Chapter-heads 0!'% Contents
I-7
Section-wise Index
I-25
#(!04%2
INTRODUCTION
1
#(!04%2
INCORPORATION OF A COMPANY
13
#(!04%2
MEMORANDUM OF ASSOCIATION
33
#(!04%2
ARTICLES OF ASSOCIATION
48
#(!04%2
CAPITAL OF THE COMPANY
56
#(!04%2
ISSUE OF SECURITIES
65
#(!04%2
FURTHER ISSUE OF SECURITIES
84
#(!04%2
REDUCTION OF CAPITAL AND BUY-BACK OF SECURITIES
100
PUBLIC ISSUE OF SECURITIES
113
#(!04%2
MEMBERSHIP OF COMPANY
123
#(!04%2
TRANSFER OF SECURITIES
155
#(!04%2
NOMINATION AND TRANSMISSION OF SHARES
180
#(!04%2
DEMOCRACY OF SHAREHOLDERS
194
#(!04%2
PROCEDURE OF GENERAL MEETING
215
#(!04%2
DIRECTORS OF COMPANY
262
#(!04%2
DISQUALIFICATIONS AND REMOVAL OF DIRECTOR
309
#(!04%2
RESTRICTIONS ON DIRECTORS IN RELATION TO COMPANY
323
#(!04%2
DUTIES, RIGHTS AND LIABILITIES OF A DIRECTOR
340
#(!04%2
MEETING OF BOARD OF DIRECTORS
358
#(!04%2
REPORT OF BOARD TO MEMBERS
390
#(!04%2
CORPORATE GOVERNANCE
402
#(!04%2
RESTRICTIONS ON POWERS OF BOARD
435
#(!04%2
I-5
#(!04%2 (%!$3
I-6 0!'%
#(!04%2
KEY MANAGERIAL PERSONNEL
451
#(!04%2
CHARGE ON ASSETS OF THE COMPANY
483
#(!04%2
DEBENTURES
503
#(!04%2
PUBLIC DEPOSITS
518
#(!04%2
ACCOUNTS OF THE COMPANY
532
#(!04%2
DIVIDEND
559
#(!04%2
FINANCIAL AUDIT OF ACCOUNTS
581
#(!04%2
COST AUDIT AND SECRETARIAL AUDIT
602
#(!04%2
PRIVATE COMPANIES
613
#(!04%2
HOLDING AND SUBSIDIARY COMPANIES
623
#(!04%2
COMPANIES LICENSED UNDER SECTION 8
630
#(!04%2
GOVERNMENT COMPANIES
636
#(!04%2
FOREIGN COMPANY
645
#(!04%2
OTHER TYPES OF COMPANIES
652
#(!04%2
MISCELLANEOUS PROVISIONS IN COMPANY LAW
667
#(!04%2
OVERVIEW OF NCLT RELATED ISSUES
688
#(!04%2
INSPECTION, INVESTIGATION, OFFENCES, PENALTIES
697
#(!04%2
ADMINISTRATION OF COMPANY LAW
724
#(!04%2
MCA-21 - E-GOVERNANCE
739
#(!04%2
PROCEDURAL COMPLIANCES BY A COMPANY
746
SUBJECT INDEX
757
Contents 0!'% Chapter-heads
I-5
Section-wise Index
I-25
1 INTRODUCTION 1.1
"ACKGROUND OF THIS BOOK
1
1.2
!DMINISTRATION OF #OMPANIES !CT
2
1.3
#OMPANY FORM OF BUSINESS ORGANISATION
2
1.4
#OMMON SEAL IN RELATION TO A COMPANY
4
1.5
#OMPANY IS NOT A @CITIZEN
6
1.6
,IMITED LIABILITY
6
1.7
6ARIOUS TYPE OF COMPANIES THAT CAN BE FORMED
7
1.8
#OMPANY IS A SEPARATE @PERSON 3EPARATE LEGAL ENTITY
10
1.9
,IFTING THE CORPORATE VEIL
12
2 INCORPORATION OF A COMPANY 2.1
)NITIAL STAGE IN FORMATION OF A COMPANY
13
2.2
.AME OF COMPANY
15
2.3
3IGNING OF MEMORANDUM AND ARTICLES
23
2.4
$OCUMENTS TO BE lLED WITH 2/#
25
2.5
#ERTIlCATE OF INCORPORATION
28
2.6
$ECLARATION AFTER INCORPORATION OF A COMPANY BEFORE COMMENCEMENT OF BUSINESS
30
I-7
#/.4%.43
I-8 0!'%
3 MEMORANDUM OF ASSOCIATION 3.1
#ONSTITUTION OF #OMPANY
33
3.2
2EGISTERED OFlCE CLAUSE
34
3.3
/BJECTS #LAUSES IN -EMORANDUM
36
3.4
#APITAL #LAUSE IN -EMORANDUM OF !SSOCIATION
36
3.5
3UBSCRIBER TO MEMORANDUM OF ASSOCIATION OF A COMPANY
37
3.6
0ERSONS ENTITLED TO OBTAIN COPIES OF -EMORANDUM AND !RTICLES OF THE COMPANY AND CERTAIN RESOLUTIONS
37
3.7
!LTERATION OF -EMORANDUM OF !SSOCIATION
37
3.8
0ROCEDURE FOR !MENDING -EMORANDUM
38
3.9
0ROCEDURE FOR CHANGE OF NAME
38
3.10 #HANGE OF 2EGISTERED /FlCE OF COMPANY
40
3.11 #HANGE OF /BJECT #LAUSE
44
3.12 #HANGING #APITAL CLAUSE IN THE -EMORANDUM OF !SSOCIATION OF A COMPANY
44
3.13 !LTERATIONS TO -EMORANDUM OF !SSOCIATION 0ROVISIONS AT A GLANCE
46
3.14 $OCTRINE OF ultra vires -EMORANDUM
47
4 ARTICLES OF ASSOCIATION 4.1
2ULES FOR INTERNAL MANAGEMENT OF COMPANY
48
4.2
"INDING NATURE OF !RTICLES
50
4.3
2ESTRICTIVE CLAUSES IN !RTICLES OF A COMPANY
52
4.4
0ROVISIONS AS APPLICABLE TO !RTICLES OF 0RIVATE ,IMITED #OMPANY
53
4.5
3UGGESTED $RAFT OF !RTICLES
53
4.6
!LTERATION OF !RTICLES OF !SSOCIATION
54
4.7
#OMPULSORY ALTERATION OF !RTICLES
55
5 CAPITAL OF THE COMPANY 5.1
@/WN &UNDS AND @,OAN &UNDS
56
5.2
0REFERENCE 3HARES
60
I-9
#/.4%.43 0!'%
6 ISSUE OF SECURITIES 6.1
6ARIOUS MODES OF RAISING CAPITAL
65
6.2
)SSUE OF SHARES AT PREMIUM
68
6.3
)SSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS
71
6.4
0RIVATE PLACEMENT OF SECURITIES
72
6.5
#ONVERSION OF DEBENTURES OR LOANS INTO SHARES AS PER LOAN AGREEMENT
75
6.6
#OMPULSORY CONVERSION OF DEBENTURES AND LOANS GIVEN BY #ENTRAL 'OVERNMENT INTO EQUITY SHARES OF THE COMPANY
75
6.7
7ARRANTS
76
6.8
0ROCEDURE FOR ISSUE OF SECURITIES
77
6.9
!LLOTMENT OF SHARES
78
6.10 )MPROPER AND IRREGULAR ALLOTMENT
79
6.11 #ALLS ON SHARES AND FORFEITURE
80
7 FURTHER ISSUE OF SECURITIES 7.1
2IGHTS ISSUE
84
7.2
@0REFERENTIAL !LLOTMENT IN CASE OF FRESH ISSUE OF SECURITIES
88
7.3
"ONUS SHARES
89
7.4
3WEAT EQUITY SHARES
94
7.5
%MPLOYEE 3TOCK /PTION 3TOCK PURCHASE
96
7.6
'LOBAL $EPOSITORY 2ECEIPTS '$2
98
8 REDUCTION OF CAPITAL AND BUY-BACK OF SECURITIES 8.1
#APITAL REDUCTION
100
8.2
0ROCEDURE FOR REDUCTION OF CAPITAL OF A COMPANY
102
8.3
/THER POWERS OF .#,4 TO ORDER REDUCTION OF CAPITAL
104
8.4
$IMINUTION OF CAPITAL DOES NOT CONSTITUTE REDUCTION OF CAPITAL
104
8.5
#OMPANY CANNOT BUY ITS OWN SHARES
105
8.6
"UY BACK OF SECURITIES
106
#/.4%.43
I-10 0!'%
9 PUBLIC ISSUE OF SECURITIES 9.1
"ACKGROUND
113
9.2
3TOCK EXCHANGE REQUIREMENTS FOR LISTING OF A SECURITY
114
9.3
2ESTRICTIONS ON UTILISATION OF FUNDS COLLECTED WHILE ISSUING SHARES TO PUBLIC
115
9.4
#OMMISSION THAT CAN BE PAID WHILE ISSUING SECURITIES
116
9.5
0UNISHMENT FOR PERSONATION FOR ACQUISITION ETC OF SECURITIES
116
9.6
0ROSPECTUS
116
9.7
'OLDEN RULE OF FULL AND PROPER DISCLOSURE IN PROSPECTUS
119
9.8
0ROCEDURAL ASPECTS OF PROSPECTUS
120
9.9
0ENALTY FOR VIOLATING PROVISIONS IN RESPECT OF PROSPECTUS
121
9.10 ,IABILITIES FOR FALSE STATEMENTS IN PROSPECTUS
121
10 MEMBERSHIP OF COMPANY 10.1
-EMBER AND SHAREHOLDER
123
10.2
,IEN ON SHARES
132
10.3
6ARIATION IN RIGHTS OF SHAREHOLDERS
133
10.4
-EMBER OF COMPANY
135
10.5
7HO CAN BECOME MEMBER OF A COMPANY
136
10.6
! MINOR AS MEMBER OF A COMPANY
139
10.7
4ERMINATION OF MEMBERSHIP
141
10.8
*OINT HOLDING OF SHARES
142
10.9
3HARES HELD IN TRUST
145
10.10 2EGISTER OF MEMBERS
150
11 TRANSFER OF SECURITIES 11.1
'ENERAL PROVISIONS OF SHARE TRANSFER
155
11.2
3TAMP DUTY ON SHARE TRANSFER DEED
160
11.3
0ROCEDURE BY COMPANY FOR TRANSFER OF SECURITY
162
11.4
4RANSFER OF SECURITY IN CASE OF LISTED COMPANY
164
11.5
2ESTRICTIONS ON TRANSFER IN CASE OF DOMINANT UNDERTAKING
165
I-11
#/.4%.43 0!'%
11.6
4RANSFER WHEN COMPANY IS UNDER WINDING UP
165
11.7
%FFECT OF FORGERY ON TRANSFER OF SECURITY
165
11.8
2EFUSAL OF TRANSFER OF SECURITY
166
11.9
)NSTRUMENT OF TRANSFER OF SECURITY
167
11.10 2IGHT OF TRANSFEREE IF TRANSFER NOT EFFECTED BY COMPANY
169
11.11 0ROTECTION AVAILABLE TO TRANSFEREE OF SHARES IN CASE OF LISTED COMPANIES
170
11.12 7HEN SHARE TRANSFER CANNOT BE REFUSED BY A COMPANY
171
11.13 2ESTRICTIONS ON TRANSFER OF SHARES IN A 0RIVATE ,IMITED #OMPANY
172
11.14 0ROCEDURE TO BE FOLLOWED IF COMPANY DECIDES TO DECLINES TRANSFER TRANSMISSION
173
11.15 !PPEAL IF COMPANY REFUSES TO TRANSFER SHARES
174
11.16 2ECTIlCATION OF REGISTER OF MEMBERS
175
11.17 #IVIL SUIT NOT AVAILABLE WHEN .#,4 HAS JURISDICTION
179
12 NOMINATION AND TRANSMISSION OF SHARES 12.1
.OMINATION OF SHARES $EBENTURES
180
12.2
)NVOLUNTARY TRANSFER OF SECURITIES
184
12.3
-ODES OF TRANSMISSION OF SECURITY
189
12.4
4RANSMISSION IN CASE OF INTESTATE SUCCESSION
191
12.5
0OSITION OF AN INSOLVENT WITH REGARD TO MEMBERSHIP IN A COMPANY
192
12.6
4RANSMISSION IN CASE OF A MENTALLY ILL PERSON
193
12.7
4RANSMISSION OF SECURITY IN CASE OF AMALGAMATION OF A COMPANY
193
12.8
4RANSMISSION WHEN A MINOR BECOMING MAJOR
193
12.9
4RANSMISSION OF SECURITY IN CASE OF #OURT ORDER OR !RBITRATION !WARD
193
13 DEMOCRACY OF SHAREHOLDERS 13.1
3HAREHOLDERS ARE ULTIMATE OWNERS BUT WITH LIMITED POWERS
194
13.2
