirous of being formed into a company in pursuance of this memorandum of
association, and we respectively agree to take the number of shares in the
capital of the company set against our respective names:—
Names, addresses, No. of shares Signature Signature, names,
descriptions and taken by each of addresses, descriptions and
occupations of subscriber subscriber occupations of witnesses
subscribers
A.B. ..................... Signed before me:
...................Merchant. Signature............................
C.D. ..................... Signed before me:
of...................Merchant Signature............................
E.F. ..................... Signed before me:
of...................Merchant Signature............................

Page 712
 Schedule I – Table A

G.H. ..................... Signed before me:

of...................Merchant Signature............................
I.J. ..................... Signed before me:
of...................Merchant Signature............................
K.L. ..................... Signed before me:
of...................Merchant Signature............................
M.N.of...................Merch ..................... Signed before me:
ant Signature............................
Total shares taken: ------------------
------------------
7th I, whose name and address is given below, am desirous of forming a company
in pursuance of this memorandum of association and agree to take all the
shares in the capital of the company (Applicable in case of one person
company):—
Name, address, description and Signature of Signature, name, address,
occupation of subscriber subscriber description and occupation of
witness
A.B. Signed before me:
of............................Merchant. Signature............................
8th Shri/Smt........., son/daughter of.................., resident of ............
aged................years shall be the nominee in the event of death of the sole
member (Applicable in case of one person company)
Dated............................the day of............................

Page 713
 Schedule I – Table B

TABLE-B MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY

GUARANTEE AND NOT HAVING A SHARE CAPITAL

[Corresponding Table C of Schedule I to the Companies Act, 1956]

1s The name of the company is "............................Limited/Private Limited".

t
2nd The registered office of the company will be situated in the State of
............................
3rd (a) The objects to be pursued by the company on its incorporation are:—
...............................................................................................................................
..............
(b) Matters which are necessary for furtherance of the objects specified in
clause 3(a) are:—
...............................................................................................................................
...............
4th The liability of the member(s) is limited.
5th Every member of the company undertakes to contribute:
(i) to the assets of the company in the event of its being wound up while he is a
member, or within one year after he ceases to be a member, for payment of the
debts and liabilities of the company or of such debts and liabilities as may have
been contracted before he ceases to be a member; and
(ii) to the costs, charges and expenses of winding up (and for the adjustment of
the rights of the contributories among themselves),
such amount as may be required, not exceeding............................rupees.
6th We, the several persons, whose names and addresses are subscribed, are
desirous of being formed into a company in pursuance of this memorandum of
association.
Names, addresses, descriptions Signature Signature, names, addresses,
and occupations of subscribers of descriptions and occupations of
subscriber witnesses
A.B. Signed before me:
of............................Merchant Signature...................................
C.D. Signed before me:
of............................Merchant Signature...................................
E.F. Signed before me:
of............................Merchant Signature...................................
G.H. Signed before me:
of...........................Merchant Signature...................................

Page 714
 Schedule I – Table B

I.J. Signed before me:

of..............................Merchant Signature...................................
K.L. Signed before me:
of............................Merchant Signature...................................
M.N. Signed before me:
of...........................Merchant Signature...................................
7th I, whose name and address is given below, am desirous of forming a company
in pursuance of this memorandum of association (Applicable in case of one
person company):—
Name, address, description and Signature of Signature, name, address,
occupation of subscriber subscriber description and occupation of
witness
A.B. ............................Merchant. Signed before me:
Signature............................
8th Shri/Smt........., son/daughter of.................., resident of ............
aged................years shall be the nominee in the event of death of the sole
member (Applicable in case of one person company)
Dated......................the day of......................

Page 715
 Schedule I – Table C

TABLE-C MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY

GUARANTEE AND HAVING A SHARE CAPITAL

[Corresponding Table D of Schedule I to the Companies Act, 1956]

1st The name of the company is ".................................Limited/Private Limited".

2nd The registered office of the company will be situated in the State
of.................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
..............................................................................................................................
...............
(b) Matters which are necessary for furtherance of the objects specified in
clause 3(a) are:—
..............................................................................................................................
...............
4th The liability of the member(s) is limited.
5th Every member of the company undertakes to contribute:
(i) to the assets of the company in the event of its being wound up while he is a
member, or within one year after he ceases to be a member, for payment of the
debts and liabilities of the company or of such debts and liabilities as may have
been contracted before he ceases to be a member; and
(ii) to the costs, charges and expenses of winding up (and for the adjustment of
the rights of the contributories among themselves),
such amount as may be required, not exceeding.................................rupees.
6th The share capital of the company is.................................rupees, divided
into.................................shares of.................................rupees each
7th We, the several persons, whose names, addresses are subscribed, are desirous
of being formed into a company in pursuance of this memorandum of
association and we respectively agree to take the number of shares in the
capital of the company set against our respective names:—
Names, addresses, No. of shares Signature Signature, names,
descriptions and taken by each of addresses, descriptions and
occupations of subscriber subscriber occupations of witnesses
subscribers
A.B. ..................... Signed before me:
of...................Merchant. Signature............................
C.D. ..................... Signed before me:
of...................Merchant Signature............................
E.F. ..................... Signed before me:
of...................Merchant Signature............................

Page 716
 Schedule I – Table C

G.H. ..................... Signed before me:

of...................Merchant Signature............................
I.J. ..................... Signed before me:
of...................Merchant Signature............................
K.L. ..................... Signed before me:
of...................Merchant Signature............................
M.N.of...................Mercha ..................... Signed before me:
nt Signature............................
8th I, whose name and address is given below, am desirous of forming a company
in pursuance of this memorandum of association and agree to take all the
shares in the capital of the company (Applicable in case of one person
company):—
Name, address, description and Signature of Signature, name, address,
occupation of subscriber subscriber description and occupation of
witness
A.B. Signed before me:
of............................Merchant. Signature............................
9th Shri/Smt........., son/daughter of.................., resident of ............
aged................years shall be the nominee in the event of death of the sole
member (Applicable in case of one person company)
Dated......................the day of......................

Page 717
 Schedule I – Table D

TABLE-D MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND

NOT HAVING SHARE CAPITAL

[Corresponding Table E of Schedule I to the Companies Act, 1956. Under Act of 1956, there was no
separate memorandum for Unlimited Company having or not having share capital.]

1st The name of the company is ".......................Company".

2nd The registered office of the company will be situated in the State of
.......................
3rd (a) The objects to be pursued by the company on its incorporation are:—
..............................................................................................................................
................
(b) Matters which are necessary for furtherance of the objects specified in
clause 3(a) are:—
..............................................................................................................................
................
4th The liability of the member(s) is unlimited.
5th We, the several persons, whose names and addresses are subscribed are
desirous of being formed into a company in pursuance of this memorandum of
association.
Names, addresses, descriptions Signature of Signature, names, addresses,
and occupations of subscribers subscriber descriptions and occupations of
witnesses
A.B. Signed before me:
of............................Merchant. Signature............................
C.D. Signed before me:
of............................Merchant. Signature............................
E.F. Signed before me:
of............................Merchant. Signature............................
G.H. Signed before me:
of............................Merchant. Signature............................
I.J. of............................Merchant. Signed before me:
Signature............................
K.L. Signed before me:
of............................Merchant. Signature............................
M.N. Signed before me:
of............................Merchant. Signature............................
6th I, whose name and address is given below, am desirous of forming a company
in pursuance of this memorandum of association (Applicable in case of one
person company):—

Page 718
 Schedule I – Table D

Name, address, description and Signature of Signature, name, address,

occupation of subscriber subscriber description and occupation of
witness
A.B. ............................Merchant. Signed before me:
Signature............................
7th Shri/Smt........., son/daughter of.................., resident of ............
aged................years shall be the nominee in the event of death of the sole
member (Applicable in case of one person company)
Dated......................the day of......................

Page 719
 Schedule I – Table E

TABLE-E MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND

HAVING SHARE CAPITAL

[Corresponding Table E of Schedule I to the Companies Act, 1956. Under Act of 1956, there was no
separate memorandum for Unlimited Company having or not having share capital.]

1s The name of the company is "........................Company".

t
2n The registered office of the company will be situated in the State
d of........................
3rd (a) The objects to be pursued by the company on its incorporation are:—
................................................................................................................................
..............
(b) Matters which are necessary for furtherance of the objects specified in
clause 3(a) are:—
................................................................................................................................
..............
4th The liability of the member(s) is unlimited.
5th The share capital of the company is........................rupees, divided
into........................ shares of........................rupees each.
6th We, the several persons, whose names, and addresses are subscribed, are
desirous of being formed into a company in pursuance of this memorandum of
association and we respectively agree to take the number of shares in the capital
of the company set against our respective names:—
Names, addresses, No. of shares Signature Signature, names,
descriptions and taken by each of addresses, descriptions and
occupations of subscriber subscriber occupations of witnesses
subscribers
A.B. ..................... Signed before me:
of...............Merchant. Signature............................
C.D. ..................... Signed before me:
of...............Merchant Signature............................
E.F. ..................... Signed before me:
of...............Merchant Signature............................
G.H. ..................... Signed before me:
of...............Merchant Signature............................
I.J. of...............Merchant ..................... Signed before me:
Signature............................
K.L. ..................... Signed before me:
of...............Merchant Signature............................

Page 720
 Schedule I – Table E

M.N. ..................... Signed before me:

of...............Merchant Signature............................
7th I, whose name and address is given below, am desirous of forming a company
in pursuance of this memorandum of association and agree to take all the
shares in the capital of the company (Applicable in case of one person
company):—
Name, address, description and Signature of Signature, name, address,
occupation of subscriber subscriber description and occupation of
witness
A.B. ............................Merchant. Signed before me:
Signature............................
8th Shri/Smt........., son/daughter of.................., resident of ............
aged................years shall be the nominee in the event of death of the sole
member (Applicable in case of one person company)
Dated......................the day of......................

Page 721
 Schedule I – Table F AOA

TABLE-F ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY SHARES

[Corresponding Table A of Schedule I to the Companies Act, 1956]

Interpretation
I. (1) In these regulations—
(a) "the Act" means the Companies Act, 2013,
(b) "the seal" means the common seal of the company.
(2) Unless the context otherwise requires, words or expressions contained in these
regulations shall bear the same meaning as in the Act or any statutory modification
thereof in force at the date at which these regulations become binding on the company.

Share capital and variation of rights

II. 1. Subject to the provisions of the Act and these Articles, the shares in the capital of
the company shall be under the control of the Directors who may issue, allot or otherwise
dispose of the same or any of them to such persons, in such proportion and on such
terms and conditions and either at a premium or at par and at such time as they may
from time to time think fit.

2. (i) Every person whose name is entered as a member in the register of members shall
be entitled to receive within two months after incorporation, in case of subscribers to the
memorandum or after allotment or within one month after the application for the
registration of transfer or transmission or within such other period as the conditions of
issue shall be provided,—
(a) one certificate for all his shares without payment of any charges; or
(b) several certificates, each for one or more of his shares, upon payment of
twenty rupees for each certificate after the first.
(ii) 455[Every certificate shall specify the shares to which it relates and the amount
paid-up thereon and shall be signed by two directors or by a director and the company
secretary, wherever the company has appointed a company secretary:
Provided that in case the company has a common seal it shall be affixed in the
presence of the persons required to sign the certificate.
Explanation.- For the purposes of this item, it is hereby clarified that in case of an
One Person Company, it shall be sufficient if the certificate is signed by a director and
the company secretary, wherever the company has appointed a company secretary, or
any other person authorised by the Board for the purpose.]

455
Substituted for item (ii) in sub-paragraph (2) of paragraph II of Table F, by notification no.
G.S.R. 362(E) dated 10th April 2018. Prior to substitution it read as ‘Every certificate shall be under the
seal and shall specify the shares to which it relates and the amount paid-up thereon.’.

Page 722
 Schedule I – Table F AOA

(iii) In respect of any share or shares held jointly by several persons, the company
shall not be bound to issue more than one certificate, and delivery of a certificate for a
share to one of several joint holders shall be sufficient delivery to all such holders.

3. (i) If any share certificate be worn out, defaced, mutilated or torn or if there be no
further space on the back for endorsement of transfer, then upon production and
surrender thereof to the company, a new certificate may be issued in lieu thereof, and if
any certificate is lost or destroyed then upon proof thereof to the satisfaction of the
company and on execution of such indemnity as the company deem adequate, a new
certificate in lieu thereof shall be given. Every certificate under this Article shall be issued
on payment of twenty rupees for each certificate.
(ii) The provisions of Articles (2) and (3) shall mutatis mutandis apply to
debentures of the company.

4. Except as required by law, no person shall be recognised by the company as holding

any share upon any trust, and the company shall not be bound by, or be compelled in
any way to recognise (even when having notice thereof) any equitable, contingent, future
or partial interest in any share, or any interest in any fractional part of a share, or (except
only as by these regulations or by law otherwise provided) any other rights in respect of
any share except an absolute right to the entirety thereof in the registered holder.

5. (i) The company may exercise the powers of paying commissions conferred by sub-
section (6) of section 40, provided that the rate per cent or the amount of the commission
paid or agreed to be paid shall be disclosed in the manner required by that section and
rules made thereunder.
(ii) The rate or amount of the commission shall not exceed the rate or amount prescribed
in rules made under sub-section (6) of section 40.
(iii) The commission may be satisfied by the payment of cash or the allotment of fully or
partly paid shares or partly in the one way and partly in the other.

6. (i) If at any time the share capital is divided into different classes of shares, the rights
attached to any class (unless otherwise provided by the terms of issue of the shares of
that class) may, subject to the provisions of section 48, and whether or not the company
is being wound up, be varied with the consent in writing of the holders of three-fourths
of the issued shares of that class, or with the sanction of a special resolution passed at
a separate meeting of the holders of the shares of that class.
(ii) To every such separate meeting, the provisions of these regulations relating to
general meetings shall mutatis mutandis apply, but so that the necessary quorum shall
be at least two persons holding at least one-third of the issued shares of the class in
question.

7. The rights conferred upon the holders of the shares of any class issued with preferred
or other rights shall not, unless otherwise expressly provided by the terms of issue of the

Page 723
 Schedule I – Table F AOA

shares of that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.

8. Subject to the provisions of section 55, any preference shares may, with the sanction
of an ordinary resolution, be issued on the terms that they are to be redeemed on such
terms and in such manner as the company before the issue of the shares may, by special
resolution, determine.

Lien

9. (i) The company shall have a first and paramount lien—

(a) on every share (not being a fully paid share), for all monies (whether presently
payable or not) called, or payable at a fixed time, in respect of that share; and
(b) on all shares (not being fully paid shares) standing registered in the name of a single
person, for all monies presently payable by him or his estate to the company:
Provided that the Board of directors may at any time declare any share to be wholly or
in part exempt from the provisions of this clause.
(ii) The company's lien, if any, on a share shall extend to all dividends payable and
bonuses declared from time to time in respect of such shares.

10. The company may sell, in such manner as the Board thinks fit, any shares on which
the company has a lien:
Provided that no sale shall be made—
(a) unless a sum in respect of which the lien exists is presently payable; or
(b) until the expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is presently
payable, has been given to the registered holder for the time being of the share or the
person entitled thereto by reason of his death or insolvency.

11. (i) To give effect to any such sale, the Board may authorise some person to transfer
the shares sold to the purchaser thereof.
(ii) The purchaser shall be registered as the holder of the shares comprised in any such
transfer.
(iii) The purchaser shall not be bound to see to the application of the purchase money,
nor shall his title to the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.

12. (i) The proceeds of the sale shall be received by the company and applied in payment
of such part of the amount in respect of which the lien exists as is presently payable.
(ii) The residue, if any, shall, subject to a like lien for sums not presently payable as
existed upon the shares before the sale, be paid to the person entitled to the shares, at
the date of the sale.

Page 724
 Schedule I – Table F AOA

Calls on shares

13. (i) The Board may, from time to time, make calls upon the members in respect of any
monies unpaid on their shares (whether on account of the nominal value of the shares
or by way of premium) and not by the conditions of allotment thereof made payable at
fixed times:
Provided that no call shall exceed one-fourth of the nominal value of the share or be
payable at less than one month from the date fixed for the payment of the last preceding
call.
(ii) Each member shall, subject to receiving at least fourteen days' notice specifying the
time or times and place of payment, pay to the company, at the time or times and place
so specified, the amount called on his shares.
(iii) A call may be revoked or postponed at the discretion of the Board.

14. A call shall be deemed to have been made at the time when the resolution of the
Board authorising the call was passed and may be required to be paid by instalments.

15. The joint holders of a share shall be jointly and severally liable to pay all calls in
respect thereof.

16. (i) If a sum called in respect of a share is not paid before or on the day appointed for
payment thereof, the person from whom the sum is due shall pay interest thereon from
the day appointed for payment thereof to the time of actual payment at ten per cent per
annum or at such lower rate, if any, as the Board may determine.
(ii) The Board shall be at liberty to waive payment of any such interest wholly or in part.

17. (i) Any sum which by the terms of issue of a share becomes payable on allotment or
at any fixed date, whether on account of the nominal value of the share or by way of
premium, shall, for the purposes of these regulations, be deemed to be a call duly made
and payable on the date on which by the terms of issue such sum becomes payable.
(ii) In case of non-payment of such sum, all the relevant provisions of these regulations
as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum
had become payable by virtue of a call duly made and notified.

18. The Board—

(a) may, if it thinks fit, receive from any member willing to advance the same, all or any
part of the monies uncalled and unpaid upon any shares held by him; and
(b) upon all or any of the monies so advanced, may (until the same would, but for such
advance, become presently payable) pay interest at such rate not exceeding, unless the
company in general meeting shall otherwise direct, twelve per cent per annum, as may
be agreed upon between the Board and the member paying the sum in advance.

Transfer of shares

Page 725
 Schedule I – Table F AOA

19. (i) The instrument of transfer of any share in the company shall be executed by or on
behalf of both the transferor and transferee.
(ii) The transferor shall be deemed to remain a holder of the share until the name of the
transferee is entered in the register of members in respect thereof.

20. The Board may, subject to the right of appeal conferred by section 58 decline to
register—
(a) the transfer of a share, not being a fully paid share, to a person of whom they do not
approve; or
(b) any transfer of shares on which the company has a lien.

21. The Board may decline to recognise any instrument of transfer unless—
(a) The instrument of transfer is in the form as prescribed in rules made under sub-section
(1) of section 56;
(b) The instrument of transfer is accompanied by the certificate of the shares to which it
relates, and such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer; and
(c) The instrument of transfer is in respect of only one class of shares.

22. On giving not less than seven days' previous notice in accordance with section 91
and rules made thereunder, the registration of transfers may be suspended at such times
and for such periods as the Board may from time to time determine:
Provided that such registration shall not be suspended for more than thirty days at any
one time or for more than forty-five days in the aggregate in any year.

Transmission of shares

23. (i) On the death of a member, the survivor or survivors where the member was a joint
holder, and his nominee or nominees or legal representatives where he was a sole
holder, shall be the only persons recognised by the company as having any title to his
interest in the shares.
(ii) Nothing in clause (i) shall release the estate of a deceased joint holder from any
liability in respect of any share which had been jointly held by him with other persons.

24. (i) Any person becoming entitled to a share in consequence of the death or insolvency
of a member may, upon such evidence being produced as may from time to time properly
be required by the Board and subject as hereinafter provided, elect, either—
(a) to be registered himself as holder of the share; or
(b) to make such transfer of the share as the deceased or insolvent member could have
made.

Page 726
 Schedule I – Table F AOA

(ii) The Board shall, in either case, have the same right to decline or suspend registration
as it would have had, if the deceased or insolvent member had transferred the share
before his death or insolvency.

25. (i) If the person so becoming entitled shall elect to be registered as holder of the
share himself, he shall deliver or send to the company a notice in writing signed by him
stating that he so elects.
(ii) If the person aforesaid shall elect to transfer the share, he shall testify his election by
executing a transfer of the share.
(iii) All the limitations, restrictions and provisions of these regulations relating to the right
to transfer and the registration of transfers of shares shall be applicable to any such
notice or transfer as aforesaid as if the death or insolvency of the member had not
occurred and the notice or transfer were a transfer signed by that member.

26. A person becoming entitled to a share by reason of the death or insolvency of the
holder shall be entitled to the same dividends and other advantages to which he would
be entitled if he were the registered holder of the share, except that he shall not, before
being registered as a member in respect of the share, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the company:
Provided that the Board may, at any time, give notice requiring any such person to elect
either to be registered himself or to transfer the share, and if the notice is not complied
with within ninety days, the Board may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share, until the requirements of the
notice have been complied with.

27. In case of a One Person Company—

(i) on the death of the sole member, the person nominated by such member shall be the
person recognised by the company as having title to all the shares of the member;
(ii) the nominee on becoming entitled to such shares in case of the member's death shall
be informed of such event by the Board of the company;
(iii) such nominee shall be entitled to the same dividends and other rights and liabilities
to which such sole member of the company was entitled or liable;
(iv) on becoming member, such nominee shall nominate any other person with the prior
written consent of such person who, shall in the event of the death of the member,
become the member of the company.

Forfeiture of shares

28. If a member fails to pay any call, or instalment of a call, on the day appointed for
payment thereof, the Board may, at any time thereafter during such time as any part of
the call or instalment remains unpaid, serve a notice on him requiring payment of so
much of the call or instalment as is unpaid, together with any interest which may have
accrued.

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29. The notice aforesaid shall—

(a) name a further day (not being earlier than the expiry of fourteen days from the date of
service of the notice) on or before which the payment required by the notice is to be made;
and
(b) state that, in the event of non-payment on or before the day so named, the shares in
respect of which the call was made shall be liable to be forfeited.

30. If the requirements of any such notice as aforesaid are not complied with, any share
in respect of which the notice has been given may, at any time thereafter, before the
payment required by the notice has been made, be forfeited by a resolution of the Board
to that effect.

31. (i) A forfeited share may be sold or otherwise disposed of on such terms and in such
manner as the Board thinks fit.
(ii) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture
on such terms as it thinks fit.

32. (i) A person whose shares have been forfeited shall cease to be a member in respect
of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to
the company all monies which, at the date of forfeiture, were presently payable by him to
the company in respect of the shares.
(ii) The liability of such person shall cease if and when the company shall have received
payment in full of all such monies in respect of the shares.

33. (i) A duly verified declaration in writing that the declarant is a director, the manager
or the secretary, of the company, and that a share in the company has been duly forfeited
on a date stated in the declaration, shall be conclusive evidence of the facts therein
stated as against all persons claiming to be entitled to the share.
(ii) The company may receive the consideration, if any, given for the share on any sale
or disposal thereof and may execute a transfer of the share in favour of the person to
whom the share is sold or disposed of.
(iii) The transferee shall thereupon be registered as the holder of the share.
(iv) The transferee shall not be bound to see to the application of the purchase money, if
any, nor shall his title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.

34. The provisions of these regulations as to forfeiture shall apply in the case of non-
payment of any sum which, by the terms of issue of a share, becomes payable at a fixed
time, whether on account of the nominal value of the share or by way of premium, as if
the same had been payable by virtue of a call duly made and notified.

Alteration of capital

Page 728
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35. The company may, from time to time, by ordinary resolution increase the share capital
by such sum, to be divided into shares of such amount, as may be specified in the
resolution.

36. Subject to the provisions of section 61, the company may, by ordinary resolution,—
(a) consolidate and divide all or any of its share capital into shares of larger amount than
its existing shares;
(b) convert all or any of its fully paid-up shares into stock, and reconvert that stock into
fully paid up shares of any denomination;
(c) sub-divide its existing shares or any of them into shares of smaller amount than is
fixed by the memorandum;
(d) cancel any shares which, at the date of the passing of the resolution, have not been
taken or agreed to be taken by any person.

37. Where shares are converted into stock,—

(a) the holders of stock may transfer the same or any part thereof in the same manner
as, and subject to the same regulations under which, the shares from which the stock
arose might before the conversion have been transferred, or as near thereto as
circumstances admit:
Provided that the Board may, from time to time, fix the minimum amount of stock
transferable, so, however, that such minimum shall not exceed the nominal amount of the
shares from which the stock arose.
(b) the holders of stock shall, according to the amount of stock held by them, have the
same rights, privileges and advantages as regards dividends, voting at meetings of the
company, and other matters, as if they held the shares from which the stock arose; but
no such privilege or advantage (except participation in the dividends and profits of the
company and in the assets on winding up) shall be conferred by an amount of stock which
would not, if existing in shares, have conferred that privilege or advantage.
(c) such of the regulations of the company as are applicable to paid-up shares shall apply
to stock and the words "share" and "shareholder" in those regulations shall include "stock"
and "stock-holder" respectively.

38. The company may, by special resolution, reduce in any manner and with, and subject
to, any incident authorised and consent required by law,—
(a) its share capital;
(b) any capital redemption reserve account; or
(c) any share premium account.

Capitalisation of profits

39. (i) The company in general meeting may, upon the recommendation of the Board,
resolve—
(a) that it is desirable to capitalise any part of the amount for the time being
standing to the credit of any of the company's reserve accounts, or to the credit of
the profit and loss account, or otherwise available for distribution; and

Page 729
 Schedule I – Table F AOA

(b) that such sum be accordingly set free for distribution in the manner specified in
clause (ii) amongst the members who would have been entitled thereto, if
distributed by way of dividend and in the same proportions.
(ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to the
provision contained in clause (iii), either in or towards—
(A) paying up any amounts for the time being unpaid on any shares held by such
members respectively;
(B) paying up in full, unissued shares of the company to be allotted and distributed,
credited as fully paid-up, to and amongst such members in the proportions
aforesaid;
(C) partly in the way specified in sub-clause (A) and partly in that specified in sub-
clause (B);

(D) A securities premium account and a capital redemption reserve account may, for the
purposes of this regulation, be applied in the paying up of unissued shares to be issued
to members of the company as fully paid bonus shares;

(E) The Board shall give effect to the resolution passed by the company in pursuance of
this regulation.

[No clause (iii) specified in the notified Act. It seems Clause (D) is intended to be clause
(iii) and Clause (E) is intended to be clause (iv).]

40. (i) Whenever such a resolution as aforesaid shall have been passed, the Board
shall—
(a) make all appropriations and applications of the undivided profits resolved to be
capitalised thereby, and all allotments and issues of fully paid shares if any; and
(b) generally do all acts and things required to give effect thereto.
(ii) The Board shall have power—
(a) to make such provisions, by the issue of fractional certificates or by payment in
cash or otherwise as it thinks fit, for the case of shares becoming distributable in
fractions; and
(b) to authorise any person to enter, on behalf of all the members entitled thereto,
into an agreement with the company providing for the allotment to them
respectively, credited as fully paid-up, of any further shares to which they may be
entitled upon such capitalisation, or as the case may require, for the payment by
the company on their behalf, by the application thereto of their respective
proportions of profits resolved to be capitalised, of the amount or any part of the
amounts remaining unpaid on their existing shares;
(iii) Any agreement made under such authority shall be effective and binding on such
members.

Buy-back of shares

Page 730
 Schedule I – Table F AOA

41. Notwithstanding anything contained in these articles but subject to the provisions of
sections 68 to 70 and any other applicable provision of the Act or any other law for the
time being in force, the company may purchase its own shares or other specified
securities.

General meetings

42. All general meetings other than annual general meeting shall be called extraordinary
general meeting.

43. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.
(ii) If at any time directors capable of acting who are sufficient in number to form a
quorum are not within India, any director or any two members of the company may call
an extraordinary general meeting in the same manner, as nearly as possible, as that in
which such a meeting may be called by the Board.

Proceedings at general meetings

44. (i) No business shall be transacted at any general meeting unless a quorum of
members is present at the time when the meeting proceeds to business.
(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as
provided in section 103.

45. The chairperson, if any, of the Board shall preside as chairperson at every general
meeting of the company.

46. If there is no such Chairperson, or if he is not present within fifteen minutes after the
time appointed for holding the meeting, or is unwilling to act as chairperson of the
meeting, the directors present shall elect one of their members to be Chairperson of the
meeting.

47. If at any meeting no director is willing to act as Chairperson or if no director is present

within fifteen minutes after the time appointed for holding the meeting, the members
present shall choose one of their members to be Chairperson of the meeting.

48. In case of a One Person Company—

(i) the resolution required to be passed at the general meetings of the company shall be
deemed to have been passed if the resolution is agreed upon by the sole member and
communicated to the company and entered in the minutes book maintained under section
118;
(ii) such minutes book shall be signed and dated by the member;
(iii) the resolution shall become effective from the date of signing such minutes by the
sole member.

Page 731
 Schedule I – Table F AOA

Adjournment of meeting

49. (i) The Chairperson may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn the meeting from time to time
and from place to place.
(ii) No business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place.
(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting
shall be given as in the case of an original meeting.
(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an adjourned
meeting.

Voting rights

50. Subject to any rights or restrictions for the time being attached to any class or classes
of shares,—
(a) on a show of hands, every member present in person shall have one vote; and
(b) on a poll, the voting rights of members shall be in proportion to his share in the paid-
up equity share capital of the company.

51. A member may exercise his vote at a meeting by electronic means in accordance
with section 108 and shall vote only once.

52. (i) In the case of joint holders, the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other joint
holders.
(ii) For this purpose, seniority shall be determined by the order in which the names stand
in the register of members.

53. A member of unsound mind, or in respect of whom an order has been made by any
court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll,
by his committee or other legal guardian, and any such committee or guardian may, on
a poll, vote by proxy.

54. Any business other than that upon which a poll has been demanded may be
proceeded with, pending the taking of the poll.

55. No member shall be entitled to vote at any general meeting unless all calls or other
sums presently payable by him in respect of shares in the company have been paid.

Page 732
 Schedule I – Table F AOA

56. (i) No objection shall be raised to the qualification of any voter except at the meeting
or adjourned meeting at which the vote objected to is given or tendered, and every vote
not disallowed at such meeting shall be valid for all purposes.
(ii) Any such objection made in due time shall be referred to the chairperson of the
meeting, whose decision shall be final and conclusive.

Proxy

57. The instrument appointing a proxy and the power-of-attorney or other authority, if
any, under which it is signed or a notarised copy of that power or authority, shall be
deposited at the registered office of the company not less than 48 hours before the time
for holding the meeting or adjourned meeting at which the person named in the
instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the
time appointed for the taking of the poll; and in default the instrument of proxy shall not
be treated as valid.

58. An instrument appointing a proxy shall be in the form as prescribed in the rules made
under section 105.

59. A vote given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the shares
in respect of which the proxy is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer shall
have been received by the company at its office before the commencement of the
meeting or adjourned meeting at which the proxy is used.

Board of Directors
60. The number of the directors and the names of the first directors shall be determined
in writing by the subscribers of the memorandum or a majority of them.

61. (i) The remuneration of the directors shall, in so far as it consists of a monthly
payment, be deemed to accrue from day-to-day.
(ii) In addition to the remuneration payable to them in pursuance of the Act, the directors
may be paid all travelling, hotel and other expenses properly incurred by them—
(a) in attending and returning from meetings of the Board of Directors or any committee
thereof or general meetings of the company; or
(b) in connection with the business of the company.

62. The Board may pay all expenses incurred in getting up and registering the company.

63. The company may exercise the powers conferred on it by section 88 with regard to
the keeping of a foreign register; and the Board may (subject to the provisions of that

Page 733
 Schedule I – Table F AOA

section) make and vary such regulations as it may think fit respecting the keeping of any
such register.

64. All cheques, promissory notes, drafts, hundis, bills of exchange and other negotiable
instruments, and all receipts for monies paid to the company, shall be signed, drawn,
accepted, endorsed, or otherwise executed, as the case may be, by such person and in
such manner as the Board shall from time to time by resolution determine.

65. Every director present at any meeting of the Board or of a committee thereof shall
sign his name in a book to be kept for that purpose.

66. (i) Subject to the provisions of section 149, the Board shall have power at any time,
and from time to time, to appoint a person as an additional director, provided the number
of the directors and additional directors together shall not at any time exceed the
maximum strength fixed for the Board by the articles.
(ii) Such person shall hold office only up to the date of the next annual general meeting
of the company but shall be eligible for appointment by the company as a director at that
meeting subject to the provisions of the Act.

Proceedings of the Board

67. (i) The Board of directors may meet for the conduct of business, adjourn and
otherwise regulate its meetings, as it thinks fit.
(ii) A director may, and the manager or secretary on the requisition of a director shall, at
any time, summon a meeting of the Board.

68. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting
of the Board shall be decided by a majority of votes.
(ii) In case of an equality of votes, the chairperson of the Board, if any, shall have a
second or casting vote.

69. The continuing directors may act notwithstanding any vacancy in the Board; but, if
and so long as their number is reduced below the quorum fixed by the Act for a meeting
of the Board, the continuing directors or director may act for the purpose of increasing
the number of directors to that fixed for the quorum, or of summoning a general meeting
of the company, but for no other purpose.

70. (i) The Board may elect a chairperson of its meetings and determine the period for
which he is to hold office.
(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present
within five minutes after the time appointed for holding the meeting, the directors present
may choose one of their number to be Chairperson of the meeting.

Page 734
 Schedule I – Table F AOA

71. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to
committees consisting of such member or members of its body as it thinks fit.
(ii) Any committee so formed shall, in the exercise of the powers so delegated, conform
to any regulations that may be imposed on it by the Board.

72. (i) A committee may elect a Chairperson of its meetings.

(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present
within five minutes after the time appointed for holding the meeting, the members present
may choose one of their members to be Chairperson of the meeting.

73. (i) A committee may meet and adjourn as it thinks fit.

(ii) Questions arising at any meeting of a committee shall be determined by a majority of
votes of the members present, and in case of an equality of votes, the Chairperson shall
have a second or casting vote.

74. All acts done in any meeting of the Board or of a committee thereof or by any person
acting as a director, shall, notwithstanding that it may be afterwards discovered that there
was some defect in the appointment of any one or more of such directors or of any person
acting as aforesaid, or that they or any of them were disqualified, be as valid as if every
such director or such person had been duly appointed and was qualified to be a director.

75. Save as otherwise expressly provided in the Act, a resolution in writing, signed by all
the members of the Board or of a committee thereof, for the time being entitled to receive
notice of a meeting of the Board or committee, shall be valid and effective as if it had
been passed at a meeting of the Board or committee, duly convened and held.

76. In case of a One Person Company—

(i) where the company is having only one director, all the businesses to be transacted at
the meeting of the Board shall be entered into minutes book maintained under section
118;
(ii) such minutes book shall be signed and dated by the director;
(iii) the resolution shall become effective from the date of signing such minutes by the
director.

Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer

77. Subject to the provisions of the Act,—

(i) A chief executive officer, manager, company secretary or chief financial officer may be
appointed by the Board for such term, at such remuneration and upon such conditions as
it may think fit; and any chief executive officer, manager, company secretary or chief
financial officer so appointed may be removed by means of a resolution of the Board;

Page 735
 Schedule I – Table F AOA

(ii) A director may be appointed as chief executive officer, manager, company secretary
or chief financial officer.

78. A provision of the Act or these regulations requiring or authorising a thing to be done
by or to a director and chief executive officer, manager, company secretary or chief
financial officer shall not be satisfied by its being done by or to the same person acting
both as director and as, or in place of, chief executive officer, manager, company
secretary or chief financial officer.

The Seal

79. (i) The Board shall provide for the safe custody of the seal.
(ii) The seal of the company shall not be affixed to any instrument except by the authority
of a resolution of the Board or of a committee of the Board authorised by it in that behalf,
and except in the presence of at least two directors and of the secretary or such other
person as the Board may appoint for the purpose; and those two directors and the
secretary or other person aforesaid shall sign every instrument to which the seal of the
company is so affixed in their presence.
456
[Explanation.- : For the purposes of this sub-paragraph it is hereby clarified that on
and from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015),
i.e. with effect from the 29th May, 2015, company may not be required to have the seal
by virtue of registration under the Act and if a company does not have the seal, the
provisions of this subparagraph shall not be applicable.]

Dividends and Reserve

80. The company in general meeting may declare dividends, but no dividend shall
exceed the amount recommended by the Board.

81. Subject to the provisions of section 123, the Board may from time to time pay to the
members such interim dividends as appear to it to be justified by the profits of the
company.

82. (i) The Board may, before recommending any dividend, set aside out of the profits
of the company such sums as it thinks fit as a reserve or reserves which shall, at the
discretion of the Board, be applicable for any purpose to which the profits of the company
may be properly applied, including provision for meeting contingencies or for equalising
dividends; and pending such application, may, at the like discretion, either be employed
in the business of the company or be invested in such investments (other than shares
of the company) as the Board may, from time to time, thinks fit.

456
Inserted an explanation after item (ii) in sub-paragraph (79) of paragraph II of Table F, by
notification no. G.S.R. 362(E) dated 10th April 2018.

Page 736
 Schedule I – Table F AOA

(ii) The Board may also carry forward any profits which it may consider necessary not to
divide, without setting them aside as a reserve.

83. (i) Subject to the rights of persons, if any, entitled to shares with special rights as to
dividends, all dividends shall be declared and paid according to the amounts paid or
credited as paid on the shares in respect whereof the dividend is paid, but if and so long
as nothing is paid upon any of the shares in the company, dividends may be declared
and paid according to the amounts of the shares.
(ii) No amount paid or credited as paid on a share in advance of calls shall be treated
for the purposes of this regulation as paid on the share.
(iii) All dividends shall be apportioned and paid proportionately to the amounts paid or
credited as paid on the shares during any portion or portions of the period in respect of
which the dividend is paid; but if any share is issued on terms providing that it shall rank
for dividend as from a particular date such share shall rank for dividend accordingly.

84. The Board may deduct from any dividend payable to any member all sums of money,
if any, presently payable by him to the company on account of calls or otherwise in
relation to the shares of the company.

85. (i) Any dividend, interest or other monies payable in cash in respect of shares may
be paid by cheque or warrant sent through the post directed to the registered address
of the holder or, in the case of joint holders, to the registered address of that one of the
joint holders who is first named on the register of members, or to such person and to
such address as the holder or joint holders may in writing direct.
(ii) Every such cheque or warrant shall be made payable to the order of the person to
whom it is sent.

86. Any one of two or more joint holders of a share may give effective receipts for any
dividends, bonuses or other monies payable in respect of such share.

87. Notice of any dividend that may have been declared shall be given to the persons
entitled to share therein in the manner mentioned in the Act.

88. No dividend shall bear interest against the company.

Accounts

89. (i) The Board shall from time to time determine whether and to what extent and at
what times and places and under what conditions or regulations, the accounts and books
of the company, or any of them, shall be open to the inspection of members not being
directors.

Page 737
 Schedule I – Table F AOA

(ii) No member (not being a director) shall have any right of inspecting any account or
book or document of the company except as conferred by law or authorised by the Board
or by the company in general meeting.

Winding up

90. Subject to the provisions of Chapter XX of the Act and rules made thereunder—
(i) If the company shall be wound up, the liquidator may, with the sanction of a special
resolution of the company and any other sanction required by the Act, divide amongst the
members, in specie or kind, the whole or any part of the assets of the company, whether
they shall consist of property of the same kind or not.
(ii) For the purpose aforesaid, the liquidator may set such value as he deems fair upon
any property to be divided as aforesaid and may determine how such division shall be
carried out as between the members or different classes of members.
(iii) The liquidator may, with the like sanction, vest the whole or any part of such assets in
trustees upon such trusts for the benefit of the contributories if he considers necessary,
but so that no member shall be compelled to accept any shares or other securities
whereon there is any liability.

Indemnity

91. Every officer of the company shall be indemnified out of the assets of the company
against any liability incurred by him in defending any proceedings, whether civil or
criminal, in which judgment is given in his favour or in which he is acquitted or in which
relief is granted to him by the court or the Tribunal.

Note : The Articles shall be signed by each subscriber of the memorandum of association
who shall add his address, description and occupation, if any, in the presence of at least
one witness who shall attest the signature and shall likewise add his address, description
and occupation, if any, and such signatures shall be in form specified below:
Names, addresses, descriptions and Witnesses (along with names, addresses,
occupations of subscribers descriptions and occupations)
A.B. of......................Merchant Signed before me
Signature...................................
C.D. of......................Merchant Signed before me
Signature...................................
E.F. of.......................Merchant Signed before me
Signature...................................
G.H. of......................Merchant Signed before me
Signature...................................
I.J. of.........................Merchant Signed before me
Signature...................................

Page 738
 Schedule I – Table F AOA

K.L. of......................Merchant Signed before me

Signature...................................
M.N. of.....................Merchant Signed before me
Signature...................................
Dated the..................day of ..................20.........
Place: ........................................

Page 739
 Schedule I – Table G AOA of Guarantee Co. with capital

TABLE-G ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE

AND HAVING A SHARE CAPITAL

[Corresponding Table D of Schedule I to the Companies Act, 1956]

1. The number of members with which the company proposes to be registered is hundred,
but the Board of Directors may, from time to time, register an increase of members.

2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.

Page 740
 Schedule I – Table H AOA of Guarantee Co. without capital

TABLE-H ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE

AND NOT HAVING SHARE CAPITAL

[Corresponding Table C of Schedule I to the Companies Act, 1956]

Interpretation
I. (1) In these regulations—
(a) the Act means the Companies Act, 2013;
(b) the seal means the common seal of the company.

(2) Unless the context otherwise requires, words or expressions contained in these
regulations shall have the same meaning as in the Act or any statutory modification
thereof in force at the date at which these regulations become binding on the company.

Members

II. 1. The number of members with which the company proposes to be registered is
hundred, but the Board of directors may, from time to time, whenever the company or
the business of the company requires it, register an increase of members.

2. The subscribers to the memorandum and such other persons as the Board shall admit
to membership shall be members of the company.

General meetings

3. All general meetings other than annual general meeting shall be called extraordinary
general meeting.

4. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.
(ii) If at any time directors capable of acting who are sufficient in number to form a
quorum are not within India, any director or any two members of the company may call
an extraordinary general meeting in the same manner, as nearly as possible, as that in
which such a meeting may be called by the Board.

Proceedings at general meetings

5. (i) No business shall be transacted at any general meeting unless a quorum of

members is present at the time when the meeting proceeds to business.
(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as
provided in section 103.

Page 741
 Schedule I – Table H AOA of Guarantee Co. without capital

6. The Chairperson, if any, of the Board shall preside as Chairperson at every general
meeting of the company.

7. If there is no such chairperson, or if he is not present within fifteen minutes after the
time appointed for holding the meeting, or is unwilling to act as chairperson of the
meeting, the directors present shall elect one of their members to be Chairperson of the
meeting.

8. If at any meeting no director is willing to act as chairperson or if no director is present

within fifteen minutes after the time appointed for holding the meeting, the members
present shall choose one of their members to be Chairperson of the meeting.

Adjournment of meeting

9. (i) The chairperson may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn the meeting from time to time
and from place to place.
(ii) No business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place.
(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting
shall be given as in the case of an original meeting.
(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an adjourned
meeting.

Voting rights

10. Every member shall have one vote.

11. A member of unsound mind, or in respect of whom an order has been made by any
Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll,
by his committee or other legal guardian, and any such committee or guardian may, on
a poll, vote by proxy.

12. No member shall be entitled to vote at any general meeting unless all sums presently
payable by him to the company have been paid.

13. (i) No objection shall be raised to the qualification of any voter except at the meeting
or adjourned meeting at which the vote objected to is given or tendered, and every vote
not disallowed at such meeting shall be valid for all purposes.

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 Schedule I – Table H AOA of Guarantee Co. without capital

(ii) Any such objection made in due time shall be referred to the chairperson of the
meeting, whose decision shall be final and conclusive.

14. A vote given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the
shares in respect of which the proxy is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer shall
have been received by the company at its office before the commencement of the
meeting or adjourned meeting at which the proxy is used.

15. A member may exercise his vote at a meeting by electronic means in accordance
with section 108 and shall vote only once.

16. Any business other than that upon which a poll has been demanded may be
proceeded with, pending the taking of the poll.

Board of Directors

17. The number of the directors and the names of the first directors shall be determined
in writing by the subscribers of the memorandum or a majority of them.

18. (i) The remuneration of the directors shall, in so far as it consists of a monthly
payment, be deemed to accrue from day-to-day.
(ii) In addition to the remuneration payable to them in pursuance of the Act, the directors
may be paid all travelling, hotel and other expenses properly incurred by them—
(a) in attending and returning from meetings of the Board of directors or any committee
thereof or general meetings of the company; or
(b) in connection with the business of the company.

Proceedings of the Board

19. (i) The Board of directors may meet for the conduct of business, adjourn and
otherwise regulate its meetings, as it thinks fit.
(ii) A director may, and the manager or secretary on the requisition of a director shall, at
any time, summon a meeting of the Board.

20. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting
of the Board shall be decided by a majority of votes.
(ii) In case of an equality of votes, the chairperson of the Board, if any, shall have a
second or casting vote.

Page 743
 Schedule I – Table H AOA of Guarantee Co. without capital

21. The continuing directors may act notwithstanding any vacancy in the Board; but, if
and so long as their number is reduced below the quorum fixed by the Act for a meeting
of the Board, the continuing directors or director may act for the purpose of increasing
the number of directors to that fixed for the quorum, or of summoning a general meeting
of the company, but for no other purpose.

22. (i) The Board may elect a chairperson of its meetings and determine the period for
which he is to hold office.
(ii) If no such chairperson is elected, or if at any meeting the chairperson is not present
within five minutes after the time appointed for holding the meeting, the directors present
may choose one of their members to be Chairperson of the meeting.

23. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to
committees consisting of such member or members of its body as it thinks fit.
(ii) Any committee so formed shall, in the exercise of the powers so delegated, conform
to any regulations that may be imposed on it by the Board.

24. (i) A committee may elect a chairperson of its meetings.

(ii) If no such chairperson is elected, or if at any meeting the chairperson is not present
within five minutes after the time appointed for holding the meeting, the members
present may choose one of their members to be Chairperson of the meeting.

25. (i) A committee may meet and adjourn as it thinks proper.

(ii) Questions arising at any meeting of a committee shall be determined by a majority of
votes of the members present, and in case of an equality of votes, the chairman shall
have a second or casting vote.

26. All acts done by any meeting of the Board or of a committee thereof or by any person
acting as a director, shall, notwithstanding that it may be afterwards discovered that
there was some defect in the appointment of any one or more of such directors or of any
person acting as aforesaid, or that they or any of them were disqualified, be as valid as
if every such director or such person had been duly appointed and was qualified to be a
director.

27. Save as otherwise expressly provided in the Act, a resolution in writing, signed by
all the members of the Board or of a committee thereof, for the time being entitled to
receive notice of a meeting of the Board or committee, shall be as valid and effective as
if it had been passed at a meeting of the Board or committee, duly convened and held.

Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer

28. Subject to the provisions of the Act,—

Page 744
 Schedule I – Table H AOA of Guarantee Co. without capital

(i) A chief executive officer, manager, company secretary or chief financial officer may be
appointed by the Board for such term, at such remuneration and upon such conditions as
it thinks fit; and any chief executive officer, manager, company secretary or chief financial
officer so appointed may be removed by means of a resolution of the Board.
(ii) A director may be appointed as chief executive officer, manager, company secretary
or chief financial officer.

29. A provision of the Act or these regulations requiring or authorising a thing to be done
by or to a director and chief executive officer, manager, company secretary or chief
financial officer shall not be satisfied by its being done by or to the same person acting
both as director and as, or in place of, chief executive officer, manager, company
secretary or chief financial officer.

The Seal
30. (i) The Board shall provide for the safe custody of the seal.
(ii) The seal of the company shall not be affixed to any instrument except by the authority
of a resolution of the Board or of a committee of the Board authorised by it in that behalf,
and except in the presence of at least two directors and of the secretary or such other
person as the Board may appoint for the purpose; and those two directors and the
secretary or other person aforesaid shall sign every instrument to which the seal of the
company is so affixed in their presence.
457
[Explanation.- For the purposes of this sub-paragraph it is hereby clarified that on and
from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015), i.e.
with effect from the 29th May, 2015, company may not be required to have the seal by
virtue of registration under the Act and if a company does not have the seal, the
provisions of this subparagraph shall not be applicable.]
Note : The Articles shall be signed by each subscriber of the memorandum of association
who shall add his address, description and occupation, if any, in the presence of at least
one witness who shall attest the signature and shall likewise add his address, description
and occupation, if any, and such signatures shall be in form specified below:
Names, addresses, descriptions and Witnesses (along with names, addresses,
occupations of subscribers descriptions and occupations)
A.B. of......................Merchant Signed before me
Signature...................................
C.D. of......................Merchant Signed before me
Signature...................................
E.F. of......................Merchant Signed before me
Signature...................................
G.H. of......................Merchant Signed before me

457
Inserted an explanation after item (ii) but before Note, in sub-paragraph (30) of paragraph II of
Table H, by notification no. G.S.R. 362(E) dated 10th April 2018.

Page 745
 Schedule I – Table H AOA of Guarantee Co. without capital

Signature...................................
I.J. of......................Merchant Signed before me
Signature...................................
K.L. of......................Merchant Signed before me
Signature...................................
M.N. of......................Merchant Signed before me
Signature...................................
Dated the......................day of ..................20.........
Place: ........................................

Page 746
 Schedule I – Table I AOA of unlimited Co. with capital

TABLE-I ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND HAVING

A SHARE CAPITAL

[Corresponding Table E of Schedule I to the Companies Act, 1956. Under Act of 1956, there was no
separate memorandum for Unlimited Company having or not having share capital.]

1. The number of members with which the company proposes to be registered is hundred,
but the Board of Directors may, from time to time, register an increase of members.

2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.

Page 747
 Schedule I – Table J AOA of unlimited Co. without capital

TABLE-J ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT

HAVING SHARE CAPITAL

[Corresponding Table E of Schedule I to the Companies Act, 1956. Under Act of 1956, there was no
separate memorandum for Unlimited Company having or not having share capital.]

1. The number of members with which the company proposes to be registered is hundred,
but the Board of Directors may, from time to time, whenever the company or the business
of the company requires it, register an increase of members.

2. The subscribers to the memorandum and such other persons as the Board shall admit
to membership shall be members of the company.

3. All the articles of Table H in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.

Page 748
 Schedule II Useful lives to compute depreciation

SCHEDULE II 458Useful lives to compute

depreciation
Schedule II (See section 123)
USEFUL LIVES TO COMPUTE DEPRECIATION

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Schedule XIV of the Companies Act, 1956]
1
[Under Part A, sub-para (i) to (iii) substituted. Under Part C, in para 5, in item IV, in sub-item (i) clause (b)
substituted. After Part C, under ‘Notes’, para 5 omitted, vide notification G.S.R. 237 (E) dated March 31,
2014. See Annexure N7.]
2
[Under Part A, in paragraph 3, sub-paragraph (i) substituted vide notification G.S.R. 627 (E) dated 29
August, 2014. See Annexure N24. Prior to amendment it read as “The useful life of an asset shall not be
longer than the useful life specified in Part 'C' and the residual value of an asset shall not be more than five
per cent of the original cost of the asset: Provided that where a company uses a useful life or residual value
of the asset which is different from the above limits, justification for the difference shall be disclosed in its
financial statement.”]

PART ‘A’

1. Depreciation is the systematic allocation of the depreciable amount of an asset over

its useful life. The depreciable amount of an asset is the cost of an asset or other amount
substituted for cost, less its residual value. The useful life of an asset is the period over
which an asset is expected to be available for use by an entity, or the number of
production or similar units expected to be obtained from the asset by the entity.

2. For the purpose of this Schedule, the term depreciation includes amortisation.

3. Without prejudice to the foregoing provisions of paragraph 1,—

1 2
[ (i) The useful life of an asset shall not ordinarily be different from the useful
life specified in Part C and the residual value of an asset shall not be more
than five per cent. of the original cost of the asset:
Provided that where a company adopts a useful life different from what is
specified in Part C or uses a residual value different from the limit specified
above, the financial statements shall disclose such difference and provide
justification in this behalf duly supported by technical advice
(ii) For intangible assets, the provisions of the accounting standards
applicable for the time being in force shall apply, except in case of

458
The heading stated here is given by the author for ease of reference and is not part of the Statute

Page 749
 Schedule II Useful lives to compute depreciation

intangible assets (Toll Roads) created under 'Build, Operate and Transfer',
'Build, Own, Operate and Transfer' or any other form of public private
partnership route in case of road projects. Amortisation in such cases may
be done as follows:- -
(a) Mode of amortisation
Amortisation Amount
Amortisation Rate = X 100

Cost of Intangible Assets

(A)
Amortisation Amount

Cost of Intangible Assets (A) Actual Revenue for the year (B)
X Projected Revenue from Intangible
Asset
(till the end of the concession period)
(C)

(b) Meaning of particulars arc as follows :—

Cost of Intangible Assets (A) = Cost incurred by the company in
accordance with the accounting
standards.

Actual Revenue for the year (B) = Actual revenue (Toll Charges)
received during the accounting
year.

Projected Revenue from Total projected revenue from the

Intangible Asset (C) = Intangible Assets as provided to
the project lender at the time of
financial closure /agreement.

The amortisation amount or rate should ensure that the whole of the cost of
the intangible asset is amortised over the concession period.

Revenue shall be reviewed at the end of each financial year and projected
revenue shall be adjusted to reflect such changes, if any, in the estimates as
will lead to the actual collection at the end of the concession period.

(c) Example:--
Cost of creation of Intangible Assets Rs. 500 Crores
Total period of Agreement 20 Years
Time used for creation of Intangible Assets 2 Years
Intangible Assets to be amortised in 18 Years

Page 750
 Schedule II Useful lives to compute depreciation

Assuming that the Total revenue to be generated out of Intangible

Assets over the period would be Rs. 600 Crores, in the following
manner:—
Revenue Remarks
Year No. ( In Rs. Crores)
Year 1 5 Actual .
Year 2 7.5 Estimate *
Year 3 10 Estimate *
Year 4 12.5 Estimate *
Year 5 17.5 Estimate *
Year 6 20 Estimate *
Year 7 23 Estimate *
Year 8 27 Estimate *
Year 9 31 Estimate *
Year 10 34. Estimate *
Year I 1 38 Estimate *
Year 12 41 Estimate *
Year 13 46 Estimate *
Year 14 50 Estimate *
Year 15 53 Estimate *
Year 16 57 Estimate *
Year 17 60 Estimate*
Year 18 67.5 Estimate* *
Total 600

`*' will be actual at the end of financial year.

Based on this the charge for first year would be Rs. 4.16 Crore
(approximately) (i.e. Rs. 5/Rs. 600 x Rs. 500 Crores) which would be
charged to profit and loss and 0.83% (i.e. Rs. 4.16 Crore/ Rs. 500 Crore
x 100) is the amortisation rate for the first year.
Where a company arrives at the amortisation amount in respect of the said
Intangible Assets in accordance with any method as per the applicable
Accounting Standards, it shall disclose the same.]

PART ‘B’

4. The useful life or residual value of any specific asset, as notified for accounting
purposes by a Regulatory Authority constituted under an Act of Parliament or by the
Central Government shall be applied in calculating the depreciation to be provided for
such asset irrespective of the requirements of this Schedule.

PART ‘C’

5. Subject to Parts A and B above, the following are the useful lives of various tangible
assets:
Nature of assets Useful Life
I. Buildings [NESD]
Page 751
 Schedule II Useful lives to compute depreciation

Buildings (other than factory buildings) RCC

(a) 60 Years
Frame Structure
Buildings (other than factory buildings) other than
(b) 30 Years
RCC Frame Structure
(c) Factory buildings -do-
(d) Fences, wells, tube wells 5 Years
(e) Others (including temporary structure, etc.) 3 Years
II. Bridges, culverts, bunders, etc. [NESD] 30 Years
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads—RCC 10 Years
(ii) Carpeted Roads—other than RCC 5 Years
(b) Non-carpeted roads 3 Years
IV. Plant and Machinery
General rate applicable to plant and machinery
(i) not covered under special plant and
machinery
Plant and Machinery other than continuous
(a) process plant not covered under specific 15 Years
industries
Continuous process plant for which no special
[ (b) rate has been prescribed under (ii) below 25 Years]
[NESD]
(ii) Special Plant and Machinery
Plant and Machinery related to production and
(a)
exhibition of Motion Picture Films
1. Cinematograph films—Machinery used 13 Years
in the production and exhibition of
cinematograph films, recording and
reproducing equipments, developing
machines, printing machines, editing
machines, synchronizers and studio
lights except bulbs
2. Projecting equipment for exhibition of -do-
films
(b) Plant and Machinery used in glass
manufacturing
1 Plant and Machinery except direct fire 13 Years
glass melting furnaces — Recuperative
and regenerative glass melting furnaces
2 Plant and Machinery except direct fire 8 Years
glass melting furnaces — Moulds
[NESD]
3 Float Glass Melting Furnaces [NESD] 10 Years
(c) Plant and Machinery used in mines and 8 Years
quarries—Portable under ground machinery

Page 752
 Schedule II Useful lives to compute depreciation

and earth moving machinery used in open

cast mining [NESD]
(d) Plant and Machinery used in
Telecommunications [NESD]
1 Towers 18 Years
2 Telecom transceivers, switching centres, 13 Years
transmission and other network
equipment
3 Telecom—Ducts, Cables and optical 18 Years
fibre
4 Satellites -do-
(e) Plant and Machinery used in exploration,
production and refining oil and gas [NESD]
1 Refineries 25 Years
2 Oil and gas assets (including wells), -do-
processing plant and facilities
3 Petrochemical Plant -do-
4 Storage tanks and related equipment -do-
5 Pipelines 30 Years
6 Drilling Rig -do-
7 Field operations (above ground) 8 Years
Portable boilers, drilling tools, well-head
tanks, etc.
8 Loggers -do-
(f) Plant and Machinery used in generation,
transmission and distribution of power [NESD]
1 Thermal/Gas/Combined Cycle Power 40 Years
Generation Plant
2 Hydro Power Generation Plant -do-
3 Nuclear Power Generation Plant -do-
4 Transmission lines, cables and other -do-
network assets
5 Wind Power Generation Plant 22 Years
6 Electric Distribution Plant 35 Years
7 Gas Storage and Distribution Plant 30 Years
8 Water Distribution Plant including -do-
pipelines
(g) Plant and Machinery used in manufacture of
steel
1 Sinter Plant 20 Years
2 Blast Furnace -do-
3 Coke ovens -do-
4 Rolling mill in steel plant -do-
5 Basic oxygen Furnace Converter 25 Years
(h) Plant and Machinery used in manufacture of
non-ferrous metals

Page 753
 Schedule II Useful lives to compute depreciation

1 Metal pot line [NESD] 40 Years

2 Bauxite crushing and grinding section -do-
[NESD]
3 Digester section [NESD] -do-
4 Turbine [NESD] -do-
5 Equipments for Calcination [NESD] -do-
6 Copper Smelter [NESD] -do-
7 Roll Grinder 40 Years
8 Soaking Pit 30 Years
9 Annealing Furnace -do-
10 Rolling Mills -do-
11 Equipments for Scalping, Slitting, etc. -do-
[NESD]
12 Surface Miner, Ripper Dozer, etc., used 25 Years
in mines
13 Copper refining plant [NESD] -do-
(i) Plant and Machinery used in medical and
surgical operations [NESD]
1 Electrical Machinery, X-ray and 13 Years
electrotherapeutic apparatus and
accessories thereto, medical, diagnostic
equipments, namely, Cat-Scan,
Ultrasound Machines, ECG Monitors,
etc.
2 Other Equipments. 15 Years
(j) Plant and Machinery used in manufacture of
pharmaceuticals and chemicals [NESD]
1 Reactors 20 Years
2 Distillation Columns -do-
3 Drying equipments/Centrifuges and -do-
Decanters
4 Vessel/storage tanks -do-
(k) Plant and Machinery used in civil construction
1 Concreting, Crushing, Piling Equipments 12 Years
and Road Making Equipments
2 Heavy Lift Equipments—
Cranes with capacity of more than 100 20 Years
tons
Cranes with capacity of less than 100 15 Years
tons
3 Transmission line, Tunneling 10 Years
Equipments [NESD]
4 Earth-moving equipments 9 Years
5 Others including Material Handling 12 Years
/Pipeline/Welding Equipments [NESD]

Page 754
 Schedule II Useful lives to compute depreciation

(l) Plant and Machinery used in salt works 15 Years

[NESD]
V. Furniture and fittings [NESD]
(i) General furniture and fittings 10 Years
(ii) Furniture and fittings used in hotels, 8 Years
restaurants and boarding houses, schools,
colleges and other educational institutions,
libraries; welfare centres; meeting halls,
cinema houses; theatres and circuses; and
furniture and fittings let out on hire for use on
the occasion of marriages and similar
functions.
VI. Motor Vehicles [NESD]
1 Motor cycles, scooters and other mopeds 10 Years
2. Motor buses, motor lorries, motor cars and 6 Years
motor taxies used in a business of running
them on hire
3 Motor buses, motor lorries and motor cars 8 Years
other than those used in a business of running
them on hire
4 Motor tractors, harvesting combines and -do-
heavy vehicles
5 Electrically operated vehicles including battery 8 Years
powered or fuel cell powered vehicles
VII. Ships [NESD]
1 Ocean-going ships
(i) Bulk Carriers and liner vessels 25 Years
(ii) Crude tankers, product carriers and easy 20 Years
chemical carriers with or without
conventional tank coatings
(iii) Chemicals and Acid Carriers :
(a) With Stainless steel tanks 25 Years
(b) With other tanks 20 Years
(iv) Liquified gas carriers 30 Years
(v) Conventional large passenger vessels -do-
which are used for cruise purpose also
(vi) Coastal service ships of all categories -do-
(vii) Offshore supply and support vessels 20 Years
(viii) Catamarans and other high speed -do-
passenger for ships or boats
(ix) Drill ships 25 Years
(x) Hovercrafts 15 Years
(xi) Fishing vessels with wooden hull 10 Years
(xii) Dredgers, tugs, barges, survey launches 14 Years
and other similar ships used mainly for
dredging purposes

Page 755
 Schedule II Useful lives to compute depreciation

2 Vessels ordinarily operating on inland

waters—
(i) Speed boats 13 Years
(ii) Other vessels 28 Years
VIII. Aircrafts or Helicopters [NESD] 20 Years
IX. Railways sidings, locomotives, rolling stocks, 15 Years
tramways and railways used by concerns,
excluding railway concerns [NESD]
X. Ropeway structures [NESD] 15 Years
XI. Office equipment [NESD] 5 Years
XII. Computers and data processing units [NESD]
(i) Servers and networks 6 Years
(ii) End user devices, such as, desktops, laptops, 3 Years
etc.
XIII. Laboratory equipment [NESD]
(i) General laboratory equipment 10 Years
(ii) Laboratory equipments used in educational 5 Years
institutions
XIV. Electrical Installations and Equipment [NESD] 10 years
XV. Hydraulic works, pipelines and sluices [NESD] 15 Years

Notes.—

1. "Factory buildings" does not include offices, godowns, staff quarters.

2. Where, during any financial year, any addition has been made to any asset,
or where any asset has been sold, discarded, demolished or destroyed, the
depreciation on such assets shall be calculated on a pro rata basis from the
date of such addition or, as the case may be, up to the date on which such
asset has been sold, discarded, demolished or destroyed.
3 The following information shall also be disclosed in the accounts, namely:—
(i) depreciation methods used; and
(ii) the useful lives of the assets for computing depreciation, if they are different
from the life specified in the Schedule.
3
4 (a) Useful life specified in Part C of the Schedule is for whole of the asset and where cost of a
part of the asset is significant to total cost of the asset and useful life of that part is different
from the useful life of the remaining asset, useful life of that significant part shall be determined
separately.
(b) The requirement under sub-paragraph (a) shall be voluntary in respect of the
financial year commencing on or after the 1st April, 2014 and mandatory for financial
statements in respect of financial years commencing on or after the 1st April, 2015.
5. [omitted]
6 The useful lives of assets working on shift basis have been specified in the
Schedule based on their single shift working. Except for assets in respect of
which no extra shift depreciation is permitted (indicated by NESD in Part C
above), if an asset is used for any time during the year for double shift, the

Page 756
 Schedule II Useful lives to compute depreciation

depreciation will increase by 50% for that period and in case of the triple shift
the depreciation shall be calculated on the basis of 100% for that period.
7 From the date this Schedule comes into effect, the carrying amount of the
asset as on that date—
(a) shall be depreciated over the remaining useful life of the asset as per this
Schedule;
(b) after retaining the residual value, 4[may] be recognised in the opening balance
of retained earnings where the remaining useful life of an asset is nil.
8. "Continuous process plant" means a plant which is required and designed to
operate for twenty-four hours a day.
3
Paragraph 4, under heading ‘Notes’, substituted vide notification G.S.R. 627 (E) dated 29 August, 2014. See
Annexure N24. Prior to substitution it read as “Useful life specified in Part C of the Schedule is for whole of
the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part
is different from the useful life of the remaining asset, useful life of that significant part shall be determined
separately.”
4
Word ‘shall’ got substituted with the word ‘may’ in paragraph 7, under heading ‘Notes’, substituted vide notification
G.S.R. 627 (E) dated 29 August, 2014. See Annexure N24.

Page 757
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

SCHEDULE III 459Instructions to prepare

Balance Sheet and Profit and Loss
account
Schedule III (See section 129)

[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Schedule VI of the Companies Act, 1956]

460
[Division I

Financial Statements for a company whose Financial Statements are required to

comply with the Companies (Accounting Standards) Rules, 2006.
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND
STATEMENT OF PROFIT AND LOSS OF A COMPANY]

GENERAL INSTRUCTIONS

1. Where compliance with the requirements of the Act including Accounting Standards as
applicable to the companies require any change in treatment or disclosure including
addition, amendment, substitution or deletion in the head or sub-head or any changes,
inter se, in the financial statements or statements forming part thereof, the same shall be
made and the requirements of this Schedule shall stand modified accordingly.

2. The disclosure requirements specified in this Schedule are in addition to and not in
substitution of the disclosure requirements specified in the Accounting Standards
prescribed under the Companies Act, 2013. Additional disclosures specified in the
Accounting Standards shall be made in the notes to accounts or by way of additional
statement unless required to be disclosed on the face of the Financial Statements.
Similarly, all other disclosures as required by the Companies Act shall be made in the
notes to accounts in addition to the requirements set out in this Schedule.

3. (i) Notes to accounts shall contain information in addition to that presented in the
Financial Statements and shall provide where required (a) narrative descriptions or
disaggregations of items recognised in those statements; and (b) information about items
that do not qualify for recognition in those statements.

459
The heading stated here is given by the author for ease of reference and is not part of the Statute

460
Substituted for the heading “General instructions for preparation of Balance Sheet and Statements of
Profit and Loss of a Company” by Notification numberG.S.R.404(E) dated 06th April, 2016.

Page 758
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall be
cross-referenced to any related information in the notes to accounts. In preparing the
Financial Statements including the notes to accounts, a balance shall be maintained
between providing excessive detail that may not assist users of financial statements and
not providing important information as a result of too much aggregation.

4. (i) Depending upon the turnover of the company, the figures appearing in the Financial
Statements may be rounded off as given below:

Turnover Rounding off

(a) less than one hundred crore To the nearest hundreds, thousands, lakhs or
rupees millions, or decimals thereof.
(b) one hundred crore rupees or To the nearest lakhs, millions or crores, or decimals
more thereof.
(ii) Once a unit of measurement is used, it 461[should] be used uniformly in the Financial
Statements.

5. Except in the case of the first Financial Statements laid before the Company (after its
incorporation) the corresponding amounts (comparatives) for the immediately preceding
reporting period for all items shown in the Financial Statements including notes shall also
be given.

6. For the purpose of this Schedule, the terms used herein shall be as per the applicable
Accounting Standards.

Note:—This part of Schedule sets out the minimum requirements for disclosure on the
face of the Balance Sheet, and the Statement of Profit and Loss (hereinafter referred to
as “Financial Statements” for the purpose of this Schedule) and Notes. Line items, sub-
line items and sub-totals shall be presented as an addition or substitution on the face of
the Financial Statements when such presentation is relevant to an understanding of the
company’s financial position or performance or to cater to industry/sector-specific
disclosure requirements or when required for compliance with the amendments to the
Companies Act or under the Accounting Standards.

PART I — BALANCE SHEET

Name of the Company.......................................

Balance Sheet as at ............................................
(Rupees in…………)

461
Substituted for the word ‘shall’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Particulars Note Figures as Figures as

No. at the end of at the end of
current the previous
reporting reporting
period period
1 2 3 4
I. EQUITY AND LIABILITIES
(1) Shareholders' funds
(a) Share capital
(b) Reserves and surplus
(c) Money received against share
warrants
(2) Share application money pending
allotment
(3) Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current liabilities
(a) Short-term borrowings
(b) 462[Trade payables:-
(A) total outstanding dues of micro
enterprises and small enterprises;
and
(B) total outstanding dues of
creditors other than micro enterprises
and small enterprises.]
(c) Other current liabilities
(d) Short-term provisions
TOTAL
II. ASSETS
Non-current assets
463
(1) (a) [Property, Plant and Equipment]
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-
progress
(iv) Intangible assets under
development
(b) Non-current investments

462
Inserted by Notification number G.S.R. 679(E) dated 4th September, 2015.

463
Substituted for the words ‘Fixed assets’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Particulars Note Figures as Figures as

No. at the end of at the end of
current the previous
reporting reporting
period period
(c) Deferred tax assets (net)
(d) Long-term loans and advances
(e) Other non-current assets
(2) Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short-term loans and advances
(f) Other current assets
TOTAL
See accompanying notes to the Financial Statements.

Notes: GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET

1. An asset shall be classified as current when it satisfies any of the following criteria:—
(a) it is expected to be realised in, or is intended for sale or consumption in, the
company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within twelve months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting date. All other
assets shall be classified as non-current.

2. An operating cycle is the time between the acquisition of assets for processing and
their realisation in cash or cash equivalents. Where the normal operating cycle cannot be
identified, it is assumed to have a duration of twelve months.

3. A liability shall be classified as current when it satisfies any of the following criteria:—
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date; or
(d) the company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date. Terms of a liability that
could, at the option of the counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
All other liabilities shall be classified as non-current.

4. A receivable shall be classified as a “trade receivable” if it is in respect of the amount

due on account of goods sold or services rendered in the normal course of business.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

5. A payable shall be classified as a “trade payable” if it is in respect of the amount due

on account of goods purchased or services received in the normal course of business.

6. A company shall disclose the following in the notes to accounts.

A. Share Capital
For each class of share capital (different classes of preference shares to be treated
separately):
(a) the number and amount of shares authorised;
(b) the number of shares issued, subscribed and fully paid, and subscribed but not
fully paid;
(c) par value per share;
(d) a reconciliation of the number of shares outstanding at the beginning and at the
end of the reporting period;
(e) the rights, preferences and restrictions attaching to each class of shares
including restrictions on the distribution of dividends and the repayment of capital;
(f) shares in respect of each class in the company held by its holding company or
its ultimate holding company including shares held by or by subsidiaries or
associates of the holding company or the ultimate holding company in aggregate;
(g) shares in the company held by each shareholder holding more than 5 per cent.
shares specifying the number of shares held;
(h) shares reserved for issue under options and contracts/commitments for the
sale of shares/disinvestment, including the terms and amounts;
(i) for the period of five years immediately preceding the date as at which the
Balance Sheet is prepared:
(A) Aggregate number and class of shares allotted as fully paid-up pursuant
to contract(s) without payment being received in cash.
(B) Aggregate number and class of shares allotted as fully paid-up by way
of bonus shares.
(C) Aggregate number and class of shares bought back.
(j) terms of any securities convertible into equity/preference shares issued along
with the earliest date of conversion in descending order starting from the farthest
such date;
(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);
(l) forfeited shares (amount originally paid-up).

B. Reserves and Surplus

(i) Reserves and Surplus shall be classified as:
(a) Capital Reserves;
(b) Capital Redemption Reserve;
(c) Securities Premium 464[omitted];
(d) Debenture Redemption Reserve;

464
Omitted the word ‘Reserve’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(e) Revaluation Reserve;

(f) Share Options Outstanding Account;
(g) Other Reserves–(specify the nature and purpose of each reserve and the
amount in respect thereof);
(h) Surplus i.e., balance in Statement of Profit and Loss disclosing allocations and
appropriations such as dividend, bonus shares and transfer to/ from reserves, etc.;
(Additions and deductions since last balance sheet to be shown under each of the
specified heads);
(ii) A reserve specifically represented by earmarked investments shall be termed as a
“fund”.
(iii) Debit balance of statement of profit and loss shall be shown as a negative figure under
the head “Surplus”. Similarly, the balance of “Reserves and Surplus”, after adjusting
negative balance of surplus, if any, shall be shown under the head “Reserves and
Surplus” even if the resulting figure is in the negative.

C. Long-Term Borrowings
(i) Long-term borrowings shall be classified as:
(a) Bonds/debentures;
(b) Term loans:
(A) from banks.
(B) from other parties.
(c) Deferred payment liabilities;
(d) Deposits;
(e) Loans and advances from related parties;
(f) Long term maturities of finance lease obligations;
(g) Other loans and advances (specify nature).
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, the aggregate
amount of such loans under each head shall be disclosed.
(iv) Bonds/debentures (along with the rate of interest and particulars of redemption
or conversion, as the case may be) shall be stated in descending order of maturity
or conversion, starting from farthest redemption or conversion date, as the case
may be. Where bonds/debentures are redeemable by instalments, the date of
maturity for this purpose must be reckoned as the date on which the first instalment
becomes due.
(v) Particulars of any redeemed bonds/debentures which the company has power
to reissue shall be disclosed.
(vi) Terms of repayment of term loans and other loans shall be stated.
(vii) Period and amount of continuing default as on the balance sheet date in
repayment of loans and interest, shall be specified separately in each case.

D. Other Long-term Liabilities

Other Long-term Liabilities shall be classified as:
(a) Trade payables;
(b) Others.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

E. Long-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits;
(b) Others (specify nature).

F. Short-term borrowings
(i) Short-term borrowings shall be classified as:
(a) Loans repayable on demand;
(A) from banks.
(B) from other parties.
(b) Loans and advances from related parties;
(c) Deposits;
(d) Other loans and advances (specify nature).
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, the aggregate
amount of such loans under each head shall be disclosed.
(iv) Period and amount of default as on the balance sheet date in repayment of
loans and interest, shall be specified separately in each case.
465
[FA. Trade Payables
The following details relating to Micro, Small and Medium Enterprises shall be disclosed
in the notes:-
(a) the principal amount and the interest due thereon (to be shown separately) remaining
unpaid to any supplier at the end of each accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and
Medium Enterprises Development Act, 2006, along with the amount of the payment made
to the supplier beyond the appointed day during each accounting year;
(c) the amount of interest due and payable for the period of delay in making payment
(which have been paid but beyond the appointed day during the year) but without adding
the interest specified under the Micro, Small and Medium Enterprises Development Act,
2006;
(d) the amount of interest accrued and remaining unpaid at the end of each accounting
year; and
(e) the amount of further interest remaining due and payable even in the succeeding
years, until such date when the interest dues above are actually paid to the small
enterprise, for the purpose of disallowance of a deductible expenditure under section 23
of the Micro, Small and Medium Enterprises Development Act, 2006.

Explanation, -The terms 'appointed day', 'buyer', 'enterprise', 'micro enterprise', 'small
enterprise' and 'supplier', shall have the same meaning assigned to those under clauses

465
Inserted by Notification number G.S.R. 679(E) dated 4th September, 2015.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium
Enterprises Development Act, 2006.]

G. Other current liabilities

The amounts shall be classified as:
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued but not due on borrowings;
(d) Interest accrued and due on borrowings;
(e) Income received in advance;
(f) Unpaid dividends;
(g) Application money received for allotment of securities and due for refund and
interest accrued thereon. Share application money includes advances towards
allotment of share capital. The terms and conditions including the number of
shares proposed to be issued, the amount of premium, if any, and the period before
which shares shall be allotted shall be disclosed. It shall also be disclosed whether
the company has sufficient authorised capital to cover the share capital amount
resulting from allotment of shares out of such share application money. Further,
the period for which the share application money has been pending beyond the
period for allotment as mentioned in the document inviting application for shares
along with the reason for such share application money being pending shall be
disclosed. Share application money not exceeding the issued capital and to the
extent not refundable shall be shown under the head Equity and share application
money to the extent refundable, i.e., the amount in excess of subscription or in
case the requirements of minimum subscription are not met, shall be separately
shown under “Other current liabilities”;
(h) Unpaid matured deposits and interest accrued thereon;
(i) Unpaid matured debentures and interest accrued thereon;
(j) Other payables (specify nature).

H. Short-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits.
(b) Others (specify nature).

I. Tangible assets
(i) Classification shall be given as:
(a) Land;
(b) Buildings;
(c) Plant and Equipment;
(d) Furniture and Fixtures;
(e) Vehicles;
(f) Office equipment;
(g) Others (specify nature).
(ii) Assets under lease shall be separately specified under each class of asset.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(iii) A reconciliation of the gross and net carrying amounts of each class of assets
at the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
depreciation and impairment losses/reversals shall be disclosed separately.
(iv) Where sums have been written-off on a reduction of capital or revaluation of
assets or where sums have been added on revaluation of assets, every balance
sheet subsequent to date of such write-off, or addition shall show the reduced or
increased figures as applicable and shall by way of a note also show the amount
of the reduction or increase as applicable together with the date thereof for the first
five years subsequent to the date of such reduction or increase.

J. Intangible assets
(i) Classification shall be given as:
(a) Goodwill;
(b) Brands /trademarks;
(c) Computer software;
(d) Mastheads and publishing titles;
(e) Mining rights;
(f) Copyrights, and patents and other intellectual property rights, services
and operating rights;
(g) Recipes, formulae, models, designs and prototypes;
(h) Licences and franchise;
(i) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of assets
at the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
amortization and impairment losses/reversals shall be disclosed separately.
(iii) Where sums have been written-off on a reduction of capital or revaluation of
assets or where sums have been added on revaluation of assets, every balance
sheet subsequent to date of such write-off, or addition shall show the reduced or
increased figures as applicable and shall by way of a note also show the amount
of the reduction or increase as applicable together with the date thereof for the first
five years subsequent to the date of such reduction or increase.

K. Non-current investments
(i) Non-current investments shall be classified as trade investments and other
investments and further classified as:
(a) Investment property;
(b) Investments in Equity Instruments;
(c) Investments in preference shares;
(d) Investments in Government or trust securities;
(e) Investments in debentures or bonds;
(f) Investments in Mutual Funds;
(g) Investments in partnership firms;
(h) Other non-current investments (specify nature).

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Under each classification, details shall be given of names of the bodies corporate
indicating separately whether such bodies are (i) subsidiaries, (ii) associates, (iii)
joint ventures, or (iv) controlled special purpose entities in whom investments have
been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly-paid). In regard
to investments in the capital of partnership firms, the names of the firms (with the
names of all their partners, total capital and the shares of each partner) shall be
given.
(ii) Investments carried at other than at cost should be separately stated specifying
the basis for valuation thereof;
(iii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value thereof;
(b) Aggregate amount of unquoted investments;
(c) Aggregate provision for diminution in value of investments.

L. Long-term loans and advances

(i) Long-term loans and advances shall be classified as:
(a) Capital Advances;
(b) Security Deposits;
(c) Loans and advances to related parties (giving details thereof);
(d) Other loans and advances (specify nature).
(ii) The above shall also be separately sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed under
the relevant heads separately.
(iv) Loans and advances due by directors or other officers of the company or any
of them either severally or jointly with any other persons or amounts due by firms
or private companies respectively in which any director is a partner or a director or
a member should be separately stated.

M. Other non-current assets

Other non-current assets shall be classified as:
(i) Long-term Trade Receivables (including trade receivables on deferred credit
terms);
(ii) Others (specify nature);
(iii) Long term Trade Receivables, shall be sub-classified as:
(a) (A) Secured, considered good;
(B) Unsecured, considered good;
(C) Doubtful.
(b) Allowance for bad and doubtful debts shall be disclosed under the
relevant heads separately.
(c) Debts due by directors or other officers of the company or any of them
either severally or jointly with any other person or debts due by firms or

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private companies respectively in which any director is a partner or a

director or a member should be separately stated.

N. Current Investments
(i) Current investments shall be classified as:
(a) Investments in Equity Instruments;
(b) Investment in Preference Shares;
(c) Investments in Government or trust securities;
(d) Investments in debentures or bonds;
(e) Investments in Mutual Funds;
(f) Investments in partnership firms;
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the bodies corporate
[indicating separately whether such bodies are: (i) subsidiaries, (ii) associates, (iii)
joint ventures, or (iv) controlled special purpose entities] in whom investments have
been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly paid). In regard
to investments in the capital of partnership firms, the names of the firms (with the
names of all their partners, total capital and the shares of each partner) shall be
given.
(ii) The following shall also be disclosed:
(a) The basis of valuation of individual investments;
(b) Aggregate amount of quoted investments and market value thereof;
(c) Aggregate amount of unquoted investments;
(d) Aggregate provision made for diminution in value of investments.

O. Inventories
(i) Inventories shall be classified as:
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools;
(g) Others (specify nature).
(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.
(iii) Mode of valuation shall be stated.

P. Trade Receivables
(i) Aggregate amount of Trade Receivables outstanding for a period exceeding six
months from the date they are due for payment should be separately stated.
(ii) Trade receivables shall be sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.

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(iii) Allowance for bad and doubtful debts shall be disclosed under the relevant
heads separately.
(iv) Debts due by directors or other officers of the company or any of them either
severally or jointly with any other person or debts due by firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated.

Q. Cash and cash equivalents

(i) Cash and cash equivalents shall be classified as:
(a) Balances with banks;
(b) Cheques, drafts on hand;
(c) Cash on hand;
(d) Others (specify nature).
(ii) Earmarked balances with banks (for example, for unpaid dividend) shall be
separately stated.
(iii) Balances with banks to the extent held as margin money or security against
the borrowings, guarantees, other commitments shall be disclosed separately.
(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated.
(v) Bank deposits with more than twelve months maturity shall be disclosed
separately.

R. Short-term loans and advances

(i) Short-term loans and advances shall be classified as:
(a) Loans and advances to related parties (giving details thereof);
(b) Others (specify nature).
(ii) The above shall also be sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed under
the relevant heads separately.
(iv) Loans and advances due by directors or other officers of the company or any
of them either severally or jointly with any other person or amounts due by firms or
private companies respectively in which any director is a partner or a director or a
member shall be separately stated.

S. Other current assets (specify nature)

This is an all-inclusive heading, which incorporates current assets that do not fit into any
other asset categories.

T. Contingent liabilities and commitments (to the extent not provided for)
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees;
(c) Other money for which the company is contingently liable.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(ii) Commitments shall be classified as:

(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for;
(b) Uncalled liability on shares and other investments partly paid;
(c) Other commitments (specify nature).

U. The amount of dividends proposed to be distributed to equity and preference

shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on preference shares shall also be
disclosed separately.
V. Where in respect of an issue of securities made for a specific purpose, the whole or
part of the amount has not been used for the specific purpose at the balance sheet date,
there shall be indicated by way of note how such unutilised amounts have been used or
invested.

W. If, in the opinion of the Board, any of the assets other than 466[Property, Plant and
Equipment] and non-current investments do not have a value on realisation in the ordinary
course of business at least equal to the amount at which they are stated, the fact that the
Board is of that opinion, shall be stated.
467
[X. Every company shall disclose the details of Specified Bank Notes (SBN) held and
transacted during the period from 8th November, 2016 to 30th December, 2016 as
provided in the Table below:-

SBNs Other denomination Total

notes
Closing cash in hand
as on 08.11.2016
(+) Permitted receipts
(-) Permitted
payments
(-) Amount deposited
in Banks
Closing cash in hand
as on 30.12.2016

Explanation : For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same
meaning provided in the notification of the Government of India, in the Ministry of Finance,
Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.]

466
Substituted for the words ‘Fixed assets’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

467
Inserted by notification number G.S.R. 308 (E) dated 30th March, 2017 with effect from 30th March, 2017.

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PART II — STATEMENT OF PROFIT AND LOSS

Name of the Company…………………….

Profit and loss statement for the year ended ………………………
(Rupees in…………)
Particulars Note No. Figures Figures
as at the as at the
end of end of
current the
reporting previous
period reporting
period
1 2 3 4
I. Revenue from operations xxx xxx
II. Other income xxx xxx
III. Total Revenue (I + II) xxx xxx
IV. Expenses :
Cost of materials consumed
Purchases of Stock-in-Trade
Changes in inventories of finished xxx xxx
goods
Work-in-progress xxx xxx
and Stock-in-Trade xxx xxx
Employee benefits expense xxx xxx
Finance costs
Depreciation and amortisation
expense
Other expenses
Total expenses xxx xxx
V. Profit before exceptional and xxx xxx
extraordinary items and tax (III -
IV)
VI. Exceptional items xxx xxx
VII. Profit before extraordinary items xxx xxx
and tax (V - VI)
VIII. Extraordinary items xxx xxx
IX. Profit before tax (VII - VIII) xxx xxx
X. Tax expense :
(1) Current tax xxx xxx
(2) Deferred tax xxx xxx
XI. Profit (Loss) for the period from xxx xxx
continuing operations (VII-VIII)
XII. Profit/(loss) from discontinuing xxx xxx
operations

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Particulars Note No. Figures Figures

as at the as at the
end of end of
current the
reporting previous
period reporting
period
XIII. Tax expense of discontinuing xxx xxx
operations
XIV. Profit/(loss) from Discontinuing xxx xxx
operations (after tax) (XII-XIII)
XV. Profit (Loss) for the period (XI + xxx xxx
XIV)
XVI. Earnings per equity share : xxx xxx
(1) Basic xxx xxx
(2) Diluted xxx xxx

See accompanying notes to the financial statements.

GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS

1. The provisions of this Part shall apply to the income and expenditure account referred
to in sub-clause (ii) of clause (40) of section 2 in like manner as they apply to a statement
of profit and loss.

2. (A) In respect of a company other than a finance company revenue from operations
shall disclose separately in the notes revenue from—
(a) Sale of products;
(b) Sale of services;
(c) Other operating revenues;
Less :
(d) Excise duty.

(B) In respect of a finance company, revenue from operations shall include revenue
from—
(a) Interest; and
(b) Other financial services.
Revenue under each of the above heads shall be disclosed separately by way of notes
to accounts to the extent applicable.

3. Finance Costs
Finance costs shall be classified as :
(a) Interest expense;
(b) Other borrowing costs;

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(c) Applicable net gain/loss on foreign currency transactions and

translation.

4. Other income
Other income shall be classified as :
(a) Interest Income (in case of a company other than a finance company);
(b) Dividend Income;
(c) Net gain/loss on sale of investments;
(d) Other non-operating income (net of expenses directly attributable to such
income).

5. Additional Information
A Company shall disclose by way of notes additional information regarding aggregate
expenditure and income on the following items:—
(i) (a) Employee Benefits Expense [showing separately (i) salaries and wages,
(ii) contribution to provident and other funds, (iii) expense on Employee
Stock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP),
(iv) staff welfare expenses].
(b) Depreciation and amortisation expense;
(c) Any item of income or expenditure which exceeds one per cent of the
revenue from operations or Rs.1,00,000, whichever is higher;
(d) Interest income;
(e) Interest expense;
(f) Dividend income;
(g) Net gain/loss on sale of investments;
(h) Adjustments to the carrying amount of investments;
(i) Net gain or loss on foreign currency transaction and translation (other
than considered as finance cost);
(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for
company law matters; (d) for management services; (e) for other services;
and (f) for reimbursement of expenses;
(k) In case of Companies covered under section 135, amount of expenditure
incurred on corporate social responsibility activities;
(l) Details of items of exceptional and extraordinary nature;
(m) Prior period items;
468
(ii) (a) In the case of manufacturing companies,—
(1) Raw materials under broad heads.
(2) Goods purchased under broad
heads.

468
Paras 5 (ii)(a)(1), 5 (ii)(a)(2) and 5 (ii)(e) shall not apply to government companies producing Defence
Equipment including the Space Research subject to fulfilment of certain conditions specified in notification
number G.S.R. 2437(E) dated 4th September, 2015.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(b) In the case of trading companies, purchases in respect of goods traded

in by the company under broad heads.
(c) In the case of companies rendering or supplying services, gross income
derived from services rendered or supplied under broad heads.
(d) In the case of a company, which falls under more than one of the
categories mentioned in (a), (b) and (c) above, it shall be sufficient
compliance with the requirements herein if purchases, sales and
consumption of raw material and the gross income from services rendered is
shown under broad heads.
(e) In the case of other companies, gross income derived under broad heads.
469
(iii) In the case of all concerns having works-in-progress, works-in-progress
under broad heads.

(iv) (a) The aggregate, if material, of any amounts set aside or proposed to be
set aside, to reserve, but not including provisions made to meet any specific
liability, contingency or commitment known to exist at the date as to which
the balance sheet is made up.
(b) The aggregate, if material, of any amounts withdrawn from such reserves.

(v) (a) The aggregate, if material, of the amounts set aside to provisions made
for meeting specific liabilities, contingencies or commitments.
(b) The aggregate, if material, of the amounts withdrawn from such
provisions, as no longer required.

(vi) Expenditure incurred on each of the following items, separately for each
item:—
(a) Consumption of stores and spare parts;
(b) Power and fuel;
(c) Rent;
(d) Repairs to buildings;
(e) Repairs to machinery;
(f) Insurance;
(g) Rates and taxes, excluding taxes on
income;
(h) Miscellaneous expenses,

(vii) (a) Dividends from subsidiary companies.

(b) Provisions for losses of subsidiary companies.

469
Para 5 (iii) shall not apply to government companies producing Defence Equipment including the Space
Research subject to fulfilment of certain conditions specified in notification number G.S.R. 2437(E) dated
4th September, 2015.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

470
(viii) The profit and loss account shall also contain by way of a note the following
information, namely:—
(a) Value of imports calculated on C.I.F. basis by the company during the
financial year in respect of—
I. Raw materials;
II. Components and spare
parts;
III. Capital goods;
(b) Expenditure in foreign currency during the financial year on account of
royalty, know-how, professional and consultation fees, interest, and other
matters;
(c) Total value if all imported raw materials, spare parts and components
consumed during the financial year and the total value of all indigenous raw
materials, spare parts and components similarly consumed and the
percentage of each to the total consumption;
(d) The amount remitted during the year in foreign currencies on account of
dividends with a specific mention of the total number of non-resident
shareholders, the total number of shares held by them on which the
dividends were due and the year to which the dividends related;
(e) Earnings in foreign exchange classified under the following heads,
namely:—
I. Export of goods calculated on F.O.B. basis;
II. Royalty, know-how, professional and consultation
fees;
III. Interest and dividend;
IV. Other income, indicating the nature thereof.

Note:— Broad heads shall be decided taking into account the concept of materiality and
presentation of true and fair view of financial statements.

GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED FINANCIAL

STATEMENTS

1. Where a company is required to prepare Consolidated Financial Statements, i.e.,

consolidated balance sheet and consolidated statement of profit and loss, the company
shall mutatis mutandis follow the requirements of this Schedule as applicable to a
company in the preparation of balance sheet and statement of profit and loss. In addition,
the consolidated financial statements shall disclose the information as per the
requirements specified in the applicable Accounting Standards including the following :

470
Paras 5 (viii) (a), 5 (viii) (b), 5 (viii) (c) and 5 (viii) (e) shall not apply to government companies producing
Defence Equipment including the Space Research subject to fulfilment of certain conditions specified in
notification number G.S.R. 2437(E) dated 4th September, 2015.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(i) Profit or loss attributable to "minority interest" and to owners of the parent in
the statement of profit and loss shall be presented as allocation for the period.
(ii) "Minority interests" in the balance sheet within equity shall be presented
separately from the equity of the owners of the parent.

2. In Consolidated Financial Statements, the following shall be disclosed by way of

additional information :
Name of the entity in the Net Assets, i.e., total assets Share in profit or loss
minus total liabilities
As % of Amount As % of Amount
consolidated net consolidated
assets profit or loss
1 2 3 4 5
Parent Subsidiaries Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
Minority Interests in all
subsidiaries Associates
(Investment as per the equity
method)

Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Joint Ventures
(as per proportionate
consolidation/investment as
per the equity method)
Indian
1.
2.
3.
.
.
Foreign
1.
2.
3.
.
.
TOTAL

3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be
covered under consolidated financial statements.

4. An entity shall disclose the list of subsidiaries or associates or joint ventures which
have not been consolidated in the consolidated financial statements along with the
reasons of not consolidating.

471
[Division II

Financial Statements for a company whose financial statements are drawn up in

compliance of the Companies (Indian Accounting Standards) Rules, 2015.

GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A

COMPANY REQUIRED TO COMPLY WITH Ind AS

1. Every company to which Indian Accounting Standards apply, shall prepare its
financial statements in accordance with this Schedule or with such modification as may
be required under certain circumstances.

2. Where compliance with the requirements of the Act including Indian Accounting
Standards (except the option of presenting assets and liabilities in the order of liquidity

471
Inserted by Notification number G.S.R. 404(E) dated 06th April, 2016.

Page 777
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

as provided by the relevant Ind AS) as applicable to the companies require any change
in treatment or disclosure including addition, amendment, substitution or deletion in the
head or sub-head or any changes inter se, in the financial statements or statements
forming part thereof, the same shall be made and the requirements under this
Schedule shall stand modified accordingly.

3. The disclosure requirements specified in this Schedule are in addition to and not in
substitution of the disclosure requirements specified in the Indian Accounting
Standards. Additional disclosures specified in the Indian Accounting Standards shall
be made in the Notes or by way of additional statement or statements unless required
to be disclosed on the face of the Financial Statements. Similarly, all other disclosures
as required by the Companies Act, 2013 shall be made in the Notes in addition to the
requirements set out in this Schedule.

4. (i) Notes shall contain information in addition to that presented in the Financial
Statements and shall provide where required-

(a) narrative descriptions or disaggregations of items recognised in those statements;

and

(b) information about items that do not qualify for recognition in those statements.

(ii) Each item on the face of the Balance Sheet, Statement of Changes in Equity and
Statement of Profit and Loss shall be cross-referenced to any related information in
the Notes. In preparing the Financial Statements including the Notes, a balance shall
be maintained between providing excessive detail that may not assist users of
Financial Statements and not providing important information as a result of too much
aggregation.

5. Depending upon the turnover of the company, the figures appearing in the Financial
Statements shall be rounded off as below:

Turnover Rounding off

(i) less than one To the nearest hundreds, thousands,
hundred crore rupees lakhs or millions, or decimals thereof.
(ii) one hundred crore To the nearest, lakhs, millions or crores,
rupees or more or decimals thereof.

Once a unit of measurement is used, it should be used uniformly in the Financial

Statements.

6. Financial Statements shall contain the corresponding amounts (comparatives) for

the immediately preceding reporting period for all items shown in the Financial
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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Statements including Notes except in the case of first Financial Statements laid before
the company after incorporation.

7. Financial Statements shall disclose all 'material' items, i.e., the items if they could,
individually or collectively, influence the economic decisions that users make on the
basis of the financial statements. Materiality depends on the size or nature of the item
or a combination of both, to be judged in the particular circumstances.

8. For the purpose of this Schedule, the terms used herein shall have the same
meanings assigned to them in Indian Accounting Standards.

9. Where any Act or Regulation requires specific disclosures to be made in the

standalone financial statements of a company, the said disclosures shall be made in
addition to those required under this Schedule.

Note: This Schedule sets out the minimum requirements for disclosure on the face of
the Financial Statements, i.e., Balance Sheet, Statement of Changes in Equity for the
period, the Statement of Profit and Loss for the period (The term 'Statement of Profit
and Loss' has the same meaning as 'Profit and Loss Account') and Notes. Cash flow
statement shall be prepared, where applicable, in accordance with the requirements of
the relevant Indian Accounting Standard.

Line items, sub-line items and sub-totals shall be presented as an addition or

substitution on the face of the Financial Statements when such presentation is relevant
to an understanding of the company's financial position or performance or to cater to
industry or sector-specific disclosure requirements or when required for compliance
with the amendments to the Companies Act, 2013 or under the Indian Accounting
Standards.

PART I - BALANCE SHEET

Name of the Company.........................

Balance Sheet as at ...........................

(Rupees in............)

Particulars Note Figures as at Figures as at

No. the end of the end of the
current previous
reporting reporting period
period

1 2 3 4

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(1) ASSETS

Non-current assets
(a) Property, Plant and
Equipment
(b) Capital work-in-
progress
(c) Investment Property
(d) Goodwill
(e) Other Intangible
assets
(f) Intangible assets
under development
(g) Biological Assets
other than bearer plants
(h) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Loans
(iv) Others (to be
specified)
(i) Deferred tax assets
(net)
(j) Other non-current
assets

(2) Current assets

(a) Inventories
(b) Financial Assets
(i) Investments
(ii) Trade receivables
(iii) Cash and cash
equivalents
(iv) Bank balances other
than (iii) above
(v) Loans
(vi) Others (to be
specified)

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(c) Current Tax Assets

(Net)
(d) Other current assets

Total Assets

EQUITY AND
LIABILITIES
Equity
(a) Equity Share capital
(b) Other Equity

LIABILITIES

(1) Non-current liabilities

(a) Financial Liabilities
(i) Borrowings
(ii) 472[Trade payables-
(A) total outstanding dues
of micro enterprises and
small enterprises; and
(B) total outstanding dues
of creditors other than
micro enterprises and
small enterprises.]
(iii) Other financial
liabilities (other than
those specified in item
(b), to be specified)
(b) Provisions
(c) Deferred tax liabilities
(Net)
(d) Other non-current
liabilities

(2) Current liabilities

(a) Financial Liabilities

472
Substituted for the words ‘Trade Payables’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(i) Borrowings
(ii) 473[Trade payables-
(A) total outstanding dues
of micro enterprises and
small enterprises; and
(B) total outstanding dues
of creditors other than
micro enterprises and
small enterprises.]

(iii) Other financial

liabilities (other than
those specified in item (c)
(b) Other current liabilities

(c) Provisions
(d) Current Tax Liabilities
(Net)

Total Equity and

Liabilities

See accompanying notes to the financial statements

STATEMENT OF CHANGES IN EQUITY

Name of the Company.........................

Statement of Changes in Equity for the period ended ........................

(Rupees in..................)

A. Equity Share Capital

Balance at the beginning Changes in equity share Balance at the end of

of the reporting period capital during the year the reporting period

473
Substituted for the words ‘Trade Payables’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

B. Other Equity

Share Equity Reserves and Surplus Debt Equity Effec Revalu Excha Other Mon To
applic compo 474 instrument Instrument tive ation nge items of ey tal
Capi [Secu Other Retai
ation nent of s through s through porti Surplus differe Other recei
tal rities Reser ned
money compo Other Other on of nces Comprehe ved
Res Premium] ves Earni
pendin und Comprehe Comprehe Cash on nsive agai
erve (speci ngs
g financi nsive nsive Flow transla Income nst
fy
allotm al Income Income Hedg ting (specify shar
natur
ent instrum es the nature) e
e)
ents financi warr
al ants
statem
ents of
a
foreign
operati
on

Balance at
the
beginning
of the
reporting
period

474
Substituted for the words ‘Securities Premium Reserve’ vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Changes
in
accounting
policy or
prior
period
errors

Restated
balance at
the
beginning
of the
reporting
period

Total
Comprehe
nsive
Income for
the year

Dividends

Transfer to
retained
earnings

Any other
change (to
be
specified)

Page 784
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Balance at
the end of
the
reporting
period

Page 785
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Note 475[ (i)]: Remeasurement of defined benefit plans and fair value changes relating
to own credit risk of financial liabilities designated at fair value through profit or loss
shall be recognised as a part of retained earnings with separate disclosure of such
items alongwith the relevant amounts in the Notes.
476
[(ii) A description of the purposes of each reserve within equity shall be disclosed in
the Notes.]

Notes:

GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET

1. An entity shall classify an asset as current when-

(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating
cycle;

(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realise the asset within twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting
period.

An entity shall classify all other assets as non-current.

2. The operating cycle of an entity is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents. When the entity's normal
operating cycle is not clearly identifiable, it is assumed to be twelve months.

3. An entity shall classify a liability as current when-

(a) it expects to settle the liability in its normal operating cycle;

(b) it holds the liability primarily for the purpose of trading;

(c) the liability is due to be settled within twelve months after the reporting period; or

475
Note is numbered as clause (i) thereof vide notification no. G.S.R. 1022(E) dated 11th October 2018.

476
Inserted clause (ii) vide notification no. G.S.R. 1022(E) dated 11th October 2018.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(d) it does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period. Terms of a liability that could, at the option of
the counterparty, result in its settlement by the issue of equity instruments do not affect
its classification.

An entity shall classify all other liabilities as non-current.

4. A receivable shall be classified as a 'trade receivable' if it is in respect of the amount

due on account of goods sold or services rendered in the normal course of business.

5. A payable shall be classified as a 'trade payable' if it is in respect of the amount due

on account of goods purchased or services received in the normal course of business.

6. A company shall disclose the following in the Notes:

A. Non-Current Assets

I. Property, Plant and Equipment:

(i) Classification shall be given as:

(a) Land

(b) Buildings

(c) Plant and Equipment

(d) Furniture and Fixtures

(e) Vehicles

(f) Office equipment

(g) Bearer Plants

(h) Others (specify nature)

(ii) Assets under lease shall be separately specified under each class of assets.

(iii) A reconciliation of the gross and net carrying amounts of each class of assets at
the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
depreciation and impairment losses or reversals shall be disclosed separately.

II. Investment Property:

A reconciliation of the gross and net carrying amounts of each class of property at the
beginning and end of the reporting period showing additions, disposals, acquisitions

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

through business combinations and other adjustments and the related depreciation
and impairment losses or reversals shall be disclosed separately.

III Goodwill:

A reconciliation of the gross and net carrying amount of goodwill at the beginning and
end of the reporting period showing additions, impairments, disposals and other
adjustments.

IV. Other Intangible assets:

(i) Classification shall be given as:

(a) Brands or trademarks

(b) Computer software

(c) Mastheads and publishing titles

(d) Mining rights

(e) Copyrights, patents, other intellectual property rights, services and operating
rights

(f) Recipes, formulae, models, designs and prototypes

(g) Licenses and franchises

(h) Others (specify nature)

(ii) A reconciliation of the gross and net carrying amounts of each class of assets at
the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
amortization and impairment losses or reversals shall be disclosed separately.

V. Biological Assets other than bearer plants:

A reconciliation of the carrying amounts of each class of assets at the beginning and
end of the reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments shall be disclosed separately.

VI. Investments:

(i) Investments shall be classified as:

(a) Investments in Equity Instruments;

(b) Investments in Preference Shares;

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(c) Investments in Government or trust securities;

(d) Investments in debentures or bonds;

(e) Investments in Mutual Funds;

(f) Investments in partnership firms; or

(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate that
are-

(i) subsidiaries,

(ii) associates,

(iii) joint ventures, or

(iv) structured entities,

in whom investments have been made and the nature and extent of the investment so
made in each such body corporate (showing separately investments which are partly-
paid). Investments in partnership firms alongwith names of the firms, their partners,
total capital and the shares of each partner shall be disclosed separately.

(ii) The following shall also be disclosed:

(a) Aggregate amount of quoted investments and market value thereof;

(b) Aggregate amount of unquoted investments; and

(c) Aggregate amount of impairment in value of investments.

VII. Trade Receivables:

477
[(i) Trade Receivables shall be sub-classified as:

a.Trade Receivables considered good - Secured;

b. Trade Receivables considered good - Unsecured;

c. Trade Receivables which have significant increase in Credit Risk; and

477
Substituted item (i) vide notification no. G.S.R. 1022(E) dated 11th October 2018. Prior to substitution, it
read as “(i) Trade receivables shall be sub-classified as: (a) Secured, considered good; (b) Unsecured
considered good; and (c) Doubtful.”.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

d. Trade Receivables - credit impaired.]

(ii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads
separately.

(iii) Debts due by directors or other officers of the company or any of them either
severally or jointly with any other person or debts due by firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated.

VIII. Loans:

(i) Loans shall be classified as-

(a) Security Deposits;

(b) Loans to related parties (giving details thereof); and

(c) Other loans (specify nature).

478
[(ii) Loans Receivables shall be sub-classified as:

a. Loans Receivables considered good - Secured;

b. Loans Receivables considered good - Unsecured;

c. Loans Receivables which have significant increase in Credit Risk; and

d. Loans Receivables - credit impaired,]

(iii) Allowance for bad and doubtful loans shall be disclosed under the relevant heads
separately.

(iv) Loans due by directors or other officers of the company or any of them either
severally or jointly with any other persons or amounts due by firms or private
companies respectively in which any director is a partner or a director or a member
should be separately stated.

IX. Bank deposits with more than 12 months maturity shall be disclosed under 'Other
financial assets';

X. Other non-current assets: Other non-current assets shall be classified as-

478
Substituted item (ii) vide notification no. G.S.R. 1022(E) dated 11th October 2018. Prior to substitution,
it read as “(ii) The above shall also be separately sub-classified as- (a) Secured, considered good; (b)
Unsecured, considered good; and (c) Doubtful.”

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(i) Capital Advances; and

(ii) Advances other than capital advances;

(1) Advances other than capital advances shall be classified as:

(a) Security Deposits;

(b) Advances to related parties (giving details thereof); and

(c) Other advances (specify nature).

(2) Advances to directors or other officers of the company or any of them either
severally or jointly with any other persons or advances to firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated. In case advances are of the nature of a financial asset as per
relevant Ind AS, these are to be disclosed under 'other financial assets' separately.

(iii) Others (specify nature).

B. Current Assets

I. Inventories:

(i) Inventories shall be classified as-

(a) Raw materials;

(b) Work-in-progress;

(c) Finished goods;

(d) Stock-in-trade (in respect of goods acquired for trading);

(e) Stores and spares;

(f) Loose tools; and

(g) Others (specify nature).

(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.

(iii) Mode of valuation shall be stated.

II. Investments:

(i) Investments shall be classified as-

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(a) Investments in Equity Instruments;

(b) Investment in Preference Shares;

(c) Investments in government or trust securities;

(d) Investments in debentures or bonds;

(e) Investments in Mutual Funds;

(f) Investments in partnership firms; and

(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate that
are-

(i) subsidiaries,

(ii) associates,

(iii) joint ventures, or

(iv) structured entities,

in whom investments have been made and the nature and extent of the investment so
made in each such body corporate (showing separately investments which are partly-
paid).

(ii) The following shall also be disclosed-

(a) Aggregate amount of quoted investments and market value thereof;

(b) Aggregate amount of unquoted investments;

(c) Aggregate amount of impairment in value of investments.

III. Trade Receivables:

479
[(i) Trade Receivables shall be sub-classified as:

479
Substituted item (i) vide notification no. G.S.R. 1022(E) dated 11th October 2018. Prior to substitution, it
read as “(i) Trade receivables shall be sub-classified as: (a) Secured, considered good; (b) Unsecured
considered good; and (c) Doubtful.”

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

a. Trade Receivables considered good - Secured;

b. Trade Receivables considered good - Unsecured;

c. Trade Receivables which have significant increase in Credit Risk; and

d. Trade Receivables - credit impaired.]

(ii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads
separately.

(iii) Debts due by directors or other officers of the company or any of them either
severally or jointly with any other person or debts due by firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated.

IV. Cash and cash equivalents: Cash and cash equivalents shall be classified as-

a. Balances with Banks (of the nature of cash and cash equivalents);

b. Cheques, drafts on hand;

c. Cash on hand; and

d. Others (specify nature).

V. Loans:

(i) Loans shall be classified as:

(a) Security deposits;

(b) Loans to related parties (giving details thereof); and

(c) Others (specify nature).

480
[(ii) Loans Receivables shall be sub-classified as:

a. Loans Receivables considered good - Secured;

b. Loans Receivables considered good - Unsecured;

c. Loans Receivables which have significant increase in Credit Risk; and

480
Substituted item (ii) vide notification no. G.S.R. 1022(E) dated 11th October 2018. Prior to substitution,
it read as “(ii) The above shall also be sub-classified as- (a) Secured, considered good; (b) Unsecured,
considered good; and (c) Doubtful.”

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

d. Loans Receivables - credit impaired.]

(iii) Allowance for bad and doubtful loans shall be disclosed under the relevant heads
separately.

(iv) Loans due by directors or other officers of the company or any of them either
severally or jointly with any other person or amounts due by firms or private companies
respectively in which any director is a partner or a director or a member shall be
separately stated.

VI. Other current assets (specify nature): This is an all-inclusive heading, which
incorporates current assets that do not fit into any other asset categories. Other current
assets shall be classified as-

(i) Advances other than capital advances

(1) Advances other than capital advances shall be classified as:

(a) Security Deposits;

(b) Advances to related parties (giving details thereof);

(c) Other advances (specify nature).

(2) Advances to directors or other officers of the company or any of them either
severally or jointly with any other persons or advances to firms or private companies
respectively in which any director is a partner or a director or a member should be
separately stated.

(ii) Others (specify nature)

C. Cash and Bank balances: The following disclosures with regard to cash and bank
balances shall be made:

(a) Earmarked balances with banks (for example, for unpaid dividend) shall be
separately stated.

(b) Balances with banks to the extent held as margin money or security against the
borrowings, guarantees, other commitments shall be disclosed separately.

(c) Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated.

D. Equity

I. Equity Share Capital: For each class of equity share capital:

(a) the number and amount of shares authorised;

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully
paid;

(c) par value per share;

(d) a reconciliation of the number of shares outstanding at the beginning and at the
end of the period;

(e) the rights, preferences and restrictions attaching to each class of shares including
restrictions on the distribution of dividends and the repayment of capital;

(f) shares in respect of each class in the company held by its holding company or its
ultimate holding company including shares held by subsidiaries or associates of the
holding company or the ultimate holding company in aggregate;

(g) shares in the company held by each shareholder holding more than five per cent.
shares specifying the number of shares held;

(h) shares reserved for issue under options and contracts or commitments for the sale
of shares or disinvestment, including the terms and amounts;

(i) for the period of five years immediately preceding the date at which the Balance
Sheet is prepared-

▪ aggregate number and class of shares allotted as fully paid up pursuant to contract
without payment being received in cash;

▪ aggregate number and class of shares allotted as fully paid up by way of bonus
shares; and

▪ aggregate number and class of shares bought back;

(j) terms of any securities convertible into equity shares issued along with the earliest
date of conversion in descending order starting from the farthest such date;

(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);

(l) forfeited shares (amount originally paid up).

II. Other Equity:

(i) 'Other Reserves' shall be classified in the notes as-

(a) Capital Redemption Reserve;

(b) Debenture Redemption Reserve;

(c) Share Options Outstanding Account; and

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(d) Others-(specify the nature and purpose of each reserve and the amount in respect
thereof);

(Additions and deductions since last balance sheet to be shown under each of the
specified heads)

(ii) Retained Earnings represents surplus i.e. balance of the relevant column in the
Statement of Changes in Equity;

(iii) A reserve specifically represented by earmarked investments shall disclose the fact
that it is so represented;

(iv) Debit balance of Statement of Profit and Loss shall be shown as a negative figure
under the head 'retained earnings'. Similarly, the balance of 'Other Equity', after
adjusting negative balance of retained earnings, if any, shall be shown under the head
'Other Equity' even if the resulting figure is in the negative; and

(v) Under the sub-head 'Other Equity', disclosure shall be made for the nature and
amount of each item.

E. Non-Current Liabilities

I. Borrowings:

(i) borrowings shall be classified as-

(a) Bonds or debentures

(b) Term loans

(I) from banks

(II) from other parties

(c) Deferred payment liabilities

(d) Deposits

(e) Loans from related parties

(f) Long term maturities of finance lease obligations

(g) Liability component of compound financial instruments

(h) Other loans (specify nature);

(ii) borrowings shall further be sub-classified as secured and unsecured. Nature of

security shall be specified separately in each case.

Page 796
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(iii) where loans have been guaranteed by directors or others, the aggregate amount
of such loans under each head shall be disclosed;

(iv) bonds or debentures (along with the rate of interest, and particulars of redemption
or conversion, as the case may be) shall be stated in descending order of maturity or
conversion, starting from farthest redemption or conversion date, as the case may be.
Where bonds/debentures are redeemable by installments, the date of maturity for this
purpose must be reckoned as the date on which the first installment becomes due;

(v) particulars of any redeemed bonds or debentures which the company has power to
reissue shall be disclosed;

(vi) terms of repayment of term loans and other loans shall be stated; and

(vii) period and amount of default as on the balance sheet date in repayment of
borrowings and interest shall be specified separately in each case.

III. Provisions: The amounts shall be classified as-

(a) Provision for employee benefits; and

(b) Others (specify nature).

IV. Other non-current liabilities;

(a) Advances; and

(b) Others (specify nature).

F. Current Liabilities

I. Borrowings:

(i) Borrowings shall be classified as-

(a) Loans repayable on demand

(I) from banks

(II) from other parties

(b) Loans from related parties

(c) Deposits

(d) Other loans (specify nature);

(ii) borrowings shall further be sub-classified as secured and unsecured. Nature of

security shall be specified separately in each case;

Page 797
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(iii) where loans have been guaranteed by directors or others, the aggregate amount
of such loans under each head shall be disclosed;

(iv) period and amount of default as on the balance sheet date in repayment of
borrowings and interest, shall be specified separately in each case.

II. Other Financial Liabilities: Other Financial liabilities shall be classified as-

(a) Current maturities of long-term debt;

(b) Current maturities of finance lease obligations;

(c) Interest accrued;

(d) Unpaid dividends;

(e) Application money received for allotment of securities to the extent refundable and
interest accrued thereon;

(f) Unpaid matured deposits and interest accrued thereon;

(g) Unpaid matured debentures and interest accrued thereon; and

(h) Others (specify nature).

'Long term debt' is a borrowing having a period of more than twelve months at the time
of origination

III. Other current liabilities: The amounts shall be classified as-

(a) revenue received in advance;

(b) other advances (specify nature); and

(c) others (specify nature);

IV. Provisions: The amounts shall be classified as-

(i) provision for employee benefits; and

(ii) others (specify nature).

481
[FA. Trade Payables

481
Inserted heading FA vide notification no. G.S.R. 1022(E) dated 11th October 2018.

Page 798
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

The following details relating to micro, small and medium enterprises shall be disclosed
in the notes:-

a. the principal amount and the interest due thereon (to be shown separately)
remaining unpaid to any supplier at the end of each accounting year;

b. the amount of interest paid by the buyer in terms of section 16 of the Micro, Small
and Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount
of the payment made to the supplier beyond the appointed day during each accounting
year;

c. the amount of interest due and payable for the period of delay in making payment
(which has been paid but beyond the appointed day during the year) but without adding
the interest specified under the Micro, Small and Medium Enterprises Development
Act, 2006;

d. the amount of interest accrued and remaining unpaid at the end of each accounting
year; and

e. the amount of further interest remaining due and payable even in the succeeding
years, until such date when the interest dues above are actually paid to the small
enterprise, for the purpose of disallowance of a deductible expenditure under section
23 of the Micro, Small and Medium Enterprises Development Act, 2006.

Explanation.- The terms ‘appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small
enterprise’ and ‘supplier’, shall have the same meaning as assigned to them under
clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and
Medium Enterprises Development Act, 2006.]

G. The presentation of liabilities associated with group of assets classified as held for
sale and non-current assets classified as held for sale shall be in accordance with the
relevant Indian Accounting Standards (Ind ASs).

H. Contingent Liabilities and Commitments: (to the extent not provided for)

(i) Contingent Liabilities shall be classified as-

(a) claims against the company not acknowledged as debt;

(b) guarantees excluding financial guarantees; and

(c) other money for which the company is contingently liable.

(ii) Commitments shall be classified as-

(a) estimated amount of contracts remaining to be executed on capital account and not
provided for;

Page 799
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(b) uncalled liability on shares and other investments partly paid; and

(c) other commitments (specify nature).

I. The amount of dividends proposed to be distributed to equity and preference

shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on irredeemable preference shares
shall also be disclosed separately.

J. Where in respect of an issue of securities made for a specific purpose the whole or
part of amount has not been used for the specific purpose at the Balance Sheet date,
there shall be indicated by way of note how such unutilised amounts have been used
or invested.
482
[K. Every company shall disclose the details of Specified Bank Notes (SBN) held and
transacted during the period 08/11/2016 to 30/12/2016 as provided in the Table below:-
SBNs Other Total
denomination
notes
Closing cash in hand as on 08.11.2016
(+) Permitted receipts
(-) Permitted payments
(-) Amount deposited in Banks
Closing cash in hand as on 30.12.2016

Explanation : For the purposes of this clause, the term ‘Specified Bank Notes’ shall have
the same meaning provided in the notification of the Government of India, in the Ministry
of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th
November, 2016.]

7. When a company applies an accounting policy retrospectively or makes a

restatement of items in the financial statements or when it reclassifies items in its
financial statements, the company shall attach to the Balance Sheet, a "Balance Sheet"
as at the beginning of the earliest comparative period presented.

8. Share application money pending allotment shall be classified into equity or liability
in accordance with relevant Indian Accounting Standards. Share application money to
the extent not refundable shall be shown under the head Equity and share application
money to the extent refundable shall be separately shown under 'Other financial
liabilities'.

482
Inserted by notification number G.S.R. 308 (E) dated 30th March, 2017 with effect from 30th March, 2017.

Page 800
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

9. Preference shares including premium received on issue, shall be classified and

presented as 'Equity' or 'Liability' in accordance with the requirements of the relevant
Indian Accounting Standards. Accordingly, the disclosure and presentation
requirements in this regard applicable to the relevant class of equity or liability shall be
applicable mutatis mutandis to the preference shares. For instance, 483[plain vanilla]
redeemable preference shares shall be classified and presented under 'non-current
liabilities' as 'borrowings' and the disclosure requirements in this regard applicable to
such borrowings shall be applicable mutatis mutandis to redeemable preference
shares.

10. Compound financial instruments such as convertible debentures, where split into
equity and liability components, as per the requirements of the relevant Indian
Accounting Standards, shall be classified and presented under the relevant heads in
'Equity' and 'Liabilities'

11. Regulatory Deferral Account Balances shall be presented in the Balance Sheet in
accordance with the relevant Indian Accounting Standards.

PART II - STATEMENT OF PROFIT AND LOSS

Name of the Company.........................

Statement of Profit and Loss for the period ended ...........................

(Rupees in............)

Particulars Note Figures Figures

No. for the for the
current previous
reporting reporting
period period

I Revenue From Operations

II Other Income

III Total Income (I+II)

IV EXPENSES
Cost of materials
consumed

Inserted words ‘plain vanilla’ in paragraph 9 vide notification no. G.S.R. 1022(E) dated 11th October
483

2018.

Page 801
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Purchases of Stock-in-
Trade

Changes in inventories of
finished goods, Stock-in-
Trade and work-in-
progress

Employee benefits
expense

Finance costs

Depreciation and
amortization expense

Other expenses

Total expenses (IV)

V Profit/(loss) before
exceptional items and tax
(I-IV)

VI Exceptional Items

VII Profit/(loss) before tax (V-

VI)

VIII Tax expense:

(1) Current tax
(2) Deferred tax

IX Profit (Loss) for the period

from continuing operations
(VII-VIII)

X Profit/(loss) from
discontinued operations

XI Tax expense of
discontinued operations

XII Profit/(loss) from

Discontinued operations
(after tax) (X-XI)

XIII Profit/(loss) for the period

(IX+XII)

Page 802
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

XIV Other Comprehensive

Income
A(i) Items that will not be
reclassified to profit or loss
(ii) Income tax relating to
items that will not be
reclassified to profit or loss
B(i) Items that will be
reclassified to profit or loss
(ii) Income tax relating to
items that will be
reclassified to profit or loss

XV Total Comprehensive
Income for the period
(XIII+XIV)(Comprising
Profit (Loss) and Other
Comprehensive Income for
the period)

XVI Earnings per equity share

(for continuing operation):
(1) Basic
(2) Diluted

XVII Earnings per equity share

(for discontinued
operation):
(1) Basic
(2) Diluted

XVIII Earnings per equity

share(for discontinued &
continuing operations)
(1) Basic
(2) Diluted

See accompanying notes to the financial statements

Notes:

Page 803
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS

1. The provisions of this Part shall apply to the income and expenditure account, in like
manner as they apply to a Statement of Profit and Loss.

2. The Statement of Profit and Loss shall include:

(1) Profit or loss for the period;

(2) Other Comprehensive Income for the period.

The sum of (1) and (2) above is 'Total Comprehensive Income'.

3. Revenue from operations shall disclose separately in the notes

(a) sale of products (including Excise Duty);

(b) sale of services; and

(c) other operating revenues.

4. Finance Costs: Finance costs shall be classified as-

(a) interest;

(b) dividend on redeemable preference shares;

(c) exchange differences regarded as an adjustment to borrowing costs; and

(d) other borrowing costs (specify nature).

5 Other income: Other income shall be classified as-

(a) interest Income;

(b) dividend Income; and

(c) other non-operating income (net of expenses directly attributable to such income).

6. Other Comprehensive Income shall be classified into-

(A) Items that will not be reclassified to profit or loss

(i) Changes in revaluation surplus;

(ii) Remeasurements of the defined benefit plans;

(iii) Equity Instruments through Other Comprehensive Income;

(iv) Fair value changes relating to own credit risk of financial liabilities designated at
fair value through profit or loss;
Page 804
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(v) Share of Other Comprehensive Income in Associates and Joint Ventures, to the
extent not to be classified into profit or loss; and

(vi) Others (specify nature).

(B) Items that will be reclassified to profit or loss;

(i) Exchange differences in translating the financial statements of a foreign operation;

(ii) Debt Instruments through Other Comprehensive Income;

(iii) The effective portion of gains and loss on hedging instruments in a cash flow hedge;

(iv) Share of Other Comprehensive Income in Associates and Joint Ventures, to the
extent to be classified into profit or loss; and

(v) Others (specify nature).

7. Additional Information: A Company shall disclose by way of notes, additional

information regarding aggregate expenditure and income on the following items:

(a) employee Benefits expense [showing separately (i) salaries and wages, (ii)
contribution to provident and other funds, (iii) share based payments to employees, (iv)
staff welfare expenses].

(b) depreciation and amortisation expense;

(c) any item of income or expenditure which exceeds one per cent of the revenue from
operations or Rs. 10,00,000, whichever is higher, in addition to the consideration of
'materiality' as specified in clause 7 of the General Instructions for Preparation of
Financial Statements of a Company;

(d) interest Income;

(e) interest Expense;

(f) dividend income;

(g) net gain or loss on sale of investments;

(h) net gain or loss on foreign currency transaction and translation (other than
considered as finance cost);

(i) payments to the auditor as (a) auditor, (b) for taxation matters, (c) for company law
matters, (d) for other services, (e) for reimbursement of expenses;

(j) in case of companies covered under section 135, amount of expenditure incurred
on corporate social responsibility activities; and

Page 805
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(k) details of items of exceptional nature;

8. Changes in Regulatory Deferral Account Balances shall be presented in the

Statement of Profit and Loss in accordance with the relevant Indian Accounting
Standards.

PART III

GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED FINANCIAL

STATEMENTS

1. Where a company is required to prepare Consolidated Financial Statements, i.e.,

consolidated balance sheet, consolidated statement of changes in equity and
consolidated statement of profit and loss, the company shall mutatis mutandis follow
the requirements of this Schedule as applicable to a company in the preparation of
balance sheet, statement of changes in equity and statement of profit and loss. In
addition, the consolidated financial statements shall disclose the information as per the
requirements specified in the applicable Indian Accounting Standards notified under
the Companies (Indian Accounting Standards) Rules 2015, including the following,
namely:-

(i) Profit or loss attributable to 'non-controlling interest' and to 'owners of the parent' in
the statement of profit and loss shall be presented as allocation for the period. Further,
'total comprehensive income' for the period attributable to 'non-controlling interest' and
to 'owners of the parent' shall be presented in the statement of profit and loss as
allocation for the period. The aforesaid disclosures for 'total comprehensive income'
shall also be made in the statement of changes in equity. In addition to the disclosure
requirements in the Indian Accounting Standards, the aforesaid disclosures shall also
be made in respect of 'other comprehensive income'.

(ii) 'Non-controlling interests' in the Balance Sheet and in the Statement of Changes in
Equity, within equity, shall be presented separately from the equity of the 'owners of
the parent'.

(iii) Investments accounted for using the equity method.

2. In Consolidated Financial Statements, the following shall be disclosed by way of

additional information:

Name of Net Assets, i.e., Share in profit or Share in other Share in total
the total assets minus loss comprehensive comprehensive
entity in total liabilities income income

Page 806
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

the
Group

As % of Amo As % of Amo As % of Amo As % of Amo

consolid unt consolid unt consolidate unt total unt
ated net ated d other comprehen
assets profit or comprehen sive
loss sive income
income

Parent

Subsidia
ries

Indian

1.

2.

3.

Foreign

1.

2.

3.

Non-
controllin
g
Interests
in all
subsidiar
ies

Associat
es
(Investm
ent as
per the
equity
method)

Indian

1.

Page 807
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

2.

3.

Foreign

1.

2.

3.

Joint
Ventures
(investm
ent as
per the
equity
method)

Indian

1.

2.

3.

Foreign

1.

2.

3.

Total

3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be
covered under consolidated financial statements.

4. An entity shall disclose the list of subsidiaries or associates or joint ventures which
have not been consolidated in the consolidated financial statements along with the
reasons of not consolidating.]
484
[Division III

484
Inserted Division III vide notification no. G.S.R. 1022(E) dated 11th October 2018.

Page 808
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Financial Statements for a Non-Banking Financial Company (NBFC) whose financial

statements are drawn up in compliance of the Companies (Indian Accounting
Standards) Rules, 2015.

GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A NON-

BANKING FINANCIAL COMPANY (NBFC) THAT IS REQUIRED TO COMPLY WITH INDIAN
ACCOUNTING STANDARDS (Ind AS)

1. Every Non-Banking Financial company as defined in the Companies (Indian

Accounting Standards) (Amendment) Rules, 2016 to which Indian Accounting Standards
apply, shall prepare its financial statements in accordance with this Schedule or with
such modification as may be required under certain circumstances.
2. Where compliance with the requirements of relevant Act, Regulations, Guidelines or
Circulars issued by the relevant regulator from time to time including Indian Accounting
Standards (Ind AS) (except the option of pre-senting assets and liabilities in accordance
with current, non-current classification as provided by relevant Ind AS) as applicable to
the NBFCs require any change in treatment or disclosure including addition,
amendment, substitution or deletion in the head or sub-head or any changes inter se, in
the financial statements or statements forming part thereof, the same shall be made and
the requirements under this Schedule shall stand modified ac- cordingly.
3. The disclosure requirements specified in this Schedule are in addition to and not in
substitution of the disclosure requirements specified in the Indian Accounting Standards.
Additional disclosures specified in the Indian Accounting Standards shall be made in the
Notes or by way of additional statement or statements unless required to be disclosed
on the face of the Financial Statements. Similarly, all other disclosures as required by
the Companies Act, 2013 shall be made in the Notes in addition to the requirements set
out in this Schedule.
4. i. Notes shall contain information in addition to that presented in the Financial
Statements and shall provide where required-

Page 809
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

a. narrative descriptions or disaggregations of items recognised in those

statements; and
b. information about items that do not qualify for recognition in those statements.
ii. Each item on the face of the Balance Sheet, Statement of Changes in Equity and
Statement of Profit and Loss shall be cross-referenced to any related information in the
Notes. In preparing the Financial Statements including the Notes, a balance shall be
maintained between providing excessive details that may not assist users of Financial
Statements and not providing important information as a result of too much aggregation.

5. Depending upon the total income of the NBFC, the figures appearing in the Financial
Statements shall be rounded off as below:

Total Income Rounding Off

i. less than one hundred crore rupees To the nearest hundreds, thousands,
lakhs or millions, or decimals thereof.

i. one hundred crore rupees or more To the nearest, lakhs, millions or crores,
or decimals thereof.

6. Once a unit of measurement is used, it should be used uniformly in the Financial

Statements.
Financial Statements shall contain the corresponding amounts (comparatives) for the
immediately preceding reporting period for all items shown in the Financial Statements
including Notes except in the case of first Financial Statements after incorporation.
7. Financial Statements shall disclose all ‘material’ items, i.e., the items if they could,
individually or collectively, influence the economic decisions that users make on the
basis of the financial statements. Materiality depends on the size or nature of the item
or a combination of both, to be judged in the particular circumstances.
8. For the purpose of this Schedule, the terms used herein shall have the same
meanings assigned to them in Indian Accounting Standards.

Page 810
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

9. Where any Act, Regulation, Guidelines or Circulars issued by the relevant regulators
from time to time requires specific disclosures to be made in the standalone financial
statements of an NBFC, the said disclosures shall be made in addition to those required
under this Schedule.
10. The NBFCs preparing financial statements as per this Schedule may change the
order of presentation of line items on the face of financial statements or order of line
items within the schedules in order of liquidity, if appropriate, considering the operations
performed by the NBFC.
Note: This Schedule sets out the minimum requirements for disclosure on the face of
the Financial Statements, i.e., Balance Sheet, Statement of Changes in Equity for the
period, the Statement of Profit and Loss for the period (The term ‘Statement of Profit and
Loss’ has the same meaning as ‘Profit and Loss Account’) and Notes. Cash flow
statement shall be prepared, where applicable, in accordance with the requirements of
the relevant Indian Accounting Standard. Line items, sub-line items and sub-totals shall
be presented as an addition or substitution on the face of the Financial Statements when
such presentation is relevant to an understanding of the NBFC’s financial position or
performance or to cater to categories of NBFCs as prescribed by the relevant regulator
or sector-specific disclosure requirements or when required for compliance with the
amendments to the relevant statutes or under the Indian Accounting Standards.

PART I -BALANCE SHEET

Name of the Non-Banking Financial Company…………………….

Balance Sheet as at ………………………
(Rupees in…………)

See accompanying notes to the financial statements

STATEMENT OF CHANGES IN EQUITY

Name of the Non-Banking Financial Company…………………….

Page 811
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Statement of Changes in Equity for the period ended ……………………

(Rupees in……………..)
A. Equity Share Capital
Balance at the beginning Changes in equity share Balance at the end of the
of the reporting period capital during the year reporting period

Xxx Xxx xxx

B. Other Equity
Share Equity Reserves and Surplus D E E R E Othe Money Total
applicati compone Statutor Capital Securiti Other R e q f e x r receiv
on nt of y Reserv es Reserv e b u f v c item ed
money compoun Reserv es Premiu es t t i e a h s of agains
pending d es m (Specify a i t c l a Othe t share
allotment financial nature) i n y t u n r war-
instrume n s I i a g Com rants
nt e t n v t e preh
d r s e i d ensi
E u t p o i ve
a m r o n f Inco
r e u r S f me
n n m t u e (spe
i t e i r r cify
n s n o p e natu
g t t n l n re)
s h s o u c
r t f s e
o h C s
u r a o
g o s n
h u h t
O g F r
t h l a
h O o n
e t w s
r h H l
C e e a
o r d t
m C g i
p o e n
r m s g
e p t
h r h
e e e
n h f
s e i
i n n
v s a
e i n
I v c
n e i
c I a
o n l
m c s
e o t

Page 812
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

m a
e t
e
m
e
n
t
s
o
f
a
f
o
r
e
i
g
n
o
p
e
r
a
t
i
o
n
Balance at
the beginning
of the
reporting
period
Changes in
accounting
policy/prior
period errors
Restated
balance at the
beginning of
the reporting
period
Total
Comprehensi
ve Income for
the year
Dividends
Transfer to
retained
earnings
Any other
change (to be
specified)
Balance at
the end of the
reporting
period

Page 813
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Note:
i. Remeasurement of defined benefit plans and fair value changes relating to own credit
risk of financial liabilities designated at fair value through profit or loss shall be
recognised as a part of retained earnings with separate dis- closure of such items
alongwith the relevant amounts in the Notes.
ii. A description of the purpose of each reserve within equity shall be disclosed in the
Notes.

Notes

GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET

A Non-Banking Financial company shall disclose the following in the notes to accounts:

A. Cash and cash equivalents: Cash and cash equivalents shall be classified as:
i. Cash on hand
ii. Balances with Banks (of the nature of cash and cash equivalents);
iii. Cheques, drafts on hand; and
iv. Others (specify nature).

Cash and Bank balances: The following disclosures with regard to cash and bank
balances shall be made:
i. Earmarked balances with banks (for example, for unpaid dividend) shall be separately
stated.
ii. Balances with banks to the extent held as margin money or security against the
borrowings, guarantees, other commitments shall be disclosed separately.
iii. Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated.

Page 814
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

B. Derivative financial Instruments

1. Explain use of derivatives
2. Cross-reference to Financial Risks section for management of risks arising from
derivatives
Part I (Current Year) (Previous Year)
Notional Fair Fair Notional Fair Fair
Amounts Value - Value - Amounts Value - Value -
Assets Liabilities Assets Liabilities
(i)Currency
derivatives:
-Spot and
forwards
Currency Futures
-Currency swaps
-Options
purchased
-Options sold
(written)
-Others
Sub total(i)

(ii)Interest rate
derivatives
-Forward Rate
Agreements and
Interest Rate
Swaps
--Options
purchased
-Options sold
(written)
-Futures
-Others
Sub-total (ii)
(iii) Credit
derivatives
(iv) Equity linked
derivatives

Page 815
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(v) Other
derivatives
(Please specify)
Total Derivative
Financial
Instruments
(i)+(ii)+(iii)+(iv)+(v)

Part II

Included in above
(Part I) are
derivatives held
for hedging and
risk management
purposes as
follows:
(i)Fair value
hedging
- Currency
derivatives
- Interest rate
derivatives
- Credit derivatives
- Equity linked
derivatives
- Others
Sub-total (i)
(ii)Cash flow
hedging:
- Currency
derivatives
- Interest rate
derivatives
- Credit derivatives
- Equity linked
derivatives
- Others
(iii)Net investment
hedging:
(iv) Undesignated
Derivatives
Total Derivative
Financial

Page 816
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Instruments (i)+
(ii)+(iii)+(iv)

With respect to hedges and hedge accounting, NBFCs may provide a description in
accordance with the requirements of Indian Accounting Standards, of how derivatives
are used for hedging, explain types of hedges recognized for accounting purposes and
their usage/application by the entity.
C. Receivables:
i. Receivables shall be sub-classified as:
a. Receivables considered good - Secured;
b. Receivables considered good - Unsecured;
c. Receivables which have significant increase in Credit Risk; and
d. Receivables - credit impaired
ii. Allowance for impairment loss allowance shall be disclosed under the relevant heads
separately.
iii. Debts due by directors or other officers of the NBFC or any of them either severally
or jointly with any other person or debts due by firms including limited liability
partnerships (LLPs), private companies respectively in which any director is a partner or
a director or a member should be separately stated.
D. Loans
(Current Year) (Previous Year)
Amortise At Fair Value Sub- Oth Tot Amort At Fair Value Sub- Other Tot
d cost Through Throu Desig Total ers al ised Throu Throu Des total s al
Other gh nated cost gh gh ign
Compre profit at fair Other profit ate
hensive or value Comp or d at
Income loss throu rehen loss fair
gh sive val
profit Inco ue
or me thro
loss ugh
prof
it or
loss
(1) (2) (3) (4) (5) = (6) (7) (8) (9) (10) (11) (12) = (13) (14)
(2)+(3 = (9)+(10) =
)(4) (1)+ +(11) (8)+
(5)+ (12)
(6) +(1
3)
Loans

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(A) (i) Bills

Purchase
d and Bills
Discounte
d
(ii) Loans
repayable
on
Demand
(iii) Term
Loans
(iv)
Leasing
(v)
Factoring
(vi)
Others (to
be
specified)
Total (A) -
Gross
Less:
Impairme
nt loss
allowance
Total (A) -
Net

(B) (i)
Secured
by
tangible
assets
(ii)Secure
d by
intangible
assets
(iii)
Covered
by
Bank/Gov
ernment
Guarante
es
(iv)
Unsecure
d
Total (B)-
Gross
Less:
Impairme
nts loss
allowance
Total (B)-
Net
(C) (I)
Loans in
India
(i) Public
Sector

Page 818
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(ii) Others
(to be
specified)
Total (C)-
Gross
Less:
Impairme
nt
Loss
allowance
Total (C)
(II)- Net
Total C(I)
and C(II)

E. Investments
Investments (Current Year) (Previous Year)
Amortise At Fair Value Sub- Oth Tot Amort At Fair Value Sub- Other Tot
d cost Through Throu Desig Total ers al ised Throu Throu Des total s al
Other gh nated cost gh gh ign
Compre profit at fair Other profit ate
hensive or value Comp or d at
Income loss throu rehen loss fair
gh sive val
profit Inco ue
or me thro
loss ugh
prof
it or
loss
(1) (2) (3) (4) (5) = (6) (7) (8) (9) (10) (11) (12) = (13) (14)
(2)+(3 = (9)+(10) =
)(4) (1)+ +(11) (8)+
(5)+ (12)
(6) +(1
3)
Mutual
funds
Governm
ent
Securities
Other
approved
securities
Debt
securities
Equity
instrumen
t
Subsidiari
es
Associate
s
Joint
Ventures
Others
(specify)

Page 819
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Total-
Gross (A)
(i)Investm
ents
outside
India
(ii)Invest
ments in
India
Total(B)
Total(A)
to tally
with (B)
Less:
Allowanc
e for
Impairme
nt loss (C)
Total -Net
D= (A)-
(C)
*Other basis of measurement such as cost may be explained as a footnote

F. Investment Property
A reconciliation of the gross and net carrying amounts of each class of property at the
beginning and end of the reporting period showing additions, disposals, acquisitions
through business combinations and other adjustments and the related depreciation and
impairment losses or reversals shall be disclosed separately.

G. Biological Assets other than bearer plants:

A reconciliation of the carrying amounts of each class of assets at the beginning and end
of the reporting period showing additions, disposals, acquisitions through business
combinations and other adjustments shall be disclosed separately.

H. Property, Plant and Equipment

i. Classification shall be given as:
a. Land
b. Buildings
c. Plant and Equipment
d. Furniture and Fixtures
e. Vehicles

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

f. Office equipment
g. Bearer Plants
h. Others (specify nature)
ii. Assets under lease shall be separately specified under each class of asset.
iii. A reconciliation of the gross and net carrying amounts of each class of assets at the
beginning and end of the reporting period showing additions, disposals, acquisitions
through business combinations and other adjustments and the related depreciation and
impairment losses or reversals shall be disclosed separately.

I. Goodwill
A reconciliation of the gross and net carrying amount of goodwill at the beginning and
end of the reporting period showing additions, impairments, disposals and other
adjustments.

J. Other Intangible assets

i. Classification shall be given as:
a. Brands or trademarks
b. Computer software
c. Mastheads and publishing titles
d. Mining rights
e. Copyrights, patents, other intellectual property rights, services and operating rights
f. Recipes, formulae, models, designs and prototypes
g. Licenses and franchises
h. Others (specify nature)
ii. A reconciliation of the gross and net carrying amounts of each class of assets at the
beginning and end of the reporting period showing additions, disposals, acquisitions
through business combinations and other adjustments and the related amortization and
impairment losses or reversals shall be disclosed separately.

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

K. Payables
The following details relating to Micro, Small and Medium Enterprises shall be disclosed:

a. the principal amount and the interest due thereon (to be shown separately) remaining
unpaid to any supplier at the end of each accounting year;
b. the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and
Medium Enterprises Development Act, 2006, along with the amount of the payment made
to the supplier beyond the appointed day during each accounting year;
c. the amount of interest due and payable for the period of delay in making payment
(which have been paid but beyond the appointed day during the year) but without adding
the interest specified under the Micro, Small and Medium Enterprises Development Act,
2006;
the amount of interest accrued and remaining unpaid at the end of each accounting year;
and
d. the amount of further interest remaining due and payable even in the succeeding
years, until such date when the interest dues above are actually paid to the small
enterprise, for the purpose of disallowance of a deductible expenditure under section 23
of the Micro, Small and Medium Enterprises Development Act, 2006.
Explanation.- The terms ‘appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small
enterprise’ and ‘supplier’, shall have the same meaning assigned to those under clauses
(b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium
Enterprises Development Act, 2006.”

L. Debt Securities

(Current Year) (Previous Year)

At At Fair Designate Total At At Fair Designate Total
Amortise Value d at fair Amortise Value d at fair
d Cost Throug value d Cost Throug value
h profit through h profit through
or loss or loss

Page 822
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

profit or profit or
loss loss
(1) (2) (3) (4) = (5) (6) (7) (8) =
(1)+(2)+( (5)+(6)+(
3) 7)
Liability
componen
t of
compound
financial
instrument
s
Others
(Bonds/
Debenture
etc.)
Total (A)
Debt
securities
in India
Debt
securities
outside
India
Total (B)
to tally
with (A)

i. bonds or debentures (along with the rate of interest, and particulars of redemption or
conversion, as the case may be) shall be stated in descending order of maturity or
conversion, starting from earliest redemption or conversion date, as the case may be. ii.
Where bonds/debentures are redeemable by installments, the date of maturity for this
purpose must be reckoned as the date on which the first installment becomes due;
particulars of any redeemed bonds or debentures which the NBFC has power to reissue
shall be disclosed.
M. Borrowings (Other than Debt Securities)
(Current Year) (Previous Year)
At At Fair Designated Total At At Fair Designated Total
Amorti Value at fair value Amortised Value at fair value
sed Through through Cost Through through
Cost profit or profit or profit or profit or
loss loss loss loss
(1) (2) (3) (4) = (5) (6) (7) (8) =
(1)+(2)+( (5)+(6)+(
3) 7)
(a) Term loans
(i) form banks
(ii) from other
parties

Page 823
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(b)Deferred
payment liabilities
(c)Loans from
related parties
(d) Finance lease
obligations
(e)Liability
component of
compound
financial
instruments
(f)Loans
repayable on
demand
(i)from banks
(ii)from other
parties
(g) Other loans
(specify nature)
Total (A)
Borrowings in
India
Borrowings
outside India
Total (B) to tally
with (A)

i. Borrowings shall further be sub-classified as secured and unsecured. Nature of security

shall be specified separately in each case.
ii. Where borrowings have been guaranteed by directors or others, the aggregate amount
of such borrowings under each head shall be disclosed;
iii. terms of repayment of term loans and other loans shall be stated; and
iv. period and amount of default as on the balance sheet date in repayment of borrowings
and interest shall be specified separately in each case.

N. Deposits
(Current Year) (Previous Year)
At At Fair Designate Total At At Fair Designate Total
Amortise Value d at fair Amortise Value d at fair
d Cost Throug value d Cost Throug value
h profit through h profit through
or loss profit or or loss profit or
loss loss
(1) (2) (3) (4) = (5) (6) (7) (8) =
(1)+(2)+(3 (5)+(6)+(7
) )

Page 824
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Deposit
s
(i)
Public
deposit
s
(ii) From
Banks
(iii)
From
Others
Total

O. Subordinated liabilities
(Current Year) (Previous Year)
At At Fair Designate Total At At Fair Designate Total
Amortise Value d at fair Amortise Value d at fair
d Cost Throug value d Cost Throug value
h profit through h profit through
or loss profit or or loss profit or
loss loss
(1) (2) (3) (4) = (5) (6) (7) (8) =
(1)+(2)+( (5)+(6)+(
3) 7)
Perpetual
Debt
Instruments
to the extent
that do not
qualify as
equity
Preference
Shares
other than
those that
qualify as
Equity
Others
(specifying
the nature
and type of
instrument
issued)
Total (A)

Subordinat
ed
Liabilities in
India
Subordinat
ed
Liabilities
outside
India

Page 825
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Total (B) to
tally with (A)

P. Other Financial Liabilities (to be specified): Other Financial liabilities shall be classified
as-
a. Interest accrued;
b. Unpaid dividends;
c. Application money received for allotment of securities to the extent refundable and
interest accrued thereon;
d. Unpaid matured deposits and interest accrued thereon;
e. Unpaid matured debentures and interest accrued thereon;
f. Margin money (to be specified);and
g. Others (specify nature)

Q. Provisions: The amounts shall be classified as-

a. Provision for employee benefits; and
b. Others (specify nature)

R. Other Non-financial liabilities (to be specified):

a. Revenue received in advance;
b. Other advances (Specify nature); and
c. Others (specify nature).

S. Equity Share Capital : For each class of equity share capital:

a. the number and amount of shares authorized;
b. the number of shares issued, subscribed and fully paid, and subscribed but not fully
paid;
c. par value per share;

Page 826
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

d. a reconciliation of the number of shares outstanding at the beginning and at the end
of the period;
e. the rights, preferences and restrictions attaching to each class of shares including
restrictions on the distribution of dividends and the repayment of capital;
f. shares in respect of each class in the company held by its holding company or its
ultimate holding company including shares held by or by subsidiaries or associates of
the holding company or the ultimate holding company in aggregate;
g. shares in the company held by each shareholder holding more than five percent shares
specifying the number of shares held;
h. shares reserved for issue under options and contracts/commitments for the sale of
shares or disinvestment, including the terms and amounts;
i. For the period of five years immediately preceding the date at which the Balance Sheet
is prepared:
Aggregate number and class of shares allotted as fully paid up pursuant to contract
without payment being received in cash;
Aggregate number and class of shares allotted as fully paid up by way of bonus shares;
and Aggregate number and class of shares bought back;

j. terms of any securities convertible into equity shares issued along with the earliest date
of conversion in descending order starting from the farthest such date;
k. calls unpaid (showing aggregate value of calls unpaid by directors and officers);
l. forfeited shares (amount originally paid up)
m. An NBFC shall disclose information that enables users of its financial statements to
evaluate the NBFC’s objectives, policies and processes for managing capital.

T. Other Equity
i. Other Reserves’ shall be classified in the notes as:
a. Capital Redemption Reserve;
b. Debenture Redemption Reserve;

Page 827
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

c. Share Options Outstanding Account;

d. Statutory Reserves; and
e. Others - (specify the nature and purpose of each reserve and the amount in respect
thereof);
(Additions and deductions since last balance sheet to be shown under each of the
specified heads)

ii. Retained Earnings represents surplus i.e. balance of the relevant column in the
Statement of Changes in Equity;
iii. A reserve specifically represented by earmarked investments shall disclose the fact
that it is so represented;
iv. Debit balance of Statement of Profit and Loss shall be shown as a negative figure
under the head ‘retained earnings’. Similarly, the balance of ‘Other Equity’, after adjusting
negative balance of retained earnings, if any, shall be shown under the head ‘Other
Equity’ even if the resulting figure is in the negative;
v. Under the sub-head ‘Other Equity’, disclosure shall be made for the nature and amount
of each item; and
vi. Under the sub-head ‘Other Equity’, disclosure shall be made for conditions or
restrictions for distribution attached to statutory reserves.

U. Contingent Liabilities and commitments (to the extent not provided for)
i. Contingent Liabilities shall be classified as:
a. Claims against the company not acknowledged as debt;
b. Guarantees excluding financial guarantees; and
c. Other money for which the company is contingently liable
ii. Commitments shall be classified as:
a. Estimated amount of contracts remaining to be executed on capital account and not
provided for;
b. Uncalled liability on shares and other investments partly paid;
Page 828
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

c. Other commitments (specify nature).

V. The amount of dividends proposed to be distributed to equity and preference

shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on irredeemable preference shares
shall also be disclosed separately.

W. Where in respect of an issue of securities made for a specific purpose the whole or
part of amount has not been used for the specific purpose at the Balance Sheet date,
there shall be indicated by way of note how such unutilized amounts have been used or
invested.

X. Other Classification related General Instructions

1. When an NBFC applies an accounting policy retrospectively or makes a restatement
of items in the financial statements or when it reclassifies items in its financial statements,
the NBFC shall attach to the Balance Sheet, a “Balance Sheet” as at the beginning of
the earliest comparative period presented.
2. Share application money pending allotment shall be classified into equity or liability in
accordance with relevant Indian Accounting Standards. Share application money to the
extent not refundable shall be shown under the head Equity and share application money
to the extent refundable shall be separately shown under ‘Other financial liabilities’.
3. Preference shares including premium received on issue, shall be classified and
presented as ‘Equity’ or ‘Liability’ in accordance with the requirements of the relevant
Indian Accounting Standards. Accordingly, the disclosure and presentation requirements
in this regard applicable to the relevant class of equity or liability shall be applicable
mutatis mutandis to the preference shares. For instance, plain vanilla redeemable
preference shares shall be classified and presented under ‘liabilities’ as ‘borrowings’ or
‘subordinated liability’ and the disclosure requirements in this regard applicable to such
borrowings shall be applicable mutatis mutandis to redeemable preference shares.

Page 829
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

4. Compound financial instruments such as convertible debentures, where split into

equity and liability components, as per the requirements of the relevant Indian Accounting
Standards, shall be classified and presented under the relevant heads in ‘‘Liabilities and
Equity’.
5. Regulatory Deferral Account Balances shall be presented in the Balance Sheet in
accordance with the relevant Indian Accounting Standards.

PART II - STATEMENT OF PROFIT AND LOSS

Name of the Non-Banking Financial Company…………………….

Statement of Profit and Loss for the period ended ………………………
(Rupees in ……………..)
Particulars Note No. Figures for the Figures for the
current reporting previous reporting
period period
Revenue from operations
(i) Interest Income
(ii) Dividend income
(iii) Rental incomes
(iv) Fees and commission Income
(v) Net gain on fair value changes
(vi) Net gain on derecognition of
financial instruments under
amortised cost category
(vii) Sale of products(including Excise
Duty)
(viii) Sale of services
(ix) Others (to be specified)
(I) Total Revenue from operations

(II) Other Income (to be specified)

(III) Total income (I+II)

Expenses
(i) Finance Costs
(ii) Fees and commission expense
(iii) Net loss on fair value changes
(iv) Net loss on derecognition of
financial instruments under
amortised cost category

Page 830
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(v) Impairment on financial

instruments
(vi) Cost of materials consumed
(vii) Purchases of Stock-in-trade
(viii) Changes in Inventories of finished
goods, stock-in-trade and work-in-
progress
(ix) Employee Benefits Expenses
(x) Depreciation, amortization and
impairment
(xi) Others expenses (to be specified)
(IV) Total Expenses (IV)
(V) Profit / (loss) before exceptional
items and tax (III-IV)
(VI) Exceptional items
(VII) Profit/(loss) before tax (V -VI)
(VIII) Tax Expense:(1) Current Tax (2)
Deferred Tax
(IX) Profit / (loss) for the period from
continuing operations(VII-VIII)
(X) Profit/(loss) from discontinued
operations
(XI) Tax Expense of discontinued
operations
(XII) Profit/(loss) from discontinued
operations(After tax) (X-XI)
(XIII) Profit/(loss) for the period (IX+XII)
(XIV) Other Comprehensive Income
(A) (i) Items that will not be
reclassified to profit or loss (specify
items and amounts)
(ii) Income tax relating to items that
will not be reclassified to profit or
loss
Subtotal (A)
Other Comprehensive Income (A +
B)
(XV) Total Comprehensive Income for
the period (XIII+XIV) (Comprising
Profit (Loss) and other
Comprehensive Income for the
period)

(XVI) Earnings per equity share (for

continuing operations)
Basic (Rs.)
Diluted (Rs.)

(XVII) Earnings per equity share (for

discontinued operations)
Basic (Rs.)
Diluted (Rs.)

Page 831
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

(XVIII) Earnings per equity share (for

discontinued operations)
Basic (Rs.)
Diluted (Rs.)

(XIX) Earnings per equity share (for

continuing and discontinued
operations)
Basic (Rs.)
Diluted (Rs.)

Notes

GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS

1. The provisions of this Part shall apply to the income and expenditure account, in like
manner as they apply to a Statement of Profit and Loss.
2. The Statement of Profit and Loss shall include:
A. Profit or loss for the period;
B. Other Comprehensive Income for the period.
The sum of (A) and (B) above is ‘Total Comprehensive Income’.

3. Interest Income
Particulars (Current Year) (Previous Year)
On Financial On Financial Interest On Financial On Financial Interest
Assets Assets Income on Assets Assets Income on
measured at measured at Financial measured at measured at Financial
fair value Amortised Assets fair value Amortised Assets
through OCI Cost classified at through OCI Cost classified at
fair value fair value
through through
profit or loss profit or loss
Interest on
loans
Interest
income from
investments
Interest on
deposits with
Banks

Page 832
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Other interest
income
Total

4. Net gain/ (loss) on fair value changes*

Particulars (Current Year) (Previous Year)
(A) Net gain/ (loss) on financial instruments at fair value through
profit or loss
(i) On trading portfolio
- Investments
- Derivatives
- Others
(ii) On financial instruments designated at fair value through profit
or loss
(B) Others ( to be specified)
Total Net gain/(loss) on fair value changes (C) Fair
Value changes:
-Realised
-Unrealised
Total Net gain/(loss) on fair value changes(D) to tally with (C)

*Fair value changes in this schedule are other than those arising on account of accrued
interest income/expense.

5. Other Income (to be specified)

Particulars (Current Year) (Previous Year)
Net gain/(loss) on ineffective portion of hedges
Net gain/(loss) on derecognition of property, plant and equipment
Net gain or loss on foreign currency transaction and translation
(other than considered as finance cost) (to be specified)
Others (to be specified)*
Total

* Any item under the subhead ‘Others’ which exceeds one per cent of the total income to
be presented separately.

6. Finance Costs
Particulars (Current Year) (Previous Year)

Page 833
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

On Financial On Financial On Financial On Financial

liabilities measured liabilities measured liabilities measured liabilities measured
at fair value through at Amortised Cost at fair value through at Amortised Cost
profit or loss profit or loss
Interest on deposits
Interest on
borrowings
Interest on debt
securities
Interest on
subordinated
liabilities
Other interest
expense
Total

7. Employee Benefits Expenses

Particulars (Current Year) (Previous Year)
Salaries and wages
Contribution to provident and other
funds
Share Based Payments to
employees
Staff welfare expenses
Others (to be specified)
Total

8. Impairment on financial instruments

Particulars (Current year) (Previous Year)
On Financial On Financial On Financial On Financial
instruments instruments instruments instruments
measured at fair measured at measured at fair measured at
value through OCI Amortised Cost value through OCI Amortised Cost
Loans
Investments
Others (to be
specified)
Total

9. Other expenses (to be specified)

Particulars (Current Year) (Previous Year)
Rent, taxes and energy costs
Repairs and maintenance
Communication Costs
Printing and stationery

Page 834
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

Advertisement and publicity

Director’s fees, allowances and
expenses
Auditor’s fees and expenses
Legal and Professional charges
Insurance
Other expenditure
Total

* Any item under the subhead ‘Others expenditure’ which exceeds one per cent of the
total income to be presented separately.

10. Other Comprehensive Income shall be classified into-

A. Items that will not be reclassified to profit or loss
i. Changes in revaluation surplus;
ii. Remeasurements of the defined benefit plans;
iii. Equity Instruments through Other Comprehensive Income;
iv. Fair value changes relating to own credit risk of financial liabilities designated at fair
value through profit or loss;
v. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent
not to be classified into profit or loss; and
vi. Others (specify nature).
B. Items that will be reclassified to profit or loss;
i. Exchange differences in translating the financial statements of a foreign operation;
ii. Debt Instruments through Other Comprehensive Income;
iii. The effective portion of gains and loss on hedging instruments in a cash flow hedge;
iv. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent
to be classified into profit or loss; and
v. Others (specify nature).

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 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

11. Additional Information: An NBFC shall disclose by way of notes, additional

information regarding aggregate expenditure and income on the following items:
i. Depreciation, amortisation and impairment
ii. payments to the auditor as (a) auditor, (b) for taxation matters, (c) for company law
matters, (d) for other services, (e) for reimbursement of expenses;
iii. in case of NBFCs covered under section 135, amount of expenditure incurred on
corporate social responsibility activities; and
iv. details of items of exceptional nature

PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED

FINANCIAL STATEMENTS

1. Where a Non-Banking Financial Company (NBFC) is required to prepare Consolidated

Financial Statements, i.e., consolidated balance sheet, consolidated statement of
changes in equity and consolidated statement of profit and loss, the NBFC shall mutatis
mutandis follow the requirements of this Schedule as applicable to an NBFC in the
preparation of balance sheet, statement of changes in equity and statement of profit and
loss. However, where the consolidated financial statements contains elements pertaining
to NBFCs and other than NBFCs, mixed basis of presentation may be followed for
consolidated financial statements where both kinds of opera-tions are significant. In
addition, the consolidated financial statements shall disclose the information as per the
requirements specified in the applicable Indian Accounting Standards notified under the
Companies (Indian Accounting Standards) Rules 2015, including the following, namely:-
i. Profit or loss attributable to ‘non-controlling interest’ and to ‘owners of the parent’ in the
statement of profit and loss shall be presented as allocation for the period. Further, ‘total
comprehensive income’ for the period attributable to ‘non-controlling interest’ and to
‘owners of the parent’ shall be presented in the statement of profit and loss as allocation
for the period. The aforesaid disclosures for ‘total comprehensive income’ shall also be
made in the statement of changes in equity. In addition to the disclosure requirements in

Page 836
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

the Indian Accounting Standards, the aforesaid disclosures shall also be made in respect
of ‘other comprehensive income’.
ii. ‘Non-controlling interests’ in the Balance Sheet and in the Statement of Changes in
Equity, within equity, shall be presented separately from the equity of the ‘owners of the
parent’.
iii. Investments accounted for using the equity method.
2. In Consolidated Financial Statements, the following shall be disclosed by way of
additional information:
Name of Net Assets, i.e., total Share in profit or loss Share in other Share in total
the entity assets minus total comprehensive income comprehensive income
in the liabilities
Group
As % of Amou As % of Amou As % of Amou As % of total Amou
consolidat nt consolidat nt consolidated nt comprehensi nt
ed net ed profit or other ve income
assets loss comprehensi
ve income
Parent
Subsidiari
es
1.
2.
3.
*
*
Indian
1.
2.
3.
*
*

Foreign
1.
2.
3.
*
*

Non-
controlling
Interests
in all
subsidiari
es
Associate

Page 837
 Schedule III Instructions to prepare Balance Sheet and Profit and loss account

s
(Investme
nt as per
the equity
method)
Indian
1.
2.
3.
*
*

Foreign
1.
2.
3.
*
*

Joint
Ventures(
as per the
equity
method)
Indian
1.
2.
3.
*
*

Foreign
1.
2.
3.
*
*

Total

3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be
covered under consolidated financial statements.
4. An entity shall disclose the list of subsidiaries or associates or joint ventures which
have not been consolidated in the consolidated financial statements along with the
reasons of not consolidating.

Page 838
 Schedule IV Code for Independent Directors

SCHEDULE IV 485Code for Independent

Directors
Schedule IV [See section 149(8)]
CODE FOR INDEPENDENT DIRECTORS
[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding schedule under the Companies Act, 1956]

The Code is a guide to professional conduct for independent directors. Adherence to

these standards by independent directors and fulfilment of their responsibilities in a
professional and faithful manner will promote confidence of the investment community,
particularly minority shareholders, regulators and companies in the institution of
independent directors.
I. Guidelines of professional conduct:
An independent director shall:
(1) uphold ethical standards of integrity and probity;
(2) act objectively and constructively while exercising his duties;
(3) exercise his responsibilities in a bona fide manner in the interest of the
company;
(4) devote sufficient time and attention to his professional obligations for informed
and balanced decision making;
(5) not allow any extraneous considerations that will vitiate his exercise of
objective independent judgment in the paramount interest of the company as
a whole, while concurring in or dissenting from the collective judgment of the
Board in its decision making;
(6) not abuse his position to the detriment of the company or its shareholders or
for the purpose of gaining direct or indirect personal advantage or advantage
for any associated person;
(7) refrain from any action that would lead to loss of his independence;
(8) where circumstances arise which make an independent director lose his
independence, the independent director must immediately inform the Board
accordingly;
(9) assist the company in implementing the best corporate governance practices.

485
The heading stated here is given by the author for ease of reference and is not part of the Statute

Page 839
 Schedule IV Code for Independent Directors

II. Role and functions:

The independent directors shall:
(1) help in bringing an independent judgment to bear on the Board's deliberations
especially on issues of strategy, performance, risk management, resources,
key appointments and standards of conduct;
(2) bring an objective view in the evaluation of the performance of board and
management;
(3) scrutinise the performance of management in meeting agreed goals and
objectives and monitor the reporting of performance;
(4) satisfy themselves on the integrity of financial information and that financial
controls and the systems of risk management are robust and defensible;
(5) safeguard the interests of all stakeholders, particularly the minority
shareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of executive directors, key
managerial personnel and senior management and have a prime role in
appointing and where necessary recommend removal of executive directors,
key managerial personnel and senior management;
(8) moderate and arbitrate in the interest of the company as a whole, in situations
of conflict between management and shareholder's interest.
III. Duties:
The independent directors shall—
(1) undertake appropriate induction and regularly update and refresh their skills,
knowledge and familiarity with the company;
(2) seek appropriate clarification or amplification of information and, where
necessary, take and follow appropriate professional advice and opinion of
outside experts at the expense of the company;
(3) strive to attend all meetings of the Board of Directors and of the Board
committees of which he is a member;
(4) participate constructively and actively in the committees of the Board in which
they are chairpersons or members;
(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed
action, ensure that these are addressed by the Board and, to the extent that
they are not resolved, insist that their concerns are recorded in the minutes of
the Board meeting;
(7) keep themselves well informed about the company and the external
environment in which it operates;
(8) not to unfairly obstruct the functioning of an otherwise proper Board or
committee of the Board;
(9) pay sufficient attention and ensure that adequate deliberations are held before
approving related party transactions and assure themselves that the same are
in the interest of the company;

Page 840
 Schedule IV Code for Independent Directors

(10) ascertain and ensure that the company has an adequate and functional vigil
mechanism and to ensure that the interests of a person who uses such
mechanism are not prejudicially affected on account of such use;
(11) report concerns about unethical behaviour, actual or suspected fraud or
violation of the company's code of conduct or ethics policy;
486
(12) [act with their authority], assist in protecting the legitimate interests of the
company, shareholders and its employees;
(13) not disclose confidential information, including commercial secrets,
technologies, advertising and sales promotion plans, unpublished price
sensitive information, unless such disclosure is expressly approved by the
Board or required by law.
IV. Manner of appointment:
(1) Appointment process of independent directors shall be independent of the company
management; while selecting independent directors the Board shall ensure that there is
appropriate balance of skills, experience and knowledge in the Board so as to enable
the Board to discharge its functions and duties effectively.
(2) The appointment of independent director(s) of the company shall be approved at the
meeting of the shareholders.
(3) The explanatory statement attached to the notice of the meeting for approving the
appointment of independent director shall include a statement that in the opinion of the
Board, the independent director proposed to be appointed fulfils the conditions specified
in the Act and the rules made thereunder and that the proposed director is independent
of the management.
(4) The appointment of independent directors shall be formalised through a letter of
appointment, which shall set out:
(a) the term of appointment;
(b) the expectation of the Board from the appointed director; the Board-level
committee(s) in which the director is expected to serve and its tasks;
(c) the fiduciary duties that come with such an appointment along with
accompanying liabilities;
(d) provision for Directors and Officers (D and O) insurance, if any;
(e) the Code of Business Ethics that the company expects its directors and
employees to follow;

Substituted for the words “acting within his authority” vide notification no. S.O. 2113(E) dt.05.07.207
486

published on and effective from 06.07.2017.

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 Schedule IV Code for Independent Directors

(f) the list of actions that a director should not do while functioning as such in the
company; and
(g) the remuneration, mentioning periodic fees, reimbursement of expenses for
participation in the Board's and other meetings and profit related commission,
if any.
[Query: if such requirement would also be applicable for appointment of existing
Independent Directors? It is clarified that appointment of independent director under
the new Act would need to be formalized through a letter of appointment. Refer para
(iv) of Circular 14/2014 dated 09 June 2014.]
(5) The terms and conditions of appointment of independent directors shall be open for
inspection at the registered office of the company by any member during normal
business hours.
(6) The terms and conditions of appointment of independent directors shall also be
posted on the company's website.

V. Reappointment:
The re-appointment of independent director shall be on the basis of report of
performance evaluation.

VI. Resignation or removal:

(1) The resignation or removal of an independent director shall be in the same manner
as is provided in sections 168 and 169 of the Act.
(2) An independent director who resigns or is removed from the Board of the company
487
shall be replaced by a new independent director within [three months] from the date
of such resignation or removal, as the case may be.
(3) Where the company fulfils the requirement of independent directors in its Board even
without filling the vacancy created by such resignation or removal, as the case may be,
the requirement of replacement by a new independent director shall not apply.

487
Substituted for the words “ a period of not more than one hundred and eighty days” vide notification no.
S.O. 2113(E) dt.05.07.207 published on and effective from 06.07.2017.

Page 842
 Schedule IV Code for Independent Directors

VII. Separate meetings:

488
(1) The independent directors of the company shall hold at least one meeting [in a
financial year], without the attendance of non-independent directors and members of
management;
(2) All the independent directors of the company shall strive to be present at such
meeting;
(3) The meeting shall:
(a) review the performance of non-independent directors and the Board as a
whole;
(b) review the performance of the Chairperson of the company, taking into
account the views of executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the
company management and the Board that is necessary for the Board to
effectively and reasonably perform their duties.
VIII. Evaluation mechanism:
(1) The performance evaluation of independent directors shall be done by the entire
Board of Directors, excluding the director being evaluated.
(2) On the basis of the report of performance evaluation, it shall be determined whether
to extend or continue the term of appointment of the independent director.

489
[ Note: The provisions of sub-paragraph (2) and (7) of paragraph II, paragraph IV,
paragraph V, clauses (a) and (b) of sub-paragraph (3) of paragraph VII and
paragraph VIII shall not apply in the case of a Government company as defined
under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013), if the
requirements in respect of matters specified in these paragraphs are specified by
the concerned Ministries or Departments of the Central Government or as the case
may be, the State Governments and such requirements are complied with by the
Government companies.]

488
Substituted for the words ‘in a year’ vide notification no. S.O. 2113(E) dt.05.07.207 published on and
effective from 06.07.2017.

489
Inserted vide notification no. S.O. 2113(E) dt.05.07.207 published on and effective from 06.07.2017.

Page 843
 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

SCHEDULE V 490Conditions for

appointment and payment of
remuneration of managerial personnel
[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[Corresponding Schedule XIII of the Companies Act, 1956]
Schedule V (See sections 196 and 197)

PART I

CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR

WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE
CENTRAL GOVERNMENT

APPOINTMENTS

No person shall be eligible for appointment as a managing or whole-time director or a

manager (hereinafter referred to as managerial person) of a company unless he satisfies
the following conditions, namely:—
(a) he had not been sentenced to imprisonment for any period, or to a fine exceeding
one thousand rupees, for the conviction of an offence under any of the following
Acts, namely:—
(i) the Indian Stamp Act, 1899 (2 of 1899);
(ii) the Central Excise Act, 1944 (1 of 1944);
(iii) the Industries (Development and Regulation) Act, 1951 (65 of 1951);
(iv) the Prevention of Food Adulteration Act, 1954 (37 of 1954);
(v) the Essential Commodities Act, 1955 (10 of 1955);
491
[(vi) the Companies Act, 2013 (18 of 2013) or any previous company law;]
(vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(viii) the Wealth-tax Act, 1957 (27 of 1957);
(ix) the Income-tax Act, 1961 (43 of 1961);
(x) the Customs Act, 1962 (52 of 1962);

490
The heading stated here is given by the author for ease of reference and is not part of the Statute

491
Substituted by notification numberS.O.2922(E) dated 12th September, 2016. Prior to substitution it read
“The Companies Act, 2013”.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

(xi) the Competition Act, 2002 (12 of 2003);

(xii) the Foreign Exchange Management Act, 1999 (42 of 1999);
(xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);
(xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
(xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003);
492
[(xvii) the Insolvency and Bankruptcy Code, 2016 (31 of 2016)
(xviii) the Goods and Service Tax Act, 2017 (21 of 2017)
(xix) the Fugitive Economic Offenders Act, 2018 (17 of 2018)]

(b) he had not been detained for any period under the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):
Provided that where the Central Government has given its approval to the
appointment of a person convicted or detained under sub-paragraph (a) or sub-
paragraph (b), as the case may be, no further approval of the Central Government
shall be necessary for the subsequent appointment of that person if he had not
been so convicted or detained subsequent to such approval.

(c) he has completed the age of twenty-one years and has not attained the age of
seventy years:
Provided that where he has attained the age of seventy years; and where his
appointment is approved by a special resolution passed by the company in general
meeting, no further approval of the Central Government shall be necessary for
such appointment;
493
[omitted]

(e) he is resident of India.

Explanation I.—For the purpose of this Schedule, resident in India includes a person
who has been staying in India for a continuous period of not less than twelve months
immediately preceding the date of his appointment as a managerial person and who
has come to stay in India,—
(i) for taking up employment in India; or
(ii) for carrying on a business or vacation in India.

Explanation II.—This condition shall not apply to the companies in Special Economic
Zones as notified by Department of Commerce from time to time:

492
Inserted items (xvii), (xviii) and (xix) in para (a) in PART I of Schedule V by notification number S.O.
4822 (E) dated 12th September 2018.

493
Para (d) in PART I of Schedule V omitted by notification number S.O. 4822 (E) dated 12th September
2018. Prior to its omission, it read as “(d) where he is a managerial person in more than one company, he
draws remuneration from one or more companies subject to the ceiling provided in section V of Part II;”.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

Provided that a person, being a non-resident in India shall enter India only after
obtaining a proper Employment Visa from the concerned Indian mission abroad. For
this purpose, such person shall be required to furnish, along with the visa application
form, profile of the company, the principal employer and terms and conditions of such
person’s appointment.

PART II

REMUNERATION
Section I.— Remuneration payable by companies having profits:

Subject to the provisions of section 197, a company having profits in a financial year may
pay remuneration to a managerial person or persons not exceeding the limits specified in
such section.
494
[Section II.— Remuneration payable by companies having no profit or inadequate profit
495
[omitted]:

Where in any financial year during the currency of tenure of a managerial person, a company
has no profits or its profits are inadequate, it may, 496 [omitted], pay remuneration to the
managerial person not exceeding the limits under (A) and (B) given below:-

(A) :

(1) (2)

Limit of yearly remuneration payable

Where the effective capital is
shall not exceed (Rupees)

(i) Negative or less than 5 crores 60 lakhs

84 lakhs
(ii) 5 crores and above but less than 100

494
Section II of Part II of Schedule V substituted by notification number S.O.2922(E) dated 12th September,
2016.

Omitted the words ‘without Central Government approval’ from the heading of Section II of PART II of
495

Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

Omitted the words ‘without Central Government approval’ from the first para of Section II of PART II of
496

Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

crores

(iii) 100 crores and above but less than

120 lakhs
250 crores

120 lakhs plus 0.01% of the effective

(iv) 250 crores and above
capital in excess of Rs. 250 crores :

497
[Provided that the remuneration in excess of above limits may be paid] if the resolution
passed by the shareholders is a special resolution.

Explanation.- It is hereby clarified that for a period less than one year, the limits shall be pro-
rated.

(B) In case of a managerial person who is functioning in a professional capacity,

498
[remuneration as per item (A) may be paid], if such managerial person is not having
any interest in the capital of the company or its holding company or any of its subsidiaries
directly or indirectly or through any other statutory structures and not having any direct or
indirect interest or related to the directors or promoters of the company or its holding company
or any of its subsidiaries at any time during the last two years before or on or after the date of
appointment and possesses graduate level qualification with expertise and specialised
knowledge in the field in which the company operates:

Provided that any employee of a company holding shares of the company not exceeding 0.5%
of its paid up share capital under any scheme formulated for allotment of shares to such
employees including Employees Stock Option Plan or by way of qualification shall be deemed
to be a person not having any interest in the capital of the company:

Provided further that the limits specified under items (A) and (B) of this section shall apply,
if-

(i) payment of remuneration is approved by a resolution passed by the Board and, in the case

Substituted for the words ‘Provided that the above limits shall be doubled’ in the proviso, in item (A) of
497

Section II of PART II of Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

Substituted for the words ‘no approval of Central Government is required’ in item (B) of Section II of
498

PART II of Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

of a company covered under sub-section (1) of section 178 also by the Nomination and
Remuneration Committee;

499
[(ii) the company has not committed any default in payment of dues to any bank or public
financial institution or non-convertible debenture holders or any other secured creditor, and in
case of default, the prior approval of the bank or public financial institution concerned or the
non-convertible debenture holders or other secured creditor, as the case may be, shall be
obtained by the company before obtaining the approval in the general meeting.];

(iii) an ordinary resolution or a special resolution, as the case may be, has been passed for
payment of remuneration as per 500[omitted] item (A) or a special resolution has been passed
for payment of remuneration as per item (B), at the general meeting of the company for a
period not exceeding three years.

(iv) a statement along with a notice calling the general meeting referred to in clause (iii) is
given to the shareholders containing the following information, namely:-

I. General information:

(1) Nature of industry

(2) Date or expected date of commencement of commercial production

(3) In case of new companies, expected date of commencement of activities as per

project approved by financial institutions appearing in the prospectus

(4) Financial performance based on given indicators

(5) Foreign investments or collaborations, if any.

499
Substituted clause (ii) of the second proviso in item (B) of Section II of PART II of Schedule V by
notification number S.O. 4822 (E) dated 12th September 2018. Prior to substitution it read as “(ii) the
company has not committed any default in repayment of any of its debts (including public deposits) or
debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year
before the date of appointment of such managerial person and in case of a default, the company obtains
prior approval from secured creditors for the proposed remuneration and the fact of such prior approval
having been obtained is mentioned in the explanatory statement to the notice convening the general
meeting;”.

500
Omitted the words ‘the limits laid down in’ from clause (ii) of the second proviso in item (B) of Section II
of PART II of Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

II. Information about the appointee:

(1) Background details

(2) Past remuneration

(3) Recognition or awards

(4) Job profile and his suitability

(5) Remuneration proposed

(6) Comparative remuneration profile with respect to industry, size of the company,
profile of the position and person (in case of expatriates the relevant details would be
with respect to the country of his origin)

(7) Pecuniary relationship directly or indirectly with the company, or relationship with
the managerial personnel, if any.

III. Other information:

(1) Reasons of loss or inadequate profits

(2) Steps taken or proposed to be taken for improvement

(3) Expected increase in productivity and profits in measurable terms

IV. Disclosures

The following disclosures shall be mentioned in the Board of Director's report under
the heading "Corporate Governance", if any, attached to the financial statement:

(i) all elements of remuneration package such as salary, benefits, bonuses, stock
options, pension, etc., of all the directors;

(ii) details of fixed component and performance linked incentives along with the
performance criteria;

(iii) service contracts, notice period, severance fees; and

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

(iv) stock option details, if any, and whether the same has been issued at a discount as
well as the period over which accrued and over which exercisable.

Explanation : For the purposes of Section II of this part, "Statutory Structure" means any entity
which is entitled to hold shares in any company formed under any statute.]

[Prior to substitution by notification number S.O.2922(E) dated 12th September 2016, Section II to Part II
of Schedule V read as under:
Where in any financial year during the currency of tenure of a managerial person, a company has no profits
or its profits are inadequate, it may, without Central Government approval, pay remuneration to the
managerial person not exceeding the higher of the limits under (A) and (B) given below:—
(A):

(1) (2)
Where the effective capital is Limit of yearly
remuneration payable shall
not exceed (Rupees)
(i) Negative or less than 5 crores 30 lakhs
(ii) 5 crores and above but less than 100 crores 42 lakhs
(iii) 100 crores and above but less than 250 60 lakhs
crores
(iv) 250 crores and above 60 lakhs plus 0.01% of the
effective capital in excess of
Rs. 250 crores:

Provided that the above limits shall be doubled if the resolution passed by the shareholders is a special
resolution.
Explanation .—It is hereby clarified that for a period less than one year, the limits shall be pro-rated.
(B) In the case of a managerial person who was not a security holder holding securities of the company of
nominal value of rupees five lakh or more or an employee or a director of the company or not related to
any director or promoter at any time during the two years prior to his appointment as a managerial person,
—2.5% of the current relevant profit:
Provided that if the resolution passed by the shareholders is a special resolution, this limit shall be
doubled:
Provided further that the limits specified under this section shall apply, if—
(i) payment of remuneration is approved by a resolution passed by the Board and, in the case
of a company covered under sub-section (1) of section 178 also by the Nomination and
Remuneration Committee;
(ii) the company has not made any default in repayment of any of its debts (including public
deposits) or debentures or interest payable thereon for a continuous period of thirty days in the
preceding financial year before the date of appointment of such managerial person;
(iii) a special resolution has been passed at the general meeting of the company for payment of
remuneration for a period not exceeding three years;
(iv) a statement along with a notice calling the general meeting referred to in clause (iii) is given
to the shareholders containing the following information, namely:—
I. General Information:
(1) Nature of industry
(2) Date or expected date of commencement of commercial production

Page 850
 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

(3) In case of new companies, expected date of commencement of activities as per project
approved by financial institutions appearing in the prospectus
(4) Financial performance based on given indicators
(5) Foreign investments or collaborations, if any.

II. Information about the appointee:

(1) Background details
(2) Past remuneration
(3) Recognition or awards
(4) Job profile and his suitability
(5) Remuneration proposed
(6) Comparative remuneration profile with respect to industry, size of the company, profile of
the position and person (in case of expatriates the relevant details would be with respect to the
country of his origin)
(7) Pecuniary relationship directly or indirectly with the company, or relationship with the
managerial personnel, if any.

III. Other information:

(1) Reasons of loss or inadequate profits
(2) Steps taken or proposed to be taken for improvement
(3) Expected increase in productivity and profits in measurable terms.

IV Disclosures:
The following disclosures shall be mentioned in the Board of Director’s report under the
heading “Corporate Governance”, if any, attached to the financial statement:—
(i) all elements of remuneration package such as salary, benefits, bonuses, stock
options, pension, etc., of all the directors;
(ii) details of fixed component and performance linked incentives along with the
performance criteria;
(iii) service contracts, notice period, severance fees;
(iv) stock option details, if any, and whether the same has been issued at a discount as
well as the period over which accrued and over which exercisable.]

Section III.— Remuneration payable by companies having no profit or inadequate profit

501
[omitted] approval in certain special circumstances:

In the following circumstances a company may, 502 [omitted], pay remuneration to a

managerial person in excess of the amounts provided in Section II above:—

Omitted the words ‘without Central Government approval’ from the heading of Section III of PART II of
501

Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

502
Omitted the words ‘without the Central Government approval’ from the first para of Section III of PART
II of Schedule V by notification number S.O. 4822 (E) dated 12th September 2018.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

(a) where the remuneration in excess of the limits specified in Section I or II is paid by
any other company and that other company is either a foreign company or has got the
approval of its shareholders in general meeting to make such payment, and treats this
amount as managerial remuneration for the purpose of section 197 and the total
managerial remuneration payable by such other company to its managerial persons
including such amount or amounts is within permissible limits under section 197.
503
[(b) where the company—
(i) is a newly incorporated company, for a period of seven years from the
date of its incorporation, or
(ii) is a sick company, for whom a scheme of revival or rehabilitation has
been ordered by the Board for Industrial and Financial Reconstruction for a
period of five years from the date of sanction of scheme of revival, or
(iii) is a company in relation to which a resolution plan has been approved by the
National Company Law Tribunal under the Insolvency and Bankruptcy
Code, 2016 for a period of five years from the date of such approval,
it may pay 504[any remuneration to its managerial persons] ]

(c) where remuneration of a managerial person exceeds the limits in Section II but the
remuneration has been fixed by the Board for Industrial and Financial Reconstruction
or the National Company Law Tribunal:
Provided that the limits under this Section shall be applicable subject to meeting all
the conditions specified under Section II and the following additional conditions:—
(i) except as provided in para (a) of this Section, the managerial
person is not receiving remuneration from any other company;
(ii) the auditor or company secretary of the company or where the
company has not appointed a Secretary, a Secretary in whole-time
practice, certifies that all secured creditors and term lenders have stated
in writing that they have no objection for the appointment of the
managerial person as well as the quantum of remuneration and such

503
Substituted by Section 255 of the Insolvency and Bankruptcy Code, 2016 read with the clause
(36) of the Eleventh Schedule thereto, with effect from 15th November, 2016 vide
notification number S.O 3453(E) dated 15th November, 2016. Prior to its substitution, it read
as “(b) where the company—
(i) is a newly incorporated company, for a period of seven years from the date of its incorporation, or

(ii) is a sick company, for whom a scheme of revival or rehabilitation has been ordered by the Board for Industrial and Financial
Reconstruction or National Company Law Tribunal, for a period of five years from the date of sanction of scheme of revival, it may
pay remuneration up to two times the amount permissible under Section II.”.

504
Substituted for the words ‘remuneration upto two times the amount permissible under Section II’ from
the long line in clause (b) of Section III of PART II of Schedule V by notification number S.O. 4822 (E) dated
12th September 2018.

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 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

certificate is filed along with the return as prescribed under sub-section

(4) of section 196.
(iii) the auditor or company secretary or where the company has not
appointed a secretary, a secretary in whole-time practice certifies that
there is no default on payments to any creditors, and all dues to deposit
holders are being settled on time.
505
[(d) omitted]

Section IV.— Perquisites not included in managerial remuneration:

1. A managerial person shall be eligible for the following perquisites which shall not be
included in the computation of the ceiling on remuneration specified in Section II and
Section III:—
(a) contribution to provident fund, superannuation fund or annuity fund to the
extent these either singly or put together are not taxable under the Income-
tax Act, 1961 (43 of 1961);
(b) gratuity payable at a rate not exceeding half a month’s salary for each
completed year of service; and
(c) encashment of leave at the end of the tenure.

2. In addition to the perquisites specified in paragraph 1 of this section, an expatriate

managerial person (including a non-resident Indian) shall be eligible to the following
perquisites which shall not be included in the computation of the ceiling on
remuneration specified in Section II or Section III—
(a) Children’s education allowance: In case of children studying in or outside
India, an allowance limited to a maximum of Rs. 12,000 per month per child
or actual expenses incurred, whichever is less. Such allowance is
admissible up to a maximum of two children.
(b) Holiday passage for children studying outside India or family staying abroad:
Return holiday passage once in a year by economy class or once in two
years by first class to children and to the members of the family from the
place of their study or stay abroad to India if they are not residing in India,
with the managerial person.
(c) Leave travel concession: Return passage for self and family in accordance
with the rules specified by the company where it is proposed that the leave
be spent in home country instead of anywhere in India.

505
Omitted clause (d) of Section III of PART II of Schedule V by notification number S.O. 4822 (E) dated
12th September 2018. Prior to omission, it read as ‘(d) a company in a Special Economic Zone as notified
by Department of Commerce from time to time which has not raised any money by public issue of shares
or debentures in India, and has not made any default in India in repayment of any of its debts (including
public deposits) or debentures or interest payable thereon for a continuous period of thirty days in any
financial year, may pay remuneration up to Rs. 2,40,00,000 per annum.’.

Page 853
 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

Explanation I.— For the purposes of Section II of this Part, “effective capital” means
the aggregate of the paid-up share capital (excluding share application money or
advances against shares); amount, if any, for the time being standing to the credit of
share premium account; reserves and surplus (excluding revaluation reserve); long-
term loans and deposits repayable after one year (excluding working capital loans,
over drafts, interest due on loans unless funded, bank guarantee, etc., and other short-
term arrangements) as reduced by the aggregate of any investments (except in case
of investment by an investment company whose principal business is acquisition of
shares, stock, debentures or other securities), accumulated losses and preliminary
expenses not written off.

Explanation II.— (a) Where the appointment of the managerial person is made in the
year in which company has been incorporated, the effective capital shall be calculated
as on the date of such appointment;

(b) In any other case the effective capital shall be calculated as on the last date of the
financial year preceding the financial year in which the appointment of the managerial
person is made.

Explanation III.— For the purposes of this Schedule, ‘‘family’’ means the spouse,
dependent children and dependent parents of the managerial person.

Explanation IV.— The Nomination and Remuneration Committee while approving the
remuneration under Section II or Section III, shall—

(a) take into account, financial position of the company, trend in the industry,
appointee’s qualification, experience, past performance, past remuneration, etc.;

(b) be in a position to bring about objectivity in determining the remuneration package

while striking a balance between the interest of the company and the shareholders.

Explanation V.— For the purposes of this Schedule, “negative effective capital” means
the effective capital which is calculated in accordance with the provisions contained in
Explanation I of this Part is less than zero.

Explanation VI.— For the purposes of this Schedule:—

506
[(A) omitted]

506
Omitted clause (A) of Explanation VI in Section IV of PART II of Schedule V by notification number S.O.
4822 (E) dated 12th September 2018. Prior to omission, it read as ‘(A) “current relevant profit” means the

Page 854
 Schedule V – Conditions for appointment and payment of remuneration of managerial personnel

(B) “Remuneration” means remuneration as defined in clause (78) of section 2 and

includes reimbursement of any direct taxes to the managerial person.

Section V. —Remuneration payable to a managerial person in two companies:

Subject to the provisions of sections I to IV, a managerial person shall draw remuneration
from one or both companies, provided that the total remuneration drawn from the
companies does not exceed the higher maximum limit admissible from any one of the
companies of which he is a managerial person.

PART III

Provisions applicable to Parts I and II of this Schedule

1. The appointment and remuneration referred to in Part I and Part II of this Schedule
shall be subject to approval by a resolution of the shareholders in general meeting.

2. The auditor or the Secretary of the company or where the company is not required to
appointed a Secretary, a Secretary in whole-time practice shall certify that the
requirement of this Schedule have been complied with and such certificate shall be
incorporated in the return filed with the Registrar under sub-section (4) of section 196.

PART IV

The Central Government may, by notification, exempt any class or classes of companies
from any of the requirements contained in this Schedule.

profit as calculated under section 198 but without deducting the excess of expenditure over income referred
to in sub-section 4 (l) thereof in respect of those years during which the managerial person was not an
employee, director or shareholder of the company or its holding or subsidiary companies.’.

Page 855
 Schedule VI Infrastructure projects and facilities

SCHEDULE VI 507Infrastructure projects

and facilities
Schedule VI (See sections 55 and 186)
[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding Schedule of the Companies Act, 1956]

The term "infrastructural projects" or "infrastructural facilities" includes the following

projects or activities:—
(1) Transportation (including inter modal transportation), includes the following:—
(a) roads, national highways, State highways, major district roads, other district
roads and village roads, including toll roads, bridges, highways, road transport
providers and other road-related services;
(b) rail system, rail transport providers, metro rail roads and other railway related
services;
(c) ports (including minor ports and harbours), inland waterways, coastal shipping
including shipping lines and other port related services;
(d) aviation, including airports, heliports, airlines and other airport related
services;
(e) logistics services.

(2) Agriculture, including the following, namely:—

(a) infrastructure related to storage facilities;
(b) construction relating to projects involving agro-processing and supply of inputs
to agriculture;
(c) construction for preservation and storage of processed agro-products,
perishable goods such as fruits, vegetables and flowers including testing
facilities for quality.

(3) Water management, including the following, namely:—

(a) water supply or
distribution;
(b) irrigation;
(c) water treatment.

507
The heading stated here is given by the author for ease of reference and is not part of the Statute

Page 856
 Schedule VI Infrastructure projects and facilities

(4) Telecommunication, including the following, namely:—

(a) basic or cellular, including radio paging;
(b) domestic satellite service (i.e., satellite owned and operated by an Indian
company for providing telecommunication service);
(c) network of trunking, broadband network and internet services.

(5) Industrial, commercial and social development and maintenance, including the
following, namely:—
(a) real estate development, including an industrial park or special economic
zone;
(b) tourism, including hotels, convention centres and entertainment centres;
(c) public markets and buildings, trade fair, convention, exhibition, cultural
centres, sports and recreation infrastructure, public gardens and parks;
(d) construction of educational institutions and hospitals;
(e) other urban development, including solid waste management systems,
sanitation and sewerage systems.

(6) Power, including the following:—

(a) generation of power through thermal, hydro, nuclear, fossil fuel, wind and other
renewable sources;
(b) transmission, distribution or trading of power by laying a network of new
transmission or distribution lines.

(7) Petroleum and natural gas, including the following:—

(a) exploration and production;
(b) import terminals;
(c) liquefaction and re-gasification;
(d) storage terminals;
(e) transmission networks and distribution networks including city gas
infrastructure.

(8) Housing, including the following:—

(a) urban and rural housing including public/mass housing, slum rehabilitation,
etc.;
(b) other allied activities such as drainage, lighting, laying of roads, sanitation and
facilities.

(9) Other miscellaneous facilities/services, including the following:—

Page 857
 Schedule VI Infrastructure projects and facilities

(a) mining and related activities;

(b) technology related infrastructure;
(c) manufacturing of components and materials or any other utilities or facilities
required by the infrastructure sector like energy saving devices and metering
devices;
(d) environment related infrastructure;
(e) disaster management services;
(f) preservation of monuments and icons;
(g) emergency services (including medical, police, fire and rescue).

(10) Such other facility service as may be prescribed.

[Comments: It is an inclusive definition and hence it shall not be restricted to what is
enumerated / listed above.]

Page 858
 Schedule VII CSR Policy

SCHEDULE VII 508CSR Policy

(See sections 135)
Activities which may be included by companies in their Corporate Social Responsibility
Policies
[Brought to force from 01 April 2014 vide notification number S.O. 902(E) dated 26th March, 2014.]
[No corresponding Schedule of the Companies Act, 1956]
[For clarification on activities covered or not under this Schedule, refer Circular 21/2014 dated 18 June
2014]
509
Activities relating to:—
(i) eradicating hunger, poverty and malnutrition, 510 [promoting health care
including preventive health care] and sanitation 511[including contribution to
the Swach Bharat Kosh set-up by the Central Government for the promotion
of sanitation] and making available safe drinking water;
(ii) promoting education, including special education and employment enhancing
vocation skills especially among children, women, elderly, and the differently
abled and livelihood enhancement projects;
(iii) promoting gender equality, empowering women, setting up homes and hostels
for women and orphans; setting up old age homes, day care centres and such
other facilities for senior citizens and measures for reducing inequalities faced
by socially and economically backward groups;
(iv) ensuring environmental sustainability, ecological balance, protection of flora
and fauna, animal welfare, agroforestry, conservation of natural resources and
maintaining quality of soil, air and water 512[including contribution to the Clean
Ganga Fund setup by the Central Government for rejuvenation of river
Ganga];
(v) protection of National Heritage, art and culture including restoration of
buildings and sites of historical importance and works of art; setting up public
libraries; promotion and development of traditional arts and handicrafts;

508
The heading stated here is given by the author for ease of reference and is not part of the Statute

509
Items (i) to (x) substituted vide notification number G.S.R. 130 (E) dated 27 February 2014. Refer
Annexure N4 for the notification as well as items (i) to (x) prior to substitution.

510
Words ‘promoting health care’ substituted by Notification number G.S.R. 261(E) dated 31 March 2014.

511
Inserted by Notification number G.S.R. 741 (E) dated 24 October 2014.

512 512
Inserted by Notification number G.S.R. 741 (E) dated 24 October 2014.

Page 859
 Schedule VII CSR Policy

(vi) measure for the benefit of armed force veterans, war widows and their
dependents;
(vii) training to promote rural sports, nationally recognized sports, Paralympic
sports and Olympics sports;
(viii) contribution to the Prime Minister’s National Relief Fund or any other fund set
up by the Central Government for socio-economic development and relief and
welfare of the Scheduled Castes, the Schedule Tribes, other backward
classes, minorities and women;
(ix) contributions or funds provided to technology incubators located within
academic institutions which are approved by the Central Government;
(x) rural development projects.
1
[ (xi) slum area development.
Explanation.— For the purposes of this item, the term ‘slum area’ shall mean any area
declared as such by the Central Government or any State Government or any other
competent authority under any law for the time being in force.]
513
[(xii) disaster management, including relief, rehabilitation and reconstruction activities.]
— P.K. MALHOTRA, Secretary to the Govt. of India.—30-08-2013.

1
[Item (xi) and explanation thereto, inserted by Notification number G.S.R. 568(E) dated
06 August 2014].

513
Inserted vide notification number G.S.R.390(E) dated 30 May 2019.

Page 860
 RULES under the Companies Act, 2013

RULES UNDER THE

COMPANIES ACT, 2013

Page 861
 Chapter I

The Companies (Specification of definitions details) Rules, 2014

Chapter I: the Companies (Specification

of definitions details) Rules, 2014
[The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i) vide notification number G.S.R. 238(E), dated 31st March, 2014 and subsequently amended vide
notification nos. G.S.R. 507(E), dated the 17th July, 2014 and G.S.R. 433(E) dated 07th May 2018.]

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R 238 (E).—In exercise of the powers conferred under sub-clause (ix) of
clause (76), sub-clause (iii) of clause (77) of section 2, read with sub-sections (1) and
(2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government
hereby makes the following rules, namely:—

1. Short title and commencement.—

(1) These rules may be called the Companies (Specification of definitions details)
Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.—

(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Certifying Authority” for the purpose of Digital Signature Certificate means
a person who has been granted a licence to issue a Digital Signature Certificate
under section 24 of the Information Technology Act, 2000 (21 of 2000) and the
Certified Filing Center (CFC) under the Act;

(c) “digital signature” means the digital signature as defined under clause (p) of
sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of
2000);

(d) “Digital Signature Certificate” means a Digital Signature Certificate as

defined under clause (q) of sub-section (1) of section 2 of the Information
Technology Act, 2000 (21 of 2000);

(e) “Director Identification Number” (DIN) means an identification number

allotted by the Central Government to any individual, intending to be appointed

Page 862
 Chapter I

The Companies (Specification of definitions details) Rules, 2014

as director or to any existing director of a company, for the purpose of his

identification as a director of a company;
Provided that the Director Identification Number (DIN) obtained by the
individuals prior to the notification of these rules shall be the DIN for the purpose
of the Companies Act, 2013:
Provided further that "Director Identification Number" (DIN) includes
the Designated Partnership Identification Number (DPIN) issued under section
7 of the Limited Liability Partnership Act, 2008 (6 of 2009) and the rules made
thereunder;
[For DIN, refer section 153]

(f) “e-Form” means a form in the electronic form as prescribed under the Act or
the rules made thereunder and notified by the Central Government under the Act;

(g) “electronic Mail” means the message sent, received or forwarded in digital
form using any electronic communication mechanism that the message so sent,
received or forwarded is storable and retrievable;

(h) “electronic mode”, for the purposes of clause (42) of section 2 of the Act,
means carrying out electronically based, whether main server is installed in India
or not, including, but not limited to-
(i) business to business and business to consumer transactions, data
interchange and other digital supply transactions;
(ii) offering to accept deposits or inviting deposits or accepting deposits
or subscriptions in securities, in India or from citizens of India;
(iii) financial settlements, web based marketing, advisory and
transactional services, database services and products, supply chain
management;
(iv) online services such as telemarketing, telecommuting, telemedicine,
education and information research; and
(v) all related data communication services,
whether conducted by e-mail, mobile devices, social media, cloud computing,
document management, voice or data transmission or otherwise;
[See section 2(42) on foreign company]

(i) “electronic record” means the electronic record as defined under clause (t)
of sub-section (1) of section 2 of the Information Technology Act, 2000;

(j) “electronic Registry” means an electronic repository or storage system of the

Central Government in which the information or documents are received,
stored, protected and preserved in electronic form;

(k) “Executive Director” means a whole time director as defined in clause (94) of
section 2 of the Act;
[See section 2(94) on whole-time director and section 149]

(l) ”Fees” means the fees as specified in the Companies (Registration Offices
and Fees) Rules, 2014;

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 Chapter I

The Companies (Specification of definitions details) Rules, 2014

(m) ”Form” means a form set forth in the Act or the rules made thereunder which
shall be used for the matter to which it relates;

(n) “Pre-fill” means the automated process of data input by the computer system
from the database maintained in electronic registry of the Central Government;

(o) “Registrar’s Front Office” means an office maintained by the Central

Government or an agency authorised by it to facilitate e-filing of documents into
the electronic registry and their inspection and viewing;

(p) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

(q) “section” means the section of the Act;

(r) 514[Omitted]

(s) For the purposes of clause (d) of sub-section (1) of Section 164 and clause
(f) of sub-section (1) of section 167 of the Act, “or otherwise” means any offence
in respect of which he has been convicted by a Court under this Act or the
Companies Act, 1956;
[Refer section 164 (1) (d) on ‘disqualification for appointment of director’ and
section 167 (1) (f) on ‘vacation of office of director’]

(2) The words and expressions used in these rules but not defined and defined in the
Act or in (i) the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or (ii) the
Securities and Exchange Board of India Act, 1992 (15 of 1992) or (iii) the Depositories
Act, 1996 (22 of 1996) or (iv) the Information Technology Act, 2000 (21 of 2000) or
rules and regulations made thereunder shall have the meanings respectively assigned
to them under the Act or those Acts.

3. Related party.-

For the purposes of sub-clause (ix) of clause (76) of section 2 of the Act, a director [other
than an independent director] or key managerial personnel of the holding company or
his relative with reference to a company, shall be deemed to be a related party.
[Words ‘other than an independent director’ inserted by Notification number G.S.R.
507 (E). dated 17 July 2014.]

514
Clause (r) omitted by the Companies Specification of Definitions Details) Amendment
Rules, 2018, notified on 07 th May 2018, with effect from 07th May 2018 vide notification number
G.S.R. 433(E). Prior to omission it read as “Total Share Capital”, for the purposes of clause (6)
and clause (87) of section 2, means the aggregate of the - (a) paid-up equity share capital; and
(b) convertible preference share capital”.

Page 864
 Chapter I

The Companies (Specification of definitions details) Rules, 2014

4. List of relatives in terms of clause (77) of section 2.-

[Refer section 2(77)]

A person shall be deemed to be the relative of another, if he or she is related to another
in the following manner, namely:-
(1) Father:
Provided that the term “Father” includes step-father.
(2) Mother:
Provided that the term “Mother” includes the step-mother.
(3) Son:
Provided that the term “Son” includes the step-son.
(4) Son’s wife.
(5) Daughter.
(6) Daughter’s husband.
(7) Brother:
Provided that the term “Brother” includes the step-brother;
(8) Sister:
Provided that the term “Sister” includes the step-sister.
[F. No. 01/13/2013 (Part-I) CL-V]
RENUKA KUMAR,
Jt. Secy.

Page 865
 Chapter I

The Companies (Restriction on number of layers) Rules, 2014

Chapter I: the Companies (Restriction

on number of layers) Rules, 2017
NOTIFICATION
New Delhi, the 20th September, 2017

G.S.R. 1176(E).—In exercise of the powers conferred under proviso to clause

(87) of section 2, section 450 read with sub-sections (1) and (2) of section 469 of the
Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following rules, namely:—

1. Short title and Commencement.—

(1) These rules may be called the Companies (Restriction on number of layers)
Rules, 2017.
(2) They shall come into force on the date of their publication in the Official
Gazette. [Published on 21st September 2017]

2. Restriction on number of layers for certain classes of holding companies.—

(1) On and from the date of commencement of these rules, no company, other
than a company belonging to a class specified in sub-rule (2), shall have more than
two layers of subsidiaries:
Provided that the provisions of this sub-rule shall not affect a company from
acquiring a company incorporated outside India with subsidiaries beyond two layers
as per the laws of such country:
Provided further that for computing the number of layers under this rule, one
layer which consists of one or more wholly owned subsidiary or subsidiaries shall not
be taken into account.

(2) The provisions of this rule shall not apply to the following classes of
companies, namely:—
(a) a banking company as defined in clause (c) of section 5 of the Banking
Regulation Act, 1949 (10 of 1949);
(b) a non-banking financial company as defined in clause (f) of Section 45-I of
the Reserve Bank of India Act, 1934 (2 of 1934) which is registered with the Reserve
Bank of India and considered as systematically important non-banking financial
company by the Reserve Bank of India;
(c) an insurance company being a company which carries on the business of
insurance in accordance with provisions of the Insurance Act, 1938 (4 of 1938) and
the Insurance Regulatory Development Authority Act, 1999 (41 of 1999);
(d) a Government company referred to in clause (45) of section 2 of the Act.

Page 866
 Chapter I

The Companies (Restriction on number of layers) Rules, 2014

(3) The provisions of this rule shall not be in derogation of the proviso to sub-
section (1) of section 186 of the Act.

(4) Every company, other than a company referred to in sub-rule (2), existing
on or before the commencement of these rules, which has number of layers of
subsidiaries in excess of the layers specified in sub-rule (1) –
(i) shall file, with the Registrar a return in Form CRL-1 disclosing the details
specified therein, within a period of one hundred and fifty days from the date of
publication of these rules in the Official Gazette;
(ii) shall not, after the date of commencement of these rules, have any
additional layer of subsidiaries over and above the layers existing on such date; and
(iii) shall not, in case one or more layers are reduced by it subsequent to the
commencement of these rules, have the number of layers beyond the number of layers
it has after such reduction or maximum layers allowed in sub rule (1), whichever is
more.

