Useful tips and guidance for startups incorporation amalgamation dissolution of private and public companies

6th
NOV

Useful tips and guidance for startups incorporation amalgamation dissolution of private and public companies

Posted by Rekha Prasad under Corporate Law

1. Short title, commencement and extent.

1) This Act may be called the Companies Act, 1956.

2) It shall come into force on such date2* as the Central Government may, by notification in the Official Gazette, appoint. 3[(3) It extends to the whole of India: 4 * * * * *] 5[Provided 6* * * that it shall apply to the State of Nagaland subject to such modifications, if any, as the Central Government may, by notification in the Official Gazette, specify.]

2. Definitions.

In this Act, unless the context otherwise requires –

1) ”Alter” and “alteration” shall include the making of additions and omissions;

2) “articles” means the articles of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act, including, so far as they apply to the company, the regulations contained, as the case may be, in Table B in the Schedule annexed to Act No. 19 of 1857 or in Table A in the First Schedule annexed to the Indian Companies Act, 1882, (6 of 1882.) or in Table A in the First

1. This Act has been extended to Goa, Daman and Diu by Regulation 12 of 1962 (with modifications), s. 3 and Sch.: to Dadra and Nagar Haveli by Regulation 6 of 1963, s. 2 and Sch. I and to Pondicherry by Regulation 7 of 1963, s. 3 and Sch.1.The provisions of this Act shall apply to Goa, Daman and Diu, subject to the exceptions, modifications and adaptations contained in the Schedule to G.S.R. 615, dated the 24th April, 1965 (Gazette of India, Pt. II, Sec. 3(i), p. 670). Amended in its application to Goa, Daman and Diu by Reg. 11 of 1963, s. 9.

2. 1st April, 1956, vide Notification No. S.R.O. 612, dated 8-3- 1956, Gazette of India, Extraordinary, 1956, Pt. II, Sec. 3, p. 473.

3. Subs. by Act 62 of 1956 s. 2 and Sch., for sub-section (3) (w.e.f. 1-11-1956).

4. Proviso omitted by Act 25 of 1968, s. 2 and Sch. (w.e.f. 15-8-1968).

5. Ins. by Act 31 of 1965, s. 2 (w.e.f. 15-10-1965).

6. The word “further” omitted by Act 25 of 1968, s. 2 and Sch. (w.e.f. 15-8-1968). Schedule annexed to the Indian Companies Act, 1913, or in Table A in Schedule I annexed to this Act;

3) ”associate”, in relation to a managing agent, means any of the following, and no others –

(a) where the managing agent is an individual; any partner or relative of such individual; any firm in which such individual, partner or relative is a partner; any private company of which such individual or any such partner, relative or firm is the managing agent or secretaries and treasurers or a director or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, such individual, partner or partners, relative or relatives, firm or firms; and private company or companies;

(b) where the managing agent is a firm: any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner or relative is a partner; any private company of which the firm first mentioned, or any such member, partner, relative or other firm is the managing agent, or secretaries and treasurers, or a director, or the manager; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the firm first mentioned, any such member or members, partner or partners, relative or relatives, other firm or firms and private company or companies;

(i) Any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of. The body corporate or of any subsidiary or holding company thereof; any partner or relative of any such director or manager; any firm in which such director, manager, partner or relative, is a partner;1 * * *

(ii) any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specified in paragraph (i) above; and 2[(iii)any subsidiary of the other body corporate referred to in paragraph (ii) above: Provided that where the body corporate is the managing agent of the other body corporate referred to in paragraph (ii) above, a subsidiary of such other body corporate shall not be an associate in relation to the managing agent aforesaid ; and]

(d) where the managing agent is a private company or a body corporate having not more than fifty members: in addition to the persons mentioned in sub clause (c), any member of the private company or body corporate;

Explanation.-If one person is an associate in relation to another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to the former within its meaning;

4) ”Associate”, in relation to any secretaries and treasurers, means any of the following, and no others –