-EETINGS OF SHAREHOLDERS
195
13.3
'ENERAL PROVISIONS OF MEETING OF MEMBERS
200
13.4
2EQUIREMENTS OF NOTICE OF A GENERAL MEETING
207
13.5
!NNUAL GENERAL MEETING
210
13.6
&INANCIAL STATEMENT
214
#/.4%.43
I-12 0!'%
14 PROCEDURE OF GENERAL MEETING 14.1
#HAIRPERSON OF THE MEETING
215
14.2
/NE PERSON MEETING
221
14.3
0ROXY AT THE MEETING
223
14.4
0ROCEDURE OF THE MEETING
229
14.5
!DJOURNMENT OF GENERAL MEETINGS
233
14.6
2ULES OF DEBATE IN A GENERAL MEETING
237
14.7
&UNCTIONS OF A #OMPANY 3ECRETARY IN REGARD TO MEETING
237
14.8
2ESOLUTIONS AND VOTING AT GENERAL MEETING
237
14.9
-EMBERS 2ESOLUTIONS AND 3TATEMENTS ON 2ESOLUTIONS
240
14.10 0RIVATE AGREEMENTS NOT BINDING
241
14.11 6OTING AT THE MEETING
241
14.12 6OTING BY POLL
245
14.13 6OTING BY POSTAL BALLOT
249
14.14 6OTING BY ELECTRONIC MEANS
252
14.15 -INUTES OF GENERAL MEETING
254
14.16 )NSPECTION OF -INUTE "OOKS OF 'ENERAL -EETING
258
14.17 3ECRETARIAL 3TANDARD 33 ON -INUTES
259
14.18 &ILING OF RESOLUTIONS WITH 2/#
259
15 DIRECTORS OF COMPANY 15.1
2OLE OF $IRECTORS
262
15.2
"OARD OF $IRECTORS
264
15.3
)NDEPENDENT DIRECTORS IN CASE OF PUBLIC COMPANIES
264
15.4
$IRECTOR ELECTED BY SMALL SHAREHOLDERS
273
15.5
0ROTECTION TO INDEPENDENT AND NON EXECUTIVE DIRECTORS
274
15.6
7HO CAN BE A $IRECTOR
274
15.7
%LECTION AND APPOINTMENT OF $IRECTORS
275
15.8
#ONTESTING AS $IRECTOR
279
15.9
0ROPORTIONAL REPRESENTATION
280
I-13
#/.4%.43 0!'%
15.10 .OMINEE $IRECTORS
281
15.11 !DDITIONAL $IRECTORS
285
15.12 !LTERNATE $IRECTOR
286
15.13 !PPOINTMENT OF DIRECTOR BY .#,4
289
15.14 &ILLING OF CASUAL VACANCY OF A DIRECTOR
289
15.15 De facto DIRECTOR
290
15.16 3PECIAL PROVISIONS RELATING TO BANKING COMPANIES
291
15.17 2ESTRICTION ON NUMBER OF $IRECTORSHIPS
291
15.18 3ECRETARIAL PROCEDURES RELATING TO DIRECTORS
292
15.19 3ECRETARIAL PRACTICE FOR APPOINTMENT #HANGE IN $IRECTOR
292
15.20 2EGISTER OF $IRECTORS AND +-0
297
15.21 2EMUNERATION TO NON WHOLETIME $IRECTORS
298
15.22 0AYMENT OF SITTING FEES AND TRAVEL EXPENSES TO $IRECTORS
300
15.23 #EILING OF TOTAL MANAGERIAL REMUNERATION
301
15.24 #ALCULATION OF @.ET 0ROlT
304
15.25 -ANAGERIAL REMUNERATION AT A GLANCE
306
15.26 2EMUNERATION TO DIRECTOR IN PROFESSIONAL CAPACITY
307
15.27 /THER PROVISIONS RELATING TO MANAGERIAL REMUNERATION
307
16 DISQUALIFICATIONS AND REMOVAL OF DIRECTOR 16.1
$ISQUALIlCATION OF A DIRECTOR
309
16.2
.O DISQUALIlCATION OF NOMINEE DIRECTORS
313
16.3
6ACATION OF OFlCE OF A $IRECTOR
314
16.4
2ESIGNATION BY DIRECTOR
317
16.5
2EMOVAL OF A DIRECTOR
319
16.6
2EMOVAL OF DIRECTOR IN REQUISITION MEETING
321
16.7
2EMOVAL OF DIRECTOR CAN AMOUNT TO OPPRESSION
321
16.8
2EMOVAL OF PERMANENT DIRECTORS
321
16.9
2EMOVAL BY .#,4
322
16.10 #IVIL COURT HAS JURISDICTION IN RESPECT OF REMOVAL OF DIRECTOR
322
16.11 2EMOVAL OF NOMINEE DIRECTOR BY WITHDRAWING NOMINATION
322
#/.4%.43
I-14 0!'%
17 RESTRICTIONS ON DIRECTORS IN RELATION TO COMPANY 17.1
#ONTRACTS IN WHICH DIRECTORS ARE INTERESTED
323
17.2
2ESTRICTIONS ON LOANS TO DIRECTORS
325
17.3
2ELATED 0ARTY 4RANSACTIONS
327
17.4
$ISCLOSURES AND REGISTERS
335
17.5
!CCOUNTING 3TANDARD RELATING TO RELATED PARTY TRANSACTIONS
337
17.6
0AYMENT TO DIRECTOR FOR LOSS OF OFlCE ETC
337
17.7
2ESTRICTION ON NON CASH TRANSACTIONS INVOLVING DIRECTORS
339
17.8
#ONTRACT BY /0# WITH ITS 3OLE -EMBER
339
18 DUTIES, RIGHTS AND LIABILITIES OF A DIRECTOR 18.1
,EGAL POSITION OF A $IRECTOR
340
18.2
$IRECTOR IS NOT AN EMPLOYEE
341
18.3
$IRECTOR HAS SOME TRAITS OF AN AGENT OF THE COMPANY
341
18.4
$IRECTOR HAS SOME TRAITS AS @TRUSTEE
341
18.5
$IRECTORS CANNOT ENTER INTO POOLING ARRANGEMENT
342
18.6
#ORPORATE OPPORTUNITY CANNOT BE DIVERTED FOR PERSONAL GAINS
342
18.7
3PECIlC DUTIES OF A DIRECTOR
343
18.8
2IGHTS OF DIRECTOR AND LIMITATIONS
343
18.9
,EGAL LIABILITY OF A DIRECTOR
344
18.10 #OMPLIANCE #ERTIlCATES FROM EXECUTIVE DIRECTORS
346
18.11 ,IABILITY UNDER #OMPANIES !CT ON @OFlCER IN DEFAULT
346
18.12 0ERSONAL LIABILITY OF $IRECTOR FOR COMPANY S DUES
348
18.13 $IRECTOR MAY BE HELD LIABLE EVEN IF NOT PERSONALLY INVOLVED IN FRAUD IF HE IS NEGLIGENT
350
18.14 $IRECTOR LIABLE FOR CONTEMPT OF #OURT BY COMPANY
351
18.15 ,IABILITY IF PERSONAL GUARANTEE GIVEN
351
18.16 )NSURANCE OF LIABILITY OF $IRECTOR
351
18.17 ,IABILITY OF DIRECTOR UNDER OTHER !CTS
353
18.18 ,IABILITIES UNDER SOME !CTS
355
18.19 ,IABILITY UNDER .EGOTIABLE )NSTRUMENTS !CT
357
I-15
#/.4%.43 0!'%
19 MEETING OF BOARD OF DIRECTORS 19.1
2OLE OF "OARD IN #OMPANY -ANAGEMENT
358
19.2
"OARD IN SUPREME IN MANAGEMENT OF #OMPANY
359
19.3
$ECISIONS OF "OARD AT THE MEETING
360
19.4
!GENDA FOR "OARD MEETINGS
362
19.5
#IRCULAR 2ESOLUTION i.e. RESOLUTION BY CIRCULATION
363
19.6
"OARD 2ESOLUTIONS REQUIRING UNANIMOUS VOTING
370
19.7
#OMMITTEES OF THE "OARD
370
19.8
!MENDMENT OR CANCELLATION OF A "OARD 2ESOLUTION
372
19.9
#ONDUCT OF A "OARD MEETING
373
19.10 #HAIRPERSON OF THE "OARD MEETING
375
19.11 !GENDA OF THE "OARD MEETING WITH RELATED PAPERS SEVEN DAYS BEFORE MEETING
377
19.12 1UORUM FOR THE "OARD -EETING
378
19.13 !DJOURNMENT OF "OARD -EETING
381
19.14 &ILING OF "OARD RESOLUTIONS AND AGREEMENTS
381
19.15 "OARD MEETINGS REQUIREMENTS IN RESPECT OF LISTED COMPANIES
382
19.16 %LECTRONIC "OARD MEETING THROUGH VIDEO CONFERENCE
383
19.17 -INUTES OF "OARD -EETING
385
20 REPORT OF BOARD TO MEMBERS 20.1
$IRECTORS 2EPORT
390
20.2
#ONTENTS OF 2EPORT OF "OARD
392
20.3
2EQUIREMENTS IN CASE OF LISTED COMPANIES
400
20.4
."&# #HIT &UND (OUSING &INANCE #OMPANIES TO DISCLOSE UNPAID DEPOSITS
401
0UNISHMENT FOR NOT COMPLYING WITH PROVISIONS
401
20.5
21 CORPORATE GOVERNANCE 21.1
4RANSPARENCY AND INTEGRITY IN COMPANY MANAGEMENT
402
#/.4%.43
I-16 0!'%
21.2
7HAT IS #ORPORATE 'OVERNANCE
403
21.3
&UNDAMENTAL 0RINCIPLES OF #ORPORATE 'OVERNANCE
403
21.4
,IMITATIONS OF #ORPORATE 'OVERNANCE
403
21.5
3%") 2EQUIREMENTS ON #ORPORATE 'OVERNANCE
404
21.6
(IGHLIGHTS OF 3%") ,ISTING /BLIGATIONS AND $ISCLOSURE 2EQUIREMENTS 2EGULATIONS
405
21.7
$ISCRETIONARY REQUIREMENTS OF CORPORATE GOVERNANCE
410
21.8
2EPORTING COMPLIANCE OF CORPORATE GOVERNANCE
412
21.9
!UDIT #OMMITTEE
412
21.10 3%") PROVISIONS RELATING TO !UDIT #OMMITTEE
416
21.11 .OMINATION AND 2EMUNERATION #OMMITTEE
419
21.12 3TAKEHOLDERS 2ELATIONSHIP #OMMITTEE
422
21.13 #ORPORATE 3OCIAL 2ESPONSIBILITY
422
22 RESTRICTIONS ON POWERS OF BOARD 22.1
)NTRODUCTION
435
22.2
3ALE OR LEASE OF UNDERTAKING
435
22.3
)NVESTMENT OF COMPENSATION RECEIVED AFTER MERGER OR AMALGAMATION
437
22.4
"ORROWING MONEY
438
22.5
2EMITTING OR GIVING TIME FOR RECOVERY OF DEBT DUE FROM DIRECTOR
439
22.6
#ONTRIBUTION TO bona fide CHARITABLE TRUSTS OR FUNDS
439
22.7
.O RESTRICTIONS ON CONTRIBUTION TO .ATIONAL $EFENCE &UND
440
22.8
2ESTRICTIONS ON POLITICAL CONTRIBUTIONS
440
22.9
2ESTRICTIONS ON MANAGERIAL REMUNERATION
442
22.10 .O RESTRICTION ON OTHER POWERS
442
22.11 )NVESTMENTS BY COMPANIES
442
22.12 2ESTRICTIONS ON INVESTMENT THROUGH INVESTMENT SUBSIDIARIES
444
22.13 ,IMIT IN RESPECT OF INVESTMENT LOAN GUARANTEE
444
22.14 'IVING GUARANTEE OR PROVIDING SECURITY FOR LOAN
445
22.15 5NANIMOUS APPROVAL OF "OARD IN MEETING
447
22.16 0UNISHMENT FOR CONTRAVENTION OF PROVISIONS
450
I-17
#/.4%.43 0!'%
23 KEY MANAGERIAL PERSONNEL 23.1
$AY TO DAY MANAGEMENT OF COMPANY
451
23.2
2OLE OF -ANAGING $IRECTOR -ANAGER
458
23.3
-$ -ANAGER IS SUBORDINATE TO "OARD OF $IRECTORS
460
23.4
7HO CAN BE APPOINTED AS -$ 74$ -ANAGER
461
23.5
$ISQUALIlCATION AS -$ 7$
462
23.6
7HEN APPROVAL OF #ENTRAL 'OVERNMENT IS NECESSARY FOR APPOINTING -$ 74$ -ANAGER
463
23.7
!PPOINTMENT OF -$ 7$
465
23.8
2EMUNERATION TO -ANAGERIAL 0ERSON
466
23.9