(5) If any company contravenes any provision of these rules the company and
every officer of the company who is in default shall be punishable with fine which may
extend to ten thousand rupees and where the contravention is a continuing one, with
a further fine which may extend to one thousand rupees for every day after the first
during which such contravention continues.

Annexure

Form CRL-1

Return regarding number of layers

(see clause (i) of sub-rule (4)of Rule 2)

1. (a) Name of the company: _______________

(b) CIN of the company: _______________

2. Number of layers of subsidiaries as on the date of commencement of these rules

_____

3. Layer wise details of subsidiary companies

SN Name of CIN of Name of CIN of Per centage

subsidiary subsidiary holding holding of shares
company company company held by
holding
company
Layer 1
1 SL1-1
2 SL1-2
3 SL1-3
Layer 2 …..

Page 867
 Chapter I

The Companies (Restriction on number of layers) Rules, 2014

.. SL2-1
.. SL2-2
.. SL2-3
Layer 3 …..
.. SL3-1
.. SL3-2
.. SL3-3
Layer 4 …..
.. SL4-1
.. SL4-2
.. SL4-3
.. …..
..Upto last ….. ….. ….. ….. …..
layer

I (Name of director of the company signing the Form) am authorised by the Board of
Directors of the company vide resolution number _______ dated ________
(DD/MM/YYYY) to sign this form and declare that —
(1) the information of the subsidiaries and the layers as contained in the form is true,
correct and complete and no information has been suppressed or concealed.
(2) I have read the provisions of section 448 and 449 of Companies Act, 2013 which
provide for punishment for false statement and punishment for false evidence
respectively.

To be digitally signed by
Director DSC
Director Identification Number of the Director

Date:
Place:

Page 868
 Chapter II [Sections 3 to 22]

The Companies (Incorporation) Rules, 2014

Chapter II: The Companies

(Incorporation) Rules, 2014
[The principal notification was published in the Gazette of India, Extraordinary Part II, Section 3, Sub-
section (i) vide number G.S.R. 250(E) dated 31st March, 2014 and subsequently amended vide
notification no.G.S.R. 349 (E) dt.01 May 2015; notification no. G.S.R. 442 (E) dt.29th May 2015;
notification no. G.S.R. 99 (E) dt.22nd January 2016; notification no. G.S.R. 336 (E) dt.23rd March 2016;
notification no. G.S.R. 743 (E) dt.27th July 2016; notification no. G.S.R. 936 (E) dt.01st Oct.
2016;notification no. G.S.R. 1184 (E) dt.29th December 2016; notification no. G.S.R. 70 (E) dt.25th
January 2017; notification no. G.S.R. 955 (E) dt.27th July 2017; notification no. G.S.R. 49 (E) dt.20th
January 2018; notification number G.S.R. 284(E) dated 23rd March 2018; notification number G.S.R.
708(E) dated 27th July 2018; notification number G.S.R. 1219(E) dated 18th December 2018; notification
number G.S.R. 144(E) dated 21st February 2019; notification number G.S.R. 180(E) dated 6th March,
2019; notification number G.S.R. 275(E) dated 29th March 2019; notification number G.S.R. 330(E)
dated 25th April 2019; notification number G.S.R. 332(E) dated 25th April 2019; notification number
G.S.R. 357(E) dated 10th May 2019; and notification number G.S.R. 411(E) dated 7th June 2019 (w.e.f.
15th August 2019).]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R. 250(E).-- In exercise of the powers conferred under section 3, section 4, sub-
sections (5) and (6) of section 5, section 6, sub-section (1) and (2) of section 7, sub-
section (1) and (2) of section 8, clauses (a) and (b) of subsection (1) of section 11, sub-
sections (2), (3), (4) and (5) of section 12, sub-sections (3), (4) and proviso to sub-section
(5) of section 13, sub-section (2) of section 14, sub-section (1) of section 17, sub-section
(1) and (2) of section 20 read with sub-sections (1) and (2) of section 469 of the
Companies Act, 2013 (18 of 2013) and in supersession of the Companies (Central
Government’s) General Rules and Forms, 1956 or any other relevant rules prescribed
under the Companies Act, 1956 (1 of 1956) on matters covered under these rules, except
as respects things done or omitted to be done before such supersession, the Central
Government hereby makes the following rules, namely: -

1. Short title and commencement.-

(1) These rules may be called the Companies (Incorporation) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure to these rules;

Page 869
 Chapter II [Sections 3 to 22]

The Companies (Incorporation) Rules, 2014

(c) “Form” or “e-Form” means a form in the electronic form or non-electronic form
as specified under the Act or Rules made there under and notified by the Central
Government under the Act;

(d) “Fees” means fees as specified in the Companies (Registration offices and
fees) Rules, 2014;

(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

(f) “Section” means the section of the Act;

[(g) “Non-Banking Financial Company” means a Non-Banking Financial

515

Company as defined in clause (f) of section 45-I of the Reserve Bank of India
Act, 1934 and includes Housing Finance Companies, Merchant Banking
companies, Micro Finance Companies, Mutual Benefit Companies, Venture
Capital Fund Companies, Stock Broker or Sub-Broker Companies, Nidhi
Companies, Chit Companies, Securitisation and Reconstruction Companies,
Mortgage Guarantee Companies, Pension Fund Companies, Asset
Management Companies and Core Investment Companies.]

(2) Words and expressions used in these rules but not defined and defined in the Act or
in Companies (Specification of definitions details) Rules, 2014 shall have the meanings
respectively assigned to them in the Act and said rules.

3. One Person Company.-

[Refer section 3]
(1) Only a natural person who is an Indian citizen and resident in India-
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company.

516
[Explanation I. - For the purposes of this rule, the term "resident in India" means a
person who has stayed in India for a period of not less than one hundred and eighty two
days during the immediately preceding financial year.

515
Clause (g) in Rule 2 inserted by the Companies (Indian Accounting Standards) (Amendment) Rules,
2016 vide Notification number S.O. 365 (E) dated 30th March 2016.

516
Substituted the explanation to sub-rule(1) of Rule 3 vide notification no. 708(E) dated 27th July 2018.
Prior to substitution, it read as “Explanation.- For the purposes of this rule, the term "resident in India"
means a person who has stayed in India for a period of not less than one hundred and eighty two days
during the immediately preceding one calendar year.”.

Page 870
 Chapter II [Sections 3 to 22]

The Companies (Incorporation) Rules, 2014

Explanation II.- For the purposes of this rule, while counting the number of days of stay
of a director in India for the financial year 2018-2019, any period of stay between
01.01.2018 till the date of notification of this rule shall also be counted]
517
[(2) A natural person shall not be member of more than a One Person Company at
any point of time and the said person shall not be a nominee of more than a One
Person Company]

(3) Where a natural person, being member in One Person Company in accordance
with this rule becomes a member in another such Company by virtue of his being a
nominee in that One Person Company, such person shall meet the eligibility criteria
specified in sub rule (2) within a period of one hundred and eighty days.

(4) No minor shall become member or nominee of the One Person Company or can hold
share with beneficial interest.

(5) Such Company cannot be incorporated or converted into a company under section 8
of the Act.

(6) Such Company cannot carry out Non-Banking Financial Investment activities
including investment in securities of any body corporate.

(7) No such company can convert voluntarily into any kind of company unless two
years have expired from the date of incorporation of One Person Company, except
threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its
average annual turnover during the relevant period exceeds two crore rupees. [Refer
rule 6]

4. Nomination by the subscriber or member of One Person Company.-

[Refer section 3]

For the purposes of first proviso to sub-section (1) of section 3-

(1) The subscriber to the memorandum of a One Person Company shall nominate a
person, after obtaining prior written consent of such person, who shall, in the event of
the subscriber’s death or his incapacity to contract, become the member of that One
Person Company.

517
Substituted by notification number G.S.R.743(E) dated 27th July, 2016. Prior to substitution it read
as “(2) No person shall be eligible to incorporate more than a One Person Company or become nominee
in more than one such company.”.

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(2) The name of the person nominated under sub-rule (1) shall be mentioned in the
memorandum of One Person Company and 518[such nomination in Form No INC-32
(SPICe) along with consent of such nominee obtained in Form No INC-3] and fee as
provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed
with the Registrar at the time of incorporation of the company along with its memorandum
and articles.

(3) The person nominated by the subscriber or member of a One Person Company
may, withdraw his consent by giving a notice in writing to such sole member and to
the One Person Company:

Provided that the sole member shall nominate another person as nominee
within fifteen days of the receipt of the notice of withdrawal and shall send an intimation
of such nomination in writing to the Company, along with the written consent of such
other person so nominated in Form No. INC-3.

(4) The company shall within thirty days of receipt of the notice of withdrawal of
consent under sub-rule (3) file with the Registrar, a notice of such withdrawal of
consent and the intimation of the name of another person nominated by the sole
member in Form No INC-4 along with fee as provided in the Companies
(Registration offices and fees) Rules, 2014 and the written consent of such another
person so nominated in Form No. INC-3.

(5) The subscriber or member of a One Person Company may, by intimation in writing to
the company, change the name of the person nominated by him at any time for any reason
including in case of death or incapacity to contract of nominee and nominate another person
after obtaining the prior consent of such another person in Form No INC-3:

Provided that the company shall, on the receipt of such intimation, file with the
Registrar, a notice of such change in Form No INC-4 along with fee as provided in the
Companies (Registration offices and fees) Rules, 2014 and with the written consent
of the new nominee in Form No.INC-3 within thirty days of receipt of intimation of the
change.

(6) Where the sole member of One Person Company ceases to be the member in the
event of death or incapacity to contract and his nominee becomes the member of such One
Person Company, such new member shall nominate within fifteen days of becoming
member, a person who shall in the event of his death or his incapacity to contract become
the member of such company, and the company shall file with the Registrar an intimation
of such cessation and nomination in Form No INC-4 along with the fee as provided in the
Companies (Registration offices and fees) Rules, 2014 within thirty days of the change
in membership and with the prior written consent of the person so nominated in Form
No.INC-3.

518
Substituted by Companies (Incorporation) Fifth Amendment Rules, 2016 notification no. G.S.R.
1184(E) with effect from 01 January, 2017. Prior to substitution it read as ‘such nomination in Form No.
INC-2 along with consent of such nominee obtained in Form No. INC-3'.

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[5. Penalty.- Omitted by Notification number G.S.R. 349(E) dated 01st May 2015]

[Prior to omission it read as under:

If One Person Company or any officer of such company contravenes the provisions of these
rules, One Person Company or any officer of the One Person Company shall be punishable
with fine which may extend to ten thousand rupees and with a further fine which may extend
to one thousand rupees for every day after the first during which such contravention
continues.]

6. One Person Company to convert itself into a public company or a private

company in certain cases.-

[Refer section 3, section 18, section 122; rule 3(7)]

(1) Where the paid up share capital of an One Person Company exceeds [fifty lakh
rupees and its average annual turnover during the relevant period]519 exceeds two
crore rupees, it shall cease to be entitled to continue as a One Person Company.

(2) Such One Person Company shall be required to convert itself, within six months of the
date on which its paid up share capital is increased beyond fifty lakh rupees or the last
day of the relevant period during which its average annual turnover exceeds two crore
rupees as the case may be, into either a private company with minimum of two members
and two directors or a public company with at least of seven members and three directors
in accordance with the provisions of section 18 of the Act.

(3) The One Person Company shall alter its memorandum and articles by passing a
resolution in accordance with sub-section (3) of section 122 of the Act to give effect to
the conversion and to make necessary changes incidental thereto.

(4) The One Person Company shall within period of sixty days from the date of applicability
of sub-rule (1), give a notice to the Registrar in Form No. INC-5 informing that it has ceased
to be a One Person Company and that it is now required to convert itself into a private
company or a public company by virtue of its paid up share capital or average annual
turnover, having exceeded the threshold limit laid down in sub-rule (1).

Explanation.-For the purposes of this rule,- "relevant period" means the period of
immediately preceding three consecutive financial years;

(5) If One Person Company or any officer of the One Person Company contravenes the
provisions of these rules, One Person Company or any officer of the One Person Company
shall be punishable with fine which may extend to ten thousand rupees and with a further
fine which may extend to one thousand rupees for every day after the first during which
such contravention continues. [Refer Rule 5 and section 450]

519
for the words " fifty lakh rupees or its average annual turnover during the relevant period”, the words
" fifty lakh rupees and its average annual turnover during the relevant period " shall be substituted by
Notification number G.S.R. 349(E) dated 01st May 2015.

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(6) A One Person Company can get itself converted into a Private or Public company after
increasing the minimum number of members and directors to two or minimum of seven
members and two or three directors as the case may be, and by maintaining the minimum
paid-up capital as per requirements of the Act for such class of company and by making
due compliance of section 18 of the Act for conversion.

7. Conversion of private company into One Person Company.-

[Refer section 3, section 18, section 122]

(1) A private company other than a company registered under section 8 of the Act [having
paid up share capital of fifty lakhs rupees or less and average annual turnover, during the
relevant period]520 is two crore rupees or less may convert itself into one person company
by passing a special resolution in the general meeting.

(2) Before passing such resolution, the company shall obtain No objection in writing from
members and creditors.

(3) The one person company shall file copy of the special resolution with the Registrar
of Companies within thirty days from the date of passing such resolution in Form No.
MGT-14.

(4) The company shall file an application in Form No.INC-6 for its conversion into One
Person Company along with fees as provided in in the Companies (Registration offices
and fees) Rules, 2014, by attaching the following documents, namely:-

(i) The directors of the company shall give a declaration by way of affidavit duly sworn
in confirming that all members and creditors of the company have given their
consent for conversion, the paid up share capital company is fifty lakhs rupees or
less or average annual turnover is less than two crores rupees, as the case may be;

(ii) the list of members and list of creditors;

(iii) the latest Audited Balance Sheet and the Profit and Loss Account; and

(iv) the copy of No Objection letter of secured creditors.

(5) On being satisfied and complied with requirements stated herein the Registrar shall
issue the Certificate.

520
for the words "having paid up share capital of fifty lakhs rupees or less or average annual turnover,
during the relevant period is, the words "having paid up share capital of fifty lakhs rupees or less and
average annual turnover during the relevant period" shall be substituted by Notification number G.S.R.
349(E) dated 01st May 2015.

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521
[7A. Penalty.-

If a One Person Company or any officer of such company contravenes any of the
provisions of these rules, the One Person Company or any officer of the such
Company shall be punishable with fine which may extend to five thousand rupees and
with a further fine which may extend to five hundred rupees for every day after the first
offence during which such contravention continues.]
[Refer section 3 and section 450]

522
[8. Names which resemble too nearly with name of existing company.-

(1) A name applied for shall be deemed to resemble too nearly with the name of an
existing company, if, and only if, after comparing the name applied for with the name
of an existing company by disregarding the matters set out in sub-rule (2), the names
are same.
(2) The following matters are to be disregarded while comparing the names under sub-
rule (1):-
(a) the words like Private, Pvt, Pvt., (P), OPC Pvt. Ltd., IFSC Limited, IFSC Pvt.
Limited, Producer Limited, Limited, Unlimited, Ltd, Ltd., LLP, Limited Liability
Partnership, company, and company, & co, & co., co., co, corporation, corp,
corpn, corp or group;

(b) the plural or singular form of words in one or both names;

A. Illustrations
(i) Green Technology Ltd. is same as Greens Technology Ltd. and
Greens Technologies Ltd.
(ii) Pratap Technology Ltd. is same as Prataps Technology Ltd. and
Prataps Technologies Ltd.
(iii) SM Computers Ltd. is not same as SMS Computers Ltd.

(c) type and case of letters, spacing between letters, punctuation marks and
special characters used in one or both names;
B. Illustrations
(i) ABC Ltd. is same as A.B.C. Ltd. and A B C Ltd.
(ii) TeamWork Ltd. is same as Team@Work Ltd. and Team-Work Ltd.

(d) use of different tenses in one or both names ;

C. Illustrations
(i) Ascend Solutions Ltd. is same as Ascended Solutions Ltd. and
Ascending Solutions Ltd.
(ii) Speak English Solutions Limited is same as Spoken English
Solutions Limited.

521
Inserted by Notification number G.S.R. 349(E) dated 01st May 2015.

522
Substituted rule 8 with new Rules 8, 8A and 8B vide notification no. G.S.R. 357(E) dated 10th May
2019.

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(e) use of different phonetic spellings including use of misspelled words of an

expression;
D. Illustrations
(i) Chemtech Ltd. is same as Chemtec Ltd., Chemtek Ltd., Cemtech Ltd.,
Cemtek Ltd., Kemtech Ltd., and Kemtek Ltd.
(ii) Bee Kay Ltd is same as BK Ltd, Be Kay Ltd., B Kay Ltd., Bee K Ltd.,
B.K. Ltd. and Beee Kay Ltd.

(f) use of host name such as ‘www’ or a domain extension such as ‘net’, ‘org’,
‘dot’ or ‘com’ in one or both names;
E. Illustrations
(i) Ultra Solutions Ltd. is same as Ultrasolutions.com Ltd.
(ii) Supreme Ultra Solutions Ltd. is not the same as Ultrasolutions.com
Ltd.

(g) the order of words in the names;

F. Illustrations
(i) Ravi Builders and Contractors Ltd. is same as Ravi Contractors and
Builders Ltd.
(ii) Ravi Builders and Contractors Limited is not the same as Ravi
Shankar Builders and Contractors Limited.

(h) use of the definite or indefinite article in one or both names;

G. Illustrations
(i) Congenial Tours Ltd. is same as A Congenial Tours Ltd. and The
Congenial Tours Ltd.
(ii) Isha Industries Limited is not the same as Anisha Industries Limited.

(i) a slight variation in the spelling of the two names including a grammatical
variation thereof;
H. Illustrations
(i) Color Technologies Ltd. is same as Colour Technologies Ltd.
(ii) Disc Solutions Ltd. is same as Disk Solutions Ltd. but it is not same
as Disco Solutions Ltd.

(j) complete translation or transliteration, and not part thereof, of an existing

name, in Hindi or in English;
I. Illustrations
(i) National Electricity Corporation Ltd. is same as Rashtriya Vidyut
Nigam Ltd. (ii) Hike Construction Ltd. is not the same as Hike Nirman
Ltd.

(k) addition of the name of a place to an existing name, which does not contain
the name of any place;
J. Illustrations
(i) If Salvage Technologies Ltd. is an existing name, it is same as
Salvage Technologies Delhi Ltd and Salvage Delhi Technologies Ltd.
(ii) Retro Pharmaceuticals Ranchi Ltd. is not the same as Retro
Pharmaceuticals Chennai Ltd.

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(l) addition, deletion, or modification of numerals or expressions denoting

numerals in an existing name, unless the numeral represents any brand;
K. Illustrations
(i) Thunder Services Ltd is same as Thunder11 Services Ltd and
OneThunder Services Ltd
(ii) Style Garments11 Ltd. is same as Style Garments Ltd and Style12
Garments Ltd.
(iii) One 11 Power Equipment Ltd is not the same as One Power
Equipment Ltd, if One 11 represents a brand:

Provided that clauses (f) to (h) and clauses (k) and (l) shall not be disregarded
while comparing the names, if a no objection by way of a Board resolution has
been provided by an existing company.

8A. Undesirable names.-

(1) The name shall be considered undesirable, if-

(a) it is prohibited under the provisions of section 3 of the Emblems and Names
(Prevention and Improper Use) Act, 1950 (12 of 1950), unless a previous
permission has been obtained under that Act; [Circular 29/2014]
(b) save as provided in section 35 of the Trade Marks Act, 1999 (47 of 1999),
the name includes a trade mark registered under the Trade Marks Act, 1999
and the rules framed thereunder in the same class of goods or services in
which the activity of the company is being carried out or is proposed to be
carried out, unless the consent of the owner or applicant for registration, of
the trade mark, as the case may be, has been obtained and produced by the
promoters;
(c) it includes any word or words which are offensive to any section of the
people;
(d) the proposed name is identical with or too nearly resembles the name of a
limited liability partnership: Provided that the provisions of rule 8 shall apply
mutatis mutandis while determining whether a proposed name is too nearly
resembling the name of a limited liability partnership;
(e) the proposed name is identical with or too nearly resembles with a name
which is for the time being reserved in accordance with rule 9: Provided that
the provisions of rule 8 shall apply mutatis mutandis while determining
whether a proposed name is too nearly resembling with a reserved name;
(f) the company’s main business is financing, leasing, chit fund, investments,
securities or combination thereof, but the proposed name is not indicative of
such related financial activities, viz., Chit Fund or Investment or Loan, etc.;
(g) the company’s name is indicative of activities financing, leasing, chit fund,
investments, securities or combination thereof, but the company’s main
business is not related to such activities;
(h) it resembles closely the popular or abbreviated description of an existing
company or limited liability partnership;

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(i) the proposed name is identical with or too nearly resembles the name of a
company or limited liability partnership incorporated outside India and
reserved by such company or limited liability partnership with the Registrar:
Provided that if a foreign company is incorporating its subsidiary
company in India, then the original name of the holding company as it is may
be allowed with the addition of word India or name of any Indian State or city,
if otherwise available: Provided further that provisions of rule 8 shall apply
mutatis mutandis while determining whether a proposed name is too nearly
resembling the name of a company or limited liability partnership
incorporated outside India;
(j) any part of the proposed name includes the words indicative of a separate
type of business constitution or legal person or any connotation thereof e.g.
co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, firm,
Inc., PLC, GmbH, SA, PTE, Sdn, AG, etc.;
Explanation.- For the purposes of this clause, it is hereby clarified that the
name including phrase ‘Electoral Trust’ may be allowed for registration of
companies to be formed under section 8 of the Act, in accordance with the
Electoral Trusts Scheme, 2013 notified by the Central Board of Direct Taxes
(CBDT):
Provided that name application is accompanied with an affidavit to the
effect that the name to be obtained shall be only for the purpose of
registration of companies under the said Electoral Trust Scheme as notified
by the Central Board of Direct Taxes;
(k) the proposed name contains the words ‘British India’;
(l) the proposed name implies association or connection with an embassy or
consulate of a foreign government;
(m) the proposed name includes or implies association or connection with or
patronage of a national hero or any person held in high esteem or important
personages who occupied or are occupying important positions in the
Government;
(n) the proposed name is identical to the name of a company dissolved as a
result of liquidation proceeding and a period of two years has not elapsed
from the date of such dissolution: Provided that if the proposed name is
identical with the name of a company which is struck off in pursuance of
action under section 248 of the Act or under section 560 of the Companies
Act, 1956 (1 of 1956) then the same shall not be allowed before the expiry of
twenty years from the date of publication in the Official Gazette being so
struck off;
(o) it is identical with the name of a limited liability partnership in liquidation or
the name of a limited liability partnership which is struck off up to a period of
five years;
(p) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock
Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual Fund’,
etc., unless a declaration is submitted by the applicant that the requirements
mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA, etc.
have been complied with by the applicant; [Circular 2/2014 on word ‘National’
or ‘Bank’; Circular 26/2014 for words ‘commodity excahnge’]
(q) the proposed name includes the word "State", in case the company is not a
Government company;

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(r) the proposed name is containing only the name of a continent, country,
State, city such as Asia limited, Germany Limited, Haryana Limited or Mysore
Limited;
(s) Use of descriptive names, where the name merely consists of commonly
used words to describe an activity.
Explanation.—For the purposes of this clause,— (A) the term “commonly
used words” refers to use of generic expressions which may be used by any
other company to describe its trade; (B) while determining whether a name
is descriptive or not, the objects of the proposed company or the order of
words appearing in a name shall not be relevant; (C) the name shall not be
deemed to be descriptive where “commonly used words” are used in addition
to other words in the name;
A. Illustrations
(i) The names Silk Manufacturers Private Limited and Manufacturers Silk Ltd.
are descriptive names as they merely describe an activity which may also
be carried out by any other company and the order of the words is not
relevant while determining a descriptive name.
(ii) The names Computer World Ltd., Food Star Ltd., Tour Hub Ltd or House
of Chocolate Ltd are not descriptive as the names do not merely consist
of commonly used words.
(iii) The names Technical Vista Ltd or Vista Technical are not descriptive as
the names do not merely consist of commonly used words and the order
of the words is not relevant while determining whether a name is
descriptive.
(iv) The name Drinking Water Plant Ltd. is a descriptive name, even if the
object of the company is not related to making drinking water plant as it
consists of commonly used words and objects of the proposed company
is not relevant while determining whether a name is descriptive.
(v) The name Silk Wise Manufacturers Private Limited is not descriptive as it
contains words other than commonly used words.
(t) the proposed name includes name of any foreign country or any city in a
foreign country, the same shall be allowed if the applicant produces any proof
of significance of business relations with such foreign country like
memorandum of understanding with a company of such country:
Provided that the name combining the name of a foreign country with the
use of India like India Japan or Japan India shall be allowed if, there is a
government to government participation or patronage and no company shall
be incorporated using the name of an enemy country. Explanation.- For the
purposes of this clause, ‘enemy country’ means so declared by the
Government of India from time to time.
(u) the proposed name of a section 8 company under the Act does not include
the words Foundation, Forum, Association, Federation, Chambers,
Confederation, Council, Electoral Trust and the like, etc.
(v) the proposed name of a Nidhi company under the Act does not have the last
words “Nidhi Limited” as a part of its name.
(w) the proposed name has been released from the register of companies upon
change of name of a company and three years have not elapsed since the
date of change unless a specific direction has been received from the
competent authority in the course of compromise, arrangement or
amalgamation.

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(2) The applicant shall declare in affirmative or negative (to affirm or deny) whether he
is using or has been using in the last five years, the name applied for incorporation of
company or LLP in any other business constitution like Sole proprietor or Partnership
or any other incorporated or unincorporated entity and if, yes details thereof and No
Objection Certificate from other partners and associates for use of such name by the
proposed Company or LLP, as the case may be, and also a declaration as to whether
such other business shall be taken over by the proposed company or LLP or not.

8B. Word or expression which can be used only after obtaining previous
approval of Central Government.

In terms clause (b) of sub-section (3) of section 4, the following words and
combinations thereof shall not be used in the name of a company in English or any of
the languages depicting the same meaning unless the previous approval of the Central
Government has been obtained for the use of any such word or expression:-

(a) Board; (b) Commission; (c) Authority; (d) Undertaking; (e) National; (f) Union; (g)
Central; (h) Federal; (i) Republic; (j) President; (k) Rashtrapati; (l) Small Scale
Industries; (m) Khadi and Village Industries Corporation; (n) Financial Corporation and
the like; (o) Municipal; (p) Panchayat; (q) Development Authority; (r) Prime Minister or
Chief Minister; (s) Minister; (t) Nation; (u) Forest corporation; (v) Development
Scheme; (w) Statute or Statutory; (x) Court or Judiciary; (y) Governor; (z) the use of
word Scheme with the name of Government (s), State, India, Bharat or any
Government authority or in any manner resembling with the schemes launched by
Central, State or local Governments and authorities; and (za) Bureau.]

8. Undesirable names.- [prior to 10th May 2019]

[Refer section 4(2)]
[Refer Circular 02/2014 dated 11 February 2014. Refer Circular 26/2014 dated 27 June 2014. Refer
Circular 29/2014 dated 11 July 2014.]

(1) In determining whether a proposed name is identical with another, the differences on account of the
following shall be disregarded-

(a) the words like Private, Pvt, Pvt., (P), Limited, Ltd, Ltd., LLP, Limited Liability Partnership;

(b) words appearing at the end of the names – company, and company, co., co, corporation, corp,
corpn, corp.;

(c) plural version of any of the words appearing in the name;

(d) type and case of letters, spacing between letters and punctuation marks;

(e) joining words together or separating the words does not make a name distinguishable from a
name that uses the similar, separated or joined words;

(f) use of a different tense or number of the same word does not distinguish one name from
another;

(g) using different phonetic spellings or spelling variations shall not be considered as distinguishing one
name from another. Illustration (For example, P.Q. Industries limited is existing then P and Q Industries

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or Pee Que Industries or P n Q Industries or P & Q Industries shall not be allowed and similarly if a
name contains numeric character like 3, resemblance shall be checked with ‘Three’ also;)

(h) misspelled words, whether intentionally misspelled or not, do not conflict with the similar,
properly spelled words;

(i) the addition of an internet related designation, such as .com, .net, .edu, .gov, .org, .in does not
make a name distinguishable from another, even where (.) is written as ‘dot’;

(j) the addition of words like New, Modern, Nav, Shri, Sri, Shree, Sree, Om, Jai, Sai, The, etc. does not
make a name distinguishable from an existing name and similarly, if it is different from the name of the
existing company only to the extent of adding the name of the place, the same shall not be allowed;
such names may be allowed only if no objection from the existing company by way of Board resolution
is submitted;

(k) different combination of the same words does not make a name distinguishable from an existing
name, e.g., if there is a company in existence by the name of “Builders and Contractors Limited”, the
name “Contractors and Builders Limited” shall not be allowed unless it is change of name of existing
company;

(l) if the proposed name is the Hindi or English translation or transliteration of the name of an existing
company or limited liability partnership in English or Hindi, as the case may be.

(2) (a) The name shall be considered undesirable, if-

(i) it attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper
Use) Act, 1950 (12 of 1950);
523
[(ii) it includes the name of a trade mark registered or a trade mark which is subject of an
application for registration under the Trade Marks Act, 1999 and the rules framed thereunder
unless the consent of the owner or applicant for registration, of the trade mark, as the case may
be, has been obtained and produced by the promoters;]

(iii) it includes any word or words which are offensive to any section of the people;

(b) The name shall also be considered undesirable, if-

(i) the proposed name is identical with or too nearly resembles the name of a limited liability
partnership;

[(ii) omitted by notification number G.S.R. 99(E) dated 22 January, 2016. Before omission it
read as “(ii) it is not in consonance with the principal objects of the company as set out in the
memorandum of association; Provided that every name need not be necessarily indicative of the
objects of the company, but when there is some indication of objects in the name, then it shall be in
conformity with the objects mentioned in the memorandum;”].

(iii) the company’s main business is financing, leasing, chit fund, investments, securities or combination
thereof, such name shall not be allowed unless the name is indicative of such related financial
activities, viz., Chit Fund or Investment or Loan, etc.;

(iv) it resembles closely the popular or abbreviated description of an existing company or limited
liability partnership;

523
Substituted by notification numberG.S.R.743(E) dated 27th July, 2016. Prior to substitution it read as
“(ii) it includes the name of a registered trade mark or a trade mark which is subject of an application for
registration, unless the consent of the owner or applicant for registration, of the trade mark, as the case may
be, has been obtained and produced by the promoters;”.

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(v) the proposed name is identical with or too nearly resembles the name of a company or limited
liability partnership incorporated outside India and reserved by such company or limited liability
partnership with the Registrar:

Provided that if a foreign company is incorporating its subsidiary company in India, then the original
name of the holding company as it is may be allowed with the addition of word India or name of any
Indian state or city, if otherwise available;

(vi) any part of the proposed name includes the words indicative of a separate type of business
constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP,
partnership, society, proprietor, HUF, firm, Inc., PLC, GmbH, SA, PTE, Sdn, AG etc.;

Explanation.- For the purposes of this sub-clause, it is hereby clarified that the name including phrase
‘Electoral Trust’ may be allowed for Registration of companies to be formed under section 8 of the Act,
in accordance with the Electoral Trusts Scheme, 2013 notified by the Central Board of Direct Taxes
(CBDT):

Provided that name application is accompanied with an affidavit to the effect that the name to be
obtained shall be only for the purpose of registration of companies under Electoral Trust Scheme as
notified by the Central Board of Direct Taxes;

(vii) the proposed name contains the words ‘British India’;

(viii) the proposed name implies association or connection with embassy or consulate or a
foreign government;

(ix) the proposed name includes or implies association or connection with or patronage of a national
hero or any person held in high esteem or important personages who occupied or are occupying
important positions in Government;

[(x) omitted by notification number G.S.R. 99(E) dated 22 January, 2016. Before omission it
read as “(x) the proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’
or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:-
BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan
and David:
Provided that existing company may use its abbreviated name as part of the name for formation of a
new company as subsidiary or joint venture or associate company but such joint venture or associated
company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture
or associated company as DPM Papers Limited and not as DPM Limited:
Provided further that the companies well known in their respective field by abbreviated names
are allowed to change their names to abbreviation of their existing name after following the
requirements of the Act;”].

(xi) the proposed name is identical to the name of a company dissolved as a result of liquidation
proceeding and a period of two years have not elapsed from the date of such dissolution:

Provided that if the proposed name is identical with the name of a company which is struck off in
pursuance of action under section 248 of the Act [or under section 560 of the Companies Act,
1956 (1 of 1956)]524, then the same shall not be allowed before the expiry of twenty years from the
publication in the Official Gazette being so struck off;

(xii) it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or
the name of a limited liability partnership which is struck off up to a period of five years;

524
Inserted by Notification number G.S.R. 349(E) dated 01st May 2015.

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(xiii) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture
Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the
applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA
etc. have been complied with by the applicant;

(xiv) the proposed name includes the word “State”, the same shall be allowed only in case the
company is a Government company;

(xv) the proposed name is containing only the name of a continent, country, state, city such as Asia
limited, Germany Limited, Haryana Limited, Mysore Limited;

(xvi) the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd., and not
Lakshmi Silk Manufacturing Co. Ltd;

[(xvii) omitted by notification number G.S.R. 99(E) dated 22 January, 2016. Before omission it
read as “(xvii) it is intended or likely to produce a misleading impression regarding the scope or
scale of its activities which would be beyond the resources at its disposal:”].

(xviii) the proposed name includes name of any foreign country or any city in a foreign country, the
same shall be allowed if the applicant produces any proof of significance of business relations with
such foreign country like Memorandum of Understanding with a company of such country:

Provided that the name combining the name of a foreign country with the use of India like India Japan
or Japan India shall be allowed if, there is a government to government participation or patronage and
no company shall be incorporated using the name of an enemy country.

Explanation.- For the purposes of this clause, enemy country means so declared by the Central
Government from time to time.

[(3) omitted by notification number G.S.R. 99(E) dated 22 January, 2016. Before omission it read as “
(3) If any company has changed its activities which are not reflected in its name, it shall change its
name in line with its activities within a period of six months from the change of activities after complying
with all the provisions as applicable to change of name.”].

[(4) omitted by notification number G.S.R. 99(E) dated 22 January, 2016. Before omission it read as
“(4) In case the key word used in the name proposed is the name of a person other than the name(s) of the
promoters or their close blood relatives, No objection from such other person(s) shall be attached with the
application for name. In case the name includes the name of relatives, the proof of relation shall be attached
and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the
name of the promoters or their relatives.”].

(5) The applicant shall declare in affirmative or negative ( to affirm or deny ) whether they are using or have
been using in the last five years , the name applied for incorporation of company or LLP in any other business
constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes
details thereof and No Objection Certificate from other partners and associates for use of such name by the
proposed Company or LLP, as the case may be, and also a declaration as to whether such other business
shall be taken over by the proposed company or LLP or not .

(6) The following words and combinations thereof shall not be used in the name of a company in English
or any of the languages depicting the same meaning unless the previous approval of the Central
Government has been obtained for the use of any such word or expression-
(a) Board;
(b) Commission;
(c) Authority;
(d) Undertaking;
(e) National;
(f) Union;
(g) Central;
(h) Federal;
(i) Republic;

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(j) President;
(k) Rashtrapati;
(l) Small Scale Industries;
(m) Khadi and Village Industries Corporation;
(n) 525Financial Corporation and the like;
(o) Municipal;
(p) Panchayat;
(q) Development Authority;
(r) Prime Minister or Chief Minister;
(s) Minister;
(t) Nation;
(u) Forest corporation;
(v) Development Scheme;
(w) Statute or Statutory;
(x) Court or Judiciary;
(y) Governor;
(z) the use of word Scheme with the name of Government (s) , State , India, Bharat or any government
authority or in any manner resembling with the schemes launched by Central, state or local
Governments and authorities; and
(za) Bureau

(7) For the Companies under section 8 of the Act, the name shall include the words foundation, Forum,
Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc. Every
company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.

(8) The names released on change of name by any company shall remain in data base and shall not be allowed
to be taken by any other company including the group company of the company who has changed the name
for a period of three years from the date of change subject to specific direction from the competent authority in
the course of compromise, arrangement and amalgamation.

526
[9. Reservation of name.-

[Refer section 4] [Refer Circular 11/2014 dated 12 May 2014 and circular 13/2014 dated 23 May 2014.
Also refer Notification number S.O. 218(E) dated 22nd January, 2016 for name approval by Central
Registration Centre (CRC) in case of application in Form No. INC-1]

525
Comma between the words Financial and Corporation omitted by notification number G.S.R.743(E)
dated 27th July, 2016.

526
Substituted by notification no. G.S.R. 284(E) dated 23rd March 2018, w.e.f. 27th March 2018. Prior to
substitution, it read as “An application for reservation of name shall be made through the web service
available at www.mca.gov.in by using form RUN (Reserve Unique Name) along with fee as provided in
the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected,
as the case may be, by the Registrar, Central Registration Centre after allowing re-submission of such
application within fifteen days for rectification of the defects, if any.” AND prior to substitution, it was
substituted by notification no. G.S.R. 49(E) dated 20th January 2018, w.e.f. 26th January 2018 as “An
application for the reservation of a name shall be made in Form No. INC-1 along with the fee as provided
in the Companies (registration offices and fees) Rules, 2014 which may be approved or rejected, as the
case may be, by the Registrar, Central Registration Centre.”. AND prior to that it was substituted by
notification number G.S.R. 99(E) dated 22 January, 2016 and before such substitution in 2016, it read
as “An application for the reservation of a name shall be made in Form No. INC-1 along with the fee as
provided in the Companies (Registration offices and fees) Rules, 2014.”.

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An application for reservation of name shall be made through the web service available
at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in
the Companies (Registration offices and fees) Rules, 2014, which may either be approved
or rejected, as the case may be, by the Registrar, Central Registration Centre]

10. Where articles contain entrenchment provision

[Refer section 5 (5)]

10. Where the articles contain the provisions for entrenchment, the company shall give
notice to the Registrar of such provisions in Form No. INC-2 or 527[omitted] or Form No.
INC-32 (SPICe)], as the case may be, along with the fee as provided in the Companies
(Registration offices and fees) Rules, 2014 at the time of incorporation of the company
or in case of existing companies, the same shall be filed in Form No. MGT-14 within thirty
days from the date of entrenchment of the articles, as the case may be, along with the fee
as provided in the Companies (Registration offices and fees) Rules, 2014.

11. Model articles

[Refer section 5 (6)]

11. The model articles as prescribed in Tables F, G, H, I and J of Schedule I may be

adopted by a company as may be applicable to the case of the company, either in
totality or otherwise.

528
[12. Application for incorporation of companies.-

527
Omitted words “Form No. INC-7” from rule 10, by notification no. G.S.R. 49(E) dt. 20th January 2018,
with effect from 26th January, 2018. Prior to that, it was Substituted with “Form No. INC-7 or Form No.
INC-32 (SPICe)” by Companies (Incorporation) Fifth Amendment Rules, 2016 notification no. G.S.R.
1184(E) with effect from 01 January, 2017. Prior to substitution it read as ‘Form No. INC-7’.

528
Substituted rule 12 by notification no. G.S.R. 49(E) dt. 20th January 2018, with effect from 26th
January, 2018.
Prior to substitution, it read as “An application shall be filed, with the Registrar within whose jurisdiction
the registered office of the company is proposed to be situated, in *[Form No. INC-7 (Part I company
and company with more than seven subscribers) and Form No. INC-32 (SPICe))] (Part I company and
company with more than seven subscribers) and Form No. INC-32 (SPICe)] along with the fee as
provided in the Companies (Registration offices and fees) Rules, 2014 for registration of a company:
**[Provided that in case pursuing of any of the objects of a company requires registration or approval
from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board, registration
or approval, as the case may be, from such regulator shall be obtained by the company before pursuing
such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the
company].”.
* Substituted with “Form No. INC-7] (Part I company and company with more than seven subscribers)
and Form No. INC-32 (SPICe))” by Companies (Incorporation) Fifth Amendment Rules, 2016

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[Relevant Notification: Registration of companies by Central Registration Centre (CRC); ]

An application for registration of a company shall be filed, with the Registrar within
whose jurisdiction the registered office of the company is proposed to be situated, in
Form No.INC-32 (SPICe) along with the fee as provided under the Companies
(Registration offices and fees) Rules, 2014;
Provided that in case pursuing of any of the objects of a company requires
registration or approval from sectoral regulators such as the Reserve Bank of India,
the Securities and Exchange Board, registration or approval, as the case may be, from
such regulator shall be obtained by the proposed company before pursuing such
objects and a declaration in this behalf shall be submitted at the stage of incorporation
of the company.]

[Refer section 4, section 7]

13. Signing of memorandum and articles.-

[Refer section 7(1) (a)]

The Memorandum and Articles of Association of the company shall be signed in the
following manner, namely:-

(1) The memorandum and articles of association of the company shall be signed by each
subscriber to the memorandum, who shall add his name, address, description and
occupation, if any, in the presence of at least one witness who shall attest the signature and
shall likewise sign and add his name, address, description and occupation, if any and the
witness shall state that “I witness to subscriber/subscriber(s), who has/have subscribed and
signed in my presence (date and place to be given); further I have verified his or their Identity
Details (ID) for their identification and satisfied myself of his/her/their identification
particulars as filled in”

(2) Where a subscriber to the memorandum is illiterate, he shall affix his thumb impression
or mark which shall be described as such by the person, writing for him, who shall place the
name of the subscriber against or below the mark and authenticate it by his own signature
and he shall also write against the name of the subscriber, the number of shares taken by
him.
529
[Explanation.- For the purposes of sub-rule (1) and sub-rule (2), the type written or
printed particulars of the subscribers and witnesses shall be allowed as if it is written
by the subscriber and witness respectively so long as the subscriber and the witness

notification no. G.S.R. 1184(E) with effect from 01 January, 2017. Prior to substitution it read as “Form
No. INC-2 (for One Person Company) and Form No. INC-7 (other than One Person Company)”.
** Proviso to Rule 12 was inserted vide the Companies (Incorporation) Second Amendment Rules, 2015
notification number G.S.R. 442(E) dated the 29th May, 2015.

529
Inserted by notification numberG.S.R.743(E) dated 27th July, 2016.

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as the case may be appends his or her signature or thumb impression, as the case
may be.]

(3) Such person shall also read and explain the contents of the memorandum and articles
of association to the subscriber and make an endorsement to that effect on the
memorandum and articles of association.

(4) Where the subscriber to the memorandum is a body corporate, the memorandum and
articles of association shall be signed by director, officer or employee of the body corporate
duly authorized in this behalf by a resolution of the board of directors of the body corporate
and where the subscriber is a Limited Liability Partnership, it shall be signed by a partner of
the Limited Liability Partnership, duly authorized by a resolution approved by all the partners
of the Limited Liability Partnership:

Provided that in either case, the person so authorized shall not, at the same time,
be a subscriber to the memorandum and articles of Association.

(5) Where subscriber to the memorandum is a foreign national residing outside India-

(a) in a country in any part of the Commonwealth, his signatures and address on the
memorandum and articles of association and proof of identity shall be notarized by a
Notary (Public) in that part of the Commonwealth.

(b) in a country which is a party to the Hague Apostille Convention, 1961, his signatures
and address on the memorandum and articles of association and proof of identity shall be
notarized before the Notary (Public) of the country of his origin and be duly apostillised in
accordance with the said Hague Convention.

(c) in a country outside the Commonwealth and which is not a party to the Hague Apostille
Convention, 1961, his signatures and address on the memorandum and articles of
association and proof of identity, shall be notarized before the Notary (Public) of such
country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or
Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular
Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any
of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and
53 Vic.C.10), or in any Act amending the same;

(d) visited in India and intended to incorporate a company, in such case the
incorporation shall be allowed if, he/she is having a valid Business Visa.

Explanation.- For the purposes of this clause, it is hereby clarified that, in case of
Person is of Indian Origin or Overseas Citizen of India, requirement of business Visa
shall not be applicable.

14. Declaration by professionals.-

[Refer section 7(1) (b)]

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For the purposes of clause (b) of sub-section (1) of section 7, the declaration by an
advocate, a Chartered Accountant, Cost accountant or Company Secretary in practice
shall be in Form No. INC-8.

Explanation (i) “chartered accountant” means a chartered accountant as defined in clause

(b) of sub section 1 of section 2 of the Chartered Accountants Act, 1949 (ii) “Cost
Accountant” means a cost accountant as defined in clause (b) of subsection (1) of section
2 of the Cost and Works Accountants Act, 1959 and (iii) “company secretary” means a
“company secretary” or “secretary” means as defined in clause (c) of sub-section (1) of
section 2 of the Company Secretaries Act, 1980.

530
[15. Declaration from Subscribers and First Directors.-

[refer circular 12/2014 on PAN declaration by foreign individuals proposed as first dorectors. ]

For the purposes of clause (c) of sub-section (1) of section 7, the declaration shall be
submitted by each of the subscribers to the memorandum and each of the first
directors named in the articles in Form No.INC-9.]

16. Particulars of every subscriber to be filed with the Registrar at the time of
incorporation.

[Refer section 7 (1) (e)]

[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the
Act.]
(1) The following particulars of every subscriber to the memorandum shall be filed with the
Registrar-
(a) Name (including surname or family name) and recent Photograph affixed
and scan with MOA and AOA:

(b) Father’s/Mother’s/ name:

(c) Nationality:

(d) Date of Birth:

(e) Place of Birth (District and State):

(f) Educational qualification:

530
Substituted for Rule 15 vide notification no. G.S.R. 708(E) dated 27th July 2018. Prior to substitution,
it read as “15. Affidavit from subscribers and first directors.-

For the purposes of clause (c) of sub-section (1) of section 7, the affidavit shall be submitted by each
of the subscribers to the memorandum and each of the first directors named in the articles in Form
No.INC-9”.

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(g) Occupation:

(h) Income-tax permanent account number:

(i) Permanent residential address and also Present address (Time since
residing at present address and address of previous residence address (es) if
stay of present address is less than one year) similarly the office/business
addresses :

(j) Email id of Subscriber;

(k) Phone No. of Subscriber;

(l) Fax no. of Subscriber (optional)

Explanation.- information related to (i) to (l) shall be of the individual subscriber

and not of the professional engaged in the incorporation of the company;

(m) Proof of Identity:

* For Indian Nationals:
PAN Card ( mandatory) and any one of the following

Voter’s identity card

Passport copy

Driving License copy

Unique Identification Number (UIN)

* For Foreign nationals and Non Resident Indians – Passport

531
[Explanation.- In case the subscriber is already holding a valid DIN, and the
particulars provided therein have been updated as on the date of application,
and the declaration to this effect is given in the application, the proof of identity
and residence need not be attached.]

(n) Residential proof such as Bank Statement, Electricity Bill, Telephone / Mobile
Bill:

Provided that Bank statement Electricity bill, Telephone or Mobile bill shall not
be more than two months old;

(o) Proof of nationality in case the subscriber is a foreign national.

531
Inserted by notification numberG.S.R.743(E) dated 27th July, 2016.

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(p) If the subscriber is already a director or promoter of a company(s), the
particulars relating to-
(i) Name of the company;
(ii) Corporate Identity Number;
(iii) Whether interested as a director or promoter;
[Term ‘interested director’ is defined under section 2(49)]
(q) 532[*]

(2) Where the subscriber to the memorandum is a body corporate, then the following
particulars shall be filed with the Registrar-
(a) Corporate Identity Number of the Company or Registration number of the
body corporate, if any

(b) GLN, if any;

(c) the name of the body corporate

(d) the registered office address or principal place of business;

(e) E-mail Id;

(f) if the body corporate is a company, certified true copy of the board resolution
specifying inter alia the authorization to subscribe to the memorandum of association
of the proposed company and to make investment in the proposed company, the
number of shares proposed to be subscribed by the body corporate, and the name,
address and designation of the person authorized to subscribe to the Memorandum;

(g) if the body corporate is a limited liability partnership 533[*], certified true copy of
the resolution agreed to by all the partners specifying inter alia the authorization to
subscribe to the memorandum of association of the proposed company and to make
investment in the proposed company, the number of shares proposed to be
subscribed in the body corporate, and the name of the partner authorized to
subscribe to the Memorandum;

(h) the particulars as specified above for subscribers in terms of clause (e) of
sub- section (1) of section 7 for the person subscribing for body corporate;

(i) in case of foreign bodies corporate, the details relating to-

(i) the copy of certificate of incorporation of the foreign body corporate; and
(ii) the registered office address.

532
Omitted by notification numberG.S.R.743(E) dated 27th July, 2016. Prior to omission it was
substituted as “the promoter or first director shall self attest his signature and latest photograph in Form
No. INC-10.” by Notification number G.S.R. 349(E) dated 01st May 2015: Prior to substitution clause
(q) read as : "the specimen signature and latest photograph duly verified by the banker or notary shall
be in the prescribed Form No. INC-10".

533
Words “or partnership firm” omitted by notification numberG.S.R.743(E) dated 27th July, 2016.

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17. Particulars of first directors of the company and their consent to act as
such.-

[Refer section 7 (1) (g)]

The particulars of each person mentioned in the articles as first director of the company
and his interest in other firms or bodies corporate along with his consent to act as director
of the company shall be filed in Form No. DIR-12 along with the fee as provided in the
Companies (Registration offices and fees) Rules, 2014.

18. Certificate of incorporation.-

[Refer section 7 (2)]

534
[18. The Certificate of Incorporation shall be issued by the Registrar in Form
No.INC-11 and the Certificate of Incorporation shall mention permanent account
number of the company where it is issued by the Income-tax Department.]

19. License under section 8 for new companies with charitable objects etc.-

[Refer section 8]
(1) A person or an association of persons (hereinafter referred to in this rule as “the
proposed company”), desirous of incorporating a company with limited liability under
sub-section (1) of section 8 without the addition to its name of the word “Limited”, or
as the case may be, the words “Private Limited”, shall make an application in 535[Form
No. INC-32(SPICe)] along with the fee as provided in the Companies (Registration
offices and fees) Rules, 2014 to the Registrar for a license under sub-section (1) of
section 8.

(2) The memorandum of association of the proposed company shall be in Form No. INC-
13.

(3) The application under sub-rule (1) shall be accompanied by the following documents,
namely:—

(a) 536[the memorandum] and articles of association of the proposed company;

534
Rule 18 substituted by the Companies (Incorporation) Amendment Rules, 2017 vide notification no.
G.S.R. 70(E) dated 25 January 2017, with effect from30 January 2017. Prior to substitution it read as
“The certificate of incorporation shall be issued by the Registrar in Form No. INC-11”.

535
Substituted fro “Form No. INC.12” vide notification number G.S.R.411(E) dated 7th June 2019, w.e.f.
15th August 2019.

536
Substituted for the words “the draft memorandum” vide notification number G.S.R.411(E) dated 7th
June 2019, w.e.f. 15th August 2019.

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(b) the declaration in Form No. INC-14 by an Advocate, a Chartered Accountant, cost
accountant or Company Secretary in practice, that 537[the memorandum] and articles of
association have been drawn up in conformity with the provisions of section 8 and rules
made thereunder and that all the requirements of the Act and the rules made thereunder
relating to registration of the company under section 8 and matters incidental or
supplemental thereto have been complied with;

(c) an estimate of the future annual income and expenditure of the company for next
three years, specifying the sources of the income and the objects of the expenditure;

(d) the declaration by each of the persons making the application in Form No. INC-15.

20. License for existing companies.-

[See section 8]
(1) A limited company registered under this Act or under any previous company law, with
any of the objects specified in clause (a) of sub-section (1) of section 8 and the restrictions
and prohibitions as mentioned respectively in clause (b) and (c) of that sub-section, and
which is desirous of being registered under section 8, without the addition to its name of the
word “Limited” or as the case may be, the words “Private Limited”, shall make an
application in Form No. INC-12 along with the fee as provided in the Companies
(Registration offices and fees) Rules, 2014 to the Registrar for a licence under sub-
section (5) of section 8.

(2) The application under sub-rule (1), shall be accompanied by the following
documents, namely:-

(a) the memorandum and articles of association of the company;

(b) the declaration as given in Form No. INC-14 by an Advocate, a Chartered accountant,
cost accountant or Company Secretary in practice, that the memorandum and articles of
association have been drawn up in conformity with the provisions of section 8 and rules
made thereunder and that all the requirements of the Act and the rules made thereunder
relating to registration of the company under section 8 and matters incidental or
supplemental thereto have been complied with;

(c) For each of the two financial years immediately preceding the date of the
application, or when the company has functioned only for one financial year, for such
year (i) the financial statements, (ii) the Board’s reports, and (iii) the audit reports,
relating to existing companies

537
Substituted for the words “the draft memorandum” vide notification number G.S.R.411(E) dated 7th
June 2019, w.e.f. 15th August 2019.

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(d) a statement showing in detail the assets (with the values thereof), and the liabilities
of the company, as on the date of the application or within thirty days preceding that
date;

(e) an estimate of the future annual income and expenditure of the company for next
three years, specifying the sources of the income and the objects of the expenditure;

(f) the certified copy of the resolutions passed in general/ board meetings approving
registration of the company under section 8; and

(g) a declaration by each of the persons making the application in Form No. INC-15.

(3) The company shall, within a week from the date of making the application to the
Registrar, publish a notice at his own expense, and a copy of the notice, as published,
shall be sent forthwith to the Registrar and the said notice shall be in Form No. INC-
26 and shall be published-

(a) at least once in a vernacular newspaper in the principal vernacular language of the
district in which the registered office of the proposed company is to be situated or is
situated, and circulating in that district, and at least once in English language in an English
newspaper circulating in that district; and

(b) on the websites as may be notified by the Central Government.

(4) The Registrar may require the applicant to furnish the approval or concurrence of any
appropriate authority, regulatory body, department or Ministry of the Central Government or
the State Government(s).

(5) The Registrar shall, after considering the objections, if any, received by it within thirty
days from the date of publication of notice, and after consulting any authority, regulatory
body, Department or Ministry of the Central Government or the State Government(s), as it
may, in its discretion, decide whether the license should or should not be granted.

(6) The licence shall be in Form No. INC-16 or Form No. INC-17, as the case may
be, and the Registrar shall have power to include in the licence such other conditions
as may be deemed necessary by him.

(7) The Registrar may direct the company to insert in its memorandum, or in its articles, or
partly in one and partly in the other, such conditions of the license as may be specified
by the Registrar in this behalf.

21. Conditions for conversion of a company registered under Section 8 into a

company of any other kind.

[Refer section 8, section 18]

(1) A company registered under section 8 which intends to convert itself into a
company of any other kind shall pass a special resolution at a general meeting for
approving such conversion.

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(2) The explanatory statement annexed to the notice convening the general meeting
shall set out in detail the reasons for opting for such conversion including the following,
namely:-

(a) the date of incorporation of the company;

(b) the principal objects of the company as set out in the memorandum of association;

(c) the reasons as to why the activities for achieving the objects of the company cannot
be carried on in the current structure i.e. as a section 8 company;

(d) if the principal or main objects of the company are proposed to be altered, what
would be the altered objects and the reasons for the alteration;

(e) what are the privileges or concessions currently enjoyed by the company, such as tax
exemptions, approvals for receiving donations or contributions including foreign contributions,
land and other immovable properties, if any, that were acquired by the company at
concessional rates or prices or gratuitously and, if so, the market prices prevalent at the time
of acquisition and the price that was paid by the company, details of any donations or
bequests received by the company with conditions attached to their utilization etc.

(f) details of impact of the proposed conversion on the members of the company
including details of any benefits that may accrue to the members as a result of the
conversion.

(3) A certified true copy of the special resolution along with a copy of the Notice convening
the meeting including the explanatory statement shall be filed with the Registrar in Form
No. MGT-14 along with the fee.

(4) The company shall file an application in Form No. INC-18 with the Regional Director
with the fee along with a certified true copy of the special resolution and a copy of the
Notice convening the meeting including the explanatory statement for approval for
converting itself into a company of any other kind and the company shall also attach the
proof of serving of the notice served to all the authorities mentioned in sub-rule (2) of rule
22.

(5) A copy of the application with annexures as filed with the Regional Director shall
also be filed with the Registrar.

22. Other conditions to be complied with by companies registered under section

8 seeking conversion into any other kind.-

[Refer section 8, section 18]

(1) The company shall, within a week from the date of submitting the application to the
Regional Director, publish a notice at its own expense, and a copy of the notice, as
published, shall be sent forthwith to the Regional Director and the said notice shall be in
Form No. INC-19 and shall be published-

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(a) at least once in a vernacular newspaper in the principal vernacular language of the
district in which the registered office of the company is situated, and having a wide
circulation in that district, and at least once in English language in an English newspaper
having a wide circulation in that district; and

(b) on the website of the company, if any, and as may be notified or directed by the
Central Government.

(2) The company shall send a copy of the notice, simultaneously with its publication,
together with a copy of the application and all attachments by registered post or hand
delivery, to the Chief Commissioner of Income Tax having jurisdiction over the company,
Income Tax Officer who has jurisdiction over the company, the Charity Commissioner, the
Chief Secretary of the State in which the registered office of the company is situated, any
organisation or Department of the Central Government or State Government or other
authority under whose jurisdiction the company has been operating and if any of these
authorities wish to make any representation to Regional Director, it shall do so within sixty
days of the receipt of the notice, after giving an opportunity to the Company.

(3) The copy of proof of serving such notice shall be attached to the application.

(4) The Board of directors shall give a declaration to the effect that no portion of the
income or property of the company has been or shall be paid or transferred directly or
indirectly by way of dividend or bonus or otherwise to persons who are or have been
members of the company or to any one or more of them or to any persons claiming
through any one or more of them.

(5) Where the company has obtained any special status, privilege, exemption, benefit or
grant(s) from any authority such as Income Tax Department, Charity Commissioner or any
organisation or Department of Central Government, State Government, Municipal Body or
any recognized authority, a “No Objection Certificate” must be obtained, if required under
the terms of the said special status, privilege, exemption, benefit or grant(s) from the
concerned authority and filed with the Regional Director, along with the application.

(6) The company should have filed all its financial statements and Annual Returns upto the
financial year preceding the submission of the application to the Regional Director and all
other returns required to be filed under the Act up to the date of submitting the application
to the Regional Director and in the event the application is made after the expiry of three
months from the date of preceding financial year to which the financial statement has been
filed, a statement of the financial position duly certified by chartered accountant made up to
a date not preceding thirty days of filing the application shall be attached.

(7) The company shall attach with the application a certificate from practicing
Chartered Accountant or Company Secretary in practice or cost accountant in practice
certifying that the conditions laid down in the Act and these rules relating to conversion
of a company registered under section 8 into any other kind of company, have been
complied with.

(8) The Regional Director may require the applicant to furnish the approval or
concurrence of any particular authority for grant of his approval for the conversion and
he may also obtain the report from the Registrar.

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(9) On receipt of the application, and on being satisfied , the Regional Director shall
issue an order approving the conversion of the company into a company of any other
kind subject to such terms and conditions as may be imposed in the facts and
circumstances of each case including the following conditions, namely;-

(a) the company shall give up and shall not claim, with effect from the date its
conversion takes effect, any special status, exemptions or privileges that it enjoyed by
virtue of having been registered under the provisions of section 8;

(b) if the company had acquired any immovable property free of cost or at a concessional
cost from any government or authority, it may be required to pay the difference between the
cost at which it acquired such property and the market price of such property at the time of
conversion either to the government or to the authority that provided the immovable property;

(c) any accumulated profit or unutilised income of the company brought forward from
previous years shall be first utilized to settle all outstanding statutory dues, amounts due to
lenders claims of creditors, suppliers, service providers and others including employees
and lastly any loans advanced by the promoters or members or any other amounts
due to them and the balance, if any, shall be transferred to the Investor Education and
Protection Fund within thirty days of receiving the approval for conversion;

(10) Before imposing the conditions or rejecting the application, the company shall be
given a reasonable opportunity of being heard by the Regional Director

(11) On receipt of the approval of the Regional Director,

(i) the company shall convene a general meeting of its members to pass a special
resolution for amending its memorandum of association and articles of association as
required under the Act consequent to the conversion of the section 8 company into a
company of any other kind;
(ii) the Company shall thereafter file with the Registrar.-
(a) a certified copy of the approval of the Regional Director within thirty days from the
date of receipt of the order in Form No. INC-20 along with the fee;
(b) amended memorandum of association and articles of association of the company.
(c) a declaration by the directors that the conditions, if any imposed by the Regional
Director have been fully complied with.

(12). On receipt of the documents referred to in sub rule (10) above, the Registrar shall
register the documents and issue the fresh Certificate of Incorporation.

23. Intimation to Registrar of revocation of licence issued under section 8.-

[Refer section 8]
Where the licence granted to a company registered under section 8 has been revoked,
the company shall apply to the Registrar in Form No. INC-20 along with the fee to convert
its status and change of name accordingly.

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538
[23A. Declaration at the time of commencement of business.-

The declaration under section 10A by a director shall be in Form No.INC-20A and shall
be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014
and the contents of the said form shall be verified by a Company Secretary or a
Chartered Accountant or a Cost Accountant, in practice:

Provided that in the case of a company pursuing objects requiring registration

or approval from any sectoral regulators such as the Reserve Bank of India, Securities
and Exchange Board of India, etc., the registration or approval, as the case may be
from such regulator shall also be obtained and attached with the declaration.]

24. 539[Omitted ….Declaration at the time of commencement of business.- ]

25. Verification of registered office.-

[Refer section 12]

(1) The verification of the registered office shall be filed in Form No. INC-22 along with
the fee, and

(2) There shall be attached to said Form, any of the following documents, namely:-

(a) the registered document of the title of the premises of the registered office in the
name of the company; or

(b) the notarized copy of lease or rent agreement in the name of the company along
with a copy of rent paid receipt not older than one month;

(c) the authorization from the owner or authorized occupant of the premises along with
proof of ownership or occupancy authorization, to use the premises by the company
as its registered office; and

538
Inserted by the Companies (Incorporation) Fourth Amendmet Rules, 2018 as notificed by notification
no. G.S.R. 1219(E) dated 18th December 2018, w.e.f. 18th December 2018.

539
Omitted vide the Companies (Incorporation) Second Amendment Rules, 2015 notification number
G.S.R. 442(E) dated the 29th May, 2015. Prior to omission it read “The declaration filed by a director
shall be in Form No. INC-21 along with the fee as and the contents of the form shall be verified by a
Company Secretary in practice or a Chartered Accountant or a Cost Accountant in practice:

Provided that in the case of a company requiring registration from sectoral regulators such as Reserve
Bank of India, Securities and Exchange Board of India etc. the approval from such regulator shall be
required.” Omission is consequent to omission of section 11.

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(d) the proof of evidence of any utility service like telephone, gas, electricity, etc.
depicting the address of the premises in the name of the owner or document, as the
case may be, which is not older than two months.

540
[25A. Active Company Tagging Identities and Verification (ACTIVE).-

[Refer Rule 12B of the Companies (Appointment and Qualification of Directors) Rules, 2014]

(1) Every company incorporated on or before the 31st December, 2017 shall file the
particulars of the company and its registered office, in e-Form ACTIVE (Active
Company Tagging Identities and Verification) on or before 25.04.2019.

Provided that any company which has not filed its due financial statements
under section 137 or due annual returns under section 92 or both with the Registrar
shall be restricted from filing e-Form-ACTIVE, unless such company is under
management dispute and the Registrar has recorded the same on the register:

Provided further that companies which have been struck off or are under
process of striking off or under liquidation or amalgamated or dissolved, as recorded
in the register, shall not be required to file e-Form ACTIVE:

Provided also that in case a company does not intimate the said particulars, the
Company shall be marked as “ACTIVE-non-compliant” on or after 26th April, 2019 and
shall be liable for action under sub-section (9) of section 12 of the Act:

Provided also that no request for recording the following event based
information or changes shall be accepted by the Registrar from such companies
marked as “ACTIVE-non-compliant”, unless “ e-Form ACTIVE” is filed-

(i) SH-07 (Change in Authorized Capital);

(ii) PAS-03 (Change in Paid-up Capital);

(iii) DIR-12 (Changes in Director except cessation);

(iv) INC-22 (Change in Registered Office);

(v) INC-28 (Amalgamation, de-merger)

(2) Where a company files “e-Form ACTIVE”, on or after 26th April, 2019, the company
shall be marked as “ACTIVE Compliant”, on payment of fee of ten thousand rupees.]

540
Inserted by the Companies (Incorporation) Amendment Rules, 2019 vide notification number G.S.R.
144(E) dated 21st February 2019, w.e.f. 25 February 2019.

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26. Publication of name by company.-

[Refer section 12]

541
[(1) Every company which has a website for conducting online business or
otherwise, shall disclose/publish its name, address of its registered office, the
Corporate Identity Number, Telephone number, fax number if any, email and the
name of the person who may be contacted in case of any queries or grievances on
the landing/home page of the said website.

(2) The Central Government may as and when required, notify the other documents
on which the name of the company shall be printed.]

27. Notice and verification of change of situation of the registered office.-

[Refer section 12]

The notice of change of the situation of the registered office and verification thereof shall
be filed in Form No. INC-22 along with the fee and shall be attached to the said form,
the similar documents and manner of verification as are specified for verification of
Registered office on incorporation in terms of sub-section (2) of section 12.
542
[28. Shifting of registered office within the same State.-

541
Substituted by notification number G.S.R. 743(E) dated 27th July, 2016. Prior to substitution it read
as “The Central Government may as and when required, notify the other documents on which the name
of the company shall be printed.”.

542
Rule 28 substituted by notification number G.S.R. 955(E) dated 27th July 2017. Prior to substitution
it read as under:

“(1) An application seeking confirmation from the Regional Director for shifting the registered office within
the same State from the jurisdiction of one Registrar of Companies to the jurisdiction of another Registrar of
Companies, shall be filed by the company with the Regional Director in Form no. INC-23 along with the fee.
(2) The company shall, not less than one month before filing any application with the Regional Director
for the change of registered office.-
(a) publish a notice, at least once in a daily newspaper published in English and in the principal language
of that district in which the registered office of the company is situated and circulating in that district;
and
(b) serve individual notice on each debenture holder, depositor and creditor of the company, clearly indicating
the matter of application and stating that any person whose interest is likely to be affected by the proposed
alteration of the memorandum may intimate his nature of interest and grounds of opposition to the Regional
Director with a copy to the company within twenty one days of the date of publication of that notice:
Provided that in case no objection is received by the Regional Director within twenty one days from the
date of service or publication of the notice, the person concerned shall be deemed to have given his
consent to the change of registered office proposed in the application:

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[Refer section 12]

An application seeking confirmation from the Regional Director for shifting the
registered office within the same State from the jurisdiction of one Registrar of
Companies to the jurisdiction of another Registrar of Companies, shall be filed by the
company with the Regional Director in Form No. INC.23 along with the fee and the
following documents,-

a. Board Resolution for shifting of registered office;

b. Special Resolution of the members of the company approving the shifting of

registered office;

c. a declaration given by the Key Managerial Personnel or any two directors authorised
by the Board, that the company has not defaulted in payment of dues to its workmen
and has either the consent of its creditors for the proposed shifting or has made
necessary provision for the payment thereof;

d. a declaration not to seek change in the jurisdiction of the Court where cases for
prosecution are pending;

e. acknowledged copy of intimation to the Chief Secretary of the State as to the

proposed shifting and that the employees interest is not adversely affected consequent
to proposed shifting].

29. Alteration of Memorandum by change of name.-

[Refer section 13]

543
[(1) The change of name shall not be allowed to a company which has not filed
annual returns or financial statements due for filing with the Registrar or which has
failed to pay or repay matured deposits or debentures or interest thereon:

Provided further that the shifting of registered office shall not be allowed if any inquiry, inspection or
investigation has been initiated against the company or any prosecution is pending against the company
under the Act.
[Provided also that on completion of such inquiry, inspection or investigation as a consequence of which
no prosecution is envisaged or no prosecution is pending, shifting of registered office shall be allowed.]
The third proviso was inserted by notification number G.S.R.743(E) dated 27th July, 2016.”
543
Substituted by notification number G.S.R.743(E) dated 27th July, 2016. Prior to substitution it read
as “(1) The change of name shall not be allowed to a company which has defaulted in filing its annual
returns or financial statements or any document due for filing with the Registrar or which has defaulted
in repayment of matured deposits or debentures or interest on deposits or debentures.”.

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Provided that the change of name shall be allowed upon filing necessary
documents or payment or repayment of matured deposits or debentures or interest
thereon as the case may be.]

(2) An application shall be filed in Form No. INC-24 along with the fee for change in the
name of the company and a new certificate of incorporation in Form No. INC-25 shall be
issued to the company consequent upon change of name.

544
[30. Shifting of registered office from one State or Union territory to another
State.-

544
Rule 30 substituted by notification number G.S.R. 955(E) dated 27th July 2017. Prior to substitution
it read as under:

“(1) An application under sub-section (4) of section 13, for the purpose of seeking approval for alteration
of memorandum with regard to the change of place of the registered office from one State Government
or Union territory to another, shall be filed with the Central Government in Form No. INC-23 along with
the fee and shall be accompanied by the following documents, namely:-
(a) a copy of the memorandum and articles of association;
(b) a copy of the notice convening the general meeting along with relevant Explanatory Statement;
(c) a copy of the special resolution sanctioning the alteration by the members of the company;
(d) a copy of the minutes of the general meeting at which the resolution authorizing such alteration was
passed, giving details of the number of votes cast in favor or against the resolution;
(e) an affidavit verifying the application;
(f) the list of creditors and debenture holders entitled to object to the application;
(g) an affidavit verifying the list of creditors;
(h) the document relating to payment of application fee;
(i) a copy of board resolution or Power of Attorney or the executed Vakalatnama, as the case may be.
[(j) a copy of the No Objection Certificate from the Reserve Bank of India where the applicant is a
registered Non-Banking Financial Company] {Clause (j) was Inserted by notification number G.S.R.743(E)
dated 27th July, 2016.}

(2) There shall be attached to the application, a list of creditors and debenture holders, drawn up to the
latest practicable date preceding the date of filing of application by not more than one month, setting
forth the following details, namely:-
(a) the names and address of every creditor and debenture holder of the company;
(b) the nature and respective amounts due to them in respect of debts, claims or liabilities:

Provided that the applicant company shall file an affidavit, signed by the Company Secretary of the
company, if any and not less than two directors of the company, one of whom shall be a managing director,
where there is one, to the effect that they have made a full enquiry into the affairs of the company and, having
done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in
the list of the debts or claims payable on a contingency or not ascertained are proper estimates of the values
of such debts and claims and that there are no other debts of or claims against the company to their
knowledge.

(3) There shall also be attached to the application an affidavit from the directors of the company that no
employee shall be retrenched as a consequence of shifting of the registered office from one state to
another state and also there shall be an application filed by the company to the Chief Secretary of the
concerned State Government or the Union territory

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[Refer section 13]
(1) An application under sub-section (4) of section 13, for the purpose of seeking
approval for alteration of memorandum with regard to the change of place of the
registered office from one State Government or Union territory to another, shall be filed
with the Central Government in Form No. INC-23 along with the fee and shall be
accompanied by the following documents, namely:-
(a) a copy of the memorandum and articles of association;
(b) a copy of the minutes of the general meeting at which the resolution authorising
such alteration was passed, giving details of the number of votes cast in favour or
against the resolution;
(c) a copy of the Board Resolution or Power of Attorney or the executed vaklatnama,
as the case may be.

(2) There shall be attached to the application, a list of creditors and debenture holders,
drawn up to the latest practicable date preceding the date of filing of application by not
more than one month, setting forth the following details, namely:-

a. the names and address of every creditor and debenture holder of the company;

(4) A duly authenticated copy of the list of creditors shall be kept at the registered office of the company and
any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect
and take extracts from the same on payment of a sum not exceeding ten rupees per page to the company.

(5) There shall also be attached to the application a copy of the acknowledgment of service of a copy
of the application with complete annexures to the Registrar and Chief Secretary of the State
Government or Union territory where the registered office is situated at the time of filing the application.

(6) The company shall at least fourteen days before the date of hearing-
(a) advertise the application in the Form No. INC-26 in a vernacular newspaper in the principal
vernacular language in the district in which the registered office of the company is situated, and at least once
in English language in an English newspaper circulating in that district;
(b) serve, by registered post with acknowledgement due, individual notice(s), to the effect set out
in clause (a) on each debenture-holder and creditor of the company; and
(c) serve, by registered post with acknowledgement due, a notice together with the copy of the
application to the Registrar 544[*] and to the regulatory body, if the company is regulated under any
special Act or law for the time being in force.
(7) Where any objection of any person whose interest is likely to be affected by the proposed application
has been received by the applicant, it shall serve a copy thereof to the Central Government on or before
the date of hearing.
(8) Where no objection has been received from any of the parties, who have been duly served, the
application may be put up for orders without hearing.
(9.) Before confirming the alteration, the Central Government shall ensure that, with respect to every creditor
and debenture holder who, in the opinion of the Central government, is entitled to object to the alteration, and
who signifies his objection in the manner directed by the Central government, either his consent to the
alteration has been obtained or his debt or claim has been discharged or has determined, or has been secured
to the satisfaction of the Central Government.
(10.) The Central Government may make an order confirming the alteration on such terms and
conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper:
Provided that the shifting of registered office shall not be allowed if any inquiry, inspection or investigation has
been initiated against the company or any prosecution is pending against the company under the Act.
[Explanation.- On completion of such inquiry, inspection or investigation as a consequence of which no
prosecution is envisaged or no prosecution is pending, shifting of registered office shall be allowed.]
The explanation was inserted by notification number G.S.R.743(E) dated 27th July, 2016.”

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b. the nature and respective amounts due to them in respect of debts, claims or
liabilities:
Provided that the list of creditors and debenture holders, accompanied by
declaration signed by the Company Secretary of the company, if any, and not less
than two directors of the company, one of whom shall be a managing director, where
there is one, stating that

i. They have made a full enquiry into the affairs of the company and, having
done so, have concluded that the list of creditors are correct, and that the
estimated value as given in the list of the debts or claims payable on a
contingency or not ascertained are proper estimates of the values of such
debts and claims and that there are no other debts of or claims against the
company to their knowledge, and

ii. no employee shall be retrenched as a consequence of shifting of the

registered office from one state to another state and also there shall be an
application filed by the company to the Chief Secretary of the concerned
State Government or the Union territory.

(3). A duly authenticated copy of the list of creditors shall be kept at the registered
office of the company and any person desirous of inspecting the same may, at any
time during the ordinary hours of business, inspect and take extracts from the same
on payment of a sum not exceeding ten rupees per page to the company.

(4). There shall also be attached to the application a copy of the acknowledgment of
service of a copy of the application with complete annexures to the Registrar and Chief
Secretary of the State Government or Union territory where the registered office is
situated at the time of filing the application.

(5). The company shall, not more than thirty days before the date of filing the
application in Form No. INC.23 -

a. advertise in the Form No. INC.26 in the vernacular newspaper in the principal
vernacular language in the district and in English language in an English newspaper
545
[with wide circulation] in the State in which the registered office of the company is
situated:
Provided that a copy of advertisement shall be served on the Central
Government immediately on its publication.

b. serve, by registered post with acknowledgement due, individual notice, to the

effect set out in clause (a) on each debenture-holder and creditor of the company; and

545
Substituted for the word ‘with the widest circulation’ by the Companies (Incorporation) 2nd
Amendment Rules, 2019 vide notification no. G.S.R. 180(E) dated 6th March 2019, w.e.f. 6th March
2019.

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c. serve, by registered post with acknowledgement due, a notice together with the
copy of the application to the Registrar and to the Securities and Exchange Board of
India, in the case of listed companies and to the regulatory body, if the company is
regulated under any special Act or law for the time being in force.

(6). There shall be attached to the application a duly authenticated copy of the
advertisement and notices issued under sub-rule (5), a copy each of the objection
received by the applicant, and tabulated details of responses along with the counter-
response from the company received either in the electronic mode or in physical mode
in response to the advertisements and notices issued under sub-rule (5).

(7). Where no objection has been received from any person in response to the
advertisement or notice under sub-rule (5) or otherwise, the application may be put up
for orders without hearing and the order either approving or rejecting the application
shall be passed within fifteen days of the receipt of the application.

8. Where an objection has been received,

i. the Central Government shall hold a hearing or hearings, as required and direct
the company to file an affidavit to record the consensus reached at the hearing, upon
executing which, the Central Government shall pass an order approving the shifting,
within sixty days of filing the application.

ii. where no consensus is reached at the hearings the company shall file an affidavit
specifying the manner in which objection is to be resolved within a definite time frame,
duly reserving the original jurisdiction to the objector for pursuing its legal remedies,
even after the registered office is shifted, upon execution of which the Central
Government shall pass an order confirming or rejecting the alteration within sixty days
of the filing of application.

(9). The order passed by the Central Government confirming the alteration may be on
such terms and conditions, if any, as it thinks fit, and may include such order as to
costs as it thinks proper:
Provided that the shifting of registered office shall not be allowed if any inquiry,
inspection or investigation has been initiated against the company or any prosecution
is pending against the company under the Act.

(10). On completion of such inquiry, inspection or investigation as a consequence of

which no prosecution is envisaged or no prosecution is pending, shifting of registered
office shall be allowed.]

31. Certified copy of the order of the Central Government

[Refer section 13]

31. The certified copy of the order of the Central Government, approving the alteration of
the memorandum for transfer of registered office of the company from one State to another,

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shall be filed in Form No. INC-28 along with the fee as with the Registrar of the State within
thirty days from the date of receipt of certified copy of the order.

32. Change of objects for which money is raised through prospectus.

[Refer section 13]

(1) Where the company has raised money from public through prospectus and has any
unutilised amount out of the money so raised, it shall not change the objects for which the
money so raised is to be applied unless a special resolution is passed through postal
ballot and the notice in respect of the resolution for altering the objects shall contain the
following particulars, namely:-
(a) the total money received;
(b) the total money utilized for the objects stated in the prospectus;
(c) the unutilized amount out of the money so raised through prospectus,
(d) the particulars of the proposed alteration or change in the objects;
(e) the justification for the alteration or change in the objects;
(f) the amount proposed to be utilised for the new objects;
(g) the estimated financial impact of the proposed alteration on the earnings and cash
flow of the company;
(h) the other relevant information which is necessary for the members to take an
informed decision on the proposed resolution;
(i) the place from where any interested person may obtain a copy of the notice of
resolution to be passed.

(2) The advertisement giving details of each resolution to be passed for change in
objects which shall be published simultaneously with the dispatch of postal ballot
notices to shareholders.

(3) The notice shall also be placed on the website of the company, if any.

33. Alteration of articles.-

[Refer section 14]

(1) For effecting the conversion of a private company into a public company or vice
versa, the application shall be filed in Form No.INC-27 with fee.
546
[(2) subject to provisions of sub-rule (1), for effecting the conversion of a public
company into a private company, a copy of order of the Tribunal approving the

546
Rule 33(2) substituted by notification number G.S.R. 936(E) dated 01 October, 2016, with effect from
01 October, 2016. Prior to substitution it read as “(2) A copy of order of the competent authority
approving the alteration, shall be filed with the Registrar in Form No. INC-27 with fee together with the
printed copy of the altered articles within fifteen days of the receipt of the order from the Central
Government. Explanation.- For the purposes of this sub-rule, the term “competent authority” means, the
Central Government.”

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alteration, shall be filed with the Registrar in Form No.INC-27 with fee together with
the printed copy of altered articles within fifteen days from the date of receipt of the
order from the Tribunal.]

34. Copies of memorandum and articles, etc. to be given to members on request

being made by them.-

[Refer section 17]

A company shall on payment of fee, send a copy of each of the following documents
to a member within seven days of the request being made by him-
(1) the memorandum;
(2) the articles;
(3) every agreement and every resolution referred to in sub-section (1) of section 117,
if and so far as they have not been embodied in the memorandum and articles.

35. Service of documents.-

[Refer section 20]

(1) A document may be served on a company or an officer thereof through electronic

transmission.

(2) For the purposes of sub-rule (1), the term, “electronic transmission” means a
communication–
(a) delivered by –
(i) facsimile telecommunication or electronic mail when directed to the facsimile
number or electronic mail address, respectively, which the company or the officer has
provided from time to time for sending communications to the company or the officer
respectively;
(ii) posting of an electronic message board or network that the company or the
officer has designated for such communications, and which transmission shall be
validly delivered upon the posting; or
(iii) other means of electronic communication,
in respect of which the company or the officer has put in place reasonable systems to
verify that the sender is the person purporting to send the transmission; and
(b) that creates a record that is capable of retention, retrieval and review, and which
may thereafter be rendered into clearly legible tangible form.

(3) A document may be served on the Registrar or any member through electronic
transmission.

(4) For the purposes of sub-rule (3), the term, “electronic transmission” means a
communication –
(a) delivered by –
(i) facsimile telecommunication or electronic mail when directed to the facsimile number
or electronic mail address, respectively, which the Registrar or the member has
provided from time to time for sending communications to the Registrar or the member
respectively;

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(ii) posting of an electronic message board or network that the Registrar or the
member has designated for those communications, and which transmission shall
be validly delivered upon the posting; or
(iii) other means of electronic communication,
in respect of which the Registrar or the member has put in place reasonable systems
to verify that the sender is the person purporting to send the transmission, and
(b) that creates a record that is capable of retention, retrieval and review, and which
may thereafter be rendered into clearly legible tangible form.

(5) For the purposes of sub-section (1) and (2) of section 20, “courier” means a
document sent through a courier which provides proof of delivery.
[The term ‘courier’ is defined by way of explanation to section 20 and per rule of interpretation, the
definition given in the main statute shall prevail over the definition given in the Rules.]

(6) In case of delivery by post, such service shall be deemed to have been effected- (i) in
the case of a notice of a meeting, at the expiration of forty eight hours after the letter
containing the same is posted; and (ii) in any other case, at the time at which the letter would
be delivered in the ordinary course of post.
547
[36. Omitted]

547
Omitted by Companies (Incorporation) Fifth Amendment Rules, 2016 notification no. G.S.R. 1184(E)
with effect from 01 January, 2017. Prior to omission it was Inserted by notification number G.S.R. 349(E)
dated 01st May, 2015 and read as
“36. Integrated Process for Incorporation.
(1) For the purpose of simplifying the filing of forms for incorporation of a company, the integrated process shall
apply with effect from 01/05/2015.
(2) For the purposes of sub-rule (1), the application for allotment of Director Identification Number upto three
Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed
company shall be filed in Integrated Form No. INC-29,for One Person Company, private company, public
company and Producer Company, with the Registrar within whose jurisdiction the registered office of the
company is proposed to be situated, along with the fee of rupees two thousand in addition to the registration
fee as specified in Companies (Registration of Offices and Fees) Rules, 2014.
(3) For the purposes of filing Integrated Incorporation form, the particulars of maximum of three directors shall
be allowed to be filled in INC-29 and allotment of Director Identification Number of maximum of three proposed
directors shall be permitted in Form INC-29 in case of proposed directors not having approved Director
Identification Number.
(4) The promoter or applicant of the proposed company shall propose only one name in e-form No. INC-29.
(5) The promoter or applicant of the proposed company may prepare Memorandum of Association as per
templates in Form INC-30 and may opt for templates of Articles of Association in Form INC-31 in accordance
with the provisions of rule 13 for preparation of Memorandum of Association and Article of Association.
(6) The promoter or the applicant shall sign and witness, the Memorandum of Association and Articles of
Association in the forms downloaded from the portal of the Ministry of Corporate Affairs and scanned legibly
and attach to e-form INC-29 in accordance with the provisions of rule 13 for preparation of Memorandum of
Association and Articles of Association.
(7) The facility to file Integrated application for incorporation in Form INC-29 is available as an option to the
process for separate applications for allotment of Director Identification Number, reservation of name and
Incorporation of a company as provided in these rules.
(8) For an application filed using the Integrated process of incorporation as provided in this rule, the provisions
of sub-clause (i) of sub-section (5) of section 4 of the Act and rule 9 of these rules shall not apply.

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[Refer Notification number S.O. 218(E) dated 22nd January, 2016 for name approval by CRC in case
of application in Form No. INC-1]

548
[37. Conversion of unlimited liability company into a limited liability company
by shares or guarantee.-

(1) Without prejudice to any other provision in the Companies Act, for effecting the
conversion of an unlimited liability company with or without share capital into limited
liability company by shares or guarantee, such a company shall pass a special
resolution in a general meeting and thereafter, an application shall be filed in Form
No. INC-27 in the manner provided in sub-rules (2) and (3).

(2) The Company shall within seven days from the date of passing of the special
resolution in a general meeting, publish a notice, in Form No. INC-27A of such
proposed conversion in two newspapers (one in English and one in vernacular
language) in the district in which the registered office of the company is situate and
shall also place the same on the website of the Company, if any, indicating clearly
the proposal of conversion of the company into a company limited by shares or
guarantee, and seeking objections if any, from the persons interested in its affairs
to such conversion and cause a copy of such notice to be dispatched to its creditors
and debentures holders made as on the date of notice of the general meeting by
registered post or by speed post or through courier with proof of dispatch. The
notice shall also state that the objections, if any, may be intimated to the Registrar

(9) A company using the provisions of this rule may furnish verification of its registered office under sub-section
(2) of section 12 of the Act by filing e-Form INC-29 in which case the company shall attach along with such e-
Form INC-29, any of the documents referred to in sub-rule (2) of rule 25.
(10) The requirement of filing e-form INC-28 may be dispensed with if, the proposed company maintains its
registered office at the given correspondence address.
(11) The Registrar within whose jurisdiction the registered office of the company is proposed to be situated
shall process INC-29 including application for allotment of Director Identification Number.
(12) (a) Where the Registrar, on examining e-form INC-29, finds that it is necessary to call for further information
or finds such application or document to be defective or incomplete in any respect, he shall give intimation to
the applicant to remove the defects and re-submit the e-form within fifteen days from the date of such intimation
given by the Registrar.
(b) After the resubmission of the document, if the registrar still finds that the document is defective or incomplete
in any respect, he shall give one more opportunity of fifteen days to remove such defects or deficiencies.
Clause (ba) was inserted by notification number G.S.R. 99(E) dated 22 January, 2016
[[(ba) After the resubmission of documents and on completion of second opportunity, if the registrar still
finds that the documents are defective or incomplete, he shall give third opportunity to remove such
defects or deficiencies;
Provided that the total period for resubmission of documents shall not exceed a total period of thirty
days.]]
(c) In case, the Registrar is of the opinion that the document is defective or incomplete in any respect after
giving such 547[[three opportunities]], the e-form INC-29 of the proposed company shall be rejected.

(13) The Certificate of Incorporation shall be issued by the Registrar in Form No. INC-11.]”

548
Inserted by notification number G.S.R.743(E) dated 27th July, 2016.

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and to the company within twenty-one days of the date of publication of the notice,
duly indicating nature of interest and grounds of opposition.

(3) The Company shall within forty five days of passing of the special resolution file
an application as prescribed in sub rule (1) for its conversion into a company limited
by shares or guarantee alongwith the fees as provided in the Companies
(Registration offices and Fees) Rules, 2014, by attaching the following documents,
namely:-

a. notice of the general meeting along with explanatory statement;

b. copy of the resolution passed in the general meeting;

c. copy of the newspaper publication;

d. a copy of altered Memorandum of Association as well as Articles of

Association duly certified by any one of the Directors duly authorised in this
behalf or Company Secretary of the Company, if any.

e. declaration signed by not less than two Directors of the Company,

including Managing Director, if any, that such conversion shall not affect any
debts, liabilities, obligations or contracts incurred or entered into by or on
behalf of the Company before conversion (except to the extent that the
liability of the members shall become limited).

f. a complete list of creditors and debenture holders, to whom individual

notices have been sent under sub-rule (2) setting forth the following details,
namely:-

(i) the names and address of every creditor and debenture holder of
the Company;

(ii) the nature and respective amounts due to them in respect of debts,
claims or liabilities:

(iii) declaration by a Director of the Company that notice as required

under sub-rule (2) has been dispatched to all the creditors and
debenture holders with proof of dispatch.

g. a declaration signed by not less than two Directors of the Company, one
of whom shall be a Managing Director where there is one, to the effect that
they have made a full enquiry into the affairs of the Company and, having
done so, have formed an opinion that the list of creditors is correct, and that
the estimated value as given in the list of the debts or claims payable on a
contingency are proper estimates of the values of such debts and claims and
that there are no other debts or claims against the company to their
knowledge.

h. a declaration of solvency signed by at least two Directors of the Company,

one of whom shall be the Managing Director, where there is one to the effect

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that the Board of Directors of the Company have made a full inquiry into the
affairs of the company, as a result of which they have formed an opinion that
it is capable of meeting its liabilities and will not be rendered insolvent within
a period of one year from the date of declaration, through a resolution,
passed in a duly convened meeting or by circulation.

i. The company shall also obtain a certificate from the Auditors that the
company is solvent and that it is a going concern as on the date of passing
of resolution by the Board certifying solvency as per clause (h) above.

j. No Objection Certificate from sectoral regulator, if applicable.

k. No Objection Certificate from all secured creditors, if any.

(4) Declaration signed by not less than two Directors including Managing Director,
where there is one, that no complaints are pending against the company from the
members or investors and no inquiry, inspection or investigation is pending against
the company or its Directors or officers.

(5) The Registrar shall, after considering the application and objections if any,
received by the Registrar and after ensuring that the company has satisfactorily
addressed the objections received by the company, suitably decide whether the
approval for conversion should or should not be granted.

(6) The certificate of incorporation consequent to conversion of unlimited liability

company to into a company limited by shares or guarantee be in Form INC-11A
issued to the company upon grant of approval for conversion.

(7) Conditions to be complied with, subsequent to conversion.-

(1) Company shall not change its name for a period of one year from the date
of such conversion.

(2) The company shall not declare or distribute any dividend without
satisfying past debts, liabilities, obligations or contracts incurred or entered
into before conversion.

Explanation: For the purpose of this clause, past debts, liabilities,

obligations or contracts does not include secured debts due to banks
and financial institutions.

(8) An Unlimited Liability Company shall not be eligible for conversion into a
company limited by shares or guarantee in case-

(a) its networth is negative, or

(b) an application is pending under the provisions of the Companies Act 1956
or the Companies Act, 2013 for striking off its name, or

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The Companies (Incorporation) Rules, 2014

(c) the company is in default of any of its Annual Returns or financial
statements under the provisions of the Companies Act, 1956 or the
Companies Act, 2013, or

(d) a petition for winding up is pending against the company, or

(e) the company has not received amount due on calls in arrears, from its
directors, for a period of not less than six months from the due date; or

(f) an inquiry, inspection or investigation is pending against the company.

(9) The Registrar of Companies shall take a decision on the application filed under
these rules within thirty days from the date of receipt of application complete in all
respects.]

549
[38. Simplified Proforma for Incorporating Company Electronically (SPICE)

(1) The application for incorporation of a company under this rule shall be in FORM
No. INC 32 (SPICe) alongwith e-Memorandum of Association (e-MOA) in Form No.
INC-33 and e-Articles of Association (e-AOA) in Form no. INC-34.
Provided that in case of incorporation of a company falling under section 8 of the
Act, FORM No. INC-32 (SPICe) shall be filed along with FORM No. INC-13
(Memorandum of Association) and FORM No. INC-31 (Articles of Association) as
attachments.
550
[provided further that in case of incorporation of a company having more than
seven subscribers or where any of the subscriber to the MOA/AOA is signing at a
place outside India, MOA/AOA shall be filed with INC-32 (SPICe) in the respective
formats as specified in Table A to J in Schedule I without filing form INC-33 and
INC-34]

(2) For the purposes of sub-rule (1), the application for allotment of Director
Identification Number upto three Directors, reservation of a name, incorporation of
company and appointment of Directors of the proposed for One Person Company,

549
Substituted by Companies (Incorporation) Fifth Amendment Rules, 2016 notification no. G.S.R. 1184(E) with
effect from 01 January, 2017. Prior to substitution it was inserted by notification number G.S.R. 936(E) dated 01
October, 2016 with effect from 02 October, 2016 and read as “(1) The simplified integrated process for
incorporation of a company in Form No. INC-32 alongwith e-Memorandum of Association in Form No. INC-33
and e-Articles of Association in Form No. INC-34.
(2) The provisions of sub-rule (2) to sub-rule (13) of rule 36 shall apply mutatis mutandis for incorporation
under this rule. Provided that for the purposes of references to form numbers INC-29, INC-30 and INC-31 in
rule 36 with Form No. INC-32, Form no. INC-33 and Form No. INC-34 shall be substituted respectively.”.

550
Second proviso inserted to Rule 38(1), by notification no. G.S.R. 49(E) dt. 20th January 2018, with
effect from 26th January, 2018.

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private company, public company and a company falling under section 8 of the Act,
shall be filed in FORM No. INC-32 (SPICe), with the Registrar, within whose
jurisdiction the registered office of the company is proposed to be situated along
with the fee of rupees five hundred in addition to the registration fee as specified in
the Companies (Registration of Offices and Fees) Rules, 2014:
Provided that where an applicant has applied for reservation of a name under Rule
9 and which has been approved therein, he may fill the reserved name as proposed
name of the company.
551
[Provided further that in case of companies incorporated, with effect from the 26th
day of January, 2018, with a nominal capital of less than or 552 [equal to rupees
fifteen lakhs] or in respect of companies not having a share capital whose number
of members as stated in the articles of association does not exceed twenty, fee on
INC-32 (SPICe) shall not be applicable.]
(3) For the purposes of filing SPICe Form, the particulars of maximum of three
directors shall be allowed to be filled in FORM No. INC-32 (SPICe), and allotment
of Director Identification Number of maximum of three proposed directors shall be
permitted in FORM No. INC-32 (SPICe) in case of proposed directors not having
approved Director Identification Number.
(4) The promoter or applicant of the proposed company shall propose only one
name in FORM No. INC-32 (SPICe).
(5) The promoter or applicant of the proposed company shall prepare Memorandum
of Association (e-MoA) in FORM No. INC-33 and Articles of Association (e-AoA) in
FORM No. INC-34, in accordance with rule 13.
Provided that the subscribers and witness or witnesses shall affix their digital
signatures to the e-MoA and e-AoA.
(6) For incorporation using application as provided in this rule, provisions of the sub-
clause (i) of sub-section (5) of section 4 of the Act, rule 9, and clause (a) of sub-rule
(1) of rule 16 to the extent of affixing recent photograph shall not apply.
(7) A company using the provisions of this rule may furnish verification of its
registered office under sub-section (2) of section 12 of the Act by filing FORM No.
INC-32 (SPICe) in which case the company shall attach along with such FORM No.
INC-32 (SPICe), any of the documents referred to in sub-rule (2) of rule 25.

(8) FORM No. INC-22 shall not be required to be filed in case the proposed
company maintains its registered office at the given correspondence address.

551
Second proviso inserted to Rule 38(1), by notification no. G.S.R. 49(E) dt. 20th January 2018, with
effect from 26th January, 2018.

552
Substituted for the words ‘equal to rupees ten lakhs’ by the Companies (Incorporation) 2nd
Amendment Rules, 2019, by notification no. G.S.R. 180(E) dt. 6th March 2019, with effect from 18th
March, 2019.

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(9) (a) Where the Registrar, on examining FORM No. INC-32 (SPICe), finds that
it is necessary to call for further information or finds such application or document
to be defective or incomplete in any respect, he shall give intimation to the applicant
to remove the defects and re-submit the e-form within fifteen days from the date of
such intimation given by the Registrar.
(b) After the resubmission of the document, if the registrar still finds that the
document is defective or incomplete in any respect, he shall give one more
opportunity of fifteen days to remove such defects or deficiencies.
Provided that the total period for re-submission of documents shall not exceed thirty
days.

(10) The Certificate of Incorporation of company shall be issued by the Registrar in

Form No. INC-11.]

553
[38A. Application for registration of the Goods and Service Tax Identificatio
Number (GSTIN), Employees’ Service Insurnace Corporation (ESIC) registration
and Employees’ Provident Fund Organisation (EPFO) registration

The application for incorporation of a company under rule 38 shall be accompanied by e-from
AGILE (INC-35) containing an application for registration of the following numbers, namely,-
(a) GSTN with effect from 31st March, 2019
(b) EPFO with effect from 9th April, 2019
(c) ESIC with effect from 15th April, 2019]
554
[39. Conversion of a company limited by guarantee into a company limited by
shares

(1) A company other than a company registered under section 25 of the Companies
Act, 1956 or section 8 of the Companies Act, 2013 may convert itself into a company
limited by shares.

(2) The company seeking conversion shall have a share capital equivalent to the
guarantee amount.

(3) A special resolution is passed by its members authorising such a conversion

omitting the guarantee clause in its Memorandum of Association and altering the
Articles of Association to provide for the articles as are applicable for a company
limited by shares.

553
Inserted by notification number G.S.R. 275(E) dated 29 March, 2019 with effect from 29 March,
2019.

554
Inserted by notification number G.S.R. 936(E) dated 01 October, 2016 with effect from 01 November,
2016.

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(4) A copy of the special resolution shall be filed with the Registrar of Companies in
Form no. MGT-14 within thirty days from the date of passing of the same along with
fee as prescribed in the Companies (Registration Offices and Fees) Rules, 2014.

(5) An application in Form No. INC-27 shall be filed with the Registrar of Companies
within thirty days from date of the passing of the special resolution enclosing the
altered Memorandum of Association and altered Articles of Association and a list of
members with the number of shares held aggregating to a minimum paid up capital
which is equivalent to the amount of guarantee hither to provided by its members.

(6) The Registrar of Companies shall take a decision on the application filed under
these rules within thirty days from the date of receipt of application complete in all
respects and upon approval of Form No. INC-27, the company shall be issued with a
certificate of incorporation in Form No. INC-11B.]

555
[40.Application under sub-section (41) of section 2 for change in financial year

[MCA vide circular no.03/2019 dated 11.03.2019 clarified and advised Regional Directors to
process e-from RD-1 filed for change in financial year u/s.2(41) or conversion of public
company into a private company u/s.14, if ‘others’ is selected till the revised form is deployed
and application shall not be rejected if ‘others’ is selected.]

(1) The application for approval of concerned Regional Director under sub-section (41)
of section 2 , shall be filed in e-Form No.RD-1 along with the fee as provided in the
Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by
the following documents, namely:-
(a) grounds and reasons for the application;
(b) a copy of the minutes of the board meeting at which the resolution authorising such
change was passed, giving details of the number of votes cast in favour and or against
the resolution;
(c) Power of Attorney or Memorandum of Appearance, as the case may be;
(d) details of any previous application made within last five years for change in financial
year and outcome thereof along with copy of order.

(2) Where the Regional Director on examining the application, referred to in sub-rule
(1), finds it necessary to call for further information or finds such application to be
defective or incomplete in any respect, he shall give intimation of such information
called for or defects or incompleteness, on the last intimated e-mail address of the
person or the company, which has filed such application, directing the person or the
company to furnish such information, or to rectify defects or incompleteness and to re-
submit such application within a period of fifteen days, in e-Form No. RD-GNL-5.
Provided that a maximum of two re-submissions shall be allowed.

(3) (a) In case where such further information called for has not been provided or the
defects or incompleteness has not been rectified to the satisfaction of the Regional

555
Inserted by the Companies (Incorporation) Fourth Amendmet Rules, 2018 as notificed by notification
no. G.S.R. 1219(E) dated 18th December 2018, w.e.f. 18th December 2018.

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Director within the period allowed under sub-rule (2), the Regional Director shall reject
the application with reasons within thirty days from the date of filing application or
within thirty days from the date of last re-submission made as the case may be.
(b) In case where the application is found to be in order, Regional Director shall allow
and convey the order within thirty days from the date of application or within thirty days
from the date of last re submission, as the case may be.
(c) where no order for approval or re-submission or rejection has been explicitly made
by the Regional Director within the stipulated time of thirty days, it shall be deemed
that the application stands approved and an approval order shall be automatically
issued to the applicant.

(4) The order conveyed by the Regional Director shall be filed by the company with
the Registrar in Form No.INC-28 within thirty days from the date of receipt of the order
along with fee as provided in the Companies (Registration Offices and Fees) Rules,
2014.]

556
[41. Application under section 14 for conversion of public company into
private company.

[MCA vide circular no.03/2019 dated 11.03.2019 clarified and advised Regional Directors to
process e-from RD-1 filed for change in financial year u/s.2(41) or conversion of public
company into a private company u/s.14, if ‘others’ is selected till the revised form is deployed
and application shall not be rejected if ‘others’ is selected.]

(1) An application under the second proviso to sub-section (1) of section 14 for the
conversion of a public company into a private company, shall, within sixty days from
the date of passing of special resolution, be filed with Regional Director in e-Form No.
RD-1 along with the fee as provided in the Companies (Registration Offices and Fees)
Rules, 2014 and shall be accompanied by the following documents, namely:-
(a) a draft copy of Memorandum of Association and Articles of Association, with
proposed alterations including the alterations pursuant to sub-section (68) of section
2;
(b) a copy of the minutes of the general meeting at which the special resolution
authorising such alteration was passed together with details of votes cast in favour
and or against with names of dissenters;
(c) a copy of Board resolution or Power of Attorney dated not earlier than thirty days,
as the case may be, authorising to file application for such conversion;
(d) declaration by a key managerial personnel that pursuant to the provisions of sub-
section (68) of section 2, the company limits the number of its members to two hundred
and also stating that no deposit has been accepted by the company in violation of the
Act and rules made thereunder;
(e) declaration by a key managerial personnel that there has been no non-compliance
of sections 73 to 76A, 177, 178, 185,186 and 188 of the Act and rules made
thereunder;
(f) declaration by a key managerial personnel that no resolution is pending to be filed

556
Inserted by the Companies (Incorporation) Fourth Amendmet Rules, 2018 as notificed by notification
no. G.S.R. 1219(E) dated 18th December 2018, w.e.f. 18th December 2018.

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in terms of sub-section (3) of section 179 and also stating that the company was never
listed in any of the Regional Stock Exchanges and if was so listed, all necessary
procedures were complied with in full for complete delisting of the shares in
accordance with the applicable rules and regulations laid down by Securities
Exchange Board of India:
Provided that in case of such companies where no key managerial personnel
is required to be appointed, the aforesaid declarations shall be filed any of the director.

(2) Every application filed under sub-rule (1) shall set out the following particulars,
namely:-
(a) the date of the Board meeting at which the proposal for alteration of Memorandum
and Articles was approved;
(b) the date of the general meeting at which the proposed alteration was approved;
(c) reason for conversion into a private company, effect of such conversion on
shareholders, creditors, debenture holders,
deposit holders and other related parties;
(d) details of any conversion made within last five years and outcome thereof along
with copy of order;
(e) details as to whether the company is registered under section 8.

(3) There shall be attached to the application, a list of creditors, debenture holders,
drawn up to the latest practicable date preceding the date of filing of application by not
more than thirty days, setting forth the following details, namely:-
(a) the names and address of every creditor and debenture holder of the company;
(b) the nature and respective amounts due to them in respect of debts, claims or
liabilities;
(c) in respect of any contingent or unascertained debt, the value, so far as can be justly
estimated of such debt:
Provided that the company shall file an affidavit, signed by the Company
Secretary of the company, if any, and not less than two directors of the company, one
of whom shall be managing director, where there is one, to the effect that they have
made a full enquiry into affairs of the company and, having done so, have formed an
opinion that the list of creditors and debenture holders is correct, and that the
estimated value as given in the list of the debts or claims payable on contingency or
not ascertained are proper estimates of the values of such debts and claims that there
are no other debts, or claims against, the company to their knowledge.

(4) A duly authenticated copy of the list of creditors and debenture holders shall be
kept at the registered office of the company and any person desirous of inspecting the
same may, at any time during the ordinary hours of business, inspect, and take
extracts from the same on payment of ten rupees per page to the company.

(5) The company shall, atleast twenty-one days before the date of filing of the
application_
(a) advertise in the Form No.INC.25A, in a vernacular newspaper in the principal
vernacular language in the district and in English language in an English newspaper,
widely circulated in the State in which the registered office of the company is situated;
(b) serve, by registered post with acknowledgement due, individual notice on each
debenture holder and creditor of the company; and
(c) serve, by registered post with acknowledgement due, a notice to the Regional

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Director and Registrar and to the regulatory body, if the company is regulated under
any law for the time being in force.

(6) (a) Where no objection has been received from any person in response to the
advertisement or notice referred to in sub-rule (5) and the application is complete in
all respects, the same may be put up for orders without hearing and the concerned
Regional Director shall pass an order approving the application within thirty days from
the date of receipt of the application.
(b) Where the Regional Director on examining the application finds it necessary to call
for further information or finds such application to be defective or incomplete in any
respect, he shall within thirty days from the date of receipt of the application, give
intimation of such information called for or defects or incompleteness, on the last
intimated e-mail address of the person or the company, which has filed such
application, directing the person or the company to furnish such information, to rectify
defects or incompleteness and to re-submit such application within a period of fifteen
days in e-Form No. RD-GNL-5:
Provided that maximum of two re-submissions shall be allowed.
(c) In cases where such further information called for has not been provided or the
defects or incompleteness has not been rectified to the satisfaction of the Regional
Director within the period allowed under sub- rule (6), the Regional Director shall reject
the application with reasons within thirty days from the date of filing application or
within thirty days from the date of last re-submission made, as the case may be.
(d) Where no order for approval or re-submission or rejection has been explicitly made
by the Regional Director within the stipulated period of thirty days, it shall be deemed
that the application stands approved and an approval order shall be automatically
issued to the applicant.

(9) (i) Where an objection has been received or Regional Director on examining the
application has specific objection under the provisions of Act, the same shall be
recorded in writing and the Regional Director shall hold a hearing or hearings within a
period thirty days , as required and direct the company to file an affidavit to record the
consensus reached at the hearing, upon executing which, the Regional Director shall
pass an order either approving or rejecting the application along with reasons within
thirty days from the date of hearing, failing which it shall be deemed that application
has been approved and approval order shall be automatically issued to the applicant.
(ii) In case where no consensus is received for conversion within sixty days of filing
the application while hearing or otherwise, the Regional Director shall reject the
application within stipulated period of sixty days:
Provided that the conversion shall not be allowed if any inquiry, inspection or
investigation has been initiated against the
company or any prosecution is pending against the company under the Act.

(10) On completion of such inquiry, inspection or investigation as a consequence of

which no prosecution is envisaged or no prosecution is pending, conversion shall be
allowed.

(11) The order conveyed by the Regional Director shall be filed by the company with
the Registrar in Form No.INC-28 within fifteen days from the date of receipt of
approval along with fee as provided in the Companies (Registration Offices and Fees)
Rules, 2014.]

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FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which are
not available online are included here.]
Form No. INC-1 – Application for reservation of name
Form No. INC-2 - One Person Company- Application for Incorporation
Form No. INC-3 - One Person Company- Nominee consent form
Form No. INC-4 - One Person Company- Change in Member/Nominee
Form No. INC-5 - One Person Company- Intimation of exceeding threshold
Form No. INC-6 - One Person Company- Application for Conversion
Form No. INC-7 - Application for Incorporation of Company (Other than OPC)
Form No. INC-8 – Declaration by professional
Form No. INC-9 – Declaration from subscribers and first directors
Form No. INC-10 - Form for verification of signature of subscribers
Form No. INC-11 – Certificate of Incorporation

Form No. INC-11A - Certificate of Incorporation pursuant to conversion of Unlimited

Liability company into Limited Liability Company

Form No. INC-12 Application for grant of License under section 8

Form No. INC-13 Memorandum of Association of section 8 company
Form No. INC-14 Declaration by professional on incorporation of section 8 company
Form No. INC-15 Declaration by each of the persons making the application to incorporate
section 8 company
Form No. INC-16 Licence under section 8 (1) of the Companies Act, 2013
Form No. INC-17 Licence under section 8(5) of the Companies Act, 2013
Form No. INC-18 - Application to Regional director for conversion of section 8 company
into company of any other kind.
Form No. INC-19 Notice for registration under section 8
Form No. INC-20 – Declaration for commencement of business
Form No. INC-21 - Declaration prior to the commencement of business or exercising
borrowing powers [Omitted by the Companies (Incorporation) Second Amendment Rules,
2015]
Form No. INC-22 - Notice of situation or change of situation of registered office
e-form ACTIVE (INC-22A) – instered by the Companies (Incorporation) Amendment, Rules
2019 w.e.f. 25.2.2019
Form No. INC-23 - Application to Regional Director for approval to shift the Registered
Office from one state to another state or from jurisdiction of one Registrar to another
Registrar within the same State.
Form No. INC-24 - Application for approval of Central Government for change of name
Form No. INC-25 Certificate of Incorporation pursuant to change of name
Form No. INC-25A Advertisement to be published in the newspaper for conversion of public
ocmpany into a private company
Form No. INC-26 Advertisement to be published in the newspaper for licence under section
by existing company / Advertisement to be published in the newspaper for change of
registered office of the company from one state to another

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Form No. INC-27 - Conversion of public company into private company or private company
into public company
Form No. INC-27A Advertisement to be published in the newspaper for conversion of
unlimited liability into limited liability company
Form No. INC-28 - Notice of Order of the Court or any other competent authority
Form No. INC-32 (SPICe)
Form No. RD-1 Substituted vide notification number G.S.R.603(E) dated 28th August
2019.
Form No. RD-GNL-5 Substituted vide notification number G.S.R.603(E) dated 28th August
2019.

Form No. INC-8

Declaration
[Pursuant to section 7(1)(b) and rule 14 of the Companies (Incorporation)
Rules, 2014]

Name of the Company:

I, …….
 an advocate who is engaged in the formation of the company
 a Chartered Accountant in India who is engaged in the formation of the
company
 a Cost Accountant in India who is engaged in the formation of the
company
 a Company Secretary in practice in India who is engaged in the formation of
the company

declare that all the requirements of Companies Act, 2013 and the rules made
thereunder relating to registration of the company under the Act and matters
precedent or incidental thereto have been complied with.

Date: Signature:
Place: Membership No.:

Form No. INC-9

557
[Declaration]
[Pursuant to section 7(1)(c) of the Companies Act, 2013 and rule 15 of the
Companies (Incorporation) Rules, 2014]
Name of the proposed company:
I ……………, being the subscriber to the memorandum / named as first director in
the articles, of the above named proposed company, hereby solemnly declare and
affirm that:

557
Substituted for the word “Affidavit” vide notification no. G.S.R. 708(E) dated 27th July 2018.

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 I have not been convicted of any offence in connection with the promotion,
formation or management of any company during the preceding five years; and
 I have not been found guilty of any fraud or misfeasance or of any breach of
duty to any company under this Act or any previous company law during the
preceding five years; and
 All the documents filed with the Registrar for registration of the company contain
information that is correct and complete and true to the best of my knowledge
and belief.

Date: Signature:
Place:

Form No. INC-10

Omitted by notification number G.S.R.743(E) dated 27th July, 2016. Prior to

omission it was as under:
Form for verification of signature of subscribers
[Pursuant to rule 16 (1) (q) of Companies (Incorporation) Rules, 2014]

Affix photo size 4’*4’ (passport size)

1. Names, father’s name and Address of subscribers/first directors:

2. Two specimen signatures:

(i)
(ii)
Attestation
(To be self-attested with address)
Note:
1. In point no. 1 above, strike off whichever is not applicable.
2. Person who is attesting should indicate his/her name, address and ID
number.

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Form No. INC-11

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Central Registration Centre
Certificate of Incorporation
[Pursuant to sub-section (2) of section 7 558{and sub-section (1) of Section 8} of the
Companies Act, 2013 (18 of 2013) and rule 18 of the Companies (Incorporation) Rules,
2014]
I hereby certify that <name of the company> is incorporated on this (i.e. FIRST, SECOND
etc.) day of <Month of approval of the work item in words> two thousand <YEAR of
approval of the work item in words> under the Companies Act, 2013 (18 of 2013) and that
the company is <limited by shares/limited by guarantee/unlimited company>.
The Corporate Identity Number of the company is <CIN>
The Permanent Account Number (PAN) of the company is <PAN>*/@
Given under my hand at < Name of the city where the Registrar of Companies office is
located > this < Date of approval of the work item in words (i.e. FIRST, SECOND etc.)> day
of < Month of approval of the work item in words > <YEAR of approval of the work item in
words>.
Digital Signature Certificate
<Full name of the Authorising officer approving the work-item>
<Assistant Registrar of Companies/ Deputy Registrar of Companies/ Registrar of
Companies>
For and on behalf of the Jurisdictional Registrar of Companies
Registrar of Companies
Central Registration Centre
Disclaimer: This certificate only evidences incorporation of the company on the basis of
documents and declarations of the applicant(s). This certificate is neither a license nor
permission to conduct business or solicit deposits or funds from public. Permission of sector
regulator is necessary wherever required. Registration status and other details of the company
can be verified on www.mca.gov.in
----------------------------------------------------------------------------------------------------------------
Mailing Address as per record available in Registrar of Companies office:
< Name of the company >
< Address of the correspondence/registered office of the company > Government Seal
*as issued by the Income Tax Department.

@ This sentence along with the footnotes, would be indicated in the certificate
only in cases where the PAN is allotted by the Income Tax Department at the time
of incorporation.

558
Inserted vide notification number G.S.R.411(E) dated 7th June 2019, w.e.f. 15th August 2019.

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Form No. INC-11A

Certificate of Incorporation pursuant to conversion of Unlimited Liability company

into Limited Liability Company

[pursuant to section 18 of the Companies Act, 2013 read with rule 37 of the Companies
(Incorporation) Rules, 2014]

I hereby certify that...............(name of the company prior to conversion) having

unlimited liability has been converted into..........(name of the company after
conversion) company having limited liability with effect from the date of this
certificate and the company is limited by shares or limited by guarantee.

The CIN of the company is.................................

Given under my hand at............... this..................... day of...............two

thousand..................

SEAL: .....................
Registrar of Companies
.....................
(State)

559
[Form No. INC-13

Memorandum of Association
[Pursuant to rule 19(2) the Companies (Incorporation) Rules, 2014].

1. The name of the company is “....................”.

2. The registered office of the company will be situated in the State of.......................

3. The objects for which the company is established are:

.....................................................................................
.....................................................................................
the doing of all such other lawful things as considered necessary for the furtherance
of the above objects:

559
Substituted for earlier form vide the Companies (Incorporation) Second Amendment Rules, 2015
notification number G.S.R. 442(E) dated the 29th May, 2015. Form No. INC-13 prior to omission is not
given here.

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 Chapter II [Sections 3 to 22]

The Companies (Incorporation) Rules, 2014

Provided that the company shall not support with its funds, or endeavour to impose
on, or procure to be observed by its members or others, any regulation or restriction
which, as an object of the company, would make it a trade union.

4. The objects of the company extend to the ...............

[Here enter the name of the State or States, and Country or Countries]

5.(i) The profits, if any, or other income and property of the company, whensoever
derived, shall be applied, solely for the promotion of its objects as set forth in this
memorandum.
(ii) No portion of the profits, other income or property aforesaid shall be paid or
transferred, directly or indirectly, by way of dividend, bonus or otherwise by way of
profit, to persons who, at any time are, or have been, members of the company or to
any one or more of them or to any persons claiming through any one or more of
them.
(iii) No remuneration or other benefit in money or money’s worth shall be given by
the company to any of its members, whether officers or members of the company or
not, except payment of out-of-pocket expenses, reasonable and proper interest on
money lent, or reasonable
and proper rent on premises let to the company.
(iv) Nothing in this clause shall prevent the payment by the company in good faith of
prudent remuneration to any of its officers or servants (not being members) or to any
other person (not being member), in return for any services actually rendered to the
company.
(v) Nothing in clauses (iii) and (iv) shall prevent the payment by the company in good
faith of prudent remuneration to any of its members in return for any services (not
being services of a kind which are required to be rendered by a member), actually
rendered to the company;

6. No alteration shall be made to this memorandum of association or to the articles of

association of the company which are for the time being in force, unless the
alteration has been previously submitted to and approved by the Registrar.

7. The liability of the members is limited.

8. [FOR COMPANIES LIMITED BY GUARANTEE]

Each member, undertakes to contribute to the assets of the company in the event of
its being wound up while he is a member or within one year afterwards, for payment
of the debts or liabilities of the company contracted before he ceases to be a
member and of the costs, charges and expenses of winding up, and for adjustment
of the rights of the contributories among themselves such amount as may be
required not exceeding a sum of Rs. ................

[FOR COMPANIES LIMITED BY SHARES]

The share capital of the company will consist of Rs. ................. divided into
.................. shares of ................. rupees each.

9. True accounts shall be kept of all sums of money received and expended by the
company and the matters in respect of which such receipts and expenditure take
place, and of the property, credits and liabilities of the company; and, subject to any

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The Companies (Incorporation) Rules, 2014

reasonable restrictions as to the time and manner of inspecting the same that may
be imposed in accordance with the regulations of the company for the time being in
force, the accounts shall be open to the inspection of the members.
Once at least in every year, the accounts of the company shall be examined and the
correctness of the balance-sheet and the income and expenditure account
ascertained by one or more properly qualified auditor or auditors.

**10. If upon a winding up or dissolution of the company, there remains, after the
satisfaction of all the debts and liabilities, any property whatsoever, the same shall
not be distributed amongst the members of the company but shall be given or
transferred to such other company having objects similar to the objects of this
company, subject to such conditions as the Tribunal may impose, or may be sold
and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed
under section 269 of the Act.

**11. The Company can be amalgamated only with another company registered
under section 8 of the Act and having similar objects.

12. We, the several persons whose names, addresses, descriptions and occupations
are hereunto subscribed are desirous of being formed into a company not for profit,
in pursuance of this Memorandum of Association:

Names, addresses, descriptions and occupations of subscribers:

1......................................of................................*
2......................................of................................*
3......................................of................................*
4......................................of................................*
5......................................of................................*
6......................................of................................*
7......................................of................................*

Witnesses to the above signatures of:

1……………………………..
2……………………………..

Dated the.................... day of...................20....

*If the association is a company limited by shares, here enter “number of shares”
taken by each subscriber.
** Note: Section 8 company which is an Electoral Trust as per the Electoral Trusts
Scheme, 2013 read with section 2(22AAA) of the Income-tax Act, 1961 may
amalgamate with another section 8 company having the object of an Electoral Trust
or may wind up or dissolve only after disbursing all its funds as per the scheme.]

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Form No. INC-14

Declaration
[Pursuant to section 7 (1)(b) and rule 19 (3)(b) of the Companies (Incorporation)
Rules, 2014]

Name of the Company:

I ,………………….,
 an advocate who is engaged in the formation of the company
 a Chartered Accountant in India who is engaged in the formation of the
company
 a Cost Accountant in India who is engaged in the formation of the company
 a Company Secretary in practice in India who is engaged in the formation of
the company

do hereby declare that:

(a) the draft memorandum and articles of association have been drawn up in
conformity with the provisions of section 8 and rules made thereunder; and
(b) all the requirements of Companies Act, 2013 and the rules made thereunder
relating to registration of the company under section 8 of the Act and matters
precedent or incidental thereto have been complied with.

Date: Signature:

Place: Membership No.:

Form No. INC-15

Declaration
[Pursuant to rule 19 (3)(d) of the Companies (Incorporation ) Rules, 2014]

In connection with the application of …………. [name of the proposed company ] for
a licence under section 8 of the Companies Act, 2013, I …………………………., [
name of the person ] do hereby declare that —

(a) the draft memorandum and articles of association have been drawn up in
conformity with the provisions of section 8 and rules made thereunder; and
(b) all the requirements of the Act and the rules made thereunder relating to
registration of the company under section 8 and matters incidental or supplemental
thereto have been complied with;
and I make this solemn declaration conscientiously believing the same to be true.

Place: Signature:
Date: Name:
Address:

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560
[ Form No. INC-16

Licence under section 8 (1) of the Companies Act, 2013

[Pursuant to rule 20 the Companies (Incorporation) Rules, 2014]
WHEREAS it has been proved to my satisfaction that ......................, a person or an
association of persons to be registered as a company under the Companies Act,
2013, for promoting objects of the nature specified in clause (a) of sub-section (1) of
section 8 of the said Act, and that it intends to apply its profits, if any, or other income
and property in promoting its objects and to prohibit the payment of any dividend to
its members;
NOW, THEREFORE, in exercise of the powers conferred by section 8 of the said
Act, I, the Registrar at ……….., hereby grant, this licence, directing that the said
person or association or persons be registered as a company with limited liability
without the addition of the word “Limited”, or as the case may be, the words “Private
Limited” to its name, subject to the following conditions, namely:
(1) that the said company shall in all respects be subject to and governed by the
conditions and provisions contained in its memorandum of association;
(2) that the profits, if any or other income and property of the said company,
whensoever derived, shall be applied solely for the promotion of the object as set
forth in its memorandum of association and that no portion thereof shall be paid or
transferred, directly or indirectly, by way of dividend, bonus, or otherwise by way of
profit, to persons who at any time are or have been members of the said company or
to any of them or to any person claiming through any one or more of them;
(3) that no remuneration or other benefit in money or money’s worth shall be given
by the company to any of its members except payment of out-of-pocket expenses,
reasonable and proper interest on money lent, or reasonable and proper rent on
premises let to the company;
(4) that nothing in this clause shall prevent the payment by the company in good faith
of prudent remuneration to any of its officers or servants (not being members) or to
any other person (not being member), in return for any services actually rendered to
the company;
(5) that nothing in clauses (3), (4) and (5) shall prevent the payment by the company
in good faith of prudent remuneration to any of its members in return for any services
(not being services of a kind which are required to be rendered by a member),
actually rendered to the company;
(6) that no alteration shall be made to the memorandum of association or to the
articles of association of the company, which are for the time being in force, unless
the alteration has been previously submitted to and approved by the Registrar ;
*(7) The Company can be amalgamated only with another company registered under
section 8 of the Act and having similar objects; and
(8) that, without prejudice to action under any law for the time being in force, this
licence shall be liable to be revoked, if the company:
(a) contravenes any of the requirements of section 8 of the Act or the rules made
thereunder or any of the conditions subject to which a licence is issued;

560
Substituted for earlier form vide the Companies (Incorporation) Second Amendment Rules, 2015
notification number G.S.R. 442(E) dated the 29th May, 2015. Form No. INC-16 prior to omission is not
given here.

Page 926
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The Companies (Incorporation) Rules, 2014

(b) if the affairs of the company are conducted fraudulently or in a manner violative of
the objects of the company or prejudicial to public interest.
………………………………..
Registrar
Dated this......................... day of......................20...………
* Note: Section 8 company which is an Electoral Trust as per the Electoral Trusts
Scheme, 2013 read with section 2(22AAA) of the Income-tax Act, 1961 may
amalgamate with another section 8 company having the object of an Electoral Trust
or may wind up or dissolve only after disbursing all its funds as per the scheme.]

Form No. INC-17

Licence under section 8 (5) of the Companies Act, 2013

[Pursuant to rule 20 the Companies (Incorporation) Rules, 2014]
WHEREAS it has been proved to my satisfaction that the objects
of.....................................Limited/ Private Limited, being a company registered under
the Companies Act, …….., as a limited company are restricted to those specified in,
clause (a) of sub-section (1) of section 8 of the said Act and that it intends to apply its
profits, if any, or other income in promoting its objects and to prohibit the payment of
any dividend to its members;
NOW, THEREFORE, in exercise of the powers conferred by sub-section (5) of section
8 of the said Act, I, the Regional Director at ……………….., hereby grant this licence
authorising the company by a special resolution to change its name by omitting the
word “Limited”, or as the case may be, the words “Private Limited” from such name
subject to the following conditions, namely:
(1) that the said company shall in all respects be subject to and governed by the
conditions and provisions contained in its memorandum of association;
(2) that the profits, if any or other income and property of the said company,
whensoever derived, shall be applied solely for the promotion of the objects as set
forth in its memorandum of association and that no portion thereof shall be paid or
transferred, directly or indirectly, by way of dividend, bonus or otherwise by way of
profit to persons who at any time are or have been members of the said company or
to any of them or to any person claiming through any one or more of them;
(3) that no remuneration or other benefit in money or money’s worth shall be given by
the company to any of its members except payment of out-of-pocket expenses,
reasonable and proper interest on money lent, or reasonable and proper rent on
premises let to the company;
(4) that nothing in this clause shall prevent the payment by the company in good faith
of prudent remuneration to any of its officers or servants (not being members) or to
any other person (not being member), in return for any services actually rendered to
the company;
(5) that nothing in clauses (3) and (4) shall prevent the payment by the company in
good faith, of prudent remuneration to any of its members in return for any services
(not being services of a kind which are required to be rendered by a member), actually
rendered to the company;
(6) that no alteration shall be made to the memorandum of association or in the articles
of association of the company, which are for the time being in force, unless the
alteration has been previously submitted to and approved by the Registrar;

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(7) The Company can be amalgamated only with another company registered under
section 8 of the Act and having similar objects; and
(8) that, without prejudice to action under any other law for the time being in force, this
licence shall be liable to be revoked, if the company:
(a) contravenes any of the requirements of section 8 of the Act or the rules made
thereunder or any of the conditions subject to which a licence is issued;
(b) if the affairs of the company are conducted fraudulently or in a manner violative of
the objects of the company or prejudicial to public interest.
………………………….
Registrar
Dated this................................ day of..........20..........

Form No. INC-19

Notice
[Pursuant to rule 22 the Companies (Incorporation) Rules, 2014]

1. Notice is hereby given that in pursuance of sub-section (5) of section 8 of the

Companies Act, 2013, an application has been made to the Registrar at …………. for
a licence that ------ a limited company may be given a licence to be registered under
sub-section (5) of section 8 of the Companies Act, 2013 without the addition of the
word “Limited” or the case may be, the words “Private Limited” to its name.

2. The principal objects of the company are as follows:

…………………………………………………………………………………………….
……………………………………………………………………………………………..
……………………………………………………………………………………………..

3. A copy of the draft memorandum and articles of the proposed company may be
seen at.................] [give the address here].

4. Notice is hereby given that any person, firm, company, corporation or body
corporate, objecting to this application may communicate such objection to the
Registrar at …………., within thirty days from the date of publication of this notice, by
a letter addressed to the Registrar (give the address) a copy of which shall be
forwarded to in the Applicant at (give the address).
Dated this.....................day of...................20...........
Name(s) of Applicant
1. ___________
2. ___________

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561
[Form No. INC-20

Declaration for commencement of business]

Form No. INC-25

Certificate of Incorporation pursuant to change of name

[Pursuant to rule 29 the Companies (Incorporation) Rules, 2014]

I hereby certify that the name of the company has been changed from
…………………………..to ………………………………. with effect from the date of
this certificate and that the company is limited by shares/limited by guarantee/
unlimited company.

The CIN of the company is ………………………..

Given under my hand at ………….. this ……………… day of ………………… two

thousand ………………………

SEAL: …….………………………..

Registrar of Companies
…………………………………
(State)

561
Inserted by the Companies (Incorporation) Fourth Amendmet Rules, 2018 as notificed by notification
no. G.S.R. 1219(E) dated 18th December 2018, w.e.f. 18th December 2018.

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562
[Form No. INC-25A

Advertisement to be published in the newspaper for conversion of public company

into a private company
Before the Regional Director, Ministry of Corporate Affairs
_____________Region

In the matter of the Companies Act, 2013, section 14 of Companies Act, 2013 and rule
41 of the Companies (Incorporation) Rules, 2014
AND
In the matter of _M/s……………… (company name) having its registered office at
___________________, Applicant

Notice is hereby given to the general public that the company intending to make an
application to the Central Government under section 14 of the Companies Act, 2013
read with aforesaid rules and is desirous of converting into a private limited company
in terms of the special resolution passed at the Annual General Meeting/ Extra
Ordinary General Meeting held on _______ to enable the company to give effect for
such conversion.
Any person whose interest is likely to be affected by the proposed change/status of
the company may deliver or cause to be delivered or send by registered post of his
objections supported by an affidavit stating the nature of his interest and grounds of
opposition to the concerned Regional Director (complete address of the Regional
Director to be given), within fourteen days from the date of publication of this notice
with a copy to the applicant company at its registered office at the address mentioned
below:

For and on behalf of the Applicant

……………
Director with DIN
Complete address of registered office
Date……..
Place.....
563
[Form No. INC-26

[Pursuant to rule 30 the Companies (Incorporation) Rules, 2014]

Advertisement to be published in the newspaper for change of registered office of
the company from one state to another

Before the Central Government

_____________Region

562
Inserted by the Companies (Incorporation) Fourth Amendmet Rules, 2018 as notificed by notification
no. G.S.R. 1219(E) dated 18th December 2018, w.e.f. 18th December 2018.

563
Form no. INC-26 substituted by notification number G.S.R.955(E) dated 27th July 2017.

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The Companies (Incorporation) Rules, 2014

In the matter of sub-section (4) of Section 13 of the Companies Act, 2013 and clause
(a) of sub-rule (5) of Rule 30 of the Companies (Incorporation) Rules, 2014
AND
In the matter of __________ Limited having its registered office at __________,
Petitioner

Notice is hereby given to the General Public that the company proposes to make an
application to the Central Government under section 13 of the Companies Act, 2013
seeking confirmation of alteration of the Memorandum of Association of the Company
in terms of the special resolution passed at the Annual General Meeting/Extra ordinary
general meeting held on _______ to enable the company to change its registered
office from “State of …..” to “State of ……..”.

Any person whose interest is likely to be affected by the proposed change of the
registered office of the company may deliver either on the MCA-21 portal
(www.mca.gov.in) by filing investor complaint form or cause to be delivered or
send by registered post of his/her objections supported by an affidavit stating the
nature of his/her interest and grounds of opposition to the Regional Director at the
address …….., within fourteen days of the date of publication of this notice with a copy
of the applicant company at its registered office at the address mentioned below:

For and on behalf of the Applicant

……………
Director

Date……..
Place………..

Note:- Strike off whichever is not applicable.]

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 Chapter II [Sections 3 to 22]

The Companies (Incorporation) Rules, 2014

Form No. INC-27A

[[Pursuant to rule 37(2) the Companies (Incorporation) Rules, 2014]

Advertisement to be published in the newspaper for conversion of unlimited liability

into limited liability company

Before the Central Government

______________Region

In the matter of the Companies Act, 2013, Section 18 of Companies Act, 2013 and
rule 37 of the Companies (Incorporation) Rules, 2014

AND

In the matter of___________ Limited (unlimited liability company) having its

registered office at_____________________, Petitioner

Notice is hereby given to the General Public that the company proposes to make
application to the Central Government under section 18 of the Companies Act,
2013 seeking confirmation of alteration of the Memorandum of Association of the
Company in terms of the special resolution passed at the Annual General Meeting/
Extra ordinary general meeting held on _______ to enable the company to convert
from unlimited liability into limited liability".

Any person whose interest is likely to be affected by the proposed conversion from
unlimited liability into limited liability may deliver or cause to be delivered or send
by registered post of his/her objections supported by an affidavit stating the nature
of his/her interest and grounds of opposition to the Registrar of companies (address
of the ROC) within twenty-one days from the date of publication of this notice
with a copy to the applicant company at its registered office at the address
mentioned below:

For and on behalf of the Applicant

........

Director

Date........

Place...........

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

Chapter III: the Companies (Prospectus

and Allotment of Securities) Rules, 2014
[The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i) vide number G.S.R. 251(E), dated the 31st March, 2014 and subsequently amended vide number
G.S.R. 424(E), dated the 30th June, 2014; G.S.R. 430 (E), dated the 7th May, 2018; G.S.R. 752(E),
dated 7th August, 2018; G.S.R. 853(E), dated 10th September 2018 (WEF 2nd October 2018); vide
notificaiton no. G.S.R. 43(E) dated 22nd January 2019; vide notificaiton no. G.S.R. 130(E) dated 19th
February 2019 (amended Form PAS-3).]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014
G.S.R. 251(E).—In exercise of the powers conferred under section 26, sub-section (1)
of section 27, section 28, section 29, sub-section (2) of section 31, sub-sections (3)
and (4) of section 39, sub-section (6) of section 40 and section 42 read with section
469 of the Companies Act, 2013 and in supersession of the Companies (Central
Government’s) General Rules and Forms, 1956 or any other rules prescribed under
the Companies Act, 1956 (1 of 1956) on matters covered under these rules except as
respects things done or omitted to be done before such supersession, the Central
Government hereby makes the following rules, namely:—

1. Short title and commencement.—

(1) These rules may be called the Companies (Prospectus and Allotment of Securities)
Rules, 2014.

(2) They shall come into force on the 1 st day of April, 2014.

2. Definitions.—

(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure to these rules;

(c) “fees” means fees as specified in the Companies (Registration Offices and
Fees) Rules, 2014;

(d) ”Form” or ‘e-Form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

(f) “section” means section of the Act;

(2) Words and expressions used in these rules but not defined and defined in the Act or
in the Companies (Specification of definitions details) Rules, 2014, shall have the
meanings respectively assigned to them in the Act or in the said Rules.

564
[3. Omitted]

Rules 3, 4, 5 and 6 omitted by notification number G.S.R. 430(E) dated 07 th

564

May 2018. Prior to omission, rule 3 read as “3. Information to be stated in the
prospectus.—

(1) The Prospectus to be issued shall contain—

(a) the names, addresses and contact details of the corporate office of the issuer company,
compliance officer of the issuer company, merchant bankers and co-managers to the issue, registrar
to the issue, bankers to the issue, stock brokers to the issue, credit rating agency for the issue,
arrangers, if any, of the instrument, names and addresses of such other persons as may be
specified by the Securities and Exchange Board in its regulations;
(b) the dates relating to opening and closing of the issue;

(c) a declaration which shall be made by the Board or the Committee authorised by the Board in the
prospectus that the allotment letters shall be issued or application money shall be refunded within
fifteen days from the closure of the issue or such lesser time as may be specified by Securities
and Exchange Board or else the application money shall be refunded to the applicants forthwith,
failing which interest shall be due to be paid to the applicants at the rate of fifteen per cent. per
annum for the delayed period.
(d) a statement given by the Board that all monies received out of the issue shall be transferred
to a separate bank account maintained with a Scheduled Bank;
(e) the details of all utilized and unutilised monies out of the monies collected in the previous
issue made by way of public offer shall be disclosed and continued to be disclosed in the balance
sheet till the time any part of the proceeds of such previous issue remains unutilized indicating
the purpose for which such monies have been utilized, and the securities or other forms of
financial assets in which such unutilized monies have been invested;
(f) the names, addresses, telephone numbers, fax numbers and e-mail addresses of the
underwriters and the amount underwritten by them;
(g) the consent of trustees, solicitors or advocates, merchant bankers to the issue, registrar to
the issue, lenders and experts;

(2) The capital structure of the company shall be presented in the following manner, namely:—
(i) (a) the authorised, issued, subscribed and paid up capital (number of securities, description
and aggregate nominal value);
(b) the size of the present issue;
(c) the paid up capital-
(A) after the issue;
(B) after conversion of convertible instruments (if applicable);
(d) the share premium account (before and after the issue);

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

(ii) the details of the existing share capital of the issuer company in a tabular form, indicating
therein with regard to each allotment, the date of allotment, the number of shares allotted,
the face value of the shares allotted, the price and the form of consideration:

Provided that in the case of an initial public offer of an existing company, the details
regarding individual allotment shall be given from the date of incorporation of the issuer and in
the case of a listed issuer company, the details shall be given for five years immediately
preceding the date of filing of the prospectus:

Provided that the issuer company shall also disclose the number and price at which
each of the allotments were made in the last two years preceding the date of the prospectus
separately indicating the allotments made for considerations other than cash and the details
of the consideration in each case.

(3) The prospectus to be issued shall contain the following particulars, namely:—
(a) the objects of the issue;
(b) the purpose for which there is a requirement of funds ;
(c) the funding plan (means of finance);
(d) the summary of the project appraisal report (if any);
(e) the schedule of implementation of the project;
(f) the interim use of funds, if any

(4) The prospectus to be issued shall contain the following details and disclosures, namely:—

(i) the details of any litigation or legal action pending or taken by any Ministry or Department of
the Government or a statutory authority against any promoter of the issuer company during the
last five years immediately preceding the year of the issue of the prospectus and any direction
issued by such Ministry or Department or statutory authority upon conclusion of such litigation
or legal action shall be disclosed;

(ii) the details of pending litigation involving the issuer, promoter, director, subsidiaries, group
companies or any other person, whose outcome could have material adverse effect on the
position of the issuer;

(iii) the details of pending proceedings initiated against the issuer company for economic
offences;

(iv) the details of default and non-payment of statutory dues etc.

(5) The details of directors including their appointment and remuneration, and particulars of the nature
and extent of their interests in the company shall be disclosed in the following manner, namely:—

(i) the name, designation, Director Identification Number (DIN), age, address, period of
directorship, details of other directorships;

(ii) the remuneration payable or paid to the director by the issuer company, its subsidiary and
associate company; shareholding of the director in the company including any stock options;
shareholding in subsidiaries and associate companies; appointment of any relatives to an
office or place of profit;

(iii) the full particulars of the nature and extent of interest, if any, of every director:
(a) in the promotion of the issuer company; or

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

565
[4. Omitted]

(b) in any immoveable property acquired by the issuer company in the two years
preceding the date of the Prospectus or any immoveable property proposed to be
acquired by it.

(iv) where the interest of such a director consists in being a member of a firm or company, the
nature and extent of his interest in the firm or company, with a statement of all sums paid or agreed
to be paid to him or to the firm or company in cash or shares or otherwise by any person either to
induce him to become, or to help him qualify as a director, or otherwise for services rendered by
him or by the firm or company, in connection with the promotion or formation of the issuer company
shall be disclosed.

(6) The sources of promoters’ contribution, if any, shall be disclosed in the following manner,
namely:—
(i) the total shareholding of the promoters, clearly stating the name of the promoter, nature
of issue, date of allotment, number of shares, face value, issue price or consideration,
source of funds contributed , date when the shares were made fully paid up, percentage of
the total pre and post issue capital;

(ii) the proceeds out of the sale of shares of the company and shares of its subsidiary
companies previously held by each of the promoters;

(iii) the disclosure for sources of promoters contribution shall also include the particulars of name,
address and the amount so raised as loan, financial assistance etc., if any, by promoters for making
such contributions and in case of own sources, complete details thereof.”.

Rules 3, 4, 5 and 6 omitted by notification number G.S.R. 430(E) dated 07 th

565

May 2018. Prior to omission, rule 4 read as “4. Reports to be set out in the
Prospectus.- The following reports shall be set out with the prospectus,
namely:—

(1) The reports by the auditors with respect to profits and losses and assets and liabilities.

Explanation.- For the purposes of this sub-rule, the report shall also include the amounts or rates of
dividends, if any, paid by the issuer company in respect of each class of shares for each of the five
financial years immediately preceding the year of issue of the prospectus, giving particulars of each
class of shares on which such dividends have been paid and particulars of the cases in which no
dividends have been paid in respect of any class of shares for any of those years:

Provided that if no accounts have been made up in respect of any part of the period of five
years ending on a date three months before the issue of the prospectus, a statement of that fact
accompanied by a statement of the accounts of the issuer company in respect of that part of the said
period up to a date not earlier than six months of the date of issue of the prospectus indicating the profit
or loss for that period and assets and liabilities position as at the end of that period together with a
certificate from the auditors that such accounts have been examined and found correct and the said
statement may indicate the nature of provision or adjustments made or which are yet to be made.

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

566
[5. Omitted]

(2) The reports relating to profits and losses for each of the five financial years or where five financial
years have not expired, for each of the financial year immediately preceding the issue of the
prospectus shall-

(a) if the company has no subsidiaries, deal with the profits or losses of the company
(distinguishing items of a non-recurring nature) for each of the five financial years
immediately preceding the year of the issue of the prospectus; and

(b) if the company has subsidiaries, deal separately with issuer company’s profits or losses
as provided in clause (a) and in addition, deal either -
(i) as a whole with the combined profits or losses of its subsidiaries, so far as
they concern members of the issuer company; or
(ii) individually with the profits or losses of each subsidiary, so far as they
concern members of the issuer company; or
(iii) as a whole with the profits or losses of the company, and, so far as they
concern members of the issuer company, with the combined profits or losses of
its subsidiaries.

(3) The reports made by the auditors in respect of the business of the company shall be stated in
the prospectus in the manner provided in sub-rule (2).”.

566
Rules 3, 4, 5 and 6 omitted by notification number G.S.R. 430(E) dated 07 th
May 2018. Prior to omission, rule 5 read as “5. Other matters and reports to be
stated in the prospectus.—The prospectus shall include the following other
matters and reports, namely:—

(1) If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to
be applied directly or indirectly—
(a) in the purchase of any business; or
(b) in the purchase of an interest in any business and by reason of that purchase, or anything
to be done in consequence thereof, or in connection therewith; the company shall become
entitled to an interest in either the capital or profits and losses or both, in such business
exceeding fifty per cent. thereof,
a report made by a chartered accountant (who shall be named in the prospectus) upon—
(i) the profits or losses of the business for each of the five financial years immediately
preceding the date of the issue of the prospectus ; and
(ii) the assets and liabilities of the business as on the last date to which the accounts of
the business were made up, being a date not more than one hundred and twenty days
before the date of the issue of the prospectus;
(c) in purchase or acquisition of any immoveable property including indirect acquisition of
immoveable property for which advances have been paid to even third parties, disclosures
regarding—
(i) the names, addresses, descriptions and occupations of the vendors;

Page 937
 Chapter III [Sections 23 to 422]

The Companies (Prospectus and Allotment of Securities) Rules, 2014

(ii) the amount paid or payable in cash, to the vendor and, where there is more than
one vendor, or the company is a sub-purchaser, the amount so paid or payable to
each vendor, specifying separately the amount, if any, paid or payable for goodwill;
(iii) the nature of the title or interest in such property proposed to be acquired by the
company; and
(iv) the particulars of every transaction relating to the property, completed within the
two preceding years, in which any vendor of the property or any person who is, or was
at the time of the transaction, a promoter, or a director or proposed director of the
company had any interest, direct or indirect, specifying the date of the transaction and
the name of such promoter, director or proposed director and stating the amount
payable by or to such vendor, promoter, director or proposed director in respect of the
transaction.

(2)(a) If -
(i) the proceeds, or any part of the proceeds, of the issue of the shares or debentures are
or are to be applied directly or indirectly and in any manner resulting in the acquisition by
the company of shares in any other body corporate; and
(ii) by reason of that acquisition or anything to be done in consequence thereof or in
connection therewith, that body corporate shall become a subsidiary of the company, a
report shall be made by a Chartered Accountant (who shall be named in the prospectus)
upon -
(A) the profits or losses of the other body corporate for each of the five financial years
immediately preceding the issue of the prospectus; and
(B) the assets and liabilities of the other body corporate as on the last date to which
its accounts were made up.
(b) The said report shall -
(i) indicate how the profits or losses of the other body corporate dealt with by the report
would, in respect of the shares to be acquired, have concerned members of the issuer
company and what allowance would have been required to be made, in relation to assets
and liabilities so dealt with for the holders of the balance shares, if the issuer company had
at all material times held the shares proposed to be acquired; and
(ii) where the other body corporate has subsidiaries, deal with the profits or losses and the
assets and liabilities of the body corporate and its subsidiaries in the manner as provided in
sub-clause (ii) of clause (a).

(3) The matters relating to terms and conditions of the term loans including re-scheduling, prepayment,
penalty, default.

(4) The aggregate number of securities of the issuer company and its subsidiary companies purchased
or sold by the promoter group and by the directors of the company which is a promoter of the issuer
company and by the directors of the issuer company and their relatives within six months immediately
preceding the date of filing the prospectus with the Registrar of Companies shall be disclosed.

(5) The matters relating to -

(A) Material contracts;
(B) Other material contracts;
(C) Time and place at which the contracts together with documents will be available for inspection
from the date of prospectus until the date of closing of subscription list.

(6) The related party transactions entered during the last five financial years immediately preceding
the issue of prospectus as under -
(a) all transactions with related parties with respect to giving of loans or, guarantees,
providing securities in connection with loans made, or investments made ;

Page 938
 Chapter III [Sections 23 to 422]

The Companies (Prospectus and Allotment of Securities) Rules, 2014

(b) all other transactions which are material to the issuer company or the related party, or
any transactions that are unusual in their nature or conditions, involving goods, services, or
tangible or intangible assets, to which the issuer company or any of its parent companies
was a party:
Provided that the disclosures for related party transactions for the period prior to
notification of these rules shall be to the extent of disclosure requirements as per the Companies
Act, 1956 and the relevant accounting standards prevailing at the said time.

(7) The summary of reservations or qualifications or adverse remarks of auditors in the last five
financial years immediately preceding the year of issue of prospectus and of their impact on the
financial statements and financial position of the company and the corrective steps taken and proposed
to be taken by the company for each of the said reservations or qualifications or adverse remarks.

(8) The details of any inquiry, inspections or investigations initiated or conducted under the Companies
Act or any previous companies law in the last five years immediately preceding the year of issue of
prospectus in the case of company and all of its subsidiaries; and if there were any prosecutions filed
(whether pending or not); fines imposed or compounding of offences done in the last five years
immediately preceding the year of the prospectus for the company and all of its subsidiaries.

(9) The details of acts of material frauds committed against the company in the last five years, if any,
and if so, the action taken by the company.

(10) A fact sheet shall be included at the beginning of the prospectus which shall contain -
(a) the type of offer document (“Red Herring Prospectus” or “Shelf Prospectus” or "Prospectus").
(b) the name of the issuer company, date and place of its incorporation, its logo, address of its
registered office, its telephone number, fax number, details of contact person, website address, e-
mail address;
(c) the names of the promoters of the issuer company;
(d) the nature, number, price and amount of securities offered and issue size, as may be applicable;
(e) the aggregate amount proposed to be raised through all the stages of offers of specified
securities made through the shelf prospectus;
(f) the name, logo and address of the registrar to the issue, along with its telephone number, fax
number, website address and e-mail address;
(g) the issue schedule -
(i) date of opening of the issue;
(ii) date of closing of the issue;
(iii) date of earliest closing of the issue, if any.
(h) the credit rating, if applicable;
(i) all the grades obtained for the initial public offer;
(j) the name(s) of the recognised stock exchanges where the securities are proposed to be listed;
(k) the details about eligible investors;

(l) coupon rate, coupon payment frequency, redemption date, redemption

amount and details of debenture trustee in case of debt securities.”.

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

567
[6. Omitted]

7. Variation in terms of contracts referred to in the prospectus or objects for

which prospectus was issued.—

[See section 27]

(1) where the company has raised money from public through prospectus and has any
unutilized amount out of the money so raised, it shall not vary the terms of contracts
referred to in the prospectus or objects for which the prospectus was issued except
by passing a special resolution through postal ballot and the notice of the proposed
special resolution shall contain the following particulars, namely:—
(a) the original purpose or object of the Issue;
(b) the total money raised;
(c) the money utilised for the objects of the company stated in the prospectus;
(d) the extent of achievement of proposed objects(that is fifty percent, sixty
percent, etc);
(e) the unutilised amount out of the money so raised through prospectus,
(f) the particulars of the proposed variation in the terms of contracts referred
to in the prospectus or objects for which prospectus was issued;
(g) the reason and justification for seeking variation;
(h) the proposed time limit within which the proposed varied objects would be
achieved;
(i) the clause-wise details as specified in sub-rule (3) of rule 3 as was required
with respect to the originally proposed objects of the issue;
(j) the risk factors pertaining to the new objects; and
(k) the other relevant information which is necessary for the members to take
an informed decision on the proposed resolution.

(2) The advertisement of the notice for getting the resolution passed for varying the
terms of any contract referred to in the prospectus or altering the objects for which
the prospectus was issued, shall be in Form PAS-1 and such advertisement shall be
published simultaneously with dispatch of Postal Ballot Notices to Shareholders.

567
Rules 3, 4, 5 and 6 omitted by notification number G.S.R. 430(E) dated 07 th
May 2018. Prior to omission, rule 6 read as “6. Period for which information to
be provided in certain cases.—For the matters specified in rules 3 to 5, which
require a company to provide certain particulars or information relating to the
preceding five financial years, it shall be sufficient compliance for a company
which has not completed five years, if such company provides such particulars
or information for all the previous years since its incorporation.”.

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

(3) The notice shall also be placed on the web-site of the company, if any.

8. Offer of Sale by Members.—

[See section 28]

(1) The provisions of Part I of Chapter III namely “Prospectus and Allotment of
Securities” and rules made there under shall be applicable to an offer of sale referred
to in section 28 except for the following, namely:-
(a) the provisions relating to minimum subscription;
(b) the provisions for minimum application value;
(c) the provisions requiring any statement to be made by the Board of directors
in respect of the utilization of money; and
(d) any other provision or information which cannot be compiled or gathered
by the offeror, with detailed justifications for not being able to comply with
such provisions.

(2) The prospectus issued under section 28 shall disclose the name of the person or
persons or entity bearing the cost of making the offer of sale along with reasons.

9. Dematerialisation of securities.—

[See section 29]

The promoters of every public company making a public offer of any convertible
securities may hold such securities only in dematerialised form:

Provided that the entire holding of convertible securities of the company by the
promoters held in physical form up to the date of the initial public offer shall be
converted into dematerialised form before such offer is made and thereafter such
promoter shareholding shall be held in dematerialized form only.

568
[9A. Issue of securities in dematerialised form by unlisted public companies.-

(1) Every unlisted public company shall –

(a) issue the securities only in dematerialised form; and
(b) facilitate dematerialisation of all its existing securities
in accordance with provisions of the Depositories Act, 1996 and regulations made
there under.

568
Inserted by notification no. G.S.R. 853(E) dated 10th September 2018, w.e.f. 2nd October 2018.

Page 941
 Chapter III [Sections 23 to 422]

The Companies (Prospectus and Allotment of Securities) Rules, 2014

(2) Every unlisted public company making any offer for issue of any securities or
buyback of securities or issue of bonus shares or rights offer shall ensure that before
making such offer, entire holding of securities of its promoters, directors, key
managerial personnel has been dematerialised in accordance with provisions of the
Depositories Act, 1996 and regulations made there under.

(3) Every holder of securities of an unlisted public company,-

(a) who intends to transfer such securities on or after 2nd October, 2018, shall
get such securities dematerialised before the transfer; or
(b) who subscribes to any securities of an unlisted public company (whether
by way of private placement or bonus shares or rights offer) on or after 2nd
October, 2018 shall ensure that all his existing securities are held in
dematerialized form before such subscription.

(4) Every unlisted public company shall facilitate dematerialisation of all its existing
securities by making necessary application to a depository as defined in clause (e) of
sub-section (1) of section 2 of the Depositories Act, 1996 and shall secure
International Security Identification Number (ISIN) for each type of security and shall
inform all its existing security holders about such facility.

(5) Every unlisted public company shall ensure that -

(a) it makes timely payment of fees (admission as well as annual) to the
depository and registrar to an issue and share transfer agent in
accordance with the agreement executed between the parties;
(b) it maintains security deposit, at all times, of not less than two years’ fees
with the depository and registrar to an issue and share transfer agent, in
such form as may be agreed between the parties; and
(c) it complies with the regulations or directions or guidelines or circulars, if
any, issued by the Securities and Exchange Board or Depository from time
to time with respect to dematerialisation of shares of unlisted public
companies and matters incidental or related thereto.

(6) No unlisted public company which has defaulted in sub-rule (5) shall make offer
of any securities or buyback its securities or issue any bonus or right shares till the
payments to depositories or registrar to an issue and share transfer agent are made.

(7) Except as provided in sub-rule (8), the provisions of the Depositories Act, 1996,
the Securities and Exchange Board of India (Depositories and Participants)
569
[Regulations, 2018] and the Securities and Exchange Board of India (Registrars to
an Issue and Share Transfer Agents) Regulations, 1993 shall apply mutatis mutandis
to dematerialisation of securities of unlisted public companies.

Substituted for “Regulations, 1996” vide notificaiton no. G.S.R.376(E) dated 22nd May 2019, w.e.f.
569
th
30 September 2019.

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570
[(8) Every unlisted public company governed by this rule shall submit Form PAS-6
to the Registrar with such fee as provided in Companies (Registration Offices and
Fees) Rules, 2014 within sixty days from the conclusion of each half year duly
certified by a company secretary in practice or chartered accountant in practice.

(8A) The company shall immediately bring to the notice of the depositories any
difference observed in its issued capital and the capital held in dematerialised form.]

(9) The grievances, if any, of security holders of unlisted public companies under this
rule shall be filed before the Investor Education and Protection Fund Authority.

(10) The Investor Education and Protection Fund Authority shall initiate any action
against a depository or participant or registrar to an issue and share transfer agent
after prior consultation with the Securities and Exchange Board of India.]
571
[(11) This rule shall not apply to an unlisted public company which is:–
(i) a Nidhi;
(ii) a Government company or
(iii) a wholly owned subsidiary.]

10. Shelf prospectus and Information Memorandum.—

[See section 31]

The information memorandum shall be prepared in Form PAS-2 and filed with the
Registrar along with the fee as provided in the Companies (Registration Offices and
Fees) Rules, 2014 within one month prior to the issue of a second or subsequent offer
of securities under the shelf prospectus.

11. Refund of Application Money.—

[See section 39]

(1) If the stated minimum amount has not been subscribed and the sum payable on
application is not received within the period specified therein, then the application
money shall be repaid within a period of fifteen days from the closure of the issue and

570
Sub-rule (8) of Rule 9A substituted with new sub-rules (8) and (8A), vide notificaiton no.
G.S.R.376(E) dated 22nd May 2019, w.e.f. 30th September 2019. Prior to substitution, it read as “(8) The
audit report provided under regulation 55A of the Securities and Exchange Board of India (Depositories
and Participants) Regulations, 1996 shall be submitted by the unlisted public company on a half-yearly
basis to the Registrar under whose jurisdiction the registered office of the company is situated.”.

571
Inserted by the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2019,
notified vide notificaiton no. G.S.R. 43(E) dated 22nd January 2019, w.e.f. 22nd January 2019.

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if any such money is not so repaid within such period, the directors of the company
who are officers in default shall jointly and severally be liable to repay that money with
interest at the rate of fifteen percent per annum.

(2) The application money to be refunded shall be credited only to the bank account
from which the subscription was remitted.

12. Return of Allotment.-

[See section 39]

(1) Whenever a company having a share capital makes any allotment of its securities,
the company shall, within thirty days thereafter, file with the Registrar a return of
allotment in Form PAS-3, along with the fee as specified in the Companies
(Registration Offices and Fees) Rules, 2014.

(2) There shall be attached to the Form PAS-3 a list of allottees stating their names,
address, occupation, if any, and number of securities allotted to each of the allottees
and the list shall be certified by the signatory of the Form PAS-3 as being complete
and correct as per the records of the company.

(3) In the case of securities (not being bonus shares) allotted as fully or partly paid up
for consideration other than cash, there shall be attached to the Form PAS-3 a copy
of the contract, duly stamped, pursuant to which the securities have been allotted
together with any contract of sale if relating to a property or an asset, or a contract for
services or other consideration.

(4) Where a contract referred to in sub-rule (3) is not reduced to writing, the company
shall furnish along with the Form PAS-3 complete particulars of the contract stamped
with the same stamp duty as would have been payable if the contract had been reduced
to writing and those particulars shall be deemed to be an instrument within the meaning
of the Indian Stamp Act, 1899 (2 of 1899), and the Registrar may, as a condition of filing
the particulars, require that the stamp duty payable thereon be adjudicated under
section 31 of the Indian Stamp Act, 1899.

(5) A report of a registered valuer in respect of valuation of the consideration shall

also be attached along with the contract as mentioned in sub-rule (3) and sub-rule
(4).

(6) In the case of issue of bonus shares, a copy of the resolution passed in the general
meeting authorizing the issue of such shares shall be attached to the Form PAS-3.

(7) In case the shares have been issued in pursuance of clause (c) of sub-section (1)
of section 62 by a company other than a listed company whose equity shares or
convertible preference shares are listed on any recognised stock exchange, there
shall be attached to Form PAS-3, the valuation report of the registered valuer.

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Explanation.- Pending notification of sub-section (1) of section 247 of the Act and
finalisation of qualifications and experience of valuers, valuation of stocks, shares,
debentures, securities etc. shall be conducted by an independent merchant banker
who is registered with the Securities and Exchange Board of India or an independent
chartered accountant in practice having a minimum experience of ten years.

13. Payment of commission.—

[See section 40]

A company may pay commission to any person in connection with the subscription
or procurement of subscription to its securities, whether absolute or conditional,
subject to the following conditions, namely: -

(a) the payment of such commission shall be authorized in the company’s articles of
association;

(b) the commission may be paid out of proceeds of the issue or the profit of the company
or both;

(c) the rate of commission paid or agreed to be paid shall not exceed, in case of
shares, five percent of the price at which the shares are issued or a rate authorised
by the articles, whichever is less, and in case of debentures, shall not exceed two
and a half per cent of the price at which the debentures are issued, or as specified in
the company’s articles, whichever is less;
(d) the prospectus of the company shall disclose—
(i)_the name of the underwriters;
(ii) the rate and amount of the commission payable to the underwriter; and
(iii) the number of securities which is to be underwritten or subscribed by the
underwriter absolutely or conditionally.

(e) there shall not be paid commission to any underwriter on securities which are not
offered to the public for subscription;

(f) a copy of the contract for the payment of commission is delivered to the Registrar
at the time of delivery of the prospectus for registration.

572
[14. Private placement.-

572
Substituted Rule 14 by notification number G.S.R. 752(E) dated 07th August 2018. Prior to
substitution, rule 14 read as “14. Private Placement.— (1)(a) For the purposes of sub-section (1) of
section 42, a company may make an offer or invitation to subscribe to securities through issue of a
private placement offer letter in Form PAS-4.

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(b) A private placement offer letter shall be accompanied by an application form serially numbered and
addressed specifically to the person to whom the offer is made and shall be sent to him, either in
writing or in electronic mode, within thirty days of recording the names of such persons in accordance
with sub-section (7) of section 42:

Provided that no person other than the person so addressed in the application form shall be allowed
to apply through such application form and any application not conforming to this condition shall be
treated as invalid.

(2) A company shall not make a private placement of its securities unless –

(a) the proposed offer of securities or invitation to subscribe securities has been previously
approved by the shareholders of the company, by a Special Resolution, for each of the Offers
or Invitations:

Provided that in the explanatory statement annexed to the notice for the general meeting
the basis or justification for the price (including premium, if any) at which the offer or
invitation is being made shall be disclosed:

Provided further that in case of offer or invitation for non-convertible debentures, it shall
be sufficient if the company passes a previous special resolution only once in a year for all
the offers or invitation for such debentures during the year.
*[Provided also that in case of an offer or invitation for non-convertible debentures referred
to in the second proviso, made within a period of six months from the date of
commencement of these rules, the special resolution referred to in the second proviso may
be passed within the said period of six months from the date of commencement of these
rules.] * Third proviso to Rule 14(2) inserted by notification number G.S.R. 424(E) dated
30th June, 2014.

(b) such offer or invitation shall be made to not more than two hundred persons in the
aggregate in a financial year:

Provided that any offer or invitation made to qualified institutional buyers, or to employees
of the company under a scheme of employees stock option as per provisions of clause (b)
of sub-section (1) of section 62 shall not be considered while calculating the limit of two
hundred persons;

Explanation.– For the purposes of this sub-rule, it is hereby clarified that –

(i) the restrictions under sub-clause (b) would be reckoned individually for each kind
of security that is equity share, preference share or debenture;

(ii) the requirement of provisions of sub-section (3) of section 42 shall apply in respect
of offer or invitation of each kind of security and no offer or invitation of another kind
of security shall be made unless allotments with respect to offer or invitation made
earlier in respect of any other kind of security is completed;

(c) the value of such offer or invitation per person shall be with an investment size of not less
than twenty thousand rupees of face value of the securities;

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(1) For the purposes of sub-section (2) and sub-section (3) of section 42, a company
shall not make an offer or invitation to subscribe to securities through private
placement unless the proposal has been previously approved by the shareholders of
the company, by a special resolution for each of the offers or invitations: Provided
that in the explanatory statement annexed to the notice for shareholders’ approval,
the following disclosure shall be made:-
(a) particulars of the offer including date of passing of Board resolution;
(b) kinds of securities offered and the price at which security is being offered;
(c) basis or justification for the price (including premium, if any) at which the offer
or invitation is being made;
(d) name and address of valuer who performed valuation;

(d) the payment to be made for subscription to securities shall be made from the bank account
of the person subscribing to such securities and the company shall keep the record of the
Bank account from where such payments for subscriptions have been received:
Provided that monies payable on subscription to securities to be held by joint holders shall
be paid from the bank account of the person whose name appears first in the application.

(3) The company shall maintain a complete record of private placement offers in Form PAS-5:

Provided that a copy of such record along with the private placement offer letter in Form PAS-4 shall
be filed with the Registrar with fee as provided in Companies (Registration Offices and Fees) Rules,
2014 and where the company is listed, with the Securities and Exchange Board within a period of thirty
days of circulation of the private placement offer letter. [As per proviso to Rule 13(1) of the Companies
(Share Capital and Debentures) Rules, this proviso is not applicable to preferential allotment. Legally
such exemption could be given only after amending Section 42(7). However, Government has given
this exemption without modifying said section 42(7).]

Explanation.- For the purpose of this rule, it is hereby clarified that the date of private placement offer
letter shall be deemed to be the date of circulation of private placement offer letter.

(4) A return of allotment of securities under section 42 shall be filed with the Registrar within thirty days
of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration Offices and
Fees) Rules, 2014 along with a complete list of all security holders containing-
(i) the full name, address, Permanent Account Number and E-mail ID of such security holder;
(ii) the class of security held;
(iii) the date of allotment of security ;
(iv) the number of securities held, nominal value and amount paid on such securities; and
particulars of consideration received if the securities were issued for consideration other than cash.

(5) The provisions of clauses (b) and (c) of sub-rule (2) shall not be applicable to -
(a) non-banking financial companies which are registered with the Reserve Bank of India under
Reserve Bank of India Act, 1934; and
(b) housing finance companies which are registered with the National Housing Bank under
National Housing Bank Act, 1987,
if they are complying with regulations made by Reserve Bank of India or National Housing Bank in
respect of offer or invitation to be issued on private placement basis:

Provided that such companies shall comply with sub-clauses (b) and (c) of sub-rule (2) in
case the Reserve Bank of India or the National Housing Bank have not specified similar
regulations.”.

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(e) amount which the company intends to raise by way of such securities;
(f) material terms of raising such securities, proposed time schedule, purposes or
objects of offer, contribution being made by the promoters or directors either as
part of the offer or separately in furtherance of objects; principle terms of assets
charged as securities:
Provided further that this sub-rule shall not apply in case of offer or invitation for
non-convertible debentures, where the proposed amount to be raised through such
offer or invitation does not exceed the limit as specified in clause (c) of subsection (1)
of section 180 and in such cases relevant Board resolution under clause (c) of sub-
section (3) of section 179 would be adequate:
Provided also that in case of offer or invitation for non-convertible debentures,
where the proposed amount to be raised through such offer or invitation exceeds the
limit as specified in clause (c) of sub-section (1) of section 180, it shall be sufficient if
the company passes a previous special resolution only once in a year for all the offers
or invitations for such debentures during the year.

(2) For the purpose of sub-section (2) of section 42, an offer or invitation to subscribe
securities under private placement shall not be made to persons more than two
hundred in the aggregate in a financial year:
Provided that any offer or invitation made to qualified institutional buyers, or to
employees of the company under a scheme of employees stock option as per
provisions of clause (b) of sub-section (1) of section 62 shall not be considered while
calculating the limit of two hundred persons.

Explanation.− For the purposes of this sub-rule, it is hereby clarified that the
restrictions aforesaid would be reckoned individually for each kind of security that is
equity share, preference share or debenture.

(3) A private placement offer cum application letter shall be in the form of an
application in Form PAS-4 serially numbered and addressed specifically to the person
to whom the offer is made and shall be sent to him, either in writing or in electronic
mode, within thirty days of recording the name of such person pursuant to sub-section
(3) of section 42:
Provided that no person other than the person so addressed in the private
placement offer cum application letter shall be allowed to apply through such
application form and any application not conforming to this condition shall be treated
as invalid.

(4) The company shall maintain a complete record of private placement offers in Form
PAS-5.

(5) The payment to be made for subscription to securities shall be made from the
bank account of the person subscribing to such securities and the company shall
keep the record of the bank account from where such payment for subscription has
been received:

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Provided that monies payable on subscription to securities to be held by joint

holders shall be paid from the bank account of the person whose name appears first
in the application:
Provided further that the provisions of this sub-rule shall not apply in case of issue
of shares for consideration other than cash.

(6) A return of allotment of securities under section 42 shall be filed with the Registrar
within fifteen days of allotment in Form PAS-3 and with the fee as provided in the
Companies (Registration Offices and Fees) Rules, 2014 along with a complete list of
all the allottees containing-
(i) the full name, address, Permanent Account Number and E-mail ID of such
security holder;
(ii) the class of security held;
(iii) the date of allotment of security ;
(iv) the number of securities held, nominal value and amount paid on such
securities; and particulars of consideration received if the securities were issued
for consideration other than cash.

(7) The provisions of sub-rule (2) shall not be applicable to -

(a) non-banking financial companies which are registered with the Reserve Bank
of India under the Reserve Bank of India Act, 1934 (2 of 1934); and
(b) housing finance companies which are registered with the National Housing
Bank under the National Housing Bank Act, 1987 (53 of 1987), if they are
complying with regulations made by the Reserve Bank of India or the National
Housing Bank in respect of offer or invitation to be issued on private placement
basis:
Provided that such companies shall comply with sub-rule (2) in case the Reserve
Bank of India or the National Housing Bank have not specified similar regulations.
(8) A company shall issue private placement offer cum application letter only after the
relevant special resolution or Board resolution has been filed in the Registry:
Provided that private companies shall file with the Registry copy of the Board
resolution or special resolution with respect to approval under clause (c) of sub-
section (3) of section 179.]

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]

Form PAS-1 Advertisement giving details of notice of special resolution for

varying the terms of any contract referred to in the prospectus or altering the
objects for which the prospectus was issued

Form PAS-2 Information memorandum,

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Form PAS-3 Return of allotment

Form PAS-4 Private Placement Offer Letter [Substituted by notification no.

G.S.R. 752(E) dated 7th August 2018.]

Form PAS-5 Record of a private placement offer to be kept by the company

Form PAS-6 Reconciliation of Share Capital Audit Report (Half-yearly) w.e.f. 30th
September 2019.

Form PAS-1

[Pursuant to section 27(1) and rule 7(2) of Companies (Prospectus and

Allotment of Securities) Rules, 2014]
Advertisement giving details of notice of special resolution for varying the terms
of any contract referred to in the prospectus or altering the objects for which the
prospectus was issued
Corporate Identification Number (CIN) -
Name of the company-
Registered office address-
Public Notice
Notice is hereby given that by a resolution dated……….., the Board has
proposed to vary the terms of the contract referred to in the prospectus
dated…….. (or to alter the object(s) for which the prospectus dated……. was
issued) issued in connection with issue of [number and description of
securities] at an issue price of Rs. ___/- per [description of security]
aggregating to Rs. __________________/.
In pursuance of the said resolution, further notice is given that for approving the
said proposition, a special resolution is to be passed by postal ballot.
The details regarding such variation/alteration are as follows-
1) Particulars of the terms of the contract to be varied (or objects to be altered)-
2) Particulars of the proposed variation/alteration-
3) Reasons/justification for the variation-
4) Effect of the proposed variation/alteration on the financial position of the
company-
5) Major Risk factors pertaining to the new Objects
6) Names of Directors who voted against the proposed variation/alteration
Any interested person may obtain the copy of the special resolution along with
the explanatory statement free of charge at the registered office of the
company or at the office of its Company Secretary Shri……….. at…………… or
visit the website of the Company viz. -------------- for a copy of the same.
Signature
Date
Place

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Form PAS-5

573
[see rule 14(4)]
Record of a private placement offer to be kept by the company
Name of the Company:
Registered office of the Company:
CIN:
DETAILS OF PRIVATE PLACEMENT OFFER :
Date when approval of the relevant authority (board or the shareholders, as the
case may be) obtained for the current Private Placement Offer Letter :
Amount of the offer:
Date of circulation of private placement offer letter:
Following details (in a tabulate statement) of the persons to whom private
placement offer letter has been circulated:-
(i) Name
(ii) Father’s name
(iii) Complete Address including Flat/House Number, Street, Locality, Pin Code
(iv) Phone number, if any
(V) email ID, if any
(VI) Initial of the Officer of the company designated to keep the Record

Form PAS–6

Reconciliation of Share Capital Audit Report (Half-yearly)

[Pursuant to sub-rule (8) of rule 9A Companies (Prospectus and Allotment of
Securities) Rules, 2014]
(All information shall be furnished for the half year ended 30th September and
31st March in every financial year for each ISIN separately)

1. Corporate identity number (CIN) of company:

2. (a) Name of the Company :
(b) Address of the registered office:
(c) E-mail id, if any:
(d) Phone Number:

3. ISIN:

Substituted for “Section 42(7) and Rule 14(3) of Companies (Prospectus and Allotment of Securities)
573

Rules, 2014” by notification no. G.S.R. 752(E) dated 7th August 2018.

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4. Period of filing: From: To:

5. Details of the capital of the company:
Number of Percentage of
shares Total Issued
Capital
(a) Issued Capital
(b) Held in dematerialised form
in CDSL
(c) Held in dematerialised form
in NSSL
(d) Held in physical form

(e) Total No. of shares [(b) +

(c) + (d)]

6. Reasons for difference in 5(a) and 5(e):

7. Details of changes in share capital during the half-year under consideration

as per Table below:
Particulars No. of shares Whether Whether
intimated to intimated to
CDSL NSDL
Rights
Bonus
Private
placement
ESOPs
Amalgamation
Conversion
Buyback
Capital
Reduction
Forfeiture
Any other (pls.
specify)

8. Details of shares held by:-

Demat Physical Total
Promoters
Directors
KMP

9. (a) Whether the Register of Members is updated (Yes / No ):

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The Companies (Prospectus and Allotment of Securities) Rules, 2014

(b) If not, the date upto which it has been updated:

10. Whether there were dematerialised shares in excess in the previous half-
yearly period (Yes / No ):

11. Has the company resolved the matter mentioned in point no. 10 above in the
current half-year? If not, reason why?:

12. Mention the total no. of demat requests, if any, confirmed after 21 days and
the total no. of demat requests pending beyond 21 days with the reasons for
delay:
Total no. of No. of requests No. of shares Reasons for
demat delay
requests
Confirmed
after 21 days
Pending for
more than 21
days

13. Name, Address, E-mail and Telephone No. of the Company Secretary of the
Company, if any : 14. Name, Address, E-mail, Telephone No. and Registration.
no. of the CA/CS certifying this form: 15. Whether there is appointment of
common agency for share registry work : If yes (Name & Address): 16. Any other
detail that the professional signing this form may like to provide: --------------------
----------------------------------------------------------------------------------------------

Verification
I am authorized by the Board of Directors of the Company vide resolution
no…………. dated…………… to sign this form and declare that all the
requirements of Companies Act, 2013 (18 of 2013), the Depositories Act, 1996
(22 of 1996) and the rules/regulations made thereunder in respect of the subject
matter of this form and matters incidental thereto have been complied with. I also
declare that all the information given herein above is true, correct and complete
including the attachments to this form and nothing material has been
suppressed. It is hereby further certified that the professional (Name and Type
i.e. C.A/CS) certifying this form has been duly engaged for this purpose.

To be digitally signed by
Designation (to be given)
DIN of the person signing the form

Certificate by practicing professional

I declare that I have been duly engaged for the purpose of certification of this
form. It is hereby certified that I have gone through the provisions of the

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Companies Act, 2013 (18 of 2013), the Depositories Act, 1996 (22 of 1996) and
rules/regulations made thereunder for the subject matter of this form and matters
incidental thereto and I have verified the above particulars (including
attachment(s)) from the original records maintained by the Company (name of
the company) which is subject matter of this form and found them to be true,
correct and complete and no information material to this form has been
suppressed. I further certify that:

a. The said records have been properly prepared, signed by the required officers
of the Company and maintained as per the relevant provisions of the Companies
Act, 2013 and the Depositories Act, 1996 and were found to be in order;

b. All the required attachments have been completely and legibly attached to this
form;

c. It is understood that I shall be liable for action under Section 448 of the
Companies Act, 2013 for wrong certification, if any found at any stage.

Signature
Chartered Accountant/Company Secretary in practice (whether Associate or
Fellow) Membership No. and also CP No.

Note: This eform has been taken on file maintained by the Registrar of
Companies through electronic mode and on the basis of statement of
correctness given by the filing company. Attention is also drawn to provisions of
Section 448 which provide for punishment for false statement and certification.”

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Chapter III: the Companies (Issue of

Global Depository Receipts) Rules,
2014
NOTIFICATION

New Delhi, the 31st March, 2014

G.S.R. 252(E).— In exercise of the powers conferred by section 41 read with 469 of
the Companies Act, 2013, the Central Government hereby makes the following rules,
namely:-

1. Short title and commencement. –

(1) These Rules may be called Companies (Issue of Global Depository Receipts)
Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.

(1) In these Rules, unless the context otherwise requires, -

“Act” means the Companies Act, 2013 (18 of 2013);

“Section” means section of the Act;

“Scheme” means the Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993 or any modification or re-
enactment thereof;

(2) The Words and expressions used in these rules but not defined and defined in the
Act or in the Companies (Specification of definitions details) Rules, 2014 or in the
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository
Receipt Mechanism) Scheme, 1993 shall have the meanings respectively assigned to
them in the Act or in the said rules or scheme.

3. Eligibility to issue depository receipts. –

A company may issue depository receipts provided it is eligible to do so in terms of

the Scheme and relevant provisions of the Foreign Exchange Management Rules
and Regulations.

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4. Conditions for issue of depository receipts. –

(1) The Board of Directors of the company intending to issue depository receipts shall
pass a resolution authorising the company to do so.

(2) The company shall take prior approval of its shareholders by a special resolution
to be passed at a general meeting:
Provided that a special resolution passed under section 62 for issue of
shares underlying the depository receipts, shall be deemed to be a special resolution
for the purpose of section 41 as well.

(3) The depository receipts shall be issued by an overseas depository bank

appointed by the company and the underlying shares shall be kept in the custody of
a domestic custodian bank.

(4) The company shall ensure that all the applicable provisions of the Scheme and
the rules or regulations or guidelines issued by the Reserve Bank of India are
complied with before and after the issue of depository receipts.

(5) The company shall appoint a merchant banker or a practising chartered accountant
or a practising cost accountant or a practising company secretary to oversee all the
compliances relating to issue of depository receipts and the compliance report taken from
such merchant banker or practising chartered accountant or practising cost accountant
or practising company secretary, as the case may be, shall be placed at the meeting of
the Board of Directors of the company or of the committee of the Board of directors
authorised by the Board in this regard to be held immediately after closure of all
formalities of the issue of depository receipts:
Provided that the committee of the Board of directors referred to above shall
have at least one independent director in case the company is required to have
independent directors.

5. Manner and form of depository receipts. –

(1) The depository receipts can be issued by way of public offering or private
placement or in any other manner prevalent abroad and may be listed or traded in an
overseas listing or trading platform.

(2) The depository receipts may be issued against issue of new shares or may be
sponsored against shares held by shareholders of the company in accordance with
such conditions as the Central Government or Reserve Bank of India may prescribe
or specify from time to time.

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(3) The underlying shares shall be allotted in the name of the overseas depository
bank and against such shares, the depository receipts shall be issued by the overseas
depository bank abroad.

6. Voting rights. –

(1) A holder of depository receipts may become a member of the company and shall
be entitled to vote as such only on conversion of the depository receipts into
underlying shares after following the procedure provided in the Scheme and the
provisions of this Act.

(2) Until the conversion of depository receipts, the overseas depository shall be
entitled to vote on behalf of the holders of depository receipts in accordance with the
provisions of the agreement entered into between the depository, holders of
depository receipts and the company in this regard.

7. Proceeds of issue. –

The proceeds of issues of depository receipts shall either be remitted to a bank account
in India or deposited in an Indian bank operating abroad or any foreign bank (which is a
Scheduled Bank under the Reserve Bank of India Act, 1934) having operations in India
with an agreement that the foreign bank having operations in India shall take
responsibility for furnishing all the information which may be required and in the event of
a sponsored issue of Depository Receipts, the proceeds of the sale shall be credited to
the respective bank account of the shareholders.

8. Depository receipts prior to commencement. –

(1) A company which has issued depository receipts prior to commencement of these
rules shall comply with the requirements under these rules within six months of such
commencement.

(2) Any issue of depository receipts after six months of commencement of these rules
shall be in accordance with the requirements of these rules.

9. Non applicability of certain provisions of the Act. –

[Refer section 29]

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The Companies (Issue of Global Depository Receipts) Rules, 2014

(1) The provisions of the Act and any rules issued thereunder insofar as they relate to
public issue of shares or debentures shall not apply to issue of depository receipts
abroad.

(2) The offer document, by whatever name called and if prepared for the issue of
depository receipts, shall not be treated as a prospectus or an offer document within
the meaning of this Act and all the provisions as applicable to a prospectus or an offer
document shall not apply to a depository receipts offer document.

(3) Notwithstanding anything contained under section 88 of the Act, until the redemption
of depository receipts, the name of the overseas depository bank shall be entered in the
Register of Members of the company.

No forms are prescribed in the Rules.

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Chapter IV: the Companies (Share

Capital and Debentures) Rules, 2014
[The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-
section (i) vide number G.S.R. 265(E), dated 31st March, 2014 and subsequently amended vide
notification nos. G.S.R. 413 (E) dated 18.06.2014; G.S.R. 210 (E) dated 18.03.2015; G.S.R. 439 (E)
dated 29.05.2015; G.S.R. 841 (E) dated 06.11.2015; G.S.R. 290 (E) dated 10.03.2016; G.S.R. 358
(E) dated 29.03.2016; G.S.R. 704 (E) dated 19.07.2016; G.S.R. 791 (E) dated 12.08.2016;]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R. 265(E).—In exercise of the powers conferred under clause (a) (ii) of section
43, sub-clause (d) of subsection (1) of section 54, sub-section (2) of 55, sub-section
(1) of section 56, sub-section (3) of section 56, sub-section (1) of section 62, sub-
section (2) of section 42, clause (f) of sub-section (2) of section 63, sub-section (1) of
section 64, clause (b) of sub-section 3 of section 67, sub-section (2) of section 68 sub-
section (6) of section 68, sub-section (9) of section 68, sub-section (10) of section 68,
sub-section (3) of section 71, sub-section (6) of section 71, sub-section (13) of section
71 and sub-sections (1) and (2) of section 72, read with sub-section (1) and (2) of
section 469 of the Companies Act, 2013 (18 of 2013) and in supersession of the
Companies (Central Government’s) General Rules and Forms, 1956 or any other
relevant rules prescribed under the Companies Act, 1956 (1 of 1956) on matters
covered under these rules, except as respects things done or omitted to be done
before such supersession, the Central Government hereby makes the following rules,
namely: -

1. Short title and commencement.-

(1) These rules may be called the Companies (Share Capital and Debentures)
Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);
(b) “Annexure” means the Annexure to these rules;
(c) “Fees” means the fees as specified in the Companies (Registration offices
and fees) Rules, 2014;
(d) “Form” or “e-form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

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(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;
(f) “section” means the section of the Act.
(2) Words and expressions used in these rules but not defined and defined in the
Act or in Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act and said rules.

3. Application.-
574
[The provisions of these rules shall apply to -
(a) all unlisted public companies;
(b) all private companies; and
(c) listed companies so far as they do not contradict or conflict with any other
regulation framed in this regard by the Securities and Exchange Board of India;]
[It may be noted that private companies are exempted from applicability section 43
and section 47, if either its memorandum or articles of association so provides- vide
notification number G.S.R. 464(E) dated 5th June 2015.]

4. Equity shares with differential rights.-

(1) No company limited by shares shall issue equity shares with differential rights
as to dividend, voting or otherwise, unless it complies with the following conditions,
namely:-
(a) the articles of association of the company authorizes the issue of shares with
differential rights;

(b) the issue of shares is authorized by an ordinary resolution passed at a general

meeting of the shareholders:
Provided that where the equity shares of a company are listed on a
recognized stock exchange, the issue of such shares shall be approved by the
shareholders through postal ballot ;

574
Replaced by Notification number G.S.R. 210(E) dated 18 March 2015. Prior to replacement it read
as “The provisions of these rules shall apply to

(a) all unlisted public companies;

(b) all private companies; and

(c) listed companies,

so far as they do not contradict or conflict with any other provision framed in this regard by the
Securities and Exchange Board of India.”

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575
[(c) the voting power in respect of shares with differential rights of the company
shall not exceed seventy four per cent. of total voting power including voting
power in respect of equity shares with differential rights issued at any point of
time;]
576
[(d) Omitted]

(e) the company has not defaulted in filing financial statements and annual
returns for three financial years immediately preceding the financial year in which
it is decided to issue such shares;

(f) the company has no subsisting default in the payment of a declared dividend to its
shareholders or repayment of its matured deposits or redemption of its preference
shares or debentures that have become due for redemption or payment of interest on
such deposits or debentures or payment of dividend;

(g) the company has not defaulted in payment of the dividend on preference shares
or repayment of any term loan from a public financial institution or State level financial
institution or scheduled Bank that has become repayable or interest payable thereon
or dues with respect to statutory payments relating to its employees to any authority
or default in crediting the amount in Investor Education and Protection Fund to the
Central Government;
577
[Provided that a company may issue equity shares with differential rights
upon expiry of five years from the end of the financial year in which such default
was made good.]

(h) the company has not been penalized by Court or Tribunal during the last
three years of any offence under the Reserve Bank of India Act, 1934, the
Securities and Exchange Board of India Act, 1992, the Securities Contracts
Regulation Act, 1956, the Foreign Exchange Management Act, 1999 or any other
special Act, under which such companies being regulated by sectoral regulators.

575
Substituted by notification number G.S.R. 574(E) dated 16th August 2019. Prior to substitution it
read as “(c) the shares with differential rights shall not exceed twenty-six percent of the total post-
issue paid up equity share capital including equity shares with differential rights issued at any point
of time;”.

576
Omitted by notification number G.S.R. 574(E) dated 16th August 2019. Prior to omission it read
as “(d) the company having consistent track record of distributable profits for the last three years;”.

577
Proviso to clause (g) of Rule 4(1) inserted by notification number G.S.R.704(E) dated 19th July,
2016.

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(2) The explanatory statement to be annexed to the notice of the general meeting in
pursuance of section 102 or of a postal ballot in pursuance of section 110 shall
contain the following particulars, namely:-
(a) the total number of shares to be issued with differential rights;
(b) the details of the differential rights ;
(c) the percentage of the shares with differential rights to the total post issue
paid up equity share capital including equity shares with differential rights
issued at any point of time;
(d) the reasons or justification for the issue;
(e) the price at which such shares are proposed to be issued either at par or at
premium;
(f) the basis on which the price has been arrived at;
(g) (i) in case of private placement or preferential issue-
(a) details of total number of shares proposed to be allotted to
promoters, directors and key managerial personnel;
(b) details of total number of shares proposed to be allotted to
persons other than promoters, directors and key managerial
personnel and their relationship if any with any promoter,
director or key managerial personnel;
(ii) in case of public issue - reservation, if any, for different classes of
applicants including promoters, directors or key managerial personnel;
(h) the percentage of voting right which the equity share capital with
differential voting right shall carry to the total voting right of the aggregate
equity share capital;
(i) the scale or proportion in which the voting rights of such class or type of
shares shall vary;
(j) the change in control, if any, in the company that may occur consequent
to the issue of equity shares with differential voting rights;
(k) the diluted Earning Per Share pursuant to the issue of such shares,
calculated in accordance with the applicable accounting standards;
(l) the pre and post issue shareholding pattern along with voting rights as per
clause 35 of the listing agreement issued by Security Exchange Board of
India from time to time.

(3) The company shall not convert its existing equity share capital with voting
rights into equity share capital carrying differential voting rights and vice–versa.

(4) The Board of Directors shall, inter alia, disclose in the Board’s Report for the
financial year in which the issue of equity shares with differential rights was
completed, the following details, namely:-
(a) the total number of shares allotted with differential rights;
(b) the details of the differential rights relating to voting rights and dividends;
(c) the percentage of the shares with differential rights to the total post issue
equity share capital with differential rights issued at any point of time and
percentage of voting rights which the equity share capital with differential

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voting right shall carry to the total voting right of the aggregate equity
share capital;
(d) the price at which such shares have been issued;
(e) the particulars of promoters, directors or key managerial personnel to
whom such shares are issued;
(f) the change in control, if any, in the company consequent to the issue of
equity shares with differential voting rights;
(g) the diluted Earning Per Share pursuant to the issue of each class of
shares, calculated in accordance with the applicable accounting
standards;
(h) the pre and post issue shareholding pattern along with voting rights in the
format specified under sub-rule (2) of rule 4.

(5) The holders of the equity shares with differential rights shall enjoy all other rights such
as bonus shares, rights shares etc., which the holders of equity shares are entitled to,
subject to the differential rights with which such shares have been issued.

(6) Where a company issues equity shares with differential rights, the Register of
Members maintained under section 88 shall contain all the relevant particulars of
the shares so issued along with details of the shareholders.

[Explanation.- For the purposes of this rule it is hereby clarified that equity shares with
differential rights issued by any company under the provisions of the Companies Act,
1956 (1 of 1956) and the rules made thereunder, shall continue to be regulated under
such provisions and rules.]
[Explanation is substituted by notification G.S.R. 413 (E) dated 18 June, 2014. Earlier explanation was:
“Explanation.- For the purposes of this rule, it is hereby clarified that differential rights attached to
such shares issued by any company under the provisions of Companies Act, 1956, shall continue till
such rights are converted with the differential rights in accordance with the provisions of the
Companies Act, 2013”.]

5. Certificate of shares (where shares are not in demat form).-

[Refer section 46 (3)]

(1) Where a company issues any share capital, no certificate of any share or shares
held in the company shall be issued, except-
(a) in pursuance of a resolution passed by the Board; and
(b) on surrender to the company of the letter of allotment or fractional coupons
of requisite value, save in cases of issues against letters of acceptance or of
renunciation, or in cases of issue of bonus shares:
Provided that if the letter of allotment is lost or destroyed, the Board may
impose such reasonable terms, if any, as to seek supporting evidence and
indemnity and the payment of out-of-pocket expenses incurred by the company
in investigating evidence, as it may think fit.

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(2) Every certificate of share or shares shall be in Form No. SH-1 or as near thereto
as possible and shall specify the name(s) of the person(s) in whose favor the
certificate is issued, the shares to which it relates and the amount paid-up thereon.
578
[(3) Every certificate shall specify the shares to which it relates and the amount
paid-up thereon and shall be signed by two directors or by a director and the
company secretary, wherever the company has appointed company secretary:

578
Substituted for sub-rule (3) of Rule 5 vide notification no. G.S.R. 363(E) dated 10th April
2018, w.e.f. 11th April 2018. Prior to substitution, it read as “(3) Every share certificate shall
be *[issued under the seal, if any, of the company], which shall be affixed in the presence
of, and signed by- (a) two directors duly authorized by the Board of Directors of the company
for the purpose or the committee of the Board, if so authorized by the Board; and **[(b) the
secretary or any person authorised by the Board for the purpose: Provided that in case a
company does not have a common seal, the share certificate shall be signed by two directors
or by a director and the Company Secretary, wherever the company has appointed a
Company Secretary: Provided further that, if the composition of the Board permits of it, at
least one of the aforesaid two directors shall be a person other than a managing director or a
whole-time director: Provided also that, in case of a One Person Company, every share
certificate shall be issued under the seal, if any, of the company, which shall be affixed in
the presence of and signed by one director or a person authorised by the Board of Directors
of the company for the purpose and the Company Secretary, or any other person authorised
by the Board for the purpose, and in case the One Person Company does not have a common
seal, the share certificate shall be signed by the persons in the presence of whom the seal is
required to be affixed in this proviso.] Explanation.- For the purposes of this sub-rule, a
director shall be deemed to have signed the share certificate if his signature is printed thereon
as a facsimile signature by means of any machine, equipment or other mechanical means
such as engraving in metal or lithography, or digitally signed, but not by means of a rubber
stamp, provided that the director shall be personally responsible for permitting the affixation
of his signature thus and the safe custody of any machine, equipment or other material used
for the purpose.”. * Substituted for “issued under the seal of the company” vide the
Companies (Share Capital and Debentures) Second Amendment Rules, 2015 notification
number G.S.R. 439(E) dated the 29th May, 2015. ** Substituted vide the Companies (Share Capital
and Debentures) Second Amendment Rules, 2015 notification number G.S.R. 439(E) dated the 29th May,
2015. Originally it read “(b) the secretary or any person authorised by the Board for the purpose: Provided that, in
companies wherein a Company Secretary is appointed under the provisions of the Act, he shall be deemed to be
authorised for the purpose of this rule: Provided further that, if the composition of the Board permits of it, at
least one of the aforesaid two directors shall be a person other than the managing or whole-time director:
Provided also that, in case of a One Person Company, every share certificate shall be issued under the seal of a
company, which shall be affixed in the presence of and signed by one director or a person authorised by the Board of
Directors of the company for the purpose and the Company Secretary, or any other person a
authorized by the Board for the purpose.”. Immediate prior to substitution by Second Amendment Rules, 2015, it
read
“(b) the secretary or any person authorised by the Board for the purpose:
Provided that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be
a person other than the managing or whole-time director:

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Provided that in case the company has a common seal it shall be affixed in
the presence of persons required to sign the certificate.

Explanation. - For the purposes of this sub-rule, it is hereby clarified that,-

(a) in case of an One Person Company, it shall be sufficient if the certificate is signed
by a director and the company secretary or any other person authorised by the
Board for the purpose.
(b) a 579[director or company secretary] shall be deemed to have signed the share
certificate if his signature is printed thereon as facsimile signature by means of any
machine, equipment or other mechanical means such as engraving in metal or
lithography or digitally signed, but not by means of rubber stamp, provided that the
580
[director or company secretary] shall be personally responsible for permitting the
affixation of his signature thus and the safe custody of any machine, equipment or
other material used for the purpose.]

(4) The particulars of every share certificate issued in accordance with sub-rule (1)
shall be entered in the Register of Members maintained in accordance with the
provisions of section 88 along with the name(s) of person(s) to whom it has been
issued, indicating the date of issue.

6. Issue of renewed or duplicate share certificate.-

[Refer section 46]

(1) (a) the certificate of any share or shares shall not be issued either in exchange for
those which are sub-divided or consolidated or in replacement of those which are
defaced, mutilated, torn or old, decrepit, worn out, or where the pages on the reverse
for recording transfers have been duly utilised, unless the certificate in lieu of which it
is issued is surrendered to the company:
Provided that the company may charge such fee as the Board thinks fit, not
exceeding fifty rupees per certificate issued on splitting or consolidation of
share certificate(s) or in replacement of share certificate(s) that are defaced,
mutilated, torn or old, decrepit or worn out:

Provided further that], in case of a One Person Company, every share certificate shall be issued under
the seal of the company, which shall be affixed in the presence of and signed by one director or a person
authorized by the Board of Directors of the company for the purpose and the Company Secretary, or any
other person authorized by the Board for the purpose.”.

579
Substitutued for the word ‘director’ by notification number G.S.R. 574(E) dated 16th August 2019.

580
Substitutued for the word ‘director’ by notification number G.S.R. 574(E) dated 16th August 2019.

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(b) Where a certificate is issued in any of the circumstances specified in this sub-
rule, it shall be stated on the face of it and be recorded in the Register maintained
for the purpose, that it is “Issued in lieu of share certificate No sub-
divided/replaced/on consolidation” and also that no fee shall be payable
pursuant to scheme of arrangement sanctioned by the High Court or Central
Government:

(c) A company may replace all the existing certificates by new certificates upon
sub-division or consolidation of shares or merger or demerger or any
reconstitution without requiring old certificates to be surrendered subject to
compliance with clause (a) of sub-rule (1) rule 5, sub-rule (2) of rule 5 and sub-
rule (3) of rule 5.

(2) (a) The duplicate share certificate shall be not issued in lieu of those that are lost or
destroyed, without the prior consent of the Board and without payment of such fees as
the Board thinks fit, not exceeding rupees fifty per certificate and on such reasonable
terms, such as furnishing supporting evidence and indemnity and the payment of out-of-
pocket expenses incurred by the company in investigating the evidence produced:
[It is clarified that a committee of directors may exercise such powers, subject to
any regulations imposed by the Board in this regard. Refer Circular 19/2014 dated
12 June 2014.]
(b) Where a certificate is issued in any of the circumstances specified in this sub-
rule, it shall be stated prominently on the face of it and be recorded in the Register
maintained for the purpose, that it is
“duplicate issued in lieu of share certificate No” and the word “duplicate” shall be
stamped or printed prominently on the face of the share certificate:
(c) In case unlisted companies, the duplicate share certificates shall be
issued within a period of three months and in case of listed companies such
certificate shall be issued 581 [within forty-five days], from the date of
submission of complete documents with the company respectively.

(3) (a) The particulars of every share certificate issued in accordance with sub-rules (1)
and (2) shall be entered forthwith in a Register of Renewed and Duplicate Share
Certificates maintained in Form No. SH-2 indicating against the name(s) of the
person(s) to whom the certificate is issued, the number and date of issue of the share
certificate in lieu of which the new certificate is issued, and the necessary changes
indicated in the Register of Members by suitable cross-references in the “Remarks”
column.

(b) The register shall be kept at the registered office of the company or at such
other place where the Register of Members is kept and it shall be preserved

581
For the words "within fifteen days", the words "within forty-five days" shall be substituted by
Notification number G.S.R. ….. (E) dated 18 March 2015.

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permanently and shall be kept in the custody of the company secretary of the
company or any other person authorized by the Board for the purpose.

(c) All entries made in the Register of Renewed and Duplicate Share Certificates
shall be authenticated by the company secretary or such other person as may
be authorised by the Board for the purposes of sealing and signing the share
certificate under the provisions of sub-rule (3) of rule 5.

7. Maintenance of share certificate forms and related books and documents.-

(1) All blank forms to be used for issue of share certificates shall be printed and the
printing shall be done only on the authority of a resolution of the Board and the blank
form shall be consecutively machine-numbered and the forms and the blocks,
engravings, facsimiles and hues relating to the printing of such forms shall be kept in the
custody of the secretary or such other person as the Board may authorise for the
purpose; and the company secretary or other person aforesaid shall be responsible for
rendering an account of these forms to the Board.

(2) The following persons shall be responsible for the maintenance, preservation
and safe custody of all books and documents relating to the issue of share
certificates, including the blank forms of share certificates referred to in sub-rule (1),
namely:—
(a) the committee of the Board, if so authorized by the Board or where the
company has a company secretary, the company secretary; or
(b) where the company has no company secretary, a Director specifically
authorised by the Board for such purpose.

(3) All books referred to in sub-rule (2) shall be preserved in good order not less
than thirty years and in case of disputed cases, shall be preserved permanently, and
all certificates surrendered to a company shall immediately be defaced by stamping or
printing the word “cancelled” in bold letters and may be destroyed after the expiry of three
years from the date on which they are surrendered, under the authority of a resolution of
the Board and in the presence of a person duly appointed by the Board in this behalf:
Provided that nothing in this sub-rule shall apply to cancellation of the
certificates of securities, under sub-section (2) of section 6 of the Depositories Act,
1996 (22 of 1996), when such certificates are cancelled in accordance with sub-
regulation (5) of regulation 54 of the Securities and Exchange Board of India
(Depositories and Participants) Regulations, 1996, made under section 30 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 25
of the Depositories Act, 1996 (22 of 1996).

8. Issue of sweat equity shares.-

[Refer Section 54]

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(1) A company other than a listed company, which is not required to comply with the
Securities and Exchange Board of India Regulations on sweat equity, shall not issue
sweat equity shares to its directors or employees at a discount or for consideration
other than cash, for their providing know-how or making available rights in the nature of
intellectual property rights or value additions, by whatever name called, unless the issue
is authorised by a special resolution passed by the company in general meeting.

Explanation.- For the purposes of this rule-

(i) the expressions “Employee” means-
(a) a permanent employee of the company who has been working in India or
outside India, for at least last one year; or
(b) a director of the company, whether a whole time director or not; or
(c) an employee or a director as defined in sub-clauses (a) or (b) above of a
subsidiary, in India or outside India, or of a holding company of the company;
(ii) the expression ‘Value additions’ means actual or anticipated economic benefits
derived or to be derived by the company from an expert or a professional for providing
know-how or making available rights in the nature of intellectual property rights, by such
person to whom sweat equity is being issued for which the consideration is not paid or
included in the normal remuneration payable under the contract of employment, in the
case of an employee.

(2) The explanatory statement to be annexed to the notice of the general meeting
pursuant to section 102 shall contain the following particulars, namely:-
(a) the date of the Board meeting at which the proposal for issue of sweat equity
shares was approved;
(b) the reasons or justification for the issue;
(c) the class of shares under which sweat equity shares are intended to be issued;
(d) the total number of shares to be issued as sweat equity;
(e) the class or classes of directors or employees to whom such equity shares are
to be issued;
(f) the principal terms and conditions on which sweat equity shares are to be
issued, including basis of valuation ;
(g) the time period of association of such person with the company;
(h) the names of the directors or employees to whom the sweat equity shares
will be issued and their relationship with the promoter or/and key managerial
personnel;
(i) the price at which the sweat equity shares are proposed to be issued;
(j) the consideration including consideration other than cash, if any to be
received for the sweat equity;
(k) the ceiling on managerial remuneration, if any, be breached by issuance of
such sweat equity and how it is proposed to be dealt with;
(l) a statement to the effect that the company shall conform to the applicable
accounting standards; and
(m) diluted Earning Per Share pursuant to the issue of sweat equity shares,
calculated in accordance with the applicable accounting standards.

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(3) The special resolution authorising the issue of sweat equity shares shall be valid
for making the allotment within a period of not more than twelve months from the
date of passing of the special resolution.

(4) The company shall not issue sweat equity shares for more than fifteen percent
of the existing paid up equity share capital in a year or shares of the issue value of
rupees five crores, whichever is higher:
Provided that the issuance of sweat equity shares in the Company shall not
exceed twenty five percent, of the paid up equity capital of the Company at any time.
582
[Provided further that a startup company, as defined in notification
number G.S.R. 180(E) dated 17th February, 2016 issued by the Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of
India, may issue sweat equity shares not exceeding fifty per cent of its paid up
capital upto five years from the date of its incorporation or registration.]

(5) The sweat equity shares issued to directors or employees shall be locked in/non
transferable for a period of three years from the date of allotment and the fact that the
share certificates are under lock-in and the period of expiry of lock in shall be stamped in
bold or mentioned in any other prominent manner on the share certificate.

(6) The sweat equity shares to be issued shall be valued at a price determined by a
registered valuer as the fair price giving justification for such valuation.

(7) The valuation of intellectual property rights or of know how or value additions for
which sweat equity shares are to be issued, shall be carried out by a registered valuer,
who shall provide a proper report addressed to the Board of directors with justification
for such valuation.

(8) A copy of gist along with critical elements of the valuation report obtained under
clause (6) and clause (7) shall be sent to the shareholders with the notice of the
general meeting.

(9) Where sweat equity shares are issued for a non-cash consideration on the basis
of a valuation report in respect thereof obtained from the registered valuer, such
non-cash consideration shall be treated in the following manner in the books of
account of the company-
(a) where the non-cash consideration takes the form of a depreciable or
amortizable asset, it shall be carried to the balance sheet of the company in
accordance with the accounting standards; or
(b) where clause (a) is not applicable, it shall be expensed as provided in the
accounting standards.

582
Second proviso to Rule 8(4) inserted by notification number G.S.R.704(E) dated 19th July, 2016.

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(10) The amount of sweat equity shares issued shall be treated as part of managerial
remuneration for the purposes of sections 197 and 198 of the Act, if the following
conditions are fulfilled, namely.-
(a) the sweat equity shares are issued to any director or manager; and
(b) they are issued for consideration other than cash, which does not take the
form of an asset which can be carried to the balance sheet of the company in
accordance with the applicable accounting standards.

(11) In respect of sweat equity shares issued during an accounting period, the
accounting value of sweat equity shares shall be treated as a form of compensation
to the employee or the director in the financial statements of the company, if the
sweat equity shares are not issued pursuant to acquisition of an asset.