(a) where the secretaries and treasurers are a firm: any member of such firm; any partner or relative of any such member; and any other firm in which any such member, partner or relative is a partner any private company of which the firm first-mentioned, or any such member, partner, relative or other firm is the managing agent, or secretaries and treasurers, or a director, or the manager ; and any body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the firm first-mentioned, any such member or members, partner or partners, relative or relatives, other firm or firms, and private company or companies;

(b) where the secretaries and treasurers are a body corporate –

(i) any subsidiary or holding company of such body corporate; the managing agent or secretaries and treasurers, or a director, the manager or an officer of the body corporate or of any subsidiary or holding company thereof ; any partner or relative of any such director or manager; any firm in which such director or manager, partner or relative, is a partner; 1 * * *

(ii) any other body corporate at any general meeting of which not less than one-third of the total voting power in regard to any matter may be exercised or controlled by any one or more of the following, namely, the body corporate and the companies and other persons specified in paragraph (i) above; and 2 [ (iii) any subsidiary of the other body corporate referred to in paragraph (ii) above: Provided that where the body corporate is the secretaries and treasurers of the other body corporate referred to in paragraph (ii) above, a subsidiary of such other body corporate shall not be an associate in relation to the secretaries and treasurers aforesaid; and]

(c) Where the secretaries and treasurers are a private company or a body corporate having not more than fifty members: in addition to the persons mentioned in sub-clause (b), any member of the private company or body corporate;

Explanation.-If one person is an associate in relation to another within the meaning of this clause, the latter shall also be deemed to be an associate in relation to the former within its meaning;

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

1. The word “and” omitted by Act 65 of 1960, s. 2.

2. Ins. by s. 2, ibid.

6) “Board of directors” or “Board”, in relation to a company, means the Board of directors of the company;

7) “Body corporate” or “corporation” includes a company incorporated outside India but 1[does not include –

(a) a corporation sole;

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

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

"book and paper " and " book or paper " include accounts, deeds , 2 [vouchers,] writings, and documents;

(9) “Branch office” in relation to a company means –

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

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

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

10) “company” means a company as defined in section 3;

1[(10A) "Company Law Board" means the Board of Company Law Administration constituted under section 10E;]

11) “the Court” means –

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

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

COMPANIES ACT (1 OF 1956) SECTION 2(11):

Company Court - Does not have jurisdiction to try all matters relating to Company - Specific provision has to be made in that regard under the Act - Petition under S 84*4) seeking direction to issue duplicate share certificates for equity shares held by petitioner - No specific provision conferring jurisdiction in that regard on Company Court - Petition before Company Court not maintainable. - AIR 2007 (NOC) 110 (BOM) (DB)

12) “Debenture” includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not;

13) “Director” includes any person occupying the position of director, by whatever name called;

1. Subs. by Act 65 of 1960, s. 2, for “does not include a corporation sole”.

2. Ins. by Act 31 of 1965, s. 3 (w.e.f. 15-10-1965),

3. Subs. by Act 65 of 1960, s. 2, for cl. (9),

14) “District Court” means the principal Civil Court of original jurisdiction in a district, but does not include a High Court in the exercise of its ordinary original civil jurisdiction;

15) “document” includes summons, notice, requisition, order, other legal process, and registers, whether issued, sent or kept in pursuance of this or any other Act or otherwise;

16) “existing company” means an existing company as defined in section 3;

17) “financial year” means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not:

1. Ins. by Act 53 of 1963, s. 2 (w.e.f. 1-1-1964).

2. Subs. by Act 65 of 1960, s. 2, for cl. (11).

Provided that, in relation to an insurance company, “financial year” shall mean the calendar year referred to in sub-section (1) of section 11 of the Insurance Act, 1938 (4 of 1938);

18) “Government company” means a Government company within the meaning of section 617;

19) “holding company” means a holding company within the meaning of section 4;

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

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

23) “limited company” means a company limited by shares or by guarantee:

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

1. Omitted by Act 30 of 1984, s.52 (w.e.f. 1.8.1984).

2. Cl. (20) omitted by Act 62 of 1956, s. 2 and Sch. (w.e.f. 1-11-1956).

25) “managing agent“ means any individual, firm or body entitled, subject to the provisions of this Act, to the management of the whole, or substantially the whole, of the affairs of a company by virtue of an agreement with the company, or by virtue of its memorandum or articles of association, and includes any individual, firm or body corporate occupying the position of a managing agent, by whatever name called.