2EMUNERATION TO DIRECTOR WHEN PROlT IS INADEQUATE OR COMPANY IS IN LOSS
467
23.10 0ERQUISITES ALLOWABLE TO -$ 7$
471
23.11 #OMPENSATION FOR LOSS OF OFlCE OR RETIREMENT
474
23.12 #OMPANY 3ECRETARY
475
23.13 -ANDATORY APPOINTMENT OF 3ECRETARY
476
23.14 2OLE OF #OMPANY 3ECRETARY
478
24 CHARGE ON ASSETS OF THE COMPANY 24.1
3ECURED BORROWINGS
483
24.2
#HARGE ON ASSETS OWNED BY COMPANY
485
24.3
#REATION OF @#HARGE
489
24.4
#HARGES lLING OF WHICH WITH 2/# IS NOT NECESSARY
494
24.5
&ILING OF CHARGE ITS MODIlCATION AND SATISFACTION
495
24.6
2EGISTRATION OF CHARGE BY 2/#
497
24.7
%FFECT OF NON REGISTRATION OF CHARGE
498
24.8
0ENALTY FOR NOT lLING CHARGES OR GIVING FALSE INFORMATION
499
24.9
2ECORDS OF CHARGES TO BE MAINTAINED BY THE COMPANY
500
24.10 2ECTIlCATION OF REGISTER OF CHARGES
500
#/.4%.43
I-18 0!'%
25 DEBENTURES 25.1
.ATURE OF @DEBENTURE
503
25.2
4YPES OF DEBENTURES
505
25.3
$EBENTURE TRUSTEES
508
25.4
0ROCEDURE FOR ISSUE OF DEBENTURES
510
25.5
/THER ISSUES RELATING TO DEBENTURES
514
25.6
0ROTECTION OF INTEREST OF DEBENTURE HOLDERS
517
26 PUBLIC DEPOSITS 26.1
$EPOSITS FROM PUBLIC AND MEMBERS
518
26.2
!CCEPTANCE OF SECURED DEPOSITS FROM PUBLIC ONLY IN SPECIlED CASES
520
26.3
/THER COMPANIES CAN ACCEPT DEPOSITS ONLY FROM MEMBERS
521
26.4
2EPAYMENT OF DEPOSITS
526
26.5
"ORROWINGS WHICH ARE EXCLUDED FROM DElNITION OF @DEPOSIT
529
27 ACCOUNTS OF THE COMPANY 27.1
.EED FOR ACCOUNTS AND AUDIT
532
27.2
&INANCIAL 3TATEMENT OF A COMPANY
535
27.3
#IRCULATION OF &INANCIAL 3TATEMENT WITH ATTACHMENTS
539
27.4
&ILING COPY OF &INANCIAL 3TATEMENTS WITH 2/#
543
27.5
2EOPENING OF ACCOUNTS AND lNANCIAL STATEMENT
546
27.6
)NTERNAL !UDIT
549
27.7
)NSPECTION OF BOOKS OF ACCOUNT
550
27.8
$IFFERENT ACCOUNTS FOR #OMPANY ,AW )NCOME 4AX
550
27.9
.ATIONAL &INANCIAL 2EPORTING !UTHORITY .&2!
551
27.10 !CCOUNTING 3TANDARDS
556
27.11 !CCOUNTING 3TANDARDS APPLICABLE TO OTHER COMPANIES
557
27.12 2EQUIREMENTS OF &INANCIAL 3TATEMENT
558
I-19
#/.4%.43 0!'%
28 DIVIDEND 28.1
3HARE OF PROlT TO MEMBERS
559
28.2
$ECLARATION OF DIVIDEND OUT OF RESERVES
561
28.3
.O DIVIDEND UNLESS CARRIED OVER LOSSES AND DEPRECIATION ARE SET OFF AGAINST PROlT
563
28.4
$ECLARATION OF DIVIDEND
564
28.5
)NTERIM DIVIDEND
565
28.6
%NTITLEMENT OF DIVIDEND
567
28.7
3%") 2EQUIREMENTS FOR DECLARATION OF DIVIDEND
568
28.8
0AYMENT OF DIVIDEND
569
28.9
$IVIDEND TO BE PAID WITHIN DAYS
571
28.10 7HEN PAYMENT OF DIVIDEND MAY BE WITHHELD
572
28.11 0AYMENT OF DIVIDEND WHEN TRANSFER NOT REGISTERED AS IT WAS AGAINST LAW
573
28.12 /THER PROVISIONS RELATING TO DIVIDEND
574
28.13 5NPAID DIVIDEND
575
28.14 )NVESTOR %DUCATION AND 0ROTECTION &UND
577
29 FINANCIAL AUDIT OF ACCOUNTS 29.1
2OLE OF AN @!UDITOR
581
29.2
!PPOINTMENT AND REMUNERATION OF !UDITORS
582
29.3
!PPOINTMENT OR REAPPOINTMENT OF AUDITORS lRM OF AUDITORS
584
29.4
#ASUAL VACANCY OF AUDITOR
587
29.5
!PPOINTMENT OF AUDITORS lRM OF AUDITORS IN 'OVERNMENT COMPANY
588
29.6
2EMUNERATION OF AUDITORS lRM OF AUDITORS
589
29.7
!PPOINTING ANOTHER AUDITOR
590
29.8
0OWERS OF !UDITOR
593
29.9
!UDIT OF "RANCH /FlCE
593
29.10 2EPORT OF !UDITORS TO -EMBERS
594
29.11 !DDITIONAL MATTERS TO BE INCLUDED IN REPORT OF AUDITOR
596
29.12 /THER PROVISIONS REGARDING AUDIT REPORT
597
#/.4%.43
I-20 0!'%
29.13 !UDITOR NOT TO RENDER CERTAIN SERVICES
599
29.14 0UNISHMENT FOR CONTRAVENTION OF PROVISIONS RELATING TO AUDIT AND AUDITORS
600
30 COST AUDIT AND SECRETARIAL AUDIT 30.1
2OLE OF #OST !UDIT
602
30.2
#OST !CCOUNTING 3TANDARDS
605
30.3
$ISTINCTION BETWEEN &INANCIAL !UDIT #OST !UDIT
605
30.4
#OST 2ECORDS AND !UDIT 2ULES
606
30.5
3ECRETARIAL !UDIT IN RESPECT OF BIGGER COMPANIES
608
30.6
3ECRETARIAL 3TANDARDS
611
30.7
#OMPANY 3ECRETARY IN 0RACTICE
612
30.8
#ERTIlCATE OF 0RACTICE OF ONLY ONE )NSTITUTE
612
31 PRIVATE COMPANIES 31.1
0RIVATE COMPANY IS GLORIlED PARTNERSHIP
613
31.2
0RIVATE COMPANY WHICH IS SUBSIDIARY OF A PUBLIC COMPANY IS PUBLIC COMPANY
619
31.3
#ONVERSION OF PRIVATE TO PUBLIC COMPANY AND vice versa
619
31.4
$IRECTOR OF A PRIVATE COMPANY CAN HAVE PERSONAL LIABILITY FOR INCOME TAX '34 AND #34
622
32 HOLDING AND SUBSIDIARY COMPANIES 32.1
/NE COMPANY OWNING OTHER
623
32.2
)MPLICATIONS OF HOLDING SUBSIDIARY RELATIONSHIP BETWEEN TWO COMPANIES
625
32.3
0ROVISIONS IN CASE OF LISTED COMPANIES
627
32.4
/THER PROVISIONS APPLICABLE TO HOLDING AND SUBSIDIARY COMPANIES
628
32.5
7HOLLY OWNED SUBSIDIARY
629
I-21
#/.4%.43 0!'%
33 COMPANIES LICENSED UNDER SECTION 8 33.1
.ON PROlT COMPANIES
630
33.2
%LECTORAL 4RUSTS
634
34 GOVERNMENT COMPANIES 34.1
#OMPANY WHERE 'OVERNMENT IS MAJOR SHAREHOLDER
636
34.2
!UDITORS OF 'OVERNMENT COMPANY
639
34.3
!NNUAL REPORT ON 'OVERNMENT COMPANIES TO 0ARLIAMENT 3TATE ,EGISLATURE
641
34.4
'OVERNMENT MANAGED COMPANIES
641
34.5
'OVERNMENT #OMPANY IS NOT @'OVERNMENT BUT IS @3TATE
641
35 FOREIGN COMPANY 35.1
"ODY #ORPORATE )NCORPORATED OUTSIDE )NDIA
645
35.2
#ERTAIN PROVISIONS APPLICABLE TO FOREIGN COMPANY
649
35.3
,IMITATIONS ON FOREIGN COMPANY
650
35.4
&OREIGN COMPANY WITH CONTROL FROM )NDIA
650
35.5
)SSUE OF SHARES DEBENTURES BY A FOREIGN COMPANY
650
36 OTHER TYPES OF COMPANIES 36.1
3MALL #OMPANY
652
36.2
/NE 0ERSON #OMPANY /0#
653
36.3
$ORMANT #OMPANY
659
36.4
'UARANTEE #OMPANY
660
36.5
)NSURANCE #OMPANIES
661
36.6
(OUSING &INANCE #OMPANIES
662
36.7
"ANKING #OMPANIES
662
36.8
%LECTRICITY #OMPANIES
662
#/.4%.43
I-22 0!'%
36.9
662
0RODUCER #OMPANIES
36.10 .ON "ANKING &INANCIAL #OMPANIES ."&#S
663
36.11 #HIT FUNDS
664
36.12 .IDHI OR -UTUAL "ENElT 3OCIETY
664
36.13 3TART UP #OMPANY
666
37 MISCELLANEOUS PROVISIONS IN COMPANY LAW 37.1
3ERVICE OF DOCUMENTS
667
37.2
2EMOVAL OF NAME OF COMPANIES FROM REGISTER OF MEMBERS
668
37.3
#ONVERSION OF 0ARTNERSHIP OR ,,0 OR SOCIETY OR OTHER BUSINESS ENTITY INTO A #OMPANY
675
37.4
2ECEIVERS AND MANAGERS
678
37.5
-EDIATION AND CONCILIATION
678
37.6
2EGISTERED VALUERS
680
37.7
)NSOLVENCY AND "ANKRUPTCY #ODE FOR COMPANIES
685
38 OVERVIEW OF NCLT RELATED ISSUES 38.1
"ACKGROUND
688
38.2
#LASS ACTION UNDER #OMPANY ,AW
688
38.3
/PPRESSION AND MISMANAGEMENT
689
38.4
#OMPROMISE AND ARRANGEMENT
691
38.5
-ERGER AND AMALGAMATION
692
38.6
#ROSS BORDER MERGERS
693
38.7
4AKEOVER OF ANOTHER COMPANY BY PURCHASING OF SHARES
693
38.8
7INDING UP OF COMPANY
693
39 INSPECTION, INVESTIGATION, OFFENCES, PENALTIES 39.1
0OWER OF 2EGISTRAR TO CALL FOR INFORMATION
697
39.2
3EARCH AND SEIZURE
699
I-23
#/.4%.43 0!'%
39.3 )NVESTIGATION
699
39.4 )NVESTIGATION OF OWNERSHIP OF A COMPANY
702
39.5 0ROTECTION OF EMPLOYEES DURING INVESTIGATION
703
39.6 3ERIOUS &RAUDS )NVESTIGATION /FlCE
703
39.7 0UNISHMENTS FOR OFFENCES
705
39.8 /FlCER AND @OFlCER IN DEFAULT
709
39.9 -EANING OF FRAUD
711
39.10 #OMPANY CAN BE PROSECUTED IF LAW PROVIDES FOR COMPULSORY IMPRISONMENT
712
39.11 0ROVISIONS IN RESPECT OF TRIAL IN #OURT
712
39.12 -EANING OF CONTINUING OFFENCE FOR PURPOSE OF LIMITATION
715
39.13 #RIMINAL ACTION OF DIRECTORS AND EMPLOYEES IS CRIMINAL ACTION OF A COMPANY
717
39.14 ,IMITS ON LIABILITY OF DIRECTORS IN CERTAIN CASES
717
39.15 0OWER OF #OURT TO GRANT RELIEF TO OFlCER IF HE HAD ACTED HONESTLY AND REASONABLY
718
39.16 0UNISHMENT FOR WRONGFUL WITHHOLDING OF PROPERTY
718
39.17 #OMPOSITION OF OFFENCES
719
40 ADMINISTRATION OF COMPANY LAW 40.1 ,AW ADMINISTERED BY #ENTRAL 'OVERNMENT
724
40.2 2EGIONAL $IRECTORS
727
40.3 2EGISTRAR OF #OMPANIES
729
40.4 2ETURNS TO 2/#
731
40.5 #OMPANY ,AW "OARD
737
40.6 3%")
737
40.7 #IVIL #OURT #OMPANY #OURT
737
40.8 .ATIONAL #OMPANY ,AW 4RIBUNAL AND !PPELLATE 4RIBUNAL
738
41 MCA-21 - E-GOVERNANCE 41.1 % GOVERNANCE IN COMPANY LAW ADMINISTRATION
739
#/.4%.43