(12) If the shares are issued pursuant to acquisition of an asset, the value of the
asset, as determined by the valuation report, shall be carried in the balance sheet
as per the Accounting Standards and such amount of the accounting value of the
sweat equity shares that is in excess of the value of the asset acquired, as per the
valuation report, shall be treated as a form of compensation to the employee or the
director in the financial statements of the company.

Explanation.- For the purposes of this sub-rule, it is hereby clarified that the
Accounting value shall be the fair value of the sweat equity shares as determined
by a registered valuer under sub-rule (6).

(13) The Board of Directors shall, inter alia, disclose in the Directors’ Report for the
year in which such shares are issued, the following details of issue of sweat equity
shares namely:-
(a) the class of director or employee to whom sweat equity shares were issued;
(b) the class of shares issued as Sweat Equity Shares;
(c) the number of sweat equity shares issued to the directors, key managerial
personnel or other employees showing separately the number of such shares
issued to them , if any, for consideration other than cash and the individual
names of allottees holding one percent or more of the issued share capital;
(d) the reasons or justification for the issue;
(e) the principal terms and conditions for issue of sweat equity shares, including
pricing formula;
(f) the total number of shares arising as a result of issue of sweat equity shares;
(g) the percentage of the sweat equity shares of the total post issued and paid up
share capital;
(h) the consideration (including consideration other than cash) received or
benefit accrued to the company from the issue of sweat equity shares;
(i) the diluted Earnings Per Share (EPS) pursuant to issuance of sweat equity
shares.

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(14) (a) The company shall maintain a Register of Sweat Equity Shares in Form No.
SH-3 and shall forthwith enter therein the particulars of Sweat Equity Shares
issued under section 54.
(b) The Register of Sweat Equity Shares shall be maintained at the registered
office of the company or such other place as the Board may decide.
(c) The entries in the register shall be authenticated by the company secretary
of the company or by any other person authorized by the Board for the
purpose.

9. Issue and redemption of preference shares.-

[Refer Section 55]

(1) A company having a share capital may, if so authorised by its articles, issue
preference shares subject to the following conditions, namely:-
(a) the issue of such shares has been authorized by passing a special
resolution in the general meeting of the company
(b) the company, at the time of such issue of preference shares, has no
subsisting default in the redemption of preference shares issued either
before or after the commencement of this Act or in payment of dividend
due on any preference shares.

(2) A company issuing preference shares shall set out in the resolution, particulars
in respect of the following matters relating to such shares, namely:-
(a) the priority with respect to payment of dividend or repayment of capital vis-a-
vis equity shares;
(b) the participation in surplus fund;
(c) the participation in surplus assets and profits, on winding-up which may
remain after the entire capital has been repaid;
(d) the payment of dividend on cumulative or non-cumulative basis.
(e) the conversion of preference shares into equity shares.
(f) the voting rights;
(g) the redemption of preference shares.

(3) The explanatory statement to be annexed to the notice of the general meeting
pursuant to section 102 shall, inter-alia, provide the complete material facts
concerned with and relevant to the issue of such shares, including-
(a) the size of the issue and number of preference shares to be issued and
nominal value of each share;
(b) the nature of such shares i.e. cumulative or non - cumulative, participating
or non - participating , convertible or non - convertible
(c) the objectives of the issue;
(d) the manner of issue of shares;
(e) the price at which such shares are proposed to be issued;
(f) the basis on which the price has been arrived at;
(g) the terms of issue, including terms and rate of dividend on each share, etc.;

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(i) the terms of redemption, including the tenure of redemption, redemption

of shares at premium and if the preference shares are convertible, the
terms of conversion;
(i) the manner and modes of redemption;
(j) the current shareholding pattern of the company;
(k) the expected dilution in equity share capital upon conversion of preference
shares.

(4) Where a company issues preference shares, the Register of Members

maintained under section 88 shall contain the particulars in respect of such
preference share holder(s).

(5) A company intending to list its preference shares on a recognized stock exchange
shall issue such shares in accordance with the regulations made by the Securities and
Exchange Board of India in this behalf.

(6) A company may redeem its preference shares only on the terms on which they were
issued or as varied after due approval of preference shareholders under section 48 of
the Act and the preference shares may be redeemed:-
(a) at a fixed time or on the happening of a particular event;
(b) any time at the company’s option; or
(c) any time at the shareholder’s option.

10. Issue and redemption of preference shares by company in infrastructural

projects.-

[Refer Section 55]

A company engaged in the setting up and dealing with of infrastructural projects
may issue preference shares for a period exceeding twenty years but not exceeding
thirty years, subject to the redemption of a minimum ten percent of such preference
shares per year from the twenty first year onwards or earlier, on proportionate basis,
at the option of the preference shareholders.

11. Instrument of transfer.-

[Refer Section 56]

(1) An instrument of transfer of securities held in physical form shall be in Form No. SH-
4 and every instrument of transfer with the date of its execution specified thereon shall be
delivered to the company within sixty days from the date of such execution.
[It is clarified that since transaction relating to transfer of shares is a contract between two or more
persons/ shareholders, any share transfer form executed before 1st April, 2014 and submitted to the
company concerned within the period prescribed under relevant section of the Companies Act, 1956
needs to be accepted by the companies for registration of transfers. In case any such share transfer
form, executed prior to 1st April, 2014, is not submitted within the prescribed period under the
Companies Act, 1956, the concerned company may get itself satisfied suitably with regard to
justification of delay in submission etc. In case a company decides not to accept the share transfer

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form, it shall convey the reasons for such non-acceptance within time provided under section 56(4)(c)
of the Act. Refer Circular 19/2014 dated 12 June 2014.]

(2) In the case of a company not having share capital, provisions of sub-rule (1) shall
apply as if the references therein to securities were references instead to the interest
of the member in the company.

(3) A company shall not register a transfer of partly paid shares, unless the company
has given a notice in Form No. SH-5 to the transferee and the transferee has given
no objection to the transfer within two weeks from the date of receipt of notice.

12. Issue of employee stock options.-

[See section 62]

A company, other than a listed company, which is not required to comply with
Securities and Exchange Board of India Employee Stock Option Scheme Guidelines
shall not offer shares to its employees under a scheme of employees’ stock option
(hereinafter referred to as “Employees Stock Option Scheme”), unless it complies with
the following requirements, namely:-

(1) the issue of Employees Stock Option Scheme has been approved by the
shareholders of the company by passing a special resolution.

Explanation: For the purposes of clause (b) of sub-section (1) of section 62 and
this rule “Employee” means-
(a) a permanent employee of the company who has been working in India or outside
India; or
(b) a director of the company, whether a whole time director or not but excluding an
independent director; or
(c) an employee as defined in clauses (a) or (b) of a subsidiary, in India or outside
India, or of a holding company of the company 583[xxx] but does not include-
(i) an employee who is a promoter or a person belonging to the promoter group; or
(ii) a director who either himself or through his relative or through any body corporate,
directly or indirectly, holds more than ten percent of the outstanding equity shares of
the company.

Words “or of an associate company” omitted by Notification number G.S.R. 210 (E) dated 18
583

March 2015.

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584
[Provided that in case of a startup company, as defined in notification number
585
[G.S.R. 127(E), dated 19th February, 2019 issued by the Department for
Promotion of Industry and Internal Trade], Ministry of Commerce and Industry
Government of India, Government of India, the conditions mentioned in sub-
clause (i) and (ii) shall not apply upto 586 [ten years] from the date of its
incorporation or registration.]

(2) The company shall make the following disclosures in the explanatory statement
annexed to the notice for passing of the resolution-
(a) the total number of stock options to be granted;
(b) identification of classes of employees entitled to participate in the
Employees Stock Option Scheme;
(c) the appraisal process for determining the eligibility of employees to the
Employees Stock Option Scheme;
(d) the requirements of vesting and period of vesting;
(e) the maximum period within which the options shall be vested;
(f) the exercise price or the formula for arriving at the same;
(g) the exercise period and process of exercise;
(h) the Lock-in period, if any ;
(i) the maximum number of options to be granted per employee and in aggregate;
(j) the method which the company shall use to value its options;
(k) the conditions under which option vested in employees may lapse e.g. in
case of termination of employment for misconduct;
(l) the specified time period within which the employee shall exercise the
vested options in the event of a proposed termination of employment or
resignation of employee; and
(m) a statement to the effect that the company shall comply with the applicable
accounting standards .

(3) The companies granting option to its employees pursuant to Employees Stock
Option Scheme will have the freedom to determine the exercise price in conformity
with the applicable accounting policies, if any.

(4) The approval of shareholders by way of separate resolution shall be obtained by

the company in case of-
(a) grant of option to employees of subsidiary or holding company; or

584
Proviso to clause (c) of Rule 12(1) inserted by notification number G.S.R.704(E) dated 19th July,
2016.

585
Substitutued by notification number G.S.R. 574(E) dated 16th August 2019. Prior to substitution it
read as “G.S.R. 180(E) dated 17th February, 2016 issued by the Department of Industrial Policy and
Promotion”.

586
Substitutued by notification number G.S.R. 574(E) dated 16th August 2019. Prior to substitution it
read as “five years”.

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(b) grant of option to identified employees, during any one year, equal to or
exceeding one percent of the issued capital (excluding outstanding warrants
and conversions) of the company at the time of grant of option.

(5)(a) The company may by special resolution, vary the terms of Employees Stock
Option Scheme not yet exercised by the employees provided such variation is not
prejudicial to the interests of the option holders.

(b) The notice for passing special resolution for variation of terms of Employees Stock
Option Scheme shall disclose full of the variation, the rationale therefor, and the details
of the employees who are beneficiaries of such variation.

(6)(a) There shall be a minimum period of one year between the grant of options and
vesting of option:
Provided that in a case where options are granted by a company under its
Employees Stock Option Scheme in lieu of options held by the same person under an
Employees Stock Option Scheme in another company, which has merged or
amalgamated with the first mentioned company, the period during which the options
granted by the merging or amalgamating company were held by him shall be adjusted
against the minimum vesting period required under this clause;

(b) The company shall have the freedom to specify the lock-in period for the shares
issued pursuant to exercise of option.

(c) The Employees shall not have right to receive any dividend or to vote or in any
manner enjoy the benefits of a shareholder in respect of option granted to them, till
shares are issued on exercise of option.

(7) The amount, if any, payable by the employees, at the time of grant of option-
(a) may be forfeited by the company if the option is not exercised by the
employees within the exercise period; or
(b) the amount may be refunded to the employees if the options are not vested due
to non-fulfillment of conditions relating to vesting of option as per the
Employees Stock Option Scheme.

(8)(a) The option granted to employees shall not be transferable to any other person.

(b) The option granted to the employees shall not be pledged, hypothecated,
mortgaged or otherwise encumbered or alienated in any other manner.

(c) Subject to clause (d), no person other than the employees to whom the option is
granted shall be entitled to exercise the option.

(d) In the event of the death of employee while in employment, all the options
granted to him till such date shall vest in the legal heirs or nominees of the deceased
employee.

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(e) In case the employee suffers a permanent incapacity while in employment, all
the options granted to him as on the date of permanent incapacitation, shall vest in
him on that day.

(f) In the event of resignation or termination of employment, all options not vested in the
employee as on that day shall expire. However, the employee can exercise the options
granted to him which are vested within the period specified in this behalf, subject to the
terms and conditions under the scheme granting such options as approved by the
Board.

(9) The Board of directors, shall, inter alia, disclose in the Directors’ Report for the
year, the following details of the Employees Stock Option Scheme:
(a) options granted;
(b) options vested;
(c) options exercised;
(d) the total number of shares arising as a result of exercise of option;
(e) options lapsed;
(f) the exercise price;
(g) variation of terms of options;
(h) money realized by exercise of options;
(i) total number of options in force;
(j) employee wise details of options granted to;-
(i) key managerial personnel;
(ii) any other employee who receives a grant of options in any one year of
option amounting to five percent or more of options granted during that year.
(iii) identified employees who were granted option, during any one year, equal to
or exceeding one percent of the issued capital (excluding outstanding warrants
and conversions) of the company at the time of grant;

(10) (a) The company shall maintain a Register of Employee Stock Options in Form
No. SH-6 and shall forthwith enter therein the particulars of option granted under
clause (b) of sub-section (1) of section 62.
(b) The Register of Employee Stock Options shall be maintained at the
registered office of the company or such other place as the Board may decide.
(c) The entries in the register shall be authenticated by the company secretary
of the company or by any other person authorized by the Board for the purpose.

(11) Where the equity shares of the company are listed on a recognized stock
exchange, the Employees Stock Option Scheme shall be issued, in accordance with
the regulations made by the Securities and Exchange Board of India in this behalf.

13. Issue of shares on preferential basis.-

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[See section 62 and refer Rule 14 of the Companies (Prospectus and Allotment of
Securities) Rules, 2014]
(1) For the purposes of clause (c) of sub-section (1) of section 62, If authorized by a
special resolution passed in a general meeting, shares may be issued by any
company in any manner whatsoever including by way of a preferential offer, to any
persons whether or not those persons include the persons referred to in clause (a) or
clause (b) of sub-section (1) of section 62 and such issue on preferential basis should
also comply with conditions laid down in section 42 of the Act:
587
[Provided that in case of any preferential offer made by a company to one
or more existing members only, the provisions of sub-rule (1) and proviso to sub-
rule (3) of rule 14 of Companies (Prospectus and Allotment of Securities) Rules,
2014 shall not apply.]
Provided 588[further] that the price of shares to be issued on a preferential
basis by a listed company shall not be required to be determined by the valuation
report of a registered valuer.

Explanation.- For the purposes of this rule,

(i) the expression ‘Preferential Offer’ means an issue of shares or other
securities, by a company to any select person or group of persons on a
preferential basis and does not include shares or other securities offered through
a public issue, rights issue, employee stock option scheme, employee stock
purchase scheme or an issue of sweat equity shares or bonus shares or
depository receipts issued in a country outside India or foreign securities;
(ii) the expression, “shares or other securities” means equity shares, fully
convertible debentures, partly convertible debentures or any other securities,
which would be convertible into or exchanged with equity shares at a later date.

(2) Where the preferential offer of shares or other securities is made by a company
whose share or other securities are listed on a recognized stock exchange, such
preferential offer shall be made in accordance with the provisions of the Act and
regulations made by the Securities and Exchange Board, and if they are not listed, the
preferential offer shall be made in accordance with the provisions of the Act and rules
made hereunder and subject to compliance with the following requirements, namely:-

(a) the issue is authorized by its articles of association;

(b) the issue has been authorized by a special resolution of the members;

587
Proviso inserted by Notification number G.S.R. 210(E) dated 18 March 2015.

588
Word ‘further’ inserted by Notification number G.S.R. 210(E) dated 18 March 2015.

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(c) 589[omitted]

(d) The company shall make the following disclosures in the explanatory
statement to be annexed to the notice of the general meeting pursuant to section
102 of the Act:
(i) the objects of the issue;
(ii) the total number of shares or other securities to be issued;
(iii) the price or price band at/within which the allotment is proposed;
(iv) basis on which the price has been arrived at along with report of the
registered valuer;
(v) relevant date with reference to which the price has been arrived at;
(vi) the class or classes of persons to whom the allotment is proposed to be
made;
(vii) intention of promoters, directors or key managerial personnel to
subscribe to the offer;
(viii) the proposed time within which the allotment shall be completed;
(ix) the names of the proposed allottees and the percentage of post
preferential offer capital that may be held by them;
(x) the change in control, if any, in the company that would occur consequent
to the preferential offer;
(xi) the number of persons to whom allotment on preferential basis have
already been made during the year, in terms of number of securities
as well as price;
(xii) the justification for the allotment proposed to be made for
consideration other than cash together with valuation report of the
registered valuer.
(xiii) The pre issue and post issue shareholding pattern of the company in
the following format-
Sr. Category Pre Issue Post Issue
No.
No. of % of share .No. of shares held % of share holding
Shares held holding
A Promoters’ holding :
1 Indian :
Individual
Bodies Corporate
Sub Total
2 Foreign Promoters

589
Clause (c) to Rule 13(2) omitted by notification number G.S.R.704(E) dated 19th
July, 2016. Prior to omission it read as “the securities allotted by way of preferential
offer shall be made fully paid up at the time of their allotment.”.

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Sr. Category Pre Issue Post Issue

No.
Sub Total (A)
B Non-Promoters’
holding :
1. Institutional
Investors
2. Non-Institution :
Private Corporate
Bodies
Directors and
Relatives
Indian Public
Others (Including
NRIs)

Sub Total(B)
GRAND TOTAL

(e) the allotment of securities on a preferential basis made pursuant to the

special resolution passed pursuant to sub-rule (2)(b) shall be completed within a
period of twelve months from the date of passing of the special resolution.

(f) if the allotment of securities is not completed within twelve months from the
date of passing of the special resolution, another special resolution shall be
passed for the company to complete such allotment thereafter.

(g) the price of the shares or other securities to be issued on a preferential basis,
either for cash or for consideration other than cash, shall be determined on the basis
of valuation report of a registered valuer;
590
[(h) where convertible securities are offered on a preferential basis with an
option to apply for and get equity shares allotted, the price of the resultant
shares pursuant to conversion shall be determined-

590
Clause (h) of Rule 13(2) substituted by notification numberG.S.R.704(E) dated 19th
July, 2016. Prior to substitution it read as “(h) where convertible securities are offered on
a preferential basis with an option to apply for and get equity shares allotted, the price of
the resultant shares shall be determined beforehand on the basis of a valuation report of a
registered valuer and also complied with the provisions of section 62 of the Act;”.

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(i) either upfront at the time when the offer of convertible securities is
made, on the basis of valuation report of the registered valuer given at
the stage of such offer, or

(ii) at the time, which shall not be earlier than thirty days to the date
when the holder of convertible security becomes entitled to apply for
shares, on the basis of valuation report of the registered valuer given
not earlier than sixty days of the date when the holder of convertible
security becomes entitled to apply for shares:
Provided that the company shall take a decision on sub-clauses (i) or (ii) at the
time of offer of convertible security itself and make such disclosure under sub-
clause (v) of clause (d) of sub-rule (2) of this rule.]

(i) where shares or other securities are to be allotted for consideration other than
cash, the valuation of such consideration shall be done by a registered valuer
who shall submit a valuation report to the company giving justification for the
valuation;

(j) where the preferential offer of shares is made for a non-cash consideration,
such non-cash consideration shall be treated in the following manner in the
books of account of the company-
(i) where the non-cash consideration takes the form of a depreciable or
amortizable asset, it shall be carried to the balance sheet of the company in
accordance with the accounting standards; or
(ii) where clause (i) is not applicable, it shall be expensed as provided in the
accounting standards.

[Explanation.- For the purposes of these rules, it is hereby clarified that, till a
registered valuer is appointed in accordance with the provisions of the Act, the
valuation report shall be made by an independent merchant banker who is
registered with the Securities and Exchange Board of India or an independent
Chartered Accountant in practice having a minimum experience of ten years.]
[Explanation is inserted by notification G.S.R. 413 (E) dated 18 June, 2014.]

[(3) The price of shares or other securities to be issued on preferential basis shall not
be less than the price determined on the basis of valuation report of a registered valuer.]
[Sub-rule (3) is inserted by notification G.S.R. 413 (E) dated 18 June, 2014.]
[Comments: Rule 13 (2)(g) requires price shall be determined based on valuation report.
It doesn’t prohibit issue of shares at lower than the price discovered under valuation
report. W.e.f. 18 June 2014, price of preferentially issued securities shall be equal or
more than the price discovered under valuation repot.]

14. Issue of Bonus Shares.-

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[Refer section 63]

14. The company which has once announced the decision of its Board
recommending a bonus issue, shall not subsequently withdraw the same.

15. Notice to Registrar for alteration of share capital.-

[Refer section 64]

15. Where a company alters its share capital in any manner specified in sub-section
(1) of section 61, or an order is passed by the Government increasing the authorized
capital of the company in pursuance of sub-section (4) read with sub-section (6) of
section 62 or a company redeems any redeemable preference shares 591 [or a
company not having share capital increases number of its members], the notice of
such alteration, increase or redemption shall be filed by the company with the
Registrar in Form No. SH-7 along with the fee.

16. Provision of money by company for purchase of its own shares by

employees or by trustees for the benefit of employees.-

[Refer section 67]

16.(1) The company shall not make a provision of money for the purchase of, or
subscription for, shares in the company or its holding company, if the purchase of,
or the subscription for, the shares by trustees is for the shares to be held by or for
the benefit of the employees of the company, unless it complies with the following
conditions, namely:-
(a) the scheme of provision of money for purchase of or subscription for the
shares as aforesaid is approved by the members by passing special resolution
in a general meeting;
(b) such purchase of shares shall be made only through a recognized stock
exchange in case the shares of the company are listed and not by way of
private offers or arrangements;
(c) where shares of a company are not listed on a recognized stock exchange,
the valuation at which shares are to be purchased shall be made by a
registered valuer;
(d) the value of shares to be purchased or subscribed in the aggregate
together with the money provided by the company shall not exceed five per
cent. of the aggregate of paid up capital and free reserves of the company;

591
Words “or a company not having share capital increases number of its members“ Inserted
in Rule 15 by notification number G.S.R.704(E) dated 19th July, 2016.

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(2) The explanatory statement to be annexed to the notice of the general meeting
to be convened pursuant to section 102 shall, in addition to the particulars
mentioned in sub-rule (1) of rule 18, contain the following particulars, namely:-
(a) the class of employees for whose benefit the scheme is being implemented
and money is being provided for purchase of or subscription to shares;
(b) the particulars of the trustee or employees in whose favor such shares are to
be registered;
(c) the particulars of trust and name, address, occupation and nationality of
trustees and their relationship with the promoters, directors or key
managerial personnel, if any;
(d) the any interest of key managerial personnel, directors or promoters in such
scheme or trust and effect thereof;
(e) the detailed particulars of benefits which will accrue to the employees from
the implementation of the scheme;
(f) the details about who would exercise and how the voting rights in respect of
the shares to be purchased or subscribed under the scheme would be
exercised;

(3)A person shall not be appointed as a trustee to hold such shares, if he-
(a) is a director, key managerial personnel or promoter of the company or its
holding, subsidiary or associate company or any relative of such director, key
managerial personnel or promoter; or
(b) beneficially holds ten percent or more of the paid-up share capital of the company.

(4) Where the voting rights are not exercised directly by the employees in respect
of shares to which the scheme relates, the Board of Directors shall, inter alia,
disclose in the Board’s report for the relevant financial year the following details,
namely:-
(a) the names of the employees who have not exercised the voting rights
directly;
(b) the reasons for not voting directly;
(c) the name of the person who is exercising such voting rights;
(d) the number of shares held by or in favour of, such employees and the
percentage of such shares to the total paid up share capital of the
company;
(e) the date of the general meeting in which such voting power was exercised;
(f) the resolutions on which votes have been cast by persons holding such voting
power;
(g) the percentage of such voting power to the total voting power on each
resolution;
(h) whether the votes were cast in favour of or against the resolution.

17. Buy-back of shares or other securities.-

[refer section 68]

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Unless stated otherwise, the following norms shall be complied with by the private
companies and unlisted public companies for buy-back of their securities-
(1) The explanatory statement to be annexed to the notice of the general meeting
pursuant to section 102 shall contain the following disclosures, namely:-
(a) the date of the board meeting at which the proposal for buy-back was
approved by the board of directors of the company;
(b) the objective of the buy-back;
(c) the class of shares or other securities intended to be purchased under the buy-
back;
(d) the number of securities that the company proposes to buy-back;
(e) the method to be adopted for the buy-back;
(f) the price at which the buy-back of shares or other securities shall be made;
(g) the basis of arriving at the buy-back price;
(h) the maximum amount to be paid for the buy-back and the sources of funds
from which the buy-back would be financed;
(i) the time-limit for the completion of buy-back;
(j) (i) the aggregate shareholding of the promoters and of the directors of the
promoter, where the promoter is a company and of the directors and key
managerial personnel as on the date of the notice convening the general
meeting;
(ii) the aggregate number of equity shares purchased or sold by persons
mentioned in sub-clause (i) during a period of twelve months preceding the
date of the board meeting at which the buy-back was approved and from that
date till the date of notice convening the general meeting;
(iii) the maximum and minimum price at which purchases and sales
referred to in sub-clause (ii) were made along with the relevant date;
(k) if the persons mentioned in sub-clause (i) of clause (j) intend to tender their
shares for buy-back –
(i) the quantum of shares proposed to be tendered;
(ii) the details of their transactions and their holdings for the last twelve
months prior to the date of the board meeting at which the buy-back was
approved including information of number of shares acquired, the price
and the date of acquisition; [In the notification, numbered as (iii) instead of
(ii)]
(l) a confirmation that there are no defaults subsisting in repayment of deposits,
interest payment thereon, redemption of debentures or payment of interest
thereon or redemption of preference shares or payment of dividend due to any
shareholder, or repayment of any term loans or interest payable thereon to any
financial institution or banking company;
(m) a confirmation that the Board of directors have made a full enquiry into
the affairs and prospects of the company and that they have formed the
opinion-
(i) that immediately following the date on which the general meeting is
convened there shall be no grounds on which the company could be
found unable to pay its debts;

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(ii) as regards its prospects for the year immediately following that date, that,
having regard to their intentions with respect to the management of the
company’s business during that year and to the amount and character of the
financial resources which will in their view be available to the company during
that year, the company shall be able to meet its liabilities as and when they
fall due and shall not be rendered insolvent within a period of one year from
that date; and
(iii) the directors have taken into account the liabilities(including
prospective and contingent liabilities), as if the company were being
wound up under the provisions of the Companies Act, 2013
(n) a report addressed to the Board of directors by the company’s auditors stating
that-
(i) they have inquired into the company’s state of affairs;
(ii) the amount of the permissible capital payment for the securities in
question is in their view properly determined;
(iii) that the audited accounts on the basis of which calculation with
reference to buy back is done is not more than six months old from the
date of offer document; and
592
[Provided that where the audited accounts are more
than six months old, the calculations with reference to buy back shall be
on the basis of un-audited accounts not older than six months from the
date of offer document which are subjected to limited review by the
auditors of the company.]
(iv) the Board of directors have formed the opinion as specified in clause (m)
on reasonable grounds and that the company, having regard to its state of
affairs, shall not be rendered insolvent within a period of one year from that
date.

(2) The company which has been authorized by a special resolution shall, before
the buy-back of shares, file with the Registrar of Companies a letter of offer in Form
No. SH-8, along with the fee:
Provided that such letter of offer shall be dated and signed on behalf of the
Board of directors of the company by not less than two directors of the company, one
of whom shall be the managing director, where there is one.

(3) The company shall file with the Registrar, along with the letter of offer, and in case
of a listed company with the Registrar and the Securities and Exchange Board, a
declaration of solvency in Form No. SH-9 along with the fee and signed by at least two
directors of the company, one of whom shall be the managing director, if any, and
verified by an affidavit as specified in the said Form.

592
Inserted by Notification number G.S.R. 290(E) dated 10th March 2016.

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(4) The letter of offer shall be dispatched to the shareholders or security holders
immediately after filing the same with the Registrar of Companies but not later than
twenty days from its filing with the Registrar of Companies.

(5) The offer for buy-back shall remain open for a period of not less than fifteen days
and not exceeding thirty days from the date of dispatch of the letter of offer.
593
[Provided that where all members of a company agree, the offer for buy-
back may remain open for a period less than fifteen days.]

(6) In case the number of shares or other specified securities offered by the
shareholders or security holders is more than the total number of shares or
securities to be bought back by the company, the acceptance per shareholder shall
be on proportionate basis out of the total shares offered for being bought back.

(7) The company shall complete the verifications of the offers received within fifteen
days from the date of closure of the offer and the shares or other securities lodged shall
be deemed to be accepted unless a communication of rejection is made within twenty
one days from the date of closure of the offer.

(8) The company shall immediately after the date of closure of the offer, open a
separate bank account and deposit therein, such sum, as would make up the entire
sum due and payable as consideration for the shares tendered for buy-back in terms
of these rules.

(9) The company shall within seven days of the time specified in sub-rule (7)-
(a) make payment of consideration in cash to those shareholders or security
holders whose securities have been accepted; or
(b) return the share certificates to the shareholders or security holders whose
securities have not been accepted at all or the balance of securities in case
of part acceptance.

(10) The company shall ensure that—

(a) the letter of offer shall contain true, factual and material information and shall
not contain any misleading information and must state that the directors of the
company accept the responsibility for the information contained in such document;
(b) the company shall not issue any new shares including by way of bonus
shares from the date of passing of special resolution authorizing the buy-back
till the date of the closure of the offer under these rules, except those arising
out of any outstanding convertible instruments;
(c) the company shall confirm in its offer the opening of a separate bank
account adequately funded for this purpose and to pay the consideration only
by way of cash;

593
Inserted by the Notification number G.S.R. 358(E) dated 29th March, 2016. Refer annexure N85.

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(d) the company shall not withdraw the offer once it has announced the offer to the
shareholders;
(e) the company shall not utilize any money borrowed from banks or financial
institutions for the purpose of buying back its shares; and
(f) the company shall not utilize the proceeds of an earlier issue of the same
kind of shares or same kind of other specified securities for the buy-back.

[No sub-rule (11) in notification. Seems numbering mistake]

[In the notification, numbered as 12 instead of 11]
(12)(a) The company, shall maintain a register of shares or other securities which
have been bought-back in Form No. SH-10.
(b) The register of shares or securities bought-back shall be maintained at the
registered office of the company and shall be kept in the custody of the secretary
of the company or any other person authorized by the board in this behalf.
(c) The entries in the register shall be authenticated by the secretary of the
company or by any other person authorized by the Board for the purpose.

(13) The company, after the completion of the buy-back under these rules, shall file
with the Registrar, and in case of a listed company with the Registrar and the
Securities and Exchange Board of India, a return in the Form No. SH-11 along with
the fee .

(14) There shall be annexed to the return filed with the Registrar in Form No. SH-11, a
certificate in Form No. SH-15 signed by two directors of the company including the
managing director, if any, certifying that the buy-back of securities has been made in
compliance with the provisions of the Act and the rules made thereunder.

18. Debentures.-

[Refer section 71]

[Circular 09/2016 dated 03rd August, 2016: It is clarified that Chapter II and Rule 18 would not apply to
issue of rupee denominated bonds made exclusively to persons resident outside India]
(1) The company shall not issue secured debentures, unless it complies with the
following conditions, namely:-
(a) An issue of secured debentures may be made, provided the date of its
redemption shall not exceed ten years from the date of issue.
594
[Provided that the following classes of companies may issue secured
debentures for a period exceeding ten years but not exceeding thirty years,
(i) Companies engaged in setting up of infrastructure projects;

594
Proviso is substituted by notification G.S.R. 413(E) dated 18 June, 2014. Earlier proviso was:
“Provided that a company engaged in the setting up of infrastructure projects may issue secured
debentures for a period exceeding ten years but not exceeding thirty years;”

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(ii) ‘Infrastructure Finance Companies’ as defined in clause (viia) of sub-direction

(1) of direction 2 of Non-Banking Financial (Non-deposit accepting or
holding) Companies Prudential Norms (Reserve Bank) Directions, 2007;
595
[(iii) Infrastructure Debt Fund Non-Banking Financial Companies' as defined
in clause (b) of direction 3 of Infrastructure Debt Fund Non-Banking
Financial Companies (Reserve Bank) Directions, 2011;
(iv) Companies permitted by a Ministry or Department of the Central
Government or by Reserve Bank of India or by the National Housing Bank
or by any other statutory authority to issue debentures for a period
exceeding ten years.]]
596
[(b) Such an issue of debentures shall be secured by the creation of a charge
on the properties or assets of the company or its subsidiaries or its holding
company or its associates companies, having a value which is sufficient for the
due repayment of the amount of debentures and interest thereon.]

(c) the company shall appoint a debenture trustee before the issue of prospectus or
letter of offer for subscription of its debentures and not later than sixty days after the
allotment of the debentures, execute a debenture trust deed to protect the interest of
the debenture holders ; and

(d) the security for the debentures by way of a charge or mortgage shall be
created in favour of the debenture trustee on-
597
[(i) 598 {any specific movable property of the company or its holding
company or subsidiaries or associate companies or otherwise.}
(ii) any specific immovable property wherever situate, or any interest therein:

595
Clause (iii) of the proviso substituted and clause (iv) inserted by Notification number G.S.R.
841(E), dated 6-11-2015. Prior to substitution, said clause (iii) read “(iii) ‘Infrastructure Debt Fund
Non-Banking Financial companies’ as defined in clause of (b) direction 3 of Infrastructure Debt Fund
Non-Banking Financial Companies (Reserve Bank) Directions, 2011.”

596
Clause (b) of Rule 18(1) substituted by notification number G.S.R.704(E) dated 19th July, 2016.
Prior to substitution it read as “(b) such an issue of debentures shall be secured by the creation of a
charge, on the properties or assets of the company, having a value which is sufficient for the due
repayment of the amount of debentures and interest thereon;”.

597
Substituted by Notification number G.S.R. 210 (E) dated 18 March 2015. Prior to substitution it
read “(i) any specific movable property of the company (not being in the nature of pledge); or (ii) any specific
immovable property wherever situate, or any interest therein.”

598
Sub-clause (i) of Rule 18(1)(d) substituted by notification number704(E) dated 19th July, 2016.
Prior to substitution it read as “any specific movable property of the company ; or”.

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Provided that in case of a non-banking financial company, the charge or

mortgage under sub-clause (i) may be created on any movable property.]
599
[Provided further that in case of any issue of debentures by a
Government company which is fully secured by the guarantee given by the
Central Government or one or more State Government or by both, the
requirement for creation of charge under this sub-rule shall not apply.
Provided also that in case of any loan taken by a subsidiary company from
any bank or financial institution the charge or mortgage under this sub-rule
may also be created on the properties or assets of the holding company;]

(2) The company shall appoint debenture trustees under sub-section (5) of section
71, after complying with the following conditions, namely:-
(a) the names of the debenture trustees shall be stated in letter of offer
inviting subscription for debentures and also in all the subsequent notices or
other communications sent to the debenture holders;

(b) before the appointment of debenture trustee or trustees, a written consent

shall be obtained from such debenture trustee or trustees proposed to be
appointed and a statement to that effect shall appear in the letter of offer
issued for inviting the subscription of the debentures;

(c) A person shall not be appointed as a debenture trustee, if he-

(i) beneficially holds shares in the company;
(ii) is a promoter, director or key managerial personnel or any other officer
or an employee of the company or its holding, subsidiary or associate
company;
(iii) is beneficially entitled to moneys which are to be paid by the company
otherwise than as remuneration payable to the debenture trustee;
(iv) is indebted to the company, or its subsidiary or its holding or associate
company or a subsidiary of such holding company;
(v) has furnished any guarantee in respect of the principal debts secured by
the debentures or interest thereon;
(vi) has any pecuniary relationship with the company amounting to two per
cent. or more of its gross turnover or total income or fifty lakh rupees or such
higher amount as may be prescribed, whichever is lower, during the two
immediately preceding financial years or during the current financial year;
(vii) is relative of any promoter or any person who is in the employment of
the company as a director or key managerial personnel

(d) the Board may fill any casual vacancy in the office of the trustee but while
any such vacancy continues, the remaining trustee or trustees, if any, may
act:

599
Inserted by Notification number G.S.R. 210 (E) dated 18 March 2015.

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Provided that where such vacancy is caused by the resignation of the

debenture trustee, the vacancy shall only be filled with the written consent of
the majority of the debenture holders.

(e) any debenture trustee may be removed from office before the expiry of
his term only if it is approved by the holders of not less than three fourth in
value of the debentures outstanding, at their meeting.

(3) It shall be the duty of every debenture trustee to-

(a) satisfy himself that the letter of offer does not contain any matter which is
inconsistent with the terms of the issue of debentures or with the trust deed;

(b) satisfy himself that the covenants in the trust deed are not prejudicial to the
interest of the debenture holders;

(c) call for periodical status or performance reports from the company;

(d) communicate promptly to the debenture holders defaults, if any, with

regard to payment of interest or redemption of debentures and action taken
by the trustee therefor;

(e) appoint a nominee director on the Board of the company in the event of-
(i) two consecutive defaults in payment of interest to the debenture holders;
or
(ii) default in creation of security for debentures; or
(iii) default in redemption of debentures.

(f) ensure that the company does not commit any breach of the terms of issue
of debentures or covenants of the trust deed and take such reasonable steps
as may be necessary to remedy any such breach;

(g) inform the debenture holders immediately of any breach of the terms of
issue of debentures or covenants of the trust deed;

(h) ensure the implementation of the conditions regarding creation of security

for the debentures, if any, and debenture redemption reserve;

(i) ensure that the assets of the company issuing debentures and of the
guarantors, if any, are sufficient to discharge the interest and principal
amount at all times and that such assets are free from any other
encumbrances except those which are specifically agreed to by the
debenture holders;

(j) do such acts as are necessary in the event the security becomes enforceable;

(k) call for reports on the utilization of funds raised by the issue of debentures-

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(l) take steps to convene a meeting of the holders of debentures as and when
such meeting is required to be held;

(m) ensure that the debentures have been converted or redeemed in

accordance with the terms of the issue of debentures;

(n) perform such acts as are necessary for the protection of the interest of
the debenture holders and do all other acts as are necessary in order to
resolve the grievances of the debenture holders.

(4) The meeting of all the debenture holders shall be convened by the debenture trustee
on-
(a) requisition in writing signed by debenture holders holding at least one-tenth
in value of the debentures for the time being outstanding;

(b) the happening of any event, which constitutes a breach, default or which in
the opinion of the debenture trustees affects the interest of the debenture
holders.

(5) For the purposes of sub-section (13) of section 71 and sub-rule (1) a trust deed
in Form No. SH-12 or as near thereto as possible shall be executed by the company
issuing debentures in favour of the debenture trustees 600[within three months of
closure of the issue or offer].

(6) The provisions of sub-rules (2) to (5) of rule 18 shall not be applicable to the public
offer of debentures.
601
[(7) The company shall comply with the requirements with regard to Debenture
Redemption Reserve (DRR) and investment or deposit of sum in respect of

600
the words "within three months of closure of the issue or offer" substituted for the words "within
sixty days of allotment of debentures" by Notification number G.S.R. 210 (E) dated 18 March 2015.

601
Substitutued by notification number G.S.R. 574(E) dated 16th August 2019. Prior to substitution it
read as “(7) The company shall create a Debenture Redemption Reserve for the purpose of
redemption of debentures, in accordance with the conditions given below-

(a) the Debenture Redemption Reserve shall be created out of the profits of the company available
for payment of dividend;

(b) the company shall create Debenture Redemption Reserve (DRR) in accordance with following
conditions:-

(i) No DRR is required for debentures issued by All India Financial Institutions (AIFIs) regulated by
Reserve Bank of India and Banking Companies for both public as well as privately placed

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debentures. For other Financial Institutions (FIs) within the meaning of clause (72) of section 2 of the
Companies Act, 2013, DRR will be as applicable to NBFCs registered with RBI.

(ii) For NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act, 1997, [and
for Housing Finance Companies registered with the National Housing Bank] ‘the adequacy’ of DRR
will be 25% [of the value of outstanding debentures] [Words “of the value of outstanding debentures”
substituted for the words “of the value of debentures” in Rule 18(7)(b)(ii) vide notification
numberG.S.R.704(E) dated 19th July, 2016] issued through public issue as per present SEBI (Issue
and Listing of Debt Securities) Regulations, 2008, and no DRR is required in the case of privately
placed debentures.

[Words “and for Housing Finance Companies registered with the National Housing Bank” inserted by
notification G.S.R. 413 (E) dated 18 June, 2014.]

(iii) For other companies including manufacturing and infrastructure companies, the adequacy of
DRR will be 25% [of the value of outstanding debentures] [Words “of the value of outstanding
debentures” substituted for the words “of the value of debentures” in Rule 18(7)(b)(iii) vide notification
number G.S.R.704(E) dated 19th July, 2016.] issued through public issue as per present SEBI (Issue
and Listing of Debt Securities), Regulations 2008 and also 25% DRR is required in the case of
privately placed debentures by listed companies. For unlisted companies issuing debentures on
private placement basis, the DRR will be 25% 97[of the value of outstanding debentures].

[Provided that where a company intends to redeem its debentures prematurely, it may
provide for transfer of such amount in Debenture Redemption Reserve as is necessary for
redemption of such debentures even if it exceeds the limits specified in this sub-rule.][ Proviso to
Rule 18(7)(b)(iii) inserted by notification number G.S.R.704(E) dated 19th July, 2016]

(c) every company required to create Debenture Redemption Reserve shall on or before the 30th day
of April in each year, invest or deposit, as the case may be, a sum which shall not be less than fifteen
percent, of the amount of its debentures maturing during the year ending on the 31st day of March of
the next year, in any one or more of the following methods, namely:-

(i) in deposits with any scheduled bank, free from any charge or lien;

(ii) in unencumbered securities of the Central Government or of any State Government;

(iii) in unencumbered securities mentioned in sub-clauses (a) to (d) and (ee) of section 20 of the
Indian Trusts Act, 1882;

(iv) in unencumbered bonds issued by any other company which is notified under sub-clause (f) of
section 20 of the Indian Trusts Act, 1882;

(v) the amount invested or deposited as above shall not be used for any purpose other than for
redemption of debentures maturing during the year referred above:

Provided that the amount remaining invested or deposited, as the case may be, shall not at any
time fall below fifteen per cent of the amount of the debentures maturing during the year ending on
the 31st day of March of that year;

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debentures maturing during the year ending on the 31st day of March of next year,
in accordance with the conditions given below:-

(a) Debenture Redemption Reserve shall be created out of profits of the company
available for payment of dividend;

(b) the limits with respect to adequacy of Debenture Redemption Reserve and
investment or deposits, as the case may be, shall be as under;-
(i) Debenture Redemption Reserve is not required for debentures issued by
All India Financial Institutions regulated by Reserve Bank of India and
Banking Companies for both public as well as privately placed
debentures;
(ii) For other Financial Institutions within the meaning of clause (72) of section
2 of the Companies Act, 2013, Debenture Redemption Reserve shall be
as applicable to Non –Banking Finance Companies registered with
Reserve Bank of India.
(iii) For listed companies (other than All India Financial Institutions and
Banking Companies as specified in sub-clause (i)), Debenture
Redemption Reserve is not required in the following cases –
(A) in case of public issue of debentures –
A. for NBFCs registered with Reserve Bank of India under section 45-IA
of the RBI Act, 1934 and for Housing Finance Companies registered
with National Housing Bank;
B. for other listed companies;
(B) in case of privately placed debentures, for companies specified in
sub-items A and B.
(iv) for unlisted companies, (other than All India Financial Institutions and
Banking Companies as specified in sub-clause (i)) –
(A) for NBFCs registered with RBI under section 45-IA of the Reserve
Bank of India Act, 1934 and for Housing Finance Companies
registered with National Housing Bank, Debenture Redemption
Reserve is not required in case of privately placed debentures.
(B) for other unlisted companies, the adequacy of Debenture Redemption
Reserve shall be ten percent. of the value of the outstanding
debentures;
(v) In case a company is covered in item (A) or item (B) of sub-clause (iii) of
clause (b) or item (B) of sub-clause (iv) of clause (b), it shall on or before
the 30th day of April in each year, in respect of debentures issued by a
company covered in item (A) or item (B) of subclause (iii) of clause (b) or

(d) in case of partly convertible debentures, Debenture Redemption Reserve shall be created in
respect of non-convertible portion of debenture issue in accordance with this sub-rule.

(e) the amount credited to the Debenture Redemption Reserve shall not be utilised by the company
except for the purpose of redemption of debentures.”.

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item (B) of sub-clause (iv) of clause (b), invest or deposit, as the case
may be, a sum which shall not be less than fifteen per cent., of the amount
of its debentures maturing during the year, ending on the 31st day of
March of the next year in any one or more methods of investments or
deposits as provided in sub-clause (vi):
Provided that the amount remaining invested or deposited, as the case
may be, shall not at any time fall below fifteen percent. of the amount of
the debentures maturing during the year ending on 31st day of March of
that year.
(vi) for the purpose of sub-clause (v), the methods of deposits or investments,
as the case may be, are as follows:—
(A) in deposits with any scheduled bank, free from any charge or lien;
(B) in unencumbered securities of the Central Government or any State
Government;
(C) in unencumbered securities mentioned in sub-clause (a) to (d) and
(ee) of section 20 of the Indian Trusts Act, 1882;
(D) in unencumbered bonds issued by any other company which is
notified under sub-clause (f) of section 20 of the Indian Trusts Act,
1882:
Provided that the amount invested or deposited as above shall not be
used for any purpose other than for redemption of debentures maturing
during the year referred above.

(c) in case of partly convertible debentures, Debenture Redemption Reserve shall

be created in respect of non-convertible portion of debenture issue in accordance
with this sub-rule.

(d) the amount credited to Debenture Redemption Reserve shall not be utilized by
the company except for the purpose of redemption of debentures.]

(8) (a) A trust deed for securing any issue of debentures shall be open for inspection
to any member or debenture holder of the company, in the same manner, to the
same extent and on the payment of the same fees, as if it were the register of
members of the company; and
(b) A copy of the trust deed shall be forwarded to any member or debenture holder
of the company, at his request, within seven days of the making thereof, on payment
of fee.
602
[(9) Nothing contained in this rule shall apply to any amount received by a
company against issue of commercial paper or any other similar instrument issued
in accordance with the guidelines or regulations or notification issued by the
Reserve Bank of India.

602
Sub-rule (9) and (10) inserted by Notification number G.S.R. 210 (E) dated 18 March 2015.

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(10) In case of any offer of foreign currency convertible bonds or foreign currency
bonds issued in accordance with the Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or
regulations or directions issued by the Reserve Bank of India, the provisions of this
rule shall not apply unless otherwise provided in such Scheme or regulations or
directions.]
603
[(11) Nothing contained in this rule shall apply to rupee denominated bonds
issued exclusively to overseas investors in terms of A.P. (DIR Series) Circular No.
17 dated September 29, 2015 of the Reserve Bank of India.]

19. Nomination by securities holders.—

[Refer section 72]

(1) Any holder of securities of a company may, at any time, nominate, in Form No.
SH-13, any person as his nominee in whom the securities shall vest in the event of
his death.

(2) On the receipt of the nomination form, a corresponding entry shall forthwith be
made in the relevant register of securities holders, maintained under section 88.

(3) Where the nomination is made in respect of the securities held by more than one
person jointly, all joint holders shall together nominate in Form No. SH-13 any
person as nominee.

(4) The request for nomination should be recorded by the Company within a period
of two months from the date of receipt of the duly filled and signed nomination form.

(5) In the event of death of the holder of securities or where the securities are held
by more than one person jointly, in the event of death of all the joint holders, the
person nominated as the nominee may upon the production of such evidence as
may be required by the Board, elect, either-
(a) to register himself as holder of the securities ; or
(b) to transfer the securities, as the deceased holder could have done.

(6) If the person being a nominee, so becoming entitled, elects to be registered as

holder of the securities himself, he shall deliver or send to the company a notice in
writing signed by him stating that he so elects and such notice shall be accompanied
with the death certificate of the deceased share or debenture holder(s).

603
Inserted by notification number791(E) dated 12th August, 2016.

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(7) All the limitations, restrictions and provisions of the Act relating to the right to
transfer and the registration of transfers of securities shall be applicable to any such
notice or transfer as aforesaid as if the death of the share or debenture holder had
not occurred and the notice or transfer were a transfer signed by that shareholder
or debenture holder, as the case may be.

(8) A person, being a nominee, becoming entitled to any securities by reason of the
death of the holder shall be entitled to the same dividends or interests and other
advantages to which he would have been entitled to if he were the registered holder
of the securities except that he shall not, before being registered as a holder in
respect of such securities, be entitled in respect of these securities to exercise any
right conferred by the membership in relation to meetings of the company:
Provided that the Board may, at any time, give notice requiring any such person
to elect either to be registered himself or to transfer the securities, and if the notice is
not complied with within ninety days, the Board may thereafter withhold payment of all
dividends or interests, bonuses or other moneys payable in respect of the securities,
as the case may be, until the requirements of the notice have been complied with.

(9) A nomination may be cancelled, or varied by nominating any other person in

place of the present nominee, by the holder of securities who has made the
nomination, by giving a notice of such cancellation or variation, to the company in
Form No. SH-14.

(10) The cancellation or variation shall take effect from the date on which the notice
of such variation or cancellation is received by the company.

(11) Where the nominee is a minor, the holder of the securities, making the
nomination, may appoint a person in 604[Form No. SH-13] specified under sub-rule
(1), who shall become entitled to the securities of the company, in the event of death
of the nominee during his minority.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms
which are not available online are included here.]
Form No. SH-1 Share Certificate
Form No. SH-2 Register of Renewed and Duplicate Share Certificate
Form No. SH-3 Register of Sweat Equity Shares
Form No. SH-4 Securities Transfer Form

604
For the word, letters and figures "Form No. SH-14", the word, letters and figures "Form SH-13"
substituted by Notification number G.S.R. ….. (E) dated 18 March 2015. Earlier reference to Form
SH-14 was incorrect and the same is rectified.

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The Companies (Share Capital and Debenture) Rules, 2014

Form No. SH-5 Notice for transfer of partly paid securities

Form No. SH-6 Register of Employee Stock Options
Form No. SH-7 Notice to Registrar of any alteration of share capital
Form No. SH-8 Letter of offer
Form No. SH-9 Declaration of Solvency
Form No. SH-10 Register of shares or other securities bought-back
Form No. SH-11 Return in respect of buy-back of securities
Form No. SH-12 Debenture Trust Deed
Form No. SH-13 Nomination form
Form No. SH-14 Cancellation or Variation of Nomination
Form No. SH-15 Certificate of compliance in respect of buy-back of securities

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Form No. SH-1

Share Certificate
[Pursuant to sub-section (3) of section 46 of the Companies Act, 2013 and rule 5
(2) of the Companies (Share Capital and Debentures) Rules 2014]
.......………….Limited/Private Limited
……………….(Corporate Identification Number)
(Incorporated under…the Companies Act, 1956/2013)
Registered Office:…………………………………………………………………
This is to certify that the person(s) named in this Certificate is/are the Registered
Holder(s) of the within mentioned share(s) bearing the distinctive number(s) herein
specified in the above named Company subject to the Memorandum and Articles
of Association of the Company and the amount endorsed herein has been paid up
on each such share.
EQUITY SHARES EACH OF RUPEES……………... (Nominal value)
AMOUNT PAID-UP PER SHARE RUPEES…………………..

Register Folio No: Certificate No:

Name(s) of the Holder(s):

No. of shares held:…………………………… ……………………………..

(in words) (in figures)

Distinctive No.(s): From……………………………. To……… (Both inclusive)

Given under the common seal of the Company this……….. day of…… 20…..
(1) Director:
(2) Director:
(3) Secretary/any other authorized person:
Note: No transfer of the Share(s) comprised in the Certificate can be registered
unless accompanied by this Certificate.

Form No. SH-2

Register of Renewed and Duplicate Share Certificates

[Pursuant to sub-section (3) of section 46 of the Companies Act, 2013 and rule 6(3)(a) the
Companies (Share Capital and Debentures) Rules 2014]
S. No. Folio No. Name of the Date of approval Class of shares
person(s) to of issue of
whom Renewed Renewed/
/ Duplicate share Duplicate share
certificate is certificate
issued
1 2 3 4 5

Date of issue of Original share Total number of Distinctive No. of Date of issue of
original share certificate shares in the shares Renewed/
certificate number From | To

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Original Share Duplicate Share

Certificate Certificate
6 7 8 9 10

Reasons for Number of the Total Number of Reference to Remarks

issue of Renewed share Shares in the entry in Register
Renewed/ certificate, if Renewed/ of Members
Duplicate Share applicable Duplicate Share
Certificate Certificate
11 12 13 14 15

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The Companies (Share Capital and Debenture) Rules, 2014

Form No. SH-3

Register of Sweat Equity Shares

[Pursuant to section 54 of the Companies Act, 2013 and rule 8 (14) of the
Companies (Share Capital and Debentures) Rules 2014]

S. No. Reference to Name of the Status of the Date of

entry in allottee allottee – passing of
register of whether Board
members director or resolution
employee
1 2 3 4 5

Date of the Date of issue Number of Certificate No.

special of sweat sweat equity / Folio No.
resolution equity shares shares issued
authorizing the
issue of sweat
equity shares
6 7 8 9

Face value of Price at which Amount to be Total consideration paid, if any,

the share the shares treated as by the employee / director
are issued paid-up
Consideration Particulars of
received in consideration
cash other than
cash
10 11 12 13 14

Lock in the date Remarks, Date of Fair Basis of Name of

period of expiry if any Joining value Valuation valuer
of lock- obtained
in period by Valuer

15 16 17 5 12 13 14

Form No. SH-4

Securities Transfer Form

[Pursuant to section 56 of the Companies Act, 2013 and sub-rule (1) of rule 11 of
the Companies (Share Capital and Debentures) Rules 2014]

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The Companies (Share Capital and Debenture) Rules, 2014

Date of execution………………
FOR THE CONSIDERATION stated below the “Transferor(s)” named do hereby
transfer to the “Transferee(s)” named the securities specified below subject to
the conditions on which the said securities are now held by the Transferor(s)
and the Transferee(s) do hereby agree to accept and hold the said securities
subject to the conditions aforesaid.

CIN:

Name of the company (in full):

Name of the Stock Exchange where the company is listed, if any:

DESCRIPTION OF SECURITIES:
Kind / class of Nominal value of Amount called up Amount paid per
securities each unit of per unit of security unit of security
(1) security (3) (4)
(2)

No. of securities being transferred Consideration received (Rs.)

In figure In words In figure In words

Distinctive From
Number To
Corresponding
Certificate Nos.

Transferor’s particulars
Registered folio Number:
Names(s) in Full Signature (s)
1.
2.
3.

I hereby confirm that the Transferor has signed before me.

Signature of witness
Name and address

Transferee’s Particulars-

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The Companies (Share Capital and Debenture) Rules, 2014

Name in Father’s / Address & Occupation Existing Signature

Full Mother’s / E-mail id folio no., if
Spouse any.
name
(1) (2) (3) (4) (5) (6)
1.
2.
3.

Folio No. of Transferee Specimen Signature of Transferee

…………………………. ……………………………………………
Value of stamp affixed:……. (Rs.)
Enclosures:
(1) Certificate of shares or debentures or other securities
(2) If no certificate is issued, letter of allotment.
(3) Others, specify……………………………………….

Stamps

Form No. SH-5

Notice for transfer of partly paid securities

[Pursuant to sub-section (3) of section 56 of the Companies Act, 2013 and sub-
rule (3) of rule 11 the Companies (Share Capital and Debentures) Rules 2014]
To-
………………..
………………..
(Name and address of transferee)

Subject: Transfer of partly paid securities

Notice is hereby given that an application has been made by the transferor for the
transfer of securities of the above named Company whose particulars are given
hereunder-
Name & Address of the Transferor:
Name & Address of the Transferee:
Class / Kind of securities:
Number of securities:
Distinctive numbers of the securities:
Securities Certificate Number:
Nominal value of each security:
Issue price of each security:
Amount called on each security:
Amount paid on each security
Amount called and due on each security:
Amount uncalled on each security:
Total amount called and due on the total number of securities lodged for transfer:

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The Companies (Share Capital and Debenture) Rules, 2014

Total amount uncalled on the total number of securities lodged for transfer:
As required under sub section (3) of section 56 of the Companies Act, 2013, notice
is hereby given by the Company to the transferee on this Day ____ of (month) of
_____ (year) that the above mentioned securities are partly paid and the
transferee shall be liable to pay the balance amount unpaid on the securities.
The transferee is hereby requested to submit his / her objection, if any, within two
weeks from the date of receipt of this notice in the absence of which it shall be
presumed that he / she has no objection to the transfer and the securities shall be
transferred in his / her name without any further correspondence.
Signature:
Form No. SH-6

Register of Employee Stock Options

[Pursuant to clause (b) of sub-section (1) of section 62 of the Companies Act,
2013 and rule 12(10) the Companies (Share Capital and Debentures) Rules 2014]
Name of Company
Registered office address
Date of special resolution …………….
S. No. Name of the Number of Date on which Exercised
grantee options options period
granted vested
1 2 3 4 5

Date on which Options exercised Exercise price Number of shares

options exercised arising as a result
of exercise of
option
6 7 8 9

Folio No. of Lock in period, Option lapsed, Total number Amount

Register of if any if any of options in forfeited /
members force refunded if
having option is not
respective exercised
entry
10 11 12 13 14

Any variation of Signature Remarks

terms of the
scheme and its
effect
15 16 17

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 Chapter IV [Sections 43 to 72]

The Companies (Share Capital and Debenture) Rules, 2014

Form No. SH-10

Register of shares or other securities bought-back

[Pursuant to sub-section (9) of section 68 of the Companies Act, 2013 and rule 17
(12) of the Companies (Share Capital and Debentures) Rules 2014]
Name of the company:
Registered address:
1. Date of passing of special resolution at the meeting of the members authorizing
buy-back of securities:
2. Date of approval by the Board:
3. Number, price and amount of shares or other specified securities authorized to
be bought back:
4. Date of opening and closing of buy-back offer:
5. Date by which buy-back was completed:
6. Description of shares or other specified securities bought back by the company:
S. No. Folio number / Name of last * Category to Date of buy-
DP Id/client ID holder of which they back
number or securities belong
certificate
number of
securities
bought-back
1 2 3 4 5

Number of **Mode of Nominal value Price at Date of

securities buy-back of securities which payment
bought- back securities are
bought back
6 7 8 9 10

Amount paid Cumulative Date of/ Reference to Remarks

for bought total of cancellation / entry in
back securities extinguishment Register of
securities bought-back and physical members
destruction of
securities
bought-back
11 12 13 14 15

*Indicate the category of securities that have been bought back

Preference shares
Equity shares

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 Chapter IV [Sections 43 to 72]

The Companies (Share Capital and Debenture) Rules, 2014

Employees’ Stock Option shares

Sweat equity shares, etc.
**Indicate whether the securities have been bought back from
the existing security-holders on a proportionate basis
the open market
odd-lots of listed securities
Employees’ Stock Option
Sweat equity
any other mode, if so indicate the mode
2. Other relevant details, if any.
Place: Signature of the authorized signatory
Date:
Name of the above person:
Designation:

Form No. SH-12

Debenture Trust Deed

[Pursuant to sub-section (13) of section 71 of the Companies Act, 2013 and rule
18 of the Companies (Share Capital and Debentures) Rules 2014]
[In notified rules, reference is wrongly made to rule 11 instead of rule 18]
The debenture trust deed shall, inter alia, contain the following:-
1. DESCRIPTION OF DEBENTURE ISSUE:
(a) Purpose of raising finance through the debenture issue;
(b) Details of debenture issue as regards amount, tenure, interest/coupon
rate, periodicity of payment, mode of payment and period of redemption;
(c) An undertaking by the company to pay the interest and principal amount
of such debentures to the Debenture holders as and when it becomes due,
as per the terms of offer;
(d) The terms of conversion/redemption of the debentures in terms of the
issue to the debenture holders, options available, and debt equity ratio and
debt service coverage ratio, if applicable.
2. DETAILS OF CHARGE CREATED (in case of secured debentures):
(a) Nature of charge created and examination of title;
(b) Rank of charge created viz. first, second, pari passu, residual, etc.;
(c) Minimum security cover required;
(d) Complete details of the asset(s) on which charge is created such as
description, nature, title, location, value, basis of valuation etc.;
(e) Methods and mode of preservation of assets charged as security for the
debentures;
(f) Other particulars of the charge, e.g., time period of charge, rate of
interest, name of the charge holder;
(g) Provision for subsequent valuation;
(h) Procedure for allowing inspection of charged assets and book of
accounts by debenture trustee or any person or person authorized by it;
(i) Charging of future assets

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The Companies (Share Capital and Debenture) Rules, 2014

(j) Time limit within which the future security for the issue of debentures
shall be created
(k) Circumstances specifying when the security may be disposed of or
leased out with the approval of trustees
(l) Enforceability of securities, events under which security becomes
enforceable
(m) Obligation of company not to create further charge or encumbrance of
the trust property without prior approval of the trustee
3. PARTICULARS OF THE APPOINTMENT OF DEBENTURE TRUSTEE(S):
(a) The conditions and procedure for the appointment of the debenture
trustee ;
(b) Procedure for resignation by trustee including appointment of new
trustees;
(c) Provision that the debenture trustee shall not relinquish his office until
another debenture trustee has been appointed;
(d) Procedure to remove debenture trustee by debenture holders providing
for removal on a resolution passed by the holders of not less than three
fourth in value of debentures;
(e) Fees or commission or other legal travelling and other expenses
payable to the trustee(s) for their services;
(f) Rights of the trustee including the right to inspect the registers of the
company and to take copies and extract thereof and the right to appoint a
nominee director;
(g) Duties of the trustee.
4. EVENTS OF DEFAULTS
(a) Events under which the security becomes enforceable which shall
include the following events:
(i) When the company makes two consecutive defaults in the
payment of any interest which ought to have been paid in
accordance with the terms of the issue;
(ii) When the company without the consent of debenture holders
ceases to carry on its business or gives notice of its intention to do
so;
(iii) When an order has been made by the Tribunal or a special
resolution has been passed by the members of the company for
winding up of the company;
(iv) When any breach of the terms of the prospectus inviting the
subscriptions of debentures or of the covenants of this deed is
committed;
(v) When the company creates or attempts to create any charge on
the mortgaged premises or any part thereof without the prior
approval of the trustees/debenture holders;
(vi) When in the opinion of the trustees the security of debenture
holders is in jeopardy.
(b) Steps which shall be taken by the debenture trustee in the event of
defaults;

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The Companies (Share Capital and Debenture) Rules, 2014

(c) Circumstances specifying when the security may be disposed off or

leased out with the approval of trustees;
(d) A covenant that the company may hold and enjoy all the mortgaged
premises and carry on therein and therewith the business until the security
constituted becomes enforceable
5. OBLIGATIONS OF COMPANY:
This section shall state the company’s duty with respect to-
(a) maintaining a Register of debenture holders including addresses of the
debenture holders, record of subsequent transfers and changes of
ownership;
(b) keeping proper books of accounts open for inspection by debenture
trustee;
(c) permitting the debenture trustee to enter the debentureholder’s premises
and inspect the state and condition of charged assets;
(d) furnishing information required by the debenture trustee for the effective
discharge of its duties and obligations, including copies of reports, balance
sheets, profit and loss account etc.;
(e) keeping charged property/security adequately insured and in proper
condition;
(f) paying all taxes, cesses, insurance premium with respect to charged
property/security, on time;
(g) not declaring any dividend to the shareholders in any year until the
company has paid or made satisfactory provision for the payment of the
installments of principal and interest due on the debentures;
(h) creating the debenture redemption reserve;
(i) converting the debentures into equity in accordance with the terms of the
issue, if applicable;
(j) informing the debenture trustee about any change in nature and conduct
of business by the company before such change;
(k) informing the debenture trustee of any significant changes in the
composition of its Board of Directors;
(l) informing the debenture trustee of any amalgamation, merger or
reconstruction scheme proposed by the company;
(m) keeping the debenture trustee informed of all orders, directions, notices,
of court/tribunal affecting or likely to affect the charged assets;
(n) not creating further charge or encumbrance over the trust property
without the approval of the trustee;
(o) obligation of the company to forward periodical reports to debenture
trustees containing the following particulars:
(i) updated list of the names and addresses of the debenture holders;
(ii) details of interest due but unpaid and reasons thereof;
(iii) the number and nature of grievances received from debenture
holders and (a) resolved by the company (b) unresolved by the
company and the reasons for the same.

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(iv) a statement that the assets of the company which are available
by way of security are sufficient to discharge the claims of the
debenture holders as and when they become due
(p) complying with all directions/guidelines issued by a Regulatory authority,
with regard to the debenture issue
(q) submitting such information, as required by the debenture trustee
6. MISCELLANEOUS:
(a) The conditions under which the provisions of the trust deed or the terms
and conditions of the debentures may be modified;
(b) The mode of service of notices and other documents on the company,
the trustee and the holders of the debentures;
(c) The company to be responsible for paying any stamp duty on the trust
deed or the debentures (if applicable);
(d) Provisions regarding meetings of the debenture holders;
(e) Provisions for redressal of grievances of debenture holders.

Form No. SH-13

Nomination Form
[Pursuant to section 72 of the Companies Act, 2013 and rule 19(1) of the
Companies (Share Capital and Debentures) Rules 2014]
To
Name of the company:
Address of the company:
I/We …………………………………….. the holder(s) of the securities particulars of
which are given hereunder wish to make nomination and do hereby nominate the
following persons in whom shall vest, all the rights in respect of such securities in
the event of my/our death.
(1) PARTICULARS OF THE SECURITIES (in respect of which nomination is being
made)
Nature of Folio No. No. of Certificate No. Distinctive No.
securities securities

(2) PARTICULARS OF NOMINEE/S —

(a) Name:
(b) Date of Birth:
(c) Father’s/Mother’s/Spouse’s name:
(d) Occupation:
(e) Nationality:
(f) Address:
(g) E-mail id:
(h) Relationship with the security holder:

(3) IN CASE NOMINEE IS A MINOR--

(a) Date of birth:

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The Companies (Share Capital and Debenture) Rules, 2014

(b) Date of attaining majority

(c) Name of guardian:
(d) Address of guardian:
605
(4) PARTICULARS OF NOMINEE IN CASE MINOR NOMINEE DIES
BEFORE ATTAINING AGE OF MAJORITY
(a) Name:
(b) Date of Birth:
(c) Father's/Mother's/Spouse's name:
(d) Occupation:
(e) Nationality:
(f) Address:
(g) E-mail id:
(h) Relationship with the security holder:
(i) Relationship with the minor nominee
Name:
Address:
Name of the Security Signature Witness with name
and
Holder(s) address

Form No. SH-14

Cancellation or Variation of Nomination

[Pursuant to sub-section (3) of section 72 of the Companies Act, 2013 and rule 19
(9) of the Companies (Share Capital and Debentures) Rules 2014]
Name of the company:
I/We hereby cancel the nomination(s) made by me/us in favor
of……………..(name and address of the nominee) in respect of the below
mentioned securities.
or
I/We hereby nominate the following person in place of …………………………. as
nominee in respect of the below mentioned securities in whom shall vest all rights
in respect of such securities in the event of my/our death.
(1) PARTICULARS OF THE SECURITIES (in respect of which nomination is being
cancelled / varied )
Nature of Folio No. No. of Certificate No. Distinctive No.
securities securities

605
Form No. SH-13 is substituted by Notification number G.S.R. ….. (E) dated 18 March 2015. Only
difference between earlier and new substituted form is details specified in item (4).

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(2) (a) PARTICULARS OF NEW NOMINEE:

i. Name:
ii. Date of Birth:
iii. Father’s/Mother’s/Spouse’s name:
iv. Nationality:
v. Address:
vi. E-mail id:
vii. Relationship with the Security holder:
(b) IN CASE NEW NOMINEE IS A MINOR--
i. Date of Birth:
ii. Date of attaining majority
iii. Name of guardian:
iv. Address of guardian:
606
(3) PARTICULARS OF NOMINEE IN CASE MINOR NOMINEE DIES BEFORE
ATTAINING AGE OF MAJORITY
(a) Name:
(b) Date of Birth:
(c) Father's/Mother's/Spouse's name:
(d) Occupation:
(e) Nationality:
(f) Address:
(g) E-mail id:
(h) Relationship with the security holder:
(i) Relationship with the minor nominee

Signature
Name of the Security Holder (s)

Witness with name and address

Form No. SH-15

Certificate of compliance in respect of buy-back of securities

[Pursuant sub-rule (14) of rule 17 of the Companies (Share Capital and

Debentures) Rules 2014]

1. (a) Corporate identity number (CIN) of company:

(b) Global location number (GLN) of company:

2. (a) Name of the company:

606
Form No. SH-14 is substituted by Notification number G.S.R. ….. (E) dated 18 March 2015. Only
difference between earlier and new substituted form is details specified in item (3).

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The Companies (Share Capital and Debenture) Rules, 2014

(b) Address of the registered office of the company:

(c) E-mail ID of the company:

We, …………………………………..directors of the above named company certify

that the provisions of Companies Act, 2013 and rules made thereunder relating to
buy-back of securities have been complied with in respect of the securities bought
back vide Board Resolution dated…………and / or special resolution passed by
the members in the general meeting held on ………….. and the details relating to
which has been filed in Form No. SH-11 with the Registrar of Companies.

Date: Signature:
Place: (1) Managing Director / Director
(2) Director
Verified by ……………………………………
Company Secretary in Practice
CP No.

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 Chapter V [Sections 73 to 76]

The Companies (Acceptance of Deposits) Rules, 2014

Chapter V: the Companies (Acceptance

of Deposits) Rules, 2014
[Note : The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3,
sub-section (i) vide number G.S.R. 256(E), dated the 31st March, 2014 and were subsequently
amended :—
(1) Vide notification number G.S.R. 386(E) dated the 6th June, 2014;
(2) Vide notification number G.S.R. 241(E) dated the 31st March, 2015;
(3) Vide notification number G.S.R. 695(E) dated the 15th September, 2015;
(4) Vide notification number G.S.R. 639(E) dated the 29th June, 2016;
(5) Vide notification number G.S.R. 454(E) dated the 11th May, 2017;
(6) Vide notification number G.S.R. 1172(E) dated the 19th September, 2017;
(7) Vide notification number G.S.R. 612(E) dated 5th July 2018;
(8) Vide notification number G.S.R. 42(E) dated 22nd January 2019; and
(9) Vide notification number G.S.R. 341(E) dated 30th April 2019.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R 256 (E).—In exercise of the powers conferred by clause (31) of section
2, section 73 and section 76 read with sub-sections (1) and (2) of section 469 of the
Companies Act, 2013 (18 of 2013), and in supersession of the Companies
(Acceptance of Deposits) Rules, 1975 or any other rules prescribed under the
Companies Act, 1956 (1 of 1956) on matters covered under these rules except as
respects things done or omitted to be done before such supersession, the Central
Government, in consultation with the Reserve Bank of India, hereby makes the
following rules, namely: —

1. Short title, commencement and application.-

(1) These rules may be called the Companies (Acceptance of Deposits) Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

(3) These rules shall apply to a company other than -

(i) a banking company;

(ii) a non-banking financial company as defined in the Reserve Bank of India

Act. 1934 (2 of 1934) registered with the Reserve Bank of India;

(iii) a housing finance company registered with the National Housing Bank
established under the National Housing Bank Act, 1987 (53 of 1987); and

(iv) a company specified by the Central Government under the proviso to sub-
section (1) of section 73 of the Act.

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 Chapter V [Sections 73 to 76]

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2. Definitions.-

(1) In these rules, unless the context otherwise requires,

(a) "Act" means the Companies Act, 2013 (18 of 2013);

(b) "Annexure" means the Annexure attached to these rules;

(c) "deposit" includes any receipt of money by way of deposit or loan or in any other
form, by a company, but does not include -

(i) any amount received from the Central Government or a State Government,
or any amount received from any other source whose repayment is
guaranteed by the Central Government or a State Government, or any
amount received from a local authority, or any amount received from a statutory
authority constituted under an Act of Parliament or a State Legislature ;

(ii) any amount received from foreign Governments, foreign or international banks,
multilateral financial institutions (including, but not limited to, International Finance
Corporation, Asian Development Bank, Commonwealth Development Corporation
and International Bank for Industrial and Financial Reconstruction), foreign
Governments owned development financial institutions, foreign export credit
agencies, foreign collaborators, foreign bodies corporate and foreign citizens,
foreign authorities or persons resident outside India subject to the provisions of
Foreign Exchange Management Act, 1999 (42 of 1999) and rules and regulations
made there under;

(iii) any amount received as a loan or facility from any banking company or from
the State Bank of India or any of its subsidiary banks or from a banking institution
notified by the Central Government under section 51 of the Banking Regulation.
Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of
section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970 (5 of 1970) or in clause (a) of section (2) of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) , or from a co-
operative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India
Act, 1934 (2 of 1934) ;

(iv) any amount received as a loan or financial assistance from Public Financial
Institutions notified by the Central Government in this behalf in consultation with
the Reserve Bank of India or any regional financial institutions or Insurance
Companies or Scheduled Banks as defined in the Reserve Bank of India Act, 1934
(2 of 1934);

(v) any amount received against issue of commercial paper or any other instruments
issued in accordance with the guidelines or notification issued by the Reserve Bank
of India;

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(vi) any amount received by a company from any other company;

(vii) any amount received and held pursuant to an offer made in accordance with
the provisions of the Act towards subscription to any securities, including share
application money or advance towards allotment of securities pending allotment,
so long as such amount is appropriated only against the amount due on allotment
of the securities applied for;

Explanation.- For the purposes of this sub-clause, it is hereby clarified that -

(a) Without prejudice to any other liability or action, if the securities for which
application money or advance for such securities was received cannot be allotted
within sixty days from the date of receipt of the application money or advance for
such securities and such application money or advance is not refunded to the
subscribers within fifteen days from the date of completion of sixty days, such
amount shall be treated as a deposit under these rules.
607
[Provided that unless otherwise required under the Companies Act,
1956 (1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of
1992) or rules or regulations made thereunder to allot any share, stock, bond, or
debenture within a specified period, if a company receives any amount by way of
subscriptions to any shares, stock, bonds or debentures before the 1st April, 2014
and disclosed in the balance sheet for the financial year ending on or before the
31st March, 2014 against which the allotment is pending on the 31st March, 2015,
the company shall, by the 1st June 2015, either return such amounts to the
persons from whom these were received or allot shares, stock, bonds or
debentures or comply with these rules.]

(b) any adjustment of the amount for any other purpose shall not be treated as
refund.
608
[(viii) any amount received from a person who, at the time of the receipt of
the amount, was a director of the company or a relative of the director of the
private company:

607
Proviso inserted by notification number G.S.R. 241(E) dated 31 March 2015.

608
Substituted by notification number G.S.R. 695(E ) dated 15 September, 2015. Prior to substitution it
read as “(viii) any amount received from a person who, at the time of the receipt of the amount, was a
director of the company:

Provided that the director from whom money is received, furnishes to the company at the time of giving
the money, a declaration in writing to the effect that the amount is not being given out of funds acquired
by him by borrowing or accepting loans or deposits from others;”.

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Provided that the director of the company or relative of the director of

the private company, as the case may be, from whom money is received,
furnishes to the company at the time of giving the money, a declaration in
writing to the effect that the amount is not being given out of funds acquired
by him by borrowing or accepting loans or deposits from others and the
company shall disclose the details of money so accepted in the Board's
report;]

(ix) any amount raised by the issue of bonds or debentures secured by a first charge
or a charge ranking pari passu with the first charge on any assets referred to in
Schedule III of the Act excluding intangible assets of the company or bonds or
debentures compulsorily convertible into shares of the company within 609 [ten
years]:
Provided that if such bonds or debentures are secured by the charge of any
assets referred to in Schedule III of the Act, excluding intangible assets, the
amount of such bonds or debentures shall not exceed the market value of such
assets as assessed by a registered valuer;
610
[(ixa) any amount raised by issue of non-convertible debenture not
constituting a charge on the assets of the company and listed on a recognised
stock exchange as per applicable regulations made by Securities and
Exchange Board of India.]

(x) any amount received from an employee of the company not exceeding his
annual salary under a contract of employment with the company in the nature of
non-interest bearing security deposit;
611
[(xi) any non-interest bearing amount received and held in trust;]

(xii) any amount received in the course of, or for the purposes of, the business of
the company,
(a) as an advance for the supply of goods or provision of services
accounted for in any manner whatsoever provided that such advance is
appropriated against supply of goods or provision of services within a
period of three hundred and sixty five days from the date of acceptance
of such advance:

609
‘ten years’ substituted for ‘five years’ vide notification number G.S.R.639(E) dated 29th June 2016.

610
Inserted vide notification number G.S.R.639(E) dated 29th June 2016.

611
Substituted by notification number G.S.R.639(E) dated 29th June 2016. Prior to substitution it read
as “(xi) any non-interest bearing amount received or held in trust;”.

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Provided that in case of any advance which is subject matter

of any legal proceedings before any court of law, the said time limit of
three hundred and sixty five days shall not apply:

(b) as advance, accounted for in any manner whatsoever, received in

connection with 612[consideration for an immovable property] under an
agreement or arrangement, provided that such advance is adjusted
613
[against such property] in accordance with the terms of agreement
or arrangement;

(c) as security deposit for the performance of the contract for supply of
goods or provision of services;

(d) as advance received under long term projects for supply of capital
goods except those covered under item (b) above:
614
[(e) as an advance towards consideration for providing future
services in the form of a warranty or maintenance contract as per
written agreement or arrangement, if the period for providing such
services does not exceed the period prevalent as per common
business practice or five years, from the date of acceptance of such
service whichever is less;

(f) as an advance received and as allowed by any sectoral regulator or

in accordance with directions of Central or State Government;

(g) as an advance for subscription towards publication, whether in print

or in electronic to be adjusted against receipt of such publications;]
Provided that if the amount received under items (a), (b) and (d)
above becomes refundable (with or without interest) due to the reasons
that the company accepting the money does not have necessary
permission or approval, wherever required, to deal in the goods or
properties or services for which the money is taken, then the amount
received shall be deemed to be a deposit under these rules:

612
for the words "consideration for property", the words "consideration for an immovable property"
substituted by notification number G.S.R. 241(E) dated 31 March 2015.

613
for the words "against the property", the words "against such property" substituted by notification
number G.S.R. 241(E) dated 31 March 2015.

614
Inserted vide notification number G.S.R.639(E) dated 29th June 2016.

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Explanation.- For the purposes of this sub-clause the amount 615[*] shall be
deemed to be deposits on the expiry of fifteen days from the date they
become due for refund.
(xiii) any amount brought in by the promoters of the company by way of
unsecured loan in pursuance of the stipulation of any lending financial
institution or a bank subject to fulfillment of the following conditions, namely:-

(a) the loan is brought in pursuance of the stipulation imposed by the

lending institutions on the promoters to contribute such finance;

(b) the loan is provided by the promoters themselves or by their relatives

or by both; and

(c) the exemption under this sub-clause shall be available only till the
loans of financial institution or bank are repaid and not thereafter;

(xiv) any amount accepted by a Nidhi company in accordance with the rules
made under section 406 of the Act.
616
[(xv) any amount received by way of subscription in respect of a chit under
the Chit Fund Act, 1982 (40 of 1982);

(xvi) any amount received by the company under any collective investment
scheme in compliance with regulations framed by the Securities and
Exchange Board of India;

(xvii) an amount of twenty five lakh rupees or more received by a start-up

company, by way of a convertible note (convertible into equity shares or
repayable within a period not exceeding five years from the date of issue) in
a single tranche, from a person.

Explanation.- For the purposes of this sub-clause,-

1. "start-up company" means a private company incorporated

under the Companies Act, 2013 or Companies Act, 1956 and
recognised as such in accordance with notification number
G.S.R. 180(E) dated 17th, February, 2016 issued by the
Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry;

615
For the words "referred to in the first proviso", the words "referred to in the proviso" substituted by
notification number G.S.R. 241(E) dated 31 March 2015. Words “referred to in the proviso” omitted vide
notification number G.S.R.639(E) dated 29th June 2016.

616
Sub-clauses (xv) to (xviii) inserted vide notification number G.S.R.639(E) dated 29th June 2016.

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II. "convertible note" means an instrument evidencing receipt of

money initially as a debt, which is repayable at the option of the
holder, or which is convertible into such number of equity shares
of the start-up company upon occurrence of specified events
and as per the other terms and conditions agreed to and
indicated in the instrument.
(xviii) any amount received by a company from Alternate Investment Funds,
Domestic Venture Capital Funds 617 [, Infrastructure Investment Trusts],
618
[Real Estate Investment Trusts,] and Mutual Funds registered with the
Securities and Exchange Board of India in accordance with regulations made
by it.]
Explanation.- For the purposes of this clause, any amount.-
(a) received by the company, whether in the form of instalments or otherwise,
from a person with promise or offer to give returns, in cash or in kind, on
completion of the period specified in the promise or offer, or earlier,
accounted for in any manner whatsoever, or
(b) any additional contributions, over and above the amount under item (a)
above, made by the company as part of such promise or offer,
shall be treated as a deposit;
[It is clarified by MCA that any amount received by a private company from its
members, directors or their relatives prior to 01 April 2014 shall not be treated
as ‘deposit’. However, any renewal or acceptance of such amount form said
parties by a private company on or after 01 April 2014 shall be treated as
‘deposit’. Refer Circular no. 05/2015 dated 30 March 2015.]

(d) "depositor" means,-

(i) any member of the company who has made a deposit with the company
in accordance with the provisions of sub-section (2) of section 73 of the Act,
or
(ii) any person who has made a deposit with a public company in accordance
with the provisions of section 76 of the Act;

(e) "eligible company" means a public company as referred to in sub-section (1) of

section 76, having a net worth of not less than one hundred crore rupees or a turnover
of not less than five hundred crore rupees and which has obtained the prior consent of
the company in general meeting by means of a special resolution and also filed the said
resolution with the Registrar of Companies before making any invitation to the Public
for acceptance of deposits:

617
Inserted by the Companies (Acceptance of Deposits) Amendment Rules, 2017 vide notification
number G.S.R. 454 (E) dated 11th May 2017 with effect from 11th May 2017.

618
Inserted by the Companies (Acceptance of Deposits) Amendment Rules, 2019, notified vide
notificaiton no. G.S.R. 42(E) dated 22nd January 2019, w.e.f. 22nd January 2019.

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Provided that an eligible company, which is accepting deposits within the limits
specified under clause (c) of sub-section (1) of section 180, may accept deposits by
means of an ordinary resolution;

(f) "fees" means fees as specified in the Companies (Registration Offices and Fees)
Rules, 2014;

(g) "Form" or 'e-Form" means a form set forth in Annexure to these rules which shall
be used for the matter to which it relates;

(h) "section" means section of the Act;

(i) "trustee" means the trustee as defined in section 3 of the Indian Trusts Act, 1882
(12 of 1882).

(2) Words and expressions used in these rules but not defined and defined in the Act
or in the Reserve Bank of India Act, 1934 (2 of 1934) or in the Companies
(Specification of definitions details) Rules, 2014, shall have the meanings respectively
assigned to them in the said Acts or in the said rules.

3. Terms and conditions of acceptance of deposits by companies.-

(1) On and from the commencement of these rules,—

(a) no company referred to in sub-section (2) of section 73 and no eligible
company shall accept or renew any deposit, whether secured or unsecured,
which is repayable on demand or upon receiving a notice within a period of less
than six months or more than thirty-six months from the date of acceptance or
renewal of such deposit:
Provided that a company may, for the purpose of meeting any of its
short-term requirements of funds, accept or renew such deposits for repayment
earlier than six months from the date of deposit or renewal, as the case may
be, subject to the condition that-
(a) such deposits shall not exceed ten per cent. of the aggregate of the
619
[paid-up share capital, free reserves and securities premium account]
of the company, and
(b) such deposits are repayable not earlier than three months from the date
of such deposits or renewal thereof.

(2) Where depositors so desire, deposits may be accepted in joint names not
exceeding three, with or without any of the clauses, namely, "Jointly", "Either or
Survivor", "First named or Survivor", "Anyone or Survivor".

619
Substituted by notification number G.S.R. 695(E) dated 15 September, 2015. Prior to substitution it
read as “paid-up share capital and free reserves”.

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(3) No company referred to in sub-section (2) of section 73 shall accept or renew any
deposit from its members, if the amount of such deposits together with the amount of
other deposits outstanding as on the date of acceptance or renewal of such deposits
exceeds 620[thirty five per cent.] of the aggregate of the 621[paid-up share capital, free
reserves and securities premium account] of the company.
622
[Provided that a Specified IFSC Public company and a private company may
accept from its members monies not exceeding one hundred per cent. of aggregate
of the paid up share capital, free reserves and securities premium account and such
company shall file the details of monies so accepted to the Registrar in Form DPT-3.

Explanation.—For the purpose of this rule, a Specified IFSC Public company means
an unlisted public company which is licensed to operate by the Reserve Bank of India
or the Securities and Exchange Board of India or the Insurance Regulatory and
Development Authority of India from the International Financial Services Centre
located in an approved multi services Special Economic Zone set-up under the Special
Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules,
2006:
Provided further that the maximum limit in respect of deposits to be accepted
from members shall not apply to following classes of private companies, namely:—
(i) a private company which is a start-up, for five years from the date of its
incorporation;
(ii) a private company which fulfils all of the following conditions, namely:—
(a) which is not an associate or a subsidiary company of any other
company;
(b) the borrowings of such a company from banks or financial institutions
or any body corporate is less than twice of its paid up share capital or fifty crore
rupees, whichever is less; and
(c) such a company has not defaulted in the repayment of such
borrowings subsisting at the time of accepting deposits under section 73:

Provided also that all the companies accepting deposits shall file the details of
monies so accepted to the Registrar in Form DPT-3.]

Words ‘thirty five per cent.’ Substituted for words ‘twenty five per cent.’ vide notification number
620

G.S.R.639(E) dated 29th June 2016.

621
Substituted by notification number G.S.R. 695(E) dated 15 September, 2015. Prior to substitution it
read as “paid-up share capital and free reserves”.

622
Substituted the proviso vide notification number G.S.R. 1172(E) dated 19th September 2017. Prior
to substitution, the proviso read as “Provided that a private company may accept from its members
monies not exceeding one hundred per cent of aggregate of the paid up share capital, free reserves
and securities premium account and such company shall file the details of monies so accepted to the
Registrar in such manner as may be specified.” The so substituted proviso was earlier iinserted vide
notification number G.S.R.639(E) dated 29th June 2016.

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[Private companies are permitted to accept deposits from its members subject to provision of the Rules
and they need not satisfy five conditions of section 73(2)(a) to (f) if –
(a) amount of deposits from members does not exceed aggregate of the paid-up share capital, free
reserves and securities premium account, and
(b) details of monies accepted as deposit from members is filed with the ROC. vide notification number
G.S.R. 464(E) dated 5th June 2015.]

(4) No eligible company shall accept or renew-

(a) any deposit from its members, if the amount of such deposit together with
the amount of deposits outstanding as on the date of acceptance or renewal of
such deposits from members exceeds ten per cent. of the aggregate of the
623
[paid-up share capital, free reserves and securities premium account] of the
company;
(b) any other deposit, if the amount of such deposit together with the amount of
such other deposits, other than the deposit referred to in clause (a), outstanding
on the date of acceptance or renewal exceeds twenty-five per cent. of
aggregate of the 624 [paid-up share capital, free reserves and securities
premium account] of the company.

(5) No Government company eligible to accept deposits under section 76 shall accept
or renew any deposit, if the amount of such deposits together with the amount of other
deposits outstanding as on the date of acceptance or renewal exceeds thirty five per
cent. of the aggregate of its 625[paid up share capital, free reserves and securities
premium account] of the company.

(6) No company referred to in sub-section (2) of section 73 or any eligible company shall
invite or accept or renew any deposit in any form, carrying a rate of interest or pay
brokerage thereon at a rate exceeding the maximum rate of interest or brokerage
prescribed by the Reserve Bank of India for acceptance of deposits by non-banking
financial companies.
Explanation:- For the purposes of this sub-rule, it is hereby clarified that the person
who is authorised, in writing, by a company to solicit deposits on its behalf and through
whom deposits are actually procured shall only be entitled to the brokerage and
payment of brokerage to any other person for procuring deposits shall be deemed to
be in violation of these rules.

623
Substituted by notification number G.S.R. 695(E) dated 15 September, 2015. Prior to substitution it
read as “paid-up share capital and free reserves”.

624
Substituted by notification number G.S.R. 695(E) dated 15 September, 2015. Prior to substitution it
read as “paid-up share capital and free reserves”.

625
Substituted by notification number G.S.R. 695(E) dated 15 September, 2015. Prior to substitution it
read as “paid-up share capital and free reserves”.

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(7) The company shall not reserve to itself either directly or indirectly a right to alter, to the
prejudice or disadvantage of the depositor, any of the terms and conditions of the deposit,
deposit trust deed and deposit insurance contract after circular or circular in the form of
advertisement is issued and deposits are accepted.
626
[(8).- (a) Every eligible company shall obtain, at least once in a year, credit rating for
deposits accepted by it and a copy of the rating shall be sent to the Registrar of
Companies alongwith the return of deposits in Form DPT-3.
(b) The credit rating referred to in clause (a) shall not be below the minimum
investment grade rating or other specified credit rating for fixed deposits, from any
one of the approved credit rating agencies as specified for Non-Banking Financial
Companies in the Non-Banking Financial Companies Acceptance of Public Deposits
(Reserve Bank) Directions, 1998, issued by the Reserve Bank of India, as amended
from time to time.]

4. Form and particulars of advertisements or circulars.-

[Private companies are permitted to accept deposits from its members subject to
provision of the Rules and they need not satisfy five conditions of section 73(2)(a) to
(f) if –
(a) amount of deposits from members does not exceed aggregate of the paid-up
share capital and free reserves, and
(b) details of monies accepted as deposit from members is filed with the ROC. vide
notification number G.S.R. 464(E) dated 5th June 2015.]

626
Sub-rule (8) substituted vide notification number G.S.R.639(E) dated 29th June 2016. Originally it was
inserted by notification number G.S.R. 241(E) dated 31 March 2015, which read (prior to substitution by
notification dated 29th June 2016) “Every eligible company shall obtain, at least once in a year, credit rating
for deposits accepted by it in the manner specified herein below and a copy of the rating shall be sent to the
Registrar of Companies alongwith the return of deposits in Form DPT-3;
Name of the agency Minimum investment Grade
Rating
(a) The Credit Rating Information Services of India Ltd. FA- (FA Minus)
(b) ICRA Ltd. MA- (MA Minus)
(c) Credit Analysis and Research Ltd. CARE BBB(FD)
(d) Fitch Ratings India Private Ltd. tA-(ind)(FD)
626
[(e) Brickwork Ratings India Pvt. Ltd. (Brickwork) BWR FBBB]
(f) SME Rating Agency of India Ltd. SMERA A

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(1) Every company referred to in sub-section (2) of section 73 intending to invite

deposit from its members shall issue a circular to all its members by registered post
with acknowledgement due or speed[ post or by electronic mode in Form DPT-1:
Provided that in addition to issue of such circular to all members in the manner
specified above, the circular may be published in English language in an English
newspaper and in vernacular language in a vernacular newspaper having wide
circulation in the State in which the registered office of the company is situated.
627
[Provided further that a certificate of the statutory auditor of the company
shall be attached in Form DPT-1, stating that the company has not committed default
in the repayment of deposits or in the payment of interest on such deposits accepted
either before or after the commencement of the Act and in case a company had
committed a default in the repayment of deposits accepted either before or after the
commencement of the Act or in the payment of interest on such deposits, a certificate
of the statutory auditor of the company shall be attached in Form DPT-1, stating that
the company had made good the default and a period of five years has lapsed since
the date of making good the default as the case may be.]
628
[(2) Every eligible company intending to invite deposits shall issue a circular in the
form of an advertisement in form DPT-1 for the purpose in English language in an
English newspaper having country wide circulation and in vernacular language in a
vernacular newspaper having wide circulation in the State in which the registered
office of the company is situated, and shall also place such circular on the website of
the company, if any.]

(3) Every company inviting deposits from the public shall upload a copy of the circular on
its website, if any.

(4) No company shall issue or allow any other person to issue or cause to be issued
on its behalf, any circular or a circular in the form of advertisement inviting deposits,
unless such circular or circular in the form of advertisement is issued on the authority
and in the name of the Board of directors of the company.

(5) No circular or a circular in the form of advertisement shall be issued by or on behalf

of a company unless, not less than thirty days before the date of such issue, there has
been delivered to the Registrar for registration a copy thereof signed by a majority of
the directors of the company as constituted at the time the Board approved the circular
or circular in the form of advertisement, or their agents, duly authorised by them in
writing.

627
Inserted second proviso to Rule 4(1) by notification number G.S.R.612(E) dated 5th July 2018.

628
Substituted by notification number G.S.R.639(E) dated 29th June 2016. Prior to substitution it read
as “(2) Every eligible company intending to invite deposits shall issue a circular in the form of an
advertisement in Form DPT-1 for the purpose in English language in an English newspaper and in
vernacular language in one vernacular newspaper having wide circulation in the State in which the registered
office of the company is situated.”.

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(6) A circular or circular in the form of advertisement issued shall be valid until the expiry
of six months from the date of closure of the financial year in which it is issued or until the
date on which the financial statement is laid before the company in annual general
meeting or, where the annual general meeting for any year has not been held, the latest
day on which that meeting should have been held in accordance with the provisions of
the Act, whichever is earlier, and a fresh circular or circular in the form of advertisement
shall be issued, in each succeeding financial year, for inviting deposits during that financial
year.
Explanation: For the purpose of this rule, the date of the issue of the newspaper in
which the advertisement appears shall be taken as the date of issue of the
advertisement and the effective date of issue of circular shall be the date of dispatch
of the circular.

629[5. Omitted- Manner and extent of deposit insurance.-

629
Omitted Rule 5 by notification number G.S.R.612(E) dated 5th July 2018. Prior to omission, it read
as “5. Manner and extent of deposit insurance.-

(1) Every company referred to in sub-section (2) of section 73 and every other eligible company inviting
deposits shall enter into a contract for providing deposit insurance at least thirty days before the issue
of circular or advertisement or at least thirty days before the date of renewal, as the case may be.

Explanation- For the purposes of this sub-rule, the amount as specified in the deposit insurance contract
shall be deemed to be the amount in respect of both principal amount and interest due thereon.
*[Provided that the companies may accept deposits without deposit insurance contract till 31st March,
2018 or till the availability of deposit insurance product, whichever is earlier.] * Proviso was substituted
by the Companies (Acceptance of Deposits) Amendment Rules, 2017 vide notification number G.S.R.
454 (E) dated 11th May 2017 with effect from 11th May 2017. Prior to that the proviso was substituted
by notification number G.S.R.639(E) dated 29th June 2016 and read as Provided that the companies
may accept deposits without deposit insurance contract till the 31st March, 2017 or till the availability of
a deposit insurance product, whichever is earlier. Prior to substitution in 2016 it was substituted by
notification number G.S.R. 241(E) dated 31 March 2015, and read as “Provided that the companies may
accept deposits without deposit insurance contract till the 31' March, 2016 or till the availability of a deposit
insurance product, whichever is earlier”. Prior to substitution in 2015, the proviso was inserted by the
Notification number S.O. 386(E) dated 06 June 2014 and it read “Provided that the companies may
accept the deposits without deposit insurance contract till the 31st March, 2015.

(2) The deposit insurance contract shall specifically provide that in case the company defaults in
repayment of principal amount and interest thereon, the depositor shall be entitled to the repayment of
principal amount of deposits and the interest thereon by the insurer up to the aggregate monetary ceiling
as specified in the contract: Provided that in the case of any deposit and interest not exceeding twenty
thousand rupees, the deposit insurance contract shall provide for payment of the full amount of the
deposit and interest and in the case of any deposit and the interest thereon in excess of twenty thousand
rupees, the deposit insurance contract shall provide for payment of an amount not less than twenty
thousand rupees for each depositor.

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6. Creation of security.-

(1) For the purposes of providing security, every company referred to in sub-section
(2) of section 73 and every eligible company inviting secured deposits shall provide
for security by way of a charge on its assets as referred to in Schedule III of the Act
excluding intangible assets of the company for the due repayment of the amount of
deposit and interest thereon for an amount which shall not be less than the amount
remaining unsecured by the deposit insurance:
Provided that in the case of deposits which are secured by the charge on the
assets referred to in Schedule III of the Act excluding intangible assets, the amount of
such deposits and the interest payable thereon shall not exceed the market value of
such assets as assessed by a registered valuer.

Explanation. I - For the purposes of this sub-rule it is clarified that the company shall
ensure that the total value of the security either by way of deposit insurance or by way
of charge or by both on company's assets shall not be less than the amount of deposits
accepted and the interest payable thereon.

Explanation. II- For the purposes of proviso to sub-clause (ix) of clause (c) of sub-rule
(1) of rule 2 and this sub-rule, it is hereby clarified that pending notification of sub-section
(1) of section 247 of the Act and finalisation of qualifications and experience of valuers,
valuation of stocks, shares, debentures, securities etc. shall be conducted by an
independent merchant banker who is registered with the Securities and Exchange Board
of India or an independent chartered accountant in practice having a minimum
experience of ten years.

(2) The security (not being in the nature of a pledge) for deposits as specified in sub-
rule (1) shall be created in favour of a trustee for the depositors on:
(a) specific movable property of the company, or
(b) specific immovable property of the company wherever situated, or any interest
therein.

(3) The amount of insurance premium paid on the insurance of such deposits shall be borne by the
company itself and shall not be recovered from the depositors by deducting the same from the principal
amount or interest payable thereon.

(4) If any default is made by the company in complying with the terms and conditions of the deposit
insurance contract which makes the insurance cover ineffective, the company shall either rectify the
default immediately or enter into a fresh contract within thirty days and in case of non-compliance, the
amount of deposits covered under the deposit insurance contract and interest payable thereon shall be
repaid within the next fifteen days and if such a company does not repay the amount of deposits within
said fifteen days it shall pay fifteen per cent. interest per annum for the period of delay and shall be
treated as having defaulted and shall be liable to be punished in accordance with the provisions of the
Act.”.

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The Companies (Acceptance of Deposits) Rules, 2014

7. Appointment of trustee for depositors.-

(1) No company referred to in sub-section (2) of section 73 or any eligible company

shall issue a circular or advertisement inviting secured deposits unless the company
has appointed one or more trustees for depositors for creating security for the
deposits:
Provided that a written consent shall be obtained from the trustee for
depositors before their appointment and a statement shall appear in the circular or
circular in the form of advertisement with reasonable prominence to the effect that the
trustees for depositors have given their consent to the company to be so appointed.

(2) The company shall execute a deposit trust deed in Form DPT-2 at least seven days
before issuing the circular or circular in the form of advertisement.

(3) No person including a company that is in the business of providing trusteeship

services shall be appointed as a trustee for the depositors, if the proposed trustee -
(a) is a director, key managerial personnel or any other officer or an employee
of the company or of its holding, subsidiary or associate company or a depositor
in the company;
(b) is indebted to the company, or its subsidiary or its holding or associate
company or a subsidiary of such holding company;
(c) has any material pecuniary relationship with the company;
(d) has entered into any guarantee arrangement in respect of principal debts
secured by the deposits or interest thereon;
(e) is related to any person specified in clause (a) above.

(4) No trustee for depositors shall be removed from office after the issue of circular or
advertisement and before the expiry of his term except with the consent of all the
directors present at a meeting of the board.
Provided that in case the company is required to have independent directors,
at least one independent director shall be present in such meeting of the Board

8. Duties of trustees.-

It shall be the duty of every trustee for depositors to-

(a) ensure that the assets of the company on which charge is created together
with the amount of deposit insurance are sufficient to cover the repayment of
the principal amount of secured deposits outstanding and interest accrued
thereon;
(b) satisfy himself that the circular or advertisement inviting deposits does not
contain any information which is inconsistent with the terms of the deposit
scheme or with the trust deed and is in compliance with the rules and provisions
of the Act;
(c) ensure that the company does not commit any breach of covenants and
provisions of the trust deed;

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The Companies (Acceptance of Deposits) Rules, 2014

(d) take such reasonable steps as may be necessary to procure a remedy for
any breach of covenants of the trust deed or the terms of invitation of deposits;
(e) take steps to call a meeting of the holders of depositors as and when such
meeting is required to be held;
(f) supervise the implementation of the conditions regarding creation of security
for deposits and the terms of deposit insurance;
(g) do such acts as are necessary in the event the security becomes enforceable;
(h) carry out such acts as are necessary for the protection of the interest of
depositors and to resolve their grievances.

9. Meeting of depositors.-

The trustee for depositors shall call a meeting of all the depositors on-
(a) requisition in writing signed by at least one-tenth of the depositors in value for the
time being outstanding;
(b) the happening of any event, which constitutes a default or which, in the opinion
of the trustee for depositors, affects the interest of the depositors.

10. Form of application for deposits.-

(1) On and from the commencement of these rules, no company shall accept, or renew
any deposit, whether secured or unsecured, unless an application, in such form as
specified by the company, is submitted by the intending depositor for the acceptance
of such deposit.

(2) The form of application referred to in sub-rule (1) shall contain a declaration by the
intending depositor to the effect that the deposit is not being made out of any money
borrowed by him from any other person.

11. Power to nominate.-

Every depositor may, at any time, nominate any person to whom his deposits shall vest
in the event of his death and the provisions of section 72 shall, as far as may be, apply to
the nomination made under this rule.

12. Furnishing of deposit receipts to depositors.-

(1) Every company shall, on the acceptance or renewal of a deposit, furnish to the
depositor or his agent a receipt for the amount received by the company, within a
period of twenty one days from the date of receipt of money or realisation of cheque
or date of renewal.

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The Companies (Acceptance of Deposits) Rules, 2014

(2) The receipt referred to in sub-rule (1) shall be signed by an officer of the company duly
authorised by the Board in this behalf and shall state the date of deposit, the name and
address of the depositor, the amount received by the company as deposit, the rate of
interest payable thereon and the date on which the deposit is repayable.

13. Maintenance of liquid assets and creation of deposit repayment reserve

account.-

[Private companies are permitted to accept deposits from its members subject to provision of the Rules
and they need not satisfy five conditions of section 73(2)(a) to (f) if –
(a) amount of deposits from members does not exceed aggregate of the paid-up share capital and free
reserves, and
(b) details of monies accepted as deposit from members is filed with the ROC. vide notification number
G.S.R. 464(E) dated 5th June 2015.]

Every company referred to in sub-section (2) of section 73 and every eligible company shall
on or before the 30th day of April of each year deposit the sum as specified in clause (c) of
the said sub-section with any scheduled bank and the amount so deposited shall not be
utilised for any purpose other than for the repayment of deposits:
630
[Provided that the amount remaining deposited shall not at any time fall below
twenty per cent. of the amount of deposits maturing during the financial year.]

14. Registers of deposits.-

(1) Every company accepting deposits shall maintain at its registered office one or
more separate registers for deposits accepted or renewed, in which there shall be
entered separately in the case of each depositor the following particulars, namely:—
(a) name, address and PAN of the depositor/s;
(b) particulars of guardian, in case of a minor;
(c) particulars of the nominee;
(d) deposit receipt number;
(e) date and the amount of each deposit;
(f) duration of the deposit and the date on which each deposit is repayable;
(g) rate of interest or such deposits to be payable to the depositor;
(h) due date for payment of interest;
(i) mandate and instructions for payment of interest and for non-deduction of tax at
source, if any;
(j) date or dates on which the payment of interest shall be made;

630
Substituted for the proviso to Rule 13 by notification no. G.S.R. 612(E) dated 5th July 2018. Prior to
substitution, it read as “Provided that the amount remaining deposited shall not at any time fall below
fifteen per cent. of the amount of deposits maturing, until the end of the current financial year and the
next financial year.”.

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The Companies (Acceptance of Deposits) Rules, 2014

631
[(k) omitted;]
(l) particulars of security or charge created for repayment of deposits;
(m) any other relevant particulars;

(2) The entries specified in sub-rule (1) shall be made within seven days from the date of
issuance of the receipt duly authenticated by a director or secretary of the company or by any
other officer authorised by the Board for this purpose.

(3) The register referred to in sub-rule (1) shall be preserved in good order for a period
of not less than eight years from the financial year in which the latest entry is made in
the register.

15. General provisions regarding premature repayment of deposits.-

Where a company makes a repayment of deposits, on the request of the depositor, after
the expiry of a period of six months from the date of such deposit but before the expiry of
the period for which such deposit was accepted, the rate of interest payable on such deposit
shall be reduced by one per cent. from the rate which the company would have paid had
the deposit been accented for the period for which such deposit had actually run and the
company shall not pay interest at any rate higher than the rate so reduced :
Provided that nothing contained in this rule shall apply to the repayment of any
deposit before the expiry of the period for which such deposit was accepted by the company,
if such repayment is made solely for the purpose of—
(a) complying with the provisions of rule 3; or
(b) providing war risk or other related benefits to the personnel of the naval, military or
air forces or to their families, on an application made by the associations or societies
formed by such personnel, during the period of emergency declared under article 352
of the Constitution:

Provided further that where a company referred to in under sub-section (2) of

section 73 or any eligible company permits a depositor to renew his deposit, before the
expiry of the period for which such deposit was accepted by the company, for availing of a
higher rate of interest, the company shall pay interest to such depositor at the higher rate if
such deposit is renewed in accordance with the other provisions of these rules and for a
period longer than the unexpired period of the deposit.

Explanation: For the purposes of this rule, where the period for which the deposit had
run contains any part of a year, then, if such part is less than six months, it shall be
excluded and if such part is six months or more, it shall be reckoned as one year.

631
Omitted clause (k) in sub-rule (1) of Rule 14 by notification no. G.S.R. 612(E) dated 5th July 2018.
Prior to omission, it read as “(k) details of deposit insurance including extent of deposit insurance;”.

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The Companies (Acceptance of Deposits) Rules, 2014

16. Return of deposits to be filed with the Registrar.-

[Documents filed with ROC can be inspected by public (through MCA portal) as per section 399 of the
Act.]
[It is clarified by a general circular 11/2017 dated 27th September 2017 that till the time the new e-form
is made available, the existing e-form can be used]

Every company to which these rules apply, shall on or before the 30th day of June, of every
year, file with the Registrar, a return in Form DPT-3 along with the fee as provided in
Companies (Registration Offices and Fees) Rules, 2014 and furnish the information
contained therein as on the 31st day of March of that year duly audited by the auditor of the
company.
632
[Explanation.- It is hereby clarified that Form DPT-3 shall be used for filing return of
deposit or particulars of transaction not considered as deposit or both by every
company other than Government company.]

633
[16A. Disclosures in the financial statement.-

(1) Every company, other than a private company, shall disclose in its financial
statement, by way of notes, about the money received from the director.
(2) Every private company shall disclose in its financial statement, by way of notes,
about the money received from the directors, or relatives of directors.]
634
[(3) Every company other than Government company shall file a onetime return of
outstanding receipt of money or loan by a company but not considered as deposits, in
terms of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to 635[31st March,
2019], as specified in Form DPT-3 within 636[ninety days from 31st March, 2019] along
with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.]

632
An exlanation to Rule 16 inserted by the Companies (Acceptance of Deposits) Amendment Rules,
2019, notified vide notificaiton no. G.S.R. 42(E) dated 22nd January 2019, w.e.f. 22nd January 2019.

633
Rule 16A iinserted vide notification number G.S.R.639(E) dated 29th June 2016.

634
An exlanation to Rule 16 inserted by the Companies (Acceptance of Deposits) Amendment Rules,
2019, notified vide notificaiton no. G.S.R. 42(E) dated 22nd January 2019, w.e.f. 22nd January 2019.

635
Substituted for “the date of publication of this notification in the Official Gazette” by the Companies
(Acceptance of Deposits) Second Amendment Rules, 2019, notified vide notificaiton no. G.S.R. 341(E)
dated 30th April 2019, w.e.f. 30th April 2019.

636
Substituted for “ninety days from the date of said publication of this notification” by the Companies
(Acceptance of Deposits) Second Amendment Rules, 2019, notified vide notificaiton no. G.S.R. 341(E)
dated 30th April 2019, w.e.f. 30th April 2019.

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The Companies (Acceptance of Deposits) Rules, 2014

[Vide circular no.05/2019 dated 12.04.2019, form DPT-3 shall be filed without additional fees
within 30 days of its depoyment on MCA21 portal. Form DPT-3 was deployed on 31.05.2019
and hence without additional fees, it could be filed till 29.06.2019.]

17. Penal rate of interest.-

Every company shall pay a penal rate of interest of eighteen per cent. per annum for the
overdue period in case of deposits, whether secured or unsecured, matured and claimed but
remaining unpaid.

18. Power of Central Government to decide certain questions.-

If any question arises as to the applicability of these rules to a particular company, such
question shall be decided by the Central Government in consultation with the Reserve Bank
of India.

19. Applicability of sections 73 and 74 to eligible companies.-

Pursuant to provisions of sub-section (2) of section 76 of the Act, the provisions of sections
73 and 74 shall, mutatis mutandis, apply to acceptance of deposits from public by eligible
companies.
Explanation.- For the purposes of this rule, it is hereby clarified that in case of a company
which had accepted or invited public deposits under the relevant provisions of the Companies
Act, 1956 and rules made under that Act (hereinafter known as "Earlier Deposits") and has
been repaying such deposits and interest thereon in accordance with such provisions, the
provisions of clause (b) of sub-section (1) of section 74 of the Act shall be deemed to have
been complied with if the company complies with requirements under the Act and these rules
and continues to repay such deposits and interest due thereon on due dates for the remaining
period of such deposit in accordance with the terms and conditions and period of such Earlier
Deposits and in compliance with the requirements under the Act and these rules;
Provided further that the fresh deposits by every eligible company shall have
to be in accordance with the provisions of Chapter V of the Act and these rules;

20. Statement regarding deposits existing as on the date of commencement of

the Act.-

For the purposes of clause (a) of sub-section (1) of section 74, the statement shall be
in Form DPT-4. [Date for filing Form DPT-4 extended upto 31 August 2014 by circular
27/2014 dated 30 June 2014]

21. Punishment for contravention.-

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The Companies (Acceptance of Deposits) Rules, 2014

If any company referred to in sub-section (2) of section 73 or any eligible company inviting
deposits or any other person contravenes any provision of these rules for which no
punishment is provided in the Act, the company and every officer of the company who is in
default shall be punishable with fine which may extend to five thousand rupees and where
the contravention is a continuing one, with a further fine which may extend to five hundred
rupees for every day after the first day during which the contravention continues.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]

Form DPT-1 Circular or circular in the form of advertisement inviting deposits

[Substituted by notification no. G.S.R. 612(E) dated 5 th July 2018]

Form DPT-2 Deposit Trust Deed

Form DPT-3 Return of deposits [This form substituted by new form DPT-3 vide
notification number S.O. 241(E) dated 31 March 2015. And Further substituted by new
form DPT-3 vide notification no. G.S.R. 612(E) dated 5 th July 2018]

Form DPT-1

CIRCULAR OR CIRCULAR IN THE FORM OF ADVERTISEMENT INVITING

DEPOSITS
[Pursuant to section 73 (2)(a) and section 76 and rule 4(1) and 4(2) of the
Companies (Acceptance of Deposits) Rules, 2014 ]

The circular or circular in the form of advertisement shall contain the following:
1. GENERAL INFORMATION
(a). Name, address, website and other contact details of the company;
(b). Date of incorporation of the company;
(c). Business carried on by the company and its subsidiaries with the details
of branches or units, if any;
(d). Brief particulars of the management of the company;
(e). Names, addresses, DIN and occupations of the directors;
(f). Management’s perception of risk factors;
(g). Details of default, including the amount involved, duration of default and
present status, in repayment of –
i) statutory dues;
ii) debentures and interest thereon;
iii) loan from any bank or financial institution and interest thereon.

2. PARTICULARS OF THE DEPOSIT SCHEME

(a). Date of passing of board resolution;
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(b). Date of passing of resolution in the general meeting authorizing the

invitation of such deposits;
(c). Type of deposits, i.e., whether secured or unsecured;
(d). Amount which the company can raise by way of deposits as per the Act
and the rules made thereunder, and the aggregate of deposits actually held on
the last day of the immediately preceding financial year and on the date of issue
of the Circular or advertisement and amount of deposit proposed to be raised
and amount of deposit repayable within the next twelve months;
(e). Terms of raising of deposits : Duration, Rate of interest, mode of payment
and repayment;
(f). Proposed time schedule mentioning the date of opening of the Scheme and
the time period for which the circular or advertisement is valid;
(g). Reasons or objects of raising the deposits;
(h). Credit rating obtained; Name of the Credit Rating Agencies, Rating
obtained, Meaning of the rating obtained, Date on which rating was obtained.
(i). Short particulars of the charge created or to be created for securing such
deposits, if any;
(j). Any financial or other material interest of the directors, promoters or key
managerial personnel in such deposits and the effect of such interest in so far
as it is different from the interests of other persons.
3. DETAILS OF ANY OUTSTANDING DEPOSITS
(a). Amount Outstanding;
(b). Date of acceptance;
(c). Total amount accepted;
(d). Rate of interest;
(e). Total number of depositors;
(f). Default, if any, in repayment of deposits and payment of interest thereon, if
any, including number of depositors, amount and duration of default involved;
(g). Any waiver by the depositors, of interest accrued on deposits;
4. FINANCIAL POSITION OF THE COMPANY
(a). Profits of the company, before and after making provision for tax, for the
three financial years immediately preceding the date of issue of circular or
advertisement;
(b). Dividends declared by the company in respect of the said three financial
years; interest coverage ratio for last three years (Cash profit after tax plus
interest paid or interest paid)
(c). A summary of the financial position of the company as in the three audited
balance sheets immediately preceding the date of issue of circular or
advertisement;
(d). Audited Cash Flow Statement for the three years immediately preceding
the date of issue of circular or advertisement;
(e). Any change in accounting policies during the last three years and their
effect on the profits and the reserves of the company.
5. A DECLARATION BY THE DIRECTORS THAT-
(a). the company has not defaulted in the repayment of deposits accepted either
before or after the commencement of the Act or payment of interest on such
deposits and where a default has occurred, the company made good the default

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The Companies (Acceptance of Deposits) Rules, 2014

and a period of five years had elapsed since the date of making good the
default;
(b). the board of directors have satisfied themselves fully with respect to the
affairs and prospects of the company and that they are of the opinion that
having regard to the estimated future financial position of the company, the
company will be able to meet its liabilities as and when they become due and
that the company will not become insolvent within a period of one year from the
date of issue of the circular or advertisement;
(c). the company has complied with the provisions of the Act and the rules made
thereunder;
(d). the compliance with the Act and the rules does not imply that repayment of
deposits is guaranteed by the Central Government;
(e). the deposits accepted by the company before the commencement of the
Act have been repaid (or will be repaid along with interest within ____ days
(days to be specified) and until they are repaid, they shall be treated as
unsecured and ranking pari passu with other unsecured liabilities).
(f). In case of any adverse change in credit rating, depositors will be given a
chance to withdraw deposits without any penalty.
(g). the deposits shall be used only for the purposes indicated in the Circular or
circular in the form of advertisement;
(h). the deposits accepted by the company (other than the secured deposits, if
any, aggregate amount of which to be indicated) are unsecured and rank pari
passu with other unsecured liabilities of the company.

Form DPT-2

Deposit Trust Deed

[Pursuant to rule 7(2) of the Companies (Acceptance of Deposits) Rules, 2014]
The deposit trust deed shall, inter alia, contain the following:-
DESCRIPTION OF DEPOSIT SCHEME -
1. Covenants stating the purpose of raising finance through the deposit scheme;
2. Details of deposit scheme as regards amount, tenure, interest or coupon rate,
periodicity of payment, mode of payment and period of redemption;
3. An undertaking by the company to pay the interest and principal amount of
such deposits to the depositors as and when it becomes due, as per the terms of the
scheme;
4. Covenants stating the tams of redemption of the deposits in terms of the
scheme to the depositors, options available, and debt equity ratio and debt service
coverage ratio, if applicable.

DETAILS OF CHARGE CREATED:-

1. Nature of charge created;
2. Rank of charge created viz. first, second, pari passu, residual, etc.;
3. Minimum security cover to be provided;
4. Asset(s) on which charge is created;
5. Other particulars of the charge, e.g., time period of charge, rate of interest,
name of the charge holder;
6. Provision for subsequent valuation;
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The Companies (Acceptance of Deposits) Rules, 2014

7. Undertaking by the company not to create further charge or encumbrance

over the trust property without the approval of the trustee;
8. A statement that the company may hold and enjoy all the mortgaged premises
and carry on the business of the company until the security becomes enforceable.

DETAILS OF DEPOSIT INSURANCE

1. Name of the insurer;
2. Amount of the insurance cover
3. Other terms and conditions governing deposit insurance contract.

PARTICULARS OF THE APPOINTMENT OF DEPOSIT TRUSTEE(S):-

1. The conditions for the appointment, resignation and removal of such trustee,
which shall ensure that-
(a) the appointment of the trustee must be confirmed by the resolution
passed by the Board of Directors.
(b) any removal of a trustee and subsequent appointment of a substitute
trustee by the company must also be approved by the Board of Directors.
(c) the casual vacancy, if any, arising in the office of the trustees, shall be
filled by the board.
2. Remuneration, legal cost, travelling and other expenses payable to the
trustee(s) for their services; and
3. Powers and duties of the trustee.

REPORTING REQUIREMENTS
A covenant to the effect that:-
1. the company will carry on its business in a proper and efficient manner with
due diligence and efficiency;
2. the company will give lo the trustee any information to the extent required by
law relating to business, mortgage property and affairs of the company which the
trustee may require in order to discharge its duties and obligations as trustee under
the trust deed;
3. the company will not utilize any portion of the deposit for purposes other than
those for which the same are accepted;
4. the company will inform the trustee of any material changes in the existing
management set up;
5. the company will not declare any dividend to the shareholders in any year
until the company has paid or made satisfactory arrangements for the payment of
the principal amounts of matured deposits and interest due on the deposits; and
6. the company shall immediately notify the trustee if it becomes aware of any
event of default or any other circumstance which may prejudice the interests of the
depositors.

EVENTS OF DEFAULTS:-
I. Events which may invite actions by the deposit trustee shall include the
following events:
a. If the company commits default in the payment of any interest and principal
which ought to be paid in accordance with the terms of the acceptance of deposits;

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The Companies (Acceptance of Deposits) Rules, 2014

b. If the company without the consent of depositors ceases to carry on its business
or gives notice of its intention to do so;
c. If an order has been made by the Court or a special resolution has been
passed by the members of the company for winding up of the company;
d. If any breach of the terms of the circular or advertisement inviting deposits or
of the covenants of this deed is committed;
e. If the company creates or attempts to create any further charge on the
mortgaged premises or any part thereof without the prior approval of the trustees or
depositors;
f If the company fails to comply with provisions of the Act;
g. If the Trustees have reasonable grounds to conclude that the security of the
depositors is in jeopardy.
2. Covenant to the effect that in case of the security becoming enforceable , the
trustees shall enter into and take possession of the property on which charge is
created and shall, in consultation with the other charge holders forthwith take steps
to determine whether the business of the company may be allowed to be carried on,
the steps to be taken for changes in management of the company, if any, actions
necessary for protection of the mortgaged property and other steps required for
protecting the interests of the depositors.
3. Covenant to the effect that the trustees may lodge a claim under insurance for
payment to depositors in terms of deposit insurance.
4. Covenant to the effect that the balance proceeds of any sale of the mortgaged
premises shall, after setting off of all costs, charges and expenses incurred for the
sale and payment of interest and the principal money due to depositors, be paid to
the company or its assignee
MISCELLANEOUS
1. The conditions under which the provisions of the trust deed or the terms and
conditions of the deposits may be modified;
2. The mode of service of notices and other documents on the borrower
company, the trustee and the holders of the deposits;
3. The borrower company to be responsible for paying any stamp duty on the
trust deed or the deposits (if applicable);
4. Provisions regarding the meeting of the deposit holders

637
[Form DPT-3

Return of deposits
[Pursuant to rules 3 and 16 of the Companies (Acceptance of Deposits) Rules,
2014]
1. *(a) CIN
(b) GLN

2. (a) Name of the company:

637
Substituted form DPT-3 vide notification number G.S.R. 1172(E) dated 19th September 2017.

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(b) Registered office address

*(c) E-mail Id

3. Purpose of the Form Return of Deposit

Particualrs of transactions by a
company not considered as deposit
as per rule 2(1)(c) of the
Companies (Acceptance of
deposits) Rules, 2014

Return of deposits and Particulars

of transactions by a company not
considred as deposit

4. Whether the company is

Public company
Private company

5. *Whether the company is a YES / NO

Government company

6. Objects of the company

7. *(a) Date of issue of

advertisement or circular:
(b) Date of last closing of
accounts:
(c) Date of expiry of validity of
advertisement or circular:

8. *Net Worth as per the latest

audited balance sheet
preceding the date of the
return-
(a) (i) Paid up share capital
(ii) Free reserves
(iii) Securities Premium
Account
(b) (i) Accumulated loss
(ii) Balance of deferred revenue
expenditure
(iii) Accumulated unprovided
depreciation
(iv) Miscellaneous expense and
preliminary expenses
(v) Other intangible assets
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The Companies (Acceptance of Deposits) Rules, 2014

(c) Net worth (a-b)

(d) Maximum limit of deposits (i.e.,

35% of the above in case of all
companies other than specified
IFSC public companies and
private companies)

9. *(a) Total number of deposit

holders as on 1st April

10. *Particulars of deposits (in

Rupees)
(a) Amount of existing deposits as at
1st April
(b) Amount of deposits renewed
during the year
(c) Amount of new deposits
accepted during the year
(i) Secured deposits
(ii) Unsecured deposits
(d) Amount of deposits repaid during
the year
(e) Balance of deposits outstanding
at the end of the year

11. *(a) Amount of deposits that

have matured but not claimed:
*(b) Amount of deposits that
have matured and claimed but
not paid:

12. *Particulars of liquid assets

(a) Amount of deposits maturing
at the end of the financial year:
And in the following next
financial year
(b) Amount required to be
invested in liquid assets:
(c) Details of liquid assets-

Particulars Amount
(a) Amount in current or other deposits account, free from
charge or lien, with any scheduled bank
(b) Unencumbered securities of Central / State Government
Face Value

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The Companies (Acceptance of Deposits) Rules, 2014

Market value
(c) Unencumbered trust securities
Face Value
Market value

13. Particulars of charge

(a) Date of entering into trust
deed
(b) Name of the trustee
(c) Short particulars of the
property on which charge is
created for securing depositors
(d) Value of the property

14. Total amounts of outstanding

money or loan received by a
company in terms of rule 2(1)(c)
of the Companies (Acceptance
of Deposits) Rles, 2014 as
specified in Rule 16(A)(3)

15. Particulars of receipt of money or loan by a company but not considered as

deposits, at the end of financial year, in terms of clause (c) of sub-rule 1 of rule 2 of
the Companies (Acceptance of Deposits) Rules,2014

(a) Any amount received from -

(i) the Central Government; or
(ii) a State Government; or any
amount received from any other
source whose repayment is
guaranteed by the Central
Government or
State Government; or
(iii)any amount received from a
local authority; or
(iv)any amount received from
statutory authority constituted
under an Act of Parliament or a
State Legislature.
(b) Any amount received from -
(i) Foreign Governments; or
(ii) Foreign or international
banks;
(iii) Multilateral financial
institutions;
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The Companies (Acceptance of Deposits) Rules, 2014

(iv) Foreign Governments owned

development financial
institutions;
(v) Foreign export credit
agencies;
(vi) Foreign collaborators;
(vii) Foreign body corporates;
(viii) Foreign citizens;
(ix) Foreign authorities or;
(x) Persons residents outside
India subject to the provisions of
Foreign Exchange Management
Act, 1999 (42 of 1999).
(c) Any amount received as -
(i) A loan or facility from any
banking company; or
(ii) From the state Bank of India
or any of its subsidiary banks; or
(iii) From a banking institution
notified by the Central
Government under section 51 of
the Banking Regulation Act,
1949 (10 of 1949); or
(iv) A corresponding new bank
as defined in clause( d )of
section 2 of the Banking
Companies (Acquisition and
Transfer of Undertakings) Act,
1980 (40 of 1980); or
(v) From a cooperative bank as
defined in clause (b-ii) of section
2 of the Reserve Bank of India
Act, 1934 (2 of 1934).
(d) Any amount received as loan
or financial assistance from -
(i) Public Financial Institutions
notified by the Central
Government; or
(ii) Any regional financial
institutions; or
(iii) Insurance companies; or
(iv) Scheduled Banks as defined
in the Reserve Bank of India
Act,1934 (2 of 1934).
(e) Any amount received against
issue of commercial paper or
any other instruments issued in

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 Chapter V [Sections 73 to 76]

The Companies (Acceptance of Deposits) Rules, 2014

accordance with the guidelines

or notification issued by the
Reserve Bank of India.
(f) Any amount received by the
company from any other
company.
(g) Any amount received and
held pursuant to an offer made in
accordance with the provisions
of the Act towards subscription
to any securities including share
application money or advance
towards allotment of securities
pending allotment, so long as
such amount is appropriated
only against the amount due on
allotment of securities applied
for.
(h) Any amount received from a
person who, at the time of the
receipt of the amount, was a
director of the company or the
relative of the director of a
private company.
(i) (A)Any amount raised by the
issue of bonds or debentures
secured by a first charge or a
charge ranking pari passu with
the first charge on any assets
referred to in Schedule III of the
Act excluding intangible assets
of the company; or
(B) bonds or debentures
compulsorily convertible into
shares of the company within ten
years.
(j) Any amount raised by the
issue of non-convertible
debentures not constituting a
charge on the assets of the
company and listed on
recognized stock exchange as
per applicable regulations made
by Securities and Exchange
Board of India.
(k) Any amount received from an
employee of the company not

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The Companies (Acceptance of Deposits) Rules, 2014

exceeding his annual salary

under a contract of employment
with the company in the nature
of non-interest bearing security
deposit.
(l) Any non-interest bearing
amount received and held in
trust.
(m) Any amount received in
course of , or for the purposes of
the business
of the company-
(i) As an advance for supply of
goods or provision of services
accounted for in any manner
whatsoever provided that such
advance is appropriated against
supply of goods or provision
of services within a period of
three hundred and sixty five days
from the date of acceptance of
such advance.
(ii) As advance accounted for in
any manner whatsoever,
received
in connection with consideration
for immovable property
under an agreement or
arrangement, provided that such
advance is adjusted against
such property in accordance with
the terms of agreement or
arrangement.
(iii) As security deposit for
performance of the contract of
supply
of goods or provision of services.
(iv) As advance received under
long term projects for supply of
capital goods except those
covered under item (b) of
subclause (xii) clause (c) of sub-
rule (1) of rule (2) of the
Companies (Acceptance of
Deposits) Rules, 2014.
(v) As an advance towards
consideration for providing future

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 Chapter V [Sections 73 to 76]

The Companies (Acceptance of Deposits) Rules, 2014

services in the form of a

warranty or maintenance
contract as
per written agreement, if the
period for providing such
services does not exceed the
period prevalent as per common
business practice or five years,
from the date of acceptance of
such service whichever is less.
(vi) As advance received and
allowed by any sectoral regulator
or
in accordance with directions of
Central or State Government.
(vii) As an advance for
subscription towards publication,
whether
in print or electronic to be
adjusted against receipt of such
publications.
(viii) Any amount brought in by
promoters of the company by
way
of unsecured loans in pursuance
of the stipulation of any
lending financial institution.
(ix) Any amount received by a
Nidhi company in accordance
with
the rules made under section
406 of the Act.
(x) Any amount received by way
of subscription in respect of chit
under the Chit Funds Act,
1982(4 of 1982).
(xi) Any amount received by
company under any collective
Investment scheme in
compliance with regulations
framed by
the Securities and Exchange
Board of India.
(xii) Any amount of twenty five
lakh rupees or more received by
a

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 Chapter V [Sections 73 to 76]

The Companies (Acceptance of Deposits) Rules, 2014

start up company, by way of

convertible note (convertible into
equity shares or repayable within
a period not exceeding five
years from the date of issue) in a
single tranche, from a
person.
(xiii) Any amount received by a
company from -
(A) Alternate Investment Funds;
(B) Domestic venture Capital
Funds;
(C) Infrastructure Investments
Trusts;
(D) Real Estate Investment
Trusts;
(E) Mutual Funds registered with
the Securities and
Exchange Board of India.

Attachment:
1. Auditor's certificate;
2. Copy of trust deed;
3. Copy of instrument creating charge;
4. List of depositors;
5. Details of liquid assets;
6. Optional attachment, if any.
Declaration
I am authorized by the Board of Directors of the Company vide resolution number*
……… dated * ……….. to sign this form and declare that all the requirements of
Companies Act, 2013 and the rules made thereunder in respect of the subject matter
of this form and matters incidental thereto have been complied with. I also declare that
all the information given herein above is true, correct and complete including the
attachments to this form and nothing material has been suppressed.
*To be digitally signed by
*Designation
*DIN of the director; or DIN or PAN of the manager or
CEO or CFO; or membership number of the company secretary
Note: Attention is also drawn to provisions of Section 448 and 449 which provide for
punishment for false statement and false evidence.

Form DPT-4

Statement regarding deposits existing on the commencement of the Act

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The Companies (Acceptance of Deposits) Rules, 2014

Page 1044
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

Chapter VI: the Companies

(Registration of Charges) Rules, 2014
[The principal notification rules were published in the Gazette of India, Part II, Section 3, Sub-
section (i), vide number G.S.R. 248(E), dated the 31st March, 2014 and subsequently
amended vide notification numbers G.S.R 440(E) 29th May, 2015; G.S.R. 339(E) 7th April,
2017; G.S.R. 614(E) 05th July, 2018; G.S.R. 1218(E) 18th December, 2018; and G.S.R.
342(E) 30th April, 2019.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R. 248(E).— In exercise of the powers conferred under Sections 77, 78,
79, 81, 82, 83, 84, 85, 87 read with section 469 of the Companies Act, 2013 (18 of
2013) and in supersession of the Companies (Central Government’s) General Rules
and Forms, 1956 or any other relevant rules prescribed under the Companies Act,
1956 (1 of 1956) on matters covered under these rules, except as respects things
done or omitted to be done before such supersession, the Central Government hereby
makes the following rules, namely:—

1. Short title and commencement.-

(1) These rules may be called the Companies (Registration of Charges) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure appended to these rules;

(c) “Fees” means the fees as specified in the Companies (Registration offices and
fees) Rules, 2014;

(d) “Form” or “eforms” means form set forth in Annexure to these rules which shall
be used for the matter to which it relates;

(e) “Regional Director” means the person appointed by the Central Government in
the Ministry of Corporate Affairs as a Regional ‘Director;

Page 1045
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

(f) “section” means the section of the Act.

(2) Words and expressions used in these rules but not defined and defined in the Act
or in Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act and said rules.

3. Registration of creation or modification of charge.

(1) For registration of charge as provided in subsection (1) of Section 77, Section 78 and
Section 79, the particulars of the charge together with a copy of the instrument, if any,
creating or modifying the charge in Form No. CHG-1 (for other than Debentures) or
Form No. CHG-9 (for debentures), as the case may be, duly signed by the company and
the charge holder 638[shall be filed] with the Registrar within a period of thirty days of the
date of creation or modification of charge along with the fee.
639
[(2) If the particulars of a charge are not filed in accordance with sub-rule (1), such
creation or modificaiton shall be filed in Form No. CHG-1 or Form No. CHG-9 within
the period as specified in section 77 on payment of additional fee or advalorem fee as
prescribed in the Companies (Registration Offices and Fees) Rules, 2014.

(3) Where the company fails to register the charge in accordance with sub-rule (1) and
the registration is effected on the application of the charge-holder, such charge-holder
shall be entitled to recover from the company the amount of any fees or additional fees
or advalorem fees paid by him to the Registrar for the purpose of registration of
charge.]

(4) A copy of every instrument evidencing any creation or modification of charge and
required to be filed with the Registrar in pursuance of Section 77, 78 or 79 shall be
verified as follows-

638
Substituted for the words “and filed” by notification no. G.S.R. 614(E) dated 05th July 2018.

639
Substituted for the sub-rules (2) and (3) of Rule 3 by notification no. G.S.R. 342(E) dated 30th April
2019. Prior to substitution it read as:-

“(2) If the particulars of a charge are not filed within the aforesaid period, but filed within a period
of three hundred days of the date of such creation or modification, the additional fee shall be
levied.

(3) If the company fails to register the particulars of the charge with the Registrar within the
period of thirty days of its creation or modification, the particulars of the charge together with a
copy of the instrument, if any, creating or modifying such charge may be filed by the charge-
holder, in Form No. CHG-1 or Form No. CHG-9, as the case may be, duly signed along with
fee”.

Page 1046
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

(a) where the instrument or deed relates solely to the property situated outside India,
the copy shall be verified by a certificate issued either 640[under the seal, if any, of the
company], or under the hand of any director or company secretary of the company
or an authorised officer of the charge holder or under the hand of some person other
than the company who is interested in the mortgage or charge;
(b) where the instrument or deed relates, whether wholly or partly, to the
property situated in India, the copy shall be verified by a certificate issued under
the hand of any director or company secretary of the company or an authorised
officer of the charge holder.

641
[4. Application to Registrar.-

(1) For the purposes of the first proviso and clause (b) of the second proviso to sub-section
(1) of section 77, the Registrar may, on being satisfied that the company had sufficient
cause for not filing the particulars and instrument of charge, if any, within a period of thirty
days of the date of creation of the charge including modification thereto, allow the
registration of the same after thirty days but within the period as specified in the said
provisos, on payment of fee, additional fee or advalorem fee, as may be applicable, as
prescribed in the Companies (Registration Offices and Fees) Rules, 2014.

(2) The application under sub-rule (1) shall be made in Form No.CHG-1 and Form
No.CHG-9 supported by a declaration from the company signed by its company
secretary or a director that such belated filing shall not adversely affect the rights of
any other intervening creditors of the company.]

5. Application of rules in certain matters.-

The provisions of rule 4 shall apply, mutatis mutandis, to the registration of charge on
any property acquired subject to such charge and modification of charge under Section
79 of the Act.

640
Substituted vide called the Companies (Registration of Charges) Amendment Rules, 2015
notification number G.S.R. 440 (E) dated the 29th May, 2015. Prior to substitution it read “under the
seal of the company”.

641
Rule 4 substituted vide called the Companies (Registration of Charges) Amendment Rules, 2019
vide notification number G.S.R. 342(E) dated 30th April, 2019. Prior to substitution it read as
“Condonation of delay by Registrar. (1) The Registrar may, on being satisfied that the company had
sufficient cause for not filing the particulars and instrument of charge, if any, within a period of thirty
days of the date of creation of the charge, allow the registration of the same after thirty days but within
a period of three hundred days of the date of such creation of charge or modification of charge on
payment of additional fee. (2) The application for delay shall be made in Form No. CHG-1 and supported
by a declaration from the company signed by its secretary or director that such belated filing shall not
adversely affect rights of any other intervening creditors of the company.”

Page 1047
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

6. Certificate of registration. –

(1) Where a charge is registered with the Registrar under sub-section (1) of Section
77 or Section 78, he shall issue a certificate of registration of such charge in Form No.
CHG-2

(2) Where the particulars of modification of charge is registered under section 79, the
Registrar shall issue a certificate of modification of charge in Form No. CHG-3

(3) The certificate issued by the Registrar under sub-rule (1) and sub-rule (2) shall be
conclusive evidence that the requirements of Chapter VI of the Act and the rules made
thereunder as to registration of creation or modification of charge, as the case may
be, have been complied with.

7. Register of charges to be kept by the Registrar.-

(1) The particulars of charges maintained on the Ministry of Corporate Affairs portal
(www.mca.gov.in/MCA21) shall be deemed to be the register of charges for the
purposes of Section 81 of the Act.

(2) The register shall be open to inspection by any person on payment of fee.

8. Satisfaction of charge.-
642
[(1) A company or charge holder shall within a period of three hundred days from
the date of the payment or satisfaction in full of any charge registered under Chapter
VI, give intimation of the same to the Registrar in Form No. CHG-4 along with the fee.]

(2) Where the Registrar enters a memorandum of satisfaction of charge in full in

pursuance of Section 82 or 83, he shall issue a certificate of registration of satisfaction of
charge in Form No. CHG-5.

9. Intimation of appointment of Receiver or Manager.-

[Refer Section 84]

The notice of appointment or cessation of a receiver of, or of a person to manage, the
property, subject to charge, of a company shall be filed with the Registrar in Form No.
CHG-6 along with fee.

642
Substituted sub-rule (1) of Rule 8 by notification no. G.S.R. 614(E) dated 05th July 2018. Prior to
substitution, it read as “(1) A company shall within a period of thirty days from the date of the payment
or satisfaction in full of any charge registered under Chapter VI, give intimation of the same to the
Registrar in Form No. CHG-4 along with the fee.”.

Page 1048
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

10. Company’s register of charges.-

[Refer Section 85]

(1) Every company shall keep at its registered office a register of charges in Form No.
CHG-7 and enter therein particulars of all the charges registered with the Registrar on
any of the property, assets or undertaking of the company and the particulars of any
property acquired subject to a charge as well as particulars of any modification of a
charge and satisfaction of charge.

(2) The entries in the register of charges maintained by the company shall be made
forthwith after the creation, modification or satisfaction of charge, as the case may be.

(3) Entries in the register shall be authenticated by a director or the secretary of the
company or any other person authorised by the Board for the purpose.

(4) The register of charges shall be preserved permanently and the instrument creating
a charge or modification thereon shall be preserved for a period of eight years from
the date of satisfaction of charge by the company.

11. Register open for inspection.-

The register of charges and the instrument of charges kept by the company shall be
open for inspection-
(a) by any member or creditor of the company without fees;
(b) by any other person on payment of fee.

643
[12. Rectification in register of charges on account of omission or
misstatement of particulars in charge previously recorded and extension of time
in filing of satisfaction of charge. -

The Central Government may on an application filed in Form No. CHG-8 in

accordance with section 87–

643
Rule 12 substituted vide called the Companies (Registration of Charges) Amendment Rules, 2019
vide notification number G.S.R. 342(E) dated 30th April, 2019. Prior to substitution it read as “12.
Condonation of delay and rectification of register of charges.- (1) Where the instrument creating or
modifying a charge is not filed within a period of three hundred days from the date of its creation
(including acquisition of a property subject to a charge) or modification and where the satisfaction of the
charge is not filed 643 [within thirty days] from the date on which such payment of satisfaction, the
Registrar shall not register the same unless the delay is condoned by the Central Government. (2) The
application for condonation of delay and for such other matters covered in sub-clause (a),(b) and (c) of
clause (i) of sub-section (1) of Section 87 of the Act shall be filed with the Central Government in Form
No. CHG-8 along with the fee. (3) The order passed by the Central Government under sub-section (1)
of section 87of the Act shall be required to be filed with the Registrar in Form No. INC-28 along with
the fee as per the conditions stipulated in the said order.”

Page 1049
 Chapter VI [Sections 77 to 87]

The Companies (Registration of Charges) Rules, 2014

(a) direct rectification of the omission or misstatement of any particulars, in any filing,
previously recorded with the Registrar with respect to any charge or modification
thereof, or with respect to any memorandum of satisfaction or other entry made in
pursuance of section 82 or section 83,
(b) direct extension of time for satisfaction of charge, if such filing is not made within a
period of three hundred days from the date of such payment or satisfaction.]

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html.]
Form No. CHG-1
Form No. CHG-2
Form No. CHG-3
Form No. CHG-4
Form No. CHG-5
Form No. CHG-6
Form No. CHG-7
Form No. CHG-8
Form No. CHG-9

Page 1050
 Chapter VII [Sections 88 to 122]

The Companies (Significant Beneficial Owners) Rules, 2014

Chapter VII: the Companies (Significant

Beneficial Owners) Rules, 2018
[The principal rules were published in the Gazette of India, Part II, Extra ordinary,
Section 3, Sub section (i) vide number G.S.R. 561(E), dated the 13th June, 2018.
Amended by notification G.S.R.100(E) dated 8 th February 2019 and by notification
G.S.R. 466(E) dated 1st July 2019]

MINISTRY OF CORPORATE AFFAIRS NOTIFICATION

New Delhi, the 13th June, 2018

G.S.R. 561(E).— In exercise of the powers conferred by Section 90 read with sub-
section (1) of section 469 of the Companies Act, 2013 (18 of 2013), the Central
Government hereby makes the following rules, namely :-

1. Short title and commencement.–

(1) These rules may be called the Companies (Significant Beneficial Owners) Rules,
2018.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

[(b) “control” means control as defined in clause (27) of section 2 of the Act;
644

644
Clauses (b) to (e) of rule 2(1) substitutued with clauses (b) to (i) by the Companies (SBO)
Amendment Rules, 2019 vide notification no. G.S.R. 100(E) dated 8th February 2019. Prior to
substituion it read as:

“[(b) "form" means the form specified in Annexure to these rules;

(c) “registered owner” means a person whose name is entered in the register of members of a company
as the holder of shares in that company but who does not hold beneficial interest in such shares;

(d) “section” means a section of the Act

(e) “significant beneficial owner” means an individual referred to in sub-section (1) of section 90 (holding
ultimate beneficial interest of not less than ten per cent.) read with sub-section (10) of section 89, but

Page 1051
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The Companies (Significant Beneficial Owners) Rules, 2014

(c) "form" means the form specified in Annexure to these rules;

(d) “majority stake” means;-

(i) holding more than one-half of the equity share capital in the body corporate; or
(ii) holding more than one-half of the voting rights in the body corporate; or
(iii) having the right to receive or participate in more than one-half of the
distributable dividend or any other distribution by the body corporate;

(e) “partnership entity” means a partnership firm registered under the Indian
Partnership Act, 1932 (9 of 1932) or a limited liability partnership registered under
the Limited Liability Partnership Act, 2008 (6 of 2009);

(f) “reporting company” means a company as defined in clause (20) of section 2 of

the Act, required to comply with the requirements of section 90 of the Act;

(g) “section” means a section of the Act;

(h) “significant beneficial owner” in relation to a reporting company means an

individual referred to in subsection (1) of section 90, who acting alone or together,
or through one or more persons or trust, possesses one or more of the following
rights or entitlements in such reporting company, namely:-
(i) holds indirectly, or together with any direct holdings, not less than ten per

whose name is not entered in the register of members of a company as the holder of such shares, and
the term ‘significant beneficial ownership’ shall be construed accordingly;

Explanation I. - For the purpose of this clause, the significant beneficial ownership, in case of persons
other than individuals or natural persons, shall be determined as under

(i) where the member is a company, the significant beneficial owner is the natural person, who, whether
acting alone or together with other natural persons, or through one or more other persons or trusts,
holds not less than ten per cent. share capital of the company or who exercises significant influence or
control in the company through other means;

(ii) where the member is a partnership firm, the significant beneficial owner is the natural person, who,
whether acting alone or together with other natural persons, or through one or more other persons or
trusts, holds not less than ten per cent. of capital or has entitlement of not less than ten per cent. of
profits of the partnership;

(iii) where no natural person is identified under (i) or (ii), the significant beneficial owner is the relevant
natural person who holds the position of senior managing official;

(iv) where the member is a trust (through trustee), the identification of beneficial owner(s) shall include
identification of the author of the trust, the trustee, the beneficiaries with not less than ten per cent.
interest in the trust and any other natural person exercising ultimate effective control over the trust
through a chain of control or ownership;

Explanation II.—It is hereby clarified that instruments in the form of global depository receipts,
compulsorily convertible preference shares or compulsorily convertible debentures shall be treated as
‘shares’ for the purpose of this clause;]”.

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 Chapter VII [Sections 88 to 122]

The Companies (Significant Beneficial Owners) Rules, 2014

cent. of the shares;

(ii) holds indirectly, or together with any direct holdings, not less than ten per
cent. of the voting rights in the shares;
(iii) has right to receive or participate in not less than ten per cent. of the total
distributable dividend, or any other distribution, in a financial year through
indirect holdings alone, or together with any direct holdings;
(iv) has right to exercise, or actually exercises, significant influence or control,
in any manner other than through direct holdings alone:

Explanation I. – For the purpose of this clause, if an individual does not hold any
right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be
considered to be a significant beneficial owner.

Explanation II. – For the purpose of this clause, an individual shall be considered
to hold a right or entitlement directly in the reporting company, if he satisfies any
of the following criteria, namely.––
(i) the shares in the reporting company representing such right or entitlement
are held in the name of the individual;
(ii) the individual holds or acquires a beneficial interest in the share of the
reporting company under subsection (2) of section 89, and has made a
declaration in this regard to the reporting company.

Explanation III. – For the purpose of this clause, an individual shall be considered
to hold a right or entitlement indirectly in the reporting company, if he satisfies any
of the following criteria, in respect of a member of the reporting company, namely:-

(i) where the member of the reporting company is a body corporate (whether
incorporated or registered in India or abroad), other than a limited liability
partnership, and the individual,––
(a) holds majority stake in that member; or
(b) holds majority stake in the ultimate holding company (whether incorporated
or registered in India or abroad) of that member;

(ii) where the member of the reporting company is a Hindu Undivided Family (HUF)
(through karta), and the individual is the karta of the HUF;

(iii) where the member of the reporting company is a partnership entity (through
itself or a partner), and the individual,- (a) is a partner; or (b) holds majority stake
in the body corporate which is a partner of the partnership entity; or (c) holds
majority stake in the ultimate holding company of the body corporate which is a
partner of the partnership entity.

(iv) where the member of the reporting company is a trust (through trustee), and
the individual,-
(a) is a trustee in case of a discretionary trust or a charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable trust.

(v) where the member of the reporting company is,-

Page 1053
 Chapter VII [Sections 88 to 122]

The Companies (Significant Beneficial Owners) Rules, 2014

(a) a pooled investment vehicle; or

(b) an entity controlled by the pooled investment vehicle, based in member State
of the Financial Action Task Force on Money Laundering and the regulator of
the securities market in such member State is a member of the International
Organization of Securities Commissions, and the individual in relation to the
pooled investment vehicle,-
(A) is a general partner; or
(B) is an investment manager; or
(C) is a Chief Executive Officer where the investment manager of such
pooled vehicle is a body corporate or a partnership entity.

Explanation IV. Where the member of a reporting company is,

(i) a pooled investment vehicle; or
(ii) an entity controlled by the pooled investment vehicle,
based in a jurisdiction which does not fulfil the requirements referred to in clause
(v) of Explanation III, the provisions of clause (i) or clause (ii) or clause (iii) or clause
(iv) of Explanation III, as the case may be, shall apply.

Explanation V. – For the purpose of this clause, if any individual, or individuals

acting through any person or trust, act with a common intent or purpose of
exercising any rights or entitlements, or exercising control or significant influence,
over a reporting company, pursuant to an agreement or understanding, formal or
informal, such individual, or individuals, acting through any person or trust, as the
case may be, shall be deemed to be ‘acting together’.

Explanation VI. – For the purposes of this clause, the instruments in the form of
global depository receipts, compulsorily convertible preference shares or
compulsorily convertible debentures shall be treated as ‘shares’.

(i) “significant influence” means the power to participate, directly or indirectly, in the
financial and operating policy decisions of the reporting company but is not control or
joint control of those policies’.]

(2) Words and expressions used in these rules but not defined and defined in the Act
or in Companies (Specification of Definitions Details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act and the said Rules.

645
[2A. Duty of the reporting company.-

645
Rules 3 and 4 substituted with Rules 2A, 3 and 4 by the Companies (SBO) Amendment Rules, 2019
vide notification no. G.S.R. 100(E) dated 8th February 2019. Prior to substituion it read as:–

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(1) Every reporting company shall take necessary steps to find out if there is any
individual who is a significant beneficial owner, as defined in clause (h) of rule 2, in
relation to that reporting company, and if so, identify him and cause such individual to
make a declaration in Form No. BEN-1.

(2) Without prejudice to the generality of the steps stated in sub-rule (1), every reporting
company shall in all cases where its member (other than an individual), holds not less
than ten per cent. of its;-
(a) shares, or
(b) voting rights, or
(c) right to receive or participate in the dividend or any other distribution payable in a
financial year,

give notice to such member, seeking information in accordance with sub-section (5) of
section 90, in Form No. BEN-4.

3. Declaration of significant beneficial ownership under section 90.-

(1) On the date of commencement of the Companies (Significant Beneficial Owners)

Amendment Rules, 2019, every individual who is a significant beneficial owner in a
reporting company, shall file a declaration in Form No. BEN-1 to the reporting company
within ninety days from such commencement.

(2) Every individual, who subsequently becomes a significant beneficial owner, or

where his significant beneficial ownership undergoes any change shall file a

[“3. Declaration of significant beneficial ownership in shares under section 90.-

(1) Every significant beneficial owner shall file a declaration in Form No. BEN-1 to the company in which
he holds the significant beneficial ownership on the date of commencement of these rules within ninety
days from such commencement and within thirty days in case of any change in his significant beneficial
ownership.

(2) Every individual, who, after the commencement of these rules, acquires significant beneficial
ownership in a company, shall file a declaration in Form No. BEN-1 to the company, within thirty days
of acquiring such significant beneficial ownership or in case of any change in such ownership. [MCA
clarified that BEN-1 form would be revised and stakeholders advised to filed declaration in the revised
BEN-1 form. Vide General Circular no. 08/2018 dated 10th September 2018]

4. Return of significant beneficial owners in shares.-

Where any declaration under rule 3 is received by the company, it shall file a return in Form No. BEN-
2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt
of declaration by it, along with the fees as prescribed in Companies (Registration offices and fees)
Rules, 2014. [MCA clarified that the time limit for filing the BEN-2 from would be 30 days from the date of
deployment of BEN-2 e-form on the MCA-21 portal and no additional fees shall be levied if the same is
filed within 30 days from the date of deployment of the said e-form. Vide General Circular No.07/2018
dated 6th September 2018]”]

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declaration in Form No. BEN-1 to the reporting company, within thirty days of acquiring
such significant beneficial ownership or any change therein.

Explanation.- Where an individual becomes a significant beneficial owner, or where his

significant beneficial ownership undergoes any change, within ninety days of the
commencement of the Companies (Significant Beneficial Owners) Amendment Rules,
2019, it shall be deemed that such individual became the significant beneficial owner
or any change therein happened on the date of expiry of ninety days from the date of
commencement of said rules, and the period of thirty days for filing will be reckoned
accordingly.

4. Return of significant beneficial owners in shares.-

Upon receipt of declaration under rule 3, the reporting company shall file a return in
Form No. BEN-2 with the Registrar in respect of such declaration, within a period of
thirty days from the date of receipt of such declaration by it, along with the fees as
prescribed in Companies (Registration offices and fees) Rules, 2014.]
[MCA vide General Circular no.8/2019 dated 29 th July 2019 extended that last date for filing
form no. BEN-2 upto 30/9/2019 without payment of additional fees.]

5. Register of significant beneficial owners.-

(1) The company shall maintain a register of significant beneficial owners in Form No.
BEN-3.

(2) The register shall be open for inspection during business hours, at such reasonable
time of not less than two hours, on every working day as the board may decide, by any
member of the company on payment of such fee as may be specified by the company
but not exceeding fifty rupees for each inspection.

6. Notice seeking information about significant beneficial owners.-

A company shall give notice seeking information in accordance with under sub-section
(5) of section 90, in Form No. BEN-4.

646
[7. Application to the Tribunal.-

646
Rules 7 and 8 substitutued by the Companies (SBO) Amendment Rules, 2019 vide notification no.
G.S.R. 100(E) dated 8th February 2019. Prior to substitution, it read as:

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The reporting company shall apply to the Tribunal, -

(i) where any person fails to give the information required by the notice in Form No.
BEN-4, within the time specified therein; or
(ii) where the information given is not satisfactory,
in accordance with sub-section (7) of section 90, for order directing that the shares in
question be subject to restrictions, including –
(a) restrictions on the transfer of interest attached to the shares in question;
(b) suspension of the right to receive dividend or any other distribution in relation to the
shares in question;
(c) suspension of voting rights in relation to the shares in question;
(d) any other restriction on all or any of the rights attached with the shares in question.

8. Non-Applicability.-

These rules shall not be made applicable to the extent the share of the reporting
company is held by,-

(a) the authority constituted under sub-section (5) of section 125 of the Act;

(b) its holding reporting company:

Provided that the details of such holding reporting company shall be reported in
Form No. BEN-2.

(c) the Central Government, State Government or any local Authority;

(d) (i) a reporting company, or

(ii) a body corporate, or
(iii) an entity, controlled by the Central Government or by any State Government or
Governments, or partly by the Central Government and partly by one or more State
Governments;

(e) Securities and Exchange Board of India registered Investment Vehicles such as
mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts
(REITs), Infrastructure Investment Trust (InVITs) regulated by the Securities and

[7. Application to the Tribunal.- The company may apply to the Tribunal in accordance with sub-section
(7) of section 90, for order directing that the shares in question be subject to restrictions, including–

(a) restrictions on the transfer of interest attached to the shares in question;

(b) suspension of the right to receive dividend in relation to the shares in question;
(c) suspension of voting rights in relation to the shares in question;
(d) any other restriction on all or any of the rights attached with the shares in question.

8. Non-Applicability.- These rules are not made applicable to the holding of shares of companies/body
corporates, in case of pooled investment vehicles/investment funds such as Mutual Funds, Alterative
Investment Funds (AIFs), Real Estate Investment Trusts(REITs) and Infrastructure Investment Trusts
(InvITs) regulated under SEBI Act.]

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Exchange Board of India,

(f) Investment Vehicles regulated by Reserve Bank of India, or Insurance Regulatory

and Development Authority of India, or Pension Fund Regulatory and Development
Authority.]

ANNEXURE

[Forms BEN-1, BEN-2, BEN-3 and BEN-4 substitutued by the Companies (SBO)
Amendment Rules, 2019 vide notification no. G.S.R. 100(E) dated 8 th February
2019.]

Form No. BEN-1 Declaration by the beneficial owner who holds or acquires
significant beneficial ownership in shares

Form No. BEN-1

Declaration by the beneficial owner who holds or acquires significant beneficial

ownership in shares
[Pursuant to section 90(1) of the Companies Act, 2013 and rule 2A, 3]

To
Name of the company:
Registered office address:

1. Purpose of filing the form (choose any one)

* For declaration of Significant Beneficial Ownership under Section 90

* For Change in Significant Beneficial Ownership under Section 90

ID of the Significant Beneficial Owner

2. Particulars of the holder of the significant beneficial interest:

Name of the Significant Beneficial Owner

(Given name and last Name)
Address and Email id
Date of Birth/Age
Father’s/ Mother’s/Spouse’s name
Occupation
Nationality
Passport No. (in case of foreign national)

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3A. Nature of indirect holding or exercise of right in the reporting company through member
of the reporting company (where more than one repeat this para of the Form)

(a) Type of Member (Company/ LLP/Any other Body Corporate/HUF/ Partnership

Firm/Discretionary Trust/Charitable trust/Specific Trust/Revocable Trust /Pooled Investment
vehicle (PIV) / Entity controlled by PIV)

(b) Corporate Identity number(CIN) or Limited Liability Partnership Identification

number(LLPIN) or any other registration number allotted by the regulator established under
the Act

(c) Name of the Member

(d) Address Line I Line II City State Country Pin Code

(e) Nature of indirect holding or exercise of right in the reporting company:

By virtue of shares % By virtue of voting rights in shares %

By virtue of rights on distributable dividend or any other distribution %

By virtue of exercise of control (attach copy of agreement)

By virtue of exercise of significant influence (attach copy of agreement)

(f) Status of significant beneficial owner in the member of the reporting company (choose any
one)

Individual in case of company or any other body corporate

Partner in case of partnership firm or LLP

Karta in case of HUF

Trustee in case of a discretionary trust or charitable trust

Beneficiary in case of a specific trust

Author or settlor in case of a revocable trust

General Partner, Investment Manager or CEO in case of pooled investment vehicle or

entity controlled by pooled investment vehicle

(g) In case the member is a partnership firm or LLP, specify whether significant beneficial
owner:

is a partner

holds majority stake in the body corporate partner

holds majority stake in the ultimate holding company of the body corporate partner

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The Companies (Significant Beneficial Owners) Rules, 2014

(h) In case the member is a company or any other body corporate, specify whether significant
beneficial owner holds:

majority stake in such company or body corporate

majority stake in the ultimate holding company of such company or body corporate

(i) Whether Significant Beneficial Owner has any direct holding or right in the reporting
company: Yes / No

If yes, enter details below:

By virtue of shares %

By virtue of voting rights in shares %

By virtue of rights on distributable dividend or any other distribution %

By virtue of exercise of control (attach copy of agreement)

By virtue of exercise of significant influence (attach copy of agreement)

Date: Place:

Signature of the holder of the significant beneficial interest

Attachments:

Form No. BEN-2

[As substitutued by notification No. G.S.R. 466(E) dated 01st July 2019]

Return to the Registrar in respect of declaration under section 90

[Pursuant to section 90(4) of the Companies Act, 2013 and rule 4 and rule 8 of
the Companies (Significant Beneficial Owners) Rules, 2018]

1. (a) *Corporate Identity Number (CIN) of company

2. (a) Name of the company (b) Registered Office Address (c) *email Id

3. * Purpose of filing the form

For declaration of Significant Beneficial Ownership under Section 90: Number of

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The Companies (Significant Beneficial Owners) Rules, 2014

Significant Beneficial Owners for whom the form is being filed

For Change in Significant Beneficial Ownership under Section 90:

Significant Beneficial Owner Number of Members through whom

indirect holding or right in reporting
company is being exercised
SB01
SB02
SB03
SB04
SB05
SB06
SB07
SB08
SB09

SBO1 I. (A) Details of the Member *

Manner in which significant beneficial interest is being held or exercised either indirectly
or together with any direct holding or right (select one or more as may be applicable)

By virtue of shares %

By virtue of voting rights in shares %

By virtue of rights on distributable dividend or any other distribution %

By virtue of exercise of control (attach copy of agreement)

By virtue of exercise of significant influence (attach copy of agreement)

Particulars of the Member (a) Type of Member (b) Corporate Identity number(CIN) or
Foreign Company Registration Number (FCRN) or Limited liability partnership
Identification number(LLPIN) or any other registration number (c) Name of the Member (d)
Address Line I Line II City State Country Pin Code (e) Email ID of the Member (f) Date of
entry of name in register u/s 88

(B) Status of the SBO

(C) Whether individual (SBO) has majority stake in the

* Member of the Reporting Company * Ultimate Holding Company of the member of the
reporting company

Corporate Identity number (CIN) or FCRN or any other registration number

Name of the ultimate holding company

(D) Whether the individual (SBO):

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The Companies (Significant Beneficial Owners) Rules, 2014

* is a Partner of the member

* holds majority stake in the body corporate partner

* holds majority stake in the ultimate holding company of the body corporate partner

Corporate Identity number(CIN) or FCRN or any other registration number

Name of the body corporate partner/ ultimate holding company

(E) Particulars of the Significant Beneficial Owner

ID of the Significant Beneficial Owner

(a) Name First name Last name Middle name

(b) Father’s Name (Even married women must give father’s name) First name Last name
Middle name

(c) Date of birth (DD/MM/YYYY) (d) Nationality (e) Whether a citizen of India O Yes O No

(f) Income Tax PAN (g) Passport Number

(h) Address Line I Line II City State Country Pin Code

(i) Email ID of the Significant Beneficial Owner

(j) Date of acquiring Significant Beneficial Interest (DD/MM/YYYY)

(k) Date of declarations under sub-section (1) of section 90 (DD/MM/YYYY)

(l) Date of receipt of the declaration by the company (DD/MM/YYYY)

(m) Whether Significant Beneficial Owner has any direct holding or right in the reporting
company O Yes O No

If yes, enter details below:

By virtue of shares %

By virtue of voting rights in shares %

By virtue of rights on distributable dividend or any other distribution %

By virtue of exercise of control (attach copy of agreement)

By virtue of exercise of significant influence (attach copy of agreement)

Attachments: 1. *Declaration under Section 90 2. Optional attachments, if any

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The Companies (Significant Beneficial Owners) Rules, 2014

Declaration:

To the best of my knowledge and belief, the information given in this form and attachments
is correct and complete. I have been authorized by board of directors’ resolution dated*
(DD/MM/YYYY) to sign and submit this form.

*To be digitally signed by DSC BOX

*Designation

*Director identification number of the director; or DIN or PAN of the manager or CEO or CFO;
or Membership number of company secretary.

Certificate by Practicing Professional

It is hereby certified that I have gone through the provisions of the Companies Act, 2013 and
Rules thereunder for the subject matter of this form and matters incidental thereto and I have
verified the above particulars (including attachment(s)) from the original records maintained
by the Company which is subject matter of this form and found them to be true, correct and
complete and no information material to this form has been suppressed.

O Chartered Accountant (in whole-time practice) or O Cost Accountant (in whole-time

practice) or O Company Secretary (in whole-time practice) DSC BOX Whether Associate or
Fellow O Associate O Fellow Membership Number Certificate of Practice Number

From No. BEN-3

Register of beneficial owners holding significant beneficial interest

[Pursuant to section 90(2) of the Companies Act, 2013 and rule 5(1)]

Name of the company:

Registered office address:

Sl. No. Name of the Address and E- Date of Birth/ Father’s/

Beneficial mail id Age Mother’s/
Owner Spouse’s name
(1) (2) (3) (4) (5)
Occupation Nationality PAN/UIN Passport No. (in Status
case of foreign
national)
(6) (7) (8) (9) (10)
Date of Date of Date of entry in Date of filing of Any other
declaration cessation Register BEN-2(SRN

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The Companies (Significant Beneficial Owners) Rules, 2014

under section 90 wise) interest, if any

(11)
Instructions, if
any, given by
the member

Form no. BEN-4

[Pursuant to section 90(5) of the Companies Act, 2013 and rule 2A, 6 and rule 7]

[<>] (the “Company”) <> [By post/email]

To: Name and address of significant beneficial owner/any other person

Date:
Subject: Notice under sub-section (5) of Section 90 of the Companies Act, 2013 and rules
made thereunder

The Company has reasonable cause to believe that* :

you are a significant beneficial owner of the company;

have knowledge of the identity of significant beneficial owner/another person

………………..likely to have such knowledge;

being a member hold not less than 10% of the shares/voting rights/rights on dividend
or any other distribution in the company

have been a significant beneficial owner of the company during the three years
immediately preceding the date of this notice, and

in respect of the above significant beneficial ownership, the return prescribed under Section
90 of the Act has not been filed in compliance with the Act.

You are accordingly advised to give the following information within 30 days of the date of this
notice in accordance with the section 90 of the Companies Act, 2013:

1. Name and Address of the Beneficial Owner

2. PAN of the B.O

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The Companies (Significant Beneficial Owners) Rules, 2014

3. Name of the person/entity/trust/body etc in whose name the shares/rights are

registered/held

4. Date of acquiring beneficial interest

5. Documents, terms and conditions or any other particulars regarding the BO ownership

6. Reason for not filing declaration in Form No. BEN-1.

7. Any other information incidental to or relevant or in your possession or knowledge to enable

the company to evaluate this matter.

* A copy of Form No. BEN-1 is attached for compliance.

The abovementioned particulars should be submitted in writing to the registered address of

the company not later than 30 days of the date of this notice failing which the company shall
proceed in the matter without further notice as per the provisions of the Act.

Name & signature

(Person authorized to issue notice)

*Delete whichever is not applicable

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Chapter VII: the Companies

(Management and Administration)
Rules, 2014
[The principal notification was published in the Gazette of India, Part II, Section 3, Sub-section (i) vide
number G.S.R. 260(E) dated 31st March, 2014 and subsequently amended vide notification number
G.S.R. 415(E) dated 23rd June, 2014; notification number G.S.R. 537(E) dated 24th July, 2014;
notification number G.S.R. 207(E) dated 19th March, 2015; notification number G.S.R. 669(E) dated
28th August, 2015; notification number G.S.R. 737(E) dated 24th September, 2015; notification
number G.S.R. 862(E) dated 16th November, 2015; notification number G.S.R. 908(E) dated 23rd
September, 2016; notification number G.S.R. 175(E) dated 16th February, 2018 (by which form nos.
MGT-6 and MGT-15 are modified); and notification number G.S.R. 560 (E) dated 13th June, 2018.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R 260(E).-- In exercise of the powers conferred under sub-section (1) of

section 88, sub-section (4) of section 88, sub-section (1) of section 89, sub-section (2)
section 89, sub-section (6) of section 89, sub-section (1) of section 91, sub-section (2)
of section 92, sub-section (3) of section 92, sub-section (2) of section 92, section 93,
sub-section (1) of section 94, sub-section (4) of section 100, sub-section (2) of section
114, sections 102, 101, 105, 108, sub-section (5) of section 109, sections 112, 113,
110, sub-section (3) of section 186, section 115, sub-section (1) of section 117, sub-
section (1) of section 118, sub-section (2) of section 119, section 120 and sub-section
(1) of section 121, read with sub-sections (1) and (2) of section 469 of the Companies
Act, 2013 (18 of 2013) and in supersession of Companies (Central Government’s)
General Rules and Forms, 1956 or any other relevant rules prescribed under the
Companies Act, 1956 (1 of 1956) on matters covered under these rules, except as
respects things done or omitted to be done before such supersession, the Central
Government hereby makes the following rules, namely: -

1. Short title and commencement.-

(1) These rules may be called the Companies (Management and Administration) Rules,
2014.

(2) They shall come into force on the 1st day of April 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,

(a) “Act” means the Companies Act, 2013 (18 of 2013);

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(b) “Annexure” means the Annexure to these Rules;

(c) “Fees” means the fees as specified in the Companies (Registration offices
and fees) Rules, 2014;

(d) “Form” or an e-form means an form set forth in Annexure to these rules
which shall be used for the matter to which it relates;

(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

(f) “section” means section of the Act;

(2) Words and expressions used in these rules but not defined and defined in the Act
or in Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act and of in the rules.

3. Register of members.-

[Refer section 88]

(1) Every company limited by shares shall, from the date of its registration, maintain a
register of its members in Form No. MGT-1:
587
[Provided that in the case of a company existing on the commencement of
the Act, the particulars as available in the register of members maintained under the
Companies Act, 1956 shall be transferred to the new register of members in Form No.
MGT-1 and in case of additional information, required as per the provisions of the Act
and these rules, is provided by the members, such information as may also be added
in the register as and when provided.]

(2) In the case of a company not having share capital, the register of members shall
contain the following particulars, in respect of each member, namely:-

(a) name of the member; address (registered office address in case the member
is a body corporate); e-mail address; Permanent Account Number or CIN;
Unique Identification Number, if any; Father’s/Mother’s/Spouse’s name;
Occupation; Status; Nationality; in case member is a minor, name of the
guardian and the date of birth of the member; name and address of nominee;

(b) date of becoming member;

587
Substituted by the Companies (Management and Administration) Amendment Rules, 2016 in place of
existing proviso by notification number 908(E) dated 23rd September, 2016. Prior to substitution the
proviso read “Provided that in the case of existing companies, registered under the Companies Act,
1956, particulars shall be compiled within six months from the date of commencement of these rules.”.

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The Companies (Management and Administration) Rules, 2014

(c) date of cessation;

(d) amount of guarantee, if any;

(e) any other interest if any; and

(f) instructions, if any, given by the member with regard to sending of notices
etc.:
588
[Provided that in the case of a company existing on the date of
commencement of the Act, the particulars as available in the register of members in
Form No.MGT-1 and in case additional information, required as per the provisions of
the Act and these rules, is provided by the members, such information may also be
added in the register as and when provided.]

4. Register of debenture holders or any other security holders.-

[Refer section 88]

Every company which issues or allots debentures or any other security shall maintain
a separate register of debenture holders or security holders, as the case may be, for
each type of debentures or other securities in Form No. MGT-2.

5. Maintenance of the Register of members etc. under section 88.-

[Refer section 88]

Every company shall maintain the registers under clauses (a), (b) and (c) of sub-
section (1) of section 88 in the following manner namely:-

(1) The entries in the registers maintained under section 88 shall be made within seven
days after the Board of Directors or its duly constituted committee approves the
allotment or transfer of shares, debentures or any other securities, as the case may
be.

(2) The registers shall be maintained at the registered office of the company unless a
special resolution is passed in a general meeting authorising the keeping of the
register at any other place within the city, town or village in which the registered office
is situated or any other place in India in which more than one-tenth of the total
members entered in the register of members reside.

(3) Consequent upon any forfeiture, buy-back, reduction, sub-division, consolidation

or cancellation of shares, issue of sweat equity shares, transmission of shares, shares

588
Substituted by the Companies (Management and Administration) Amendment Rules, 2016 in place
of existing proviso by notification number 908(E) dated 23rd September, 2016. Prior to substitution the
proviso read “Provided that in the case of existing companies, registered under the Companies Act,
1956, particulars shall be compiled within six months from the date of commencement of these rules.”.

issued under any scheme of arrangements, mergers, reconstitution or employees

Page 1068
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stock option scheme or any of such scheme provided under this Act or by issue of
duplicate or new share certificates or new debenture or other security certificates, entry
shall be made within seven days after approval by the Board or committee, in the
register of members or in the respective registers, as the case may be.
(4) If any change occurs in the status of a member or debenture holder or any other
security holder whether due to death or insolvency or change of name or due to
transfer to Investor Education Protection Fund or due to any other reason, entries
thereof explaining the change shall be made in the respective register.

(5) If any rectification is made in the register maintained under section 88 by the
company pursuant to any order passed by the competent authority under the Act, the
necessary reference of such order shall be indicated in the respective register.

(6) If any order is passed by any judicial or revenue authority or by Security and
Exchange Board of India (SEBI) or competent authority attaching the shares,
debentures or other securities and giving directions for remittance of dividend or
interest, the necessary reference of such order shall be indicated in the respective
register.

(7) In case of companies whose securities are listed on a stock exchange in or outside
India, the particulars of any pledge, charge, lien or hypothecation created by the
promoters in respect of any securities of the company held by the promoter including
the names of pledgee/pawnee and any revocation therein shall be entered in the
register within fifteen days from such an event.

(8) If promoters of any listed company, which has formed a joint venture company with
another company have pledged or hypothecated or created charge or lien in respect
of any security of the listed company in connection with such joint venture company,
the particulars of such pledge, hypothecation, charge and lien shall be entered in the
register members of the listed company within fifteen days from such an event.

6. Index of names to be included in Register.-

[Refer section 88]

(1) Every register maintained under sub-section (1) of section 88 shall include an index
of the names entered in the respective registers and the index shall, in respect of each
folio, contain sufficient indication to enable the entries relating to that folio in the
register to be readily found: Provided that the maintenance of index is not necessary
in case the number of members is less than fifty.

(2) The company shall make the necessary entries in the index simultaneously with
the entry for allotment or transfer of any security in such Register.

7. Foreign register of members, debenture holders, other security holders or beneficial

owners residing outside India.-

[Refer section 88]

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(1) A company which has share capital or which has issued debentures or any other
security may, if so authorised by its articles, keep in any country outside India, a part of
the register of members or as the case may be, of debenture holders or of any other
security holders or of beneficial owners, resident in that country (hereafter in this rule
referred to as the "foreign register").

(2) The company shall, within thirty days from the date of the opening of any foreign
register, file with the Registrar notice of the situation of the office in Form No. MGT-3
along with the fee where such register is kept; and in the event of any change in the
situation of such office or of its discontinuance, shall, within thirty days from the date
of such change or discontinuance, as the case may be, file notice in Form No. MGT-
3 with the Registrar of such change or discontinuance.

(3) A foreign register shall be deemed to be part of the company's register (hereafter
in this rule referred to as the "principal register") of members or of debenture holders
or of any other security holders or beneficial owners, as the case may be.

(4) The foreign register shall be maintained in the same format as the principal register.

(5) A foreign register shall be open to inspection and may be closed, and extracts may
be taken there from and copies thereof may be required, in the same manner, mutatis
mutandis, as is applicable to the principal register, except that the advertisement
before closing the register shall be inserted in at least two newspapers circulating in
the place wherein the foreign register is kept.

(6) If a foreign register is kept by a company in any country outside India, the decision
of the appropriate competent authority in regard to the rectification of the register shall
be binding.

(7) Entries in the foreign register maintained under sub-section (4) of section 88 shall
be made simultaneously after the Board of Directors or its duly constituted committee
approves the allotment or transfer of shares, debentures or any other securities, as
the case may be.

(8) The company shall—

(a) transmit to its registered office in India a copy of every entry in any foreign
register within fifteen days after the entry is made; and
(b) keep at such office a duplicate register of every foreign register duly entered
up from time to time.

(9) Every such duplicate register shall, for all the purposes of this Act, be deemed to
be part of the principal register.

(10) Subject to the provisions of section 88 and the rules made thereunder, with respect
to duplicate registers, the shares or as the case may be, debentures or any other
security, registered in any foreign register shall be distinguished from the shares or as
case may be, debentures or any other security, registered in the principal register and
in every other foreign register; and no transaction with respect to any shares or as the
case may be, debentures or any other security, registered in a foreign register shall,
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during the continuance of that registration, be registered in any other register.

(11) The company may discontinue the keeping of any foreign register; and thereupon
all entries in that register shall be transferred to some other foreign register kept by the
company outside India or to the principal register.

8. Authentication.-

[Refer section 88]

(1) The entries in the registers maintained under section 88 and index included therein
shall be authenticated by the company secretary of the company or by any other person
authorised by the Board for the purpose, and the date of the board resolution authorising
the same shall be mentioned.

(2) The entries in the foreign register shall be authenticated by the company secretary
of the company or person authorised by the Board by appending his signature to each
entry.

9. Declaration in respect of beneficial interest in any shares.-

[Refer section 89]

(1) A person whose name is entered in the register of members of a company as the
holder of shares in that company but who does not hold the beneficial interest in such
shares (hereinafter referred to as “the registered owner”), shall file with the company,
a declaration to that effect in Form No. MGT.4 589[*], within a period of thirty days from
the date on which his name is entered in the register of members of such company:
Provided that where any change occurs in the beneficial interest in such
shares, the registered owner shall, within a period of thirty days from the date of such
change, make a declaration of such change to the company in Form No. MGT.4 590[*].

(2) Every person holding and exempted from furnishing declaration or acquiring a
beneficial interest in shares of a company not registered in his name (hereinafter referred
to as “the beneficial owner”) shall file with the company, a declaration disclosing such

Words ‘in duplicate’ omitted by the Companies (Management and Administration) Amendment
589

Rules, 2016 in place of existing proviso by notification number 908(E) dated 23rd September, 2016.

Words ‘in duplicate’ omitted by the Companies (Management and Administration) Amendment
590

Rules, 2016 in place of existing proviso by notification number 908(E) dated 23rd September, 2016.

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interest in Form No. MGT-5 591 [*], within thirty days after acquiring such beneficial
interest in the shares of the company:
Provided that where any change occurs in the beneficial interest in such
shares, the beneficial owner shall, within a period of thirty days from the date of such
change, make a declaration of such change to the company in Form No. MGT-5 592[*].

(3) Where any declaration under section 89 is received by the company, the company
shall make a note of such declaration in the register of members and shall file, within
a period of thirty days from the date of receipt of declaration by it, a return in Form No.
MGT-6 with the Registrar in respect of such declaration with fee.
[Provided that nothing contained in this rule shall apply in relation to a trust which
is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may
be approved by the Securities and Exchange Board of India].
[Above proviso to Rule 9(3), inserted vide notification number G.S.R. 537(E) dated 24th July 2014]
[Comments: Companies are exempted from filing beneficial ownership details with ROC in respect of
a trust which is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may be
approved by the SEBI. However, such trust need to continue to declare to the Company about beneficial
ownership and change therein. Also ostensible owners (now called 'registered owner' in the Rules) are
also required to continue to disclose to the company.]

10. Closure of register of members or debenture holders or other security holders.-

[Refer section 91]

(1) A company closing the register of members or the register of debenture holders or
the register of other security holders shall give at least seven days previous notice and
in such manner, as may be specified by Securities and Exchange Board of India, if
such company is a listed company or intends to get its securities listed, by
advertisement at least once in a vernacular newspaper in the principal vernacular
language of the district and having a wide circulation in the place where the registered
office of the company is situated, and at least once in English language in an English
newspaper circulating in that district and having wide circulation in the place where the
registered office of the company is situated and publish the notice on the website as
may be notified by the Central Government and on the website, if any, of the Company.

(2) The provisions contained in sub-rule (1) shall not be applicable to a private company
provided that the notice has been served on all members of the private company not
less than seven days prior to closure of the register of members or debenture holders
or other security holders.

Words ‘in duplicate’ omitted by the Companies (Management and Administration) Amendment
591

Rules, 2016 in place of existing proviso by notification number 908(E) dated 23rd September, 2016.

Words ‘in duplicate’ omitted by the Companies (Management and Administration) Amendment
592

Rules, 2016 in place of existing proviso by notification number 908(E) dated 23rd September, 2016.

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11. Annual Return-.

[Refer section 92]

(1) Every company shall prepare its annual return in Form No. MGT-7.
[It is, clarified that Form MGT-7 shall not apply to annual returns in respect of companies whose financial
year ended on or before 1st April, 2014 and for annual returns pertaining to earlier years. Refer Circular
22/2014 dated 25 June 2014.]

(2) The annual return, filed by a listed company or a company having paid-up share
capital of ten crore rupees or more or turnover of fifty crore rupees or more, shall be
certified by a Company Secretary in practice and the certificate shall be in Form No.
MGT-8.
[It is clarified that for filing financial statement in form AOC-4 and AOC-4 XBRL, as may be applicable, time for
filing the same with ROC without payment of additional fees has been extended till 30 September 2015 and AOC-
4 CFS for consolidated financial statement till 31 October 2015 vide general circular 10/2015 dated 13th July, 2015
and further extended till 30 November 2015 vide general circular
14/2015 and then upto 30 December 2015 vide general circular 15/2015 and only for State of Tamil
Nadu and UT of Puducherry till 30 January 2016 vide general circular 16/2015.]
[MCA relaxed the additional fees payable to companies having registered office in the State of Kerala,
due to heavy rains and floods, on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and e- Form MGT-7 upto
31.12.2018, wherever additional fee is applicable – vide General Circular no. 09/2018 dated 5th October
2018.]
[Due to various difficulties faced by Stakeholders, MCA relaxed the additional fees payable on e-forms
AOC-4, AOC (CFS) AOC-4 XBRL and e- Form MGT-7 upto 31.12.2018 for the financial year ended
31.03.2018, wherever additional fee is applicable – vide General Circular no. 10/2018 dated 29th
October 2018.]

12. Extract of annual return.-

[Refer section 92]

(1) The extract of the annual return to be attached with the Board’s Report shall be in
Form No. MGT-9.

(2) A copy of the annual return shall be filed with the Registrar with such fee as may
be specified for the purpose.

593
[13. Omitted]

593
Omitted rule 13 vide notification number G.S.R. 560(E) dated 13th June 2018. Prior to omission,
it read as “Return of changes in shareholding position of promoters and top ten shareholders.- Every
listed company shall file with the Registrar, a return in Form No. MGT-10, with respect to changes in
the shareholding positions of promoters and top ten shareholders of the company, in each case,
representing increase or decrease by two per cent or more of the paid-up share capital of the company,
within fifteen days of such change.” And was substituted by the Companies (Management and

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Administration) Amendment Rules, 2016 in place of existing proviso by notification number 908(E) dated
23rd September, 2016. Prior to substitution it read “Every listed company shall file with the

14. Inspection of registers, returns etc.-

[Refer section 94]

(1) The registers and indices maintained pursuant to section 88 and copies of returns
prepared pursuant to section 92, shall be open for inspection during business hours,
at such reasonable time on every working day as the board may decide, by any
member, debenture holder, other security holder or beneficial owner without payment
of fee and by any other person on payment of such fee as may be specified in the
articles of association of the company but not exceeding fifty rupees for each
inspection.

Explanation.- For the purposes of this sub-rule, reasonable time of not less than two
hours on every working day shall be considered by the company.

(2) Any such member, debenture holder, security holder or beneficial owner or any other
person may require a copy of any such register or entries therein or return on payment
of such fee as may be specified in the articles of association of the company but not
exceeding ten rupees for each page. Such copy or entries or return shall be supplied
within seven days of deposit of such fee.
[It is clarified that until the requisite fee is specified by companies, inspections could be allowed without
levy of fee. Refer Circular 22/2014 dated 25 June 2014]

15. Preservation of register of members etc. and annual return.

[Refer section 94; section 88, section 92]

(1) The register of members along with the index shall be preserved permanently and
shall be kept in the custody of the company secretary of the company or any other
person authorized by the Board for such purpose; and

(2) The register of debenture holders or any other security holders along with the index
shall be preserved for a period of eight years from the date of redemption of debentures
or securities, as the case may be, and shall be kept in the custody of the company

Registrar, a return in Form No. MGT-10 along with the fee with respect to changes relating to either
increase or decrease of two percent or more in the shareholding position of promoters and top ten
shareholders of the company in each case, [*], within fifteen days of such change. [**]”.
[* words ‘either value or volume of the shares’ omitted vide notification number G.S.R. 537(E) dated
24th July 2014. Comments: This is a big relief to companies as otherwise, companies were required
to track change in value, which changes on stock markets frequently.]

[** Explanation to Rule 13, omitted vide notification number G.S.R. 537(E) dated 24th July 2014. Prior
to omission, it read as “Explanation.- For the purpose of this sub-rule, the expression “change” means
increase or decrease by two percent or more in the shareholding of each of the promoters and each of
the top ten shareholders of the company.”]

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The Companies (Management and Administration) Rules, 2014

secretary of the company or any other person authorized by the Board for such
purpose.

(3) Copies of all annual returns prepared under section 92 and copies of all certificates
and documents required to be annexed thereto shall be preserved for a period of eight
years from the date of filing with the Registrar.
(4) The foreign register of members shall be preserved permanently, unless it is
discontinued and all the entries are transferred to any other foreign register or to the
principal register. Foreign register of debenture holders or any other security holders
shall be preserved for a period of eight years from the date of redemption of such
debentures or securities.

(5) The foreign register shall be kept in the custody of the company secretary or person
authorised by the Board.
594
[(6) omitted.]

16. Copies of the registers and annual return.-

[Refer section 94; section 88, section 92]

Copies of the registers maintained under section 88 or entries therein and annual
return filed under section 92 shall be furnished to any member, debenture-holder, other
security holder or beneficial owner of the company or any other person on payment of
such fee as may be specified in the Articles of Association of the company but not
exceeding rupees ten for each page and such copy shall be supplied by the company
within a period of seven days from the date of deposit of fee to the company.
[It is clarified that until the requisite fee is specified by companies, inspections could be allowed without
levy of fee. Refer Circular 22/2014 dated 25 June 2014]

17. Calling of Extraordinary general meeting by requistionists.-

[Refer section 100]

(1) The members may requisition convening of an extraordinary general meeting in
accordance with sub-section (4) of section 100, by providing such requisition in writing
or through electronic mode at least clear twenty-one days prior to the proposed date
of such extraordinary general meeting.

(2) The notice shall specify the place, date, day and hour of the meeting and shall
contain the business to be transacted at the meeting.-

594
Omitted sub-rule (6) of rule 15 vide notification number G.S.R. 560(E) dated 13th June 2018. Prior to
omission, it read as “A copy of the proposed special resolution in advance to be filed with the registrar as
required in accordance with first proviso of sub-section (1) of section 94, shall be filed with the Registrar,
at least one day before the date of general meeting of the company in Form No. MGT-14.”.

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Explanation.- For the purposes of this sub-rule, it is here by clarified that requistionists
should convene meeting at Registered office or in the same city or town where
Registered office is situated and such meeting should be convened 595[on any day
except national holiday].
(3) If the resolution is to be proposed as a special resolution, the notice shall be given
as required by sub-section (2) of section 114.

(4) The notice shall be signed by all the requistionists or by a requistionists duly
authorised in writing by all other requistionists on their behalf or by sending an
electronic request attaching therewith a scanned copy of such duly signed requisition.

(5) No explanatory statement as required under section 102 need be annexed to the
notice of an extraordinary general meeting convened by the requistionists and the
requistionists may disclose the reasons for the resolution(s) which they propose to
move at the meeting.

(6) The notice of the meeting shall be given to those members whose names appear
in the Register of members of the company within three days on which the
requistionists deposit with the Company a valid requisition for calling an extraordinary
general meeting.

(7) Where the meeting is not convened, the requistionists shall have a right to receive
list of members together with their registered address and number of shares held and
the company concerned is bound to give a list of members together with their registered
address made as on twenty first day from the date of receipt of valid requisition together
with such changes, if any, before the expiry of the forty-five days from the date of receipt
of a valid requisition.

(8) The notice of the meeting shall be given by speed post or registered post or through
electronic mode. Any accidental omission to give notice to, or the non-receipt of such
notice by, any member shall not invalidate the proceedings of the meeting.

18. Notice of the meeting.-

[Refer section 101]

(1) A company may give notice through electronic mode.
Explanation: For the purpose of this rule, the expression “electronic mode” shall mean
any communication sent by a company through its authorized and secured computer
programme which is capable of producing confirmation and keeping record of such
communication addressed to the person entitled to receive such communication at the
last electronic mail address provided by the member.

595
Substituted by the Companies (Management and Administration) Amendment Rules, 2016 in place
of existing proviso by notification number 908(E) dated 23rd September, 2016. Prior to substitution words
used were ‘on working day’

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(2) A notice may be sent through e-mail as a text or as an attachment to e-mail or as

a notification providing electronic link or Uniform Resource Locator for accessing such
notice.

(3) (i) The e-mail shall be addressed to the person entitled to receive such e-mail as
per the records of the company or as provided by the depository:
Provided that the company shall provide an advance opportunity atleast once
in a financial year, to the member to register his e-mail address and changes therein
and such request may be made by only those members who have not got their email
id recorded or to update a fresh email id and not from the members whose e-mail ids
are already registered.
(ii) The subject line in e-mail shall state the name of the company, notice of the type
of meeting, place and the date on which the meeting is scheduled.
(iii) If notice is sent in the form of a non-editable attachment to e-mail, such
attachment shall be in the Portable Document Format or in a non-editable format
together with a 'link or instructions' for recipient for downloading relevant version of
the software.
(iv) When notice or notifications of availability of notice are sent by e-mail, the
company should ensure that it uses a system which produces confirmation of the
total number of recipients e-mailed and a record of each recipient to whom the notice
has been sent and copy of such record and any notices of any failed transmissions
and subsequent re-sending shall be retained by or on behalf of the company as “proof
of sending”.
(v) The company’s obligation shall be satisfied when it transmits the e-mail and the
company shall not be held responsible for a failure in transmission beyond its control:
(vi) If a member entitled to receive notice fails to provide or update relevant e-mail
address to the company, or to the depository participant as the case may be, the
company shall not be in default for not delivering notice via e-mail.
(vii) The company may send e-mail through in-house facility or its registrar and
transfer agent or authorise any third party agency providing bulk e-mail facility.
(viii) The notice made available on the electronic link or Uniform Resource Locator
has to be readable, and the recipient should be able to obtain and retain copies and
the company shall give the complete Uniform Resource Locator or address of the
website and full details of how to access the document or information.
(ix) The notice of the general meeting of the company shall be simultaneously placed
on the website of the company if any and on the website as may be notified by the
Central Government.
596
[Explanation.- Omitted.]

19. Proxies.-

[Refer section 105]

596
Omitted the explanation after sub-rule (3) of rule 18 vide notification number G.S.R. 560(E) dated
13th June 2018. Prior to omission, it read as “Explanation.- For the purpose of this rule, it is hereby
declared that the extra ordinary general meeting shall be held at a place within India.”.

(1) A member of a company registered under section 8 shall not be entitled to appoint
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The Companies (Management and Administration) Rules, 2014

any other person as his proxy unless such other person is also a member of such
company.

(2) A person can act as proxy on behalf of members not exceeding fifty and holding in
the aggregate not more than ten percent of the total share capital of the company
carrying voting rights:
Provided that a member holding more than ten percent of the total share capital
of the Company carrying voting rights may appoint a single person as proxy and such
person shall not act as proxy for any other person or shareholder.

(3) The appointment of proxy shall be in the Form No. MGT-11.

20. Voting through electronic means.-

[Refer section 108]

[It is clarified by MCA that:-
1. Section 108 and rule 20 are not mandatory till 31st December 2014.
2. MCA has also clarified that a person who has voted through e-voting mechanism in accordance with
rule 20 shall not be debarred from participation in the general meeting physically. But he shall not be
able to vote in the meeting again, and his earlier vote (cast through e-means) shall be treated as final.
3. voting by show of hands under section 107 would not be allowable in cases where rule 20 of
Companies (Management and Administration) Rules, 2014 is applicable.
4. Where a shareholder who is not able to participate in the general meeting personally and who is also
not exercising voting through e-means then such a person shall not have the option to vote through
postal ballot.
Refer Circular 20/2014 dated 17 June 2014.]
[Rule 20 is substituted by Notification number G.S.R. 207(E) dated 19 March 2015 with the following
new Rule 20:
"20. Voting though electronic means.- (1) The provisions of this rule shall apply in
respect of the general meetings for which notices are issued on or after the date of
commencement of this rule.
597
[(2) Every company which has listed its equity shares on at recognised stock
exchange and every company having not less than one thousand members shall
provide to its members facility to exercise their right to vote on resolutions proposed
to be considered at general meeting by electronic means:
Provided that at Nidhi, or an enterprise or institutional investor referred to in
Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of

597
Substituted by the Companies (Management and Administration) Amendment Rules, 2016 in place
of existing proviso by notification number 908(E) dated 23rd September, 2016. Prior to substitution it
read as “(2) Every company other than a company referred to in Chapter XB or Chapter XC of the
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2009 having its equity shares listed on a recognised stock exchange or a company having not less than
one thousand members, shall provide to its members facility to exercise their right to vote on resolutions
proposed to be considered at general meetings by electronic means.”.
Capital and Disclosure Requirements) Regulations, 2009 is not required to provide the
facility to vote by electronic means:

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Explanation.- For the purpose of this sub-rule, “Nidhi” means a company which has
been incorporated as at Nidhi with the object of cultivating the habit of thrift and savings
amongst its members, receiving its deposits from and lending, to its members only, for
their mutual benefit, and which complies with such rules as are prescribed by the
Central Government for regulation of such class of companies.]

Explanation.- For the purposes of this rule, the expression-

(i) "agency" means the National Securities Depository Limited, the Central Depository
Services (India) Limited or any other entity approved by the Ministry of Corporate
Affairs subject to the condition that the National Securities Depository Limited, the
Central Depository Services (India) Limited or such other entity has obtained a
certificate from the Standardisation Testing and Quality Certification Directorate,
Department of Information Technology, Ministry of Communications and Information
Technology, Government of India including with regard to compliance with parameters
specified under Explanation (vi);

(ii) "cut-off date" means a date not earlier than seven days before the date of general
meeting for determining the eligibility to vote by electronic means or in the general
meeting;

(iii) "cyber security" means protecting information, equipment, devices, computer,

computer resource, communication device and information stored therein from
unauthorised access, use, disclosures, disruption, modification or destruction;

(iv) "electronic voting system" means a secured system based process of display of
electronic ballots, recording of votes of the members and the number of votes polled
in favour or against, in such a manner that the entire voting exercised by way of
electronic means gets registered and counted in an electronic registry in a centralised
server with adequate cyber security;

(v) "remote e-voting" means the facility of casting votes by a member using an
electronic voting system from a place other than venue of a general meeting;

(vi) "secured system" means computer hardware, software, and procedure that —
(a) are reasonably secure from unauthorised access and misuse;
(b) provide a reasonable level of reliability and correct operation;
(c) are reasonably suited to performing the intended functions; and
(d) adhere to generally accepted security procedures;

(vii) "voting by electronic means" includes "remote e-voting" and voting at the general
meeting through an electronic voting system which may be the same as used for
remote e-voting.

(3) A member may exercise his right to vote through voting by electronic means on
resolutions referred to in sub-rule (2) and the company shall pass such resolutions in
accordance with the provisions of this rule.

(4) A company which provides the facility to its members to exercise voting by
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The Companies (Management and Administration) Rules, 2014

electronic means shall comply with the following procedure, namely:-

(i) the notice of the meeting shall be sent to all the members, directors and
auditors of the company either -
(a) by registered post or speed post ; or
(b) through electronic means, namely, registered e-mail ID of the
recipient; or
(c) by courier service;

(ii) the notice shall also be placed on the website, if any, of the company and of
the agency forthwith after it is sent to the members;

(iii) the notice of the meeting shall clearly state -

(A) that the company is providing facility for voting by electronic
means and the business may be transacted through such voting;
(B) that the facility for voting, either through electronic voting system
or ballot or polling paper shall also be made available at the meeting and
members attending the meeting who have not already cast their vote by
remote e-voting shall be able to exercise their right at the meeting;
(C) that the members who have cast their vote by remote e-voting
prior to the meeting may also attend the meeting but shall not be entitled
to cast their vote again;

(iv) the notice shall -

(A) indicate the process and manner for voting by electronic means ;
(B) indicate the time schedule including the time period during which
the votes may be cast by remote e-voting;
(C) provide the details about the login ID;
(D) specify the process and manner for generating or receiving the
password and for casting of vote in a secure manner.

(v) the company shall cause a public notice by way of an advertisement to be

published, immediately on completion of despatch of notices for the meeting
under clause (i) of sub-rule (4) but at least twenty-one days before the date of
general meeting, at least once in a vernacular newspaper in the principal
vernacular language of the district in which the registered office of the company
is situated, and having a wide circulation in that district, and at least once in
English language in an English newspaper having country-wide circulation, and
specifying in the said advertisement, inter alia, the following matters, namely:-
(a) statement that the business may be transacted through voting by
electronic means ;
(b) the date and time of commencement of remote e-voting;
(c) the date and time of end of remote e-voting;
(d) cut-off date;
(e) the manner in which persons who have acquired shares and
become members of the company after the despatch of notice may
obtain the login ID and password;
(f) the statement that -
(A) remote e-voting shall not be allowed beyond the said date
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and time;
(B) the manner in which the company shall provide for voting
by members present at the meeting; and
(C) a member may participate in the general meeting even
after exercising his right to vote through remote e-voting but shall
not be allowed to vote again in the meeting; and
(D) a person whose name is recorded in the register of
members or in the register of beneficial owners maintained by the
depositories as on the cut-off date only shall be entitled to avail
the facility of remote e-voting as well as voting in the general
meeting;
(g) website address of the company, if any, and of the agency where
notice of the meeting is
displayed; and
(h) name, designation, address, email id and phone number of the
person responsible to address the grievances connected with facility for
voting by electronic means:

Provided that the public notice shall be placed on the website of

the company, if any, and of the agency;

(vi) the facility for remote e-voting shall remain open for not less than three
days and shall close at 5.00 p.m. on the date preceding the date of the general
meeting;

(vii) during the period when facility for remote e-voting is provided, the
members of the company, holding shares either in physical form or in
dematerialised form, as on the cut-off date, may opt for remote e-voting:

Provided that once the vote on a resolution is cast by the member, he

shall not be allowed to change it subsequently or cast the vote again:

Provided further that a member may participate in the general meeting

even after exercising his right to vote through remote e-voting but shall not be
allowed to vote again;

(viii) at the end of the remote e-voting period, the facility shall forthwith be
blocked:

Provided that if a company opts to provide the same electronic voting

system as used during remote e-voting during the general meeting, the said
facility shall be in operation till all the resolutions are considered and voted upo in
the meeting and may be used for voting only by the members attending the
meeting and who have not exercised their right to vote through remote e-voting.

(ix) the Board of Directors shall appoint one or more scrutiniser, who may be
Chartered Accountant in practice, Cost Accountant in practice, or Company
Secretary in practice or an Advocate, or any other person who is not in
employment of the company and is a person of repute who, in the opinion of
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the Board can scrutinise the voting and remote e-voting process in a fair and
transparent manner:

Provided that the scrutiniser so appointed may take assistance of a person

who is not in employment of the company and who is well-versed with the
electronic voting system;

(x) the scrutiniser shall be willing to be appointed and be available for the
purpose of ascertaining the requisite majority;

(xi) the Chairman shall, at the general meeting, at the end of discussion on
the resolutions on which voting is to be held, allow voting, as provided in clauses
(a) to (h) of sub-rule (1) of rule 21, as applicable, with the assistance of
scrutiniser, by use of ballot or polling paper or by using an electronic voting
system for all those members who are present at the general meeting but have
not cast their votes by availing the remote e-voting facility.

(xii) the scrutiniser shall, immediately after the conclusion of voting at the
general meeting, first count the votes cast at the meeting, thereafter unblock
the votes cast through remote e-voting in the presence of at least two witnesses
not in the employment of the company and make, not later than three days of
conclusion of the meeting, a consolidated scrutiniser's report of the total votes
cast in favour or against, if any, to the Chairman or a person authorised by him
in writing who shall countersign the same:

Provided that the Chairman or a person authorised by him in writing shall

declare the result of the voting forthwith;

Explanation.- It is hereby clarified that the manner in which members have cast
their votes, that is, affirming or negating the resolution, shall remain secret and
not available to the Chairman, Scrutiniser or any other person till the votes are
cast in the meeting.

(xiii) For the purpose of ensuring that members who have cast their votes
through remote e-voting do not vote again at the general meeting, the
scrutiniser shall have access, after the closure of period for remote e-voting and
before the start of general meeting, to details relating to members, such as their
names, folios, number of shares held and such other information that the
scrutiniser may require, who have cast votes through remote e-voting but not
the manner in which they have cast their votes:

(xiv) the scrutiniser shall maintain a register either manually or electronically

to record the assent or dissent received, mentioning the particulars of name,
address, folio number or client ID of the members, number of shares held by
them, nominal value of such shares and whether the shares have differential
voting rights;

(xv) the register and all other papers relating to voting by electronic means
shall remain in the safe custody of the scrutiniser until the Chairman considers,
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approves and signs the minutes and thereafter, the scrutiniser shall hand over
the register and other related papers to the company.

(xvi) the results declared along with the report of the scrutiniser shall be
placed on the website of the company, if any, and on the website of the agency
immediately after the result is declared by the Chairman :
Provided that in case of companies whose equity shares are listed on a
recognised stock exchange, the company shall, simultaneously, forward the
results to the concerned stock exchange or exchanges where its equity shares
are listed and such stock exchange or exchanges shall place the results on its
or their website.

(xvii) subject to receipt of requisite number of votes, the resolution shall be

deemed to be passed on the date of the relevant general meeting.

Explanation.- For the purposes of this clause, the requisite number of votes
shall be the votes required to pass the resolution as the 'ordinary resolution' or
the 'special resolution', as the case may be, under section 114 of the Act.

(xviii) a resolution proposed to be considered through voting by electronic

means shall not be withdrawn."]
[Rule 20 is substituted by Notification number G.S.R. 207(E) dated 19 March 2015.
Prior to substitution it (old Rule 20) read as follows:

(1) Every listed company or a company having not less than one thousand shareholders, shall
provide to its members facility to exercise their right to vote at general meetings by electronic
means.
[Provided that the Company may provide the facility referred to in this sub-rule on or before
the 1st day of January 2015.]

[Proviso is inserted by notification G.S.R. 415 (E) dated 23 June, 2014.]

[It may be noted that, for listed companies, clause 35B of listing agreement provides that issuer
shall provide e-voting facility to its shareholders, in respect of all shareholders' resolutions, to
be passed at General Meetings or through postal ballot. Such e-voting facility shall be kept
open for such period specified under the Companies (Management and Administration) Rules,
2014 for shareholders to send their assent or dissent. Further, issuer shall continue to enable
those shareholders, who do not have access to e-voting facility, to send their assent or dissent
in writing on a postal ballot as per the provisions of the Companies (Management and
Administration) Rules, 2014 or amendments made thereto.]
(2) A member may exercise his right to vote at any general meeting by electronic means and company may
pass any resolution by electronic voting system in accordance with the provisions of this rule.
Explanation.- For the purposes of this rule.-
(i) the expressions “voting by electronic means” or “electronic voting system” means a ‘secured system’
based process of display of electronic ballots, recording of votes of the members and the number of votes
polled in favour or against, such that the entire voting exercised by way of electronic means gets registered
and counted in an electronic registry in a centralized server with adequate ‘cyber security’;
(ii) the expression “secured system” means computer hardware, software, and procedure that –
(a) are reasonably secure from unauthorized access and misuse;
(b) provide a reasonable level of reliability and correct operation;
(c) are reasonably suited to performing the intended functions; and
(d) adhere to generally accepted security procedures.

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(iii) the expression “Cyber security” means protecting information, equipment, devices, computer, computer
resource, communication device and information stored therein from unauthorised access, use, disclosures,
disruption, modification or destruction.