1[Explanation I.-For the purposes of this Act, references to "managing agent" shall be construed as references to any individual, firm, or body corporate who, or which, was, at any time before the 3rd day of April, 1970, the managing agent of any company.

Explanation II.-For the removal of doubts, it is hereby declared that notwithstanding anything contained in section 6 of the Companies (Amendment) Act, 1969, (17 of 1969.) this clause shall remain, and shall be deemed always to have remained, in force;]

26) “managing director” means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with 2[substantial powers of management] which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called:

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

1. Ins. by Act 41 of 1974, s. 2 (w.e.f. 1-2-1975).

2. Subs. by Act 65 of 1960, s. 2, for "any powers of management".

3. Ins. by s. 2, ibid.

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

27) “member”, in relation to a company, does not include a bearer of a share-warrant of the company issued in pursuance of section 114;

28) “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act;

29) “modify” and “modification” shall include the making of additions and omissions;

1[(30) "officer" includes any director, managing agent, secretaries and treasurers, manager or secretary, 2[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,] and also includes –

(a) where the managing agent, 3[or the secretaries and treasures] is or are a firm, any partner in the firm;

(b) where the managing agent or the secretaries and treasurers is or are a body corporate, any director or manager of the body corporate; but save in sections, 477, 478, 539, 543, 545, 621, 625 and 633 does not include an auditor;]

31) “officer who is in default“, in relation to any provision referred to in section 5, has the meaning specified in that section;

32) “paid-up capital” or “capital paid up” includes capital credited as paid up;

33) “prescribed” means, as respects the provisions of this Act relating to the winding up of companies except sub-section (5) of section 503, 5[sub-section (3) of section 550, section 552 and sub-section (3) of section 555], prescribed by rules made by the Supreme Court in consultation with High Courts, and as respects the other provisions of this Act including sub-section (5) of section 503,1[sub-section (3) of section 550, section 552 and sub-section (3) of section 555], prescribed by rules made by the Central Government;

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1. Subs. by Act 65 of 1960, s. 2, for cl. (30).

2. Ins. by Act 31 of 1965, s. 3 (w.e.f. 15-10-1965).

3 . Subs. by Act 41of 1974, s. 2, for “the secretaries and treasurers or the secretary” (w.e.f. 1-8-1975).

4. Sub-clause (c) omitted by s. 2, ibid. (w.e.f. 1-8-1975).

5 Subs. by Act 65 of 1960, s. 2, for “sub-section (1) of section 549 and subsection (3) of section 550″.

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34) “previous companies law” means any of the laws specified in clause (ii) of sub-section (1) of section 3;

35) “private company” means a private company as defined in section 3;

36) “prospectus” means 2[any document described or issued as a prospectus and includes any] notice, circular, advertisement or other document 3[inviting deposits from the public or] inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate;

37) “public company” means a public company as defined in section 3;

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

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

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

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

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1. Subs. by Act 65 of 1960. s. 2, for “sub-section (1) of section 549 and subsection (3) of section 550″.

2. Subs. by s. 2, ibid., for “any prospectus”.

3. Ins. by Act 41 of 1974, s. 2 (w.e.f. 1-2-1975).

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

42) “Schedule” means a Schedule annexed to this Act;

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

44) “secretaries and treasurers” means any firm or body corporate (not being the managing agent) which, subject to the superintendence, control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company; and includes any firm or body corporate occupying the position of secretaries and treasurers, by whatever name called, and whether under a contract of service or not.

1[Explanation I.-For the purposes of this Act, references to "secretaries and treasurers" shall be construed as references to any firm or body corporate which was, at any time before the 3rd day of April, 1970, secretaries and treasurers of any company.