I-24 0!'%
42 PROCEDURAL COMPLIANCES BY A COMPANY 42.1 #OMPLIANCE REQUIREMENTS
746
42.2 2EGISTERS AND 2ECORDS
746
42.3 -AINTENANCE AND INSPECTION OF DOCUMENT IN ELECTRONIC FORM BY COMPANY
749
42.4 2EGULAR RETURNS TO BE lLED BY COMPANIES
750
SUBJECT INDEX
757
RESTRICTIONS ON DIRECTORS IN RELATION TO COMPANY
17
17.1 CONTRACTS IN WHICH DIRECTORS ARE INTERESTED ! DIRECTOR MUST WORK IN THE BEST INTERESTS OF THE COMPANY AS HE IS IN lDUCIARY RELATIONSHIP WITH THE COMPANY (E SHOULD NOT TAKE UNDUE ADVANTAGE OF HIS POSITION AS @DIRECTOR OF THE COMPANY (E SHOULD NOT MAKE ANY SECRET PROlT )N ORDER TO ENSURE THAT HE DOES NOT MISUSE HIS POSITION CERTAIN RESPONSIBILITIES HAVE BEEN CAST ON HIM Interested director 4HE TERM h)NTERESTED DIRECTORv WAS DElNED IN SECTION OF #OMPANIES !CT AS EXISTING UPTO 4HIS DElNITION HAS BEEN OMITTED W E F AS THE DElNITION WAS TOO BROAD (ENCE NOW THE TERM @INTERESTED DIRECTOR WILL APPLY TO A CONTRACTS OR ARRANGEMENTS AS SPECIlED IN SECTION OF #OMPANIES !CT I E MORE THAN SHAREHOLDING OR #%/ OF THE BODY CORPORATE OR lRM WHERE DIRECTOR IS PARTNER OWNER OR MEMBER B ,OANS WHERE DIRECTOR IS INTERESTED AS PER SECTION OF #OMPANIES !CT C 2ELATED PARTY TRANSACTIONS UNDER SECTION OF #OMPANIES !CT 17.1-1 Disclosure of interest in contract or arrangement %VERY DIRECTOR OF A COMPANY WHO IS IN ANY WAY WHETHER DIRECTLY OR INDIRECTLY CONCERNED OR INTERESTED IN A CONTRACT OR ARRANGEMENT OR PROPOSED CONTRACT OR ARRANGEMENT ENTERED INTO OR TO BE ENTERED INTO BY COMPANY SHALL DISCLOSE THE NATURE OF HIS CONCERN OR INTEREST AT THE MEETING OF THE "OARD IN WHICH THE CONTRACT OR ARRANGEMENT IS DISCUSSED (E SHALL NOT PARTICIPATE IN SUCH MEETING 4HE CONTRACT OR ARRANGEMENT MAY BE a WITH A BODY CORPORATE IN WHICH SUCH DIRECTOR OR SUCH DIRECTOR IN ASSOCIATION WITH ANY OTHER DIRECTOR HOLDS MORE THAN SHAREHOLDING OF THAT BODY CORPORATE or IS A PROMOTER MANAGER #HIEF %XECUTIVE /FlCER OF THAT BODY CORPORATE OR b WITH A lRM OR OTHER ENTITY IN WHICH SUCH DIRECTOR IS A PARTNER OWNER OR MEMBER AS THE CASE MAY BE SECTION OF #OMPANIES !CT ;#ORRESPONDING TO SECTION OF THE !CT= )N CASE OF SECTION LICENSED I E NON PROlT COMPANIES THE DISCLOSURE IS REQUIRED ONLY IF TRANSACTION WITH RELATED PARTY EXCEEDS 2S ONE LAKH -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT If director becomes interested at a later stage )F ANY DIRECTOR WAS NOT SO CONCERNED OR INTERESTED AT THE TIME OF ENTERING INTO SUCH CONTRACT OR ARRANGEMENT BUT BECAME CONCERNED OR INTERESTED AFTER THE CONTRACT OR ARRANGEMENT IS ENTERED INTO HE SHALL DISCLOSE HIS CONCERN OR INTEREST FORTHWITH WHEN HE BECOMES CONCERNED OR INTERESTED or AT THE lRST MEETING OF THE "OARD HELD AFTER HE BECOMES SO CONCERNED OR INTERESTED PROVISO TO SECTION OF #OMPANIES !CT
323
Para 17.1
2%342)#4)/.3 /. $)2%#4/23 ). 2%,!4)/. 4/ #/-0!.9
324
Contract voidable at option of assessee if interest not disclosed or director participated in the Board meeting ! CONTRACT OR ARRANGEMENT ENTERED INTO BY THE COMPANY WITHOUT DISCLOSURE BY DIRECTOR AS REQUIRED UNDER SECTION 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 SECTION OF #OMPANIES !CT 4HUS THE CONTRACT IS NOT VOID ab initio )T BECOMES VOID ONLY IF COMPANY DOES SO No prohibition on entering into contract with company, unless prohibited under other law 4HERE IS NO PROHIBITION UNDER THE #OMPANIES !CT ON ENTERING INTO CONTRACT WITH COMPANY (OWEVER IF THERE IS RESTRICTION OR PROHIBITION IS SOME OTHER RULE OR LAW THAT RESTRICTION OR PROHIBITION WILL PREVAIL SECTION A OF #OMPANIES !CT Contract or arrangement between two companies or body corporates where director holds 2% or more paid up capital 0ROVISIONS OF SECTION OF #OMPANIES !CT SHALL APPLY ONLY TO ANY CONTRACT OR ARRANGEMENT ENTERED INTO OR TO BE ENTERED INTO BETWEEN a TWO COMPANIES OR b 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 OR MORE OF THE PAID UP SHARE CAPITAL IN THE OTHER COMPANY or the body corporate SECTION b OF #OMPANIES !CT WORDS IN ITALICS INSERTED W E F 7HILE CALCULATING THE SHARES IN OTHER COMPANY ONLY INVESTMENT OF DIRECTORS IS CONSIDERED )NVESTMENT OF HIS RELATIVES IS NOT TO BE CONSIDERED ;4HIS SEEMS TO BE A LOOPHOLE= )F THE DIRECTOR IS A PARTNER IN ANY lRM THE PROVISIONS IN RESPECT OF INTEREST APPLY IRRESPECTIVE OF THE INVESTMENT OF THE DIRECTOR IN THE lRM OR THE RATIO OF PROlT IN SUCH PARTNERSHIP lRM I E EVEN IF HIS SHARE OF PROlT IS LESS THAN IN PARTNERSHIP lRM OR HIS INVESTMENT IS LESS THAN IN THE lRM HE IS REGARDED AS INTERESTED IN THE CONTRACT WITH THAT PARTNERSHIP lRM )N Needle Industries (India) Ltd. V Needle Industries Newey #OMP #AS 3#2 3## !)2 3# #OMP ,* 3# IT WAS HELD MERE SENTIMENTAL INTEREST OR IDEOLOGICAL CONCERN OR FRIENDSHIP IS NOT ENOUGH TO MAKE A PERSON @INTERESTED DIRECTOR 17.1-2 Disclosure to be made in meeting of Board of Directors 4HE DISCLOSURE OF INTEREST SHOULD BE MADE IN THE MEETING OF "OARD OF $IRECTORS $ISCLOSURE BY CIRCULATING THE DETAILS TO DIRECTORS IS NOT ADMISSIBLE AS DISCLOSURE SECTION OF #OMPANIES !CT ;CORRESPONDING TO SECTION AND C OF THE !CT= 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES HAD MADE THE SAME PROVISION 4HIS SUB RULE HAS BEEN OMITTED W E F (OWEVER STILL IN VIEW OF SECTION OF #OMPANIES !CT THE DISCLOSURE IS REQUIRED AT "OARD MEETING ONLY 4HERE IS NO RESTRICTION IN MAKING DISCLOSURE IN "OARD MEETING THROUGH VIDEO CONFERENCE 17.1-3 General notice to Board %VERY DIRECTOR SHALL DISCLOSE HIS CONCERN OR INTEREST IN ANY COMPANY OR COMPANIES OR BODIES CORPORATE lRMS OR OTHER ASSOCIATION OF INDIVIDUALS WHICH SHALL INCLUDE THE SHAREHOLDING IN SUCH MANNER AS MAY BE PRESCRIBED 4HE DISCLOSURE SHALL BE A AT THE lRST MEETING OF THE "OARD IN WHICH HE PARTICIPATES AS A DIRECTOR B THEREAFTER AT THE lRST MEETING OF THE "OARD IN EVERY lNANCIAL YEAR OR C WHENEVER THERE IS ANY CHANGE IN THE DISCLOSURES ALREADY MADE THEN AT THE lRST "OARD MEETING HELD AFTER SUCH CHANGE SECTION OF #OMPANIES !CT ;CORRESPONDING TO SECTION A OF THE !CT= 4HE DISCLOSURE SHOULD BE IN FORM -"0 )T IS HIS DUTY TO ENSURE THAT IT IS DISCLOSED AT THE MEETING HELD IMMEDIATELY AFTER DATE OF NOTICE 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES
325
2%342)#4)/.3 /. ,/!.3 4/ $)2%#4/23
Para 17.2
.ORMAL PRACTICE IS THAT ALL DIRECTORS USED TO SUBMIT A LIST OF COMPANIES IN WHICH THEY ARE DIRECTORS COMPANIES IN WHICH THEY HOLD SHARES AND lRMS IN WHICH THEY ARE PARTNERS PROPRIETORS 3UCH NOTICE EXPIRES AT THE END OF lNANCIAL YEAR AND IT IS RENEWED BY GIVING FRESH NOTICE IN THE lRST "OARD MEETING OF NEXT lNANCIAL YEAR Notices must be kept at registered office and in proper custody !LL NOTICES GIVEN BY DIRECTORS SHOULD BE KEPT AT REGISTERED OFlCE AND PRESERVED FOR EIGHT YEARS FROM END OF lNANCIAL YEAR 4HESE SHOULD IN CUSTODY OF 3ECRETARY OR PERSON AUTHORIZED BY "OARD 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES Specific disclosure when contract comes for discussion even if general disclosure made and non-participation in meeting %VEN IF GENERAL DISCLOSURE AS REQUIRED UNDER SECTION OF #OMPANIES !CT HAS BEEN MADE SPECIlC DISCLOSURE IS REQUIRED WHEN THE CONTRACT COMES BEFORE THE "OARD FOR DISCUSSION 7HEN THE CONTRACT COMES FOR DISCUSSION THE INTERESTED DIRECTOR SHALL NOT PARTICIPATE IN THE "OARD MEETING SECTION OF #OMPANIES !CT )N CASE OF PRIVATE COMPANY THE DIRECTOR IS REQUIRED TO DISCLOSE HIS INTEREST IN CONTRACT 4HEN HE CAN PARTICIPATE IN THE MEETING AND VOTE -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT 17.1-4 Effect of non-disclosure of interest )F A DIRECTOR FAILS TO DISCLOSE HIS INTEREST IN ANY CONTRACT OR ARRANGEMENT TO "OARD OF $IRECTORS AS REQUIRED HIS OFFICE AS DIRECTOR BECOMES VACANT SECTION E OF #OMPANIES !CT ;#ORRESPONDING TO SECTION I OF THE !CT= )F A DIRECTOR OF THE COMPANY CONTRAVENES THE PROVISIONS OF SECTION OF #OMPANIES !CT ;RELATING TO DISCLOSURE= HE SHALL BE LIABLE TO A PENALTY OF ONE LAKH RUPEES - SECTION OF #OMPANIES !CT AS AMENDED ON %ARLIER THERE WAS PROVISION FOR IMPRISONMENT AND FINE 4HUS CONTRACT CONTINUES TO BE VALID AND ENFORCEABLE UNLESS IT IS AVOIDED BY "OARD