(3) A company [which provides] the facility to its members to exercise their votes at any general meeting
by electronic voting system shall follow the following procedure, namely;
[The words "which opts to provide" are substituted with the words "which provides" by notification G.S.R.
415 (E) dated 23 June, 2014.]
(i) the notices of the meeting shall be sent to all the members, auditors of the company, or directors either
–
(a) by registered post or speed post ; or
(b) through electronic means like registered e-mail id;
(c) through courier service;
(ii) the notice shall also be placed on the website of the company, if any and of the agency forthwith after it
is sent to the members;
(iii) the notice of the meeting shall clearly mention that the business may be transacted through electronic
voting system and the company is providing facility for voting by electronic means;
(iv) the notice shall clearly indicate the process and manner for voting by electronic means and the time
schedule including the time period during which the votes may be cast and shall also provide the login ID
and create a facility for generating password and for keeping security and casting of vote in a secure
manner;
(v) the company shall cause an advertisement to be published, not less than five days before the date of
beginning of the voting period, at least once in a vernacular newspaper in the principal vernacular language
of the district in which the registered office of the company is situated, and having a wide circulation in that
district, and at least once in English language in an English newspaper having a wide circulation in that
district, about having sent the notice of the meeting and specifying therein, inter alia, the following matters,
namely:-
(a) statement that the business may be transacted by electronic voting;
(b) the date of completion of sending of notices;
(c) the date and time of commencement of voting through electronic means;
(d) the date and time of end of voting through electronic means;
(e) the statement that voting shall not be allowed beyond the said date and time;
(f) website address of the company and agency, if any, where notice of the meeting is displayed;
and
(g) contact details of the person responsible to address the grievances connected with the electronic
voting;
(vi) the e-voting shall remain open for not less than one day and not more than three days: Provided that in
all such cases, such voting period shall be completed three days prior to the date of the general meeting;
(vii) during the e-voting period, shareholders of the company, holding shares either in physical form or in
dematerialized form, as on the record date, may cast their vote electronically: Provided that once the vote
on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.
(viii) at the end of the voting period, the portal where votes are cast shall forthwith be blocked.
(ix) the Board of directors shall appoint one scrutinizer, who may be chartered Accountant in practice, Cost
Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the
company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in
a fair and transparent manner: Provided that the scrutinizer so appointed may take assistance of a person
who is not in employment of the company and who is well-versed with the e-voting system;

[MCA has clarified that rule 20(3) is being amended to align it with rule 20(1). Regarding voluntary
application of rule 20, it is clarified that in case a company not mandated under rule 20(1) opts or decided
to give its shareholders the e-voting facility, in such a case, the whole of procedure specified in rule 20 shall
be applicable to such a company. This is necessary so that any piece-meal application does not prejudice
the interest of shareholders. Refer Circular 20/2014 dated 17 June 2014.]

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

Chapter VIII: IEPF (Appointment of

Chairperson and Members …) Rules,
2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 13th January, 2016

G.S.R.26(E).--In exercise of the powers conferred by sub-sections (5), (6) and (7)
of section 125 read with section 469 of the Companies Act, 2013 (18 of 2013), the
Central Government hereby makes the following rules, namely:-

1. Short title, extent and commencement.--

(1) These rules may be called the Investor Education and Protection Fund
Authority (Appointment of Chairperson and Members, holding of meetings
and provision for offices and officers) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official
Gazette.

2. Definitions.-
(1) In these rules, unless the context otherwise requires,-

(a) "Act" means the Companies Act. 2013;

(b) "Authority" means the Investor Education and Protection Fund

Authority constituted under subsection (5) of section 125 of the Act;

(c) "Chairperson" means the chairperson of the authority appointed

under rule (5) of these rules;

(d) "Company" means company as defined in sub-section (20) of

section 2 of the Act and includes 'corresponding new bank' as defined
in sub-section (d) of section 2 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 (5 of 1970) and clause (b) of
section 2 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980);

(e) "Fund" means the Investor Education and Protection Fund (IEPF)
established under section 125 of the Act;

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

(f) "Investor" means any person, who has committed money in shares,
or debentures, bond or deposits under a scheme or plan of a company
registered under the Act;

(g) "Member" means members of the Authority appointed under sub-

section (6) of section 125 of the Act; and

(h) "Section" means the section of the Act.

(2) Words and expressions used in these rules and not defined herein but
defined in the Act or in the Companies (Specification of Definitions Details)
Rules, 2014, shall have the same meanings respectively assigned to them in
the Act or in the said rules.

3. Establishment of the Authority.-

The Authority shall be established on such date as may be notified by the Central
Government

3A.
647
The Authority shall be a body corporate by the name aforesaid having perpetual
succession and a common seal with power to acquire, hold and dispose of property, both
movable and immovable, and to contract and shall, by the said name, sue or be sued.

4. Composition of the Authority.-

(1) The Authority shall consist of the following, namely:-

(a) Chairperson

(b) six members

(c) Chief Executive Officer

(2) The Chief Executive Officer shall be the convenor of the Authority.

5. Chairperson of the Authority.-

The Secretary, Ministry of Corporate Affairs shall be the ex-officio
Chairperson of the Authority.

647
Rule 3A inserted by notificaiton nuber G.S.R. 853(E) dated 5th September 2016.

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

6. Chief Executive Officer of the Authority.-

The Central Government shall appoint a person to be the Chief Executive
Officer of the Authority.

7. Members of the Authority.-

The Central Government may appoint the following as the members of the
Authority, namely:-

(i) a person not below the rank of Executive Director to be nominated

by the Reserve Bank of India as ex-officio member;

(ii) a person not below the rank of Executive Director to be nominated

by the Securities and Exchange Board of India as ex-officio member;

(iii) four persons having special knowledge and experience of not less
than fifteen years, in finance, management, accountancy or law with
one person from each discipline and such person shall have special
knowledge, or professional experience, which shall in the opinion of
the Central Government shall be useful to the Authority.

8. The term of office of members of the Authority.-

(1) The members of the Authority appointed under clause (iii) of rule 7 shall
hold office for a period of three years and shall be eligible for reappointment;

Provided that no member shall hold office for more than three terms.

Provided further that a member shall be eligible for reappointment

after expiration of cooling off period of three years after his term.

(2) Notwithstanding anything contained in sub-rule (1), the Central

Government shall have the right to terminate the services of a member
appointed under clause (iii) of rule 7, at any time before the expiry of the
period specified under sub-rule (1), by giving him notice of not less than three
months in writing for reasons mentioned in sub-rule (4), and a member shall
also have the right to relinquish his office, at any time before the expiry of the
period specified under sub-rule (1), by giving to the Central Government
notice of not less than three months in writing.

(3) The members appointed under clause (iii) of rule 7 shall hold office for a
period of three years or till attaining the age of 65 years whichever is earlier.

(4) The Central Government shall remove a member from office if he-

(a) is, or at any time has been, adjudicated as insolvent;

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

(b) is of unsound mind and stands so declared by a competent court;

(c) has been convicted of an offence which, in the opinion of the

Central Government, involves a moral turpitude;

(d) has, in the opinion of the Central Government, so abused his

position as to render his continuation in office detrimental to the public
interest.

Provided that no member shall be removed under this sub-rule

unless he has been given a reasonable opportunity of being
heard in the matter.

9. The number of officers and employees of the Authority.-

The Authority shall have such number of officers and other employees for
rendering secretarial assistance and for its day to day functions as are set
out in Schedule I to these rules.

10. Functions of the Authority.-

(1) Subject to the provision of the Act, the Authority shall have the duty to
administer the Fund for Investor Education and Protection.

(2) The general management of the affairs of the Authority shall vest in the
Chief Executive Officer, who may exercise powers, which may be authorised
by the Authority.

(3) The Chief Executive Officer shall function under superintendence and
direction of the Chairperson.

(4) Without prejudice to the generality of the provisions, the functions of the
Authority shall include the following, namely:-

(a) The Authority may constitute permanent Committees for

overseeing its functions;
(b) Each Committee shall comprise two members, Chief Executive
Officer and concerned functional head, who shall be the secretary of
the Committee. The Committee shall be headed by an ex-officio
member;

(b) The Authority may outsource, if required, work related to Funds

and Shares Management.

(c) The broad functional divisions of the Authority shall be as per

Schedule II to these rules.

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

11. Meetings.-
(1) The Authority and its Committees shall meet at such times and places as
it may consider necessary.

(2) The Authority and its Committees shall determine its own procedure for
holding of meetings.

(3) If the Authority or its Committees has to hold a meeting elsewhere than
in New Delhi, the approval of the Chairperson of the Authority shall be
obtained indicating the reasons thereof.

(4) The Authority and the Committees shall meet at least once in a quarter
and at least four such meetings shall be held in a financial year:

Provided that not more than one hundred and twenty days shall
intervene between two consecutive meetings.

(5) The meeting of the Authority shall be presided over by the Chairperson.

(6) If for any reason, the Chairperson is unable to attend a meeting, any other
Member chosen by the Members present from amongst themselves at the
meeting shall preside over the meeting.

(7) In case of difference in opinion on any question before the Authority, or

any of its Committees, the views of the majority shall be taken as the final
decision.

(8) More than fifty percent appointed Members of the Authority shall
constitute the quorum for the transaction of business at a meeting of the
Authority.

(9) Two members of a Committee shall constitute the quorum for the
transaction of business at a meeting of the Committee.

(10) For journeys performed by a non-official member of the Authority or

Committee or a special invitee in connection with the work of the Authority or
Committee, the actual expenditure for attending the meeting shall be
reimbursed, subject to maximum of such expenditure limit applicable to a
Senior Administrative Grade officer of Government of India.

12. Member not to participate in meetings in certain cases.-

A member, who has any pecuniary interest, direct or indirect in any matter
that is brought up for consideration at a meeting of the Authority and its
Committees, shall, as soon as possible after relevant circumstances have
come to his knowledge, disclose the nature of his interest at such meeting
and such disclosure shall be recorded in the proceedings of the Authority
Page 1089
 Chapter VII [Sections 123 to 127]
IEPF (Appointment of Chairperson and Members …) Rules, 2016

and its Committees, and the member shall not take any part in any
deliberation or decision of the Authority and its Committees with respect to
that matter.

13. Vacancies, etc., not to invalidate proceedings of

Authority.-

No act or proceeding of the Authority and its Committees shall be invalid

merely by reason of-

(a) any vacancy in, or any defect in the constitution of the Authority
and its Committees;

(b) any defect in the appointment of a person acting as a member of

the Authority and its Committees;

(c) any laches in the procedure of the Authority and its Committees
not affecting the merits of the case.

14. Protection of action taken in good faith.-

No suit, prosecution or other legal proceedings shall lie against the Central
Government or Authority or any officer of the Central Government or any
member, officer or other employee of the Authority for anything, which is in
good faith done or intended to be done under these rules.

Schedule I

S. Designation Pay Scale Number of

No. posts
1. General Manager PB-4 + GP Rs. 01
8700

2. Assistant General PB-3 + GP Rs. 01

Manager 5400
3. Senior Accounts PB-3 + GP Rs. 01
Officer 5400
4. Assistant Accounts PB-2 + GP Rs. 02
Officer 4800

Schedule II
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IEPF (Appointment of Chairperson and Members …) Rules, 2016

Functional Divisions of the Authority

(1) Administration:

(i) Establishing, equipping, maintaining and operating administrative

functions as may be necessary or deemed expedient for fulfilling the objects
of the Fund.

(ii) Authority and committees of Authority related matters.

(2) Investment/ Funds Management:

(i) Maintaining funds standing to the credit of Fund, investing the same in
interest bearing account of any nationalised bank.

(ii) Opening of depository account of authority and transferring into the

account securities of investor and transferring to investors account securities
upon settlement of the claim.

(3) Claims and Settlement:

(i) Making refunds to eligible investors after following due procedure in

respect of claims lodged by investors in accordance with clause (a) of sub-
section (3) of section 125 of the Act and rules made thereunder.

(ii) Distribution of disgorged amount as per the order of the court or the
Authority.

(iii) Distribution of disgorged amount in consultation with Legal and

Enforcement Division, to eligible and identified security holders who have
suffered losses due to any wrong actions of any person in accordance with
the order of Tribunal or order of the Authority, as the case may be. The
amount to be distributed shall be limited to amount disgorged in respect of
any particular order and no other funds can be used for distribution.

(4) Legal and Enforcement:

(i) Initiation of legal cases against non-compliant companies or persons.

(ii) Handling disputes and legal cases arising out of claims or settlement or
any other dispute.

(iii) Reimbursement of funds from Fund for meeting legal expenses incurred
in pursuing class action suits under section 37 and 245 of the Act by
members, debenture holders or depositors as sanctioned by Tribunal in
accordance with the procedure prescribed in this regard.

(5) Investor Education and Protection:

(i) Registering associations or institutions or professional bodies or

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IEPF (Appointment of Chairperson and Members …) Rules, 2016

chambers of commerce and industry or other organisations engaged in

investor education and protection activities.

(ii) Sanctioning grants to the registered entities for seminars, programmes,

projects or activities in the field of corporate governance, Investors'
Education and Protection including research activities.

(iii) Monitoring of the utilisation of the grants to ensure the achievements of

the objectives of the sanctioning of the grants.

(iv) Cooperating and collaborating with institutions engaged in Investor

Education, corporate governance, awareness, and protection activities.

(v) Conducting on its own or in collaboration with entities engaged in Investor

education and protection or academic institutions or other regulated entities
like Stock Exchanges, Depositories, Banks and Mutual funds nationwide
investors' education and awareness programmes including seminars and
symposia.

(vi) Setting up of institutional arrangements or infrastructure for taking up

programmes; projects and action plans keeping in view the objectives and
expenditure relating thereto, including research and training activities.

(vii) Publishing and disseminating information for investors' benefit and

objects and achievements of the Fund.

(viii) Advising Central Government on the issues related to Investors'

interest.

(ix) Sponsor specific studies or research or analysis for the development of

capital market.

(6) Finance, Accounts and Audit:

(i) Maintenance of accounts of inflow and outflow of funds.

(ii) Reconciliation of accounts of investors.

(iii) Preparation of all accounting reports, audit work and annual report.

(iv) Returns to Central Government.

(v) Preparation of budget of authority and its monitoring.

(vi) Accounting for all claims of investor in respective accounts.

(vii) Procedure for accounting of investors' funds and securities.

(7) The Chairperson may re-allocate functions, merge or sub-divide divisions as per
administrative requirement.
[F. No. 05/27/2013-IEPF] MANOJ KUMAR, Jt. Secy.

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The Companies (Management and Administration) Rules, 2014

Chapter VIII: IEPF Authority (Accounting, Audit,

Transfer and Refund) Rules, 2016
[Refer general circular no. 13/2016 dated 05 th December 2016 and general circular no.15/2016 dated 07 th
December 2016]
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 05th September, 2016

G.S.R.854(E).--In exercise of the powers conferred by sub-sections (1),

(2),(3),(4),(8),(9), (10) and (11) of section 125 and sub-section (6) of section 124 read
with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government
hereby makes the following rules, namely:-

1. Short title, extent and commencement.--

(1) These rules may be called the Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016.

(2) They shall come into force with effect from the 7th September, 2016.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013;

(b) “Authority” means the Investor Education and Protection Fund Authority
constituted under sub-section (5) of Section 125 of the Act;

(c) “Chairperson” means the chairperson of the authority appointed under sub-
section (6) of Section 125 of the Act;

[(d) “Company” means a company defined in sub-section (20) of section 2 of

648

the Act and includes ‘corresponding new bank’ as defined in sub-section (d) of
section 2 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 (5 of 1970) and clause (b) of section 2 of the Banking Companies

648
Rule 2(1)(d) substituted by the Investor Education and Protection Fund Authority (Accounting, Audit,
Transfer and Refund) Amendment Rules, 2017 vide notification no. G.S.R. 178(E) dated 28 February 2017,
with effect from 28 February 2017. Prior to substitution it read as “(d) “Company” means company as defined
in sub-section (20) of section 2 of the Act and includes ‘corresponding new bank’ as defined in sub-section
(d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970)
and clause (b) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
(40 of 1980);”.

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(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) and

‘subsidiary bank’ as defined in clause (k) of section 2 of State Bank of India
(Subsidiary Bank) Act, 1959 (38 of 1959);

(da) “Corporate action” means any action taken by the company relating to
transfer of shares and all the benefits accruing on such shares namely, bonus
shares, split, consolidation, fraction shares etc., except right issue to the
Authority;]

(e) “Existing IEPF” means the Investor Education and Protection Fund (IEPF)
constituted under section 205C of the Companies Act, 1956 (1 of 1956);

(f) “Fund” means the Investor Education and Protection Fund (IEPF) constituted
under section 125 of the Act;

(g) “Investor” means any person, who has committed money in shares, or
debentures, bond or deposits under a scheme or plan of a company registered
under the Act;

(h) “Member” means member of the Authority appointed under sub-section (6)
of section 125 of the Act; and

(i) “Section” means the section of the Act.

(2) Words and expressions used in these rules and not defined herein but defined in
the Act or in the Companies (Specification of Definitions Details) Rules, 2014, shall
have the same meanings respectively assigned to them in the Act or in the said rules.

3. Fund.-

(1) The Authority shall administer the Fund.

(2) There shall be credited to the Fund, the following amounts, namely:-
(a) all amounts payable as mentioned in clause (a) to (n) of sub-section (2) of
section 125 of the Act;
(b) all shares in accordance with sub-section (6) of section 124 of the Act;
(c) all the resultant benefits arising out of shares held by the Authority under clause
(b);
(d) all grants, fees and charges received by the Authority under these rules;
(e) all sums received by the Authority from such other sources as may be decided
upon by the Central Government;
(f) all income earned by the Authority in any year;
649
[(g) all amounts payable as mentioned in sub-section (3) of section 10B of the

649
Clause (g) of Rule 3(2) substituted by the Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Amendment Rules, 2017 vide notification no. G.S.R. 178(E) dated 28 February 2017,
effective from 28 February 2017. Prior to substitution it read as “(g) all amounts payable as mentioned in sub-section

Page 1094
 Chapter VII [Sections 123 to 127]
The Companies (Management and Administration) Rules, 2014

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970,

section 10B of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 and section 40A of the State Bank of India (Subsidiary
Bank) Act, 1959; and]
(h) all other sums of money collected by the Authority as envisaged in the Act.

(3) In case of term deposits and debentures of companies, due unpaid or unclaimed
interest shall be transferred to the Fund along with the transfer of the matured amount
of such term deposits and debentures.

(4) (a) All the money, which accrue under sub section (2) [except clause (g)] of section
125 of the Act shall be deposited in the Consolidated Fund of India under the Major
Head ‘0075- Miscellaneous General Services – 104 - Unclaimed and Unpaid dividends,
deposits and debentures etc.’. Such sums along with amount deposited under section
205C of the Companies Act, 1956 shall be transferred to the Fund in the non-interest
bearing Public Account after taking due approval of Parliament through Appropriation
Act. This non-interest bearing Public Account shall be termed as IEPF Fund and shall
be utilised for the purposes provided under sub-section (3) of section 125 of the Act.

(b) (i) All amounts remitted by the companies shall initially be accounted for under
the following heads of Accounts:-
Major Head 0075 – Miscellaneous General
Services Minor Head 104 - Unpaid dividend
of Companies.
(ii) Grants and donations given to the Fund by the State Governments, Companies
or any other institutions for the purpose of the Fund as also the interest or other
income received out of the Investments made from the Fund shall be credited
to a separate sub-head under “800 – Other Receipts” below the MH 0075 – Misc.
General Services.
(iii) Amount booked under the above receipt head shall be transferred to the Fund
account under Major Head ‘8235 – General and other Reserve Fund – 116 – IE
& PF’ by the PAO, Ministry of Corporate Affairs after making suitable budget
provision under Major Head ‘3451 – Secretariat Economic Services 797 –
Transfer to Reserve Fund Deposit Account – Transfer to Investor’s Education
and Protection Fund’. In case the amounts of receipts in a year is more than the
budget provision made under Major Head 3451 transfer to the Fund, the
difference shall be transferred to the Fund in subsequent year, after obtaining
approval of the Budget Division of Department of Economic Affairs and after
making adequate budget provision in the relevant year.
(iv) Budget provision in connection with the activities to be financed from the Fund
shall be made under Major Head 3451 – Secretariat Economic Services 090
Secretariat – Investor’s Education and Protection Fund. Actual expenditure
under the head shall be recouped from the Fund and the amount so recouped
shall be accounted for under the Major Head ‘3451’ as Deduct entry below Minor
Head ‘902 – Deduct – amount met from Investor’s Education and Protection
Fund’ with contra debit to Major Head – ‘8235 – General and Other Reserve

(3) of section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and section
10B of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980; and”.
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Funds -116 – Investor’s Education and Protection Fund’ .

4. Accounts and audit.-

(1) The Authority shall maintain proper accounts and other relevant records as given
in Schedule to these rules and prepare an annual statement of accounts in such form
as may be specified by the Central Government in consultation with the Comptroller
and Auditor-General of India.

(2) The accounts of the Authority shall be audited annually by the Internal Audit Party
of the office of Chief Controller of Accounts and Comptroller and Auditor-General of
India at such intervals and any expenditure incurred in connection with such audit shall
be payable by the Authority to the Comptroller and Auditor-General of India.

(3) The Comptroller and Auditor-General of India or any other person appointed by
him in connection with the audit of the accounts of the Authority shall have the same
rights and privileges and authority in connection with such audit as the Comptroller
and Auditor-General generally has in connection with the audit of the Government
accounts and, in particular, shall have the right to demand the production of books,
accounts, connected vouchers and other documents and papers and to inspect any of
the offices of the Authority.

(4) The accounts of the Authority as certified by the Comptroller and Auditor-General
of India or any other person appointed by him in this behalf together with the audit
report thereon shall be forwarded annually to the Central Government and that
Government shall cause the same to be laid before each House of Parliament.

5. Statement to be furnished to the Fund.-

(1) Any amount required to be credited by the companies to the Fund as provided
under clause (a) to (n) of sub-section (2) of section 125 of the Act shall be remitted
into the specified branches of Punjab National Bank, which is the accredited Bank of
the Pay and Accounts Office, Ministry of Corporate Affairs and other authorised banks
engaged by the MCA-21 system, within a period of thirty days of such amounts
becoming due to be credited to the Fund.

(2) The amount shall be tendered by the companies along with challan (in triplicate) to
the specified Bank Branches of Punjab National Bank and other authorised banks
under MCA-21 system who will return two copies of the challan, duly stamped in token
of having received the amount, to the Company. The third copy of the challan will be
forwarded along with the daily credit scroll by the receiving branch to its Focal Point
Branch of the Bank for onward transmission to the Pay and Accounts Office, Ministry
of Corporate Affairs.

(3) Every company shall file with the concerned Authority one copy of the challan
referred to in sub-rule (2) indicating the deposit of the amount to the Fund and shall fill
in the full particulars of the amount tendered, including the head of account to which it
has been credited.

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(4) The company shall, along with the copy of the challan as required under sub-rule
(3), furnish a Statement in Form No. IEPF 1 containing details of such transfer to the
Authority within thirty days of submission of challan.

(5) The amount may also be remitted by Electronic Fund Transfer in such manner, as
may be specified by the Central Government.

(6) (a) On receipt of the statement, the Authority shall enter the details of such receipt
in a Register maintained physically or electronically by it in respect of each company
every year, and reconcile the amount so remitted and collected, with the concerned
designated bank on monthly basis.
(b) Each designated bank shall furnish an abstract of such receipts during the month
to the Authority within seven days after the close of every month.
(c) The company shall maintain record consisting of name, last known address,
amount, folio number or client ID, certificate number, beneficiary details etc. of the
persons in respect of whom unpaid or unclaimed amount has remained unpaid or
unclaimed for a period of seven years and has been transferred to the Fund and the
Authority shall have the powers to inspect such records.

(7) The provisions of this rule shall be applicable mutatis mutandis in respect of the
amounts to be credited to the Fund in pursuance of clauses (h) to (m) of sub-section
(2) of section 125.

(8) Every company shall within a period of ninety days after the holding of Annual
General Meeting or the date on which it should have been held as per the provisions
of section 96 of the Act and every year thereafter till completion of the seven years
period, identify the unclaimed amounts, as referred in sub-section 2 of section 125 of
the Act, as on the date of holding of Annual General Meeting or the date on which it
should have been held as per the provisions of section 96 of the Act, separately furnish
and upload on its own website and also on website of Authority or any other website
as may be specified by the Government, a statement or information through Form No.
IEPF 2, separately for each year, containing following information, namely:-
(a) the names and last known addresses of the persons entitled to receive the sum;
(b) the nature of amount;
(c) the amount to which each person is entitled;
(d) the due date for transfer into the Investor Education and Protection Fund; and
(e) such other information as may be considered relevant for the purposes.

650
[6. Manner of transfer of shares under sub-section (6) of section 124 to the Fund. -

650
Rule 6 substituted by the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and
Refund) Amendment Rules, 2017 vide notification no. G.S.R. 178(E) dated 28 February 2017, with effect from 28
February 2017. Prior to substitution it read as “(1) The shares shall be credited to an IEPF suspense account (on
the name of the company) with one of the depository participants as may be identified by the Authority within a
period of thirty days of such shares becoming due to be transferred to the Fund:

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Provided that, in case the beneficial owner has encashed any dividend warrant during the last seven years, such
shares shall not be required to be transferred to the Fund even though some dividend warrants may not have been
encashed.
(1) For the purposes of effecting transfer of such shares, the Board shall authorise the Company Secretary or any
other person to sign the necessary documents.
(2) The company shall follow the following procedure, namely:-
(a) The company shall inform at the latest available address, the shareholder concerned regarding transfer of shares
three months before the due date of transfer of shares and also simultaneously publish a notice in the leading
newspaper in English and regional language having wide circulation, and on their website giving details of such
shareholders and shares due for transfer:
Provided that in cases, where the seven years as provided under sub-section (5) of section 124 have been completed
or are being completed within three months from the date of coming into force of these rules, the company shall
initiate the aforesaid procedure immediately and transfer the shares on completion of three months;
(b) In case, where there is a specific order of Court or Tribunal or statutory Authority restraining any transfer of
such shares and payment of dividend, the company shall not transfer such shares to the Fund:
Provided that the company shall furnish details of such shares and unpaid dividend to the Authority in Form No.
IEPF 3 within thirty days from the end of financial year;
(c) For the purposes of effecting the transfer where the shares are dealt with in a depository,-
(i) the Company Secretary or the person authorised by the Board shall sign on behalf of such shareholders, the
delivery instruction slips of the depository participants where the shareholders had their accounts for transfer in
favour of IEPF suspense account (name of the company);
(ii) on receipt of the delivery instruction slips, the depository shall effect the transfer of shares in favour of the
Fund in its records.
(d) For the purposes of effecting the transfer where the shares are held in physical form,-
(i) the Company Secretary or the person authorised by the Board shall make an application, on behalf of the
concerned shareholders, to the company, for issue of duplicate share certificates;
(ii) on receipt of the application under clause (a), a duplicate certificate for each such shareholder shall be issued
and it shall be stated on the face of it and be recorded in the register maintained for the purpose, that the duplicate
certificate is “Issued in lieu of share certificate No for purpose of transfer to IEPF” and the word “duplicate”
shall be stamped or punched in bold letters across the face of the share certificate;
(iii) particulars of every share certificate issued as above shall be entered forthwith in a register of renewed and
duplicate share certificates maintained in Form No. SH 2 as specified in the Companies (Share Capital and
Debentures) Rules, 2014;
(iv) after issue of duplicate share certificates, the Company Secretary or the person authorised by the Board, shall
sign the necessary Form No. SH 4 i.e., securities transfer Form as specified in the Companies (Share Capital and
Debentures) Rules, 2014, for transferring the shares in favour of the Fund;
(v) on receipt of the duly filled transfer forms along with the duplicate share certificates, the Board or its Committee
shall approve the transfer and thereafter the transfer of shares shall be effected in favour of the Fund in the records
of the company.
(3) The company or depository, as the case may be, shall preserve copies of the depository instruction slips,
transfer deeds and duplicate certificates for its records.
(4) While effecting such transfer, the company shall send a statement to the Fund in Form No. IEPF 4 containing
details of such transfer.
(5) The voting rights on shares transferred to the Fund shall remain frozen until the rightful owner claims the
shares:
Provided that for the purpose of the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011, the shares which have been transferred to the Authority shall
not be excluded while calculating the total voting rights.
(7) Once the physical shares are transferred in the name of the Authority, the Authority shall dematerialise these
shares and it shall keep only those shares in physical form, where dematerialisation of shares is not possible.
(8) The Authority shall maintain IEPF suspense account (name of the company) with depository participant on
behalf of the shareholders who are entitled for the shares and all benefits accruing on such shares e.g. bonus shares,
split, consolidation, fraction shares etc. except right issue shall also be credited to such IEPF suspense account
(name of the company).
(9) The shares held in such IEPF suspense account shall not be transferred or dealt with in any manner whatsoever

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[See Circular 03/2017 dated 27.04.2017 and also general circular 12/2017 dated
16.10.2017]

(1) The shares shall be credited to DEMAT Account of the Authority to be opened by
the Authority for the said purpose, within a period of thirty days of such shares
becoming due to be transferred to the Fund:

Provided that, in case the beneficial owner has encashed any dividend warrant
during the last seven years, such shares shall not be required to be transferred to the
Fund even though some dividend warrants may not have been enchased:

Provided further that in cases where the period of seven years provided under
sub-section (5) of section 124 has been completed or being completed during the
period from 7th September 2016 to 31st May, 2017, the due date of transfer of such
shares shall be deemed to be 31st May, 2017.
[Vide General Circular no. 06/2017 dated 29th May 2017 it is stated that a revised due date for transfer/
transmittal of shares shall be notified soon and Companies which have already published notice in
newspaper and send notices to the shareholders, need not give the fresh notices again due to this
extension]

(2) For the purposes of effecting transfer of such shares, the Board shall authorise the
Company Secretary or any other person to sign the necessary documents.

(3) The company shall follow the following procedure while transferring the shares,
namely: -

(a) The company shall inform, at the latest available address, the shareholder
concerned regarding transfer of shares three months before the due date of transfer
of shares and also simultaneously publish a notice in the leading newspaper in English
and regional language having wide circulation informing the concerned that the names
of such shareholders and their folio number or DP ID -Client ID are available on their
website duly mentioning the website address.

(b) In case, where there is a specific order of Court or Tribunal or statutory Authority
restraining any transfer of such shares and payment of dividend or where such shares

except for the purposes of transferring the shares back to the claimant as and when he approaches the Authority
or in accordance with sub-rule (10) and (11).
(10) If the company is getting delisted, the Authority shall surrender shares on behalf of the shareholders in
accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 and
the proceeds realised shall be credited to the Fund and a separate ledger account shall be maintained for such
proceeds.
(11) In case the company whose shares or securities are held by the Authority is being wound up, the Authority
may surrender the securities to receive the amount entitled on behalf of the security holder and credit the amount
to the Fund and a separate ledger account shall be maintained for such proceeds.
(12) Any further dividend received on such shares shall be credited to the Fund and a separate ledger account shall
be maintained for such proceeds.”.

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are pledged or hypothecated under the provisions of the Depositories Act, 1996 or
shares already been transferred under sub-rule (1) above, the company shall not
transfer such shares to the Fund:

Provided that the company shall furnish details of such shares and unpaid
dividend to the Authority in Form No. IEPF 3 within thirty days from the end of financial
year.

(c) For the purposes of effecting the transfer, where the shares are dealt with in a
depository-
(i) the Company shall inform the depository by way of corporate action, where
the shareholders have their accounts for transfer in favour of the Authority.
(ii) on receipt of such intimation, the depository shall effect the transfer of shares
in favour of DEMAT account of the Authority.

(d) For the purposes of effecting the transfer where the shares are held in physical
form-
(i) the Company Secretary or the person authorised by the Board shall make
an application, on behalf of the concerned shareholders, to the company, for
issue of duplicate share certificates;
(ii) on receipt of the application under clause (a), a duplicate certificate for each
such shareholder shall be issued and it shall be stated on the face of it and be
recorded in the register maintained for the purpose, that the duplicate certificate
is “Issued in lieu of share certificate No for purpose of transfer to IEPF” and
the word “duplicate” shall be stamped or punched in bold letters on the first
page of the share certificate;
(iii) particulars of every share certificate issued as above shall be entered
forthwith in a register of renewed and duplicate share certificates maintained in
Form No. SH-2 as specified in the Companies (Share Capital and Debentures)
Rules, 2014;
(iv) after issue of duplicate share certificates, the company shall inform the
depository by way of corporate action to convert the duplicate share certificates
into DEMAT form and transfer in favour of the Authority.
[It is clarified by general circular no. 07/2017 dated 05 th June 2017 that the procedure similar to
what is followed in case of transmission of shares may be followed by companies while
transferring shares to IEPF Authority pursuant to section 124 (6) read with applicable rules]

(4) The company shall make such transfers through corporate action and shall
preserve copies for its records.

(5) While effecting such transfer, the company shall send a statement to the Authority
in Form No. IEPF 4 containing details of such transfer.

(6) The voting rights on shares transferred to the Fund shall remain frozen until the
rightful owner claims the shares:
Provided that for the purpose of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the shares
which have been transferred to the Authority shall not be excluded while calculating
the total voting rights.

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The Companies (Management and Administration) Rules, 2014

(7) The company shall maintain the details of shareholding of each individual
shareholder whose shares have been credited to the DEMAT account of the Authority.

(8) All benefits accruing on such shares e.g., bonus shares, split, consolidation,
fraction shares etc., except right issue shall also be credited to such DEMAT account.

(9) The shares held in such DEMAT account shall not be transferred or dealt with in
any manner whatsoever except for the purposes of transferring the shares back to the
claimant as and when he approaches the Authority or in accordance with sub-rule (10)
and (11).

(10) If the company is getting delisted, the Authority shall surrender shares on behalf
of the shareholders in accordance with the Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009 and the proceeds realised shall be
credited to the Fund and a separate ledger account shall be maintained for such
proceeds.

(11) In case the company whose shares or securities are held by the Authority is being
wound up, the Authority may surrender the securities to receive the amount entitled
on behalf of the security holder and credit the amount to the Fund and a separate
ledger account shall be maintained for such proceeds.

(12) Any further dividend received on such shares shall be credited to the Fund and a
separate ledger account shall be maintained for such proceeds.]

7. Refunds to claimants from Fund. –

651
[(1) Any person whose shares, unclaimed dividend, matured deposits, matured

651
Rule 7 substituted by the Investor Education and Protection Fund Authority (Accounting,
Audit, Transfer and Refund) Amendment Rules, 2017 vide notification no. G.S.R. 178(E) dated
28 February 2017, with effect from 28 February 2017. Prior to substitution it read as “(1) Any
person, whose shares, unclaimed dividend, matured deposits, matured debentures, application
money due for refund, or interest thereon, sale proceeds of fractional shares, redemption
proceeds of preference shares, etc. has been transferred to the Fund, may claim the shares under
provision to sub-section (6) of section 124 or apply for refund, under clause (a) of sub-section
(3) of section 125 or under proviso to sub-section (3) of section 125, as the case may be, to the
Authority by making an application in Form IEPF 5 online available on website
www.iepf.gov.in along with fee, as decided by the Authority from time to time in consultation
with the Central Government, under his own signature.
(2) The claimant shall after making an application online in Form IEPF-5 under rule (1), send
the same duly signed by him along with, requisite documents as enumerated in Form IEPF-5
to the concerned company at its registered office for verification of his claim.

Page 1101
 Chapter VII [Sections 123 to 127]
The Companies (Management and Administration) Rules, 2014

debentures, application money due for refund, or interest thereon, sale proceeds of
fractional shares, redemption proceeds of preference shares etc., has been
transferred to the Fund, may claim the shares under proviso to sub-section (6) of
section 124 or apply for refund under clause (a) of sub-section (3) of section 125 or
under proviso to sub-section (3) of section 125, as the case may be, to the Authority
by submitting an online application in Form IEPF-5 available on the website
www.iepf.gov.in along with fee specified by the Authority from time to time in
consultation with the Central Government.

(2) The claimant shall after making an application in Form IEPF-5 under rule (1), send
the same duly signed by him along with, requisite documents as enumerated in Form
IEPF-5 to the concerned company at its registered office for verification of his claim.

(3) The company shall, within fifteen days of receipt of claim form, send a verification report
to the Authority in the format specified by the Authority along with all documents submitted
by the claimant.
(4) After verification of the entitlement of the claimant-
(a) to the amount claimed, the Authority and then Drawing and Disbursement Officer of the
Authority shall present a bill to the Pay and Accounts Office for e- payment as per the
guidelines.
(b) to the shares claimed, the Authority shall issue a refund sanction order with the approval of
the Competent Authority and shall either credit the shares which are lying with depository
participant in IEPF suspense account (name of the company) to the demat account of the
claimant to the extent of the claimant’s entitlement or in case of the physical certificates, if any,
cancel the duplicate certificate and transfer the shares in favour of the claimant.
(5) The Authority shall, in its records, cause a note to be made of all the payments made under
sub- rule (4).
(6) An application received for refund of any claim under this rule duly verified by the
concerned company shall be disposed of by the Authority within sixty days from the date of
receipt of the verification report from the company, complete in all respects and any delay
beyond sixty days shall be recorded in writing specifying the reasons for the delay and the same
shall be communicated to the claimant in writing or by electronic means.
(7) In cases, where the application is incomplete, a communication shall be sent to the claimant
by the Authority detailing deficiencies of the application.
(8) In case, claimant is a legal heir or successor or administrator or nominee of the registered
security holder, he has to ensure that the transmission process is completed by the company
before filing any claim with the Authority.
(9) The claimant shall file only one consolidated claim in respect of a company in a financial
year.
(10) The company shall be solely liable under all circumstances whatsoever to indemnity the
IEPF Authority in case of any dispute or lawsuit that may be initiated due to any incongruity
or inconsistency or disparity in the verification report or otherwise. The IEPF Authority shall
not be liable to indemnity the security holder or Company for any liability arising out of any
discrepancy in verification report submitted etc. leading to any litigation or complaint arising
thereof.”.
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 Chapter VII [Sections 123 to 127]
The Companies (Management and Administration) Rules, 2014

(3) The company shall, within fifteen days from the date of receipt of claim, send a
verification report to the Authority in the format specified by the Authority along with all
the documents submitted by the claimant.

(4) After verification of the entitlement of the claimant-

(a) to the amount claimed, the Authority and then Drawing and Disbursement Officer
of the Authority shall present a bill to the Pay and Accounts Office for e- payment as
per the guidelines,
(b) to the shares claimed, the Authority shall issue a refund sanction order with the
approval of the Competent Authority and shall credit the shares to the DEMAT account
of the claimant to the extent of the claimant’s entitlement.

(5) The Authority shall, in its records, cause a note to be made of all the payments
made under sub-rule (4).

(6) An application received for refund of any claim under this rule duly verified by the
concerned company shall be disposed of by the Authority within sixty days from the
date of receipt of the verification report from the company, complete in all respects and
any delay beyond sixty days shall be recorded in writing specifying the reasons for the
delay and the same shall be communicated to the claimant in writing or by electronic
means.

(7) In cases, where the application is incomplete or not approved, a communication

shall be sent to the claimant and the concerned company by the Authority detailing
deficiencies of the application.

(8) In case, claimant is a legal heir or successor or administrator or nominee of the

registered share holder, he has to ensure that the transmission process is completed
by the company before filing any claim with the Authority.

(9) In case, claimant is a legal heir or successor or administrator or nominee of any

other registered security or in cases where request of transfer or transmission of
shares is received after the transfer of shares by company to the Authority, the
company shall verify all requisite documents required for registering transfer or
transmission and shall issue letter to the claimant indicating his entitlement to the said
security and furnish a copy of the same to the Authority while verifying the claim of
such claimant.

(10) The claimant shall file only one consolidated claim in respect of a company in a
financial year.

(11) The company shall be liable under all circumstances whatsoever to indemnify the
Authority in case of any dispute or lawsuit that may be initiated due to any incongruity
or inconsistency or disparity in the verification report or otherwise and the Authority
shall not be liable to indemnify the security holder or Company for any liability arising
out of any discrepancy in verification report submitted etc., leading to any litigation or
complaint arising thereof.]

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8. Power to direct payment of amount due to the Fund. –

(1) The company shall furnish a statement to the Authority in Form No. IEPF 6 within
thirty days of end of financial year stating therein the amounts due to be transferred to
the Fund in next financial year.

(2) The company shall also furnish a statement to the authority within thirty days of the
closure of its accounts for the financial year stating therein the reasons of deviation, if
any, of amounts detailed in sub-rule (1) above and actual amounts transferred to the
Fund.

(3) Authority shall furnish a report to the Central Government within sixty days of end
of financial year giving details of companies who have failed to transfer the due amount
to the Fund.

(4) Authority shall also furnish a report to the Central Government by end of next
financial year giving details of companies who have failed to file information referred
to in sub-rule (8) of rule 5.

9. Transfer of assets, liabilities, etc., of the existing IEPF to the Authority.-

On and from the date of establishment of the Authority,—

(a) any reference to the existing IEPF in any law other than these rules or in any
contract or other instrument shall be deemed as a reference to the Authority;
(b) all properties and assets, movable and immovable, of, or belonging to, the existing
IEPF, shall vest in the Authority;
(c) all rights and liabilities of the existing IEPF shall be transferred to, and be the rights
and liabilities of the Authority;
(d) without prejudice to the provisions of clause (c), all debts, obligations and liabilities
incurred, all contracts entered into and all matters and things engaged to be done
by, with or for the existing IEPF immediately before that date, for or in connection
with the purpose of the said existing IEPF shall be deemed to have been incurred,
entered into, or engaged to be done by, with or for, the Authority;
(e) all sums of money due to the existing IEPF immediately before that date shall be
deemed to be due to the Authority; and
(f) all suits and other legal proceedings instituted or which could have been instituted
by or against the existing IEPF, immediately before that date may be continued or
may be instituted by or against the Authority.

10. Returns and reports.-

(1) The Authority shall furnish to the Central Government at such time and in such form
and manner as may be specified or as the Central Government may direct, such
returns and statements and such particulars with regard to its activity.

(2) Without prejudice to the provisions of sub-rule (1), the Authority shall, within one
hundred and eighty days after the end of each financial year, submit to the Central
Government a report in such form, as may be specified, giving a true and full account
Page 1104
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The Companies (Management and Administration) Rules, 2014

of its activities during the previous financial year.

11. Protection of action taken in good faith.-

No suit, prosecution or other legal proceedings shall lie against the Central
Government or Authority or any officer of the Central Government or any member,
officer or other employee of the Authority for anything which is in good faith done or
intended to be done under these rules.

12. Repeal and savings. –

(1) The Investor Education and Protection Fund (Awareness and Protection of
Investors) Rules, 2001 and Investor Education and Protection Fund (Uploading of
information regarding unpaid and unclaimed amounts lying with companies) Rules,
2012 are hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken or purported to
have been done or taken under the rules repealed by sub-rule (1) shall, in so far as it
is not inconsistent with the provisions of these rules, be deemed to have been done or
taken under the corresponding provisions of these rules.

SCHEDULE

REGISTERS AND BOOKS OF ACCOUNT TO BE MAINTAINED BY THE AUTHORITY

(i) Register of Shares transferred under sub-section (6) of section 124

(ii) Central Cash Book
(iii) Company wise Ledger
(iv) General Ledger
(v) Cashier's Cash Book
(vi) Bank Ledger
(vii) Register of Assets
(viii) Investment Register
(ix) Claim Register
(x) Refund Register
(xi) Suspense Register
(xii) Documents Register
(xiii) Any other register or Book as decided by Authority

Forms notified

Form No. IEPF-1

Form No. IEPF-2
Form No. IEPF-3
Form No. IEPF-4
Form No. IEPF-5
Form No. IEPF-6

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 Chapter VIII [Sections 123 to 127]
IEPFA (Recruitment, Salary…) Rules, 2017

Chapter VIII: IEPF Authority (Recruitment,

Salary and other Terms and Conditions of
Service of General Manager and Assistant
General Manager) Rules, 2017

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 18th January, 2017

G.S.R. 46(E).—In exercise of the powers conferred by sub-section (7) of
section 125 and section 469 of the Companies Act, 2013 (18 of 2013), the Central
Government hereby makes the following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the Investor Education and Protection Fund Authority
(Recruitment, Salary and other Terms and Conditions of Service of General Manager and
Assistant General Manager) Rules, 2017
(2) These rules shall come into force on the date of their publication in the Official Gazette.

2. Definitions. –

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);
(b) “Investor Education and Protection Fund Authority” means the Authority as
defined under section 125 of the Act;

(2) All the words and expressions used and not defined in these rules, but defined in the
Act shall have the meanings as assigned to them in the Act.

3. Application. –

These rules shall apply to the General Manager and Assistant General Manager of the
Investor Education and Protection Fund Authority.

4. Number of posts, classification and level in the pay matrix. –

The number of posts, their classification and level in the pay matrix attached thereto
shall be as specified in columns (2) to (4) of the Schedule.

Page 1106
 Chapter VIII [Sections 123 to 127]
IEPFA (Recruitment, Salary…) Rules, 2017

5. Method of recruitment, eligibility etc. –

The method or recruitment, eligibility and other matters relating thereto shall be as
specified in columns (5) to (13) of the Schedule.

6. Procedure for appointment on deputation. –

The following procedure shall be followed for making appointment on deputation to

posts wherever prescribed in the Schedule:
(1) The Investor Education and Protection Fund Authority shall invite applications for
the posts of General Manager and Assistant General Manager.
(2) The selection committee for evaluating the applications received under sub-rule 1
above shall be constituted as per column 12 of the schedule.

7. Period of deputation.-

The period of deputation, including the period of deputation in another ex-cadre post
held immediately preceding this appointment in the same or some other organisation
or department of the Central Government, shall be three years from the date of
beginning of the deputation for the posts below LEVEL 11 in the PAY MATRIX of
Rs67700 – 208700and shall be five years for the posts of LEVEL 13 in the PAY MATRIX
of Rs 118500 – 214100 or above. The period of deputation may be extended as per
extant instruction of the Department of Personnel and Training issued in this regard.
(2) The applicant for deputation should not have attained the age of fifty six years on
the last date of receipt of applications. The instructions issued by Department of
Personnel and Training shall be applicable to officers and staff serving on deputation
basis to the Investor Education and Protection Fund Authority

8. Conditions of service. –

The conditions of service of the General Manager and Assistant General Manager of
the Investor Education and Protection Fund Authority including in matters of pay,
allowances and leave shall be regulated in accordance with such rules and regulations
as are as the extant time applicable to the officers and employees of the corresponding
Level in the Pay Matrix of the Central Government.

9. Accommodation. –

The General Manager and Assistant General Manager of the Investor Education and
Protection Fund Authority shall have the option of claiming House Rent Allowance in
accordance with the rate prescribed by the Central Government as applicable to
officers and employees of the corresponding Levels in the Pay Matrix of the Central
Government:
Provided that they shall not be eligible for House Rent Allowance in case they
are declared eligible for general pool residential accommodation and occupy such a
Government accommodation allotted to them.

10. Disciplinary Proceedings. –

The modalities of disciplinary proceedings against the General Manager and Assistant
General Manager of the Investor Education and Protection Fund Authority shall be
notified by the Chief Executive Officer of the Investor Education and Protection Fund
Authority as per rules and regulations applicable to officers and employees of the
corresponding Level in the Pay Matrix of the Central Government.

Page 1107
 Chapter VIII [Sections 123 to 127]
IEPFA (Recruitment, Salary…) Rules, 2017

11. Disqualification. –

No person-
(i) who has entered or contracted a marriage with a person having a spouse
living, or
(ii) who, having a spouse living , has entered into or contracted a marriage
with any person, Shall be eligible for appointment to the said posts:
Provided that the Central Government may, if satisfied that such marriage is
permissible under the personal law applicable to such person and the other party to
the marriage and that there are other grounds for so doing, exempt any person from the
operation of this rule.

12. Power to relax.-

Where the Central Government is of the opinion that it is necessary or expedient to do

so, it may, by order and for reasons to be recorded in writing, relax any of the provisions
of these rules with respect to any class or category of persons.

SCHEDULE

(see rule 4)
Name of Number of Classificati LEVEL Whether Age limit Education Whether
the Post Post on in selection for direct al age
the Pay post or recruits and other and other
Matrix non- qualificatio educational
selection ns qualificatio
post requiredfor ns
direct prescribed
recruits for direct
recruits will
apply in the
1 2 3 4 5 6 7 8
(1) *1 (2017) Not Level – Not Not Not Not
Genera applicable 13 applicable Applicabl Applicable Applicable
l *Subject to in pay e
Manag variation matrixof
er, depending Rs.
IEPF on 118500–
(2) *1 (2017) Not Level - Not Not Not Not
Assista applicable 10 is the Applicable Applicabl applicable applicable
nt *Subject to pay e
Genera variation matrixof
l depending Rs.
Manag on work load 56100

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 Chapter VIII [Sections 123 to 127]
IEPFA (Recruitment, Salary…) Rules, 2017

Period Method of In case of recruitment by If Departmental Circumstan

of recruitment, promotion or deputation or Promotion ces
probatio whether by absorption, grades from Committee in which
n, if any direct which promotion/deputation/ exists, what is its UPSC is to
recruitment or absorption is to be made composition be
by consultedin
promotionor by making
deputation or recruitment
absorptionsand
percentage of

9 10 11 12 13
Not Deputation By Deputation The Selection Not
Applicab Officers of the Central or Committee for
le State deputation consists
(i) holding analogous post on (i) Additional
regular basis. Secretary,
– or-- Affairs -- Chairman
(ii) with six years regular (ii) JointSecretary,
service in LEVEL 12 in the Ministry of
Rs. 78800 – 209200. Affairs -- Member
--or-- (iii) Joint
(iii) with ten years regular Secretary,
LEVEL 11in the Pay Matrix of Affairs -- Member
Rs 67700 - 208700
Desirable: Having
Administration/ Establishment

Not Deputation By Deputation The Selection Not Applicable

applicabl Officers of the Centralor Committee for
Government deputation consists
(i) holding analogous post on (i) Additional
regular basis. Secretary,
-or- Affairs -- Chairman
(ii) with two years regular (ii) JointSecretary,
LEVEL 8 in the Pay Matrix of Ministry of
Rs. 47600 - 151100 Affairs -- Member
Desirable: Having (iii) Joint
Administration/Establishment Ministry of
Affairs -- Member

[F. No. 05/19/14-IEPF]

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 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018

Chapter IX: the National Financial

Reporting Authority Rules, 2018
Ministry of Corporate Affairs
Notification
New Delhi, the 13th Novemebr, 2018

G.S.R. 1111(E).- In exercise of the powers conferred under under sub-sections (2) and
(4) of section 132, sub-section (1) of section 139 and sub-section (1) of section 469 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following rules, namely :-

1. Short Title and Commencement.─

(1) These rules may be called the National Financial Reporting Authority Rules, 2018.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.─

(1) In these rules, unless the context otherwise requires,─

(a) “accounting standards” means the ‘accounting standards’ as defined in clause (2)
of section 2 of the Act;

(b) “Act” means the Companies Act, 2013 (18 of 2013);

(c) “auditing standards” means the ‘auditing standards’ as defined in clause (7) of
section 2 of the Act;

(d) “auditor” means an individual or a firm including a limited liability partnership

incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009) or any other
Act for the time being in force, who has been appointed as an auditor of a company or
a body corporate under section 139 of the Act or under any other Act for the time being
in force;

(e) “Authority” means the National Financial Reporting Authority constituted under sub-
section (1) of section 132 of the Act;

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(f) “chairperson” means the chairperson of the Authority;

(g) “Division” means a division established by the Authority for the purpose of
organising and carrying out its functions and duties;

(h) “Form” means the Form annexed to these Rules;

(i) “full-time member” means a member who has been appointed as such under sub-
section (3) of section 132 of the Act;

(j) “part-time member” means a member of the Authority other than a full-time member.

(2) Words and expressions used and not defined in these rules but defined in the Act
shall have the same meanings respectively assigned to them in the Act.

3. Classes of companies and bodies corporate governed by the Authority.─

(1) The Authority shall have power to monitor and enforce compliance with accounting
standards and auditing standards, oversee the quality of service under sub-section (2)
of section 132 or undertake investigation under sub-section (4) of such section of the
auditors of the following class of companies and bodies corporate, namely:-

(a) companies whose securities are listed on any stock exchange in India or outside
India;

(b) unlisted public companies having paid-up capital of not less than rupees five
hundred crores or having annual turnover of not less than rupees one thousand crores
or having, in aggregate, outstanding loans, debentures and deposits of not less than
rupees five hundred crores as on the 31st March of immediately preceding financial
year;

(c) insurance companies, banking companies, companies engaged in the generation

or supply of electricity, companies governed by any special Act for the time being in
force or bodies corporate incorporated by an Act in accordance with clauses (b), (c),
(d), (e) and (f) of sub-section (4) of section 1 of the Act;

(d) any body corporate or company or person, or any class of bodies corporate or
companies or persons, on a reference made to the Authority by the Central
Government in public interest; and

(e) a body corporate incorporated or registered outside India, which is a subsidiary or

associate company of any company or body corporate incorporated or registered in
India as referred to in clauses (a) to (d), if the income or networth of such subsidiary or
associate company exceeds twenty per cent. of the consolidated income or
consolidated networth of such company or the body corporate, as the case may be,
referred to in clauses (a) to (d).

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NFRA Rules, 2018
(2) Every existing body corporate other than a company governed by these rules, shall
inform the Authority within thirty days of the commencement of these rules, in Form
NFRA-1, the particulars of the auditor as on the date of commencement of these rules.

(3) Every body corporate, other than a company as defined in clause (20) of section 2,
formed in India and governed under this rule shall, within fifteen days of appointment
of an auditor under sub-section (1) of section 139, inform the Authority in Form NFRA-
1, the particulars of the auditor appointed by such body corporate:
Provided that a body corporate governed under clause (e) of sub-rule (1) shall
provide details of appointment of its auditor in Form NFRA-1.

(4) A company or a body corporate other than a company governed under this rule
shall continue to be governed by the Authority for a period of three years after it ceases
to be listed or its paid-up capital or turnover or aggregate of loans, debentures and
deposits falls below the limit stated therein.

4. Functions and duties of the Authority.─

(1) The Authority shall protect the public interest and the interests of investors, creditors
and others associated with the companies or bodies corporate governed under rule 3
by establishing high quality standards of accounting and auditing and exercising
effective oversight of accounting functions performed by the companies and bodies
corporate and auditing functions performed by auditors.

(2) In particular, and without prejudice to the generality of the foregoing, the Authority
shall:─
(a) maintain details of particulars of auditors appointed in the companies and
bodies corporate specified in rule 3;
(b) recommend accounting standards and auditing standards for approval by
the Central Government;
(c) monitor and enforce compliance with accounting standards and auditing
standards;
(d) oversee the quality of service of the professions associated with ensuring
compliance with such standards and suggest measures for improvement in
the quality of service;
(e) promote awareness in relation to the compliance of accounting standards
and auditing standards;
(f) co-operate with national and international organisations of independent audit
regulators in establishing and overseeing adherence to accounting
standards and auditing standards; and
(g) perform such other functions and duties as may be necessary or incidental
to the aforesaid functions and duties.

(3) The Central Government may, by notification, and subject to such conditions,
limitations and restrictions as may be specified therein delegate any of its powers or
functions under the Act, other than the power to make rules, to the Authority.

Page 1112
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018
5. Annual return.

Every auditor referred to in rule 3 shall file a return with the Authority on or before 30th
April every year in such form as may be specified by the Central Government.

6. Recommending accounting standards and auditing standards.─

(1) For the purpose of recommending accounting standards or auditing standards for
approval by the Central Government, the Authority─
(a) shall receive recommendations from the Institute of Chartered Accountants
of India on proposals for new accounting standards or auditing standards or
for amendments to existing accounting standards or auditing standards;
(b) may seek additional information from the Institute of Chartered Accountants
of India on the recommendations received under clause (a), if required.

(2) The Authority shall consider the recommendations and additional information in
such manner as it deems fit before making recommendations to the Central
Government.

7. Monitoring and enforcing compliance with accounting standards.─

(1) For the purpose of monitoring and enforcing compliance with accounting standards
under the Act by a company or a body corporate governed under rule 3, the Authority
may review the financial statements of such company or body corporate, as the case
may be, and if so required, direct such company or body corporate or its auditor by a
written notice, to provide further information or explanation or any relevant documents
relating to such company or body corporate, within such reasonable time as may be
specified in the notice.

(2) The Authority may require the personal presence of the officers of the company or
body corporate and its auditor for seeking additional information or explanation in
connection with the review of the financial statements of such company or body
corporate.

(3) The Authority shall publish its findings relating to non-complainces on its website
and in such other manner as it considers fit, unless it has reasons not to do so in the
public interest and it records the reasons in writing.

(4) Where the Authority finds or has reason to believe that any accounting standard
has or may have been violated, it may decide on the further course of investigation or
enforcement action through its concerned Division.

8. Monitoring and enforcing compliance with auditing standards.─

Page 1113
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018

(1) For the purpose of monitoring and enforcing compliance with auditing standards
under the Act by a company or a body corporate governed under rule 3, the Authority
may: –
(a) review working papers (including audit plan and other audit documents) and
communications related to the audit;

(b) evaluate the sufficiency of the quality control system of the auditor and the manner
of documentation of the system by the auditor; and

(c) perform such other testing of the audit, supervisory, and quality control procedures
of the auditor as may be considered necessary or appropriate.

(2) The Authority may require an auditor to report on its governance practices and
internal processes designed to promote audit quality, protect its reputation and reduce
risks including risk of failure of the auditor and may take such action on the report as
may be necessary.

(3) The Authority may seek additional information or may require the personal
presence of the auditor for seeking additional information or explanation in connection
with the conduct of an audit.

(4) The Authority shall perform its monitoring and enforcement activities through its
officers or experts with sufficient experience in audit of the relevant industry.

(5) The Authority shall publish its findings relating to non-complainces on its website
and in such other manner as it considers fit, unless it has reasons not to do so in the
public interest and it records the reasons in writing.

(6) The Authority shall not publish proprietary or confidential information, unless it has
reasons to do so in the public interest and it records the reasons in writing.

(7) The Authority may send a separate report containing proprietary or confidential
information to the Central Government for its information.

(8) Where the Authority finds or has reason to believe that any law or professional or
other standard has or may have been violated by an auditor, it may decide on the
further course of investigation or enforcement action through its concerned Division.

9. Overseeing the quality of service and suggesting measures for improvement.─

(1) On the basis of its review, the Authority may direct an auditor to take measures for
improvement of audit quality including changes in their audit processes, quality control,
and audit reports and specify a detailed plan with time-limits.

(2) It shall be the duty of the auditor to make the required improvements and send a
report to the Authority explaining how it has complied with the directions made by the
Authority.
Page 1114
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018

(3) The Authority shall monitor the improvements made by the auditor and take such
action as it deems fit depending on the progress made by the auditor.

(4) The Authority may refer cases with regard to overseeing the quality of service of
auditors of companies or bodies corporate referred to in rule 3 to the Quality Review
Board constituted under the Chartered Accountants Act, 1949 (38 of 1949) or call for
any report or information in respect of such auditors or companies or bodies corporate
from such Board as it may deem appropriate.

(5) The Authority may take the assistance of experts for its oversight and monitoring
activities.

10. Power to investigate.─

(1) Where the Authority has-

(a) received any reference from the Central Government for investigation into
any matter of professional or other misconduct under sub-section (4) of
section 132 of the Act;

(b) decided to undertake investigation into any matter on the basis of its
compliance or oversight activities; or

(c) decided to undertake suo motu investigation into any matter of professional
or other misconduct, after recording reasons in writing for this purpose, it
shall forward the matter to its Division dealing with enforcement for carrying
out investigation and other action.

(2) If, during the investigation, the Authority has evidence to believe that any company
or body corporate has not complied with the requirements under the Act or rules which
involves or may involve fraud amounting to rupees one crore or more, it shall report its
findings to the Central Government.

(3) On the commencement of these rules-

(a) the action in respect of cases of professional or other misconduct against auditors
of companies referred to in rule 3 shall be initiated by Authority and no other institute
or body shall initiate any such proceedings against such auditors:
Provided that no other institute or body shall initiate or continue any proceedings
in such matters of misconduct where the Authority has initiated an investigation under
this rule;

(b) the action in respect of cases of professional or other misconduct against auditors
of companies or bodies corporate other than those referred to in rule 3 shall continue
to be proceeded with by the Institute of Chartered Accountants of India as per
provisions of the Chartered Accountants Act, 1949 and the regulations made
thereunder.
Page 1115
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018

11. Disciplinary proceedings.─

(1) Based on the reference received from the Central Government or findings of its
monitoring or enforcement or oversight activities, or on the basis of material otherwise
available on record, if the Authority believes that sufficient cause exists to take actions
permissible under sub-section (4) of section 132, it shall refer the matter to the
concerned division, which shall cause a show-cause notice to be issued to the auditor.

(2) The show-cause notice shall be in writing, and shall, inter alia, state-
(a) the provisions of the Act or rules under which it has been issued;
(b) the details of the alleged facts;
(c) the details of the evidence in support of the alleged facts;
(d) the provisions of the Act, rules or the accounting standards or auditing
standards thereunder allegedly violated, or the manner in which the public
interest is allegedly affected;
(e) the actions that the Authority proposes to take or the directions it proposes
to issue if the allegations are established;
(f) the time limit and the manner in which the auditor is required to respond to
the show-cause notice;
(g) the consequences of failure to respond to the show-cause notice; and
(h) the procedure to be followed for disposal of the show-cause notice.

(3) The show-cause notice shall enclose copies of documents relied upon and extracts
of relevant portions from the report of investigation or other records.

(4) The show-cause notice shall be served on the auditor in the following manner,
namely –
(a) by sending it to the auditor at the address provided by him or provided by
the Institute of Chartered Accountants of India (if required by the Authority)
by registered post with acknowledgement due; or
(b) by an appropriate electronic means to the email address of the auditor
provided by him or it or provided by the the Institute of Chartered
Accountants of India (if required by the Authority):
Provided that where the auditor is a firm –
(a) a notice to a firm shall be deemed to be a notice to all the partners or
employees of that firm as on the date of service of notice;
(b) the notice shall call upon the firm to disclose the name or names of the
partner or partners concerned who shall be responsible for answering
the allegations;
(c) the partner whose name is disclosed by the firm shall be responsible for
answering the notice against the firm, and if no partner, whether
erstwhile or present, of the firm owns responsibility for the allegations
made against the firm, then the firm as a whole shall be responsible for
answering the allegations, and all the partners and employees of that
firm as on the date of occurrence of alleged misconduct, shall be
responsible for answering the allegations.

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 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018
(5) The Division shall dispose of the show-cause notice within a period of ninety days
of the assignment through a summary procedure as may be specified by the Authority,
by a reasoned order in adherence to the principles of natural justice including where
necessary or appropriate an opportunity of being heard in person, and after
considering the submissions, if any, made by the auditor, the relevant facts and
circumstances, and the material on record.

(6) The order disposing of a show-cause notice may provide for-

(a) no action;
(b) caution;
(c) action for imposing penalty against auditor under sub-clause (A) of clause
(c) of sub-section (4) of section 132 or for debarring the auditor from
engaging as such under sub-clause (B) of clause (c) of sub-section (4) of
section 132 or both.

(7) The order passed under sub-rule (6) shall not become effective until thirty days
have elapsed from the date of issue of the order unless the Division states otherwise
in the order along with the reason for the same.

(8) The order passed under sub-rule (6) shall be served on the auditor in the manner
specified in sub-rule (3) and a copy of the same shall be sent
(i) in all cases to - (a) the Central Government; and (b) the Institute of Chartered
Accountants of India;
(ii) in the case of a company referred to in sub-section (5) of section 139 to the
Comptroller and Auditor General of India;
(iii) in the case of a listed company to the Securities and Exchange Board of India;
(iv) in the case of a bank or a non-banking finance company to the Reserve Bank of
India;
(v) in the case of an insurance company to the Insurance Regulatory and Development
Authority of India;
(vi) in case the auditor is resident outside India to concerned regulator of such country;

and the same shall be published on the website of the Authority.

12. Manner of enforcement of orders passed in disciplinary proceedings.─

(1) Where the order passed under rule 11 relates to imposition of a monetary penalty
on any auditor, the auditor shall deposit the amount of penalty with the Authority within
thirty days of the order:
Provided that where the auditor prefers an appeal against the order of the
Authority, it shall deposit ten per cent. of the amount of the monetary penalty with the
Appellate Tribunal.

(2) If, within thirty days of the order passed under rule 11, the auditor neither pays the
penalty nor appeals against the order, the Authority shall, without prejudice to any other
action, inform about such non-compliance to every company or body corporate
(including those not covered by rule 3) in which the auditor is functioning as auditor
Page 1117
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018
and every such company or body corporate shall appoint a new auditor in accordance
with the provisions of the Act.

(3) Where the order passed under rule 11 imposes a penalty on the auditor or debars
the auditor from practice, the order shall be sent to every company or body corporate
in which the auditor is functioning as auditor.

(4) Where the order passed under rule 11 debars the auditor from practice or the order
under sub-rule (2) is passed, the order shall be sent to every company or body
corporate (including those not covered by rule 3) in which the auditor is functioning as
auditor and every such company or body corporate shall appoint a new auditor in
accordance with the provisions of the Act.

13. Punishment in case of non-compliance.-

If a company or any officer of a company or an auditor or any other person contravenes

any of the provisions of these rules, the company and every officer of the company
who is in default or the auditor or such other person shall be punishable as per the
provisions of section 450 of the Act.

14. Role of chairperson and full-time members.─

All matters related to, investigation, monitoring, enforcement and disciplinary

proceedings shall be examined and decided by the chairperson or any one or more of
the full-time members, acting through one of the Divisions.

15. Advisory committees, study groups and task forces.─

For the effective performance of its functions under the Act, the Authority may
constitute advisory committees, study groups and task forces.

16. Financial reporting advocacy and education.─

The Authority shall take suitable measures for the promotion of awareness and
significance of accounting standards, auditing standards, auditors’ responsibilities,
audit quality and such other matters through education, training, seminars, workshops,
conferences and publicity.

17. Confidentiality and security of information.─

Page 1118
 Chapter IX [Sections 128 to 138]
NFRA Rules, 2018

(1) The Authority and all persons and organisations associated with it shall maintain
complete confidentiality and security of the information provided to them for the
purpose of the work of the Authority.

(2) The Authority may enter into such contractual arrangements as may be necessary
in order to maintain complete confidentiality and security of the information.

18. Avoidance of conflict of interest.─

(1) The Authority shall not enter into any contract, arrangement or relationship or
participate in any event that may, or is likely to be perceived to, interfere with its ability
to perform its functions and duties in an effective, fair and reasonable manner.

(2) In particular the Authority or any person associated with it shall not receive any
funds, assets, donations, favours, gifts or sponsorships from any source other than the
Central Government and shall not enter into any liabilities, obligations or commitments
except as permitted by the Central Government.

19. International associations and international assistance.─

(1) The Authority may become a member of regional or international associations of

independent audit regulators and standard-setters on such terms as it deems fit. (2)
The Authority may provide assistance to, or receive assistance from, foreign
independent audit regulators in investigation of an auditor in accordance with Indian
laws on such terms as it deems fit.

Annexure
Form NFRA-1

Page 1119
 Chapter IX [Sections 128 to 138]
NFRA (Meeting for Transaction of Business) Rules, 2019

Chapter IX: the National Financial

Reporting Authority (Meeting for
Transaction of Business) Rules, 2019
Ministry of Corporate Affairs
Notification
New Delhi, the 22nd May, 2019

G.S.R. 377(E).- In exercise of the powers conferred by sub-section (10) of section 132
read with section 469 of the Companies Act, 2013 (18 of 2013), the Central
Government hereby makes the following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the National Financial Reporting Authority (Meeting for
Transaction of Business) Rules, 2019.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions. –

(1) In these rules, unless the context otherwise requires, –

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Authority” means National Financial Reporting Authority constituted under

sub-section (1) of section 132 of the Act;

(c) “chairperson” means the chairperson of the National Financial Reporting

Authority appointed under sub-section (3) of section 132 of the Act;

(d) “full-time member” means a member who has been appointed as such under
sub-section (3) of section 132 of the Act and includes the chairperson;

(e) “member” means any member, including the chairperson, so appointed

under sub-section (3) of section 132 of the Act;

(f) “part-time member” means a member other than a full-time member,

appointed as such under sub-section (3) of section 132 of the Act;

Page 1120
 Chapter IX [Sections 128 to 138]
NFRA (Meeting for Transaction of Business) Rules, 2019
(g) “Secretary” means the Secretary of the Authority appointed under sub-
section (11) of section 132 of the Act and includes an officer of the Authority
authorised by the chairperson to function as Secretary.

(2) Words and expressions used and not defined in these rules but defined in the Act
shall have the same meanings as respectively assigned to them in the Act.

3. Meetings for transaction of business and procedure thereof. –

(1) The meetings of the Authority shall ordinarily be held at its head office situated in
New Delhi for the purpose of discharging its functions:
Provided that the Authority may also hold meetings at its other offices or at any
other place in India, whenever, in the opinion of the Authority, it is expedient to do so.

(2) The chairperson shall decide in advance, the date, time, place and the agenda for
each meeting of the Authority.

(3) The Secretary, and such other officers and persons as permitted by the
chairperson, shall attend a meeting of the Authority.

(4) If the chairperson, for any reason, is unable to attend a meeting of the Authority,
the senior-most full-time member present at the meeting, shall preside at the meeting.

(5) The Authority may grant leave of absence to a member not present in the meeting
and such leave of absence shall be recorded in the minutes of the meeting.

(6) Any member unable to be present in a meeting for any reason, may choose to
participate in the said meeting through video conferencing.

(7) Wherever considered necessary, a business may be transacted by a resolution

passed by circulation of an agenda to the members: Provided that a resolution passed
through circulation of the agenda to the members shall be placed before the next
meeting of the Authority for ratification.

(8) Matters placed for consideration of the Authority shall be decided by a majority of
the members present and voting, and in the event of an equality of votes, the
chairperson or in his absence, the member presiding, shall have a second or casting
vote.

(9) The quorum for a meeting of the Authority shall be four Members, of which at least
one member shall be a full-time member.

(10) The Authority shall cause the minutes of all the proceedings to be maintained in
the books kept for the purpose which may be in the form of binders containing loose
leaves, duly numbered.

(11) A copy of draft minutes of the proceedings of each meeting of the Authority shall
be circulated as soon as possible for confirmation by the members.
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(12) The confirmed minutes shall be signed by the chairperson or the member
presiding at the succeeding meeting, and taken on record thereafter.

(13) A member, who has any pecuniary interest, direct or indirect in any matter that is
brought up for consideration at a meeting of the Authority, shall, as soon as possible
after relevant circumstances have come to his knowledge, disclose the nature of his
interest at such meeting and such disclosure shall be recorded in the proceedings of
the Authority, and such member shall not take any part in any deliberation or decision
of the Authority with respect to that matter.

(14) If any doubt arises in the procedure to be adopted in a meeting, the same shall be
placed before the chairperson or in his absence, the member presiding, whose
decision in this regard shall be final.

4. Power to regulate procedure in certain circumstances. –

In a situation not provided for in these rules, the chairperson may, for reasons to be
recorded in writing, determine the procedure in a particular case.

5. Effect of any irregularities of procedure.-

No act or proceeding of the Authority shall be invalid merely by reason of any

irregularities in the procedure of the Authority not affecting the merits of the case.

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Chapter XI: the Companies

(Appointment and Qualification of
Directors) Rules, 2014
[The principal notification was published in the Gazette of India, Extraordinary Part II, Section 3, Sub-
section (i) vide number G.S.R. 259(E) dated 31st March, 2014 and subsequently amended vide
notification no. G.S.R. 671(E) dt. 18 Sept. 2014; notification no. G.S.R. 42(E) dt. 19 Jan. 2015;
notification no. G.S.R. 839(E) dt. 05 July 2017; notification no. G.S.R. 51(E) dt. 22 Jan. 2018; notification
number G.S.R. 431(E) dated 07th May 2018; Notification no. 558(E) dated 12th June 2018 (Form DIR-
3 and DIR-6 substituted); Notification no. G.S.R. 615(E) dated 5th July 2018; Notification no. G.S.R.
798(E) dated 21st August 2018; Notification no. G.S.R. 904(E) dated 20th September 2018; Notification
no. G.S.R. 339(E) dated 30th April 2019; Notification no. G.S.R. 368(E) dated 16th May 2019; Notificaiton
no. G.S.R. 528(E) dated 25th July 2019.]

Ministry of Corporate Affairs

Notification
New Delhi, the 31st March, 2014

G.S.R. 259(E).- In exercise of the powers conferred under second proviso to sub-
section (1), sub-section (4), clause (f) of sub-section (6) of section 149, sub-sections
(3) and (4) of section 150, section 151, sub-section (5) of section 152, section 153,
section 154, section 157, section 160, sub-section (1) of section 168 and section 170
read with section 469 of the Companies Act, 2013, and in supersession of the
Companies (Central Government’s) General Rules and Forms, 1956 or any other rules
prescribed under the Companies Act, 1956 (1 of 1956) on matters covered under
these rules, except as respects things done or omitted to be done before such
supersession, the Central Government hereby makes the following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the Companies (Appointment and Qualification of
Directors) Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires, -

(a) “Act” means the Companies Act, 2013 (18 of 2013);

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(b) “Annexure” means the Annexure to these rules;

(c) “digital signature” means the digital signature as defined under clause (p) of
sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(d) “Director Identification Number” (DIN) means an identification number allotted

by the Central Government to any individual, intending to be appointed as director
or to any existing director of a company, for the purpose of his identification as a
director of a company:
Provided that the Director Identification Number (DIN) obtained by the
individuals prior to the notification of these rules shall be the DIN for the purpose
of the Companies Act, 2013:
Provided further that "Director Identification Number" (DIN) includes the
Designated Partnership Identification Number (DPIN) issued under section 7 of the
Limited Liability Partnership Act, 2008 (6 of 2009) and rules made thereunder;

(e) “electronic record” means the electronic record as defined under clause (t) of
sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(f) “electronic Registry” means an electronic repository or storage system of the

Central Government in which the information or documents are received, stored,
protected and preserved in electronic form;

(g) “Fees” means the fees as specified in the Companies (Registration Offices and
Fees) Rules, 2014;

(h) “Form” or “e-Form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(i) “Regional Director” means the person appointed by the Central Government in
the Ministry of Corporate Affairs as a Regional Director;

(j) “section” means section of the Act;

(k) For the purposes of clause (d) of sub-section (1) of section 164 and clause (f)
of sub-section (1) of section 167 of the Act, “or otherwise” means any offence in
respect of which he has been convicted by a Court under the Act or under the
Companies Act, 1956.
[See section 164(1)(d) on ‘disqualification for appointment of director’ and section
167(1)(f) on ‘vacation of office of director’]

(2) Words and expressions used in these rules and not defined but defined under the
Act or under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the
Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories
Act, 1996 (22 of 1996) or the Information Technology Act, 2000 (21 of 2000) or the
Companies (Specification of definitions details) Rules, 2014 shall have the meanings
respectively assigned to them in the Act or in those Acts or such rules.

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3. Woman director on the Board.-

[Refer second proviso to section 149(1)]

The following class of companies shall appoint at least one woman director-

(i) every listed company;

(ii) every other public company having -

(a) paid–up share capital of one hundred crore rupees or more; or
(b) turnover of three hundred crore rupees or more:

Provided that a company, which has been incorporated under the Act and is
covered under provisions of second proviso to sub-section (1) of section 149 shall
comply with such provisions within a period of six months from the date of its
incorporation:

Provided further that any intermittent vacancy of a woman director shall be

filled-up by the Board at the earliest but not later than immediate next Board meeting
or three months from the date of such vacancy whichever is later.

Explanation.- For the purposes of this rule, it is hereby clarified that the paid up share
capital or turnover, as the case may be, as on the last date of latest audited financial
statements shall be taken into account.

4. Number of independent directors.-

[Refer section 149 (4)]

(1) The following class or classes of companies shall have at least two directors as
independent directors -

(i) the Public Companies having paid up share capital of ten crore rupees or more; or

(ii) the Public Companies having turnover of one hundred crore rupees or more; or

(iii) the Public Companies which have, in aggregate, outstanding loans, debentures
and deposits, exceeding fifty crore rupees:

Provided that in case a company covered under this rule is required to appoint
a higher number of independent directors due to composition of its audit committee,
such higher number of independent directors shall be applicable to it:

Provided further that any intermittent vacancy of an independent director shall

be filled-up by the Board at the earliest but not later than immediate next Board
meeting or three months from the date of such vacancy, whichever is later:

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Provided also that where a company ceases to fulfil any of three conditions
laid down in sub-rule (1) for three consecutive years, it shall not be required to comply
with these provisions until such time as it meets any of such conditions;

Explanation. - For the purposes of this rule, it is here by clarified that, the paid up share
capital or turnover or outstanding loans, debentures and deposits, as the case may
be, as existing on the last date of latest audited financial statements shall be taken
into account:

Provided that a company belonging to any class of companies for which a

higher number of independent directors has been specified in the law for the time
being in force shall comply with the requirements specified in such law.

652
[(2) The following classes of unlisted public company shall not be covered under
sub-rule (1), namely:-

a. a joint venture;

b. a wholly owned subsidiary; and

c. a dormant company as defined under section 455 of the Act.]

5. Qualifications of independent director.-

[Refer section 149]

653
[(1)] An independent director shall possess appropriate skills, experience and
knowledge in one or more fields of finance, law, management, sales, marketing,
administration, research, corporate governance, technical operations or other
disciplines related to the company’s business.
654
[(2) None of the relatives of an independent director, for the purposes of sub-clauses
(ii) and (iii) of clause (d) of sub-section (6) of section 149,-

652
Sub-rule (2) inserted by notification number G.S.R. 839(E) dated 05th July 2017, published on and
effective from 06.07.2017. FURTHER it is clarified vide general circular 09/2017 dated 05th September
2017 that a "joint venture" would mean a joint arrangement, entered into in writing, whereby the parties
that have joint control of the arrangement, have rights to the net assets of the arrangement. The usage
of the term is similar to that under the Accounting Standards.

653
Rule 5 numbered as sub-rule (1) by notification number G.S.R. 431(E) dated 07th May 2018.

654
Inserted sub-rule (2) in Rule 5 by notification number G.S.R. 431(E) dated 07th May 2018.

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The Companies (Appointment and Qualification of Directors) Rules, 2014

(i) is indebted to the company, its holding, subsidiary or associate company or their
promoters, or directors; or
(ii) has given a guarantee or provided any security in connection with the indebtedness
of any third person to the company, its holding, subsidiary or associate company or
their promoters, or directors of such holding company,

for an amount of fifty lakhs rupees, at any time during the two immediately preceding
financial years or during the current financial year.]

6. Creation and maintenance of databank of persons offering to become

independent directors. –

[Refer section 150]

(1) Any body, institute or association (hereinafter to be referred as “the agency”), which
has been authorised in this behalf by the Central Government shall create and
maintain a data bank of persons willing and eligible to be appointed as independent
director and such data bank shall be placed on the website of the Ministry of Corporate
Affairs or on any other website as may be approved or notified by the Central
Government.

(2) The data bank referred to in sub-rule (1) shall contain the following details in
respect of each person included in the data bank to be eligible and willing to be
appointed as independent director-
(a) DIN (Director Identification Number);
(b) the name and surname in full;
655
[(c) omitted;]
(d) the father’s name 656[omitted];
(e) the date of Birth;
(f) gender;
(g) the nationality;
(h) the occupation;
(i) full Address with PIN Code (present and permanent);
(j) phone number;
(k) e-mail id;
(l) the educational and professional qualifications;
(m) experience or expertise, if any;
(n) any legal proceedings initiated or pending against such person;
(o) the list of limited liability partnerships in which he is or was a designated
partner along with –
(i) the name of the limited liability partnership;

655
Omitted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to omission it was
“(c) income-tax PAN”.

656
Omitted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to omission it was
“and mother’s name and Spouse’s name (if married)”

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The Companies (Appointment and Qualification of Directors) Rules, 2014

(ii) the nature of industry; and

(iii) the duration- with dates;
(p) the list of companies in which he is or was director along with -
(i) the name of the company;
(ii) the nature of industry;
(iii) the nature of directorship – Executive or Non-executive or Managing
Director or Independent Director or Nominee Director; and
(iv) duration – with dates.

(3) A disclaimer shall be conspicuously displayed on the website hosting the databank
that a company must carry out its own due diligence before appointment of any person
as an independent director and “the agency” maintaining the databank or the Central
Government shall not be held responsible for the accuracy of information or lack of
suitability of the person whose particulars form part of the databank.

(4) Any person who desires to get his name included in the data bank of independent
directors shall make an application to “the agency” 657[omitted].

(5) The agency may charge a reasonable fee from the applicant for inclusion of his
name in the data bank of independent directors.

(6) Any person who has applied for inclusion of his name in the data bank of
independent directors or any person whose name appears in the data bank, shall
intimate to the agency about any changes in his particulars within fifteen days of such
change.

(7) The databank posted on the website shall -

(a) be accessible at the specified website;
(b) be substantially identical to the physical version of the data bank;
(c) be searchable on the parameters specified in sub-rule (2);
(d) be presented in a format or formats convenient for both printing and viewing
online; and
(e) contain a link to obtain the software required to view or print the particulars
free of charge.

7. Small shareholders’ director.-

[Refer section 151]

(1) A listed company, may upon notice of not less than one thousand small
shareholders or one-tenth of the total number of such shareholders, whichever is
lower, have a small shareholders’ director elected by the small shareholders:

657
Omitted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to omission it was
“in Form DIR-1”.

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Provided that nothing in this sub-rule shall prevent a listed company to opt to
have a director representing small shareholders suo motu and in such a case the
provisions of sub-rule (2) shall not apply for appointment of such director.

(2) The small shareholders intending to propose a person as a candidate for the post
of small shareholders’ director shall leave a notice of their intention with the company
at least fourteen days before the meeting under their signatures specifying the name,
address, shares held and folio number of the person whose name is being proposed
for the post of director and of the small shareholders who are proposing such person
for the office of director:

Provided that if the person being proposed does not hold any shares in the
company, the details of shares held and folio number need not be specified in the
notice:

(3) The notice shall be accompanied by a statement signed by the person whose name
is being proposed for the post of small shareholders’ director stating -
(a) his Director Identification Number;
(b) that he is not disqualified to become a director under the Act; and
(c) his consent to act as a director of the company

(4) Such director shall be considered as an independent director subject to, his being
eligible under sub-section (6) of section 149 and his giving a declaration of his
independence in accordance with subsection (7) of section 149 of the Act.

(5) The appointment of small shareholders’ director shall be subject to the provisions
of section 152 except that-
(a) such director shall not be liable to retire by rotation;
(b) such director’s tenure as small shareholders’ director shall not exceed a
period of three consecutive years; and
(c) on the expiry of the tenure, such director shall not be eligible for re-
appointment.

(6) A person shall not be appointed as small shareholders’ director of a company, if

the person is not eligible for appointment in terms of section 164.

(7) A person appointed as small shareholders’ director shall vacate the office if -
(a) the director incurs any of the disqualifications specified in section 164;
(b) the office of the director becomes vacant in pursuance of section 167;
(c) the director ceases to meet the criteria of independence as provided in sub-
section (6) of section 149.

(8) No person shall hold the position of small shareholders’ director in more than two
companies at the same time:

Provided that the second company in which he has been appointed shall not
be in a business which is competing or is in conflict with the business of the first
company.

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(9) A small shareholders’ director shall not, for a period of three years from the date
on which he ceases to hold office as a small shareholders’ director in a company, be
appointed in or be associated with such company in any other capacity, either directly
or indirectly.

8. Consent to act as director.-

[Refer section 152]

Every person who has been appointed to hold the office of a director shall on or before
the appointment furnish to the company a consent in writing to act as such in Form
DIR-2:

Provided that the company shall, within thirty days of the appointment of a
director, file such consent with the Registrar in Form DIR-12 along with the fee as
provided in the Companies (Registration Offices and Fees) Rules, 2014.

9. 658 [Application for allotment of Director Identification Number before

appointment in an existing company].-

[Refer section 153]

659
[ (1) Every applicant, who intends to be appointed as director of an existing company
shall make an application electronically in Form DIR-3, to the Central Government for
allotment of a Director Identification Number (DIN) along with such fees as provided
under the Companies (Registration Offices and Fees) Rules, 2014.
Provided that in case of proposed directors not having approved DIN, the
particulars of maximum three directors shall be mentioned in Form No.INC-32 (SPICe)
and DIN may be allotted to maximum three proposed directors through Form INC-32
(SPICe)].

(2) The Central Government shall provide an electronic system to facilitate submission
of application for the allotment of DIN through the portal on the website of the Ministry
of Corporate Affairs.

658
Substituted marginal note of Rule 9 vide notification no. G.S.R. 51(E) dt. 22nd January 2018 w.e.f.
26 January 2018. Prior to substitution, it read as “Application for allotment of Director Identification
th

Number”.

659
Substituted sub-rule (1) of Rule 9 vide notification no. G.S.R. 51(E) dt. 22nd January 2018 w.e.f. 26th
January 2018. Prior to substitution, it read as “(1) Every individual, who is to be appointed as director
of a company shall make an application electronically in Form DIR-3, to the Central Government for the
allotment of a Director Identification Number (DIN) along with such fees as provided in the Companies
(Registration Offices and Fees) Rules, 2014.”.

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(3) (a) The applicant shall download Form DIR-3 from the portal, fill in the required
particulars sought 660[therein, verify and sign the form] and after attaching copies of
the following documents, scan and file the entire set of documents electronically-
(i) photograph;
(ii) proof of identity;
(iii) proof of residence;
661
[ (iiia) board resolution proposing his appointment as director in an existing
company]
662
[omitted] and
(v) specimen signature duly verified.
663
[ (b) Form DIR-3 shall be signed and submitted electronically by the applicant
using his or her own Digital Signature Certificate and shall be verified digitally by
a company secretary in full time employment of the company or by the managing
director or director or CEO or CFO of the company in which the applicant is
intended to be appointed as director in an existing company,]

[(4) In case the name of a person does not have a last name, then his or her father’s
664

or grandfather’s surname shall be mentioned in the last name alongwith the

declaration in Form No. DIR-3A.]

10. Allotment of DIN.-

[Refer section 154]

660
Altered by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to alteration it was
“therein and sign the form”.

661
Inserted sub-clause (iiia) in clause (a) of sub-rule (3) of Rule 9 vide notification no. G.S.R. 51(E) dt.
22nd January 2018 w.e.f. 26th January 2018.

662
Omitted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to omission it was
“(iv) verification by the applicant for applying for allotment of DIN in Form DIR-4;”

663
Substituted clause (b) in sub-rule (3) of Rule 9 vide notification no. G.S.R. 51(E) dt. 22nd January
2018 w.e.f. 26th January 2018. Prior to substitution, it read as “(b) Form DIR-3 shall be signed and
submitted electronically by the applicant using his or her own Digital Signature Certificate and shall be
verified digitally by - (i) a chartered accountant in practice or a company secretary in practice or a cost
accountant in practice; or (ii) a company secretary in full time employment of the company or by the
managing director or director of the company in which the applicant is to be appointed as director.”.

664
Inserted by Notification number G.S.R. 671 (E) dated 18 September 2014.

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(1) On the submission of the Form DIR-3 on the portal and payment of the requisite
amount of fees through online mode 665[an application number shall be generated by
the system automatically].

(2) After generation of the 666 [application number], the Central Government shall
process the applications received for allotment of DIN under sub-rule (2) of rule 9,
decide on the approval or rejection thereof and communicate the same to the applicant
along with the DIN allotted in case of approval by way of a letter by post or
electronically or in any other mode, within a period of one month from the receipt of
such application.

(3) If the Central Government, on examination, finds such application to be defective

or incomplete in any respect, it shall give intimation of such defect or incompleteness,
by placing it on the website and by email to the applicant who has filed such
application, directing the applicant to rectify such defects or incompleteness by
resubmitting the application within a period of fifteen days of such placing on the
website and email:

Provided that the Central Government shall -

(a) reject the application and direct the applicant to file fresh application with
complete and correct information, where the defect has been rectified
partially or the information given is still found to be defective;
(b) treat and label such application as invalid in the electronic record in case the
defects are not removed within the given time; and
(c) inform the applicant either by way of letter by post or electronically or in any
other mode.

(4) In case of rejection or invalidation of application, 667[omitted] the fee so paid with
the application shall neither be refunded nor adjusted with any other application.

(5) All Director Identification Numbers allotted to individual(s) by the Central

Government before the commencement of these rules shall be deemed to have been
allotted to them under these rules.

(6) The Director Identification Number so allotted under these rules is valid for the life-
time of the applicant and shall not be allotted to any other person.

665
Substituted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to substitution it
read as “the provisional DIN shall be generated by the system automatically which shall not be utilized
till the DIN is confirmed by the Central Government”.

666
Substituted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to substitution it
read as “provisional DIN”.

667
Omitted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to omission it read
as “the provisional DIN so allotted by the system shall get lapsed automatically and”.

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10A.
668
[10A. (1) Every director, functioning as a director in one or more companies on or
before the 30th June, 2007 and who has not yet intimated his DIN to such company
or companies shall, within one month of the receipt of Director Identification Number
from the Central Government, intimate his Director Identification Number to the
company or all companies wherein he is a director as per Form DIR-3B.

(2) The intimation by the company of Director Identification Number of its directors
under section 157 of the Act shall be furnished in Form DIR-3C within fifteen days of
receipt of intimation under section 156.]

11. Cancellation or surrender or Deactivation of DIN.-

[Refer section 155]

[(1)] The Central Government or Regional Director (Northern Region), Noida or any
officer authorised by the Regional Director may, upon being satisfied on verification of
particulars or documentary proof attached with the application received 669[alongwith
fees as specified in Companies (Registration Offices and Fees) Rules, 2014] from any
person, cancel or deactivate the DIN in case -
(a) the DIN is found to be duplicated in respect of the same person provided the data
related to both the DIN shall be merged with the validly retained number;
(b) the DIN was obtained in a wrongful manner or by fraudulent means;
(c) of the death of the concerned individual;
(d) the concerned individual has been declared as a person of unsound mind by a
competent Court;
(e) if the concerned individual has been adjudicated an insolvent:
Provided that before cancellation or deactivation of DIN pursuant to clause (b),
an opportunity of being heard shall be given to the concerned individual;
(f) on an application made in Form DIR-5 by the DIN holder to surrender his or her DIN
along with declaration that he has never been appointed as director in any
company and the said DIN has never been used for filing of any document with
any authority, the Central Government may deactivate such DIN:
Provided that before deactivation of any DIN in such case, the Central
Government shall verify e-records.

Explanation.- For the purposes of clause (b) -

(i) the term “wrongful manner” means if the DIN is obtained on the strength of
documents which are not legally valid or incomplete documents are furnished or
on suppression of material information or on the basis of wrong certification or by
making misleading or false information or by misrepresentation;

668
Rule 10A inserted by Notification number G.S.R. 671 (E) dated 18 September 2014.

669
Inserted by Notification number G.S.R. 671 (E) dated 18 September 2014.

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The Companies (Appointment and Qualification of Directors) Rules, 2014

(ii) the term “fraudulent means” means if the DIN is obtained with an intent to
deceive any other person or any authority including the Central Government.
670
[(2) The Central Government or Regional Director (Northern Region), or any officer
authorised by the Central Government or Regional Director (Northern Region) shall,
deactivate the Director Identification Number (DIN), of an individual who does not
intimate his particulars in e-form DIR-3-KYC 671[or the web service DIR-3-KYC-WEB]
within stipulated time in accordance with Rule 12A.

(3) The de-activated DIN shall be re-activated only after e-form DIR-3-KYC 672[or the
web service DIR-3-KYC-WEB] is filed along with fee as prescribed under Companies
(Registration Offices and Fees) Rules, 2014.]

12. Intimation of changes in particulars specified in DIN application. –

[Refer section 157]

(1) Every individual who has been allotted a Director Identification Number under these
rules shall, in the event of any change in his particulars as stated in Form DIR-3,
intimate such change(s) to the Central Government within a period of thirty days of
such change(s) in Form DIR-6 in the following manner, namely;-
673
[(i) The applicant shall download Form DIR-6 from the portal, fill in the relevant
changes, verify the Form and attach duly scanned copy of the proof of the changed
particulars and submit electronically;]
(ii) the form shall be digitally signed by a chartered accountant in practice or a
company secretary in practice or a cost accountant in practice;
(iii) the applicant shall submit the Form DIR-6;

(2) The Central Government, upon being satisfied, after verification of such changed
particulars from the enclosed proofs, shall incorporate the said changes and inform
the applicant by way of a letter by post or electronically or in any other mode confirming
the effect of such change in the electronic database maintained by the Ministry.

670
Rule 11 renumbered as sub-rule (1) and inserted sub-rules (2) and (3) by notification number G.S.R.
615(E) dated 5th July 2018.

671
Inserted by notification no. G.S.R. 528(E) dated 25th July 2019 w.e.f. 5th August 2019.

672
Inserted by notification no. G.S.R. 528(E) dated 25th July 2019 w.e.f. 5th August 2019.

673
Substituted by Notification number G.S.R. 671 (E) dated 18 September 2014. Prior to substitution it
read as “(i) the applicant shall download Form DIR-6 from the portal and fill in the relevant changes,
attach copy of the proof of the changed particulars and verification in the Form DIR-7 all of which shall
be scanned and submitted electronically;”.

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(3) The DIN cell of the Ministry shall also intimate the change(s) in the particulars of
the director submitted to it in Form DIR-6 to the concerned Registrar(s) under whose
jurisdiction the registered office of the company(s) in which such individual is a director
is situated.

(4) The concerned individual shall also intimate the change(s) in his particulars to the
company or companies in which he is a director within fifteen days of such change.

674
[12A Directors KYC:-

Every individual 675 [who holds] a Director Identification Number (DIN) as on 31st
March of a financial year as per these rules shall, 676[submit e-form DIR-3-KYC for the
said financial year to the Central Government on or before 30th September of
immediate next financial year].

Provided that every individual who has already been allotted a Director
Identification Number (DIN) as at 31st March, 2018, shall submit e-form 677{DIR-3 KYC
on or 678<before 5th October, 2018>}.]
679
[Provided further that where an individual who has already submitted e-form
DIR-3 KYC in relation to any previous financial year, submits web-form DIR-3 KYC-
WEB through the web service in relation to any subsequent financial year it shall be
deemed to be compliance of the provisions of this rule for the said financial year:
Provided also that in case an individual desires to update his personal mobile
number or the e-mail address, as the case may be, he shall update the same by
submitting e-form DIR-3 KYC only:

674
Rule 11 renumbered as sub-rule (1) and inserted sub-rules (2) and (3) by notification number G.S.R.
615(E) dated 5th July 2018.

Substituted for ‘who has been allotted’ by notification no. G.S.R. 528(E) dated 25th July 2019 w.e.f.
675
th
5 August 2019.

676
Substitutued for “submit e-form DIR-3-KYC to the Central Government on or before 30th June of
immediate next financial year” by notification no. G.S.R. 528(E) dated 25th July 2019 w.e.f. 5th August
2019. AND earlier for words “on or before 30th April of immediate next financial year”, the words ‘on or
before 30th June of immediate next financial year’ were substitutued vide notification number G.S.R.
339(E) dated 30th April 2019.

677
Substituted for “DIR-3 KYC on or before 31st August 2018” by notification number G.S.R. 798(E)
dated 21st August 2018.

Substituted for “before 15th September 2018” by notification number G.S.R. 904(E) dated 20th
678

September 2018.

679
Inserted by notification no. G.S.R. 528(E) dated 25th July 2019 w.e.f. 5th August 2019.

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Provided also that fee for filing e-form DIR-3 KYC or web-form DIR-3 KYC-WEB
through the web service, as the case may be, shall be payable as provided in
Companies (Registration Offices and Fees) Rules, 2014.]

680
[12B. Directors of company required to file e-form ACTIVE.-

(1) Where a company governed by Rule 25A of the Companies (Incorporation) Rules,
2014, fails to file the e-form ACTIVE within the period specified therein, the Director
Identification Number (DIN) allotted to its existing directors, shall be marked as
“Director of ACTIVE non-compliant company”.

(2) Where the DIN of a director has been marked as “Director of ACTIVE non-
compliant company”, such director shall take all necessary steps to ensure that all
companies governed by rule 25A of the Companies (Incorporation) Rules, 2014,
where such director has been so appointed, file e-form ACTIVE.

(3) After all the companies referred to in sub-rule (2) file the e-form ACTIVE, the DIN
of such director shall be marked as “Director of ACTIVE compliant company]

13. Notice of candidature of a person for directorship.-

[Refer section 160]

The company shall, at least seven days before the general meeting, inform its
members of the candidature of a person for the office of a director or the intention of
a member to propose such person as a candidate for that office-

(1) by serving individual notices, on the members through electronic mode to such
members who have provided their email addresses to the company for communication
purposes, and in writing to all other members; and

(2) by placing notice of such candidature or intention on the website of the company,
if any:
Provided that it shall not be necessary for the company to serve individual
notices upon the members as aforesaid, if the company advertises such candidature
or intention, not less than seven days before the meeting at least once in a vernacular
newspaper in the principal vernacular language of the district in which the registered
office of the company is situated, and circulating in that district, and at least once in
English language in an English newspaper circulating in that district.

14. Disqualification of directors’ sub-section (2) of section 164.-

[Refer section 164]

680
Inserted new Rule 12B vide notificaiton no. G.S.R. 368(E) dated 16th May 2019.

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(1) Every director shall inform to the company concerned about his disqualification
under sub-section (2) of section 164, if any, in Form DIR-8 before he is appointed or
re-appointed.

(2) Whenever a company fails to file the financial statements or annual returns, or fails
to repay any deposit, interest, dividend, or fails to redeem its debentures, as specified
in sub-section (2) of section 164, the company shall immediately file Form DIR-9, to
the Registrar furnishing therein the names and addresses of all the directors of the
company during the relevant financial years.

(3) When a company fails to file the Form DIR-9 within a period of thirty days of the
failure that would attract the disqualification under sub-section (2) of section 164,
officers of the company specified in clause (60) of section 2 of the Act shall be the
officers in default.

(4) Upon receipt of the Form DIR-9 under sub-rule (2), the Registrar shall immediately
register the document and place it in the document file for public inspection.

(5) Any application for removal of disqualification of directors shall be made in Form
DIR-10.

15. Notice of resignation of director.-

[Refer section 168 and Circular 03/2015 dated 03 March 2015]

The company shall within thirty days from the date of receipt of notice of resignation
from a director, intimate the Registrar in Form DIR-12 and post the information on its
website, if any.
[Refer MCA General Circular no. 03/2015 dated 03 March 2015 for clarification relating
to filing of e-form DIR-11 and DIR-12]

16. Copy of resignation of director to be forwarded by him.-

[Refer section 168 and Circular 03/2015 dated 03 March 2015]

Where a director resigns from his office, he 681[may] within a period of thirty days from
the date of resignation, forward to the Registrar a copy of his resignation along with
reasons for the resignation in Form DIR-11 along with the fee as provided in the
Companies (Registration Offices and Fees) Rules, 2014.
682
[Provided that in case a company has already filed Form DIR-12 with the
Registrar under rule 15, a foreign director of such company resigning from his office

681
Substituted for the word ‘shall’ in Rule 16 by notification number G.S.R. 431(E) dated 07th May 2018.

682
Inserted by the Companies (Appointment and Qualification of Directors) Amendment Rules, 2015
notification number G.S.R. 42 (E) dated 19th January, 2015.

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The Companies (Appointment and Qualification of Directors) Rules, 2014

may authorise in writing a practising chartered accountant or cost accountant in

practice or company secretary in practice or any other resident director of the company
to sign Form DIR-11 and file the same on his behalf intimating the reasons for the
resignation.]

17. Register of directors and key managerial personnel.-

[Refer section 170]

(1) Every company shall keep at its registered office a register of its directors and key
managerial personnel containing the following particulars, namely:-
(a) Director Identification Number (optional for key managerial personnel);
(b) present name and surname in full;
(c) any former name or surname in full;
(d) father’s name, mother’s name and spouse’s name(if married) and surnames in
full;
(e) date of birth;
(f) residential address (present as well as permanent);
(g) nationality (including the nationality of origin, if different);
(h) occupation;
(i) date of the board resolution in which the appointment was made;
(j) date of appointment and reappointment in the company;
(k) date of cessation of office and reasons therefor;
(l) office of director or key managerial personnel held or relinquished in any other
body corporate;
(m) membership number of the Institute of Company Secretaries of India in
case of company secretary, if applicable; and
(n) Permanent Account Number (mandatory for key managerial personnel if not
having DIN);

(2) In addition to the details of the directors or key managerial personnel, the company
shall also include in the aforesaid Register the details of securities held by them in the
company, its holding company, subsidiaries, subsidiaries of the company’s holding
company and associate companies relating to-
(a) the number, description and nominal value of securities;
(b) the date of acquisition and the price or other consideration paid;
(c) date of disposal and price and other consideration received;
(d) cumulative balance and number of securities held after each transaction;
(e) mode of acquisition of securities ;
(f) mode of holding – physical or in dematerialized form; and
(g) whether securities have been pledged or any encumbrance has been created
on the securities.

18. Return containing the particulars of directors and the key managerial
personnel. -

[Refer section 170]

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A return containing the particulars of appointment of director or key managerial

personnel and changes therein, shall be filed with the Registrar in Form DIR-12 along
with such fee as may be provided in the Companies (Registration Offices and Fees)
Rules, 2014 within thirty days of such appointment or change, as the case may be.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]

Form DIR-1 [Form DIR-1 OMITTED by Notification number G.S.R. 671 (E) dated 18
September 2014.]

Form DIR-2

Form DIR-3 [Substituted for old form DIR-3 by Notification number G.S.R. 671 (E)
dated 18 September 2014.]

Form DIR-3 KYC [Inserted by notification number G.S.R. 615(E) dated 5th July
2018]

Form DIR-3-KYC-WEB [Inserted by notification number G.S.R. 528(E) dated 25th

July 2018]

Form DIR-3A [Inserted by Notification number G.S.R. 671 (E) dated 18 September
2014.]

Form DIR-3B [Inserted by Notification number G.S.R. 671 (E) dated 18 September
2014.]

Form DIR-3C [Inserted by Notification number G.S.R. 671 (E) dated 18 September
2014.]

Form DIR-4 [Form DIR-4 OMITTED by Notification number G.S.R. 671 (E) dated 18
September 2014.]

Form DIR-5 [New form DIR-5 vide notification number G.S.R. 839(E) dated
05.07.2017, published on and effective from 06.07.2017]

Form DIR-6 [New form DIR-6 substituted for old form DIR-6 by Notification number
G.S.R. 671 (E) dated 18 September 2014.]

Form DIR-7 [Form DIR-7 OMITTED by Notification number G.S.R. 671 (E) dated 18
September 2014.]

Form DIR-8

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The Companies (Appointment and Qualification of Directors) Rules, 2014

Form DIR-9

Form DIR-10

Form DIR-11

Form DIR-12

Form DIR-2

Form DIR-2
Consent to act as a director of a company
[Pursuant to section 152(5) and rule 8 of Companies (Appointment and Qualification of
Directors) Rules, 2014]
To
………………. (Name of the company)
………………. (Address of the company)

Subject: Consent to act as a director.

I …………………., hereby give my consent to act as director of …………………………..

(name of the company), pursuant to sub-section (5) of section 152 of the Companies Act,
2013 and certify that I am not disqualified to become a director under the Companies Act,
2013.

1. Director Identification Number (DIN):

2. Name (in full):
3. Father’s Name (in full):
4. Address:
5. E-mail id:
6. Mobile no.
7. Income-tax PAN
8. Occupation:
9. Date of birth:
10. Nationality:
11. No. of companies in which I am already a Director and out of such companies the
names of the companies in which I am a Managing Director, Chief Executive Officer,
Whole time Director, Secretary, Chief Financial Officer, Manager.
12. Particulars of membership No. and Certificate of practice No. if the applicant is a
member of any professional Institute. Specifically state NIL if none.

Declaration
I declare that I have not been convicted of any offence in connection with the promotion,
formation or management of any company or LLP and have not been found guilty of any
fraud or misfeasance or of any breach of duty to any company under this Act or any previous
company law in the last five years. I further declare that if appointed my total Directorship

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 Chapter XI [Sections 149 to 172]

The Companies (Appointment and Qualification of Directors) Rules, 2014

in all the companies shall not exceed the prescribed number of companies in which a person
can be appointed as a Director.

Signature:
Designation:
Date:
Place:

Attachments:
1. Proof of identity;
2. Proof of residence;

Form DIR-3A

[Inserted by Notification number G.S.R. 671(E) dated 18 September 2014]

FORM. DIR-3A

Declaration

[Pursuant to rule 9(4) of the Companies (Appointment and Qualification of Directors)

Rules, 2014]
If the name of a person does not have a last name, then his/her father's first name
should be filled in the mandatory "last Name' field. In such a case, declaration should
also be submitted along with DIN application, in the format given below:
Specimen/format of declaration:
(If ID proof has single name for applicant)
I... ................................................. (Applicant name as per ID proof) son/daughter of
(Name) ................................................. (Surname) residing at
................................ (Address as per address proof) do solemnly affirm and state as
follows:
I do not use my Family Name/Surname as my last name. However, as this
is a mandatory requirement for DIN application, I am using my father's
surname as last name.
I solemnly declare that the statements given above are true to the best of my
knowledge and belief and that it conceals nothing and that no part of it is false.
I further declare that I have read and understood the provisions of sections 153,
155, 156, 447 and 448 read with sections 449, 450 and 451 of the Companies Act,
2013.
MID proof has single name for applicant's father)
I .................. and my father's name ...................... ., as appearing on the enclosed ID
proof, does not have the surname. My grandfather's name is ... (name) ....................
(Surname) ...................... For the purpose of the DIN application, I am mentioning my
grandfather's surname " ............................... " as my surname, as this is a mandatory
requirement for applying DIN.

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I solemnly declare that the statements given above are true to the best of my
knowledge and belief and that it conceals nothing and that no part of it is false.
I further declare that I have read and understood the provisions of Sections 153, 447
and 448 read with Sections 449, 450 and 451 of the Companies Act, 2013.
Date Signature of the Applicant"
Place

Form DIR-3B [Inserted by Notification number G.S.R. 671(E) dated 18 September 2014]

Form DIR-3B

[Inserted by Notification number G.S.R. 671(E) dated 18 September 2014]

FORM DIR-3B
Intimation of allotment of Director Identification Number (DIN) to
the Company by the Director
[Pursuant to rule 10(A) of the Companies (Appointment and Qualification of
Directors) Amendment Rules, 2014]
To

Da t e
Subject: Intimation of allotment of Director Identification Number (DIN) to the
Company by the

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 Chapter XI [Sections 149 to 172]

The Companies (Appointment and Qualification of Directors) Rules, 2014

Director
Sir, Reference section 156 of the Companies Act, 2013 and the Rules made
thereunder, I
am submitting the information regarding DIN allotted to me
along with additional information as prescribed:
Sr Subject Particular
. s
N 1 Director Identification Number (DIN)
o. 2 Name
3 Father's Name
4 Present residential address
5 e-mail ID
6 Designation (Director or Managing Director or
Alternate director or Additional Director or Director
appointed in casual vacancy or Nominee Director or
7 Whole-time director)
Specify whether (pleaseExecutive
Chairman, specify) Director,
Non-Executive Director (in case more than one,
8 specify both)
Category (Promoter or Professional or Independent)
9 Name of the company or Institution whose
Nominee the director is
10 Date of Appointment
11. Detail of the companies in which appointed as
director/KMP
Name of the CIN Designatio Date of
Company n appointment
12. Specimen Signature

A copy of the DIN Allotment Letter is enclosed. Please acknowledge the

receipt.
Declaration
I hereby declare that:-
(i) I was appointed as director since incorporation i.e. with
effect from Or
(ii) I was appointed as director by the Board w.e.f. ......... vide board resolution
number
.................. dated ............... or by the shareholders resolution number ....
dated .............. w.e.f. ............... (copy of the said resolution shall be
attached).
(iii) Copy of form 32 filed with the ROC to the effect of such appointment.
Yours Faithfully

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Form DIR-8

FORM 'DIR-8'
Intimation by Director
[Pursuant to Section 164(2) and rule 14(1) of Companies (Appointment and
Qualification of Directors) Rules, 2014]
Registration No. of Company …………………..
Nominal Capital Rs. …………………..
Paid-up Capital Rs. …………………..
Name of Company …………………..
Address of its Registered Office …………………..

To
The Board of Directors of …………………..
I, ………………….., son/daughter/wife of ………………….. resident of
………………….. director/managing director/manager in the company hereby give
notice that I am/was a director in the following companies during the last three
years:-
Name of the Company Date of Appointment Date of Cessation

1
2

I further confirm that I have not incurred disqualification under section 164(2) of the
Companies Act, 2013 in any of the above companies, in the previous financial year,
and that I, at present, stand free from any disqualification from being a director.
or
I further confirm that I have incurred disqualifications under section 164(2) of the
Companies Act, 2013 in the following company(s) in the previous financial year, and
that I, at present stand disqualified from being a director.
Name of the Company Date of Appointment Date of Cessation

1
2

Signature (Full Name)

Dated this ……………. day of …………

Form DIR-9

FORM 'DIR-9'
Report by the company to Registrar
[Pursuant to Section 164 (2) read with rule 14 (2) of the Companies
(Appointment and Qualification of Directors) Rules, 2014]
Registration No. of Company ……………………..
Nominal Capital Rs. ……………………..
Paid-up Capital Rs. ……………………..

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Name of Company ……………………..

Address of its Registered Office ……………………..

To
The Registrar of Companies,

It is hereby reported under section 164(2)of Companies Act, 2013 that M/s.
…………………….. have failed to (i) file the financial statements and annual returns
for the last three financial years, or (ii) repay deposits or pay interest thereon on due
date being …………………….. or redeem its debentures on due date being
…………………….. or pay dividend declared by the company since
…………………….. or both. The period of one year has expired on
……………………...
The name and address of directors at the relevant period are as under :-
(a) Director's name in full, without abbreviations
(b) Director's name as per company's records
(abbreviations may be expanded and shown)
(c) Address of the Director : -
(i) Permanent
(ii) Present
(d) Positions held by the director in the last 5 years, prior to disqualification:

Signature Designation*
Dated this …………………….. day of ……
*State whether Director, Managing Director, Manager or Secretary

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The Companies (Meetings of Board and its Powers) Rules, 2014

Chapter XII: the Companies (Meetings

of Board and its Powers) Rules, 2014
[The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i), vide notification number G.S.R. 240(E), dated the 31st March, 2014 and subsequently amended by
notification nos. G.S.R. 398 (E) dated the 12th June, 2014; G.S.R. 590 (E) dated the 14th August,
2014; G.S.R. 206 (E) dated the 18th March, 2015; G.S.R. 971(E) dated the 14th December, 2015;
G.S.R. 309 (E) dated the 30th March, 2017; G.S.R. 880 (E) dated the 13th July, 2017; and G.S.R. 429
(E) dated the 07th May, 2018]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R. 240 (E).—In exercise of powers conferred under sections 173, 175, 177,
178, 179, 184, 185, 186, 187, 188, 189 and section 191 read with section 469 of the
Companies Act, 2013 and in supersession of the Companies (Central Government’s)
General Rules and Forms, 1956 or any other Rules prescribed under the Companies
Act, 1956 on matters covered under these rules, except as respects things done or
omitted to be done before such suppression, the Central Government hereby makes
the following rules, namely:—

1. Short title and commencement.-

(1) These rules may be called the Companies (Meetings of Board and its Powers)
Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013;

(b) “Annexure” means the Annexure appended to these rules;

(c) “Fees” means the fees as specified in the Companies (Registration Offices
and Fees) Rules, 2014;

(d) “Form” or “e-Form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(e) “section” means the section of the Act.

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(2) Words and expressions used in these rules but not defined and defined in the
Act or in the Companies (Specification of definitions details) Rules, 2014, shall have
the same meanings respectively assigned to them in the Act or in the said Rules.

3. Meetings of Board through video conferencing or other audio visual means.-

[Refer section 173]

A company shall comply with the following procedure, for convening and conducting
the Board meetings through video conferencing or other audio visual means.

(1) Every Company shall make necessary arrangements to avoid failure of video or
audio visual connection.

(2) The Chairperson of the meeting and the company secretary, if any, shall take due
and reasonable care-

(a) to safeguard the integrity of the meeting by ensuring sufficient security and
identification procedures;

(b) to ensure availability of proper video conferencing or other audio visual

equipment or facilities for providing transmission of the communications for
effective participation of the directors and other authorised participants at the
Board meeting;

(c) to record proceedings and prepare the minutes of the meeting;

(d) to store for safekeeping and marking the tape recording(s) or other
electronic recording mechanism as part of the records of the company at least
before the time of completion of audit of that particular year.

(e) to ensure that no person other than the concerned director are attending or
have access to the proceedings of the meeting through video conferencing
mode or other audio visual means; and

(f) to ensure that participants attending the meeting through audio visual means
are able to hear and see the other participants clearly during the course of the
meeting:
Provided that the persons, who are differently abled, may make request
to the Board to allow a person to accompany him.

(3) (a) The notice of the meeting shall be sent to all the directors in accordance with the
provisions of sub-section (3) of section 173 of the Act.

(b) The notice of the meeting shall inform the directors regarding the option available
to them to participate through video conferencing mode or other audio visual means,

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and shall provide all the necessary information to enable the directors to participate
through video conferencing mode or other audio visual means.

(c) A director intending to participate through video conferencing or audio visual

means shall communicate his intention to the Chairperson or the company
secretary of the company.

(d) If the director intends to participate through video conferencing or other audio
visual means, he shall give prior intimation to that effect sufficiently in advance so
that company is able to make suitable arrangements in this behalf.
683
[(e) Any director who intends to participate in the meeting through electronic
mode may intimate about such participation at the beginning of the calendar
year and such declaration shall be valid for one year:
Provided that such declaration shall not debar him from participation in
the meeting in person in which case he shall intimate the company sufficiently
in advance of his intention to participate in person.]

(f) In the absence of any intimation under clause (c), it shall be assumed that
the director shall attend the meeting in person.

(4) At the commencement of the meeting, a roll call shall be taken by the Chairperson
when every director participating through video conferencing or other audio visual
means shall state, for the record, the following namely:-
(a) name;
(b) the location from where he is participating;
(c) that he has received the agenda and all the relevant material for the meeting; and
(d) that no one other than the concerned director is attending or having access to
the proceedings of the meeting at the location mentioned in clause (b);

(5) (a) After the roll call, the Chairperson or the company secretary shall inform the Board
about the names of persons other than the directors who are present for the said meeting
at the request or with the permission of the Chairperson and confirm that the required
quorum is complete.

Explanation.- A director participating in a meeting through video conferencing or other

audio visual means shall be counted for the purpose of quorum, unless he is to be
excluded for any items of business under any provisions of the Act or the rules.

683
Substituted for “(e) The director, who desire, to participate may intimate his intention of participation
through the electronic mode at the beginning of the calendar year and such declaration shall be valid
for one calendar year.” vide notification no. G.S.R.880 (E) dt. 13.07.2017, published on and effective
from 14.07.2017.

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(b) The Chairperson shall ensure that the required quorum is present throughout the
meeting.

(6) With respect to every meeting conducted through video conferencing or other audio
visual means authorised under these rules, the scheduled venue of the meeting as set
forth in the notice convening the meeting 684[**], shall be deemed to be the place of the
said meeting and all recordings of the proceedings at the meeting shall be deemed to be
made at such place.

(7) The statutory registers which are required to be placed in the Board meeting as per
the provisions of the Act shall be placed at the scheduled venue of the meeting and where
such registers are required to be signed by the directors, the same shall be deemed to
have been signed by the directors participating through electronic mode, if they have
given their consent to this effect and it is so recorded in the minutes of the meeting.

(8) (a) Every participant shall identify himself for the record before speaking on any
item of business on the agenda.
(b) If a statement of a director in the meeting through video conferencing or other audio
visual means is interrupted or garbled, the Chairperson or company secretary shall
request for a repeat or reiteration by the Director.

(9) If a motion is objected to and there is a need to put it to vote, the Chairperson shall
call the roll and note the vote of each director who shall identify himself while casting
his vote.

(10) From the commencement of the meeting and until the conclusion of such meeting,
no person other than the Chairperson, Directors, company secretary and any other
person whose presence is required by the Board shall be allowed access to the place
where any director is attending the meeting either physically or through video
conferencing without the permission of the Board.

(11) (a) At the end of discussion on each agenda item, the Chairperson of the meeting
shall announce the summary of the decision taken on such item along with names of
the directors, if any, who dissented from the decision taken by majority 685[and the
draft minutes so recorded shall be preserved by the company till the confirmation of
the draft minutes in accordance with sub-rule (12)].
(b) The minutes shall disclose the particulars of the directors who attended the meeting
through video conferencing or other audio visual means.

684
The words and commas ",which shall be in India," omitted by Notification G.S.R. 590(E) dated 14th
August 2014.

685
Inserted by notification no. G.S.R.880 (E) dt. 13.07.2017, published on and effective from
14.07.2017.

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(12) (a) The draft minutes of the meeting shall be circulated among all the directors
within fifteen days of the meeting either in writing or in electronic mode as may be
decided by the Board.
(b) Every director who attended the meeting, whether personally or through video
conferencing or other audio visual means, shall confirm or give his comments in writing,
about the accuracy of recording of the proceedings of that particular meeting in the draft
minutes, within seven days or some reasonable time as decided by the Board, after receipt
of the draft minutes failing which his approval shall be presumed.
(c) After completion of the meeting, the minutes shall be entered in the minute book
as specified under section 118 of the Act and signed by the Chairperson.
Explanation.-For the purposes of this rule, “video conferencing or other audio visual means”
means audio- visual electronic communication facility employed which enables all the
persons participating in a meeting to communicate concurrently with each other without an
intermediary and to participate effectively in the meeting.

4. Matters not to be dealt with in a meeting through video conferencing or other

audio visual means.-

[Refer section 173]

[**] The following matters shall not be dealt with in any meeting held through video
conferencing or other audio visual means.-

(i) the approval of the annual financial statements;

(ii) the approval of the Board’s report;

(iii) the approval of the prospectus;

(iv) the Audit Committee Meetings for 686 [**] consideration of financial statement
including consolidated financial statement, if any, to be approved by the Board under
sub-section (1) of section 134 of the Act; and

(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and
takeover.

686
by Notification G.S.R. 590(E) dated 14th August 2014, following changes made
(a) in sub-rule (1), for the brackets, figure and word "(1) The", the word "The" substituted.
(b) in clause (vi), for the words "consideration of accounts", the words "consideration of financial
statement including consolidated financial statement, if any, to be approved by the Board under sub-
section (1) of section 134 of the Act" substituted”.

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687
[Provided that where there is quorum in a meeting through physical presence of
directors, any other director may participate through video conferencing or other audio
visual means.]

5. Passing of resolution by circulation.-

[Refer section 175]

A resolution in draft form may be circulated to the directors together with the necessary
papers for seeking their approval, by electronic means which may include E-mail or fax.

6. Committees of the Board.-

[Refer section 177 and section 178]

688
[The Board of Directors of 689[every listed public company] and a company
covered under rule 4 of the Companies (Appointment and Qualification of Directors)
Rules, 2014 shall constitute an ‘Audit Committee’ and a ‘Nomination and
Remuneration Committee of the Board’.]

Explanation.- The paid up share capital or turnover or outstanding loans, or borrowings or

debentures or deposits, as the case may be, as existing on the date of last audited
Financial Statements shall be taken into account for the purposes of this rule.
690
[Provided that public companies covered under this rule which were not
required to constitute Audit Committee under section 292A of the Companies Act,
1956 (1 of 1956) shall constitute their Audit Committee within one year from the

687
Inserted the proviso to Rule 4 vide notification no. G.S.R. 429(E) dated 07th May 2018.

688
Rule 6 substituted vide notification no. G.S.R.880 (E) dt. 13.07.2017, published on and effective from
14.07.2017.. Prior to substitution it read as “The Board of directors of every listed companies and the
following classes of companies shall constitute an Audit Committee and a Nomination and
Remuneration Committee of the Board- (i) all public companies with a paid up capital of ten crore rupees
or more; (ii) all public companies having turnover of one hundred crore rupees or more; (iii) all public
companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding
fifty crore rupees or more.”.

Substituted for the words ‘every listed company’ vide notification no. G.S.R. 429(E) dated 07th May
689

2018.

690
Both provisos, after the explanation, inserted by notification number G.S.R. 398(E) dated 12 June
2014.

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commencement of these rules or appointment of independent directors by them,

whichever is earlier:
Provided further that public companies covered under this rule shall constitute
their Nomination and Remuneration Committee within one year from the
commencement of these rules or appointment of independent directors by them,
whichever is earlier.]
691
[6A. Omnibus approval for related party transactions on annual basis.-

All related party transactions shall require approval of the Audit Committee and the
Audit Committee may make omnibus approval for related party transactions proposed
to be entered into by the company subject to the following conditions, namely:-

(1) The Audit Committee shall, after obtaining approval of the Board of Directors,
specify the criteria for making the omnibus approval which shall include the following,
namely:-

(a) maximum value of the transactions, in aggregate, which can be allowed

under the omnibus route in a year;

(b) the maximum value per transaction which can be allowed;

(c) extent and manner of disclosures to be made to the Audit Committee at the
time of seeking omnibus approval;

(d) review, at such intervals as the Audit Committee may deem fit, related party
transaction entered into by the company pursuant to each of the omnibus
approval made;

(e) transactions which cannot be subject to the omnibus approval by the Audit
Committee.

(2) The Audit Committee shall consider the following factors while specifying the
criteria for making omnibus approval, namely: -

(a) repetitiveness of the transactions (in past or in future);

(b) justification for the need of omnibus approval.

(3) The Audit Committee shall satisfy itself on the need for omnibus approval for
transactions of repetitive nature and that such approval is in the interest of the
company.

691
Rule 6A inserted by Companies (Meetings of Board and its Powers) Second Amendment Rules,
2015, vide notification number G.S.R. 971 (E) dated 14 December 2015.

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(4) The omnibus approval shall contain or indicate the following: -

(a) name of the related parties;

(b) nature and duration of the transaction;

(c) maximum amount of transaction that can be entered into;

(d) the indicative base price or current contracted price and the formula for
variation in the price, if any; and

(e) any other information relevant or important for the Audit Committee to take
a decision on the proposed transaction:

Provided that where the need for related party transaction cannot be foreseen and
aforesaid details are not available, audit committee may make omnibus approval for
such transactions subject to their value not exceeding rupees one crore per
transaction.

(5) Omnibus approval shall be valid for a period not exceeding one financial year and
shall require fresh approval after the expiry of such financial year.

(6) Omnibus approval shall not be made for transactions in respect of selling or
disposing of the undertaking of the company.

(7) Any other conditions as the Audit Committee may deem fit.]

7. Establishment of vigil mechanism.-

[Refer section 177]

(1) Every listed company and the companies belonging to the following class or
classes shall establish a vigil mechanism for their directors and employees to report
their genuine concerns or grievances-
(a) the Companies which accept deposits from the public;
(b) the Companies which have borrowed money from banks and public financial
institutions in excess of fifty crore rupees.

(2) The companies which are required to constitute an audit committee shall oversee the
vigil mechanism through the committee and if any of the members of the committee have a
conflict of interest in a given case, they should recuse themselves and the others on the
committee would deal with the matter on hand.

(3) In case of other companies, the Board of directors shall nominate a director to play the
role of audit committee for the purpose of vigil mechanism to whom other directors and
employees may report their concerns.

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(4) The vigil mechanism shall provide for adequate safeguards against victimisation of
employees and directors who avail of the vigil mechanism and also provide for direct
access to the Chairperson of the Audit Committee or the director nominated to play the
role of Audit Committee, as the case may be, in exceptional cases.

(5) In case of repeated frivolous complaints being filed by a director or an employee,

the audit committee or the director nominated to play the role of audit committee may
take suitable action against the concerned director or employee including reprimand.

8. Powers of Board.-

[Refer section 179]

In addition to the powers specified under sub-section (3) of section 179 of the Act, the
following powers shall also be exercised by the Board of Directors only by means of
resolutions passed at meetings of the Board.-

(1) to make political contributions;

(2) to appoint or remove key managerial personnel (KMP);

[(3) xxxx Omitted by Notification number G.S.R. 206 (E) dated 18th March, 2015. Prior to
omission it read as “(3) to take note of appointment(s) or removal(s) of one level below
the Key Management Personnel;”]

(4) to appoint internal auditors and secretarial auditor;

[(5) xxxx Omitted by Notification number G.S.R. 206 (E) dated 18th March, 2015. Prior to
omission it read as “(5) to take note of the disclosure of director’s interest and
shareholding;”]

[(6) xxxx Omitted by Notification G.S.R. 206 (E) dated 18th March, 2015. Prior to omission
it read as “(6) to buy, sell investments held by the company (other than trade
investments), constituting five percent or more of the paid up share capital and free
reserves of the investee company;”]

[(7) xxxx Omitted by Notification number G.S.R. 206(E) dated 18th March, 2015. Prior to
omission it read as “(7) to invite or accept or renew public deposits and related matters;”]

[(8) xxxx Omitted by Notification number G.S.R. 206(E) dated 18th March, 2015. Prior to
omission it read as “(8) to review or change the terms and conditions of public deposit;”]

[(9) xxxx Omitted by Notification number G.S.R. 206(E) dated 18th March, 2015. Prior to
omission it read as “(9) to approve quarterly, half yearly and annual financial statements
or financial results as the case may be.”]

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9. Disclosures by a director of his interest.-

[Refer section 184]

(1) Every director shall disclose his concern or interest in any company or companies
or bodies corporate (including shareholding interest), firms or other association of
individuals, by giving a notice in writing in Form MBP-1.

(2) It shall be the duty of the director giving notice of interest to cause it to be disclosed
at the meeting held immediately after the date of the notice.

(3) All notices shall be kept at the registered office and such notices shall be preserved
for a period of eight years from the end of the financial year to which it relates and
shall be kept in the custody of the company secretary of the company or any other
person authorised by the Board for the purpose.

692
[10. Loans to Director etc. under section 185.- Omitted

[Refer section 185]

(1) Any loan made by a holding company to its wholly owned subsidiary company or any
guarantee given or security provided by a holding company in respect of any loan made
to its wholly owned subsidiary company is exempted from the requirements under this
section; and
(2) Any guarantee given or security provided by a holding company in respect of loan made
by any bank or financial institution to its subsidiary company is exempted from the
requirements under this section:
Provided that such loans made under sub-rule (1) and (2) are utilised by the
subsidiary company for its [principal]693 business activities.]

11. Loan and investment by a company under section 186 of the Act.-

[Refer section 186]

(1) Where a loan or guarantee is given or where a security has been provided by a
company to its wholly owned subsidiary company or a joint venture company, or
acquisition is made by a holding company, by way of subscription, purchase or
otherwise of, the securities of its wholly owned subsidiary company, the requirement
of sub-section (3) of section 186 shall not apply:

692
Rule 10 omitted by Companies (Meetings of Board and its Powers) Second Amendment Rules,
2015, vide notification number G.S.R. 971 (E) dated 14 December 2015.

693
For word ‘principle’ word ‘principal’ substituted by Notification number G.S.R. 206 (E) dated 18th March,
2015.

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Provided that the company shall disclose the details of such loans or guarantee
or security or acquisition in the financial statement as provided under sub-section (4)
of section 186.

(2) For the purposes of clause (a) of sub-section (11) of section 186, the expression
“business of financing of companies” shall include, with regard to a Non-Banking Financial
Company registered with the Reserve Bank of India, “business of giving of any loan to a
person or providing any guaranty or security for due repayment of any loan availed by any
person in the ordinary course of its business”.

(3) No company registered under section 12 of the Securities and Exchange Board of
India Act, 1992 and also covered under such class or classes of companies which may
be notified by the Central Government in consultation with the Securities and Exchange
Board, shall take any inter-corporate loan or deposits, in excess of the limits specified
under the regulations applicable to such company, pursuant to which it has obtained
certificate of registration from the Securities and Exchange Board of India.

12. Register.-

[Refer section 186]

(1) Every company giving loan or giving guarantee or providing security or making an
acquisition of securities shall, from the date of its incorporation, maintain a register in Form
MBP-2 and enter therein separately, the particulars of loans and guarantees given,
securities provided and acquisitions made as aforesaid.
[It is clarified by MCA that registers maintained by companies pursuant to sub-section (5) of
Section 372A of Companies Act, 1956 may continue as per requirements under these
provisions and the new format prescribed vide Form MBP2 shall be used for particulars
entered in such registers on and from 1.4.2014. Refer Circular 15/2014 dated 09 June 2014.]

(2) The entries in the register shall be made chronologically in respect of each such
transaction within seven days of making such loan or giving guarantee or providing
security or making acquisition.

(3) The register shall be kept at the registered office of the company and the register
shall be preserved permanently and shall be kept in the custody of the company
secretary of the company or any other person authorised by the Board for the purpose.

(4) The entries in the register (either manual or electronic) shall be authenticated by
the company secretary of the company or by any other person authorised by the Board
for the purpose.

(5) For the purpose of sub-rule (4), the register can be maintained either manually or in
electronic mode.

(6) The extracts from the register maintained under sub-section (9) of section 186 may
be furnished to any member of the company on payment of such fee as may be

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prescribed in the Articles of the company which shall not exceed ten rupees for each
page.

694
[13. Special Resolution.-

[Refer section 186]

A resolution passed at a general meeting in terms of sub-section (3) of section 186 to
give any loan or guarantee or investment or providing any security or the acquisition
under sub-section (2) of section 186 shall specify the total amount up to which the
Board of Directors are authorised to give such loan or guarantee, to provide such
security or make such acquisition:
Provided that the company shall disclose to the members in the financial statement
the full particulars in accordance with the provisions of sub-section (4) of section 186.]

14. Investments of company to be held in its own name.-

[Refer section 187]

(1) Every company shall, from the date of its registration, maintain a register in Form
MBP-3 and enter therein, chronologically, the particulars of investments in shares or other
securities beneficially held by the company but which are not held in its own name and
the company shall also record the reasons for not holding the investments in its own name
and the relationship or contract under which the investment is held in the name of any
other person.

(2) The company shall also record whether such investments are held in a third party’s
name for the time being or otherwise.

694
Substituted Rule 13 vide notification no. G.S.R. 429(E) dated 07th May 2018. Prior to substitution, it
read as “13. Special Resolution.- (1) Where the aggregate of the loans and investment so far made, the
amount for which guarantee or security so far provided to or in all other bodies corporate along with the
investment, loan, guarantee or security proposed to be made or given by the Board, exceed the limits
specified under section 186, no investment or loan shall be made or guarantee shall be given or security
shall be provided unless previously authorised by a special resolution passed in a general meeting.
Explanation.-For the purpose of this sub-rule, it is clarified that it would sufficient compliance if such
special resolution is passed within one year from the date of notification of this section.

(2) A resolution passed at a general meeting in terms of sub-section (3) of section 186 to give any loan
or guarantee or investment or providing any security or the acquisition under sub section (2) of section
186 shall specify the total amount up to which the Board of Directors are authorised to give such loan
or guarantee, to provide such security or make such acquisition:

Provided, that the company shall disclose to the members in the financial statement the full particulars
in accordance with the provision of sub-section (4) of section 186.”.

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(3) The register shall be maintained at the registered office of the company. The
register shall be preserved permanently and shall be kept in the custody of the
company secretary of the company or if there is no company secretary, any director
or any other officer authorised by the Board for the purpose.

(4) The entries in the register shall be authenticated by the company secretary of the
company or by any other person authorised by the Board for the purpose.

15. Contract or arrangement with a related party.-

[Refer section 188]

[It may be noted that - The exemption is given to private companies vide notification number
G.S.R. 464(E) dated 5th June 2015 - from applicability of said requirements so far as related
party transactions are with holding company, subsidiary company, fellow subsidiary company
or an associate company. It may be noted that section 188 is applicable to private companies
for transactions with related parties specified under section 2 (76) – (other than those stated
above).]
A company shall enter into any contract or arrangement with a related party subject to
the following conditions, namely:-

(1) The agenda of the Board meeting at which the resolution is proposed to be moved
shall disclose-
(a) the name of the related party and nature of relationship;
(b) the nature, duration of the contract and particulars of the contract or arrangement;
(c) the material terms of the contract or arrangement including the value, if any;
(d) any advance paid or received for the contract or arrangement, if any;
(e) the manner of determining the pricing and other commercial terms, both
included as part of contract and not considered as part of the contract;
(f) whether all factors relevant to the contract have been considered, if not, the
details of factors not considered with the rationale for not considering those
factors; and
(g) any other information relevant or important for the Board to take a decision on the
proposed transaction.

(2) Where any director is interested in any contract or arrangement with a related party,
such director shall not be present at the meeting during discussions on the subject
matter of the resolution relating to such contract or arrangement-

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695
[(3) For the purposes of first proviso to sub-section (1) of section 188, except with
the prior approval of the company by a 696[resolution], a company shall not enter into
a transaction or transactions, where the transaction or transactions to be entered into,
-
(a) as contracts or arrangements with respect to clauses (a) to (e) of subsection (1) of
section 188, with criteria as mentioned below -
(i) sale, purchase or supply of any goods or materials, directly or through
appointment of agent, 697[amounting to ten per cent. or more] of the turnover of
the company or rupees one hundred crore, whichever is lower, as mentioned
in clause (a) and clause (e) respectively of sub-section (1) of section 188;

695
sub-rule (3) substituted by Notification G.S.R. 590(E) dated 14th August 2014. Prior to substitution,
sub-rule (3) read as under:
(3) For the purposes of first proviso to sub-section (1) of section 188, except with the prior approval of
the company by a special resolution-
(i) a company having a paid-up share capital of ten crore rupees or more shall not enter into a
contract or arrangement with any related party; or
(ii) a company shall not enter into a transaction or transactions, where the transaction or transactions
to be entered into—
(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section
188 with criteria, as mentioned below—
(i) sale, purchase or supply of any goods or materials directly or through appointment
of agents exceeding twenty five percent.of the annual turnover as mentioned in clause
(a) and clause (e) respectively of sub-section (1) of section 188;
(ii) selling or otherwise disposing of, or buying, property of any kind directly or through
appointment of agents exceeding ten percent of net worth as mentioned in clause (b)
and clause (e) respectively of sub-section (1) of section 188;
(iii) leasing of property of any kind exceeding ten percent of the net worth or exceeding
ten percent of turnover as mentioned in clause (c) of sub-section (1) of section 188;
(iv) availing or rendering of any services directly or through appointment of agents
exceeding ten percent of the net worth as mentioned in clause (d) and clause (e) of
sub-section (1) of section 188;
(b) appointment to any office or place of profit in the company, its subsidiary company or
associate company at a monthly remuneration exceeding two and half lakh rupees as
mentioned in clause (f) of sub-section (1) of section 188; or
(c) remuneration for underwriting the subscription of any securities or derivatives thereof of the
company exceeding one percent of the net worth as mentioned in clause (g) of sub-section (1)
of section 188

696
Words 'special resolution' substituted with the word 'resolution' by Companies (Meetings of Board
and its Powers) Second Amendment Rules, 2015, vide notification number 971(E) dated 14 December
2015.

Substituted for words “exceeding ten per cent.” by the Companies (Meetings of Board and its
697

Powers) Amendment Rules, 2017 vide notification number G.S.R. 309(E) dated 30th March 2017.

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(ii) selling or otherwise disposing of or buying property of any kind, directly or

through appointment of agent, 698[amounting to ten per cent. or more] of net
worth of the company or rupees one hundred crore, whichever is lower, as
mentioned in clause (b) and clause (e) respectively of sub-section (1) of
section 188;
(iii) leasing of property of any kind 699[amounting to ten per cent. or more] of the
net worth of the company or 700 [ten per cent. or more of] turnover of the
company or rupees one hundred crore, whichever is lower, as mentioned in
clause (c) of sub-section (1) of section 188;
(iv) availing or rendering of any services, directly or through appointment of
agent, 701[amounting to ten per cent. or more of turnover] of the company or
rupees fifty crore, whichever is lower, as mentioned in clause (d) and clause (e)
respectively of sub-section (1) of section 188:

Explanation.- It is hereby clarified that the limits specified in sub-clauses (i) to

(iv) shall apply for transaction or transactions to be entered into either
individually or taken together with the previous transactions during a financial
year.

(b) is for appointment to any office or place of profit in the company, its subsidiary
company or associate company at a monthly remuneration exceeding two and half
lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

(c) is for remuneration for underwriting the subscription of any securities or derivatives
thereof, of the company exceeding one per cent. of the net worth as mentioned in
clause (g) of sub-section (1) of section 188.

Explanation.- (1) The Turnover or Net Worth referred in the above sub-rules shall be
computed on the basis of the Audited Financial Statement of the preceding Financial
year.

Substituted for words “exceeding ten per cent.” by the Companies (Meetings of Board and its
698

Powers) Amendment Rules, 2017 vide notification number G.S.R. 309(E) dated 30th March 2017.

Substituted for words “exceeding ten per cent.” by the Companies (Meetings of Board and its
699

Powers) Amendment Rules, 2017 vide notification number G.S.R. 309(E) dated 30th March 2017.

Substituted for words “ten per cent. of turnover” by the Companies (Meetings of Board and its
700

Powers) Amendment Rules, 2017 vide notification number G.S.R. 309(E) dated 30th March 2017.

Substituted for words “exceeding ten per cent.” by the Companies (Meetings of Board and its
701

Powers) Amendment Rules, 2017 vide notification number G.S.R. 309(E) dated 30th March 2017.

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(2) In case of a wholly owned subsidiary, the 702[resolution] passed by the holding
company shall be sufficient for the purpose of entering into the transactions
between the wholly owned subsidiary and the holding company.

(3) The explanatory statement to be annexed to the notice of a general meeting

convened pursuant to section 101 shall contain the following particulars, namely:-
(a) name of the related party;
(b) name of the director or key managerial personnel who is related, if any;
(c) nature of relationship;
(d) nature, material terms, monetary value and particulars of the contract or
arrangement;
(e) any other information relevant or important for the members to take a
decision on the proposed resolution.]

16. Register of contracts or arrangements in which directors are interested.—

[Refer section 189]

[Term ‘interested director’ is defined under section 2(49)]
(1) Every company shall maintain one or more registers in Form MBP-4, and shall
enter therein the particulars of—
(a) company or companies or bodies corporate, firms or other association of
individuals, in which any director has any concern or interest, as mentioned under
sub-section (1) of section 184:
Provided that the particulars of the company or companies or bodies corporate in
which a director himself together with any other director holds two percent or less of the
paid-up share capital would not be required to be entered in the register;
(b) contracts or arrangements with a body corporate or firm or other entity as
mentioned under sub-section (2) of section 184, in which any director is, directly or
indirectly, concerned or interested; and
(c) contracts or arrangements with a related party with respect to transactions to which
section 188 applies.

(2) The entries in the register shall be made at once, whenever there is a cause to make
entry, in chronological order and shall be authenticated by the company secretary of the
company or by any other person authorised by the Board for the purpose.

(3) The register shall be kept at the registered office of the company and the register
shall be preserved permanently and shall be kept in the custody of the company
secretary of the company or any other person authorised by the Board for the purpose.

702
Words 'special resolution' substituted with the word 'resolution' by Companies (Meetings of Board
and its Powers) Second Amendment Rules, 2015, vide notification number G.S.R. 971 (E) dated 14
December 2015.

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(4) The company shall provide extracts from such register to a member of the company
on his request, within seven days from the date on which such request is made upon
the payment of such fee as may be specified in the articles of the company but not
exceeding ten rupees per page.

17. Payment to director for loss of office, etc. in connection with transfer of
undertaking, property or shares.—

[Refer section 191]

(1) No director of a company shall receive any payment by way of compensation in
connection with any event mentioned in sub-section (1) of section 191 unless the following
particulars are disclosed to the members of the company and they pass a resolution at a
general meeting approving the payment of such amount —
(a) name of the director;
(b) amount proposed to be paid;
(c) event due to which compensation become payable;
(d) date of Board meeting recommending such payment;
(e) basis for the amount determined;
(f) reason or justification for the payment;
(g) manner of payment - whether payable in cash or otherwise and how;
(h) sources of payment; and
(i) any other relevant particulars as the Board may think fit.

(2) Any payment made by a company by way of compensation for the loss of office or as
a consideration for retirement from office or in connection with such loss or retirement, to
a managing director or whole time director or manager of the company shall not exceed
the limit as set out under section 202.

(3) No payment shall be made to the managing director or whole time director or manager
of the company by way of compensation for the loss of office or as consideration for
retirement from office (other than notice pay and statutory payments in accordance with the
terms of appointment of such director or manager, as applicable) or in connection with such
loss or retirement if —
(a) the company is in default in repayment of public deposits or payment of interest
thereon;
(b) the company is in default in redemption of debentures or payment of interest
thereon;
(c) the company is in default in repayment of any liability, secured or unsecured,
payable to any bank, public financial institution or any other financial institution;
(d) the company is in default in payment of any dues towards income tax, VAT,
excise duty, service tax or any other tax or duty, by whatever name called,
payable to the Central Government or any State Government, statutory
authority or local authority (other than in cases where the company has
disputed the liability to pay such dues);

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The Companies (Meetings of Board and its Powers) Rules, 2014

(e) there are outstanding statutory dues to the employees or workmen of the
company which have not been paid by the company (other than in cases where the
company has disputed the liability to pay such dues); and
(f) the company has not paid dividend on preference shares or not redeemed
preference shares on due date.

Explanation: Pending notification of sub-section (1) of section 247 of the Act and
finalisation of qualifications and experience of valuers, valuation of stocks, shares,
debentures, securities etc. will be conducted by an independent merchant banker who is
registered with the Securities and Exchange Board of India or an independent chartered
accountant in practice having a minimum experience of ten years.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form MBP-1
Form MBP-2
Form MBP-3
Form MBP-4

Form MBP-1

Notice of interest by director

[Pursuant to section 184 (1) and rule 9(1)]
To
The Board of Directors
.................. Limited
Dear Sir(s)
I, ............ , son/daughter/spouse of.............. , resident of............ , being a director
in the company hereby give notice of my interest or concern in the following
company or companies, bodies corporate, firms or other association of individuals:-

Page 1163
 Chapter XII [Sections 173 to 195]

The Companies (Meetings of Board and its Powers) Rules, 2014

Sl. No. Names of Nature of Shareholding Date on

the interest or which
Companies concern / interest or
/bodies Change in concern
corporate/ interest or arose /
firms/ concern changed
association
of
individuals

Signature:
MD/Director/Secretary/Whole time Director
Place:
Date:

Form MBP-2

Form MBP - 2
Register of loans, guarantee, security and acquisition made by the company
[Pursuant to section 186 (9) & rule 12(1)]
Nature of Date of making Name and Amount of loan/
transaction loan/acquisition / giving address of the security/acquisition
(whether loan/ guarantee/ providing person or body /guarantee
guarantee/ security corporate to
security/acquisition whom it is made
) or given or whose
securities have
been acquired
(Listed/Unlisted
entities)
(1) (2) (3) (4)

Time period for Purpose of % of Date of passing

which it is made/ loan/acquisition loan/acquisition Board resolution
given /guarantee/ security /exposure on
guarantee/
security provided
to the paid up
capital, free
reserves and

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 Chapter XII [Sections 173 to 195]

The Companies (Meetings of Board and its Powers) Rules, 2014

securities
premium account
and % of free
reserves and
securities
premium
(5) (6) (7) (8)

Date of passing For Loans For acquisitions

special resolution,
if required
Rate of Date of Number and kind Nominal value and
interest maturity of securities paid up value
(9) (10) (11) (12) (13)

For acquisitions Signatures and

Remarks
Cost of acquisition Date of Selling
(in case of selling of price (how
securities how the investment the price
purchased price was arrived
was arrived at) at)
(14) (15) (16) (17)

Signature:
MD/Director/Secretary/Whole time Director
Place:
Date:

Form MBP-3

Form MBP – 3
Register of investments not held in its own name by the company
[Pursuant to section 187 (3) and rule 14(1)]

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 Chapter XII [Sections 173 to 195]

The Companies (Meetings of Board and its Powers) Rules, 2014

S. No Date of the Date of Name of the Address and E- Purpose of

board investment person/ mail id of investment
resolution depository in person /
authorising whose name depository
such investment is in whose
investment held name
investment
is held

(1) (2) ( 3) (4) ( 5) (6)

Name of the Class of Number of Client ID Face value Paid up

company or securities securities / DP No. of securities value of
body securities
corporate in
which
investment
is made

(7) (8) ( 9) (10) (11) (12)

Cost of Date of Number of Sale Balance Remarks, if

consideration
acquisition disposal securities securities any
disposed off left, if any

(13) (14) (15) (16) (17) (18)

Signature:
MD/Director/Secretary/Whole time Director

Form MBP-4

Form MBP-4
Register of contracts with related party and contracts and
Bodies etc. in which directors are interested
[Pursuant to section 189(1) and rule 16(1)]

Page 1166
 Chapter XII [Sections 173 to 195]

The Companies (Meetings of Board and its Powers) Rules, 2014

A. Contracts or agreements with any related party under section 188 or in

which any director is concerned or interested under sub- section (2) of section
184
Date of contract / Name of the party Name of the Relation with
arrangement with which contract interested director director/ company/
is entered into Nature of concern
or interest
(1) (2) (3) (4)

Principal terms Whether the Date of approval at Details of voting

and conditions transaction is at the meeting of the on such resolution
arm's length basis Board No. of Directors
present in the
meeting
(5) (6) (7) (8)

Details of voting on such resolution Date of the next

Directors voting in Directors voting Directors meeting at which
favour against remaining neutral register was
placed for
signature
(9) (10) (11) (12)

Reference of Amount of contract Date of Signature

specific items - (a) or arrangement shareholders, if
to (g) under sub- any
section (1) of
section 188
(13) (14) (15) (16)

Remarks, if any
(17)

B. Name of the bodies corporate, firms or other association of individuals as

mentioned under sub-section (1) of section 184, in which any director is
having any concern or interest
Names of the Name of the Nature of Shareholding Date on which
Companies interested interest or (if any) interest or
/bodies director concern / concern arose
corporate/ Change in / changed
firms/ interest or
association of concern
individuals

Signature:………………………………….
MD/Director/Secretary/Whole time Director

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The Companies (Meetings of Board and its Powers) Rules, 2014

Place:
Date:

Page 1168
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Chapter XIII: the Companies

(Appointment and Remuneration of
Managerial Personnel) Rules, 2014
[The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3,
sub-section (i), vide number G.S.R. 249(E), dated the 31st March, 2014, subsequently
amended vide notification number G.S.R.390(E) dated 09.06.2014; G.S.R.646 (E) dated
30.06.2016; and G.S.R. 875(E), dated 12 th September 2018.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R 249(E).— In exercise of the powers conferred under sub-section (4) of

section 196, sub-section (5) of section 197, sub-section (12) of section 197, section 200,
sub-section (1) of section 198, sub-section (1) of section 203, sub-section (1) of section
204 and sub-section (1) of section 205 of the Companies Act, 2013,read with sub-
sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013) and in
supersession of the Companies (Central Government’s) General Rules and Forms, 1956
or any other relevant rules prescribed under the Companies Act, 1956 (1 of 1956) on
matters covered under these rules, except as respects things done or omitted to be done
before such supersession, the Central Government hereby makes the following rules,
namely: -

1. Short title and commencement.-

(1) These rules may be called the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure to these rules;

(c) “Fees” means the fees as specified in the Companies (Registration offices and
fees) Rules, 2014;

(d) “Form” or “e form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

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 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

(f) “section” means section of the Act.

(2) Words and expressions used in these rules but not defined and defined in the Act or
in Companies (Specification of definitions details) Rules, 2014 shall have the meanings
respectively assigned to them in the Act and said rules.

3. Filing of return of appointment.-

[Refer section 196]

A company shall file a return of appointment of a Managing Director, Whole-Time Director
or Manager, 703[*] within sixty days of the appointment, with the Registrar in Form No. MR-
1 along with such fee as may be specified for this purpose.

4. Sitting fees.-

[Refer section 197]

A company may pay a sitting fee to a director for attending meetings of the Board or
committees thereof, such sum as may be decided by the Board of directors thereof which
shall not exceed one lakh rupees per meeting of the Board or committee thereof:
Provided that for Independent Directors and Women Directors, the sitting fee shall
not be less than the sitting fee payable to other directors.

5. Disclosure in Board’s report.-

[Refer section 197]

(1) Every listed company shall disclose in the Board’s report-
(i) the ratio of the remuneration of each director to the median remuneration of the
employees of the company for the financial year;
(ii) the percentage increase in remuneration of each director, Chief Financial
Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the
financial year;
(iii) the percentage increase in the median remuneration of employees in the financial
year;
(iv) the number of permanent employees on the rolls of company;

Words ‘Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO)’
703

omitted by notification number646(E) dated 30th June, 2016.

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 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

704
[(v), (vi) and (vii) omitted]
(viii) average percentile increase already made in the salaries of employees other
than the managerial personnel in the last financial year and its comparison with the
percentile increase in the managerial remuneration and justification thereof and
point out if there are any exceptional circumstances for increase in the managerial
remuneration;
705
[(ix) to (xi) omitted]
; and
(xii) affirmation that the remuneration is as per the remuneration policy of the company.

Explanation.- For the purposes of this rule.-

(i) the expression “median” means the numerical value separating the higher half of a
population from the lower half and the median of a finite list of numbers may be found
by arranging all the observations from lowest value to highest value and picking the
middle one;
(ii) if there is an even number of observations, the median shall be the average of the two
middle values.

(2) The board’s report shall include a statement showing the 706[the names of the top ten
employees in terms of remuneration drawn and the name of every employee, who-]-

704
clauses (v), (vi), (vii) and (ix) to (xi) omitted by notification number646(E) dated 30th June, 2016. Prior
to omission it read as “(v) the explanation on the relationship between average increase in remuneration
and company performance;
(vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the
company;
(vii) variations in the market capitalisation of the company, price earnings ratio as at the closing date of
the current financial year and previous financial year and percentage increase over decrease in the
market quotations of the shares of the company in comparison to the rate at which the company came
out with the last public offer in case of listed companies, and in case of unlisted companies, the variations
in the net worth of the company as at the close of the current financial year and previous financial year;”.
705
clauses (ix) to (xi) omitted by notification number646(E) dated 30th June, 2016.Prior to
omission it read as “(ix) comparison of the each remuneration of the Key Managerial Personnel
against the performance of the company;
(x) the key parameters for any variable component of remuneration availed by the directors;

(xi) the ratio of the remuneration of the highest paid director to that of the employees who are not
directors but receive remuneration in excess of the highest paid director during the year”.

706
Substituted by notification number646(E) dated 30th June, 2016. Prior to substitution it read “name
of every employee of the Company, who”.

Page 1171
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(i) if employed throughout the financial year, was in receipt of remuneration for
that year which, in the aggregate, was not less than 707[one crore and two lakh
rupees];

(ii) if employed for a part of the financial year, was in receipt of remuneration for
any part of that year, at a rate which, in the aggregate, was not less than 708[eight
lakh and fifty thousand rupees per month];

(iii) if employed throughout the financial year or part thereof, was in receipt of
remuneration in that year which, in the aggregate, or as the case may be, at a rate
which, in the aggregate, is in excess of that drawn by the managing director or
whole-time director or manager and holds by himself or along with his spouse and
dependent children, not less than two percent of the equity shares of the company.

(3) The statement referred to in sub-rule (2) shall also indicate -

(i) designation of the employee;

(ii) remuneration received;

(iii) nature of employment, whether contractual or otherwise;

(iv) qualifications and experience of the employee;

(v) date of commencement of employment;

(vi) the age of such employee;

(vii) the last employment held by such employee before joining the company;

(viii) the percentage of equity shares held by the employee in the company within
the meaning of clause (iii) of sub-rule (2) above; and

(ix) whether any such employee is a relative of any director or manager of the
company and if so, name of such director or manager:

Provided that the particulars of employees posted and working in a country

outside India, not being directors or their relatives, drawing more than sixty lakh rupees
per financial year or five lakh rupees per month, as the case may be, as may be decided
by the Board, shall not be circulated to the members in the Board’s report, but such

707
Substituted by notification number646(E) dated 30th June, 2016. Prior to substitution it read as “sixty
lakh rupees”.

708
Substituted by notification number646(E) dated 30th June, 2016. Prior to substitution it read as “five
lakh rupees per month”.

Page 1172
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

particulars shall be filed with the Registrar of Companies while filing the financial
statement and Board Reports:

Provided further that such particulars shall be made available to any

shareholder on a specific request made by him in writing before the date of such Annual
General Meeting wherein financial statements for the relevant financial year are
proposed to be adopted by shareholders and such particulars shall be made available
by the company within three days from the date of receipt of such request from
shareholders:

Provided also that in case of request received even after the date of
completion of Annual General Meeting, such particulars shall be made available
to the shareholders within seven days from the date of receipt of such request.

6. 709[Parameters for consideration of remuneration].-

[Refer section 200]

The 710[omitted] or the company shall have regard to the following matters, namely:-

(1) the Financial and operating performance of the company during the three preceding
financial years.

(2) the relationship between remuneration and performance.

(3) the principle of proportionality of remuneration within the company, ideally by a rating
methodology which compares the remuneration of directors to that of other directors on
the board who receives remuneration and employees or executives of the company.

(4) whether remuneration policy for directors differs from remuneration policy for other
employees and if so, an explanation for the difference.

(5) the securities held by the director, including options and details of the shares
pledged as at the end of the preceding financial year.

7. Fees.-

[Refer section 201]

Substituted for “Applications to the Central Government” by notification no. G.S.R. 875(E) dated 12th
709

September 2018.

710
Omitted words “Central Government” by notification no. G.S.R. 875(E) dated 12th September 2018.

Page 1173
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(1) Every application made to the Central Government under the provisions of Chapter
XIII shall be made in Form No. MR-2 and shall be accompanied by fee as may be
specified for the purpose.
711
[(2) omitted ]
(3) Every such application seeking approval shall be made to the Central Government
within a period of ninety days from the date of such appointment.

8. Appointment of Key Managerial Personnel.-

[Refer section 203]

Every listed company and every other public company having a paid-up share capital of
ten crore rupees or more shall have whole-time key managerial personnel.

8A. Appointment of Company Secretaries in companies not covered under rule

8.—

A company other than a company covered under rule 8 which has a paid up share
capital of five crore rupees or more shall have a whole-time company secretary.
[Rule 8A inserted w.e.f. 9th June 2014 by the Companies (Appointment and Remuneration of
Managerial Personnel) Amendment Rules, 2014. Refer Annexure N13.]

9. Secretarial Audit Report.-

[Refer section 204]

711
Omitted sub-rule (2) of Rule 7by notification no. G.S.R. 875(E) dated 12th September 2018.
Prior to omission, it read as “(2) The companies other than listed companies and subsidiary of a
listed company may without Central Government approval pay remuneration to its managerial
personnel, in the event of no profit or inadequate profit beyond ceiling specified in Section II, Part II of
Schedule V, subject to complying with the following conditions namely:-
(i) payment of remuneration is approved by a resolution passed by the Board and, in the case of a
company covered under sub-section (1) of section 178 also by the Nomination and Remuneration
Committee, if any, and while doing so record in writing the clear reason and justification for payment
of remuneration beyond the said limit;
(ii) the company has not made any default in repayment of any of its debts (including public deposits)
or debentures or interest payable thereon preference shares and dividend on preference shares for a
continuous period of thirty days in the preceding financial year before the date of payment to such
managerial personnel;
(iii) the approval of shareholders by way of a special resolution at a general meeting of the
company for payment of remuneration for a period not exceeding three years;
(iv) a statement along-with a notice calling the general meeting referred to clause (iii) of sub-rule (2)
above, shall contain the information as per sub clause (iv) of second proviso to clause (B) of section
II of part-II of Schedule V of the Act including reasons and justification for payment of remuneration
beyond the said limit;
(v) the company has filed Balance Sheet and Annual Return which are due to be filed with the
Registrar of Companies.”.

Page 1174
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(1) For the purposes of sub-section (1) of section 204, the other class of companies
shall be as under-
(a) every public company having a paid-up share capital of fifty crore rupees or
more; or
(b) every public company having a turnover of two hundred fifty crore rupees or
more.
(2) The format of the Secretarial Audit Report shall be in Form No. MR-3.

10. Duties of Company Secretary.-

[Refer section 204]

The duties of company secretary shall also discharge, the following duties, namely:-

(1) to provide to the directors of the company, collectively and individually, such
guidance as they may require, with regard to their duties, responsibilities and powers;

(2) to facilitate the convening of meetings and attend Board, committee and general
meetings and maintain the minutes of these meetings;

(3) to obtain approvals from the Board, general meeting, the government and such
other authorities as required under the provisions of the Act;

(4) to represent before various regulators, and other authorities under the Act in
connection with discharge of various duties under the Act;

(5) to assist the Board in the conduct of the affairs of the company;

(6) to assist and advise the Board in ensuring good corporate governance and in
complying with the corporate governance requirements and best practices; and

(7) to discharge such other duties as have been specified under the Act or rules; and

(8) such other duties as may be assigned by the Board from time to time.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form No. MR-1
Form No. MR-2 [substituted by notification no. G.S.R. 875(E), dated 12 th September,
2018]

Form No. MR-3

Page 1175
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Form No. MR-3

Form No. MR-3

SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED ... ... ...
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies
(Appointment and Remuneration Personnel) Rules, 2014]
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED ... ... ...
To,
The Members,
Limited
I/We have conducted the secretarial audit of the compliance of applicable statutory provisions
and the adherence to good corporate practices by...(name of the company).(hereinafter called
the company). Secretarial Audit was conducted in a manner that provided me/us a reasonable
basis for evaluating the corporate conducts/statutory compliances and expressing my opinion
thereon.
Based on my/our verification of the (name of the company’s) books, papers, minute books,
forms and returns filed and other records maintained by the company and also the
information provided by the Company, its officers, agents and authorized representatives
during the conduct of secretarial audit, I/We hereby report that in my/our opinion, the
company has, during the audit period covering the financial year ended on _____, _____
complied with the statutory provisions listed hereunder and also that the Company has proper
Board-processes and compliance- mechanism in place to the extent, in the manner and
subject to the reporting made hereinafter:
I/we have examined the books, papers, minute books, forms and returns filed and other
records maintained by (“the Company”) for the financial year ended on __, ______ according
to the provisions of:
(i) The Companies Act, 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made
thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made
thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and
External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and
Exchange Board of India Act, 1992 (‘SEBI Act’):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;
(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999;

Page 1176
 Chapter XIII [Sections 196 to 205]

The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(e) The Securities and Exchange Board of India (Issue and Listing of Debt
Securities) Regulations, 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share
Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with
client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009; and
(h) The Securities and Exchange Board of India (Buyback of Securities)
Regulations, 1998;
(vi) (Mention the other laws as may be applicable specifically to the company)

I/we have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with ..... Stock
Exchange(s), if applicable;
During the period under review the Company has complied with the provisions of the Act,
Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following
observations:
Note: Please report specific non compliances / observations / audit qualification, reservation
or adverse remarks in respect of the above para wise.
I/we further report that
The Board of Directors of the Company is duly constituted with proper balance of Executive
Directors, Non-Executive Directors and Independent Directors. The changes in the
composition of the Board of Directors that took place during the period under review were
carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed
notes on agenda were sent at least seven days in advance, and a system exists for seeking and
obtaining further information and clarifications on the agenda items before the meeting and for
meaningful participation at the meeting.
Majority decision is carried through while the dissenting members’ views are captured and
recorded as part of the minutes.
I/we further report that there are adequate systems and processes in the company commensurate
with the size and operations of the company to monitor and ensure compliance with applicable
laws, rules, regulations and guidelines.
Note: Please report specific observations / qualification, reservation or adverse remarks in
respect of the Board Structures/system and processes relating to the Audit period.
I/we further report that during the audit period the company has…………………………
(Give details of specific events / actions having a major bearing on the company’s affairs in
pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred
to above).
For example:
(i) Public/Right/Preferential issue of shares / debentures/sweat equity, etc.
(ii) Redemption / buy-back of securities
(iii) Major decisions taken by the members in pursuance to section 180 of the Companies
Act, 2013
(iv) Merger / amalgamation / reconstruction, etc.
(v) Foreign technical collaborations

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 Chapter XIII [Sections 196 to 205]

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Place : Signature:
Date : Name of Company Secretary in practice / Firm:
ACS/FCS No.
C P No.:
Note: Parawise details of the Audit finding, if necessary, may be placed as annexure to the
report.

Page 1178
 Chapter XV [Sections 230 to 240]

The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

Chapter XV: the Companies

(Compromises, Arrangements and
Amalgamations) Rules, 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 14th December, 2016

G.S.R. 1134(E).—In exercise of the powers conferred by sub-sections (1) and (2) of
section 469 read with sections 230 to 233 and sections 235 to 240 of the Companies
Act, 2013 (18 of 2013), the Central Government hereby makes the following rules,
namely:-

1. Short Title and Commencement.—

(1) These rules may be called the Companies (Compromises, Arrangements and
Amalgamations) Rules, 2016.

(2) They shall come into force with effect from 15th December, 2016.

2. Definitions.—

(1) In these rules, unless the context otherwise requires.—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the annexure to these rules;

(c) “Form” means a form set forth in annexure “A” to these rules which shall be used
for the matter to which it relates, and includes an electronic version thereof;

(d) “Liquidator” means the Liquidator appointed under the Act or under the Insolvency
and Bankruptcy Code, 2016 (31 of 2016);

(2) All other words and expressions used in these rules but not defined herein, and
defined in the Act or in the Companies (Specification of Definitions Details) Rules,
2014 or in the National Company Law Tribunal Rules, 2016, shall have the same
meanings respectively assigned to them in the Act or in the said rules.

3. Application for order of a meeting.—

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 Chapter XV [Sections 230 to 240]

The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

(1) An application under sub-section (1) of section 230 of the Act may be submitted in
Form no. NCLT-1 (appended in the National Company Law Tribunal Rules, 2016)
along with:-
(i) a notice of admission in Form No. NCLT-2 (appended in the National
Company Law Tribunal Rules, 2016);

(ii) an affidavit in Form No. NCLT-6 (appended in the National Company Law
Tribunal Rules, 2016);

(iii) a copy of scheme of compromise or arrangement, which should include

disclosures as per sub-section (2) of section 230 of the Act; and

(iv) fee as prescribed in the Schedule of Fees.

(2) Where more than one company is involved in a scheme in relation to which an
application under sub-rule (1) is being filed, such application may, at the discretion of
such companies, be filed as a joint-application.

(3) Where the company is not the applicant, a copy of the notice of admission and of
the affidavit shall be served on the company, or, where the company is being wound
up, on its liquidator, not less than fourteen days before the date fixed for the hearing
of the notice of admission.

(4) The applicant shall also disclose to the Tribunal in the application under sub-rule
(1), the basis on which each class of members or creditors has been identified for the
purposes of approval of the scheme.

4. Disclosures in application made to the Tribunal for compromise or

arrangement.—

Creditors Responsibility Statement. –

For the purposes of sub-clause (i) of clause (c) of sub-section (2) of section 230 of the
Act, the creditor’s responsibility statement in Form No. CAA. 1 shall be included in the
scheme of corporate debt restructuring.

Explanation:- For the purpose of this rule, it is clarified that a scheme of corporate debt
restructuring as referred to in clause (c) of sub-section (2) of section 230 of the Act
shall mean a scheme that restructures or varies the debt obligations of a company
towards its creditors.

5. Directions at hearing of the application.—

Upon hearing the application under sub-section (1) of section 230 of the Act, the
Tribunal shall, unless it thinks fit for any reason to dismiss the application, give such
directions as it may think necessary in respect of the following matters:-
(a) determining the class or classes of creditors or of members whose meeting or
meetings have to be held for considering the proposed compromise or arrangement;

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or dispensing with the meeting or meetings for any class or classes of creditors in
terms of sub-section (9) of section 230;

(b) fixing the time and place of the meeting or meetings;

(c) appointing a Chairperson and scrutinizer for the meeting or meetings to be held,
as the case may be and fixing the terms of his appointment including remuneration;

(d) fixing the quorum and the procedure to be followed at the meeting or meetings,
including voting in person or by proxy or by postal ballot or by voting through electronic
means;

Explanation.— For the purposes of these rules, “voting through electronic means” shall
take place, mutatis mutandis, in accordance with the procedure as specified in rule
20 of Companies (Management and Administration) Rules, 2014.

(e) determining the values of the creditors or the members, or the creditors or members
of any class, as the case may be, whose meetings have to be held;

(f) notice to be given of the meeting or meetings and the advertisement of such notice;

(g) notice to be given to sectoral regulators or authorities as required under sub-

section (5) of section 230;

(h) the time within which the chairperson of the meeting is required to report the result
of the meeting to the Tribunal; and

(i) such other matters as the Tribunal may deem necessary.

6. Notice of meeting.—

(1) Where a meeting of any class or classes of creditors or members has been directed
to be convened, the notice of the meeting pursuant to the order of the Tribunal to be
given in the manner provided in subsection (3) of section 230 of the Act shall be in
Form No. CAA.2 and shall be sent individually to each of the creditors or members.

(2) The notice shall be sent by the Chairperson appointed for the meeting, or, if the
Tribunal so directs, by the company (or its liquidator), or any other person as the
Tribunal may direct, by registered post or speed post or by courier or by email or by
hand delivery or any other mode as directed by the Tribunal to their last known address
at least one month before the date fixed for the meeting.

Explanation: - It is hereby clarified that the service of notice of meeting shall be

deemed to have been effected in case of delivery by post, at the expiration of forty
eight hours after the letter containing the same is posted.

(3) The notice of the meeting to the creditors and members shall be accompanied by
a copy of the scheme of compromise or arrangement and a statement disclosing the

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following details of the compromise or arrangement, if such details are not already
included in the said scheme:-

(i) details of the order of the Tribunal directing the calling, convening and conducting
of the meeting:-
(a) date of the Order;
(b) date, time and venue of the meeting.

(ii) details of the company including:

(a) Corporate Identification Number (CIN) or Global Location Number (GLN) of
the company;
(b) Permanent Account Number (PAN);
(c) name of the company;
(d) date of incorporation;
(e) type of the company (whether public or private or one-person company);
(f) registered office address and e-mail address;
(g) summary of main object as per the memorandum of association; and main
business carried on by the company;
(h) details of change of name, registered office and objects of the company
during the last five years;
(i) name of the stock exchange (s) where securities of the company are listed,
if applicable;
(j) details of the capital structure of the company including authorised, issued,
subscribed and paid up share capital; and
(k) names of the promoters and directors along with their addresses.

(iii) if the scheme of compromise or arrangement relates to more than one company,
the fact and details of any relationship subsisting between such companies who are
parties to such scheme of compromise or arrangement, including holding, subsidiary
or of associate companies;

(iv) the date of the board meeting at which the scheme was approved by the board of
directors including the name of the directors who voted in favour of the resolution, who
voted against the resolution and who did not vote or participate on such resolution;

(v) explanatory statement disclosing details of the scheme of compromise or

arrangement including:-
(a) parties involved in such compromise or arrangement;
(b) in case of amalgamation or merger, appointed date, effective date, share
exchange ratio (if applicable) and other considerations, if any;
(c) summary of valuation report (if applicable) including basis of valuation and
fairness opinion of the registered valuer, if any, and the declaration that the
valuation report is available for inspection at the registered office of the
company;
(d) details of capital or debt restructuring, if any;
(e) rationale for the compromise or arrangement;
(f) benefits of the compromise or arrangement as perceived by the Board of
directors to the company, members, creditors and others (as applicable);
(g) amount due to unsecured creditors.

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(vi) disclosure about the effect of the compromise or arrangement on:

(a) key managerial personnel;
(b) directors;
(c) promoters;
(d) non-promoter members;
(e) depositors;
(f) creditors;
(g) debenture holders;
(h) deposit trustee and debenture trustee;
(i) employees of the company:

(vii) Disclosure about effect of compromise or arrangement on material interests of

directors, Key Managerial Personnel (KMP) and debenture trustee.

Explanation – For the purposes of these rules it is clarified that-

(a) the term ‘interest’ extends beyond an interest in the shares of the company, and is
with reference to the proposed scheme of compromise or arrangement.

(b) the valuation report shall be made by a registered valuer, and till the registration of
persons as valuers is prescribed under section 247 of the Act, the valuation report
shall be made by an independent merchant banker who is registered with the
Securities and Exchange Board or an independent chartered accountant in practice
having a minimum experience of ten years.

(viii) investigation or proceedings, if any, pending against the company under the Act.

(ix) details of the availability of the following documents for obtaining extract from or
for making or obtaining copies of or for inspection by the members and creditors,
namely:
(a) latest audited financial statements of the company including consolidated
financial statements;

(b) copy of the order of Tribunal in pursuance of which the meeting is to be

convened or has been dispensed with;

(c) copy of scheme of compromise or arrangement;

(d) contracts or agreements material to the compromise or arrangement;

(e) the certificate issued by Auditor of the company to the effect that the
accounting treatment, if any, proposed in the scheme of compromise or
arrangement is in conformity with the Accounting Standards prescribed under
Section 133 of the Companies Act, 2013; and

(f) such other information or documents as the Board or Management believes

necessary and relevant for making decision for or against the scheme;

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(x) details of approvals, sanctions or no-objection(s), if any, from regulatory or any

other governmental authorities required, received or pending for the proposed scheme
of compromise or arrangement.

(xi) a statement to the effect that the persons to whom the notice is sent may vote in
the meeting either in person or by proxies, or where applicable, by voting through
electronic means.

Explanation- For the purposes of this rule, disclosure required to be made by a

company shall be made in respect of all the companies, which are part of the
compromise or arrangement.

7. Advertisement of the notice of the meeting.—

The notice of the meeting under sub-section (3) of Section 230 of the Act shall be
advertised in Form No. CAA.2 in at least one English newspaper and in at least one
vernacular newspaper having wide circulation in the State in which the registered
office of the company is situated, or such newspapers as may be directed by the
Tribunal and shall also be placed, not less than thirty days before the date fixed for
the meeting, on the website of the company (if any) and in case of listed companies
also on the website of the SEBI and the recognized stock exchange where the
securities of the company are listed:

Provided that where separate meetings of classes of creditors or members are to be

held, a joint advertisement for such meetings may be given.

8. Notice to statutory authorities.—

(1) For the purposes of sub-section (5) of section 230 of the Act, the notice shall be
in Form No. CAA.3, and shall be accompanied with a copy of the scheme of
compromise or arrangement, the explanatory statement and the disclosures
mentioned under rule 6, and shall be sent to.-
(i) the Central Government, the Registrar of Companies, the Income-tax
authorities, in all cases;
(ii) the Reserve Bank of India, the Securities and Exchange Board of India, the
Competition Commission of India, and the stock exchanges, as may be
applicable ;
(iii) other sectoral regulators or authorities, as required by Tribunal.

(2) The notice to the authorities mentioned in sub-rule (1) shall be sent forthwith, after
the notice is sent to the members or creditors of the company, by registered post or
by speed post or by courier or by hand delivery at the office of the authority.

(3) If the authorities referred to under sub-rule (1) desire to make any representation
under sub-section (5) of section 230, the same shall be sent to the Tribunal within a
period of thirty days from the date of receipt of such notice and copy of such
representation shall simultaneously be sent to the concerned companies and in case

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no representation is received within the stated period of thirty days by the Tribunal, it
shall be presumed that the authorities have no representation to make on the
proposed scheme of compromise or arrangement.

9. Voting.—

The person who receives the notice may within one month from the date of receipt of
the notice vote in the meeting either in person or through proxy or through postal ballot
or through electronic means to the adoption of the scheme of compromise and
arrangement.

Explanation. For the purposes of voting by persons who receive the notice as
shareholder or creditor under this rule–

(a) “shareholding” shall mean the shareholding of the members of the class who are
entitled to vote on the proposal; and

(b) “outstanding debt” shall mean all debt owed by the company to the respective class
or classes of creditors that remains outstanding as per the latest audited financial
statement, or if such statement is more than six months old, as per provisional financial
statement not preceding the date of application by more than six months.

10. Proxies.—

(1) Voting by proxy shall be permitted, provided a proxy in the prescribed form duly
signed by the person entitled to attend and vote at the meeting is filed with the
company at its registered office not later than 48 hours before the meeting.

(2) Where a body corporate which is a member or creditor (including holder of

debentures) of a company authorises any person to act as its representative at the
meeting, of the members or creditors of the company, or of any class of them, as the
case may be, a copy of the resolution of the Board of Directors or other governing
body of such body corporate authorising such person to act as its representative at
the meeting, and certified to be a true copy by a director, the manager, the secretary,
or other authorised officer of such body corporate shall be lodged with the company
at its registered office not later than 48 hours before the meeting.

(3) No person shall be appointed as a proxy who is a minor.

(4) The proxy of a member or creditor blind or incapable of writing may be accepted if
such member or creditor has attached his signature or mark thereto in the presence
of a witness who shall add to his signature his description and address : provided that
all insertions in the proxy are in the handwriting of the witness and such witness shall
have certified at the foot of the proxy that all such insertions have been made by him
at the request and in the presence of the member or creditor before he attached his
signature or mark.

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(5) The proxy of a member or creditor who does not know English may be accepted if
it is executed in the manner prescribed in the preceding sub-rule and the witness
certifies that it was explained to the member or creditor in the language known to him,
and gives the member’s or creditor's name in English below the signature.

11. Copy of compromise or arrangement to be furnished by the company.—

Every creditor or member entitled to attend the meeting shall be furnished by the
company, free of charge, within one day on a requisition being made for the same,
with a copy of the scheme of the proposed compromise or arrangement together with
a copy of the statement required to be furnished under section 230 of Act.

12. Affidavit of service.—

(1) The Chairperson appointed for the meeting of the company or other person
directed to issue the advertisement and the notices of the meeting shall file an affidavit
before the Tribunal not less than seven days before the date fixed for the meeting or
the date of the first of the meetings, as the case may be, stating that the directions
regarding the issue of notices and the advertisement have been duly complied with.

(2) In case of default under sub-rule (1), the application along with copy of the last
order issued shall be posted before the Tribunal for such orders as it may think fit to
make.

13. Result of the meeting to be decided by voting.—

(1) The voting at the meeting or meetings held in pursuance of the directions of the
Tribunal under Rule 5 on all resolutions shall take place by poll or by voting through
electronic means.

(2) The report of the result of the meeting under sub - rule (1) shall be in Form No.
CAA. 4 and shall state accurately the number of creditors or class of creditors or the
number of members or class of members, as the case may be, who were present and
who voted at the meeting either in person or by proxy, and where applicable, who
voted through electronic means, their individual values and the way they voted.

14. Report of the result of the meeting by Chairperson.—

The Chairperson of the meeting (or where there are separate meetings, the
Chairperson of each meeting) shall, within the time fixed by the Tribunal, or where no
time has been fixed, within three days after the conclusion of the meeting, submit a
report to the Tribunal on the result of the meeting in Form No. CAA.4.

15. Petition for confirming compromise or arrangement.—

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(1) Where the proposed compromise or arrangement is agreed to by the members or

creditors or both as the case may be, with or without modification, the company (or its
liquidator), shall, within seven days of the filing of the report by the Chairperson,
present a petition to the Tribunal in Form No. CAA.5 for sanction of the scheme of
compromise or arrangement.

(2) Where a compromise or arrangement is proposed for the purposes of or in

connection with scheme for the reconstruction of any company or companies, or for
the amalgamation of any two or more companies, the petition shall pray for appropriate
orders and directions under section 230 read with section 232 of the Act.

(3) Where the company fails to present the petition for confirmation of the compromise
or arrangement as aforesaid, it shall be open to any creditor or member as the case
may be, with the leave of the Tribunal, to present the petition and the company shall
be liable for the cost thereof.

16. Date and notice of hearing.—

(1) The Tribunal shall fix a date for the hearing of the petition, and notice of the hearing
shall be advertised in the same newspaper in which the notice of the meeting was
advertised, or in such other newspaper as the Tribunal may direct, not less than ten
days before the date fixed for the hearing.

(2) The notice of the hearing of the petition shall also be served by the Tribunal to the
objectors or to their representatives under sub-section (4) of section 230 of the Act
and to the Central Government and other authorities who have made representation
under rule 8 and have desired to be heard in their representation.

17. Order on petition.—

(1) Where the Tribunal sanctions the compromise or arrangement, the order shall
include such directions in regard to any matter or such modifications in the
compromise or arrangement as the Tribunal may think fit to make for the proper
working of the compromise or arrangement.

(2) The order shall direct that a certified copy of the same shall be filed with the
Registrar of Companies within thirty days from the date of the receipt of copy of the
order, or such other time as may be fixed by the Tribunal.

(3) The order shall be in Form No. CAA. 6, with such variations as may be necessary.

18. Application for directions under section 232 of the Act.—

(1) Where the compromise or arrangement has been proposed for the purposes of or
in connection with a scheme for the reconstruction of any company or companies or
the amalgamation of any two or more companies, and the matters involved cannot be
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dealt with or dealt with adequately on the petition for sanction of the compromise or
arrangement, an application shall be made to the Tribunal under section 232 of the
Act, by a notice of admission supported by an affidavit for directions of the Tribunal as
to the proceedings to be taken.

(2) Notice of admission in such cases shall be given in such manner and to such
persons as the Tribunal may direct.

19. Directions at hearing of application.—

Upon the hearing of the notice of admission given under rule 18 or upon any adjourned
hearing thereof, the Tribunal may make such order or give such directions as it may
think fit, as to the proceedings to be taken for the purpose of reconstruction or
amalgamation, as the case may be, including, where necessary, an inquiry as to the
creditors of the transferor company and the securing of the debts and claims of any of
the dissenting creditors in such manner as the Tribunal may think just and appropriate.

20. Order under section 232 of the Act.—

An order made under section 232 read with section 230 of the Act shall be in Form
No.CAA.7 with such variation as the circumstances may require

21. Statement of compliance in mergers and amalgamations.—

For the purpose of sub-section (7) of section 232 of the Act, every company in relation
to which an order is made under sub-section (3) of section 232 of the Act shall until
the scheme is fully implemented, file with the Registrar of Companies, the statement
in Form No. CAA.8 along with such fee as specified in the Companies (Registration
Offices and Fees) Rules, 2014 within two hundred and ten days from the end of each
financial year.

22. Report on working of compromise or arrangement.—

At any time after issuing an order sanctioning the compromise or arrangement, the
Tribunal may, either on its own motion or on the application of any interested person,
make an order directing the company or where the company is being wound-up, its
liquidator, to submit to the Tribunal within such time as the Tribunal may fix, a report
on the working of the said compromise or arrangement and on consideration of the
report, the Tribunal may pass such orders or give such directions as it may think fit.

23. Liberty to apply.—

(1) The company, or any creditor or member thereof, or in case of a company which
is being wound-up, its liquidator, may, at any time after the passing of the order
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sanctioning the compromise or arrangement, apply to the Tribunal for the

determination of any question relating to the working of the compromise or
arrangement.

(2) The application shall in the first instance be posted before the Tribunal for
directions as to the notices and the advertisement, if any, to be issued, as the Tribunal
may direct.

(3) The Tribunal may, on such application, pass such orders and give such directions
as it may think fit in regard to the matter, and may make such modifications in the
compromise or arrangement as it may consider necessary for the proper working
thereof, or pass such orders as it may think fit in the circumstances of the case.

24. Liberty of the Tribunal.—

(1) At any time during the proceedings, if the Tribunal hearing a petition or application
under these Rules is of the opinion that the petition or application or evidence or
information or statement is required to be filed in the form of affidavit, the same may
be ordered by the Tribunal in the manner as the Tribunal may think fit.

(2) The Tribunal may pass any direction(s) or order or dispense with any procedure
prescribed by these rules in pursuance of the object of the provisions for
implementation of the scheme of arrangement or compromise or restructuring or
otherwise practicable except on those matters specifically provided in the Act.

25. Merger or Amalgamation of certain companies.—

(1) The notice of the proposed scheme, under clause (a) of subsection (1) of section
233 of the Act, to invite objections or suggestions from the Registrar and Official
Liquidator or persons affected by the scheme shall be in Form No. CAA.9.

(2) For the purposes of clause (c) of sub-section (1) of section 233 of the Act the
declaration of solvency shall be filed by each of the companies involved in the scheme
of merger or amalgamation in Form No. CAA.10 along with the fee as provided in the
Companies (Registration Offices and Fees) Rules, 2014, before convening the
meeting of members and creditors for approval of the scheme.

(3) For the purposes of clause (b) and (d) of sub-section (1) of section 233 of the Act,
the notice of the meeting to the members and creditors shall be accompanied by –

(a) a statement, as far as applicable, referred to in sub-section (3) of section 230 of

the Act read with sub-rule (3) of rule 6 hereof;

(b) the declaration of solvency made in pursuance of clause (c) of sub-section (1) of
section 233 of the Act in Form No. CAA.10;

(c) a copy of the scheme.

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(4)(a) For the purposes of sub-section (2) of section 233 of the Act, the transferee
company shall, within seven days after the conclusion of the meeting of members or
class of members or creditors or class of creditors, file a copy of the scheme as agreed
to by the members and creditors, along with a report of the result of each of the
meetings in Form No. CAA.11 with the Central Government, along with the fees as
provided under the Companies (Registration Offices and Fees) Rules, 2014.

(b) Copy of the scheme shall also be filed, along with Form No. CAA. 11 with -
(i) the Registrar of Companies in Form No. GNL-1 along with fees provided
under the Companies (Registration Offices and Fees) Rules, 2014; and

(ii) the Official Liquidator through hand delivery or by registered post or speed
post.

(5) Where no objection or suggestion is received to the scheme from the Registrar of
Companies and Official Liquidator or where the objection or suggestion of Registrar
and Official Liquidator is deemed to be not sustainable and the Central Government
is of the opinion that the scheme is in the public interest or in the interest of creditors,
the Central Government shall issue a confirmation order of such scheme of merger or
amalgamation in Form No. CAA.12.

(6) Where objections or suggestions are received from the Registrar of Companies or
Official Liquidator and the Central Government is of the opinion, whether on the basis
of such objections or otherwise, that the scheme is not in the public interest or in the
interest of creditors, it may file an application before the Tribunal in Form No.
CAA.13 within sixty days of the receipt of the scheme stating its objections or opinion
and requesting that Tribunal may consider the scheme under section 232 of the Act.

(7) The confirmation order of the scheme issued by the Central Government or
Tribunal under sub-section (7) of section 233 of the Act, shall be filed, within thirty days
of the receipt of the order of confirmation, in Form INC-28 along with the fees as
provided under Companies (Registration Offices and Fees) Rules, 2014 with the
Registrar of Companies having jurisdiction over the transferee and transferor
companies respectively.

(8) For the purpose of this rule, it is clarified that with respect to schemes of
arrangement or compromise falling within the purview of section 233 of the Act, the
concerned companies may, at their discretion, opt to undertake such schemes under
sections 230 to 232 of the Act, including where the condition prescribed in clause (d)
of sub-section (1) of section 233 of the Act has not been met.

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712
[25A. Merger or amalgamation of a foreign company with a Company and vice
versa. –

(1) A foreign company incorporated outside India may merge with an Indian company
after obtaining prior approval of Reserve Bank of India and after complying with the
provisions of sections 230 to 232 of the Act and these rules.

(2) (a) A company may merge with a foreign company incorporated in any of the
jurisdictions specified in Annexure B after obtaining prior approval of the Reserve Bank
of India and after complying with provisions of sections 230 to 232 of the Act and these
rules.
(b) The transferee company shall ensure that valuation is conducted by valuers who
are members of a recognised professional body in the jurisdiction of the transferee
company and further that such valuation is in accordance with internationally accepted
principles on accounting and valuation. A declaration to this effect shall be attached
with the application made to Reserve Bank of India for obtaining its approval under
clause (a) of this sub-rule.

(3) The concerned company shall file an application before the Tribunal as per
provisions of section 230 to section 232 of the Act and these rules after obtaining
approvals specified in sub-rule (l) and sub-rule (2), as the case may be.

Explanation 1. For the purposes of this rule the term "company" means a company
as defined in clause (20) of section 2 of the Act and the term "foreign company" means
a company or body corporate incorporated outside India whether having a place of
business in India or not:

Explanation 2. For the purposes of this rule, it is clarified that no amendment shall be
made in this rule without consultation of the Reserve Bank of India.]

26. Notice to dissenting shareholders for acquiring the shares.—

For the purposes of sub-section (1) of section 235 of the Act, the transferee company
shall send a notice to the dissenting shareholder(s) of the transferor company, in Form
No. CAA.14 at the last intimated address of such shareholder, for acquiring the shares
of such dissenting shareholders.

27. Determination of price for purchase of minority shareholding.—

712
Inserted by the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules,
2017 vide notification number G.S.R. 368 (E) dated 13th April 2017 with effect from 13th April 2017.

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For the purposes of sub-section (2) of section 236 of the Act, the registered valuer
shall determine the price (hereinafter called as offer price) to be paid by the acquirer,
person or group of persons referred to in sub-section (1) of section 236 of the Act for
purchase of equity shares of the minority shareholders of the company, in accordance
with the following rules:-

(1) In the case of a listed company,-

(i) the offer price shall be determined in the manner as may be specified by the
Securities and Exchange Board of India under the relevant regulations framed by it,
as may be applicable; and
(ii) the registered valuer shall also provide a valuation report on the basis of valuation
addressed to the Board of directors of the company giving justification for such
valuation.

(2) In the case of an unlisted company and a private company,

(i) the offer price shall be determined after taking into account the following factors:-
(a) the highest price paid by the acquirer, person or group of persons for
acquisition during last twelve months;
(b) the fair price of shares of the company to be determined by the registered
valuer after taking into account valuation parameters including return on net
worth, book value of shares, earning per share, price earning multiple vis-à-vis
the industry average, and such other parameters as are customary for valuation
of shares of such companies; and
(ii) the registered valuer shall also provide a valuation report on the basis of valuation
addressed to the board of directors of the company giving justification for such
valuation.

28. Circular containing scheme of amalgamation or merger.—

(1) For the purposes of clause (a) of sub-section (1) of section 238 of the Act, every
circular containing the offer of scheme or contract involving transfer of shares or any
class of shares and recommendation to the members of the transferor company by its
directors to accept such offer, shall be accompanied by such information as set out in
Form No. CAA.15 .
(2) The circular shall be presented to the Registrar for registration.

29. Appeal under sub-section (2) of section 238 of the Act.—

Any aggrieved party may file an appeal against the order of the Registrar of
Companies refusing to register any circular under sub-section (2) of section 238 of the
Act and the said appeal shall be in the Form No. NCLT.9 (appended in the National
Company Law Tribunal Rules, 2016) supported with an affidavit in the Form No.
NCLT.6 (appended in the National Company Law Tribunal Rules, 2016).

SCHEDULE OF FEES

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S. Sections of the Rule Nature of application or Fees

No. Companies Act, 2013 Number petition
1. Sub-section (1) of 3 (1) Application for compromise Rs.
section 230 arrangement and 5,000/-
amalgamation.
2. Sub-section (2) of Application by dissenting Rs.
section shareholders. 1,000/-
235
3. Sub-section (2) of 29 Appeal against order of Rs.
section Registrar refusing to register 2,000
238 any circular.x

Annexure A

[See Rule 2(1)(c)]

FORM NO. CAA.1

[Pursuant to section 230(2)(c)(i) and rule 4]

Creditor’s Responsibility Statement
I/ We, …………………, the creditors of M/s…………… for an amount of Rs.
……………. as on ……………… do hereby declare that I / we have read and
understood the proposed corporate debt restructuring scheme and am / are of the
view that it is in my/our best interest to concur with the scheme.
I/ We further declare that the debt is owed to me / us by the company or the liability
was created by the company in my/ our favor in good faith and in the ordinary course
of business of the company;
I/We believe that the scheme does not give me/us any fraudulent preference at the
cost of any secured/unsecured Creditors.
Signature of creditor/s
Date:
Place:

FORM NO. CAA. 2

[Pursuant to Section 230 (3) and rule 6 and 7)]

Company Petition No ...... of 20.....
………………….Applicant(s)
Notice and Advertisement of notice of the meeting of creditors or members
Notice is hereby given that by an order dated the ...... 20 ... the _____ Bench of the
National Company Law Tribunal has directed a meeting (or separate meetings) to be
held of [here mention 'debenture holders' or 'first debenture holders' or' second
debenture holders' or 'unsecured creditors' or 'secured creditors' or 'preference
shareholders' or 'equity shareholders' as the case may be whose meeting or meetings
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have to be held] of the said company for the purpose of considering, and if thought fit,
approving with or without modification, the compromise or arrangement proposed to
be made between the said company and [here mention the class of creditors or
members with whom the compromise or arrangement or amalgamation is to be made]
of the company aforesaid. In pursuance of the said order and as directed therein
further notice is hereby given that a meeting of [here set out the class of creditors or
members whose meeting has to be held] of the said company will be held
at….on....day…the…day of................ 20...at........ o'clock in the noon at which time
and place the said [here mention the class of creditors or members] are requested to
attend [Where separate meetings of classes of creditors or members are to be held,
set them out separately with the place, date and time of the meeting in each case.]
Copies of the said compromise or arrangement or amalgamation, and of the statement
under section 230 can be obtained free of charge at the registered office of the
company or at the office of its authorized representative Shri.... at.......Persons entitled
to attend and vote at the meeting (or respective meetings), may vote in person or by
proxy, provided that all proxies in the prescribed form are deposited at the registered
office of the company at... .... not later than 48 hours before the meeting.
Forms of proxy can be had at the registered office of the Company.
The Tribunal has appointed Shri................................ and failing him, Shri….as
chairperson of the said meeting (or several meetings). The above mentioned
compromise or arrangement or amalgamation, if approved by the meeting, will be
subject to the subsequent approval of the tribunal.
Dated this ....day of...... .20.....
Chairperson appointed for the meeting
(or as the case may be )

FORM NO. CAA.3

[Pursuant to section 230(5) and rule 8]

In the Matter of compromise and / or arrangement of …………………
NOTICE TO CENTRAL GOVERNMENT, REGULATORY AUTHORITIES
To,
The Central Government/
The Registrar of Companies/
The Income-Tax Authorities/
[in all cases]
The Reserve Bank of India/
The Securities and Exchange Board of India/
The Stock Exchanges of ……………/
The Competition Commission of India/
[as may be applicable]
Other sectoral regulator or authorities
[As required by Tribunal]
Notice is hereby given in pursuance of sub-section (5) of section 230 of the Companies
Act, 2013, that as directed by the _____ Bench of the National Company Law Tribunal
at ……… by an order dated ………. under sub-section (1) of section 230 of the Act, a
meeting of the members and / or creditors of (Company’s name)……. shall be held on

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……………. to consider the scheme of compromise and / or arrangement of

………………with …………… at ………,.
A copy of the notice and scheme of the compromise or arrangement are enclosed.
You are hereby informed that representations, if any, in connection with the proposed
compromise and / or arrangement may be made to the Tribunal within thirty days from
the date of receipt of this notice. Copy of the representation may simultaneously be
sent to the concerned company(ies). In case no representation is received within the
stated period of thirty days, it shall be presumed that you have no representation to
make on the proposed scheme of compromise or arrangement.
Authorized Signatory
Dated this ……… day of …………….20…
Place
Enclosures : i) Copy of notice with statement as required under section 230(3);
ii) Copy of scheme of compromise or arrangement

FORM No. CAA. 4

[Pursuant to rule 13(2) and rule 14 ]

Company Petition No of...... of 20.....
……………….Applicant(s)
Report of result of meeting by Chairperson:
I, ______ the person appointed by this Hon'ble Tribunal to act as chairperson of the
meeting of (the debenture holders or first debenture holders or second debenture
holders or unsecured creditors or secured creditors or preference shareholders or
equity shareholders) of the above named company, summoned by notice served
individually upon them and by advertisement dated the .... day of.. 20...........................,
and held on the day of.. 20... at... , do hereby report to this Hon'ble Tribunal as follows:
1. The said meeting was attended either personally or by proxy by [here state the
number of creditors or the class of creditors or the number of members or the class of
members as the case may be, who attended the meeting] of the said company entitled
together to [here mention the total value to the debts, or debentures, where the
meeting was of creditors, and the total number and value of the shares, where the
meeting was of members, of those who attended the meeting], representing [ …….
percentage ] of the total value of debts or debentures or shares ……………. of the
company.
2. The scheme of compromise or arrangement was read out and explained by me to the
meeting, and the question submitted to the said meeting was whether the (here state the class
of creditors or members as the case may be) of the said company agreed to the compromise
or arrangement submitted to the meeting and agreed thereto.
3. The majority of persons representing three-fourths in value of the creditors, or class of
creditors or members or class of members, as the case may be, (or such persons unanimously)
are of the opinion that the compromise or arrangement should be approved and agreed to. The
result of the voting upon the said question was as follows:
The under‐ mentioned [here mention the class of creditors or members who attended the
meeting] voted in favour of the proposed compromise or arrangement being adopted and
carried into effect:
Name of creditor or Address Value of debt (or No. of Number of votes

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member preference or equity shares

held

The under‐ mentioned [here mention the class of creditors or members who attended the
meeting] voted against the proposed compromise or arrangement being adopted and carried
into effect:

Name of creditor or Address Value of debt (or No. of Number of votes

member preference or equity shares
held

Dated this................................ day of .............................20..........

Sd/-
Chairperson
**If the compromise or arrangement was approved with modifications, it should be so stated
and the modifications made should be set out, and also the particulars of the voting on the
modifications.

FORM NO. CAA.5

[Pursuant to section 230 and rule 15(1)]

[HEADING AS IN FORM NCLT. 4]
Petition to sanction compromise or arrangement
The petition of ______Ltd, (*in liquidation by its liquidator) the petitioner above named
is as follows:‐
1. The object of this petition is to obtain sanction of Tribunal to a compromise or arrangement
whereby (here set out the nature of the compromise or arrangement).
2. The company was incorporated under the [...] Act.................................. with a nominal
capital of Rs [...]divided into shares of Rs[…] each of which [...] shares were issued and Rs[...]
was paid up on each share issued.
3. The objects for which the company was formed are as set forth in the company's
Memorandum of Association. They are: (Set out the principal objects).
4. [Here set out the nature of the business carried on by the company, its financial position and
the circumstances that necessitated the compromise or arrangement and the benefits sought to
be achieved by the compromise or arrangement and its effect].

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5. The compromise or arrangement was in the following terms:-[Here set out the terms of the
compromise or arrangement].
6. By an order made in the above matter on […]the petitioner was directed to convene a meeting
of [here set out the class of creditors or members of whom the meeting was to be held] of the
company for the purpose of considering and, if thought fit approving with or without
modifications. The said compromise or arrangement and the said order directed that
[…] or failing him […] should act as chairperson of the said meeting and should report the
result thereof to this Tribunal.
7. Notice of the meeting was sent individually to the [here mention the class of creditors or
members to whom the notice was sent] as required by the order together with a copy of the
compromise or arrangement and of the statement required by section 231, 232 read with section
230 of the Act and a form of proxy. The notice of the meeting was also advertised
as directed by the said order in (here set out the newspapers).
8. On the [...], a meeting of (here mention the class of creditors or members whose meeting
was convened) of the company duly convened in accordance with the said order, was held at
[...]and the said [...], acted as the chairperson of the meeting.
9. The said [...], has reported the result of the meeting to this Hon'ble Tribunal.
10. The said meeting was attended by (here set out the number of the class of creditors or
members, as the case may be, who attended the meeting either in person or by proxy), and the
total value of their [here mention debts, debentures or shares, as the case may be] is Rs[....] [in
the case of shares, the total number and value of the shares should be mentioned]
representing [ ……. percentage ] of the total value of debts or debentures or shares
……………. of the company. The said compromise or arrangement was read and explained by
the said [...], to the meeting and it was resolved unanimously [or by a majority of [...] votes
against [...] votes] as follows:‐[Here set out the resolution as passed].
11. The sanctioning of the compromise or arrangement will be for the benefit of the company.
12. Notice of this petition need not be served on any person. The petitioner therefore prays:
(1) That the said compromise or arrangement may be sanctioned by the Tribunal as to be
binding on all the [here set out the class of creditors or members of the company on whom the
compromise or arrangement is to be binding] of the said company and on the said company.
(2) Or such other order may be made in the premises as to the Tribunal shall deem fit.

Verification etc. Petitioner

[Note: (1) The affidavit in support should verify the petition and prove any matters not proved
in any prior affidavit, such as advertisement, holding of meetings, posting of notices, copies of
compromise or arrangement and proxies etc., and should exhibit the report of the chairperson
and verify the same.]
Note: (2) If the company is being wound‐up, say so.
Note: (3) If any modifications were made in the compromise or arrangement, at the meeting,
they should be set out in separate paragraph.
* To be inserted where the company is being wound‐up.

FORM NO. CAA.6

[Pursuant to section 230(7) and sub-rule (3) of rule 17]

[HEADING AS IN FORM NCLT. 4]
Order on petition
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The above petition coming on for hearing on ………….. upon reading the said petition, the
order dated..... whereby the 'said company (or, liquidator of the said company), was ordered to
convene a meeting (or separate meeting) of the creditors/debenture holders/preference
shareholders/equity shareholders/ of the above company for the purpose of considering, and if
thought fit, approving, with or without modification, the compromise or arrangement proposed
to be made between the said company and.....................................................and annexed to the
affidavit of......................................................filed the ..................................... day of......20
......the ....................... and the (here mention the newspaper) dated.........each containing the
advertisement of the said notice convening the said meeting(s) directed to be held by the said
order dated…20....................the affidavit of..............filed the day of... 20..................................
, showing the publication and despatch of the notices convening the said meeting(s). the
report(s) of the chairperson/ chairpersons of the said meeting(s) (respectively) dated as to the
result of the said meeting(s), (and upon hearing Shri...................advocate for etc.) and it
appearing from the report(s) that the proposed compromise or arrangement has been approved
(here state whether unanimously or by a majority of not less than three‐fourths in value of the
creditors or class of creditors or members or class of members as the case may be present and
voting in person or by proxy or through postal ballot or through electronic means).
This Tribunal do hereby sanction the compromise or arrangement set forth in para .............of
the petition herein and in the schedule hereto. and doth hereby declare the same to be binding
on...(here enter the class of creditors or members on whom it is to be binding) of the above
named company and also on the said company (and its liquidator').
And this Tribunal do further order:‐
[Here enter any directions given or modifications made by the Tribunal regarding the carrying
out of the compromise or arrangement.]
That the parties to the compromise or arrangement or other persons interested shall be at liberty
to apply to this Tribunal for any directions that may be necessary in regard to the working of
the compromise or arrangement, and
That the said company [or the liquidator of the said company] do file with the Registrar of
Companies a certified copy of this order within thirty days of the receipt of the order.

SCHEDULE
Scheme of compromise or arrangement as sanctioned by the Tribunal
Dated this ....... day of.. ............. .20... .
(By the Tribunal)
Registrar
To be inserted where the company is being wound‐up. Where the compromise or
arrangement has been approved with the modifications, it should be so stated

FORM NO. CAA.7

[Pursuant to section 232 and rule 20]

[HEADING AS IN FORM NCLT. 4]
Order under section 232
Upon the above petition [and application'] coming on for further hearing on ..........upon
reading etc., and upon hearing etc.
THIS TRIBUNAL DO ORDER

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(1) That all the property, rights and powers of the transferor company specified in the
first, second and third parts of the Schedule hereto and all other property, rights and
powers of the transferor company be transferred without further act or deed to the
transferee company and accordingly the same shall pursuant to section 232 of the Act,
be transferred to and vested in the transferee company for all the estate and interest
of the transferor company therein but subject nevertheless to all charges now affecting
the same [other than(here set out any charges which by virtue of the compromise or
arrangement are to cease to have effect)]; and
(2) That all the liabilities and duties of the transferor company be transferred without
further act or deed to the transferee company and accordingly the same shall pursuant
to section 232 of the Act, be transferred to and become the liabilities and duties of the
transferee company; and
(3) That all proceedings now pending by or against the transferor company be
continued by or against the transferee company; and
(4) That the transferee company do without further application allot to such members
of the transferor company as have not given such notice of dissent as is required by
clause ____ of the compromise or arrangement herein the shares in the transferee
company to which they are entitled under the said compromise or arrangement; and
(5) That the transferor company shall within thirty days of the date of the receipt of this
order cause a certified
copy of this order to be delivered to the Registrar of Companies for registration and on
such certified copy being so delivered the transferor company shall be dissolved* and
the Registrar of Companies shall place all documents relating to the transferor
company and registered with him on the file kept by him in relation to the transferee
company and the files relating to the said two companies shall be consolidated
accordingly; and
(6) That any person interested shall be at liberty to apply to the Tribunal in the above
matter for any directions that may be necessary.
Schedule
First Part
(Insert a short description of the freehold property of the transferor company)
Second Part
(Insert a short description of the leasehold property of the transferor company)
Third Part
(Insert a short description of all stocks, shares, debentures and other charges in
action of the transferor company)
Dated ..........
(By the Tribunal)
Registrar
* Where the Tribunal directs that the transferor company should be dissolved from any
other date, the clause should be altered accordingly.