Explanation II.-For the removal of doubts, it is hereby declared that notwithstanding anything contained in section 6 of the Companies (Amendment) Act, 1969 (17 of 1969), this clause shall remain, and shall be deemed always to have remained, in force;]

4[(45) "secretary" means a Company Secretary within the meaning of clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980), and includes any other individual possessing the prescribed qualifications and appointed to perform the duties which may be performed by a secretary under this Act and any other ministerial or administrative duties;]

5[(45A) "secretary in whole-time practice" means a secretary who shall be deemed to be in practice within the meaning of sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who is not in fulltime employment;]

6[(46A) "Securities and Exchange Board of India" means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992)]

46) “share” means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied;

47) “subsidiary company” or “subsidiary” means a subsidiary company within the meaning of section 4;

48) “total voting power“, in regard to any matter relating to a body corporate, means the total number of votes which may be cast in regard to that matter on a poll at a meeting of such body, if all the members thereof and all other persons, if any, having a right to vote on that matter are present at the meeting, and cast their votes;

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1. Ins. by Act 41 of 1974, s. 2 (w.e.f. 1-2-1975).

2. Subs. by Act 65 of 1960, s. 2, for el. (45).

3. 41 of 1974, s. 2, for certain words (w.e.f. 1-2-1975).

4. Subs. by Act 31 of 1988, s. 2 (w.e.f. ————–).

5. Subs by s.2 ibid (w.e.f. 15.6.1988).

6. Ins. by Act 22 of 1996, s.31 and Sch. (w.e.f. 20.9.1995).

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49) “trading corporation” means a trading corporation within the meaning of entries 43 and 44 in List I in the Seventh Schedule to the Constitution;

50) “variation” shall, include abrogation; and “vary” shall include abrogate. 2[(2A.) Words and expressions used and not defined in this Act but defined in the Depositories Act, 1996 (22 of 1996), shall have the same meanings respectively assigned to them in that Act.]

3. Definitions of “Company”, “Existing Company”, “Private Company” and “Public Company”

(1) In this Act, unless the context otherwise requires, the expressions “company”, “existing company”, “private company” and “public company” shall, subject to the provisions of subsection (2), have the meanings specified below –

i) “company” means a company formed and registered under this Act or an existing company as defined in clause (ii);

ii) ”Existing company” means a company formed and registered under any of the previous companies laws specified below –

(a) Any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866.)and repealed by that Act;

(b) The Indian Companies Act, 1866 (10 of 1866);

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

(e) The Registration of Transferred Companies Ordinance,

942 ( 54 of 1942); and

2[(f) Any law corresponding to any of the Acts or the Ordinance aforesaid and in force –

(1) in the merged territories or in a Part B 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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1. Cl. (49A) omitted by Act 17 of 1967, s. 4 and Sch. (w.e.f. 1-7-1967).

2. Ins. by Act 22 of 1996, s. 31 and Sch. (w.e.f. 20.9.1995).

3 Subs. by Act 62 of 1956, s. 2 and Sch., for cl. (f) (w.e.f. 1- 11-1956).

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(2) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956). 1[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];]

iii) “private company” means a company which, by its articles –

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

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

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

(ii) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and

1. Ins. by Act 25 of 1968, s. 2 and Sch. (w.e.f, 15-8-1968).

–

Provided that where two or more persons hold one or more shares, in a company jointly, they shall, for the purposes of this definition, be treated as a single member;

iv) “Public company” means a company which is not a private company.

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

(a) a company the registered office where of is in Burma, Aden or Pakistan, and which immediately before the separation of that country from India was a company as defined in clause (i) of subsection (1); Meaning of “holding company” and “subsidiary”.

(b)

Meaning of “holding company” and “subsidiary”

4. Meaning of “holding company” and “subsidiary”

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

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

2[(b) that other –

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

(ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital; or]

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

1. Cl. (b) omitted by Act 62 of 1956, s. 2 and Sch (w.e.f. 1-11-1956).

2. Subs. by Act 65 of 1960, s. 3, for cl, (b),

Illustration

Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B. Company C is a subsidiary of Company A, by virtue of clause (c) above. It Company D is a subsidiary of Company C, Company D will be a subsidiary of Company B and consequently also of Company A, by virtue of clause (c) above; and so on.