17.2 RESTRICTIONS ON LOANS TO DIRECTORS 4HE RESTRICTIONS ARE COVERED UNDER SECTION OF #OMPANIES !CT 4HIS ENTIRE SECTION HAS BEEN RE WRITTEN W E F 5NDER REVISED PROVISIONS LOANS TO DIRECTORS OR lRMS IN WHICH THEY ARE INTERESTED CAN BE ONLY AS PER PROVISIONS OF SECTION OF #OMPANIES !CT !S PER SECTION OF #OMPANIES !CT AS SUBSTITUTED W E F 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 HOLDING COMPANY OR ANY PARTNER OR RELATIVE OF ANY SUCH DIRECTOR OR B ANY lRM IN WHICH ANY SUCH DIRECTOR OR RELATIVE IS A PARTNER 3UCH LOAN OR SECURITY OR GUARANTEE CAN BE GIVEN IN CONNECTION WITH ANY LOAN TAKEN BY ANY PERSON IN WHOM ANY OF THE DIRECTORS OF THE COMPANY IS INTERESTED IF A SPECIAL RESOLUTION IS PASSED IN GENERAL MEETING AND B THE LOANS ARE UTILISED BY borrowing company for its principal business activities SECTION OF #OMPANIES !CT AS SUBSTITUTED W E F Explanatory statement to proposed special resolution 4HE EXPLANATORY STATEMENT ATTACHED TO NOTICE OF 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
Para 17.2
2%342)#4)/.3 /. $)2%#4/23 ). 2%,!4)/. 4/ #/-0!.9
326
3INCE THE EXPLANATORY STATEMENT REQUIRES ALL DETAILS OF PROPOSED LOAN A GENERAL AND OMNIBUS APPROVAL TO BOARD FOR GIVING SUCH LOANS IS NOT PERMISSIBLE Loan can be only to another company or body corporate 4HE LOAN CAN BE GIVEN ONLY TO ANOTHER company or body corporate NOT TO DIRECTOR OR HIS RELATIVE OR ANY PARTNERSHIP lRM Meaning of “to any other person in whom director is interested” 4HE EXPRESSION hTO ANY OTHER PERSON IN WHOM DIRECTOR IS INTERESTEDv MEANS THE FOLLOWING ;Explanation TO SECTION OF #OMPANIES !CT AS SUBSTITUTED W E F 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 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 "OARD OF DIRECTORS MANAGING DIRECTOR OR MANAGER WHEREOF IS ACCUSTOMED TO ACT IN ACCORDANCE WITH THE DIRECTIONS OR INSTRUCTIONS OF THE "OARD OR OF ANY DIRECTOR OR DIRECTORS OF THE LENDING COMPANY Non-applicability of the restriction 4HE RESTRICTIONS IN RESPECT OF LOANS TO DIRECTORS DIRECTLY OR INDIRECTLY ARE NOT APPLICABLE IN FOLLOWING CASES ;SECTION OF #OMPANIES !CT AS SUBSTITUTED W E F = a 'IVING 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 YIELDS OF ONE YEAR THREE YEAR lVE YEAR OR TEN YEAR 'OVERNMENT SECURITY CLOSEST TO THE TENOR OF THE LOAN OR c !NY LOAN MADE BY HOLDING COMPANY TO ITS WHOLLY OWNED SUBSIDIARY OR ANY GUARANTEE GIVEN OR SECURITY PROVIDED IN RESPECT OF ANY LOAN MADE TO WHOLLY OWNED SUBSIDIARY (OWEVER THE LOAN SHOULD BE USED BY THE WHOLLY OWNED SUBSIDIARY COMPANY for its principal business activities, OR d !NY GUARANTEE GIVEN OR SECURITY PROVIDED BY HOLDING COMPANY IN RESPECT OF LOAN MADE BY ANY "ANK OR &INANCIAL )NSTITUTION TO ITS SUBSIDIARY NEED NOT BE WHOLLY OWNED SUBSIDIARY (OWEVER THE LOAN SHOULD BE USED BY THE SUBSIDIARY COMPANY for its principal business activities Restriction not applicable to specified private companies 4HE RESTRICTIONS UNDER SECTION OF #OMPANIES !CT ARE NOT APPLICABLE TO A PRIVATE COMPANY A IN WHOSE SHARE CAPITAL OTHER BODY CORPORATE HAS NOT INVESTED ANY MONEY B WHICH HAS BORROWINGS FROM BANKS AND &) OR ANY BODY CORPORATE NOT MORE THAN TWICE OF THEIR PAID UP CAPITAL OR ` CRORES WHICHEVER IS LOWER AND C 4HE PRIVATE COMPANY IS NOT IN DEFAULT IN REPAYMENT OF SUCH BORROWINGS -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT 4HUS IF A PRIVATE COMPANY FULlLS THESE CONDITIONS IT CAN GIVE LOAN OR GUARANTEE TO DIRECTOR OR TO ANY OTHER PERSON IN WHOM DIRECTOR IS INTERESTED Restriction not applicable to Government company if loan or security approved by Government 2ESTRICTION ON GIVING LOANS OR SECURITY TO DIRECTOR OR OTHER PERSON IN WHOM DIRECTOR IS INTERESTED IS NOT APPLICABLE TO 'OVERNMENT COMPANY IF LOAN OR SECURITY APPROVED BY CONCERNED ADMINISTRATIVE MINISTRY OF 'OVERNMENT -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT Penalty for contravention 4HE COMPANY AND EVERY OFlCER WHO IS IN DEFAULT SHALL BE PUNISHABLE WITH lNE WHICH SHALL NOT BE LESS THAN ` lVE LAKH BUT WHICH MAY EXTEND TO ` TWENTY lVE LAKH
327
2%,!4%$ 0!249 42!.3!#4)/.3
Para 17.3
%VERY OFlCER OF THE COMPANY WHO IS IN DEFAULT SHALL BE PUNISHABLE WITH IMPRISONMENT FOR A TERM WHICH MAY EXTEND TO SIX MONTHS OR WITH lNE WHICH SHALL NOT BE LESS THAN lVE LAKH RUPEES BUT WHICH MAY EXTEND TO TWENTY lVE LAKH RUPEES &URTHER 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 BE PUNISHABLE WITH IMPRISONMENT WHICH MAY EXTEND TO SIX MONTHS OR WITH lNE WHICH SHALL NOT BE LESS THAN ` lVE LAKH BUT WHICH MAY EXTEND TO ` TWENTY lVE LAKH OR WITH BOTH SECTION OF #OMPANIES !CT AS SUBSTITUTED W E F =
17.3 RELATED PARTY TRANSACTIONS 2ELATED PARTY TRANSACTIONS ARE INEVITABLE IN ANY BUSINESS "USINESS CAN GROW ONLY WITH MUTUAL COOPERATION AND SUPPORT 0ARA OF THE !3 BEAUTIFULLY EXPLAINS INEVITABILITY OF RELATED PARTY TRANSACTIONS AS FOLLOWS 2ELATED PARTY RELATIONSHIPS ARE A NORMAL FEATURE OF COMMERCE AND BUSINESS &OR EXAMPLE ENTERPRISES FREQUENTLY CARRY ON SEPARATE PARTS OF THEIR ACTIVITIES THROUGH SUBSIDIARIES OR ASSOCIATES AND ACQUIRE INTERESTS IN OTHER ENTERPRISES FOR INVESTMENT PURPOSES OR FOR TRADING REASONS THAT ARE OF SUFlCIENT PROPORTIONS FOR THE INVESTING ENTERPRISE TO BE ABLE TO CONTROL OR EXERCISE SIGNIlCANT INmUENCE ON THE lNANCIAL AND OR OPERATING DECISIONS OF ITS INVESTEE &RQÀLFWV RI LQWHUHVWV LQ UHODWHG SDUW\ WUDQVDFWLRQV $UTY OF A $IRECTOR IS COMPARABLE TO THAT OF A TRUSTEE ,IKE TRUSTEE HE IS IN A lDUCIARY POSITION vis-à-vis THE COMPANY (E IS EXPECTED TO ACT IN THE BEST INTERESTS OF THE COMPANY 7HENEVER PERSONAL INTERESTS AND COMPANY INTERESTS CLASH HIS PERSONAL INTERESTS SHOULD BE SECONDARY TO THE INTERESTS OF THE COMPANY )N REALITY THE POSITION IS QUITE DIFFERENT 7AYS ARE DEVISED TO SIPHON OF FUNDS OF THE COMPANY FOR PERSONAL GAINS 4HERE ARE MANY WAYS OF DOING THIS BUT ONE MOST POPULAR WAY IS TO DIVERT FUNDS OF COMPANY THROUGH TRANSACTIONS WITH RELATED PARTIES 4RANSACTIONS WITH RELATED PARTIES ARE ALSO USED AS A TOOL OF @TAX MANAGEMENT 0ROVISIONS EXIST IN INCOME TAX LIKE TRANSFER PRICING EXCISE LAW IN VALUATION AND CUSTOMS LAW IN VALUATION TO CONTROL @TAX PLANNING THROUGH RELATED PARTY TRANSACTIONS 4HE #OMPANIES !CT HAS MADE ELABORATE PROVISIONS TO CONTROL SUCH RELATED PARTY TRANSACTIONS AND ENSURE THAT RELATED PARTY TRANSACTIONS ARE NOT USED AS TOOL TO DIVERT FUNDS OF THE COMPANY FOR PERSONAL BENElT OF DIRECTORS 0HDQLQJ RI µUHODWHG SDUW\¶ 3ECTION OF #OMPANIES !CT DElNES @RELATED PARTY AS FOLLOWS h2ELATED PARTYv WITH REFERENCE TO A COMPANY MEANS i A DIRECTOR OR HIS RELATIVE ii A KEY MANAGERIAL PERSONNEL OR HIS RELATIVE iii A lRM 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 ;4HE WORDS @OR HIS RELATIVE HAVE BEEN ADDED VIDE #OMPANIES 2EMOVAL OF $IFlCULTIES 3IXTH /RDER W E F = 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 ;4HE WORD @AND WAS SUBSTITUTED IN PLACE OF @OR vide #OMPANIES 2EMOVAL OF $IFlCULTIES &IFTH /RDER =
Para 17.3