FORM NO. CAA.8

[Pursuant to section 232(7) and rule 21]

In the Matter of compromise and / or arrangement of …………………
Statement to be filed with Registrar of Companies

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1. (a) Corporate identity number (CIN) of company:

(b) Global location number (GLN) of company:
2. (a) Name of the company:
(b) Address of the registered office of the company:
(c) E-mail ID of the company:
3. Date of Board of Directors’ resolution approving the scheme
4. Date of Order of Tribunal approving the Scheme under Section 232(3)
5. Details regarding:-
(a) Completed actions under the Order
(b) Pending actions under the Order with status
Declaration of compliance of scheme as per the Order of the Tribunal
I, the Director / Company Secretary of …………………. do solemnly affirm and declare
that we are in compliance with the Order of the Tribunal dated ________.
A copy of the scheme of the compromise or arrangement is enclosed.
__________________
Director / Company Secretary
__________________
Chartered Accountant in practice / Cost Accountant in practice / Company Secretary
in practice
Date:
Place:
Attachments:-
1) Scheme of Compromise or Arrangement
2) Details of Compliance of the Scheme
3) Other Attachments, if any

FORM NO. CAA.9

[Pursuant to section 233(1)(a) and rule 25(1)]

Notice of the scheme inviting objections or suggestions
Notice is hereby given by M/s […] (transferor / transferee company) that a scheme of
merger or amalgamation is proposed to be entered with M/s […] (transferor /
transferee company) and in pursuance of sub-section (1)(a) of Section 233 of the
Companies Act, 2013, objections or suggestions are invited in respect of the scheme.
A copy of the scheme of merger or amalgamation is enclosed.
Objections or suggestions are invited from –
(i) the Registrar (mention the details of the Registrar of the area where the registered
office of the transferor / transferee company is situated);
(ii) Official Liquidator (mention the details of the Official Liquidator of the area where
the registered office of the transferor company is situated); and
(iii) [Any person whose interest is likely to be affected by the proposed scheme].
Any person mentioned in (i) , (ii) or (iii) above, desirous of providing objections or
suggestions in respect of the scheme should send their objections or suggestions
within thirty days from the date of this notice to […](the Central Government at
…………………. (address) and to Shri _______ (address) being authorised
representative of the transferor company).

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Date :
Place :
Sd/-(mention the details of the authorised representative of the transferor company).

Enclosure: A copy of the scheme of merger or amalgamation

FORM NO. CAA.10

[Pursuant to section 233(1)(c) and rule 25(2)]

Declaration of solvency
1. (a) Corporate identity number (CIN) of company :
(b) Global location number (GLN) of company:
2. (a) Name of the company:
(b) Address of the registered office of the company:
(c) E-mail ID of the company:
3.(a) Whether the company is listed:
Yes
No
(b) If listed, please specify the name(s) of the stock exchange(s) where listed:
----------------------------------------------------------------------
--------------------------------------------------------------------
4. Date of Board of Directors’ resolution approving the scheme
Declaration of solvency
We, the directors of M/s …………………. do solemnly affirm and declare that we have
made a full enquiry into the affairs of the company and have formed the opinion that
the company is capable of meeting its liabilities as and when they fall due and that the
company will not be rendered insolvent within a period of one year from the date of
making this declaration.
We append an audited statement of company’s assets and liabilities as at …………
being the latest date of making this declaration.
We further declare that the company’s audited annual accounts including the Balance
Sheet have been filed upto date with the Registrar of Companies …………………..
Signed for and behalf of the board of directors
(1) Signature :……………
Date Name :…………..
Place Managing Director, if any

(2) Signature :……………

Name :……………
Director

(3) Signature :…………….

Name :…………….
Director

Verification

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We solemnly declare that we have made a full enquiry into the affairs of the company
including the assets and liabilities of this company and that having done so and having noted
that the scheme of merger or amalgamation between ………………… and
…………………………..is proposed to be placed before the shareholders and creditors of
the company for approval as per the provisions of sub-section of (1) of section 233 of the
Companies Act, 2013, we make this solemn declaration believing the same to be true.
Verified this day the ……… day of …………….., 20……
(1) Signature :……………
Name :…………..
Managing Director
(2) Signature :……………
Name :……………
Director
(3) Signature :…………….
Name :…………….
Director

Solemnly affirmed and declared at ………… the ………………. day of ……………, 20…
before me.
Commissioner of Oaths and Notary Public

Attachments:
a) Copy of board resolution
b) Statement of assets and liabilities
c) Auditor’s report on the statement of assets and liabilities

ANNEXURE
Statement of assets and liabilities as at ……….
Name of the company …………………….
Assets
Book Estimated
Value Realisable value
1. Balance at Bank
2. Cash in hand
3. Marketable securities
4. Bills receivables
5. Trade debtors
6. Loans & advances
7. Unpaid calls
8. Stock-in-trade
9. Work in progress
10. Freehold property
11. Leasehold property
12. Plant and machinery
13. Furniture, fittings,
utensils, etc.
14. Patents, trademarks, etc.

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15. Investments other

than
marketable securities
16. Other property
Total:

Liabilities
Estimated to rank for payment
(to the nearest rupee)
1. Secured on specific assets
2. Secured by floating charge(s)
3.Estimated cost of liquidation
and other expense including
interest accruing until payment
of debts in full.
4.Unsecured creditors
(amounts estimated
to rank for payment)
(a) Trade accounts
(b) Bills payable
(c) Accrued expense
(d) Other liabilities
(e) Contingent liabilities
………………………..
Total:
………………………..
Total estimated value of assets Rs.
………………………
Total liabilities Rs.
………………………
Estimated surplus after paying Rs.
………………………
debts in full
Remarks
(1) Signature :……………
Name :…………..
Managing Director
(2) Signature :……………
Name :……………
Director
(3) Signature :…………….
Name :…………….
Director
Place : ……………
Date: ………….

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FORM NO.CAA.11

[Pursuant to section 233(2) and rule 25(4)]

Notice of approval of the scheme of merger
(To be filed by the transferee company to the Central Government, Registrar and the Official
Liquidator)
1. (a) Corporate Identity Number (CIN) :
(b) Global Location Number GLN) :
2. (a) Name of the transferee company:
(b) Registered office address:
(c) E-mail id:
3. Whether the transferor and transferee are:
□ Small companies
□ Holding and wholly owned subsidiaries
4. Details of transferor
(a) Corporate Identity Number (CIN) :
(b) Global Location Number GLN) :
Name of the company:
Registered office address:
E-mail id:
5. Brief particulars of compromise or arrangement involving merger:
6. Details of approval of the scheme of merger by the transferee company:
(a) Approval by members
(i) Date of dispatch of notice to members:
(ii) Date of the General meeting:
(iii) Date of approval of scheme in the General meeting:
(iv) Approved by majority of: (members or class of members holding atleast ninety percent
of the total number of
shares)
(b) Approval by creditors
(i) Date of dispatch of notice to creditors:
(ii) Date of the meeting of creditors:
(iii) Date of approval of scheme in creditors meeting:
(iv) Approved by majority of: (at least nine tenth in value of
creditors)
7. Details of approval of the scheme of merger by the transferor company:
(a) Approval by members
(i) Date of dispatch of notice to members:
(ii) Date of the General meeting:
(iii) Date of approval of scheme in the General meeting:
(iv) Approved by majority of: (members or class of members holding atleast ninety percent
of the total number
of shares)
(b) Approval by creditors
(i) Date of dispatch of notice to creditors:
(ii) Date of the meeting of creditors:
(iii) Date of approval of scheme in such meeting:
(iv) Approved by majority of: (at least nine tenths in value of creditor)
Declaration

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I ………………..the director of the transferee company hereby declares that-

(i) Notice of the scheme as required under section 233(1)(a) was duly sent to the
Registrars and Official Liquidators of the place where the registered office of the
transferor and transferee companies are situated and to all other persons who are
likely to be affected by the scheme and a copy of the same has been attached
herewith;
(ii) the objections to the scheme have been duly taken care of to the satisfaction of the
respective persons;
(iii) the scheme has been approved by the members and creditors of the transferee
and transferor company by the requisite majority in accordance with section 233(1)(b)
and (d) respectively;
(iv) all the requirements under section 233 of the Act and the rules made there have
been complied with; and
(v) to the best of my knowledge and belief the information given in this application and
its attachments is correct and complete;
Date:
Place:
Signature
Attachments:
1. Copy of the scheme approved by both creditors and members;
2. Notice sent in accordance with section 233(1)(a);
3. Optional attachments, if any.

FORM NO. CAA.12

[Pursuant to section 233 and rule 25(5)]

Confirmation order of scheme of merger or amalgamation between
Ms……………………………..and Ms……………………………..
Pursuant to the provisions of section 233, the scheme of compromise, arrangement
or merger of M/s …………………….(transferor company) with
M/s………………………………….( transferee company) approved by their respective
members and creditors as required under section 233(1)(b) and (d), is hereby
confirmed and the scheme shall be effective from the …………………….day of
………………20…
A copy of the approved scheme is attached to this order.
Signature with seal
Date
Place

FORM NO.CAA.13

[Pursuant to section 233(5) and rule 25(6)]

Application by the Central Government to the Tribunal
[HEADING AS IN FORM NCLT. 4]
(Name and address of the applicant)

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State the name and address of the persons who should be given opportunity of being
heard in disposing of this reference.
(Note: Please enclose as many additional copies of the reference application as there
are persons as above named.)
On the basis of the information available from the documents annexed hereto-
1. The applicant hereby makes reference to the National Company Law Tribunal, -----
, Bench, under section …………….. of the Companies Act, 2013
2. The applicant states as follow :
(Here set out the brief facts of the case)
3. The submission of the applicant is as follows :
(Submission)
4. The applicant has annexed hereto the documents or copies thereof as specified
below:

Place:
Date: Signature of the
applicant
List of Document
1.
2.
3.

FORM NO. CAA.14

[Pursuant to section 235(1) and rule 26]

Notice to dissenting shareholders
To
………………..
………………..
Notice for acquiring ……….shares held by you in M/s……….(hereinafter called ‘the
transferor company’)
Notice is hereby given by M/s………………. (hereinafter called ‘the transferee
company’) that an offer made by the transferee company on …………… to all the
shareholders of the transferor company for acquisition of the shares or class of shares
at the price of ………. has been approved by the holders of ………… in value of the
shares, being not less than nine-tenth in value of the said shares (other than shares
already held at the date of the offer by the transferee company either by itself or by its
nominees or subsidiaries).
In pursuance of the provisions of sub-section (1) of section 235 of the Companies Act
2013, notice is further given that the transferee company is desirous of acquiring
………..shares held by you in the transferor company at a price of Rs…………….,
being the price paid to the approving shareholders.
Take further note that if you are not in favour of such acquisition of your shares by the
transferee company, then you may apply to the Tribunal within one month hereof.
Unless an application is made by you as aforesaid or unless on such application the
Tribunal orders otherwise, the transferee company will be entitled and bound to
acquire the aforesaid shares held by you in the transferor company on the terms of
the above mentioned offer.

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Date:
Place:
Signature
(On behalf of transferee company)

FORM NO.CAA.15

[Pursuant to section 238(1)(a) and rule 28]

Information to be furnished along with circular in relation to any scheme or contract
involving the transfer of shares or any class of shares in the transferor company to the
transferee company
Details of the transferee company
1.(a) Corporate Identity Number :
(b) Global Location Number :
2. (a) Name of the company:
(b) Registered office address:
(c) E-mail id:
3. Whether the company is
□ Public company
□ Private company
□ OPC
4. (a) Whether the shares of the company are listed on a recognized stock exchange:
□ Yes
□ No
(b) If yes, name of the stock exchanges where shares are listed:
5.Main objects/ principal business of the company:
6.Capital structure of the company:
Authorized share capital:
Issued share capital:
Subscribed share capital:
Paid up share capital:
7.Debt structure of the company:
8.Details of the promoters, key managerial personnel, directors of the company:
9.Material interest and effect of the scheme on such interest of:
(i) Key Managerial Personnel
(ii) Promoters
(iii) Directors
(iv) Debenture trustees
(v) Deposit trustees
(vi) Auditors
10.(a) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers,
managing directors of the
transferee company
Shareholder’s name -
Status (whether a director, Key Managerial Personnel, etc.) -
Share type-
Number of shares-

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Value per share (Rs.)-

(b) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers,
managing director in the
transferor company
Shareholder’s name
Status (whether a director, Key Managerial Personnel, etc.)-
Share type -
Number of shares -
Value per share (Rs.)-
11. (a) Offer made by any other person on behalf of the company:
□ Yes
□ No
(b) State the interest of the other person in the company:

Details of the transferor company

12. (a) Corporate Identity Number :
(b) Global Location Number :
13. (a) Name of the company:
(b) Registered office address:
(c) E-mail id:
14. Whether the company is
□ Public company
□ Private company
□ One Person Company
15. (a) Whether the shares of the company is listed on a recognized stock exchange:
□ Yes
□ No
(b) If yes, name of the stock exchanges where shares are listed:
16. Main objects/ principal business of the company:
17. Capital structure of the company:
Authorized share capital:
Issued share capital:
Subscribed share capital:
Paid up share capital:
18. Debt structure of the company:
19. Details of the promoters, key managerial personnel, directors of the company:
20. Material interest and effect of the scheme on such interest of:
(i) Key Managerial Personnel
(ii) Promoters
(iii) Directors
(iv) Debenture trustees
(v) Deposit trustees
(vi) Auditors
21. (a) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers,
managing directors of the transferee company
Shareholder’s name-
Status (whether a director, Key Managerial Personnel, etc.)-
Share type -
Number of shares -

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Value per share (Rs.)-

Status (whether a director, Key Managerial Personnel, etc.)-
Share type -
Number of shares -
Value per share (Rs.)-
(b) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers,
managing director in the transferor company
Shareholder’s name-
Status (whether a director, Key Managerial Personnel, etc.)-
Share type-
Number of shares-
Value per share (Rs.)-
22. Any relation that subsists between transferor and transferee company:

Details of the scheme

23. Reasons for which the offer has been recommended by director of the transferor
company:
24. Form of consideration
Total consideration ……………………..
□ Cash ………………………
□ Other than cash …….………………..
25. if consideration is other than cash, particulars thereof:
26. if consideration involves the allotment of shares in the transferee company,
(a) Share exchange ratio:
(b) basis of valuation of shares of transferee company:
(c) Full particulars of the shares and the rights attached thereto:
27. Sources from which the transferee company proposes to pay for the acquisition of the
said shares, if the consideration is cash:

Declaration
I/We, ………….., directors of the transferor company do solemnly declare that the
information given in this statement and enclosures is correct and complete to the best
of my/our knowledge.
Date:
Place:
Signature
Enclosures:
1. Details of transfer of shares in the transferor company by its directors, Key
Managerial Personnel, promoters, manager, managing director in the two years
preceding the offer;
2. Statement of valuation of shares by a registered valuer;
3. Auditor’s certificate regarding the offer;
4. Offer document shall contain a statement by or on behalf of transferee company
disclosing the steps it has taken to ensure that necessary cash will be available;
5. Details of change of name, registered office and objects of the transferee
company;
6. Details of change of name, registered office and objects of the transferor
company.

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713
[Annexure B

Jurisdictions referred to in clause (a) of sub-rule (2) of rule 25A

Jurisdictions -
(i) whose securities market regulator is a signatory to International Organization of
Securities Commission's Multilateral Memorandum of Understanding (Appendix A
Signatories) or a signatory to bilateral Memorandum of Understanding with SEBI, or
(ii) whose central bank is a member of Bank for International Settlements (BIS), and
(iii) a jurisdiction, which is not identified in the public statement of Financial Action Task
Force (FATE) as:

(a) a jurisdiction having a strategic Anti-Money Laundering or Combating the

Financing of Terrorism deficiencies to which counter measures apply; or

a jurisdiction that has not made sufficient progress in addressing the deficiencies or
has not committed to an action plan developed with the Financial Action Task Force
to address the deficiencies.]

713
Inserted by the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules,
2017 vide notification number G.S.R. 368 (E) dated 13th April 2017 with effect from 13th April 2017.

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Chapter XVII: The Companies

(Registered Valuers and Valuation)
Rules, 2017
[The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i) vide number G.S.R. 1316(E), dated the 18th October, 2017 and subsequently amended vide number
G.S.R. 155(E), dated the 9th February, 2018; G.S.R. 559(E) dated 13th June 2018; G.S.R. 925(E)
dated 25th September 2018; and G.S.R. 1108(E) dated 13th November 2018.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 18th October, 2017

G.S.R. 1316(E).─ In exercise of the powers conferred by section 247 read with sections
458, 459 and 469 of the Companies Act, 2013 (18 of 2013), the Central Government
hereby makes the following rules, namely:-

CHAPTER I
PRELIMINARY

1. 714[Short title, commencement and application].─

(1) These rules may be called the Companies (Registered Valuers and Valuation) Rules,
2017.

(2) They shall come into force on the date of their publication in the Official Gazette.
715
[(3) These rules shall apply for valuation in respect of any property, stocks, shares,
debentures, securities or goodwill or any other assets or net worth of a company or its
liabilities under the provision of the Act or these rules.

Explanation.- It is hereby clarified that conduct of valuation under any other law other
than the Act or these rules by any person shall not be affected by virtue of coming into
effect of these rules.]

2. Definitions.─

(1) In these rules, unless the context otherwise requires ─

Substituted for “Short title and commencement” by notification no. G.S.R. 1108(E) dated 13th
714

November 2018.

715
Inserted by notification no. G.S.R. 1108(E) dated 13th November 2018.

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(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “authority” means an authority specified by the Central Government under

section 458 of the Companies Act, 2013 to perform the functions under these
rules;

(c) “asset class” means a distinct group of assets, such as land and building,
machinery and equipment, displaying similar characteristics, that can be
classified and requires separate set of valuers for valuation;

(d) “certificate of recognition” means the certificate of recognition granted to a

registered valuers organisation under sub-rule (5) of rule 13 and the term
“recognition” shall be construed accordingly;

(e) “certificate of registration” means the certificate of registration granted to a

valuer under subrule (6) of rule 6 and the term “registration” shall be construed
accordingly;

(f) “partnership entity” means a partnership firm registered under the Indian
Partnership Act, 1932 (9 of 1932) or a limited liability partnership registered
under the Limited Liability Partnership Act, 2008 (6 of 2009);

(g) “Annexure” means an annexure to these rules;

(h) “registered valuers organisation” means a registered valuers organisation

recognised under sub-rule (5) of rule 13;

(i) “valuation standards” means the standards on valuation referred to in rule

18; and

(j) “valuer” means a person registered with the authority in accordance with
these rules and the term “registered valuer” shall be construed accordingly.

(2) Words and expressions used but not defined in these rules, and defined in the Act
or in the Companies (Specification of Definitions Details) Rules, 2014, shall have the
same meanings respectively assigned to them in the Act or in the said rules.

CHAPTER II

ELIGIBILITY, QUALIFICATIONS AND REGISTRATION OF VALUERS

3. Eligibility for registered valuers.─

(1) A person shall be eligible to be a registered valuer if he-

(a) is a valuer member of a registered valuers organisation;

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Explanation.─ For the purposes of this clause, “a valuer member” is a

member of a registered valuers organisation who possesses the
requisite educational qualifications and experience for being registered
as a valuer;

(b) is recommended by the registered valuers organisation of which he is a

valuer member for registration as a valuer;

(c) has passed the valuation examination under rule 5 within three years
preceding the date of making an application for registration under rule 6;

(d) possesses the qualifications and experience as specified in rule 4;

(e) is not a minor;

(f) has not been declared to be of unsound mind;

(g) is not an undischarged bankrupt, or has not applied to be adjudicated as a

bankrupt;

(h) is a person resident in India;

Explanation.─ For the purposes of these rules ‘person resident in India’

shall have the same meaning as defined in clause (v) of section 2 of the
Foreign Exchange Management Act, 1999 (42 of 1999) as far as it is
applicable to an individual;

(i) has not been convicted by any competent court for an offence punishable
with imprisonment for a term exceeding six months or for an offence involving
moral turpitude, and a period of five years has not elapsed from the date of
expiry of the sentence:

Provided that if a person has been convicted of any offence and

sentenced in respect thereof to imprisonment for a period of seven years
or more, he shall not be eligible to be registered;

(j) has not been levied a penalty under section 271J of Income-tax Act, 1961
(43 of 1961) and time limit for filing appeal before Commissioner of Income-tax
(Appeals) or Income-tax Appellate Tribunal, as the case may be has expired,
or such penalty has been confirmed by Income-tax Appellate Tribunal, and five
years have not elapsed after levy of such penalty; and

(k) is a fit and proper person:

Explanation.─ For determining whether an individual is a fit and proper

person under these rules, the authority may take account of any relevant
consideration, including but not limited to the following criteria-

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(i) integrity, reputation and character,

(ii) absence of convictions and restraint orders, and

(iii) competence and financial solvency.

(2) No partnership entity or company shall be eligible to be a registered valuer if-

(a) it has been set up for objects other than for rendering professional or
financial services, including valuation services and that in the case of a
company, it is 716[] a subsidiary, joint venture or associate of another company
or body corporate;

(b) it is undergoing an insolvency resolution or is an undischarged bankrupt;

(c) all the partners or directors, as the case may be, are not ineligible under
clauses (c), (d), (e), 717[(f)], (g), (h), (i), (j) and (k) of sub-rule (1);

(d) three or all the partners or directors, whichever is lower, of the partnership
entity or company, as the case may be, are not registered valuers; or

(e) none of its partners or directors, as the case may be, is a registered valuer
for the asset class, for the valuation of which it seeks to be a registered valuer.

4. Qualifications and experience.─

An individual shall have the following qualifications and experience to be eligible for
registration under rule 3, namely:-

(a) post-graduate degree or post-graduate diploma, in the specified discipline, from a

University or Institute established, recognised or incorporated by law in India and at
least three years of experience in the specified discipline thereafter; or

(b) a Bachelor’s degree or equivalent, in the specified discipline, from a University or

Institute established, recognised or incorporated by law in India and at least five years
of experience in the specified discipline thereafter; or

716
Omitted the word “not” by notification no. G.S.R. 1108(E) dated 13th November 2018.

717
Inserted by notification no. G.S.R. 1108(E) dated 13th November 2018.

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(c) membership of a professional institute established by an Act of Parliament enacted

for the purpose of regulation of a profession with at least three years’ experience after
such membership 718[].

Explanation-I.─ For the purposes of this clause the ‘specified discipline’ shall mean
the specific discipline which is relevant for valuation of an asset class for which the
registration as a valuer or recognition as a registered valuers organisation is sought
under these rules.

Explanation-II.─ Qualifying education and experience 719[] for various asset classes,
is given in an indicative manner in Annexure–IV of these rules.

[ Explanation-III.─ For the purposes of this rule and Annexure IV, ‘equivalent’ shall
720

mean professional and technical qualifications which are recognised by the Ministry of
Human Resources and Development as equivalent to professional and technical
degree.]

5. Valuation Examination.─

(1) The authority shall, either on its own or through a designated agency, conduct
valuation examination for one or more asset classes, for individuals, who possess the
qualifications and experience as specified in rule 4, and have completed their
educational courses as member of a registered valuers organisation, to test their
professional knowledge, skills, values and ethics in respect of valuation: Provided that
the authority may recognise an educational course conducted by a registered valuers
organisation before its recognition as adequate for the purpose of appearing for
valuation examination: Provided also that the authority may recognise an examination
conducted as part of a master’s or post graduate degree course conducted by a
University which is equivalent to the valuation examination.

(2) The authority shall determine the syllabus for various valuation specific subjects or
assets classes for the valuation examination on the recommendation of one or more
Committee of experts constituted by the authority in this regard.

(3) The syllabus, format and frequency of the valuation examination, including
qualifying marks, shall be published on the website of the authority at least three
months before the examination.

718
Omitted “and having qualification mentioned at clause (a) or (b)” by notification no. G.S.R. 1108(E)
dated 13th November 2018.

719
Omitted “and examination or training” by notification no. G.S.R. 1108(E) dated 13th November 2018.

720
Inserted by notification no. G.S.R. 1108(E) dated 13th November 2018.

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(4) An individual who passes the valuation examination, shall receive

acknowledgement of passing the examination.

(5) An individual may appear for the valuation examination any number of times.

6. Application for certificate of registration.─

(1) An individual eligible for registration as a registered valuer under rule 3 may make
an application to the authority in Form-A of Annexure-II along with a non-refundable
application fee of five thousand rupees in favour of the authority.

(2) A partnership entity or company eligible for registration as a registered valuer under
rule 3 may make an application to the authority in Form-B of Annexure-II along with
a non-refundable application fee of ten thousand rupees in favour of the authority.

(3) The authority shall examine the application, and may grant twenty one days to the
applicant to remove the deficiencies, if any, in the application.

(4) The authority may require the applicant to submit additional documents or
clarification within twenty- one days.

(5) The authority may require the applicant to appear, within twenty one days, before
the authority in person, or through its authorised representative for explanation or
clarifications required for processing the application.

(6) If the authority is satisfied, after such scrutiny, inspection or inquiry as it deems
necessary, that the applicant is eligible under these rules, it may grant a certificate of
registration to the applicant to carry on the activities of a registered valuer for the
relevant asset class or classes in Form-C of the Annexure-II within sixty days of
receipt of the application, excluding the time given by the authority for presenting
additional documents, information or clarification, or appearing in person, as the case
may be.

(7) If, after considering an application made under this rule, the authority is of the prima
facie opinion that the registration ought not be granted, it shall communicate the
reasons for forming such an opinion within forty-five days of receipt of the application,
excluding the time given by it for removing the deficiencies, presenting additional
documents or clarifications, or appearing in person, as the case may be.

(8) The applicant shall submit an explanation as to why his/its application should be
accepted within fifteen days of the receipt of the communication under sub- rule (7),
to enable the authority to form a final opinion.

(9) After considering the explanation, if any, given by the applicant under sub-rule (8),
the authority shall either –

(a) accept the application and grant the certificate of registration; or

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(b) reject the application by an order, giving reasons thereof.

(10) The authority shall communicate its decision to the applicant within thirty days of
receipt of explanation.

7. Conditions of Registration.─

The registration granted under rule 6 shall be subject to the conditions that the valuer
shall –

(a) at all times possess the eligibility and qualification and experience criteria as
specified under rule 3 and rule 4;

(b) at all times comply with the provisions of the Act , these rules and the Bye-laws or
internal regulations, as the case may be, of the respective registered valuers
organisation;

(c) in his capacity as a registered valuer, not conduct valuation of the assets or
class(es) of assets other than for which he/it has been registered by the authority;

(d) take prior permission of the authority for shifting his/ its membership from one
registered valuers organisation to another;

(e) take adequate steps for redressal of grievances;

(f) maintain records of each assignment undertaken by him for at least three years
from the completion of such assignment;

(g) comply with the Code of Conduct (as per Annexure-I of these rules) of the
registered valuers organisation of which he is a member;

(h) in case a partnership entity or company is the registered valuer, allow only the
partner or director who is a registered valuer for the asset class(es) that is being valued
to sign and act on behalf of it;

(i) in case a partnership entity or company is the registered valuer, it shall disclose to
the company concerned, the extent of capital employed or contributed in the
partnership entity or the company by the partner or director, as the case may be, who
would sign and act in respect of relevant valuation assignment for the company;

(j) in case a partnership entity is the registered valuer, be liable jointly and severally
along with the partner who signs and acts in respect of a valuation assignment on
behalf of the partnership entity;

(k) in case a company is the registered valuer, be liable alongwith director who signs
and acts in respect of a valuation assignment on behalf of the company;

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(l) in case a partnership entity or company is the registered valuer, immediately inform
the authority on the removal of a partner or director, as the case may be, who is a
registered valuer along with detailed reasons for such removal; and

(m) comply with such other conditions as may be imposed by the authority.

8. Conduct of Valuation.─

(1) The registered valuer shall, while conducting a valuation, comply with the valuation
standards as notified or modified under rule 18:

Provided that until the valuation standards are notified or modified by the
Central Government, a valuer shall make valuations as per-

(a) internationally accepted valuation standards;

(b) valuation standards adopted by any registered valuers organisation.

(2) The registered valuer may obtain inputs for his valuation report or get a separate
valuation for an asset class conducted from another registered valuer, in which case
he shall fully disclose the details of the inputs and the particulars etc. of the other
registered valuer in his report and the liabilities against the resultant valuation,
irrespective of the nature of inputs or valuation by the other registered valuer, shall
remain of the first mentioned registered valuer.

(3) The valuer shall, in his report, state the following:-

(a) background information of the asset being valued;

(b) purpose of valuation and appointing authority;

(c) identity of the valuer and any other experts involved in the valuation;

(d) disclosure of valuer interest or conflict, if any;

(e) date of appointment, valuation date and date of report;

(f) inspections and/or investigations undertaken;

(g) nature and sources of the information used or relied upon;

(h) procedures adopted in carrying out the valuation and valuation standards followed;

(i) restrictions on use of the report, if any;

(j) major factors that were taken into account during the valuation;

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(k) conclusion; and

(l) caveats, limitations and disclaimers to the extent they explain or elucidate the
limitations faced by valuer, which shall not be for the purpose of limiting his
responsibility for the valuation report.

9. Temporary surrender.─

(1) A registered valuer may temporarily surrender his registration certificate in

accordance with the bye-laws or regulations, as the case may be, of the registered
valuers organisation and on such surrender, the valuer shall inform the authority for
taking such information on record.

(2) A registered valuers organisation shall inform the authority if any valuer member
has temporarily surrendered his/its membership or revived his/ its membership after
temporary surrender, not later than seven days from approval of the application for
temporary surrender or revival, as the case may be.

(3) Every registered valuers organisation shall place, on its website, in a searchable
format, the names and other details of its valuers members who have surrendered or
revived their memberships.

10. Functions of a Valuer.─

721
A valuer shall conduct valuation required under the Act as per these rules [].

11. Transitional Arrangement.─

Any person who may be rendering valuation services under the Act, on the date of
commencement of these rules, may continue to render valuation services without a
certificate of registration under these rules upto 722[723[31st January 2019]]:

721
Omitted “and he may conduct valuation as per these rules if required under any other law or by any
other regulatory authority” by notification no. G.S.R. 1108(E) dated 13th November 2018.

722
Substituted at both places in rule 11 with “30th September 2018” for “31st March 2018” vide
notification no. G.S.R. 155(E) dt. 09th February 2018, published on 12th February 2018.

723
Substituted at both places in rule 11 for “30th September 2018” vide notification no. G.S.R. 925(E)
dt. 25th September 2018.

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Provided that if a company has appointed any valuer before such date and the
valuation or any part of it has not been completed before 654[724[31st January
2019]], the valuer shall complete such valuation or such part within three
months thereafter.
725
[]

CHAPTER III

RECOGNITION OF REGISTERED VALUERS ORGANISATIONS

12. Eligibility for registered valuers organisations.─

(1) An organisation that meets requirements under subrule (2) may be recognised as
a registered valuers organisation for valuation of a specific asset class or asset classes
if ─

(i) it has been registered under section 25 of the Companies Act, 1956 (1 of
1956) or section 8 of the Companies Act, 2013 (18 of 2013) with the sole object
of dealing with matters relating to regulation of valuers of an asset class or asset
classes and has in its bye laws the requirements specified in Annexure-III;

(ii) 726[it is a professional institute] established by an Act of Parliament enacted

for the purpose of regulation of a profession;

Provided that, subject to sub-rule (3), the following organisations may also
be recognised as a registered valuers organisation for valuation of a specific
asset class or asset classes, namely:-

(a) an organisation registered as a society under the Societies Registration Act,

1860 (21 of 1860) or any relevant state law, or;

724
Substituted at both places in rule 11 for “30th September 2018” vide notification no. G.S.R. 925(E)
dt. 25th September 2018.

725
Omitted explanation by notification no. G.S.R. 1108(E) dated 13th November 2018. Prior to omission,
it read as “Explanation.─ It is hereby clarified that conduct of valuation by any person under any law
other than the Act, or these rules shall not be effected by virtue of coming into effect of these rules
unless the relevant other laws or other regulatory bodies require valuation by such person in accordance
with these rules in which case these rules shall apply for such valuation also from the date specified
under the laws or by the regulatory bodies.”.

726
Substituted for “a professional institute’ by notification no. G.S.R. 1108(E) dated 13th November
2018.

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(b) an organisation set up as a trust governed by the Indian Trust Act, 1882 (2
of 1882).

(2) The organisation referred to in sub-rule (1) shall be recognised if it –

(a) conducts educational courses in valuation, in accordance with the syllabus

determined by the authority, under rule 5, for individuals who may be its valuers
members, and delivered in class room or through distance education modules
and which includes practical training;

(b) grants membership or certificate of practice to individuals, who possess the

qualifications and experience as specified in rule 4, in respect of valuation of
asset class for which it is recognised as a registered valuers organisation;

(c) conducts training for the individual members before a certificate of practice
is issued to them;

(d) lays down and enforces a code of conduct for valuers who are its members,
which includes all the provisions specified in Annexure-I;

(e) provides for continuing education of individuals who are its members;

(f) monitors and reviews the functioning, including quality of service, of valuers
who are its members; and

(g) has a mechanism to address grievances and conduct disciplinary

proceedings against valuers who are its members.

(3) A registered valuers organisation, being an entity under proviso to sub-rule (1),
shall convert into or register itself as a company under section 8 of the Companies
Act, 2013 (18 of 2013), and include in its bye laws the requirements specified in
Annexure- III, within one year from the date of commencement of these rules.

13. Application for recognition.─

(1) An eligible organisation which meets the conditions specified in rule 12 may make
an application for recognition as a registered valuers organisation for asset class or
classes to the authority in Form-D of the Annexure-II along with a non-refundable
application fee of rupees one lakh in favour of the authority.

(2) The authority shall examine the application, and may grant twenty-one days to the
applicant to remove the deficiencies, if any, in the application.

(3) The authority may require the applicant to submit additional documents or
clarification within twenty-one days.
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(4) The authority may require the applicant to appear, within twenty-one days, before
the Authority through its authorised representative for explanation or clarifications
required for processing the application.

(5) If the authority is satisfied, after such scrutiny, inspection or inquiry as it deems
necessary that the applicant is eligible under these rules, it may grant a certificate of
recognition as a registered valuers organisation in Form-E of Annexure-II.

(6) If, after considering an application made under sub-rule (1), the authority is of the
prima facie opinion that recognition ought not to be granted, it shall communicate the
reasons for forming such an opinion within forty-five days of receipt of the application,
excluding the time given by it for removing the deficiencies, presenting additional
documents or clarifications, or appearing through authorised representative, as the
case may be.

(7) The applicant shall submit an explanation as to why its application should be
accepted within fifteen days of the receipt of the communication under sub- rule (6),
to enable the authority to form a final opinion.

(8) After considering the explanation, if any, given by the applicant under sub- rule (7),
the authority shall either –

(a) accept the application and grant the certificate of recognition; or

(b) reject the application by an order, giving reasons thereof.

(9) The authority shall communicate its decision to the applicant within thirty days of
receipt of explanation.

14. Conditions of Recognition.─

The recognition granted under rule 13 shall be subject to the conditions that the
registered valuers organisation shall-

(a) at all times continue to satisfy the eligibility requirements specified under rule 12;

(b) maintain a register of members who are registered valuers, which shall be publicly
available;

(c) admits only individuals who possess the educational qualifications and experience
requirements, in accordance with rule 4 and as specified in its recognition certificate,
as members;

(d) make such reports to the authority as may be required by it;

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(e) comply with any directions, including with regard to course to be conducted by
valuation organisation under clause (a) of sub-rule (2) of rule 12, issued by the
authority;

(f) be converted or registered as company under section 8 of the Act, with governance
structure and bye laws specified in Annexure-III, within a period of one year from the
date of commencement of these rules if it is an organisation referred to in proviso to
sub-rule (1) of rule 12;

(g) shall have the governance structure and incorporate in its bye laws the
requirements specified in Annexure-III within one year of commencement of these
rules if it is an organisation referred to in clause (i) of sub-rule (1) of rule 12 and existing
on the date of commencement of these rules;

(h) display on its website, the status and specified details of every registered valuer
being its valuer members including action under rule 17 being taken against him; and

(i) comply with such other conditions as may be specified by authority.

CHAPTER IV

CANCELLATION OR SUSPENSION OF CERTIFICATE OF REGISTRATION OR

RECOGNITION

15. Cancellation or suspension of certificate of registration or recognition.-

The authority may cancel or suspend the registration of a valuer or recognition of a

registered valuers organisation for violation of the provisions of the Act, any other law
allowing him to perform valuation, these rules or any condition of registration or
recognition, as the case may be in the manner specified in rule 17.

16. Complaint against a registered valuer or registered valuers organisation.-

A complaint may be filed against a registered valuer or registered valuers organisation

before the authority in person or by post or courier along with a non-refundable fees
of rupees one thousand in favour of the authority and the authority shall examine the
complaint and take such necessary action as it deems fit: Provided that in case of a
complaint against a registered valuer, who is a partner of a partnership entity or
director of a company, the authority may refer the complaint to the relevant registered
valuers organisation and such organisation shall handle the complaint in accordance
with its bye laws.

17. Procedure to be followed for cancellation or suspension of registration or

recognition certificate.─

(1) Based on the findings of an inspection or investigation, or a complaint received or

on material otherwise available on record, if the authorised officer is of the prima facie
opinion that sufficient cause exists to cancel or suspend the registration of a valuer or

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cancel or suspend the recognition of a registered valuers organisation, it shall issue a

show cause notice to the valuer or registered valuers organisation,:

Provided that in case of an organisation referred to in clause (ii) of sub-rule (1)

of rule 12 which has been granted recognition, the authorised officer shall,
instead of carrying out inspection or investigation, seek the information required
from the registered valuers organisation within the time specified therein and in
the case of a default, give one more opportunity to provide the information
within specified time failing which or in the absence of sufficient or satisfactory
information provided, either initiate the process under this rule or refer the
matter to the Central Government for appropriate directions.

(2) The show-cause notice shall be in writing and shall state-

(a) the provisions of the Act and rules under which it has been issued;

(b) the details of the alleged facts;

(c) the details of the evidence in support of the alleged facts;

(d) the provisions of the Act or rules or certificate of registration or recognition

allegedly violated, or the manner in which the public interest has allegedly been
affected;

(e) the actions or directions that the authority proposes to take or issue if the
allegations are established;

(f) the manner in which the person is required to respond to the show-cause
notice;

(g) consequences of failure to respond to the show-cause notice within the

given time; and

(h) procedure to be followed for disposal of the show-cause notice.

(3) The show-cause notice shall be served in the following manner by-

(a) sending it to the valuer or registered valuers organisation at its registered

address by registered post with acknowledgment due; or

(b) an appropriate electronic means to the email address provided by the valuer
or registered valuers organisation to the authority.

(4) The authorised officer shall dispose of the show-cause notice by reasoned order
in adherence to the principles of natural justice.

(5) The order in disposal of a show-cause notice may provide for-

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(a) no action;

(b) warning; or

(c) suspension or cancellation of the registration or recognition; or

(d) change in any one or more partner or director or the governing board of the
registered valuers organisation.

(6) An order passed under sub-rule (5) cancelling the recognition of a registered
valuers organisation, shall specify the time within which its members may take
membership of another registered valuers organisation recognised for valuation of
relevant asset class without prejudice to their registration.

(7) The order passed under sub-rule (5) shall be issued to the concerned person
immediately, and published on the website of the authority.

(8) The order passed under sub-rule (5) shall not become effective until thirty days
have elapsed from the date of issue of the order unless stated otherwise.

(9) Any person aggrieved by an order of the authorised officer under sub-rule (5) may
prefer an appeal before the authority.

Explanation.─ For the purposes of this rule, the authorised officer shall be an officer
as may be specified by the authority.

CHAPTER V

VALUATION STANDARDS

18. Valuation Standards.─

The Central Government shall notify and may modify (from time to time) the valuation
standards on the recommendations of the Committee set up under rule 19.

19. Committee to advise on valuation matters.─

(1) The Central Government may constitute a Committee to be known as “Committee

to advise on valuation matters” to make recommendations on formulation and laying
down of valuation standards and policies for compliance by companies and registered
valuers.

(2) The Committee shall comprise of-

(a) a Chairperson who shall be a person of eminence and well versed in

valuation, accountancy, finance, business administration, business law,
corporate law, economics;
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(b) one member nominated by the Ministry of Corporate Affairs;

(c) one member nominated by the Insolvency and Bankruptcy Board of India;

(d) one member nominated by the Legislative Department;

(e) up to four members nominated by Central Government representing

authorities which are allowing valuations by registered valuers;

(f) up to four members who are representatives of registered valuers

organisations, nominated by Central Government.

(g) Up to two members to represent industry and other stakeholder nominated

by the Central Government in consultation with the authority;
727
[(h) Presidents of, the Institute of Chartered Accountants of India, the Institute
of Company Secretaries of India, the Institute of Cost Accountants of India as
ex-officio members]

(3) The Chairperson and Members of the Committee shall have a tenure of three years
and they shall not have more than two tenures.

CHAPTER VI

MISCELLANEOUS

20. Punishment for contravention.-

Without prejudice to any other liabilities where a person contravenes any of the
provision of these rules he shall be punishable in accordance with sub-section (3) of
section 469 of the Act.

21. Punishment for false statement.—

If in any report, certificate or other document required by, or for, the purposes of any
of the provisions of the Act or the rules made thereunder or these rules, any person
makes a statement,—

(a) which is false in any material particulars, knowing it to be false; or

(b) which omits any material fact, knowing it to be material, he shall be liable under
section 448 of the Act.

727
Inserted clause (h) in Rule 19(2) vide notification number G.S.R. 559(E) dated 13th June 2018.

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ANNEXURE-I

MODEL CODE OF CONDUCT FOR REGISTERED VALUERS

[See clause (g) of rule 7 and clause (d) of sub-rule (2) of rule 12]

Integrity and Fairness

1. A valuer shall, in the conduct of his/its business, follow high standards of integrity
and fairness in all his/its dealings with his/its clients and other valuers.

2. A valuer shall maintain integrity by being honest, straightforward, and forthright in

all professional relationships.

3. A valuer shall endeavour to ensure that he/it provides true and adequate information
and shall not misrepresent any facts or situations.

4. A valuer shall refrain from being involved in any action that would bring disrepute to
the profession.

5. A valuer shall keep public interest foremost while delivering his services.

Professional Competence and Due Care

6. A valuer shall render at all times high standards of service, exercise due diligence,
ensure proper care and exercise independent professional judgment.

7. A valuer shall carry out professional services in accordance with the relevant
technical and professional standards that may be specified from time to time

8. A valuer shall continuously maintain professional knowledge and skill to provide

competent professional service based on up-to-date developments in practice,
prevailing regulations/guidelines and techniques.

9. In the preparation of a valuation report, the valuer shall not disclaim liability for his/its
expertise or deny his/its duty of care, except to the extent that the assumptions are
based on statements of fact provided by the company or its auditors or consultants or
information available in public domain and not generated by the valuer.

10. A valuer shall not carry out any instruction of the client insofar as they are
incompatible with the requirements of integrity, objectivity and independence.

11. A valuer shall clearly state to his client the services that he would be competent to
provide and the services for which he would be relying on other valuers or
professionals or for which the client can have a separate arrangement with other
valuers.

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Independence and Disclosure of Interest

12. A valuer shall act with objectivity in his/its professional dealings by ensuring that
his/its decisions are made without the presence of any bias, conflict of interest,
coercion, or undue influence of any party, whether directly connected to the valuation
assignment or not.

13. A valuer shall not take up an assignment if he/it or any of his/its relatives or
associates is not independent in terms of association to the company.

14. A valuer shall maintain complete independence in his/its professional relationships

and shall conduct the valuation independent of external influences.

15. A valuer shall wherever necessary disclose to the clients, possible sources of
conflicts of duties and interests, while providing unbiased services.

16. A valuer shall not deal in securities of any subject company after any time when
he/it first becomes aware of the possibility of his/its association with the valuation, and
in accordance with the Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015 or till the time the valuation report becomes public,
whichever is earlier.

17. A valuer shall not indulge in “mandate snatching” or offering “convenience

valuations” in order to cater to a company or client’s needs.

18. As an independent valuer, the valuer shall not charge success fee.

19. In any fairness opinion or independent expert opinion submitted by a valuer, if

there has been a prior engagement in an unconnected transaction, the valuer shall
declare the association with the company during the last five years.

Confidentiality

20. A valuer shall not use or divulge to other clients or any other party any confidential
information about the subject company, which has come to his/its knowledge without
proper and specific authority or unless there is a legal or professional right or duty to
disclose.

Information Management

21. A valuer shall ensure that he/ it maintains written contemporaneous records for
any decision taken, the reasons for taking the decision, and the information and
evidence in support of such decision. This shall be maintained so as to sufficiently
enable a reasonable person to take a view on the appropriateness of his/its decisions
and actions.

22. A valuer shall appear, co-operate and be available for inspections and
investigations carried out by the authority, any person authorised by the authority, the

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registered valuers organisation with which he/it is registered or any other statutory
regulatory body.

23. A valuer shall provide all information and records as may be required by the
authority, the Tribunal, Appellate Tribunal, the registered valuers organisation with
which he/it is registered, or any other statutory regulatory body.

24. A valuer while respecting the confidentiality of information acquired during the
course of performing professional services, shall maintain proper working papers for
a period of three years or such longer period as required in its contract for a specific
valuation, for production before a regulatory authority or for a peer review. In the event
of a pending case before the Tribunal or Appellate Tribunal, the record shall be
maintained till the disposal of the case.

Gifts and hospitality.

25. A valuer or his/its relative shall not accept gifts or hospitality which undermines or
affects his independence as a valuer.

Explanation.─ For the purposes of this code the term ‘relative’ shall have the
same meaning as defined in clause (77) of Section 2 of the Companies Act,
2013 (18 of 2013).

26. A valuer shall not offer gifts or hospitality or a financial or any other advantage to
a public servant or any other person with a view to obtain or retain work for himself/
itself, or to obtain or retain an advantage in the conduct of profession for himself/ itself.

Remuneration and Costs.

27. A valuer shall provide services for remuneration which is charged in a transparent
manner, is a reasonable reflection of the work necessarily and properly undertaken,
and is not inconsistent with the applicable rules.

28. A valuer shall not accept any fees or charges other than those which are disclosed
in a written contract with the person to whom he would be rendering service.

Occupation, employability and restrictions.

29. A valuer shall refrain from accepting too many assignments, if he/it is unlikely to
be able to devote adequate time to each of his/ its assignments.

30. A valuer shall not conduct business which in the opinion of the authority or the
registered valuer organisation discredits the profession.

ANNEXURE-II

: Forms are not reproduced here.

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ANNEXURE - III

(See sub-rule (3) of rule 12 and clauses (f) and (g) of rule 14)

Governance Structure and Model Bye Laws for registered valuers organisation

Part I

1. Governance Structure No person shall be eligible to be recognised as an registered

valuers organisation unless it is a company registered under section 8 of the
Companies Act, 2013 with share capital, and –

(a) its sole object is to carry on the functions of a registered valuers organisation under
the Companies Act, 2013;

(b) it is not under the control of person(s) resident outside India,

(c) not more than forty-nine per cent. of its share capital is held, directly or indirectly,
by persons resident outside India; and

(d) it is not a subsidiary of a body corporate through more than one layer:

Explanation: “layer” in relation to a body corporate means its subsidiary;

(e) itself, its promoters, its directors and persons holding more than ten percent. of its
share capital are fit and proper persons.

2. REGISTERED VALUERS ORGANISATION TO HAVE BYE-LAWS

(1) The registered valuers organisation shall submit to the authority its bye-laws along
with the application for its registration as a registered valuers organisation.

(2) The bye-laws shall provide for all matters specified in the model bye-laws in Part
II.

(3) The bye-laws shall at all times be consistent with the model bye-laws.

(4) The registered valuers organisation shall publish its bye-laws, the composition of
all committees formed, and all policies created under the bye-laws on its website.

3. AMENDMENT OF BYE-LAWS

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(1) The Governing Board may amend the bye-laws by a resolution passed by votes in
favour being not less than three times the number of the votes, if any, cast against the
resolution, by the directors.

(2) A resolution passed in accordance with sub-bye law (1) shall be filed with the
authority within seven days from the date of its passing, for its approval.

(3) The amendments to the bye-laws shall come into effect on the seventh day of the
receipt of the approval, unless otherwise specified by the authority.

(4) The registered valuers organisation shall file a printed copy of the amended bye-
laws with the authority within fifteen days from the date when such amendment is
made effective.

4. Composition of the Governing Board.

(1) The Governing Board shall have a minimum of ____ [Insert number] directors

(2) More than half of the directors shall be persons resident in India at the time of their
appointment, and at all times during their tenure as directors.

(3) Not more than one fourth of the directors shall be registered valuers.

(4) More than half of the directors shall be independent directors at the time of their
appointment, and at all times during their tenure as directors:

Provided that no meeting of the Governing Board shall be held without the
presence of at least one independent director.

(5) An independent director shall be an individual –

(a) who has expertise in the field of finance, law, management or valuation;

(b) who is not a registered valuer;

(c) who is not a shareholder of the registered valuers organisation; and

(d) who fulfils the requirements under sub-section (6) of section 149 of the Companies
Act, 2013.

(6) The directors shall elect an independent director as the Chairperson of the
Governing Board.

Explanation - For the purposes of bye laws, any fraction contained in (a) ‘more than
half’ shall be rounded off to the next higher number; and (b) ‘not more than one- fourth’
shall be rounded down to the next lower number.

PART II

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MODEL BYE-LAWS OF A REGISTERED VALUERS ORGANISATION

I. GENERAL

1. The name of the registered valuers organisation is “____” (hereinafter referred to

as the ‘Organisation’).

2. The ‘Organisation’ is registered as a company under section 8 of the Companies

Act, 2013 (18 of 2013) with its registered office situated at ______ [provide full
address].

3. These bye-laws may not be amended, except in accordance with this Annexure.

II. DEFINITIONS

4. (1) In these bye-laws, unless the context otherwise requires –

(a) “certificate of membership” means the certificate of membership of the

Organisation granted under byelaw 10;

(b) “Act” means the Companies Act, 2013 (18 of 2013);

(c) “Governing Board” means the Board of Directors or Board of the Organisation as
defined under clause (10) of section 2 of Companies Act, 2013 (18 of 2013);

(d) “relative” shall have the same meaning as assigned to it in clause (77) of section 2
of the Companies Act, 2013 (18 of 2013);

(2) Unless the context otherwise requires, words and expressions used and not
defined in these bye-laws shall have the meanings assigned to them in the Companies
Act, 2013 (18 of 2013).

III. OBJECTIVES

5. (1) The Organisation shall carry on the functions of the registered valuers
organisation under the Companies (Registered Valuers and Valuation) Rules, 2017,
and functions incidental thereto.

(2) The Organisation shall not carry on any function other than those specified in sub-
clause (1), or which is inconsistent with the discharge of its functions as a registered
valuers organisation.

IV. DUTIES OF THE ORGANISATION

6. (1) The Organisation shall maintain high ethical and professional standards in the
regulation of its members.

(2) The Organisation shall –

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(a) ensure compliance with the Companies Act, 2013 and rules, regulations and
guidelines issued thereunder governing the conduct of registered valuers organisation
and registered valuers;

(b) employ fair, reasonable, just, and non-discriminatory practices for the enrolment
and regulation of its members;

(c) be accountable to the authority in relation to all bye-laws and directions issued to
its members;

(d) develop the profession of registered valuers;

(e) promote continuous professional development of its members;

(f) continuously improve upon its internal regulations and guidelines to ensure that
high standards of professional and ethical conduct are maintained by its members;
and

(g) provide information about its activities to the authority.

V. COMMITTEES OF THE ORGANISATION

Advisory Committee of Members.

7. (1) The Governing Board may form an Advisory Committee of members of the
Organisation to advise it on any matters pertaining to-

(a) the development of the profession;

(b) standards of professional and ethical conduct; and

(c) best practices in respect of Valuation.

(2) The Advisory Committee may meet at such places and times as the Governing
Board may provide. Other Committees of the Organisation.

8. (1) The Governing Board shall constitute-

(a) one or more Membership Committee(s) consisting of such members as it deems

fit;

(b) a Monitoring Committee consisting of such members as it deems fit;

(c) one or more Grievance Redressal Committee(s), with not less than three
members,;

(d) one or more Disciplinary Committee(s) consisting of at least one member

nominated by the authority.

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(2) The Chairperson of each of these Committees shall be an independent director of

the Organisation.

VI. MEMBERSHIP

Eligibility for Enrolment.

9. No individual shall be enrolled as a member if he is not eligible to be registered as

a registered valuer with the authority:

Provided that the Governing Board may provide additional eligibility

requirements for enrolment:

Provided further that such additional requirements shall not discriminate on the
grounds of religion, race, caste, gender, place of birth or professional affiliation.

Process of Enrolment as Member.

10. (1) An individual may apply for enrolment as a member by submitting an

application in such form, in such manner and with such fees as may be specified by
the Organisation.

(2) The Organisation shall examine the application in accordance with the applicable
provisions of the rules, regulations and guidelines thereunder.

(3) On examination of the application, the Organisation shall give an opportunity to the
applicant to remove the deficiencies, if any, in the application.

(4) The Organisation may require an applicant to submit additional documents,

information or clarification that it deems fit, within reasonable time.

(5) The Organisation may reject an application if the applicant does not satisfy the
criteria for enrolment or does not remove the deficiencies or submit additional
documents or information to its satisfaction, for reasons recorded in writing.

(6) The rejection of the application shall be communicated to the applicant stating the
reasons for such rejection, within thirty days of the receipt of the application, excluding
the time given for removing the deficiencies or presenting additional documents or
clarification by the Organisation, as the case may be.

(7) The acceptance of the application shall be communicated to the applicant, along
with a certificate of membership.

(8) An applicant aggrieved of a decision rejecting his application may appeal to the
Membership Committee of the Organisation within thirty days from the receipt of such
decision.

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(10) The Membership Committee shall pass an order disposing of the appeal in the
manner it deems expedient, within thirty days of the receipt of the appeal.

Membership Fee.

11. The Organisation may require the members to pay a fixed sum of money as its
annual membership fee. Register of Members.

12. (1) The Organisation shall maintain a register of its professional members,
containing their-

(a) name;

(b) proof of identity;

(c) contact details;

(d) address;

(e) date of enrolment and membership number;

(f) date of registration with the authority and registration number;

(g) details of grievances pending against him with the Organisation;

(h) details of disciplinary proceedings pending against him with the Organisation; and

(i) details of orders passed against him by the authority or Disciplinary Committee of
the Organisation.

(2) The records relating to a member shall be made available for inspection to-

(a) the authority,

(b) any other person who has obtained the consent of the member for such inspection.

VII. DUTIES OF MEMBERS

13. (1) In the performance of his functions, a member shall-

(a) act in good faith in discharge of his duties as a registered valuer;

(b) discharge his functions with utmost integrity and objectivity;

(c) be independent and impartial;

(d) discharge his functions with the highest standards of professional competence and
professional ethics;

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(e) continuously upgrade his professional expertise;

(f) comply with applicable laws in the performance of his functions; and

(g) maintain confidentiality of information obtained in the course of his professional

activities unless required to disclose such information by law.

14. The Organisation shall have a Code of Conduct that shall be consistent with, and
that shall provide for all matters in the Code of Conduct as specified in the Annexure-
I.

VIII. MONITORING OF MEMBERS

15. The Organisation shall have a Monitoring Policy to monitor the professional
activities and conduct of members for their adherence to the provisions of the Act,
rules, regulations and guidelines issued thereunder, these byelaws, the Code of
Conduct and directions given by the Governing Board.

16. A member shall submit information about ongoing and concluded engagements
as a registered valuer, in the manner and format specified by the Organisation, at least
twice a year stating inter alia, the date of assignment, date of completion and reference
number of valuation assignment and valuation report.

17. The Monitoring Committee shall review the information and records submitted by
the members in accordance with the Monitoring Policy.

18. The Monitoring Policy shall provide for the following –

(a) the frequency of monitoring;

(b) the manner and format of submission or collection of information and records of
the members, including by way of inspection;

(c) the obligations of members to comply with the Monitoring Policy;

(d) the use, analysis and storage of information and records; (e) evaluation of
performance of members; and

(f) any other matters that may be specified by the Governing Board.

19. The Monitoring Policy shall –

(a) have due regard for the privacy of members,

(b) provide for confidentiality of information received, except when disclosure of

information is required by the authority or by law, and

(c) be non-discriminatory.

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20. The Organisation shall submit a report to the authority in the manner specified by
the authority with information collected during monitoring, including information
pertaining to –

(a) the details of the appointments made under the Act/these Rules,

(b) the transactions conducted with stakeholders during the period of his appointment;

(c) the transactions conducted with third parties during the period of his appointment;
and

(d) the outcome of each appointment.

IX. GRIEVANCE REDRESSAL MECHANISM

21. (1) The Organisation shall have a Grievance Redressal Policy providing the
procedure for receiving, processing, redressing and disclosing grievances against the
Organisation or any member of the Organisation by-

(a) any member of the Organisation;

(b) any person who has engaged the services of the concerned members of the
Organisation; or

(c) any other person or class of persons as may be provided by the Governing Board.

(2) The Grievance Redressal Committee, after examining the grievance, may-

(a) dismiss the grievance if it is devoid of merit; or

(b) initiate a mediation between parties for redressal of grievance.

(3) The Grievance Redressal Committee shall refer the matter to the Disciplinary
Committee, wherever the grievance warrants disciplinary action.

22. The Grievance Redressal Policy shall provide for- (a) the format and manner for
filing grievances; (b) maximum time and format for acknowledging receipt of a
grievance; (c) maximum time for the disposal of the grievance by way of dismissal,
reference to the Disciplinary Committee or the initiation of mediation; (d) details of the
mediation mechanism (e) provision of a report of the grievance and mediation
proceedings to the parties to the grievance upon dismissal or resolution of the
grievance; (f) action to be taken in case of malicious or false complaints; (g)
maintenance of a register of grievances made and resolutions arrived at; and (h)
periodic review of the Grievance Redressal Mechanism.

X. DISCIPLINARY PROCEEDINGS

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23. The Organisation may initiate disciplinary proceedings by issuing a show-cause

notice against members- (a) based on a reference made by the Grievances Redressal
Committee; (b) based on monitoring of members; (c) following the directions given by
the authority or any court of law; or (d) suo moto, based on any information received
by it.

24. (1) The Organisation shall have a Disciplinary Policy, which shall provide for the
following - (a) the manner in which the Disciplinary Committee may ascertain facts; (b)
the issue of show-cause notice based on the facts; (c) disposal of show-cause notice
by a reasoned order, following principles of natural justice; (d) timelines for different
stages of disposal of show cause notice; and (e) rights and obligations of the parties
to the proceedings.

(2) The orders that may be passed by the Disciplinary Committee shall include- (a)
expulsion of the member; (b) suspension of the member for a certain period of time;
(c) admonishment of the member; (d) imposition of monetary penalty; (e) reference of
the matter to the authority, which may include, in appropriate cases, recommendation
of the amount of restitution or compensation that may be enforced by the authority;
and (f) directions relating to costs.

(3) The Disciplinary Committee may pass an order for expulsion of a member if it has
found that the member has committed- (a) an offence under any law for the time being
in force, punishable with imprisonment for a term exceeding six months, or an offence
involving moral turpitude; (b) a gross violation of the Act, rules, regulations and
guidelines issued thereunder, bye-laws or directions given by the Governing Board
which renders him not a fit and proper person to continue acting as a registered valuer.

(4) Any order passed by the Disciplinary Committee shall be placed on the website of
the Organisation within seven days from passing of the said order, with one copy each
being provided to each of the parties to the proceeding.

(5) Monetary penalty received by the Organisation under the orders of the Disciplinary
Committee shall be used for the professional development.

25. (1) The Governing Board shall constitute an Appellate Panel consisting of one
independent director of the Organisation, one member each from amongst the persons
of eminence having experience in the field of law and field of valuation, and one
member nominated by the authority.

(2) Any person aggrieved of an order of the Disciplinary Committee may prefer an
appeal before the Appellate Panel within thirty days from the receipt of a copy of the
final order.

(3) The Appellate Panel shall dispose of the appeal in the manner it deems expedient,
within thirty days of the receipt of the appeal.

XI. SURRENDER OF MEMBERSHIP AND EXPULSION FROM MEMBERSHIP

Temporary Surrender of Membership.

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26. (1) A member shall make an application for temporary surrender of his
membership of the Organisation at least thirty days before he- (a) becomes a person
not resident in India; (b) takes up employment; or (c) starts any business, except as
specifically permitted under the Code of Conduct; and upon acceptance of such
temporary surrender and on completion of thirty days from the date of application for
temporary surrender, the name of the member shall be temporarily struck from the
registers of the Organisation, and the same shall be intimated to the authority. (2) No
application for temporarily surrender of membership of the Organisation shall be
accepted if - (a) there is a grievance or disciplinary proceeding pending against the
member before the Organisation or the authority, and he has not given an undertaking
to cooperate in such proceeding; or (b) the member has been appointed as a
registered valuer for a process under the Companies Act, 2013, and the appointment
of another registered valuer may be detrimental to such process. (3) A member may
make an application to revive his temporarily surrendered membership when the
conditions for temporary surrender as provided in sub-clause (1) cease to be
applicable, and upon acceptance of the application for revival, the name of the
member shall be re-inserted in the register of the Organisation, and the same shall be
intimated to the authority.

Surrender of Membership

27. (1) A member who wishes to surrender his membership of the Organisation may
do so by submitting an application for surrender of his membership. (2) Upon
acceptance of such surrender of his membership, and completion of thirty days from
the date of such acceptance, the name of the member shall be struck from the
registers of the Organisation, and the same shall be intimated to the authority.

28. Any fee that is due to the Organisation from a member surrendering his
membership shall be cleared prior to his name being struck from the registers of the
Organisation.

29. The Organisation may refuse to accept the surrender of membership by any
member if - (a) there is any grievance or disciplinary proceeding pending against the
member before the Organisation or the authority; or (b) the member has been
appointed as a registered valuer process under the Companies Act, 2013, and the
appointment of another registered valuer may be detrimental to such process.

Expulsion from Membership.

30. A member shall be expelled by the Organisation– (a) if he becomes ineligible to

be enrolled under bye-law 9; (b) on expiry of thirty days from the order of the
Disciplinary Committee, unless set aside or stayed by the Appellate Panel; (c) upon
non-payment of membership fee despite at least two notices served in writing; (d) upon
the cancellation of his certificate of registration by the authority; (e) upon the order of
any court of law.

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728
[ANNEXURE-IV

Eligibility Qualification and Experience for Registration as Valuer

(See Explanation II to rule 4)

Asset class Eligibility Experience in specified

Qualification discipline
Plant and Machinery (i) Graduate in (i) Five years
Mechanical, Electrical,
Electronic and
Communication,
Electronic and
Instrumentation,
Production, Chemical,
Textiles, Leather,
Metallurgy, or
Aeronautical Engineering,
or Graduate in Valuation
of Plant and Machinery or
equivalent;

(ii) Post Graduate on (ii) Three years

above courses.
Land and Building (i) Graduate in Civil (i) Five years
Engineering, Architecture,
or Town Planning or
equivalent;

(ii) Post Graduate on (ii) Three years

above courses and also in
valuation of land and
building or Real Estate
Valuation (a two-year full
time post-graduation
course).
Securities or Financial (i) Member of Institute of Three years
Assets Chartered Accountants of
India, Member of Institute
of Company Secretaries
of India, Member of the
Institute of Cost
Accountants of India,

728
Substituted by notification no. G.S.R. 1108(E) dated 13th November 2018.

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The Companies (Registered Valuers and Valuation) Rules, 2017

Master of Business
Administration or Post
Graduate Diploma in
Business Management
(specialisation in finance).

(ii) Post Graduate in

Finance
Any other asset class along with corresponding qualifications and experience in
accordance with rule 4 as may be specified by the Central Government.

Note.- The eligibility qualification means qualification obtained from a recognised

Indian University or equivalent Institute whether in India or abroad.

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The Companies (Authorised to Register) Rules, 2014

Chapter XXI: the Companies

(Authorized to Register) Rules, 2014
[The principal rules was published in the Gazette of India, Extraordinary Part II, Section 3, Sub-section
(i) vide number G.S.R. 257(E) dated the 31st day of March, 2014 and subsequently amended vide
notification no. G.S.R. 563(E) dated 31st May 2016 and notification no. 173(E) dated 16th February
2018 (whereby Form no. URC-1 was substituted. It was further amended by G.S.R. 613(E) dated 5th
July 2018]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R. 257(E).—In exercise of the powers conferred by sub-section (1) of section

164, sub-section (1) of section 466, section 367, and section 374 read with sub-section
(1) and sub-section (2) of section 469 of the Companies Act, 2013 (18 of 2013) and in
supersession of Companies (Central Government’s) General Rules and Forms, 1956
prescribed under the Companies Act, 1956 (1 of 1956) in so far as they relate to the
matters covered under these rules, except as respects things done or omitted to be done
before such supersession, the Central Government hereby makes the following rules,
namely: —

1. Short title and commencement

(1) These rules may be called the 729[Companies (Authorised to Register) Rules, 2014].

(2) They shall come into force on 1st day of April, 2014.

2. Definitions.

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Schedule” means the schedule annexed to these Rules;

(c) ‘fees’ means the fees as specified in the Companies (Registration Offices and
Fees) Rules, 2014;

(d) “Form” or “e-form” means the form in the schedule to these rules which shall
be used for the matter to which it relates;

Substituted for “Companies (Authoried to Registered) Rules, 2014” vide notification number G.S.R.
729

563(E) dated 31 May, 2016.

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The Companies (Authorised to Register) Rules, 2014

(e) ‘Regional Director’ means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

(f) “Registrar (LLP)” means the Registrar dealing with the matters relations to
Limited Liability Partnership.
730
[g) "firm" means a firm as defined in section 4 of the Indian Partnership Act,
1932 (9 of 1932);]

[(h) “society” means a society registered under the Societies Registration Act,
731

1860 (21 of 1860) and includes a society registered under or deemed to be

registered under any other law for the time being in force;

(i) “trust” means an irrevocable public charitable or religious trust registered under
any law for the time being in force and represented by its trustees, in whom the
trust property is vested, as members;

(j) “Registrar of Firms” means the Registrar appointed under section 57 of the
Indian Partnership Act, 1932 (9 of 1932);

(k) “Registrar of Trusts” includes a Charity Commissioner, an Inspector-General

of Registration or such other authority having the duty of registering trusts in a
State.]

(2) Words and expressions used in these rules but not defined and defined in the Act
or in Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act and said rules.

3. Rule 3

[Refer section 366]

732
[3. (1) For the purposes of sub-section (2) of section 366 of the Act, the provision of
Chapter II of the Act relating to incorporation of company and matters incidental thereto
shall be applicable mutatis mutandis for such registration:

730
Inserted by notification number G.S.R. 563(E) dated 31 May, 2016.

731
Inserted by notification number G.S.R. 613(E) dated 5th July, 2018.

732732
Substituted rule 3 by notification number G.S.R. 613(E) dated 5th July, 2018. Prior to substitution,
it read as “3. (1) For the purposes of sub-section (2) of section 366 of the Act, the provision of Chapter II
relating to incorporation of company and matters incidental thereto shall be applicable mutatis mutandis for
such registration:
Provided that there shall be seven or more members for the purposes of registration of a
company under this sub-rule.

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(2) A company after obtaining availability of name in terms of the provisions of section 4 of the Act, shall attach
the required documents and information to the Registrar along with Form No. URC-1 in the following manner,
namely:—

(a) For registration as a company limited by shares :

(i) A list showing the names, addresses, and occupations of all persons named therein as
members with details of shares held by them respectively, showing separately shares
allotted for consideration in cash and for consideration other than cash alongwith the source
of consideration) and distinguishing, in cases where the shares are numbered, each share
by its number, who on a day, not being more than six clear days before the day of seeking
registration, were partners of the Limited Liability Partnership 732[or firm as the case may
be];

(ii) a list showing the particulars of persons proposed as the first directors of the company, their
names, including surnames or family names, the DIN, passport number (if any) with expiry date,
residential addresses and their interests in other firms or bodies corporate along with their consent
to act as directors of the company;

(iii) an affidavit from each of the persons proposed as the first directors, that he is not
disqualified to be a director under sub-section (1) of section 164 and that all the documents
filed with the Registrar for registration of the company contain information that is correct and
complete and true to the best of his knowledge and belief;

(iv) a list containing the names and addresses of the Partners of the Limited Liability
Partnership *[or firm as the case may be]; *Inserted by notification number G.S.R. 563(E)
dated 31 May, 2016.

*[(v) in case of a firm, deeds of partnership, bye laws or other instrument constituting or
regulating the company and duly verified in the manner provided in sub-rule (4) and in case
the deed of partnership was revised at any time in the past, copies of the principal and all
subsequent deeds including the latest deed, along with the certificate of the registration
issued by Registrar of firms, in case the firm is registered]. *Substituted by notification
number G.S.R. 563(E) dated 31 May, 2016. Prior to substitution it read as “(v) a copy of the
Act of Parliament or other Indian law, deed of partnership, bye laws or other instrument
constituting or regulating the company and duly verified in the manner provided in sub-rule
(4)”.

(vi) a statement specifying the following particulars:—

(i) the nominal share capital of the company and the number of shares into which it is
divided;
(ii) the number of shares taken and the amount paid on each share;
(iii) the name of the company, with the addition of the word "Limited" or "Private Limited"
as the case may require, as the last word or words thereof;

(vii) written consent or No Objection Certificate from all the secured creditors of the
applicant;

(viii) written consent from the majority of members whether present in person or by proxy
at a general meeting agreeing for registration under this part.

*[(ix) an undertaking that the proposed directors shall comply with the requirements of Indian
Stamp Act, 1899 (2 of 1899) as applicable;

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The Companies (Authorised to Register) Rules, 2014

(x) a statement of assets and liabilities of the Limited Liability Partnership or the firm, as
the case may be, duly certified by a chartered accountant in practice made as on a date
not earlier than thirty days of the filing of form No.URC-1;

(xi) a copy of latest income tax return of the Limited Liability Partnership or firm as the case
may be.] *Inserted by notification number G.S.R. 563(E) dated 31 May, 2016.

(b) For registration as a company limited by guarantee or as an unlimited company:

(i) a list showing the names, addresses and occupations of all persons, who on a day, not being
more than six clear days before the day of seeking registration, were members of the company
with proof of membership;

(ii) a list showing the particulars of persons proposed as the first directors of the company,
their names, including surnames or family names, the DIN, passport number (if any) with
expiry date, residential addresses and their interests in other firms or bodies corporate along
with their consent to act as directors of the company;

(iii) an affidavit from each of the first directors, that he is not disqualified to be a director under
sub-section (1) of section 164 and that all the documents filed with the Registrar for registration
of the company contain information that is correct and complete and true to the best of his
knowledge and belief;

(iv) a list containing the names and addresses of the Partners of the Limited Liability Partnership
*[or firm as the case may be]; * Inserted by notification number G.S.R. 563(E) dated 31 May,
2016.

*[(v) a copy of instrument constituting or regulating the company and duly verified in the manner
provided in sub-rule (4) and in case the deed of partnership was revised at any time in the past,
copies of principal and all the subsequent deeds including the latest deed, along with the
certificate of the registration issued by Registrar of firms if any]; *Substituted by notification
number G.S.R. 563(E) dated 31 May, 2016. Prior to substitution it read as “(v) a copy of the Act
of Parliament or other Indian law, bye-laws or other instrument constituting or regulating the
company duly verified in the manner provided in rule (4)”.

(vi) in the case of a company intended to be registered as a company limited by guarantee, a

copy of the resolution declaring the amount guarantee.

(vii) Written consent or No Objection Certificate from all the secured creditors of the applicant.

(viii) Written consent from the majority of members whether present in person or by proxy at a
general meeting agreeing for registration under this part.

*[(ix) an undertaking that the proposed directors shall comply with the requirements of Indian
Stamp Act, 1899 (2 of 1899);

(x) a statement of assets and liabilities of the Limited Liability Partnership or the firm, as the
case may be, duly certified by a chartered accountant in practice which is made as on a date
not earlier than thirty days of the filing of form No.URC-1;

(xi) a copy of latest income tax return of the Limited Liability Partnership or firm as the case
may be.] *Inserted by notification number G.S.R. 563(E) dated 31 May, 2016.

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The Companies (Authorised to Register) Rules, 2014

Provided that there shall be two or more members for the purposes of registration of a
company under this sub-rule:
Provided further that a company with less than seven members shall register as
a private company.

(2) A company shall attach and provide the required documents and information to the
Registrar along with Form No. URC. 1 in the following manner, namely:-

(a) In case of an application by a Limited Liability Partnership or firm for registration

as a company limited by shares -

(i) a list showing the names, addresses, and occupations of all persons
named therein as partners with details of shares held by them respectively,
showing separately shares allotted for consideration in cash and for
consideration other than cash along-with the source of consideration and
distinguishing, in cases where the shares are numbered, each share by its
number, who on a day, not being more than six clear days before the day
of seeking registration, were partners of the Limited Liability Partnership or
firm as the case may be;

(ii) a list showing the particulars of persons proposed as the first directors
of the company, alongwith Director Identification Number (DIN), passport
number, if any, with expiry date, residential addresses and their interests in
other firm or body corporate along with their consent to act as directors of
the company;

(iii) in case of a firm, deed of partnership, bye-laws or other instrument

constituting or regulating the firm and in case the deed of partnership was
revised at any time in the past, copies of the principal and all subsequent
deeds including the latest deed, along with the certificate of the registration
issued by the Registrar of Firms, in case the firm is registered;

(iv) written consent or No Objection Certificate from all the secured creditors
of the applicant;

*[(3) An undertaking, from all the members or partners providing that in the event of registration as a
company under Part I of Chapter XXI of the Act, necessary documents or papers shall be submitted to
the registering or other authority with which the company was earlier registered, for its dissolution as a
firm] * Substituted by notification number G.S.R. 563(E) dated 31 May, 2016. Prior to substitution it read
as “(3) An affidavit, duly notarised, from all the members or partners providing that in the event of
registration as a company under Part I of Chapter XXI of the Act, necessary documents or papers shall
be submitted to the registering or other authority with which the company was earlier registered, for its
dissolution as Limited Liability Partnership.”

(4) The list of members and directors and any other particulars relating to the company which are
required to be delivered to the Registrar shall be duly verified by the declaration of any two or more
proposed directors, or two or more designated partners of the Limited Liability Partnership *[or
authorised partners of the firm as the case may be.]. *Inserted by notification number G.S.R. 563(E)
dated 31 May, 2016

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The Companies (Authorised to Register) Rules, 2014

(v) written consent, from the majority of members whether present in

person or by proxy at a general meeting, agreeing for such registration;

(vi) an undertaking that the proposed directors shall comply with the
requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;

(vii) a copy of the latest income tax return of the Limited Liability Partnership
or firm, as the case may be.

(b) In case of an application by a Limited Liability Partnership or firm for registration

as a company limited by guarantee or as an unlimited company-

(i) a list showing the names, addresses and occupations of all persons, who
on a day, not being more than six clear days before the day of seeking
registration, were partners of the Limited Liability Partnership or firm, as the
case may be with proof of membership;

(ii) a list showing the particulars of persons proposed as the first directors
of the company, alongwith DIN, passport number, if any, with expiry date,
residential addresses and their interests in other firm or body corporate
along with their consent to act as directors of the company;

(iii) in case of a firm, deed of partnership, bye laws or other instrument

constituting or regulating the company and in case the deed of partnership
was revised at any time in the past, copies of the principal and all
subsequent deeds including the latest deed, along with the certificate of the
registration issued by the Registrar of Firms, in case the firm is
registered;

(iv) in the case of a company intended to be registered as a company

limited by guarantee, a copy of the resolution declaring the amount of
guarantee;

(v) written consent or No Objection Certificate from all the secured creditors
of the applicant;

(vi) written consent from the majority of members whether present in person
or by proxy at a general meeting agreeing for such registration;

(vii) an undertaking that the proposed directors shall comply with the
requirements of the Indian Stamp Act, 1899 (2 of1899), as applicable;

(viii) a copy of the latest income tax return of the Limited Liability Partnership
or firm, as the case may be.

(c) In case of an application by a society for registration as a company limited by

guarantee under section 8-

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The Companies (Authorised to Register) Rules, 2014

(i) a list showing the names, addresses and occupations of all persons, who
on a day, not being more than six clear days before the day of seeking
registration, were members of the society with proof of membership;

(ii) a list showing the particulars of persons proposed as the first directors
of the company, alongwith DIN, passport number, if any, with expiry date,
residential addresses and their interests in other firms or bodies corporate
along with their consent to act as directors of the company;

(iii) a list containing the names and addresses of the members of the
governing body of the society;

(iv) a certified copy of the certificate of registration of the society;

(v) written consent or No Objection Certificate from all the secured creditors
of the applicant;

(vi) written consent .from the majority of members whether present in

person or by proxy at a general meeting agreeing for such registration, and
the resolution shall also provide for declaration of the amount of guarantee;

(vii) an undertaking that the proposed directors shall comply with the
requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;

(viii) a copy of the latest income tax return of the society;

(ix) details of the objects of the company alongwith a declaration from all
the members that the restrictions and prohibitions as mentioned in clause
(b) and clause (c) of sub-section (1) of section 8 of the Act shall be
complied.

(d) In case of an application by a trust for registration as a company limited by

guarantee under section 8-

(i) a list showing the names, addresses and occupations of all persons, who
on a day, not being more than six clear days before the day of seeking
registration, were trustees of the trust with proof thereof;

(ii) a list showing the particulars of persons proposed as the first directors
of the company, alongwith DIN, passport number, if any, with expiry date,
residential addresses and their interests in other firm or body corporate
along with their consent to act as directors of the company;

(iii) a certified copy of the certificate of registration of the trust and the trust
deed;

(iv) written consent or No Objection Certificate from all the secured creditors
of the applicant;

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 Chapter XXI [Sections 366 to 378]

The Companies (Authorised to Register) Rules, 2014

(v) written consent from the majority of members whether present in person
or by proxy at a general meeting agreeing for such registration, and the
resolution shall also provide for declaration of the amount of guarantee;

(vi) an undertaking that the proposed directors shall comply with the
requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;

(vii) a copy of the latest income tax return of the trust;

(viii) details of the objects of the company alongwith a declaration from all
the members that the restrictions and prohibitions as mentioned in clause
(b) and clause (c) of sub-section (1) of section 8 of the Act shall be
complied.

(3) Where an application is made by a society or trust for registration as a company limited
by guarantee and it has been proved to the satisfaction of the Registrar that the proposed
company has its objects in accordance with clause (a) of subsection (1) of section 8 of
the Act and it intends to comply with the restrictions and prohibitions as mentioned
respectively in clause (b) and clause (c) of that sub-section, the Registrar shall issue a
license in Form No. INC. 16 to allow such society or trust to be registered as a limited
company without the addition to its name of the word "Limited", or as the case may be,
the words "Private Limited” and thereupon issue a certificate of incorporation in terms of
sub-rule (4) of rule 4 on an application submitted under Chapter II of the Act for
incorporation of a company:
Provided further that a society which has not filed the annual or other returns,
statutorily required to be filed with the Registrar of Societies, shall not be eligible to apply
for registration under section 366 of the Act.

(4) An undertaking from all the members or partners or trustees providing that in the event
of registration as a company under Part I of Chapter XXI of the Act, necessary documents
or papers shall be submitted to the registering or other authority with which the company
was earlier registered, for its dissolution:
Provided that no such undertaking shall be required to be submitted in case the
application for registration under Part I of Chapter XXI of the Act has been made by a
Limited Liability Partnership registered under the Limited Liability Partnership Act, 2008
(6 of 2009).

(5) The list of members and directors and any other particulars relating to the company
which are required to be delivered to the Registrar shall be duly verified by the declaration
of any two or more proposed directors.]

4. Obligation of companies seeking registration to make publication.-

[Refer section 374]

(1) For the purpose of clause (b) of section 374 of the Act, every ‘company’ seeking
registration under the provision of Part I of Chapter XXI shall publish an advertisement about

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The Companies (Authorised to Register) Rules, 2014

registration under the said Part, seeking objections, if any within twenty one clear days from
the date of publication of notice and the said advertisement shall be in Form No. URC-2,
which shall be published 733[in a newspaper in English and in ay vernacular language,
circulating in the district in which 734[Limited Liability Partnership, firm, society or trust, as
the case may be, is situated]].

(2) A copy of the notice, as published and the copy of the notice served on 735[Registrar
of Firms, Registrar of Societies or Registrar of Trust, as the case may be] along with
proof of service, shall be attached with Form No. URC-1.

(3) The Registrar shall, after considering the application and the objections, if any,
received by him within thirty days from the date of publication of advertisement, and
after ensuring that the company has addressed the objections, suitably decide whether
the registration should or should not be granted.

(4) If the Registrar is satisfied on the basis of documents and information filed by the
applicants, decides that the applicant should be registered, he shall issue a certificate
of incorporation in Form No. INC-11.

5. Other obligations of companies seeking registration.-For the purpose of

clause (d) of section 374 of the Act,—

[Refer section 374]

736
[(i) where a firm has obtained a certificate of registration under section 367, an
intimation to this effect shall be given, within fifteen days of such registration to the

733
Substituted by notification number G.S.R. 563(E) dated 31 May 2016. Prior to substitution it read as
“in a newspaper and in English and in the principal vernacular language of the district in which Limited Liability
Partnership is in existence and circulated in that district”.

734
Substituted for the words “Limited Liability Partnership or the firm as the case may be is situate” by
notification number G.S.R. 613(E) dated 05th July 2018.

Substituted for the words “Registrar (LLP)” by notification number G.S.R. 613(E) dated 05th July
735

2018.

736
Substituted by notification number G.S.R. 631(E) dated 05th July 2018. Prior to substitution, it read
as “(i) where a firm has obtained a certificate of registration under section 367, an intimation to this effect
shall be given, within fifteen days of such registration to the concerned Registrar of firms under which
it was originally registered, along with papers for its dissolution as a firm”. Prior to that, it was
ssubstituted by notification number G.S.R. 563(E) dated 31 May, 2016 and until then it read as “(i) where
a Limited Liability Partnership has obtained a certificate of registration under section 367, an intimation to this
effect shall be given, within fifteen days of such registration to the concerned Registrar (LLP) under which it
was originally registered, along with necessary documents or papers for its dissolution as Limited Liability
Partnership”.

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concerned Registrar of firms under which it was originally registered, along with papers
for its dissolution as a firm];

[(i) where a firm, society or trust has obtained a certificate of registration under section
367 of the Act, an intimation to this effect shall be given within fifteen days of such
registration to the concerned Registrar of Firms, Registrar of Societies or Registrar of
Trusts, as the case may be, under which it was originally registered, along with
documents for its dissolution as a firm, society or trust as the case may be;]

(ii) statement of accounts, prepared not later than fifteen days preceding the date of
seeking registration and certified by the Auditor together with the Audited Financial
Statements of the previous year, wherever applicable shall be attached with Form No.
URC-1:
Provided that if the assets of the existing company during the immediately
preceding three years are revalued for the purpose of vesting of its assets with the
company to be incorporated under this Act, the surplus arising out of such revaluation
shall not be deemed to have been credited to the capital account or current account
of partners.

(iii) notice shall be given to the 737[Registrar of Firms] 738[Registrar of Societies or Registrar
of Trusts, as the case may be] under which it was originally registered and shall require
that objections, if any to be made by such concerned 739[Registrar of Firms] [Registrar of
Societies or Registrar of Trusts, as the case may be] to the Registrar, shall be made within
a period of twenty-one days from the date of such notice, failing which it shall be presumed
that they have no objection and the notice shall disclose the purpose and substance of
matters in relation to objections;

(iv) in case of the registration of Limited Liability Partnership into a company under these
rules, a declaration by the said Limited Liability Partnership that it has filed all documents
which are required to be filed under the Liability Partnership Act with the Registrar (LLP)
and the declaration shall be attached with Form No. URC-1;

(v) a statement of proceedings, if any, by or against the 740 {Limited Liability

Partnership, firm, society or trust 741[ } as the case may be] which are pending in any
court or any other Authority shall be attached with Form No. URC-1.

737
Substituted for “concerned Registrar (LLP)” by notification number G.S.R. 563(E) dated 31 May, 2016.

738
Inserted by notification number G.S.R. 613(E) dated 05th July 2018.

739
Substituted for “concerned Registrar (LLP)” by notification number G.S.R. 563(E) dated 31 May, 2016.

Substituted for the words “Limited Liability Partnership or the firm” by notification number G.S.R.
740

613(E) dated 05th July 2018.

Inserted words ‘or the firm as the case may be’ by notification number G.S.R. 563(E) dated 31 May,
741

2016.

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742
[(vi) in case a society or trust intending to register as a company under section 366
of the Act is registered under section 12A of the Income Tax Act, 1961 (43 of 1961)
for claiming exemption on its income, an intimation in this regard shall be sent to the
Income- tax authorities and proof of its service shall be attached with Form No. URC.
1;.

(vii) upon registration of a society or trust as a company under the Act, no application
for conversion into a company of any other kind, except conversion from a private
company to a public company or vice-versa, shall be made till the expiry of a period of
ten years from the date of incorporation under the Act.

(viii) no application for registration as a company under the Act shall be made by a
trust during the pendency of any proceedings under section 92 of the Code of Civil
Procedure (5 of 1908).]

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form No. URC.1 [substituted by notification no. G.S.R. 613(E) dated 5th July 2018]

Form No. URC.2 [substituted by notification no. G.S.R. 613(E) dated 5th July 2018]

Form No. URC-2

Advertisement giving notice about registration under Part I of Chapter XXI

[Pursuant to section 374(b) of the companies Act, 2013 and rule 4(1) of the
companies (Authorised to Register) Rules, 2014]

1. Notice is hereby given that in pursuance of sub-section (2) of section 366 of the
Companies Act, 2013, an application has been made to the Registrar at …………….
that ……………….. a partnership firm/LLP/Co-operative Society/Society/a business
entity( delete what is not applicable) may be registered under Part I of Chapter XXI of
the Companies Act 2013, as a company limited by shares, or as a company limited by
guarantee or as an unlimited company (delete whichever is not applicable).

2. The principal objects of the companyare as follows:

3. A copy of the draft memorandum and articles of association of the proposed

company may be inspected at the office at …………..] [give the address here].

742
Inserted clauses (vi), (vii) and (viii) by notification number G.S.R. 613(E) dated 05th July 2018.

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4. Notice is hereby given that any person objecting to this application may
communicate their objection in writing to the Registrar at (address) , within twenty one
days from the date of publication of this notice, with a copyto the company at its
registered office.

Dated ……….. this day of ……… 20……

Name(s) of Applicant

(1) …………………………..

(1) …………………………..

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Chapter XXII: the Companies

(Registration of Foreign Companies)
Rules, 2014
Government of India
Ministry of Corporate Affairs
NOTIFICATION
New Delhi, the 31st March, 2014
G.S.R.266(E).- In exercise of the powers conferred under clause (c) and clause (h) of
sub-section (1) and sub-section (3) of section 380, clause (a) of sub-section (1) and
sub-section (3) of section 381, section 385, clause (a) of section 386, section 389 and
section 390 read with section 469 of the Companies Act, 2013, and in supersession of
the Companies (Central Government’s) General Rules and Forms, 1956 or any other
rules prescribed under the Companies Act, 1956 (1 of 1956) on matters covered under
these rules, except as respects things done or omitted to be done before such
supersession, the Central Government hereby makes the following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the Companies (Registration of Foreign Companies)
Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure enclosed to these rules;

(c) For the purposes of clause (42) of section 2 of the Act, ”electronic mode” means
carrying out electronically based, whether main server is installed in India or not,
including, but not limited to -
(i) business to business and business to consumer transactions, data
interchange and other digital supply transactions;
(ii) offering to accept deposits or inviting deposits or accepting deposits or
subscriptions in securities, in India or from citizens of India;
(iii) financial settlements, web based marketing, advisory and transactional
services, database services and products, supply chain management;
(iv) online services such as telemarketing, telecommuting, telemedicine,
education and information research; and
(v) all related data communication services,

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whether conducted by e-mail, mobile devices, social media, cloud computing,

document management, voice or data transmission or otherwise;

(d) ”fees” means the fees as specified in the Companies (Registration Offices and
Fees) Rules, 2014;

(e) “Form” or “e-Form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(f) “Schedule” means the Schedule to the Act;

(g) “section” means section of the Act.

(2) The words and expressions used in these rules but not defined and defined in the
Act or in the Companies (Specification of definitions details) Rules, 2014 shall have
the meanings respectively assigned to them in the Act or in the said rules.

3. Particulars relating to directors and Secretary to be furnished to the Registrar

by foreign Companies.-

[Refer section 380]

[Refer Circular 12/2014 dated 22 May 2014 and Circular 16/2014 dated 10 June 2014]
(1) Every foreign company shall, within thirty days of establishment of its place of
business in India, in addition to the particulars specified in subsection (1) of section
380 of the Act, also deliver to the Registrar for registration, a list of directors and
Secretary of such company.

(2) The list of directors and secretary or equivalent (by whatever name called) of the
foreign company shall contain the following particulars, for each of the persons
included in such list, namely:-
(a) personal name and surname in full;
(b) any former name or names and surname or surnames in full;
(c) father’s name or mother’s name and spouse’s name;
(d) date of birth;
(e) residential address;
(f) nationality;
(g) if the present nationality is not the nationality of origin, his nationality of
origin;
(h) passport Number, date of issue and country of issue; (if a person holds more
than one passport then details of all passports to be given)
(i) income-tax permanent account number (PAN) , if applicable;
(j) occupation, if any ;
(k) whether directorship in any other Indian company, (Director Identification
Number (DIN), Name and Corporate Identity Number (CIN) of the company
in case of holding directorship);
(l) other directorship or directorships held by him;
(m) Membership Number (for Secretary only); and

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(n) e-mail ID.

(3) A foreign company shall, within a period of thirty days of the establishment of its
place of business in India, file with the registrar Form FC-1 with such fee as provided
in Companies (Registration Offices and Fees) Rules, 2014 and with the documents
required to be delivered for registration by a foreign company in accordance with the
provisions of sub-section (1) of section 380 and the application shall also be supported
with an attested copy of approval from the Reserve Bank of India under Foreign
Exchange Management Act or Regulations, and also from other regulators, if any,
approval is required by such foreign company to establish a place of business in India
or a declaration from the authorised representative of such foreign company that no
such approval is required.

(4) Where any alteration is made or occurs in the document delivered to the Registrar
for registration under sub-section (1) of section 380, the foreign company shall file with
the Registrar, a return in Form FC-2 along with the fee as provided in the Companies
(Registration Offices and Fees) Rules, 2014 containing the particulars of the alteration,
within a period of thirty days from the date on which the alteration was made or
occurred.

4. Financial Statement of foreign company.-

[Refer section 381]

(1) Every foreign company shall prepare financial statement of its Indian business
operations in accordance with Schedule III or as near thereto as may be possible for
each financial year including-
(i) documents required to be annexed thereto in accordance with the provisions
of Chapter IX of the Act i.e. Accounts of Companies ;
(ii) documents relating to copies of latest consolidated financial statements of the
parent foreign company , as submitted by it to the prescribed authority in the
country of its incorporation under the provisions of the law for the time being in
force in that country:
Provided that where such documents are not in English language, there
shall be annexed to it a certified translation thereof in the English language:
Provided further that where the Central Government has exempted or
specified different documents for any foreign company or a class of foreign
companies, then documents as specified shall be submitted;
(iii) Such other documents as may be required to be annexed or attached in
accordance with sub-rule (2).

(2) Every foreign company shall, along with the financial statement required to be filed
with the Registrar, attach thereto the following documents; namely:-
(a) Statement of related party transaction, which shall include-
(i) name of the person in India which shall be deemed to be the related party within
the meaning of clause (76) of section 2 of the Act of the foreign company or of
any subsidiary or holding company of such foreign company or of any firm in
which such foreign company or its subsidiary or holding company is a partner;

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(ii) nature of such relationship;

(iii) description and nature of transaction;
(iv) amount of such transaction during the year with opening ,closing, highest and
lowest balance during the year and provisions made (if any) in respect of such
transactions;
(v) reason of such transaction;
(vi) material effect of such transaction on both the parties;
(vii) amount written off or written back in respect of dues from or to the related
parties;
(viii) a declaration that such transactions were carried out at arms length basis;
and
(ix) any other details of the transaction necessary to understand the financial
impact;
(b) Statement of repatriation of profits which shall include-
(i) amount of profits repatriated during the year;
(ii) recipients of the repatriation;
(iii) form of repatriation;
(iv) dates of repatriation;
(v) details if repatriation made to a jurisdiction other than the residence of the
beneficiary;
(vi) mode of repatriation; and
(vii) approval of the Reserve Bank of India or any other authority, if any.
(c) Statement of transfer of funds (including dividends if any) which shall, in relation of
any fund transfer between place of business of foreign company in India and any other
related party of the foreign company outside India including its holding, subsidiary and
associate company, include-
(i) date of such transfer;
(ii) amount of fund transferred or received;
(iii) mode of receipt or transfer of fund;
(iv) purpose of such receipt or transfer; and
(v) approval of Reserve Bank of India or any other authority, if any.

(3) The documents referred to in this rule shall be delivered to the Registrar within a
period of six months of the close of the financial year of the foreign company to which
the documents relate:
Provided that the Registrar may, for any special reason, and on application
made in writing by the foreign company concerned, extend the said period by a period
not exceeding three months.

5. Audit of accounts of foreign company.-

[Refer section 381]

(1) Every foreign company shall get its accounts, pertaining to the Indian business
operations prepared in accordance with the requirements of clause (a) of sub-section
(1) of section 381 and rule 4, audited by a practicing Chartered Accountant in India or
a firm or limited liability partnership of practicing chartered accountants.
Explanation.- For the purposes of this sub-rule, the expressions “Chartered
Accountant”, “Firm” and limited liability partnership shall have the meanings

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respectively assigned to them under the Act and Limited Liability Partnership Act, 2008
(6 of 2009) respectively.

(2) The provisions of Chapter X i.e. Audit and Auditors and rules made there under,
as far as applicable, shall apply, mutatis mutandis, to the foreign company.

6. List of places of business of foreign company.-

[Refer section 381]

Every foreign company shall file with the Registrar, along with the financial statement,
in Form FC-3 with such fee as provided under Companies (Registration Offices and
Fees) Rules, 2014 a list of all the places of business established by the foreign
company in India as on the date of balance sheet.

7. Annual Return.-

[Refer section 384]

Every foreign company shall prepare and file, within a period of sixty days from the
last day of its financial year, to the Registrar annual return in Form FC-4 along with
such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014
containing the particulars as they stood on the close of the financial year.

8. Office where documents to be delivered and fee for registration of

documents.-

[Refer section 380]

(1) Any document which any foreign company is required to deliver to the Registrar
shall be delivered to the Registrar having jurisdiction over New Delhi, and references
to the Registrar in Chapter XXII of the Act i.e. Companies Incorporated Outside India
and these rules shall be construed accordingly.

(2) The fee to be paid to the Registrar for registering any document relating to a foreign
company shall be such as provided in the Companies (Registration Offices and Fees)
Rules, 2014.

(3) If any foreign company ceases to have a place of business in India, it shall forthwith
give notice of the fact to the Registrar, and as from the date on which notice is so
given, the obligation of the company to deliver any document to the Registrar shall
cease, provided it has no other place of business in India.

9. Certification.-

[Refer section 380]

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A copy of any charter, statutes, memorandum and articles, or other instrument

constituting or defining the constitution of a Foreign company shall be duly certified to
be a true copy in the manner given below –
(1) If the company is incorporated in a country outside the Commonwealth-
(a) the copy aforesaid shall be certified as a true copy by-
(i) an official of the Government to whose custody the original is situated; or
(ii) a Notary (Public) of such Country; or
(iii) an officer of the company.
(b) The signature or seal of the official referred to in sub-clause (i) of clause (a)
or the certificate of the Notary (Public) referred to in sub-clause (ii) of clause
(a) shall be authenticated by a diplomatic or consular officer empowered in
this behalf under section 3 of the Diplomatic and Consular Officers (Oaths
and fees) Act, 1948 (XL of 1948), or where there is no such officer, by any
of the officials mentioned in section 6 of the Commissioners of Oath Act,
1889 (52 and 53 Vic. C. 10), or in any relevant Act for the said purpose.
(c) The certificate of the officer of the company referred to in sub-clause (iii) of
clause (a) shall be signed before a person having authority to administer an
oath as provided under section 3 of the Diplomatic and Consular Officers
(Oath and Fees) Act, 1948 (XL of 1948), or as the case may be, by section
3 of the Commissioners of Oath Act, 1889 (52 and 53 Vic, C. 10) and the
status of the person administering the oath in the latter case being
authenticated by any official specified in section 6 of the Commissioners of
Oaths Act, 1889 (52 and 53 Vic. C. 10) or in any relevant Act for the said
purpose.

(2) If the company is incorporated in any part of the Commonwealth, the copy of the
document shall be certified as a true copy by-
(a) an official of the Government to whose custody the original of the document
is committed; or
(b) a Notary (Public) in that part of the Commonwealth; or
(c) an officer of the company, on oath before a person having authority to
administer an oath in that part of the Commonwealth.

(3) Any altered document delivered to the Registrar should also be duly certified in the
manner mentioned above.

(4) If the Company is incorporated in a country falling outside the Commonwealth, but
a party to the Hague Apostille Convention, 1961-
(a) the copy of the documents shall be certified as a true copy
by an official of the Government to whose custody the original is committed
and be duly apostillised in accordance with Hague Convention;
(b) a list of the directors and the secretary of the Company, if any, the name and
address of persons resident in India, authorized to accept notice on behalf
of the Company shall be duly notarized and be apostillised in the Country
of their origin in accordance with Hague Convention;
(c) the signatures and address on the Memorandum of Association and proof of
identity, where required, of foreign nationals seeking to register a company
in India shall be notarized before the notary of the country of their origin and
be duly apostillised in accordance with the said Hague Convention.

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10. Authentication of translated documents.-

[Refer section 380]

(1) All the documents required to be filed with the Registrar by the foreign companies
shall be in English language and where any such document is not in English language,
there shall be attached a translation thereof in English language duly certified to be
correct in the manner given in these rules.

(2) Where any such translation is made outside India, it shall be authenticated by the
signature and the seal, if any, of-
(a) the official having custody of the original; or
(b) a Notary (Public) of the country (or part of the country) where the company is
incorporated:
Provided that where the company is incorporated in a country outside the
Commonwealth, the signature or seal of the person so certifying shall be authenticated
by a diplomatic or consular officer empowered in this behalf under section 3 of the
Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, or, where there is no
such officer, by any of the officials mentioned in section 6, of the Commissioners of
Oaths Act, 1889 (52 and 53 Vic C 10), or in any relevant Act for the said purpose.

(3) Where such translation is made within India, it shall be authenticated by-
(a) an advocate, attorney or pleader entitled to appear before any High Court; or
(b) an affidavit, of a competent person having, in the opinion of the Registrar, an
adequate knowledge of the language of the original and of English.

11. Documents to be annexed to prospectus.-

[Refer section 389]

The following documents shall be annexed to the prospectus, namely:-
(a) any consent to the issue of the prospectus required from any person as an expert;
(b) a copy of contracts for appointment of managing director or manager and in case
of a contract not reduced into writing, a memorandum giving full particulars
thereof;
(c) a copy of any other material contracts, not entered in the ordinary course of
business, but entered within preceding two years;
(d) a copy of underwriting agreement; and
(e) a copy of power of attorney, if prospectus is signed through duly authorized agent
of directors.

12. Action for improper use or description as foreign company.-

[Refer section 380]

If any person or persons trade or carry on business in any manner under any name or
title or description as a foreign company registered under the Act or the rules made
thereunder, that person or each of those persons shall, unless duly registered as

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foreign company under the Act and rules made thereunder, shall be liable for
investigation under section 210 of the Act and action consequent upon that
investigation shall be taken against that person.

13. Issue of Indian Depository Receipts (IDRs).-

[Refer section390]
(1) For the purposes of section 390, no company incorporated or to be incorporated
outside India, whether the company has or has not established, or may or may not
establish, any place of business in India (hereinafter in this rule called ‘issuing
company’) shall make an issue of Indian Depository Receipts (IDRs) unless such
company complies with the conditions mentioned under this rule, in addition to the
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 and any directions issued by the Reserve Bank of
India.
Explanation.- For the purposes of this rule, the term “Indian Depository Receipt”
(hereinafter referred to as ‘IDR’) means any instrument in the form of a depository
receipt created by a Domestic Depository in India and authorized by a company
incorporated outside India making an issue of such depository receipts.

(2) The issuing company shall not issue IDRs unless-

(a) its pre-issue paid-up capital and free reserves are at least US$ 50 million and
it has a minimum average market capitalization (during the last three years) in
its parent country of at least US$ 100 million;
(b) it has been continuously trading on a stock exchange in its parent or home
country (the country of incorporation of such company) for at least three
immediately preceding years;
(c) it has a track record of distributable profits in terms of section
123 of the Act, for at least three out of immediately preceding five years;
(d) It fulfills such other eligibility criteria as may be laid down by the Securities and
Exchange Board of India from time to time in this behalf.

(3) The issuing company shall follow the following procedure for making an issue of
IDRs:
(a) the issuing company shall, where required, obtain the necessary approvals or
exemptions from the appropriate authorities from the country of its incorporation
under the relevant laws relating to issue of capital and IDRs.
(b) issuing company shall obtain prior written approval from the Securities and
Exchange Board of India on an application made in this behalf for issue of IDRs
along with the issue size.
(c) an application under clause (b) shall be made to the Securities and Exchange
Board of India (along with draft prospectus) at least ninety days prior to the
opening date of the IDRs issue, in such form , along with such fee and furnishing
such information as may be specified by the Securities and Exchange Board of
India from time to time:
Provided that the issuing company shall also file with the Securities and
Exchange Board of India, through a Merchant Banker, a due diligence report along

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with the application under clause (b) in the form specified by the Securities and
Exchange Board of India.
(d) the Securities and Exchange Board of India may, within a period of thirty days of
receipt of an application under clause (c), call for such further information, and
explanations, as it may deem necessary, for disposal of such application and shall
dispose the application within a period of thirty days of receipt of further
information or explanation:
Provided that if within a period of sixty days from the date of submission of
application or draft prospectus, the Securities and Exchange Board of India
specifies any changes to be made in the draft prospectus, the prospectus shall not
be filed with the Securities and Exchange Board of India or Registrar of
Companies unless such changes have been incorporated therein.
(e) the issuing company shall on approval being granted by the Securities and
Exchange Board of India to an application under clause (b), pay to the Securities
and Exchange Board of India an issue fee as may be prescribed from time to time
by the Securities and Exchange Board of India.
(f) the issuing company shall file a prospectus, certified by two authorized signatories
of the issuing company, one of whom shall be a whole-time director and other the
Chief Financial Officer, stating the particulars of the resolution of the Board by
which it was approved with the Securities and Exchange Board of India and
Registrar of Companies, New Delhi before such issue:
Provided that at the time of filing of said prospectus with the Registrar of
Companies, New Delhi, a copy of approval granted by the Securities and
Exchange Board of India and the statement of fees paid by the Issuing Company
to the Securities and Exchange Board of India shall also be attached.
(g) the prospectus to be filed with the Securities and Exchange Board of India and the
Registrar of Companies, New Delhi shall contain the particulars as prescribed in
sub-rule (8) and shall be signed by all the whole-time directors of the issuing
company, and the Chief Financial Officer.
(h) the issuing company shall appoint an overseas custodian bank, a Domestic
Depository and a Merchant Banker for the purpose of issue of IDRs.
(i) the issuing company may appoint underwriters registered with the Securities and
Exchange Board of India to underwrite the issue of IDRs.
(j) the issuing company shall deliver the underlying equity shares or cause them to be
delivered to an Overseas Custodian Bank and the said bank shall authorize the
domestic depository to issue IDRs.
(k) the issuing company shall obtain in-principle listing permission from one or more
stock exchanges having nationwide trading terminals in India.

Explanation- For the purposes of this rule,-

(i) “Domestic Depository” means custodian of securities registered with the Securities
and Exchange Board of India and authorized by the issuing company to issue
IDRs.
(ii) “Merchant Banker" means a Merchant Banker as defined in sub-regulation (cb) of
regulation 2 of the Securities and Exchange Board (Merchant Bankers)
Regulations, 1992.
(iii) "Overseas Custodian Bank” means a banking company which is established in a
country outside India and which acts as custodian for the equity shares of Issuing
Company, against which IDRs are proposed to be issued by having a custodial

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arrangement or agreement with the Domestic Depository or by establishing a

place of business in India.

(4) The Merchant Banker to the issue of IDRs shall deliver for registration the following
documents or information to the Securities and Exchange Board of India and Registrar
of Companies at New Delhi, namely:-
(a) instrument constituting or defining the constitution of the issuing company;
(b) the enactments or provisions having the force of law by or under which the
incorporation of the Issuing company was effected, a copy of such provisions
attested by an officer of the company be annexed;
(c) if the issuing company has established place of business in India, address of its
principal office in India;
(d) if the issuing company does not establish a principal place of business in India, an
address in India where the said instrument, enactments or provision or copies
thereof are available for public inspection, and if these are not in English, a
translation thereof certified by a key managerial personnel of the Issuing company
shall be kept for public inspection;
(e) a certified copy of the certificate of incorporation of the issuing company in the
country in which it is incorporated;
(f) the copies of the agreements entered into between the issuing company, the
overseas custodian bank, the Domestic Depository, which shall inter alia specify
the rights to be passed on to the IDR holders;
(g) if any document or any portion thereof required to be filed with the Securities and
Exchange Board of India or the Registrar of Companies is not in English language,
a translation of that document or portion thereof in English, certified by a key
managerial personnel of the company to be correct and attested by an authorized
officer of the Embassy or Consulate of that country in India, shall be attached to
each copy of the document.

(5) (a) No application form for the securities of the issuing company shall be issued
unless the form is accompanied by a memorandum containing the salient features
of prospectus in the specified form.

(b) An application form can be issued without the memorandum as specified in

clause (a), if it is issued in connection with an invitation to enter into an
underwriting agreement with respect to the IDRs.

(c) The prospectus for subscription of IDRs of the Issuing company which
includes a statement purporting to be made by an expert shall not be circulated,
issued or distributed in India or abroad unless a statement that the expert has
given his written consent to the issue thereof and has not withdrawn such consent
before the delivery of a copy of the prospectus to the Securities and Exchange
Board of India and the Registrar of Companies, New Delhi, appears on the
prospectus.

(d) The provisions of the Act shall apply for all liabilities for misstatements in
prospectus or punishment for fraudulently inducing persons to invest money in
IDRs.

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(e) The person(s) responsible for issue of the prospectus shall not incur any
liability by reason of any non-compliance with or contravention of any provision of
this rule, if-
(i) as regards any matter not disclosed, he proves that he had no knowledge
thereof; or
(ii) the contravention arose in respect of such matters which in the opinion of the
Central Government or the Securities and Exchange Board of India were not
material.

(6) (a) A holder of IDRs may transfer the IDRs, may ask the Domestic Depository to
redeem them or any person may seek reissuance of IDRs by conversion of
underlying equity shares, subject to the provisions of the Foreign Exchange
Management Act, 1999, the Securities and Exchange Board of India Act, 1992,
or the rules, regulations or guidelines issued under these Acts, or any other law
for the time being in force;
(b) In case of redemption, Domestic Depository shall request the Overseas
Custodian Bank to get the corresponding underlying equity shares released in
favour of the holder of IDRs for being sold directly on behalf of holder of IDRs, or
being transferred in the books of Issuing company in the name of holder of IDRs
and a copy of such request shall be sent to the issuing company for information.
(c) A holder of IDRs may, at any time, nominate a person to whom his IDRs shall
vest in the event of his death and Form FC-5 may be used for this purpose.

(7) (a) The repatriation of the proceeds of issue of IDRs shall be subject to laws for
the time being in force relating to export of foreign exchange.
(b) The number of underlying equity shares offered in a financial year through IDR
offerings shall not exceed twenty five per cent. of the post issue number of equity
shares of the company.
(c) Notwithstanding the denomination of securities of an Issuing company, the
IDRs issued by it shall be denominated in Indian Rupees.
(d) The IDRs issued under this Rule shall be listed on the recognized Stock
Exchange(s) in India as specified in clause (k) of sub-rule (3) and such IDRs may
be purchased, possessed and freely transferred by a person resident in India as
defined in section 2(v) of the Foreign Exchange Management Act, 1999, subject
to the provisions of the said Act:
Provided that the IDRs issued by an Issuing company may be purchased,
possessed and transferred by a person other than a person resident in India if
such Issuing company obtains specific approval from Reserve Bank of India in this
regard or complies with any policy or guidelines that may be issued by Reserve
Bank of India on the subject matter;
(e) Every issuing company shall comply with such continuous disclosure
requirements as may be specified by the Securities and Exchange Board of India
in this regard.
(f) On the receipt of dividend or other corporate action on the IDRs as specified in
the agreements between the Issuing company and the Domestic Depository, the
Domestic Depository shall distribute them to the IDR holders in proportion to their
holdings of IDRs.

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(8) The prospectus or letter of offer shall, inter alia, contain the following particulars,
namely:-

(a) General information-

(i) Name and address of the registered office of the company;
(ii) name and address of the Domestic Depository, the Overseas
Custodian Bank with the address of its office in India, the Merchant Banker, the
underwriter to the issue and any other intermediary which may be appointed in
connection with the issue of IDRs;
(iii) names and addresses of Stock Exchanges where applications are made
or proposed to be made for listing of the IDRs;
(iv) the provisions relating to punishment for fictitious applications;
(v) statement or declaration for refund of excess subscription;
(vi) declaration about issue of allotment letters or certificates or IDRs within
the stipulated period;
(vii) date of opening of issue;
(viii) date of closing of issue;
(ix) date of earliest closing of the issue;
(x) declaration by the Merchant Banker with regard to adequacy of
resources of underwriters to discharge their respective obligations, in case of
being required to do so;
(xi) a statement by the Issuing company that all moneys received out of
issue of IDRs shall be transferred to a separate domestic bank account, name
and address of the bank and the nature and number of the account to which
the amount shall be credited;
(xii) the details of proposed utilisation of the proceeds of the IDR issue.

(b) Capital Structure of the Company- The authorized, issued, subscribed and paid-
up capital of the issuing company;

(c) Terms of the issue-

(i) rights of the IDR holders against the underlying securities;
(ii) details of availability of prospectus and forms, i.e., date, time, place etc.;
(iii) amount and mode of payment seeking issue of IDRs; and
(iv) any special tax benefits for the Issuing company and holders of IDRs in
India.

(d) Particulars of Issue-

(i) the objects of the issue;
(ii) the cost of the Project, if any; and
(iii) the means of financing the projects, if any including contribution by
promoters.

(e) Company, Management and Project-

(i) the main objects, history and present business of the company;
(ii) the Promoters or parent group or owner group and their background:
Provided that in case there are no identifiable promoters, the names,
addresses and other particulars as may be specified by the Securities
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and Exchange Board of India of all the persons who hold five percent. or
more equity share capital of the company shall be disclosed;
(iii) the subsidiaries of the company, if any;
(iv) the particulars of the Management or Board (i.e. Name and complete
address(es) of Directors, Manager, Managing Director or other principal officers
of the company);
(v) the location of the project, if any;
(vi) the details of plant and machinery, infrastructure facilities, technology
etc., where applicable;
(vii) the schedule of implementation of project and progress made so far,
if applicable;
(viii) nature of product(s), consumer(s), industrial users;
(ix) the particulars of legal, financial and other defaults, if any;
(x) the risk factors to the issue as perceived; and
(xi) consent of the Merchant Bankers, Overseas Custodian Bank, the
Domestic Depository and all other intermediaries associated with the issue of
IDRs.
(xii) the information, as may be specified by the Securities and Exchange
Board of India, in respect of listing, trading record or history of the Issuing
company on all the stock exchanges, whether situated in its parent country or
elsewhere.

(f) Report-
(i) Where the law of a country, in which the Issuing company is incorporated, requires
annual statutory audit of the accounts of the Issuing company, a report by the statutory
auditor of the Issuing company, in such form as may be specified by the Securities
and Exchange Board of India on -
(A) the audited financial statements of the Issuing company in respect of three
financial years immediately preceding the date of prospectus;
(B) the interim audited financial statements in respect of the period ending on a
date which is less than 180 days prior to the date of opening of the issue, if the
gap between the ending date of the latest audited financial statements disclosed
under clause (A) and the date of the opening of the issue is more than 180 days:
Provided that if the gap between such date of latest audited financial
statements and the date of opening of issue is 180 days or less, the requirement
under item (B) shall be deemed to be complied with, if a statement, as may be
specified by the Securities and Exchange Board of India, in respect of material
changes in the financial position of Issuing company for such gap is disclosed in
the Prospectus:
Provided further that in case of an Issuing company which is a foreign bank
incorporated outside India and which is regulated by a member of the Bank for
International Settlements or a member of the International Organization of
Securities Commissions which is a signatory to a Multilateral Memorandum of
Understanding, the requirement under this paragraph, in respect of period
beginning with last date of period for which the latest audited financial statements
are made and the date of opening of the issue shall be satisfied, if the relevant
financial statements are based on limited review report of such statutory auditor;

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(ii) Where the law of the country, in which the Issuing company is incorporated, does
not require annual statutory audit of the accounts of the Issuing company, a report, in
such form as may be specified by the Securities And Exchange Board of India, certified
by a Chartered Accountant in practice within the terms and meaning of the Chartered
Accountants Act, 1949 on -
(A) the financial statements of the Issuing company, in particular on the profits
and losses for each of the three financial years immediately preceding the date
of prospectus and upon the assets and liabilities of the Issuing company; and
(B) the interim financial statements in respect of the period ending on a date which
is less than one hundred and eighty days prior to the date of opening of the issue
have to be included in report, if the gap between the ending date of the latest
financial statements disclosed under item (A) and the date of the opening of the
issue is more than one hundred and eighty days:
Provided that if the gap between such date of latest audited financial
statements and the date of opening of issue is one hundred and eighty days or
less, the requirement under item (B) shall be deemed to be complied with if a
statement, as may be specified by the Securities And Exchange Board of India,
in respect of changes in the financial position of Issuing company for such gap
is disclosed in the Prospectus.
(iii) the gap between date of opening of issue and date of reports specified under sub-
clauses (i) and (ii) shall not exceed one hundred and twenty days;
(iv) If the proceeds of the IDR issue are used for investing in other body(ies) corporate,
then following details of such body(ies) corporate shall be given-
(A) the Name and address(es) of the bodies corporate;
(B) the reports stated in sub-clauses (i) and (ii), as the case may be, in respect
of such body (ies) corporate also.”

(g) Other Information-

(i) the Minimum subscription for the issue;
(ii) the fees and expenses payable to the intermediaries involved in the issue of
IDRs;
(iii) the declaration with regard to compliance with the Foreign Exchange
Management Act, 1999.

(h) Inspection of Documents-

The Place at which inspection of the offer documents, the financial statements and
auditor's report thereof shall be allowed during the normal business hours; and
(i) any other information as specified by the Securities and Exchange Board of India
or the Income-tax Authorities or the Reserve Bank of India or other regulatory
authorities from time to time.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form No. FC.1

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Form No. FC-2

Form No. FC-3

Form No. FC-4

Form No. FC.5

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The Companies (Registration Offices and Fees) Rules, 2014

Chapter XXIV: the Companies

(Registration Offices and Fees) Rules,
2014
[The principal notification was published in the Gazette of India, Part II, Section 3, Sub-section (i) vide
number G.S.R. 268(E), dated 31st March, 2014 and subsequently amended by notification no. G.S.R.
297(E) dt. 28 April 2014; notification no. G.S.R. 122(E) dated 24th February 2015; notification number
G.S.R. 438 (E) dated 29th May 2015; notification no. G.S.R. 493(E) dated 06th May 2016; notification
no. G.S.R. 48(E) dated 20th January 2018; by notification no. G.S.R. 435(E) dated 07th May 2018; by
notification no. G.S.R. 616(E) dated 05th July 2018; by notification no. G.S.R. 797(E) dated 21st August
2018; by notification no. G.S.R. 905(E) dated 20th September 2018; by notification no. G.S.R. 143(E)
dated 21st February 2019; by notification no. G.S.R. 329(E) dated 25th April 2019; and by notification
no. G.S.R. 340(E) dated 30th April 2019.]

Ministry of Corporate Affairs

NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R 268(E)- In exercise of the powers conferred by section 396, 398, 399, 403 and
404, read with subsections (1) and (2) of section 469 of the Companies Act, 2013 (18
of 2013) and in supersession of Companies (Central Government’s) General Rules
and Forms, 1956, except as respects things done or omitted to be done before such
supersession, the Central Government hereby makes the following rules, namely: -

1. Short title and commencement.-

(1) These rules may be called of the Companies (Registration Offices and Fees)
Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.-

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means Annexure to these rules;

(c) “Certifying Authority” for the purpose of “Digital Signature Certificate” means
a person who has been granted a licence to issue it under section 24 of the
Information Technology Act, 2000 (21 of 2000).

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(d) “Digital Signature” means digital signature as defined under clause (p) of
sub-section (1) of section 2 of the Information Technology Act, 2000; (21 of
2000);

(e) “Digital Signature Certificate” means a Digital Signature Certificate as defined

under clause (q) of sub-section (1) of section 2 of the Information Technology Act,
2000 (21 of 2000);

(f) “electronic record” means electronic record as defined under clause (t) of
sub-section (1) of section 2 of the Information Technology Act, 2000; (21 of
2000);

(g) “electronic registry” means an electronic repository or storage system of

the Central Government in which the information or documents are received,
stored, protected and preserved in electronic form;

(h) “electronic mail” means message sent, received or forwarded in digital

form using any electronic communication mechanism such that the message
so sent, received or forwarded is storable and retrievable ;

(i) “Form” or “e-form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(j) “Regional Director” means the person appointed by the Central

Government in the Ministry of Corporate Affairs as a Regional Director;

(k) “Registrar’s Facilitation Office” means an office maintained by the Central

Government or an agency authorised by it to facilitate e-filing of documents
into the electronic registry and their inspection and viewing;

(l) “Straight Through Process” means the process in which an e-from is

approved through system without manual interruption.

(2) Words and expressions used in these rules but not defined and defined in
the Act and the Information Technology Act, 2000 (21 of 2000) or in Companies
(Specification of definitions details) Rules, 2014 shall have the meanings
respectively assigned to them in those Acts and the said rules.

3. Business activity.-

Every company including foreign company which carries out its business through
electronic mode, whether its main server is installed in India or outside India, which-

(i) undertakes business to business and business to consumer transactions,

data interchange or other digital supply transactions;

(ii) offers to accept deposits or invites deposits or accepts deposits or

subscriptions in securities, in India or from citizens of India;

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(iii) undertakes financial settlements, web based marketing, advisory and

transactional services, database services or products, supply chain
management;

(iv) offers online services such as telemarketing, telecommuting, telemedicine,

education and information research; or

(v) undertakes any other related data communication services,

whether conducted by e-mail, mobile devices, social media, cloud computing,
document management, voice or data transmission or otherwise, shall be deemed
to have carried out business in India.

4. Registration offices.-

[Refer section 396]

(1) The Central Government shall establish such number of offices at such
places as it thinks fit, specifying their jurisdiction for the purpose of
exercising such powers and discharge of such functions as are conferred
on the Central Government by or under this Act or under the rules made
thereunder and for the purposes of registration of companies under the
Act.

(2) The office of the Registrar shall observe such normal working hours as may
be approved by the Central Government and shall be open for the
transaction of business with the public on all days except Saturday, Sunday
and public holidays during working hours between 10.30 a.m. and 3.30 p.m.

(3) The offices other than the office of the Registrar shall observe such normal
working hours as may be approved by the Central Government.

5. Powers and duties of Registrars.-

[Refer section 396]

(1) The Registrars shall exercise such powers and discharge such duties as are
conferred on them by the Act or the rules made thereunder or delegated to them
by the Central Government, wherever the power or duty has been conferred
upon the Central Government by the Act or the rules made there under.

(2) Whenever according to the Act, any function or duty is to be discharged by

the Registrar, it shall, until the Central Government otherwise directs, be done
by the Registrar, or in his absence, by such person as the Central
Government may for the time being authorise:
Provided that in the event of the Central Government altering the
constitution of the existing registry offices or any of them, any such function
or duty shall be discharged by such officer and at such place, with reference

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The Companies (Registration Offices and Fees) Rules, 2014

to the local situation of the registered offices of the companies concerned, as

the Central Government may appoint.

6. Seal of Registrar.-

[Refer section 396]

The Registrar shall have a seal and such seal shall bear the words “Registrar of
Companies, ______ (Place and State)”.

7. Manner and conditions of filing.-

[Refer section 398]

Every application, financial statement, prospectus, return, declaration, memorandum,
articles, particulars of charges, or any other particulars or document or any notice, or
any communication or intimation required to be filed or delivered or served under the
Act and rules made there under, shall be filed or delivered or served in computer
readable electronic form, in portable document format (pdf) or in such other format as
has been specified in any rule or form in respect of such application or form or
document or declaration to the Registrar through the portal maintained by the Central
Government on its web-site or through any other website notified by the Central
Government:

Provided that where the documents are required to be filed on Non-Judicial

Stamp Paper, the company shall submit such documents in the physical form, in
addition to their submission in electronic form, unless the Central Government, by an
order, does not require submission in physical form and proof of delivery of documents
submitted in physical form shall be scanned and form part of attachment to the e-form.

Provided further that if stamp duty on such documents is paid electronically

through the portal maintained by the Central Government or through any other website
notified by the Central Government, then, the company shall not be required to make
physical submission of such documents, in addition to their submission in the
electronic form:

Provided also that in respect of certain documents filed under the Act which
are not covered for payment of stamp duty through the portal of the Central
Government, and stamp duty payable on such documents in the respective State is
equal to or less than one hundred rupees, the company shall scan such stamped
documents complete in all respects and shall file electronically for evidencing by the
Registrar and shall not be required to submit such documents, except those which are
required to be filed for compounding of offences or adjudication of penalties or
applications to Central Government or Regional Director in the physical form
separately:
Provided also that unless otherwise stated in any law for the time being in
force, the company shall retain such documents duly stamped in original permanently
for the documents relating to incorporation and matters incidental thereto, changes in
any of the clauses of the Memorandum and Articles of Association and in other cases

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The Companies (Registration Offices and Fees) Rules, 2014

for a minimum period of eight years from the date of filing of the documents and shall
be required to produce the same as and when the same is required for inspection and
verification by the competent authority under any law for the time being in force:

Provided also that any correspondences (physically or electronically) and

documents to be filed by any person shall contain name, designation, address,
membership number or Director Identification Number, as the case may be, of the
person signing such document and make sure correctness thereof and in no case,
correspondence, merely with signature and writing authorised signatory shall be
acceptable.

Provided also that no request for recording any event based information or
changes shall be accepted by the Registrar from such defaulting companies, unless
they file their updated Balance Sheet and Profit and Loss Account and Annual Return
with the Registrar of Companies except,-
(i) filing of order of Court or other authorities,
(ii) Balance Sheet and Profit and Loss Account,
(iii) Compounding application,
(iv) Form for transfer of money to Investor Education and Protection Fund,
(v) Application for removal of the Auditor and
(vi) GNL-1 for making company active.

8. Authentication of documents.-

(1) An electronic form shall be authenticated by authorised signatories using digital

signature.

(2) Where there is any change in directors or secretaries, the form relating to
appointment of such directors or secretaries has to be filed by an continuing director
or the secretary of the company.

(3) The authorised signatory and the professional, if any, who certify e-form shall be
responsible for the correctness of the contents of e-form and correctness of the
enclosures attached with the electronic form.

(4) Every person authorised for authentication of e-forms, documents or applications

etc., which are required to be filed or delivered under the Act or rules made there
under, shall obtain a digital signature certificate from the Certifying Authority for the
purpose of such authentication and such certificate shall not be valid unless it is of
class II or Class III specification under the Information Technology Act, 2000 (21 of
2000).

(5) The electronic forms required to be filed under the Act or the rules thereunder shall
be authenticated on behalf of the company by the Managing Director or Director or
Secretary of the Company or other key managerial personnel.

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The Companies (Registration Offices and Fees) Rules, 2014

(6) Scanned image of documents shall be of original signed documents relevant to

the e-forms or forms and the scanned document image shall not be left blank without
bearing the actual signature of authorised person.

(7) It shall be the sole responsibility of the person who is signing the form and
professional who is certifying the form to ensure that all the required attachments
relevant to the form have been attached completely and legibly as per provisions of the
Act, and rules made thereunder to the forms or application or returns filed.

(8) The documents or form or application filed may contain a power of attorney issued
to an Advocate or Chartered Accountant or Cost Accountant or Company Secretary
who is in whole time practice and to any others person supported by Board resolution
to make representation to the registering or approving authority failing which a Director
or key managerial personnel can make representation before such authority .

(9) Where any instance of filing document, application or return etc., containing a false
or misleading information or omission of material fact, requiring action under section
448 or section 449 is observed, the person shall be liable under section 448 and 449
of the Act.

(10) Without prejudice to any other liability, in case of certification of any form,
document, application or return under the Act containing wrong or false or misleading
information or omission of material fact or attachments by the person, the Digital
Signature Certificate shall be de-activated by the Central Government till a final
decision is taken in this regard.

(11) The Central Government shall set up and maintain for filing of electronic forms,
documents and applications, and for viewing and inspection of documents in the
electronic registry or for obtaining certified copies thereof-
(a) a website or portal to provide access to the electronic registry; and
(b) as many Registrar’s Facilitation Offices as may be necessary and at such
places and for such time as the Central Government may determine.
[following sub-rule (12) inserted w.e.f. 28 April 2014. Notification making this
amendment is given below.]
743
[(12)(a) The following e-forms filed by companies, other than one person companies
and small companies, under sub-rule (1) of rule 9, shall be pre-certified by the
Chartered Accountant or the Company Secretary or as the case may be the Cost
Accountant, in whole-time practice, namely:-
INC-21, INC-22, INC-28, PAS-3, SH-7, CHG-1, CHG-4, CHG-9, MGT- 14,DIR-
6, DIR-12, MR-1, MR-2, MSC-1, MSC-3, MSC-4, GNL-3, ADT-1, NDH-1, NDH-2,
NDH-3;
(b) The following e-forms filed by companies, other than one person companies
and small companies, under sub-rule (1) of rule 9, shall be pre-certified in the following
manner, namely:—

743
Inserted by notification no. G.S.R. 297 (E) dated 28th April, 2014.

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The Companies (Registration Offices and Fees) Rules, 2014

(i) GNL-1 - optional pre-certification by the Chartered Accountant or the

Company Secretary or as the case may be the Cost Accountant, in whole-time
practice;
(ii) DPT-3 – certification by Auditors of the company;
(iii)MGT-10-certification by a Company Secretary in whole-time practice;
744
[(iv) AOC-4 certification by the Chartered Accountant or Company Secretary
or as the case may be by the Cost Accountant, in whole-time practice.]

(c) E-form DIR-3 shall be filed along with attestation of photograph, identity proof and
proof of residence of the applicant by the Chartered Accountant or the Company
Secretary or as the case may be the Cost Accountant, in whole-time practice.]

9. Maintaining documents electronically.-

[following sub-rule (1) substituted w.e.f. 28 April 2014. Notification making this
amendment is given below. Prior to substitution it read as “(1) The Central
Government shall set up and maintain a secure electronic registry in which all the
applications, financial statement, prospectus, return, register, memorandum,
articles, particulars of charges, or any particulars or returns or any other documents
filed under the Act to be electronically stored.”]
745
[(1) The Central Government shall set up and maintain a secure centralised
electronic registry in which all the applications, financial statement, prospectus,
return, register, memorandum, articles, particulars of charges, or any particulars or
returns or any other documents under the Act shall be filed and stored electronically.]

(2) Every document or certificate or notice or other document required to be registered

or authenticated by the Registrar or an officer of the Central Government under the
Act or rules made there under, shall be registered or authenticated through a valid
digital signature of such person or a system generated digital signature.

(3) The Registrar shall issue document, certificate, notice, receipt, approval or
communicate endorsement or acknowledgement in the electronic mode:
Provided that where the Registrar is not able to issue any certificate, receipt,
endorsement, acknowledgement or approval in electronic mode for the reasons to be
recorded in writing, he may issue such certificate or receipt or endorsement,
acknowledgement or approval in the physical form under manual signature affixing
seal of his office.

744
Substituted by notification no. G.S.R. 1049 (E) dated 07 November, 2016. Prior to substitution it read
as “(iv) AOC-4- certification by a Chartered Accountant in whole-time practice;”.

745
The sub-rule (1) of Rule 9 substituted w.e.f. 28 April 2014 vide notification number G.S.R. 297(E)
Prior to substitution it read as “(1) The Central Government shall set up and maintain a secure electronic
registry in which all the applications, financial statement, prospectus, return, register, memorandum,
articles, particulars of charges, or any particulars or returns or any other documents filed under the Act
to be electronically stored.”

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(4) The Registrar may send any document, certificate, notice or any other
communication to the company or its authorised representative or directors or both in
the electronic manner for which the company shall create and maintain at all times a
valid electronic addresses including email, user identifications capable of receiving
and acknowledging the receipt of the document, certificate, notice or other
communication, automated or otherwise.

10. Procedure on receipt of any application or form or document electronically.-

[Refer Circular 10/2014 dated 07 May 2014]

(1) The Registrar shall examine or cause to be examined every application or e-Form
or document required or authorised to be filed or delivered under the Act and rules
made thereunder for approval, registration, taking on record or rectification by the
Registrar, as the case may be:

Provided that save as otherwise provided in the Act, the Registrar shall take a
decision on the application, e-form or documents within thirty days from the date of its
filing excluding the cases in which an approval of the Central Government or the
Regional Director or any other competent authority is required:

Provided further that the e-Forms or documents identified as informative in

nature and filed under Straight Through Process may be examined by the Registrar at
any time on suo-motu or on receipt of any information or complaint from any source at
any time after its filing:

Provided also that nothing contained in the first proviso shall affect the powers
of the Registrar to call information or explanation in pursuance of section 206.

(2) Where the Registrar, on examining any application or e-Form or document referred
to in sub-rule (1), finds it necessary to call for further information or finds such application
or e-form or document to be defective or incomplete in any respect, he shall give
intimation of such information called for or defects or incompleteness, by e-mail on the
last intimated e-mail address of the person or the company, which has filed such
application or e-form or document, directing him or it to furnish such information or to
rectify such defects or incompleteness or to re-submit such application or e-Form or
document within the period allowed under sub-rule (3):

Provided that in case the e-mail address of the person or the company in
question is not available, the intimation shall be given by the Registrar by post at the
last intimated registered office address of the company or the last intimated address
of the person, as the case may be and the Registrar shall preserve the facts of the
intimation in the electronic record.

(3) Except as otherwise provided in the Act, the Registrar shall allow fifteen days’
time to the person or company which has filed the application or e-Form or document
under sub-rule (1) for furnishing further information or for rectification of the defects
or incompleteness or for re-submission of such application or e-form or document.

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The Companies (Registration Offices and Fees) Rules, 2014

746
[provided that no re-submission of the application is allowed in the case of
reservation of a name through web service – RUN]

(4) In case where such further information called for has not been provided or has
been furnished partially or defects or incompleteness has not been rectified or has
been rectified partially or has not been rectified as required within the period allowed
under sub-rule (3), the Registrar shall either reject or treat the application or e-form
or document, as the case may be, as invalid in the electronic record, and shall inform
the person or company, as the case may be, in the manner as specified in sub-rule
(2).

(5) Where any document has been recorded as invalid by the Registrar, the
document may be rectified by the person or company only by fresh filing along with
payment of fee and additional fee, as applicable at the time of fresh filing, without
prejudice to any other liability under the Act.

(6) In case the Registrar finds any e-form or document filed under Straight Through
Process as defective or incomplete in any respect, at any time suo-motu or on receipt
of information or compliant from any source at any time, he shall treat the e-form or
document as defective in the electronic registry and shall also issue a notice pointing
out the defects or incompleteness in the e-Form or document at the last intimated e-
mail address of the person or the company which has filed the document, calling
upon the person or company to file the e-Form or document afresh along with fee
and additional fee, as applicable at the time of actual re-filing, after rectifying the
defects or incompleteness within a period of thirty days from the date of the notice:
Provided that in case the e-mail address of the person or the company in
question is not available, the intimation shall be given by the Registrar by post at the
last intimated registered office address of the company or the last intimated address
of the person, as the case may be and the Registrar shall preserve the facts of the
intimation in the electronic record.
747
[(7) Any further information or documents called for, in respect of application or e-
form or document, filed electronically with the Ministry of Corporate Affairs shall be
furnished in Form No. GNL-4 as an addendum.]

11. Vacation or removal of directors.-

[Refer section 398]

(1) In the event of vacation or removal of directors before approving or invalidating Form
No DIR-12, the Registrar shall verify the documents as to correctness of contents and

746
Proviso to Rule 10(3) inserted vide notification number G.S.R. 48(E) dated 20th January 2018 w.e.f.
26th January 2018.

747
Inserted by Notification number G.S.R. 122 (E) dated 24 February 2015.

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The Companies (Registration Offices and Fees) Rules, 2014

whether adequate supporting documents namely, copy of board resolution, copy of

notices sent for calling board meeting or copy of minutes of board of directors reflecting
voted for or against.

(2) If the Registrar on verification of documents further finds that the company has
violated any of the provisions of the Act or rules, he shall refer the matter to the
Regional Director concerned, who shall enquire the matter by giving an opportunity to
the person who has been removed or vacated as director and convey the decision of
the matter to the Registrar within ninety days from the date of reference to him by the
Registrar.

12. Fees.-

[Refer section 399 and section 403]

(1) The documents required to be submitted, filed, registered or recorded or any fact
or information required or authorised to be registered under the Act shall be submitted,
filed, registered or recorded on payment of the fee or on payment of such additional
fee as applicable, as mentioned in Table annexed to these rules.

(2) For the purpose of filing the documents or applications for which no e-form is
prescribed under the various rules prescribed under the Act, the document or
application shall be filed through Form No. GNL-1 or GNL-2 along with fee as
applicable and in case a single form is prescribed for multiple purposes, the fee shall
be paid for each of the purposes contained in the single form.

(3) For the purpose of filing information to sub-clause (60) of section 2 of the Act, such
information shall be filed in Form No. GNL-3 along with fee as applicable.

13. Mode of Payment.-

[Refer section 399 and section 403]

The fees, charges or other sums payable for filing any application, form, return or any
other document in pursuance of the Act or any rule made thereunder shall be paid by
means of credit card; or internet banking; or remittance at the counter of the authorised
banks or any other mode as approved by the Central Government.

14. Inspection, production and evidence of documents kept by Registrar.-

[Refer section 398]

The inspection of the documents maintained in the electronic registry so set up in
pursuance of rule 9 and which are otherwise available for inspection under the Act or
rules made thereunder, shall be made by any person in electronic form.

15. Inspection of documents.-

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The Companies (Registration Offices and Fees) Rules, 2014

[Refer section 399]

Any person may –
(a) inspect any document kept by the Registrar, being documents filed or registered
by him in pursuance of this Act or the Companies Act, 1956 (1 of 1956) or making a
record of any fact required or authorised to be recorded or registered in pursuance of
this Act, on payment for each inspection of fee.
(b) require a certificate of incorporation of any company, or a copy or extract of any
other document or any part of any other document to be certified by the Registrar, on
payment of fee. [Refer Circular 5/2014]
748
[Provided that no person shall be entitled under section 399 to inspect or
obtain copies of resolutions referred to in clause (g) of sub-section (3) of section 117
of the Act.]

Annexure: Table of Fees

Table of Fees
[pursuant to rule 12 of the Companies (Registration of Offices and Fees) Rules,
2014]
I. Fee for filings etc. under section 403 of the Companies Act, 2013

Table of fees for the documents required to be submitted, filed, registered

or recorded or for any fact or information required or authorized to be registered
under the Act, shall be submitted filed, registered or recorded within the time
specified in the relevant provision on payment of fee as prescribed hereunder :—
749
[A. TABLE OF FEES TO BE PAID TO THE REGISTRAR

748
Inserted vide the Companies (Registration Offices and Fees) Second Amendment Rules, 2015
notification number G.S.R. 438 (E) dated the 29th May, 2015.

749
Table of fees substituted vide notification number G.S.R. 48 (E) dated 20th January 2018, w.e.f. 26th
January 2018. Prior to substitution it read as follows:

(I) In respect of a company having a share capital : Other than *OPC and
OPCs and Small
Small Companies
Companies
1. (a) For OPC and small companies whose nominal share capital --- 2000
does not exceeds Rs.10,00,000.
(b) For every Rs. 10,000 of nominal share capital or part of Rs. --- 200
10,000 after the first Rs. 10,00,000 and upto Rs. 50,00,000

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The Companies (Registration Offices and Fees) Rules, 2014

(c) For registration of a company whose nominal share capital 5000 ---
does not exceeds Rs. 1,00,000.

2. For registration of a company whose nominal share capital

exceeds Rs.1,00,000, the above fee of Rs. 5,000 with the following
additional fees regulated according to the amount of nominal capital
:
(a) for every Rs. 10,000 of nominal share capital or part of 400
Rs.10,000 after the first Rs.1,00,000 upto Rs.5,00,000
(b) for every Rs. 10,000 of nominal share capital or part of 300
Rs.10,000 after the first Rs.5,00,000 upto Rs.50,00,000
(c) for every Rs. 10,000 of nominal share capital or part of 100
Rs.10,000 after the first Rs.50,00,000 upto Rs. one crore
(d) for every Rs. 10,000 of nominal share capital or part of Rs. 75
10,000 after the first Rs. 1 crore.
Provided that where the additional fees, regulated according to the
amount of the nominal capital of a company, exceeds a sum of
rupees two crore and fifty lakh, the total amount of additional fees
payable for the registration of such company shall not, in any
case, exceed rupees two crore and fifty lakhs.
3. For filing a notice of any increase in the nominal share capital of a
company, the difference between the fees payable on the increased
share capital on the date of filing the notice for the registration of a
company and the fees payable on existing authorized capital, at the
rates prevailing on the date of filing the notice.
4. For registration of any existing company, except such companies
as are by this Act exempted from payment of fees in respect of
registration under this Act, the same fee is charged for registering a new
company.
5. For submitting, filing, registering or recording any document by this Act
required or authorised to be submitted, filed, registered or recorded

(a) in respect of a company having a nominal share capital of up to 200

1,00,000.

(b) in respect of a company having a nominal share capital of Rs. 300

1,00,000 or more but less than Rs.5,00,000.

(c) in respect of a company having a nominal share capital of Rs. 400

5,00,000 or more but less than Rs. 25,00,000
(d) in respect of a company having a nominal share capital of 500
Rs.25,00,000 or more but less than Rs. 1 crore or more.

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The Companies (Registration Offices and Fees) Rules, 2014

(e) in respect of a company having a nominal share capital of Rs. 600

1 crore or more.
6. For making a record of or registering any fact by this Act required or
authorised to be recorded or registered by the Registrar -
(a) in respect of a company having a nominal share capital of up to 200
1,00,000.
(b) in respect of a company having a nominal share capital of Rs. 300
1,00,000 or more but less than Rs.5,00,000.
(c) in respect of a company having a nominal share capital of Rs. 400
5,00,000 or more but less than Rs. 25,00,000
(d) in respect of a company having a nominal share capital of Rs. 500
25,00,000 or more but less than Rs. 1 crore or more.
(e) in respect of a company having a nominal share capital of Rs. 600
1 crore or more.

(II) In respect of a company not having a share capital:

7. For registration of a company whose number of members as 2000

stated in the articles of association, does not exceed 20
8. For registration of a company whose number of members as 5000
stated in the articles of association, exceeds 20 but does not exceed
200
9. For registration of a company whose number of members as
stated in the articles of association, exceeds 200 but is not stated to
be unlimited, the above fee of Rs.5,000 with an additional Rs.10 for
every member after first 200.
10. For registration of a company in which the number of members
is stated in the articles of association to be unlimited.
11. For registration of any increase in the number of members made after 10000
the registration of the company, the same fees as would have been
payable in respect of such increase, if such increase had been stated in
the articles of association at the time of registration :
Provided that no company shall be liable to pay on the whole a
greater fee than Rs. 10,000 in respect of its number of members,
taking into account the fee paid on the first registration of the
company.
12. For registration of any existing company except such companies as
are by this Act exempted from payment of fees in respect of registration
under this Act, the same fee as is charged for registering a new
company.

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The Companies (Registration Offices and Fees) Rules, 2014

(I) In respect of a company having a share capital: Other than *OPC and
OPCs and Small
Small Companies
Companies (in Rupees)
(in Rupees)
1. (a) For OPC and small companies whose nominal --- ---
share capital does not exceeds Rs.10,00,000.
(b) For registration of OPC and small companies whose --- 200
nominal share capital exceed Rs. 10,00,000, , the fee
of Rs. 2000 with the following additional fees regulated
according to the amount of nominal capital: For every
Rs.10,000 of nominal share capital or part of Rs.10,000
after the first Rs.10,00,000 and up to Rs. 50,00,000.
2. (a) For registration of a company (other than OPC and --- ----
small companies) whose nominal share capital is less
than or equal to Rs. 10,00,000 at the time of
incorporation.
(b) For registration of a company (other than OPC and ---
small companies) whose nominal share capital exceed
Rs. 10,00,000, the fee of Rs.36,000 with the following
additional fees regulated according to the amount of
nominal capital :

13. For filing or registering any document by this Act required or 200
authorized to be filed or registered with the Registrar.
14. For making a record of or registering any fact by this Act required or 200
authorized to be recorded or registered by the Registrar.

(1) The above table prescribed for small companies [as defined under section 2(85) of the Act] and
one person companies defined under Rule related to Chapter II r/w 2(62) of the Act shall be
applicable provided the said company shall remain as said class of company for a period not less
than one year from its incorporation.

(2) The above table of fee shall be applicable for any such intimation to be furnished to the Registrar or
any other officer or authority under section 159 of the Act, filing of notice of appointment of auditors or
Secretarial Auditor or Cost Auditor. [Correct section could have been section 139. However notification
uses words ‘section 159’ !]

(3) The above table of fee and calculation of fee as applicable for increase in authorised capital shall
be applicable for revised capital in accordance with sub-section (11) of 233 of the Act, (after setting
off fee paid by the transferor company on its authorised capital prior to its merger or amalgamation
with the transferee company).

(4) The above table of fee shall be applicable for filing revised financial statement or board report
under section 130 and 131 of the Act.

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The Companies (Registration Offices and Fees) Rules, 2014

(i) for every Rs. 10,000 of nominal share capital or part 300
of Rs.10,000 after the first Rs.5,00,000 upto
Rs.50,00,000
(ii) for every Rs. 10,000 of nominal share capital or part 100
of Rs.10,000 after the first Rs.50,00,000 upto Rs. one
crore
(iii) for every Rs. 10,000 of nominal share capital or part 75
of Rs. 10,000 after the first Rs. 1 crore.
Provided that where the additional fees, regulated
according to the amount of the nominal capital of a
company, exceeds a sum of rupees two crore and fifty
lakh, the total amount of additional fees payable for the
registration of such company shall not, in any case,
exceed rupees two crore and fifty lakhs.
3. For filing a notice of any increase in the nominal share
capital of a company, the difference between the fees
payable on the increased share capital on the date of
filing the notice for the registration of a company and the
fees payable on existing authorized capital, at the rates
prevailing on the date of filing the notice:
(a) For OPC and small companies whose nominal share --- 2000
capital does not exceed Rs. 10,00,000.
(b) For OPC and small companies, for every Rs. 10,000 --- 200
of nominal share capital or part of Rs. 10,000 after the
first Rs. 10,00,000 and upto Rs. 50,00,000.
Other than OPC and small companies (c) For increase in 5000
nominal capital of a company whose nominal share
capital does not exceed Rs. 1,00,000.
(d) For increase in nominal capital of a company whose
nominal share capital exceed Rs. 1,00,000, the above
fee of Rs. 5,000 with the following additional fees
regulated according to the amount of nominal capital :
(i) for every Rs. 10,000 of nominal share capital or part 400
of Rs. 10,000 after the first Rs. 1,00,000 upto Rs.
5,00,000.
(ii) for every Rs. 10,000 of nominal share capital or part 300
of Rs 10,000 after the first Rs. 5,00,000 upto Rs.
50,00,000.
(iii) for every Rs. 10,000 of nominal share capital or part 100
of Rs. 10,000 after the first Rs. 50,00,000 upto Rs. one
crore.
(iv) for every Rs. 10,000 of nominal share capital or part 75
of Rs. 10,000 after the first Rs. 1 crore.
Provided further that where the additional fees, regulated
according to the amount of the nominal capital of a
company, exceed a sum of rupees two crore and fifty
lakh, the total amount of additional fees payable for the
registration of such company shall not, in any case,
exceed rupees two crore and fifty lakhs.

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The Companies (Registration Offices and Fees) Rules, 2014

4. For registration of any existing company, except such

companies as are by this Act exempted from payment of
fees in respect of registration under this Act, the same fee
is charged for registering a new company.
5. For submitting, filing, registering or recording any document
by this Act required or authorised to be submitted, filed,
registered or recorded
(a) in respect of a company having a nominal share 200
capital of up to 1,00,000.
(b) in respect of a company having a nominal share 300
capital of Rs. 1,00,000 or more but less than
Rs.5,00,000.
(c) in respect of a company having a nominal share 400
capital of Rs. 5,00,000 or more but less than Rs.
25,00,000
(d) in respect of a company having a nominal share 500
capital of Rs.25,00,000 or more but less than Rs. 1
crore or more.
(e) in respect of a company having a nominal share 600
capital of Rs. 1 crore or more.
Provided that in case of companies to be incorporated
with effect from 26.01.2018 with a nominal capital
which does not exceed rupees ten lakhs fee shall not
be payable.
6. For making a record of or registering any fact by this Act
required or authorised to be recorded or registered by the
Registrar -
(a) in respect of a company having a nominal share 200
capital of up to 1,00,000.
(b) in respect of a company having a nominal share 300
capital of Rs. 1,00,000 or more but less than
Rs.5,00,000.
(c) in respect of a company having a nominal share 400
capital of Rs. 5,00,000 or more but less than Rs.
25,00,000
(d) in respect of a company having a nominal share 500
capital of Rs. 25,00,000 or more but less than Rs. 1
crore or more.
(e) in respect of a company having a nominal share 600
capital of Rs. 1 crore or more.
(II) In respect of a company not having a share
capital:

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The Companies (Registration Offices and Fees) Rules, 2014

7. For registration of a company whose number of ---

members as stated in the articles of association, does
not exceed 20
8. For registration of a company whose number of 5000
members as stated in the articles of association,
exceeds 20 but does not exceed 200
9. For registration of a company whose number of
members as stated in the articles of association,
exceeds 200 but is not stated to be unlimited, the
above fee of Rs.5,000 with an additional Rs.10 for
every member after first 200.
10. For registration of a company in which the number 10000
of members is stated in the articles of association to be
unlimited.
11. For registration of any increase in the number of
members made after the registration of the company, the
same fees as would have been payable in respect of such
increase, if such increase had been stated in the articles of
association at the time of registration :
Provided that no company shall be liable to pay on the
whole a greater fee than Rs. 10,000 in respect of its
number of members, taking into account the fee paid on
the first registration of the company.
12. For registration of any existing company except such
companies as are by this Act exempted from payment of
fees in respect of registration under this Act, the same fee
as is charged for registering a new company.
13. For filing or registering any document by this Act 200
required or authorized to be filed or registered with the
Registrar.
Provided that in case of companies to be incorporated
with effect from 26.01.2018 whose number of members
as stated in the articles of association, does not exceed
20, fee shall not be payable.
14. For making a record of or registering any fact by this Act 200
required or authorized to be recorded or registered by the
Registrar.

(1) The above table prescribed for small companies [as defined under section 2(85)
of the Act] and one person companies defined under Rule related to Chapter II read
with section 2(62) of the Act shall be applicable provided the said company shall
remain as said class of company for a period not less than one year from its
incorporation.

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The Companies (Registration Offices and Fees) Rules, 2014

(2) The above table of fee shall be applicable for any such intimation to be furnished to
the Registrar or any other officer or authority under section 159 of the Act, filing of notice
of appointment of auditors or Secretarial Auditor or Cost Auditor. [Correct section could
have been section 139. However notification uses words ‘section 159’ !]

(3) The above table of fee and calculation of fee as applicable for increase in
authorised capital shall be applicable for revised capital in accordance with sub-
section (11) of 233 of the Act, (after setting off fee paid by the transferor company
on its authorised capital prior to its merger or amalgamation with the transferee
company).

(4) The above table of fee shall be applicable for filing revised financial statement
or board report under section 130 and 131 of the Act.
750
[B. Following Table of additional fee shall be applicable for delay in filing of forms
other than for increase in Nominal Share Capital or forms under section 92/137 of
the Act.

750
Substituted sub-item (B) in item I to the Annexure vide notification no. G.S.R. 435 (E) dated 07
May 2018. Prior to substitution, it read as: “B. Following table of additional fees shall be
applicable for delays in filing of the forms other than for increase in Nominal Share Capital

Sl no Period of delays Forms including charge documents

01 up to 15 days (sections 93,139 and 157) One time

02 More than 15 days and up to 30 days (Sections 93, 139 2 times of normal filing fees
and 157) and up to 30 days in remaining forms.

03 More than 30 days and up to 60 days 4 times of normal filing fees

04 More than 60 days and up to 90 days 6 times of normal filing fees

05 More than 90 days and up to 180 days 10 times of normal filing fees

06 More than 180 days and up to 270 days 12 times of normal filing fees

Note:-(1) The additional fee shall also applicable to revised financial statement or board’s report under
sections 130 and 131 of the Act and secretarial audit report filed by the company secretary in practice
under section 204 of the Act.

(2) The belated filing of documents/forms (including increasing in nominal capital and delay caused
thereon) which were due to be filed whether in Companies Act, 1956 Act or the Companies Act, 2013
Act i.e. due for filing prior to notification of these fee rules, the fee applicable at the time of actual filing
shall be applicable.

(3) Delay beyond 270 days, the second proviso to sub-section (1) of section 403 of the Act may be
referred.”.

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The Companies (Registration Offices and Fees) Rules, 2014

TABLE
751
Sl. Period of delays [Forms excluding
No. charge documents]
01 Upto 15 days (sections 139 and 157) One time
02 More than 15 days and upto 30 days 2 times of normal fees
(Sections 139 and 157)
03 More than 30 days and upto 60 days 4 times of normal fees
04 More than 60 days and upto 90 days 6 times of normal fees
05 More than 90days and upto 180 days 10 times of normal fees
06 Beyond 180 days 12 times of normal fees

Note.- The belated filing of documents/forms (including increasing in nominal

capital and delay caused thereon) which were due to be filed whether in Companies
Act, 1956 Act or the Companies Act, 2013 Act i.e. due for filing prior to notification
of these fee rules , the fee payable at the time of actual filing shall be applicable.]

C. For increase in authorised capital, the additional fees shall be applicable at the
following rates:-

Delay upto 6 months Delay beyond 6 months

slab 2.5 % per month on the fees payable 3% per month on the fees payable under
under para I.3 or II.12 of Table A para I.3 or II.12 of Table A above as the
above as the case may be. case may be.

(1) The above fee table shall also be applicable for delay in filing application
with Registrar under subsection (11) of section 233 of the Act.
752
[D. For Forms under section 92 or 137:-
(i) In case the period within which a document required to be submitted under section
92 or 137 of the Act expires after 30/06/2018, the additional fee mentioned in Table
shall be payable:-

Sl. Period of delays Additional fee payable

No. (in Rs.)
01 Delay beyond period provided under One Hindered per day
Section 92(4) of the Act

751
Substituted for “Forms including charge documents” vide notification number G.S.R. 340(E) dated
30th April, 2019.

752
Inserted sub-item (D) in Item I vide notification no. G.S.R. 435(E) dated 07th May 2018.

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The Companies (Registration Offices and Fees) Rules, 2014

02 Delay beyond period provided under One Hindered per day

Section 137(1) of the Act

753
[ E. Fees for filing charge documents.
(a) charges created or modified before the 2nd November, 2018, and allowed to be
filed within a period of three hundred days of such creation or six months from the 2nd
November, 2018, as the case may be, the following additional fees shall be payable:-

Sl. Period of delays Additional fee payable

No. (in Rs.)
1 Upto 30 days 2 times of normal fees
2 More than 30 days and upto 60 days 4 times of normal fees
3 More than 60 days and upto 90 days 6 times of normal fees
4 More than 90 days and upto 180 days 10 times of normal fees
5 More than 180 days 12 times of normal fees

(b) For the charges created or modified on or after the 2nd November, 2018:-
(A) The following additional fees or advalorem fees, as the case may be, shall
be payable up to 31st July, 2019, by all companies:-

Sl. Period of delays Additional fee payable

No. (in Rs.)
1 Upto 30 days 2 times of normal fees
2 More than 30 days and upto 60 days 4 times of normal fees
3 More than 60 days and upto 90 days 6 times of normal fees

(B) the following additional fees or advalorem fees as the case may be, shall
be payable with effect from 1st August, 2019:-
Sl. Period of delay Small Comapnies and One Other than Small
No. Person Company Companies and One
Person Company
1 Upto 30 days 3 times of normal fees 6 times of normal fees
2 More than 30 3 times of normal fees plus 6 times of normal fees,
days and up to 90 an ad valorem fee of 0.025 plus an ad valorem fee of
days per cent. of the amount 0.05 per cent. of the
secured by the charge, amount secured by the
subject to the maximum of charge, subject to the
one lakh rupees maximum of five lakh
rupees

753
Inserted sub-item (E) in Item I vide notification number G.S.R. 340(E) dated 30th April, 2019.

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The Companies (Registration Offices and Fees) Rules, 2014

(ii) In all other cases where the belated annual returns or balance sheet/financial
statement which were due to be filed whether in the Companies Act, 1956 or the
Companies Act, 2013 the following additional fee mentioned in Table shall be payable:

Sl. No. Period of delays Additional fee

payable (in Rs.) upto
30/06/2018
01 Upto 30 days 2 times of normal
filing fees
02 More than 30 days and upto 60 4 times of normal Plus Rs.100
days filing fees per day with
03 More than 60 days and upto 90 6 times of normal effect from
days filing fees 01/07/2018
05 More than 90days and upto 180 10 times of normal
days filing fees
06 Beyond 180 days 12 times of normal
filing fees

Note: (1) The additional fee shall also be applicable to revised financial statement or
board’s report under section 130 and 131 of the Act and secretarial audit report filed
by the company secretary in practice under section 204 of the Act. (2) The belated
filing of documents/forms (including increasing in nominal capital and delay caused
thereon) which were due to be filed whether in Companies Act, 1956 Act or the
Companies Act, 2013 Act i.e. due for filing prior to notification of these fee rules, the
fee payable at the time of actual filing shall be applicable.]

II. FEE ON APPLICATIONS (including Appeal) made to Central Government

under sub-section (2) of Section 459 of the Companies Act, 2013.

1 For Application made Other than OPCs OPC and

and Small
Small Companies Companies

By a company having an authorized share

(i) capital of:
a) Upto Rs. 25,00,000 2,000 1000
b) More thanRs.25,00,000 and upto
5,000 2500
Rs.50,00,000
c) More than 50,00,000 and upto Rs.
5,00,00,000 10,000 ---
d) More than Rs. 5,00,00,000 and upto Rs. 10 15,000
crores
e) More than Rs. 10 crores 20,000 ---

(ii) By a company limited by guarantee but not 2,000 ---

having a share capital
(iii) By an Association or proposed company for 2,000 ---
issue of license under section 8 of the Act

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 Chapter XXIV [Sections 396 to 404]

The Companies (Registration Offices and Fees) Rules, 2014

(iv) By a company having a valid license issued 2000 ---

under
8 of thesection
Act
(v) By a foreign company 5,000 ---
754
[(v Application for allotmentof Director Identification 500 500
i) Number (DIN) under section 153 of the Act
(vii) (vii) For surrender of Director Identification
Number under Rule 11(f) of the Companies 1000 1000]
(Appointment and Qualification of Director)
Rules, 2014

(1) Every application to the Registrar of Companies filed by any person for
reservation of name under sub-section (4) of section 4 of the Companies
Act, 2013 shall be accompanied with the fee of Rs.1,000.
(2) For every application made to Regional Director (including appeal) or
Registrar of Companies (except specifically stated elsewhere), Table of
fees as above shall be applicable.
Note: The separate fee schedule shall be prescribed under sub-section
(2) of section 459 of the Act for applications to be filed before Tribunal.

III. Annual Fee payable by a dormant company under sub-section (5) of section
455 of the Companies Act, 2013.

1 For Application made Other than OPCs OPC and

and small
Small Companies companies

(i) By a company having an authorized share

capital of:
a) Upto Rs. 25,00,000 2,000 1000

b) More than Rs.25,00,000 and upto 5,000 2500

Rs.50,00,000

c) More than 50,00,000 and upto Rs. 10,000 ---

5,00,00,000
d) More than Rs. 5,00,00,000 and upto Rs. 10 15,000 ---
crores

e) More than Rs. 10 crores 20,000 ---

(ii) By a company limited by guarantee but not 2,000 ---
having a share capital

754
Sub-item (vi) substituted by notification no. G.S.R. 1049(E) dated 07 November, 2016. Prior to
substitution fees of Rs.500 was prescribed under sub-item (vi) for companies other than OPCs and
small companies. New sub-item (vii) is inserted by the notification ibid.

Page 1290
 Chapter XXIV [Sections 396 to 404]

The Companies (Registration Offices and Fees) Rules, 2014

IV. Fee for Inspection and providing certified copies of documents kept by the
Registrar under section 399 of the Act.

(i) Under clause (a) of sub-section (1) of section 399 of the Act [for online inspection]
– Rs.100
(ii) Under clause (b) of sub-section (1) of section 399 of the Act [certified by ROC]
(a) For copy of Certificate of Incorporation – Rs.100
(b) For copy or extract of other documents including hard copy of such
document on computer readable media – Rs. 25 per page.

V. Fee for registration of documents under section 385 of the Act.

Rs. 6000 for each document. [for Foreign companies]

VI. Fees for Removal of Names of Companies from the Registrar of Companies
under section 248 (2) of the Act.

Rs. 5000.

755
[VII. FEE FOR FILING e- Form DIR-3 KYC under rule 12A of the Companies
(Appointment and Qualification of Directors) Rules, 2014.

(i) Subject to serial number (iii) below, ---

fee payable till the 30th September of
every financial year in respect of e-form
DIR-3 KYC or DIR-3 KYC- WEB through
web service, as the case may be, for the
immediate previous financial year.

(ii) Fee payable (in delayed case). Rs.5000

(iii) Fee payable if the individual failed to Rs.5000
file e-form DIR-3 KYC or DIR-3 KYC-
WEB through web service, as the case

755
Substitutued vide notification number G.S.R. 527(E) dated 25th July 2018, w.e.f. 05th August 2019.
Prior to its substitution it was inserted by notification number G.S.R. 616(E) dated 05th July 2019 and
rad as “ 755 [VII. FEE FOR FILING e- Form DIR-3 KYC under rule 12A of the Companies
(Appointment and Qualification of Directors) Rules, 2014.

i) Fee payable till the 30th April of every financial ---

year in respect of e-form DIR-3 KYC as at the
31st March of immediate previous year.
ii) Fee payable (in delayed case). Rs.5000

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 Chapter XXIV [Sections 396 to 404]

The Companies (Registration Offices and Fees) Rules, 2014

may be, for the immediate previous

financial year (in delayed case).
756
[ Note: During the financial year (2018-2019), fee of rupees five hundred shall be
payable from 21.09.2018 to 05.10.2018 and fee of rupees five thousand shall be
payable on or after 06.10.2018.]

757
[VIII. FEE FOR FILING e- Form ACTIVE under rule 25A of the Companies
(Incorporation) Rules, 2014.

i) Fee payable till the 758[15.6.2019] on ---

e-form ACTIVE.
ii) Fee payable (in delayed case). Rs.10,000

INSTRUCTIONS
1.Payment of fees - Except as otherwise provided elsewhere, the table of fees
annexed to the Companies (Registration Offices and Fees), Rules 2014, shall be
payable in the following head.

(1) fees payable to the Registrar in pursuance of the Act or any rule or regulation
made or notification issued thereunder shall be paid to the Registrar on any
authorized bank by the Ministry of Corporate Affairs and acting as the agent of the
Reserve Bank of India for credit under the following head, namely : -

Major Alphanumeric code Account Code Serial Code Sourcecategory

Head description check digit

1475 Other general 147500105 14750006 113

Economic service
Regulation of joint stock
companies
(a) Registration fees 14750010599 14750032 114
(b) Filing fees 14750010598 14750033 117
(c) inspection and 14750010597 14750034 112
copying fee

756
Substituted for the note by notification no. G.S.R. 905(E) dated 20th September 2018. Prior to
substitution, it read as “for the current financial year (2018-2019), no fee shall be chargeable till the
15th September 2018 and fee of Rs.500 shall be payable on or after 16th September 2018”. And prior
to that it was inserted by notification number G.S.R. 616(E) dated 05th July 2018 and read as “Note :
For the current financial (2018-2019), no fee shall be chargeable till the 31st August, 2018 and fee of
Rs.5000 shall be payable on or after the 1st September, 2018”.

757
Inserted by the Companies (Registration Offices and Fees) Amendment Rules, 2019 vide notification
number G.S.R. 143(E) dated 21st February 2019, w.e.f. 25 February 2019.

758
Replaced for 25.4.2019 by by the Companies (Registration Offices and Fees) Second Amendment
Rules, 2019 vide notification number G.S.R. 329(E) dated 25th April 2019, w.e.f. 25 April 2019.

Page 1292
 Chapter XXIV [Sections 396 to 404]

The Companies (Registration Offices and Fees) Rules, 2014

(d) other fees 14750010596 14750035 119

(2) Where application is filed through electronic media or through any other
computer readable media, the user may choose any one of the following payment
options namely, (i) Credit Card; or (ii) Internet Banking; or (iii) Remittance at the
Bank Counter or (iv) any other mode as approved by the Central Government. The
requisite fee as specified in Companies (Registration Offices and Fees), Rules
2014 shall be payable through any of the accredited branches of the following
Banks.
(a) Punjab National Bank
(b) State Bank of India
(c) Indian Bank
(d) ICICI Bank
(e) HDFC Bank
(f) Union Bank of India”
(3) The fees payable to the Registrars may be paid bank drafts payable at drawn
on banks, located at the same city or town as the office of the Registrar :

(4) Where a fee payable to the Registrar is paid through bank drafts as,
aforesaid it shall not be deemed to have been paid unless and until the relevant
drafts are cashed and the amount credited."

Forms Notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html.]

Page 1293
 Chapter XXIV [Sections 396 to 404]

The Companies (Registration Offices and Fees) Rules, 2014

New form GNL-1 and GNL-4 notified vide notification number G.S.R. 493(E) dated 07
May, 2016.
Form No. GNL-1
Form No. GNL-2
Form No. GNL-3
Form No. GNL-4

Page 1294
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

Chapter XXVI: Nidhi Rules

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 31st March, 2014
G.S.R. 258(E).—In exercise of the powers conferred under sub-section (1) of Section
406 read with subsections (1) and (2) of 469 of the Companies Act, 2013, the Central
Government hereby makes the following rules, namely:—

1. Short title and commencement.—

(1) These Rules may be called Nidhi Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Application.—

These rules shall apply to,—

(a) every company which had been declared as a Nidhi or Mutual Benefit Society
under sub-section (1) of Section 620A of the Companies Act, 1956;

(b) every company functioning on the lines of a Nidhi company or Mutual Benefit
Society but has either not applied for or has applied for and is awaiting notification to
be a Nidhi or Mutual Benefit Society under sub-Section (1) of Section 620A of the
Companies Act, 1956; and

(c) every company incorporated as a Nidhi pursuant to the provisions of Section 406 of the
Act.
759
[(d) every company declared as Nidhi or Mutual Benefit Society under sub-section (1)
of section 406 of the Act]

3. Definitions.—

(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Doubtful Asset” means a borrowal account which has remained a Non-
performing asset for more than two years but less than three years;

759
Inserted clause (d) in Rule 2 by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide
notification no. G.S.R. 467(E) dated 1st July 2019.

Page 1295
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(c) “Loss Asset” means a borrowal account which has remained a Non-performing
asset for more than three years or where in the opinion of the Board, a shortfall in
the recovery of the loan account is expected because the documents executed may
become invalid if subjected to legal process or for any other reason;

(d) “Net Owned Funds” means the aggregate of paid up equity share capital and
free reserves as reduced by accumulated losses and intangible assets appearing
in the last audited balance sheet:
Provided that the amount representing the proceeds of issue of preference
shares shall not be included for calculating Net Owned Funds.
760
[‘(da) “Nidhi” means a company which has been incorporated as a Nidhi with the
object of cultivating the habit of thrift and savings amongst its members, receiving
deposits from, and lending to, its members only, for their mutual benefit, and which
complies with the rules made by the Central Government for regulation of such
class of companies.]

(e) “Non-Performing Asset” means a borrowal account in respect of which interest

income or instalment of loan towards re payment of principal amount has remained
unrealised for twelve months;

(f) “Standard Asset” means the asset in respect of which no default in re-payment
of principal or payment of interest has occurred or is perceived and which has
neither shown signs of any problem relating to re-payment of principal sum or
interest nor does it carry more than normal risk attached to the business;

(g) “Sub-Standard Asset” means a borrowal account which is a Non-performing asset:

Provided that reschedulement or renegotiation or rephasement of the loan
instalment or interest payment shall not change the classification of an asset unless
the borrowal account has satisfactorily performed for at least twelve months after
such reschedulement or renegotiation or rephasement.

(2) Words and expressions used herein, but not defined in these rules and defined in
the Act or in the Companies (Specification of definitions details) Rules, 2014 shall have
the same meaning as assigned to them in the Act or in the said Rules.

761
[ 3A. Declaration of Nidhis .─

The Central Government, on receipt of application (in Form NDH-4 along with fee
thereon) of a public company for declaring it as Nidhi and on being satisfied that the

760
Inserted clause (da) in Rule 3 by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide
notification no. G.S.R. 467(E) dated 1st July 2019.

761
Inserted Rule 3A by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide notification no.
G.S.R. 467(E) dated 1st July 2019.

Page 1296
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

company meets the requirements under these rules, shall notify the company as a
Nidhi in the Official Gazette:
Provided that a Nidhi incorporated under the Act on or after the commencement
of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within sixty days from
the date of expiry of:-
(a) one year from the date of its incorporation; or
(b) the period up to which extension of time has been granted by the Regional
Director under sub-rule (3) of rule 5:

Provided further that nothing in the first proviso shall prevent a Nidhi from filing
Form NDH-4 before the period referred therein:

Provided also that that in case a company does not comply with the
requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to
Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).]

4. Incorporation and incidental matters.—

(1) A Nidhi 762[*] shall be a public company and shall have a minimum paid up equity
share capital of five lakh rupees.

(2) On and after the commencement of the Act, no Nidhi shall issue preference shares.

(3) If preference shares had been issued by a Nidhi before the commencement of this
Act, such preference shares shall be redeemed in accordance with the terms of issue
of such shares.

(4) Except as provided under the proviso to sub-rule (e) to rule 6, no Nidhi shall have any
object in its Memorandum of Association other than the object of cultivating the habit of thrift
and savings amongst its members, receiving deposits from, and lending to, its members
only, for their mutual benefit.

(5) Every 763[*] “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.

5. Requirements for minimum number of members, net owned fund etc.—

762
Words ‘to be incorporated under the Act’ in Rule 4(1) omitted by the Nidhi Amendment Rules 2019
w.e.f. 15th August 2019 vide notification no. G.S.R. 467(E) dated 1st July 2019.

763
Words ‘Company incorporated as a’ in Rule 4(5) omitted by the Nidhi Amendment Rules 2019 w.e.f.
15th August 2019 vide notification no. G.S.R. 467(E) dated 1st July 2019.

Page 1297
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(1) Every Nidhi shall, within a period of one year 764[from the date of its incorporation],
ensure that it has—
(a) not less than two hundred members;
(b) Net Owned Funds of ten lakh rupees or more;
(c) unencumbered term deposits of not less than ten per cent of the outstanding
deposits as specified in rule 14; and
(d) ratio of Net Owned Funds to deposits of not more than 1:20.

(2) Within ninety days from the close of the first financial year after its incorporation and
where applicable, the second financial year, Nidhi shall file a return of statutory compliances
in Form NDH-1 along with such fee as provided in Companies (Registration Offices and
Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a
chartered accountant in practice or a cost accountant in practice.

(3) If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1) above, it shall within
thirty days from the close of the first financial year, apply to the Regional Director in
Form NDH-2 along with fee specified in Companies (Registration Offices and Fees)
Rules, 2014 for extension of time and the Regional Director may consider the
application and pass orders within thirty days of receipt of the application.
765
[Provided that the Regional Director may extend the period upto one year from
the date of receipt of application.]

Explanation.—For the purpose of this rule “Regional Director” means the person
appointed by the Central Government in the Ministry of Corporate Affairs as a Regional
Director;

(4) If the failure to comply with sub-rule (1) of this rule extends beyond the second
financial year, Nidhi shall not accept any further deposits from the commencement of
the second financial year till it complies with the provisions contained in sub-rule (1)
766
[and get itself declared under sub-section(1) of section 406], besides being liable
for penal consequences as provided in the Act.

6. General restrictions or prohibitions.—

No Nidhi shall—

Substitutued for the words ‘from the commencement of these rules’ in Rule 5(1) by the Nidhi
764

Amendment Rules 2019 w.e.f. 15th August 2019 vide notification no. G.S.R. 467(E) dated 1st July 2019.

765
Proviso to Rule 5(3) inserted by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide
notification no. G.S.R. 467(E) dated 1st July 2019.

766
Inserted in Rule 5(4) by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide notification
no. G.S.R. 467(E) dated 1st July 2019.

Page 1298
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(a) carry on the business of chit fund, hire purchase finance, leasing finance, insurance
or acquisition of securities issued by any body corporate;

(b) issue preference shares, debentures or any other debt instrument by any name or in
any form whatsoever;

(c) open any current account with its members;

(d) acquire another company by purchase of securities or control the composition of the
Board of Directors of any other company in any manner whatsoever or enter into any
arrangement for the change of its management, unless it has passed a special
resolution in its general meeting and also obtained the previous approval of the
Regional Director having jurisdiction over such Nidhi;

Explanation.—For the purposes of this sub-rule, “control” shall have the same
meaning assigned to it in clause (27) of section 2 of the Act;

(e) carry on any business other than the business of borrowing or lending in its own name:
Provided that Nidhis which have adhered to all the provisions of these rules
may provide locker facilities on rent to its members subject to the rental income from
such facilities not exceeding twenty per cent of the gross income of the Nidhi at any
point of time during a financial year.

(f) accept deposits from or lend to any person, other than its members;

(g) pledge any of the assets lodged by its members as security;

(h) take deposits from or lend money to any body corporate;

(i) enter into any partnership arrangement in its borrowing or lending activities;

(j) issue or cause to be issued any advertisement in any form for soliciting deposit:
Provided that private circulation of the details of fixed deposit Schemes among the
members of the Nidhi carrying the words “for private circulation to members only”
shall not be considered to be an advertisement for soliciting deposits.

(k) pay any brokerage or incentive for mobilising deposits from members or for
deployment of funds or for granting loans.

7. Share capital and allotment.—

Page 1299
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(1) Every Nidhi shall issue 767[fully paid-up] equity shares of the nominal value of not
less than ten rupees each:
Provided that this requirement shall not apply to a company referred to in sub-rules
(a) and (b) of rule 2.

(2) No service charge shall be levied for issue of shares.

(3) Every Nidhi shall allot to each deposit holder at least a minimum of ten equity
shares or shares equivalent to one hundred rupees:
Provided that a savings account holder and a recurring deposit account holder
shall hold at least one equity share of rupees ten.

8. Membership.—

(1) A Nidhi shall not admit a body corporate or trust as a member.

(2) Except as otherwise permitted under these rules, every Nidhi shall ensure that its
membership is not reduced to less than two hundred members at any time.

(3) A minor shall not be admitted as a member of Nidhi:

Provided that deposits may be accepted in the name of a minor, if they are
made by the natural or legal guardian who is a member of Nidhi.

9. Net owned funds.—

Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any
preference share capital) of not less than ten lakh rupees or such higher amount as
the Central Government may specify from time to time.

10. Branches.—

(1) A Nidhi may open branches, only if it has earned net profits after tax continuously
during the preceding three financial years.

(2) Subject to the provisions contained in sub-rule (1), a Nidhi may open up to three
branches within the district.

(3) If a Nidhi proposes to open more than three branches within the district or any
branch outside the district, it shall obtain the prior permission of the Regional Director
and an intimation is to be given to the Registrar about opening of every branch within
thirty days of such opening.

767
Inserted in Rule 7(1) by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide notification
no. G.S.R. 467(E) dated 1st July 2019.

Page 1300
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(4) No Nidhi shall open branches or collection centres or offices or deposit centres, or
by whatever name called outside the State where its registered office is situated.

(5) No Nidhi shall open branches or collection centres or offices or deposit centres, or
by whatever name called unless financial statement and annual return (up to date) are
filed with the Registrar.

(6) A Nidhi shall not close any branch unless it—

(a) publishes an advertisement in a newspaper in vernacular language in the
place where it carries on business at least thirty days prior to such closure,
informing the public about such closure;
(b) fixes a copy of such advertisement or a notice informing such closure of the
branch on the notice board of Nidhi for a period of at least thirty days from the date
on which advertisement was published under clause (a) ; and
(c) gives an intimation to the Registrar within thirty days of such closure.

11. Acceptance of deposits by Nidhis.—

(1) A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds
(NOF) as per its last audited financial statements.

(2) In the case of companies covered under clauses (a) and (b) of rule 2 and existing on or
before 26th July, 2001 and which have accepted deposits in excess of the aforesaid limits,
the same shall be restored to the prescribed limit by increasing the Net Owned Funds
position or alternatively by reducing the deposit according to the table given below:

TABLE

Ratio of Net Owned Funds to Deposits (as Date by which the company has to achieve
on 31.3. 2013) prescribed ceiling of 1:20
a) More than 1:20 but up to 1:35 By 31.3 2015
b) More than 1:35 but up to 1:45 By .31.3 2016
c) More than 1:45 By .31.3 2017
.
(3) The companies which are covered under the Table in sub-rule (2) above shall not
accept fresh deposits or renew existing deposits if such acceptance or renewal leads
to violation of the prescribed ratio.

(4) The ratio specified in sub-rule (2) above shall also apply to incremental deposits.

12. Application form for deposit.—

(1) Every application form for placing a deposit with a Nidhi shall contain the following
particulars, namely:—
(a) Name of Nidhi;
Page 1301
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(b) Date of incorporation of Nidhi;

768
[(ba) The date of declaration or notification as Nidhi;]
(c) The business carried on by Nidhi with details of branches, if any;
(d) Brief particulars of the management of Nidhi (name, addresses and
occupation of the directors, including DIN);
(e) Net profits of Nidhi before and after making provision for tax for the preceding
three financial years;
(f) Dividend declared by Nidhi during the preceding three financial years;
(g) Mode of repayment of the deposit;
(h) Maturity period of the deposit;
(i) Interest payable on the deposit;
(j) The rate of interest payable to the depositor in case the depositor withdraws the
deposit prematurely;
(k) The terms and conditions subject to which the deposit may be accepted or
renewed;
(l) A summary of the financials of the company as per the latest two audited
financial statements as given below:
(i) Net Owned Funds
(ii) Deposits accepted
(iii) Deposits repaid
(iv) Deposits claimed but remaining unpaid
(v) Loans disbursed against—
(a) immovable property;
(b) deposits; and
(c) gold and jewellery
(vi) Profit before tax
(vii) Provision for tax
(viii) Profit after tax
(ix) Dividend per share
(m) any other special features or terms and conditions subject to which the
deposit is accepted or renewed.

(2) The application form shall also contain the following statements, namely:—
(a) in case of Non-payment of the deposit or part thereof as per the terms and
conditions of such deposit, the depositor may approach the 769[Bench of the
National Company Law Tribunal] having jurisdiction over Nidhi;
(b) in case of any deficiency of Nidhi in servicing its depositors, the depositor may
approach the National Consumers Disputes Redressal Forum, the State
Consumers Disputes Redressal Forum or District Consumers Disputes
Redressal Forum, as the case may be, for redressal of his relief;

768
Inserted clause (ba) in Rule 12(1) by the Nidhi Amendment Rules 2019 w.e.f. 15th August 2019 vide
notification no. G.S.R. 467(E) dated 1st July 2019.

769
Substituted for ‘Registrar of companies’ in Rule 12(2)(a) by the Nidhi Amendment Rules 2019 w.e.f.
15th August 2019 vide notification no. G.S.R. 467(E) dated 1st July 2019.

Page 1302
 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(c) a declaration by the Board of Directors to the effect that the financial position of
Nidhi as disclosed and the representations made in the application form are
true and correct and that Nidhi has complied with all the applicable rules;
(d) a statement to the effect that the Central Government does not undertake any
responsibility for the financial soundness of Nidhi or for the correctness of any
of the statement or the representations made or opinions expressed by Nidhi;
(e) the deposits accepted by Nidhi are not insured and the repayment of deposits
is not guaranteed by either the Central Government or the Reserve Bank of
India; and
(f) a verification clause by the depositor stating that he had read and understood
the financial and other particulars furnished and representations made by Nidhi
in his application form and after careful consideration he is making the deposit
with Nidhi at his own risk and volition.

(3) Every Nidhi shall obtain proper introduction of new depositors before opening their
accounts or accepting their deposits and keep on its record the evidence on which it has
relied upon for the purpose of such introduction.

(4) For the purposes of introduction of depositors, a Nidhi shall obtain documentary
evidence of the depositor in the form of proof of identity and address as under:
(a) Proof of Identity (any one of the following)
(i) Passport
(ii) Unique Identification Number
(iii) Income-tax PAN card
(iv) Elector Photo Identity Card
(v) Driving licence
(vi) Ration card
(b) Proof of address (any one of the following)
(i) Passport
(ii) Unique Identification Number
(iii) Elector Photo Identity Card
(iv) Driving licence
(v) Ration card
(vi) Telephone bill
(vii) Bank account statement
(viii) Electricity bill
(documents referred to serial numbers (vi), (vii) and (viii) above shall not be more than
two months old)

13. Deposits.—

(1) The fixed deposits shall be accepted for a minimum period of six months and a
maximum period of sixty months.

(2) Recurring deposits shall be accepted for a minimum period of twelve months and
a maximum period of sixty months.

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(3) In case of recurring deposits relating to mortgage loans, the maximum period of
recurring deposits shall correspond to the repayment period of such loans granted by
Nidhi.

(4) The maximum balance in a savings deposit account at any given time qualifying
for interest shall not exceed one lakh rupees at any point of time and the rate of interest
shall not exceed two per cent above the rate of interest payable on savings bank
account by nationalised banks.

(5) A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the
maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking
Financial Companies can pay on their public deposits.

(6) A fixed deposit account or a recurring deposit account shall be foreclosed by the
depositor subject to the following conditions, namely:—
(a) a Nidhi shall not repay any deposit within a period of three months from the date
of its acceptance;
(b) where at the request of the depositor, a Nidhi repays any deposit after a period
of three months, the depositor shall not be entitled to any interest up to six
months from the date of deposit;
(c) where at the request of the depositor, a Nidhi makes repayment of a deposit before
the expiry of the period for which such deposit was accepted by Nidhi, the rate of
interest payable by Nidhi on such deposit shall be reduced by two per cent from the
rate which Nidhi would have ordinarily paid, had the deposit been accepted for the
period for which such deposit had run:
Provided that in the event of death of a depositor, the deposit may be repaid
prematurely to the surviving depositor or depositors in the case of joint holding
with survivor clause, or to the nominee or to legal heir with interest up to the
date of repayment at the rate which the company would have ordinarily paid,
had such deposit been accepted for the period for which such deposit had run.

14. Un-encumbered term deposits.—

Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits
with a Scheduled commercial bank (other than a co-operative bank or a regional rural
bank), or post office deposits in its own name an amount which shall not be less than ten
per cent of the deposits outstanding at the close of business on the last working day of the
second preceding month:
Provided that in cases of unforeseen commitments, temporary withdrawal may be
permitted with the prior approval of the Regional Director for the purpose of repayment to
depositors, subject to such conditions and time limit which may be specified by the Regional
Director to ensure restoration of the prescribed limit of ten per cent.

15. Loans.—

(1) A Nidhi shall provide loans only to its members.

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The Nidhi Rules, 2014

(2) The loans given by a Nidhi to a member shall be subject to the following limits,
namely:—
(a) two lakh rupees, where the total amount of deposits of such Nidhi from its
members is less than two crore rupees;
(b) seven lakh fifty thousand rupees, where the total amount of deposits of such
Nidhi from its members is more than two crore rupees but less than twenty crore
rupees;
(c) twelve lakh rupees, where the total amount of deposits of such Nidhi from its
members is more than twenty crore rupees but less than fifty crore rupees; and
(d) fifteen lakh rupees, where the total amount of deposits of such Nidhi from its
members is more than fifty crore rupees:
Provided that where a Nidhi has not made profits continuously in the three
preceding financial years, it shall not make any fresh loans exceeding fifty per cent of
the maximum amounts of loans specified in clauses (a), (b), (c) or (d).
Provided further that a member shall not be eligible for any further loan if he
has borrowed any earlier loan from the Nidhi and has defaulted in repayment of
such loan.

(3) For the purposes of sub-rule (2), the amount of deposits shall be calculated on the
basis of the last audited annual financial statements.

(4) A Nidhi shall give loans to its members only against the following securities,
namely:—

(a) gold, silver and jewellery:

Provided that the re-payment period of such loan shall not exceed one year.

(b) immovable property:

Provided that the total loans against immovable property [excluding mortgage
loans granted on the security of property by registered mortgage, being a registered
mortgage under section 69 of the Transfer of Property Act, 1882 (IV of 1882)] shall not
exceed fifty per cent of the overall loan outstanding on the date of approval by the board,
the individual loan shall not exceed fifty per cent of the value of property offered as security
and the period of repayment of such loan shall not exceed seven years.

(c) fixed deposit receipts, National Savings Certificates, other Government Securities and
insurance policies:
Provided that such securities duly discharged shall be pledged with Nidhi and
the maturity date of such securities shall not fall beyond the loan period or one year
whichever is earlier:
Provided further that in the case of loan against fixed deposits, the period of
loan shall not exceed the unexpired period of the fixed deposits.

16. Rate of interest.—

The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven
and half per cent above the highest rate of interest offered on deposits by Nidhi and
shall be calculated on reducing balance method:

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The Nidhi Rules, 2014

Provided that Nidhi shall charge the same rate of interest on the borrowers in
respect of the same class of loans and the rates of interest of all classes of loans shall
be prominently displayed on the notice board at the registered office and each branch
office of Nidhi.

17. Rules relating to Directors.—

(1) The Director shall be a member of Nidhi.

(2) The Director of a Nidhi shall hold office for a term up to ten consecutive years on the
Board of Nidhi.

(3) The Director shall be eligible for re-appointment only after the expiration of two years
of ceasing to be a Director.

(4) Where the tenure of any Director in any case had already been extended by the
Central Government, it shall terminate on expiry of such extended tenure.

(5) The person to be appointed as a Director shall comply with the requirements of
sub-section (4) of Section 152 of the Act and shall not have been disqualified from
appointment as provided in section 164 of the Act.

18. Dividend.-

A Nidhi shall not declare dividend exceeding twenty five per cent or such higher
amount as may be specifically approved by the Regional Director for reasons to be
recorded in writing and further subject to the following conditions, namely:—
(a) an equal amount is transferred to General Reserve;
(b) there has been no default in repayment of matured deposits and interest; and
(c) it has complied with all the rules as applicable to Nidhis.

19. Auditor.—

(1) No Nidhi shall appoint or re-appoint an individual as auditor for more than one term
of five consecutive years.

(2) No Nidhi shall appoint or re-appoint an audit firm as auditor for more than two terms
of five consecutive years: Provided that an auditor (whether an individual or an audit
firm) shall be eligible for subsequent appointment after the expiration of two years from
the completion of his or its term:

Explanation: For the purposes of this proviso:

(i) in case of an auditor (whether an individual or audit firm), the period for which he or
it has been holding office as auditor prior to the commencement of these rules shall
be taken into account in calculating the period of five consecutive years or ten
consecutive years, as the case may be;

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 Chapter XXVI [Section 406]

The Nidhi Rules, 2014

(ii) appointment includes re-appointment.

20. Prudential norms.—

(1) Every Nidhi shall adhere to the prudential norms for revenue recognition and
classification of assets in respect of mortgage loans or jewel loans as contained
hereunder.

(2) Income including interest or any other charges on non-performing assets shall be
recognised only when it is actually realised and any such income recognised before
the asset became non-performing and which remains unrealised in a year shall be
reversed in the profit and loss account of the immediately succeeding year.

(3) (a) In respect of mortgage loans, the classification of assets and the provisioning
required shall be as under:
NATURE OF ASSET PROVISION REQUIRED
Standard Asset No provision
Sub-standard Asset 10% of the aggregate outstanding amount
Doubtful Asset 25% of the aggregate outstanding amount
Loss Asset 100% of the aggregate outstanding amount

Provided that a Nidhi may make provision for exceeding the percentage specific herein.
(b) The estimated realisable value of the collateral security to which a Nidhi has valid
recourse may be reduced from the aggregate outstanding amount, if the proceedings for
the sale of the mortgaged property have been initiated in a court of law within the previous
two years of the interest, income or instalment remaining unrealised.

(4) In case of companies which were incorporated on or before 26-07-2001, such

companies shall make provisions in respect of loans disbursed and outstanding as on
31-03-2002 for income reversal and non-performing assets as per table given below:

For the year ended Extent of provision

31-03-2015 Un-provided balance on equal basis over the
31-03-2016 three years as specified in the preceding
column.
31-03-2017

(5) (a) The Notes on the financial statements of a year shall disclose-
(i) the total amount of provisions, if any, to be made on account of income reversal
and non-performing assets remaining unrealised;
(ii) the cumulative amount provided till the previous year;
(iii) the amount provided in the current year; and
(iv) the balance amount to be provided.
(b) Such disclosure shall continue to be made until the entire amount to be provided
has been provided for.

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The Nidhi Rules, 2014

(6) In respect of loans against gold or jewellery—

(a) the aggregate amount of loan outstanding against the security of gold or
jewellery shall either be recovered or renewed within three months from the due
date of repayment;
(b) if the loan is not recovered or renewed and the security is not sold within the
aforesaid period of three months, the company shall make provision in the current
year’s financial statements to the extent of unrealised amount or the aggregate
outstanding amount of loan including interest as applicable;
(c) no income shall be recognised on such loans outstanding after the expiry of the
three months period specified in (a) above or sale of gold or jewellery, whichever is
earlier; and
(d) the loan to value ratio shall not exceed 80 per cent.
Explanation.- For the purposes of this rule, the term ‘loan to value ratio’ means the
ratio between the amount of loan given and the value of gold or jewellery against which
such loan is given.

21. Filing of half yearly return.—

[Documents filed with ROC can be inspected by public (through MCA portal) as per
section 399 of the Act.]
Every company covered under rule 2 shall file half yearly return with the Registrar in
Form NDH-3 along with such fee as provided in Companies (Registration Offices and
Fees) Rules, 2014 within thirty days from the conclusion of each half year duly certified
by a company secretary in practice or chartered accountant in practice or cost
accountant in practice.

22. Auditor’s certificate.—

The Auditor of the company shall furnish a certificate every year to the effect that the
company has complied with all the provisions contained in the rules and such certificate
shall be annexed to the audit report and in case of non-compliance, he shall specifically
state the rules which have not been complied with.

23. Power to enforce compliance.—

(1) For the purposes of enforcing compliance with these rules, the Registrar of companies
may call for such information or returns from Nidhi as he deems necessary and may
engage the services of chartered accountants, company secretaries in practice, cost
accountants, or any firm thereof from time to time for assisting him in the discharge of
his duties.

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The Nidhi Rules, 2014

(2) In respect of any Nidhi which has violated these rules or has failed to function in terms
of the Memorandum and Articles of Association, the 770[Central Gocernment] may appoint
a Special Officer to take over the management of Nidhi and such Special Officer shall
function as per the guidelines given by such Regional Director:

Provided that an opportunity of being heard shall be given to the concerned

Nidhi by the Regional Director before appointing any Special Officer.

24. Penalty for non-compliance.-

If a company falling under rule 2 contravenes any of the provisions of the rules
prescribed herein, the company and every officer of the company who is in default
shall be punishable with fine which may extend to five thousand rupees, and where
the contravention is a continuing one, with a further fine which may extend to five
hundred rupees for every day after the first during which the contravention continues.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html.]
Form NDH.1
Form NDH.2
Form NDH.3

770

Page 1309
 Chapter XXVII [Section 434]

The Companies (Transfer of Pending Proceedings) Rules, 2016

The Companies (Transfer of Pending

Proceedings) Rules, 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 7th December, 2016

G.S.R. 1119(E).— In exercise of the powers conferred under sub-sections (1) and (2)
of section 434 of the Companies Act, 2013 (18 of 2013) read with sub-section (1) of
section 239 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter
referred to as the Code), the Central Government hereby makes the following rules,
namely:—

1. Short title and Commencement. –

(1) These rules may be called the Companies (Transfer of Pending Proceedings)
Rules, 2016.

(2) They shall come into force with effect from the 15th December, 2016, except rule
4, which shall come into force from 1st April, 2017.

2. Definitions.-

(1) In these rules, unless the context otherwise requires-

(a) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);`

(b) “Tribunal” means the National Company Law Tribunal constituted under section
408 of the Companies Act, 2013.

(2) Words and expressions used in these rules and not defined, but defined in the
Companies Act, 1956 (1 of 1956) (herein referred to as the Act), the Companies Act,
2013 (18 of 2013) or the Companies (Court) Rules, 1959 or the Code shall have the
meanings respectively assigned to them in the respective Act or rules or the Code, as
the case may be.

3. Transfer of pending proceedings relating to cases other than Winding up.—

All proceedings under the Act, including proceedings relating to arbitration,

compromise, arrangements and reconstruction, other than proceedings relating to
winding up on the date of coming into force of these rules shall stand transferred to
the Benches of the Tribunal exercising respective territorial jurisdiction:
Provided that all those proceedings which are reserved for orders for allowing
or otherwise of such proceedings shall not be transferred.

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The Companies (Transfer of Pending Proceedings) Rules, 2016

4. Pending proceeding relating to voluntary winding up:

771
[All proceedings relating to voluntary winding up of a company where notice of the
resolution by advertisement has been given under sub-section (1) of section 485 of
the Act but the company has not been dissolved before the 1st day of April 2017 shall
continue to be dealt with in accordance with provisions of the Act.]

5. Transfer of pending proceedings of Winding up on the ground of inability to

pay debts.—
772
[(1) All petitions relating to winding up of a company under clause (e) of section 433
of the Act on the ground of inability to pay its debts pending before a High Court, and,
where the petition has not been served on the respondent under rule 26 of the
Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal
established under sub-section (4) of section 419 of the Companies Act, 2013
exercising territorial jurisdiction to be dealt with in accordance with Part II of the Code:

Provided that the petitioner shall submit all information, other than information
forming part of the records transferred in accordance with rule 7, required for
admission of the petition under sections 7, 8 or 9 of the Code, as the case may be,
including details of the proposed insolvency professional to the Tribunal upto 15th day
of July 2017, failing which the petition shall stand abated:

771
Replaced for existing Rule 4 by notification number G.S.R. 732(E) dated 29th June 2017. Prior to
replacement it read as “All applications and petitions relating to voluntary winding up of companies
pending before a High Court on the date of commencement of this rule, shall continue with and dealt
with by the High Court in accordance with provisions of the Act.”.

772
Replaced for existing Rule 5 by notification number G.S.R. 732(E) dated 29th June 2017 with effect
from 16th June 2017. Prior to replacement it read as “(1) All petitions relating to winding up under clause
(e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and
where the petition has not been served on the respondent as required under rule 26 of the Companies
(Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4)
of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as
applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance
with Part II of the Code:
Provided that the petitioner shall submit all information, other than information forming part of the
records transferred in accordance with Rule 7, required for admission of the petition under sections 7,
8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the
Tribunal within 772[six months] from date of this notification, failing which the petition shall abate.

(2) All cases where opinion has been forwarded by Board for Industrial and Financial Reconstruction,
for winding up of a company to a High Court and where no appeal is pending, the proceedings for
winding up initiated under the Act, pursuant to section 20 of the Sick Industrial Companies (Special
Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the
provisions of the Act. ”.

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The Companies (Transfer of Pending Proceedings) Rules, 2016

Provided further that any party or parties to the petitions shall, after the 15th
day of July, 2017, be eligible to file fresh applications under sections 7 or 8 or 9 of the
Code, as the case may be, in accordance with the provisions of the Code:

Provided also that where a petition relating to winding up of a company is not

transferred to the Tribunal under this rule and remains in the High Court and where
there is another petition under clause (e) of section 433 of the Act for winding up
against the same company pending as on 15th December, 2016, such other petition
shall not be transferred to the Tribunal, even if the petition has not been served on the
respondent.]

6. Transfer of pending proceedings of Winding up matters on the grounds other

than inability to pay debts.—

All petitions filed under clauses (a) and (f) of section 433 of the Companies Act, 1956
pending before a High Court and where the petition has not been served on the
respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be
transferred to the Bench of the Tribunal exercising territorial jurisdiction and such
petitions shall be treated as petitions under the provisions of the Companies Act, 2013
(18 of 2013).

7. Transfer of Records.—

Pursuant to the transfer of cases as per these rules the relevant records shall also be
transferred by the respective High Courts to the National Company Law Tribunal
Benches having jurisdiction forthwith over the cases so transferred.

8. Fees not to be paid.—

Notwithstanding anything contained in the National Company Law Tribunal Rules,

2016, no fee shall be payable in respect of any proceedings transferred to the Tribunal
in accordance with these rules.
[F. No. 1/5/2016– CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy.

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 Chapter XXVIII [Section 435-446]

The Companies (Mediation and Conciliation) Rules, 2016

Chapter XXVIII: the Companies

(Mediation and Conciliation) Rules,
2016
Government of India
Ministry of Corporate Affairs
NOTIFICATION
New Delhi, the 09th September, 2016
G.S.R.877(E).- In exercise of the powers conferred under section 442 read with
section 469 of the Companies Act, 2013 (18 of 2013). The Central Government
hereby makes the following rules, namely:

1. Short Title and Commencement.-

(1) These rules may be called the Companies (Mediation and Conciliation) Rules,
2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.-

(1) In these rules, unless the context Otherwise requires,-

(a) "Act" means the Companies Act, 2013 (18 of 2013);

(b) "Regional Director" means the person appointed by the Central

Government in the Ministry of Corporate Affairs as a Regional Director;

(c) "Annexure" means the annexure attached to these rules;

(d) "Form" or "e-Form" means a form set forth in the Annexure which shall
be used for the matter to which it relates;

(e) "Panel" means the Mediation and Conciliation Panel.

(2) The words and expressions used in these rules but not defined and defined in
the Act or in the Companies (Specification of Definitions Details) Rules, 2014 shall
have the meanings respectively assigned to them in the Act or the rules.

3. Panel of mediators or conciliators.-

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The Companies (Mediation and Conciliation) Rules, 2016

(1) Regional Director shall prepare a panel of experts willing and eligible to be
appointed as mediators or conciliators in the respective regions and such panel
shall he placed on the website of the Ministry of Corporate Affairs or on any other
website as may be notified by the Central Government.

(2) The Regional Director may invite applications from persons interested in getting
empanelled as mediator or conciliator and possessing the requisite qualifications
specified in Rule 4.

(3) A person who intends to get empanelled as mediator or conciliator and

possesses the requisite qualifications shall apply to the Regional Director in Form
MDC-1.

(4) Application received under sub-rule (3), if rejected by the Regional Director, the
Regional Director shall record the reasons in writing for the same.

(5) The Regional Director shall invite applications from persons interested in
getting empanelled as mediator or conciliator every year during the month of
February and update the Panel which shall be effective from 1st of April of every
year:

Provided that for Financial Year 2016-17, the Regional Director may call for
applications from the persons interested in getting empanelled as mediator or
conciliator, within 60 days from the date of publication of these rules and prepare
the panel for the current financial year within a period of 30 days.

4. Qualifications for empanelment.-

A person shall not be qualified for being empanelled as mediator or conciliator

unless he -

(a) has been a Judge of the Supreme Court of India; or

(b) has been a Judge of a High Court; or

(c) has been a District and Sessions Judge; or

(d) has been a Member or Registrar of a Tribunal constituted at the National

level under any law for the time being in force; or

(e) has been an officer in the Indian Corporate law Service or Indian Legal
Service with fifteen years experience; or

(f) is a qualified legal practitioner for not less than ten years; or

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The Companies (Mediation and Conciliation) Rules, 2016

(g) is or has been a professional for at least fifteen years of continuous

practice as Chartered Accountant or Cost Accountant or Company
Secretary; or

(h) has been a Member or President of any State Consumer Forum; or

(i) is an expert in mediation or conciliation who has successfully undergone

training in mediation or conciliation.

5. Disqualifications for empanelment.-

A person shall be disqualified for being empanelled as mediator or conciliator, if

he -

(a) is an undischarged insolvent or has applied to be adjudicated as an

insolvent and his application is pending;

(b) has been convicted for an offence which, in the opinion of the Central
Government, involves moral turpitude;

(c) has been removed or dismissed from the service of the Government or
the Corporation owned or controlled by the Government;

(d) has been punished in any disciplinary proceeding, by the appropriate

disciplinary authority; or

(e) has, in the opinion of the Central Government, such financial or other
interest in the subject matter of dispute or is related to any of the parties as
is likely to affect prejudicially the discharge by him of his functions as a
mediator or conciliator.

6. Application for appointment of Mediator or Conciliator and his appointment.-

(1) (a) Parties concern may agree on the name of the sole mediator or
conciliator for mediation or conciliation between them;

(b) Where, there are two or more sets of parties and are unable to agree on a sole
mediator or conciliator, the Central Government or the Tribunal or the Appellate
Tribunal may ask each party to nominate the mediator or conciliator or the Central
Government or the Tribunal or the Appellate Tribunal may appoint the mediator or
conciliator, as may be deemed necessary for mediation or conciliation between the
parties.

(2) The application to the Central Government or the Tribunal or the Appellate

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 Chapter XXVIII [Section 435-446]

The Companies (Mediation and Conciliation) Rules, 2016

Tribunal, as the case may be, for referring the matter pertaining to any proceeding
pending before it for mediation or conciliation shall be in Form MDC-2 and shall be
accompanied with a fee of one thousand rupees.

(3) On receipt of an application under sub-rule (2), the Central Government or the
Tribunal or the Appellate Tribunal skill appoint one or more experts from the panel.

(4) The Central Government or the Tribunal or the Appellate Tribunal as the ease
may be, before which any proceeding is pending may, suo motu, refer any matter
pertaining to such proceeding to such number of experts from the Mediation and
Conciliation Panel, if it deems fit in the interest of parties.

7. Deletion from the Panel.-

The Regional Director may by recording reasons in writing and after giving him an
opportunity of being heard, remove any person from the Panel.

8. Withdrawing name from Panel.-

Any person who intends to withdraw his name from the Mediation and Conciliation
Panel may make an application to the Regional Director indicating the reasons for
such withdrawal and the Regional Director shall take a decision on such
application within fifteen days of receipt of such application and update the Panel
accordingly.

9. Duty of mediator or conciliator to disclose certain facts.-

(1) It shall be the duty of a mediator or conciliator to disclose to the Central

Government or the Tribunal or the Appellate Tribunal, as the case may be, about
any circumstances which may give rise to a reasonable doubt as to his
independence or impartiality in carrying out his functions.