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

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

(b) that a person’s appointment thereto follows necessarily from his appointment as director, managing agent, secretaries and treasurers, or manager of, or to any other office or employment in, that other company; or

1[(c) that the directorship is held by an individual nominated by that other company or a subsidiary thereof;]

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

(a) any shares hold or power exercisable by that other company in a fiduciary capacity shall be treated as not held or exercisable by it;

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

(i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity); or

(ii) by, or by a nominee for, a subsidiary of that other company, not, being a subsidiary which is concerned only in a fiduciary capacity; shall be treated as held or exercisable by that other company;

1. Subs. by Act 65 of 1960, s. 3, for cl. (c).

(c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded –

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

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

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

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

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

2[4A. Public financial institutions.

1) Each of the financial institutions specified in this subsection shall be regarded, for the purposes of this Act, as a public financial institution, namely –

(i) the Industrial Credit and Investment Corporation of India Limited, a company formed and registered under the Indian Companies Act, 1913 (7 of 1913);

1. Ins. by Act 65 of 1960, s. 3.

2. Ins. by Act 41 of 1974, s. 3 (w.e.f. 1-2-1975).

(ii) the Industrial Finance Corporation of India, established under section 3 of the Industrial Finance Corporation Act, 1948 (15 of 1948);

(iii) the Industrial Development Bank of India, established under section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964);

(iv) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);

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

2) Subject to the provisions of sub-section (1), the Central Government may, by notification in the Official Gazette, specify such other institution as it may think fit to be a public financial institution:

Provided that no institution shall be so specified unless –

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

(ii) not less than fifty one per cent of the paid-up share capital of such institution is held or controlled by the Central Government.

COMPANIES ACT(1 OF 1956) SECTION 4A :

For words “Unit Trust of India” occurring in any Act Rule, Regulation or Notification words “specified Company” and Administrator of the Specified Undertaking of the Unit Trust of India” are substituted by operation of S.18 of UTI Act - Hence they must be deemed to be financial institutions specified in S.4A(1) of Act - Consequently Unit Trust of India come within definition of financial institution u/s 2(h) of Recovery Act. - AIR 2007 SC 523 (A).

1[5. Meaning of "officer who is in default".

For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is in default" means all the following officers of the company, namely –

a) the managing director or managing directors;

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

c) the manager;

d) the secretary;

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

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

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

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

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

6. Meaning of "relative".

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

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

b) they are husband and wife; or

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

1. Subs by Act 31 of 1988, s. 3 (w.e.f. 15.7.1988).

2. Subs by Act 65 of 1960, s.4, for s.6.

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

Except where this Act expressly provides otherwise, a person shall not be deemed to be, within the meaning of any provision in this Act, a person in accordance with whose directions or instructions the Board of directors of a company is accustomed to act, by reason only that the Board acts on advice given by him in a professional capacity.

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

The Central Government may, by order, declare that in the case of any company, 1* * *, any establishment carrying on either the same or substantially the same activity as that carried on by the head office of the company, or 2[any establishment engaged in any production, processing or manufacture], shall not be treated as a branch office of the company for all or any of the purposes of this Act.

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

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

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

10. Jurisdiction of Courts.

1) The Court having jurisdiction under this Act shall be –

(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of subsection (2); and

1. The words “not being a banking or an insurance company” omitted by Act 65 of 1960, s. 5.

2. Subs. by s. 5, ibid. for “any production or manufacture”.

(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district.

2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred –

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

(b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by Part VII (sections 425 to 560) and the other provisions of this Act relating to the winding up of companies.

3) For the purposes of jurisdiction to wind up companies, the expression “registered office” means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up.

10A. [Constitution of Tribunal.] Repealed by the Companies Tribunal (Abolition) Act, 1967 (17 of 1967) s. 4 and Sch.

10B. [Procedure of Tribunal.] Repealed by s. 4 and Sch. ibid

10C. [Powers of Tribunal.] Repealed by s 4 and Sch., ibid

10D. [Appeals against decisions. etc. of the Tribunal.] Repealed by s. 4 and Sch., ibid.

PART IA

BOARD OF COMPANY LAW ADMINISTRATION

10E. Constitution of Board of Company Law Administration.