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vi ANY BODY CORPORATE WHOSE "OARD OF $IRECTORS MANAGING DIRECTOR OR MANAGER IS ACCUSTOMED TO ACT IN ACCORDANCE WITH THE ADVICE DIRECTIONS OR INSTRUCTIONS OF A DIRECTOR OR MANAGER vii ANY PERSON UNDER 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 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 5NDER THE CLAUSE ix IT HAS BEEN SPECIlED THAT A DIRECTOR OTHER THAN AN INDEPENDENT DIRECTOR OR +EY -ANAGERIAL 0ERSONNEL +-0 OF THE HOLDING COMPANY OR HIS RELATIVE WITH REFERENCE TO A COMPANY SHALL BE TREATED AS @RELATED PARTY OF THE COMPANY 2ULE OF #OMPANIES 3PECIlCATION OF $ElNITIONS $ETAILS 2ULES 4HE CLAUSE viii ;WORDS IN ITALICS= HAVEN BEEN INSERTED W E F 4HE CLAUSE WAS READING AS FOLLOWS UPTO viii ANY COMPANY WHICH IS ! A HOLDING SUBSIDIARY OR AN ASSOCIATE COMPANY OF SUCH COMPANY OR " A SUBSIDIARY OF A HOLDING COMPANY TO WHICH IT IS ALSO A SUBSIDIARY Key Managerial Personnel (KMP) h+EY MANAGERIAL PERSONNELv IN RELATION TO A COMPANY MEANS i THE #HIEF %XECUTIVE /FlCER OR THE -ANAGING $IRECTOR OR THE -ANAGER ii THE #OMPANY 3ECRETARY iii THE WHOLETIME DIRECTOR iv THE #HIEF &INANCIAL /FlCER AND v SUCH OTHER OFlCER AS MAY BE PRESCRIBED (vi such other officer, not more than one level below the directors, who is in whole-time employment, designated as Key Managerial Person by the Board and (vii such other officer as may be prescribed ;SECTION 51 OF #OMPANIES !CT = ;4HE WORDS IN ITALICS HAVE BEEN ADDED W E F = %FFECT OF THE AMENDMENT W E F IS THAT AN OFlCER ONE LEVEL BELOW THE LEVEL OF WHOLETIME DIRECTORS CAN IS DESIGNATED AS +-0 BY "OARD Interested director - 4HE TERM “)NTERESTED DIRECTOR” WAS DElNED IN SECTION OF #OMPANIES !CT AS EXISTING UPTO 4HIS DElNITION HAS BEEN OMITTED W E F AS THE DElNITION WAS TOO BROAD (ENCE NOW THE TERM ‘INTERESTED DIRECTOR’ WILL APPLY TO A CONTRACTS OR ARRANGEMENTS AS SPECIlED IN SECTION OF #OMPANIES !CT I E MORE THAN SHAREHOLDING OR #%/ OF THE BODY CORPORATE OR lRM WHERE DIRECTOR IS PARTNER OWNER OR MEMBER B ,OANS WHERE DIRECTOR IS INTERESTED AS PER SECTION OF #OMPANIES !CT C 2ELATED PARTY TRANSACTIONS UNDER SECTION OF #OMPANIES !CT Relative h2ELATIVEv MEANS A PERSON WHO IS A RELATIVE OF ANOTHER IF I THEY ARE MEMBERS OF A (INDU UNDIVIDED FAMILY II THEY ARE HUSBAND AND WIFE OR III ONE PERSON IS RELATED TO THE OTHER IN SUCH MANNER AS MAY BE PRESCRIBED ;SECTION OF #OMPANIES !CT CORRESPONDING TO SECTIONS AND 3CHEDULE )! OF THE !CT= ! PERSON SHALL BE DEEMED TO BE RELATIVE OF ANOTHER IF HE OR SHE IS RELATED TO ANOTHER IN ANY OF THE FOLLOWING MANNER &ATHER INCLUDING STEP FATHER -OTHER INCLUDING STEP MOTHER 3ON INCLUDING STEP SON 3ON S WIFE $AUGHTER $AUGHTER S HUSBAND "ROTHER INCLUDING STEP BROTHER 3ISTER INCLUDING STEP SISTER 2ULE OF #OMPANIES 3PECIlCATION OF $ElNITIONS $ETAILS 2ULES
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Para 17.3
Associate Company h!SSOCIATE COMPANYv IN RELATION TO ANOTHER COMPANY MEANS A COMPANY IN WHICH THAT OTHER COMPANY HAS A SIGNIlCANT INmUENCE BUT WHICH IS NOT A SUBSIDIARY COMPANY OF THE COMPANY HAVING SUCH INmUENCE AND INCLUDES JOINT VENTURE COMPANY Explanation &OR THE PURPOSE OF THIS CLAUSE A 4HE TERM @SIGNIlCANT INmUENCE MEANS CONTROL OF AT LEAST OF total voting power OR CONTROL OR PARTICIPATION IN BUSINESS DECISIONS UNDER AN AGREEMENT B @*OINT 6ENTURE MEANS A JOINT ARRANGEMENT WHEREBY THE PARTIES THAT HAVE JOINT CONTROL OF THE ARRANGEMENT HAVE RIGHTS TO THE NET ASSETS OF THE ARRANGEMENT EXPLANATION TO SECTION OF #OMPANIES !CT AS AMENDED ON 4HE TERM USED IS @TOTAL VOTING POWER 4HUS W E F PREFERENCE SHARE HOLDING WILL BE CONSIDERED ONLY IF PAYMENT OF DIVIDEND IS IN ARREARS FOR MORE THAN TWO YEARS Earlier Explanation as existing upto 7-5-2018 4HE EARLIER EXPLANATION AS FOLLOWS &OR THE PURPOSES OF THIS CLAUSE hSIGNIlCANT INmUENCEv MEANS CONTROL OF AT LEAST TWENTY PER CENT OF TOTAL SHARE CAPITAL OR OF BUSINESS DECISIONS UNDER AN AGREEMENT ;SECTION OF #OMPANIES !CT = &OR PURPOSE OF THE AFORESAID DElNITION PRIOR TO h4OTAL 3HARE #APITALv MEANS THE AGGREGATE OF THE A PAID UP EQUITY SHARE CAPITAL AND B CONVERTIBLE PREFERENCE SHARE CAPITAL 2ULE R OF #OMPANIES 3PECIlCATION OF $ElNITIONS $ETAILS 2ULES 4HUS NON CONVERTIBLE PREFERENCE CAPITAL AND UNCALLED AND OR UNPAID EQUITY CAPITAL WAS NOT REQUIRED TO BE CONSIDERED FOR PURPOSE OF DElNITION OF @ASSOCIATE COMPANY Control h#ONTROLv 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 MANAGEMENT RIGHTS OR SHAREHOLDERS AGREEMENTS OR VOTING AGREEMENTS OR IN ANY OTHER MANNER ;SECTION OF #OMPANIES !CT = Meaning of ‘accustomed to act’ - Shadow director and dummy director )F A DIRECTOR IS ACCUSTOMED TO ACT UNDER ADVICE DIRECTIONS OR INSTRUCTIONS OF ANOTHER PERSON EXCEPT WHERE SUCH ADVISE IS GIVEN IN PROFESSIONAL CAPACITY SUCH PERSON IS CONSIDERED AS @RELATED PARTY 3UCH PERSON IS OFTEN TERMED AS @SHADOW DIRECTOR 4HE PERSON WHO IS ACTING ON BASIS OF HIS ADVICE OR INSTRUCTIONS CAN BE TERMED AS @DUMMY DIRECTOR @!CCUSTOMED MEANS ON REGULAR BASIS AND NOT ON RARE BASIS OR ONCE IN A WHILE )T IS DIFlCULT TO ESTABLISH THAT A DIRECTOR IS ACCUSTOMED TO ACT ON ADVISE OR DIRECTIONS OF ANOTHER PERSON )N FACT IF A DIRECTOR ADMITS TO DOING THAT HE WILL BE FAILING IN HIS DUTY AS DIRECTOR 3OMETIMES PEONS CLERKS OR DRIVERS ARE APPOINTED AS DIRECTORS OF SOME COMPANIES EFFECTIVELY ADMINISTERED BY @REMOTE CONTROL BY SUCH @SHADOW DIRECTOR )N SUCH CASES IT MAY BE ABLE TO ESTABLISH WHO IS IN REAL CONTROL OF THE COMPANY ;3OME EXAMPLES IN POLITICS CAN BE 3MT 3ONIA 'ANDHI OR ,ATE "ALASAHEB 4HAKARE= 7ZR SXEOLF FRPSDQLHV µUHODWHG SHUVRQ¶ LI GLUHFWRU KROGV PRUH WKDQ SDLG XS FDSLWDO RI DQRWKHU ! 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 IS RELATED PARTY SECTION V OF #OMPANIES !CT ;4HE WORD @AND WAS SUBSTITUTED IN PLACE OF @OR vide #OMPANIES 2EMOVAL OF $IFlCULTIES &IFTH /RDER = 6WUDQJH UHVXOWV GXH WR UXOH EDVHG GH¿QLWLRQ $ElNITION OF @RELATED PARTY IS RULE BASED AND NOT PRINCIPLE BASED 3UCH DElNITION CAN SOMETIMES LEAD TO ABSURD RESULTS
Para 17.3
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&OR EXAMPLE -R -UKESH !MBANI AND -R !NIL !MBANI MAY NOT BE ON SPEAKING TERMS BUT THE BIOLOGICAL FACT THAT THEY ARE BROTHERS CANNOT BE DENIED (ENCE THEY BECOME @RELATED PARTY AS PER RULE BASED DElNITION THOUGH GROUND REALITIES MAY BE QUITE DIFFERENT )T IS ALSO POSSIBLE TO MANIPULATE THE PROVISIONS SO THAT THOUGH THEY ARE RELATED PARTIES THEY DO NOT lT IN THE DElNITION OF @RELATED PARTY /NE CRUDE WAY OF DOING THIS IS TO APPOINT CLERKS DRIVERS AND PEONS AS DIRECTORS AND EVEN SHAREHOLDERS 4HOUGH SUCH DIRECTORS CAN COME WITHIN THE CLAUSE @ANY PERSON UNDER WHOSE ADVICE DIRECTIONS OR INSTRUCTIONS A DIRECTOR OR MANAGER IS ACCUSTOMED TO ACT THIS BECOMES DIFlCULT TO PROVE /F COURSE IF A DIRECTOR ADMITS THAT HE IS ACTING ON ADVICE AND DIRECTIONS OF ANOTHER PERSON HE IS SURELY VIOLATING ALL HIS DUTIES AS A DIRECTOR &RQVHQW RI %RDUG LQ FDVH RI UHODWHG SDUW\ WUDQVDFWLRQ ! COMPANY CAN ENTER INTO SPECIlED RELATED PARTY TRANSACTION ONLY WITH APPROVAL OF "OARD AND SUBJECT TO PRESCRIBED CONDITIONS SECTION OF #OMPANIES !CT ;#ORRESPONDING TO SECTION OF THE !CT= 4HE CONSENT MUST BE OBTAINED IN THE "OARD MEETING AND NOT BY CIRCULAR RESOLUTION 4HE PROVISION APPLIES TO FOLLOWING CONTRACTS OR ARRANGEMENTS a SALE PURCHASE OR SUPPLY OF ANY GOODS OR MATERIALS b SELLING OR OTHERWISE DISPOSING OF OR BUYING PROPERTY OF ANY KIND c LEASING OF PROPERTY OF ANY KIND d AVAILING OR RENDERING OF ANY SERVICES e APPOINTMENT OF ANY AGENTS FOR PURCHASE OR SALE OF GOODS MATERIALS SERVICES OR PROPERTY f SUCH RELATED PARTY S APPOINTMENT TO ANY OFlCE OR PLACE OF