(2) Every mediator or conciliator shall from the time of his appointment and
throughout continuance of the mediation or conciliation proceedings, without any
delay, disclose to the parties about existence of any circumstance referred to in
sub-rule (1).

10. Withdrawal of appointment.-

The Central Government or the Tribunal or the Appellate Tribunal as the case may
be, upon receiving any disclosure furnished by the mediator or conciliator under
rule 9, or after receiving any other information from a party or other person in any
proceeding which is pending and on being satisfied that such disclosures or
information has raised a reasonable doubt as to the independence or impartiality
of such mediator or conciliator, may withdraw his appointment and in his place,
appoint any other mediator or conciliator in that proceeding;

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 Chapter XXVIII [Section 435-446]

The Companies (Mediation and Conciliation) Rules, 2016

Provided that the mediator or conciliator may, offer to withdraw himself from
such proceeding and request the Central Government or the Tribunal or the
Appellate Tribunal as the case may be to appoint any other mediator or conciliator.

11. Procedure for disposal of matters.-

(1) For the purposes of mediation and conciliation, the mediator or conciliator shall
follow the following procedure, namely:-

(i) he shall fix, in consultation with the parties, the dates and the time of each
mediation or conciliation session, where all parties have to be present;

(ii) he shall hold the mediation or conciliation at the place decided by the
Central Government or the Tribunal or the Appellate Tribunal, as the case
may be, or such other place where the parties and the mediator or
conciliator jointly agree;

(iii) he may conduct joint or separate meetings with the parties;

(iv) each party shall, ten days before a session, provide to the mediator or
conciliator a brief memorandum setting forth the issues, which need to be
resolved, and his position in respect of those issues and all information
reasonably required for the mediator or conciliator to understand the issue
and a copy of such memorandum shall also be given to the opposite party
or parties:

Provided that in suitable or appropriate cases, the above mentioned

period may be reduced at the discretion of the mediator or conciliator;

(v) each party shall furnish to the mediator or conciliator such other
information as may be required by him in connection with the issues to be
resolved.

(2) Where there is more than one mediator or conciliator, the mediator or
conciliators may first concur with the party that agreed to nominate him and
thereafter internet with the other mediator or conciliator, with a view to resolve the
dispute.

12. Mediator or Conciliator not bound by the Indian Evidence Act, 1872 or the
Code of Civil Procedure, 1908.-

The mediator or conciliator shall not be bound by the Indian Evidence Act, 1872 or
the Code of Civil Procedure, 1908 while disposing the matter, but shall be guided
by the principles of fairness and natural justice, having regard to the rights and
obligations of the parties, usages of trade, if any, and the circumstances of the

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 Chapter XXVIII [Section 435-446]

The Companies (Mediation and Conciliation) Rules, 2016

dispute.

13. Representation of parties.-

The parties shall ordinarily be present personally or through an authorised attorney

at the sessions or meetings notified by the mediator or conciliator:

Provided that the parties may be represented by an authorised person or

counsel with the permission of the mediator or conciliator in such sessions or
meetings and the mediator or conciliator or the Central Government or the Tribunal
or the Appellate Tribunal as the case may be, shall be entitled to direct or ensure
the presence of any party to appear in person:

Provided further that the party not residing in India may, with the
permission of the mediator or conciliator, be represented by his or her authorised
representative at the sessions or meetings.

14. Consequences of non-attendance of parties at sessions or meetings on due

dates.-

If a party fails to attend a session or a meeting fixed by the mediator or conciliator

deliberately or wilfully for two consecutive times, the mediation or conciliation shall
be deemed to have failed and mediator or conciliator shall report the matter to the
Central Government or the Tribunal or the Appellate Tribunal, as the case may be.

15. Administrative assistance.-

In order to facilitate the conduct of mediation or conciliation proceedings, the

mediator or conciliator with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person.

16. Offer or settlement by parties.-

(1) Any party to the proceeding may, "without prejudice" offer a settlement to the
other party at any stage of the proceedings, with a notice to the mediator or
conciliator.

(2) Any party to the proceeding may make a, "with prejudice" offer to the other
party at any stage of the proceedings with a notice to the mediator or conciliator.

17. Role of Mediator or Conciliator.-

The mediator or conciliator shall attempt to facilitate voluntary resolution of the

dispute by the parties and communicate the view of each party to the other, assist
them in identifying issues reducing misunderstandings, clarifying priorities,
exploring areas of compromise and generating options in an attempt to resolve the
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dispute, emphasising that it is the responsibility of the parties to take decision

which affect them and he shall not impose any terms of settlement on the parties:

Provided that on consent of both the parties, the mediator or conciliator

may impose such terms and conditions on the parties for early settlement of the
dispute as he may deem fit.

18. Parties alone responsible for taking decision.-

The parties shall be made to understand that the mediator or conciliator facilitates
in arriving a decision to resolve the dispute and that he shall not and cannot impose
any settlement nor the mediator or conciliator give any assurance that the
mediation or conciliation shall result in a settlement and the mediator or conciliator
shall not impose any decision on the parties.

19. Time limit for completion of mediation or conciliation.-

(1) The process for any mediation or conciliation under these rules shall be
completed within a period of three months from the date of appointment of expert
or experts from the Panel.

(2) On the expiry of three months from the date of appointment of expert from the
Panel, the mediation or conciliation process shall stand terminated.

(3) In case of mediation or conciliation in relation to any proceeding before Tribunal

or Appellate Tribunal which could not be completed within three months, the
Tribunal or as the case may be, the Appellate Tribunal, may on the application of
mediator or conciliator or any of the party to the proceedings, extend the period for
mediation or conciliation by such period not exceeding three months.

20. Parties to act in good faith.-

All the parties shall commit to participate in the proceedings in good faith with the
intention to settle the dispute.

21. Confidentiality, disclosure and inadmissibility of information.-

(1) When a mediator or conciliator receives factual information concerning the

dispute from any party, he shall disclose the substance of that information to the
other party, so that the other party may have an opportunity to present such
explanation as it may consider appropriate:

Provided that when a party gives information to the mediator or conciliator

subject to a specific condition that the information may be kept confidential, the
mediator or conciliator shall not disclose that information to the other party.

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(2) The receipt or perusal, or preparation of records, reports or other documents

by the mediator or conciliator, while serving in that capacity shall be confidential
and the mediator or conciliator shall not be compelled to divulge information
regarding those documents nor as to what transpired during the mediation or
conciliation before the Central Government or the Tribunal or the Appellate
Tribunal or as the case may be, or any other authority or any person or group of
persons.

(3) The parties shall maintain confidentially in respect of events that transpired
during the mediation and conciliation and shall not rely on or introduce the said
information in other proceedings as to -

(i) views expressed by a party in the course of the mediation or conciliation

proceedings;

(ii) documents obtained during the mediation or conciliation which were

expressly required to be treated as confidential or other notes, drafts or
information given by the parties or the mediator or conciliator.

(iii) proposals made or views expressed by the mediator or conciliator;

(iv) admission made by a party in the course of mediation or conciliation

proceedings.

(4) There shall be no audio or video recording of the mediation or conciliation

proceedings.

(5) No statement of parties or the witnesses shall he recorded by the mediator or

conciliator.

22. Privacy.-

The mediation or conciliation sessions or meetings shall be conducted in privacy

where the persons as mentioned in rule 13 shall be entitled to represent parties
but other persons may attend only with the permission of the parties and with the
consent of the mediator or conciliator.

23. Protection of action taken in good faith.-

No mediator or conciliator shall be held liable for anything, which is done or omitted
to be done by him, in good faith during the mediation or conciliation proceedings
for civil or criminal action nor shall be summoned by any party to the suit or
proceeding to appear before the Central Government or the Tribunal or the

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Appellate Tribunal, as the case may be, to testify regarding information received
by him or action taken by him or in respect of drafts or records prepared by him or
shown to him during the mediation or conciliation proceedings.

24. Communication between mediator or conciliator and the Central

Government or the Tribunal or the Appellate Tribunal.-

In order to preserve the confidence of parties in the Central Government or the

Tribunal or the Appellate Tribunal as the case may be and the neutrality of the
mediator or conciliator, there shall be no communication between the mediator or
conciliator and the Central Government or the tribunal or the Appellate Tribunal,
as the case may be, in the subject matter:

Provided that, if any communication between the mediator or conciliator and

the Central Government or the Tribunal or the Appellate Tribunal, as the case may
be, is necessary, it shall be in writing and copies of the same shall he given to the
parties or the authorised representative:

Provided further that communication between the mediator or conciliator

and the Central Government or the Tribunal or the Appellate Tribunal, as the case
may be, shall be limited to Communication by the mediator or conciliator:

(i) about the failure of the party to attend;

(ii) about the consent of the parties;

(iii) about his assessment that the case is not suited for settlement through
the mediation or conciliation;

(iv) about settlement of dispute between the parties.

25. Settlement agreement.-

(1) Where an agreement is reached between the parties in retard to all the issues
or some of the issues in the proceeding, the same shall be reduced to writing and
signed by the parties and if any counsel has represented the parties, the conciliator
or mediator may also obtain the signature of such counsel on the settlement
agreement.

(2) The agreement of the parties so signed shall he submitted to the mediator or
conciliator who shall, with a covering letter signed by him, forward the same to the
Central Government or the Tribunal or the Appellate Tribunal, as the case may be.

(3) Where no agreement is reached at between the parties, before the time limit
specified in rule 19, or where the mediator or conciliator is of the view that no

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settlement if possible, he shall report the same to the Central Government or the
Tribunal or the Appellate Tribunal, as the case may be, in writing.

26. Fixing date for recording settlement and passing order.-

(1) The Central Government or the Tribunal or the Appellate Tribunal as the case
may be, shall fix a date of hearing normally within fourteen days from the date of
receipt of the report of the mediator or conciliator under rule 25 and on such date
of hearing, if the Central Government or the Tribunal or the Appellate Tribunal, as
the case may be, is satisfied that the parties have settled their dispute, it shall pass
an order in accordance with terms thereof.

(2) If the settlement disposes of only certain issues arising in the proceeding, on
the basis of which may order is passed as stated in sub-rule (1), the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, shall
proceed further to decide the remaining issues.

27. Expenses of the mediation and conciliation.-

(1) At the time of referring the matter to the mediation or conciliation, the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, may fix
the fee of the mediator or conciliator and as far as possible, a consolidated sum
may be fixed rather than for each session or meeting.

(2) The expense of the mediation or conciliation including the fee of the mediator
or conciliator, costs of administrative assistance and other ancillary expenses
concerned, shall be borne equally by the various contesting parties or as may be
otherwise directed by the Central Government or the Tribunal or the Appellate
Tribunal, as the case may be.

(3) Each party shall bear the costs for production of witnesses on his side including
experts or for production of documents.

(4) The mediator or conciliator may, before the commencement of the mediation
or conciliation, direct the parties to deposit equal share of the probable costs of the
mediation or conciliation including the fees to be paid to the mediator or conciliator.

(5) If any party or parties do not pay the amount referred to sub-rule (4), the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, shall
on the application of the mediator or conciliator, or any party, issue appropriate
directions to the concerned parties.

(6) The mediation or conciliation shall commence only on the deposit of amount
referred to in sub-rule (4) and in case amount is not paid before such
commencement, the mediation or conciliation shall be deemed to have terminated.

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28. Ethics to be followed by Mediator or Conciliator.-

The mediator or conciliator shall-

(a) follow and observe the rules strictly and with due diligence;

(b) not carry on any activity, or conduct which shall reasonably be

considered as conduct unbecoming of a mediator or conciliator;

(c) uphold the integrity and fairness of the mediation or conciliation process;

(d) ensure that the parties involved in the mediation or conciliation are fairly
informed and have an adequate understanding of the procedural aspects of
the process;

(e) satisfy himself or herself that he or she is qualified to undertake and

complete the assignment in a professional manner;

(f) disclose any interest or relationship likely to affect impartiality or which

might seek an appearance of partiality or bias;

(g) avoid, while communicating with the parties, any impropriety or

appearance of impropriety;

(h) be faithful to the relationship of trust and confidentiality imposed in the

office of mediator or conciliator;

(i) conduct all proceedings related to the resolutions of a dispute, in

accordance with the relevant applicable law;

(j) recognise that the mediation or conciliation is based on principles of self-

determination by the parties and that the mediation or conciliation process
relies upon the ability of parties to reach a voluntary, undisclosed
agreement; and

(k) maintain the reasonable expectations of the parties as to confidentiality

and refrain from promises or guarantees of results.

Provided that if any party finds conduct of mediator or conciliator violative

of ethics laid down in this rule, the party may immediately bring it to the notice of
the Regional Director.

29. Resort to arbitral or judicial proceedings.-

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The parties shall not initiate, during the mediation or conciliation under these rules,
any arbitral or judicial proceedings in respect of a matter that is the subject-matter
of the mediation or conciliation, except that a party may initiate arbitral or Judicial
proceedings, where, in his, opinion, such proceedings are necessary for protecting
his rights.

30. Matters not to be referred to the mediation or conciliation.-

The following matters shall not be referred to mediation or conciliation, namely:-

(a) the matters relating to proceedings in respect of inspection or investigation

under Chapter XIV of the Act; or the matters which relate to defaults or offences
for which applications for compounding have been made by one or more parties.

(b) cases involving serious and specific allegations of fraud fabrication of

documents forgery, impersonation, coercion etc.

(c) cases involving prosecution for criminal and non-compoundable offences.

(d) cases which involve public interest or interest of numerous persons who are
not parties before the Central Government or the Tribunal or the Appellate Tribunal
as the case may be.

Form MDC-1

[See rule 3(3) of the Companies (Mediation and Conciliation) Rules, 2016]

Application for Empanelment of Mediator or Conciliator on the Panel

To

The Regional Director________

I .................................................S/o or D/o or W/o*.......................... resilient of

.................................. (address) am hereby pleased to offer my services as
Mediator or Conciliator so as to take up any assignment or matters referred by
the Central Government at the places furnished hereunder:

1.________ 2._____ 3.________ 4._______________

I possess requisite qualifications and experience in the following fields for the
past _______years. In this regard, my resume or an illustrative memoranda as to
my qualifications, experience, notable achievements with relevant proofs and
declaration are enclosed hereto in two sets duly attested.

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Area of Experience in brief:

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
I shall abide by the Companies (Mediation and Conciliation) Rules, 2016 and
such other relevant rules or Code of Conduct or Guidelines as may be specified
from time to time.

I state that upon the receipt of the intimation of offer of empanelment the
necessary documentation shall also be executed.

I request you to consider my application for empanelment in the Panel.

Place:

Dated:

Signature

Encl:

(Seal)

*Strike off whichever is not applicable.

FORM MDC-2

[See rule 6(2) of the Companies (Mediation and Conciliation) Rules, 2016]

Application for referring the matter to the Panel

To

The (Designated Officer)

The Central Government/Tribunal/Appellate Tribunal.

I.................................................S/o or D/o or W/o*..........................resident of

_________________(address) being a party in the proceeding before
Central Government/Tribunal/Appellate Tribunal under section
____________of the Act bearing reference number ________ (if any)
hereby apply for referring the matter to the Mediation and Conciliation

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The Companies (Mediation and Conciliation) Rules, 2016

Panel.

The requisite fee has been paid vide..............................(details of fees paid).

Place:

Dated:

SIGNATURE

* Strike off whichever is not applicable

(Amardeep S. Bhatia)
Joint Secretary to the Government of India

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The Companies (Adjudication of Penalties) Rules, 2014

Chapter XXIX: the Companies

(Adjudication of Penalties) Rules, 2014
Government of India
Ministry of Corporate Affairs
NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R.254(E).- In exercise of the powers conferred by section 454 read with section
469 of the Companies Act, 2013, the Central Government hereby makes the
following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the Companies (Adjudication of Penalties)

Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure enclosed to these Rules;

(c) “Fees” means fees as prescribed in the Companies (Registration Offices and
Fees) Rules, 2014;

(d) ”Form” or ‘e-Form” means a form set forth in Annexure to these rules which
shall be used for the matter to which it relates;

(e) “Regional Director” means the person appointed by the Central Government
in the Ministry of Corporate Affairs as a Regional Director;

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The Companies (Adjudication of Penalties) Rules, 2014

(f) “section” means section of the Act;

(2) Words and expressions used in these rules but not defined, and defined in the Act
or in the Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act or in the said Rules.

773
[3. Adjudication of penalties.-

773
Substituted rule 3 by the Companies (Adjudication of Penalties) Amendment Rules, 2019 notified
vide notification no.G.S.R. 131(E) dated 19th February, 2019 w.e.f. 19th February 2019. Prior to
substitution, it read as “3. Adjudication of penalties:- (1) The Central Government may appoint any of its officers,
not below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of the Act.

(2) Before adjudging penalty, the adjudicating officer shall issue a written notice to the company and to every
officer of the company who is in default, to show cause, within such period as may be specified in the notice
(not being less than fifteen days and more than forty five days from the date of service thereon), why the inquiry
should not be held against him:

Provided that every notice issued under this sub-rule, shall clearly indicate the nature of non-
compliance or default under the Act alleged to have been committed or made by such company and officer in
default, as the case may be:

Provided further that the adjudicating officer may, for reasons to be recorded in writing, extend the
period referred to above by a further period not exceeding fifteen days, if the company or officer (as applicable)
satisfies the said officer that it has sufficient cause for not responding to the notice within the stipulated period.

(3) If, after considering the cause, if any, shown by such company or officer, the adjudicating officer is of the
opinion that an inquiry should be held, he shall issue a notice fixing a date for the appearance of such company,
through its authorised representative, or officer of such company whether personally or through his authorised
representative.

(4) On the date fixed for hearing and after giving a reasonable opportunity of being heard to the person(s)
concerned, the adjudicating officer may, subject to reasons to be recorded in writing, pass any order as he
thinks fit including an order for adjournment of the hearing to a future date.

(5) Every order passed under sub-rule (4), shall be dated and signed by the adjudicating officer.

(6) The adjudicating officer shall send a copy of the order passed by it to the concerned company or officer who
is in default and to the Central Government.

(7) While holding an inquiry, the adjudicating officer shall have the following powers, namely:-
(a) to summon and enforce the attendance of any person acquainted with the facts and circumstances
of the case;
(b) to order for evidence or to produce any document, which in the opinion of the adjudicating officer, may
be useful for or relevant to the subject matter of the inquiry.

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The Companies (Adjudication of Penalties) Rules, 2014

(1) The Central Government may appoint any of its officers, not below the rank of
Registrar, as adjudicating officers for adjudging penalty under the provisions of the Act.
[For list of ROCs designated as Adjudicating officer and their jurisdiction, refer Annexure N40 dated
24 March 2015]

(2) Before adjudging penalty, the adjudicating officer shall issue a written notice in the
specified manner, to the company, the officer who is in default or any other person, as
the case may be, to show cause, within such period as may be specified in the notice
(not being less than fifteen days and more than thirty days from the date of service
thereon), why the inquiry should not be imposed on it or him:

(3) Every notice issued under the Act alleged to have been committed or made by
such company, officer in default, or any other person, as the case may be and also
draw attention to the relevant penal provisions of the Act and the maximum penalty
which can be imposed on the company, and each of the officers in default, or the other
person.

(4) The reply to such notice shall be filed in electronic mode only within the period as
specified in the notice :
Provided that the adjudicating officer may, for reasons to be recorded in
writing, extend the period referred to above by a further period not exceeding fifteen
days, if the company or officer in default or any person as the case may be, satisfies
the adjudicating officer that it or he has sufficient cause for not responding to the notice
within the stipulated period or the adjudicating officer has reason to believe that the
company or the officer or the person has received a shorter notice and did not have
reasonable time to give reply.

(5) If, after considering the reply submitted by such company, its officer, or any other
person, as the case may be, the adjudicating officer is of the opinion that physical
appearance is required, he shall issue a notice, within a period of ten working days
from the date of receipt of reply fixing a date for the appearance of such company,
through its authorised representative, or officer of such company, or any other person,
whether personally or through his authorised representative :
Provided that if any person, to whom a notice is issued under sub-rule (2),
desires to make an oral representation, whether personally or through his authorised

(8) If any person fails, neglects or refuses to appear as required under sub-rule (7) before the adjudicating
officer, the adjudicating officer may proceed with the inquiry in the absence of such person after recording the
reasons for doing so.

(9) While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors,
namely:-
(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of
the default;
(b) the amount of loss caused to an investor or group of investors or creditors as a result of the default;
(c) the repetitive nature of the default.

(10) All sums realised by way of penalties under the Act shall be credited to the Consolidated Fund of India. ”.

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The Companies (Adjudication of Penalties) Rules, 2014

representative and has indicated the same while submitting his reply in electronic
mode, the adjudicating officer shall allow such person to make such representation
after fixing a date of appearance.

(6) On the date fixed for hearing and after giving a reasonable opportunity of being
heard to the person concerned, the adjudicating officer may, subject to reasons to be
recorded in writing, pass any order in writing as he thinks fit including an order for
adjournment :
Provided that after hearing, adjudicating officer may require the concerned
person to submit his reply in writing on certain other issues related to the notice under
sub-rule (2), relevant for determination of the default.

(7) The adjudicating officer shall pass an order,-

(a) within thirty days of the expiry of the period referred in sub-rule (2) or of such
extended period as referred therein, where physical appearance was not required
under sub-rule (5);
(b) within ninety days of the date of issue of notice under sub-rule (2), where any
person appeared before the adjudicating officer under sub-rule (5):
Provided that in case an order is passed after the aforementioned duration, the
reasons of the delay shall be recorded by the adjudicating officer and no such order
shall be invalid merely because of its passing after the expiry of such thirty days or
ninety days as the case may be.

(8) Every order of the adjudicating officer shall be duly dated and signed by him and
shall clearly state the reasons for requiring the physical appearance under sub-rule
(5).

(9) The adjudicating officer shall send a copy of the order passed by him to the
concerned company, officer who is in default or any other person or all of them and to
the Central Government and a copy of the order shall also be uploaded on the website.

(10) For the purposes of this rule, the adjudicating officer shall exercise the following
powers, namely:-
(a) to summon and enforce the attendance of any person acquainted with the facts
and circumstances of the case after recording reasons in writing;
(b) to order for evidence or to produce any document, which in the opinion of the
adjudicating officer, may be relevant to the subject matter.

(11) If any person fails to reply or neglects or refuses to appear as required under sub-
rule (5) or subrule (10) before the adjudicating officer, the adjudicating officer may
pass an order imposing the penalty, in the absence of such person after recording the
reasons for doing so.

(12) While adjudging quantum of penalty, the adjudicating officer shall have due regard
to the following factors, namely:-
(a) size of the company;

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The Companies (Adjudication of Penalties) Rules, 2014

(b) nature of business carried on by the company;

(c) injury to public interest;
(d) nature of the default;
(e) repetition of the default;
(f) the amount of disproportionate gain or unfair advantage, wherever quantifiable,
made as a result of the default; and
(g) the amount of loss caused to an investor or group of investors or creditors as a
result of the default:
Provided that, in no case, the penalty imposed shall be less than the minimum
penalty prescribed, if any, under the relevant section of the Act.

(13) In case a fixed sum of penalty is provided for default of a provision, the
adjudicating officer shall impose that fixed sum, in case of any default therein.

(14) Penalty shall be paid through Ministry of Corporate Affairs portal only.

(15) All sums realised by way of penalties under the Act shall be credited to the
Consolidated Fund of India.

Explanation 1.- For the purposes of this rule, the term “specified manner” shall mean
service of documents as specified under section 20 of the Act and rules made
thereunder and details in respect of address (including electronic mail ID) provided in
the KYC documents filed in the registry shall be used for communication under this
rule.

Explanation 2.- For the purposes of this rule, it is hereby clarified that the requirement
of submission of replies in electronic mode shall become mandatory after the creation
of the e-adjudication platform.]

4. Appeal against the order of adjudicating officer. –

(1) Every appeal against the order of the adjudicating officer shall be filed in writing
with the Regional Director having jurisdiction in the matter within a period of sixty days
from the date of receipt of the order of adjudicating officer by the aggrieved party, in
Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified
copy of the order against which the appeal is sought:

Provided that where the party is represented by an authorised representative,

a copy of such authorisation in favour of the representative and the written consent
thereto by such authorised representative shall also be appended to the appeal:

Provided further that an appeal in Form ADJ shall not seek relief(s) therein
against more than one order unless the reliefs prayed for are consequential.

(2) Every appeal filed under this rule shall be accompanied by such fee as provided in
the Companies (Registration Offices and Fees) Rules, 2014.

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The Companies (Adjudication of Penalties) Rules, 2014

5. Registration of appeal.-

(1) On the receipt of an appeal, office of the Regional Director shall endorse the date
on such appeal and shall sign such endorsement.

(2) If, on scrutiny, the appeal is found to be in order, it shall be duly registered and
given a serial number:
Provided that where the appeal is found to be defective, the Regional Director
may allow the appellant such time, not being less than fourteen days following the date
of receipt of intimation by the appellant from the Regional Director about the nature of
the defects, to rectify the defects and if the appellant fails to rectify such defects within
the time period allowed as above, the Regional Director may by order and for reasons
to be recorded in writing, decline to register such appeal and communicate such
refusal to the appellant within a period of seven days thereof:

Provided further that the Regional Director may, for reasons to be recorded
in writing, extend the period referred to in the first proviso above by a further period
of fourteen days if an appellant satisfies the Regional Director that the appellant had
sufficient cause for not rectifying the defects within the period of fourteen days
referred to in the first proviso.

6. Disposal of appeal by Regional Director.-

(1) On the admission of the appeal, the Regional Director shall serve a copy of appeal
upon the adjudicating officer against whose order the appeal is sought along-with a
notice requiring such adjudicating officer to file his reply thereto within such period, not
exceeding twenty-one days, as may be stipulated by the Regional Director in the said
notice:
Provided that the Regional Director may, for reasons to be recorded in writing,
extend the period referred to in sub-rule (1) above for a further period of twenty-one
days, if the adjudicating officer satisfies the Regional Director that he had sufficient
cause for not being able to file his reply to the appeal within the above-said period of
twenty-one days.

(2) A copy of every reply, application or written representation filed by the adjudicating
officer before the Regional Director shall be forthwith served on the appellant by the
adjudicating officer.

(3) The Regional Director shall notify the parties, the date of hearing of the appeal
which shall not be a date earlier than thirty days following the date of such notification
for hearing of the appeal.

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The Companies (Adjudication of Penalties) Rules, 2014

(4) On the date fixed for hearing the Regional Director may, subject to the reasons to
be recorded in writing, pass any order as he thinks fit including an order for
adjournment of the hearing to a future date.

(5) In case the appellant or the adjudicating officer does not appear on the date fixed
for hearing, the Regional Director may dispose of the appeal ex-parte:
Provided that where the appellant appears afterwards and satisfies the
Regional Director that there was sufficient cause for his nonappearance, the Regional
Director may make an order setting aside the ex-parte order and restore the appeal.

(6) Every order passed under this rule shall be dated and signed by the Regional
Director.

(7) A certified copy of every order passed by the Regional Director shall be
communicated to the adjudicating officer and to the appellant forthwith and to the
Central Government.

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form No. ADJ

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The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

Chapter XXIX: the Companies (Removal

of Names of Companies from the
Register of Companies) Rules, 2014
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 26th December, 2016

G.S.R. 1174(E).—In exercise of the powers conferred by sub-sections (1), (2) and (4)
of section 248 read with section 469 of the Companies Act, 2013 (18 of 2013) and in
supersession of the Companies (Central Government) General Rules and Forms,
1956 except as respects things done or omitted to be done before such supersession,
the Central Government hereby makes the following rules, namely:-

1. Short title and commencement.-

(1) These rules may be called the Companies (Removal of Names of Companies from
the Register of Companies) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.-

(1) In these rules, unless the context otherwise requires, -

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Form” or “e-Form” means a non-electronic form or an electronic form

annexed to these rules.

(2) Words and expressions used in these rules but not defined and defined in the Act
or in the Companies (Specification of Definitions Details) Rules, 2014, shall have the
same meanings respectively assigned to them in the Act or in the said rules.

3. Removal of name of company from the Register on suo-motu basis.-

(1) The Registrar of Companies may remove the name of a company from the register
of companies in terms of sub-section (1) of section 248 of the Act:

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Provided that following categories of companies shall not be removed from the
register of companies under this rule and rule 4, namely:-

(i) listed companies;

(ii) companies that have been delisted due to non-compliance of listing

regulations or listing agreement or any other statutory laws;

(iii) vanishing companies;

(iv) companies where inspection or investigation is ordered and being carried

out or actions on such order are yet to be taken up or were completed but
prosecutions arising out of such inspection or investigation are pending in the
Court;

(v) companies where notices under section 234 of the Companies Act, 1956 (1
of 1956) or section 206 or section 207 of the Act have been issued by the
Registrar or Inspector and reply thereto is pending or report under section 208
has not yet been submitted or follow up of instructions on report under section
208 is pending or where any prosecution arising out of such inquiry or scrutiny,
if any, is pending with the Court;

(vi) companies against which any prosecution for an offence is pending in any
court;

(vii) companies whose application for compounding is pending before the

competent authority for compounding the offences committed by the company
or any of its officers in default;

(viii) companies, which have accepted public deposits which are either
outstanding or the company is in default in repayment of the same;

(ix) companies having charges which are pending for satisfaction; and

(x) companies registered under section 25 of the Companies Act, 1956 or

section 8 of the Act.

Explanation.- For the purposes of clause (iii), the expression “vanishing company”
means a company, registered under the Act or previous company law or any other law
for the time being in force and listed with Stock Exchange which has failed to file its
returns with the Registrar of Companies and Stock Exchange for a consecutive period
of two years, and is not maintaining its registered office at the address notified with
the Registrar of Companies or Stock Exchange and none of its directors are traceable.

(2) For the purpose of sub-rule (1), the Registrar shall give a notice in writing in Form
STK 1 which shall be sent to all the directors of the company at the addresses available
on record, by registered post with acknowledgement due or by speed post.

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(3) The notice shall contain the reasons on which the name of the company is to be
removed from the register of companies and shall seek representations, if any, against
the proposed action from the company and its Directors along with the copies of
relevant documents, if any, within a period of thirty days from the date of the notice.

4 . Application for removal of name of company.—

(1) An application for removal of name of the company under sub-section (2) of section
248 shall be made in Form STK-2 along with the fee of 774[ten thousand rupees.
Provided that no application in Form No. STK-2 shall be filed by a company
unless it has filed overdue returns in Form No. AOC-4 (Financial Statement) or AOC-
4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of
the financial year in which the company ceased to carry its business operations:
Provided further that in case a company intends to file Form No. STK-2 after
the action under sub-section (1) of section 248 has been initiated by the Registrar, it
shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or
AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing
Form No. STK-2:
Provided also that once notice in Form No. STK-7 has been issued by the
Registrar pursuant to the action initiated under sub-section (1) of section 248, a
company shall not be allowed to file an application in Form No. STK-2.].

(2) Every application under sub-rule (1) shall accompany a no objection certificate
from appropriate Regulatory Authority concerned in respect of following companies,
namely :-

(i) companies which have conducted or conducting non-banking financial and

investment activities as referred to in the Reserve Bank of India Act, 1934 (2 of
1934) or rules and regulations thereunder;

(ii) housing finance companies as referred to in the Housing Finance

Companies (National Housing Bank) Directions, 2010 issued under the
National Housing Bank Act, 1987 (53 of 1987);

(iii) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938)

or rules and regulations thereunder;

(iv) companies in the business of capital market intermediaries as referred to in

the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and
regulations thereunder;

774
Substituted by notification no. G.S.R. 350(E) dated 8th May 2019 w.e.f. 10th May 2019. Prior to
substitution it read as “five thousand rupees”.

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(v) companies engaged in collective investment schemes as referred to in the

Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and
regulations thereunder;

(vi) asset management companies as referred to in the Securities and

Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations
thereunder;

(vii) any other company which is regulated under any other law for the time
being in force.

(3) The application in Form STK 2 shall be accompanied by -

(i) indemnity bond duly notarised by every director in Form STK 3;

(ii) a statement of accounts 775 [in Form No. STK-8] containing assets and
liabilities of the company made up to a day, not more than thirty days before
the date of application and certified by a Chartered Accountant;

(iii) An affidavit in Form STK 4 by every director of the company;

(iv) a copy of the special resolution duly certified by each of the directors of the
company or consent of seventy five per cent of the members of the company in
terms of paid up share capital as on the date of application;

(v) a statement regarding pending litigations, if any, involving the company.

5. Manner of filing of application.–

(1) The application in Form STK 2 shall be signed by a director duly authorised by the
Board in their behalf.

(2) Where the director concerned does not have a registered digital signature
certificate, a physical copy of the form duly filled in shall be signed manually by the
director duly authorised in that behalf and shall be attached with the Form STK 2 while
uploading the form.

6. Form to be certified.-

The Form STK 2 shall be certified by a Chartered Accountant in whole time practice
or Company Secretary in whole time Practice or Cost Accountant in whole time
practice, as the case may be.

775
Inserted vide notification no. G.S.R. 350(E) dated 8th May 2019 w.e.f. 10th May 2019.

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7. Manner of publication of notice –

(1) The notice under sub-section (1) or sub-section (2) of section 248 shall be in Form
STK 5 or STK 6, as the case may be, and be-

(i) placed on the official website of the Ministry of Corporate Affairs on a

separate link established on such website in this regard;

(ii) published in the Official Gazette;

(iii) published in English language in a leading English newspaper and at least

once in vernacular language in a leading vernacular language newspaper, both
having wide circulation in the State in which the registered office of the company
is situated.

Provided that in case of any application made under sub-section (2) of section
248 of the Act, the company shall also place the application on its website, if any, till
the disposal of the application.
776
[Provided further that the publication of notice under clause (iii) of this sub-
rule, in respect of cases falling under subsection (1) of section 248 shall be in Form
No. STK 5A.]

(2) The Registrar of Companies shall, simultaneously intimate the concerned

regulatory authorities regulating the company, viz, the Income-tax authorities, central
excise authorities and service-tax authorities having jurisdiction over the company,
about the proposed action of removal or striking off the names of such companies and
seek objections, if any, to be furnished within a period of thirty days from the date of
issue of the letter of intimation and if no objections are received within thirty days from
the respective authority, it shall be presumed that they have no objections to the
proposed action of striking off or removal of name.

8. Manner of notarisation, appostilisation or consularisation of indemnity bond

and declaration in case of foreign nationals or non-resident Indians:-

For the purposes of these rules, if the person is a foreign national or non-resident
Indian, the indemnity bond, and declaration shall be notarised or appostilised or
consularised.

776
Inserted by the Companies (Removal of Names of Companies from the Register of Companies)
Amendment Rules, 2017 vide notification number G.S.R. 355(E) dated 12th April 2017 with effect from
13th April 2017.

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9. Notice of striking off and dissolution of company. –

The Registrar shall cause a notice under subsection (5) of section 248 of striking off
the name of the company from the register of companies and its dissolution to be
published in the Official Gazette in Form STK 7 and the same shall also be placed on
the official website of the Ministry of Corporate Affairs.

10. Applications or forms pending before Central Government. –

Any application or pending proceeding for striking off or Form-FTE filed with the
Registrar of Companies prior to the commencement of these rules but not disposed of
by such authority for want of any information or document shall, on its submission, to
the satisfaction of the authority, be disposed of in accordance with the rules made
under the Companies Act, 1956 (1 of 1956).

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]

Form No. STK 1

Notice by Registrar for removal of name of a company from the register of companies
[Pursuant to sub-section (1) of section 248 of the Companies Act, 2013 and rule 3 of the Companies
(Removal of Names of Companies from the Register of Companies) Rules, 2016]
----------------------------------------------------------------------
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of the Registrar Of Companies, …….. (State)
(Address of ROC)

Letter No.--------------- Dated:-------------

Reference:

In the matter of M/s --------------------------------- In the matter of Companies Act, 2013

To,
………………
………………
(1) Pursuant to sub-sections (1) and (2) of Section 248 of the Companies Act, 2013,
notice is hereby given that as per available record :-
• the company has failed to commence its business within one year of its
incorporation; or

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• the company is not carrying on any business or operation for a period of two
immediately preceding financial years and has not made any application within
such period for obtaining the status of a dormant company under section 455.
• the company has filed an application under sub-section (2) of section 248 for
removing the name from the register of companies on the grounds mentioned
in sub-section (1) of section 248.
(tick whichever is applicable)

(2) Therefore, on the basis of aforesaid ground(s), I intend to remove the name of
company from the register of companies and request you to send your representation
along with copies of the relevant documents, if any, within thirty days from the date of
receipt of this notice.

(3) Unless a cause to the contrary is shown within the time period above mentioned,
the name of the above mentioned company shall be liable to be removed from the
register of companies. However, the directors of the company shall be liable for
appropriate action under the Act.

Registrar of Companies
To
The Company/All Directors
Mailing address as per record available in Registrar of Companies Office
Copy to all directors : [in case the notice issued to the company only]

Form No. STK-2

Refer general circular no. 16/2016 dated 26th December, 2016.

Form No. STK - 3

Indemnity Bond
(To be drawn on Stamp Paper of appropriate value)
(to be given individually or collectively by every director)
[Pursuant to clause (i) of sub-rule (3) of rule 4 of the Companies (Removal of Names of Companies
from the Register of Companies) Rules, 2016]

To,
The Registrar of Companies,
1. I/We, the Director(s) of ……………………… (mention name of the Company),
incorporated on……………………under the Companies Act, 2013 or Companies Act,
1956 having its registered office at…………………… do hereby declare that:

(i) I/We ……………………….S/o/D/o/W/o Shri……………..am/are Director(s) of this

Company.
(ii) That I/We have made an affidavit confirming that the company does not have any
assets and liabilities as on date.
(iii) Further, the Company has been inoperative from the date of its incorporation/The
Company commenced business/operations/commercial activity after incorporation but

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has been inoperative for the past ………………..year(s) (strike out whichever is not
applicable). Thus the Company is defunct and I request the Registrar of
Companies,……………… to strike off the name of the Company from the register of
companies under Section 248 of the Companies Act, 2013.

2. I/We do hereby undertake to indemnify : -

(i) the claimants for all lawful claims against the company arising in future after the
striking off the name of the Company.
(ii) any person for any losses that may arise pursuant to striking off the name of the
Company.
(iii) the claimants for all lawful claims and liabilities, which have not come to our notice
up to this stage, and if any claim arises or observed even after the name of the
Company has been struck off in terms of Section 248 of the Companies Act, 2013.
Place:
Date:
(Name, Father’s name, Address and Signature)
(To be given by every Director)
WITNESSES:
1. Signature:
Name:
Father’s name:
Address:
Occupation:

2. Signature:
Name:
Father’s name:
Address:
Occupation:

FORM No. STK -4

AFFIDAVIT
(to be given individually by every Director)
[Pursuant to sub section (2) of section 248 read with clause (iii) of sub-rule (3) of Rule 4]
----------------------------------------------------------------------

1. I/ We ……………. Director of………………. (hereinafter called “the Company”),

incorporated on …………….. under the Companies Act, 2013 or the Companies Act,
1956 having its registered office at…………………. and having CIN …………… do
solemnly affirm and state as under:
(i) I/ We …………….. S/o / D/o Shri/Smt……………. Holder of DIN/Income Tax
PAN/Passport number ………………….. (copy of Income Tax PAN/Passport duly
attested by a Gazetted Officer or a whole time practicing professional viz Chartered
Accountant/Company Secretary/Cost Accountant) am Director of the Company stated
above since………. (mention date of appointment).

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(ii) My present residential address is……………………. (copy of documentary

evidence duly attested by a Gazetted Officer or a whole time practicing professional
viz Chartered Accountant/Company Secretary/Cost Accountant) is enclosed
(Alternatively, an affidavit sworn before Magistrate may be enclosed).

(iii) My permanent address is…………………………… (copy of documentary evidence

duly attested by a Gazetted Officer or a whole time practicing professional viz
Chartered Accountant/Company Secretary/Cost Accountant) is enclosed
(Alternatively, an affidavit sworn before Magistrate may be enclosed).
(iv) The Company does not maintain any bank account as on date.
(v) The Company ………………… (mention name of the Company) does not have any
assets and liabilities as on date.
(vi) The Company has been inoperative from the date of its incorporation/The
Company commenced business/operations/commercial activity after incorporation but
has been inoperative for the past……………….. year(s) due to following
reasons…………
(give the reasons here).
(vii) As on date, the Company does not have any dues towards Income Tax/Sales
Tax/Central Excise/Banks and Financial Institutions; and other Central or State
Government Departments/Authorities or any Local Authorities.

2. I further affirm that –

(i) No inquiry, technical scrutiny, inspection or investigation is ordered or pending
against the company;
(ii) No prosecution or any compounding application for any offence under the Act or
under any of the other Acts is pending against the company or against the
undersigned;
(iii) The company is neither listed nor delisted for non-compliance of listing agreement;
(iv) The company is not a company incorporated for charitable purposes under section
8 of the Companies Act, 2013 or section 25 of the Companies Act, 1956;
(v) The company does not have any management disputes or there is no litigation
pending with regard to management or shareholding of the company;
(vi) No order is in operation staying filing of the documents by a court or tribunal or any
other competent authority;
(vii) The company is not prevented from making the applications for strike off as
mentioned in section 249 of the Act.
777
{(viii) The company has fulfilled all pending compliances, if any [Applicable in case
an application under sub-section (2) of section 248 has been filed after the initiation of
action under sub-section (1) of section 248]}.

I solemnly state that the contents of this affidavit are true to the best of my knowledge
and belief and that it conceals nothing and that no part of it is false.
Signature:_____________________
(Deponent)

777
Inserted by notificaiton no. G.S.R. 350(E) dated 8th May 2019 w.e.f. 10th May 2019

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Verification:-
I verify that the contents of this affidavit are true to the best of my knowledge and
belief.

Place: Signature______________________
(Deponent)
Date:
Note : Attention is also drawn to provisions of section 449 which provide for
punishment for false evidence.

FORM No. STK - 5

PUBLIC NOTICE
[Pursuant to sub-section (1) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7
of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]
----------------------------------------------------------------------
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of the Registrar Of Companies
(Address of RoC)

Public Notice No.--------------- Date:------------

Reference:

In the matter of striking off of companies under section 248 (1) of the Companies Act,
2013, of M/s._____________, M/s. ___________, M/s_______

1. Notice is hereby given that the Registrar of Companies has a reasonable cause to
believe that -

(i) The following companies have not commenced business within one year of their
incorporation.
M/s__________________________ (indicate names of companies)
M/s__________________________

(ii) The following companies have not been carrying on any business or operation for
a period of two immediately preceding financial years and have not made any
application within such period for obtaining the status of dormant company under
section 455.
M/s. _____________________________
M/s. _____________________________ (indicate name of companies)

And, therefore, proposes to remove/strike off the names of the above mentioned
companies from the register of companies and dissolve them unless a cause is shown
to the contrary, within thirty days from the date of this notice.

2. Any person objecting to the proposed removal/striking off of name of the companies
from the register of companies may send his/her objection to the office address

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mentioned hereabove within thirty days from the date of publication of this notice.
Registrar of Companies

Following form No. STK – 5A inserted by the Companies (Removal of Names of

Companies from the Register of Companies) Amendment Rules, 2017 vide notification
number G.S.R. 355(E) dated 12th April 2017 with effect from 13th April 2017.

FORM No. STK – 5A

PUBLIC NOTICE
[Pursuant to sub-section (1) and sub-section (4) of section 248 of the Companies Act,
2013 and second proviso to rule 7(1) of the Companies (Removal of Names of
Companies from the Register of Companies) Rules, 2016]
----------------------------------------------------------------------
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of the Registrar of Companies
(Address of RoC)
Public Notice No.---------------
Date:------------
Reference:
In the matter of striking off names of companies under section 248 (1) of the
Companies Act, 2013, of the companies as per details below:—
1. Notice is hereby given that the Registrar of Companies has a reasonable cause to
believe that, the companies, whose names are listed on the _________ (provide web
link of the page on Ministry’s website where the names are listed),-
(i) have not commenced business within one year of their incorporation; OR
(ii) have not been carrying on any business or operation for a period of two immediately
preceding financial years and have not made any application within such period for
obtaining the status of dormant company under section 455 of the Companies Act,
2013.
[Strike off whichever is not applicable]
And, therefore, proposes to remove/strike off the names of the above-mentioned
companies from the register of companies and dissolve them unless a cause is shown
to the contrary, within thirty days from the date of such notice.

2. Any person objecting to the proposed removal/striking off of name of the companies
from the register of companies may send his objection to the office address mentioned
hereabove within thirty days from the date of publication of this notice.

Registrar of Companies.

FORM No. STK – 6

PUBLIC NOTICE

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[Pursuant to sub-section (2) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7
of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]
----------------------------------------------------------------------
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of the Registrar Of Companies
(Address of RoC)
Public Notice No.--------------- Date:------------
Reference:

In the matter of striking off or removal of names of companies under section 248 (2)
of the Companies Act, 2013 in respect of :

1. M/s._____________,
2. M/s. _____________,
3. M/s______________

Notice is hereby given that the Registrar of Companies had received applications from
the above mentioned companies under section 248(2) of the Companies Act, 2013 for
removal of its/their name (s) from the register of companies either on the ground that
they have failed to commence business within one year of their incorporation or on the
ground that the company (ies) is/are not carrying on any business or operation for a
period of two immediately preceding financial years and has/have not made any
application (s) within such period for obtaining the status of a dormant company under
section 455 of the Companies Act, 2013 or the company(ies) have obtained the status
of dormant company, but it/they do not wish to continue its/their registration as
companies and have, therefore, requested for removal/strike off of its/their names from
the register of companies.

(2) Accordingly, the Registrar of Companies proposes to remove or strike off the
names of the above mentioned companies from the Register of Companies.

(3) Any person objecting to the proposed removal or striking off of name of the
companies from the register of companies may send his or her objection to the office
address mentioned here above within thirty days from the date of publication of this
notice.

Registrar of Companies

FORM No. STK - 7

NOTICE OF STRIKING OFF AND DISSOLUTION

[Pursuant to sub-section (5) of section 248 of the Companies Act, 2013 and rule 9 of the Companies
(Removal of Names of Companies from the Register of Companies) Rules, 2016]
----------------------------------------------------------------------
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS

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Office of the Registrar Of Companies

(Address of RoC)
Dated:------------
Reference:

In the matter of Companies Act, 2013 and of M/s -------------------------------------------,

CIN ----------------

This is with respect to this Office’s Notice No. _______ dated _______ application
(Form STK 2) dated ------------- vide SRN ……………………... and notice in form STK
5 issued on dated ____________. Notice is hereby published that pursuant to sub-
section (5) of Section 248 of the Companies Act, 2013 the name of M/s------------------
----- has this day of ………………….. been struck off the register of companies and the
said Company is dissolved.
Registrar of Companies
Registrar of Companies/Additional Registrar of Companies/Joint Registrar of
Companies/Deputy Registrar of Companies/Assistant Registrar of Companies

Mailing Address of the company as per record available in Registrar of Companies

office:
M/s ------------------------------------

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778
[FORM No. STK - 8

[See rule 4(3)(ii)]

Statement of Account
Name of the Company:
CIN No.
Statement of Account as on date:
Particulars : (Brief break up in respect of each item needs to be given).

I. Sources of Funds
(1) Capital
(2) Reserves and Surplus (including balance in Profit and Loss Account)
(3) Loan Funds
Secured loans from Financial Institutions
Secured loans from Banks
Secured loans from Govt.
Others Secured loans
Debentures
Unsecured Loans
Deposits and interest thereon

Total Loan Funds

Total of (1) to (3)

II. Application of Funds

(1) Fixed Assets
(2) Investments
(3) (i) Current Assets, loans and Advances
Less : (ii) Current Liabilities and provisions
Creditors
Unpaid Dividend
Payables
Others

Total Current Liabilities and provisions

Net Current assets ( i –ii)

(4) Miscellaneous expenditure to the extent not written off or adjusted

(5) Profit and Loss Account (Debit balance)
Total of 1 to 5
Date : Place:
Name and Signature of (Managing Director)*
Name and Signature (Secretary)*

778
Inserted vide notification no. G.S.R. 350(E) dated 8th May 2019 w.e.f. 10th May 2019.

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Name and Signature of (Directors)

* Applicable only if there is MD/Secretary
Duly certified by Chartered Accountant in whole time practice.
Membership No/Certificate of Practice Number with seal

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The Companies (Miscellaneous) Rules, 2014

Chapter XXIX: the Companies

(Miscellaneous) Rules, 2014
Government of India
Ministry of Corporate Affairs
NOTIFICATION
New Delhi, the 31st March, 2014

G.S.R.253(E).- In exercise of the powers conferred under section 455, sub-section (2) of
section 459 and sub-section (1) of section 464 read with section 469 of the Companies
Act, 2013, and in supersession of the Companies (Central Government’s) General Rules
and Forms, 1956 or any other rules prescribed under the Companies Act, 1956 (1 of
1956) on matters covered under these rules, except as respects things done or omitted
to be done before such supersession, the Central Government hereby makes the
following rules, namely:-

1. Short title and commencement.-

(1) These rules may be called the Companies (Miscellaneous) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.

2. Definitions.

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means Annexure enclosed to these Rules;

(c) “Fees” means fees as prescribed in the Companies (Registration Offices and
Fees) Rules, 2014;

(d) ”Form” or “e-Form” means a form set forth in Annexure to these rules which shall
be used for the matter to which it relates;

(e) “section” means section of the Act;

(2) Words and expressions used in these rules but not defined, and defined in the Act or
in the Companies (Specification of definitions details) Rules, 2014 shall have the
meanings respectively assigned to them in the Act or in the said Rules.

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The Companies (Miscellaneous) Rules, 2014

3. Application for obtaining status of dormant company.-

[Refer section 455]

For the purposes of sub-section (1) of section 455, a company may make an application
in Form MSC-1 along with such fee as provided in the Companies (Registration Offices
and Fees) Rules, 2014 to the Registrar for obtaining the status of a Dormant Company in
accordance with the provisions of section 455 after passing a special resolution to this
effect in the general meeting of the company or after issuing a notice to all the
shareholders of the company for this purpose and obtaining consent of at least 3/4 th
shareholders (in value):
Provided that a company shall be eligible to apply under this rule only, if-
(i) no inspection, inquiry or investigation has been ordered or taken up or carried
out against the company;
(ii) no prosecution has been initiated and pending against the company under
any law;
(iii) the company is neither having any public deposits which are outstanding nor
the company is in default in payment thereof or interest thereon;
(iv) the company is not having any outstanding loan, whether secured or
unsecured:
Provided that if there is any outstanding unsecured loan, the company
may apply under this rule after obtaining concurrence of the lender and
enclosing the same with Form MSC-1 ;
(v) there is no dispute in the management or ownership of the company and a
certificate in this regard is enclosed with Form MSC-1;
(vi) the company does not have any outstanding statutory taxes, dues, duties etc.
payable to the Central Government or any State Government or local authorities
etc.;
(vii) the company has not defaulted in the payment of workmen’s dues;
(viii) the securities of the company are not listed on any stock exchange within or
outside India.

4. Certificate of status of dormant company.-

[Refer section 455]

The Registrar shall, after considering the application filed in Form MSC-1, issue a
certificate in Form MSC-2 allowing the status of a Dormant Company to the applicant.

5. Register of dormant companies.-

[Refer section 455]

Page 1350
 Chapter XXIX

The Companies (Miscellaneous) Rules, 2014

The Register maintained under the portal maintained by the Ministry of Corporate Affairs
on its web-site www.mca.gov.in or any other website notified by the Central Government,
shall be the register for dormant companies.

6. Minimum number of directors for dormant company.-

[Refer section 455]

A dormant company shall have a minimum number of three directors in case of a public
company, two directors in case of a private company and one director in case of a One
Person Company:
Provided that the provisions of the Act in relation to the rotation of auditors shall
not apply on dormant companies.

7. Return of dormant companies.-

[Refer section 455]

A dormant company shall file a “Return of Dormant Company” annually, inter-alia,
indicating financial position duly audited by a chartered accountant in practice in Form
MSC-3 along with such annual fee as provided in the Companies (Registration Offices
and Fees) Rules, 2014 within a period of thirty days from the end of each financial year:
Provided that the company shall continue to file the return or returns of allotment
and change in directors in the manner and within the time specified in the Act, whenever
the company allots any security to any person or there is any change in the directors of
the company.

8. Application for seeking status of an active company.-

[Refer section 455]

(1) An application, under sub-section (5) of section 455, for obtaining the status of an
active company shall be made in Form MSC-4 along with fees as provided in the
Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by a
return in Form MSC-3 in respect of the financial year in which the application for obtaining
the status of an active company is being filed:
Provided that the Registrar shall initiate the process of striking off the name of the
company if the company remains as a dormant company for a period of consecutive five
years.

(2) The Registrar shall, after considering the application filed under sub-rule (1), issue
a certificate in Form MSC-5 allowing the status of an active company to the applicant.

Page 1351
 Chapter XXIX

The Companies (Miscellaneous) Rules, 2014

(3) Where a dormant company does or omits to do any act mentioned in the Grounds
of application in Form MSC-1 submitted to Registrar for obtaining the status of dormant
company, affecting its status of dormant company, the directors shall within seven days
from such event, file an application, under sub-rule (1) of this rule, for obtaining the status
of an active company.

(4) Where the Registrar has reasonable cause to believe that any company registered
as ‘dormant company’ under his jurisdiction has been functioning in any manner, directly
or indirectly, he may initiate the proceedings for enquiry under section 206 of the Act and
if, after giving a reasonable opportunity of being heard to the company in this regard, it is
found that the company has actually been functioning, the Registrar may remove the
name of such company from register of dormant companies and treat it as an active
company.

9. Fees for application to Central Government.-

[Refer section 459]

For the purposes of sub-section (2) of section 459, every application which may be, or is
required to be, made to the Central Government under any provision of the Act-

(a) in respect of any approval, sanction, consent, confirmation or recognition to be

accorded by that Government to, or in relation to, any matter; or

(b) in respect of any direction or exemption to be given or granted by that Government in

relation to any matter; or

(c) in respect of any other matter,

shall be accompanied by such fee as provided in the Companies (Registration Offices

and Fees) Rules, 2014.

10. Association or partnership of persons exceeding certain number. –

[Refer section 464]

No association or partnership shall be formed, consisting of more than fifty persons for
the purpose of carrying on any business that has for its objects the acquisition of gain
by the association or partnership or by individual members thereof, unless it is
registered as a company under the Act or is formed under any other law for the time
being in force.

Page 1352
 Chapter XXIX

The Companies (Miscellaneous) Rules, 2014

779
[11. Application or forms pending before Central Government, Regional Director
or Registrar of companies.

Any application or form filed with the Central Government or Regional Director or
Registrar (hereinafter referred to as 'the authority') prior to the commencement of these
rules but not disposed of by such authority for want of any information or document shall,
on its submission, to the satisfaction of the authority, be disposed of in accordance with
the rules made under the Companies Act, 1956 (1 of 1956).]

FORMS notified

[Latest version of forms can be downloaded from

mca.gov.in/MinistryV2/Download_eForm_choose.html. Only those forms which
are not available online are included here.]
Form No. MSC-1
Form No. MSC.2
Form No. MSC-3
Form No. MSC-4
Form No. MSC.5

779
Rule 11 inserted by Notification number G.S.R. 506 (E) dated 17th July, 2014.

Page 1353
 Annexure N1

Notification 12 September 2013

NOTIFICATIONS
Annexure N1: Notification 12 September
2013
[For clarification on transitional period for resolutions passed under the Companies Act,
1956, refer circular 32/2014 dated 23 July 2014.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 12th September, 2013

S.O. 2754(E).—In exercise of the powers conferred by sub-section (3) of Section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the
12th day of September, 2013 as the date on which the following provisions of the said
Act shall come into force, namely :-
SL. No. Section
1. Section 2
clause (1);
clauses (3) to (6) (both inclusive);
clauses (8) to (12) (both inclusive);
clauses (14) to (22) (both inclusive);
clauses (24) to (28) (both inclusive);
clause (29) [except sub-clause (iv)];
clause (30);
clauses (32) to (40) (both
inclusive); clauses (43) to (46)
(both inclusive);
clauses (49) to (61) (both inclusive);
clauses (63) to (66) (both inclusive);
clause (67) [except sub-clause (ix)];
clause (84);
clause (86);
clause (87) [except the proviso and Explanation (d)],
clauses (88) and (89);
clauses (90) to (95) (both inclusive);
2. Section 19;
3. Section 21;
4. Section 22;
5. Section 23 [except clause (b) of sub-section (1) and sub-section
(2)];

Page 1354
 Annexure N1

Notification 12 September 2013

6. Section 24;
7. Section 25 [except sub-section (3)];
8. Sections 29 to 32 (both inclusive);
9. Section 33 [except sub-section (3)];
10. Section 34;
11. Section 35 [except clause (e) of sub-section (1)];
12. Sections 36 to 38 (both inclusive);
13. Section 39 [except sub-section (4)];
14. Section 40 [except sub-section (6)];
15. Sections 44 and 45;
16. Sections 49 to 51 (both inclusive);
17. Sections 57 to 60 (both inclusive);
18. Section 65;
19. Section 69;
20. Section 70 [except sub-section (2)];
21. Section 86;
22. Section 91;
23. Section 100 [except sub-section (6)];
24. Section 102;
25. Section 103;
26. Section 104;
27. Section 105 [except the third and fourth proviso of sub-section (1)
and sub-
section (7)];
28. Section 106;
29. Section 107;
30. Section 111;
31. Section 112;
32. Section 113 [except clause (b) of sub-section (1)];
33. Section 114;
34. Section 116;
35. Section 127;
36. Section 133;
37. Section 161 [except sub-section (2)];
38. Sections 162 and 163;
39. Section 176;
40. Sections180 to 183 (both inclusive);
41. Section 185;
42. Section 192;
43. Section 194;
44. Section 195;
45. Section 202;
46. Section 379;
47. Sections 382 and 383;
48. Section 386 [except clause (a)];

Page 1355
 Annexure N1

Notification 12 September 2013

49. Section 394;

50. Section 405;
51. Sections 407 to 414 (both inclusive);
52. Section 439;
53. Sections 443 to 453 (both inclusive);
54. Sections 456 to 463 (both inclusive);
55. Sections 467 to 470 (both inclusive).

Page 1356
 Annexure N2

Electoral Trust

Annexure N2: Electoral Trust

MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 7th November, 2013

S.O. 3396(E).— In exercise of the powers conferred by sub-section (6) of section 25

of the Companies Act, 1956 (1 of 1956) (hereinafter referred to as the said Act), the Central
Government hereby directs that the companies incorporated with the name containing the
expression “electoral trust” and approved in accordance with the procedure laid down in the
Electoral Trusts Scheme, 2013, notified vide number S.O. 309(E), dated 31st January, 2013,
and to which licence is granted under section 25 of the said Act, shall be exempt from the
provisions of clause (b) of sub-section (1) and sub-section (2) of section 293A of the said
Act which has since been replaced by sub-section (1) of section 182 of the Companies Act,
2013 (18 of 2013) and notified vide number S.O. 2754(E) dated 12th September, 2013.
[F. No 17/27/2013-CL-V]
RENUKA KUMAR, Jt. Secy.

Page 1357
 Annexure N3

Amendment to Schedule VII

Annexure N3: Notification for Section 135

and Schedule VII
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 27th February, 2014

S.O. 582(E).—In exercise of the powers conferred by Sub-section 3 of Section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 1st
day of April, 2014 as the date on which the provision of section 135 and Schedule VII of
the said Act shall come into force.
[F. No. 1/15/2013-CL-V]
RENUKA KUMAR , Jt. Secy.

Page 1358
 Annexure N4

Notification 01 April 2014

Annexure N4: Notification 01 April 2014

[For clarification on transitional period for resolutions passed under the Companies Act,
1956, refer circular 32/2014 dated 23 July 2014.]
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 26th March, 2014

S.O. 902(E).—In exercise of the powers conferred by sub-section (3) of

Section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby
appoints the 1st day of April, 2014 as the date on which the following provisions of
the said Act shall come into force, namely:—
Sl. No. Sections

1 Section 2
2 clause (2);
3 clause (7);
4 clause (13);
5 clause (31);
6 clause (41);
7 clause (42);
8 clause (47) and clause (48);
9 clause (62);
10 clause (83);
11 clause (85);
12 Explanation (d) of clause (87);
13 Sections 3 to 6 (both inclusive);
14 Section 7 [except sub-section (7)];
15 Section 8 [except sub-section (9)];
16 Sections 9 to 13 (both inclusive);
17 Section 14 [except second proviso to sub-section (1) and sub-section (2)];
18 Sections 15 to 18 (both inclusive);
19 Section 20;
20 clause (b) of sub-section (1) and sub-section (2) of section 23;
21 sub-section (3) of section 25;
22 Sections 26 to 28 (both inclusive);
23 Sub-section (3) of section 33;
24 Clause (e) of sub-section (1) of section 35;
25 Sub-section (4) of section 39;
26 Sub-section (6) of section 40;
27 Sections 41 and 42 (both inclusive);
28 Section 43;
29 Sections 46 and 47 (both inclusive);
30 Sections 52 to 54 (both inclusive);
31 Section 55 except sub-section (3);
32 Section 56;
33 Section 61 [except proviso to clause (b) of sub-section (1)];
34 Section 62 [except sub-sections (4) to (6)];
35 Sections 63 and 64 (both inclusive);
36 Sections 67 and 68 (both inclusive);
37 Sub-section (2) of section 70;
38 Section 71 [except sub-sections (9) to (11)];

Page 1359
 Annexure N4

Notification 01 April 2014

Sl. No. Sections

39 Section 72;
Section 73;
40
41 Sub-section (1) of section 74;
42 Section 76;
43 Sections 77 to 85 (both inclusive);
44 Sections 87 to 90 (both inclusive);
45 Sections 92 to 96 (both inclusive);
46 Sub-section (6) of section 100;
47 Section 101;
48 Third and Fourth proviso to sub-section (1) and sub-section (7) of section
49 105;
Sections 108 to 110 (both inclusive);
50 Clause (b) of sub-section (1) of section 113;
51 Section 115;
52 Sections 117 and 118 (both inclusive);
53 Section 119 [except sub-section (4)];
54 Sections 120 to 122 (both inclusive);
55 Section 123;
56 Section 126;
57 Sections 128 and 129 (both inclusive);
58 Section 134;
59 Sections 136 to 139 (both inclusive);
60 Section 140 [except second proviso to sub-section (4) and sub-section (5)];
61 Sections 141 to 160 (both inclusive);
62 Sub-section (2) of section 161;
63 Sections 164 to 168 (both inclusive);
64 Section 169 except sub-section (4);
65 Sections 170 to 172 (both inclusive);
66 Sections 173 to 175 (both inclusive);
67 Sections 177 to 179 (both inclusive);
68 Section 184;
69 Sections 186 to 191 (both inclusive);
70 Section 193;
71 Sections 196 to 201 (both inclusive);
72 Sections 203 to 205 (both inclusive);
73 Section 206 to 209 (both inclusive);
74 Section 210;
75 Section 211;
76 Section 212, [except references of sub-section (10) of section 66, sub-
section (5) of section 140, section 213, sub-section (1) of section 251 and
sub-section (3) of section 339 made in sub-section (6) and also sub-
77 sections (8)
Sections 214toand
(10)];
215;
78 Section 216 [except sub-section (2)];
79 Section 217;
80 Sections 219 and 220 (both inclusive);
81 Section 223;
82 Section 224 [except sub-section (2) and (5)];
83 Section 225;
84 Sections 228 and 229 (both inclusive);
85 Sections 366 to 369 (both inclusive);
86 Section 370 (except the proviso);
87 Section 371;
88 Section 374;

Page 1360
 Annexure N4

Notification 01 April 2014

Sl. No. Sections

89 Sections 380 and 381 (both inclusive);

90 Sections 384 and 385 (both inclusive);
91 Clause (a) of section 386;
92 Sections 387 to 390 (both inclusive);
93 Sub-section (1) of section 391;
94 Sections 392 and 393 (both inclusive);
95 Section 395;
96 Sections 396 to 398 (both inclusive);
97 Section 399 [except reference of word Tribunal in sub-section (2)];
98 Sections 400 to 404 (both inclusive);
99 Section 406;
100 Section 442;
101 Sections 454 and 455 (both inclusive);
102 Section 464;
103 Schedule-I;
104 Schedule-II;
105 Schedule-III;
106 Schedule-IV;
107 Schedule-V;
108 Schedule-VI.
[F. No. 1/15/2013-CL. V]

Page 1361
 Annexure N5

Delegation to RDs

Annexure N5: Delegation to RDs

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 21st May, 2014

S.O. 1352(E).— In exercise of the powers conferred by Section 458 of the Companies
Act, 2013 (18 of 2013), and in supersession of the notification of the Government of
India, Ministry of Corporate Affairs, dated the 10th July, 2012, published in the Gazette
of India, Extraordinary, Part II, Section 3, sub-section (ii) vide number S.O. 1539(E),
dated the 10th July, 2012, in so far as it relates to items (a) to (f) and item (n), except as
respects things done or omitted to be done before such supersession, the Central
Government hereby delegates to the Regional Directors at Mumbai, Kolkata, Chennai,
Noida, Ahmedabad, Hyderabad and Shillong, the power and functions vested in it under
the following sections of the said Act, subject to the condition that the Central
Government may revoke such delegation of powers or may itself exercise the powers
under the said sections, if in its opinion such a course of action is necessary in the public
interest, namely :—
(a) clause (i) of sub-section (4) of Section 8 (for alteration of memorandum in case
of conversion into another kind of company);
(b) sub-section (6) of Section 8;
(c) sub-sections (4) and (5) of Section 13;
(d) Section 16;
(e) Section 87;
(f) sub-section (3) of Section 111;
(g) sub-section (1) of Section 140; and
(h) proviso (i) to sub-section (1) of Section 399.

2. This notification shall come into force with effect from the date of its publication in
the Official Gazette.

Page 1362
 Annexure N5

Delegation to RDs

Annexure N6: Delegation to ROCs

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 21st May, 2014

S.O. 1353 (E).—In exercise of the powers conferred by Section 458 of the Companies
Act, 2013 (18 of 2013), and in supersession of the notification of the Government of
India, Ministry of Corporate Affairs, dated the 10th July, 2012, published in the Gazette
of India, Extraordinary, Part II, section 3, sub-section (ii) vide number S.O. 1538 (E),
dated the 10th July, 2012, in so far as it relates to items (a) to (b) and items (d) to (e),
except as respects things done or omitted to be done before such supersession, the
Central Government hereby delegates to the Registrar of Companies, the power and
functions vested in it under the following sections of the said Act, subject to the condition
that the Central Government may revoke such delegation of powers or may itself
exercise the powers and functions under the said sections, if in its opinion, such a course
of action is necessary in the public interest, namely:—
(a) sub-section (2) of Section 4;
(b) sub-section (1) of Section 8;
(c) clause (i) of sub-section (4) of Section 8, except for alteration of memorandum
in case of conversion into another kind of company;
(d) sub-section (5) of Section 8; and
(e) sub-section (2) of Section 13.
2. This notification shall come into force from the date of its publication in the Official
Gazette.
[F. No. 1/6/2014-CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1363
 Annexure N7

Sec. 74(2) and (3) notified

Annexure N7: Section 74(2) and (3)

notified
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 6th June, 2014

S.O. 1459(E).—In exercise of the powers conferred by sub-section (3) of

Section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby
appoints the 6th day of June, 2014 as the date on which the provisions of sub-
section (2) and (3) of Section 74 of the said Act shall come into force.

[F. No. 1/8/2013-CL-V]

Page 1364
 Annexure N8

Constitution of National Advisory Committee on AS

Annexure N8: Constitution of National

Advisory Committee on Accounting
Standards
[Refer Section 132]
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 18th September, 2014

S.O. 2425(E).—In exercise of the powers conferred by sub-section (1) of Section 210A
of the Companies Act, 1956 (1 of 1956), the Central Government hereby constitutes an
Advisory Committee to be called the National Advisory Committee on Accounting
Standards, consisting of the following persons to advise the Central Government on the
formulation and laying down of accounting policies and accounting standards for
adoption by companies or class of companies under the said Act, namely:—

(1) Shri Amarjit Chopra, Chartered Chairperson, [Nominated under clause

Accountant (a) of sub-section(2) of section 210A]
(2) Dr A.S. Durga Prasad, President, Member, [nominated under clause (b) of
Nominee of The Institute of Cost and sub-section (2) of section 2I0A]
Works Accountants of India
(3) Shri R. Sridharan. President, Member, [nominated under clause (b) of
Nominee of The Institute of Company sub-section (2) of section 2I0A]
Secretaries of India
(4) CA. K. Raghu, President, Nominee Member, [nominated under clause (b) of
of The Institute of Chartered sub-section (2) of section 210A]
Accountants of India
(5) Joint Secretary, Ministry of Member,[Nominated under clause (c) of
Corporate Affairs sub-section (2) of section 210A]
(6) Shri Sudarshan Sen, Chief General Member,[Nominated under clause (d) of
Manager-in-Charge, Nominee of sub-section (2) of section 210A]
Reserve Bank of India
(7) Shri P Sesh Kumar, Director Member,[Nominated under clause (e) of
General (Commercial), Nominee of sub-section (2) of section 210A]
Comptroller and Auditor General of
India
(8) Prof. I.M Pandey, Ex-faculty, Indian Member,[Nominated under clause (f) of
Institute of Management, Ahmedabad sub-section (2) of section 210A]
(9) joint Secretary, Tax Policy Law-B, Member,[Nominated under clause (g) of
Nominee of Central Board of Direct sub-section (2) of section 210A]
Taxes.
(10) Shri Rostow Ravanan, Nominee of Member,[Nominated under clause (h) of
Confederation of Indian Industry. sub-section (2) of section 210A]

Page 1365
 Annexure N8

Constitution of National Advisory Committee on AS

(11) Shri Adesh Gupta, Nominee of Member,[Nominated under clause (h) of

Federation of Indian Chambers of sub-section (2) of section 210A]
Commerce and Industry
(12) Dr. Ashok Haldia, Nominee of Member,[Nominated under clause (h) of
Associated Chambers of Commerce sub-section (2) of section 210A]
and Industry of India
(13) Shri S. Ravindran, Executive Member,[Nominated under clause (i) of
Director, Nominee of Securities sub-section (2) of section 210A]
Exchange Board of India.

2. The Chairperson and members shall hold office for a period of one year from the
date of publication of this notification in the Official Gazette or till the constitution of
National Financial Reporting Authority under Section 132 of the Companies Act, 2013
(18 of 2013) whichever is earlier.
3. This notification shall come into force onl8th September, 2014.

Page 1366
 Annexure N9

ROCs as Adjudicating Officers

Annexure N9: ROCs as adjudicating officers

under section 454 read with the Companies
(Adjudication of Penalties) Rules, 2014
Ministry of Corporate Affairs
NOTIFICATION
Shastri Bhawan, 'A' Wing, 5th Floor,
New Delhi, dated:24th March, 2015

S.0. 831 (E).- In exercise of the powers conferred by section 454 of the Companies Act,
2013 (18 of 2013) read with the Companies (Adjudication of Penalties) Rules, 2014, the
Central Government hereby appoints following Registrars of Companies as adjudicating
officers for the purposes of this Act in respect of jurisdictions indicated against each
Registrar.

SI. No. Designation States/ Union territories under his

jurisdiction
1. Registrar of Companies, Union territory of Delhi and whole State of
Delhi Haryana.
2. Registrar of Companies, Whole State of Punjab and Union
Chandigarh territory of Chandigarh.
3. Registrar of Companies, Whole State of Uttar Pradesh
Kanpur
4. Registrar of Companies - Whole State of Uttarakhand
cum-Official Liquidator,
Nainital
5. Registrar of Companies -cum- Whole State of Jammu and Kashmir.
Official Liquidator, Jammu
6. Registrar of Companies -cum- Whole State of Himachal Pradesh
Official Liquidator, Shimla
7. Registrar of Companies, Whole State of West Bengal.
Kolkata
8. Registrar of Companies -cum- Whole State of Bihar.
Official Liquidator, Patna
9. Registrar of Companies -cum- Whole State of Orissa.
Official Liquidator, Cuttack
10. Registrar of Companies -cum- Whole State of Jharkhand.
Official Liquidator, Ranchi

Page 1367
 Annexure N9

ROCs as Adjudicating Officers

780
11. [Registrar of Companies, Whole States of Assam, Meghalaya, Manipur,
Guwahati] Tripura, Mizoram, Nagaland and Arunachal
Pradesh.
12. Registrar of Companies, (i) Whole State of Tamil Nadu except
Chennai Coimbatore, Dharmapuri, Dindigul, Erode,
Krishnagiri, Namakkal, Nilgiris, Salem,
Tiruppur districts.
(ii) Union territory of Andaman and Nicobar
Islands.
13. Registrar of Companies, Coimbatore, Dharmapuri, Dindigul,Erode,
Coimbatore Krishnagiri, Namakkal, Nilgiris, Salem,
Tiruppur districts the State of Tamil Nadu.
14. Registrar of Companies, Union territory of Puducherry
Puducherry
15. Registrar of Companies, Whole State of Kerala and Union territory
Ernakulam of Lakshadweep Islands.
16. Registrar of Companies, Whole States of Andhra Pradesh and
Hyderabad Telangana.
17. Registrar of Companies, Whole State of Karnataka.
Bangalore
18. Registrar of Companies, Whole State of Maharashtra except
Mumbai Pune, Ahmednagar, Kolhapur, Solapur,
Satara, Sangli, Ratnagiri, Sindhudurg.
19. Registrar of Companies, Pune, Ahmednagar, Kolhapur, Solapur,
Pune Satara, Sangli, Ratnagiri, Sindhudurg
districts the State of Maharashtra.
20. Registrar of Companies -cum- Whole State of Goa and Union territory of
Official Liquidator, Goa Daman and Diu.
21. Registrar of Companies, Whole State of Gujarat and Union territory
Ahmedabad of Dadra and Nagar Haveli.
22. Registrar of Companies, Whole State of Madhya Pradesh.
Gwalior
23. Registrar of Companies -cum- Whole State of Chhattisgarh.
Official Liquidator, Bilaspur
24. Registrar of Companies -cum- Whole State of Rajasthan.
Official Liquidator, Jaipur

2. The Appeals, if any, filed before the concerned Regional Director having jurisdiction
over the adjudicating offices shall be disposed of in accordance with the notification of
the Government of India in the Ministry of Corporate Affairs published in the Gazette of
India, Extraordinary, Part II, Section 3 Sub-section (i), vide number G.S.R. 887 (E), dated
the 14th December, 2011 and G.S.R.763 (E), dated the 15th October, 2012.

780
Substitutued for ‘Registrar of Companies, Shillong’ vide notification number S.O. 2650(E) dated 25th
July 2019.

Page 1368
 Annexure N9

ROCs as Adjudicating Officers

3. This notification shall come into force with immediate effect.

[F.No. A-42011/112/2014-Ad.II]

Page 1369
 Annexure N10

Delegation of powers u/s. 94 (5) to Regional Directors

Annexure N10: Delegation of powers u/s. 94 (5) to Regional Directors

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 31st March, 2015
S.O.891(E).— In exercise of the powers conferred by section 458 of the Companies
Act, 2013 (18 of 2013), the Central Government hereby delegates to the Regional
Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad, Hyderabad and
Shillong, the powers and functions vested in it under sub-section (5) of section 94
of the Companies Act, 2013, subject to the condition that the Central Government
may revoke such delegation of powers or may itself exercise the powers under the
said sub-section, if in its opinion such a course of action is necessary in the public
interest.
2. This notification shall come into force with effect from the date of its publication
in the Official Gazette.
[F. No. 1/6/2014-CL-V]
AMARDEEP SINGH BHATIA

Page 1370
 Annexure N11

Secretarial Standard – 1 Board Meetings

Annexure N11: ICSI notified Secretarial Standards

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

NOTIFICATION

New Delhi, the 23rd April, 2015

ICSI NO. 1(SS) of 2015 ---In exercise of the powers conferred by sub-section (10)
of section 118 and explanation under sub-section (1) of section 205 of the Companies
Act, 2013 (18 of 2013), the Central Government has vide letter no.1/3/2014/CL/I dated
April 10, 2015 approved the following Secretarial Standards (SS), specified by the
Institute of Company Secretaries of India constituted under Section 3 of Companies
Secretaries Act, 1980 namely, :-

(i) SS-1 : Meetings of the Board of Directors ( Annexure I) and

(ii) SS-2 : General Meetings (Annexure II)

These Secretarial Standards shall come into force on 1st day of July, 2015.

By the Order of the Council of the Institute of Company

Secretaries of India C. S. SUTANU SINHA, Chief Executive
and Officiating Secy.

[ ADVT-III/4/Exty/121/18/15]

Secretarial Standard on Meetings of the Board of Directors

SECRETARIAL STANDARD

ON

MEETINGS OF THE BOARD OF DIRECTORS

The following is the text of the Secretarial Standard-1 (SS-1) on "Meetings of the
Board of Directors", issued by the Council of the Institute of Company Secretaries of
India and approved by the Central Government.

Adherence by a company to this Secretarial Standard is mandatory, as per the

provisions of the Companies Act, 2013.

(In this Secretarial Standard, the Standard portions have been set in bold type.
These shall be read in the context of the background material which has been
set in normal. Both the Standard portions and the background material have
equal authority).

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INTRODUCTION

This Standard prescribes a set of principles for convening and conducting Meetings of
the Board of Directors and matters related thereto.

SCOPE

This Standard is applicable to the Meetings of Board of Directors of all companies

incorporated under the Act except One Person Company (OPC) in which there is
only one Director on its Board. The principles enunciated in this Standard for
Meetings of the Board of Directors are also applicable to Meetings of Committee
(s) of the Board, unless otherwise stated herein or stipulated by any other
applicable Guidelines, Rules or Regulations.

This Standard is in conformity with the provisions of the Act. However, if, due to
subsequent changes in the Act, a particular Standard or any part thereof becomes
inconsistent with the Act, the provisions of the Act shall prevail.

DEFINITIONS

The following terms are used in this Standard with the meaning specified:

"Act" means the Companies Act, 2013 (Act No. 18 of 2013) or any previous
enactment thereof, or any statutory modification thereto or re-enactment thereof
and includes any Rules and Regulations framed thereunder.

"Articles" means the Articles of Association of a company, as originally framed or as

altered from time to time or applied in pursuance of any previous company law or the
Companies Act, 2013.

"Calendar Year" means calendar year as per Gregorian calendar i.e. a period of one
year which begins on 1' January and ends on 31 5' December.

"Chairman" means the Chairman of the Board or its Committee, as the case may be,
or the Chairman appointed or elected for a Meeting.

"Committee" means a Committee of Directors constituted by the Board.

"Electronic Mode" in relation to Meetings means Meetings through video conferencing or

other audio-visual means. "Video conferencing or other audio-visual means" means
audio-visual electronic communication facility employed which enables all the persons
participating in a Meeting to communicate concurrently with each other without an
intermediary and to participate effectively in the Meeting.

"Invitee" means a person, other than a Director and Company Secretary, who attends
a particular Meeting by invitation.

"Maintenance" means keeping of registers and records either in physical or electronic

form, as may be permitted under any law for the time being in force, and includes the

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making of appropriate entries therein, the authentication of such entries and the
preservation of such physical or electronic records.

"Meeting" means a duly convened, held and conducted Meeting of the Board or any
Committee thereof. "Minutes" means a formal written record, in physical or electronic
form, of the proceedings of a Meeting.

"Minutes Book" means a Book maintained in physical or in electronic form for the
purpose of recording of Minutes.

"National Holiday" includes Republic Day i.e. 20h January, Independence Day i.e. 15' h
August, Gandhi Jayanti i.e. 2nd October and such other day as may be declared as
National Holiday by the Central Government.

"Original Director" means a Director in whose place the Board has appointed any
other individual as an Alternate Director.

"Quorum" means the minimum number of Directors whose presence is necessary for
holding of a Meeting.

"Secretarial Auditor" means a Company Secretary in Practice appointed in pursuance

of the Act to conduct the secretarial audit of the company.

"Secured Computer System" means computer hardware, software, and procedure that —

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

"Timestamp" means the current time of an event that is recorded by a Secured

Computer System and is used to describe the time that is printed to a file or other
location to help keep track of when data is added, removed, sent or received.

Words and expressions used and not defined herein shall have the meaning
respectively assigned to them under the Act.

SECRETARIAL STANDARDS

1. Convening a Meeting

1.1 Authority

1.1.1 Any Director of a company may, at any time, summon a Meeting of the
Board, and the Company Secretary or where there is no Company Secretary, any
person authorised by the Board in this behalf, on the requisition of a Director,
shall convene a Meeting of the Board, in consultation with the Chairman or in

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his absence, the Managing Director or in his absence, the Whole-time Director,
where there is any, unless otherwise provided in the Articles.

1.1.2 The Chairman may, unless dissented to or objected by the majority of

Directors present at a Meeting at which a Quorum is present, adjourn the
Meeting for any reason, at any stage of the Meeting.

1.2 Time, Place, Mode and Serial Number of Meeting

1.2.1 Every Meeting shall have a serial number.

1.2.2 A Meeting may be convened at any time and place, on any day,
excluding a National Holiday.

Notice of the Meeting, wherein the facility of participation through Electronic Mode is
provided, shall clearly mention a venue, whether registered office or otherwise, to be
the venue of the Meeting and it shall be the place where all the recordings of the
proceedings at the Meeting would be made.

A Meeting adjourned for want of Quorum shall also not be held on a National
Holiday.

1.2.3 Any Director may participate through Electronic Mode in a Meeting, if the
company provides such facility, unless the Act or any other law specifically
does not allow such participation through Electronic Mode in respect of any
item of business.

Directors shall not participate through Electronic Mode in the discussion on certain
restricted items, unless expressly permitted by the Chairman. Such restricted items
of business include approval of the annual financial statement, Board's report
prospectus and matters relating to amalgamation, merger, demerger, acquisition
and takeover. Similarly, participation in the discussion through Electronic Mode
shall not be allowed in Meetings of the Audit Committee for consideration of annual
financial statement including consolidated financial statement, if any, to be
approved by the Board, unless expressly permitted by the Chairman.

1.3 Notice

1.3.1 Notice in writing of every Meeting shall be given to every Director by hand
or by speed post or by registered post or by courier or by facsimile or by e-mail
or by any other electronic means.

The Notice shall be sent to the postal address or e-mail address, registered by the
Director with the company or in the absence of such details or any change thereto,
any of such addresses appearing in the Director Identification Number (DIN)
registration of the Director.

Where a Director specifies a particular means of delivery of Notice, the Notice shall
be given to him by such means.

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Proof of sending Notice and its delivery shall be maintained by the company.

1.3.2 Notice shall be issued by the Company Secretary or where there is no

Company Secretary, any Director or any other person authorised by the Board
for the purpose.

1.3.3 The Notice shall specify the serial number, day, date, time and full
address of the venue of the Meeting.

1.3.4 In case the facility of participation through Electronic Mode is being made
available, the Notice shall inform the Directors about the availability of such
facility, and provide them necessary information to avail such facility.

Where such facility is provided, the Notice shall seek advance confirmation from the
Directors as to whether they will participate through Electronic Mode in the Meeting.

The Notice shall also contain the contact number or e-mail address (es) of the
Chairman or the Company Secretary or any other person authorised by the Board, to
whom the Director shall confirm in this regard. In the absence of an advance
communication or confirmation from the Director as above, it shall be assumed that
he will attend the Meeting physically.

1.3.5 The Notice of a Meeting shall be given even if Meetings are held on pre-
determined dates or at pre-determined intervals.

1.3.6 Notice convening a Meeting shall be given at least seven days before the
date of the Meeting, unless the Articles prescribe a longer period.

In case the company sends the Notice by speed post or by registered post or by
courier, an additional two days shall be added for the service of Notice.

Notice of an adjourned Meeting shall be given to all Directors including those who did
not attend the Meeting on the originally convened date and unless the date of
adjourned Meeting is decided at the Meeting, Notice thereof shall also be given not
less than seven days before the Meeting.

13.7 The Agenda, setting out the business to be transacted at the Meeting, and
Notes on Agenda shall be given to the Directors at least seven days before the
date of the Meeting, unless the Articles prescribe a longer period.

Agenda and Notes on Agenda shall be sent to all Directors by hand or by speed post
or by registered post or by courier or by e-mail or by any other electronic means.
These shall be sent to the postal address or e-mail address or any other electronic
address registered by the Director with the company or in the absence of such details
or any change thereto, to any of such addresses appearing in the Director
Identification Number (DIN) registration of the Directors.

In case the company sends the Agenda and Notes on Agenda by speed post or by
registered post or by courier, an additional two days shall be added for the service of
Agenda and Notes on Agenda.

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Where a Director specifies a particular means of delivery of Agenda and Notes on

Agenda, these papers shall be sent to him by such means.

Proof of sending Agenda and Notes on Agenda and their delivery shall be
maintained by the company.

The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also
at the address registered with the company, even if these have been sent to the
Alternate Director.

Notes on items of business which are in the nature of Unpublished Price Sensitive
Information may be given at a shorter period of time than stated above, with the
consent of a majority of the Directors, which shall include at least one Independent
Director, if any.

For this purpose,

"unpublished price sensitive information" means any information, relating to a

company or its securities, directly or indirectly, that is not generally available which
upon becoming generally available, is likely to materially affect the price of the
securities and shall, ordinarily including but not restricted to, information relating to
the following: —

(i) financial results;

(ii) dividends;

(iii) change in capital structure;

(iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of

business and such other transactions;

(v) changes in key managerial personnel; and

(vi) material events in accordance with the listing agreement. 781

General consent for giving Notes on items of Agenda which are in the nature of
Unpublished Price Sensitive Information at a shorter Notice may be taken in the first
Meeting of the Board held in each financial year and also whenever there is any
change in Directors.

Where general consent as above has not been taken, the requisite consent shall be
taken before the concerned items are taken up for consideration at the Meeting. The
fact of consent having been taken shall be recorded in the Minutes.

781
Definition under SEBI (Prohibition of Insider Trading) Regulations, 2015

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Supplementary Notes on any of the Agenda Items may be circulated at or prior to the
Meeting but shall be taken up with the permission of the Chairman and with the
consent of a majority of the Directors present in the Meeting, which shall include at
least one Independent Director, if any.

1.3.8 Each item of business requiring approval at the Meeting shall be

supported by a note setting out the details of the proposal, relevant material
facts that enable the Directors to understand the meaning, scope and
implications of the proposal and the nature of concern or interest, if any, of any
Director in the proposal, which the Director had earlier disclosed.

Where approval by means of a Resolution is required, the draft of such Resolution

shall be either set out in the note or placed at the Meeting.

The items of business that are required by the Act or any other applicable law to
be considered at a Meeting of the Board shall be placed before the Board at its
Meeting. An illustrative list of such items is given at Annexure 'A'.

There are certain items which shall be placed before the Board at its first Meeting. An
illustrative list thereof is given at Annexure B.

1.3.9 Each item of business to be taken up at the Meeting shall be serially

numbered.

Numbering shall be in a manner which would enable ease of reference or cross-

reference.

1.3.10 Any item not included in the Agenda may be taken up for consideration
with the permission of the Chairman and with the consent of a majority of the
Directors present in the Meeting, which shall include at least one Independent
Director, if any.

In case of absence of Independent Directors, if any, at such Meeting, the Minutes

shall be final only after at least one Independent Director, if any, ratifies the decision
taken in respect of such item. In case the company does not have an Independent
Director, the Minutes shall be final only on ratification of the decision taken in respect
of such item by a majority of the Directors of the company, unless such item was
approved at the Meeting itself by a majority of Directors of the company.

1.3.11 To transact urgent business, the Notice, Agenda and Notes on Agenda
may be given at shorter period of time than stated above, if at least one
Independent Director, if any, shall be present at such Meeting. If no Independent
Director is present, decisions taken at such a Meeting shall be circulated to all
the Directors and shall be final only on ratification thereof by at least one
Independent Director, if any. In case the company does not have an
Independent Director, the decisions shall be final only on ratification thereof by
a majority of the Directors of the company, unless such decisions were
approved at the Meeting itself by a majority of Directors of the company.

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The fact that the Meeting is being held at a shorter Notice shall be stated in the
Notice.

2. Frequency of Meetings

2.1 Meetings of the Board

The Board shall meet at least once in every calendar quarter, with a maximum
interval of one hundred and twenty days between any two consecutive
Meetings of the Board, such that at least four Meetings are held in each
Calendar Year.

The Board shall hold its first Meeting within thirty days of the date of incorporation of
the company. It shall be sufficient if one Meeting is held in each of the remaining
calendar quarters, subject to a maximum interval of one hundred and twenty days
between any two consecutive Meetings of the Board, after the first Meeting.

Further, it shall be sufficient if a One Person Company, Small Company or Dormant

Company holds one Meeting of the Board in each half of a calendar year and the gap
between the two Meetings of the Board is not less than ninety days.

An adjourned Meeting being a continuation of the original Meeting, the interval period
in such a case, shall be counted from the date of the original Meeting.

2.2 Meetings of Committees

Committees shall meet as often as necessary subject to the minimum number

and frequency stipulated by the Board or as prescribed by any law or authority.

2.3 Meeting of Independent Directors

Where a company is required to appoint Independent Directors under the Act,

such Independent Directors shall meet at least once in a Calendar Year.

The meeting shall be held to review the performance of Non-Independent Directors

and the Board as a whole; to review the performance of the Chairman and to assess
the quality, quantity and timeliness of flow of information between the company
management and the Board and its members that is necessary for the Board to
effectively and reasonably perform their duties.

The Company Secretary shall facilitate convening and holding of such meeting, if so
desired by the Independent Directors.

3. Quorum

3.1 Quorum shall be present throughout the Meeting.

Quorum shall be present not only at the time of commencement of the Meeting but
also while transacting business.

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3.2 A Director shall not be reckoned for Quorum in respect of an item in which
he is interested and he shall not be present, whether physically or through
Electronic Mode, during discussions and voting on such item.

For this purpose, a Director shall be treated as interested in a contract or

arrangement entered into or proposed to be entered into by the company:

(a) with the Director himself or his relative; or

(b) with any body corporate, if such Director, along with other Directors holds more
than two percent of the paid-up share capital of that body corporate, or he is a
promoter, or manager or chief executive officer of that body corporate; or

(c) with a firm or other entity, if such Director °this relative is a partner, owner or
Member, as the case may be, of that firm or other entity.

3.3 Directors participating through Electronic Mode in a Meeting shall be

counted for the purpose of Quorum, unless they are to be excluded for any
items of business under the provisions of the Act or any other law.

Any Director participating through Electronic Mode in respect of restricted items with
the express permission of Chairman shall however, neither be entitled to vote nor be
counted for the purpose of Quorum in respect of such restricted items.

The restricted items of business include approval of the annual financial statement,
Board's Report, prospectus and matters relating to amalgamation, merger, demerger,
acquisition and takeover and in meetings of Audit Committee for the consideration of
annual financial statement including consolidated financial statement, if any, to be
approved by the Board.

3.4 Meetings of the Board

3.4.1 The Quorum for a Meeting of the Board shall be one-third of the total
strength of the Board, or two Directors, whichever is higher.

Any fraction contained in the above one-third shall be rounded off to the next one.

Where the Quorum requirement provided in the Articles is higher than one-third of the
total strength, the company shall conform to such higher requirement.

Total strength for this purpose, shall not include Directors whose places are vacant.

If the number of Interested Directors exceeds or is equal to two-thirds of the total

strength, the remaining Directors present at the Meeting, being not less than two,
shall be the Quorum during such item.

If a Meeting of the Board could not be held for want of Quorum, then, unless
otherwise provided in the Articles, the Meeting shall automatically stand adjourned to
the same day in the next week, at the same time and place or, if that day is a

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National Holiday, to the next succeeding day which is not a National Holiday, at the
same time and place.

If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled.

3.4.2 Where the number of Directors is reduced below the minimum fixed by
the Articles, no business shall be transacted unless the number is first made
up by the remaining Director(s) or through a general meeting.

If the number of Directors is reduced below the Quorum fixed by the Act for a
Meeting of the Board, the continuing Directors may act for the purpose of increasing
the number of Directors to that fixed for the Quorum or of summoning a general
meeting of the company, and for no other purpose.

3.5 Meetings of Committees

The presence of all the members of any Committee constituted by the Board is
necessary to form the Quorum for Meetings of such Committee unless
otherwise stipulated in the Act or any other law or the Articles or by the Board.

Regulations framed under any other law may contain provisions for the Quorum of a
Committee and such stipulations shall be followed.

4. Attendance at Meetings

4.1 Attendance registers

4.1.1 Every company shall maintain separate attendance registers for the
Meetings of the Board and Meetings of the Committee.

The pages of the respective attendance registers shall be serially numbered.

If an attendance register is maintained in loose-leaf form, it shall be bound

periodically depending on the size and volume.

4.1.2 The attendance register shall contain the following particulars: serial
number and date of the Meeting; in case of a Committee Meeting name of the
Committee; place of the Meeting; time of the Meeting; names of the Directors
and signature of each Director present; name and signature of the Company
Secretary who is in attendance and also of persons attending the Meeting by
invitation.

4.1.3 Every Director, Company Secretary who is in attendance and every Invitee
who attends a Meeting of the Board or Committee thereof shall sign the
attendance register at that Meeting.

In case of Directors participating through Electronic Mode, the Chairman shall confirm
the attendance of such Directors. For this purpose, at the commencement of the
Meeting, the Chairman shall take a roll call. The Chairman or Company Secretary
shall request the Director participating through Electronic Mode to state his full name

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and location from where he is participating and shall record the same in the Minutes.
The proceedings of such Meetings shall be recorded through any electronic recording
mechanism and the details of the venue, date and time shall be mentioned.

The attendance register shall be deemed to have been signed by the Directors
participating through Electronic Mode, if their attendance is recorded by the Chairman
or the Company Secretary in the Attendance Register and the Minutes of the Meeting.

4.1.4 The attendance register shall be maintained at the Registered Office of the
company or such other place as may be approved by the Board.

The attendance register may be taken to any place where a Meeting of the Board or
Committee is held.

4.1.5 The attendance register is open for inspection by the Directors.

The Company Secretary in Practice appointed by the company or the Secretarial

Auditor or the Statutory Auditor of the company can also inspect the attendance
register as he may consider necessary for the performance of his duties.

A Member of the company is not entitled to inspect the attendance register.

4.1.6 Entries in the attendance register shall be authenticated by the Company

Secretary or where there is no Company Secretary, by the Chairman by
appending his signature to each page.

4.1.7 The attendance register shall be preserved for a period of at least eight
financial years and may be destroyed thereafter with the approval of the Board.

The recording of attendance of Meetings through Electronic Mode shall be preserved

for a period of at least eight financial years and may be destroyed thereafter with the
approval of the Board.

4.1.8 The attendance register shall be kept in the custody of the Company
Secretary.

Where there is no Company Secretary, the attendance register shall be kept in the
custody of any Director authorised by the Board for this purpose.

4.2 Leave of absence shall be granted to a Director only when a request for
such leave has been received by the Company Secretary or by the Chairman.

The office of a Director shall become vacant in case the Director absents himself
from all the Meetings of the Board held during a period of twelve months with or
without seeking leave of absence of the Board.

5. Chairman

5.1 Meetings of the Board

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5.1.1 The Chairman of the company shall he the Chairman of the Board. If the
company does not have a Chairman, the Directors may elect one of themselves
to be the Chairman of the Board.

5.1.2 The Chairman of the Board shall conduct the Meetings of the Board. If no
Chairman is elected or if the Chairman is unable to attend the Meeting, the
Directors present at the Meeting shall elect one of themselves to chair and
conduct the Meeting, unless otherwise provided in the Articles.

It would be the duty of the Chairman to check, with the assistance of Company
Secretary, that the Meeting is duly convened and constituted in accordance with the
Act or any other applicable guidelines, Rules and Regulations before proceeding to
transact business. The Chairman shall then conduct the Meeting. The Chairman shall
encourage deliberations and debate and assess the sense of the Meeting.

If the Chairman is interested in any item of business, he shall, with the consent of the
members present, entrust the conduct of the proceedings in respect of such item to
any Dis-interested Director and resume the Chair after that item of business has
been transacted. The Chairman shall also not be present at the Meeting during
discussions on such items.

In case some of the Directors participate through Electronic Mode, the Chairman and
the Company Secretary shall safeguard the integrity of the Meeting by ensuring
sufficient security and identification procedures. No person other than the Director
concerned shall be allowed access to the proceedings of the Meeting where Director
(s) participate through Electronic Mode, except a Director who is differently abled,
provided such Director requests the Board to allow a person to accompany him and
ensures that such person maintains confidentiality of the matters discussed at the
Meeting.

Unless otherwise provided in the Articles, in case of an equality of votes, the

Chairman shall have a second or casting vote.

5.2 Meetings of Committees

A member of the Committee appointed by the Board or elected by the

Committee as Chairman of the Committee, in accordance with the Act or any
other law or the Articles, shall conduct the Meetings of the Committee. If no
Chairman has been so elected or if the elected Chairman is unable to attend
the Meeting, the Committee shall elect one of its members present to chair and
conduct the Meeting of the Committee, unless otherwise provided in the
Articles.

6. Passing of Resolution by Circulation

The Act requires certain business to be approved only at Meetings of the Board.
However other business that requires urgent decisions can be approved by means of
Resolutions passed by circulation. Resolutions passed by circulation arc deemed to be
passed at a duly convened Meeting of the Board and have equal authority.

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6.1. Authority

6.1.1 The Chairman of the Board or in his absence, the Managing Director or in
his absence, the Whole-time Director and where there is none, any Director other
than an Interested Director, shall decide, before the draft Resolution is
circulated to all the Directors, whether the approval of the Board for a
particular business shall be obtained by means of a Resolution by circulation.

An illustrative list of items which shall be placed before the Board at its Meeting and
shall not be passed by circulation is given at Annexure 'A'.

6.1.2 Where not less than one-third of the total number of Directors for the time
being require the Resolution under circulation to be decided at a Meeting, the
Chairman shall put the Resolution for consideration at a Meeting of the Board.

Interested Directors shall not be excluded for the purpose of determining the above
one-third of the total number of Directors.

6.2. Procedure

6.2.1 A Resolution proposed to be passed by circulation shall be sent in draft,

together with the necessary papers, individually to all the Directors including
Interested Directors on the same day.

6.2.2 The draft of the Resolution to be passed and the necessary papers shall
be circulated amongst the Directors by hand, or by speed post or by registered
post or by courier, or by e-mail or by any other recognised electronic means.

The draft of the Resolution and the necessary papers shall be sent to the postal
address or e-mail address registered by the Director with the company or in the
absence of such details or any change thereto, any of the addresses appearing in the
Director Identification Number (DIN) registration of the Director.

Proof of sending and delivery of the draft of the Resolution and the necessary papers
shall be maintained by the company.

6.2.3 Each business proposed to be passed by way of Resolution by

circulation shall be explained by a note setting out the details of the
proposal, relevant material facts that enable the Directors to understand the
meaning, scope and implications of the proposal, the nature of concern or
interest, if any, of any Director in the proposal, which the Director had earlier
disclosed and the draft of the Resolution proposed. The note shall also
indicate how a Director shall signify assent or dissent to the Resolution
proposed and the date by which the Director shall respond.

Each Resolution shall be separately explained.

The decision of the Directors shall be sought for each Resolution separately.

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Not more than seven days from the date of circulation of the draft of the Resolution
shall be given to the Directors to respond and the last date shall be computed
accordingly.

6.3. Approval

6.3.1 The Resolution is passed when it is approved by a majority of the

Directors entitled to vote on the Resolution, unless not less than one-third of
the total number of Directors for the time being require the Resolution under
circulation to he decided at a Meeting.

Every such Resolution shall carry a serial number.

If any special majority or the affirmative vote of any particular Director or Directors is
specified in the Articles, the Resolution shall be passed only with the assent of such
special majority or such affirmative vote.

An Interested Director shall not be entitled to vote. For this purpose, a Director shall
be treated as interested in a contract or arrangement entered or proposed to be
entered into by the company:

(a) with the Director himself or his relative; or

(b) with any body corporate, if such Director, along with other Directors holds more
than two percent of the paid-up share capital of that body corporate, or he is a
promoter, or manager or chief executive officer of that body corporate; or

(c) with a firm or other entity, if such Director or his relative is a partner, owner or
Member, as the case may be, of that firm or other entity.

6.3.2 The Resolution, if passed, shall be deemed to have been passed on the
last date specified for signifying assent or dissent by the Directors or the date
on which assent from more than two-third of the Directors has been received,
whichever is earlier, and shall be effective from that date, if no other effective
date is specified in such Resolution.

Directors shall signify their assent or dissent by signing the Resolution to be passed
by circulation or by email or any other electronic means.

Directors shall append the date on which they have signed the Resolution. In case a
Director does not append a date, the date of receipt by the company of the signed
Resolution shall be taken as the date of signing.

In cases where the interest of a Director is yet to be communicated to the company,

the concerned Director shall disclose his interest before the last date specified for the
response and abstain from voting.

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In case not less than one-third of the Directors wish the matter to be discussed and
decided at a Meeting, each of the concerned Directors shall communicate the same
before the last date specified for the response.

In case the Director does not respond on or before the last date specified for
signifying assent or dissent, it shall be presumed that the Director has abstained from
voting.

If the approval of the majority of Directors entitled to vote is not received by the last
date specified for receipt of such approval, the Resolution shall be considered as not
passed.

6.4. Recording

Resolutions passed by circulation shall be noted at the next Meeting of the

Board and the text thereof with dissent or abstention, if any, shall be recorded
in the Minutes of such Meeting.

Minutes shall also record the fact that the Interested Director did not vote on the
Resolution.

6.5. Validity
Passing of Resolution by circulation shall be considered valid as if it had been
passed at a duly convened Meeting of the Board.
This shall not dispense with the requirement for the Board to meet at the specified
frequency.

7. Minutes
Every company shall keep Minutes of all Board and Committee Meetings in a Minutes
Book. Minutes kept in accordance with the provisions of the Act evidence the
proceedings recorded therein. Minutes help in understanding the deliberations and
decisions taken at the Meeting.

7.1. Maintenance of Minutes

7.1.1 Minutes shall be recorded in books maintained for that purpose.

7.1.2 A distinct Minutes Book shall be maintained for Meetings of the Board
and each of its Committees.

7.1.3 Minutes may be maintained in electronic form in such manner as

prescribed under the Act and as may be decided by the Board. Minutes in
electronic form shall be maintained with Timestamp.

A company may maintain its Minutes in physical or in electronic form with Timestamp.

Every company shall however follow a uniform and consistent form of maintaining the
Minutes. Any deviation in such form of maintenance shall be authorised by the Board.

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7.1.4 The pages of the Minutes Books shall be consecutively numbered.

This shall be followed irrespective of a break in the Book arising out of periodical
binding in case the Minutes are maintained in physical form. This shall be equally
applicable for maintenance of Minutes Book in electronic form with Timestamp.

In the event any page or part thereof in the Minutes Book is left blank, it shall be
scored out and initialled by the Chairman who signs the Minutes.

7.1.5 Minutes shall not be pasted or attached to the Minutes Book, or tampered
with in any manner.

7.1.6 Minutes of the Board Meetings, if maintained in loose-leaf form, shall be

bound periodically depending on the size and volume and coinciding with one
or more financial years of the company.

There shall be a proper locking device to ensure security and proper control to
prevent removal or manipulation of the loose leaves.

7.1.7 Minutes of the Board Meeting shall be kept at the Registered Office of the
company or at such other place as may be approved by the Board.

7.2. Contents of Minutes

7.2.1 General Contents

7.2.1.1 Minutes shall state, at the beginning the serial number and type of the
Meeting, name of the company, day, date, venue and time of commencement and
conclusion of the Meeting. In case a Meeting is adjourned, the Minutes shall be entered
in respect of the original Meeting as well as the adjourned Meeting. In respect of a Meeting
convened but adjourned for want of quorum, a statement to that effect shall be recorded
by the Chairman or any Director present at the Meeting in the Minutes.

7.2.1.2 Minutes shall record the names of the Directors present physically or
through Electronic Mode, the Company Secretary who is in attendance at the
Meeting and Invitees, if any, including Invitees for specific items.

The names of the Directors shall be listed in alphabetical order or in any other logical
manner, but in either case starting with the name of the person in the Chair.

The capacity in which an Invitee attends the Meeting and where applicable, the name of the
entity such Invitee represents and the relation, if any, of that entity to the company shall also
be recorded.

7.2.1.3 Minutes shall contain a record of all appointments made at the Meeting.

Where the Minutes have been kept in accordance with the Act and all appointments have
been recorded, then until the contrary is proved, all appointments of Directors, First Auditors,
Key Managerial Personnel, Secretarial Auditors, Internal Auditors and Cost Auditors, shall

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be deemed to have been duly approved by the Board. All appointments made one level
below Key Managerial Personnel shall be noted by the Board.

7.2.2 Specific Contents

7.2.2.1 Minutes shall inter-alia contain:

(a) Record of election, if any, of the Chairman of the Meeting.

(b) Record of presence of Quorum.

(c) The names of Directors who sought and were granted leave of absence.

(d) The mode of attendance of every Director whether physically or through

Electronic Mode.

(e) In case of a Director participating through Electronic Mode, his

particulars, the location from where and the Agenda items in which he
participated.

(f) The name of Company Secretary who is in attendance and Invitees, if any,
for specific items and mode of their attendance if through Electronic
Mode.

(g) Noting of the Minutes of the preceding Meeting.

(h) Noting the Minutes of the Meetings of the Committees.

(i) The text of the Resolution(s) passed by circulation since the last Meeting,
including dissent or abstention, if any.

(j) The fact that an Interested Director was not present during the
discussion and did not vote.

(k) The views of the Directors particularly the Independent Director, if

specifically insisted upon by such Directors, provided these, in the opinion
of the Chairman, are not defamatory of any person, not irrelevant or
immaterial to the proceedings or not detrimental to the interests of the
company.

(l) If any Director has participated only for a part of the Meeting, the Agenda
items in which he did not participate.

(m) The fact of the dissent and the name of the Director who dissented from
the Resolution or abstained from voting thereon.

(n) Ratification by Independent Director or majority of Directors, as the

case may be, in case of Meetings held at a shorter Notice and the
transacting of any item other than those included in the Agenda.

(o) The time of commencement and conclusion of the Meeting.

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7.2.2.2. Apart from the Resolution or the decision, Minutes shall mention
the brief background of all proposals and summarise the deliberations
thereof. In case of major decisions, the rationale thereof shall also be
mentioned.

The decisions shall be recorded in the form of Resolutions, where it is statutorily or

otherwise required. In other cases, the decisions can be recorded in a narrative
form.

Where a Resolution was passed pursuant to the Chairman of the Meeting exercising
his second or casing vote, the Minutes shall record such fact.

7.3. Recording of Minutes

7.3.1 Minutes shall contain a fair and correct summary of the proceedings
of the Meeting.

The Company Secretary shall record the proceedings of the Meetings. Where there is
no Company Secretary, any other person duly authorised by the Board or by the
Chairman in this behalf shall record the proceedings.

The Chairman shall ensure that the proceedings of the Meeting are correctly recorded.

The Chairman has absolute discretion to exclude from the Minutes, matters which in
his opinion are or could reasonably be regarded as defamatory of any person,
irrelevant or immaterial to the proceedings or which are detrimental to the interests
of the company.

7.3.2 Minutes shall be written in clear, concise and plain language.

Minutes shall be written in third person and past tense. Resolutions shall however be
written in present tense.

Minutes need not be an exact transcript of the proceedings at the Meeting.

In case any Director requires his views or opinion on a particular item to be recorded
verbatim in the Minutes, the decision of the Chairman whether or not to do so shall
be final.

7.3.3 Any document, report or notes placed before the Board and referred to in
the Minutes shall be identified by initialling of such document, report or notes
by the Company Secretary or the Chairman.

Wherever any approval of the Board is taken on the basis of certain papers laid
before the Board, proper identification shall be made by initialling of such papers by
the Company Secretary or the Chairman and a reference thereto shall be made in
the Minutes.

7.3.4 Where any earlier Resolution (s) or decision is superseded or modified,

Minutes shall contain a reference to such earlier Resolution (s) or decision.

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7.3.5 Minutes of the preceding Meeting shall be noted at a Meeting of the Board
held immediately following the date of entry of such Minutes in the Minutes
Book.

Minutes of the Meetings of any Committee shall be noted at a Meeting of the Board
held immediately following the date of entry of such Minutes in the Minutes Book.

7.4. Finalisation of Minutes

Within fifteen days from the date of the conclusion of the Meeting of the
Board or the Committee, the draft Minutes thereof shall be circulated by
hand or by speed post or by registered post or by courier or by e -mail or
by any other recognised electronic means to all the members of the
Board or the Committee for their comments.

Where a Director specifies a particular means of delivery of draft Minutes, these

shall be sent to him by such means.

If the draft Minutes are sent by speed post or by registered post or by courier, an
additional two days may be added for delivery of the draft Minutes.

Proof of sending draft Minutes and its delivery shall be maintained by the company.

The Directors, whether present at the Meeting or not, shall communicate their
comments, if any, in writing on the draft Minutes within seven days from the date of
circulation thereof, so that the Minutes are finalised and entered in the Minutes
Book within the specified time limit of thirty days.

If any Director communicates his comments after the expiry of the said period of
seven days, the Chairman shall have the discretion to consider such comments.

In the event a Director does not comment on the draft Minutes, the draft Minutes
shall be deemed to have been approved by such Director.

A Director, who ceases to be a Director after a Meeting of the Board is entitled to

receive the draft Minutes of that particular Meeting and to offer comments thereon,
irrespective of whether he attended such Meeting or not.

7.5. Entry in the Minutes Book

7.5.1 Minutes shall be entered in the Minutes Book within thirty days from the
date of conclusion of the Meeting.

In case a Meeting is adjourned, the Minutes in respect of the original Meeting as

well as the adjourned Meeting shall be entered in the Minutes Book within thirty
days from the date of the respective Meetings.

7.5.2 The date of entry of the Minutes in the Minutes Book shall be recorded
by the Company Secretary.

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Where there is no Company Secretary, it shall be entered by any other person duly
authorised by the Board or by the Chairman.

7.5.3 Minutes, once entered in the Minutes Book, shall not be altered. Any
alteration in the Minutes as entered shall be made only by way of express
approval of the Board at its subsequent Meeting in which such Minutes are
sought to be altered.

7.6. Signing and Dating of Minutes

7.6.1 Minutes of the Meeting of the Board shall be signed and dated by the
Chairman of the Meeting or by the Chairman of the next Meeting.

Minutes of the previous Meeting may be signed either by the Chairman of such
Meeting at any time before the next Meeting is held or by the Chairman of the next
Meeting at the next Meeting.

7.6.2 The Chairman shall initial each page of the Minutes, sign the last page
and append to such signature the date on which and the place where he has
signed the Minutes.

Any blank space in a page between the conclusion of the Minutes and signature of
the Chairman shall be scored out.

If the Minutes are maintained in electronic form, the Chairman shall sign the Minutes
digitally.

7.6.3 Minutes, once signed by the Chairman, shall not be altered, save as
mentioned in this Standard.

7.6.4 A copy of the signed Minutes certified by the Company Secretary or

where there is no Company Secretary, by any Director authorised by the
Board shall be circulated to all Directors within fifteen days after these are
signed.

7.7. Inspection and Extracts of Minutes

7.7.1 The Minutes of Meetings of the Board and any Committee thereof can
be inspected by the Directors.

A Director is entitled to inspect the Minutes of a Meeting held before the period of
his Directorship.

A Director is entitled to inspect the Minutes of the Meetings held during the period of
his Directorship, even after he ceases to be a Director.

The Company Secretary in Practice appointed by the company, the Secretarial

Auditor, the Statutory Auditor, the Cost Auditor or the Internal Auditor of the
company can inspect the Minutes as he may consider necessary for the
performance of his duties.

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Inspection of Minutes Book may be provided in physical or in electronic form.

While providing inspection of Minutes Book, the Company Secretary or the official
of the company authorised by the Company Secretary to facilitate inspection shall
take all precautions to ensure that the Minutes Book is not mutilated or in any way
tampered with by the person inspecting.

A Member of the company is not entitled to inspect the Minutes of Meetings of the
Board.

7.7.2 Extracts of the Minutes shall be given only after the Minutes have been
duly entered in the Minutes Book. However, certified copies of any Resolution
passed at a Meeting may be issued even earlier, if the text of that Resolution
had been placed at the Meeting.

A Director is entitled to receive, a copy of the Minutes of a Meeting held before the
period of his Directorship.

A Director is entitled to receive a copy of the signed Minutes of a Meeting held

during the period of his Directorship, even if he ceases to be a Director.

Extracts of the duly signed Minutes may be provided in physical or electronic form.

8. Preservation of Minutes and other Records

8.1 Minutes of all Meetings shall be preserved permanently in physical or in

electronic form with Timestamp.

Where, under a scheme of arrangement, a company has been merged or

amalgamated with another company, Minutes of all Meetings of the transferor
company, as handed over to the transferee company, shall be preserved
permanently by the transferee company, notwithstanding that the transferor
company might have been dissolved.

8.2 Office copies of Notices, Agenda, Notes on Agenda and other related
papers shall be preserved in good order in physical or in electronic form for as
long as they remain current or for eight financial years, whichever is later and
may be destroyed thereafter with the approval of the Board.

Office copies of Notices, Agenda, Notes on Agenda and other related papers of the
transferor company, as handed over to the transferee company, shall be preserved
in good order in physical or electronic form for as long as they remain current or for
eight financial years, whichever is later and may be destroyed thereafter with the
approval of the Board and permission of the Central Government, where applicable.

8.3 Minutes Books shall be kept in the custody of the Company Secretary.

Where there is no Company Secretary, Minutes shall be kept in the custody of any
Director duly authorised for the purpose by the Board.

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9. Disclosure

The Annual Report and Annual Return of a company shall disclose the number
and dates of Meetings of the Board and Committees held during the financial
year indicating the number of Meeting ,: attended by each Director.

EFFECTIVE DATE

This Standard shall come into effect from 01 st July, 2015.

Annexure 'A'

(Para 1.3.8)

Illustrative list of items of business which shall not be passed by circulation

and shall be placed before the Board at its Meeting

General Business Items

• Noting Minutes of Meetings of Audit Committee and other Committees.

• Approving financial statements and the Board's Report.

• Considering the Compliance Certificate to ensure compliance with the

provisions of all the laws applicable to the company.

• Specifying list of laws applicable specifically to the company.

• Appointment of Secretarial Auditors and Internal Auditors.

Specific Items

• Borrowing money otherwise than by issue of debentures.

• Investing the funds of the company.

• Granting loans or giving guarantee or providing security in respect of loans.

• Making political contributions.

• Making calls on shareholders in respect of money unpaid on their shares.

• Approving Remuneration of Managing Director, Whole-time Director and Manager

• Appointment or Removal of Key Managerial Personnel.

• Appointment of a person as a Managing Director / Manager in more than one

company.

• According sanction for related party transactions which are not in the ordinary
course of business or which are not on arm's length basis.

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• Purchase and Sale of subsidiaries/assets which are not in the normal course of
business.

• Approve Payment to Director for loss of office.

• Items arising out of separate meeting of the Independent Directors if so decided by

the Independent Directors.

Corporate Actions

• Authorise Buy Back of securities

• Issue of securities, including debentures, whether in or outside India.

• Approving amalgamation, merger or reconstruction.

• Diversify the business.

• Takeover another company or acquiring controlling or substantial stake in

another company. Additional list of items in case of listed companies

• Approving Annual operating plans and budgets.

• Capital budgets and any updates.

• Information on remuneration of KMP.

• Show cause, demand, prosecution notices and penalty notices which are materially
important.

• Fatal or serious accidents, dangerous occurrences, any material effluent1or pollution

problems.

• Any material default in financial obligations to and by the company, or

substantial non-payment for goods sold by the company.

• Any issue, which involves possible public or product liability claims of substantial
nature, including any judgement or order which, may have passed strictures on the conduct
of the company or taken an adverse view regarding another enterprise that can have
negative implications on the company.

• Details of any joint venture or collaboration agreement.

• Transactions that involve substantial payment towards goodwill, brand equity, or

intellectual property.

• Significant labour problems and their proposed solutions. Any significant

development in Human Resources/ Industrial Relations front like signing of wage
agreement, implementation of Voluntary Retirement Scheme etc.

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• Quarterly details of foreign exchange exposures and the steps taken by

management to limit the risks of adverse exchange rate movement, if material.

• Non-compliance of any regulatory, statutory or listing requirements and

shareholder services such as non-payment of dividend, delay in share transfer etc..

Annexure 'B'
(Para 1.3.8)

Illustrative list of items of business for the Agenda for the First Meeting of the
Board of the Company

1. To appoint the Chairman of the Meeting.

2. To note the Certificate of Incorporation of the company, issued by the Registrar of

Companies.

3. To take note of the Memorandum and Articles of Association of the company, as

registered.

4. To note the situation of the Registered Office of the company and ratify the
registered document of the title of the premises of the registered office in the
name of the company or a Notarised copy of lease / rent agreement in the
name of the company.

5. To note the first Directors of the company.

6. To read and record the Notices of disclosure of interest given by the Directors.

7. To consider appointment of Additional Directors.

8. To consider appointment of the Chairman of the Board.

9. To consider appointment of the first Auditors.

10. To adopt the Common Seal of the company.

11. To appoint Bankers and to open bank accounts of the company.

12. To authorise printing of share certificates and correspondence with the

depositories, if any.

13. To authorise the issue of share certificates to the subscribers to the

Memorandum and Articles of Association of the company.

14. To approve and ratify preliminary expenses and preliminary agreements.

15. To approve the appointment of the Key Managerial Personnel, if applicable and
other senior officers.

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16. To authorise Director(s) of the company to file a declaration with the ROC for
commencement of business.

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Secretarial Standard on General Meetings

SECRETARIAL STANDARD

ON

GENERAL MEETINGS

Following is the text of the Secretarial Standard-2 (SS-2) on "General Meetings",

issued by the Council of the Institute of Company Secretaries of India and approved
by the Central Government.

Adherence by a company to this Secretarial Standard is mandatory, as per the

provisions of the Companies Act, 2013.

(In this Secretarial Standard, the Standard portions have been set in bold type.
These shall be read in the context of the background material which has been
set in normal type. Both the Standard portions and the background material
have equal authority).

INTRODUCTION

This Standard seeks to prescribe a set of principles for the convening and
conducting of General Meetings and matters related thereto.

This Standard also deals with conduct of e-voting and postal ballot.

SCOPE

This Standard is applicable to all types of General Meetings of all companies incorporated
under the Act except One Person Company (OPC) and class or classes of companies
which are exempted by the Central Government through notification. The principles
enunciated in this Standard for General Meetings of Members are applicable mutatis-
mutandis to Meetings of debenture-holders and creditors. A Meeting of the Members or
class of Members or debenture-holders or creditors of a company under the directions of
the Court or the Company Law Board (CLB) or the National Company Law Tribunal
(NCLT) or any other prescribed authority shall be governed by this Standard without
prejudice to any rules, regulations and directions prescribed for and orders of, such
courts, judicial forums and other authorities with respect to the conduct of such Meetings.

This Standard is in conformity with the provisions of the Act. However, if, due to
subsequent changes in the Act, a particular Standard or any part thereof becomes
inconsistent with the Act, the provisions of the Act shall prevail.

DEFINITIONS

The following terms are used in this Standard with the meaning specified:

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"Act" means the Companies Act, 2013 (Act No. 18 of 2013) or any previous
enactment thereof, or any statutory modification thereto or re-enactment thereof and
includes any Rules and Regulations framed thereunder.

"Agency" means agency approved or recognised by the Ministry of Corporate Affairs

and appointed by the Board for providing and supervising electronic platform for
voting.

"Articles" means the Articles of Association of a company, as originally framed or as

altered from time to time or applied in pursuance of any previous company law or the
Companies Act, 2013.

"Calendar Year" means calendar year as per Gregorian calendar, i.e., a period of
one year which begins on January and ends on 31st December.

"Chairman" means the Chairman of the Board or the Chairman appointed or elected for a
Meeting.

"Maintenance" means keeping registers and records either in physical or electronic form,
as may be permitted under any law for the time being in force, And includes the making of
necessary entries therein, the authentication of such entries and the preservation of such
physical or electronic records.

"Meeting" or "General Meeting" or "Annual General Meeting" or "Extra-Ordinary

General Meeting" means a duly convened, held and conducted Meeting of
Members.

"Minutes" means a formal written record, in physical or electronic form, of the proceedings
of a Meeting.

"Minutes Book" means a Book maintained in physical or in electronic form for the
purpose of recording of Minutes.

"National Holiday" includes Republic Day, i.e., 26111 January, Independence Day,
i.e., 151h August, Gandhi Jayanti, i.e., 2"d October and such other day as may be
declared as National Holiday by the Central Government.

"Ordinary Business" means business to be transacted at an Annual General Meeting

relating to (i) the consideration of financial statements, consolidated financial statements, if
any, and the reports of the Board of Directors and Auditors; (ii) the declaration of any
dividend; (iii) the appointment of Directors in the place of those retiring; and (iv) the
appointment or ratification thereof and fixing of remuneration of the Auditors.

"Proxy" means an instrument in writing signed by a Member, authorising another

person, whether a Member or not, to attend and vote on his behalf at a Meeting and
also where the context so requires, the person so appointed by a Member.

"Quorum" means the minimum number of Members whose presence is necessary for
holding of a Meeting.

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"Remote e-voting" means the facility of casting votes by a member using an electronic
voting system from a place other than venue of a general meeting.

"Secretarial Auditor" means a Company Secretary in Practice appointed in pursuance

of the Act to conduct the secretarial audit of the company.

"Secured Computer System" means computer hardware, software, and procedure that
—

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

"Special Business" means business other than the Ordinary Business to be

transacted at an Annual General Meeting and all business to be transacted at any
other General Meeting.

"Timestamp" means the current time of an event that is recorded by a Secured

Computer System and is used to describe the time that is printed to a file or other
location to help keep track of when data is added, removed, sent or received.

'Voting by electronic means, includes 'remote e-voting' and voting at the general
meeting through an electronic voting system which may be the same as used for
remote e-voting.

"Voting by postal ballot" means voting by ballot, by post or by electronic means.

"Voting Right" means the right of a Member to vote on any matter at a Meeting of
Members or by means of e-voting or postal or physical ballot;

Words and expressions used and not defined herein shall have the meanings
respectively assigned to them under the Act.

SECRETARIAL STANDARD

1. Convening a Meeting

1.1 Authority

A General Meeting shall be convened by or on the authority of the Board.

The Board shall, every year, convene or authorise convening of a Meeting of its
Members called the Annual General Meeting to transact items of Ordinary Business
specifically required to be transacted at an Annual General Meeting as well as
Special Business, if any. If the Board fails to convene its Annual General Meeting in
any year, any Member of the company may approach the prescribed authority, which
may then direct the calling of the Annual General Meeting of the company.

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The Board may also, whenever it deems fit, call an Extra-ordinary General Meeting of
the company.

The Board shall, on the requisition of Members who hold, as on the date of the receipt
of a valid requisition,

(a) in the case of company having a share capital, not less than one-tenth of the
paid-up share capital carrying Voting Rights or

(b) in the case of a company not having share capital, not less than one-tenth of
total voting power of the company,

call an Extra-ordinary General Meeting of the company.

If, on receipt of a valid requisition having been made in this behalf, the Board, within
twenty-one days from the date of such receipt, fails to call a Meeting on any day within
forty-five days from the date of receipt of such requisition, the requisitionists may
themselves call and hold the Meeting within three months from the date of requisition,
in the same manner in which the Board should have called and held the Meeting.

Explanatory statement need not be annexed to the Notice of an Extra-ordinary

General Meeting convened by the requisitionists and the requisitionists may
disclose the reasons for the Resolution(s) which they propose to move at the
Meeting.

Such requisition shall not pertain to any item of business that is required to be
transacted mandatorily through postal ballot.

1.2 Notice

1.2.1 Notice in writing of every Meeting shall be given to every Member of the
company. Such Notice shall also be given to the Directors and Auditors of the
company, to the Secretarial Auditor, to Debenture Trustees, if any, and,
wherever applicable or so required, to other specified persons.

In the case of Members, Notice shall be given at the address registered with the
Company or depository. In the case of shares or other securities held jointly by two or
more persons, the Notice shall be given to the person whose name appears first as
per records of the Company or the depository, as the case may be. In the case of any
other person who is entitled to receive Notice, the same shall be given to such
person at the address provided by him.

Where the company has received intimation of death of a Member, the Notice of
Meeting shall be sent as under:

(a) where securities are held singly, to the Nominee of the single holder;

(b) where securities are held by more than one person jointly and any joint holder
dies, to the surviving first joint holder;

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(c) where securities are held by more than one person jointly and all the joint
holders die, to the Nominee appointed by all the joint holders;

In the absence of a Nominee, the Notice shall be sent to the legal representative of
the deceased Member. In case of insolvency of a Member, the Notice shall be sent to
the assignee of the insolvent Member.

In case the Member is a company or body corporate which is being wound up, Notice
shall be sent to the liquidator.

1.2.2 Notice shall be sent by hand or by ordinary post or by speed post or by

registered post or by courier or by facsimile or by e-mail or by any other
electronic means. 'Electronic means' means any communication sent by a
company through its authorised and secured computer programme which is
capable of producing confirmation and keeping record of such
communication addressed to the person entitled to receive such
communication at the last electronic mail address provided by the Member.

In case the Notice and accompanying documents are given by e-mail, these shall be
sent at the Members' email addresses, registered with the company or provided by
the depository, in the manner prescribed under the Act.

The company shall ensure that it uses a system which produces confirmation of the
total number of recipients e-mailed and a record of each recipient to whom the Notice
has been sent and copy of such record and any Notices of any failed transmissions
and subsequent re-sending shall be retained by or on behalf of the company as
"proof of sending".

In case of the Directors, Auditors, Secretarial Auditors and others, if any, the Notice
and accompanying documents shall be sent at the e-mail addresses provided by
them to the company, if being sent by electronic means.

Notice shall be sent to Members by registered post or speed post or courier or e-mail
and not by ordinary post in the following cases:

(a) if the company provides the facility of e-voting ;

(b) if the item of business is being transacted through postal ballot;

If a Member requests for delivery of Notice through a particular mode, other than one
of those listed above, he shall pay such fees as may be determined by the company
in its Annual General Meeting and the Notice shall be sent to him in such mode.

Notice shall be sent to Members by registered post or speed post or e-mail if the
Meeting is called by the requisitionists themselves where the Board had not
proceeded to call the Meeting.

1.2.3 In case of companies having a website, the Notice shall be hosted on the
website.

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1.2.4 Notice shall specify the day, date, time and full address of the venue of
the Meeting.

Notice shall contain complete particulars of the venue of the Meeting including route
map and prominent land mark for easy location. In case of companies having a
website, the route map shall be hosted along with the Notice on the website.

Meetings shall be called during business hours, i.e., between 9 a.m. and 6 p.m., on a
day that is not a National Holiday. A Meeting called by the requisitionists shall be
convened only on a working day.

Annual General Meetings shall be held either at the registered office -of the
company or at some other place within the city, town or village in which the
registered office of the company is situated, whereas other General Meetings may
be held at any place within India. A Meeting called by the requisitionists shall be
held either at the registered office of the company or at some other place within the
city, town or village in which the registered office of the company is situated.

Notice of a company which has a share capital or the Articles of which provide for
voting at a Meeting by Proxy, shall prominently contain a statement that a Member
entitled to attend and vote is entitled to appoint a Proxy, or where that is allowed, one
or more proxies, to attend and vote instead of himself and that a Proxy need not be a
Member. In case of companies where Proxy shall be a Member under the Act, a
statement to that effect shall appear in the Notice prominently.

1.2.5 Notice shall clearly specify the nature of the Meeting and the business
to be transacted thereat. In respect of items of Special Business, each such
item shall be in the form of a Resolution and shall be accompanied by an
explanatory statement which shall set out all such facts as would enable a
Member to understand the meaning, scope and implications of the item of
business and to take a decision thereon. In respect of items of Ordinary
Business, Resolutions are not required to be stated in the Notice except
where the Auditors or Directors to be appointed are other than the retiring
Auditors or Directors, as the case may be.

The nature of the concern or interest (financial or otherwise), if any, of the following
persons, in any special item of business or in a proposed Resolution, shall be
disclosed in the explanatory statement:

(a) Directors and Manager,

(b) Other Key Managerial Personnel; and

(c) Relatives of the persons mentioned above.

In case any item of Special Business to be transacted at a Meeting of the company

relates to or affects any other company, the extent of shareholding interest in that
other company of every Promoter, Director, Manager, and of every other Key
Managerial Personnel of the first mentioned company shall, if' the extent of such

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shareholding is not less than two percent of the paid-up share capital of that
company; also be stated in the explanatory statement.

Where reference is made to any document, contract, agreement, the Memorandum

of Association or Articles of Association, the relevant explanatory statement shall
state that such documents are available for inspection and such documents shall be
so made available for inspection in physical or in electronic form during specified
business hours at the Registered Office of the company and copies thereof shall also
he made available for inspection in physical or electronic form at the Head Office as
well as Corporate Office of the company, if any, if such office is situated elsewhere,
and also at the Meeting.

In all cases relating to the appointment or re-appointment and/or fixation of

'remuneration of Directors including Managing Director or Executive Director or
Whole - time Director or of Manager or variation of the terms of remuneration,
details of each such Director or Manager, including age, qualifications, experience,
terms and conditions of appointment or re-appointment along with details of
remuneration sought to be paid and the remuneration last drawn by such person, if
applicable, date of first appointment on the Board, shareholding in the company,
relationship with other Directors, Manager and other Key Managerial Personnel of
the company, the number of Meetings of the Board attended during the year and
other Directorships, Membership/ Chairmanship of Committees of other Boards
shall be given in the explanatory statement.

In case of appointment of Independent Directors, the justification for choosing the

appointees for appointment as Independent Directors shall be disclosed and in
case of re-appointment of Independent Directors, performance evaluation report of
such Director or summary thereof shall be included in the explanatory statement.

1.2.6 Notice and accompanying documents shall be given at least twenty-one

Clear days in advance of the Meeting.

For the purpose of reckoning twenty-one days clear Notice, the day of sending the
Notice and the day of Meeting shall not be counted. Further in case the company
sends the Notice by post or courier, an additional two days shall be provided for the
service of Notice.

In case a valid special notice under the Act has been received from Member(s), the
company shall give Notice of the Resolution to all its Members at least seven days
before the Meeting, exclusive of the day of dispatch of Notice and day of the Meeting,
in the same manner as a Notice of any General Meeting is to be given.

Where this is not practicable, the Notice shall be published in a vernacular

newspaper in the principal vernacular language of the district in which the registered
office of the company is situated, and in an English newspaper in English language,
both having a wide circulation in that district, at least seven days before the Meeting,
exclusive of the day of publication of the Notice and day of the Meeting. In case of
companies having a website, such Notice shall also be hosted on the website.

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1.2.7 Notice and accompanying documents may be given at a shorter period of

time if consent in writing is given thereto, by physical or electronic means, by
not less than ninety-five per cent. of the Members entitled to vote at such
Meeting.

The request for consenting to shorter Notice and accompanying documents shall be
sent together with the Notice and the Meeting shall be held only if the consent is
received prior to the date fixed for the Meeting from not less than ninety five per
cent. of the Members entitled to vote at such Meeting.

1.2.8 No business shall be transacted at a Meeting if Notice in accordance with

this Standard has not been given.

However, any accidental omission to give Notice to, or the non-receipt of such
Notice by any Member or other person who is entitled to such Notice for any
Meeting shall not invalidate the proceedings of the Meeting.

1.2.9 No items of business other than those specified in the Notice and those
specifically permitted under the Act shall be taken up at the Meeting.

A Resolution shall be valid only if it is passed in respect of an item of business

contained in the Notice convening the Meeting or it is specifically permitted under
the Act.

Items specifically permitted under the Act which may be taken up for consideration
at the Meeting are:

(a) Proposed Resolutions, the notice of which has been given by Members;

(b) Resolutions requiring special notice, if received with the intention to move;

(c) Candidature for Directorship, if any such notice has been received.

Where special notice is required of any Resolution and notice of the intention to
move such Resolution is received by the company from the prescribed number of
Members, such item of business shall be placed for consideration at the Meeting
after giving Notice of the Resolution to Members in the manner prescribed under
the Act.

Any amendment to the Notice, including the addition of any item of business, can be
made provided the Notice of amendment is given to all persons entitled to receive
the Notice of the Meeting at least twenty-one clear days before the Meeting.

1.2.10 Notice shall be accompanied, by an attendance slip and a Proxy form

with clear instructions for filling, stamping, signing and/or depositing the
Proxy form.

1.2.11 A Meeting convened upon due Notice shall not be postponed or

cancelled.

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If, for reasons beyond the control of the Board, a Meeting cannot be held on the
date originally fixed, the Board may reconvene the Meeting, to transact the same
business as specified in the original Notice, after giving not less than three days
intimation to the Members. The intimation shall be either sent individually in the
manner stated in this Standard or published in a vernacular newspaper in the
principal vernacular language of the district in which the registered office of the
company is situated, and in an English newspaper in English language, both
having a wide circulation in that district.

2. Frequency of Meetings
2.1 Annual General Meeting

Every company shall, in each Calendar Year, hold a General Meeting called
the Annual General Meeting.

Every company shall hold its first Annual General Meeting within nine months from the
date of closing of the first financial year of the company and thereafter in each
Calendar Year within six months of the close of the financial year, with an interval of
not more than fifteen months between two successive Annual General Meetings. The
aforesaid period of six months or interval of fifteen months may be extended by a
period not exceeding three months with the prior approval of the Registrar of
Companies, in case of any Annual General Meeting other than the first Annual
General Meeting. If a company holds its first Annual General Meeting, as aforesaid, it
shall not be necessary for the company to hold any Annual General Meeting in the
Calendar Year of its incorporation.

2.2 Extra-Ordinary General Meeting

Items of business other than Ordinary Business may be considered at an

Extra-Ordinary General Meeting or by means of a postal ballot, if thought fit
by the Board.

3. Quorum

3.1 Quorum shall be present throughout the Meeting.

Quorum shall be present not only at the time of commencement of the Meeting but
also while transacting business.

Unless the Articles provide for a larger number, the Quorum for a General Meeting shall
be:

(a) in case of a public company,—

(i) five Members personally present if the number of Members as on the date of
Meeting is not more than one thousand;

(ii) fifteenMembers personally present if the number of Members as on the date

of Meeting is more than one thousand but up to five thousand;

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(iii)thirty Members personally present if the number of Members as on the date

of the Meeting exceeds five thousand;

(b) in the case of a private company, two Members personally present.

Where the Quorum provided in the Articles is higher than that provided under the
Act, the Quorum shall conform to such higher requirement.

Members need to be personally present at a Meeting to constitute the Quorum.

Proxies shall be excluded for determining the Quorum.

3.2 A duly authorised representative of a body corporate or the representative

of the President of India or the Governor of a State is deemed to be a Member
personally present and enjoys all the rights of a Member present in person.

One person can be an authorised representative of more than one body corporate. In
such a case, he is treated as more than one Member present in person for the purpose
of Quorum. However, to constitute a Meeting, at least two individuals shall be present in
person. Thus, in ease of a public company having not more than 1000 members with a
Quorum requirement of five Members, an authorised representative of five bodies
corporate cannot form a Quorum by himself but can do so if at least one more Member is
personally present.

Members who have voted by Remote e-voting have the right to attend the General
Meeting and accordingly their presence shall be, counted for the purpose of
Quorum.

A Member who is not entitled to vote on any particular item of business being a
related party, if present, shall be counted for the purpose of Quorum.

The stipulation regarding the presence of a Quorum does not apply with respect to
items of business transacted through postal ballot.

4. Presence of Directors and Auditors

4.1 Directors

4.1.1 If any Director is unable to attend the Meeting, the Chairman shall
explain such absence at the Meeting.

The Chairman of the Audit Committee. Nomination and Remuneration Committee

and the Stakeholders Relationship Committee, or any other Member of any such
Committee authorised by the Chairman of the Committee to attend on his behalf,
shall attend the General Meeting.

4.1.2 Directors who attend General Meetings of the company and the
Company Secretary shall be seated with the Chairman.

The Company Secretary shall assist the Chairman in conducting the Meeting.

4.2 Auditors

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The Auditors, unless exempted by the company, shall, either by themselves

or through their authorised representative, attend the General Meetings of the
company and shall have the right to be heard at such Meetings on that part of
the business which concerns them as Auditors.

The authorised representative who attends the General Meeting of the company
shall also be qualified to be an Auditor.

4.3 Secretarial Auditor

The Secretarial Auditor, unless exempted by the company shall, either by

himself or through his authorised representative, attend the Annual
General Meeting and shall have the right to be heard at such Meeting on
that part of the business which concerns him as Secretarial Auditor.

The Chairman may invite the Secretarial Auditor or his authorised representative to
attend any other General Meeting, if he considers it necessary.

The authorised representative who attends the General Meeting of the company
shall also be qualified to be a Secretarial Auditor.

5. Chairman
5.1 Appointment

The Chairman of the Board shall take the chair and conduct the Meeting. If
the Chairman is not present within fifteen minutes after the time appointed
for holding the Meeting, or if he is unwilling to act as Chairman of the
Meeting, or if no Director has been so designated, the Directors present at
the Meeting shall elect one of themselves to be the Chairman of the
Meeting. If no Director is present within fifteen Minutes after the time
appointed for holding the Meeting, or if no Director is willing to take the
chair, the Members present shall elect, on a show of hands, one of
themselves to be the Chairman of the Meeting, unless otherwise provided
in the Articles.

If a poll is demanded on the election of the Chairman, it shall be taken forthwith in

accordance with the provisions of the Act and the Chairman elected on a show of
hands shall continue to be the Chairman of the Meeting until some other person is
elected as Chairman as a result of the poll, and such other person shall be the
Chairman for the rest of the Meeting.

The Chairman shall ensure that the Meeting is duly constituted in accordance with the
Act and the Articles or any other applicable laws, before it proceeds to transact
business. The Chairman shall then conduct the Meeting in a fair and impartial manner
and ensure that only such business as has been set out in the Notice is transacted.
The Chairman shall regulate the manner in which voting is conducted at the Meeting
keeping in view the provisions of the Act.

5.2 The Chairman shall explain the objective and implications of the
Resolutions before they are put to vote at the Meeting.

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The Chairman shall provide a fair opportunity to Members who are entitled to vote
to seek clarifications and/or offer comments related to any item of business and
address the same, as warranted.

5.3 In case of public companies, the Chairman shall not propose any
Resolution in which he is deemed to be concerned or interested nor shall he
conduct the proceedings for that item of business.

If the Chairman is interested in any item of business, without prejudice to his Voting
Rights on Resolutions, he shall entrust the conduct of the proceedings in respect of
such item to any Dis-Interested Director or to a Member, with the consent of the
Members present, and resume the Chair after that item of business has been
transacted.

6. Proxies

6.1 Right to Appoint

A Member entitled to attend and vote is entitled to appoint a Proxy, or where

that is allowed, one or more proxies, to attend and vote instead of himself and
a Proxy need not be a Member.

However, a Proxy shall be a Member in case of companies with charitable objects

etc. and not for profit registered under the specified provisions of the Act.

A Proxy can act on behalf of Members not exceeding fifty and holding in the
aggregate not more than ten percent of the total share capital of the company
carrying Voting Rights.

However, a Member holding more than ten percent of the total share capital of the
company carrying Voting Rights may appoint a single person as Proxy for his entire
shareholding and such person shall not act as a Proxy for another person or
shareholder.

If a Proxy is appointed for more than fifty Members, he shall choose any fifty
Members and confirm the same to the company before the commencement of
specified period for inspection. In case, the Proxy fails to do so, the company shall
consider only the first fifty proxies received as valid.

6.2 Form of Proxy

6.2.1 An instrument appointing a Proxy shall be either in the Form specified in

the Articles or in the Form set out in the Act.

The instrument of Proxy shall be signed by the appointer or his attorney duly authorised
in writing, or if the appointer is a body corporate, be under its seal or be signed by an
officer or an attorney duly authorised by it.

6.2.2 An instrument of Proxy duly filled, stamped and signed, is valid only for
the Meeting to which it relates including any adjournment thereof.

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6.3 Stamping of Proxies

An instrument of Proxy is valid only if it is properly stamped as per the

applicable law. Unstamped or inadequately stamped Proxies or Proxies upon
which the stamps have not been cancelled are invalid.

6.4 Execution of Proxies

6.4.1 The Proxy-holder shall prove his identity at the time of attending the
Meeting.

6.4.2 An authorised representative of a body corporate or of the President of

India or of the Governor of a State, holding shares in a company, may appoint a
Proxy under his signature.

6.5 Proxies in Blank and Incomplete Proxies

6.5.1 A Proxy form which does not state the name of the Proxy shall not be
considered valid.

6.5.2 Undated Proxy shall not be considered valid.

6.53 If a company receives multiple Proxies for the same holdings of a Member,
the Proxy which is dated last shall be considered valid; if they are not dated or
bear the same date without specific mention of time, all such multiple Proxies
shall be treated as invalid.

6.6 Deposit of Proxies

6.6.1 Proxies shall be deposited with the company either in person or through post
not later than forty-eight hours before the commencement of the Meeting in relation
to which they are deposited and a Proxy shall be accepted even on a holiday if the
last date by which it could be accepted is a holiday.

Any provision in the Articles of a company which specifies or requires a longer period
for deposit of Proxy than forty-eight hours before a Meeting of the company shall
have effect as if a period of forty-eight hours had been specified in or required for
such deposit.

6.6.2 If the Articles so provide, a Member who has not appointed a Proxy to
attend and vote on his behalf at a Meeting may appoint a Proxy for any
adjourned Meeting, not later than forty-eight hours before the time of such
adjourned Meeting.

6.7 Revocation of Proxies

6.7.1 If a Proxy had been appointed for the original Meeting and such Meeting
is adjourned, any Proxy given for the adjourned Meeting revokes the Proxy
given for the original Meeting.

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6.7.2 A Proxy later in date revokes any Proxy/Proxies dated prior to such Proxy.

6.7.3 A Proxy is valid until written notice of revocation has been received by
the company before the commencement of the Meeting or adjourned Meeting,
as the case may be.

An undated notice of revocation of Proxy shall not be accepted. A notice of

revocation shall be signed by the same Member (s) who had signed the Proxy, in
the case of joint Membership.

A Proxy need not be informed of the revocation of the Proxy issued by the Member.

6.7.4 When a Member appoints a Proxy and both the Member and Proxy attend
the Meeting, the Proxy stands automatically revoked.

6.8 Inspection of Proxies

6.8.1 Requisitions, if any, for inspection of Proxies shall be received in writing

from a Member entitled to vote on any Resolution at least three days before the
commencement of the Meeting.

6.8.2 Proxies shall be made available for inspection during the period
beginning twenty-four hours before the time fixed for the commencement of
the Meeting and ending with the conclusion of the Meeting.

Inspection shall be allowed between 9 a.m. and 6 p.m. during such period.

6.8.3 A fresh requisition, conforming to the above requirements, shall be given

for inspection of Proxies in case the original Meeting is adjourned.

6.9 Record of Proxies

6.9.1 All Proxies received by the company shall be recorded chronologically in

a register kept for that purpose.

6.9.2 In case any Proxy entered in the register is rejected, the reasons therefor
shall be entered in the remarks column.

7. Voting

7.1 Proposing a Resolution

Every Resolution shall be proposed by a Member and seconded by another

Member.

7.2 E-voting

7.2.1 Every company having its equity shares listed on a recognized stock
exchange other than companies whose equity shares are listed on SME
Exchange or on the Institutional Trading Platform and other companies as

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prescribed shall provide e-voting facility to their Members to exercise their

Voting Rights.

Other companies presently prescribed are companies having not less than one
thousand Members.

The facility of Remote e-voting does not dispense with the requirement of holding a
General Meeting by the company.

7.2.2 Voting at the Meeting

Every company, which has provided e-voting facility to its Members, shall also
put every Resolution to vote through a ballot process at the Meeting.

Ballot process may be carried out by distributing ballot/poll slips or by making

arrangement for voting through computer or secure electronic systems.

Any Member, who has already exercised his votes through Remote e-voting, may
attend the Meeting but is prohibited to vote at the Meeting and his vote, if any, cast
at the Meeting shall be treated as invalid.

A Proxy can vote in the ballot process.

7.3 Show of Hands

Every company shall, at the Meeting, put every Resolution, except a

Resolution which has been put to Remote e-voting, to vote on a show of hands
at the first instance, unless a poll is validly demanded.

A Proxy cannot vote on a show of hands.

7.4 Poll

The Chairman shall order a poll upon receipt of a valid demand for poll either
before or on the declaration of the result of the voting on any Resolution on
show of hands.

Poll in such cases shall be through a Ballot process.

While a Proxy cannot speak at the Meeting, he has the right to demand or join in the
demand for a poll.

The poll may be taken by the Chairman, on his own motion also.

7.5 Voting Rights

7.5.1 Every Member holding equity shares and, in certain cases as prescribed
in the Act, every Member holding preference shares, shall be entitled to vote
on a Resolution.

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Every Member entitled to vote on a Resolution and present in person shall, on a

show of hands, have only one vote irrespective of the number of shares held by him.

A Member present in person or by Proxy shall, on a poll or ballot, have votes in

proportion to his share in the paid up equity share capital of the company, subject to
differential rights as to voting, if any, attached to certain shares as stipulated in the
Articles or by the terms of issue of such shares.

Preference shareholders have a right to vote only in certain cases as prescribed under
the Act.

7.5.2 A Member who is a related party is not entitled to vote on a Resolution

relating to approval of any contract or arrangement in which such Member is a
related party.

7.6 Second or Casting Vote

Unless otherwise provided in the Articles, in the event of equality of votes,

whether on show of hands or electronically or on a poll, the Chairman of the
Meeting shall have a second or casting vote.

Where the Chairman has entrusted the conduct of proceedings in respect of an item
in which he is interested to any Dis-interested Director or to a Member, a person
who so takes the chair shall have a second or casting vote.

8. Conduct of e-voting

8.1 Every company that is required or opts to provide e-voting facility to its
Members shall comply with the provisions in this regard.

8.2 Every company providing e-voting facility shall offer such facility to all
Members, irrespective of whether they hold shares in physical form or in
dematerialised form.

8.3. The facility for Remote e-voting shall remain open for not less than three
days. The voting period shall close at 5 p.m. on the day preceding the date of the
General Meeting.

8.4 Board Approval

The Board shall:

(a) appoint one or more scrutinisers for e-voting or the ballot process,

The scrutiniser (s) may be a Company Secretary in Practice, a Chartered

Accountant in Practice, a Cost Accountant in Practice, or an Advocate or any other
person of repute who is not in the employment of the company and who can, in the
opinion of the Board, scrutinise the e-voting process or the ballot process, as the
case may be, in a fair and transparent manner.

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The scrutiniser (s) so appointed may take assistance of a person who is not in
employment of the company and who is well-versed with the e-voting system.

Prior consent to act as a scrutiniser(s) shall be obtained from the scrutiniser(s)

and placed before the Board for noting.

(b) appoint an Agency;

(c) decide the cut-off date for the purpose of reckoning the names of Members
who are entitled to Voting Rights;

The cut-off date for determining the Members who are entitled to vote through
Remote e-voting or voting at the meeting shall be a date not earlier than seven days
prior to the date fixed for the Meeting.

Only Members as on the cut-off date, who have not exercised their Voting Rights
through Remote e-voting, shall be entitled to vote at the Meeting.

(d) authorise the Chairman or in his absence, any other Director to receive the
scrutiniser's register, report on e-voting and other related papers with
requisite details.

The scrutiniser(s) is required to submit his report within a period of three days
from the date of the meeting.

The Chairman or any other director so authorized shall countersign the

scrutiniser's report so received.

8.5 Notice

8.5.1 Notice of the Meeting, wherein the facility of e-voting is provided, shall be
sent either by registered post or speed post or by courier or by e-mail or by
any other electronic means.

An advertisement containing prescribed details shall be published, immediately on

completion of despatch of notices for meeting but atleast twenty one days before the
date of the General Meeting, at least once in a vernacular newspaper in the principal
vernacular language of the district in which the registered office of the company is
situated and having a wide circulation in that district and at least once in English
language in an English newspaper, having country-wide circulation, and specifying
therein, inter-alia the following matters, namely:-

a) A statement to the effect that the business may be transacted by e-voting;

b)The date and time of commencement of remote e-voting;

c) The date and time of end of Remote e-voting;

d)The cut-off date as on which the right of voting of the Members shall be
reckoned;

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e) The manner in which persons who have acquired shares and become
Members after the despatch of Notice may obtain the login ID and password;

f) The manner in which company shall provide for voting by Members present at
the Meeting

g) The statement that

i) Remote e-Voting shall not be allowed beyond the said date and time;

ii) a Member may participate in the General Meeting even after exercising
his right to vote through Remote e-voting but shall not be entitled to vote
again; and

iii) a Member as on the cut-off date shall only be entitled for availing the
Remote e-voting facility or vote, as the case may be, in the General
Meeting;

h)Website address of the company, in case of companies having a website and

Agency where Notice is displayed; and

i) Name, designation, address, e-mail ID and phone number of the person

responsible to address the grievances connected with the e-voting.

Advertisement shall also be placed on the website of the company, in case of

companies having a website and of the Agency.

8.5.2 Notice shall also be placed on the website of the company, in case of
companies having a website, and of the Agency.

Such Notice shall remain on the website till the date of General Meeting.

8.5.3 Notice shall inform the Members about procedure of Remote e-voting,
availability of such facility and provide necessary information thereof to
enable them to access such facility.

Notice shall clearly state that the company is providing e-voting facility and that the
business may be transacted through such voting.

Notice shall describe clearly the Remote e-voting procedure and the procedure of
voting at the General Meeting by Members who do not vote by Remote e-voting.

Notice shall also clearly specify the date and time of commencement and end of
Remote e-voting and contain a statement that at the end of Remote e-voting period,
the facility shall forthwith be blocked.

Notice shall also contain contact details of the official responsible to address the
grievances connected with voting by electronic means.

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Notice shall clearly specify that any Member, who has voted by Remote e-voting,
cannot vote at the Meeting. Notice shall also specify the mode of declaration of the
results of e- voting.

Notice shall also clearly mention the cut-off date as on which the right of voting of
the Members shall be reckoned and state that a person who is not a Member as on
the cut off date should treat this Notice for information purposes only.

Notice shall provide the details about the login ID and the process and manner for
generating or receiving the password and for casting of vote in a secure manner.

8.6 Declaration of results

8.6.1 Based on the scrutiniser's report received on Remote e-voting and voting
at the Meeting, the Chairman or any other Director so authorised shall
countersign the scrutiniser's report and declare the result of the voting
forthwith with details of the number of votes cast for and against the
Resolution, invalid votes and whether the Resolution has been carried or not.

8.6.2 The result of the voting, with details of the number of votes cast for and
against the Resolution, invalid votes and whether the Resolution has been
carried or not shall be displayed on the Notice Board of the company at its
Registered Office and its Head Office as well as Corporate Office, if any, if
such office is situated elsewhere. Further, the results of voting alongwith the
scrutiniser's report shall also be placed on the website of the company, in
case of companies having a website and of the Agency, immediately after the
results are declared.

8.6.3 The Resolution, if passed by a requisite majority, shall be deemed to

have been passed on the date of the relevant General Meeting.

8.7 Custody of scrutinisers' register, report and other related papers

The scrutinisers' register, report and other related papers received front the
scrutiniser(s) shall be kept in the custody of the Company Secretary or any
other person authorised by the Board for this purpose.

9. Conduct of Poll

9.1 When a poll is demanded on any Resolution, the Chairman shall get the
validity of 'the demand verified and, if the demand is valid, shall order the poll
forthwith if it is demanded on the question of appointment of the Chairman or
adjournment of the Meeting and, In any other case, within forty-eight hours of
the demand for poll.

9.2 In the case of a poll, which is not taken forthwith, the Chairman shall
announce the date, venue and time of taking the poll to enable Members to have
adequate and convenient opportunity to exercise their vote. The Chairman may
permit any Member who so desires to be present at the time of counting of
votes.

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If the date, venue and time of taking the poll cannot be announced at the Meeting, the
Chairman shall inform the Members, the modes and the time of such communication,
which shall in any case be within twenty four hours of closure of the Meeting.

A Member who did not attend the Meeting can participate and vote in the poll in such
cases.

9.3 Each Resolution put to vote by poll shall be put to vote separately.

One ballot paper may be used for more than one item.

9.4 Appointment of scrutinisers

The Chairman shall appoint such number of scrutinisers, as he deems

necessary, who may include a Company Secretary in Practice, a Chartered
Accountant in Practice, a Cost Accountant in Practice, an Advocate or any
other person of repute who is not in the employment of the company, to ensure
that the scrutiny of the votes cast on a poll is done in a fair and transparent
manner.

At least one of the scrutinisers shall be a Member who is present at the Meeting, provided
such a Member is available and willing to be appointed.

9.5 Declaration of results

9.5.1 Based on the scrutiniser's report, the Chairman shall declare the result of
the poll within two days of the submission of report by the scrutiniser, with
details of the number of votes cast for and against the Resolution, invalid votes
and whether the Resolution has been carried or not.

The scrutiniser shall submit his report to the Chairman who shall countersign the same. In
case Chairman is not available, for such purpose, the report by the scrutiniser shall be
submitted to any Director who is authorised by the Board to receive such report, who shall
countersign the scrutiniser's report on behalf of the Chairman.

The result shall be announced by the Chairman or any other person authorised by the
Chairman in writing for this purpose.

The Chairman of the Meeting shall have the power to regulate the manner in which
the poll shall be taken and shall ensure that the poll is scrutinised in the manner
prescribed under the Act.

9.5.2 The result of the poll with details of the number of votes cast for and
against the Resolution, invalid votes and whether the Resolution has been
carried or not shall be displayed on the Notice Board of the company at its
Registered Office and its Head Office as well as Corporate Office, if any, if such
office is situated elsewhere, and in case of companies having a website, shall
also be placed on the website.

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9.5.3 The result of the poll shall be deemed to be the decision of the Meeting on
the Resolution on which the poll was taken.

10. Prohibition on Withdrawal of Resolutions

Resolutions for items of business which are likely to affect the market price of
the securities of the company shall not be withdrawn. However, any resolution
proposed for consideration through e-voting shall not be withdrawn.

11. Rescinding of Resolutions

A Resolution passed at a Meeting shall not be rescinded otherwise than by a

Resolution passed at a subsequent Meeting.

12. Modifications to Resolutions

Modifications to any Resolution which do not change the purpose of the

Resolution materially may be proposed, seconded and adopted by the requisite
majority at the Meeting and, thereafter, the modified Resolution shall be duly
proposed, seconded and put to vote.

No modification to any proposed text of the Resolution shall be made if it in any way
alters the substance of the Resolution as set out in the Notice. Grammatical, clerical,
factual and typographical errors, if any, may be corrected as deemed fit by the
Chairman.

No modification shall be made to any Resolution which has already been put to vote
by Remote e-voting before the Meeting.

13. Reading of Reports

13.1 The qualifications, observations or comments or other remarks on the

financial transactions or matters which have any adverse effect on the
functioning of the company, if any, mentioned in the Auditor's Report shall be
read at the Annual General Meeting and attention of the Members present shall
be drawn to the explanations / comments given by the Board of Directors in
their report.

13.2 The qualifications, observations or comments or other remarks if any,

mentioned in the Secretarial Audit Report issued by the Company Secretary in
Practice, shall be read at the Annual General Meeting and attention of Members
present shall be drawn to the explanations / comments given by the Board of
Directors in their report.

14. Distribution of Gifts

No gifts, gift coupons, or cash in lieu of gifts shall be distributed to Members at

or in connection with the Meeting.

15. Adjournment of Meetings

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15.1 A duly convened Meeting shall not be adjourned unless circumstances so

warrant. The Chairman may adjourn a Meeting with the consent of the Members,
at which a Quorum is present, and shall adjourn a Meeting if so directed by the
Members.

Meetings shall stand adjourned for want of requisite Quorum.

The Chairman may also adjourn a Meeting in the event of disorder or other like
causes, when it becomes impossible to conduct the Meeting and complete its
business.

15.2 If a Meeting is adjourned sine-die or for a period of thirty days or more, a

Notice of the adjourned Meeting shall be given in accordance with the
provisions contained hereinabove relating to Notice.

15.3 If a Meeting is adjourned for a period of less than thirty days, the company
shall give not less than three days' Notice specifying the day, date, time and
venue of the Meeting, to the Members either individually or by publishing an
advertisement in a vernacular newspaper in the principal vernacular language
of the district in which the registered office of the company is situated, and in
an English newspaper in English language, both having a wide circulation in
that district.

15.4 If a Meeting, other than a requisitioned Meeting, stands adjourned for want
of Quorum, the adjourned Meeting shall be held on the same day, in the next
week at the same time and place or on such other day, not being a National
Holiday, or at such other time and place as may be determined by the Board.

If a Meeting is adjourned for want of a Quorum to the same day on the next week, at
the same time and place or with a change of day, time or place, the company shall
give not less than three days' Notice specifying the day, date, time and venue of the
Meeting, to the Members either individually or by publishing an advertisement in a
vernacular newspaper in the principal vernacular language of the district in which the
registered office of the company is situated, and in an English newspaper in English
language, both having a wide circulation in that district.

If, at an adjourned Meeting, Quorum is not present within half an hour from the time
appointed, the Members present, being not less than two in number, will constitute the
Quorum.

15.5 If, within half an hour from the time appointed for holding a Meeting called
by requisitionists, a Quorum is not present, the Meeting shall stand cancelled.

15.6 At an adjourned Meeting, only the unfinished business of the original

Meeting shall be considered.

Any Resolution passed at an adjourned Meeting would be deemed to have been

passed on the .date of the adjourned Meeting and not on any earlier date. ;

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16. Passing of Resolutions by postal ballot

16.1 Every company, except a company having less than or equal to two
hundred Members, shall transact items of business as prescribed, only by
means of postal ballot instead of transacting such business at a General
Meeting.

The list of items of businesses requiring to be transacted only by means of a postal

ballot is given at Annexure.

The Board may however opt to transact any other item of special business, not being
any business in respect of which Directors or auditors have a right to be heard at the
Meeting, by means of postal ballot.

Ordinary Business shall not be transacted by means of a postal ballot.

16.2 Every company having its equity shares listed on a recognized stock
exchange other than companies whose equity shares are listed on SME
Exchange or on the Institutional Trading Platform and other companies which
are required to provide e-voting facility shall provide such facility to its Members
in respect of those items, which are required to be transacted through postal
ballot.

Other companies presently prescribed are companies having not less than one thousand
Members.

16.3 Board Approval

The Board shall:

(a) identify the businesses to be transacted through postal ballot;

(b) approve the Notice of postal ballot incorporating proposed Resolution(s)

and explanatory statement thereto;

(c) authorise the Company Secretary or where there is no Company

Secretary, any Director of the company to conduct postal ballot
process and sign and send the Notice along with other documents ;

(d) appoint one scrutiniser for the postal ballot.

The scrutiniser may be a Company Secretary in Practice, a Chartered Accountant

in Practice, a Cost Accountant in Practice, an Advocate or any other person of
repute who is not in the employment of the company and, who can in the opinion
of the Board, scrutinise the postal ballot process in a fair and transparent manner.

The scrutiniser shall however not be an officer or employee of the company.

The scrutiniser so appointed may take assistance of a person who is not in

employment of the company and who is well-versed with the e-voting system.

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Prior Consent to act as a scrutiniser shall be obtained from the scrutiniser and
placed before the Board for noting.

(e) appoint an Agency in respect of e-voting for the postal ballot;

(f) decide the record date for reckoning Voting Rights and ascertaining those
Members to whom the Notice and postal ballot forms shall be sent.

Only Members as of the record date shall be entitled to vote on the proposed Resolution
by postal ballot.

(g) decide on the calendar of events.

(h) authorise the Chairman or in his absence, any other Director to receive the
scrutiniser's register, report on postal ballot and other related papers with
requisite details.

The scrutiniser is required to submit his report within seven days from the last
date of receipt of postal ballot forms.

16.4 Notice

16.4.1 Notice of the postal ballot shall be given in writing to every Member of
the company. Such Notice shall be sent either by registered post or speed
post, or by courier or by e-mail or by any other electronic means at the address
registered with the company.

The Notice shall be accompanied by the postal ballot form with the necessary
instructions for filling, signing and returning the same.

In case the Notice and accompanying documents are sent to Members by e-mail,
these shall be sent to the Members' e-mail addresses, registered with the company
or provided by the depository, in the manner prescribed tinder the Act.

Such Notice shall also be given to the Directors and Auditors of the company, to the
Secretarial Auditor, to Debenture Trustees, if any, and, wherever applicable or so
required, to other specified recipients.

An advertisement containing prescribed details shall be published at least once in a

vernacular newspaper in the principal vernacular language of the district in which the
registered office of the company is situated, and having a wide circulation in that district,
and at least once in English language in an English newspaper having a wide circulation
in that district, about having dispatched the Notice and the ballot papers.

16.4.2 In case of companies having a website, Notice of the postal ballot shall
also be placed on the website.

Such Notice shall remain on the website till the last date for receipt of the postal
ballot forms from the Members.

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16.4.3 Notice shall specify the day, date, time and venue where the results of
the voting by postal ballot will be announced and the link of the website where
such results will be displayed.

Notice shall also specify the mode of declaration of the results of the voting by postal
ballot.

16.4.4 Notice of the postal ballot shall inform the Members about availability of
e-voting facility, if any, and provide necessary information thereof to enable
them to access such facility.

In case the facility of e-voting has been made available, the provisions relating to
conduct of e-voting shall apply, 'mutatis mutendis, as far as applicable.

Notice shall describe clearly the e-voting procedure.

Notice shall also clearly specify the date and time of commencement and end of e-
voting, if any and contain a statement that voting shall not be allowed beyond the said
date and time. Notice shall also contain contact details of the official responsible to
address the grievances connected with the e-voting for postal ballot.

Notice shall clearly specify that any Member cannot vote both by post and e-voting
and if he votes .both by post and e-voting, his vote by post shall be treated as invalid.

The advertisement shall, inter alia, state the following matters:

(a) a statement to the effect that the business is to be transacted by postal ballot
which may include voting by electronic means;

(b) the date of completion of dispatch of Notices;

(c) the date of commencement of voting ( postal and e-voting);

(d) the date of end of voting ( postal and e-voting);

(e) the statement that any postal ballot form received from the Member after thirty
days from the date of dispatch of Notice will not be valid;

a statement to the effect that Member who has not received postal ballot form
may apply to the company and obtain a duplicate thereof;

(g) contact details of the person responsible to address the queries/grievances

connected with the voting by postal ballot including voting by electronic means, if
any; and

(h) day, date, time and venue of declaration of results and the link of the website
where such results will be displayed.

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Notice and the advertisement shall clearly mention the record date as on which the
right of voting of the Members shall be reckoned and state that a person who is not a
Member as on the record date should treat this Notice for information purposes only.

16.4.5 Each item proposed to be passed through postal ballot shall be in

the form of a Resolution and shall be accompanied by an explanatory
statement which shall set out all such facts as would enable a Member to
understand the meaning, scope and implications of the item of business
and to take a decision thereon.

16.5 Postal ballot forms

16.5.1 The postal ballot form shall be accompanied by a postage prepaid reply
envelope addressed to the scrutiniser.

A single postal ballot Form may provide for multiple items of business to be transacted.

16.5.2 The postal ballot form shall contain instructions as to the manner in
which the form is to be completed, assent or dissent is to be recorded and its
return to the scrutiniser.

The postal ballot form may specify instances in which such Form shall be treated as
invalid or rejected and procedure for issue of duplicate postal ballot Forms.

16.5.3 A postal ballot form shall be considered invalid if:

(a) A form other than one issued by the company has been used;

(b) It has not been signed by or on behalf of the Member;

(c) Signature on the postal ballot form doesn't match the specimen
signatures with the company

(d) It is not possible to determine without any doubt the assent or dissent
of the Member;

(e) Neither assent nor dissent is mentioned;

(f) Any competent authority has given directions in writing to the company to
freeze the Voting Rights of the Member;

(g) The envelope containing the postal ballot form is received after the last
date prescribed;

(h) The postal ballot form, signed in a representative capacity, is not

accompanied by a certified copy of the relevant specific authority;

(i) It is received from a Member who is in arrears of payment of calls;

(j) It is defaced or mutilated in such a way that its identity as a genuine

form cannot be established;

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(k) Member has made any amendment to the Resolution or imposed any
condition while exercising his vote.

A postal ballot form which is otherwise complete in all respects and is lodged within
the prescribed time limit but is undated shall be considered valid.

16.6 Declaration of results

16.6.1 Based on the scrutiniser's report, the Chairman or any other Director
authorised by him shall declare the result of the postal ballot on the date,
time and venue specified in the Notice, with details of the number of votes
cast for and against the Resolution, invalid votes and the final result as to
whether the Resolution has been carried or not.

The scrutiniser shall submit his report to the Chairman who shall countersign the
same. In case Chairman is not available, for such purpose, the report by the
scrutiniser shall be submitted to any other Director who is authorised by the Board to
receive such report, who shall countersign the scrutiniser's report on behalf of the
Chairman.

16.6.2 The result of the voting with details of the number of votes cast for and
against the Resolution, invalid votes and whether the Resolution has been
carried or not, along with the scrutiniser's report shall be displayed on the
Notice Board of the company at its Registered Office and its Head Office as
well as Corporate Office, if any, if such office is situated elsewhere, and also be
placed on the website of the company, in case of companies having a website.

16.6.3 The Resolution, if passed by requisite majority, shall be deemed to have

been passed on the last date specified by the company for receipt of duly
completed postal ballot forms or e-voting.

16.7 Custody of scrutiniser's registers, report and other related papers

The postal ballot forms, other related papers, register and scrutiniser's report
received from the scrutiniser shall be kept in the custody of the Company
Secretary or any other person authorised by the Board for this purpose.

16.8 Rescinding the Resolution

A Resolution passed by postal ballot shall not be rescinded otherwise than by

a Resolution passed subsequently through postal ballot.

16.9 Modification to the Resolution

No amendment or modification shall be made to any Resolution circulated to

the Members for passing by means of postal ballot.

17. Minutes

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Every company shall keep Minutes of all Meetings. Minutes kept in accordance with
the provisions of the Act evidence the proceedings recorded therein. Minutes help in
understanding the deliberations and decisions taken at the Meeting.

17.1 Maintenance of Minutes

17.1.1 Minutes shall be recorded in books maintained for that purpose.

17.1.2 A distinct Minutes Book shall be maintained for Meetings of the

Members of the company, creditors and others as may be required under the
Act.

Resolutions passed by postal ballot shall be recorded in the Minutes book of

General Meetings.

17.1.3 Minutes may be maintained in electronic form in such manner as

prescribed under the Act and as may be decided by the Board. Minutes in
electronic form shall be maintained with Timestamp.

A company may maintain its Minutes in physical or in electronic form with

Timestamp.

Every company shall, however, follow a uniform and consistent form of maintaining
the Minutes. Any deviation in such form of maintenance shall be authorised by the
Board.

17.1.4 The pages of the Minutes Books shall be consecutively numbered.

This shall be followed irrespective of a break in the Book arising out of periodical
binding in case the Minutes are maintained in physical form. This shall be equally
applicable for maintenance of Minutes Book in electronic form with Timestamp.

In the event any page or part thereof in the Minutes Book is left blank, it shall be
scored out and initialled by the Chairman who signs the Minutes.

17.1.5 Minutes shall not be pasted or attached to the Minutes Book, or

tampered with in any manner.

17.1.6 Minutes of Meetings, if maintained in loose-leaf form, shall be bound

periodically depending on the size and volume.

There shall be a proper locking device to ensure security and proper control to
prevent removal or manipulation of the loose leaves.

17.1.7 Minutes Books shall be kept at the Registered Office of the company or
at such other place, as may be approved by the Board.

17.2 Contents of Minutes

17.2.1 General Contents

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17.2.1.1 Minutes shall state, at the beginning the Meeting, name of the
company, day, date, venue and time of commencement and conclusion of the
Meeting.

In case a Meeting is adjourned, the Minutes shall be entered in respect of the original
Meeting as well as the adjourned Meeting. In respect of a Meeting convened but
adjourned for want of Quorum a statement to that effect shall be recorded by the
Chairman or any Director present at the Meeting in the Minutes.

17.2.1.2 Minutes shall record the names of the Directors and the Company
Secretary present at the Meeting.

The names of the Directors shall be listed in alphabetical order or in any other logical
manner, but in either case starting with the name of the person in the Chair.

17.2.2 Specific Contents

17.2.2.1 Minutes shall, inter alia, contain:

(a) The Record of election, if any, of the Chairman of the Meeting.

(b) The fact that certain registers, documents, the Auditor's Report and
Secretarial Audit Report, as prescribed under the Act were available for
inspection.

(c) The Record of presence of Quorum.

(d) The number of Members present in person including representatives.

(e) The number of proxies and the number of shares represented by them.

(f) The presence of the Chairmen of the Audit Committee, Nomination and
Remuneration Committee and Stakeholders Relationship Committee or their
authorised representatives.

(g) The presence if any, of the Secretarial Auditor, the Auditors, or their
authorised representatives, the Court/Tribunal appointed observers or
scrutinisers.

(h) Summary of the opening remarks of the Chairman.

(i) Reading of qualifications, observations or comments or other remarks on

the financial transactions or matters which have any adverse effect on the
functioning of the company, as mentioned in the report of the Auditors.

(j) Reading of qualifications, observations or comments or other remarks as

mentioned in the report of the Secretarial Auditor.

(k) Summary of the clarifications provided on various Agenda Items.

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(I) In respect of each Resolution, the type of the Resolution, the names of the
persons who proposed and seconded and the majority with which such
Resolution was passed.

Where a motion is moved to modify a proposed Resolution, the result of voting on

such motion shall be mentioned. If a Resolution proposed undergoes modification
pursuant to a motion by shareholders, the Minutes shall contain the details of voting
for the modified Resolution.

(m) In the case of poll, the names of scrutinisers appointed and the number
of votes cast in favour and against the Resolution and invalid votes.

(n) If the Chairman vacates the Chair in respect of any specific item, the fact
that he did so and in his place some other Director or Member took the Chair.

(o) The time of commencement and conclusion of the Meeting.

17.2.2.2 In respect of Resolutions passed by e-voting or postal ballot, a brief

report on the e-voting or postal ballot conducted including the Resolution
proposed, the result of the voting thereon and the summary of the scrutiniser's
report shall be recorded in the Minutes Book and signed by the Chairman or in
the event of death or inability of the Chairman, by any Director duly authorised
by the Board for the purpose, within thirty days from the date of passing of
Resolution by e-voting or postal ballot.

17.3. Recording of Minutes

17.3.1 Minutes shall contain a fair and correct summary of the proceedings of
the Meeting.

The Company Secretary shall record the proceedings of the Meetings. Where there is
no Company Secretary, any other person authorised by the Board or by the Chairman in
this behalf shall record the proceedings.

The Chairman shall ensure that the proceedings of the Meeting are correctly recorded.

The Chairman has absolute discretion to exclude from the Minutes, matters which in
his opinion are or could reasonably be regarded as defamatory of any person,
irrelevant or immaterial to the proceedings or which are detrimental to the interests of
the company.

17.3.2 Minutes shall be written in clear, concise and plain language.

Minutes shall be written in third person and past tense. Resolutions shall however be
written in present tense.

Minutes need not be an exact transcript of the proceedings at the Meeting.

17.3.3 Each item of business taken up at the Meeting shall be numbered.

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Numbering shall be in a manner which would enable ease of reference or cross-

reference.

17.4. Entry in the Minutes Book

17.4.1 Minutes shall be entered in the Minutes Book within thirty days from the
date of conclusion of the Meeting.

In case a Meeting is adjourned, the Minutes in respect of the original Meeting as well
as the adjourned Meeting shall be entered in the Minutes Book within thirty days from
the date of the respective Meetings.

17.4.2 The date of entry of the Minutes in the Minutes Book shall be recorded
by the Company Secretary.

Where there is no Company Secretary, it shall be entered by any other person

authorised by the Board or the Chairman

17.4.3 Minutes, once entered in the Minutes Book, shall not be altered.

17.5. Signing and Dating of Minutes

17.5.1 Minutes of a General Meeting shall be signed and dated by the Chairman
of the Meeting or in the event of death or inability of that Chairman, by any
Director who was present in the Meeting and duly authorised by the Board for
the purpose, within thirty days of the General Meeting.

17.5.2 The Chairman shall initial each page of the Minutes, sign the last page
and append to such signature the date on which and the place where he has
signed the Minutes.

Any blank space in a page between the conclusion of the Minutes and signature of
the Chairman shall be scored out.

If the Minutes are maintained in electronic form, the Chairman shall sign the Minutes
digitally.

17.6. Inspection and Extracts of Minutes

17.6.1 Directors and Members are entitled to inspect the Minutes of all General
Meetings including Resolutions passed by postal ballot.

Minutes of all General Meetings shall be open for inspection by any Member during
business hours of the company, without charge, subject to such reasonable
restrictions as the company may, by its Articles or in General Meeting, impose, so,
however, that not less than two hours in each business day are allowed for
inspection.

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The Company Secretary in Practice appointed by the company, the Secretarial Auditor,
the Statutory Auditor, the Cost Auditor or the Internal Auditor of the company can inspect
the Minutes as he may consider necessary for the performance of his duties.

Inspection of Minutes Book may be provided in physical or in electronic form.

While providing inspection of Minutes Book, the Company Secretary or the official of
the company authorised by the Company Secretary to facilitate inspection shall take
all precautions to ensure that the Minutes Book is not mutilated or in any way
tampered with by the person inspecting.

17.6.2 Extract of the Minutes shall be given only after the Minutes have been
duly signed. However, any Resolution passed at a Meeting may be issued even
pending signing of the Minutes, provided the same is certified by the Chairman
or any Director or the Company Secretary.

When a Member requests in writing for a copy of any Minutes, which he is entitled to
inspect, the company shall furnish the same within seven working days of receipt of
his request, subject to payment of such fee as may be specified in the Articles of the
company. In case a Member requests for the copy of the Minutes in electronic form,
in respect of any previous General Meetings held during a period immediately
preceding three financial years, the company shall furnish the same on payment of
such fee as prescribed under the Act.

Copies of the Minutes or the extracts thereof as requisitioned by the Member, duly
certified by the Company Secretary or where there is no Company Secretary, an
officer duly authorised by the Board in this behalf, may be provided in physical or
electronic form.

18. Preservation of Minutes and other Records

18.1 Minutes of all Meetings shall be preserved permanently in physical or in

electronic form with Timestamp.

Where, under a scheme of arrangement, a company has been merged or

amalgamated with another company, Minutes of all Meetings of the transferor
company, as handed over to the transferee company, shall be preserved
permanently by the transferee company, notwithstanding that the transferor
company might have been dissolved.

18.2 Office copies of Notices, scrutiniser's report, and related papers shall be
preserved in good order in physical or in electronic form for as long as they
remain current or for eight financial years, whichever is later and may be
destroyed thereafter with the approval of the Board.

Office copies of Notices, scrutiniser's report, and related papers of the transferor
company, as handed over to the transferee company, shall be preserved in good
order in physical or electronic form for as long as they remain current or for eight
financial years, whichever is later and may be destroyed thereafter with the approval
of the Board and permission of the Central/Government, where applicable.

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18.3 Minutes Books shall be kept in the custody of the Company Secretary.

Where there is no Company Secretary, Minutes shall be kept in the custody of any
Director duly authorised for the purpose by the Board.

19. Report on Annual General Meeting

Every listed company shall prepare a report on Annual General Meeting in

the prescribed form, including a confirmation that the Meeting was
convened, held and conducted as per the provisions of the Act.

Such report which shall be a fair and correct summary of the proceedings of the
Meeting shall contain:

(a) the day, date, time and venue of the Annual General Meeting;

(b) confirmation with respect to appointment of Chairman of the Meeting;

(c) number of Members attending the Meeting;

(d) confirmation of Quorum;

(e) confirmation with respect to compliance of the Act and Standards with respect to
calling, convening and conducting the Meeting;

(f) business transacted at the Meeting and result thereof with a brief summary of
the discussions;

(g) particulars with respect to any adjournment, postponement of Meeting, change

in venue; and

(h) any other points relevant for inclusion in the report.

It shall be signed and dated by the Chairman of the Meeting or in case of his
inability to sign, by any two Directors of the company, one of whom shall be the
Managing Director, if there is one and Company Secretary.

Such report shall be filed with the Registrar of Companies within thirty days of the
conclusion of the Annual General Meeting.

20. Disclosure

The Annual Return of a company shall disclose the date of Annual General
Meeting held during the financial year.

EFFECTIVE DATE

This Standard shall come into effect from 01st July, 2015

Annexure

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(Para 16.1)

Items of business which shall be passed only by postal ballot

1. alteration of the objects clause of the memorandum and in the case of the
company in existence immediately before the commencement of the Act, alteration
of the main objects of the memorandum

2. alteration of articles of association in relation to insertion or removal of provisions

which are required to be included in the articles of a company in order to constitute it
a private company

3. change in place of registered office outside the local limits of any city, town or
village

4. change in objects for which a company has raised money from public through
prospectus and still has any unutilised amount out of the money so raised

5. issue of shares with differential rights as to voting or dividend or otherwise

6. variation in the rights attached to a class of shares or debentures or other

securities

7. buy-back of shares by a company

8. appointment of a Director elected by small shareholders

9. sale of the whole or substantially the whole of an undertaking of a company or

where the company owns more than one undertaking, of whole or substantially the
whole of any of such undertakings

10. giving loans or extending guarantee or providing security in excess of the limit
specified

11. any other Resolution prescribed under any applicable law, rules or regulations

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 Annexure N12

The Companies (Amendment) Act, 2015

Annexure N12: the Companies (Amendment) Act, 2015 partially notified

Ministry of Corporate Affairs

Notification
New Delhi, the 29th May, 2015

S.O. 1440(E).- In exercise of the powers conferred by sub-section (2) of Section 1 of the
Companies (Amendment) Act, 2015 (21 of 2015), the Central Government hereby
appoints the 29th May, 2015 as the date on which the provisions of sections 1 to 12 and
15 to 23 of the said Act shall come into force.
[File No. 1 /6 /2015-CL. V]
AMARDEEP SING BHATIA,
Joint Secretary to the Government of India

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Exemptions to Govt. Companies

Annexure N13: Exemptions to Government Companies

This notification is amended by new notification number G.S.R. 582(E) dated 13th June 2017.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 5th June, 2015

G.S.R. 463(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of said Section of the
Companies Act, 2013 (18 of 2013) and in supersession of notifications issued under
section 620 of the Companies Act, 1956 (1 of 1956), except as respects things done or
omitted to be done before such supersession, the Central Government, in the interest of
public, hereby directs that certain provisions of the Companies Act, 2013, as specified in
column (2) of the Table, shall not apply or shall apply with such exceptions, modifications
and adaptations, as specified in column (3) of the said Table, to a Government company,
namely:—

Serial Chapter Number /Section Exceptions, Modifications and

number Number /Sub-section(s) in Adaptations
the Companies Act, 2013
(1) (2) (3)
1 Chapter II, section 4. In section 4, in sub-section (1), in
clause (a), the words 'in the case of
a public limited company, or the last
words "Private Limited" in the case
of a private limited company' shall
be omitted.
2 Chapter IV, section 56. In sub-section (1), after the proviso,
the following provisos shall be
inserted, namely:—
Provided further that the provisions
of this sub-section, in so far as it
requires a proper instrument of
transfer, to be duly stamped and
executed by or on behalf of the
transferor and by or on behalf of the
transferee, shall not apply with
respect to bonds issued by a
Government company, provided that
an intimation by the transferee
specifying his name, address and
occupation, if any, has been
delivered to the company along with

Page 1432
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Exemptions to Govt. Companies

the certificate relating to the bond;

and if no such certificate is in
existence, along with the letter of
allotment of the bond:
Provided also that the provisions of
this sub-section shall not apply to a
Government Company in respect of
securities held by nominees of the
Government.
3 Chapter VII, section 89. Shall not apply.
4 Chapter VII, section 90. Shall not apply.
5 Chapter VII, sub-section (2) of In sub-section (2), for the words
section 96. "some other place within the city,
town or village in which the
registered office of the company is
situate", the words "such other place
as the Central Government may
approve in this behalf' shall be
substituted.
6 Chapter VIII, second proviso to Shall not apply to a Government
sub-section (1) of section 123. Company in which the entire paid up
share capital is held by the Central
Government, or by any State
Government or Governments or by
the Central Government and one or
more State Governments.
7 Chapter VIII, sub-section (4) of Shall not apply to a Government
section 123. Company in which the entire paid up
share capital is held by the Central
Government, or by any State
Government or Governments or by
the Central Government and one or
more State Governments or by one
or more Government Company.
782
8 Chapter IX, section 129. Shall not apply to the companies
engaged in defence production to
the extent of application of relevant
Accounting Standard on segment
reporting.

782
Substituted for ‘Shall not apply to the extent of application of Accounting Standard 17 (Segment
Reporting) to the companies engaged in defence production’ with effect from 23rd February 2018 by
notification no. S.O. 802(E) dated 23rd February 2018.

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Exemptions to Govt. Companies

9 Chapter IX, clause (e) of Shall not apply.

sub-section (3) of section 134.
10 Chapter IX, clause (p) of Shall not apply in case the directors
sub-section (3) of section 134. are evaluated by the Ministry or
Department of the Central
Government which is
administratively in charge of the
company, or, as the case may be, the
State Government, as per its own
evaluation methodology.
11 Chapter XI, section 149(1)(b) Shall not apply.
and first proviso to sub-section
(1) of section 149.
12 Chapter XI, clause (a) of In section 149, in sub-section (6), in
sub-section (6) of section 149. clause (a), for the word "Board", the
words "Ministry or Department of
the Central Government which is
administratively in charge of the
company, or, as the case may be,
the State Government" shall be
substituted.
13 Chapter XI, clause (c) of Shall not apply.
sub-section (6) of section 149.
14 Chapter XI, sub-section (5) of Shall not apply where appointment
section 152. of such director is done by the
Central Government or State
Government, as the case may be.
15 Chapter XI, sub-sections (6) and Shall not apply to --
(7) of section 152. (a) a Government Company in which
the entire paid up share capital is held
by the Central Government, or by any
State Government or Governments
or by the Central Government and
one or more State Governments;
(b) a subsidiary of a Government
company, referred to in (a) above, in
which the entire paid up share
capital is held by that Government
company.
16 Chapter XI, section 160. Shall not apply to—
(a) a Government Company in which
the entire paid up share capital is
held by the Central Government, or
by any State Government or
Governments or by the Central

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 Annexure N13

Exemptions to Govt. Companies

Government and one or more State

Governments;
(b) a subsidiary of a Government
company, referred to in (a) above, in
which the entire paid up share capital
is held by that Government company.
17 Chapter XI, section 162. Shall not apply to —
. (a) a Government Company in which
the entire paid up share capital is
held by the Central Government, or
by any State Government or
Governments or by the Central
Government and one or more State
Governments;
(b) a subsidiary of a Government
company, referred to in (a) above, in
which the entire paid up share capital
is held by that Government company.
18 Chapter XI, section 163. Shall not apply to—
(a) a Government Company in which
the entire paid up share capital is
held by the Central Government, or
by any State Government or
Governments or by the Central
Government and one or more State
Governments;
(b) a subsidiary of a Government
company, referred to in (a) above, in
which the entire paid up share
capital is held by that
Government company. .
19 Chapter XI, sub-section (2) of Shall not apply.
section 164.
20 Chapter XI, section 170. Shall not apply to a Government
Company in which the entire share
capital is held by the Central
Government, or by any State
Government or Governments or by
the Central Government or by one or
more State Governments.
21 Chapter XI, section 171 Shall not apply to a Government
Company in which the entire share
capital is held by the Central
Government, or by any State
Government or Governments or by

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 Annexure N13

Exemptions to Govt. Companies

the Central Government or by one or

more State Governments.
22 Chapter XII, clause (i) of sub- In clause (i) of sub-section (4) of the
section (4) of section 177. section 177, for the words
"recommendation for appointment,
remuneration and terms of
appointment" the words
"recommendation for remuneration"
shall be substituted.
23 Chapter XII, sub-sections (2), Shall not apply to Government
(3) and (4) of section 178. company except with regard to
appointment of 'senior management'
and other employees.
24 Chapter XII, section 185 Shall not apply to a Government
Company in case such company
obtains approval of the Ministry of
Department of the Central
Government which is administratively
in charge of the company, or, as the
case may be, the State Government
before making any loan or giving any
guarantee or providing any security
under the section.
25 Chapter XII, section 186 Shall not apply to –
(a) a Government company engaged
in defence production;
(b) a Government company, other
than a listed company, in case such
company obtains approval of the
Ministry or Department of the Central
Government which is administratively
in charge of the company, or, as the
case may be, the State Government
before making any loan or giving any
guarantee or providing any security or
making any investment under the
section.
26 Chapter XII, first and second Shall not apply to --
proviso to sub-section (1) of (a) a Government company in
section 188. respect of contracts or arrangements
entered into by it with any other
Government company;
(b) a Government company, other
than a listed company, in respect of
contracts or arrangements other than

Page 1436
 Annexure N13

Exemptions to Govt. Companies

those referred to in clause (a), in

case such company obtains approval
of the Ministry or Department of the
Central Government which is
administratively in charge of the
company, or, as the case may be, the
State Government before entering
into such contract or arrangement.
27 Chapter XIII, sub-sections (2), Shall not apply.
(4) and (5) of section 196.
28 Chapter XIII, section 197 Shall not apply.
29 Chapter XIII, sub-sections (1), After sub-section (4), the following
(2), (3) and (4) of section 203. sub-section shall be inserted,
namely:-
"(4A) The provisions of sub-sections
(1), (2), (3) and (4) of this section
shall not apply to a managing director
or Chief Executive Officer or
manager and in their absence, a
whole-time director of the
Government Company."
30 Chapter XXIX,sub-section In sub-section (2), the words "the
(2) of section 439. Registrar, a shareholder of the
company, or of" shall be omitted.

2. The Government companies, while complying with such exceptions, modifications

and adaptations, as specified in column (3) of the aforesaid Table, shall ensure that the
interests of their shareholders are protected.

3. A copy of this notification has been laid in draft before both Houses of Parliament as
required by sub-section (2) of section 462 of the Companies Act, 2013.

Page 1437
 Annexure N14

Exemptions to Private Companies

Annexure N14: Exemptions to Private Companies

This notification is amended by new notification number G.S.R. 583(E) dated 13th June 2017.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 5th June, 2015

G.S.R. 464(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of said section of the
Companies Act, 2013 (18 of 2013), the Central Government, in the interest of public,
hereby directs that certain provisions of the Companies Act, 2013, as specified in column
(2) of the Table, shall not apply or shall apply with such exceptions, modifications and
adaptations, as specified in column (3) of the said Table, to a private company, namely:-

Serial Chapter Number/ Exceptions, Modifications and Adaptations

Number Section Number /
Sub-section(s) in the
Companies Act, 2013
(1) (2) (3)
1 Chapter 1, sub-clause Shall not apply with respect to section 188.
(viii) of clause (76) of
section 2.
2 Chapter IV, section 43 Shall not apply where memorandum or articles
and section 47. of association of the private company so
provides.
3 Chapter IV, sub-clause Shall apply with following modifications:—
(i) of clause (a) of sub- In clause (a), in sub-clause (i), the following
section (1) and sub- proviso shall be inserted, namely:—
section (2) of section Provided that notwithstanding anything
62. contained in this sub-clause and sub-section
(2) of this section, in case ninety per cent. of the
members of a private company have given their
consent in writing or in electronic mode, the
periods lesser than those specified in the said
sub-clause or sub-section shall apply.
4 Chapter IV, clause (b) In clause (b), for the words "special resolution",
of sub- section (1) of the words "ordinary resolution" shall be
section 62. substituted.
5 Chapter IV, section 67. Shall not apply to private companies -
(a) in whose share capital no other body
corporate has invested any money;
(b) if the borrowings of such a company
from banks or
financial institutions or any body corporate is
less than twice its paid up share capital or fifty
crore rupees, whichever is lower; and

Page 1438
 Annexure N14

Exemptions to Private Companies

(c) such a company is not in default in

repayment of such borrowings subsisting at the
time of making transactions under this section.
6 Chapter V, clauses (a) Shall not apply to a private company which
to (e) of sub-section accepts from its members monies not
(2) of section 73. exceeding one hundred per cent. of aggregate
of the paid up share capital and free reserves,
and such company shall file the details of
monies so accepted to the Registrar in such
manner as may be specified.
7 Chapter VII, sections Shall apply unless otherwise specified in
101 to 107 and section respective sections or the articles of the
109. company provide otherwise.
8 Chapter VII, clause (g) Shall not apply.
of sub-section (3) of
section 117.
9 Chapter X, Clause (g) Shall apply with the modification that the words
of sub- section (3) of "other than one person companies, dormant
section 141. companies, small companies and private
companies having paid-up share capital less
than one hundred crore rupees" shall be
inserted after the words "twenty companies".
10 Chapter XI, section Shall not apply.
160.
11 Chapter XI, section Shall not apply.
162.
12 Chapter XII, section Shall not apply.
180.
13 Chapter XII, sub- Shall apply with the exception that the
section (2) of section interested director may participate in such
184. meeting after disclosure of his interest.
14 Chapter XII, section Shall not apply to a private company -
185. (a) in whose share capital no other body
corporate has invested any money;
(b) if the borrowings of such a company
from banks or
financial institutions or any body corporate is
less than twice of its paid up share capital or
fifty crore rupees, whichever is lower; and
(c) such a company has no default in
repayment of such borrowings subsisting at the
time of making transactions under this section.
15 Chapter XII, second Shall not apply.
proviso to sub-section
(1) of section 188.
16 Chapter XIII, sub- Shall not apply.
sections (4) and (5) of
section 196.

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 Annexure N14

Exemptions to Private Companies

2. The private companies, while complying with such exceptions, modifications and
adaptations, as specified in column (3) of the aforesaid Table, shall ensure that the
interests of their shareholders are protected.
3. A copy of this notification has been laid in draft before both Houses of Parliament
as required by sub-section (2) of section 462 of the Companies Act, 2013.
[F. No. 1/1 /2014-CL.V]

Annexure N15: Exemptions to Nidhi Companies

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 5th June, 2015

G.S.R. 465(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 read with section 406 of the Companies Act, 2013 (18 of 2013)
and in supersession of notification number G.S.R. 517(E), dated the 3151 August, 2006
and G.S.R. 326(E), dated the 8th April, 2011 or any other notification issued under section
620A of the Companies Act, 1956, except as respects things done or omitted to be done
before such supersession, the Central Government in the interest of public, hereby
directs that certain provisions of the Companies Act, 2013, as specified in column (2) of
the Table, shall not apply or shall apply with such exceptions, modifications and
adaptations, as specified in column (3) of the said Table, to Nidhis, namely:—

Serial Provisions of the Exemptions, modifications and

No. Companies Act, 2013 adaptations
(1) (2) (3)
1 Sub-section (2) of Section Shall apply subject to the modification that in
20 the case of a Nidhi, the document may be
served only on members who hold shares of
more than one thousand rupees in face value
or more than one per cent. of the total paid-up
share capital of the Nidhis whichever is less.

For other shareholders, document may be

served by a public notice in newspaper
circulated in the district where the
Registered Office of the Nidhi is situated; and
publication of the same on the notice board of
the Nidhi.
2 Section 42 except sub-section Shall not apply.
(1), explanation (11) to sub-
section (2), sub-sections (4),
(6), (8), (9) and (10)

Page 1440
 Annexure N14

Exemptions to Private Companies

3 Clause (b) of sub-section Shall apply, subject to the modification that no

(1) of Section 47 member shall exercise voting rights on poll in
excess of five per cent. of total voting rights of
equity shareholders.
4 Section 62 Shall not apply.
5 Sub-section (1) of Section Shall not apply, when shares are purchased by
67 the company from a member on his ceasing to
be a depositor or borrower and it shall not be
considered as reduction of capital, under
section 66 of the Companies Act, 2013.
6 Sub-section (5) of Section Shall apply, subject to the modification that any
123 dividend payable in cash may be paid by
crediting the same to the account of the member,
if the dividend is not claimed within 30 days from
the date of declaration of the dividend.
7 Section 127 Shall apply, subject to the modification that
where the dividend payable to a member is one
hundred rupees or less, it shall be sufficient
compliance of the provisions of the section, if
the declaration of dividend is announced in the
local language in one local newspaper of wide
circulation and announcement of the said
declaration is also displayed on the notice board
of the Nidhis for at least three months.
8 Sub-section (1) of Section Shall apply, subject to the modification that, in the
136 case of members who do not individually or
jointly hold shares of more than one thousand
rupees in face value or more than one per cent.
of the total paid-up share capital whichever is
less, it shall be sufficient compliance with the
provisions of the section if an intimation is sent
by public notice in newspaper circulated in the
district in which the Registered Office of the Nidhi
is situated stating the date, time and venue of
Annual General Meeting and the financial
statement with its enclosures can be
inspected at the registered office of the
company, and the financial statement with
enclosures are affixed in the Notice Board of the
company and a member is entitled to vote either
in person or through proxy.
9 Section 160 In sub-section (1), for the words "one lakh
rupees", the words "ten thousand rupees"
shall be substituted.
10 Section 185 Shall not apply, provided the loan is given to a
director or his relative in their capacity as
members and such transaction is disclosed in
the annual accounts by a note.

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 Annexure N14

Exemptions to Private Companies

11 Second proviso to sub- Shall apply with the modification that the
section (1) of Section 197 remuneration of a director who is neither
managing director nor whole-time director or
manager for performing special services to the
Nidhis specified in the articles of association
may be paid by way of monthly payment
subject to the approval of the company in
general meeting and also to the provisions of
section 197 :

Provided 'that no approval of the company in

general meeting shall be required where,—

a Nidhi does not have a managing director or

a whole-time director or a manager;

(b) the remuneration payable during a financial

year to all the directors of the Nidhi does not
exceed ten per cent. of the net profits of such
Nidhi or fifteen lakh rupees, whichever is less;
and

(c) a remuneration payable under clause (b) is

approved by a special resolution passed in
this behalf by the Nidhi.
12 Section 403 Shall apply, with the modification that the filing
fees in respect of every return of allotment
under sub-section (9) of section 42 shall be
calculated at the rate of one rupee for every
one hundred rupees or parts thereof on the
face value of the shares included in the return
but shall not exceed the amount of normal
filing fee payable.

2. The Nidhis, while complying with such exceptions, modifications and adaptations,
as specified in column (3) of the aforesaid Table, shall ensure that the interests of their
shareholders are protected.

3. A copy of this notification has been laid in draft before both Houses of Parliament
as required by sub-section (2) of section 462 of the Companies Act, 2013.

[F. No. 2/11/2014-CLN]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1442
 Annexure N16

Exemptions to Section 8 companies

Annexure N16: Exemptions to section 8 companies

This notification is amended by new notification number G.S.R. 584(E) dated 13th June 2017.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 5th June, 2015

G.S.R. 466(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of said Section read with
Section 8 of the Companies Act, 2013 (18 of 2013), and in supersession of notifications
issued under section 25 of the Companies Act, 1956 (1 of 1956) except as respects
things done or omitted to be done before such supersession, the Central Government in
the interest of public, hereby directs that certain provisions of the Companies Act, 2013,
as specified in column (2) of the Table, shall not apply or shall apply with such
exceptions, modifications and adaptations, as specified in column (3) of the said Table,
to a body to which a licence is granted under the provisions of the aforesaid Section 8,
namely —

Serial Provisions of the Act Exemptions, modifications and

No. adaptations
(1) (2) (3)
1 Clause (24) of section 2. The provisions of clause (24) of section 2
shall not apply.
2 Clause (68) of section 2. The requirement of having minimum paid-
up share capital shall not apply.
3 Clause (71) of section 2. The requirement of having minimum paid-
up share capital shall not apply.
4 Sub-section (2) of section In sub-section (2), after the proviso and
96. before the explanation, the following proviso
shall be inserted, namely:-
Provided further that the time, date and
place of each annual general meeting arc
decided upon before-hand by the board of
directors having regard to the directions, if
any, given in this regard by the company in
its general meeting.
5 Sub-section (1) of In sub-section (1), for the words "twenty one
section 101. days", the words "fourteen days" shall be
substituted.
6 Section 118. The section shall not apply as a whole
except that minutes may be recorded within
thirty days of the conclusion of every
meeting in case of companies where the
articles of association provide for
confirmation of minutes by circulation.

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Exemptions to Section 8 companies

7 Sub-section (1) of In sub-section (1), for the words "twenty one

section 136. days", the words "fourteen days" shall be
substituted.
8 Sub-section (1) of section Shall not apply.
149 and the first proviso
to sub-section (1).
9 Sub-sections (4), (5), (6), Shall not apply.
(7), (8), (9), (10), (11),
clause (i) of sub-section
(12) and sub-section (13)
of section 149.
10 Section 150. Shall not apply.
11 Proviso to sub-section (5) Shall not apply.
of section 152.
12 Section 160. Shall not apply to companies whose articles
provide for election of directors by ballot.
13 Sub-section (1) of section Shall not apply.
165.
14 Sub-section (1) of section Shall apply only to the extent that the Board
173. of Directors, of such Companies shall hold
at least one meeting within every six
calendar months.
15 Sub-section (1) of section In sub-section (1),---
174.
(a) for the words "one-third of its total
strength or two directors, whichever is
higher", the words "either eight members or
twenty five per cent. of its total strength
whichever is less" shall be substituted;
(b) the following proviso shall be inserted,
namely:-
"Provided that the quorum shall not be less
than two members".
16 Sub-section (2) of section The words "with independent directors
177. forming a majority" shall be omitted.
17 Section 178. Shall not apply.
18 Section 179. Matters referred to in clauses (d), (e) and (f)
of sub-section (3) may be decided by the
Board by circulation instead of at a meeting.
19 Sub-section (2) of section Shall apply only if the transaction with
184. reference to section 188 on the basis of
terms and conditions of the contract or
arrangement exceeds one lakh rupees.

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 Annexure N16

Exemptions to Section 8 companies

20 Section 189. Shall apply only if the transaction with

reference to section 188 on the basis of
terms and conditions of the contract or
arrangement exceeds one lakh rupees.

2. The companies covered under Section 8 of the Companies Act, 2013, while
complying with such exceptions, modifications and adaptations, as specified in column
(3) of the aforesaid Table, shall ensure that the interests of their shareholders are
protected.
3. A copy of this notification has been laid in draft before both Houses of Parliament
as required by sub-section (2) of Section 462 of the Companies Act, 2013.
[F. No. 1/2/2014-CL.I]
AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1445
 Annexure N17

Establishment of SFIO

Annexure N17: Establishment of SFIO

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 21st July, 2015

S.O. 2005(E).—In exercise of the powers conferred by sub-section (1) of section 211 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby establishes the
Serious Fraud Investigation Office earlier established vide Government of India’s
Resolution No. 45011/16/2003-Admn-I dated the 2nd July, 2003, as the Serious Fraud
Investigation Office with effect from the date of publication of the notification in the Official
Gazette.
[F. No. A-35011/09/2011-Admn.III]

Annexure N18: Regional Director’s office, location and jurisdiction

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 3rd November, 2015

G.S.R. 832(E) .— In exercise of the powers conferred by sub-section (1) of

Section 396 of the Companies Act, 2013 (18 of 2013), the Central Government hereby
notifies following Regional Directors in the Ministry of Corporate Affairs mentioned in
column (1) of the Table below to discharge the functions conferred upon them by the
Companies Act, 2013 or delegated to them by the Central Government under that Act
for the respective jurisdiction as indicated in the corresponding column (2) of the Table
below:-
Office and location Jurisdiction

(1) (2)
(1) Regional Director, North Region States of Haryana, Punjab, Jammu and Kashmir,
Directorate, Headquarter at New Delhi. Himachal Pradesh, Uttar Pradesh, Uttrakhand
and Union Territory of Chandigarh and National
Capital Territory of Delhi.
(2) Regional Director, North Western States of Rajasthan, Gujarat, Madhya Pradesh,
Region Directorate, Headquarter at Chattisgarh and Union Territory of Dadra and
Ahmedabad. Nagar Haveli.
(3) Regional Director, Western Region States of Maharashtra, Goa and Union Territory
Directorate, Headquarter at Mumbai. of Daman and Diu.
(4) Regional Director, Southern Region States of Tamil Nadu, Kerala and Union Territory
Directorate, Headquarter at Chennai. of Puducherry, Union Territory of Andaman and
Nicobar Islands and Union Territory of
Lakshadweep.