1) As soon as may be after the commencement of the Companies (Amendment) Act, 1988, the Central Government shall, by notification in the Official Gazette, constitute a Board to be called the Board of Company Law Administration.

(1A) The Company Law Board shall exercise and discharge such powers and functions as may be conferred on it, by or under this Act or any other law, and shall also exercise and discharge such other powers and functions of the Central Government under this Act or any other law as may be conferred on it by the Central Government, by notification in the Official Gazette under the provisions of this Act or that other law.]

1. Ins. by Act 53 of 1963, s. 4 (w.e.f. 1-1-1964).

2. Subs. by Act 31 of 1988, s. 4 (w.e.f. 31.5.1991).

2) The Company Law Board shall consist of such number of members, not exceeding 1[nine], as the Central Government deems fit, to be appointed by that Government by notification in the Official Gazette:

Provided that the Central Government may, by notification in the official Gazette, continue the appointment of the chairman or any other member of the company Law Board functioning as such immediately before the commencement of the Companies (Amendment) Act, 1988 (31 of 1988), as the chairman or any other member of the Company Law Board, after such commencement for such period not exceeding three years as may be specified in the notification.

(2A) The members of the Company Law Board shall possess such qualifications and experience as maybe prescribed.”]

3) One of the members shall be appointed by the Central Government to be the chairman of the Company Law Board.

3) No act done by the Company Law Board shall be called in question on the ground only of any defect in the constitution of, or the existence of any vacancy in, the Company Law Board.

(4B) 6[The Board may, by order in writing, form one or more Benches from among its members and authorise each such Bench to exercise and discharge such of the Board's powers and functions as may be specified in the order; and every order made or act done by a Bench in exercise of such powers or discharge of such functions shall be deemed to be the order or act as the case may be, of the Board.

(4C) Every Bench referred to in sub-section (4B) shall have powers which are vested in a Court under the Code of Civil Procedure, 1908, (5 of 1908). while trying a suit, in respect of the following matters, namely –

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

-1. Subs. by Act 41 of 1974, s. 4, for "five" (w.e.f. 1-2-1975).

2. Ins. by Act 31 of 1988, s.4 (w.e.f. 31-5-1991).

3. Ins by s.4, ibid (w.e.f. 4-8-1989).

4. Omitted by s.4, ibid Act 31 of 1988, s. 4 (w.e.f.31-5-1991).

5. Ins.by Act 41 of 1974, s.4 (w.e.f. 1-2-1975).

6. Subs. by s.4, ibid (w.e.f.1-2-1975).

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

(d) examining witnesses on oath;

(e) granting adjournments;

(f) reception of evidence on affidavits.

(4D) Every Bench shall be deemed to be a civil court for the purposes of section 195 and 1[Chapter XXVI of the Code of Criminal Procedure, 1973], (2 of 1974). and every proceeding before the Bench shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Indian Penal Code and for the purpose of section 196 of that Code.] (45 of 1860).

5) Without prejudice to the provisions of sub-sections (4C) and (4D), the Company Law Board shall in the exercise of its powers and the discharge of its functions under this Act or any other law be guided by the principles of natural justice and shall act in its discretion.

6) Subject to the foregoing provisions of this section, the Company Law Board shall have power to regulate its own procedure

Appeals against the orders of the Company Law Board

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

Any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order:

Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.]

COMPANIES ACT(1 OF 1956) – SECTION 10-F:

Appeal - From decision or order of Company law Board, filed u/s 10-F - lies before Single judge of High Court and not before Division Bench - AIR 2007 (NOC) 107 (Bom) (FB)

COMPANIES ACT (1 OF 1956) SECTION 10-FB

S.10-FB(as amended by Companies (Second Amendment) Act 2002) - National Company Law Tribunal and National Company Law Appellate Tribunal - Barring jurisdiction of High Court under Arts.226, 227 in Company matters - Such wholesale transfer of powers to Tribunal - Whether offends scheme of separation of powers and independence of judiciary - Question is of seminal importance - Referred to Constitution Bench - AIR 2007 SC (SUPP) 1024.

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