PROlT IN THE COMPANY ITS SUBSIDIARY COMPANY OR ASSOCIATE COMPANY AND g UNDERWRITING THE SUBSCRIPTION OF ANY SECURITIES OR DERIVATIVES THEREOF OF THE COMPANY Meaning of ‘office or place of profit’ @/FlCE OR PLACE OF PROlT MEANS ANY OFlCE OR PLACE i WHERE SUCH OFlCE 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 ii WHERE SUCH OFlCE OR PLACE IS HELD BY AN INDIVIDUAL OTHER THAN A DIRECTOR OR BY ANY lRM PRIVATE COMPANY OR OTHER BODY CORPORATE IF THE INDIVIDUAL lRM 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 ;%XPLANATION TO SECTION OF #OMPANIES !CT = )N U C Raman V P.T.A. Rahim 3## IT WAS HELD THAT OFlCE OF PROlT MUST YIELD PECUNIARY GAIN AS PROlT -ERELY GETTING TRAVELLING ALLOWANCE AND DAILY ALLOWANCE IS NOT @OFlCE OF PROlT SAME VIEW IN Jaya Bachchan V UOI 3## Disclosure in agenda of the Board meeting !GENDA OF "OARD MEETING SHALL DISCLOSE DETAILS AS SPECIlED IN 2ULE OF #OMPANIES -EETING OF "OARD AND ITS 0OWERS 2ULES Interested director not to be present )NTERESTED DIRECTOR SHALL NOT BE PRESENT AT THE MEETING DURING DISCUSSIONS ON THE SUBJECT MATTER RELATING TO MATTER 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES
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Para 17.3
4HIS RESTRICTION IS NOT APPLICABLE TO PRIVATE COMPANY 4HE DIRECTOR IS REQUIRED TO DISCLOSE HIS INTEREST IN THE RESOLUTION 4HEN HE CAN PARTICIPATE IN THE "OARD MEETING AND VOTE -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT 3ULRU DSSURYDO LQ JHQHUDO PHHWLQJ E\ ordinary UHVROXWLRQ LQ FDVH RI ODUJH FRPSDQLHV or large contracts )N THE CASE OF A COMPANY HAVING PAID UP SHARE CAPITAL OF NOT LESS THAN PRESCRIBED AMOUNT OR TRANSACTIONS not EXCEEDING PRESCRIBED SUMS THE CONTRACT OR ARRANGEMENT CAN BE ENTERED INTO BY COMPANY ONLY AFTER PRIOR APPROVAL BY ordinary resolution IN GENERAL MEETING lRST proviso TO SECTION OF #OMPANIES !CT ;4ILL TH -AY SPECIAL RESOLUTION WAS REQUIRED= Related party not to vote at the general meeting 4HE MEMBER WHO IS A RELATED PARTY SHALL NOT VOTE AT THE GENERAL MEETING SECOND proviso TO SECTION OF #OMPANIES !CT 4HE RESTRICTION ON VOTING APPLIES ONLY TO THE CONTRACT OR ARRANGEMENT FOR WHICH THE RESOLUTION IN RESPECT OF RELATED PARTY TRANSACTION IS PASSED -#! CIRCULAR .O DATED ;4HUS THE RELATED PARTY CAN VOTE ON OTHER RESOLUTIONS TO BE PASSED IN THE GENERAL MEETING= ;4ILL TH -AY SPECIAL RESOLUTION WAS REQUIRED= 4HIRD proviso HAS BEEN ADDED TO THIS SUB SECTION ;I E TO SECTION = W E F PROVIDING THAT THIS RESTRICTION SHALL NOT APPLY IF OR MORE MEMBERS ARE RELATIVES OF PROMOTERS OR ARE RELATED PARTIES 4HUS IN CASE OF PUBLIC COMPANY A MEMBER CAN VOTE IN GENERAL MEETING EVEN IF HE IS INTERESTED IN THE RESOLUTION IF OR MORE MEMBERS ARE RELATIVES OF PROMOTERS OR ARE RELATED PARTIES Provision does not apply to private company 4HIS SUB SECTION IS NOT APPLICABLE TO A PRIVATE COMPANY -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT 4HUS IN CASE OF PRIVATE COMPANY A MEMBER CAN VOTE IN GENERAL MEETING EVEN IF HE IS INTERESTED IN THE RESOLUTION Drafting mistake 4HE TERM @NOT EXCEEDING PRESCRIBED SUMS IS NOT CORRECT )T SHOULD BE @EXCEEDING PRESCRIBED SUMS 4HIS DRAFTING MISTAKE HAS REALLY MADE THE SECTION INEFFECTIVE #ENTRAL 'OVERNMENT WILL HAVE TO AMEND THE SECTION )N THE MEANWHILE IT MAY ISSUE NOTIlCATION UNDER SECTION OF #OMPANIES !CT TO REMOVE THE DIFlCULTY Where prior approval is required )N FOLLOWING CASES PRIOR APPROVAL BY SPECIAL RESOLUTION IN GENERAL MEETING IS REQUIRED 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES ;AS AMENDED W E F = a AS CONTRACTS OR ARRANGEMENTS WITH RESPECT TO CLAUSES a TO e OF SUB SECTION OF SECTION WITH CRITERIA AS MENTIONED BELOW ;4HE WORDS IN ITALICS IN FOLLOWING SUB CLAUSES HAVE BEEN INSERTED W E F = i SALE PURCHASE OR SUPPLY OF ANY GOODS OR MATERIALS DIRECTLY OR THROUGH APPOINTMENT OF AGENT amounting to 10% or more OF THE TURNOVER OF THE COMPANY AS MENTIONED IN SECTION CLAUSE a AND CLAUSE e RESPECTIVELY 4HE LIMIT SHALL APPLY FOR ALL TRANSACTION S TOGETHER DURING THE lNANCIAL YEAR ; THE WORDS WERE @OR RUPEES ONE HUNDRED CRORE WHICHEVER IS LOWER 4HESE HAVE BEEN OMITTED W E F = ii SELLING OR OTHERWISE DISPOSING OF OR BUYING PROPERTY OF ANY KIND DIRECTLY OR THROUGH APPOINTMENT OF AGENTS amounting to 10% or more OF NET WORTH OF THE COMPANY AS MENTIONED IN SECTION CLAUSE b AND CLAUSE e RESPECTIVELY 4HE LIMIT SHALL APPLY FOR ALL TRANSACTION S TOGETHER DURING THE lNANCIAL YEAR ; THE WORDS WERE @OR RUPEES ONE HUNDRED CRORE WHICHEVER IS LOWER 4HESE HAVE BEEN OMITTED W E F =
Para 17.3
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iii LEASING OF PROPERTY OF ANY KIND amounting to ten per cent or more OF TURNOVER OF THE COMPANY AS MENTIONED IN SECTION c 4HE LIMIT SHALL APPLY FOR ALL TRANSACTION S TOGETHER DURING THE lNANCIAL YEAR ;WORDS IN ITALICS SUBSTITUTED W E F = iv AVAILING OR RENDERING OF ANY SERVICES DIRECTLY OR THROUGH APPOINTMENT OF AGENTS amounting to 10% or more OF THE NET WORTH OF THE COMPANY AS MENTIONED IN SECTION CLAUSE d AND CLAUSE e 4HE LIMIT SHALL APPLY FOR ALL TRANSACTION S TOGETHER DURING THE lNANCIAL YEAR ; 4HE WORDS WERE @OR RUPEES lFTY CRORES WHICHEVER IS LOWER 4HESE WORDS HAVE BEEN OMITTED W E F b APPOINTMENT TO ANY OFlCE OR PLACE OF PROlT IN THE COMPANY ITS SUBSIDIARY COMPANY OR ASSOCIATE COMPANY AT A MONTHLY REMUNERATION EXCEEDING TWO AND HALF LAKH RUPEES AS MENTIONED IN SECTION F OR c 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 SECTION G OF #OMPANIES !CT ;Note 4HE 4URNOVER OR .ET 7ORTH REFERRED IN THE SUB RULES SHALL BE ON THE BASIS OF THE !UDITED &INANCIAL 3TATEMENT OF THE PRECEDING &INANCIAL YEAR= Relaxation in case of holding and wholly owned company )N CASE OF RELATED PARTY TRANSACTIONS BETWEEN HOLDING COMPANY AND ITS WHOLLY OWNED SUBSIDIARY PASSING OF RESOLUTION IN GENERAL MEETING IS NOT REQUIRED IF ACCOUNTS OF HOLDING COMPANY AND ITS SUBSIDIARY ARE CONSOLIDATED AND PLACED BEFORE SHAREHOLDERS AT GENERAL MEETING FOR APPROVAL lFTH proviso TO SECTION OF #OMPANIES !CT ;EARLIER IT WAS FOURTH PROVISO UPTO = Explanation TO 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES PROVIDES THAT PASSING OF RESOLUTION IN GENERAL MEETING FOR APPROVING RELATED PARTY IS NOT REQUIRED IF SPECIAL RESOLUTION IS PASSED BY HOLDING COMPANY )T SHALL BE SUFlCIENT TO ENTER INTO TRANSACTION BETWEEN HOLDING AND ITS WHOLLY OWNED SUBSIDIARY COMPANY 0ASSING OF RESOLUTION BY SUBSIDIARY IS NOT REQUIRED .OW W E F TH -AY THIS RULE WILL APPLY ONLY WHEN THE ACCOUNTS ARE NOT CONSOLIDATED AND NOT PLACED BEFORE GENERAL MEETING Holding, subsidiary or associate of private company will not be ‘related party’ )N CASE OF A PRIVATE COMPANY A HOLDING SUBSIDIARY OR ASSOCIATE COMPANY OR SUBSIDIARY OF ITS HOLDING COMPANY WILL NOT BE CONSIDERED AS @RELATED PARTY 4HUS RESTRICTIONS ON RELATED PARTY TRANSACTIONS WILL NOT APPLY IF A PRIVATE COMPANY ENTERS INTO CONTRACT OR ARRANGEMENT WITH ITS HOLDING SUBSIDIARY OR ASSOCIATE COMPANY OR SUBSIDIARY OF ITS HOLDING COMPANY -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT (OWEVER IF HOLDING SUBSIDIARY OR ASSOCIATE COMPANY IS PUBLIC COMPANY PROVISIONS WILL APPLY UNLESS AS STATED ABOVE IS APPLICABLE Requirements of explanatory statement %XPLANATORY STATEMENT SHALL CONTAIN DETAILS AS SPECIlED IN Explanation TO 2ULE OF #OMPANIES -EETINGS OF "OARD AND ITS 0OWERS 2ULES Related party transactions not in ordinary course of business should be approved by Board in meeting 2ELATED PARTY TRANSACTIONS NOT IN ORDINARY COURSE OF BUSINESS SHOULD BE APPROVED BY "OARD OF $IRECTORS IN MEETING NOT BY CIRCULATION !NNEXURE ! OF 3ECRETARIAL 3TANDARD 33 WHICH IS MANDATORY W E F AND !NNEXURE )" OF )#3) 'UIDANCE .OTE ON "OARD -EETINGS