Page 1446
 Annexure N17

Establishment of SFIO

(5) Regional Director, Eastern Region States of West Bengal, Bihar, Jharkhand, Orissa.
Directorate, Headquarter at Kolkata.
(6) Regional Director, North Eastern States of Meghalaya, Assam, Arunachal
Region Directorate, Headquarter at Pradesh, Nagaland, Mizoram, Manipur and
783
[Guwahati]. Tripura.
(7) Regional Director, South East States of Karnataka, Andhra Pradesh and
Region Directorate, Headquarter at 784[Telangana].
Hyderabad.

2. The Regional Directors specified in column (1) of the Table shall continue to exercise
the functions conferred upon them under the Companies Act, 1956 or delegated under
that Act in respect of provisions of that Act, which are still in force.

3. This notification shall come into force from the date of its publication in the Official
Gazette.

Substitutued “Guwahati” for the word “Shillong” vide notificaiton number S.O. 2652(E) dated 25th July
783

2019.

784
Word Telangana inserted by Notification number S.O. 1556(E) dated 27th April, 2016.

Page 1447
 Annexure N19

Ss. 13 and 14 of Co Amend Act 2015

Annexure N19: Commencement of Ss. 13 and

14 of the Companies (Amendment) Act, 2015
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 14th December, 2015

S. O. 3388(E).—In exercise of the powers conferred by sub-section (2) of Section 1 of

the Companies (Amendment) Act, 2015 (21 of 2015), the Central Government hereby
appoints the 14th day of December, 2015 as the date on which the provisions of section
13 and 14 of the said Act shall come into force.

Page 1448
 Annexure N20

Delegation of power to RD

Annexure N20: Delegation of power to RD

u/s.208
Ministry of Corporate Affairs
Notification
New Delhi, the 31st December, 2015

S.O. 3557(E) - In exercise of the powers conferred by section 458 of the Companies Act,
2013 (18 of 2013) the Central Government hereby delegates to the Regional Directors at
Mumbai, Kolkata, Chennai, Delhi, Ahmedabad, Hyderabad and Shillong, the power
vested in it under section 208 of the said Act for receiving the report from the Registrar
(having jurisdiction over the place of registered office of the company concerned) or from
the Inspector where such report recommends action for violation of offences under the
said Act for which imprisonment of less than two years is provided, (except for violation
of offences under Chapter III, IV, section 127, 177 and 178 for which the report shall be
received by the Central Government), subject to the conditions, namely:-

2. On receipt of the report referred to in paragraph 1, the Regional Director -

(a) shall examine the report and obtain legal advice, if required;
(b) shall direct initiation of prosecution if he agrees with the recommendation of the
Registrar or inspector to initiate prosecution against the company, officers or employees,
present or past of the company, or any other person connected with the affairs of the
company; and
(c) shall inform the Central Government (along with reasons for non-acceptance of
recommendation of Registrar or Inspector, wherever he disagrees) about the action taken
on the report submitted by Registrar or Inspector.

3. The Regional Director shall, on receipt of the report, where such report recommends
action for violation of offences other than those specified in paragraph 1, examine the
same, obtain legal advice, if required, and submit it to the Central Government seeking
initiation of prosecution.

Page 1449
 Annexure N21

S.125 (part) wef 13 Jan. 2016

Annexure N21: Section 125(5) to (7) relating

to IEPF
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 13th January, 2016

S.O. 125(E).—In exercise of the powers conferred by sub-section (3) of Section 1 of the
Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 13th day
of January, 2016 as the date on which the provisions of sub-section (5), sub-section (6)
[except with respect to the manner of administration of the Investor Education and
Protection Fund] and sub-section (7) of section 125 of the said Act shall come into force.

[F. No. 5/27/2013-IEPF (Part)]

Page 1450
 Annexure N22

CRC to approve name

Annexure N22: Name approval by Central

Registration Centre
[Refer Section 4(2),(4) and (5); Rule 9 (form INC-1) Rule 36 (Form INC-29) of the Companies
(Incorporation) Rules, 2014. Also refer to notification number S.O. 1211(E) dated 23 March 2016 on
registration of companies by CRC. Further eform INC-29 omitted by notification no. G.S.R. 1184(E) with
effect from 01 January, 2017.]

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 22nd January, 2016

S.O. 218(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section
396 of the Companies Act, 2013 (18 of 2013) (herein after referred to as the Act), the
Central Government hereby establishes a Central Registration Centre (CRC) having
territorial jurisdiction all over India, for discharging or carrying out the function of
processing and disposal of applications for reservation of names under the provisions of
the said Act.

2. The CRC shall function under the administrative control of Registrar of Companies,
Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar
is appointed to the CRC. The CRC shall process applications for reservation of name i.e.,
e-Form No. INC-1 filed along with the prescribed fee as provided in the Companies
(Registration of Offices and Fees) Rules, 2014.

3. Processing and approval of name or names proposed in e-Form No. INC-29 shall
continue to be done by the respective Registrar of Companies having jurisdiction over
incorporation of companies under the Companies Act, 2013 as per the provisions of the
Act and the rules made thereunder.

4. The CRC shall be located at Indian Institute of Corporate Affairs (IICA), Plot No. 6,7,
8, Sector 5, IMT Manesar, District Gurgaon (Haryana), Pin Code-122050.

5. This notification shall come into force from 26th January, 2016.

[F. No. A-42011/03/2016-Ad.II]

Page 1451
 Annexure N23

Debt Networth Ratio

Annexure N23: Debt Networth Ratio for buy-

back of securities by Govt NBFCs and HFCs
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 10th March, 2016

S. O. 702(E).— In exercise of the powers conferred under the proviso to clause (d) of
sub-section (2) of section 68 of the Companies Act, 2013 (18 of 2013) (Act), the Central
Government hereby notifies that the debt to capital and free reserves ratio shall be 6:1
for government companies within the meaning of clause (45) of section 2 of the
Companies Act, 2013 which carry on Non-Banking Finance Institution activities and
Housing Finance activities.
[F. No. 01/04/2013-CL-V(Pt-II)]

Page 1452
 Annexure N24

CRC to incorporate companies

Annexure N24: Registration of Companies by

Central Registration Centre
[It may be noted that eform INC-29 omitted by notification no. G.S.R. 1184(E) with effect from 01
January, 2017.]
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 23rd March, 2016
[Rule 12]
S.O. 1211(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section
396 of the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the Act), the
Central Registration Centre (herein after referred to CRC) established vide notification
number S.O. 218(E) dated 22nd January 2016 shall also exercise functional jurisdiction
of processing and disposal of e-forms and all related matters pertaining to registration of
companies under section 7, 8 and 366 of the Companies Act, 2013 having territorial
jurisdiction all over India.

2. The CRC shall process forms pertaining to registration of companies i.e. e-forms (INC-
2, INC-7 and INC-29 along with linked forms INC-22, DIR-12 and URC-1 and any other
forms as may be notified by the Central Government) filed along with the prescribed fee
as provided in the Companies (Registration of Offices and Fees) Rules, 2014.

3. The jurisdiction, processing and approval of name or names proposed in e-Form

number INC-29 hitherto exercised by the respective Registrar of companies having
jurisdiction over incorporation of companies under the Companies Act, 2013 and the rules
made thereunder shall forthwith be exercised by Registrar, CRC.

4. The jurisdictional Registrar of companies, other than Registrar CRC, within whose
jurisdiction the registered office of the company is situated shall continue to have
jurisdiction over the companies incorporated by the Registrar, CRC under the Companies
Act, 2013 for all other provisions of the Act and the rules made thereunder, which may be
relevant after incorporation.
5. This notification shall come into force from 28th March, 2016.
[F. No. A-42011/03/2016-Ad.II]

Page 1453
 Annexure N25

Telangana within South East RD’s power u/s.396

Annexure N25: Telangana within South East

RD’s power u/s.396
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 27th April, 2016

S.O.1556(E).--In exercise of the powers conferred by sub-section (1) of section 396

of the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act), the
Central Government notified the jurisdictions of Regional Directors vide notification
number G.S.R 832(E) dated 03.11.2015 to discharge the functions under sub-section
(1) of section 396 of the said Act.

2. In the said notification in serial number (7), in column (2), for the words "States of
Karnataka and Andhra Pradesh" the words "States of Karnataka, Andhra Pradesh
and Telangana" shall be substituted and shall be deemed to have been substituted
with effect from 3rd November, 2015.

[F. No. 1/16/2013 -CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy.

Note 1 : Providing retrospective effect to the notification would not adversely affect
the rights or privileges of any of the stakeholders.

Note 2 : The principal notification was published in the Gazette of India, Extraordinary,
Part II, Section 3, sub-section (i) vide number G.S.R. 832(E), dated 3rd November,
2015.

Page 1454
 Annexure N26

Delegation of Power to appoint Inspector to RDs

Annexure N26: Delegation of power to

appoint inspector to RDs
MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 29th April, 2016

S.O. 1626(E) - In exercise of the powers conferred by sub-section (1) of section 458
of the Companies Act (18 of 2013), the Central Government being satisfied that
circumstances warrant, hereby delegates the powers to appoint Inspectors for
inspection of books and papers of a company under sub-section (5) of section 206,
as ordered by Central Government, to the Regional Directors.

Sd/-
Amardeep Singh Bhatia,
Joint Secretary

Page 1455
 Annexure N27

Constitution of IEPF Authority

Annexure N27: IEPF Authority -

Constitution.
MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 05 May, 2016

S.O.1647(E).--In exercise of the powers conferred by sub-sections (5) and (6) of

section 125 of the Companies Act, 2013 read with rules 5 and 7 of the Investor
Education and Protection Fund Authority (Appointment of Chairperson and Members,
holding meetings and provision for offices and officers) Rules, 2016 (herein after
referred to as the said rules), the Central Government hereby constitutes the Investor
Education and Protection Fund Authority consisting of following persons, namely:-

Sl.
Particulars Designation
No.

1. Sh. Tapan Ray, Chairperson- ex-officio

Secretary, (Till he continues the
Ministry of Corporate Affairs, post of Secretary in
Shastri Bhawan, Ministry of Corporate
New Delhi-110001. Affairs)

2. Sh. Gyan Bhushan, Executive Member- ex-officio

Director, Securities and (Till he continues the
Exchange Board of India, SEBI post of Executive
Bhavan, Plot No. C4-A, "G" Director in the
Block, Bandra Kurla Complex, Securities and
Bandra (E), Mumbai-400051. Exchange Board of
India)

Page 1456
 Annexure N27

Constitution of IEPF Authority

3. Sh. U. S. Paliwal, Executive Member- ex-officio

Director, Reserve Bank of India, (Till he continues the
17th Floor, Central Office post of Executive
Building, Shahid Bhagat Singh Director in Reserve
Marg, Fort, Mumbai-400001. Bank of India)

4. Sh. Amarjit Chopra, Member

11, Empire Estate, Sultanpur,
Mehrauli-Gurgaon Road, New
Delhi-110030.

5. Sh. N. L. Meena, Member

Flat No. 109, Tower-2, Ganga
Block, Sector D-6, Vasant Kunj,
New Delhi-110070

6. Smt. Anita Kapur, B-9/12, Member

Ground Floor, Vasant Vihar,
New Delhi-110057.

2. The term of office of members at serial no. 4 to 6 shall be governed by rule 8 of the
said rules. Non-official members of the Authority shall be entitled for reimbursement
of actual expenditure incurred for attending the meetings as per the provisions of sub-
rule (10) of rule 11 of said rules.

[F. No. 5/27/2013-IEPF (Part-I)]

Page 1457
 Annexure N28

Appointment of CEO of IEPF Authority

Annexure N28: Appointment of CEO of IEPF

Authority
MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 02 May, 2016

S.O.1648(E).--In exercise of the powers conferred by sub-section (6) of section 125

of the Companies Act, 2013 read with rule 6 of the Investor Education and Protection
Fund Authority (Appointment of Chairperson and Members, holding meetings and
provision for offices and officers) Rules, 2016, the Central Government hereby
appoints Shri Amardeep Singh Bhatia, IAS (NL. 1993) to the post of Chief Executive
Officer (CEO) (Additional Charge) to the Investor Education and Protection Fund
Authority from the date of his assumption of charge for a period of six months, or till
further orders, whichever is earlier.

[F. No. 5/27/2013-IEPF (Part-1)]

Sd/-
MANOJ KUMAR
Joint Secretary

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 20th February, 2017

S.O. 554(E).—In exercise of the powers conferred by sub-section (5) and (6) of section
125 of the Companies Act, 2013 (18 of 2013) read with rule 6 of the Investor Education
and Protection Fund Authority (Appointment of Chairperson and Members, holding
meetings and provision for offices and officers) Rules, 2016, the Central Government
hereby extends the period of tenure of Shri Amardeep Singh Bhatia, as Chief Executive
Officer (Additional Charge) in the Investor Education and Protection Fund Authority for
a further period of one year with effect from the 1st November, 2016 or till further orders,
whichever is earlier.
[F. No. 05/05/2014-IEPF]
GYANESHWAR KUMAR SINGH,
Jt. Secy.
Note: The principle notification was published in the Gazette of India, vide number S.O.
1648(E), dated 2nd May, 2016 .

Page 1458
 Annexure N29

Special Courts notified

Annexure N29: Special Courts notified

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 18 May, 2016

S.O. 1795(E).--In exercise of the powers conferred by sub-section (3) of section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the
18th day of May, 2016 as the date on which the provisions of clause (iv) of sub-section
(29) of section 2, sections 435 to 438 (both sections inclusive) and section 440 of the
said Act shall come into force.

[F. No. 01/12/2009-CL-I (Vol. IV)]

Page 1459
 Annexure N30

CSR Amendment Rules 2016

Annexure N30: Jurisdiction of Special Courts

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 18 May, 2016

S.O.1796(E).--In exercise of the powers conferred by sub-section (1) of section 435

of the Companies Act, 2013 (18 of 2013), the Central Government hereby, after
obtaining the concurrence of the respective Chief Justices of the High Courts,
designates the following Courts mentioned in the Table below as Special Courts for
the purposes of trial of offences punishable under the Companies Act, 2013 with
imprisonment of two years or more in terms of section 435 of the Companies Act,
2013, namely:-

TABLE

Sl. No. Existing Court Jurisdiction as Special Court

(1) (2) (3)
1 Courts of Additional State of Jammu and Kashmir
Special Judge, Anti-
Corruption at Jammu
and Srinagar
785
2 Presiding Officers of [Whole of State of
Court No's. 37 and 58 Maharashtra, except Pune,
of the City Civil and Ahmednagar, Kolhapur,
Sessions Court, Greater Solapur, Satara, Sangli,
Mumbai Ratnagiri and Sindhudurg
districts of State of
Maharashtra]
3 Court of Principal Union Territories of Dadra and
District and Sessions Nagar Haveli and Daman and
Judge, Union territory of Diu
Dadra and Nagar Haveli
at Silvassa.

Substitutued for the words “State of Maharashtra” vide notification number S.O.3119(E) dated 28th
785

August 2019.

Page 1460
 Annexure N30

CSR Amendment Rules 2016

4 Court of District Judge- State of Goa

1 and Additional
Sessions Judge, Panaji.
5 Court of Principal State of Gujarat
District and Sessions
Judge,
Ahmedabad (Rural),
situated at Mirzapur,
Ahmedabad.
6 9th Additional Sessions State of Madhya Pradesh
Judge, Gwalior Madhya
Pradesh.
7 Court of Additional Union territory of Andaman and
District and Session Nicobar Islands.
Judge, Port Blair,
Andaman and Nicobar
Islands.
8 2nd Special Court, State of West Bengal
Calcutta.

2. The aforesaid Courts mentioned in column number (2) shall exercise the
jurisdiction as Special Courts in respect of jurisdiction mentioned in column number
(3).

[F. No. 01/12/2009-CL-I (Vol. IV)]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1461
 Annexure N31

Constitution of NCLT

Annexure N31: NCLT Constitution

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st June, 2016

S.O.1932(E).--In exercise of the powers conferred by section 408 of the Companies

Act, 2013 (18 of 2013), the Central Government hereby constitutes the National
Company Law Tribunal to exercise and discharge the powers and functions as are,
or may be, conferred on it by or under the said Act with effect from the 1st day of
June, 2016.

[F. No. A-45011/14/2016-Ad. IV]

Page 1462
 Annexure N32

Constitution of NCLAT

Annexure N32: NCLAT - Constitution

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st June, 2016

S.O.1933(E).--In exercise of the powers conferred by section 410 of the Companies

Act, 2013 (18 of 2013), the Central Government hereby constitutes the National
Company Law Appellate Tribunal for hearing appeal against the orders of National
Company Law Tribunal with effect from the 1st day of June, 2016.

[F. No. A-45011/14/2016-Ad. IV]

Page 1463
 Annexure N33

NCLT related provisions brought to force from 01 June 2016

Annexure N33: NCLT related provisions

brought to force from 01st June, 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st June, 2016

S.O.1934(E).--In exercise of the powers conferred by sub-section (3) of section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the
01st day of June, 2016 as the date on which the following provisions of the said Act
shall come into force, namely:--

Sl. Section
No.
1. Sub-section (7) of section 7 [except clause (c) and (d)]
2. Second proviso to sub-section (1) of section 14
3. Sub-section (2) of section 14
4. Sub-section (3) of section 55
5. Proviso to Clause (b) of sub-section (1) of section 61
6. Sub-sections (4) to (6) of section 62
7. Sub-sections (9) to (11) of section 71
8. Section 75
9. Section 97
10. Section 98
11. Section 99
12. Sub-section (4) of section 119
13. Section 130
14. Section 131
15. Second proviso to sub-section (4) and sub-section (5) of
section 140
16. Sub-section (4) of section 169
17. Section 213
18. Sub-section (2) of Section 216
19. Section 218

Page 1464
 Annexure N33

NCLT related provisions brought to force from 01 June 2016

20. Section 221

21. Section 222
22. Sub-sections (5) of section 224
23. Sections 241, 242 [except clause (b) of sub-section (1),
clause (c) & (g) of sub-section (2)], 243, 244, and 245
24. Reference of word 'Tribunal' in sub-section (2) of section
399
25. Sections 415 to 433 (both inclusive)
26. Sub-section (1)(a) and (b) of section 434
27. Sub-section (2) of section 434
28. Section 441
29. Section 466

[F. No. A-45011/14/2016-Ad. IV]

Page 1465
 Annexure N34

Jurisdiction of NCLT Bench

Annexure N34: NCLT bench Jurisdictions

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st June, 2016

S.O.1935(E).--In exercise of the powers conferred by sub-section (1) of section 419

of the Companies Act, 2013 (18 of 2013), the Central Government hereby constitutes
the following Benches of the National Company Law Tribunal mentioned in column
(2) of the table below, located at the place mentioned in column (3) and to exercise
the jurisdiction over the area mentioned in column (4), namely:--

TABLE

Serial Title of the Bench Location Territorial

Number Jurisdiction of
the Bench
(1) (2) (3) (4)
(a) National Company 786
1. New Delhi [omitted].
Law Tribunal, Principal (2) State of
Bench. Rajasthan.
(b) National Company (3) Union
Law Tribunal, New Delhi territory of Delhi.
Bench.
2. National Company Law Ahmedabad (1) State of
Tribunal, Ahmedabad Gujarat.
Bench. (2) State of
Madhya
Pradesh.
(3) Union
territory of Dadra
and Nagar
Haveli.
(4) Union
territory of
Daman and Diu.
3. National Company Law Allahabad (1) State of Uttar
Tribunal, Allahabad Pradesh.

786
Words “(1) State of Haryana” omitted by notification number S.O. 345 (E) dated 3rd February, 2017.

Page 1466
 Annexure N34

Jurisdiction of NCLT Bench

Bench. (2) State of

Uttarakhand.
4. National Company Law Bengaluru (1) State of
Tribunal, Bengaluru Karnataka.
Bench.
5. National Company Law Chandigarh (1) State of
Tribunal, Chandigarh Himachal
Bench. Pradesh.
(2) State of
Jammu and
Kashmir.
(3) State of
Punjab.
(4) Union
territory of
Chandigarh.
787
[(5) State of
Haryana]
6. National Company Law Chennai (1) State of
Tribunal, Chennai Bench. Kerala.
(2) State of
Tamil Nadu.
(3) Union
territory of
Lakshadweep.
(4) Union
territory of
Puducherry.
7. National Company Law Guwahati (1) State of
Tribunal, Guwahati Arunachal
Bench. Pradesh.
(2) State of
Assam.
(3) State of
Manipur.
(4) State of
Mizoram.

787
Words “(1) State of Haryana” inserted by notification number S.O. 345 (E) dated 3rd February, 2017.

Page 1467
 Annexure N34

Jurisdiction of NCLT Bench

(5) State of
Meghalaya.
(6) State of
Nagaland.
(7) State of
Sikkim.
(8) State of
Tripura.
8. National Company Law Hyderabad (1) State of
Tribunal, Hyderabad Andhra Pradesh.
Bench. (2) State of
Telangana.
9. National Company Law Kolkata (1) State of
Tribunal, Kolkata Bench. Bihar.
(2) State of
Jharkhand.
(3) 788[omitted].
(4) State of West
Bengal.
(5) Union
territory of
Andaman and
Nicobar Islands.
10. National Company Law Mumbai (1) 789[omitted].
Tribunal, Mumbai Bench. (2) State of Goa.
(3) State of
Maharashtra.
790 National Company Law (1) State of
11. Jaipur
Tribunal, Jaipur Bench Rajasthan

Words “(1) State of Odisha” omitted by notification number S.O. 3430 (E) dated 12th July 2018, w.e.f.
788
th
15 July 2018.

789
Words “(1) State of Chhattisgarh” omitted by notification number S.O. 3430 (E) dated 12th July 2018,
w.e.f. 15th July 2018.

790
Entry 11 for NCLT Jaipur inserted by notification number S.O. 3145(E) dated 28th June 2018 w.e.f. 01st
July 2018 – amending notification number S.O. 1935(E) dated 01st June 2016.

Page 1468
 Annexure N34

Jurisdiction of NCLT Bench

791 National Company Law (1) State of

12. Cuttack
Tribunal, Cuttack Bench Odisha
(2) State of
Chhatisgarh
792 National Company Law (1) State of
13. Kochi
Tribunal, Kochi Bench Kerala
(2) Union
Territory of
Lakhsadweep

[F. No. A-45011/14/2016-Ad. IV]

791
Entry 12 for NCLT, Cuttack inserted by notification number S.O. 3430 (E) dated 12th July 2018, w.e.f.
15th July 2018.

792
Entry 13 for NCLT Kochi inserted by notification number S.O. 3683(E) dated 27th July 2018 w.e.f. 01st
August 2018 – amending notification number S.O. 1935(E) dated 01st June 2016.

Page 1469
 Annexure N35

Transfer of matters from CLB to NCLT

Annexure N35: Transfer of matters from

CLB to NCLT w.e.f. 01 June 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st June, 2016

S.O.1936(E).--In exercise of the powers conferred by clause (a) of sub-section (1) of

section 434 of the Companies Act, 2013 (18 of 2013), the Central Government hereby
appoints the 01st day of June, 2016, on which all matters or proceedings or cases
pending before the Board of Company Law Administration (Company Law Board)
shall stand transferred to the National Company Law Tribunal and it shall dispose of
such matters or proceedings or cases in accordance with the provisions of the
Companies Act, 2013 or the Companies Act, 1956.

[F. No. 1/30/CLB/2013/CL-V]

Page 1470
 Annexure N36

Appointment of Chairperson, NCLAT

Annexure N36: Appointment of Chairperson,

NCLAT
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 06th July, 2016

S.O.2320(E).--In exercise of powers conferred by section 410 of the Companies Act,

2013, the Central Government hereby appoints Justice S. J. Mukhopadhaya, Judge
(Retd.), Supreme Court of India as Chairperson, National Company Law Appellate
Tribunal in the pay scale of Rs. 90,000/- (fixed) with effect from 1st June, 2016 for a
period of five years or till he attains the age of seventy years, whichever is earlier.

[F. No. A-45011/20/2013-Ad. IV]

Page 1471
 Annexure N37

Appointment of President, NCLT

Annexure N37: Appointment of President,

NCLT
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 06th July, 2016

S.O.2321(E).--In exercise of powers conferred under section 408 read with sub
section (1) of section 466 of the Companies Act, 2013, the Central Government
hereby appoints Justice (Retd.), Shri M. M. Kumar, Chairman, Company Law Board
as President, National Company Law Tribunal with effect from 1st June, 2016 as an
ad-interim arrangement till joining of a regular incumbent to the post or until further
orders, whichever is earlier.

[F. No. A-45011/20/2013-Ad. IV]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1472
 Annexure N38

Applicability of Section 381(1)(a) of Companies Act, 1956 to foreign Airline Company

Annexure N38: Applicability of Section

381(1)(a) of Companies Act, 1956 to foreign
Airline Company
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 19th July, 2016

S.O.2463(E).--In exercise of the powers conferred by sub-section (1) of section 381

of the Companies Act, 2013 (18 of 2013) (hereinafter referred to as "the Act") and in
supersession of the notification number G.S.R 59, dated 06.01.1959 issued under
sub-section (1) of section 594 of the Companies Act, 1956 (1 of 1956), in so far as it
relates to the foreign company which is an airlines company, the Central Government
hereby directs that the requirement of clause (a) of sub-section (1) of section 381 of
the Act shall apply to a foreign company which is an airlines company (hereinafter
referred to as "the company") having a share capital, subject to the following
exceptions and modifications, namely:-

1. It shall be deemed sufficient compliance of the provisions of clause (a) of

sub-section (1) of section 381 of the Act, if in respect of the period ending on
or after the 31st March, 2016, a company submits to the appropriate Registrar
of Companies in India,-

(i) documents relating to copies of latest consolidated financial

statements of the parent foreign company, as submitted by it to the
prescribed authority in the country of its incorporation under the
provisions of the law for the time being in force in that country:

Provided that where such documents are not in English

language, there shall be annexed to it a certified translation
thereof in the English language.

(ii) in respect of its Indian Business operations, a statement of receipts

and payments for the financial year, duly authenticated by a practicing
Chartered Accountant in India or a firm or a Limited Liability Partnership
of practicing Chartered Accountants in India.

(iii) the documents required to be filed with Registrar of Companies

under sub-rule (2) of rule 4 of the Companies (Registration of Foreign
Companies) Rules, 2014.

2. Notwithstanding anything contained in the above paragraphs, the company

shall, if so required by notice in writing from the Central Government, furnish

Page 1473
 Annexure N38

Applicability of Section 381(1)(a) of Companies Act, 1956 to foreign Airline Company

to the Central Government such information with regard to its accounts as the
Central Government may require.

3. This notification shall come into force on the date of its publication in the
Official Gazette.

[F. No. 1/23/2013-CL-V]

Page 1474
 Annexure N39

Special Court at Delhi

Annexure N39: Special Court at Delhi

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 27th July, 2016

S.O.2554(E).--In exercise of the powers conferred by sub-section (1) of section 435

of the Companies Act, 2013 (18 of 2013), the Central Government hereby, with the
concurrence of the Chief Justice of the High Court of Delhi, designates the following
Court as Special Court for the purposes of providing speedy trial of offences
punishable under the Companies Act, 2013 with imprisonment of two years or more
under the Companies Act, 2013, namely:-

TABLE

Sl. Existing Court Jurisdiction as

No. Special Court
(1) (2) (3)
1 Court of Additional Sessions National Capital
Judge-03, South-West District, Territory of Delhi
Dwarka

2. The aforesaid Court mentioned in column number (2) shall exercise the
jurisdiction as Special Court in respect of jurisdiction mentioned in column number
(3).

[F. No. 01/12/2009-CL-I (Vol. IV)]

AMARDEEP SINGH BHATIA, Jt. Secy.
[Also refer notification number S.O.1796(E) dated 18th May, 2016 for jurisdiction of other special
courts.]

Page 1475
 Annexure N40

Appointment of Members, NCLT

Annexure N40: Appointment of Members,

NCLT
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 28th July, 2016

S.O.2563(E).--In exercise of the powers conferred by section 408 of the Companies

Act, 2013, the Central Government hereby appoints following persons as Judicial and
Technical Members in the National Company Law Tribunal in the pay scale of Rs.
67000-79000/- with effect from the dates mentioned against each for a period of five
years or till he attains the age of sixty five years, whichever is earlier:-

S. Name Post Date of

No. Joining
(1) (2) (3) (4)
1. Shri Bethala Shantha Vijaya Judicial 01.06.2016
Prakash Kumar Member
2. Shri Rajeswara Rao Judicial 02.06.2016
Vittanalla Member
3. Ms. Ina Malhotra Judicial 02.06.2016
Member
4. Ms. Deepa Krishan Technical 02.06.2016
Member
5. Dr. Ashok Kumar Mishra Technical 02.06.2016
Member
6. Shri Vijai Pratap Singh Judicial 02.06.2016
Member
7. Shri D. M. Gautam Technical 02.06.2016
Member
8. Ch. Mohd Sharief Tariq Judicial 02.06.2016
Member
9. Shri Venkataramany Technical 03.06.2016
Bhaskar Member
10. Justice R. P. Nagrath Judicial 03.06.2016
Member
11. Shri S. Vijayaraghavan Technical 06.06.2016
Member

Page 1476
 Annexure N40

Appointment of Members, NCLT

12. Shri Ratakonda Murali Judicial 06.06.2016
Member
13. Ms. Manorama Kumari Judicial 06.06.2016
Member
14. Shri V. Nallasenapathy Technical 08.06.2016
Member
15. Shri V. Seetha Rama Judicial 09.06.2016
Avadhani Member
16. Shri K. Anantha Judicial 09.06.2016
Padmanabha Swamy Member
17. Shri Bikki Raveendra Babu Judicial 09.06.2016
Member
18. Shri R. Varadharajan Judicial 10.06.2016
Member
19. Shri Mukul Kumar Shrawat Judicial 20.06.2016
Member
20. Shri Ravi Kumar Duraisamy Technical 26.06.2016
Member
21. Justice (Retd.) P. K. Saikia Judicial 27.06.2016
Member
22. Shri Santanu Kumar Technical 28.06.2016
Mohapatra Member
23. Shri H. P. Chaturvedi Judicial 19.07.2016
Member

[F. No. A-12023/03/2013-Ad.IV]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1477
 Annexure N41

Appointment of Member, NCLAT

Annexure N41: Appointment of Member,

NCLAT
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 10th August, 2016

S.O.2677(E).--In exercise of the powers conferred by section 410 of the Companies

Act, 2013, the Central Government hereby appoints Shri Balvinder Singh, as
Technical Member in the National Company Law Appellate Tribunal in the pay scale
of Rs. 80,000/- (fixed) with effect from the 1st July, 2016, for a period of five years or
till he attains the age of sixty seven years, whichever is earlier.

[F. No. A-19011/26/2016-Ad.IV]

GYANESHWAR KUMAR SINGH, Jt. Secy.

Page 1478
 Annexure N42

8 new Special Courts

Annexure N42: Special Courts – 8 new

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 01st September, 2016 [published on 02nd September 2016]

S.O.2843(E).--In exercise of the powers conferred by sub-section (1) of section 435

of the Companies Act, 2013 (18 of 2013), the Central Government hereby, with the
concurrence of the Chief Justice of the High Courts of Chhattisgarh, Rajasthan,
Punjab and Haryana, Madras and Manipur, designates the following Courts as
Special Courts for the purposes of providing speedy trial of offences punishable with
imprisonment of two years or more under the Companies Act, 2013, namely:-

TABLE
Sr. Existing Court Jurisdiction as
No. special court

(1) (2) (3)

1. Sessions Judge, Bilaspur State of Chhattisgarh

2. Court of Special Judge, (Sati Niwaran), State of Rajasthan

Jaipur

3. Court of Sessions Judge and 2nd Additional State of Punjab

Sessions Judge, S.A.S. Nagar

4. Court of Sessions Judge and 2nd Additional State of Haryana

Sessions Judge, Gurgaon

5. Court of Sessions Judge and 2nd Additional Union Territory of

Sessions Judge, Chandigarh Chandigarh

6. I Additional District and Sessions Court, Districts of

Coimbatore Coimbatore,
Dharampuri, Dinidgul,
Erode, Krishnagiri,
Namakkal, Niligiris,

Page 1479
 Annexure N42

8 new Special Courts

Salem and Tiruppur

7. II Additional District and Sessions Court, Union Territory of

Puducherry Puducherry

8. Sessions Judge, Imphal East State of Manipur

2. The aforesaid Courts mentioned in column number (2) shall exercise the jurisdiction
as Special Courts in respect of jurisdiction mentioned in column number (3).

[F. No. 01/12/2009-CL-I (Vol-IV)]

Page 1480
 Annexure N43

Few provisions wef 7th Sep. 2016

Annexure N43: Ss.124 (in part) and 125

notified
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 05th September, 2016

S.O. 2866(E).--In exercise of the powers conferred by sub-section (3) of section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints 7 th
September, 2016 as the date on which the provisions of section 124, sub-sections (1)
to (4), (6) [with respect to the manner of administration of the Investor Education and
Protection Fund] and (8) to (11) of section 125 of the said Act shall come into force.

[F. No. 5/27/2013-IEPF (Part)]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1481
 Annexure N44

Few provsions wef 09 Sep. 2016

Annexure N44: Ss. 227, 242(1)(b),

242(2)(c) and (g), 246 and 337 to 341 w.e.f.
09th September 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 09th September, 2016

S.O.2912(E).--In exercise of the powers conferred by sub-section (3) of section 1 of

the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints 9th
September, 2016 as the date on which the provisions of section 227, clause (b) of
sub-section (1) of Section 242, clauses (c) and (g) of sub-section (2) of section 242,
section 246 and sections 337 to 341 (to the extent of their applicability for section
246), of the said Act shall come into force.

(Amardeep Singh Bhatia)

Page 1482
 Annexure N45

National Advisory Committee on AS

Annexure N45: Constitution of National

Advisory Committee on Accounting
Standards
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 3rd October, 2016

S.O. 3118 (E). – In exercise of the powers conferred by sub-section (1) of Section 210A
of the Companies Act, 1956, (1 of 1956), the Central Government hereby constitutes an
Advisory Committee to be called the National Advisory Committee on Accounting
Standards, consisting of the following persons, to advise the Central Government on the
formulation and laying down of accounting policies and accounting standards for adoption
by companies or class of companies under the said Act or the Companies Act, 2013 (18
of 2013) as the case may be, namely:-

(1) Shri Amarjit Chopra Chairperson,

Chartered Accountant [nominated under clause (a) of sub-
section (2) of section 210A]
(2) Shri Manas Kumar Thakur Member,
President, Nominee of the Institute of [nominated under clause (b) of sub-
Cost Accountants of India section (2) of section 210A]
(3) Ms. Mamta Binani Member,
President, Nominee of the Institute of [nominated under clause (b) of sub-
Company Secretaries of India section (2) of section 210A]
(4) Shri M. Devaraja Reddy Member,
President, Nominee of the Institute of [nominated under clause (b) of sub-
Chartered Accountants of India section (2) of section 210A]
(5) Joint Secretary Member,
Ministry of Corporate Affairs [nominated under clause (c) of sub-
section (2) of section 210A]
(6) Shri Sudarashan Sen Member,
Chief General Manager-in-Charge, [nominated under clause (d) of sub-
Nominee of the Reserve Bank of India section (2) of section 210A]
(7) Director General (Commercial) Member,
Nominee of Comptroller and Auditor [nominated under clause (e) of sub-
General of India section (2) of section 210A]
(8) Dr. Sanjeev Singhal Member,
Former Associate Professor, [nominated under clause (f) of sub-
FORE School of Management section (2) of section 210A]
(9) Joint Secretary, TPL-II Member,

Page 1483
 Annexure N45

National Advisory Committee on AS

Nominee of the Central Board of Direct [nominated under clause (g) of sub-
Taxes section (2) of section 210A]
(10) Shri Dipankar Chatterji Member,
Nominee of the Confederation of Indian [nominated under clause (h) of sub-
Industry section (2) of section 210A]
(11) Shri Sushil Agarwal Member,
Nominee of the Federation of Indian [nominated under clause (h) of sub-
Chambers of Commerce and Industry section (2) of section 210A]
(12) Dr. Ashok Haldia Member,
Nominee of the Associated Chamber of [nominated under clause (h) of sub-
Commerce and Industry of India section (2) of section 210A]
(13) Executive Director Member,
Nominees of Securities and Exchange [nominated under clause (i) of sub-
Board of India section (2) of section 210A]

2. The Chairperson and members shall hold office for a period of one year from the date
of publication of this notification in the Official Gazette or till the constitution of National
Financial Reporting Authority under section 132 of the Companies Act, 2013 (18 of 2013),
whichever is earlier.

3. This notification shall come into force on its publication in the Gazette.
[F. No. 1/5/2001-CL-V (Part VI)]

Page 1484
 Annexure N46

Constitution of Special Court at Meghalaya

Annexure N46: Special Court at Meghalaya

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 17th November, 2016

S.O.3464 (E).--In exercise of the powers conferred by sub-section (1) of section 435
of the Companies Act, 2013 (18 of 2013), the Central Government hereby, with the
concurrence of the Chief Justice of the High Courts of Meghalaya, hereby designates
the following Court as Special Court for the purposes of providing speedy trial of
offences punishable with imprisonment of two years or more under the Companies
Act, 2013, namely:-

TABLE
Sr. Existing Court Jurisdiction as
No. special court

(1) (2) (3)

1. Court of District Sessions Judge, Shillong State of Meghalaya

2. The aforesaid Court mentioned in column number (2) shall exercise the jurisdiction as
Special Court in respect of jurisdiction mentioned in column number (3).

[F. No. 01/12/2009-CL-I (Vol.IV)]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1485
 Annexure N47

National Company Law Tribunal

Annexure N47: NCLT to exercise jurisdiction

and powers under Part II of IBC
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 30th November, 2016

S.O.3591 (E).—In exercise of the powers conferred by sub-section (4) of section 419 of
the Companies Act, 2013 (18 of 2013), read with clause (1) of section 5 of the Insolvency
and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central
Government hereby designates Benches of the National Company Law Tribunal
constituted vide notification number S.O. 1935 (E) dated the 1st day of June, 2016 to
exercise the Jurisdiction, powers and authority of the Adjudicating Authority conferred by
or under Part II of the Code.
2. This notification shall come into force from 1st December, 2016.
[F. No. A-45011/14/2016-Ad-IV]

Page 1486
 Annexure N48

Commencement from 15 Dec. 2016

Annexure N48: Commencement of certain

provisions from 15th December, 2016
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 07th December, 2016

S.O. 3677(E).—In exercise of the powers conferred by sub-section (3) of section 1 of the
Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 15th day
of December, 2016 as the date on which the following provisions of the said Act shall
come into force, namely :-

SL.No. Section
1 Clause (23) of section 2
2 Clause (c) and (d) of sub-section (7) of section 7
3 Sub-section (9) of section 8
4 Section 48
5 Section 66
6 Sub-section (2) of section 224
7 Section 226
8 Section 230 [except sub-section (11) and (12)], and Sections 231 to 233
9 Sections 235 to 240
10 Sections 270 to 288
11 Sections 290 to 303
12 Section 324
13 Sections 326 to 365
14 Proviso to section 370
15 Sections 372 to 373
16 Sections 375 to 378
17 Sub-section (2) of section 391
18 Clause (c) of sub-section (1) of section 434

[F. No. 2/31/CAA/2013-CL-V-pt]

Page 1487
 Annexure N49

Delegation of powers to RDs

Annexure N49: Delegation of powers to RDs

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 19th December, 2016

S.O. 4090(E).—In exercise of the powers conferred by Section 458 of the Companies
Act, 2013 (18 of 2013), and in supersession of the notification of the Government of
India, in the Ministry of Corporate Affairs, dated the 10th July, 2012, published in the
Gazette of India, Extraordinary, Part II, Section 3, sub-section (ii) vide number S.O.
1539(E), dated the 10th July, 2012, and also in supersession of the notification of the
Government of India, in the Ministry of Corporate Affairs, dated the 21st May, 2014,
published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (ii) vide
number S.O. 1352(E), dated the 22nd May, 2014, except as respects things done or
omitted to be done before such supersession, the Central Government hereby delegates
to the Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad,
Hyderabad and Shillong, the powers and functions vested in it under the following
sections of the said Act, subject to the condition that the Central Government may revoke
such delegation of powers or may itself exercise the powers under the said sections, if
in its opinion such a course of action is necessary in the public interest, namely :—

(a) clause (i) of sub-section (4) of section 8 (for alteration of memorandum in case of
conversion into another kind of company);

(b) sub-section (6) of section 8;

(c) sub-sections (4) and (5) of section 13;

(d) section 16;

(e) section 87;

(f) sub-section (3) of section 111;

(g) sub-section (1) of section 140;

(h) sub-section (5) of section 230;

(i) sub-sections (2), (3), (4), (5) and (6) of section 233;

(j) first and second proviso of sub-section (3) of section 272;

(k) sub-section (1) of section 348;

(l) sections 361, 362, 364 and 365

(m) clause (i) of the proviso to sub-section (1) of section 399 and

Page 1488
 Annexure N49

Delegation of powers to RDs

(n) section 442.

2. This notification shall come into force with effect from the date of its publication in
the Official Gazette.
[F. No. 2/31/CAA/2013-CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1489
 Annexure N50

Chapter XVIII notified

Annexure N50: Commencement of Sections

248 to 252
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 26th December, 2016

S.O. 4167(E).—In exercise of the powers conferred by sub-section (3) of Section 1 of

the Companies Act, 20l3 (18 of 20l3), the Central Government hereby appoints the 26th
December, 2016 as the date on which the provisions of section 248 to 252 of the said
Act, shall come into force.

[F. No. 1/28/2013-CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1490
 Annexure N51

Exemptions to unlisted public company operating from IFSC in SEZ

Annexure N51: Exemptions to unlisted public

company operating from IFSC in SEZ
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 4th January, 2017
G.S.R. 08(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-section
(1) of Section 462 and in pursuance of sub-section (2) of the said section of the
Companies Act, 2013 (18 of 2013), the Central Government, in the interest of public,
hereby directs that certain provisions of the Companies Act, 2013 (18 of 2013), as
specified in column (2) of the Table, shall not apply or shall apply with such exceptions,
modifications and adaptations as specified in column (3) of the said Table, to an
unlisted public company which is licensed to operate by the Reserve Bank of India
or the Securities and Exchange Board of India or the Insurance Regulatory and
Development Authority of India from the International Financial Services Centre
located in an approved multi services Special Economic Zone set-up under the Special
Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules,
2006 (herein after referred to as “Specified IFSC public company”), namely:—

Serial Provisions of the Exceptions/Modifications/Adaptations

Number Companies Act,
2013
(18 of 2013)

(1) (2) (3)

1. Clause (41) of In Clause (41), after the second proviso, the following
section 2 proviso shall be inserted, namely :-
“Provided also that in case of a Specified IFSC public
company, which is a subsidiary of a foreign company, the
financial year of the subsidiary may be same as the
financial year of its holding company and approval of the
Tribunal shall not be required.”.

2. Sub-clause Shall not apply with respect to section 188.

(viii) of clause
(76) of section 2
3. Sub-section (2) In sub-section (2), the following proviso shall be inserted,
of section 3 namely:-
“Provided that a Specified IFSC public company shall be
formed only as a company limited by shares.”.
4. Clause (a) of In clause (a) of sub-section (1), after the proviso, the
subsection following proviso shall be inserted, namely:-
(1) of section 4 “Provided further that a Specified IFSC public company
shall have the suffix “International Financial Service
Company” or “IFSC” as part of its name.”.

Page 1491
 Annexure N51

Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

5. Clause (c) of In clause (c) of sub-section (1) of section 4, the following

subsection proviso shall be inserted, namely:-
(1) of section 4 “Provided that a Specified IFSC public company shall state
its objects to do financial services activities, as permitted
under the Special Economic Zones Act, 2005 (28 of 2005)
read with the Special Economic Zones Rules, 2006 and
any matter considered necessary in furtherance thereof, in
accordance with license to operate, from International
Financial Services Centre located in an approved multi
services Special Economic Zone, granted by the Reserve
Bank of India or the Securities and Exchange Board of
India or the Insurance Regulatory and Development
Authority of India.”.
6. Sub-section (1) In sub-section (1), the following proviso shall be inserted,
of section 12 namely:-
“Provided that a Specified IFSC public company shall
have its registered office at the International Financial
Services Centre located in the approved multi services
Special Economic Zone set-up under the Special
Economic Zones Act, 2005 read with the Special
Economic Zones Rules, 2006, where it is licensed to
operate, at all times.”.
7. Sub-section (2) For the words “thirty days” read as “sixty days”.
of section 12
8. Sub-section (4) For the words “fifteen days” read as “sixty days”.
of section 12
9. Sub-section (5) For sub-section (5), the following sub-section shall be
of section 12 substituted, namely:-
“(5) Except on the authority of a resolution passed by
the Board of Directors, the registered office of the
Specified IFSC public company shall not be changed
from one place to another within the International
Financial Services Centre:
Provided that the Specified IFSC public company shall
not change the place of its registered office to any other
place outside the said International Financial Services
Centre.”.
10. Section 21 For the words “an officer” read as “an officer or any other
person”.
11. Sub-sections Shall not apply.
(3) and (7) of
section 42
12. Sub-section (6) For the words “sixty days” read as “ninety days”.
of section 42
13. Section 43 Shall not apply to a Specified IFSC public company,
where memorandum of association or articles of
association of such company provides for it.

Page 1492
 Annexure N51

Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

14. Section 47 Shall not apply to a Specified IFSC public company,

where memorandum of association or articles of
association of such company provides for it.
15. Clause (c) of Shall not apply.
sub- section (1)
of section 54
16. Sub-section (4) In sub-section (4), after the proviso, the following
of section 56 proviso shall be inserted, namely:-
“Provided further that a Specified IFSC public company
shall deliver the certificates of all securities to subscribers
after incorporation, allotment, transfer or transmission
within a period of sixty days.”.
17. Clause (a) of In clause (a) of sub-section (1), the following
sub- section (1) proviso shall be inserted, namely:-
of section 62 “Provided that notwithstanding anything contained in
sub-clause (i), in case of a Specified IFSC public
company, the periods lesser than those specified in
the said sub-clause shall apply if ninety per cent. of
the members have given their consent in writing or
in electronic mode.”.
18. Clause (b) of For the words “special resolution” read as “ordinary
sub- section resolution”.
(1) of section
62
19. Section 67 Shall not apply to a Specified IFSC public company-
(a) in whose share capital no other body corporate has
invested any money;
(b) if the borrowings of such company from banks or
financial institutions or any body corporate is less than
twice of its paid up share capital or fifty crore rupees,
whichever is lower; and
(c) such a company is not in default in repayment of
such borrowings subsisting at the time of making
transactions under this section.
20. Clauses (a) to Shall not apply to a Specified IFSC public company
(e) of sub- which accepts from its members, monies not exceeding
section (2) of one hundred per cent. of aggregate of the paid up
section 73 share capital and free reserves, and such company
shall file the details of monies so accepted to the
Registrar in such manner as may be specified.

21. Sub-section In sub-section (1), the following proviso shall be inserted,

(1) of section namely:-
82 “Provided that in case of a Specified IFSC public
company, the Registrar may, on an application by the
company, allow such registration to be made within a
period of three hundred days of such creation on

Page 1493
 Annexure N51

Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

payment of such additional fees as may be

prescribed.”.
22. Sub-section For the words “thirty days” read as “sixty days”.
(6) of section
89
23. Sub-section Shall not apply.
(3) of section
92
24. Sub-section In sub-section (1), the following proviso shall be inserted,
(1) of section namely:-
100 “Provided that in case of a Specified IFSC public
company, the Board may subject to the consent of all
the shareholders, convene its extraordinary general
meeting at any place within or outside India.”.
25. Sections 101 Shall apply in case of a Specified IFSC public
to 107 and company, unless otherwise specified in the articles of
section 109 the company.
26. Sub-section For the words “thirty days” read as “sixty days”.
(1) of section
117
27. Clause (g) of Shall not apply.
sub-section (3)
of section 117
28. Sub-section In sub-section (1), the following proviso shall be inserted,
(1) of section namely:-
118 “Provided that in case of a Specified IFSC public
company, the minutes of every meeting of its Board of
Directors or of every committee of the Board, to be
prepared and signed in the manner as may be
prescribed under sub-section (1) at or before the next
Board meeting or committee meeting, as the case may
be and kept in the books kept for that purpose.”.
29. Sub-section Shall not apply.
(10) of section
118
30. Sub-section In sub-section (3), following proviso shall be inserted,
(3) of section namely:-
134 “Provided that in case of a Specified IFSC public
company, if any information listed in this sub-section is
provided in the financial statement, the company may
not include such information in the report of the Board
of Directors.”.
31. Section 135 Shall not apply for a period of five years from the
commencement of business of a Specified IFSC public
company.
32. Section 138 Shall apply if the articles of the company provides for the
same.

Page 1494
 Annexure N51

Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

33. Fourth proviso For the words “ fifteen days” read as “ thirty days”.
to sub section
(1) of section
139
34. All provisos to Shall not apply.
sub- section
(2) of section
139
35. Sub-section In sub-section (1) after the proviso, the following proviso
(1) of section shall be inserted, namely:-
140 “Provided further that in case of a Specified IFSC public
company, where, within a period of sixty days from the
date of submission of the application to the Central
Government under this sub-section, no decision is
communicated by the Central Government to the
company, it would be deemed that the Central
Government has approved the application and the
company shall appoint new auditor at a general meeting
convened within three months from the date of expiry of
sixty days period.”.
36. Second Shall not apply.
proviso to sub-
section (1) of
section 149
37. Sub- section In sub-section (3), the following proviso shall be inserted,
(3) of section namely:-
149 “Provided that this sub-section shall apply to a
Specified IFSC public company in respect of financial
years other than the first financial year from the date of
its incorporation.”.
38. Sub- Shall not apply.
sections
(4) to (11),
clause (i)
of sub-
section
(12) and
sub-
section
(13) of
section
149
39. Sub-section For the words “thirty days” read as “sixty days”.
(5) of
section 152
40. Sub-sections Shall not apply.
(6) and (7) of
section 152

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Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

41. Section 160 Shall apply as per the articles framed by the company.

42. Sub-section In sub-section (3), the following proviso shall be inserted,

(3) of namely:-
section 161 “Provided that in case of a Specified IFSC public
company, the Board may appoint, any person
nominated by any institution or company or body
corporate as a director in pursuance of the provisions of
any law for the time being in force or of any agreement
or by the Central Government or the State Government
by virtue of its shareholding in a Government
company.”.
43. Section 162 Shall not apply.

44. Proviso to For the word “shall” read as “may”.

sub-section
(1) of
section 168
45. Sub-section For the words “thirty days” at both places read as “sixty
(2) of section days”.
170
46. Sub-section In sub-section (1), after theproviso, the following proviso
(1) of section shall be inserted, namely:-
173 “Provided further that a Specified IFSC public company
shall hold the first meeting of the Board of Directors
within sixty days of its incorporation and thereafter hold
atleast one meeting of the Board of Directors in each
half of a calendar year.”.
47. Sub-section Shall apply with the exception that interested director
(3) of may participate in such meeting provided the
section 174 disclosure of his interest is made by the concerned
director either prior or at the meeting.
48. Section 177 Shall not apply.

49. Section 178 Shall not apply.

50. Sub-section In sub-section (3), after the second proviso, the

(3) of section following proviso shall be inserted, namely:-
179 “Provided also that in case of a Specified IFSC public
company, the Board can exercise powers by means of
resolutions passed at the meetings of the Board or
through resolutions passed by circulation.”.
51. Section 180 Shall apply in case of a Specified IFSC public
company, unless the articles of the company provides
otherwise.

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Exemptions to unlisted public company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act,
2013
(18 of 2013)

52. Sub-section Shall apply with the exception that interested director
(2) of section may participate in such meeting provided the
184 disclosure of his interest is made by the concerned
director either prior or at the meeting.
53. Sub-section In the Explanation, for clause (c), the following clause
(1) of section shall be substituted, namely:-
185 “(c) any private company of which any such director is
a director or member in which director of the lending
company do not have direct or indirect shareholding
through themselves or through their relatives and a
special resolution is passed to this effect;”.
54. Sub-section Shall not apply.
(1) of section
186
55. Sub-sections Shall not apply if a company passes a resolution either
(2) and (3) of at meeting of the Board of Directors or by circulation.
section 186
56. Sub-section In sub-section (5), after theproviso, the following proviso
(5) of section shall be inserted, namely:-
186 “Provided further that in case of a Specified IFSC public
company, the Board can exercise powers under this
sub-section by means of resolutions passed at
meetings of the Board of Directors or through
resolutions passed by circulation.”.
57. Second Shall not apply.
proviso to sub-
section (1) of
section 188
58. Sub-section Shall not apply.
(4) of section
196
59. Section 197 Shall not apply.

2. A copy of this notification has been laid in draft before both Houses of the Parliament
as required by sub-section (2) of section 462 of the Companies Act, 2013 (18 of 2013).
[F. No. 3/1/2015-CL.I]
AMARDEEP SINGH BHATIA, Jt. Secy.

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Exemptions to a licensed private company operating from IFSC in SEZ

Annexure N52: Exemptions to licensed

private company operating from IFSC in SEZ
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 4th January, 2017

G.S.R. 09(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-section
(1) of Section 462 and in pursuance of sub-section (2) of the said section of the
Companies Act, 2013 (18 of 2013), the Central Government, in the interest of public,
hereby directs that certain provisions of the Companies Act, 2013 (18 of 2013), as
specified in column (2) of the Table, shall not apply or shall apply with such exceptions,
modifications and adaptations as specified in column (3) of the said Table, to a private
company which is licensed to operate by the Reserve Bank of India or the Securities
and Exchange Board of India or the Insurance Regulatory and Development Authority
of India from the International Financial Services Centre located in an approved
multi services Special Economic Zone set-up under the Special Economic Zones Act,
2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 (herein after
referred to as “Specified IFSC public company”), namely:—

Serial Provisions of the Exceptions/Modifications/Adaptations

Number Companies Act, 2013
(18 of 2013)

(1) (2) (3)

1. Clause (41) of section 2 In Clause (41), after the second proviso, the
following proviso shall be inserted, namely :-
“Provided also that in case of a Specified
IFSC private company, which is a subsidiary
of a foreign company, the financial year of
the subsidiary may be same as the financial
year of its holding company and approval of
the Tribunal shall not be required.”.

2. Sub-section (2) of In sub-section (2), the following proviso shall

section 3 be inserted, namely:-
“Provided that a Specified IFSC private
company shall be formed only as a company
limited by shares.”.
3. Clause (a) of subsection In clause (a) of sub-section (1), after the
(1) of section 4 proviso, the following proviso
shall be inserted, namely:-
“Provided further that a Specified IFSC
private company shall have the suffix
“International Financial Service Company”
or “IFSC” as part of its name.”.

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Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

4. Clause (c) of subsection In clause (c) of sub-section (1) of section 4,

(1) of section 4 the following proviso shall
be inserted, namely:-
“Provided that a Specified IFSC private
company shall state its objects to do
financial services activities, as permitted
under the Special Economic Zones Act,
2005 (28 of 2005) read with the Special
Economic Zones Rules, 2006 and any
matter considered necessary in furtherance
thereof, in accordance with license to
operate, from International Financial
Services Centre located in an approved
multi services Special Economic Zone,
granted by the Reserve Bank of India or the
Securities and Exchange Board of India or
the Insurance Regulatory and Development
Authority of India.”.
5. Sub-section (1) of In sub-section (1), the following proviso
section 12 shall be inserted, namely:-
“Provided that a Specified IFSC private
company shall have its registered office at
the International Financial Services Centre
located in the approved multi services
Special Economic Zone set-up under the
Special Economic Zones Act, 2005 read
with the Special Economic Zones Rules,
2006, where it is licensed to operate, at all
times.”.
6. Sub-section (2) of For the words “thirty days” read as “sixty
section 12 days”.
7. Sub-section (4) of For the words “fifteen days” read as “sixty
section 12 days”.
8. Sub-section (5) of For sub-section (5), the following sub-
section 12 section shall be substituted, namely:-
“(5) Except on the authority of a resolution
passed by the Board of Directors, the
registered office of the Specified IFSC
private company shall not be changed
from one place to another within the
International Financial Services Centre:
Provided that the Specified IFSC private
company shall not change the place of its
registered office to any other place outside
the said International Financial Services
Centre.”.
9. Section 21 For the words “an officer” read as “an
officer or any other person”.

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Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

10. Sub-sections (3) and (7) of Shall not apply.

section 42
11. Sub-section (6) of For the words “sixty days” read as “ninety
section 42 days”.
12. Clause (c) of sub- section (1) Shall not apply.
of section 54
13. Sub-section (4) of In sub-section (4), after the proviso, the
section 56 following proviso shall be inserted,
namely:-
“Provided further that a Specified IFSC
private company shall deliver the
certificates of all securities to subscribers
after incorporation, allotment, transfer or
transmission within a period of sixty days.”.
14. Sub-section (1) of In sub-section (1), the following proviso
section 82 shall be inserted, namely:-
“Provided that in case of a Specified IFSC
private company, the Registrar may, on
an application by the company, allow
such registration to be made within a
period of three hundred days of such
creation on payment of such additional
fees as may be prescribed.”.
15. Sub-section (6) of For the words “thirty days” read as “sixty
section 89 days”.

16. Sub-section (3) of Shall not apply.

section 92
17. Sub-section (1) of In sub-section (1), the following proviso
section 100 shall be inserted, namely:-
“Provided that in case of a Specified IFSC
private company, the Board may subject
to the consent of all the shareholders,
convene its extraordinary general meeting
at any place within or outside India.”.
18. Sub-section (1) of For the words “thirty days” read as “sixty
section 117 days”.

19. Sub-section (1) of In sub-section (1), the following proviso

section 118 shall be inserted, namely:-
“Provided that in case of a Specified IFSC
private company, the minutes of every
meeting of its Board of Directors or of
every committee of the Board, to be
prepared and signed in the manner as
may be prescribed under sub-section (1)
at or before the next Board meeting or
committee meeting, as the case may be
and kept in the books kept for that
purpose.”.

Page 1500
 Annexure N52

Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

20. Sub-section (10) of section Shall not apply.

118
21. Sub-section (3) of In sub-section (3), following proviso shall
section 134 be inserted, namely:-
“Provided that in case of a Specified IFSC
private company, if any information listed
in this sub-section is provided in the
financial statement, the company may not
include such information in the report of
the Board of Directors.”.
22. Section 135 Shall not apply for a period of five years
from the commencement of business of a
Specified IFSC private company.
23. Section 138 Shall apply if the articles of the company
provides for the same.
24. Fourth proviso to sub section For the words “ fifteen days” read as “
(1) of section 139 thirty days”.

25. All provisos to sub- section Shall not apply.

(2) of section 139
26. Sub-section (1) of In sub-section (1) after the proviso, the
section 140 following proviso shall be
inserted, namely:-
“Provided further that in case of a
Specified IFSC private company, where,
within a period of sixty days from the date
of submission of the application to the
Central Government under this sub-
section, no decision is communicated by
the Central Government to the company, it
would be deemed that the Central
Government has approved the application
and the company shall appoint new
auditor at a general meeting convened
within three months from the date of expiry
of sixty days period.”.
27. Sub- section (3) of section In sub-section (3), the following proviso
149 shall be inserted, namely:-
“Provided that this sub-section shall apply
to a Specified IFSC private company in
respect of financial years other than the
first financial year from the date of its
incorporation.”.

Page 1501
 Annexure N52

Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

28. Sub-section (3) of In sub-section (3), the following proviso

section 161 shall be inserted, namely:-
“Provided that in case of a Specified IFSC
private company, the Board may appoint,
any person nominated by any institution or
company or body corporate as a director
in pursuance of the provisions of any law
for the time being in force or of any
agreement or by the Central Government
or the State Government by virtue of its
shareholding in a Government company.”.
29. Proviso to sub-section (1) For the word “shall” read as “may”.
of section 168
30. Sub-section (2) of For the words “thirty days” at both places
section 170 read as “sixty days”.

31. Sub-section (1) of In sub-section (1), after the proviso, the

section 173 following proviso shall be
inserted, namely:-
“Provided further that a Specified IFSC
private company shall hold the first
meeting of the Board of Directors within
sixty days of its incorporation and
thereafter hold atleast one meeting of the
Board of Directors in each half of a
calendar year.”.
32. Sub-section (3) of Shall apply with the exception that
section 174 interested director may participate in such
meeting provided the disclosure of his
interest is made by the concerned
director either prior or at the meeting.
33. Sub-section (3) of In sub-section (3), after the second
section 179 proviso, the following proviso shall be
inserted, namely:-
“Provided also that in case of a Specified
IFSC private company, the Board can
exercise powers by means of resolutions
passed at the meetings of the Board or
through resolutions passed by
circulation.”.
34. Sub-section (1) of In the Explanation, for clause (c), the
section 185 following clause shall be substituted,
namely:-
“(c) any private company of which any
such director is a director or member in
which director of the lending company
do not have direct or indirect
shareholding through themselves or
through their relatives and a special
resolution is passed to this effect;”.

Page 1502
 Annexure N52

Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

35. Sub-section (1) of Shall not apply.

section 186
36. Sub-sections (2) and (3) of Shall not apply if a company passes a
section 186 resolution either at meeting of the Board
of Directors or by circulation.
37. Sub-section (5) of In sub-section (5), after the proviso, the
section 186 following proviso shall be
inserted, namely:-
“Provided further that in case of a
Specified IFSC private company, the
Board can exercise powers under this
sub-section by means of resolutions
passed at meetings of the Board of
Directors or through resolutions passed
by circulation.”.
38. Sub-section (2) of section In sub-section (2), the following proviso
384 shall be inserted, namely:-
“Provided that notwithstanding anything
contained in this Act, the exemptions
provided under section 92 to companies
incorporated under this Act for the purpose
of operating from the International Financial
Services Centre located in an approved
multi services Special Economic Zone set-
up under the Special Economic Zones Act,
2005 (28 of 2005) and the Special
Economic Zones Rules, 2006, shall apply
mutatis mutandis to a foreign company
registered under Chapter XXII of this Act,
which has a place of business or which
conducts business activity from the
International Financial Services Centre
located in an approved multi services
Special Economic Zone set-up under the
Special Economic Zones Act, 2005 and the
Special Economic Zones Rules, 2006.” .
39. Sub-section (4) of section In sub-section (4), the following proviso
384 shall be inserted, namely:-
“Provided that notwithstanding anything
contained in this Act, the exemptions
provided under Chapter VI to companies
incorporated under this Act for the purpose
of operating from the International Financial
Services Centre located in an approved
multi services Special Economic Zone set-
up under the Special Economic Zones Act,
2005 (28 of 2005) and the Special

Page 1503
 Annexure N52

Exemptions to a licensed private company operating from IFSC in SEZ

Serial Provisions of the Exceptions/Modifications/Adaptations
Number Companies Act, 2013
(18 of 2013)

Economic Zones Rules, 2006, shall apply

mutatis mutandis to a foreign company
registered under Chapter XXII of this Act,
which has a place of business or which
conducts business activity from the
International Financial Services Centre
located in an approved multi services
Special Economic Zone set-up under the
Special Economic Zones Act, 2005 and the
Special Economic Zones Rules, 2006.” .

2. A copy of this notification has been laid in draft before both Houses of the
Parliament as required by sub-section (2) of Section 462 of the Companies Act, 2013
(18 of 2013).
[F. No. 3/1/2015-CL.I (Part-1)]
AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1504
 Annexure N53

Exemptions to government companies

Annexure N53: Exemptions to government

companies
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 13th June, 2017
G.S.R. 582(E).— In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of section 462 of the
Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act), the Central
Government, in the interest of public, hereby amends the notification of the Government
of India, in the Ministry of Corporate Affairs, vide number G S.R. 463(E) dated the 5 th
June, 2015 published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-
section (i), dated the 5th June 2015 (hereinafter referred to as the principal
notification),namely:-

2. In the principal notification, in the Table, for serial number 5 and the entries relating
thereto, the following serial number and the entries relating thereto shall be substituted,
namely.-

(1) (2) (3)

“5. Chapter Vll, subsection In sub-section (2), for the words "such other place as
(2) of section 96. the Central Government may approve in this behalf'',
the words "such other place within the city, town or
village in which the registered office of the company is
situate or such other place as the Central Government
may approve in this behalf'' shall be substituted

3 ln the principal notification, in the Table, for serial number 15 and the entries relating
thereto, the following serial number and the entries relating thereto shall be substituted,
namely:-

(1) (2) (3)

"15. Chapter Xl, sub- Shall not apply to -
sections (6) and (7) of
section 152. (a) a Government company, which is not a listed
company, in which not less than fifty-one per cent. of
paid up share capital is held by the Central
Government, or by any State Government or
Governments or by the Central Government and one
or more State Governments;

(b) a subsidiary of a Government company, referred

to in (a) above.".

4. In the principal notification, in the Table, after serial number 29, the following number
and serial the entries relating thereto shall be inserted, namely:_

Page 1505
 Annexure N53

Exemptions to government companies

(1) (2) (3)
"29A. Chapter XV, sections For the word "Tribunal", wherever it occurs, the
230 to 232 words "Central Government" shall be substituted.".

5. In the principal notification, after paragraph 2, the following paragraph shall be

inserted, namely:-

"2A. The exceptions, modifications and adaptations provided in column (3) of the
aforesaid Table shall be applicable to a Government company which has not committed
a default in filing its financial statements under section 137 of the said Act or annual
return under section 92 of the said Act with the Registrar.".

Page 1506
 Annexure N54

Exemptions to private companies

Annexure N54: Exemptions to private

companies
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 13th June, 2017

G.S.R. 583(E).— In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of section 462 of the
Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act), the Central
Government, in the interest of public, hereby amends the notification of the Government
of India, in the Ministry of Corporate Affairs, vide number G.S.R. 464(E) dated the
5th June, 2015 published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-
section (i), dated the 5th June 2015 (hereinafter referred to as the principal
notification),namely:-

2. In the principal notification, in the Table, the existing serial number 1 and the entries
relating thereto shall be re-numbered as serial number 1-A, and before the serial number
1A as so re-numbered and the entries relating thereto, the following serial number and
the entries relating thereto shall be inserted, namely-

(1) (2) (3)

"1. Chapter I, For the proviso, the following shall be substituted, namely:-
clause (40)
of section Provided that the financial statement, with respect to one person
2. company, small company, dormant company and private
company (if such private company is a start-up) may not include
the cash flow statement;

Explanation. - For the purposes of this Act, the term ''start-up'' or

"start-up company" means a private company incorporated under
the Companies Act, 2013 (18 of 2013) or the Companies Act,
1956 (1 of 1956) and recognised as start-up in accordance with
the notification issued by the Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry.".

3. In the principal notification, in the Table, for serial number 6 and the entries relating
thereto, the following serial number and the entries relating thereto shall be substituted,
namely:-

(1) (2) (3)

"6. Chapter V, Shall not apply to a private company-
clauses (a)
to (e) of
sub-
section (2)

Page 1507
 Annexure N54

Exemptions to private companies

of section (A) which accepts from its members monies not exceeding one
73. hundred per cent. of aggregate of the paid up share capital, free
reserves and securities premium account; or

(B) which is a start-up, for five years from the date of its
incorporation; or

(C) which fulfils all of the following conditions, namely:-

(a) which is not an associate or a subsidiary company of any other

company;

(b) if the borrowings of such a company from banks or financial

institutions or any body corporate is less than twice of its paid up
share capital or fifty crore rupees, whichever is lower; and

(c) such a company has not defaulted in the repayment of such

borrowings subsisting at the time of accepting deposits under this
section:

Provided that the company referred to in clauses (A), (B) or (C)

shall file the details of monies accepted to the Registrar in such
manner as may be specified.".

4. In the principal notification, in the table, after serial number 6 and the entries relating
thereto, the following serial numbers and the entries shall be inserted, namely:-

(1) (2) (3)

''6A, Chapter Shall apply to private companies which are small companies,
Vll, clause namely:-
(g) of sub-
section (1) "(g) aggregate amount of remuneration drawn by directors;".
of section
92
6B. Chapter For the proviso, the following proviso shall be substituted,
Vll, proviso namely:-
to sub-
section (1) Provided that in relation to One Person Company, small company
of section and private company (if such private company is a start-up), the
92 annual return shall be signed by the company secretary, or where
there is no company secretary, by the director of the company.".

5. In the principal notification, after serial number 9, the following serial number and the
entries relating thereto shall be inserted, namely:-

(1) (2) (3)

"9A. Chapter X, Shall not apply to a private company:-
clause (i)
of sub-

Page 1508
 Annexure N54

Exemptions to private companies

section (3) (i) which is a one person company or a small company; or (ii)
of section which has turnover less than rupees fifty crores as per latest
143. audited financial 793 [statement AND] which has aggregate
borrowings from banks or financial institutions or any body
corporate at any point of time during the financial year less than
rupees twenty five crore.".

6. In the principal notification, after serial number 11, the following serial numbers and
the entries relating thereto shall be inserted, namely:-

(1) (2) (3)

"11 Chapter For sub-section (5), the following sub-section shall be substituted,
A. XII, sub- namely:-
section (5)
of section (5) A One Person Company, small company, dormant company
173 and a private company (if such private company is a start-up)
shall be deemed to have complied with the provisions of this
section if at least one meeting of the Board of Directors has been
conducted in each half of a calendar year and the gap between
the two meetings is not less than ninety days: Provided that
nothing contained in this sub-section and in section 174 shall
apply to One Person Company in which there is only one director
on its Board of Directors.
11B. Chapter Shall apply with the exception that the interested director may
Xll, sub- also be counted towards quorum in such meeting after disclosure
section (3) of his interest pursuant to section 184.".
of section
174.

7. In the principal notification, after paragraph 2, the following paragraph shall be

inserted, namely:-

"2A. The exceptions, modifications and adaptations provided in column (3) of the
aforesaid Table shall be applicable to a private company which has not committed a
default in filing its financial statements under section 137 of the said Act or annual return
under section 92 of the said Act with the Registrar.".

793
Words ‘statement or’ replaced with the words ‘statement and’ vide notification number S.O. 2218(E)
dated 13th July, 2017.

Page 1509
 Annexure N55

Exemptions to section 8 companies

Annexure N55: Exemptions to section 8

companies
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 13th June, 2017

G.S.R. 584(E).— In exercise of the powers conferred by clauses (a) and (b) of sub-
section (1) of Section 462 and in pursuance of sub-section (2) of section 462 read with
section 8 of the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said
Act), the Central Government, in the interest of public, hereby amends the notification of
the Government of India, in the Ministry of Corporate Affairs, vide number G.S.R. 466(E)
dated the 5th June, 2015 published in the Gazette of India, Extraordinary, Part-II, Section
3, Sub-section (i), dated the 5th June 2015 (hereinafter referred to as the principal
notification), namely:-

2. In the principal notification, in the Table, for serial number 8 and the entries relating
thereto, the following serial number and the entries relating thereto shall be substituted,
namely:-

(1) (2) (3)

"8 Clause (b) and first Shall not apply."
proviso to sub-section
(1) of section 149.

3. In the principal notification, in the Table, after serial No. 19, the following serial number
and the entries relating thereto shall be inserted, namely:-

(1) (2) (3)

19A. Sub-section (7) of In sub-section (7), the following proviso shall be
section 186 inserted, namely:-

Provided that nothing contained in this sub-section

shall apply to a company in which twenty-six per
cent. or more of the paid-up share capital is held by
the Central Government or one or more State
Governments or both, in respect of loans provided
by such company for funding Industrial Research
and Development projects in furtherance of its
objects as stated in its memorandum of
association.".

4. In the principal notification, after paragraph 2, the following paragraph shall be

inserted, namely:-

Page 1510
 Annexure N55

Exemptions to section 8 companies

"2A. The exceptions, modifications and adaptations provided in column (3) of the
aforesaid Table shall be applicable to a company covered under section 8 of the said
Act which has not committed a default in filing its financial statements under section 137
of the said Act or annual return under section 92 of the said Act with the Registrar ".

Page 1511
 Annexure N56

Special courts

Annexure N56: Special Courts – 4 new

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 05th February 2018

S.O. 528(E).--In exercise of the powers conferred by sub-section (1) of section 435
of the Companies Act, 2013 (18 of 2013), the Central Government, with the
concurrence of the Chief Justice of the High Courts of Kearla, Orissa and Gauhati,
hereby designates the following Courts mentioned in column (2) of the Table below
as Special Courts for the purposes of providing speedy trial of offences punishable
with imprisonment of two years or more under the said sub-section, namely:-

TABLE
Sr. Courts Jurisdiction as
No. special court

(1) (2) (3)

1. Additional District and Sessions Court-VII, State of Kerala

Ernakulam

2. District and Sessions Court, Kavaratti Union Territory of

Lakshadweep

3. District and Sessions Judge, Cuttack State of Odisha

4. Additional District and Sessions Judge, No. State of Assam

1, Kamrup (M), Guwahati

Page 1512
 Annexure N57

Special courts

Annexure N57: Special Courts – U.P.

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 23rd April 2018

S.O. 1710(E).--In exercise of the powers conferred by sub-section (1) of section 435
of the Companies Act, 2013 (18 of 2013), the Central Government, with the
concurrence of the Chief Justice of the High Court of Allahabad hereby designates
the following Courts mentioned in column (1) of the Table below as Special Court for
the purposes of providing speedy trial of offences punishable with imprisonment of
two years or more under the said sub-section, namely:-

TABLE
Courts Jurisdiction as special court

(1) (2)

9th Court of Additional District and State of Uttar Pradesh

Sessions Judge, Kanpur Nagar.

Page 1513
 Annexure N58

Special Court

Annexure N58: Special Court – Nagaland,

Mizoram and Arunachal Pradesh
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 5th September 2018

S.O. 4285(E).-- In exercise of the powers conferred by sub-section (1) of section 435
of the Companies Act, 2013 (18 of 2013), the Central Government, with the
concurrence of the Chief Justice of the Gauhati High Court at Gauhati hereby
designates the following Courts mentioned in column (1) of the Table below as
Special Courts for the purposes of providing speedy trial of offences punishable with
imprisonment of two years or more under the said Act, namely:-

TABLE
Courts Jurisdiction as special court

(1) (2)

Court of District and Sessions State of Nagaland.

Judge at Kohima

Court of District and Sessions State of Mizoram

Judge at Aizawl

West Session Division, Yupia State of Arunachal Pradesh

Page 1514
 Annexure N59

Special Court

Annexure N59: Special Court – Maharashtra

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 17th July 2019

S.O. 2564(E).-In exercise of the powers conferred by sub-section (1) of section 435
of the Companies Act, 2013 (18 of 2013), the Central Government, with the
concurrence of the Chief Justice of the Gauhati High Court at Gauhati hereby
designates the following Courts mentioned in column (1) of the Table below as
Special Courts for the purposes of providing speedy trial of offences punishable with
imprisonment of two years or more under the said Act, namely:-

TABLE
Courts Jurisdiction as special court

(1) (2)

Court of District Judge-1 and State of Maharashtra.

Additional Sessions Judge, Pune

NOTIFICATION
New Delhi, the 28th August, 2019
S.O. 3120(E).—In exercise of the powers conferred by sub-section (1) of section 435 of
the Companies Act, 2013 (18 of 2013) and in supersession of the notification of the
Government of India, Ministry of Corporate Affairs, vide number S.O. 2564(E),
dated, the 17th July, 2019, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (ii), except as respects things done or omitted to be done before
such supersession, the Central Government with the concurrence of the Chief Justice of
the High Court, Bombay, hereby designates the following Court mentioned in column (2)
of the Table below as Special Court for the purpose of providing speedy trial of offences
punishable with imprisonment of two years or more under the said Act, namely:-

Sl. Court Jurisdiction as Special Court

No.
(1) (2) (3)
1 Court of District Judge-1 and Additional Sessions Pune, Ahmednagar,
Judge, Pune Kolhapur, Solapur, Satara,
Sangli, Ratnagiri and
Sindhudurg districts of the
State of Maharashtra.

Page 1515
 Annexure N50

Chapter XVIII notified

ORDERS
Annexure O1: CLB to exercise powers
under Sections 24, 58 and 59 until NCLT
setup
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 20th September, 2013.

S.O. 2821(E).—Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to
as the said Act) received the assent of the President on 29th August, 2013 and section
1 thereof came into force on the same date;
And whereas the provisions contained in section 24, section 58 and section 59 of
the said Act have come into force on the 12th day of September, 2013;
And whereas section 24 provides for exercise of certain powers regarding
prospectus, return of allotment, redemption of preference shares and other matters
specifically provided in the said Act by the Central Government, Tribunal or the Registrar;
And whereas section 58 and section 59 of the said Act provide for certain powers
of the Tribunal which deal with hearing of an appeal against the refusal of registration or
rectification of name of members in the register of members of a company respectively;
And whereas the constitution of the Tribunal after following the procedure
specified under Chapter XXVII of the said Act is likely to take some time;
And whereas the provisions of section 55A, section 111 and section 111A of the
Companies Act, 1956 (1 of 1956) which correspond to section 24, section 58 and section
59 of the said Act confer above said powers on the Company Law Board constituted
under the Companies Act, 1956;
And whereas difficulties have arisen regarding compliance with the provisions of
section 24, section 58 and section 59 of the said Act in so far as they relate to exercise
of certain powers by the Tribunal during the period it is duly constituted under the said
Act;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the above said difficulties, namely:-

1. Short title and commencement.-

(1) This Order may be called the Companies (Removal of Difficulties) Order,
2013.
(2) It shall come into force on the date of its publication in the Official Gazette.

2.Continuance of matters, proceedings or cases before the Company Law Board until
their transfer to the Tribunal under section 434.-
It is hereby clarified that until a date is notified by the Central Government under
sub-section (1) of section 434 of the Companies Act, 2013 (18 of 2013) for transfer of all
matters, proceedings or cases to the Tribunal constituted under Chapter XXVII of the

Page 1516
 Annexure N50

Chapter XVIII notified

said Act, the Board of Company Law Administration shall exercise the powers of the
Tribunal under sections 24, 58 and section 59 in pursuance of the second proviso to
sub-section (1) of section 465 of the said Act.
[F.No.1/15/2013-CL-V]

Page 1517
 Annexure O2

Amendment to the Company Law Board Regulations 1991

Annexure O2: Order: Amendment to the

Company Law Board Regulations, 1991
File No. 10/36/2001-CLB
GOVERNMENT OF INDIA
COMPANY LAW BOARD
Paryavaran Bhawan, 3rd Floor, B-Block, C.G.O. Complex, Lodhi Road,
New Delhi - 110 003
Dated: 25/09/2013
O RDER
In exercise of the powers conferred by sub- section (4B) and sub-section (6) of
Section 10(E) of the Companies Act, 1956 (1 of 1956) read with Regulation 4 of the
Company Law Board Regulations, 1991 and Ministry of Corporate Affairs, companies
(Removal of Difficulties) Order, 2013 dated 20.09.2013 notified under sub-section (1) of
section 470 of the Companies Act, 2013, the Board, hereby, makes the following
Regulations further to amend the Company Law Board Regulations 1991, namely:-

1. In CHAPTER I of the Company Law Board Regulations, 1991, (hereinafter referred

to as the said regulations),-
(a) In Definitions, in definition 2 (1) (a), for the expression "Act" means the
Companies Act, 1956 (1 of 1956), the following expressions shall be substituted
namely:-
" "Act" means the Companies Act, 1956 (1 of 1956) and Companies
Act, 2013 (1 of 2013) as applicable."

2. In CHAPTER II of the said Regulations,

(a) In Regulation 4, for sub-regulation (3), the following sub-regulation shall be
substituted namely:-
"It shall be lawful for the Chairman to provide that matters falling
under sections 43, 49, 58A, 58AA, 79, 80A, 111 and/or 111A
(petitions received and registered in CLB upto 11.09.2013), 113, 117,
117C, 118, 144, 163, 167, 186, 196, 219, 225, 235, 237B, 247, 284,
304, 307, 614, 621A and all matters arising under Chapter VI
(prevention of oppression and mismanagement) of the Companies
Act, 1956, section 45QA of the R.B.I. Act, 1934 and sections 24, 58
and 59 (petitions received and registered in CLB on or after
12.09.2013) of the Companies Act, 2013 shall be dealt by Regional
Benches, namely, New Delhi Bench, Chennai Bench, Kolkata Bench
and Mumbai Bench, consisting of one or more Members."
(b) In Regulation 14 of the said regulations,
(i) for sub-regulation (2), the following sub-regulation shall be substituted
namely:-
"The petitioner/ applicant shall serve an advance notice with a
copy of the petition, reference or application on the
Page 1518
 Annexure O2

Amendment to the Company Law Board Regulations 1991

respondent(s) and shall produce evidence of such service at

the time of presentation of such petition, reference or
application in CLB."
for sub-regulation (3), the following sub-regulation shall be
substituted namely:-
"The Petitioner shall serve a copy of the reference or petition
other than a petition under section 49, 79, 80A, 111 and/or 111A
(petitions received and registered in CLB upto 11.09.2013), 113,
118, 144, 163, 188, 196, 219, 225, 284, 304 and 307 of the
Companies Act, 1956 and under sections 58 and 59 (petitions
received and registered in CLB on or after 12.09.2013) of the
Companies Act, 2013, upon the concerned Registrar of
Companies having jurisdiction over the company and shall attach
to and present with his petition, reference, an acknowledgement
from the office of the Registrar of Companies receiving a copy of
the petition or reference so served."
(c) In Regulation 15 of the said regulations,
(i) for sub-regulation (2), the following sub-regulation shall be substituted
namely:-
"Every petition or application shall be presented in CLB after
giving two clear working days advance notice for mentioning
(excluding the date of such presentation) and accompanied by
evidence of such advance notice having been served on the
respondent(s). If, on scrutiny, the petition or application is found
to be in order, it shall be duly registered and given a serial
number."
(ii) after sub-regulation (2), the following proviso shall be inserted namely:-
"Provided that in an exceptional situation of urgency, the above
notice period may be dispensed with by the order of the
Bench."
(d) In Regulation 18 of the said regulations,
(i) for sub-regulation (1), the following sub-regulation shall be substituted
namely:-
"A petition shall be accompanied by documents as prescribed in
Annexure III and shall be accompanied by an index of
documents, brief of synopsis within two pages and date of events
within two pages."

3. In CHAPTER IV of the said Regulations,

(a) In Annexure II, in Form No. 1, for the expression "in the matter of Companies
Act, 1956, the following expression shall be substituted namely:-
"In the matter of Companies Act, 1956/ The Companies Act, 2013"
(b) In Annexure III of the said Regulations, against serial number 9, for the
expressions 111 [or 111A], the following expression shall be substituted namely:-
"111 [or 111A] of the Companies Act, 1956 and 58 [or 59] of the Companies
Act, 2013."
Page 1519
 Annexure O2

Amendment to the Company Law Board Regulations 1991

4. This order shall come into force with immediate effect.

By Order of the Company Law Board
(P. K. Malhotra)
Secretary, Company Law Board
Telephone: 24363451
1. P.A. to Hon'ble Chairman, Company Law Board, New Delhi.
2. Hon'ble Members, Company Law Board, New Delhi Bench, Kolkata Bench,
Mumbai Bench and Chennai Bench.
3. Bench Officers, Company Law Board, Principal Bench, New Delhi Bench/Kolkata Bench/
Mumbai Bench/ Chennai Bench.
4. All Regional Directors/All Registrars of Companies/All Official Liquidator.
5. Sr. PPS to Secretary, Ministry of Corporate Affairs, New Delhi.
6. PS to Shri Amardeep Singh Bhatia, Joint Secretary, MCA.
7. Shri B. N. Harish, Director Inspection & Investigation, MCA.
8. Shri N. K. Dua, Deputy Director, MCA.
9. Secretary, DGIR, New Delhi.
10. Secretary, Competition Commission of India, New Delhi.
11. Director, S.F.I.O, New Delhi.
12. CLB, web site/ Notice Board.
13. The Institute of Chartered Accountants of India, ITO, New Delhi.
14. The Institute of Company Secretaries of India, ICSI, House 22, Institutional
Area, Lodhi Road, New Delhi - 110003.
15. Corporate Law Adviser, 158, Basant Enclave, Palam Road, New Delhi-110057.
16. Taxman Allied Services Ltd., 59/32, New Rohtak Road, Delhi.
17. The All India Reporter Pvt. Ltd., 31-D 'B' Block, Delhi High Court, New Delhi.
18. Bar councils New Delhi/ Kolkata.

Page 1520
 Annexure O3

Related Party u/s. 2(76)

Annexure O3: Order: Related Party under

section 2(76)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 9th July, 2014
S.O. 1820 (E).—Whereas the Companies Act, 2013 (18 of 2013) (hereinafter
referred to as the said Act) received the assent of the President on 29th August, 2013
and section 1 thereof came into force on the same date;
And whereas clause (76) of Section 2 of the said Act define the term ‘related
party’. In sub-clause (v) of the said clause, the word ‘or’ has appeared inadvertently and
therefore defeating the intention of that clause.
And whereas difficulties have arisen regarding compliance with the provision.
Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 470
of the Companies Act, 2013 the Central Government hereby makes the following order to
remove the above said difficulties, namely :-

1. Short title and commencement.—

(1) This order may be called the Companies (Removal of Difficulties) Fifth Order, 2014.
(2) It shall come into force on the date of its publication in the Official Gazette.

2. In sub-clause (v) of clause (76) of section 2, for the words “or holds”, the words “and
holds” shall be substituted.

[F. No. 2/5/2014-CL.V]

Page 1521
 Annexure O4

Amendment to Section 92(2)

Annexure O4: Order: Amendment to sub-

section (2) of section 92
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 29th April, 2014
S.O. 1177 (E). – In exercise of the powers conferred by sub-section (1) of section 470
of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order, namely:-
1. (1) This Order may be called the Companies (Removal of Difficulties) [*] Order, 2014.
(2) It shall come into force at once.
2. In sub-section (2) of section 92 of the said Act, for the words “The annual return, filed
by a listed company or, by a company having such paid-up share capital and turnover
as may be prescribed”, the words “The annual return, filed by a listed company or, by a
company having such paid-up share capital or turnover as may be prescribed” shall be
substituted.
[F. No. 2/6/2014-CL.V]
RENUKA KUMAR, Jt. Secretary

[*] Clarified vide notification number S.O.1406(E). dated 27th May 2014, for “(1) This
order may be called the Companies (Removal of Difficulties) Second Order, 2014” read
“(1) This order may be called the Companies (Removal of Difficulties) Order, 2014”.

Page 1522
 Annexure O5

CLB under section 73(4)

Annexure O5: Order: CLB to exercise

powers under section 73(4)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 2nd June, 2014
S.O. 1428(E).— In exercise of the powers conferred by sub-section (1) of Section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove certain difficulties that have arisen in giving effect to the
provisions of Section 73 of the said Act, namely:—

1. (1) This Order may be called the Companies (Removal of Difficulties) Second Order,
2014.
(2) It shall come into force at once.

2. Jurisdiction, Powers, authority and functions of Company Law Board.-

Until a date is notified by the Central Government under sub-section (1) of Section 434 of
the Companies Act, 2013 (18 of 2013), the Company Law Board constituted in pursuance
of sub-section (1) of Section 10E of the Companies Act, 1956 (1 of 1956) shall exercise
the jurisdiction, powers, authority and functions under subsection (4) of Section 73 of the
Companies Act, 2013 (18 of 2013).
[F. No. 2/8/2014-CL-V ]
AMARDEEP SINGH BHATIA,
Jt. Secy.

Page 1523
 Annexure O6

CLB to exercise powers u/first proviso to S.2(41)

Annexure O6: Order: CLB to exercise

powers under first proviso to section
2(41)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 2nd June, 2014
S.O. 1429(E).— In exercise of the powers conferred by sub-section (1) of Section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order, namely:—
1. (1) This Order may be called the Companies (Removal of Difficulties) Third Order,
2014.
(2) It shall come into force at once.
2. Jurisdiction, powers, authority and functions of Company Law Board.-
Until the National Company Law Tribunal is constituted under section 408 of the
Companies Act, 2013 (18 of 2013), the Board of Company Law Administration constituted
in pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 ( 1 of 1956)
shall exercise the jurisdiction, powers, authority and functions under the first proviso to
clause (41) of Section 2 of the Companies Act, 2013 (18 of 2013).
[F. No. 2/9/2014-CL-V ]

Page 1524
 Annexure O7

CLB to exercise powers u/s.74(2)

Annexure O7: Order: CLB to exercise

powers under section 74(2)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 6th June, 2014
S.O. 1460(E).— In exercise of the powers conferred by sub-section (1) of Section 470
of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order, namely:—
1. (1) This Order may be called the Companies (Removal of Difficulties) Fourth Order,
2014.
(2) It shall come into force from the date of notification in the Official Gazette.

2. Jurisdiction, powers, authority and functions of Company Law Board.-

Until a date is notified by the Central Government under sub-section (1) of Section 434
of the Companies Act, 2013 (18 of 2013), the Company Law Board constituted in
pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 (1 of 1956)
shall exercise the jurisdiction, powers, authority and functions of the Tribunal under sub-
section (2) of Section 74 of the said Act.
[F. No. 1/8/2013-CL-V ]

Page 1525
 Annexure O8

Related party u/s.2(76)

Annexure O8: Related party under

section 2(76)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 24th July, 2014
S.O. 1894 (E).—Whereas the Companies Act, 2013 (18 of 2013) (hereinafter
referred to as the said Act) received the assent of the President on 29th August, 2013
and section 1 thereof came into force on the same date;
And whereas clause (76) of section 2 of the Act, which provides for definition of
the term “related party” has come into force on 12th September, 2013;
And whereas difficulties have arisen in interpreting the said clause due to the
absence of the word “relative” in sub-clause (iv), although such word has occurred in sub-
clauses (i), (ii), (iii) and (v) of the aforesaid clause (76) resulting in a disharmonious
interpretation of the said definition.
Now, therefore, in exercise of the powers conferred by sub-section (1) of section
470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the aforesaid difficulties, namely:—

1. Short title and commencement.—(1) This Order may be called the Companies
(Removal of Difficulties) Sixth Order, 2014.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. Amendment of section 2.—In section 2 of the Companies Act, 2013, in clause (76), in
sub-clause (iv), after the word “manager”, the word “or his relative” shall be inserted.
[F. No. 2/14/2014-CL.V]

Page 1526
 Annexure O9

Amendment to S.143(5)

Annexure O9: Order: Amendment to

Section 143 (5)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 4th September, 2014

S.O. 2226(E).—Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to
as the said Act) received the assent of the President on the 29th August, 2013 and section
143 of the Act, which provides for the powers and duties of the auditors and auditing
standards, came into force with effect from 1st April, 2014;

And whereas sub-sections (5) and (7) of section 139 of the said Act provide for power of
the Comptroller and Auditor-General of India to appoint an auditor duly qualified to be
appointed as an auditor in a Government company or any other company owned or
controlled, directly or indirectly, by the Central Government, or by any State Government
or Governments, or partly by the Central Government and partly by one or more State
Governments;

And whereas sub-section (5) of Section 143 of the said Act which provides for power of
the Comptroller and Auditor-General of India to conduct supplementary audit does not
specifically cover companies ‘owned or controlled, directly or indirectly, by the Central
Government, or by any State Government or Governments, or partly by the Central
Government and partly by one or more State Governments’;

And whereas difficulties have arisen in implementation of the provisions of sub-section

(5) of section 143 for companies referred to in sub-sections (5) and (7) of section 139 of
the said Act;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of
the Companies Act, 2013, the Central Government hereby makes the following Order to
remove the aforesaid difficulties, namely :—

1. Short title and commencement.—

(1) This order may be called the Companies (Removal of Difficulties) Seventh
Order, 2014.
(2) It shall come into force on the date of its publication in the Official Gazette.

2. In section 143 of the Companies Act, 2013 in sub-section (5), for the portion beginning
with the words “In the case of a Government company” and ending with the words
“required to be audited and”, the following shall be substituted, namely :—

Page 1527
 Annexure O9

Amendment to S.143(5)

“In the case of a Government company or any other company owned or controlled,
directly or indirectly, by the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly by one or more State
Governments, the Comptroller and Auditor-General of India shall appoint the
auditor under sub-section (5) or sub-section (7) of Section 139 and direct such
auditor the manner in which the accounts of the company are required to be
audited and”.
[F. No. 1/33/2013-CL.-V]

Page 1528
 Annexure O10

Amendment to Ss. 2(85) and 186

Annexure O10: Order: Amendment to

sections 2(85) and 186
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 13th February, 2015

S.O. 504 (E).- Whereas, the Companies Act, 2013 (18 of 2013) (hereinafter referred to
as the said Act) received the assent of the President on the 29th August, 2013;
And whereas, clause (85) of section 2 of the said Act provides for definition of the
term "small company";
And whereas, clause (b) of sub-section (11) of section 186 of the said Act provides
that the requirements of provisions of section 186 [except sub-section (1) of the said
section] shall not apply to any acquisition made by a non-banking financial company
registered under Chapter IIIB of the Reserve Bank of India Act, 1934 (2 of 1934) and any
other company whose principal business is acquisition of securities;
And whereas, such provisions of clause (85) of section 2 and section 186 of the
said Act had come into force on the 1st day of April, 2014;
And whereas, the following difficulties have arisen in giving effect to the above
provisions of the said Act: -
(a) According to clause (85) of section 2, a company may be treated as a 'small
company' if it meets either of the conditions provided therein thereby making the
second limit unrestricted or inconsequential. Difficulties have arisen in this regard as
companies which, though, meet one of the criteria but exceed the monetary lim it in
respect of second criteria excessively are also getting classified as `small companies';
and
(b) in clause (b) of sub-section (11) of section 186, in the absence of provisions for
exemption to a banking company or an insurance company or a housing finance
company making acquisition of securities in its ordinary course of business, a difficulty
has arisen that such companies cannot make any acquisition of securities in their
ordinary course of business;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section
470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes
the following Order to remove the aforesaid difficulties, namely:-
(1) Short title and commencement.- (1) This Order may be called the Companies
(Removal of Difficulties) Order, 2015.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Companies Act, 2013 (hereinafter referred to as the said Act), -
(a) in section 2, in clause (85), in sub-clause (i), for the word "or" occurring at the end,
the word "and" shall be substituted; and

Page 1529
 Annexure O10

Amendment to Ss. 2(85) and 186

(b) in section 186 of the said Act, in sub-section (11), in clause (b), after item (iii), the
following item shall be inserted, namely :-
"(iv) made by a banking company or an insurance company or a housing finance
company, making acquisition of securities in the ordinary course of its business.".
[F. No. 1/13/2013-CL.V-Part]

Page 1530
 Annexure O11

CARO, 2015

Annexure O11: CARO, 2015

MINISTRY OF CORPORATE AFFAIRS
Order
New Delhi, the 10th April, 2015

S.O. 990 (E).- In exercise of the powers conferred by sub-section (11) of section 143 of
the Companies Act, 2013 (18 of 2013) and in supersession of the Companies (Auditor's
Report) Order, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3,
Sub-section (i), vide number G.S.R. 480 (E), dated the 12th June, 2003, except as
respects things done or omitted to be done before such supersession, the Central
Government, after consultation with the Institute of Chartered Accountants of India,
constituted under the Chartered Accountants Act, 1949 (38 of 1949), hereby makes the
following Order, namely:-

1. Short title, application and commencement. –

(1) This order may be called the Companies (Auditor's Report) Order, 2015.
(2) It shall apply to every company including a foreign company as defined in clause (42)
of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the
Companies Act], except -
(i) a banking company as defined in clause (c) of section 5 of the Banking
Regulation Act, 1949 (10 of 1949);
(ii) an insurance company as defined under the Insurance Act,1938 (4 of 1938);
(iii) a company licensed to operate under section 8 of the Companies Act;
(iv) a One Person Company as defined under clause (62) of section 2 of the
Companies Act and a small company as defined under clause (85) of section 2 of
the Companies Act; and
(v) a private limited company with a paid up capital and reserves not more than
rupees fifty lakh and which does not have loan outstanding exceeding rupees
twenty five lakh from any bank or financial institution and does not have a turnover
exceeding rupees five crore at any point of time during the financial year.
(3) It shall come into force on the date of its publication in the Official Gazette.

2. Auditor's report to contain matters specified in paragraphs 3 and 4. –

Every report made by the auditor under section 143 of the Companies Act, on the
accounts of every company examined by him to which this Order applies for the financial
year commencing on or after 1st April, 2014, shall contain the matters specified in
paragraphs 3 and 4.

3. Matters to be included in the auditor's report. –

The auditor's report on the account of a company to which this Order applies shall include
a statement on the following matters, namely:-

Page 1531
 Annexure O11

CARO, 2015

(i) (a) whether the company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets;
(b) whether these fixed assets have been physically verified by the management at
reasonable intervals; whether any material discrepancies were noticed on such
verification and if so, whether the same have been properly dealt with in the books of
account;

(ii) (a) whether physical verification of inventory has been conducted at reasonable
intervals by the management;
(b) are the procedures of physical verification of inventory followed by the management
reasonable and adequate in relation to the size of the company and the nature of its
business. If not, the inadequacies in such procedures should be reported;
(c) whether the company is maintaining proper records of inventory and whether any
material discrepancies were noticed on physical verification and if so, whether the same
have been properly dealt with in the books of account;

(iii) whether the company has granted any loans, secured or unsecured to companies,
firms or other parties covered in the register maintained under section 189 of the
Companies Act. If so,
(a) whether receipt of the principal amount and interest are also regular; and
(b) if overdue amount is more than rupees one lakh, whether reasonable steps have been
taken by the company for recovery of the principal and interest;

(iv) is there an adequate internal control system commensurate with the size of the
company and the nature of its business, for the purchase of inventory and fixed assets
and for the sale of goods and services. Whether there is a continuing failure to correct
major weaknesses in internal control system.

(v) in case the company has accepted deposits, whether the directives issued by the
Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant
provisions of the Companies Act and the rules framed there under, where applicable,
have been complied with? If not, the nature of contraventions should be stated; If an order
has been passed by Company Law Board or National Company Law Tribunal or Reserve
Bank of India or any court or any other tribunal, whether the same has been complied
with or not?

(vi) where maintenance of cost records has been specified by the Central Government
under sub-section (1) of section 148 of the Companies Act, whether such accounts and
records have been made and maintained;

(vii) (a) is the company regular in depositing undisputed statutory dues including provident
fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory dues with the
appropriate authorities and if not, the extent of the arrears of outstanding statutory dues

Page 1532
 Annexure O11

CARO, 2015

as at the last day of the financial year concerned for a period of more than six months
from the date they became payable, shall be indicated by the auditor.
(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of customs
or duty of excise or value added tax or cess have not been deposited on account of any
dispute, then the amounts involved and the forum where dispute is pending shall be
mentioned. (A mere representation to the concerned Department shall not constitute a
dispute).
(c) whether the amount required to be transferred to investor education and protection
fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956)
and rules made thereunder has been transferred to such fund within time.

(viii) whether in case of a company which has been registered for a period not less than
five years, its accumulated losses at the end of the financial year are not less than fifty
per cent of its net worth and whether it has incurred cash losses in such financial year
and in the immediately preceding financial year;

(ix) whether the company has defaulted in repayment of dues to a financial institution or
bank or debenture holders? If yes, the period and amount of default to be reported;

(x) whether the company has given any guarantee for loans taken by others from bank or
financial institutions, the terms and conditions whereof are prejudicial to the interest of the
company;

(xi) whether term loans were applied for the purpose for which the loans were obtained;

(xii) whether any fraud on or by the company has been noticed or reported during the
year; If yes, the nature and the amount involved is to be indicated.

4. Reasons to be stated for unfavourable or qualified answers.-

(1) Where, in the auditor's report, the answer to any of the questions referred to in
paragraph 3 is unfavourable or qualified, the auditor's report shall also state the reasons
for such unfavourable or qualified answer, as the case may be.
(2) Where the auditor is unable to express any opinion in answer to a particular question,
his report shall indicate such fact together with the reasons why it is not possible for him
to give an answer to such question.
[File No. 17/4 /2015-CL-V]
Amardeep Singh Bhatia
Joint Secretary to the Government of India

Page 1533
 Annexure O12

CARO, 2016

Annexure O12: CARO, 2016

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 29th March, 2016
S.O. 1228(E).—In exercise of the powers conferred by sub-section (11) of section 143 of
the Companies Act, 2013 (18 of 2013 ) and in supersession of the Companies (Auditor's
Report) Order, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3,
Sub-section (ii), vide number S.O. 990 (E), dated the 10th April, 2015, except as respects
things done or omitted to be done before such supersession, the Central Government,
after consultation with the, committee constituted under proviso to sub-section (11) of
section 143 of the Companies Act, 2013 hereby makes the following Order, namely:—

1. Short title, application and commencement.-

(1) This Order may be called the Companies (Auditor's Report) Order, 2016.
(2) It shall apply to every company including a foreign company as defined in clause (42)
of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the
Companies Act], except–
(i) a banking company as defined in clause (c) of section 5 of the Banking
Regulation Act, 1949 (10 of 1949);
(ii) an insurance company as defined under the Insurance Act,1938 (4 of 1938);
(iii) a company licensed to operate under section 8 of the Companies Act;
(iv) a One Person Company as defined under clause (62) of section 2 of the
Companies Act and a small company as defined under clause (85) of section 2 of
the Companies Act; and
(v) a private limited company, not being a subsidiary or holding company of a public
company, having a paid up capital and reserves and surplus not more than rupees
one crore as on the balance sheet date and which does not have total borrowings
exceeding rupees one crore from any bank or financial institution at any point of
time during the financial year and which does not have a total revenue as disclosed
in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing
operations) exceeding rupees ten crore during the financial year as per the
financial statements.

2. Auditor's report to contain matters specified in paragraphs 3 and 4. - Every report

made by the auditor under section 143 of the Companies Act, 2013 on the accounts of
every company audited by him, to which this Order applies, for the financial years
commencing on or after 1st April, 2015, shall in addition, contain the matters specified in
paragraphs 3 and 4, as may be applicable:

Provided the Order shall not apply to the auditor’s report on consolidated financial
statements.

Page 1534
 Annexure O12

CARO, 2016

3. Matters to be included in the auditor's report. - The auditor's report on the accounts
of a company to which this Order applies shall include a statement on the following
matters, namely:-
(i) (a) whether the company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets;
(b) whether these fixed assets have been physically verified by the management at
reasonable intervals; whether any material discrepancies were noticed on such
verification and if so, whether the same have been properly dealt with in the
books of account;
(c) whether the title deeds of immovable properties are held in the name of the company.
If not, provide the details thereof;

(ii) whether physical verification of inventory has been conducted at reasonable intervals
by the management and whether any material discrepancies were noticed and if so,
whether they have been properly dealt with in the books of account;

(iii) whether the company has granted any loans, secured or unsecured to companies,
firms, Limited Liability Partnerships or other parties covered in the register maintained
under section 189 of the Companies Act, 2013. If so,
(a) whether the terms and conditions of the grant of such loans are not prejudicial
to the company’s interest;
(b) whether the schedule of repayment of principal and payment of interest has
been stipulated and whether the repayments or receipts are regular;
(c) if the amount is overdue, state the total amount overdue for more than ninety
days, and whether reasonable steps have been taken by the company for recovery
of the principal and interest;

(iv) in respect of loans, investments, guarantees, and security whether provisions of

section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide
the details thereof.

(v) in case, the company has accepted deposits, whether the directives issued by the
Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant
provisions of the Companies Act, 2013 and the rules framed thereunder, where
applicable, have been complied with? If not, the nature of such contraventions be stated;
If an order has been passed by Company Law Board or National Company Law Tribunal
or Reserve Bank of India or any court or any other tribunal, whether the same has been
complied with or not?

(vi) whether maintenance of cost records has been specified by the Central Government
under sub-section (1) of section 148 of the Companies Act, 2013 and whether such
accounts and records have been so made and maintained.

Page 1535
 Annexure O12

CARO, 2016

(vii) (a) whether the company is regular in depositing undisputed statutory dues including
provident fund, employees' state insurance, income-tax, sales-tax, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory dues to the
appropriate authorities and if not, the extent of the arrears of outstanding statutory dues
as on the last day of the financial year concerned for a period of more than six months
from the date they became payable, shall be indicated;
(b) where dues of income tax or sales tax or service tax or duty of customs or duty of
excise or value added tax have not been deposited on account of any dispute, then the
amounts involved and the forum where dispute is pending shall be mentioned. (A mere
representation to the concerned Department shall not be treated as a dispute).

(viii) whether the company has defaulted in repayment of loans or borrowing to a financial
institution, bank, Government or dues to debenture holders? If yes, the period and the
amount of default to be reported (in case of defaults to banks, financial institutions, and
Government, lender wise details to be provided).

(ix) whether moneys raised by way of initial public offer or further public offer (including
debt instruments) and term loans were applied for the purposes for which those are
raised. If not, the details together with delays or default and subsequent rectification, if
any, as may be applicable, be reported;

(x) whether any fraud by the company or any fraud on the Company by its officers or
employees has been noticed or reported during the year; If yes, the nature and the
amount involved is to be indicated;

(xi) whether managerial remuneration has been paid or provided in accordance with the
requisite approvals mandated by the provisions of section 197 read with Schedule V to
the Companies Act? If not, state the amount involved and steps taken by the company
for securing refund of the same;

(xii) whether the Nidhi Company has complied with the Net Owned Funds to Deposits in
the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining
ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet
out the liability;

(xiii) whether all transactions with the related parties are in compliance with sections 177
and 188 of Companies Act, 2013 where applicable and the details have been disclosed
in the Financial Statements etc., as required by the applicable accounting standards;

(xiv) whether the company has made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year under review and if so, as
to whether the requirement of section 42 of the Companies Act, 2013 have been complied
with and the amount raised have been used for the purposes for which the funds were
raised. If not, provide the details in respect of the amount involved and nature of non-
compliance;

Page 1536
 Annexure O12

CARO, 2016

(xv) whether the company has entered into any non-cash transactions with directors or
persons connected with him and if so, whether the provisions of section 192 of Companies
Act, 2013 have been complied with;

(xvi) whether the company is required to be registered under section 45-IA of the Reserve
Bank of India Act, 1934 and if so, whether the registration has been obtained.

4. Reasons to be stated for unfavourable or qualified answers.- (1) Where, in the

auditor's report, the answer to any of the questions referred to in paragraph 3 is
unfavourable or qualified, the auditor's report shall also state the basis for such
unfavourable or qualified answer, as the case may be.

(2) Where the auditor is unable to express any opinion on any specified matter, his report
shall indicate such fact together with the reasons as to why it is not possible for him to
give his opinion on the same.

[F. No. 17/45/2015-CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1537
 Annexure O13

Inserted proviso to S.143(11)

Annexure O13: Proviso inserted to section

143(11)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 29th March, 2016

S.O. 1226(E).–Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to
as the said Act) received the assent of the President on 29th August, 2013 and
section 1 thereof came into force on the same date;
And, whereas, the provisions contained in section 143 of the said Act which provides
for powers and duties of auditors and auditing standards has come into force on the
1st April, 2014;
And, whereas, sub-section (11) of section 143 of the said Act provides that the Central
Government may, in consultation with the National Financial Reporting Authority, by
general or special order, direct, in respect of such class or description of companies,
as may be specified in the order, that the auditor’s report shall also include a
statement on such matters as may be specified therein;
And, whereas, section 132 of the said Act, which provides for constitution, functions
etc., of the National Financial Reporting Authority and the National Financial Reporting
Appellate Authority, has not been brought into force and it may take some time to
bring said section into force;
And, whereas, the National Advisory Committee on Accounting Standards, constituted
under section 210A of the Companies Act, 1956 (1 of 1956) provides for advising the
Central Government on the formulation and laying down of accounting policies and
accounting standards for adoption by companies or class of companies;
And, whereas, sub-section (4A) of section 227 of the Companies Act, 1956 (1 of
1956), which corresponds to sub-section (11) of section 143 of the Companies Act,
2013, (18 of 2013) provides that the Central Government may consult the Institute of
Chartered Accountants of India constituted under the Chartered Accountants Act,
1949 (38 of 1949), while issuing order directing that in case of specified class or
description of companies the auditor's report shall include a statement on additional
matters as specified in the order;
And, whereas, the Central Government constituted a Committee chaired by the Joint
Secretary or Regional Director, Ministry of Corporate Affairs and representatives from
the Institute of Chartered Accountants of India and Industry Chambers and National
Advisory Committee on Accounting Standards, Chairman and representative from the
Office of the Comptroller and Auditor-General, as special invitees to hold consultation
required under sub-section (11) of section 143 of the Companies Act, 2013;
And, whereas, the Central Government, on the basis of recommendations of the said
Committee, has issued the Companies (Auditor’s Report) Order, 2015 on 10th April,
2015 for financial year 2015-16 vide notification number S.O.990 (E) dated the 10th
April, 2015 published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-

Page 1538
 Annexure O13

Inserted proviso to S.143(11)

section (ii) and proposes to issue similar Order to be applicable from the financial year
2015-16 onwards;
And, whereas, difficulties have arisen regarding compliance with the provisions of sub-
section (11) of section 143, in so far as they relate to consultation with National Financial
Reporting Authority till the period it is duly constituted under section 132 of the
Companies Act, 2013;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the above said difficulties, namely:-

1. Short title and commencement.-

(1) This Order may be called the Companies (Removal of Difficulties) Order, 2016.
(2) It shall be deemed to have come into force from the 10th April, 2015.

2. In the Companies Act, 2013, in section 143, in sub-section (11), the following proviso
shall be inserted, namely:-
“Provided that until the National Financial Reporting Authority is constituted under
section 132, the Central Government may hold consultation required under this sub-
section with the Committee chaired by an officer of the rank of Joint Secretary or
equivalent in the Ministry of Corporate Affairs and the Committee shall have the
representatives from the Institute of Chartered Accountants of India and Industry
Chambers and also special invitees from the National Advisory Committee on
Accounting Standards and the office of the Comptroller and Auditor-General”.
[F. No. 17/45/2015-CL-V]

Page 1539
 Annexure O14

Proviso inserted to Section 133

Annexure O14: Proviso inserted to section 133

MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 29th March, 2016
S.O. 1227(E).–Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to as
the said Act) received the assent of the President on 29th August, 2013 and section 1
thereof came into force on the same date;
And, whereas, section 133 provides that the Central Government may prescribe the
standards of accounting or any addendum thereto, as recommended by the Institute of
Chartered Accountants of India, constituted under section 3 of the Chartered Accountants
Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations
made by the National Financial Reporting Authority;

And, whereas, section 133 of the said Act, has come into force with effect from 12th
September, 2013;

And, whereas, section 132 of the said Act, which provides for constitution, functions etc.
of the National Financial Reporting Authority and National Financial Reporting Appellate
Authority, has not been brought into force and it may take some time to bring said section
into force;

And, whereas, the National Advisory Committee on Accounting Standards, constituted

under section 210A of the Companies Act, 1956 provides for advising the Central
Government on the formulation and laying down of accounting policies and accounting
standards for adoption by companies or class of companies;

And, whereas, sub-section (3C) of section 211 of the Companies Act, 1956 (1 of 1956)
which corresponds to section 133 of the Companies Act, 2013 (18 of 2013) provides that
the expression “accounting standards” means the standards of accounting recommended
by the Institute of Chartered Accountants of India constituted under the Chartered
Accountants Act, 1949 (38 of 1949), as may be prescribed by the Central Government in
consultation with the National Advisory Committee on Accounting Standards established
under sub-section (1) of section 210A;

And, whereas, difficulties have arisen regarding compliance with the provisions of section
133 in so far as they relate to consultation with National Financial Reporting Authority till
the period it is duly constituted under section 132 of the said Act;

And, whereas, on the basis of the recommendations of the National Advisory Committee
on Accounting Standards, the Central Government issued the Companies (Indian
Accounting Standards) Rules, 2015 with effect from 1st April, 2015 vide notification
number G.S.R. 111(E) dated the 16th February, 2015 published in the Gazette in India,

Page 1540
 Annexure O14

Proviso inserted to Section 133

Extraordinary, Part-II, Section 3, Sub-section (i) dated the 19th February, 2015;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the above said difficulties, namely:-

1. Short title and commencement.- (1) This Order may be called the Companies (Removal
of Difficulties) Second Order, 2016.
(2) It shall be deemed to have come into force from the 1st April, 2015.

2. In section 133 of the Companies Act, 2013 (herein after referred to as the said Act),
the following proviso shall be inserted, namely:-

“Provided that until the National Financial Reporting Authority is constituted under section
132 of the Companies Act, 2013 (18 of 2013), the Central Government may prescribe the
standards of accounting or any addendum thereto, as recommended by the Institute of
Chartered Accountants of India, constituted under section 3 of the Chartered Accountants
Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations
made by National Advisory Committee on Accounting Standards constituted under
section 210 A of the Companies Act, 1956”.

[F. No. 17/45/2015-CL-V]

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1541
 Annexure O15

Third proviso to section 139(2) substituted

Annexure O15: Third proviso to Section

139(2) substituted
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 29th March, 2016

S.O. 2264(E).--Whereas, the Companies Act, 2013 (18 of 2013) (hereinafter referred
to as the said Act) received the assent of the President on 29th August, 2013 and
section 1 thereof came into force on the same date;

And, whereas, the provisions contained in section 139, which provides for appointment
of auditors has come into force on the 1st April, 2014;

And, whereas, sub-section (2) of section 139 of the said Act provides that no listed
company and the prescribed class of companies shall appoint or re-appoint-

(a) an individual as auditor for more than one term of five consecutive years;
and

(b) an audit firm as auditor for more than two terms of five consecutive years;

And, whereas, first proviso to sub-section (2) provides for period for which the
individual auditor or audit firm who or which have completed term provided under such
sub-section shall not be eligible for re-appointment as auditor in the same company;

And, whereas, the third proviso to sub-section (2) provides that every company,
existing on or before the commencement of this Act which is required to comply with
provisions of sub-section (2) shall comply with the requirements of such sub-section
within three years from the date of commencement of the said Act;

And, whereas, as per provisions of sub-section (1) of section 139, the companies are
required to appoint auditor at the annual general meeting who shall hold office from
the conclusion of that meeting till the conclusion of sixth annual general meeting;

And, whereas, difficulties have arisen regarding compliance with the provisions of third
proviso to sub-section (2) of section 139 in so far as they relate to the period within
which companies would comply with provisions of sub-section (2) of section 139 of the
said Act;

Page 1542
 Annexure O15

Third proviso to section 139(2) substituted

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470
of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the above said difficulties, namely:-

1. Short title and commencement.-

(1) This Order may be called the Companies (Removal of Difficulties) Third
Order, 2016.

(2) It shall be deemed to have come into force from 1st April, 2014.

2. In the Companies Act, 2013, in section 139, in sub-section (2), for the third proviso,
the following proviso shall be substituted, namely:-

"Provided also that every company, existing on or before the commencement

of this Act which is required to comply with the provisions of this sub-section,
shall comply with requirements of this sub-section within a period which shall
not be later than the date of the first annual general meeting of the company
held, within the period specified under sub-section (1) of section 96, after three
years from the date of commencement of this Act.".

AMARDEEP SINGH BHATIA, Jt. Secy.

Page 1543
 Annexure O16

Provisos to Se. 434(1)(c)

Annexure O16: Provisos inserted to

Section 434(1)(c)
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 7th December, 2016

S.O. 3676(E).—Whereas clause (c) of sub-section (1) of section 434 of the Companies
Act, 2013 (hereinafter referred to as the 2013 Act) provides that on a date which may be
notified by the Central Government for the purpose of transfer of pending proceedings,
all proceedings under the Companies Act, 1956 (hereinafter referred to as the 1956 Act)
including proceedings relating to arbitration, compromise, arrangements and
reconstruction and winding up of companies, pending immediately before such date
before any District Court or High Court, shall stand transferred to the Tribunal and the
Tribunal may proceed to deal with such proceedings from the stage before their transfer;

And, whereas, the proviso thereof further provides that only such proceedings relating to
the winding up of companies shall be transferred to the Tribunal that are at a stage as
may be prescribed by the Central Government;

And, whereas, clause (c) of sub-section (1) of section 434 of the 2013 Act shall come into
force from the 15th December, 2016;

And, whereas, provisions of sections 6 to 32, 60 to 67 of the Insolvency and Bankruptcy

Code, 2016 (hereinafter referred to as the Code) have been brought into force on 1st
December, 2016 and sections 33 to 54 of the Code and the provisions of Chapter XV and
Chapter XX of the 2013 Act shall be notified to come into force from 15th December,
2016;

And, whereas, it has been decided that (i) proceedings under the 1956 Act with High
Courts on all cases other than winding-up as on 15th December, 2016 shall stand
transferred to the Benches of the Tribunals exercising respective territorial jurisdiction and
(ii) all cases of winding up under the 1956 Act which are pending before the High Courts
as on 15th December, 2016 and wherein petitions have not been served to the
respondents as per rule 26 of Companies (Court) Rules, 1959 shall be transferred to
Tribunal, and all remaining cases of winding up pending on that date would continue
with the respective High Courts;

And, whereas, difficulties have arisen regarding continuation of provisions of the 1956 Act
for (i) those proceedings relating to cases other than winding-up that are reserved for
orders for allowing or otherwise and (ii) those winding up cases which would not be

Page 1544
 Annexure O16

Provisos to Se. 434(1)(c)

transferred to Tribunal and be proceeded with by High Courts on account of

commencement of the corresponding provisions under the 2013 Act or under the Code;

And, whereas, difficulties have also arisen regarding transfer of proceedings relating to
cases other than winding-up where hearings have been completed and only
pronouncement of order is pending or is reserved since their transfer to Tribunal may
result into delay and rights of parties to the proceedings are likely to be affected
prejudicially;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following Order to remove the above said difficulties, namely:-

1. Short title and commencement.- (1) This Order may be called the Companies
(Removal of Difficulties) Fourth Order, 2016.
(2) It shall come into force with effect from the 15th December, 2016.

2. In the Companies Act, 2013, in Section 434, in sub-section (1), in clause (c), after the
proviso, the following provisos shall be inserted, namely:-
“Provided further that only such proceedings relating to cases other than winding-up, for
which orders for allowing or otherwise of the proceedings are not reserved by the High
Courts shall be transferred to the Tribunal:
Provided further that –
(i) all proceedings under the Companies Act, 1956 other than the cases relating to
winding up of companies that are reserved for orders for allowing or otherwise
such proceedings; or
(ii) the proceedings relating to winding up of companies which have not been
transferred from the High Courts;
shall be dealt with in accordance with provisions of the Companies Act, 1956 and the
Companies (Court) Rules, 1959”.
[F. No. 16/61/2016-Legal]

Page 1545
 Annexure O17

Half yearly return on MSME

Annexure O17: Half yearly return on

MSME
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 22nd January, 2019

S.O. 368(E).—Whereas, the Central Government vide notification number S.O. 5622(E),
dated the 2nd November, 2018 has directed that all companies, who get supplies of goods
or services from micro and small enterprises and whose payments to micro and small
enterprise suppliers exceed forty five days from the date of acceptance or the date of
deemed acceptance of the goods or services as per the provisions of section 9 of the
Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) (hereafter
referred to as “Specified Companies”), shall submit a half yearly return to the Ministry of
Corporate Affairs stating the following:
(a) the amount of payment due; and
(b) the reasons of the delay;

And whereas, in exercise of power under section 405 of the Companies Act, 2013, (18 of
2013) the Central Government, considers it necessary to require “Specified Companies”
to furnish above
information under said section of the Act.

Now, therefore, in exercise of the powers conferred by section 405 of the Companies Act,
2013 (18 of 2013), the Central Government hereby makes the following Order, namely:-

1. Short title and commencement.- (1) This Order may be called the Specified
Companies (Furnishing of information about payment to micro and small enterprise
suppliers) Order, 2019.
(2) It shall come into force from the date of its publication in the Official Gazette.

2. Every specified company shall file in MSME Form I details of all outstanding dues to
Micro or small enterprises suppliers existing on the date of notification of this order within
thirty days from the date of publication of this notification.

3. Every specified company shall file a return as per MSME Form I annexed to this Order,
by 31st October for the period from April to September and by 30th April for the period
from October to March.

Page 1546
 Annexure C1

Circular 15/2013 ss.2(68), 102, 133 and 180

CIRCULARS
Annexure C1: Circular 15/2013 – Ss.
2(68), 102, 133 and 180
General Circular No.15/2013
F.No. 01/12/2013-CL-V
Government of India
Ministry of Corporate Affairs
5thFloor,'A'Wing,
Shastri Bhawan,
Dr. Rajendra PrasadRoad,
New Delhi-1
Dated 13.09.2013
To
All Regional Directors,
All Registrar of Companies.
Subject:Clarification on the notification dated 12.9.2013.
Sir,

The Companies Act 2013 received the assent of the President on 29th August, 2013
and was notified in the Gazette of India on 30rh August, 2013. Towards the proper
implementation of the Companies Act 2013, first tranche of Draft Rules on 16 chapters
have been placed on the website of the Ministry on 9.9.2013 for inviting comments
objections/suggestions from the general public/stakeholders. Of the 16 Chapters, only
13 Chapters require specifying of Forms referred to in those chapters. The draft Forms
shall be placed on the website shortly.

2. Ministry of corporate Affairs has also notified 98 sections for implementation of the
provisions of the Companies Act, 2013 (the “said Act”) on 12.9.2013. Certain difficulties
have been expressed by the stakeholders in the implementation of following provisions
of the said Act. With a view to facilitate proper administration of the said Act, it is clarified
that –
(i) Sub-section (68) of section 2:- Registrar of Companies may register those
Memorandum and Articles of Association received till 11.9.2013 as per the definition
clause of the ‘private company’ under the Companies Act 1956 without referring to the
definition of ‘private company' under the "said Act”.
(ii) Section 102:- All companies which have issued notices of general meeting on or
after 12.9.2013, the statement to be annexed to the shall comply with additional
requirements as prescribed in section 102 of the “said Act”.
(iii) Section 133:- Till the Standards of Accounting or any addendum thereto are
prescribed by Central Government in consultation and recommendation of the National

Page 1547
 Annexure C1

Circular 15/2013 ss.2(68), 102, 133 and 180

Financial Reporting Authority, the existing Accounting Standards notified under the
Companies Act, 1956 shall continue to apply.
(iv) section 180:- In respect of requirements of special resolution under Section 180 of
the “said Act” as against ordinary resolution required by the Companies Act 1956, if
notice for any such general meeting was issued prior to 12.9.2013, then such resolution
may be passed in accordance with the requirement of the Companies Act 1956.
3. This issues with the approval of competent authority.

Page 1548
 Annexure C2

Circular 16/2013

Annexure C2: Circular 16/2013 – CA 1956

correspond to 98 provisions, cease to
have effect
Circular No. 16 /2013
F. No.01/12/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing, Shastri
Bhawan, Dr.Rajendra Prasad
Road, New Delhi-1
Dated 18.09.2013
To
All Regional Directors,
All Registrar of Companies.

Subject: Clarification on the notification dated 12.9.2013.

Sir,

This Ministry had issued a notification on 12.09.2013 bringing into force

to 98 sections or part thereof of the Companies Act, 2013. The said
notification is available on the Ministry's website. This Ministry has been
receiving requests for clarification as to whether the provisions of the
Companies Act, 1956 corresponding to such 98 sections would continue to
apply or not.

It is hereby clarified that with effect from 12.09.2013, the relevant

provisions of the Companies Act, 1956, which correspond to provisions of 98
sections of the Companies Act, 2013 brought into force on 12.09.2013, cease to
have effect from that date.
This issues with the approval of competent authority.

Page 1549
 Annexure C3

Circular 18/2013 on sec.186

Annexure C3: Circular 18/2013 – on

Sec.186
Circular No. 18/2013
No. 17/202/2013-CL-V
Government of India
Ministry of Corporate Affairs
Shastri Bhawan,
5th Floor, IA' Wing,
Dr. Rajendra Prasad Road,
New Delhi 110001
Dated 11.11.2013
To
All Registrar of Companies
All Regional Director

Sub: - Clarification with regard to applicability of provision of

Section 372A of the Companies Act, 1956.

Sir,

This Ministry has received number of representations consequent

upon notifying Section 185 of the Companies Act, 2013 dealing with loans
to directors which is corresponding to Section 295 of the Companies Act,
1956. Section 186 of the Companies Act, 2013 is yet to be notified.
It is clarified that Section 372A of the Companies Act, 1956 dealing
with
inter-corporate loans continue to remain in force till section 186 of the
Companies
Act, 2013 is notified.

This issues with the approval of competent authority

Yours faithfully,

(Kamna Sharma)
Assistant Director

Page 1550
 Annexure C4

Circular 20/2013 on sec.182(3)

Annexure C4: Circular 19/2013 – on

Sec.182(3)
Circular no. 19/2013
No. 17/27/2O13-CL-V
Government of India
Ministry of Corporate Affairs

Shastri Bhawan, 5th Floor, 'A' Wing,

Dr. Rajendra Prasad Road,
New Delhi 110001
Dated 10.12.2013
To
All Registrar of Companies
All Regional Director

Sub:- Clarification with regard to applicability of section 182(3) of the Companies Act,
2013.

Sir,
Ministry has received representations seeking clarification on disclosures to be made
under section 182 of the Companies Act, 2013. The same have been examined. With
the coming into force of the scheme relating to 'Electoral Trust Companies' in terms of
section (24AA) of the Income Tax Act, 1961 read with Ministry of Finance Notification
number S.O.309(E) dated 31st January, 2013 it will be expedient to explain the
requirements of disclosure on part of a company of any amount or amounts contributed
by it to any political parties under section 182(3) of the Companies Act, 2013.

It is hereby clarified as under;

(i) Companies contributing any amount or amounts to an ‘Electoral Trust Company' for
contributing to a political party or parties are not required to make disclosures required
under section 182(3) of Companies Act 2013. It will suffice if the Accounts of the
company disclose the amount released to an Electoral Trust Company.

(ii) Companies contributing any amount or amounts directly to a political party or parties
will be required to make the disclosures laid down in section 182(3) of the Companies
Act, 2013.

(iii) Electoral Trust Companies will be required to disclose all amounts received by them
from other companies/sources in their Books of Accounts and also disclose the amount
or amounts contributed by them to a political party or parties as required by section
182(3) of Companies Act, 2013.

Page 1551
 Annexure C5

Circular 20/2013 on sec. 2(87)

Annexure C5: Circular 20/2013 – on

Sec.2(87)
General Circular No.20/2013

No.1/12/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R.P. Road. New Delhi-110001
Dated: 27th December. 2013.
To
All Registrar of Companies,
All Regional Directors.

Subject: - Clarification with regard to holding of shares or exercising power in a

fiduciary capacity - Holding and Subsidiary relationship under Section 2(87) of the
Companies Act, 2013.

Sir,
This Ministry has received a number of representations consequent upon
notifying section 2(87) of the Companies Act, 2013 which defines "subsidiary company"
or "subsidiary". The stakeholders have requested this Ministry to clarify whether shares
held or power exercisable by a company in a 'fiduciary capacity' will be excluded while
determining if a particular company is a subsidiary of another company. The
stakeholders have further pointed out that in terms of section 4(3) of the Companies
Act, 1956, such shares or powers were excluded from the purview of holding-subsidiary
relationship.

2. The matter has been examined in the Ministry and it is hereby clarified that the shares
held by a company or power exercisable by it in another company in a 'fiduciary
capacity' shall not be counted for the purpose of determining the holding-subsidiary
relationship in terms of the provision of section 2(87) of the Companies Act, 2013.

3. This issues with the approval of competent authority.

[It is clarified that the shares held by a company in another company in a 'fiduciary capacity'
shall not be counted for the purpose of determining the relationship of 'associate company'.
Refer Circular 24/2014 dated 25 June 2014.]

Page 1552
 Annexure C6

Circular 1/2014 on S. 394A of the Companies Act, 1956

Annexure C6: Circular 1/2014 – on S.

394A of the Companies Act, 1956
General Circular No. 1/2014
F. No. 2/1/2014
Ministry of Corporate Affairs
Government of India
5th Floor, A Wing, Shastri Bhawan, Dr.
R.P. Road, New Delhi,
15th January 2014.
To,
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Report u/s 394A of the Companies Act, 1956- Taking accounts of
comments/inputs from Income Tax Department and other sectoral
Regulators while filing reports by RDs.
Sir,
Section 394A of the Companies Act, 1956 requires service of a notice on the
Central Government wherever cases involving arrangement/compromise (under Section
391) or reconstruction / amalgamation (under Section 394) come up before the Court of
competent jurisdiction. As the powers of the Central Government have been delegated to
the Regional Directors (RDs) who also file representations on behalf of the Government
wherever necessary.

2. It is to be noted that the said provisions is in addition to the requirement of the report to be
received respectively from the Registrar of Companies and the Official Liquidator under the
first and second provisos to Section 394(1). A joint reading of Sections 394 and 394A makes
it clear that the duties to be performed by the Registrar and Official Liquidator under Section
394 and of the Regional Director concerned acting on behalf of the Central Government
under Section 394A are quite different.

3. An instance has recently come to light wherein a Regional Director did not project the
objections of the Income Tax Department in a case under Section394. The matter has
been examined and it is decided that while responding to notices on behalf of the Central
Government under Section 394A, the Regional Director concerned shall invite specific
comments from Income Tax Department within 15 days of receipt of notice before filing his
response to the Court. If no response from the Income Tax Department is forthcoming, it
may be presumed that the Income Tax Department has no objection to the action proposed
under Section 391 or 394 as the case may be. The Regional Directors must also see if in a

Page 1553
 Annexure C6

Circular 1/2014 on S. 394A of the Companies Act, 1956

particular case feedback from any other sectoral Regulator is to be obtained and if it
appears necessary for him to obtain such feedback, it will also be dealt with in a like manner.

4. It is also emphasized that it is not for the Regional Director to decide correctness or
otherwise of the objections/views of the Income tax Department or other Regulators.
While ordinarily such views should be projected by the Regional Director in his
representation, if there are compelling reasons for doubting the correctness of such
views, the Regional Director must make a reference to this Ministry for taking up the
matter with the Ministry concerned before filing the representation under Section 394A.

5. This Circular is effective from the date of issue.

Yours Faithfully,
(Vinod Sharma)
Deputy Director
Ph: 23385382

Page 1554
 Annexure C7

Circular 2/2014 on word ‘National’ or ‘Bank’ in name

Annexure C7: Circular 2/2014 – on word

‘National’ or ‘Bank’ in name
[Also refer Circular 26/2014 dated 27 June 2014 for words ‘National’ or ‘Bank’ in name
and Circular 29/2014 dated 11 July 2014 on Emblems and Names (Prevention of
Improper Use) Act, 1950.]
[Refer rule 8A (1)(p) of the Companies (Incorporation) Rules, 2014]
Circular No 2 / 2014
F No. 2/2/2014 — C L -V
Government of India
Ministry of Corporate Affairs

5th Floor 'A' Wing, Shastri Bhawan,

Dr RP Road, New Delhi — 110 001.
Dated the 11th February, 2014
To,
All Regional Directors,
All Registrar of Companies,
All Stakeholders

Sub:- Use of word 'National' in the names of Companies or Limited Liability

Partnerships (LLPs) .

Sir,
It has come to the knowledge of this Ministry that Companies / Limited
Liability Partnerships are being registered with the word 'National' in their names.
It is being intimated that no company should be allowed to be registered with the
word 'National' as part of its title unless it is a government company and the Central
/ State government(s) has a stake in it. This should be stringently enforced by all
Registrar of Companies (ROCs) while registering companies. Similarly, the word
'Bank' may be allowed in the name of an entity only when such entity produces a
'No Objection Certificate' from the RBI in this regard.

By the same analogy the word "Stock Exchange" or "Exchange" should be

allowed in name of a company only where 'No Objection Certificate' from SEBI in this
regard is produced by the Promoters.
Kamna Sharma
(Assistant Director)
23387263

Page 1555
 Annexure C8

Circular 03/2014 on Sec.185

Annexure C8: Circular 03/2014 – on

Sec.185
General Circular No.03/2014
No.1/12/2013 CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R.P. Road. New Delhi-110001
Dated:- 14/2/2014.
To
All Registrar of Companies,
All Regional Directors.
All Stakeholders

Subject: Clarification with regard to Section 185 of the Companies Act, 2013.

Sir,

This Ministry has received number of representations on the applicability of Section 185
of the Companies Act, 2013 with reference Io loans made, guarantee given or security
provided under Section 372A of the Companies Act, 1956. The issue has been
examined with reference to applicability of Section 372A of the Companies Act, 1956
vis-a-vis Section 185 of the Companies Act, 2013. Section 372A of the Companies Act,
1956, specifically exempts any loans mode, any guarantee given or security provided
or any investment mode by a holding company to its wholly owned subsidiary. Whereas,
Section 185 of the Companies Act, 2013 prohibits guarantee given or any security
provided by holding company in respect of any loon taken by its subsidiary company
except in the ordinary course of business.

2. In order to maintain harmony with regard to applicability of Section 372A of the

Companies Act, 1956 till the same is repealed and Section 185 of the Companies Act,
2013 is notified, it is hereby clarified that any guarantee given or security provided by a
holding company in respect of loans made by a bank or financial institution to its
subsidiary company, exemption as provided in clause (d) of sub-section (8) of section
372A of the Companies Act, 1956 shall be applicable till section 186 of the Companies
Act, 2013 is notified. This clarification will, however, be applicable to cases where loans
so obtained are exclusively utilized by the subsidiary for its principal business activities.

Page 1556
 Annexure C9

Circular 04/2014 on sec.180

Annexure C9: Circular 04/2014 – on

Sec.180
General Circular no. 04 /2014

No. 1/32/20I3- CL V (Pt. File)

Government of India
Ministry of Corporate Affairs

5th Floor, 'A'Wing, Shastri Bhavan,

Dr. R P Road, New Delhi-l10001.
Dated:25/03/2014
To
All Regional Directors,
All Registrar of Companies,
All the Stakeholders,

Subject: Clarification with regard to section 180 of the Companies Act, 2013.

Sir,

This Ministry has received many representations regarding various difficulties arising
out of implementation of section 180 of the Companies Act, 2013 with reference to
borrowings and/or creation of security, based on the basis of ordinary resolution. The
matter has been examined in the Ministry and it is hereby clarified that the resolution
passed under section 293 of the Companies Act, 1956 prior to 12.09.2013 with
reference to borrowings (subject to the limits prescribed) and / or creation of security on
assets of the company will be regarded as sufficient compliance of the requirements of
section 180 of the Companies Act, 2013 for a period of one year from the date of
notification of section 180 of the Act.
Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)
Ph. No. 23387263
Copy to: Guard file.

Page 1557
 Annexure C10

Circular 05/2014 on Certified copies

Annexure C10: Circular 05/2014 – on

Certified Copies
[refer section 399 (1) (b)]
General Circular No.05/2014

No. HQ/7/2002-Computerisation
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi-110001
Dated 28th March, 2014
To
All Regional Directors
All Registrar of Companies
All Stakeholders

Sub: Online payment of stamp duty and court fee stamp for issue of certified
copies.

The Ministry has reviewed the process of issue of certified copies of the
documents filed with the Registrar of companies. As per the existing process, in
case a User applies for the certified true copy of any document, he needs to pay
MCA fee online at MCA portal. The fee is computed based on the number of
documents required.
2. Once the selection of documents is done and the requisite MCA fee is
paid, the Stakeholder is required to approach the jurisdictional ROC along with the
application and the acknowledgement of the fee paid. The application needs to be
filed along with Stamp Papers of requisite value and the Court Fee stamp attached
to the same. The amount of Stamp Duty as well as Court Fee varies from State to
State. On receipt of the application, the respective ROC affix the certified
documents on the Stamp paper and returns the same to the Stakeholder (Applicant)
duly certified.
3. With a view to identify and improve the component causing delay in issue
of certified copy the Ministry has enabled payment of Stamp Duty as well as Court
Fee online through MCA portal. This would enable the respective ROCs to send
the certified documents without awaiting for physical stamp papers and any formal
application (with Court Fee Stamp) in this regard.
4. Amount of Court Fee shall be added to the MCA fee calculated by the system
for getting Certified Copies. This would be based on the State in which the registered
office of the company is situated. Court Fee would be added per SRN irrespective of
number of documents applied for.

Page 1558
 Annexure C10

Circular 05/2014 on Certified copies

5. Stamp duty for obtaining certified true copy would also be paid electronically
through the system as per the existing process. The Stamp Duty would be calculated
based on document, number of copies requested and the State wherein the registered
office of the company is situated. Separate SRN will be generated for payment of
Stamp Duty.
6. After the application is completely processed; an acknowledgement for
stamp duty payment shall be generated separately. The same to be appended to the
certified copy of the document. The certified copy of the documents requested shall
be sent to the stakeholder by the jurisdictional Registrar of Companies within 15 days
by post. The Copies would be sent at the address of applicant mentioned in the
challan.
7. The Registrar of company shall ensure that the corresponding amount of
court fee stamp is pasted against the record of despatch of certified copy or the print
out of the challan for payment of MCA fee. The court fee stamp paid by ROC will be
booked as Office expenses.
8. The Circular shall be effective from 31.03.2014.
Yours faithfully
(Shyam Sunder)
Deputy Director

Page 1559
 Annexure C11

Circular 06/2014 on forms roll out

Annexure C11: Circular 06/2014 dated 28

March 2014 – on forms roll out plan of
new e-forms and continuation of e-forms
under Companies Act 1956
[For Form No. MGT-10, also refer Circular 17/2014 dated 11 June 2014]
General Circular no. 6/2014
F. No:-MCA21/28/2014
Ministry of Corporate Affairs
Government of India
‘A’ Wing, 5th Floor, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-11001
Date: - 29/03/2014
To,
All Regional Director
All Registrars of Companies

Sub: - Roll out plan of various forms under the Companies Act, 2013 and
continuance of forms under the provisions of Companies Act, 1956

Sir,
I am directed to inform that this Ministry has notified 183 additional sections in addition
to 99 sections earlier notified under the provisions of Companies Act, 2013. In this
regard a Notification related to commencement of Companies Act, 2013 has been
issued on 25/03/2014 which is available on the website of the Ministry.

2. In order to facilitate the completion of notified sections this Ministry has planned a
staggered roll out of various forms. It has been decided to waive fees for all event based
filing whose due date falls between 01/04/2014 to 30/04/2014. For the same, a
separate Circular is being issued by the Policy Cell of this Ministry.

3. From 01/04/2014 to 14/04/2014 except existing e-forms mentioned in Table “A” no

other e-forms will be available for filing. Other Front office portal services will continue.
From 01/04/2014 to 13/04/2014 the period will be used for clearing pending e-forms
already filed under the provisions of Companies Act, 1956.
Table “A”
S. No. Old Purpose of form
form

Page 1560
 Annexure C11

Circular 06/2014 on forms roll out

1 66 Form for submission of compliance certificate with the Registrar

2 14LLP Form for intimating to Registrar of Companies of

conversion of the company into limited liability
partnership (LLP).
3 20B Form for filing annual return by a company having a
share capital with the Registrar
4 21A Particulars of annual return for the company not having
share capital
5 23AC Form for filing balance sheet and other documents with
the Registrar
6 23ACA Form for filing Profit and Loss account and other
documents with the Registrar
7 23ACA- Form for filing XBRL document in respect of Profit and Loss
XBRL account and other documents with the Registrar
8 23AC- Form for filing XBRL document in respect of balance sheet
XBRL and other documents with the Registrar
9 23C Form of application to the Central Government for
appointment of cost auditor
10 23D Form for Information by Cost Auditor to Central
Government
11 35A Information to be furnished in relation to any offer of a
scheme or contract involving the transfer of shares or any
class of shares in the transferor company to the transferee
company
12 A-XBRL Form for filing XBRL document in respect of compliance
report and other documents with the Central Government
13 FTE Application for striking off the name of company under the Fast
Track Exit(FTE) Mode
14 I-XBRL Form for filing XBRL document in respect of cost audit
report and other documents with the Central Government
15 5-INV Transfer unpaid dividend amount to IEPF
16 21 Order of the court/authority till 14/04/2014

4. in addition to above, e-forms mentioned in Table “B” will also be available for filing
Table “B”
S. No. Old form Purpose of form
1 Refund Application for requesting refund of fees paid

Page 1561
 Annexure C11

Circular 06/2014 on forms roll out

2 BankACC Application for simplifying bank account opening process

as user shall not be required to submit any physical
application form.
3 Investor Form for filing complaint(s) against the company
Complaint
Form

5. From 14/04/2014, 39 new e-forms mentioned in Table “C” will be available on MCA
portal for upload. Test version of these forms will be available from 28/03/2014 onwards.
Final forms will be available from 14/04/2014.
Table “C”
S. No. New form Purpose of form Old form
no.
1 INC-1 Application for reservation of name 1A
2 INC-2 OPC- Application for Incorporation New form
3 INC-3 OPC- Nominee consent form New form
4 INC-4 OPC- Change in Member/Nominee New form
5 INC-5 OPC- Intimation of cessation New form
6 INC-6 OPC- Application for Conversion New form
7 INC-7 Incorporation of Co. (Other than OPC) 1
8 INC-18 Application to Regional director for conversion of New form
section 8 co. into any other kind of co.

9 INC-20 Intimation to Registrar of revocation/surrender of New form

license issued u/s 8
10 INC-21 Application for commencement of business 19, 20
11 INC-22 Notice for situation or change of situation of 18
registered office
12 INC-23 Application to Regional director for approval to 1AD,
shift the registered office from one state to 24AAA
another state or from jurisdiction of one registrar
to another within the state
13 INC-24 Application for change of name 1B
14 INC-27 Conversion form Pvt. To public or vice-versa 1B, 62
15 INC-28 Notice of order of the Court or Tribunal or any 21
16 PAS-3 other
Returncompetent authority
of allotment 2
17 SH-7 Notice to Registrar for alteration of share capital 5
18 SH-8 letter of offer New form
19 SH-11 Return in respect of buy back of securities 4C
20 CHG-1 Application for registration of creation or 8
modification of charge (other than debentures)

Page 1562
 Annexure C11

Circular 06/2014 on forms roll out

S. No. New form Purpose of form Old form

no.
21 CHG-4 Particulars of satisfaction of charge 17
22 CHG-6 Notice of appointment or cessation of receiver or 15
manager
23 CHG-9 Application for registration of creation or 10
modification of charge in case of debentures
24 MGT-14 Filing of Resolutions and agreements to the 23
Registrar under section 117
25 DIR-3 Application for allotment of Director Identification DIN1
26 DIR-5 Number of change in particulars of Director to
Intimation DIN4
be given to the Central Government
27 DIR-7 Notice of resignation of a director to the Registrar New form
28 DIR-8 Particulars of appointment of directors and the 32, 32AD
key managerial personnel and the changes
29 MR-1 among them
Return of appointment of managing director or 25C
whole time director or manager
30 MR-2 Form of application to the Central Government 25A
for approval of appointment or reappointment
and remuneration or increase in remuneration or
waiver for excess or over payment to managing
director or whole time director or manager and
commission or remuneration to directors
31 URC-1 Application by a company for registration under 37, 39
section 366
32 FC-1 Information to be filed by foreign company 44
33 FC-2 Return of alteration in the documents filed for 49, 52
registration by foreign company
34 FC-3 List of all principal places of business in India 52
35 FC-4 established
Annual Return by foreign company PTII
36 ADJ Memorandum of Appeal New form
37 MSC-1 Application to ROC for obtaining the status of New form
dormant company
38 MSC-3 Return of dormant companies New form
39 MSC-4 Application for seeking status of active company New form

6. There are 5 general e-forms and 2 e-forms mentioned in Table “D” will be available
for filing w.e.f. 28/04/2014 will be available for filing 24 notified forms/events which will
be made available for individual e-filing at a later date, can be attached with these 7 e-

Page 1563
 Annexure C11

Circular 06/2014 on forms roll out

forms and filed. Details of physical forms allowed to be filed along with general e-forms
are attached with this Circular.
Table “D”
S. No. New Purpose of form Old
form no. form
1 GNL-1 Form for filing an application with Registrar 61
of Companies
2 GNL-2 Form for submission of documents with 62
Registrar of Companies
3 CG-1 Form for filing application or documents with 65
Central Government
4 GNL-3 Particulars of person(s) or director(s) or 1AA
changed or specified for the purpose of
section 2(60)
5 MGT-6 Form of return to be filed with the Registrar 22B
6 RD-1 Form for filing application to Regional 24A
Director
7 RD-2 Form for filing petitions to Central 24AAA
Government (Regional Director)

7. In view of above, you are requested to give wide publicity of the circular for
dissemination of information.
This issued with the approval of the competent authority.
Yours Faithfully
Encl:- As above
(Sanjay Kumar Gupta)
Deputy Director
23384657
Copy to
1. PPS to CAM
2. PPS to Secretary
3. PPS to Additional Secretary
4. PPS to JS(R), JS(M), JS(B), JS(P)
5. PPS to DII(UCN), DII(BNH)
6. Dir(AK),DIR(AB),DIR(NC)

Page 1564
 Annexure C11

Circular 06/2014 on forms roll out

S. Number Numbe Purpose of filing Section Chapter Remarks

No. of the r of the under number
form form which
under under the
the old the form is
Act new required
Act to be
filed
(CA'13)
1 Application for 441 28 Radio button
Compounding of active in new
offences Form GNL-1
2 Application for Extension of 96 8 Radio button
period of annual general active in new
meeting by three months Form GNL-1
3 61 GNL-1 Application for Extending the 132 9 Radio button
period of annual accounts active in new
upto eighteen months under Form GNL-1
section 210(4) for earlier
4 Application for Declaring a 248, 28 years button
Radio
defunct company 252 active in new
Form GNL-1
for earlier
5 Application for Scheme of 232 15 years button
Radio
arrangement, amalgamation active in new
Form GNL-1
6 Application for Normalising a 455 29 Radio button
dormant company active in new
Form GNL-1
for earlier
7 Application - Others No No years
Radio button
Section Section active in new
Form GNL-1
8 Statement in lieu of Deleted Deleted No provision
prospectus as per schedule exists in new
IV act. Hence
62 GNL-2 option is
disabled in
new form
GNL-2 (62)
9 Prospectus 26(4) 3 Radio button
active in new
Form GNL-2
10 Return of Deposits 76 5 Radio button
active in new
Form GNL-2
11 Form SH-9: Declaration of 68(6) 4 Radio button
Solvency active in new
Form GNL-2

Page 1565
 Annexure C11

Circular 06/2014 on forms roll out

S. Number Numbe Purpose of filing Section Chapter Remarks

No. of the r of the under number
form form which
under under the
the old the form is
Act new required
Act to be
filed
(CA'13)
12 Filing Final Statement of As per As per Radio button
Account of winding up - old rules old active in new
Form 156 and act. rules Form GNL-2
and act.
13 Liquidator's statement u/s As per As per Radio button
551read with rule 327 old rules old active in new
[Companies (Court) Rules] and act. rules Form GNL-2
- Form 152 and act.
14 Liquidator's Affidavit u/s As per As per Radio button
551read with rule 327 old rules old active in new
[Companies (Court) Rules] - and act. rules Form GNL-2
Form 153 and act.
15 Liquidator's Statement of As per As per Radio button
Unpaid Dividend or old rules old active in new
Undistributed Assets under and act. rules Form GNL-2
Sec.555 read with rule 335 and act.
16 [Companies
Declaration of(Court) Rules] -
Solvency As per As per Radio button
Form 154 a statement of
embodying old rules old active in new
assets and liabilities - Rule and act. rules Form GNL-2
313 [Companies (Court) and act.
17 Rules] -ofForm
Return final winding up As per As per Radio button
159
meeting (Members voluntary old rules old active in new
winding up)- Rule 331 and act. rules Form GNL-2
[Companies (Court) Rules] - and act.
18 Form 149
Return of final winding up As per As per Radio button
meeting (Creditors voluntary old rules old active in new
winding up) - Rule 331 and act. rules Form GNL-2
[Companies (Court) Rules] - and act.
19 Form of final winding up
Return As per As per Radio button
157
meeting (Creditors voluntary old rules old active in new
winding up) - Rule 331 and act. rules Form GNL-2
[Companies (Court) Rules] - and act.
20 Other
Form documents No No Radio button
158 Section Section active in new
Form GNL-2

Page 1566
 Annexure C11

Circular 06/2014 on forms roll out

S. Number Numbe Purpose of filing Section Chapter Remarks

No. of the r of the under number
form form which
under under the
the old the form is
Act new required
Act to be
filed
(CA'13)
21 Application to RD for approval Deleted Deleted No provision
for entering into contract exists in new
act, hence
option is
disabled in
new form RD-
1 (24A)
24A RD-1
22 Application to RD for Deleted Deleted No provision
appointment of auditor exists in new
act, hence
option is
disabled in
new form RD-
1 (24A)

23 Application to RD for Issue 8(1) and 2 New form

of license under section 8 8(5) prescribed

24 Application to RD for 139, 10 New form

removal of auditor 142 prescribed
25 Application to RD for 16 2 New form
rectification of name prescribed
26 Application to RD - Others No No New form
Section Section prescribed
27 Form for filing petitions to 13(4) 2 New form INC-
Central Government 23 prescribed,
(Regional Director) for hence radio
shifting of registered office button is
of the company from one disabled in
State to another under Form RD-2
section 17

Page 1567
 Annexure C11

Circular 06/2014 on forms roll out

S. Number Numbe Purpose of filing Section Chapter Remarks

No. of the r of the under number
form form which
under under the
the old the form is
Act new required
Act to be
filed
(CA'13)
28 Form for filing petitions to Deleted Deleted No provision
Central Government exists in new
(Regional Director) under act, hence
section 18 option is
disabled in
new form RD-
2 (24AAA)
24AAA RD-2
29 Form for filing petitions to Deleted Deleted No provision
Central Government exists in new
(Regional Director) under act, hence
section 19 option is
disabled in
new form RD-
2 (24AAA)

30 Form for filing petitions to 87 6 New form

Central Government prescribed
(Regional Director) for
condonation of delay in
filing charge forms under
section 141
31 Form for filing petitions to Deleted Deleted Rule is not
Central Government prescribed,
(Regional Director) under hence option
section 188 is disabled in
new form
32 Application for extension of Deleted Deleted Rule
RD-2is not
time for repayment of (24AAA)
prescribed,
deposits hence option
is disabled in
65 CG-1 new form
CG-1 (65)
33 Information and explanation Deleted Deleted Rule is not
on reservations and prescribed,
qualification contained in the hence option
cost audit report by a is disabled in
company pursuant to section new form
233B(7) of the Companies CG-1 (65)
Act, 1956

Page 1568
 Annexure C11

Circular 06/2014 on forms roll out

S. Number Numbe Purpose of filing Section Chapter Remarks

No. of the r of the under number
form form which
under under the
the old the form is
Act new required
Act to be
filed
(CA'13)
32 Application - Others No No New form
Section Section prescribed

Page 1569
 Annexure C12

Circular 07/2014 on forms roll out

Annexure C12: Circular 07/2014 dated 0

April 2014 – Provisions of Companies
Act 1956 to remain in force
General Circular No. 07/2014
F.No.02/01/2014 CL-V
Ministry of Corporate Affairs
Government of India
'A' Wing, 5th Floor, Shastri Bhawan,
Dr. R.P. Road. New Delhi-110001
Dated:- 1st April 2014.
To
All Registrar of Companies,
All Regional Directors.
All Stakeholders
Subject: - Dissemination of information with regards to provisions of the Companies
Act, 2013 as notified till date vis-à-vis the corresponding provisions of the Companies
Act, 1956.
Sir,

As you are aware that the Ministry had already notified 99 sections on 12.09.2013 and
183 Sections of the Companies Act, 2013 are notified w.e.f. 01.04.2014. Certain
corresponding Sections and parts of certain Section of the Companies Act, 1956 shall
continue in force. A table indicating provisions of the Companies Act, 2013 so notified,
corresponding provisions of Companies Act, 1956 and corresponding provisions of the
Companies Act, 1956 which shall remain in force is enclosed for dissemination to all
stakeholders.
Encl: As above.
Yours faithfully,
(KMS. Narayanan)
Assistant Director
23387263
Table containing provisions of Companies Act, 2013 as notified up to date and
corresponding provisions thereof under Companies Act, 1956/

Note: This is a ready reckoner for the information of stakeholders. Please refer to the
relevant notifications and circulars issued separately.

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
1. Section 2 force

Page 1570
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
Clause (1) 2(1) Nil
force
Clause (2) 211(3C) Nil
Clause (3) 2(1A) Nil
Clause (4) 2(1B) Nil
Clause (5) 2(2) Nil
Clause (6) Nil Nil
Clause (7) Nil Nil
Clause (8) Nil Nil
Clause (9) 2(5) Nil
Clause (10) 2(6); 252(3) Nil
Clause (11) 2(7) Nil
Clause (12) 2(8) Nil
Clause (13) 209(1) Nil
Clause (14) 2(9) Nil
Clause (15) Nil Nil
Clause (16) 124 Nil
Clause (17) Explanation to section Nil
33(2)
Clause (18) Nil Nil
Clause (19) Nil Nil
Clause (20) 2(10) and 3 Nil
Clause (21) 2(23) and 12(2)(b) Nil
Clause (22) 2(23) and 12(2)(a) Nil
Clause (24) 2(45) Nil
Clause (25) 2(45A) Nil
Clause (26) Nil 428
The term ‘Contributory’
shall continue for the
purposes winding up.
Clause (27) Nil Nil
Clause (28) 233B(1) Nil
Clause (29)(except sub- 2(11), 2(14), 10 622
clause (iv)

Page 1571
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
Clause (30) 2(12) Nil
force
Clause (31) Explanation to 58A (11) Nil
Clause (32) 2(12A) Nil
Clause (33) 2(12B) Nil
Clause (34) 2(13) Nil
Clause (35) 2(14A) Nil
Clause (36) 2(15) Nil
Clause (37) 2(15A) Nil
Clause (38) 59(2) Nil
Clause (39) Nil Nil
Clause (40) Nil Nil
Clause (41) [except first 2(17) Nil
proviso]
Clause (42) Nil Nil
Explanation to section 2 Nil
Clause (43) (29A)
Clause (44) Nil Nil
Clause (45) 2(18), 617 Nil
Clause (46) 2(19), 4 Nil
Clause (47) Nil Nil
Clause (48) Nil Nil
Clause (49) Nil Nil
Clause (50) Nil Nil
Clause (51) Nil Nil
Clause (52) 2(23A) Nil
Clause (53) 2(24) Nil
Clause (54) 2(26) Nil
Clause (55) 2(27), 41 Nil
Clause (56) 2(28) Nil
Clause (57) 2(29A) Nil
Clause (58) Nil Nil
Clause (59) 2(30) Nil
Clause (60) 2(31), 5, 7 Nil

Page 1572
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
Clause (61) Nil 448
force
Clause (62) Nil Nil
Clause (63) Nil Nil
Clause (64) 2(32) Nil
Clause (65) Explanation to section Nil
192A
Clause (66) 2(33) Nil
Clause (67)[except sub- 2(34) Nil
clause (ix)]
Clause (68) 2(35) Nil
Clause (69) Explanation (a) to section Nil
62(6)
Clause (70) 2(36) Nil
Clause (71) 2(37) Nil
Clause (72) 4A Nil
Clause (73) 2(39) Nil
Clause (74) Nil Nil
Clause (75) 2(40) Nil
Clause (76) Nil Nil
Clause (77) 2(41), 6 and schedule IA Nil
Clause (78) Explanation to 198 Nil
Clause (79) 2(42) Nil
Clause (80) 2(43) Nil
Clause (81) 2(45AA) Nil
Clause (82) 2(45B) Nil
Clause (83) Nil Nil
Clause (84) 2(46) Nil
Clause (85) Nil Nil
Clause (86) Nil Nil
Clause (87) 2(47), 4 Nil
Clause (88) Explanation II to Section Nil
79A
Clause (89) 2(48) Nil
Clause (90) 2(49A) Nil
Clause (91) Nil Nil
Clause (92) 12(2)(c) Nil
Clause (93) Nil Nil
Clause (94) Explanation to Section Nil
Clause (95) 269
2(31A), 2A Nil
2. Section 3 12 Nil
3. Section 4 13,14,15,15A,15B, 20, Nil
4. Section 5 37
26,27,28,29,30 Nil

Page 1573
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
5. Section 6 9 Nil
force
6. Section 7 (except sub-section 33,34(1),35 Nil
(7)
7. Section 8 (except sub-section 25 Nil
(9)
8. Section 9 34(2) Nil
9. Section 10 36 Nil
10. Section 11 149 Nil
11. Section 12 17A, 146, 147 Nil
12. Section 13 16,17,18,19,21,23 Nil

13. Section 14 31 Proviso to sub-section

(except second proviso to (except proviso to sub-
sub-section (1) and sub- section (1) and Sub- (1) of section 31;
section (2)) section (2A); 43)
Sub-section (2A) of
section 31
14. Section 15 40 Nil
15. Section 16 22 Nil
16. Section 17 39 Nil
17. Section 18 32 Nil
18. Section 19 42 Nil
19. Section 20 51, 52, 53 Nil
20. Section 21 54 Nil
21. Section 22 47, 48 Nil
22. Section 23 67 Nil
23. Section 24 55A Nil
24. Section 25 64 Nil
25. Section 26 55,56,57,58,59,60, Sch. Nil
26. Section 27 II
61 Nil
27. Section 28 Nil Nil
28. Section 29 68B Nil
29. Section 30 66 Nil
30. Section 31 68 Nil
31. Section 32 60B Nil
32. Section 33 56(3) Nil
33. Section 34 63 Nil
34. Section 35 62 Nil
35. Section 36 68 Nil
36. Section 37 Nil Nil
37. Section 38 68A Nil
38. Section 39 69, 75 Nil

Page 1574
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
39. Section 40 73, 76 Nil
force
40. Section 41 Nil Nil
41. Section 42 67 Nil
42. Section 43 2(46A), 85, 86 Nil
43. Section 44 82 Nil
44. Section 45 83 Nil
45. Section 46 84 Nil
46. Section 47 87 Nil
47. Section 49 91 Nil
48. Section 50 92 Nil
49. Section 51 93 Nil
50. Section 52 78 Nil
51. Section 53 79 Nil
52. Section 54 79A Nil
53. Section 55 except sub- 80 and 80A (except Proviso to section
section Proviso to section 80A(1) and section
(3) 80A(1) and 80A(2)
section 80A(2))
54. Section 56 108, 108A to 108 I, Nil
109,110,113
55. Section 57 116 Nil
56. Section 58 111 Nil
57. Section 59 111A Nil
58. Section 60 148 Nil
59. Section 61 except proviso to 94 Nil
clause (b) of sub-section (1)
Section 62 except sub- sub-sections (4) to (7)
60. 81 except sub-sections
sections of section 81 and
(4) to (6) (4) to (7)
section 94A
61. Section 63 Proviso to 205 (3) Nil
62. Section 64 94A(3), 95,97 Nil
63. Section 65 98 Nil
64. Section 67 77 Nil
65. Section 68 77A Nil
66. Section 69 77AA Nil

Page 1575
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
67. Section 70 77B Nil
force
68. Section 71 except sub- 117B(4) and 117C (4)
sections (9) to (11) 117,117A,117B,117C,118 and (5)
,119, 122
Except 117B(4) and
117C (4) and (5)

69. Section 72 109A,109B Nil

70. Section 73 58A, 58AA, 58AAA, 58B, Nil
59
71. Sub-section (1) of section 74 Nil Nil
72. Section 76 58A Nil
73. Section 77 125,128, 129,132, 133, Nil
145
74. Section 78 134 Nil
75. Section 79 127,135 Nil
76. Section 80 126 Nil
77. Section 81 130 Nil
78. Section 82 138 Nil
79. Section 83 139,140 Nil
80. Section 84 137 Nil
81. Section 85 131, 136,143,144 Nil
82. Section 86 142 Nil
83. Section 87 141 Nil
84. Section 88 150,151,152,152A,153, Nil
153A, 153B, 157, 158
85. Section 89 187C Nil
86. Section 90 187D Nil
87. Section 91 154 Nil
88. Section 92 159,160,161,162,Sch V Nil
89. Section 93 Nil Nil
90. Section 94 163 Nil
91. Section 95 164 Nil
92. Section 96 165,166, 170 Nil
93. Section 100 169 (9) Nil

Page 1576
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
94. Section 101 171,172 Nil
force
95. Section 102 173 Nil
96. Section 103 174 Nil
97. Section 104 175 Nil
98. Section 105 176, Schedule IX Nil
99. Section 106 181,182,183 Nil
100. Section 107 177, 178 Nil
101. Section 108 Nil Nil
102. Section 109 179,180,184,185 Nil
103. Section 110 192A Nil
104. Section 111 188 Nil
105. Section 112 187A, 187B Nil
106. Section 113 187 Nil
107. Section 114 189 Nil
108. Section 115 190 Nil
109. Section 116 191 Nil
110. Section 117 192 Nil
111. Section 118 193,194,195,197 Nil
112. Section 119 (except sub- 196 Nil
section (4))
113. Section 120 Nil Nil
114. Section 121 Nil Nil
115. Section 122 Nil Nil
116. Section 123 Section 205 Nil
Sub-section (3) of
section 206
205A
117. Section 126 206A Nil

118. Section 127 207 Nil

119. Section 128 Nil
209, 214
120. Section 129 210, 211, 212, 213, 221, Nil
222, 223

121. Section 133 211 (3C) Nil

Page 1577
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
122. Section 134 215, 216, 217, 218 Nil
force
123. Section 135 Nil Nil
124. Section 136 219 Nil

125. Section 137 220 Nil

126. Section 138 Nil Nil

127. Section 139 224, 224A, 619 Nil

128. Section 140 [except second 225 except proviso to Proviso to sub-section
proviso to sub-section (4) sub- section (3) (3) of section 225
and sub-section (5)]
129. Section 141 226 Nil

130. Section 142 224(8) Nil

131. Section 143 227, 228, 263A Nil
132. Section 144 Nil Nil
133. Section 145 229, 230 Nil
134. Section 146 231 Nil
135. Section 147 232, 233, 233A Nil
136. Section 148 233B Nil
137. Section 149 252, 253, 258, 259 Nil
138. Section 150 Nil Nil
139. Section 151 Proviso to sub- section Nil
(1) of section 252
140 Section 152 254, 255, 256, 264 Nil
141 Section 153 266A Nil
142 Section 154 266B Nil
143 Section 155 266C Nil
144 Section 156 266D Nil
145 Section 157 266E Nil
146 Section 158 266F Nil
147 Section 159 266G Nil
148 Section 160 257 Nil
149 Section 161 260, 262, 313 Nil
150 Section 162 263 Nil
151 Section 163 265 Nil
152 Section 164 202, 274 Nil
153 Section 165 275, 276, 277, 278, 279 Nil
154 Section 166 312 Nil
155 Section 167 283 Nil

Page 1578
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
156 Section 168 Nil Nil
force
157 Section 169 except sub- 284 except sub-section Sub-section (4) of
section (4) (4) section 284
158 Section 170 303, 307 Nil
159 Section 171 304 Nil
160 Section 172 Nil Nil
161 Section 173 285, 286 Nil
162 Section 174 287, 288 Nil
163 Section 175 289 Nil
164 Section 176 290 Nil
165 Section 177 292A Nil
166 Section 178 Nil Nil
167 Section 179 Section 291 Nil
Section 292
168 Section 180 293 Nil
169 Section 181 Nil Nil
170 Section 182 293A Nil
171 Section 183 293B Nil
172 Section 184 299, 305 Nil
173 Section 185 295, 296 Nil
174 Section 186 372A Nil
175 Section 187 49 Nil
176 Section 188 294, 294A, 294AA, 297, Nil
314
177 Section 189 301 Nil
178 Section 190 302 Nil
179 Section 191 319, 320, 321 Nil
180 Section 192 Nil Nil
181 Section 193 Nil Nil
182 Section 194 Nil Nil
183 Section 195 Nil Nil
184 Section 196 197A, 267, 311, 317, 384, Nil
385, 388
185 Section 197 198, 201, 309, 310, 387 Nil
186 Section 198 349 Nil
187 Section 199 Nil Nil
188 Section 200 637AA Nil
189 Section 201 640B Nil
190 Section 202 318 Nil
191 Section 203 269, 316, 386 Nil
192 Section 204 Nil Nil
193 Section 205 Nil Nil

Page 1579
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
194 Section 206 234 [except sub-section Nil
force
195 Section 207 (8)]
209A Nil
196 Section 208 Nil Nil
197 Section 209 234A Nil
198 Section 210 235 Nil
199 Section 211 Nil Nil
200 Section 212 [except sub- Nil Nil
section (8) to (10)];
201 Section 214 236 Nil
202 Section 215 238 Nil
203 247 [except sub-section
Section 216 [except sub- 1A] Sub-section (1A) of
section (2)] section 247
204 Section 217 240 Nil
205 Section 219 239 Nil
206 Section 220 240A Nil
207 Section 223 241, 246 Nil
208 Section 224[except sub- 242, 244 Section 243
section (2) and (5)]
209 Section 225 245 Nil
210 Section 228 Sub-section (8) of Nil
Section 234
211 Section 229 Nil Nil
212 Section 366 565 Nil
213 Section 367 574 Nil
214 Section 368 575 Nil
215 Section 369 576 Nil
216 Section 370[except proviso] Section 577 except Proviso to section 577
proviso
217 Section 371 Section 578 Nil
218 Section 374 Nil Nil
219 Section 379 Nil Nil
220 Section 380 592, 593 Nil
221 Section 381 594 Nil
222 Section 382 595 Nil
223 Section 383 596 Nil
224 Section 384 600 Nil
225 Section 385 601 Nil
226 Section 386 602 602
227 Section 387 603 Nil
228 Section 388 604 Nil
229 Section 389 605 Nil

Page 1580
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
230 Section 390 605A Nil
force
231 Sub-section (1) Section 391 607 Nil
232 Section 392 598, 606 Nil
233 Section 393 599 Nil
234 Section 394 619A Nil
235 Section 395 Nil Nil
236 Section 396 609 Nil
237 Section 397 610A Nil
238 Section 398 610B Nil
239 Section 399 except reference 610 Nil
of word Tribunal in sub-
section (2)
240 Section 400 Nil Nil
241 Section 401 610D Nil
242 Section 402 610E Nil

243 Section 403 611, Schedule X Nil

244 Section 404 612 Nil
245 Section 405 615 Nil
246 Section 406 620A Nil
247 Section 407 Explanation to 10FD Nil
248 Section 408 10FB, 10FC Nil
249 Section 409 10FD Nil
250 Section 410 10FR Nil
251 Section 411 Nil Nil
252 Section 412 10FX Nil
253 Section 413 10FE, 10FT Nil
254 Section 414 10FG, 10FW Nil
255 Section 439 621, 624 Nil
256 Section 442 Nil Nil
257 Section 443 624A Nil
258 Section 444 624B Nil
259 Section 445 Nil Nil
260 Section 446 626 Nil
261 Section 447 Nil Nil
262 Section 448 628 Nil
263 Section 449 629 Nil
264 Section 450 629A Nil
265 451 Nil Nil
266 452 630 Nil
267 453 631 Nil
268 Section 454 Nil Nil

Page 1581
 Annexure C12

Circular 07/2014 on forms roll out

S. No. Corresponding Corresponding

Provisions of Companies
provisions of provisions of
Act, 2013 as notified
(98+1+183= 282 Sections) Companies Act, 1956 Companies Act, 1956
continue to remain in
269 Section 455 Nil Nil
force
270 456 635A Nil
271 Section 457 635AA Nil
272 Section 458 637 Nil
273 Section 459 637AA Nil
274 Section 460 637B Nil
275 Section 461 638 Nil
276 Section 462 Nil Nil
277 Section 463 633 Nil
278 Section 464 11 Nil
279 Section 467 641 Nil
280 Section 468 643 Nil
281 Section 469 642 Nil
282 Section 470 Nil Nil
Schedule I Schedule I Nil
Schedule II Schedule XIV Nil
Schedule III Schedule VI Nil
Schedule IV Nil Nil
Schedule V Schedule XIII Nil
Schedule VI Nil Nil
Schedule VII Nil Nil

Page 1582
 Annexure C13

Circular 08/2014 on books of accounts etc.

Annexure C13: Circular 08/2014 –

relevant financial year for maintenance
of books of accounts etc. under
Companies Act 2013
General Circular 08/2014
[Refer Section 129 and Section 134]
No. 1/19/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing,
Shastri Bhavan, Dr. R P Road,
New Delhi- 110 001.
Dated 04.04.2014
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Commencement of provisions of the Companies Act, 2013 with regard

to maintenance of books of accounts and preparations/adoption/filing
of financial statements, auditors report, Board's report and
attachments to such statements and reports— Applicability with
regard to relevant financial year.
Sir,
A number of provisions of the Companies Act, 2013 including those relating
to maintenance of books of account, preparation, adoption & filing of financial
statements (and documents required to be attached thereto), Auditors reports and the
Board of Directors report (Board's report) have been brought into force with effect from
1st April, 2014. Provisions of Schedule II (Useful lives to compute depreciation) and
Schedule III (Format of financial statements) have also been brought into force from
that date. The relevant Rules pertaining to these provisions have also been notified,
placed on the website of the Ministry and have come into force from the same date.
The Ministry has received requests for clarification with regard to the relevant
financial year with effect from which such provisions of the new Act relating to
maintenance of books of account, preparation, adoption and filing of financial
statements (and attachments thereto), auditors report and Board's report will be
applicable.
Although the position in this behalf is quite clear, to make things absolutely
clear it is hereby notified that the financial statements (and documents required to
be attached thereto), auditors report and Board's report in respect of financial years

Page 1583
 Annexure C13

Circular 08/2014 on books of accounts etc.

that commenced earlier than 1st April, 2014 shall be governed by the relevant
provisions/Schedules/rules of the Companies Act, 1956.
Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)
Ph: 23387263

Page 1584
 Annexure C14

Circular 09/2014 on new e-forms

Annexure C14: Circular 09/2014 – on

new e-forms
[For Form No. MGT-10, also refer Circular 17/2014 dated 11 June 2014]
General Circular 09/2014
MCA.21/28/2014-E-Gov
Ministry of Corporate Affairs
Government of India
'A' Wing, 5th Floor, Shastri Bhawan
Dr. R. P. Road, New Delhi-110001.
Dated 25th April, 2014
To,
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subs- Availability of E-forms/non-e-forms under the Companies Act, 2013-reg..

Sir,
In continuation of General Circular No. 6 of 2014, I am directed to inform that
w.e.f. 28th April 2014, 46 e-forms including 3 general e-forms will be available for filing
by the stakeholders. The 3 General e-Forms will be used for filing 17 forms which are
not available as e-forms as on date. Details of these 17 forms and corresponding 3 e-
Forms with which these will be filed as attachments are given hereunder in Table "A".
2. The stakeholders will fill the 17 Forms physically and get it duly signed/certified by
the professionals, if applicable, as per the requirement of the forms and attach these
with the prescribed General e-Form as given in attached Table 'A'. The arrangement
will continue till the 17 Forms are made available as e-Forms.
3. In addition to filing of the 17 Forms, stakeholders can also file application for seeking
extension of date of AGM/ Accounting period by filing form GNL-1. Documents in respect
of Companies under liquidation will also be allowed to file along with form GNL-2.
Documents in respect of particulars of person(s) or Directors charged or specified for the
purpose of section 2(60) of the Companies Act, 2013 will be allowed to file along with
form GNL-3. Documents/ forms for filing petitions to Central Government will be allowed
to file with form RD-2.
4. It is hereby clarified to all ROCs that dealing hand / approving officers are required to
check the physically attached form thoroughly for all fields including name of company
and CIN etc. before registry or according approval, etc.
5. This issue with the approval of the competent authority.
Yours faithfully,
(KMS Narayanan)
Assistant Director
23387263
Annexure

Page 1585
 Annexure C14

Circular 09/2014 on new e-forms

Table A
Filing of Forms as an Attachment to certain e-Forms

SI. No. General Form to be Subject/Purpose of Form to be attached

e-Form attached
with General
e-Form
1. GNL-2 PAS-2 INFORMATION MEMORANDUM
2. PAS-4 PRIVATE PLACEMENT OFFER LETTER
3. SH-9 DECLARATION OF SOLVENCY
4. DPI-1 CIRCULAR OF ADVERTISEMENT FOR DEPOSITS
5. DPT-3 RETURN OF DEPOSITS
RETURN OF DEPOSIT EXISTING AT
6. DPT-4
COMMENCEMENT
NOTICE OF APPOINTMENT OF AUDITOR BY
COMPANY [This form is upgraded and is
7. ADT-1
available for download and efiling w.e.f. 20
October 2014]
8. ADT-3 NOTICE OF RESIGNATION BY AUDITOR
9. DIR-9 REPORT BY COMPANY TO ROC FOR DIN OF
EXISTING DIRECTOR
10. NDH-1 RETURN OF STATUTORY COMPLIANCES
BY NIDHI COMPANY
11. NDH-3 HALF YEARLY RETURN BY NIDHI COMPANY
12. CG-1 DIR-10 FORM OF APPLICATION FOR REMOVAL OF
DISQUALIFICATION
13. RD-1 CHG-8 APPLICATION TO CG FOR CONDONATION OF
14. MGT-3 DELAY OF SITUATION OR CHANGE OF
NOTICE
SITUATION OF REGISTERED OFFICE AND
15. ADT-2 VERIFICATION
APPLICATION FOR REMOVAL OF AUDITORS
16. DIR-5 APPLICATION FOR SURRENDER OF DIN
17. NDH-2 APPLICATION FOR EXTENSION OF TIME TO RD

Page 1586
 Annexure C15

Circular 10/2014 Certification of forms

Annexure C15: Circular 10/2014

Certification of E-forms/non e-forms
General Circular- 10/2014

File No MCA21/28/2014-E-gov

Government of India
Ministry of Corporate Affairs
"A" Wing, 5'h Floor, Shastri Bhawan Dr
R. P. Road, New Delhi-110001
Date: - 07.05.2014
To,
All Regional Director
All Registrars of Companies

Sub: - Certification of E-forms/non e-forms under the Companies Act, 2013 by

the Practicing Professionals: - regarding..

Sir,

The Ministry has allowed registered Members of the professionals bodies (the ICAI,
ICSI and the ICOAI) to authenticate correctness and integrity of documents being filed
by them with the MCA in electronic mode. Details of documents required to be certified
have been given in the notification dated 28/04/2014 available on the MCA portal.

2. In this regard attention is invited towards the requirement of authentication of documents

prescribed under the Companies (Registration Offices and Fees) Rules, 2014 which
elaborate on the responsibility. Further, Rule 10 of ibid the Registrar is to examine e-forms
or non e-forms attached and filed with general forms on MCA portal viz. to verify whether
all the requirements have been complied with and all the attachment to the forms have
been duly scanned and attached in accordance with the requirement of above said rules.

3. Where any instance of filing of documents, application or return or petition etc.

containing false or misleading information or omission of material fact or incomplete
information is observed, the Regional Director or the Registrar as the case may be, shall
conduct a quick inquiry against the professionals who certified the form and signatory
thereof including an officer in default who appears prima facie responsible for submitting
false or misleading or incorrect information pursuant to requirement of above said Rules;
15 days notice may be given for the purpose.

Page 1587
 Annexure C15

Circular 10/2014 Certification of forms

4. The Regional Director or the Registrar will submit his/her report in respect of the
inquiry initiated, irrespective of the outcome, to the E-Governance cell of the Ministry
within 15 days of the expiry of period given for submission of an explanation with
recommendation in initiating action u/s 447 and 448 of the Companies Act, 2013
wherever applicable and also regarding referral of the matter to the concerned
professional Institute for initiating disciplinary proceedings.

5. The E-Gov cell of the Ministry shall process each case so referred and issue necessary
instructions to the Regional Director/ Registrar of Companies for initiating action u/s 448
and 449 of the Act wherever prima facie cases have been made out. The E-Gov cell will
thereafter refer such cases to the concerned Institute for conducting disciplinary
proceedings against the errant member as well as debar the concerned professional
from filing any document on the MCA portal in future.

6. The Registrar shall forward a fortnightly report to the concerned Regional Director
as well as to the E-Gov Division. Thereafter, the Regional Director shall forward a
consolidated report to the Joint Secretary E-Governance Division on or before 7th of
every month as per the prescribed proforma (copy enclosed).

7. This issues with the approval of the Secretary.

PROFORMA FOR FORTNIGHTLY REPORT BY ROC

For the period from..................... to ..............

SL NAME OF THE MEMBER MEMBERSHIP NO DETAILS REMARKS
NO PROFESSIONAL OF THE /CP NO. OF THE
INSTITUTE CASE

PROFORMA FOR MONTHLY REPORT BY RD

FOR THE MONTH OF

Si Name of Details of the Membership no / Fact of remarks

no the ROC professional CP no. the case

Page 1588
 Annexure C16

Circular 11/2014 Name reservation extension

Annexure C16: Circular 11/2014

extension of period of name reservation
upto 31 May 2014
[Refer section 4(4) and Rule 9 of the Companies (Incorporation) Rules, 2014]
[Also refer circular 13/2014 dated 23 May 2014 and circular 31/2014 dated 19 July 2014]
General Circular No. 11/2014
MCA21/72/2014-e-gov.Cell
Government of India
Ministry of Corporate Affairs
"A" Wing, 5th Floor, Shastri Bhawan
Dr. R.P. Road, New Delhi-110001
Date 12th May, 2014
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Sub: - One time opportunity for extension of Period of Reservation of Name.

Sir,
Services for incorporation of companies were not available on the MCA21 portal
to stakeholders from 1st April, 2014 to 28th April, 2014 because of the deployment
requirements for new E-forms. Many stakeholders had reserved names for the purpose
of Company incorporation with 60 days prescribed validity expiring during the above
mentioned period. They could not avail of the 60 days prescribed period for using the
name to complete the corresponding incorporation requirements due to the non-
availability of services.
2. In view of this, the validity of reservation of all such names with due date of expiry
between 1st April, 2014 to 28th April, 2014 is hereby extended upto 31st May, 2014. All
applicants whose cases fall in the above mentioned category may be advised to file
relevant E-forms for incorporating companies under the Companies Act, 2013 well
before the extended validity period.
Yours faithfully,
(KMS Narayanan)
Assistant Director Tel-23387263

Page 1589
 Annexure C17

Circular 12/2014 PAN for foreign director

Annexure C17: Circular 12/2014

Applicability of PAN requirement for
Foreign nationals
[refer Rule 15 of Companies (Incorporation) Rules, 2014]
[It is clarified that the provisions of this Circular are applicable to a Foreign National who
is a subscriber/promoter at the time of incorporation of the Company. Refer Circular
16/2014 dated 10 June 2014]
[refer Rule 3 of Companies (Registration of Foreign Companies) Rules, 2014 under
Chapter XXI]
General Circular No. 12/2014
F.No.1/12/2013 CL-V
Government of India
Ministry of Corporate Affairs
'A' Wing, 5th Floor, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi-110001
Dated: 22nd May, 2014
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Sub: Applicability of PAN requirement for Foreign Nationals.

Sir,
Attention of Ministry has been drawn to difficulties being faced by Foreign
Nationals while filing Incorporation form (INC-7) due to mandatory requirement
of submission of PAN details of intending Directors at the time of filing the
application for incorporation.
2. It is hereby clarified that PAN details are mandatory only for those foreign
nationals who are required to possess "PAN" in terms of provisions of the
Income Tax Act, 1961 on the date of application for incorporation. Where the
intending Director who is a Foreign National is not required to compulsorily
possess PAN, it will be sufficient for such a person to furnish his/her passport
number, alongwith undertaking stating that provisions of mandatory
applicability of PAN are not applicable to the person concerned. The form of
Declaration is required to be made in the proforma enclosed.
3. This issues with the approval of Competent Authority.
Yours faithfully,

Page 1590
 Annexure C17

Circular 12/2014 PAN for foreign director

(KMS Narayanan)
Assistant
Director Tel:
23387263
End. As above.
Copy to:
1. PSO to Secretary
2. PPS to Additional Secretary
3. PS to IS(M)/JS(B)/JS(SP)
4. DIR(AK)/DIR(AB)/DIR(NC)/DIR(PS)

Undertaking
______________ (name) ___________ son of ________ (father's name) __________,
citizen of _________ (nationality) ________ having passport No. ______ (passport
Number) declare as under:
(i) That I am not required under the provisions of Income Tax Act, 1961 to obtain
Income Tax Permanent Account Number (PAN);
(ii) That in view of the above I have not been issued any PAN; and
(iii) That I undertake to furnish to the Registrar of Companies (mention jurisdiction)
details of my PAN as soon as a Permanent Account Number is issued to me.

Date: (Signature)

Page 1591
 Annexure N50

Chapter XVIII notified

Annexure C18: Circular 13/2014

extension of period of name reservation
upto 15 June 2014
[Refer section 4(4) and Rule 9 of the Companies (Incorporation) Rules, 2014]
[Also refer circular 11/2014 dated 12 May 2014 and circular 31/2014 dated 19 July
2014]

General Circular no. 13 /2014

F. No: MCA21/ 28 / 2014-e.Gov.
Government of India
Ministry of Corporate Affairs
`A' Wing, 5th Floor, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-110001
Date: 23.05.2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Extension of validity period for names reserved as on 31st March, 2014.

Sir,
In continuation of the General Circular No.11/2014 dated 12.05.2014, approval
of the Competent Authority is hereby conveyed to extend continuity of all reserved
names as on 31St March, 2014 for another fifteen days period from the date of issue
of this circular.
This issues with approval of Competent Authority.
Yours faithfully,
(KMS Narayanan)

Page 1592
 Annexure C19

Circular 14/2014 Clarification on Independent Director

Annexure C19: Circular 14/2014

Clarification on Independent Director
General Circular No. 14/2014
No. 1/22/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan,
Dr R.P. Road, New Delhi
Dated: 9 th June, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Subject: Clarifications on Rules prescribed under the Companies Act, 2013 Matters
relating to appointment and qualifications of directors and Independent
Directors - reg.
Sir,
Government has received representations from Industry Chambers,
Professional Institutes and other stakeholders seeking clarifications inter alia about
appointment of Independent Directors (IDs) under the relevant provisions of the
Companies Act, 2013 (Act) read with relevant rules with effect from 1st April, 2014.
The representations have been examined and clarifications on the following points are
hereby given:-
(i) Section 149(6)(c): "pecuniary interest in certain transactions" :- (a) This provision
inter alia requires that an 'ID' should have no 'pecuniary relationship' with the
company concerned or its holding/ subsidiary/ associate company and certain other
categories specified therein during the current and last two preceding financial
years. Clarifications have been sought whether a transaction entered into by an 'ID'
with the company concerned at par with any member of the general public and at
the same price as is payable/paid by such member of public would attract the bar
of 'pecuniary relationship' under section 149(6)(c). The matter has been examined
and it is hereby clarified that in view of the provisions of section 188 which take
away transactions in the ordinary course of business at arm's length price from the
purview of related party transactions, an 'ID' will not be said to have 'pe cuniary
relationship' under section 149(6)(c) in such cases.
(b) Stakeholders have also sought clarification whether receipt of remuneration, (in
accordance with the provisions of the Act) by an 'ID' from a company would be

Page 1593
 Annexure C19

Circular 14/2014 Clarification on Independent Director

considered as having pecuniary interest while considering his appointment in the

holding company, subsidiary company or associate company of such company.
The matter has been examined in consultation with SEBI and it is clarified
that 'pecuniary relationship' provided in section 149(6)(c) of the Act does not
include receipt of remuneration, from one or more companies, by way of fee
provided under sub-section (5) of section 197, reimbursement of expenses for
participation in the Board and other meetings and profit related commission
approved by the members, in accordance with the provisions of the Act.
(ii) Section 149: Appointment of 'IDs' : Clarification has been sought if 'IDs' appointed
prior to April 1, 2014 may continue and complete their remaining tenure, under the
provisions of the Companies Act, 1956 or they should demit office and be re-appointed
(should the company so decide) in accordance with the provisions of the new Act.
The matter has been examined in the light of the relevant provisions of the
Act, particularly section 149(5) and 149(10) & (11). Explanation to section 149(11)
clearly provides that any tenure of an 'ID' on the date of commencement of the Act
shall not be counted for his appointment/holding office of director under the Act. In
view of the transitional period of one year provided under section 149(5), it is hereby
clarified that it would be necessary that if it is intended to appoint existing 'IDs' under
the new Act, such appointment shall be made expressly under section 149(10)/ (11)
read with Schedule IV of the Act within one year from 1st April, 2014, subject to
compliance with eligibility and other prescribed conditions.
(iii) Section 149 (10)/(11) - Appointment of 'IDs' for less than 5 years:-Clarification
has been sought as to whether it would be possible to appoint an individual as an
ID for a period less than five years.
It is clarified that section 149(10) of the Act provides for a term of "upto five
consecutive years" for an 'ID'. As such while appointment of an 'ID' for a term of
less than five years would be permissible, appointment for any term (whether for
five years or less) is to be treated as a one term under section 149(10) of the Act.
Further, under section 149(11) of the Act, no person can hold office of 'ID' for more
than two consecutive terms'. Such a person shall have to demit office after two
consecutive terms even if the total number of years of his appointment in such two
consecutive terms is less than 10 years. In such a case the person completing
'consecutive terms of less than ten years’ shall be eligible for appointment only after
the expiry of the requisite cooling-off period of three years.

(iv) Appointment of 'IDs' through letter of appointment:- With reference to Para

IV(4) of Schedule IV of the Act (Code for IDs) which requires appointment of 'IDs'
to be formalized through a letter of appointment, clarification has been sought if
such requirement would also be applicable for appointment of existing 'IDs'?

Page 1594
 Annexure C19

Circular 14/2014 Clarification on Independent Director

The matter has been examined. In view of the specific provisions of Schedule
IV, appointment of 'IDs' under the new Act would need to be formalized through a
letter of appointment.
This issues with the approval of the competent authority.
Yours faithfully
(Kamna Sharma)
Assistant Director
Copy to:- e-Governance Section and Web Contents Officer to place this circular on the
Ministry's website; Guard File

Page 1595
 Annexure C20

Circular 15/2014 Register of Investments

Annexure C20: Circular 15/2014

Clarification on register of investments
General Circular No. 15/2014
File No.5/6/2014-CL-I
Government of India
Ministry of Corporate Affairs
'A' Wing, 5th floor, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-110001
Dated: 9th June, 2014
To
All Regional Directors
All Registrars of Companies
All Stakeholders

Subject: Clarification regarding maintaining register in new format [sub-section (9) of

section 186] - reg.

Sir,

This Ministry has received various, communications seeking clarification regarding sub-
section (9) of section 186 read with sub-rule (1) of Rule 12 of the Companies (Meeting
of Board and its Powers) Rule, 2014 with regard to maintenance of register of
loans/guarantee/security/making acquisition in new format.

2. In this connection, it is hereby clarified that registers maintained by companies

pursuant to sub-section (5) of Section 372A of Companies Act, 1956 may continue as
per requirements under these provisions and the new format prescribed vide Form
MBP2 shall be used for particulars entered in such registers on and from 1.4.2014.

3. This issues with the approval of the Competent Authority.

Yours faithfully,
(Kamna Sharma)
Assistant Director
Copy to:
PSO to Secretary/PPS to AS
PSs to JS (M)/JS (B)/JS (SP)/DII (UCN)/DII (RCM)
DIR (AK)/DIR (AB)/DIR (NC)/DIR (PS) , CL.V Section

Page 1596
 Annexure C21

Circular 16/2014 PAN requirement for Foreign Nationals

Annexure C21: Circular 16/2014 PAN

requirement for foreign nationals
[refer Rule 3 of Companies (Registration of Foreign Companies) Rules, 2014 under
Chapter XXI]
General Circular No. 16/2014
F. No: 01/12/2013 CL-V
Ministry of Corporate Affairs
Government of India
`A' Wing, 5th floor, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-01
Dated: 10.06.2014
To
All Regional Directors,
All Registrars of Companies.
All Stakeholders.

Sub: Applicability of PAN requirement for Foreign Nationals

Sir,

In continuation of the General Circular No. 12/2014 dated 22.05.2014 regards the above
subject, it is clarified that the provisions of the said Circular are applicable to a Foreign
National who is a subscriber/promoter at the time of incorporation of the Company.

2. In case the said subscriber/promoter, does not possess Permanent Account Number
(PAN), he/she shall furnish a declaration in the prescribed proforma, as an attachment
to the Incorporation Form (INC-7).

3. Further, it is clarified that, in case of a Resident Director of the proposed company

he/she shall be required to submit PAN details at the time of incorporation.

4. This issue with the approval of the Competent Authority.

Yours faithfully
Encl- Undertaking
(Sanjay Kumar Gupta)
Deputy Director
Undertaking

Page 1597
 Annexure C21

Circular 16/2014 PAN requirement for Foreign Nationals

I ______________ (name) ________ son of ___________ (father's name), citizen of

___________ (nationality) R/o(Address) ___________ having passport No. _________
(passport Number) ____________ hereby declare as under:
(i) That I am not required to obtain Income Tax Permanent Account Number (PAN) under
the provisions of Income Tax Act, 1961;
(ii) That in view of the above I have not been issued any PAN; and
(iii) That I undertake to furnish to the Registrar of Companies (mention jurisdiction)
details of my PAN as soon as a Permanent Account Number is allotted to me.
Date:
Place:
(Signature)
Name of the Person

Page 1598
 Annexure C22

Circular 17/2014 Form No. MGT-10

Annexure C22: Circular 17/2014 Form No.

MGT-10
[Refer section 93]
General Circular No. 17
No. MCA21/72/2014 -e.Gov.
Government of India
Ministry of Corporate Affairs
`A' Wing, 5th floor, Shastri Bhawan
Dr. Rajendra Prasad, New Delhi-110001
Dated:11 June, 2014
To
All Regional Directors
All Registrars of Companies
All Stakeholders

Subject:- Filling of MGT-10- clarification-regarding .

Sir,

In continuation of General Circular No. 06/2014 dated 29.03.2014 [it is actually of 28

March 2014] and 09/2014 dated 25.04.2014 , I am directed to inform you that
stakeholders are required to fill Form MGT-10 physically, get it duly signed/ certified by
a professional and file it alongwith other required enclosures as attachments with the
prescribed General E-Form No. GNL-2. This temporary arrangement will continue till an
E-Form for MGT-10 is made available. Fee applicable for MGT-10 will be as per the
Table of Fees prescribed in Companies (Registration Offices and Fees) Rules, 2014.

2. This issues with the approval of the Competent Authority.

(Sanjay Kumar Gupta)
Deputy Director
Ph: 23384657
Copy to:
1. PSO to Secretary
2. PPS to Addl. Secretary
3. PS to JS(M)/ PS to JS(B)/ PPS to JS(SP)
4. DIR(AK)/DIR(AB) /DIR(NC)/DIR(PS)
5. AD(MKS)

Page 1599
 Annexure N50

Chapter XVIII notified

Annexure C23: Circular 18/2014 Form No.

INC-27 – conversion of a public company into
a private company
General Circular No. 18
File No. MCA21/72/2014 –e.Gov.
Government of India
Ministry of Corporate Affairs
`A' Wing, 5th floor, Shastri Bhawan
Dr. Rajendra Prasad, New Delhi-110001
Dated: 11 June, 2014
To
All Regional Directors
All Registrars of Companies
All Stakeholders

Subject:- Clarification for filing of form No. INC-27 for conversion of company from
public to private under the provisions of Companies Act, 2013-reg.

Sir,

Attention of the Ministry has been drawn to difficulties being faced by stakeholders while
filing form INC-27 for conversion of a public company into a private company. The
relevant provisions of Companies Act, 2013 (second proviso to sub-section (1) and sub-
section (2) of section 14) have not been notified. In view of this, the corresponding
provisions of Companies Act, 1956 (Proviso to sub-section (1) and sub-section (2A) of
Section 31) shall remain in force till corresponding provisions of Companies Act, 2013
are notified. The Central Government has delegated such powers under the Companies
Act, 1956 to the Registrar of Companies (ROCs) vide item No. (c) of the notification
number S.O. 1538(E) dated the 10th July, 2012 and this delegated power remains in
force. Applications for such conversions, therefore, have to be filed and disposed as per
the earlier provisions.

2. This issues with the approval of the Competent Authority.

(Sanjay Kumar Gupta)
Deputy Director

Page 1600
 Annexure C24

Circular 19/2014 Share transfer forms and duplicate share certificates

Annexure C24: Circular 19/2014 Share

transfer forms and duplicate share
certificates
General Circular No. 19 /2014
No. 1/4/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing, Shastri Bhavan,
Dr. R.P. Road, New Delhi
Dated 12th June, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarifications on Rules prescribed under the Companies Act, 2013 ¬Matters
relating to share capital and debentures- reg.

Sir,

Government has received representations from Industry Chambers, Professional

Institutes and other stakeholders seeking clarifications on matters relating to 'share
capital and debentures' under the relevant provisions of the Companies Act, 2013 (Act)
read with relevant rules, which have come into force with effect from 1st April, 2014. The
representations have been examined and clarifications on the following points are
hereby given:-

(i) Share Transfer Forms executed before 1st April, 2014:- In view of prescription of new
Securities Transfer Form as per Form SH-4 with effect from 1st April, 2014, the
companies and other stakeholders have sought clarity with regard to Share Transfer
Forms executed before 1st April, 2014 as per earlier Form 7B but which are yet to be
accepted/registered by companies.

The matter has been examined and it is clarified that since transaction relating to
transfer of shares is a contract between two or more persons/ shareholders, any share
transfer form executed before 1st April, 2014 and submitted to the company concerned
within the period prescribed under relevant section of the Companies Act, 1956 needs

Page 1601
 Annexure C24

Circular 19/2014 Share transfer forms and duplicate share certificates

to be accepted by the companies for registration of transfers. In case any such share
transfer form, executed prior to 1st April, 2014, is not submitted within the prescribed
period under the Companies Act, 1956, the concerned company may get itself satisfied
suitably with regard to justification of delay in submission etc. In case a company decides
not to accept the share transfer form, it shall convey the reasons for such non-
acceptance within time provided under section 56(4)(c) of the Act.
[Refer Rule 11 of the Companies (Issue of Shares and Debenture) Rules, 2014]

(ii) Delegation of powers by board under rule 6(2)(a): Clarification has been sought
whether the powers of the Board provided under rule 6(2)(a) of Companies (Share
Capital and Debentures) Rules, 2014 with regard to issue of duplicate share certificates
can be exercised by a Committee of Directors.

The matter has been examined in light of the relevant provisions of the Act,
particularly sections 179 & 180 and regulation 71 of Table "F" of Schedule I and it is
clarified that a committee of directors may exercise such powers, subject to any
regulations imposed by the Board in this regard.

This issues with the approval of the competent authority.

Yours faithfully
(Kamna Sharma)
Assistant Director (Policy)
Copy to:-
1. e-Governance Section and Web Contents Officer to place this circular on the
Ministry's website
2. Guard File

Page 1602
 Annexure C25

Circular 20/2014 e-voting

Annexure C25: Circular 20/2014 e-voting

General Circular No. 20/2014
No. 1/34/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr R.P. Road, New Delhi
Dated 17th June, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification with regard to voting through electronic means -reg.

Sir,

Section 108 of the Companies Act, 2013 read with rule 20 of the Companies
(Management and Administration) Rules, 2014 deal with the exercise of right to vote by
members by electronic means (e-means). The provisions seek to ensure wider
shareholders participation in the decision making process in companies. Corporates and
other stakeholders while appreciating the new approach have drawn attention to some
practical difficulties in respect of general meetings to be held in the next few months.

2. The suggestions received from the stakeholders have been examined. It is noticed
that compliance with procedural requirements, engagement of Depository Agencies and
the need for clarity on matter like demand for poll/ postal ballot etc. will take some more
time. Accordingly, it has been decided not to treat the relevant provisions as mandatory
till 31st December, 2014. The relevant notification in this regard is being issued
separately.

3. To provide clarity and ensure uniformity in the e-voting procedure, clarifications on

certain issues raised by the stakeholders are provided in the Annexure to this circular
for guidance of all concerned.

This issues with the approval of the competent authority.

Yours faithfully,
(KMS Narayanan)

Page 1603
 Annexure C25

Circular 20/2014 e-voting

Assistant Director
23387263
Copy to:-
1. e-Governance Section and Web Contents Officer to place this circular on the
Ministry's website
2. Guard File

Annexure

Clarifications on issues associated with e-voting procedure

(i) Show of hands not to be allowed in case of e-voting:- In view of clear provisions of
section 107, voting by show of hands would not be allowable in cases where rule 20 of
Companies (Management and Administration) Rules, 2014 is applicable.

(ii) Participation in the general meeting after voting by e-means:- It is clarified that a
person who has voted through e-voting mechanism in accordance with rule 20 shall not
be debarred from participation in the general meeting physically. But he shall not be able
to vote in the meeting again, and his earlier vote (cast through e-means) shall be treated
as final.

(iii) Applicability of rule 20 for matters specified under rule 22(16):- Stakeholders have
asked whether matters specified under rule 22(16) (transactions of certain items only
through postal ballot) can be considered in a general meeting where e-voting facility is
available. It has been examined and it is stated that in view of clear provisions of section
110(1)(a) read with such rule 22(16) it would be necessary to transact items specified in
rule 22(16) only through postal ballot and not at the general meeting.

(iv) Relevance of provisions relating to demand for poll:- In case of companies having
share capital, voting through e-means takes into account 'Proportion principle' [i.e. 'one
share - one vote'] unlike 'one person - one vote' principle under 'show of hands'. This
alongwith provisions of section 107 make it clear that in case of companies which are
covered under section 108 read with rule 20 of Companies (Management and
Administration) Rules, the provisions relating to demand for poll would not be relevant.

(v) Permissibility of voting by postal ballot under rule 20:- Stakeholders have sought a
clarification that in cases (covered under rule 20) where a shareholder who is not able
to participate in the general meeting personally and who is also not exercising voting
through e-means whether such a person shall have the option to vote through postal
ballot. The matter has been examined and it is felt that keeping in view the provisions of
the Act such an option would not be available.

Page 1604
 Annexure C25

Circular 20/2014 e-voting

(vi) Manner of voting in case of shareholders present in the meeting:- Stakeholders have
sought clarity about manner of voting for shareholders (of a company covered under
rule 20) who are present in the general meeting. It is hereby clarified that since voting
through e-means would be on the basis of proportion of share in the paid-up capital or
'one-share one-vote', the Chairperson of the meeting shall regulate the meeting
accordingly.

(vii) Applying rule 20 voluntarily:- Stakeholders have referred to words 'A company which
opts to' appearing in rule 20(3) and have raised a query whether rule 20 is applicable to
companies not covered in rule 20(1). It is clarified that rule 20(3) is being amended to
align it with rule 20(1). Regarding voluntary application of rule 20, it is clarified that in
case a company not mandated under rule 20(1) opts or decided to give its shareholders
the e-voting facility, in such a case, the whole of procedure specified in rule 20 shall be
applicable to such a company. This is necessary so that any piece-meal application
does not prejudice the interest of shareholders.

Page 1605
 Annexure C26

Circular 21/2014 CSR

Annexure C26: Circular 21/2014

General Circular No. 21/2014
No. 05/01/2014- CSR
Government of India
Ministry of Corporate Affairs
5th Floor, ‘A’ Wing,
Shastri Bhawan, Dr. R. P. Marg,
New Delhi - 110 001
Dated: 18th June, 2014
To,
All Regional Director,
All Registrar of Companies,
All Stakeholders

Subject: - Clarifications with regard to provisions of Corporate Social

Responsibility under section 135 of the Companies Act, 2013.
Sir,
This Ministry has received several references and representation from
stakeholders seeking clarifications on the provisions under Section 135 of the
Companies Act, 2013 (herein after referred as ‘the Act’) and the Companies (Corporate
Social Responsibility Policy) Rules, 2014, as well as activities to be undertaken as per
Schedule VII of the Companies Act, 2013. Clarifications with respect to representations
received in the Ministry on Corporate Social Responsibility (herein after referred as
(‘CSR’) are as under:-

(i) The statutory provision and provisions of CSR Rules, 2014, is to ensure that while
activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII
of the Companies Act 2013, the entries in the said Schedule VII must be interpreted
liberally so as to capture the essence of the subjects enumerated in the said Schedule.
The items enlisted in the amended Schedule VII of the Act, are broad-based and are
intended to cover a wide range of activities as illustratively mentioned in the Annexure.