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Para 17.3
SEBI requirements in respect of related party transactions in case of listed entities ,ISTED ENTITY SHALL FORMULATE POLICY ON MATERIALITY OF RELATED PARTY TRANSACTIONS 2ELATED PARTY TRANSACTIONS REQUIRE PRIOR APPROVAL OF AUDIT COMMITTEE !UDIT #OMMITTEE CAN GIVE OMNIBUS APPROVAL SUBJECT TO PRESCRIBED CONDITIONS 4HESE SHOULD BE APPROVED IN GENERAL MEETING WHERE RELATED PARTIES SHALL ABSTAIN FROM VOTING %VEN EXISTING CONTINUING CONTRACTS NEED APPROVAL IN GENERAL MEETING 2EGULATION OF 3%") ,ISTING /BLIGATIONS AND $ISCLOSURE 2EQUIREMENTS 2EGULATIONS :KHQ WKH SURYLVLRQV UHODWLQJ WR UHODWHG SDUW\ WUDQVDFWLRQV GR QRW DSSO\ 4HE PROVISIONS RELATING TO RELATED PARTY TRANSACTIONS DO NOT APPLY IN CERTAIN SITUATIONS Provisions not applicable to transactions in ordinary course of business 4HE PROVISION OF SECTION OF #OMPANIES !CT ARE NOT APPLICABLE 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 THIRD proviso TO SECTION OF #OMPANIES !CT h!RM S LENGTH TRANSACTIONv MEANS A TRANSACTION BETWEEN TWO RELATED PARTIES THAT IS CONDUCTED AS IF THEY WERE UNRELATED SO THAT THERE IS NO CONmICT OF INTEREST %XPLANATION B TO SECTION OF #OMPANIES !CT 4HIS PROVISION SEEMS VERY LITIGATION PRONE AS IT IS NOT CLEAR WHO IS GOING TO DECIDE WHETHER THE TRANSACTION IS IN @ORDINARY COURSE OF BUSINESS AND WHETHER THE TRANSACTION IS AT @ARM S LENGTH )T SEEMS THE BURDEN OF PROOF WILL BE ON CONCERNED DIRECTOR TO ESTABLISH THAT THE TRANSACTION IS IN ORDINARY COURSE OF BUSINESS AND IS AT ARM S LENGTH Provision not applicable to corporate restructuring, amalgamation 0ROVISIONS OF SECTION OF #OMPANIES !CT ARE NOT APPLICABLE TO TRANSACTIONS ARISING OUT OF COMPROMISES ARRANGEMENTS AND AMALGAMATIONS DEALT WITH UNDER SPECIlC PROVISIONS OF #OMPANIES !CT OR !CT -#! CIRCULAR .O DATED Restrictions not applicable to Government companies in specified cases 2ESTRICTIONS UNDER SECTION OF #OMPANIES !CT RELATING TO RELATED PARTY TRANSACTIONS ARE NOT APPLICABLE IN FOLLOWING CASES A 'OVERNMENT COMPANY IN RESPECT OF CONTRACT WITH ANOTHER 'OVERNMENT COMPANY EVEN IF LISTED B 'OVERNMENT COMPANY IF IT OBTAINS APPROVAL FROM CONCERNED ADMINISTRATIVE MINISTRY OF 'OVERNMENT TO MAKE SUCH LOAN OR GIVE GUARANTEE OR PROVIDE SECURITY OR MAKE INVESTMENT 4HIS RELAXATION IS not APPLICABLE TO LISTED 'OVERNMENT COMPANIES EXCEPT IN CASE OF CONTRACT WITH ANOTHER 'OVERNMENT COMPANY -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT Not applicable to contracts entered prior to 31-3-2014 #ONTRACTS ENTERED INTO BY COMPANIES PRIOR TO UNDER PROVISIONS OF THE !CT DO NOT REQUIRE FRESH APPROVAL UNDER SECTION OF #OMPANIES !CT (OWEVER IF THERE IS ANY MODIlCATION TO THE CONTRACT AFTER COMPLIANCE WITH SECTION OF #OMPANIES !CT WILL BE REQUIRED -#! CIRCULAR .O DATED 5HVSRQVLELOLW\ RI GLUHFWRU RU .03 WR GLVFORVH WKHLU LQWHUHVW ZKLFK DUH WR EH HQWHUHG in register of contracts %VERY DIRECTOR OR KEY MANAGERIAL PERSONNEL SHALL WITHIN A PERIOD OF THIRTY DAYS OF HIS APPOINTMENT OR RELINQUISHMENT OF HIS OFlCE AS THE CASE MAY BE DISCLOSE TO THE COMPANY THE PARTICULARS SPECIlED IN SECTION RELATING TO HIS CONCERN OR INTEREST IN THE OTHER ASSOCIATIONS WHICH ARE REQUIRED TO BE INCLUDED IN THE REGISTER OF CONTRACTS OR ARRANGEMENTS IN WHICH DIRECTORS OR +-0 ARE INTERESTED SECTION OF #OMPANIES !CT 0ENALTY FOR CONTRAVENTION OF THE PROVISION BY DIRECTOR IS 2S SECTION OF #OMPANIES !CT
Para 17.3
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Disclosure by director at Board meeting %VERY DIRECTOR SHALL GIVE NOTICE IN WRITING TO THE COMPANY AT A MEETING OF THE "OARD OF SUCH MATTERS RELATING TO HIMSELF AS MAY BE NECESSARY FOR THE PURPOSE OF ENABLING THE COMPANY TO COMPLY WITH THE PROVISIONS OF SECTION RELATING TO REGISTRAR OF CONTRACTS IN WHICH DIRECTORS AND +-0 ARE INTERESTED SECTION OF #OMPANIES !CT ;4HUS INDIRECTLY IT MEANS THAT THE DIRECTOR IS REQUIRED TO DISCLOSE THE DETAILS OF CONTRACTS OR ARRANGEMENTS IN WHICH HE IS INTERESTED= Disclosure in Board’s report of related party transactions %VERY CONTRACT OR ARRANGEMENT ENTERED INTO UNDER SECTION OF #OMPANIES !CT SHALL BE REFERRED TO IN THE "OARD S REPORT TO THE SHAREHOLDERS ALONG WITH THE JUSTIlCATION FOR ENTERING INTO SUCH CONTRACT OR ARRANGEMENT SECTION OF #OMPANIES !CT Entry in register of contracts not required for small value transactions - 0ROVISIONS RELATING TO DISCLOSURE BY DIRECTOR OR +-0 +EY -ANAGERIAL 0ERSONNEL OF TRANSACTIONS IN WHICH HE IS INTERESTED DOES NOT APPLY FOR CONTRACT OR ARRANGEMENT 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 lVE LAKH RUPEES IN THE AGGREGATE IN ANY YEAR SECTION A OF #OMPANIES !CT .OTE THAT DISCLOSURE IN "OARD MEETING IS REQUIRED /NLY ENTRY IN THE REGISTER OF CONTRACTS IS NOT REQUIRED )N CASE OF SECTION LICENSED I E NON PROlT COMPANIES THE ENTRY IN REGISTER OF CONTRACTS IS REQUIRED ONLY IF TRANSACTION WITH RELATED PARTY EXCEEDS 2S ONE LAKH %VEN DISCLOSURE IS NOT REQUIRED IF TRANSACTION IS LESS THAN 2S ONE LAKH -#! .OTIlCATION DATED ISSUED UNDER SECTION OF #OMPANIES !CT Entry in register of contracts not required in case of banking company for collection of Bills 0ROVISIONS RELATING TO DISCLOSURE BY DIRECTOR OR +-0 OF TRANSACTIONS IN WHICH HE IS INTERESTED DOES NOT APPLY TO CONTRACT OR ARRANGEMENT BY BANKING COMPANY FOR COLLECTION OF BILLS IN ORDINARY COURSE OF BUSINESS SECTION B OF #OMPANIES !CT .OTE THAT DISCLOSURE IN "OARD MEETING IS REQUIRED /NLY ENTRY IN THE REGISTER OF CONTRACTS IS NOT REQUIRED &RQVHTXHQFHV LI FRQWUDFW RU DUUDQJHPHQW LV QRW UDWL¿HG E\ %RDUG JHQHUDO PHHWLQJ )F ANY CONTRACT OR ARRANGEMENT IS ENTERED INTO BY A DIRECTOR OR ANY OTHER EMPLOYEE WITHOUT OBTAINING THE CONSENT OF THE "OARD OR APPROVAL BY AN ordinary resolution IN THE GENERAL MEETING UNDER SECTION OF #OMPANIES !CT AND IF IT IS NOT RATIlED BY THE "OARD OR 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 SHALL BE VOIDABLE AT THE OPTION OF THE "OARD or the shareholders as applicable SECTION OF #OMPANIES !CT 7ORDS IN ITALICS INSERTED W E F )F 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 SECTION OF #OMPANIES !CT Company can recover losses from director or other employee #OMPANY CAN PROCEED AGAINST A DIRECTOR OR ANY OTHER EMPLOYEE WHO HAD ENTERED INTO SUCH CONTRACT OR ARRANGEMENT IN CONTRAVENTION OF THE PROVISIONS OF SECTION FOR RECOVERY OF ANY LOSS SUSTAINED BY THE COMPANY AS A RESULT OF SUCH CONTRACT OR ARRANGEMENT SECTION OF #OMPANIES !CT
Company Law Ready Reckoner AUTHOR
:
TAXMANN’S EDITORIAL BOARD
PUBLISHER
:
TAXMANN
DATE OF PUBLICATION
:
JANUARY 2024
EDITION
:
14TH EDITION
ISBN NO
:
9789357787086
NO. OF PAGES
:
808
BINDING TYPE
:
PAPERBACK
Rs. 2295 | USD 61
Description This book provides complete and accurate information about all provisions of the Companies Act 2013. It features a topic-wise commentary on all provisions of the Companies Act 2013. It also includes guidance on all practical issues companies and corporate professionals face. The Present Publication is the 14th Edition & updated till 1st January 2024. This book is authored by Taxmann’s Editorial Board with the following noteworthy features: u
[Topic-wise Commentary] on 40+ topics of the Companies Act, 2013
u
[Analysis of all Provisions of Companies Act] with relevant
Rules, Judicial Pronouncements, Circulars and Notifications
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