(ii) It is further clarified that CSR activities should be undertaken by the companies in
project/ programme mode [as referred in Rule 4 (1) of Companies CSR Rules, 2014].
One-off events such as marathons/ awards/ charitable contribution/ advertisement/
sponsorships of TV programmes etc. would not be qualified as part of CSR expenditure.

Page 1606
 Annexure C26

Circular 21/2014 CSR

(iii) Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations
(such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure
under the Companies Act.

(iv) Salaries paid by the companies to regular CSR staff as well as to volunteers of the
companies (in proportion to company’s time/hours spent specifically on CSR) can be
factored into CSR project cost as part of the CSR expenditure. [This para stands omitted
as Rule 4(6) amended by notification dated 12.09.2014 – Refer Circular 36/2014 dated
17.09.2014.]

(v) “Any financial year” referred under Sub-Section (1) of Section 135 of the Act read
with Rule 3(2) of Companies CSR Rules, 2014, implies ‘any of the three preceding
financial years’.

(vi) Expenditure incurred by Foreign Holding Company for CSR activities in India will
qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed
through Indian subsidiaries and if the Indian subsidiary is required to do so as per section
135 of the Act.

(vii) ‘Registered Trust’ (as referred in Rule 4(2) of the Companies CSR Rules, 2014)
would include Trusts registered under Income Tax Act 1956, for those States where
registration of Trust is not mandatory.

(viii) Contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as
CSR expenditure as long as (a) the Trust/ society/ section 8 companies etc. is created
exclusively for undertaking CSR activities or (b) where the corpus is created exclusively
for a purpose directly relatable to a subject covered in Schedule VII of the Act.

2. This issues with the approval of Competent Authority.

Yours faithfully,
Sd/-
(Seema Rath)
Assistant Director (CSR)
Phone No. 23389622

Annexure referred to at para (i) of General Circular No. 21/2014 dated 18.06.2014

Sl. Additional items requested to be Whether covered under Schedule

No. included in Schedule VII or to be VII of the Act
clarified as already
1. Promotion of Road Safety through
CSR:

Page 1607
 Annexure C26

Circular 21/2014 CSR

Sl. Additional items requested to be Whether covered under Schedule

No. included in Schedule VII or to be VII of the Act
clarified as already
(i) (a) Promotions of Education, (a) Schedule VII (ii) under
“Educating the Masses and “promoting education”.
Promotion of Road Safety
awareness in all facets of road
usage,
(b) Drivers’ training, (b) For drivers training etc. Schedule
VII (ii) under “vocational skills”.
(c) Training to enforcement (c) It is establishment functions of
personnel, Government (cannot be covered).
(d) Safety traffic engineering and (d) Schedule VII (ii) under
awareness through print, audio and “promoting education”.
visual media” should be included.
(ii) Social Business Projects : (ii) Schedule VII (i) under ‘promoting
“giving medical and Legal aid, health care including preventive
treatment to road accident victims” health care.’
should be included.
2. Provisions for aids and appliances to Schedule VII (i) under ‘promoting
the differently-able persons - health care including preventive
‘Request for inclusion health care.’
3. The company contemplates of Item no. (ii) of Schedule VII under
setting up ARTIIC (Applied Research the head of “promoting education”
Training and Innovation Centre) at and “vocational skills” and “rural
Nasik. development”.
Centre will cover the following
aspects as CSR initiatives for the
benefit of the predominately rural
farming community:
(a) Capacity building for farmers (a) “Vocational skill” livelihood
covering best sustainable farm enhancement projects.
management practices.
(b) Training Agriculture Labour on (b) “Vocational skill”
skill development.
(c) Doing our own research on the (c) ‘Ecological balance’, ‘maintaining
field for individual crops to find out quality of soil, air and water’.
the most cost optimum and Agri
– ecological sustainable farm
practices. (Applied research) with a
focus on water management.

Page 1608
 Annexure C26

Circular 21/2014 CSR

Sl. Additional items requested to be Whether covered under Schedule

No. included in Schedule VII or to be VII of the Act
clarified as already
(d) To do Product Life Cycle analysis (d) “Conservation of natural
from the soil conservation point of resource” and ‘maintaining quality of
view. soil, air and water’.
4. To make “Consumer Protection Consumer education and
Services” eligible under CSR. awareness can be covered under
(Reference received by Dr. V.G. Schedule VII (ii) “promoting
Patel, Chairman of Consumer education”.
Education and Research Centre).
(i) Providing effective consumer
grievance redressal mechanism.
(ii) Protecting consumer’s health and
safety, sustainable consumption,
consumer service, support and
complaint resolution.
(iii) Consumer protection activities.
(iv) Consumer Rights to be
mandated.
all consumer protection programs
and activities” on the same lines as
Rural Development, Education etc.
5. a) Donations to IIM [A] for Conservation and renovation of
conservation of buildings and school buildings and classrooms
renovation of classrooms would relates to CSR activities under
qualify as “promoting education” and Schedule VII as “promoting
hence eligible for compliance of education”.
companies with Corporate Social
Responsibility.

b) Donations to IIMA for

conservation of buildings and
renovation of classrooms would
qualify as “protection of national
heritage, art and culture, including
restoration of buildings and sites of
historical importance” and hence
eligible for compliance of companies
with CSR.
6. Non Academic Technopark TBI not Schedule VII (ii) under “promoting
located within an academic education”, if approved by

Page 1609
 Annexure C26

Circular 21/2014 CSR

Sl. Additional items requested to be Whether covered under Schedule

No. included in Schedule VII or to be VII of the Act
clarified as already
Institution but approved and Department of Science and
supported by Department of Science Technology.
and Technology.
7. Disaster Relief Disaster relief can cover wide range
of activities that can be
appropriately shown under various
items listed in Schedule VII. For
example,
(i) medical aid can be covered under
‘promoting health care including
preventive health care.’
(ii) food supply can be covered
under eradicating hunger, poverty
and malnutrition.
(iii) supply of clean water can be
covered under ‘sanitation and
making available safe drinking
water’.
8. Trauma care around highways in Under ‘health care’.
case of road accidents.
9. Clarity on "rural development Any project meant for the
projects” development of rural India will be
covered under this.
10. Supplementing of Govt. schemes Yes. Under Schedule VII, item no.
like mid-day meal by corporates (i) under ‘poverty and malnutrition’.
through additional nutrition would
qualify under Schedule VII.
11. Research and Studies in the areas Yes, under the respective areas of
specified in Schedule VII. items defined in Schedule VII.
Otherwise under ‘promoting
education’.
12. Capacity building of government No.
officials and elected representatives
– both in the area of PPPs and urban
infrastructure.
13. Sustainable urban development and Not covered.
urban public transport systems
14. Enabling access to, or improving the Can be covered under both the
delivery of, public health systems be heads of “healthcare” or “measures

Page 1610
 Annexure C26

Circular 21/2014 CSR

Sl. Additional items requested to be Whether covered under Schedule

No. included in Schedule VII or to be VII of the Act
clarified as already
considered under the head for reducing inequalities faced by
“preventive healthcare” or “measures socially & economically backward
for reducing inequalities faced by groups”, depending on the context.
socially & economically backward
groups”?
15. Likewise, could slum re-development Yes.
or EWS housing be covered under
“measures for reducing inequalities
faced by socially & economically
backward groups”?
16. Renewable energy projects Under ‘Environmental sustainability,
ecological balance and conservation
of natural resources’,
17. (i) Are the initiatives mentioned in (i) & (ii) Schedule VII is to be
Schedule VII exhaustive? liberally interpreted so as to capture
the essence of subjects enumerated
(ii) In case a company wants to in the schedule.
undertake initiatives for the
beneficiaries mentioned in Schedule
VII, but the activity is not included in
Schedule VII, then will it count (as
per 2(c)(ii) of the Final Rules, they
will count)?
18. US-India Physicians Exchange No.
Program – broadly speaking, this
would be program that provides for
the professional exchange of
physicians between India and the
United States.

Page 1611
 Annexure C27

Circular 22/2014 Format of AR for FY 2013-14

Annexure C27: Circular 22/2014 Format of

AR for FY 2013-14
General Circular No. 22/2014

No. 1/34/2013-CL-V (Part-I)

Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan, Dr

R.P. Road, New Delhi.

Dated: 25th June, 2014

To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification with regard to format of annual return applicable for

Financial Year 2013-14 and fees to be charged by companies for
allowing inspection of records.
Sir,
Government has received requests for clarification about the applicability of
form of annual return (MGT-7) prescribed under rule 11(1) of the Companies
(Management and Administration) Rules, 2014 for financial year(s) commencing
earlier than 1st April, 2014. The matter has been examined in the light of provisions
of section 92(1) of the Act which requires annual return to contain particulars as they
stood on the close of the financial year. It is, clarified that Form MGT-7 shall not apply
to annual returns in respect of companies whose financial year ended on or before 1 st
April, 2014 and for annual returns pertaining to earlier years. These companies may
file their returns in the relevant Form applicable under the Companies Act, 1956.

2. Companies have also sought clarity about permitting free of cost inspection of
records under rule 14(2) and rule 16 of the rules cited above and till a fee is prescribed
for the purpose in the Articles. It is clarified that until the requisite fee is specified by
companies, inspections could be allowed without levy of fee.

3. This issues with the approval of the competent authority.

Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)
23387263

Page 1612
 Annexure C28

Circular 23/2014 Subsidiary of a foreign company

Annexure C28: Circular 23/2014 Subsidiary

of a foreign company
General Circular no. 23/2014
F. N: 1/13/2013 -CL-V
Government of India
Ministry of Corporate Affairs

`A' Wing, 5th Floor, Shastri Bhawan Dr.

R.P. Road, New Delhi-110001

Date: 25.06.2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification relating to incorporation of a company i.e. company

Incorporated outside India.

Sir,
Government has received references seeking clarity about the status of
subsidiaries incorporated/to be incorporated by companies incorporated outside India.
Attention has, in particular, been drawn to the absence of the deeming provision of sub-
section (7) of section 4 of the Companies Act, 1956 in the Companies Act, 2013 (New
Act).
The matter has been examined in the Ministry in the light of sections 2(68), 2(71)
and 2(87) of the New Act and it is clarified that there is no bar in the new Act for a
company incorporated outside India to incorporate a subsidiary either as a public
company or a private company. An existing company, being a subsidiary of a company
incorporated outside India registered under the Companies Act, 1956, either as private
company or a public company by virtue of section 4(7) of that Act, will continue as a
private company or public company, as the case may be, without any change in the
incorporation status of such company.

3. This issues with approval of Competent Authority.

Page 1613
 Annexure C29

Circular 24/2014

Annexure C29: Circular 24/2014 Associate

company and beneficial holding
General Circular no. 24/2014

F. No: 01/13/2013 -CL-v

Government of India
Ministry of Corporate Affairs

'A' Wing, 5th Floor, Shastri Bhawan

Dr. Rajendra Prasad Road, New Delhi-110001

Date: 25.06.2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification with regard to holding of shares in a fiduciary capacity by

associate company under section 2(6) of the Companies Act, 2013.

Sir,

In continuation of the General Circular No. 20/2013 dated 27/12/2013, it is

clarified that the shares held by a company in another company in a 'fiduciary capacity'
shall not be counted for the purpose of determining the relationship of 'associate
company' under section 2(6) of the Companies Act, 2013.

2. This issues with approval of Competent Authority.

Yours faithfully,
(KMS Narayan)
Asst. Director

Page 1614
 Annexure C30

Circular 25/2014 Resident Director u/s.149(3)

General Circular No. 25/2014

No. 1/22/ 13-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan, Dr

R.P. Road, New Delhi

Dated :- 26th June, 2014

To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification on applicability of requirement for resident

director.

Sir,
Section 149(3) of the Companies Act, 2013 (Act) requires every company to
have at least one director who has stayed in India for a total period of not less than 182
days in the previous calendar year. Government has received requests from
stakeholders for clarification with regard to applicability of these provisions in the current
calendar/financial year.

2. The matter has been examined. It is clarified that the 'residency requirement' would
be reckoned from the date of commencement of section 149 of the Act i.e. 1st April,
2014. The first 'previous calendar year' for compliance with these provisions would,
therefore, be Calendar Year 2014. The period to be taken into account for compliance
with these provisions will be the remaining period of calendar year 2014 (i.e. 1st April
to 31st December). Therefore, on a proportionate basis, the number of days for which
the director(s) would need to be resident in India, during Calendar Year 2014, shall
exceed 136 days.

3. Regarding newly incorporated companies it is clarified that companies incorporated

between 1.4.2014 to 30.9.2014 should have a resident director either at the
incorporation stage itself or within six months of their incorporation. Companies
incorporated after 30.9.2014 need to have the resident director from the date of
incorporation itself.

This issues with the approval of the competent authority.

Page 1615
 Annexure C31

Circular 26/2014 Name

Annexure C31: Circular 26/2014 word

‘Commodity Exchange’ in name
[Also refer Circular 02/2014 dated 11 February 2014 for words ‘National’ or ‘Bank’ in
name and Circular 29/2014 dated 11 July 2014 on Emblems and Names (Prevention of
Improper Use) Act, 1950.]
[Refer rule 8A (1)(p) of the Companies (Incorporation) Rules, 2014]
General Circular No: 26 /2014
No. 2/2/2014-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A Wing', Shastri Bhawan,
Dr. R.P. Road, New Delhi — 110001
Dated: 27th June, 2014

To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification with regard to use of the words "Commodity Exchange" in

a company-reg.

Sir,
In continuation of this Ministry's circular no. 02/2014 dated 11.02.2014, it is hereby
clarified the use of the word "Commodity Exchange" may be allowed only where a "No
Objection Certificate" from the Forward Markets Commission (FMC) is furnished by the
applicant. All other provisions of the Companies (Incorporation) Rules, 2014 will continue
to be applicable.

2. It is also clarified that the certificate from Forward Markets Commission will
also be required in cases of companies registered with the words "Commodity
Exchange' before the issue of this circular.

3. This issues with the approval of competent authority.

Page 1616
 Annexure C32

Circular 27/2014 Clarification regarding filing of Form DPT-4

Annexure C32: Circular 27/2014

Clarification regarding filing of Form DPT-4
F. No. MCA21/123/2014/e-Gov. Cell
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi - 110001
Dated the 30th June, 2014
To,
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Sub: - Clarification regarding filing of Form DPT4 under Companies Act, 2013.

Sir,

This Ministry has received reference regarding filing of Form DPT4 under the provisions
of the Companies Act, 2013. As per section 74(1)(a) of the Companies Act, 2013 and
the Companies (Acceptance of Deposits) Rules, 2014 made there under, companies
are required to file a statement regarding deposits existing as on date of commencement
of the Act within a period of 3 months from such commencement. The time for filing of
said statement is expiring on 30-06-2014.

2. After considering the reference, it has been decided to grant extension of time for the
period of 2 months i.e. up to 31-08-2014 without any additional fee in terms of section
403 of the Act to enable the companies for filing of statement under Form DPT4 with the
Registrar.

Yours faithfully,
(M. S. Pachouri)
Deputy Director

Page 1617
 Annexure C33

Circular 28/2014

Annexure C33: Circular 28/2014

Clarification on form MGT-14 through STP
mode
[Refer section 117]
File No.1/9/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi - 110001
Dated the 9th July, 2014
To,
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: clarification on form MGT-14 through STP mode.

Sir,

In order to simplify procedures and with a view to ensure timely disposal of E-Forms in
the office of Registrars of Companies and keeping in view the penal provisions for false
declaration as contained in section 448 read with section 447, the following E-Forms with
the conditions mentioned along with will be processed and taken on record using the
Straight Through Process mode.

S. No. E-Form Conditions

1 MGT-14 All cases except for change of Name, change of
object, resolution for further issue of capital and
conversion of companies will be STP Mode.

This circular will be effective from 21.07.2014.

Page 1618
 Annexure C34

Circular 29/2014 Name of companies in consonance with Emblems Act

Annexure C34: Circular 29/2014 Name of

Companies in consonance with Emblems Act
[Also refer Circular 02/2014 dated 11 February 2014 for words ‘National’ or ‘Bank’ in
name and Circular 26/2014 dated 27 June 2014 for word “commodity exchange”.]
[Refer rule 8A (1)(a) of the Companies (Incorporation) Rules, 2014]
General Circular No: 29 /2014
File No. 2/2/2014-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A Wing', Shastri Bhawan,
Dr. R.P. Road, New Delhi — 110001
Dated: 11th July, 2014

To
All Regional Directors,
All Registrars of Companies.

Subject: Registration of names of the Companies shall be in consonance with the

provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950 –
reg.

Sir,
In continuation of this Ministry’s circular No. 02/2014 and 26/2014 dated 11.02.2014 and
27.06.2014 respectively, it is hereby directed that while allotting names to Companies /
Limited Liability Partnerships, the Registrar of Companies concerned should exercise due
care to ensure that the names are not in contravention of the Emblems and Names
(Prevention of Improper Use) Act, 1950. To this end it is necessary that Registrars are fully
familiar with the provisions of the said Act.

2. This issues with the approval of the competent authority.

Yours faithfully,
(Kamna Sharma)
Assistant Director
Tel: 23387263

Page 1619
 Annexure C35

Circular 30/2014 Clarifications on matters relating to Related Party Transactions

Annexure C35: Circular 30/2014

Clarifications on matters relating to Related
Party Transactions
General Circular No. 30/2014
No. 1/32/2013- CL-V (Pt)
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS

5th Floor, A Wing Shastri Bhavan,

Dr R.P. Road, New Delhi
Dated: 17th July 2014
To,
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarifications on matters relating to Related Party Transactions.

Sir,

Government has received representations from stakeholders seeking certain

clarifications on related party transactions covered under section 188 of the Companies
Act, 2013. These representations have been examined and the following clarifications are
given:-

1. Scope of second proviso to Section 188(1):- Second proviso to sub-section (1) of section
188 requires that no member of the company shall vote on a special resolution to approve
the contract or arrangement (referred to in the first proviso), if such a member is a related
party. It is clarified that `related party' referred to in the second proviso has to be construed
with reference only to the contract or arrangement for which the said special resolution is
being passed. Thus, the term 'related party' in the above context refers only to such related
party as may be a related party in the context of the contract or arrangement for which the
said special resolution is being passed.

2. Applicability of Section 188 to corporate restructuring, amalgamations etc.:- It is clarified

that transactions arising out of Compromises, Arrangements and Amalgamations dealt with
under specific provisions of the Companies Act, 1956/Companies Act, 2013, will not attract
the requirements of section 188 of the Companies Act, 2013.

3. Requirement of fresh approvals for past contracts under Section 188.:- Contracts entered
into by companies, after making necessary compliances under Section 297 of the
Companies Act, 1956, which already came into effect before the commencement of Section

Page 1620
 Annexure C35

Circular 30/2014 Clarifications on matters relating to Related Party Transactions

188 of the Companies Act, 2013, will not require fresh approval under the said section 188
till the expiry of the original term of such contracts. Thus, if any modification in such contract
is made on or after 1st April, 2014, the requirements under section 188 will have to be
complied with.

4. This issues with approval of the competent authority.

Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)
Ph: 23387263

Page 1621
 Annexure C31

Circular 41/2014

Annexure C36: Circular 31/2014 Extension

of time for few names approved
[Refer section 4(5)]
[Also refer circular 11/2014 dated 12 May 2014 and circular 13/2014 dated 23 May
2014]
General Circular No. 31/2014
F. No. MCA21/152/2014-eGov Cell
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr R.P. Road, New Delhi
Dated: 19th July, 2014
To
All Regional Directors,
All Registrars of Companies.

Subject: Extension of validity of reserved names -

reg.

Sir,
The Service Provider of MCA-21 has brought to the notice of the Ministry
that the letters of intimation issued in respect of 9522 cases for reservation of
names (INC-1) allow the applicants to use reserved names within 60 days of
date of such intimation. This is at variance with the implementation in the MCA-
21. This is causing inconvenience to the stakeholders.

In view of this, the validity of 1930 of the above mentioned 9522 cases for
reservations of names which have expired as on the date of this circular is hereby
extended upto 18th August, 2014. Further, in case of 6864 cases where names
have been reserved and are yet to be used, the time period as indicated in the
letters of intimations is allowed. All applicants may accordingly be advised to file
relevant e-forms for incorporation of companies under the Companies Act, 2013
well before the validity period.

This issues with the approval of the competent authority.

Page 1622
 Annexure C37

Circular 32/2014

Annexure C37: Circular 32/2014

Clarification on transitional period for
resolutions passed Under the Companies Act,
1956
General Circular No. 32/2014
No.1/ 25/ 13-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan, Dr
R.P. Road, New Delhi.
Dated: - 23rd July, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Subject: Clarification on transitional period for resolutions passed
Under the Companies Act, 1956.
Sir,
It has been brought to the notice of the Government that many companies have
passed resolutions during financial year 2013-14 under the relevant provisions of the
Companies Act, 1956 (Old Act) which are/were at different stages of implementation
after coming into force of corresponding provisions of the new Companies Act, 2013
(New Act). Ministry has received suggestions that while section 6 of the General
Clauses Act, 1897 protects the validity of such resolutions, it will be advisable if a
suitable communication is also issued in the matter by the Ministry by way of abundant
caution.
2. The matter has been examined in the light of similar issues clarified earlier.
It is clarified that resolutions approved or passed by companies under relevant
applicable provisions of the Old Act during the period from 1st September, 2013 to
31st March, 2014, can be implemented, in accordance with provisions of the Old Act,
notwithstanding the repeal of the relevant provision subject to the conditions (a) that
the implementation of the resolution actually commenced before 1st April, 2014 and
(b) that this transitional arrangement will be available upto expiry of one year from the
passing of the resolution or six months from the commencement of the corresponding
provision in New Act whichever is later. It is also clarified that any amendment of the
resolution must be in accordance with the relevant provision of the New Act.
This issues with the approval of the competent authority.

Page 1623
 Annexure C38

Circular 33/2014

Annexure C38: Circular 33/2014

Clarification on auditor of Government
company
General Circular No. 33/2014
No.1/ 33/ 13-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan, Dr
R.P. Road, New Delhi.
Dated: - 31st July, 2014
All Regional Directors,
All Registrars of Companies.

Subject: Clarification with regard to applicability of provisions of section 139(5)

and 139(7) of the Companies Act, 2013

Sir,

Doubts have been raised about applicability of sections 139(5) and 139(7) of the
Companies Act, 2013 (New Act), which deal with appointment of auditors by
Comptroller and Auditor General of India (C&AG), to 'deemed Government Companies'
referred to in section 619B of the Companies Act 1956 (Old Act) i.e. companies where
ownership or control lies with two or more Government companies or corporations etc.
in the manner detailed in section 619B ibid. Stakeholders have pointed out that the
New Act does not contain specific provisions about 'deemed Government companies'
on the lines of section 619B of the Old Act. Clarification has been sought whether,
under the new Act, such deemed Government companies would be subject to audit by
the C&AG in the same manner as Government Companies. '

2. The above issue has been examined and it is clarified that the new Act does not
alter the position with regard to audit of such deemed Government companies through
C&AG and thus such companies are covered under subsection (5) and (7) of section
139 of the New Act.

3. Further, it has also been observed that the words "any other company owned or
controlled, directly or indirectly by the Central Government and partly by one or more
State Governments" appearing in sub-sections (5) and (7) of section 139 of the New Act
are to be read with the definition of 'control' in section 2(27) of the New Act. Thus
documents like articles of association and shareholders agreements etc. envisaging
control under section 2(27) are to be taken into account while deciding whether an

Page 1624
 Annexure C38

Circular 33/2014

individual company, other than those referred in paragraph 1-2 above, is covered under
section 139(5)/139(7) of the New Act.

4. Clarification has also been sought about the manner in which the information
about incorporation of a company subject to audit by an auditor to be appointed by
the C&AG is to be communicated to the C&AG for the purpose of appointment of first
auditors under section 139(7) of the New Act. It is hereby clarified that such
responsibility rests with both, the Government concerned and the relevant company.
To avoid any confusion it is further clarified that it will primarily be the responsibility
of the company concerned to intimate to the C&AG about its incorporation along with
name, location of registered office, capital structure of such a company immediately
on its incorporation. It is also incumbent on such a company to share such intimation
to the relevant Government so that such Government may also send a suitable
request to the C&AG.

5. This issues with the approval of the competent authority.

Page 1625
 Annexure C39

Circular 34/2014 CLSS, 2014

Annexure C39: Circular 34/2014 Company

Law Settlement Scheme
General Circular No. 34/2014
F. No.02/13/2014 CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan, Dr
R.P. Road, New Delhi.
Dated: 12/08/2014
To,
All Regional Directors,
All Registrars of Companies.

Subject: Company Law Settlement Scheme, 2014

Sir,
As you are aware, the Companies Act requires companies to file annual
documents (Annual Return and Financial Statements) on the MCA21 electronic registry
within prescribed time limits. Sections 92, 137 and 403 of the Companies Act, 2013,
which correspond to sections 159, 220 and 611 of the Companies Act, 1956 may be
referred to in this regard. These annual documents are considered very important in
context of an up-to-date Registry. It is observed that a large percentage of companies
have not filed their statutory documents making them liable for penalties and
prosecution for such non-compliance.

2. The Companies Act, 2013 lays down a stricter regime for the defaulting companies
with higher additional fees. The quantum of punishment has been enhanced under the
above mentioned provisions of the Act vis-a-vis the earlier Act i.e. Companies Act, 1956.
A specific provision for enhanced fine in case of repeated default has also been included
in the form of section 451 of the Act. Additionally, the provisions of section 164(2) of the
Act, inter alia, providing for disqualification of directors In case a company has not filed
financial statements or annual returns for any continuous period of three financial years
has been extended to all companies.

3. The Ministry has received representations from various stakeholders requesting for
grant of transitional period/one-time opportunity to enable them to file their pending
annual documents to avoid attraction of higher fees/fine and other penal action,
especially disqualification of their Directors prescribed under the new provisions of the
Act.

4. In order to give such an opportunity to the defaulting companies to enable them to

make their default good by filing these belated documents, the Central Government in
exercise of powers conferred under section 403 and 460 of the Companies Act, 2013
has decided to introduce a Scheme namely 'Company Law Settlement Scheme 2014"

Page 1626
 Annexure C39

Circular 34/2014 CLSS, 2014

[CLSS-2014] condoning the delay in filing the above mentioned documents with the
Registrar, granting immunity for prosecution and charging a reduced additional fee of
25% of the actual additional fees payable as per section 403 read with Companies
(Registration Offices and Fee ) Rules, 2014 for filing those belated documents under
the Companies Act, 1956/2013 and the Rules made thereunder.

5. In addition, the scheme gives an opportunity to Inactive companies to get their

companies declared as 'dormant company' under section 455 of the Act (Chapter XXIX)
by filing a simple application at reduced fees. The said provision enables Inactive
companies to remain on the Register of Companies with minimal compliance
requirements.

6. The details of the Scheme are as under:-

(i) The scheme shall come into force on the 15 th August 2014 and shall remain in
force up to 15th October, 2014794.

(ii) Definitions - In this Scheme, unless the context otherwise requires, -

(a) "Act" means the Companies Act, 2013 and Companies Act, 1956 (where
ever applicable);
(b) "Company" means a company as defined in clause of 20 of section 2 of
the Companies Act, 2013;
(c) "defaulting company" means a company defined under the Companies
Act, 2013, and which has made a default in filing of annual statutory
documents.
(d) "designated authority" means the Registrar of Companies having
jurisdiction over the registered office of the company.
(e) "immunity certificate" means the certificate referred to in sub-paragraph
(vi) of the Scheme;
(f) "inactive Company" means as defined in Explanation (i) to sub-section (1) of
section 455(1) of Companies Act, 2013.

(iii) Applicability: - Any "defaulting company" is permitted to file belated documents

which were due for filing till 30th June 2014 In accordance with the provisions of this
Scheme:

(iv) Manner of payment of fees and additional fee on filing belated document for
seeking Immunity under the Scheme - The defaulting company shall pay statutory
filing fees as prescribed under the Companies (Registration Offices and fee) Rules,
2014 along with additional fees of 25% of the actual additional fee payable on the date
of filing of each belated document.

794
The CLSS was extended till 15 November 2014 by Circular no. 40/2014 dated 15 October 2014. It
was further extended till 31 December 2014 by Circular no. 44/2014 dated 14 November 2014.

Page 1627
 Annexure C39

Circular 34/2014 CLSS, 2014

(v) Withdrawal of appeal against prosecution launched for the offences: If the
defaulting company has filed any appeal against any notice issued or complaint filed
before the competent court for violation of the provisions under the Companies Act,
1956 and/or Companies Act, 2013 in respect of which application is made under this
scheme, the applicant shall before filing an application for issue of immunity certificate,
withdraw the appeal and furnish proof of such withdrawal along with the application.

(vi) Application for issue of Immunity in respect of document(s) filed under the
Scheme —The application for seeking immunity in respect of belated documents filed
under the Scheme may be made electronically in the e-Form CLSS-2014 annexed, after
the document(s) are taken on file, or on record or approved by the Registrar of
Companies as the case may be. The e-Form for filing application to obtain such a
certificate will be available on the MCA21 portal from 1" September, 2014 and may be
filed thereafter but not later than three months from the date of closure of the Scheme.
There shall not be any fee payable on this Form.
Provided that this immunity shall not be applicable in the matter of any appeal pending
before the court of law and in case of management disputes of the company pending
before the court of law or tribunal.

(vii) Order by designated authority granting immunity from penalty and

prosecution - The designated authority shall consider the application and upon being
satisfied shall grant the immunity certificate in respect of documents filed under this
Scheme.

(viii) Scheme not to apply in certain cases - (a) This scheme shall not apply to the
filing of belated documents other than the following:
a. Form 20B — Form for filing annual return by a company having share capital.
b. Form 21A — Particulars of Annual return for the company not having share
capital.
c. Form 23AC, 23ACA, 23AC-XBRL and 23ACA-XBRL — Forms for filing
Balance Sheet and Profit & Loss account.
d. Form 66 — Form for submission of Compliance Certificate with the Registrar.
e. Form 23B — Form for intimation for Appointment of Auditors.

(ix) This Scheme shall not apply

a. to companies against which action for striking off the name under sub-section
(5) of section 560 of Companies Act, 1956 has already been initiated by the
Registrar of Companies or
b. where any application has already been filed by the companies for action of
striking off name from the Register of Companies or
c. where applications have been filed for obtaining Dormant Status under section
455 of the Companies Act, 2013;
d. to vanishing companies

(x) After granting the immunity, the Registrar concerned shall withdraw the
prosecution(s) pending if any before the concerned Court(s);

Page 1628
 Annexure C39

Circular 34/2014 CLSS, 2014

(xi) Scheme for Inactive Companies: The defaulting inactive companies, while filing
due documents under CLSS-2014 can, simultaneously, either:
a. apply to get themselves declare as Dormant Company under section 455 of
the Companies Act, 2013 by filing e-form MSC-1 at 25% of the fee for the said
form; OR
b. apply for striking off the name of the company by filing e- Form FTE at 25% of
the fee payable on form FTE.

(xii) Applicability of clause (a) sub-section (2) of Companies Act, 2013 in case of
companies availing the Scheme:- In case of defaulting companies which avail of this
Scheme and file all belated documents, the provisions of clause (a) of sub-section (2)
of section 164 of the Companies Act, 2013 shall apply only for the prospective defaults,
if any, by such companies.

7. At the conclusion of the Scheme, the Registrar shall take necessary action under the
Companies Act, 1956/ 2013 against the companies who have not availed this Scheme
and are in default in filing these documents in a timely manner.

Page 1629
 Annexure C40

Circular 35/2014 Clarification on AS-10

Annexure C40: Circular 35/2014

Clarification on AS-10 Capitalization of cost
[Refer section 133 on AS] General Circular No. 35/2014
F.No.17/66/2013/CL-V
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
5th Floor, 'A' Wing Shastri
Bhawan, Dr. R.P. Road, New
Delhi Dated: 27th August 2014

All Regional Directors,

All Registrars of Companies,
All Stakeholders.
Subject: Clarification Accounting Standards (AS) 10 — Capitalization of Cost -
regarding.

Sir,
Government has received a number of representations seeking clarifications on
capitalization of costs in cases of Competitive Bid power projects. The clarifications
sought were with regard to capitalization of borrowing costs incurred during extended
delay in commercial production for reasons beyond the developer's control, and whether
capitalization of power plant should be unit-wise or project-wise. The matter has been
examined in consultation with the Accounting Standards Board (ASB) of the Institute of
Chartered Accountants of India (ICAI).

2. Accounting Standards AS-10 and AS-16 prescribe the principles of capitalization of

various costs based on the underlying concept that only such expenditure should be
capitalized as form a part of the cost of fixed assets which increase the worth of the
assets. Cost incurred during the extended delay in commencement of commercial
production after the plant is otherwise ready does not increase the worth of fixed assets.
Such costs cannot, therefore, be capitalized.

3. Accounting Standard AS 16, inter alia provides guidance with regard to part
capitalization where some units of a project are complete. In case one of the units of
the project is ready for commercial production and is capable of being used while
construction continues for the other units, costs should be capitalized in relation to that
part once the part is ready for commercial production.

4. It is further clarified that AS 10 and AS 16 are applicable irrespective of whether

the power projects are 'Cost Plus projects' or 'Competitive Bid projects'.
This issues with approval of the competent authority.

Page 1630
 Annexure C41

Circular 36/2014

Annexure C41: Circular 36/2014

Clarification (iv) of Circular 21/2014 stands
omitted
[Refer section 135 and Circular 21/2014 dated 18 June 2014]
General Circular No. 36/2014
F .No.17/66/2013/CL-V
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
5th Floor, 'A' Wing,
Shastri Bhawan, Dr. R.P. Road,
New Delhi-110001
Dated: 17.09.2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Subject: Clarification with regard to provisions of Corporate Social Responsibility
(CSR) under section 135 of the Companies Act, 2013.
Sir,
In continuation of the General Circular No. 21 of 2014 dated 18.06.2014, the following
clarifications are hereby issued:
(i) Rule 4(6) of the Companies (Corporate Social Responsibility Policy) Rules, 2014
as notified on 27.02.2014 has been amended by notification dated 12.09.2014; and
(ii) Consequently, clarification (iv) in General Circular No. 21 of 2014 dated
18.06.2014, stands omitted.
2. This issues with the approval of Competent Authority.

Page 1631
 Annexure C42

Circular 38/2014

Annexure C42: Circular 38/2014

Clarification on refund of deposit under
section 160 by section 8 company
[Refer section 160]
General Circular No. 38/2014
No. 1/22/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, "A" Wing, Shastri Bhavan,
Dr R.P. Road, New Delhi
Dated: 14th October, 2014
To
All Regional Directors,
All Registrars of Companies.

Subject: Right of persons other than retiring directors to stand for directorship -
Refund of deposit under section 160 of the Companies Act, 2013 in
certain cases.
Si r,
Clarity has been sought by companies registered under section 8 of the
Companies Act, 2013 (corresponding to section 25 of Companies Act, 1956) about
the manner in which the amount of deposit of rupees one lakh received by them under
sub-section (1) of section 160 of the Companies Act, 2013 (Act) is to be handled if
the depositor fails to secure more than twenty five per cent of the total valid votes. It
has been noted that the relevant provision is silent on such issue.

2. The matter has been examined in the Ministry and it is clarified that in such cases,
the Board of directors of a section 8 company is to decide as to whether the deposit
made by or on behalf of the person failing to secure more than twenty-five percent of
the valid votes is to be forfeited or refunded.

3. This issues with the approval of the competent authority.

Page 1632
 Annexure C43

Circular 39/2014 Clarification on notes to Consolidated Financial Statement

Annexure C43: Circular 39/2014

Clarification on notes to Consolidated
Financial Statement
[Refer section 129(3)]
General Circular No. 39/2014
No. 4/2/2014-CL-I
Government of India
Ministry of Corporate Affairs
5th Floor, "A" Wing, Shastri Bhavan,
Dr R.P. Road, New Delhi.
Dated: 14th October, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Subject: Clarification on matters relating to Consolidated Financial
Statement.
Sir,
Government has received representations from stakeholders seeking
clarifications on the manner of presentation of notes in Consolidated Financial
Statement (CFS) to be prepared under Schedule III to the Companies Act, 2013(Act).
These representations have been examined in consultation with the Institute of
Chartered Accountants of India (ICAI) and it is clarified that Schedule III to the Act
read with the applicable Accounting Standards does not envisage that a company
while preparing its CFS merely repeats the disclosures made by it under stand-alone
accounts being consolidated. In the CFS, the company would need to give all
disclosures relevant for CFS only.
2. This issues with the approval of the competent authority.
Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)

Page 1633
 Annexure C44

Circular 41/2014 Clarification under CLSS, 2014

Annexure C44: Circular 41/2014

Clarification under CLSS, 2014 on section
164(2)
[Refer section 164(2)]
General Circular No. 41/2014
No. 2/13/2014-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing, Shastri Bhawan,
Dr. R.P. Road, New Delhi.
Dated: 15.10.2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: COMPANY LAW SETTLEMENT SCHEME, 2014 (CLSS-2014) -

Clarification u/s 164(2) of the Companies Act, 2013.
Sir,
Representations have been received from stakeholders seeking clarification as
to whether immunity from disqualification of directors pursuant to clause (a) of sub-
section (2) of section 164 of the Companies Act, 2013 will be applicable with respect
to companies who have filed Balance Sheets and Annual Returns on or after
01/04/2014, but before coming into force of CLSS-2014 with effect from 15.08.2014 as
contained in General Circular No. 34/2014 dated 12/08/2014.

2. The matter has been examined and it is hereby clarified that in case of companies,
who have filed their balance sheets and annual returns on or after 01/04/2014 but prior
to launch of CLSS-2014, disqualification under clause (a) of sub-section (2) of section
164 of the Companies Act, 2013 shall apply only for prospective defaults, if any, by
such companies.

3. This issues with the approval of the competent authority.

Page 1634
 Annexure C45

Circular 42/2014 Clarification on filing of notice of appointment of cost auditor in form CRA-2

[Refer section 164(2) and Circular 02/2015 dated 11 February 2015]

General Circular No. 42/2014
No. 1/40/2013/CL.V-Part
Government of India
Ministry of Corporate Affairs
5th Floor, "A" Wing, Shastri Bhawan, Dr. R. P.
Road, New Delhi.
Dated: 12th November, 2014
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Subject: Clarification on matters relating to the Companies (Cost Records and
Audit) Rules, 2014.
Sir,
Government has received representations from stakeholders seeking
clarifications about Rules 5 (1) and 6 (2) of the Companies (Cost Records and Audit)
Rules, 2014 regarding maintenance of cost records and filing of notice of
appointment of the Cost Auditor in Form CRA-2 in electronic mode. The matter has
been examined in the Ministry and the following is clarified:
Considering delay in availability of Form CRA-2 on the MCA website, it has
been decided to extend the date of filing of the said Form without any
penalty/late fee up to 31st January, 2015. Form CRA-2 will be made available
on the MCA website soon. It is noted that some companies have filed Form 23C
for appointment of Cost Auditor for the financial year 2014-15. It is clarified that
such companies need not file form CRA-2 afresh for the financial year 2014-15.
2. This issues with the approval of the Competent Authority.
Yours faithfully,
(Kamna Sharma)

Page 1635
 Annexure C46

Circular 43/2014

Annexure C46: Circular 43/2014

Clarification on applicability of Chapter III
to issue of FCCB / FCB
[Refer Chapter III]
General Circular No. 43/2014
No. 1/21/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, "A" Wing, Shastri Bhavan, Dr

R.P. Road, New Delhi
Dated: 13th November, 2014
To
All Regional Directors,
All Registrars of Companies.

Subject: Issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign

Currency Bonds (FCBs) - Clarification regarding applicability of
provisions of Chapter III of the Companies Act, 2013.
Sir,
The Ministry has been receiving references from stakeholders seeking clarity
on applicability of provisions of Chapter III of the Companies Act, 2013 (Act) to the
issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds
(FCBs) by Indian companies exclusively to persons resident outside India in
accordance with applicable sectoral regulatory provisions.

2. The matter has been examined in the Ministry in consultation with

Ministry of Finance and SEBI. The issue of FCCBs and FCBs by companies is
regulated by the Ministry of Finance's regulations contained in Issue of Foreign
Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts
Mechanism) Scheme, 1993 (Scheme) and Reserve Bank of India through its various
directions/regulations. It is, accordingly, clarified that unless otherwise provided in the
said Scheme or the directions/regulations issued by Reserve Bank of India, provisions
of Chapter III of the Act shall not apply to an issue of a FCCB or FCB made exclusively
to persons resident outside India in accordance with the above mentioned regulations.
3. This issues with the approval of the competent authority.

Page 1636
 Annexure C47

Circular 45/2014 Extension of time for AGM for companies in J &K

Annexure C47: Circular 45/2014

Clarification Extension of time for AGM for
companies in J & K
[Refer section 96]
General Circular No. 45/2014
F.No.02/13/2014 CL-V
Government of India
Ministry of Corporate Affairs
'A' Wing, 5th Floor, Shastri Bhawan,
Dr. Rajendra Prasad Road,
New Delhi-110001.
Dated: 18.11.2014
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Extension of time for holding Annual General Meeting (AGM) under
section 96(1) of the Companies Act, 2013-Companies registered in State of
Jammu and Kashmir.
Sir,
The State of Jammu and Kashmir faced unprecedented floods, particularly in the
Kashmir valley in September 2014. Kashmir Chamber of Commerce and Industry and
others have represented that due to the devastation caused by the floods, companies
registered in the State could not convene AGMs for the financial year 2013-2014 within
the stipulated time as required under the provisions of Companies Act, 2013.
2. In view of the exceptional circumstances, Registrar of Companies Jammu and
Kashmir is advised to exercise powers conferred on him under the third proviso to
section 96(1) of the Companies Act, 2013 to grant extension of time upto
31/12/2014 to those companies registered in the State of Jammu and Kashmir who
could not hold their AGMs (other than first AGM) for the financial year 2013-14
within the stipulated time.
3. This issues with the approval of the competent authority.
Yours faithfully,
(KMS Narayanan)
Assistant Director

Page 1637
 Annexure C48

Circular 01/2015 Constitution of committee to monitor implementation of CSR Policies

Annexure C48: Circular 01/2015

Constitution of committee to monitor
implementation of CSR Policies
[Refer section 135]
General Circular 01/2015
F.No. 05/09/2014-CSR
Government of India
Ministry of Corporate Affairs
5th floor, 'A' wing, Shastri Bhawan,
Dr. R.P. Road, New Delhi — 110001.
Dated: 03.02.2015
OFFICE MEMORANDUM

Subject: Constitution of a High Level Committee to suggest measures for improved

monitoring of the implementation of Corporate Social Responsibility policies by the
companies under Section 135 of the Companies Act, 2013.

Undersigned has been directed to state that a High Level Committee has been
constituted under the Chairmanship of Shri Anil Baijal, Former Secretary, Govt. of India
to suggest measures for monitoring the progress of implementation of Corporate Social
Responsibility (CSR) policies by companies at their level and by the Government under
the provisions of Section 135 of the Companies Act, 2013 and Rules thereunder.

2. The composition of the High Level Committee is as under:

Sr. Name Role
No.
i. Shri Anil Baijal Chairperson
Former Secretary to Govt. of India
ii. Prof. Deepak Nayyar Member
Professor (Emeritus), Jawaharlal Nehru
University,
New Delhi
iii. Shri Onkar S. Kanwar Member
Chairman & Managing Director, Apollo Tyres
Ltd.
iv. Shri Kiran Karnik Member
Former President-NASSCOMM, New Delhi
v. Secretary, Department of Public Enterprises Member
(Represented by an officer not below the rank
of Joint Secretary)
vi. Additional Secretary (*) Member-Convener
Ministry of Corporate Affairs

Page 1638
 Annexure C48

Circular 01/2015 Constitution of committee to monitor implementation of CSR Policies

(*) Economic Adviser, MCA will discharge the responsibility in the absence of Additional
Secretary, MCA.

3. Terms of Reference of the Committee are as under:

(i) To recommend suitable methodologies for monitoring compliance of the
provisions of Section 135 (Corporate Social Responsibility) of the Companies Act, 2013
by the companies covered thereunder.
(ii) To suggest measures to be recommended by the Government for adoption by
the companies for systematic monitoring and evaluation of their own CSR initiatives.
(iii) To identify strategies for monitoring and evaluation of CSR initiatives through
expert agencies and institutions to facilitate adequate feedback to the Government with
regard to efficacy of CSR expenditure and quality of compliance by the companies.
(iv) To examine if a different monitoring mechanism is warranted for Government
Companies undertaking CSR, and if so to make suitable recommendations in this
behalf.
(iii) Any other matter incidental to the above or connected thereto.

4. The Committee shall submit its report within Six months from the date of holding of
its first meeting.

5. Ministry of Corporate Affairs and Indian Institute of Corporate Affairs (IICA) shall
jointly provide secretarial and technical support to the High Level Committee.

6. This issues with the approval of Hon’ble Union Minister for Corporate Affairs.
(Dr. Pankaj Srivastava)
Director
Telephone:011-23389263
Email: pankaj.srivastava@gov.in

Page 1639
 Annexure C49

Circular 02/2015

Annexure C49: Circular 02/2015 Extension

of time for filing form CRA-2 for
appointment of cost auditor
[Refer section 164(2) read with Circular 42/2014 dated 12 th November 2014]
General Circular No.02/2015
No. 1/40/2013-CL-V-Part
Government of India
Ministry of Corporate Affairs
*****
5th Floor, 'A' Wing, Shastri Bhawan,
New Delhi: 110001
Dated: 11th February, 2015
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders
Subject: Extension of time for filing of Notice of appointment of the Cost
Auditor in Form CRA-2.
Si r,
In continuation to the General Circular No. 42/2014, the last date of
filing of Form CRA-2 without any penalty/late fee is hereby extended upto
31st March, 2015.
2. This issues with the approval of competent authority.

Page 1640
 Annexure C50

Circular 03/2015 Clarification on filing of form DIR-11 and form DIR-12

Annexure C50: Circular 03/2015

Clarification on filing of form DIR-11 and
form DIR-12
[Refer section 168 and Rules 15 and 16 of the Companies (Appointment and
Qualification of Directors) Rules, 2014]
MCA General Circular 03/2015
F.No.MCA21/272/2014
Government of India
Ministry of Corporate Affairs
5th floor, ‘A’ Wing, Shastri Bhawan,
Dr. R. P. Road, New Delhi
Dated: 03rd March 2015
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.
Clarification relating to filing of e-form DIR-11 and DIR-12 under the
Companies Act, 2013- regarding.
Sir,
This Ministry has received several representations about the difficulties faced by
stakeholders due to deactivation of Digital Signature Certificate (DSC) following en
masse resignation of all the directors of a company before appointment of new
directors in their places. The difficulty arises because of automatic deactivation of
DSC on filing of DIR-11 (Notice of resignation of a director to the Registrar) by the
resigned/resigning Director (s), and none of the new Director's details having been
filed. As a result, form DIR-12 (Particulars of appointment of directors and the key
managerial personnel and the changes among them) cannot be filed by a company
due to lack of an authorized signatory Director.
2. In order to enable the filing of such e-forms and till an alternative mechanism is
put in place in MCA21 system, it is clarified that the Registrar of Companies within

Page 1641
 Annexure C50

Circular 03/2015 Clarification on filing of form DIR-11 and form DIR-12

their respective jurisdictions are authorized, on request from the stakeholders, and
after due examination, to allow any one of the resigned director who was an
authorized signatory Director for the purpose of filing DIR-12 only along with
additional fees, as applicable and subject to compliance of other provisions of
Companies Act, 2013.
3.This issues with the approval of Secretary, MCA.
Yours faithfully,
(KMS Narayanan)
Assistant Director (Policy)

Page 1642
 Annexure C51

Circular 04/2015 Loan to employees and Sec.186

Annexure C51: Circular 04/2015

Clarification on loan to employees and
section 186
General Circular No. 04/2015
No. 1/32/2013-CL.V Government of India
Ministry of Corporate Affairs
5th floor, A' wing, Shastri Bhavan
New Delhi — 110001
Dated: 10/03/2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject : Clarification with regard to section 185 and 186 of the Companies Act, 2013
— loans and advances to employees - reg.

Sir,

This Ministry has received a number of references seeking clarification on the

applicability of provisions of section 186 of the Companies Act, 2013 relating to grant of
loans and advances by Companies to their employees.

2. The issue has been examined and it is hereby clarified that loans and/or
advances made by the companies to their employees, other than the managing or whole
time directors (which is governed by section 185) are not governed by the requirements
of section 186 of the Companies Act, 2013. This clarification will, however, be applicable
if such loans/advances to employees are in accordance with the conditions of service
applicable to employees and are also in accordance with the remuneration policy, in
cases where such policy is required to be formulated.

3. This issues with the approval of the Secretary.

Page 1643
 Annexure C52

Circular 05/2015 Pvt Co recevining amount from its Directors or relatives

Annexure C52 Circular 05/2015:

Clarification on amount received by private
companies from its members, directors or
their relatives prior to 01 April 2014
General Circular No. 05/2015

F. No. 1/8/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr. R.P. Road, New Delhi.
Dated: 30th March, 2015
To
All Regional Directors,
All Registrars of Companies,
All stakeholders.

Subject: Amounts received by private companies from their members,

directors or their relatives before 1st April, 2014 - Clarification
regarding applicability of Companies (Acceptance of Deposits)
Rules, 2014
Sir,

Stakeholders have sought clarifications as to whether amounts received by

private companies from their members, directors or their relatives prior to 1st April,
2014 shall be considered as deposits under the Companies Act, 2013 as such
amounts were not treated as 'deposits' under section 58A of the Companies Act,
1956 and rules made thereunder.

2.The matter has been examined in consultation with RBI and it is clarified that
such amounts received by private companies prior to 1st April, 2014 shall not be
treated as 'deposits' under the Companies Act, 2013 and Companies (Acceptance of
Deposits) Rules, 2014 subject to the condition that relevant private company shall
disclose, in the notes to its financial statement for the financial year commencing on
or after 1st April, 2014 the figure of such amounts and the accounting head in which
such amounts have been shown in the financial statement.

Page 1644
 Annexure C52

Circular 05/2015 Pvt Co recevining amount from its Directors or relatives

3. Any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall,
however, be in accordance with the provisions of Companies Act, 2013 and rules
made thereunder.

4.This issues with the approval of the competent authority.

Page 1645
 Annexure C53

Circular 06/2015 Clarification under section 186(7)

Annexure C53 Circular 06/2015:

Clarification under section 186 (7)
General Circular No. 06/2015
File No. 5/3/13-CL.V
Government of India
Ministry of Corporate Affairs
5th floor, 'A' wing, Shastri Bhavan
Dr. R P Road, New Delhi.
Dated 9th April, 2015
All Regional Directors,
All Registrar of Companies,
All Stakeholders.
Subject : Clarification under sub-section (7) of section 186 of the
Companies Act, 2013
Sir,
Attention of this Ministry has been drawn to General Circular No 06/2013 dated
14.03.2013 vide which it was clarified that in cases where the effective yield (effective
rate of return) on tax free bonds is greater than the yield on prevailing bank rate, there
was no violation of Section 372A(3) of Companies Act, 1956. Stakeholders have
requested for similar clarification w.r.t. corresponding section 186(7) of the Companies
Act, 2013.
2. The matter has been examined in the Ministry and it is hereby clarified that in
cases where the effective yield (effective rate of return) on tax free bonds is greater
than the prevailing yield of one year, three year, five year or ten year Government
Security closest to the tenor of the loan, there is no violation of sub-section (7) of
section 186 of the Companies Act, 2013.
3. This issues with the approval of competent authority.
Yours faithfully,
(KMS Narayanan)
Assistant Director
Phone 23387263

Page 1646
 Annexure C54

Circular 7/2015

Annexure C54: Circular 07/2015

Clarification on remuneration of managerial
person under Act of 1956
[Section 197 and Schedule V]
General Circular No. 07/2015
F. No. 1/5/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr. R.P. Road, New Delhi
Dated: 10th April, 2015
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Remuneration to managerial person under Schedule XIII of the

Companies Act, 1956 - Clarification with regard to payment for period.

Sir,

Stakeholders have drawn attention to the provisions of Schedule XIII (sixth proviso to
Para (C) of Section II of Part II) of the Companies Act, 1956 (Earlier Act) and as clarified
vide Circular number 14/ 11/2012-CL-VII dated 16th August, 2012, which allowed listed
companies and their subsidiaries to pay remuneration, without approval of Central
Government, in excess of limits specified in para II Para (C) of such Schedule if the
managerial person met the conditions specified therein. Stakeholders have expressed
that since similar provisions are not available in the Schedule V of the Companies Act,
2013, there is a need for a clarification that a managerial person appointed in accordance
with such provision of Schedule XIII of Earlier Act may receive relevant remuneration for
the period as approved by the company in accordance with such provisions of Earlier
Act.

2. The matter has been examined in the light of earlier clarifications on transitional
matters issued by the Ministry. It is clarified that a managerial person referred to in para
1 above may continue to receive remuneration for his remaining term in accordance with
terms and conditions approved by company as per relevant provisions of Schedule XIII
of earlier Act evenif the part of his/her tenure falls after 1st April, 2014.

3. This issues with the approval of the competent authority.

Page 1647
 Annexure C55

Circular 08/2015 Extension of time for filing form CRA-2

General Circular No. 8/201S
File No./1/40/2013/CL-V
Government of India
Ministry of Corporate Affairs
'A' Wing, 5th floor, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-110001
Dated: 12th June, 201S
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Sub: - Extension of time for filing of Notice of appointment of the Cost Auditor for the
F.Y. 2015-16 in Form CRA-2 and filing of cost audit report to the Central
Government for the F.Y. 2014-15 in form CRA-4.
Sir,
The Ministry has received several representations about the non-availability of
the revised form CRA-2 on MCA-21 required for filing of notice of appointment of the
Cost Auditor for the F.Y. 2015-16, although the time limit for filing of the same has either
lapsed or will be lapsing. The revised form CRA-2 has now been notified on 12th June,
2015 and is available on the MCA21 system for filing.
2. In view of the delay in availability of revised Form CRA-2 on the MCA21 portal,
however, the additional fee on account of any delay beyond the prescribed period of
30 days from the date of Board Meeting in which the appointment of the Auditor was
made for filing of CRA-2 for the financial year starting on or after 1st April, 2015 is
waived for all such filings till 30th June, 2015.
3. The revised e-Form CRA-4 has also been notified vide the above mentioned
notification and will be made available on MCA-21 portal shortly. Therefore, on the similar
lines mentioned in above paras, additional fees on delayed filing of form CRA-4 beyond
the prescribed period of 30 days from the date of receipt of a copy of Cost Audit Report
from the Cost Auditor for the Financial Year starting on or after 1st April, 2014 is also
waived for all such filings till 31st August, 2015.
4. This issues with the approval of the Competent Authority.
Yours faithfully,
(KMS. Narayanan)
Assistant Director

Page 1648
 Annexure C56:

Circular 09/2015 Clarification on repayment of deposits

General Circular No. 09 /2015

No. 1/8/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan,
Dr R.P. Road, New Delhi
Dated: 18th June, 2015
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification on repayment of deposits accepted by the companies before the

commencement of the Companies Act, 2013 under section 74 of the said Act

Sir,

This Ministry has received representations seeking clarification regarding processing of

the deposits related complaints received from investors under section 74 of the
Companies Act, 2013 (the said Act) in respect of defaults made by companies in
repayment of deposits accepted by them before the commencement of the said Act i.e.
before 1st April, 2014 and filing of prosecutions against defaulting companies by the
Registrars of Companies/Regional Directors.

2. The matter has been examined in the Ministry and it is clarified that vide Removal of
Difficulties (Second) Order [S.O. 1428(E)] dated 2nd June, 2014 and Removal of
Difficulties (Fourth) Order [S.O. 1460(E)] dated 6th June, 2014, the Company Law Board
has been empowered to exercise the powers of National Company Law Tribunal under
sub-section (4) of section 73 and sub-section (2) of section 74 of the said Act, till the
latter's constitution. Thus, a depositor is free to file an application under section 73 (4) of
the said Act, with the Company Law Board if the company fails to make repayment of
deposits accepted by it. Further the company may also file application under section
74(2) of the said Act with the Company Law Board seeking extension of time in making
the repayment of deposits accepted by it before the commencement of the provisions of
the said Act .

3. Further, attention is also drawn to Explanation appearing below Rule 19 of the

Companies (Acceptance of Deposits) Rules, 2014 which clarifies the conditions subject
to which a company would be deemed to have complied with the requirements laid down
in section 74(1)(b) of the Companies Act, 2013. Companies can repay deposits accepted
prior to 1st April, 2014 in accordance with terms and conditions for which the deposits
had been accepted.

4. It is also clarified that there is no bar on the Registrar of Companies for filing of
prosecution against a company if such company fails to make repayment of deposits
accepted by it under the provisions of the Companies Act, 1956 or Companies Act, 2013,
subject to the contents of para 3 above.

Page 1649
 Annexure C56:

Circular 09/2015 Clarification on repayment of deposits

This issues with the approval of the competent authority.
Yours faithfully
(KMS Narayanan)

Page 1650
 Annexure C57

Circular 10/2015

Annexure C57: Circular 10/2015 Extension of

time for filing MGT-7 (Annual Return) and
AOC-4 (Financial Statement) upto 31 Oct.
2015
General Circular No. 10 / 2015
F.No. 01/34/2013 CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing, Shastri
Bhawan, Dr. Rajendra Prasad
Road, New Delhi-1
Dated:13/07/2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing of

forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the
Companies Act, 2013-reg.
[For AOC-4, refer Section 137 and rule 12 of the Companies (Accounts) Rules,
2014 and for MGT-7, refer section 92 and rule 11 of the Companies (Management and
Administration) Rules, 2014]

Sir,
This Ministry has clarified vide General Circular 8/2014 dated 04/04/2014
that provisions of the Companies Act, 2013 relating to financial state ments,
auditors report and board's report shall apply in respect of financial years
commencing on or after 1st April, 2014. Form AOC-4 or Form AOC-4 XBRL
(Format of filing of financial statement) shall, as applicable, have to be used for
filing of such statement for financial years commencing on or after 1st April,
2014. Attention is also invited to this Ministry's General Circular 22/2014 dated
25/06/2014 wherein it has been clarified that MGT-7 (Form of Annual Return)
shall apply to annual returns in respect of financial years ending after 1st April,
2014.

2. The electronic versions of Forms AOC-4, AOC-4 XBRL and MGT-7 are being
developed and shall be made available for electronic filing latest by 30th
September 2015. In addition, a separate form for filing of Consolidated Financial
Statement (CFS) with the nomenclature AOC-4 CFS will be made available
latest by October 2015. MGT-7 has been notified while AOC-4, AOC-4 XBRL
and AOC-4 CFS will be notified shortly.

Page 1651
 Annexure C57

Circular 10/2015
3. In view of this, it has been decided to relax the additional fee payable on
Forms AOC-4, AOC-4 XBRL and Form MGT-7 upto 31/10/2015. Further, a
company which is not required to file its financial statement in XBRL format and
is required to file its CFS would be able to do so in the separate form for CFS
without any additional fees upto 30/11/2015.

4. This issues with the approval of the competent authority.

Yours faithfully,
(Kamna Sharma)

Page 1652
 Annexure C58

Circular 11/2015 Circulating Financial Statement at general meeting with shorter notice and
filing of unaudited financials with ROC

Annexure C58: Circular 11/2015 Circulation

on circulating Financial Statement at general
meeting with shorter notice and filing of
unaudited financials with ROC
General Circular No.11/2015

No. 1/19/1023-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, A Wing, Shastri Bhavan,
Dr. R.P. Road, New Delhi
Dated 21st July, 2015
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders.

Subject: Clarification with regard to circulation and filing of financial statement under
relevant provisions of the Companies Act, 2013-reg.

Sir,
Stakeholders have drawn attention to the proviso to section 101(1) of the
Companies Act, 2013 (Act) which allows general meetings to be called at a shorter
notice than twenty one days, and sought clarification as to whether provisions of section
136 would also allow circulation of financial statements at a shorter notice if conditions
under section 101 are fulfilled.

1.2 The matter has been examined and it is clarified that a company holding a general
meeting after giving a shorter notice as provided under section 101 of the Act may also
circulate financial statements (to be laid/considered in the same general meeting) at
such shorter notice.

2.1 Attention has also been drawn to the provisions of clause (a) of fourth proviso to
section 136 (1) which require every company having a subsidiary or subsidiaries to
place on its website, if any, separate audited accounts in respect of each of its
subsidiary. Further, fourth proviso to section 137(1) requires that a company shall
attach along with its financial statements to be filed with the Registrar, the accounts
of its subsidiary(ies) which have been incorporated outside India and which have not
established their place of business in India. Clarification has been sought on -

Page 1653
 Annexure C58

Circular 11/2015 Circulating Financial Statement at general meeting with shorter notice and
filing of unaudited financials with ROC

(a) Whether a company covered under above provisions can place/ file
unaudited accounts of a foreign subsidiary if the audit of such foreign subsidiary
is not a mandatory legal requirement in the country where such foreign
subsidiary has been incorporated and such audit has not been conducted, and;
(b) Whether accounts of such foreign subsidiary would need to be as per
format under Schedule III/Accounting Standards or the format as per country
of incorporation of the foreign subsidiary would be sufficient.

2.2 The matter has been examined in the Ministry in consultation with ICAI and it is
clarified that in case of a foreign subsidiary, which is not required to get its accounts
audited as per legal requirements prevalent in the country of its incorporation and
which does not get such accounts audited, the holding/parent Indian may place/file
such unaudited accounts to comply with requirements of Section 136(1) and 137(1)
as applicable. These, however, would need to be translated in English, if the original
accounts are not in English. Further, the format of accounts of foreign subsidiaries
should be, as far as possible, in accordance with requirements under Companies Act,
2013. In case this is not possible, a statement indicating the reasons for deviation may
be placed/filed alongwith such accounts.
This issues with the approval of the competent authority.
Yours faithfully
(K S Narayanan)
Assistant Director

Page 1654
 Annexure C59

Circular 12/2015 Extension of time for filing cost audit report upto 30 th September, 2015

Annexure C59: Circular 12/2015 Extension

of time for filing cost audit report upto 30th
September, 2015
General Circular No.12/2015
No.52/22/CAB//2015
Government of India
Ministry of Corporate Affairs
5th floor, ‘A’ Wing, Shashtri Bhavan,
New Delhi 110001
Dated 1st September, 2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Extension of time for filing of cost audit report to the Central Government for
the Financial Year 2014-2015 in form CRA-4 - reg.
[For AOC-4, refer Section 137 and rule 12 of the Companies (Accounts) Rules,
2014 and for MGT-7, refer section 92 and rule 11 of the Companies (Management
and Administration) Rules, 2014]

Sir,

In continuation to General Circular No.08/2015 dated 12.06.2015, the last date of

filing of Form CRA-4 without any penalty/late fee is hereby extended upto 30th
September, 2015.

2. This is issued with the approval of competent authority.

[No. 52/22/CAB/2015]
Yours faithfully,
(K. M. S. Narayanan)

Page 1655
 Annexure C60

Circular 14/2015 Extension of time for filing MGT-7, AOC-4 upto 30th November, 2015

Annexure C60: Circular 14/2015 Extension

of time for filing MGT-7, AOC-4 upto 30th
November, 2015
General Circular No.14/2015
F.01/34/2013-CL.V
No. Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri

Bhawan Dr. Rajendra Prasad Road, New Delhi
Dated: 28th October, 2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders

Subject: Relaxation of additional fees and extension of last date of filing of

AOC-4, AOC-4 XBRL and MGT-7 E-Forms under the Companies Act,
2013 - reg.
[For AOC-4, refer Section 137 and rule 12 of the Companies (Accounts) Rules,
2014 and for MGT-7, refer section 92 and rule 11 of the Companies (Management
and Administration) Rules, 2014]
Sir,
In continuation of this Ministry’s General Circular No.10/2015 dated 13.07.2015,
keeping in view the request received from various stakeholders, it has been decided to
relax the additional fee payable on forms AOC-4 and AOC-4 XBRL upto 30th November,
2015. The additional fee requirement for MGT-7 E-Form is also relaxed for all such
forms filed till 30th November, 2015, wherever additional fee is applicable.
2. This issues with the approval of competent authority.
Yours faithfully,
(K.M.S. Narayanan)
Assistant Director
Tel: +911123387263
Copy to:- 1. E-Governance Cell.

Page 1656
 Annexure C60

Circular 14/2015 Extension of time for filing MGT-7, AOC-4 upto 30th November, 2015

Annexure C61: Circular 15/2015 Extension

of time for filing MGT-7, AOC-4 upto 30th
December, 2015
General Circular No. 15/2015
F.No. 01/34/2013 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, W Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 30/11/2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing of forms
MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act,
2013-reg.
[For AOC-4, refer Section 137 and rule 12 of the Companies (Accounts) Rules,
2014 and for MGT-7, refer section 92 and rule 11 of the Companies (Management
and Administration) Rules, 2014]

Sir,

In continuation of this Ministry's General Circular 14/2015 dated 28.10.2015, keeping in

view requests received from various stakeholders, it has been decided to relax the
additional fees payable on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and e- Form MGT-
7 upto 30.12.2015, wherever additional fee is applicable.

2. This issues with the approval of the competent authority.

Yours faithfully,
(K.M.S. Narayanan)
Assistant Director
Tel: +911123387263
Copy to:- 1. E-Governance Cell.

Page 1657
 Annexure C62

Circular 16/2015

Annexure C62: Circular 16/2015 Extension of

time for filing MGT-7, AOC-4 upto 30th
January, 2016 – State of TN and UT
Puducherry
General Circular No. 16/2015
F.No. 01/34/2013 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 30/12/2015
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing of forms MGT-
7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013 -
State of Tamil Nadu and UT of Puducherry - reg.

[For AOC-4, refer Section 137 and rule 12 of the Companies (Accounts) Rules,
2014 and for MGT-7, refer section 92 and rule 11 of the Companies (Management and
Administration) Rules, 2014]

Sir,

In continuation of this Ministry's General Circular 15/2015 dated 30.11.2015, keeping in

view requests received from various stakeholders stating that due to heavy rains and
floods in the State of Tamil Nadu and UT of Puducherry, the normal life/work was
affected, it has been decided to relax the additional fees payable for the State of Tamil
Nadu and UT of Puducherry on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and e- Form
MGT-7 upto 30.01.2016, wherever additional fee is applicable.

2. This issues with the approval of the competent authority.

Page 1658
 Annexure C63

Circular 01/2016 FAQ on CSR

Annexure C63: Circular 01/2016 FAQ on

CSR
General Circular No. 01/2016
F.No. 05/19/2015 - CSR
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 12th January, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.
[Read with Circular No. 05/2016 dated 16th May 2016]

Frequently Asked Questions with regard to Corporate Social Responsibility

under section 135 of the Companies Act, 2013

Sir,

Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies
CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the
Ministry of Corporate Affairs, provide the broad contour within which eligible
Companies are required to formulate their CSR policies including activities to be
undertaken and implement the same in the right earnest. While complying with the
Corporate Social Responsibility (CSR) provisions of the Act, Board of the eligible
companies are empowered to appraise and approve their CSR policy including CSR
projects or programmes or activities to be undertaken. In this connection, Ministry
has been receiving several queries and references seeking further clarifications on
various issues relating to CSR provision of the Act.

2. In continuation to this Ministry's General Circular dated 18th June, 2014 and 17th
September, 2014, a set of FAQs along with response of the Ministry is provided for
facilitating effective implementation of CSR :

FREQUENTLY ASKED QUESTIONS ON CORPORATE SOCIAL

RESPONSIBILITIES

Page 1659
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
1. Whether CSR provisions of the Companies Act, 2013 is
applicable to all companies?
CSR provisions of the Companies Act 2013 is applicable to
every company registered under the Companies Act 2013
and any other previous Companies law having
• net worth of rupees five hundred crore or more,
or
• turnover of rupees one thousand crore or more
or
• a net profit of rupees five crore or more during
any financial year
2. What is meaning of 'any financial year' mentioned above?
" Any Financial year" referred under Sub-Section (1) of
Section 135 of the Act read with Rule 3(2) of Companies
CSR Rule, 2014 implies any of the three preceding financial
years (refer General Circular No. 21/2014, dated:
18.06.2014)
3. Whether CSR expenditure of a company can be claimed as
a business expenditure?
The amount spent by a company towards CSR cannot be
claimed as business expenditure. The Finance Act, 2014
provides that any expenditure incurred by an assessee on
the activities relating to Corporate Social Responsibility
referred to in Section 135 of the Companies Act, 2013 shall
not be deemed to be an expenditure incurred by the
assessee for the purposes of the business or profession.
4. Whether the 'average net profit' criteria for Section 135(5) is
Net profit before tax or Net profit after tax?
Computation of net profit for Section 135 is as per section
198 of the Companies Act, 2013 which is primarily PROFIT
BEFORE TAX (PBT).
5. Can the CSR expenditure be spent on the activities beyond
Schedule VII?
General Circular No. 21/2014 dated June 18, 2014 of MCA
has clarified that the statutory provision and provisions of

Page 1660
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
CSR Rules, 2014, is to ensure that activities undertaken in
pursuance of the CSR policy must be relatable to. Schedule
VII of the Companies Act, 2013. The entries in the said
Schedule VII must be interpreted liberally so as to capture
the essence
of the subjects enumerated in the said Schedule. The items
enlisted in the Schedule VII of the Act, are broad-based and
are intended to cover a wide range of activities. The General
Circular also provides an illustrative list of activities that can
be covered under CSR. In a similar way many more can be
covered. It is for the Board of the company to take a call on
this.
6. What tax benefits can be availed under CSR?
No specific tax exemptions have been extended to CSR
expenditure per se. The finance Act, 2014 also clarifies that
expenditure on CSR does not form part of business
expenditure. While no specific tax exemption has been
extended to expenditure incurred on CSR, spending on
several activities like contributions to Prime Minister's Relief
Fund, scientific research, rural development projects, skill
development projects, agricultural extension projects, etc.,
which find place in Schedule VII, already enjoy exemptions
under different sections of the Income Tax Act, 1961.
7. Which activities would not qualify as CSR?
• The CSR projects or programs or activities that
benefit only the employees of the company and their
families.
• One-off events such as
marathons/awards/charitable
contribution/advertisement/sponsorships of TV
programmes etc.
• Expenses incurred by companies for the
fulfillment of any other Act/Statute of regulations
(such as Labour Laws, Land Acquisition Act, 2013,
Apprentice Act, 1961 etc.)

Page 1661
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
• Contribution of any amount directly or indirectly
to any political party.
• Activities undertaken by the company in
pursuance of its normal course of business.
• The project or programmes or activities
undertaken outside India.
8. Whether a holding or subsidiary of a company which fulfils
the criteria under Section 135(1) has to comply with section
135, even if the holding and subsidiary itself does not fulfill
the criteria.
Holding or subsidiary of a company does not have to comply
with Section 135(1) unless the holding or subsidiary itself
fulfills the criteria.
9. Whether provisions of CSR are applicable on Section 8
Company, if it fulfills the criteria of Section 135(1) of the Act.
Section 135 of the Act reads " Every company.......", i.e. no
specific exemption is given to section 8 companies with
regard to applicability of Section 135, hence section 8
companies are required to follow CSR provisions
10. Can contribution of money to a trust/Society/Section 8
Companies by a company be treated as CSR expenditure of
the company?
General Circular No. 21/2014 of MCA dated June 18,
2014 clarifies that Contribution to Corpus of a
Trust/Society/Section 8 companies etc. will qualify as CSR
expenditure as long as:
(a) the Trust/Society/Section 8 company etc. is created
exclusively for undertaking CSR activities or
(b) where the corpus is created exclusively for a purpose
directly relatable to a subject covered in Schedule VII of the
Act.
11. Whether display of CSR policy of a company on website of
the company is mandatory or not?
As per Section 135(4) the Board of Directors of the company
shall, after taking into account the recommendations of CSR

Page 1662
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
Committee, approve the CSR Policy for the company and
disclose contents of such policy in its report and the same
shall be displayed on the company's website, if any (refer
Rule 8 & 9 of CSR Policy Rules 2014).
12. Whether reporting of CSR is mandatory in Board's Report?
The Board's Report of a company qualifying under Section
135(1) pertaining to a financial year commencing on or after
the 1st day of April, 2014 shall include an annual report on
CSR containing particulars specified in Annexure. (refer
Rule 9 of CSR Policy Rules 2014).
13. Whether it is mandatory for Foreign Company to give report
on CSR activity?
In case of a foreign company, the balance sheet filed under
sub-clause (b) of subsection (1) of section 381 shall contain
an Annexure regarding report on CSR.
14. Whether contribution towards disaster relief qualifies as
CSR or not?
(May please refer point no. 7 to the annexure to General
Circular dated 18.06.2014 issued by Ministry of Corporate
Affairs).
15. Whether contribution in kind can be monetized to be shown
as CSR expenditure?
Section 135 prescribes "....shall ensure that company
spends....".The company has to spend the amount.
16. if a company spends in excess of 2% of its average net profit
of three preceding years on CSR in a particular year, can the
excess amount spent be carried forward to the next year and
be offset against the required 2% CSR expenditure of the
next year?
Any excess amount spent (i.e., more than 2% as specified
in Section 135) cannot be carried forward to the subsequent
years and adjusted against that year's CSR expenditure.
17. Can the unspent amount from out of the minimum required
CSR expenditure be carried forward to the next year?

Page 1663
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
The Board is free to decide whether any unspent amount
from out of the minimum required CSR expenditure is to be
carried forward to the next year. However, the carried
forward amount should be over and above the next year's
CSR allocation equivalent to at least 2% of the average net
profit of the company of the immediately preceding three
years.
18. What is the role of Government in monitoring implementation
of CSR by companies under the provision of the Companies
Act, 2013?
The main thrust and spirit of the law is not to monitor but to
generate conducive environment for enabling the corporates
to conduct themselves in a socially responsible manner,
while contributing towards human development goals of the
country.
The existing legal provisions like mandatory disclosures,
accountability of the CSR Committee and the Board,
provisions for audit of the accounts of the company etc.,
provide sufficient safeguards in this regard. Government has
no role to play in monitoring implementation of CSR by
companies
19. Whether government is proposing to establish any
mechanism for third parties to monitor the quality and
efficacy of CSR expenditure as well as to have an impact
assessment of CSR by Companies?
Government has no role to play in engaging external experts
for monitoring the quality and efficacy of CSR expenditure of
companies. Boards/CSR Committees are fully competent to
engage third parties to have an impact assessment of its
CSR programme to validate compliance of the CSR
provisions of the law.
20. Can CSR funds be utilized to fund Government Scheme?
The objective of this provision is indeed to involve the
corporates in discharging their social responsibility with their
innovative ideas and management skills and with greater
efficiency and better outcomes. Therefore, CSR should not

Page 1664
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
be interpreted as a source of financing the resource gaps in
Government Scheme. Use of corporate innovations and
management skills in the delivery of 'public goods' is at the
core of CSR implementation by the companies. In-principle,
CSR fund of companies should not be used as a source of
funding Government Schemes. CSR projects should have a
larger multiplier effect than that under the Government
schemes.
However, under CSR provision of the Act and rules made
thereunder, the Board of the eligible company is competent
to take decision on supplementing any Government Scheme
provided the scheme permits corporates participation and all
provisions of Section 135 of the Act and rules thereunder are
compiled by the company.
21. Who is the appropriate authority for approving and
implementation of the CSR programmes/projects of a
Company? What is Government's role in this regard?
Government has no role to play in this regard. Section 135
of the Act, Schedule VII and Companies CSR Policy Rules,
2014 read with General Circular dated 18.06.2014 issued by
the Ministry of Corporate Affairs, provide the broad contour
within which eligible companies are required to formulate
their CSR policies including activities to be undertaken and
implement the same in the right earnest. Therefore, all CSR
programmes/projects should be approved by the Boards on
the recommendations of their CSR Committees. Changes, if
any, in the programme/project should also be undertaken
only with the approval of the Committee/Board.
22. How can companies with small CSR funds take up CSR
activities in a project/programme mode?
A well designed CSR project or programme can be managed
with even small fund. Further, there is a provision in the CSR
Policy Rules, 2014 that such companies can combine their
CSR programs with other similar companies by way of
pooling their CSR resources. (refer rule 4 in Companies
(CSR Policy) Rules, 2014).

Page 1665
 Annexure C63

Circular 01/2016 FAQ on CSR

Sl. FAQs
No.
23. Whether involvement of employees of the company in CSR
project/programmes of a company can be monetized and
accounted for under the head of 'CSR expenditure'?
Contribution and involvement of employees in CSR activities
of the company will no doubt generate interest/pride in CSR
work and promote transformation from Corporate Social
Responsibility (CSR) as an obligation, to Socially
Responsible Corporate (SRC) in all aspects of their
functioning. Companies therefore, should be encouraged to
involve their employees in CSR activities. However
monetization of pro bono services of employees would not
be counted towards CSR expenditure.

3. This issues with the approval of Competent Authority.

Yours faithfully,
(Seema Rath)
Deputy Director (CSR-Cell)

Page 1666
 Annexure C64

Circular 03/2016 Relaxation of additional fees and extension of time for various e-forms

Annexure C64: Circular 03/2016 Relaxation

of additional fees and extension of time for
various e-forms
General Circular No. 03/2016
F.No. 01/34/2013 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 12th April, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Relaxation of additional fees and extension of last date of filing of various e-Forms
under the Companies Act - reg

Sir,

This Ministry has launched V2R2 on 28th March, 2016, downtime was given to Infosys from
25th March, 2016 to 27th March, 2016. Since the launch of the system, a number of
stakeholders have faced issues and representations have been received from stakeholders to
resolve the issues including, for allowing waiver of additional fee till the new system
stabilizes.

2. In view of the above, it has been decided to relax the additional fee payable on e-forms
which are due for filing by companies between 25th March 2016 to 30th April, 2016 as one
time waiver of additional fee and it is also clarified to stakeholders that if such due e-forms
are filed after 10.05.2016, no such relaxation shall be allowed.

3. This issues with the approval of the Competent Authority.

Yours faithfully
(K. M. S. Narayanan)

Page 1667
 Annexure C65

Circular 04/2016 Clarification on Accounting Standards Amendment Rules

Annexure C65: Circular 04/2016

Clarification on Accounting Standards
Amendment Rules
General Circular No. 04/2016
F.No. 09/09/2009 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 27th April, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Clarification with regard to Companies (Accounting Standards) Amendment

Rules 2016

Sir,

Stakeholders have sought clarifications with regard to the accounting period for which
the accounts would need to be prepared using the Accounting Standards, as
amended through the Companies (Accounting Standards) Amendment Rules, 2016.
The matter has been examined in the Ministry and it is hereby clarified that the
amended Accounting Standards should be used for preparation of accounts for
accounting periods commencing on or after the date of notification.

This issues with the approval of the competent authority.

Yours faithfully
(Sudhir Kapoor)
Deputy Director

Page 1668
 Annexure C66

Circular 05/2016 Clarification on CSR

Annexure C66: Circular 05/2016

Clarification on CSR
General Circular No. 05/2016
F.No. 05/01/2014-CSR
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 16th May, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Clarification with regard to provisions of Corporate Social

Responsibility under section 135 of the Companies Act, 2013

In continuation to this Ministry's General Circular 01 of 2016 dated 12.01.2016, it is

clarified that companies, while undertaking Corporate Social Responsibility activities
under provision of the Companies Act, 2013, shall not contravene any other
prevailing laws of the land including Cigarettes and Other Tobacco Products Act
(COTPA), 2003.

2. This issues with the approval of Competent Authority.

Yours faithfully,
(Seema Rath)
Dy. Director-CSR-Cell

Page 1669
 Annexure C68

Circular 07/2016 Relaxation of additional fees and extension of time for filing various e-forms

Annexure C67: Circular 06/2016 Relaxation

of additional fees and extension of time for
filing various e-forms
General Circular No. 06/2016
F.No. 01/34/2013 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 16th May, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Relaxation of additional fees and extension of last date of filing of various e-

Forms under the Companies Act-reg

Sir,

In continuation of this Ministry's General Circular No. 03/2016 dated 12.04.2016,

keeping in view of requests received from various stakeholders, it has been decided
to extend the period for which the one time waiver of additional fees is applicable to
all e-forms which are due for filing by companies between the 25th March 2016 upto
31st May 2016 as well as extend the last date for filing such documents and availing
the benefit of waiver to 10.06.2016.

2. This issues with the approval of the Competent Authority.

Yours faithfully
(K.M.S. Narayanan
Assistant Director

Page 1670
 Annexure C68

Circular 7/2016

Annexure C68: Circular 07/2016 Relaxation

of additional fees and extension of time for
filing various e-forms
General Circular No. 07/2016
F. No. MCA/21/33/2016-e-Gov cell
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 31st May, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Relaxation of additional fees and extension of time for filing of e-Forms by the
Companies under Companies Act, 2013 and for filing of Annual Return (Form
11 ) by the LLPs under the Limited Liability Partnership Act, 2008

Sir,

In continuation of this Ministry's General Circular No.03/2016 dated

12.04.2016 and General Circular No.06/2016 dated 16.05.2016, keeping in view
requests received from various stakeholders, it has been decided to extend the period
for which the one time waiver of additional fees is applicable to all eforms which are
due for filing by companies between 25.03.2016 to 30.06.2016 as well as extend the
last date for filing such documents and availing the benefit of waiver to 10.07.2016

2. Further, in view of the requests received from stakeholders, it has been decided to
extend the time limit prescribed under the provisions of section 35 of LLP Act, for filing
of Form 11 of LLP in respect of Financial Year ending on 31.3.2016 upto 30.06.2016,
without additional fees.

3. This issues with the approval of competent authority.

Page 1671
 Annexure C69

Circular 08/2016 Relaxation of additional fees and extension of time for AOC-4 and MGT-7

Annexure C69: Circular 08/206 Relaxation of

additional fees and extension of time for
AOC-4 and MGT-7
General Circular No. 08/2016
F. No. MCA 21/68/2016-E-Gov Cell
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 29th July, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Relaxation of additional Fees and extension of last date of in filing AOC-4,

AOC-4 (XBRL), AOC-4 (CFS) and MGT-7 under the Companies Act, 2013

The Ministry have revised form AOC-4 which would be deployed shortly. Further,
Form AOC-4 (XBRL) and Form AOC-4 (CFS) are also under revision and this may
be available for deployment by end of August, 2016.

2. As per the relevant provisions of the Companies Act, 2013, the financial
statements and Annual Returns will have to be filed by the Companies within 30 days
and 60 days of conclusion of AGM or the last day by which AGM ought to have been
held, as the case may be.

3. In the light of the above and keeping in view that some time could be required for
companies to get familiarised with filing of the new forms, it has been decided to allow
companies to file financial statements and Annual Returns on or before 29.10.2016
where due date for holding of the Annual General Meeting is on or after 01,04.2016,
without payment of additional filing fee.

4. This issues with the approval of the competent authority.

Sd/-
(K. M. S. Narayanan)
Assistant Director

Page 1672
 Annexure C70

Circular 09/2016 Issue of Rupee Bonds to Overseas Investor and applicability of Chapter III

Annexure C70: Circular 09/2016 Issue of

Rupee Bonds to Overseas Investor and
applicability of Chapter III
General Circular No. 09/2016
F.No. 1/21/2013-CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 03rd August, 2016
To
All Regional Directors,
All Registrar of Companies.
Issuance of rupee bonds to overseas investors by Indian companies -
Clarification regarding applicability of provisions of Chapter 111 of the
Companies Act, 2013
Sir,

The Ministry has received references from stakeholders seeking clarity on

applicability of provisions of Chapter III of the Companies Act. 2013 (Act) and rule 18
of Companies (Share Capital and Debenture) Rules, 2014 to the issue of rupee
bonds by Indian companies exclusively to persons resident outside India in
accordance with applicable sectoral regulatory provisions.

2. The matter has been examined in the Ministry in consultation with Reserve Bank
of India. The matter relating to issue of rupee denominated bonds to overseas
investors is being regulated by RBI as part of ECB Policy framework. It is,
accordingly, clarified that unless otherwise provided in the circular/ directions/
regulations issued by Reserve Bank of India, provisions of Chapter III of the Act and
rule 18 of Companies (Share Capital and Debenture) Rules. 2014 would not apply to
issue of rupee denominated bonds made exclusively to persons resident outside
India in accordance with applicable sectoral regulatory provisions as stated above.
Necessary changes in Companies (Share Capital and Debenture) Rules. 2014 in this
regard are being made.

3. This issues with the approval of the competent authority.

Page 1673
 Annexure C71

Circular 12/2016

Annexure C71: Circular 12/2016 Relaxation

of additional fees and extension of last date of
filing AOC-4 and MGT-7
General Circular No. 12/2016
F.No. MCA 21/153/2012 E-Gov Cell
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 27.10.2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing AOC-4, AOC-
4 (XBRL), AOC-4 (CFS) and MGT-7 e-forms under the Companies Act, 2013-regarding.

Sir,
In continuation of this Ministry’s General Circular No.08/2016 dated 29.07.2016, keeping
in view the requests received from various stakeholders, it has been decided to further
extend last date for filing of financial statements and annual returns using e-forms AOC-
4, AOC-4 (XBRL), AOC-4 (CFS), or MGT-7, as the case may be, without payment of
additional fees, wherever applicable, till 29th November, 2016.

2. This issues with the approval of the competent authority.

Yours faithfully,
(K.M.S. Narayanan)
Assistant Director

Page 1674
 Annexure C72

Circular 13/2016 Clarification re.filing offline challans with IEPF Authority

Annexure C72: Circular 13/2016

Clarification re. filing offline challans with
IEPF Authority
General Circular No. 13/2016
No. 05/05/2016-IEPF
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 05.12.2016
To
All Stakeholders,
Nodal Officer’s (IEPF) of Concerned Companies
All Regional Director’s & Registrar of Companies of Min of Corp. Affairs

Subject: Clarification Regarding Filing of Offline Challans with IEPF Authority

under Companies Act
In accordance with Investor Education & Protection Fund (Accounting, Audit.
Transfer and Refund) Rules, 2016, notified on 05.09.2016, it is mandatory for the
companies depositing amounts to IEPF under section 125 of Companies Act 2013
to:-
(i) generate challan online only;
(ii) file form IEPF-I mentioning the SRN No. of challan (online mode only).
2. All companies transferring the amount to IEPF are, therefore, requested to ensure
that the above procedure is followed. The challans not generated on MCA 21 portal
will not be accepted after 15.12.2016.
3. This issues with the approval of the Competent Authority.

Yours faithfully,
(Monica Gupta)
Deputy Director
Copy to:-
1. CEO, IEPF Authority
2 Sr. AO, IEPF Authority
3. E-Gov. Cell, MCA
4. Guard file

Page 1675
 Annexure C72

Circular 13/2016 Clarification re.filing offline challans with IEPF Authority

Page 1676
 Annexure C73

Circular 14/2016

Annexure C73: Circular 14/2016 Relaxation

of additional fees and extension of last date of
filing MGT07 and AOC-4 in State of Jammu
and Kashmir
General Circular No. 14/2016
F.No. MCA 02/13/2014 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 07/12/2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.
Subject: Relaxation of additional fees and extension of last date of in filing of
forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the
Companies Act, 2013- State of Jammu and Kashmir
In continuation of this Ministry's General Circular 12/2016 dated 27.10.2016, keeping
in view the requests received from various stakeholders stating that due to
curfew/strikes and disturbances from past more than four months in the State of
Jammu and Kashmir and the resultant difficulty expressed by various stakeholders in
convening meetings in a timely manner, it has been decided to relax the additional
fees payable by the companies having registered offices in the State of Jammu and
Kashmir on e-forms AOC-4, AOC (CFS), AOC-4 XBRL and e- Form MGT-7 upto
31.12.2016, wherever additional fee is applicable.
2. This issues with the approval of the competent authority.

Yours faithfully,
(K.M.S. Narayanan)
Assistant Director

Page 1677
 Annexure C74

Circular 15/2016

Annexure C74: Circular 15/2016 Due date of

transfer of shares to IEPF
General Circular No. 15/2016
F.No. MCA 05/23/2016 -IEPF
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 07/12/2016
To
All Stakeholders,
Nodal Officer’s (IEPF) of Concerned Companies
All Regional Director’s & Registrar of Companies of Min of Corp. Affairs

Subject: Clarification regarding due date of transfer of shares to IEPF Authority

Sir/Madam,
Various representations have been received from the Companies for Simplification of
transfer process of shares under Investor Education & Protection Fund (Accounting.
Audit, Transfer and Refund) Rules, 2016, notified on 05.09.2016. It has also been
requested for extending the due date prescribed for transferring the shares to IEPF
Authority. The matters, including simplification of transfer process and extension of
date for such transfer, are under consideration and the rules are likely to be revised.
The revised rules shall be notified in due course.
2. This issues with the approval of the Competent Authority.
Yours faithfully,
(Monica Gupta)

Page 1678
 Annexure C75

Circular 16/2016

Annexure C75: Circular 16/2016 Removal of

names of Companies – availability of Form
STK on MCA-21 portal
General Circular No. 16/2016
F.No. MCA 1/28/2013 CL-V
GOVERNMENT OF INDIA
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1
Dated: 26th December, 2016
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.
Subject: Removal of names of companies from the Register of Companies-
clarification regarding availability of Form STK on MCA-21 portal-reg
Sir,
This Ministry has commenced provisions of sections 248 to 252 of the Companies
Act, 2013 w.r.t. removal of names of companies from the Register of Companies today
and notified relevant rules simultaneously. However, e-Form STK-2 prescribed under
the said rules, for making application to the Registrar of Companies for removal of
name of the company from the register of companies, is under development and
would be deployed in some time.
2. Stakeholders are requested to bear with the inconvenience caused in this regard.
Yours faithfully,
(K.M.S. Narayanan)

Page 1679
 Annexure C76

Circular 01/2017 – Closure of place of business by foreign company

Annexure C76: Circular 01/2017 Sec.391

closure of business by foreign company
General Circular No. 01/2017
F. No. 1/23/2013-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing, Shastri Bhawan, Dr. R. P. Road, New Delhi
Dated: 22th February, 2017
To
All RDs,
All ROCs,
The Stakeholders.
Sub: Section 391 (2) closure of place of business by a Foreign Company. —
req.

Sir,

Sub-Section (2) of Section 391 of the Companies Act, 2013, states that the
provisions of Chapter XX shall apply mutatis mutandis for closure of the place of
business of a foreign company in India as if it were a company incorporated in India.
These provisions have been brought into force on 15 th December 2016. Stakeholders
have sought clarification with regard to scope of application of the said sub-section.

2. The matter has been examined in the Ministry and it has been noted that subsection
(1) and sub-section (2) of section 391 needs to be read harmoniously.
Accordingly, it is clarified that provisions of sub-section (2) of Section 391 of the
Companies Act, 2013 would apply only in case of a foreign company which has issued
prospectus or IDRs pursuant to provisions of Chapter XXII of Companies Act, 2013.

2. This issues with the approval of Competent Authority.

Yours faithfully,
(Sudhir Kapoor)
Deputy Director
Ph.-23386065

Page 1680
 Annexure C77

Circular 02/2017 – For Companies transferred amount to IEPF prior to 15.12.2016, through
Challans not generated on MCA-21 portal

Annexure C77: Circular 02/2017 For

companies transferred amount to IEPF prior
to 15.12.2016, through Challans not
generated on MCA-21 portal
General Circular No. 02/2017
No.05/05/2016-IEPF
Government of India
Ministry of Corporate Affairs
5th Floor, "A" Wing,
Shastri Bhawan, Dr. R.P. Road
New Delhi-1 10001
Dated: 20/04/2017
To
All Stakeholders,
Nodal Officer's (IEPF) of Concerned Companies
All Regional Director's & Registrar of Companies of Min of Corp. Affairs

Subject: Clarification regarding online generation of Challans for Offline

payment cases.

Sir/Madam,

In terms of Investors Education and Protection Fund (Accounting, Audit,

Transfer and Refund) Rules, 2016 as notified on 05.09.2016, and as per the
prerequisites of e-form IEPF-I, the companies are required to transfer the amounts to
Investor Education and Protection Fund (IEPF) through Challans generated on MCA
21 portal. Attention is also drawn to circular No. 13/2016 dated 05.12.2016 issued by
this office, communicating that Challans which are not generated on MCA 21 portal will
not be accepted after 15.12.2016.

2. However it has been noticed that there are companies, which have transferred the
amount to IEPF prior to 15.12.2016, through Challans not generated on MCA-21 portal
and these companies were/are unable to file IEPF-I .

3. To facilitate filing of e-form IEPF-I by such companies, following two step processes
is suggested: -

Step-I

Page 1681
 Annexure C77

Circular 02/2017 – For Companies transferred amount to IEPF prior to 15.12.2016, through
Challans not generated on MCA-21 portal

Company concerned is required to submit details of the challans in prescribed format

(enclosed) to IEPF Authority on email id challan.iepfa@mca.gov.in. The copy of
challans and certificate for authentication of the details submitted are required to be
obtained from practicing professionals' viz. Chartered Accountants, Company
Secretaries and Cost Accountants. This information will be accepted by IEPF Authority
up to 20th May, 2017 only and no further relaxation shall be granted.

Step Il
The submitted data shall be processed by the IEPF Authority and a Front Office service
will be made available on IEPF website-www.iepf.gov.in from 5th June 2017 for a period
of 30 days i.e. up to 5th July, 201 7 to enable the companies to submit the required data
online. An automated generated number will be provided by the MCA21 system on
validation of entries and using this automated generated number as SRN, companies
may file e-form IEPF-I online & upload investor details without requirement of filing
additional fees.
4. This issues with the approval of the Competent Authority.
Yours Sincerely,

(Monika Gupta)
Deputy Director

Name of the Company

SI. CIN/BCIN Amount Date of Financial Mode of Particulars

No. Paid Payment Year Payment of the
(Always payment
be offline)

Page 1682
 Annexure C78

Circular 03/2017 – Transfer of shares to IEPF Authority

Annexure C78: Circular 03/2017 Transfer of

shares to IEPF Authority
General Circular No. 03/2017
No. 11/06/2017-1EPF
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing
Shastri Bhawan, Dr. R. P. Road
New Delhi - 110001
Dated: 27.04.2017
To
All Stakeholders
Nodal Officer's (IEPF) of Concerned Companies
All Regional Director's & Registrar of Companies of Min. of Corp. Affairs

Subject: Transfer of Shares to IEPF Authority

[THIS CIRCULAR IS WITHDRAWN BY GENRERAL CIRCULAR NO. 05/2017 DATED

16TH MAY 2017]

Sir/Madam,

Pursuant to second proviso to Rule 6 of Investor Education and Protection

Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017
notified on February 28, 2017, where the seven-year period provided under sub-
section (5) of section 124 is completed during September 7, 2016 to May 31, 2017,
the due date for transfer of such shares by companies is May 31, 2017.

2. The IEPF Authority has decided to open a special demat account with National
Securities Depository Limited (NSDL) through a Depository Participant of NSDL

3. The special demat account will have features and functionality to support IEPF
operations using paperless, digital processes and facilitate record keeping of shares
transferred to the IEPF Authority to meet the requirements of the Rules. The details
of the DEMAT account will be issued in due course.

4. All companies required to transfer shares to IEPF Authority under the aforesaid
Rules shall transfer such shares, whether held in dematerialised form or physical
form, to the demat account of IEPF Authority by way of corporate action. Information

Page 1683
 Annexure C78

Circular 03/2017 – Transfer of shares to IEPF Authority

related to the shareholders whose shares are being transferred to IEPF's demat
account shall be provided to NSDL in prescribed format.

5. NSDL will prescribe the file formats and operational procedures for transfer of
shares to special demat account of the IEPF Authority by April 30 th 2017 and May
15th 2017 respectively.

6. The charges to be levied by NSDL to the companies towards upload and

maintenance of records pertaining to shares transferred to the special demat account
of the IEPF Authority are as under:

i. Transaction Fees at the time of effecting transfer of shares to Demat Account of IEPF
Authority: Rs. 10/- per record subject to minimum of Rs. 500/-.

ii. Annual Maintenance Fees: Rs. 11/- per record subject to minimum based on paid-up
capital of the company as mentioned below:

Nominal Value of Admitted Annual Custody Fee

Securities (Rs.) payable by Company (Rs.)

UptoRs.5 crore 2,700

Above Rs.5 crore and up to 6,750
Rs. 10 crore
Above Rs. 10 crore and up to 13,500
Rs.20 crore
Above Rs.20 crore 22,500

These charges are in addition to the fees that Depositories levy on the companies
for corporate actions.
Yours faithfully,

(Monika Gupta)
Deputy Director

Page 1684
 Annexure C79

Circular 04/2017 – Applicability of Sec.16(1)(a)

Annexure C79: Circular 04/2017

Applicability of Sec.16(1)(a)
General Circular No. 04/2017
F. No. 17/89/2016-CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing
Shastri Bhawan, Dr. R. P. Road
New Delhi - 110001
Dated: 16.05.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Clarification regarding applicability of Section 16(1)(a) of the Companies

Act, 2013 with reference to cases under corresponding provisions of Companies
Act, 1956 – reg.

Sir,
A representation was received from Regional Director, Mumbai seeking clarification as to
whether Regional Directors can entertain, fresh applications u/s 16 of the Companies Act, 2013
in respect of applications which were earlier rejected by them under Companies Act, 1956 on
the ground of being time-barred ac the prescribed period of twelve months had been completed
(under Section 22 (1) (ii) (b) of the Companies Act, 1956). It was expressed that section 16 of
the Companies Act, 2013 does not specify any time limitation.

2. The matter has been examined in consultation with D/O Legal Affairs and it is clarified that
applications that were rejected by Regional Directors under Section 22(1) (ii) (b) of the
Companies Act, 1956, on the ground that such applications were made after the requisite period
of twelve months specified therein, cannot apply afresh under Section 16 (1)(a) of the
Companies Act, 2013, as the extinguished limitation cannot be considered to be revived even
if no limitation period has been prescribed/laid down in the said section.

3. This issues with approval of the Secretary, MCA.

Yours faithfully,
(KMS Narayanan)
Asst. Director

Page 1685
 Annexure C80

Circular 05/2017 – Transfer of shares to IEPF Authority

Annexure C80: Circular 05/2017 Transfer of

shares to IEPF Authority
General Circular No. 05/2017
No. 11/06/2017-IEPF
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing
Shastri Bhawan, Dr. R. P. Road
New Delhi - 110001
Dated: 16.05.2017
To
All Stakeholders
Nodal Officer’s (IEPF) of Concerned Companies
All Regional Director’s & Registrar of Companies of Min. of Corp. Affairs

Subject: Transfer of shares to IEPF Authority

Sir/Madam,

Please refer to General Circular No. 03/2017 dated 27.04.2017 regarding "Transfer of shares
to IEPF Authority" issued by this office.

2. The subject matter of the said circular is being reviewed by the Ministry and hence the said
circular stands withdrawn with immediate effect. Fresh instructions on the matter will be issued
in due course of time.

3. This issues with the approval of the Competent Authority.

Yours sincerely,
(Monica Gupta)
Deputy Director

Page 1686
 Annexure C81

Circular 06/2017 – Due date for transfer of shares to IEPF Authority

Annexure C81: Circular 06/2017

Clarification on due date of transfer of shares
to IEPF Authority
General Circular No. 06/2017
No. 11/06/2017-IEPF
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing
Shastri Bhawan, Dr. R. P. Road
New Delhi - 110001
Dated: 29.05.2017
To
All Stakeholders
Nodal Officer’s (IEPF) of Concerned Companies
All Regional Director’s & Registrar of Companies of Min. of Corp. Affairs

Subject: Clarification regarding due date of transfer of shares to IEPF Authority

Sir/Madam,

Pursuant to second proviso to Rule 6 of Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 notified on February
28, 2017, where the seven year period provided under sub-section (5) of section 124 is
completed during September 7, 2016 to May 31, 2017, the due date for transfer of such shares
by companies is May 31, 2017.

2. The modalities for transfer/ transmittal of shares from companies accounts to the demat
account of the IEPF Authority are being finalized with the depositories. IEPF Authority is
considering to open special Demat account and till opening of demat accounts, the due date for
transfer of shares stands extended. In view of this, a revised due date for transfer/ transmittal
of shares shall be notified soon.

3. Companies, are advised to complete all formalities, as laid down in the aforesaid Rules
without waiting for the fresh dates. Companies which have already published notice in
newspaper and send notices to the shareholders, need not give the fresh notices again due to
this extension.

4. This issues with the approval of Competent Authority.

Yours sincerely,
(Monica Gupta)
Deputy Director

Page 1687
 Annexure C82

Circular 7/2017

Annexure C82: Circular 07/2017

Clarification on transmission of securities by
operation of law
General Circular No. 07/2017
No. 05/03/2016-IEPF
Government of India
Ministry of Corporate Affairs
5th Floor, 'A' Wing
Shastri Bhawan, Dr. R. P. Road
New Delhi - 110001
Dated: 05.06.2017
To
All Stakeholders
Nodal Officer’s (IEPF) of Concerned Companies
All Regional Director’s & Registrar of Companies of Min. of Corp. Affairs

Subject: Clarification regarding transmission of securities by Operation of Law – Reg.

Sir/Madam,

Clarity has been sought by stakeholders w.r.t. issue of duplicate shares under Rule 6(3)(d) of
the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund)
Rules, 2016. It has been stated that since transfer of shares to IEPF under section 124 (6) of the
Companies Act, 2013 read with rules referred to above takes place on account of operation of
law hence the procedure followed during transmission of shares may be followed in such cases
and duplicate shares need not be issued in such cases. The suggestion made by the
stakeholders has been examined in the Ministry and it is clarified that the procedure similar to
what is followed in case of transmission of shares may be followed by companies while
transferring shares to IEPF Authority pursuant to section 124 (6) read with applicable rules.

2. This issues with the approval of the Competent Authority.

Yours faithfully,
(Monica Gupta)

Page 1688
 Annexure C83

Circular 08/2017 – Clarification on exemption to pvt ltd u/s.143(3)(i)

Annexure C83: Circular 08/2017

Clarification regarding applicability of
exemption given to certain private companies
under section 143(3)(i) of the Companies Act,
2013
General Circular No. 08/2017
No. 1/1/2014-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 25.07.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Clarification regarding applicability of exemption given to certain private

companies under section 143(3)(i) of the Companies Act, 2013.

Sir/Madam,

Stakeholders have drawn attention of this Ministry to the serial no. 5 of notification No. G.S.R.
583(E) dated 13th June, 2017 which states that requirements of reporting under section
143(3)(i) of the Companies Act, 2013 shall not apply to certain private companies as mentioned
therein and have sought clarification w.r.t. the financial year(s) in respect of which the said
exemption shall be applicable. The issue has been examined in the Ministry and it is hereby
clarified that the exemption shall be applicable for those audit reports in respect of financial
statements pertaining to financial years commencing on or after 1st April, 2016, which are made
on or after the date of the said notification.

2. This issues with the approval of the Competent Authority.

Yours faithfully,
(KMS Narayanan)
Asst. Director

Page 1689
 Annexure C84

Circular 9/2017

Annexure C84: Circular 09/2017 Exemptions

given to certain unlisted public companies
from the appointment of independent
directors
General Circular No. 09/2017
No. 1/22/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 05.09.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Exemptions given to certain unlisted public companies under the Companies
(Appointment and Qualification of Directors) Rules, 2014 from the appointment of
independent directors – reg.

Sir,
This Ministry, vide notification number G.S.R. 839(E) dated 5th July, 2017 issued the Companies
(Appointment and Qualification of Directors) Amendment Rules, 2017 inter-alia amending rule 4
of the Companies (Appointment and Qualification of Directors) Rules, 2014. The said amended
Rule 4 inter-alia provides that an unlisted public company which is a joint venture, a wholly owned
subsidiary or a dormant company will not be required to appoint Independent Directors.
Stakeholders have sought clarifications with regard to the meaning of joint venture for the
purposes of availing exemption under Rule 4 of the aforesaid Rules as such a term is not defined
in the Companies Act, 2013.

2.The matter has been examined and it is hereby clarified that a "joint venture" would mean a
joint arrangement, entered into in writing, whereby the parties that have joint control of the
arrangement, have rights to the net assets of the arrangement. The usage of the term is similar
to that under the Accounting Standards.

3. This issues with the approval of Competent Authority.

Yours faithfully,
(KMS Narayanan)

Page 1690
 Annexure C85

Circular 10/2017

Annexure C85: Circular 10/2017 Obligation

to comply with the Ind AS- Payment Banks,
Small Finance Banks which are subsidiaries
of Corporates
General Circular No. 10/2017
F.No. 01/01/2009-CL-V (Pt. IV)
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi
Dated: 13.09.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Obligation to comply with the Indian Accounting Standards (Ind AS) and Rule 4
of Companies (Indian Accounting Standards) Rules, 2015- Payment Banks, Small Finance
Banks which are subsidiaries of Corporates.

Sir,
This Ministry vide notification no. GSR 365(E), dated 30.03.2016 notified Companies (Indian
Accounting Standards) Amendment Rules, 2016 inter-alia amending Companies (Indian
Accounting Standards) Rules, 2015. Some stakeholders have sought clarifications with regard
to implementation of Ind AS wherein the holding company has Payment Banks or Small Finance
Banks as its subsidiaries.

2. The matter has been examined and it is hereby clarified that the holding company if it is
covered by the corporate sector roadmap for implementation of Ind AS, shall follow the corporate
sector roadmap and if the company has got payment bank or small finance bank as its subsidiary
then subsidiary company shall follow the banking sector roadmap prescribed vide RBI circular
DBR.BP.BC.No.76/21.07.001/2015-16 dated 11th February, 2016 on "Implementation of Indian
Accounting Standards (Ind AS)" read with circular DBR.NBD.No.25/16.13.218/2016-17 dated
6th October, 2016 on "Operating Guidelines for Payments Banks". However, the Payment Banks
or Small Finance Banks shall provide the Ind AS financial data to its holding company for the
purpose of consolidation.

3. This issues with the approval of Competent Authority.

Yours faithfully,
(Sudhir Kapoor)

Page 1691
 Annexure C86

Circular 11/2017

Annexure C86: Circular 11/2017

Clarification regarding the timelines for
making applicable/available new Form DPT-
3
General Circular No. 11/2017
F.No. 01/01/2009-CL-V (Pt. IV)
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 27.09.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Clarification regarding the timelines for making applicable/available new Form
DPT-3 issued vide the Companies (Acceptance of Deposits) Second Amendment Rules,
2017 – reg.

Sir,
This Ministry, vide notification number G.S.R. 1172(E) dated 19th September, 2017 has issued
the Companies (Acceptance of Deposits) Second (Amendment) Rules, 2017 thereby amending
the Companies (Acceptance of Deposits) Rules, 2014. The said amendment Rules inter-alia
provide for substitution of existing Form DPT-3 with a new Form DPT-3. Stakeholders have
sought clarifications w.r.t. timelines of the applicability/ availability of the new Form DPT-3.

2. The matter has been examined and it is hereby clarified that new Form DPT-3 shall be made
available for E-filing after the month of November, 2017 and till the time the new e-form is made
available, the existing e-form can be used.

3. This issues with the approval of Competent Authority.

Yours faithfully,
(KMS Narayanan)

Page 1692
 Annexure C87

Circular 12/2017 Transfer of shares to IEPFA

Annexure C87: Circular 12/2017 Transfer of

shares to IEPF Authority
General Circular No. 12/2017
No. 11/06/2017-IEPF
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 16.10.2017
To
All Stakeholders,
Nodal Officers (IEPF) of Concerned Companies
All Regional Directors and Registrar of Companies
MD & CEO NSDL
MD & CEO CDSL

Subject: Transfer of shares to IEPF Authority.

Pursuant to second proviso to Rule 6 of Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016 as amended time to time, wherein the
seven years period provided under sub-section (5) of section 124 is completed for
unpaid/unclaimed dividends during September 7, 2016 to October 31, 2017, the due date for
transfer of such shares by companies is 31st October, 2017.

2.The IEPF Authority has opened demat accounts with National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL) through Punjab National Bank and
SBICAP Securities Limited respectively, as Depository Participants. The details of said accounts
are as under:

Particulars PNB SBI CAP

DP ID IN3000708 12047200
Client ID 10656671 13676780

3. These demat accounts will have features and functionality to support IEPF operations using
paperless, digital processes and facilitate record keeping of shares transferred to the IEPF
Authority to meet the requirements of the Rules.

4. All companies which are required to transfer shares to IEPF Authority under the aforesaid
Rules, shall transfer such shares, whether held in dematerialised form or physical form, to the
demat accounts of IEPF Authority by way of corporate action. The Information related to the
shareholders, whose shares are being^ transferred to IEPF’s demat accounts with PNB or
SBICAP shall be provided by the companies to NSDL or CDSL respectively as per the prescribed
format by the concerned depository.

Page 1693
 Annexure C87

Circular 12/2017 Transfer of shares to IEPFA

5. The Ministry of Corporate Affairs has held separate discussions with NSDL and CDSL during
which they have agreed to levy reduced charges for account maintenance and record keeping
pertaining to shares transferred to the demat accounts of IEPF Authority. A Memorandum of
Understanding (MOU) to the effect is being finalized with the two depositories and the same will
also be uploaded on website www.iepf.gov.in on finalization. NSDL and CDSL shall, based on
these discussions, separately notify the charges, which shall not be more than those finalized in
the MOU. NSDL and CDSL are required to allow the services with immediate effect.

6. Any cash benefit accruing on account of shares transferred to IEPF such as dividend,
proceeds realised on account of delisting of equity shares of the company, amount entitled on
behalf of security holder if the company is being wound up as per Rule 6, sub-rule (10), (11) and
(12) of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and
Refund) Rules, 2016, shall be transferred by companies to bank account opened by the Authority
with Punjab National Bank, Sansad Marg, New Delhi, which has been linked to demat accounts
mentioned at para 2 above.

7. It is clarified that Only amounts mentioned in para 6 above are to be transferred to Bank
account indicated above. Transfer of amount due to be transferred under section 125(2) of the
Companies Act, 2013 or any other amount to aforesaid account is strictly prohibited.

8. This issues with the approval of the Competent Authority.

Page 1694
 Annexure C88

Circular 13/2017

Annexure C88: Circular 13/2017 Relaxation

for filing AOC-4 XBRL
General Circular No. 13/2017
[Section 137]
F.No. 01/19/2013-CL-V (Pt.)
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 26.10.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of filing of AOC-4 XBRL
E- Forms using Ind AS under the Companies Act, 2013-reg.

Sir,
All companies required to prepare or voluntarily preparing their financial statements in
accordance with Companies (Indian Accounting Standards) Rules, 2015 for financial year 2016-
2017 are required to file their statements only in XBRL format. The draft taxonomy for Ind AS
has been uploaded since 30.06.2017 in order to enable the stakeholders to familiarize
themselves with the new requirements. The development of tools necessary for deployment of
the taxonomy for XBRL filing is expected to be completed by 28.02.2018. It has, therefore, been
decided to extend the last date for filing of AOC-4 XBRL for such companies for the financial
year 2016-17 without additional fee till 31st March, 2018. The filing should be made by these
companies accordingly when the Ind AS based XBRL taxonomy is deployed, for which a
separate intimation would be given to all the stakeholders.

2. This issues with the approval of competent authority.

Yours faithfully,
(Sudhir Kapoor)

Page 1695
 Annexure C89

Circular 14/2017

Annexure C89: Circular 14/2017 Relaxation

for filing AOC-4 and AOC-4 XBRL
General Circular No. 14/2017
[Section 137]
F.No. 01/34/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 27.10.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of filing AOC-4 and AOC-
4 (XBRL non-IndAS) under the Companies Act, 2013-reg.

Sir,
The Ministry of Corporate Affairs has extended the date for filing of AOC-4 (XBRL E-forms using
Ind AS) for the financial year 2016-2017 without additional fee till 31.03.2018 vide General
Circular No.13/2017 dt. 26.10.2017. Keeping in view the requests received from various
stakeholders, for allowing extension of time for filing of financial statements for the financial year
ended 31.03.2017 on account of various factors, it has been decided to extend the time for filing
e-forms AOC-4 and AOC-4 (XBRL non-IndAS) and the corresponding AOC-4 CFC e-forms upto
28.11.2017 without levying additional fee.

2. This issues with the approval of the competent authority.

Yours faithfully,
(KMS Narayanan)
Assistant Director

Page 1696
 Annexure C90

Circular 15/2017

Annexure C90: Circular 15/2017 Relaxation

for filing CRA-4
General Circular No. 15/2017
[Rule 6(6) of the Companies (Cost Records and Audit) Rules]
F.No. 52/28/CAB/2017
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 04.12.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of filing of Form CRA-4
under the Companies Act, 2013-reg.

Sir,
The Ministry of Corporate Affairs has received several representations about extension of the
last date for filing of Form CRA-4 without additional fees on account of Companies (Cost Records
and Audit) Amendment Rules, 2017 and other reasons. The matter has been examined and it
has been decided to extend the last date for filing of Form CRA-4, for the financial years starting
on or after 1st April, 2016, without additional fees till 31st December, 2017.

2. This issues with the approval of competent authority.

Yours faithfully,
(KMS Narayanan)

Page 1697
 Annexure C91

Circular 16/2017 – CODS, 2018

Annexure C91: Circular 16/2017 CODS 2018

[The CODS was extended upto 30 April 2018 by General Circular No.2 dated 28th March 2018]
[The CODS was extended upto 01st May 2018 by General Circular No.3 dated 27th April 2018]
[The ROCs directed to re-activate DINs if National Company Law Tribunal orders revival during tenure of
CODS by General Circular No.5 dated 17th May 2018]

General Circular No. 16/2017

F.No. 02/04/ 2017-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi
Dated: 29.12.2017
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Sir,

Subject: Condonation of Delay Scheme, 2018

Whereas, companies registered under the Companies Act, 2013 (or its predecessor Act) are
inter-alia required to file their Annual Financial statements and Annual Returns with the
Registrar of Companies and non-filing of such reports is an offence under the said Act.

Whereas, section 164(2) of the Act read with section 167 of the Companies Act, 2013 [the Act],
which provisions were commenced with effect from 01.04.2014, provide for disqualification of a
director on account of default by a company in filing an annual return or a financial statement
for a continuous period of three years.

Whereas, Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014
further prescribes that every director shall inform to the company concerned about his
disqualification, if any, under section 164(2), in form DIR-8.

Whereas, consequent upon notification of provisions of section 164(2), Ministry of Corporate

Affairs (MCA) had launched a Company Law Settlement Scheme 2014 providing an opportunity
to the defaulting companies to clear their defaults within the time period specified therein and
following the due process as notified.

Whereas, MCA in September 2017, identified 3,09,614 directors associated with the companies
that had failed to file financial statements or annual returns in the MCA21 online registry for a
continuous period of three financial years 2013-14 to 2015-16 in terms of provisions of section
164(2) r/w 167(1)(a) of the Act and they were barred from accessing the online registry and a
list of such directors was published on the website of MCA.

Page 1698
 Annexure C91

Circular 16/2017 – CODS, 2018

Whereas, as a result of above action, there have been a spate of representations from industry,
defaulting companies and their directors seeking an opportunity for the defaulting companies to
become compliant and normalize operations.

Whereas, certain affected persons have also filed writ petitions before various High Courts
seeking relief from the disqualification.

Whereas, with a view to giving an opportunity for the non-compliant, defaulting companies to
rectify the default, in exercise of its powers conferred under sections 403, 459 and 460 of the
Companies Act, 2013, the Central Government has decided to introduce a Scheme namely
"Condonation of Delay Scheme 2018" [CODS-2018] as follows.

1. The scheme shall come into force with effect from 01.01.2018 and shall remain in force up to
31.03.2018

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

i. "Act" means the Companies Act, 2013 and Companies Act, 1956 (where ever applicable);

ii. ''overdue documents'' means the financial statements or the annual returns or other
associated documents, as applicable, in the case of a defaulting company and refer to
documents mentioned in paragraph 5 of the scheme.

iii. "Company" means a company as defined in clause of 20 of section 2 of the Companies Act,
2013;

iv. "Defaulting company" means a company which has not filed its financial statements or annual
returns as required under the Companies Act, 1956 or Companies Act, 2013, as the case may
be, and the Rules made thereunder for a continuous period of three years.

v. "Designated authority" means the Registrar of Companies having jurisdiction over the
registered office of the company.

3. Applicability: - This scheme is applicable to all defaulting companies (other than the
companies which have been stuck off/whose names have been removed from the register of
companies under section 248(5) of the Act). A defaulting company is permitted to file its overdue
documents which were due for filing till 30.06.2017 in accordance with the provisions of this
Scheme.

4. Procedure to be followed for the purposes of the scheme:- (1) In the case of defaulting
companies whose names have not been removed from register of companies,-

i) The DINs of the concerned disqualified directors de-activated at present, shall be temporarily
activated during the validity of the scheme to enable them to file the overdue documents.

ii) The defaulting company shall file the overdue documents in the respective prescribed eForms
paying the statutory filing fee and additional fee payable as per section 403 of the Act read with
Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents.

Page 1699
 Annexure C91

Circular 16/2017 – CODS, 2018

iii) The defaulting company after filing documents under this scheme, shall seek condonation of
delay by filing form e-CODS attached to this scheme online on the MCA21 portal. The fee for
filing application e- form CODS is Rs.30,000/- (Rs. Thirty Thousand only).

The DINS of the Directors associated with the defaulting companies that have not filed their
overdue documents and the eform CODS, and these are not taken on record in the MCA21
registry and are still found to be disqualified on the conclusion of the scheme in terms of section
164(2)(a) r/w 167(1)(a) of the Act shall be liable to be deactivated on expiry of the scheme
period.

v) In the event of defaulting companies whose names have been removed from the register of
companies under section 248 of the Act and which have filed applications for revival under
section 252 of the Act up to the date of this scheme, the Director’s DIN shall be re-activated
only NCLT order of revival subject to the company having filing of all overdue documents.

5. Scheme not to apply for certain documents - This scheme shall not apply to the filing of
documents other than the following overdue documents:

i) Form Number 20B/MGT-7- Form for filing Annual return by a company having share capital.

ii) Form 21A/MGT-7- Particulars of Annual return for the company not having share capital.

iii) Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL) and
AOC-4(non-XBRL) - Forms for filing Balance Sheet/ Financial Statement and profit and loss
account.

iv) Form 66 - Form for submission of Compliance Certificate with the Registrar.

v) Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

6. The Registrar concerned shall withdraw the prosecution(s) pending if any before the
concerned Court(s) for all documents filed under the scheme. However, this scheme is without
prejudice to action under section 167(2) of the Act or civil and criminal liabilities, if any, of such
disqualified directors during the period they remained disqualified.

7. At the conclusion of the Scheme, the Registrar shall take all necessary actions under the
Companies Act, 1956/ 2013 against the companies who have not availed themselves of this
Scheme and continue to be in default in filing the overdue documents.

8. The e-Form CODS 2018 would be available from 20.02.2018 or an alternate date, which will
be intimated by the ministry on www.mca.gov.in. The stakeholder should complete the
necessary procedural requirements and file overdue documents without waiting for the
availability of the e-CODS form.

Encl. as above.

Form e-CODS 2018 is not reproduced here.

Page 1700
 Annexure C92

Circular 1/2018

Annexure C92: Circular 01/2018 Relaxation

for filing AOC-4 XBRL
General Circular No. 01/2018
[Section 137]
F.No. 01/19/2013-CL-V (Pt.)
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 28.03.2018
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of filing of AOC-4 XBRL
E-Forms using Ind AS under the Companies Act, 2013-reg.

Sir,
In continuation of this Ministry's General Circular No. 13/2017 dated 26.10.2017 and upon
consideration of requests received from various stakeholders for extending the last date of filing
of AOC-4 XBRL E-Forms using Ind AS under the Companies Act, 2013, it has been decided to
extend the last date for filing of AOC-4 XBRL for all eligible companies required to prepare or
voluntarily prepare their financial statements in accordance with Companies (Indian Accounting
Standards) Rules, 2015 for the financial year 2016-17, without additional fee till 30th April, 2018.

2. This issues with the approval of competent authority.

Yours faithfully,
(KMS Narayanan)
Assistant Director

Page 1701
 Annexure C93

Circular 2/2018

Annexure C93: Circular 02/2018 CODS 2018

General Circular No. 02/2018
F.No. 02/04/2017-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 28.03.2018
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Sir,

Subject: Condonation of Delay Scheme, 2018

In continuation to the Ministry's General Circular No. 16/2017 dated 29/12/2017 on the subject
cited above, this Ministry has, on consideration of requests received from various stakeholders,
has decided to extend the Condonation of Delay Scheme, 2018 upto 30th April, 2018.

2. This issues with the approval of the competent authority.

Yours faithfully,
(KMS Narayanan)

Page 1702
 Annexure C94

Circular 04/2018

Annexure C94: Circular 04/2018 Relaxing

additional fees and extension of time for filing
AOC-4 XBRL using Ind AS
General Circular No. 04/2018
F.No. 02/04/2017-CL-V (Pt.)
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi

Dated: 27.04.2018
To
All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Sir,

Subject: Relaxation of additional fees and extension of last date of filing of AOC-4 XBRL
E-forms using Ind AS under the Companies Act, 2013 – reg.

In continuation to the Ministry's General Circular No. 13/2017 dated 26.10.2017, General Circular
No. 01/2018 dated 28.03.2018 and upon consideration of requests received from various
stakeholders for extending the last date of filing of AOC-4 XBRL E-forms using Ind AS under the
Companies Act, 2013, it has been decided to extend the last date for filing of AOC-4 XBRL for
all companies required to prepare or voluntarily prepare their financial statements in accordance
with Companies (Indian Accounting Standards) Rules, 2015 for the financial year 2016-17,
without additional fee till 31 st May, 2018.

2. This issues with the approval of the competent authority.

Yours faithfully,
(Sudhir Kapoor)
Deputy Director

Page 1703
 Annexure C95

Circular 05/2015 – CODS – Directions to ROCs

General Circular No. 05/2018

F.No. 02/04/2017-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, 'A' Wing, Shastri Bhawan,

Dr. R. P. Road, New Delhi
Dated: 17.05.2018
To
All Regional Directors / All Registrar of Companies,
All Stakeholders.

Sir,

Subject: Condonation of Delay Scheme, 2018

In continuation of General Circular No. 16/2017 dated 29.12.2017, General Circular No. 02/2018
dated 28.03.2018 and General Circular No. 03/2018 dated 27.04.2018 on the subject cited
above, it is stated that this Ministry has received representations from stakeholders raising
doubts regarding filing requirements of e-CODS. 2018, in such cases, where petitions have
already been filed before NCLT under section 252 of the Companies Act 2013, during the
currency of the scheme and orders are pending before the NCLT and whether such struck off
companies can file CODS upon obtaining orders for the same even after 01.05.2018.

2. The matter has been examined and it is clarified that as per para 4(v) of the General Circular
No.16/2017 dt. 29.12.2017, which states "In the event of defaulting companies whose names
have been removed from the register of companies under section 248 of the Act and which
have ,filed applications. for revival under section 252 of the Act up to the date of this scheme,
the Director’s DIN shall be re-activated only NCLT order of revival subject to the company
having filing of all overdue documents". It. is therefore, hereby directed that in such cases the
Registrar(s) of Companies shall raise a ticket through Change Requirement Form (CRF) on
MCA21 portal along with copy of NCLT order and E-governance shall activate DIN of the
directors of such struck off companies that have been revived through NCLT to file e-CODS.
2018. However, the directors whose DINs are proposed to be activated through CRF should not
be directors on any other company which has been stuck off under section 248(1) of the Act
(other than the one revived through NCLT order as mentioned in CRF). This may be ensured
by the ROC before raising CRF with E-governance.

3. Further, the Registrar(s) of Companies are directed to ensure that CRFs are raised in such
cases only after thorough scrutiny of the NCLT orders and ensuring that such struck off
companies had filed overdue documents before filing e-CODS, 2018 and had filed petitions
before the NCLT during the validity of CODS Scheme.

4. This issues with the approval of the competent authority.

Page 1704
 Annexure C96

Circular 04/2019

Annexure C96: Circular 04/2019 Extension of

time for filing form CRA-2
General Circular No. 4/2019
File No.52/10/CAB/2019
Government of India
Ministry of Corporate Affairs
5th floor, 'A' Wing, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-1
Dated: 4th April, 2019
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Sub: - Relaxation ofadditional fees and extension of last date of filing e-form CRA-2
(Form of intimation of appointment of cost auditor by the company to Central
Government) in certain cases under the Companies Act, 2013 reg.

Sir / Madam,

The Ministry has received several representations about extension of last date for filing
e-form CRA-2 without additional fees where the company has been mandated to get its
cost records audited for the first time under the Companies Act, 2013 on account of
Companies (Cost Records and Audit) Amendment Rules, 2013 on account of Companie
s (Cost Records and Audit) Amendment Rules, 2018 as notified vide G.S.R. 1157(E)
dated 03.12.2018.

2. The matter has been examined and it has been decided to extend the last date for
filing of e-form CRA-2 in the abovementioned cases without payment of additional fees
upto 31.05.2019.

3. This issues with the approval of the competant authority.

Yours faithfully,

Page 1705
 Annexure C97

Circular 05/2019 – Filing of one-time return in DPT-3

Annexure C97: Circular 05/2019 Filing of

one-time return in DPT-3
General Circular No. 5/2019
File No.01/08/2013- CL V (Vol. VI)
Government of India
Ministry of Corporate Affairs
5th floor, 'A' Wing, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-1
Dated: 12.04.2019
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Sub : - Filing of one time re turn in DPT -3 Form - reg .

Sir/Madam,

As per Rule 16A(3) of the Companies (Acceptance of Deposit) Rules, 2014 "every
company other than Government company shall file a onetime return of outstanding
receipt of money or loan by a company but not considered as deposits, in terms of
clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to the date of publication of
this notification in the Official Gazette, as specified in Form DPT-3 within ninety days
from the date of said publication of this notification along with filing fees as provided in
the Companies (Registration Offices and Fees) Rules, 2014". It may also be noted
that data on deposits should be filed upto 31st March, 2019 (as opposed to 22nd
January, 2019 which was originally indicated in the said Rule). Rule change is being
issued separately.
2. Pending the deployment of DPT-3 Form on MCA 21 portal and in order to
avoid inconvenience to stake holders on account of various factors, it is stated that the
additional fee, as provided under the Companies (Registration Offices and Fees)
Rules, 2014, shall be levied after 30 days from the date of deployment of the DPT- 3
form on MCA 21 portal.
3. This issues with the approval of competent authority.

(Sridhar Pamarthi)
Joint Director

Page 1706
 Annexure C98

Circular 06/2019 – Clarification on ADT-1 filed through GNL-2

Annexure C98: Circular 06/2019

Clarification on ADT-1 filed through GML-2
General Circular No. 6/2019
File No.01/22/2013- CL-V
Government of India
Ministry of Corporate Affairs
5th floor, 'A' Wing, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-1
Dated: 13.05.2019
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Subject: Clarificaiton for form ADT-1 filed through GNL-2 under the Companies Act,
2013 – reg.

Sir/Madam,

In contbuation of General Circular no.09/2014 dt. 25.04.2014, the Ministry of Corporate

Affairs has received representation from stakeholders seeking relaxation of fee for filing
e-form No. ADT-1, particularly form ADT-1 filed through GNL-2 during the period from
01.04.2014 to 20.10.2014 for appointment of Auditor for the period from 01.04.2014 to
31.03.2019 due to non-availability of e-form ADT-1 during the said period.

2. Accordingly, the matter has been examined and it is hereby clarified that companies
which had filed Form no. ADT-1 through GNL-2 as an attachment (by selecting ‘others’)
during the period from 01.04.2014 to 22.10.2014 may file eform no. ADT-1 for
appointment of Auditor for the period upto 31.03.2019 without fee, till 15.06.2019 (since
fee had been paid for filing GNL-2 for the same purpose) and thereafter fee and
additional fee shall be applicable as per Companies (Registration of Office and Fees)
Rules, 2014.

3. Stakeholders are advised to avail this one time opportunity and file ADT-1 without
fee as stated above, well in time and adhere to the time line as specified above.

4. This issues with approva of the competent authority.

Page 1707
 Annexure C99

Circular 07/2019 – Filing DIR-3 KYC

Annexure C99: Circular 07/2019 Filing DIR-

3 KYC
General Circular No. 7/2019
File No.01/22/2013- CL-V
Government of India
Ministry of Corporate Affairs
5th floor, 'A' Wing, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-1
Dated: 27.06.2019
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Subject: Filng DIR-3 KYC under the Companies Act, 2013 – regarding.

Sir,

The Ministry of Corporate Affairs has received representation from stakeholders

expressing certain difficulties in filing e-form DIR-3 KYC in accordance with Rule 12A
of the Companies (Appointment and Qualification of Directors) Rules, 2014. Request
have also been made for extensio of period for filing such form.

2. The matter has been examined and it is hereby informed that it is being proposed
that every person who has already filed DIR-3 KYC will only be required to complete
his/her KYC through a simple web-based verificaiton service, with pre-filled data based
on the records in the registry, for ease of verificaiton by the person concerned.
However, in case a person wishes to update his mobile no. or e-mail address, he would
be required to file e-form DIR-3 KYC, as this facility of updation is not being proposed
in the eb-based service. In case of updation in any other personal detail, e-form DIR-6
may be filed for updation of the same before completitoin of KYC through the web-
based service.

3. The amendment in the relevant rules including the amendment related to extension
of time (allowing for adequate time) for completion of KYC through e-form DIR-3 KYC
or the web-based service, as the case may be, is being notified shortly. Stakeholders
are advised to take note of the same and file according to the revised notificaiton.

4. This issues with approva of the competent authority.

Page 1708
 Annexure C99

Circular 09/2019 – Clarification on ‘effective date’ u/s.236(2)

Annexure C100: Circular 09/2019 Filing

DIR-3 KYC
General Circular No. 7/2019
File No.07/12/2019- CL-I
Government of India
Ministry of Corporate Affairs
5th floor, 'A' Wing, Shastri Bhawan
Dr. Rajendra Prasad Road, New Delhi-1
Dated: 21st August 2019
To
All Regional Directors,
All Registrars of Companies,
All Stakeholders

Subject: Clarification under section 232(6) of the Companies Act 2013

Sir,
Several queries have been received in the Ministry with respect to interpretation of the
provision of section 232(6) of the Companies Act, 2013 (Act). Clarification has been
sought on whether it is mandatory to indicate a specific calendar date as 'appointed
date' in the schemes referred to in the section. Further, requests have also been
received to confirm whether the ‘acquisition date' for the purpose of Ind-AS 103
(Business combinations) would be the 'appointed date' referred to in section 232(6).

2. The matter has been examined in detail in the Ministry in the light of the provisions
of the Act, applicable rules, prevalent practices and orders passed by Courts/NCLT. It
is noted that companies have been filing schemes under sections 230-232 of the Act
indicating 'appointed date' either as a specific calendar date or an event based date, as
may have been mutually agreed upon by the parties to the scheme. section 232 (5)
also requires that every company in relation to which the order is made shall file a
certified copy of the order with the Registrar of Companies for registration within 30
days of the receipt of certified copy of the order.

3. In Marshall Sons & Co. India Ltd. v. lTO 1223 lTR 8091, it was held by the Hon'ble
Supreme Court that every scheme of amalgamation has to necessarily provide a date
with effect from which the amalgamation/transfer shall take place, and that such date
may precede the date of sanctioning of the scheme by the Court, the date of filing of
certified copies of the orders of the Court belore the Registlar of Companies, and the
date of allotment of shares, etc. It was observed therein that, the scheme, however,
would be given effect from the transfer date (appointed date) itself.

Page 1709
 Annexure C99

Circular 09/2019 – Clarification on ‘effective date’ u/s.236(2)

4. In another case, in the matter of amalgamation of Equitas Housing Finance Limited

and Equitas Micro Finance Limited with Equitas Finance Limited in C.P.Nos. 119 to 121
of 2016, the Hon'ble Madras High Court held that the provisions of section 394 (1) of
the Companies Act, 1956 (corresponding to section 232 of the Companies Act, 2013)
provided enough leeway to a company to delay the date on which the scheme of
amalgamation shall take effect and tie the same to the occurrence of an event. Thus,
the Court rejected the argument that the 'appointed date' in the scheme should
necessarilv be a specific calendar date.

5. Section 232 (6) of the Act states that the scheme shall be deemed to be effective
from the 'appointed date' and not a date subsequent to the 'appointed date'. This is an
enabling provision to allow the companies to decide and agree upon an 'appointed date'
from which the scheme shall come into force.

6. In view ofthe above, it is hereby clarified that:

a) The provision of section 232 (6) of the Act enables the companies in question to
choose and state in the scheme an 'appointed date'. This date may be a specific
calendar date or may be tied to the occurence of an event such as grant of license by
a competent authority or fulfilment of any pre-conditions agreed upon by the parties, or
meeting any other requirement as agreed upon between the parties, etc., which are
relevant to the scheme.

b) The 'appointed date' identified under the scheme shall also be deemed to be the
'acquisition date' and date of transfer of control for the purpose of conforming to
accounting standards (including Ind-AS 103 Business Combinations).

c) where the 'appointed date' is chosen as a specific calendar date, it may precede the
date of filing of the application for scheme of merger/amalgamation in NCLT. However,
if the 'appointed date' is significantly ante-dated beyond a year from the date of filing,
the justification for the same would have to be specifically brought out in the scheme
and it should not be against public interest.

d) The scheme may identify the 'appointed date' based on the occurrence of a trigger
event which is key to the proposed scheme and agreed upon by the parties to the
scheme. This event would have to be indicated in the scheme itself upon occurrence of
which the scheme would become effective. However in case of such event based date
being a date subsequent to the date of filing the order with the Registrar under section
232(5), the company shall file an intimation of the same with the Registrar within 30
days of such scheme coming into force.

7. This issues with the approval ofthe competent authority.

Page 1710
 Annexure 1

Mapping of e-forms under New Act with old e-forms

VALUE ADDITIONS
Annexure 1: Mapping of e-forms under
New Act with old e-forms
Mapping of e-forms prescribed under the Companies Act, 2013 with e-forms
prescribed under Companies Act, 1956

S. e-Form Corresponding Purpose of Form as per Companies

No. (Companies eForm Act, 2013
Act, 2013) (Companies Act,
1956)
1 INC-1 1A Application for reservation of name
2 INC-2 New form Form for Incorporation and nomination
(One Person Company)
3 INC-3 New form Form for consent of nominee of One
Person Company
4 INC-4 New form Form for change in member/nominee of
One Person Company
5 INC-5 New form Form for intimation of exceeding
threshold of One Person Company
6 INC-6 New form Application for Conversion
7 INC-7 1 Application for Incorporation of
Company (Other than One Person
Company)
8 INC-18 New form Application to Regional Director for
conversion of section 8 company into
any other kind of company
9 INC-20 New form Intimation to Registrar of revocation or
surrender of license issued under
section 8
10 INC-21 19 Declaration prior to the commencement
of business
11 INC-22 18 Notice of situation or change of situation
of registered office and verification
12 INC-23 1AD, 24AAA Application to Regional director for
approval to shift the registered office
from one state to another state or from
jurisdiction of one registrar to another
within the state

Page 1711
 Annexure 1

Mapping of e-forms under New Act with old e-forms

S. e-Form Corresponding Purpose of Form as per Companies

No. (Companies eForm Act, 2013
Act, 2013) (Companies Act,
1956)
13 INC-24 1B Application for approval of Central
Government for change of name
14 INC-27 1B, 62 Conversion of public company into
private company or private company into
public company
15 INC-28 21 Notice of order of the Court or other
authority
16 PAS-3 2 Return of allotment
17 SH-7 5 Notice to Registrar for alteration of share
capital
18 SH-8 New form letter of offer
19 SH-11 4C Return in respect of buy back of
securities
20 CHG-1 8 Application for registration of creation,
modification of charge (other than those
related to debentures) including
particulars of modification of charge by
Asset Reconstruction Company in terms
of Securitization and Reconstruction of
Financial Assets and Enforcement of
Securities Interest Act, 2002
(SARFAESI)
21 CHG-4 17 Particulars for satisfaction of charge
22 CHG-6 15 Notice of appointment or cessation of
receiver or manager
23 CHG-9 10 Application for registration of creation or
modification of charge for debentures or
rectification of particulars filed in respect
of creation or modification of charge for
debentures
24 MGT-6 22B Form of return to be filed with the
Registrar
25 MGT-14 23 Filing of Resolutions and agreements to
the Registrar under section 117
26 DIR-3 DIN1 Application for allotment of Director
Identification Number
27 DIR-6 DIN4 Intimation of change in particulars of
Director to be given to the Central
Government
28 DIR-11 New form Notice of resignation of a director to the
Registrar

Page 1712
 Annexure 1

Mapping of e-forms under New Act with old e-forms

S. e-Form Corresponding Purpose of Form as per Companies

No. (Companies eForm Act, 2013
Act, 2013) (Companies Act,
1956)
29 DIR-12 32, 32AD Particulars of appointment of directors
and the key managerial personnel and
the changes amongst them
30 MR-1 25C Return of appointment of managing
director or whole time director or
manager
31 MR-2 25A Form of application to the Central
Government for approval of appointment
or reappointment and remuneration or
increase in remuneration or waiver for
excess or over payment to managing
director or whole time director or
manager and commission or
remuneration to directors
32 URC-1 37, 39 Application by a company for registration
under section 366
33 FC-1 44 Information to be filed by foreign
company
34 FC-2 49, 52 Return of alteration in the documents
filed for registration by foreign company
35 FC-3 52 List of all principal places of business in
India established by foreign company
36 FC-4 PTII Annual Return
37 GNL-1 61 Form for filing an application with
Registrar of Companies
38 GNL-2 62 Form for submission of documents with
Registrar of Companies
39 GNL-3 1AA Particulars of person(s) or director(s) or
charged or specified for the purpose of
section 2(60)
40 ADJ New form Memorandum of Appeal
41 MSC-1 New form Application to ROC for obtaining the
status of dormant company
42 MSC-3 New form Return of dormant companies
43 MSC-4 New form Application for seeking status of active
company
44 RD-1 24A Form for filing application to Regional
Director
45 RD-2 24AAA Form for filing petitions to Central
Government (Regional Director)

Page 1713
 Annexure 1

Mapping of e-forms under New Act with old e-forms

S. e-Form Corresponding Purpose of Form as per Companies

No. (Companies eForm Act, 2013
Act, 2013) (Companies Act,
1956)
46 CG-1 65 Form for filing application or documents
with Central Government
47 - 66 Form for submission of compliance
certificate with the Registrar
48 - 5INV Statement of unclaimed and unpaid
amounts
49 - 14LLP Form for intimating to Registrar of
Companies of conversion of the
company into limited liability partnership
(LLP).
50 - 20B Form for filing annual return by a
company having a share capital with the
Registrar
51 - 21A Particulars of annual return for the
company not having share capital
52 - 23AC Form for filing balance sheet and other
documents with the Registrar
53 - 23ACA Form for filing Profit and Loss account
and other documents with the Registrar
54 - 23ACA-XBRL Form for filing XBRL document in
respect of Profit and Loss account and
other documents with the Registrar
55 - 23AC-XBRL Form for filing XBRL document in
respect of balance sheet and other
documents with the Registrar
56 - 23C Form of application to the Central
Government for appointment of cost
auditor
57 - 23D Form for Information by Cost Auditor to
Central Government
58 - 35A Information to be furnished in relation to
any offer of a scheme or contract
involving the transfer of shares or any
class of shares in the transferor
company to the
59 - A-XBRL Form for filing XBRL document in
respect of compliance report and other
documents with the Central Government
60 - FTE Application for striking off the name of
company under the Fast Track Exit(FTE)
Mode

Page 1714
 Annexure 1

Mapping of e-forms under New Act with old e-forms

S. e-Form Corresponding Purpose of Form as per Companies

No. (Companies eForm Act, 2013
Act, 2013) (Companies Act,
1956)
61 - I-XBRL Form for filing XBRL document in
respect of cost audit report and other
documents with the Central Government
62 - Refund Application for requesting refund of fees
paid
63 - BankACC Application for simplifying bank account
opening process as user shall not be
required to submit any physical
application form.
64 - Investor Complaint Form for filing complaint(s) against the
Form company
65 - 67AD Clarification

Page 1715
 Annexure 2

Consent of Board at its meeting

Annexure 2: Matters requiring approval

of the Board by resolution at the meeting
of the Board

(1) Section 161(4): Filling casual vacancy of a Director

In the case of a public company, if the office of any director appointed by the
company in general meeting is vacated before his term of office expires in the
normal course, the resulting casual vacancy may, in default of and subject to any
regulations in the articles of the company, be filled by the Board of Directors at a
meeting of the Board:

(2) Proviso to section 175(1): where Board so decides

where not less than one-third of the total number of directors of the company for
the time being require that any resolution under circulation must be decided at a
meeting, the chairperson shall put the resolution to be decided at a meeting of
the Board.

(3) Section 179(3): Exercise certain powers by Board

The Board shall exercise the following powers by means of resolution passed at
the meeting of the Board-

(i) To make calls on shareholders in respect of money unpaid for the shares held
by them.
(ii) To authorize the buy-back of securities
(iii) To issue securities, including debentures, whether in or outside India;
(iv) To borrow monies;
(v) To invest the funds of the company;
(vi) To grant loans or give guarantee or provide security in respect of loans;
(vii) To approve financial statement and the Board’s report;
(viii) To diversify the business of the company;
(ix) To approve amalgamation, merger or reconstruction;
(x) To take over a company or acquire a controlling or substantial stake in
another Company;
(xi) Any other matter which includes under rule 8 of the Companies (meetings
of Board and its powers) Rules, 2014-

a) To make political contribution

b) To appoint or remove key managerial personnel (KMP)

Page 1716
 Annexure 2

Consent of Board at its meeting

c) To appoint internal auditors and secretarial auditor;

Following items specified in aforesaid Rule 8 Omitted by Notification

number G.S.R. ….. (E) dated 19th March, 2015, hence do not require
approval at Board Meeting.

a) To take note of appointment(s) or removal(s) of one level below the

KMP;

b) To take note of the disclosure of director’s interest and

shareholding;

c) To buy, sell investments held by the company (other than trade

investments), constituting five percent or more of the paid–up share
capital and free reserves of the investee company;

d) To invite or accept or renew public deposits and related matters;

e) To review or change the terms and conditions of public deposit;

f) To approve quarterly, half yearly and annual financial statements

or financial results as the case may be.

(4) 1st Proviso to Section 179(3): Delegation of powers of Board

The Board shall, by a resolution passed at a meeting, delegate to any Committee

of directors, the managing director, the manager or any other principal officer of
the company or in the case of a branch office of the company, the principal officer
of the branch office, the powers specified in clauses (d) to (f) under section 179(3)
on such conditions as it may specify.

(5) Second proviso to section 182(1): Political contribution

No contribution to political party shall be made by a company unless a resolution

authorising the making of such contribution is passed at a meeting of the Board
of Directors and such resolution shall, subject to the other provisions of this
section, be deemed to be justification in law for the making and the acceptance
of the contribution authorised by it.

(6) Section 186(5): Loan and investment by company

No investment shall be made or loan or guarantee or security given by the

company unless the resolution sanctioning it is passed at a meeting of the Board
with the consent of all the directors present at the meeting.

Page 1717
 Annexure 2

Consent of Board at its meeting

(7) Section 188(1)- The Company shall enter into the following contract or arrangement
with Related Party after consent of the Board of Directors given by a resolution at a
meeting of the Board-

(1) sale, purchase or supply of goods or materials;

(2) selling or otherwise disposing of, or buying, property of any kind;
(3) leasing of property of any kind;
(4) availing or rendering of any services;
(5) appointment of any agent for purchase or sale of goods, materials,
services or property;
(6) such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company; and
(7) underwriting the subscription of any securities or derivatives thereof, of
the company

(8) Section 196 (4)

Subject to the provision of Section 197 and Schedule V, a managing director or

whole-time director or manager shall be appointed and the terms and conditions
of such appointment and remuneration payable be approved by the Board of
Directors at a meeting which shall be subjected to approval by the members at
the next general meeting.

(9) Third proviso to section 203 (3)-

a company may appoint or employ a person as its managing director, if he is the

managing director or manager of one, and of not more than one, other company and
such appointment or employment is made or approved by a resolution passed at a
meeting of the Board with the consent of all the directors present at the meeting and
of which meeting, and of the resolution to be moved thereat, specific notice has been
given to all the directors then in India.

(10) Section 203(4) –

If the office of any whole-time key managerial personnel is vacated, the resulting
vacancy shall be filled-up by the Board at a meeting of the Board within a period of
six months from the date of such vacancy.

(11) Section 305(1) –

Where it is proposed to wind-up a Company voluntarily, its director(s), or in case the
company has more than two directors, the majority of its directors, shall, at a meeting
of the Board, make a declaration verified by an affidavit to the effect that they have
made a full inquiry into the affairs of the company and they have formed an opinion
that the Company has no debt or whether it will be able to pay its debts in full from the
proceeds of assets sold in voluntary winding up.

Page 1718
 Annexure 3

Consent of members by postal ballot

Annexure 3: Matters requiring consent

of members by postal ballot
All companies are required to transact following businesses only through postal ballot.
[Rule 22 (16) of the Companies (Management and Administration) Rules, 2014]:
Exception to the Rule: One Person Company and companies having members up to
two hundred are not required to transact business through postal ballot [proviso to
Rule 22(16) of the Companies (Management and Administration) Rules, 2014].
1. alteration of the object clause of the memorandum and in the case of the
company in existence immediately before the commencement of the Act,
alteration of the main objects of the memorandum;
2. change in objects for which a company has raised money from public through
prospectus and still has any unutilized amount out of the money so raised
[Section 13(8) read with Rule 32 of the Companies (Incorporation) Rules, 2014]
3. alteration of articles of association in relation to insertion or removal of
provisions which, are required to be included in the articles of a company in
order to constitute it a private company as per it’s definition;
4. change in place of registered office outside the local limits of any city, town
or village [Section 12(5)];
5. issue of shares with differential rights as to voting or dividend or otherwise
[Section 43(a)(ii) read with proviso to Rule 4(1)(b) of the Companies (Share
Capital and Debenture) Rules, 2014]
6. variation in the rights attached to a class of shares or debentures or other
securities [Section 48]
7. buy-back of shares by a company [Section 68(1)];
8. election of a director [section 151];
9. sale of the whole or substantially the whole of an undertaking of a company
[Section 180(1)(a)];
10. Giving loans or extending guarantee or providing security in excess of the
limit specified in [section 186(3)]:

Exceptions: Business other than ordinary business and business with respect of
which directors/auditors have a right to be heard not to be transacted vide postal
ballot.

The following matter also requires consent of members by postal ballot:

Variation in terms of contracts referred to in the prospectus or objects for which

prospectus was issued – where a company has raised money from public through
prospectus and still has any unutilized amount out of the money so raised [Rule 7 of
the Companies (Prospectus and Allotment of Securities) Rules, 2014].

Besides under the provisions of the Companies Act, 2013, consent of members by
postal ballot is also prescribed under :

Page 1719
 Annexure 3

Consent of members by postal ballot

a) Clause 35B of listing agreement – states that “The company agrees to provide e-
voting facility to its shareholders, in respect of those business, which are transacted
through postal ballot.”;
b) Under following SEBI Regulations:
(i) for voluntary delisiting of securities from all recognized stock exchanges; [regulation
8(1)(b) of SEBI (Delisting of Securities) Regulations, 2009]
(ii) Acquisition of shares of target company, not involving change of control, pursuant
to a scheme of corporate debt restructuring of RBI, provided such scheme has been
authorized by shareholders by special resolution passed by postal ballot, shall be
exempt from the obligation to make an open offer under regulation 3. [Regulation
10(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
2011]
(iii) increase in voting rights in a target company of any shareholder pursuant to buy-
back of shares, shall be exempt from the obligation to make an open offer under
regulation 3(2), provided that in case of a shareholder resolution, voting is by way of a
postal ballot. (However, to claim exemption other conditions are also to be complied
with.) [Regulation 10(4)(c) of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011]
(iv) During pendency of competing offers, if any vacancy in office of director of target
company arises due to death or incapacitation of any director, then such vacancy may
be filled by any person, subject to approval of such appointment by shareholders of
target company by way of a postal ballot. [Proviso to regulation 24(3) of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011]
(v) where acquirer has not declared an intention in the detailed public statement and
the letter of offer to alienate any material assets of the target company or of any of its
subsidiaries outside the ordinary course of business AND acquirer has acquired
control of the target company AND the target company or any of its subsidiaries is
required to alienate its assets, then such alienation shall be subject to approval of
shareholders of the target company by way of a postal ballot. [Proviso to regulation
25(2) of the SEBI
(vi) During pendency of public offer, the Board of Directors of the target company are
prohibited from taking several actions as specified in the regulations unless the
approval of shareholders of the target company by way of a special resolution by
postal ballot is obtained. [Regulation 26(2) of the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011]
(vii) Debt securities can be rolled over subject to, inter alia, approval of holders of 75%
in value of debt securities through postal ballot [Regulation 18(5)(a) of SEBI (Issue
and Listing of Debt Securities) Regulations, 2008]
(viii) for varying terms of issue of debt instruments, consent of investors by special
resolution by postal ballot is obtained [regulation 34(7) of the SEBI (Public Offer and
Listing of Securitised Debt Instruments) Regulations, 2008].
(ix) Roll over of non convertible portion of partly convertible debt instruments, the
value of which exceeds fifty lakh rupees, may be rolled over subject to, inter alia,
seventy five per cent. of the holders of the convertible debt instruments of the issuer
have, through a resolution, approved the rollover through postal ballot; [Regulation
21(1)(a) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009]

Page 1720
 Annexure 3

Consent of members by postal ballot

(x) A listed issuer whose post-issue face value capital is less than twenty five crore
rupees may migrate its specified securities to SME exchange if its shareholders
approve such migration by passing a special resolution through postal ballot
[Regulation 106T of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009]
(xi) An issuer, whose specified securities are listed on a SME Exchange and whose
post issue face value capital is more than ten crore rupees and upto twenty five crore
rupees, may migrate its specified securities to Main Board if its shareholders approve
such migration by passing a special resolution through postal ballot [Regulation
106U(1) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009]
(xii) Where the post issue face value capital of an issuer listed on SME exchange is
likely to increase beyond twenty five crore rupees by virtue of any further issue of
capital by the issuer by way of rights issue, preferential issue, bonus issue, etc. the
issuer shall migrate its specified securities listed on SME exchange to Main Board. In
such a case, no further issue of capital by the issuer shall be made unless, inter alia,
the shareholders of the issuer have approved the migration by passing a special
resolution through postal ballot [Proviso to regulation 106U(2) of SEBI (Issue of
Capital and Disclosure Requirements) Regulations, 2009]

(xiii) A company whose specified securities are listed on institutional trading platform
may exit from that platform, if, inter alia, its shareholders approve such exit by passing
a special resolution through postal ballot where ninety per cent. of total votes and the
majority of non-promoter votes have been cast in favor of such proposal; [regulation
106ZD of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009]

Page 1721
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Annexure 4: Companies Act 2013 vis-à-

vis Companies Act 1956
Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
CHAPTER I PRELIMINARY
Short title, extent,
1 commencement and
application
2 Definitions
2(1)“abridged prospectus” 1st April, 2014 Section 2(1)
2(2)“accounting standards” 1st April, 2014 211(3C)
12th September,
2(3)“alter” or “alteration” 2(1A)
2013
12th September,
2(4)“Appellate Tribunal” 2(1B)
2013
12th September,
2(5)“articles” 2(2)
2013
12th September,
2(6)“associate company” NIL
2013
2(7)“auditing standards” 1st April, 2014 NIL
2(8)“authorised capital” or 12th September,
Nil
“nominal capital” 2013
12th September,
2(9)“banking company” 2(5)
2013
2(10)“Board of Directors” or 12th September,
2(6); 252(3)
“Board” 2013
2(11)“body corporate” or 12th September,
2(7)
“corporation” 2013
2(12)“book and paper” and 12th September,
2(8)
“book or paper” 2013
2(13)“books of account” 1st April, 2014 209(1)
12th September,
2(14)“branch office” 2(9)
2013
12th September,
2(15)“called-up capital” Nil
2013
12th September,
2(16)“charge” 124
2013
12th September, Explanation to
2(17)“chartered accountant”
2013 section 33

Page 1722
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
2(18)“Chief Executive 12th September,
NIL
Officer” 2013
2(19)“Chief Financial 12th September,
NIL
Officer” 2013
12th September,
2(20)“company” 2(10)
2013
2(21)“company limited by 12th September,
12(2)(b)
guarantee” 2013
2(22)“company limited by 12th September,
12(2)(a)
shares” 2013
2(23)“Company Liquidator” not yet notified NIL
2(24)“company secretary” or 12th September,
2(45)
“secretary” 2013
2(25)“company secretary in 12th September,
2(45A)
practice” 2013
12th September,
2(26)“contributory” NIL
2013
12th September,
2(27)“control” NIL
2013
12th September,
2(28)“cost accountant” 233B(1)
2013
12th September,
2(29)“court” 2013 [except sub 2(11), 2(14), 10
clause(iv)]
12th September,
2(30)“debenture” 2(12)
2013
2(31)“deposit” 1st April, 2014 Explanation to 58A
12th September,
2(32)“depository” 2(12A)
2013
12th September,
2(33)“derivative” 2(12B)
2013
12th September,
2(34)“director” 2(13)
2013
12th September,
2(35)“dividend” 2(14A)
2013
12th September,
2(36)“document” 2(15)
2013
2(37)“employees’ stock 12th September,
2(15A)
option” 2013
12th September,
2(38)“expert” 59(2)
2013

Page 1723
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
12th September,
2(39)“financial institution” NIL
2013
12th September,
2(40)“financial statement” NIL
2013
2(41)“financial year” 1st April, 2014 2(17)
2(42)“foreign company” 1st April, 2014 591(1)
Explanation to
12th September, section 2 (29A) and
2(43)“free reserves”
2013 explanation (b) to
section 372A
2(44)“Global Depository 12th September,
NIL
Receipt” 2013
2(45)“Government 12th September,
2(18), 617
company” 2013
12th September,
2(46)“holding company” 2(19)
2013
2(47)“independent director” 1st April, 2014 NIL
2(48)“Indian Depository
1st April, 2014 NIL
Receipt”
12th September,
2(49)“interested director” NIL
2013
12th September,
2(50)“issued capital” NIL
2013
2(51)“key managerial 12th September,
NIL
personnel” 2013
12th September,
2(52)“listed company” 2(23A)
2013
12th September,
2(53)“manager” 2(24)
2013
12th September,
2(54)“managing director” 2(26)
2013
12th September,
2(55)“member” 2(27), 41
2013
12th September,
2(56)“memorandum” 2(28)
2013
12th September,
2(57)“net worth” 2(29A)
2013
12th September,
2(58)“notification” Nil
2013
12th September,
2(59)“officer” 2(30)
2013

Page 1724
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
2(60)“officer who is in 12th September,
2(31),5,7
default” 2013
12th September,
2(61)“Official Liquidator” Nil
2013
2(62)“One Person
1st April, 2014 Nil
Company”
2(63)"ordinary or special 12th September,
Nil
resolution" 2013
2(64)“paid-up share capital” 12th September,
2(32)
or “share capital paid-up” 2013
12th September, Explanation to
2(65)“postal ballot”
2013 section 192A
12th September,
2(66)“prescribed” 2(33)
2013
12th September,
2(67)“previous company
2013 [except sub 2(34)
law”
clause(ix)]
12th September,
2(68)“private company” 2(35)
2013
12th September,
2(69)“promoter” section 62(6)(a)
2013
12th September,
2(70)“prospectus” 2(36)
2013
12th September,
2(71)“public company” 2(37)
2013
2(72)“public financial 12th September,
4A
institution” 2013
2(73)“recognised stock 12th September,
2(39)
exchange” 2013
12th September,
2(74)“register of companies” Nil
2013
12th September,
2(75)“Registrar” 2(40)
2013
12th September,
2(76)“related party” Nil
2013
12th September, 2(41), 6 and
2(77)‘‘relative’’
2013 schedule IA
12th September,
2(78)“remuneration” Explanation to 198
2013
12th September,
2(79)“Schedule” 2(42)
2013

Page 1725
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
12th September,
2(80)“scheduled bank” 2(43)
2013
12th September,
2(81)“securities” 2(45AA)
2013
2(82)“Securities and 12th September,
2(45B)
Exchange Board” 2013
2(83)“Serious Fraud
1st April, 2014 Nil
Investigation Office”
12th September,
2(84)“share” 2(46)
2013
2(85)‘‘small company’’ 1st April, 2014 Nil
12th September,
2(86)“subscribed capital” Nil
2013
2(87)“subsidiary company”
12th September,
or “subsidiary”
2013 [except the 2(47)
Explanation (d) came into
proviso]
effect on 1st April, 2014
12th September, Explanation II to
2(88)“sweat equity shares”
2013 Section 79A
12th September,
2(89)“total voting power” 2(48)
2013
12th September,
2(90)“Tribunal” 2(49A)
2013
12th September,
2(91)“turnover” Nil
2013
12th September,
2(92)“unlimited company” 12(2)(c)
2013
12th September,
2(93)“voting right” Nil
2013
12th September, Explanation to
2(94)“whole-time director”
2013 Section 269
CHAPTER II
INCORPORATION OF
COMPANY AND MATTERS
INCIDENTAL THERETO
3 Formation of company 1st April, 2014 12
4 Memorandum. 1st April, 2014 13,14,15,20,37
5 Articles. 1st April, 2014 26,27,28,29,30
Act to over-ride
6 1st April, 2014 9
memorandum, articles, etc.

Page 1726
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
1st April, 2014
except sub-section
7, which brought to
force from 1st June
7 Incorporation of company. 33,34(1),35
2016. And clauses
(c) and (d) of sub-
section 7 from 15th
December 2016
1st April, 2014
except sub-section
Formation of companies
8 9 which brought to 25
with charitable objects, etc.
force from 15th
December 2016
9 Effect of registration. 1st April, 2014 34(2)
Effect of memorandum and
10 1st April, 2014 36
articles.
Commencement of
11 1st April, 2014 149
business, etc.
Registered office of
12 1st April, 2014 17A, 146, 147
company.
13 Alteration of memorandum. 1st April, 2014 16,17,18,19,21,23
1st April, 2014
(except second
proviso to sub-
section (1) which
became effective
14 Alteration of articles. 31
from 01 June 2016
and Sub-section
(2) which became
effective from 01
June 2016)
Alteration of memorandum
15 or articles to be noted in 1st April, 2014 40
every copy.
Rectification of name of
16 1st April, 2014 22
company.
Copies of memorandum,
17 articles, etc., to be given to 1st April, 2014 39
members.
Conversion of companies
18 1st April, 2014 32
already registered.

Page 1727
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Subsidiary company not to
12th September,
19 hold shares in its holding 42
2013
company.
20 Service of documents. 1st April, 2014 51,52,53
Authentication of
12th September,
21 documents, proceedings 54
2013
and contracts.
Execution of bills of 12th September,
22 47,48
exchange, etc. 2013
CHAPTER III
PROSPECTUS AND
ALLOTMENT OF
SECURITIES
PART I.—Public offer
12th September,
2013 [except
clause (b) of sub
section (1) which
Public offer and private
23 became effective 67
placement.
from 1st April 2014
and sub section (2)
w.e.f. 1st April,
2014]
Power of Securities and
Exchange Board to regulate 12th September,
24 55A
issue and transfer of 2013
securities, etc.
12th September,
2013 [except sub-
Document containing offer
section (3), which
25 of securities for sale to be 64
became effective
deemed prospectus.
from 1st April,
2014]
Matters to be stated in 55,56,57,58,59,60,
26 1st April, 2014
prospectus. Sch. II
Variation in terms of
27 contract or objects in 1st April, 2014 61
prospectus.
Offer of sale of shares by
28 certain members of 1st April, 2014 NIL
company.

Page 1728
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Public offer of securities to 12th September,
29 68B
be in dematerialised form. 2013
Advertisement of 12th September,
30 66
prospectus. 2013
12th September,
31 Shelf prospectus. 60A
2013
12th September,
32 Red herring prospectus. 60B
2013
12th September,
2013 [except sub-
Issue of application forms section (3) which
33 56(3)
for securities. became effective
from 1st April,
2014]
Criminal liability for mis- 12th September,
34 63
statements in prospectus. 2013
12th September,
2013 [except
clause (e) of sub-
Civil liability for mis-
35 section (1) which 62
statements in prospectus.
became effective
from 1st April,
2014]
Punishment for fraudulently
12th September,
36 inducing persons to invest 68
2013
money.
12th September,
37 Action by affected persons. NIL
2013
Punishment for personation
12th September,
38 for acquisition, etc., of 68A
2013
securities.
12th September,
2013 [except sub-
Allotment of securities by section (4), which
39 69,75
company. became effective
from 1st April,
2014]
12th September,
Securities to be dealt with in 2013 [except sub-
40 73
stock exchanges. section (6) which
became effective

Page 1729
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
from 1st April,
2014]
41 Global depository receipt. 1st April, 2014 NIL
PART II.—Private
placement
Offer or invitation for
42 subscription of securities on 1st April, 2014 67
private placement.
CHAPTER IV SHARE
CAPITAL AND
DEBENTURES
43 Kinds of share capital. 1st April, 2014 2(46A), 85, 86
Nature of shares or 12th September,
44 82
debentures. 2013
12th September,
45 Numbering of shares. 83
2013
46 Certificate of shares. 1st April, 2014 84
47 Voting rights. 1st April, 2014 87
Variation of shareholders’ 15th December
48 106, 107
rights. 2016
Calls on shares of same
12th September,
49 class to be made on uniform 91
2013
basis.
Company to accept unpaid
12th September,
50 share capital, although not 92
2013
called up.
Payment of dividend in
12th September,
51 proportion to amount paid- 93
2013
up.
Application of premiums
52 1st April, 2014 78
received on issue of shares.
Prohibition on issue of
53 1st April, 2014 79
shares at discount.
Issue of sweat equity
54 1st April, 2014 79A
shares.
1st April, 2014
80 and 80A (except
(except sub-
Issue and redemption of Proviso to section
55 section 3, which
preference shares. 80A(1) and section
became effective
80A(2))
from 1st April 2014)

Page 1730
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Transfer and transmission of 108, 108A to 108 I,
56 1st April, 2014
securities. 109,110,113
Punishment for personation 12th September,
57 116
of shareholder. 2013
Refusal of registration and 12th September,
58 111, 111A
appeal against refusal. 2013
Rectification of register of 12th September,
59 111, 111A
members. 2013
Publication of authorised,
12th September,
60 subscribed and paid-up 148
2013
capital.
1st April, 2014
[except proviso to
Power of limited company to clause (b) of sub-
61 94
alter its share capital. section (1), which
became effective
from 1st April 2014]
1st April, 2014
[except sub-
81 except sub-
Further issue of share sections (4) to (6),
62 sections (4) to (7);
capital. which became
94A(1)
effective from 1st
April 2014]
63 Issue of bonus shares. 1st April, 2014 Proviso to 205 (3)
Notice to be given to
64 Registrar for alteration of 1st April, 2014 94A(3), 95,97
share capital.
Unlimited company to
provide for reserve share 12th September,
65 98
capital on conversion into 2013
limited company.
15th December
66 Reduction of share capital. 106 and 107
2016
Restrictions on purchase by
company or giving of loans
67 1st April, 2014 77
by it for purchase of its
shares.
Power of company to
68 1st April, 2014 77A
purchase its own securities.

Page 1731
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Transfer of certain sums to
12th September,
69 capital redemption reserve 77AA
2013
account.
12th September,
2013 [except sub-
Prohibition for buy-back in section (2), which
70 77B
certain circumstances. became effective
from 1st April,
2014]
1st April, 2014
[except sub- 117,117A,117B,117
section (9) to (11), C,118,119,122
71 Debentures.
which became Except 117B(4) and
effective from 1st 117C (4) and (5)
June 2016]
72 Power to nominate. 1st April, 2014 109A,109B
58A, 58AA, 58AAA,
58B, 59
CHAPTER V
ACCEPTANCE OF
DEPOSITS BY
COMPANIES
Prohibition on acceptance of
73 1st April, 2014
deposits from public.
Sub-section (1)
which became
Repayment of deposits, etc., effective from 1st
74 accepted before April 2014. Nil
commencement of this Act. Sub-sections (2)
and (3) w.e.f. 6th
June 2014.
75 Damages for fraud. 1st June 2016
Acceptance of deposits from
76 1st April, 2014 58A
public by certain companies.
CHAPTER VI
REGISTRATION OF
CHARGES
Duty to register charges, 125,128, 129,132,
77 1st April, 2014
etc. 133, 145
Application for registration of
78 1st April, 2014 134
charge.

Page 1732
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Section 77 to apply in
79 1st April, 2014 127, 135
certain matters.
80 Date of notice of charge. 1st April, 2014 126
Register of charges to be
81 1st April, 2014 130
kept by Registrar.
Company to report
82 1st April, 2014 138
satisfaction of charge.
Power of Registrar to make
entries of satisfaction and
83 1st April, 2014 139, 140
release in absence of
intimation from company.
Intimation of appointment of
84 1st April, 2014 137
receiver or manager.
Company’s register of
85 1st April, 2014 131, 136, 143, 144
charges.
Punishment for 12th September,
86 142
contravention. 2013
Rectification by Central
87 Government in register of 1st April, 2014 141
charges.
CHAPTER VII
MANAGEMENT AND
ADMINISTRATION
150, 151, 152,
88 Register of members, etc. 1st April, 2014 152A, 153, 153A,
153B, 157, 158
Declaration in respect of
89 beneficial interest in any 1st April, 2014 187C
share.
Investigation of beneficial
90 ownership of shares in 1st April, 2014 187D
certain cases.
Power to close register of
members or debenture- 12th September,
91 154
holders or other security 2013
holders.
159, 160, 161, 162,
92 Annual return. 1st April, 2014
Schedule V
Return to be filed with
93 Registrar in case promoters’ 1st April, 2014 Nil
stake changes.

Page 1733
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Place of keeping and
94 inspection of registers, 1st April, 2014 163
returns, etc.
Registers, etc., to be
95 1st April, 2014 164
evidence.
96 Annual general meeting. 1st April, 2014 165, 166, 170
Power of Tribunal to call
97 1st June 2016
annual general meeting.
Power of Tribunal to call
98 1st June 2016
meetings of members, etc.
Punishment for default in
99 complying with provisions of 1st June 2016
sections 96 to 98.
12th September,
2013 [except sub-
Calling of extraordinary section (6), which
100 169(9)
general meeting. became effective
from 1st April,
2014]
101 Notice of meeting. 1st April, 2014 171, 172
Statement to be annexed to 12th September,
102 173
notice. 2013
12th September,
103 Quorum for meetings. 174
2013
12th September,
104 Chairman of meetings. 175
2013
12th September,
2013 [except the
3rd and 4th
proviso of sub-
105 Proxies. section (1) and 176, Schedule IX
sub-section (7)
which became
effective from 1st
April, 2014]
12th September,
106 Restriction on voting rights. 181, 182, 183
2013
12th September,
107 Voting by show of hands. 177, 178
2013
Voting through electronic
108 1st April, 2014 Nil
means.

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Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
109 Demand for poll. 1st April, 2014 179, 180, 184, 185
110 Postal ballot. 1st April, 2014 192A
Circulation of members’ 12th September,
111 188
resolution. 2013
Representation of President 12th September,
112 187A,187B
and Governors in meetings. 2013
12th September,
2013 [except
Representation of clause (b) of sub-
113 corporations at meeting of section (1), which 187
companies and of creditors. became effective
from 1st April,
2014]
Ordinary and special 12th September,
114 189
resolutions. 2013
Resolutions requiring
115 1st April, 2014 190
special notice.
Resolutions passed at 12th September,
116 191
adjourned meeting. 2013
Resolutions and
117 1st April, 2014 192
agreements to be filed.
Minutes of proceedings of
general meeting, meeting of
118 Board of Directors and other 1st April, 2014 193, 194, 195, 197
meeting and resolutions
passed by postal ballot.
1st April, 2014
[except sub-
Inspection of minute-books section (4), which
119 196
of general meeting. became effective
from 1st June
2016]
Maintenance and inspection
120 of documents in electronic 1st April, 2014 Nil
form.
Report on annual general
121 1st April, 2014 Nil
meeting.
Applicability of this Chapter
122 1st April, 2014 Nil
to One Person Company.

Page 1735
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
CHAPTER VIII
DECLARATION AND
PAYMENT OF DIVIDEND
Section 205, Sub-
123 Declaration of dividend. 1st April, 2014 section (3) of
section 205A, 206
7th September
124 Unpaid Dividend Account. 205A, 205B
2016
S.125(5), (6)
except
administration of
IEPF and (7) w.e.f.
13th January 2016
Investor Education and
125 205C
Protection Fund.
S.125(1) to (4) and
(6) with respect to
administration of
IEPF w.e.f. 7th
September 2016
Right to dividend, rights
shares and bonus shares to
126 be held in abeyance 1st April, 2014 206A
pending registration of
transfer of shares.
Punishment for failure to 12th September,
127 207
distribute dividends. 2013
CHAPTER IX ACCOUNTS
OF COMPANIES
Books of account, etc., to be
128 1st April, 2014 209, 214
kept by company.
210, 211, 212, 213,
129 Financial statement. 1st April, 2014
221, 222, 223
Re-opening of accounts on
130 1st June 2016
court’s or Tribunal’s orders.
Voluntary revision of
131 financial statements or 1st June 2016
Board’s report.
S.132(1) w.e.f. 1st
Constitution of National
October 2018;
132 Financial Reporting S.210A
S.132(2) w.e.f.
Authority.
24th October

Page 1736
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Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
2018; and
S.132(3) to (11)
w.e.f. 21st March
2018
Central Government to
12th September,
133 prescribe accounting 211 (3C)
2013
standards.
Financial statement, Board’s
134 1st April, 2014 215, 216, 217, 218
report, etc.
Corporate Social
135 1st April, 2014 Nil
Responsibility.
Right of member to copies
136 of audited financial 1st April, 2014 219
statement.
Copy of financial statement
137 1st April, 2014 220
to be filed with Registrar.
138 Internal audit. 1st April, 2014 Nil
CHAPTER X AUDIT AND
AUDITORS
224 (except 224(8)),
139 Appointment of auditors. 1st April, 2014
224A, 619, 619B
1st April, 2014
[except 2nd
proviso to sub
Removal, resignation of
section (4) and sub 225 (except 225(3)),
140 auditor and giving of special
section (5), which 619
notice.
are brought to
force from 1st June
2016]
Eligibility, qualifications and
141 1st April, 2014 226, 619
disqualifications of auditors.
142 Remuneration of auditors. 1st April, 2014 224(8), 619
Powers and duties of
143 auditors and auditing 1st April, 2014 227, 228, 619
standards.
Auditor not to render certain
144 1st April, 2014 Nil
services.
Auditor to sign audit reports,
145 1st April, 2014 229, 230, 619
etc.
Auditors to attend general
146 1st April, 2014 231, 619
meeting.

Page 1737
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Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Punishment for
147 1st April, 2014 232, 233, 233A, 619
contravention.
Central Government to
specify audit of items of cost
148 1st April, 2014 233B
in respect of certain
companies.
CHAPTER XI
APPOINTMENT AND
QUALIFICATIONS OF
DIRECTORS
252 (except proviso
Company to have Board of
149 1st April, 2014 to 252(1)), 253, 258,
Directors.
259
Manner of selection of
independent directors and
150 1st April, 2014 NIL
maintenance of databank of
independent directors.
Appointment of director Proviso to sub-
151 elected by small 1st April, 2014 section (1) of
shareholders. section 252
152 Appointment of directors. 1st April, 2014 254, 255, 256, 264
Application for allotment of
153 Director Identification 1st April, 2014 266A
Number.
Allotment of Director
154 1st April, 2014 266B
Identification Number.
Prohibition to obtain more
155 than one Director 1st April, 2014 266C
Identification Number.
Director to intimate Director
156 1st April, 2014 266D
Identification Number.
Company to inform Director
157 Identification Number to 1st April, 2014 266E
Registrar.
Obligation to indicate
158 Director Identification 1st April, 2014 266F
Number.
Punishment for
159 1st April, 2014 266G
contravention.

Page 1738
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Right of persons other than
160 retiring directors to stand for 1st April, 2014 257
directorship.
12th September,
2013 [except sub-
Appointment of additional
section (2), which
161 director, alternate director 260, 262, 313
is brought to force
and nominee director.
from 1st April,
2014]
Appointment of directors to 12th September,
162 263
be voted individually. 2013
Option to adopt principle of
12th September,
163 proportional representation 265
2013
for appointment of directors.
Disqualifications for
164 1st April, 2014 202, 274
appointment of director.
275, 276, 277, 278,
165 Number of directorships. 1st April, 2014
279
166 Duties of directors. 1st April, 2014 312
167 Vacation of office of director. 1st April, 2014 283
168 Resignation of director. 1st April, 2014 NIL
1st April, 2014
except sub-section
169 Removal of directors. (4) which is 284
brought to force
from 1st June 2016
Register of directors and
170 key managerial personnel 1st April, 2014 303, 307
and their shareholding.
171 Members’ right to inspect. 1st April, 2014 304
172 Punishment. 1st April, 2014 NIL
CHAPTER XII MEETINGS
OF BOARD AND ITS
POWERS
173 Meetings of Board. 1st April, 2014 285, 286
Quorum for meetings of
174 1st April, 2014 287, 288
Board.
Passing of resolution by
175 1st April, 2014 289
circulation.

Page 1739
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Defects in appointment of
12th September,
176 directors not to invalidate 290
2013
actions taken.
177 Audit Committee. 1st April, 2014 292A
Nomination and Part II of Schedule
Remuneration Committee XIII, read with
178 1st April, 2014
and Stakeholders Explanation IV
Relationship Committee. thereto
179 Powers of Board. 1st April, 2014 291, 292
Restrictions on powers of 12th September,
180 293
Board. 2013
Company to contribute to
12th September,
181 bona fide and charitable NIL
2013
funds, etc.
Prohibitions and restrictions
12th September,
182 regarding political 293A
2013
contributions.
Power of Board and other
persons to make 12th September,
183 293B
contributions to national 2013
defence fund, etc.
Disclosure of interest by
184 1st April, 2014 299, 305
director.
12th September,
185 Loan to directors, etc. 295, 296
2013
Loan and investment by
186 1st April, 2014 372A
company.
Investments of company to
187 1st April, 2014 49
be held in its own name.
294, 294A, 294AA,
188 Related party transactions. 1st April, 2014
297, 314
Register of contracts or
189 arrangements in which 1st April, 2014 301
directors are interested.
Contract of employment with
190 managing or whole-time 1st April, 2014 302
directors.
Payment to director for loss
of office, etc., in connection
191 1st April, 2014 319, 320, 321
with transfer of undertaking,
property or shares.

Page 1740
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Restriction on non-cash
12th September,
192 transactions involving NIL
2013
directors.
Contract by One Person
193 1st April, 2014 NIL
Company.
Prohibition on forward
dealings in securities of 12th September,
194 NIL
company by director or key 2013
managerial personnel.
Prohibition on insider trading 12th September,
195 NIL
of securities. 2013
CHAPTER XIII
APPOINTMENT AND
REMUNERATION OF
MANAGERIAL
PERSONNEL
Appointment of managing 197A, 267, 311,
st
196 director, whole-time director 1 April, 2014 317, 384, 385, 388
or manager.
Overall maximum
managerial remuneration
and managerial 198, 201, 309, 310,
197 1st April, 2014
remuneration in case of 387
absence or inadequacy of
profits.
198 Calculation of profits. 1st April, 2014 349
Recovery of remuneration in
199 1st April, 2014 NIL
certain cases.
Central Government or
200 company to fix limit with 1st April, 2014 637AA
regard to remuneration.
Forms of, and procedure in
201 relation to, certain 1st April, 2014 640B
applications.
Compensation for loss of
12th September,
202 office of managing or whole- 318
2013
time director or manager.
Appointment of key
203 1st April, 2014 269, 316, 386
managerial personnel.
Secretarial audit for bigger
204 1st April, 2014 NIL
companies.

Page 1741
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Functions of company
205 1st April, 2014 NIL
secretary.
CHAPTER XIV
INSPECTION, INQUIRY
AND INVESTIGATION
Power to call for information,
234 [except sub-
206 inspect books and conduct 1st April, 2014
section (8)]
inquiries.
Conduct of inspection and
207 1st April, 2014 209A
inquiry.
208 Report on inspection made. 1st April, 2014 NIL
209 Search and seizure. 1st April, 2014 234A
Investigation into affairs of
210 1st April, 2014 235
company.
Establishment of Serious
211 1st April, 2014 NIL
Fraud Investigation Office.
1st April, 2014
[except sub-
Investigation into affairs of
section (8) to (10)
212 Company by Serious Fraud NIL
which are brought
Investigation Office.
to force from 24th
August 2017]
Investigation into company’s
213 1st June, 2016 237
affairs in other cases.
Security for payment of
214 costs and expenses of 1st April, 2014 236
investigation.
Firm, body corporate or
215 association not to be 1st April, 2014 238
appointed as inspector.
1st April, 2014
[except sub-
Investigation of ownership of section (2), which 247 [except sub-
216
company. became effective section 1A]
from 1st June
2016]
Procedure, powers, etc., of
217 1st April, 2014 240
inspectors.
Protection of employees
218 1st June, 2016 635B
during investigation.

Page 1742
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Power of inspector to
conduct investigation into
219 1st April, 2014 239
affairs of related companies,
etc.
Seizure of documents by
220 1st April, 2014 240A
inspector.
Freezing of assets of
221 company on inquiry and 1st June, 2016 NIL
investigation.
Imposition of restrictions
222 1st June, 2016 250
upon securities.
223 Inspector’s report. 1st April, 2014 241, 246
1st April, 2014
[except sub-
section (2) which
Actions to be taken in became effective
224 pursuance of inspector’s from 15th 242, 244
report. December 2016
and sub-section
(5) from 1st June
2016]
225 Expenses of investigation. 1st April, 2014 245
Voluntary winding up of
15th December,
226 company, etc., not to stop 250A
2016
investigation proceedings.
Legal advisers and bankers
9th September
227 not to disclose certain 251
2016
information.
Investigation, etc., of foreign Sub-section (8) of
228 1st April, 2014
companies. Section 234
Penalty for furnishing false
229 statement, mutilation, 1st April, 2014 NIL
destruction of documents.
CHAPTER XV
COMPROMISES,
ARRANGEMENTS AND
AMALGAMATIONS
15th December
Power to compromise or
2016 except sub-
230 make arrangements with 390, 391, 393, 394A
sections (11) and
creditors and members.
(12)

Page 1743
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Power of Tribunal to enforce
15th December
231 compromise or 392
2016
arrangement.
Merger and amalgamation 15hth December
232 394
of companies. 2016
Merger or amalgamation of 15th December
233 NIL
certain companies. 2016
Merger or amalgamation of
234 company with foreign 13th April 2017 NIL
company.
Power to acquire shares of
shareholders dissenting 15th December
235 395
from scheme or contract 2016
approved by majority.
Purchase of minority 15th December
236 NIL
shareholding. 2016
Power of Central
Government to provide for 15th December
237 396
amalgamation of companies 2016
in public interest.
Registration of offer of
15th December
238 schemes involving transfer NIL
2016
of shares.
Preservation of books and
15th December
239 papers of amalgamated 396A
2016
companies.
Liability of officers in respect
of offences committed prior 15th December
240 NIL
to merger, amalgamation, 2016
etc.
CHAPTER XVI
PREVENTION OF
OPPRESSION AND
MISMANAGEMENT
Application to Tribunal for
241 relief in cases of oppression, 1st June 2016
etc.
1st June 2016,
except clause (b)
242 Powers of Tribunal.
of sub-section (1),
clauses (c) and (g)

Page 1744
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
of sub-section (2),
which is brought to
force from 9th
September 2016
Consequence of termination
243 or modification of certain 1st June 2016
agreements.
Right to apply under section
244 1st June 2016
241.
245 Class action. 1st June 2016
Application of certain
provisions to proceedings 9th September
246
under section 241 or section 2016
245.
CHAPTER XVII
REGISTERED VALUERS
Valuation by registered
247 18th October 2017
valuers.
CHAPTER XVIII
REMOVAL OF NAMES OF
COMPANIES FROM THE
REGISTER OF
COMPANIES
Power of Registrar to
26th December
248 remove name of company
2016
from register of companies.
Restrictions on making
26th December
249 application under section
2016
248 in certain situations.
Effect of company notified 26th December
250
as dissolved. 2016
Fraudulent application for 26th December
251
removal of name. 2016
26th December
252 Appeal to Tribunal.
2016
CHAPTER XIX REVIVAL
AND REHABILITATION OF
SICK COMPANIES
253 Determination of sickness. Never brought to
Application for revival and force. And Omitted
254
rehabilitation. Ss. 253 to 269

Page 1745
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Exclusion of certain time in w.e.f. 15th
255 computing period of November 2016 by
limitation. section 255 of the
Appointment of interim Insolvency and
256
administrator. Bankruptcy Code,
257 Committee of creditors. 2016
258 Order of Tribunal.
Appointment of
259
administrator.
Powers and duties of
260
company administrator.
Scheme of revival and
261
rehabilitation.
262 Sanction of scheme.
263 Scheme to be binding.
264 Implementation of scheme.
Winding up of company on Never brought to
265 report of company force. And Omitted
administrator. Ss. 253 to 269
Power of Tribunal to assess w.e.f. 15th
266 damages against delinquent November 2016 by
directors, etc. section 255 of the
Punishment for certain Insolvency and
267 Bankruptcy Code,
offences.
268 Bar of jurisdiction. 2016

Rehabilitation and
269
Insolvency Fund.

CHAPTER XX WINDING
UP
15th December
270 Modes of winding up.
2016
PART I.—Winding up by
the Tribunal
Circumstances in which
15th December
271 company may be wound up
2016
by Tribunal.
15th December
272 Petition for winding up.
2016

Page 1746
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
15th December
273 Powers of Tribunal.
2016
Directions for filing 15th December
274
statement of affairs. 2016
Company Liquidators and 15th December
275
their appointments. 2016
Removal and replacement 15th December
276
of liquidator. 2016
Intimation to Company
15th December
277 Liquidator, provisional
2016
liquidator and Registrar.
15th December
278 Effect of winding up order.
2016
Stay of suits, etc., on 15th December
279
winding up order. 2016
15th December
280 Jurisdiction of Tribunal.
2016
Submission of report by 15th December
281
Company Liquidator. 2016
Directions of Tribunal on
15th December
282 report of Company
2016
Liquidator.
Custody of company's 15th December
283
properties. 2016
Promoters, directors, etc., to
15th December
284 cooperate with Company
2016
Liquidator.
Settlement of list of
15th December
285 contributories and
2016
application of assets.
Obligations of directors and 15th December
286
managers. 2016
15th December
287 Advisory committee.
2016
Submission of periodical 15th December
288
reports to Tribunal. 2016
Never brought to
Power of Tribunal on force. And Omitted
289 application for stay of S. 289 w.e.f. 15th
winding up. November 2016 by
section 255 of the

Page 1747
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Insolvency and
Bankruptcy Code,
2016
Powers and duties of 15th December
290
Company Liquidator. 2016
Provision for professional
15th December
291 assistance to Company
2016
Liquidator.
Exercise and control of
15th December
292 Company Liquidator's
2016
powers.
Books to be kept by 15th December
293
Company Liquidator. 2016
Audit of Company 15th December
294
Liquidator's accounts. 2016
Payment of debts by
15th December
295 contributory and extent of
2016
set-off.
Power of Tribunal to make 15th December
296
calls. 2016
Adjustment of rights of 15th December
297
contributories. 2016
15th December
298 Power to order costs.
2016
Power to summon persons
15th December
299 suspected of having
2016
property of company, etc.
Power to order examination 15th December
300
of promoters, directors, etc. 2016
Arrest of person trying to 15th December
301
leave India or abscond. 2016
Dissolution of company by 15th December
302
Tribunal. 2016
Appeals from orders made
15th December
303 before commencement of
2016
Act.
PART II.—Voluntary
winding up
Circumstances in which
304 company may be wound up
voluntarily.

Page 1748
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Declaration of solvency in
305 case of proposal to wind up
voluntarily.
306 Meeting of creditors. Never brought to
Publication of resolution to force. And Omitted
307
wind up voluntarily. Ss. 304 to 323
Commencement of w.e.f. 15th
308 November 2016 by
voluntary winding up.
Effect of voluntary winding section 255 of the
309 Insolvency and
up.
Appointment of Company Bankruptcy Code,
310 2016
Liquidator.
Power to remove and fill
311 vacancy of Company
Liquidator.
Notice of appointment of
312 Company Liquidator to be
given to Registrar.
Cesser of Board's powers
313 on appointment of Company
Liquidator.
Powers and duties of
314 Company Liquidator in
voluntary winding up.
315 Appointment of committees.
Company Liquidator to
316 submit report on progress of
winding up.
Report of Company
317 Liquidator to Tribunal for
examination of persons.
Final meeting and
318
dissolution of company.
Power of Company
Liquidator to accept shares,
319
etc., as consideration for
sale of property of company.
Distribution of property of
320
company.
Arrangement when binding
321
on company and creditors.

Page 1749
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Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Power to apply to Tribunal
322 to have questions
determined, etc.
Costs of voluntary winding
323
up.
PART III.—Provisions
applicable to every mode
of winding up
Debts of all descriptions to 15th December
324
be admitted to proof. 2016
Never brought to
force. And Omitted
S. 325 w.e.f. 15th
Application of insolvency
November 2016 by
325 rules in winding up of
section 255 of the
insolvent companies.
Insolvency and
Bankruptcy Code,
2016
Overriding preferential 15th December
326
payments. 2016
15th December
327 Preferential payments.
2016
15th December
328 Fraudulent preference.
2016
Transfers not in good faith 15th December
329
to be void. 2016
15th December
330 Certain transfers to be void.
2016
Liabilities and rights of
15th December
331 certain persons fraudulently
2016
preferred.
15th December
332 Effect of floating charge.
2016
Disclaimer of onerous 15th December
333
property. 2016
Transfers, etc., after
15th December
334 commencement of winding 536
2016
up to be void.
Certain attachments,
15th December
335 executions, etc., in winding
2016
up by Tribunal to be void.

Page 1750
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Offences by officers of 15th December
336
companies in liquidation. 2016
15th December
2016
Penalty for frauds by However to the
337
officers. extent it applies to
sec.246, w.e.f. 9th
September 2016
15th December
2016
Liability where proper However to the
338
accounts not kept. extent it applies to
sec.246, w.e.f. 9th
September 2016
15th December
2016
Liability for fraudulent However to the
339
conduct of business. extent it applies to
sec.246,w.e.f. 9th
September 2016
15th December
2016
Power of Tribunal to assess
However to the
340 damages against delinquent
extent it applies to
directors, etc.
sec.246, w.e.f. 9th
September 2016
15th December
Liability under sections 339 2016
and 340 to extend to However to the
341
partners or directors in firms extent it applies to
or companies. sec.246, w.e.f. 9th
September 2016
Prosecution of delinquent
15th December
342 officers and members of
2016
company.
Company Liquidator to
15th December
343 exercise certain powers
2016
subject to sanction.
Statement that company is 15th December
344
in liquidation. 2016

Page 1751
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Books and papers of 15th December
345
company to be evidence. 2016
Inspection of books and
15th December
346 papers by creditors and
2016
contributories.
Disposal of books and 15th December
347
papers of company. 2016
Information as to pending 15th December
348
liquidations. 2016
Official Liquidator to make
15th December
349 payments into public
2016
account of India.
Company Liquidator to
15th December
350 deposit monies into
2016
scheduled bank.
Liquidator not to deposit
15th December
351 monies into private banking
2016
account.
Company Liquidation
15th December
352 Dividend and Undistributed
2016
Assets Account.
Liquidator to make returns, 15th December
353
etc. 2016
Meetings to ascertain
15th December
354 wishes of creditors or
2016
contributories.
Court, tribunal or person,
15th December
355 etc., before whom affidavit
2016
may be sworn.
Powers of Tribunal to
15th December
356 declare dissolution of
2016
company void.
Commencement of winding 15th December
357
up by Tribunal. 2016
Exclusion of certain time in
15th December
358 computing period of
2016
limitation.
PART IV.—Official
Liquidators
Appointment of Official 15th December
359
Liquidator. 2016

Page 1752
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Powers and functions of 15th December
360
Official Liquidator. 2016
Summary procedure for 15th December
361
liquidation. 2016
Sale of assets and recovery 15th December
362
of debts due to company. 2016
Settlement of claims of
15th December
363 creditors by Official
2016
Liquidator.
15th December
364 Appeal by creditor.
2016
Order of dissolution of 15th December
365
company. 2016
CHAPTER XXI PART I.—
Companies Authorised to
Register under this Act
Companies capable of being
366 1st April, 2014 565
registered.
Certificate of registration of
367 1st April, 2014 574
existing companies.
Vesting of property on
368 1st April, 2014 575
registration.
369 Saving of existing liabilities. 1st April, 2014 576
1st April, 2014
[except the
Continuation of pending proviso, which is
370 577
legal proceedings. brought to force
from 15th
December 2016]
Effect of registration under
371 1st April, 2014 578
this Part.
Power of Court to stay or 15th December
372 580, 586
restrain proceedings. 2016
Suits stayed on winding up 15th December
373 581, 587
order. 2016
Obligations of companies
374 1st April, 2014 NIL
registering under this Part.
PART II.—Winding up of
unregistered companies
Winding up of unregistered 15th December
375
companies. 2016

Page 1753
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Power to wind up foreign
15th December
376 companies, although
2016
dissolved.
Provisions of Chapter 15th December
377
cumulative. 2016
Saving and construction of
enactments conferring
power to wind up 15th December
378
partnership firm, association 2016
or company, etc., in certain
cases.
CHAPTER XXII
COMPANIES
INCORPORATED
OUTSIDE INDIA
Application of Act to foreign 12th September,
379 591
companies. 2013
Documents, etc., to be
380 delivered to Registrar by 1st April, 2014 592, 593
foreign companies.
Accounts of foreign
381 1st April, 2014 594
company.
Display of name, etc., of 12th September,
382 595
foreign company. 2013
12th September,
383 Service on foreign company. 596
2013
Debentures, annual return,
registration of charges,
384 1st April, 2014 600
books of account and their
inspection.
Fee for registration of
385 1st April, 2014 601
documents.
12th September,
2013 [except
clause (a) which is
386 Interpretation. 602
brought to force
from 1st April
2014]
Dating of prospectus and
387 particulars to be contained 1st April, 2014 603
therein.

Page 1754
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Provisions as to expert’s
388 1st April, 2014 604
consent and allotment.
389 Registration of prospectus. 1st April, 2014 605
Offer of Indian Depository
390 1st April, 2014 605A
Receipts.
1st April, 2014 for
sub-section (1)
Application of sections 34 to
391 and 15th December 607
36 and Chapter XX.
2016 for sub-
section (2)
Punishment for
392 1st April, 2014 598, 606
contravention.
Company's failure to comply
with provisions of this
393 1st April, 2014 599
Chapter not to affect validity
of contracts, etc.
CHAPTER XXIII
GOVERNMENT
COMPANIES
Annual reports on 12th September,
394 619A (1), (2)
Government companies. 2013
Annual reports where one or
395 more State Governments 1st April, 2014 619A(3), (4)
are members of companies.
CHAPTER XXIV
REGISTRATION OFFICES
AND FEES
396 Registration offices. 1st April, 2014 609
Admissibility of certain
397 1st April, 2014 610A
documents as evidence.
Provisions relating to filing
of applications, documents,
398 1st April, 2014 610B
inspection, etc., in electronic
form.
1st April, 2014
[except Reference
Inspection, production and of word Tribunal in
399 evidence of documents kept sub-section (2), 610
by Registrar. which is made
effective from 1st
June 2016]

Page 1755
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Electronic form to be
400 exclusive, alternative or in 1st April, 2014 NIL
addition to physical form.
Provision of value added
401 services through electronic 1st April, 2014 610D
form.
Application of provisions of
402 Information Technology Act, 1st April, 2014 610E
2000.
403 Fee for filing, etc. 1st April, 2014 611, Schedule X
Fees, etc., to be credited
404 1st April, 2014 612
into public account.
CHAPTER XXV
COMPANIES TO FURNISH
INFORMATION OR
STATISTICS
Power of Central
Government to direct 12th September,
405 615
companies to furnish 2013
information or statistics.
CHAPTER XXVI NIDHIS
Power to modify Act in its
406 1st April, 2014 620A
application to Nidhis.
CHAPTER XXVII
NATIONAL COMPANY
LAW TRIBUNAL AND
APPELLATE TRIBUNAL
12th September,
407 Definitions. Explanation to 10FD
2013
Constitution of National 12th September,
408 10FB,10FC
Company Law Tribunal. 2013
Qualification of President 12th September,
409 10FD
and Members of Tribunal. 2013
Constitution of Appellate 12th September,
410 10FR(1)
Tribunal. 2013
Qualifications of chairperson
12th September,
411 and Members of Appellate 10FR(2) and (3)
2013
Tribunal.
Selection of Members of
12th September,
412 Tribunal and Appellate 10FX
2013
Tribunal.

Page 1756
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Term of office of President,
12th September,
413 chairperson and other 10FE,10FT
2013
Members.
Salary, allowances and
12th September,
414 other terms and conditions 10FG,10FW
2013
of service of Members.
Acting President and
415 Chairperson of Tribunal or 1st June 2016 10FI, 10FU
Appellate Tribunal.
416 Resignation of Members. 1st June 2016
417 Removal of Members. 1st June 2016
Staff of Tribunal and
418 1st June 2016
Appellate Tribunal.
419 Benches of Tribunal. 1st June 2016
420 Orders of Tribunal. 1st June 2016
Appeal from orders of
421 1st June 2016
Tribunal.
Expeditious disposal by
422 Tribunal and Appellate 1st June 2016
Tribunal.
423 Appeal to Supreme Court. 1st June 2016
Procedure before Tribunal
424 1st June 2016
and Appellate Tribunal.
Power to punish for
425 1st June 2016
contempt.
426 Delegation of powers. 1st June 2016
President, Members,
427 officers, etc., to be public 1st June 2016
servants.
Protection of action taken in
428 1st June 2016
good faith.
Power to seek assistance of
429 Chief Metropolitan 1st June 2016
Magistrate, etc.
Civil court not to have
430 1st June 2016
jurisdiction.
Vacancy in Tribunal or
Appellate Tribunal not to
431 1st June 2016
invalidate acts or
proceedings.

Page 1757
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Right to legal
432 1st June 2016
representation.
433 Limitation. 1st June 2016
1st June 2016 for
Sec.434(1)(a) and
Transfer of certain pending (b) and S.434(2)
434
proceedings. AND 15th
December 2016
for Sec.434(1)(c)
CHAPTER XXVIII
SPECIAL COURTS
Establishment of Special
435 18th May 2016
Courts.
Offences triable by Special
436 18th May 2016
Courts.
437 Appeal and revision. 18th May 2016
Application of Code to
438 proceedings before Special 18th May 2016
Court.
Offences to be non- 12th September,
439 621, 624
cognizable. 2013
440 Transitional provisions. 18th May 2016
Compounding of certain
441 1st June 2016 621A
offences.
Mediation and Conciliation
442 1st April, 2014 NIL
Panel.
Power of Central
12th September,
443 Government to appoint 624A
2013
company prosecutors.
12th September,
444 Appeal against acquittal. 624B
2013
Compensation for
12th September,
445 accusation without NIL
2013
reasonable cause.
12th September,
446 Application of fines. 626
2013
CHAPTER XXIX
MISCELLANEOUS
12th September,
447 Punishment for fraud. NIL
2013

Page 1758
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Punishment for false 12th September,
448 628
statement. 2013
Punishment for false 12th September,
449 629
evidence. 2013
Punishment where no
12th September,
450 specific penalty or 629A
2013
punishment is provided.
Punishment in case of 12th September,
451 NIL
repeated default. 2013
Punishment for wrongful 12th September,
452 630
withholding of property. 2013
Punishment for improper
12th September,
453 use of “Limited” or “Private 631
2013
Limited”.
454 Adjudication of penalties. 1st April, 2014 NIL
455 Dormant company. 1st April, 2014 NIL
Protection of action taken in 12th September,
456 635A
good faith. 2013
Non-disclosure of 12th September,
457 635AA
information in certain cases. 2013
Delegation by Central
12th September,
458 Government of its powers 637
2013
and functions.
Powers of Central
Government or Tribunal to
accord approval, etc., 12th September,
459 637AA
subject to conditions and to 2013
prescribe fees on
applications.
Condonation of delay in 12th September,
460 637B
certain cases. 2013
Annual report by Central 12th September,
461 638
Government. 2013
Power to exempt class or
12th September,
462 classes of companies from NIL
2013
provisions of this Act.
Power of court to grant relief 12th September,
463 633
in certain cases. 2013
Prohibition of association or
464 partnership of persons 1st April, 2014 11
exceeding certain number.

Page 1759
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
Repeal of certain
465
enactments and savings.
Dissolution of Company Law
466 Board and consequential 1st June 2016
provisions.
Power of Central
12th September,
467 Government to amend 641
2013
Schedules.
Powers of Central
12th September,
468 Government to make rules 643
2013
relating to winding up.
Power of Central 12th September,
469 642
Government to make rules. 2013
12th September,
470 Power to remove difficulties. NIL
2013
SCHEDULE I 1st April, 2014 Schedule I
MEMORANDUM OF
TABLE - ASSOCIATION OF A
A COMPANY LIMITED BY
SHARES
MEMORANDUM OF
ASSOCIATION OF A
TABLE - COMPANY LIMITED BY
B GUARANTEE AND NOT
HAVING A SHARE
CAPITAL
MEMORANDUM OF
ASSOCIATION OF A
TABLE - COMPANY LIMITED BY
C GUARANTEE AND
HAVING A SHARE
CAPITAL
MEMORANDUM OF
ASSOCIATION OF AN
TABLE -
UNLIMITED COMPANY
D
AND NOT HAVING SHARE
CAPITAL
MEMORANDUM OF
TABLE -
ASSOCIATION OF AN
E
UNLIMITED COMPANY

Page 1760
 Annexure 4

Companies Act 2013 vis-à-vis Companies Act 1956

Corresponding
SECTION provision under
HEADING W.E.F.
NUMBER the Companies
Act, 1956
AND HAVING SHARE
CAPITAL
ARTICLES OF
TABLE - ASSOCIATION OF A
F COMPANY LIMITED BY
SHARES
ARTICLES OF
ASSOCIATION OF A
TABLE - COMPANY LIMITED BY
G GUARANTEE AND
HAVING A SHARE
CAPITAL
ARTICLES OF
ASSOCIATION OF A
TABLE -
COMPANY LIMITED BY
H
GUARANTEE AND NOT
HAVING SHARE CAPITAL
ARTICLES OF
ASSOCIATION OF AN
TABLE - I UNLIMITED COMPANY
AND HAVING A SHARE
CAPITAL
ARTICLES OF
ASSOCIATION OF AN
TABLE - J UNLIMITED COMPANY
AND NOT HAVING SHARE
CAPITAL
SCHEDULE I 1st April, 2014 SCHEDULE I
SCHEDULE II 1st April, 2014 Schedule XIV
SCHEDULE III 1st April, 2014 Schedule VI
SCHEDULE IV 1st April, 2014 NIL
SCHEDULE V 1st April, 2014 Schedule XIII
SCHEDULE VI 1st April, 2014 NIL
SCHEDULE VII 1st April, 2014 NIL

Page 1761
 Annexure 5

Provisions of the Companies Act 1956 still in force

Annexure 5: Provisions of the

Companies Act, 1956 still in force
Companies Act 1956 Corresponding provisions under
Provisions still in operation Companies Act 2013 – not yet
brought to force
Proviso to section 80A(1): redemption of No corresponding provision
irredeemable preference shares
section 80A(2): any class of shareholders or No corresponding provision
any court or the Central Government cannot
vary or modify section 80A
Section 210A: Constitution of National Section 132: Constitution of National
Advisory Committee on Accounting Financial Reporting Authority
Standards

For comparative list of provisions of the Companies Act, 2013 as notified till April 01,
2013 vis-à-vis the corresponding provisions of the Companies Act, 1956 as also
provision of Companies Act, 1956 still in operation, refer Circular 7/2014.

Page 1762