The Companies Act, 2013
## THE COMPANIES ACT, 2013

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## ARRANGEMENT OF SECTIONS

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CHAPTER I

PRELIMINARY

SECTIONS

1. Short title, extent, commencement and application.
2. Definitions.

CHAPTER II

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

3. Formation of company.
3A. Members severally liable in certain cases.
4. Memorandum.
5. Articles.
6. Act to override memorandum, articles, etc.
7. Incorporation of company.
8. Formation of companies with charitable objects, etc.
9. Effect of registration.
10. Effect of memorandum and articles.
10A. Commencement of business, etc.
11. [Omitted.].
12. Registered office of company.
13. Alteration of memorandum.
14. Alteration of articles.
15. Alteration of memorandum or articles to be noted in every copy.
16. Rectification of name of company.
17. Copies of memorandum, articles, etc., to be given to members.
18. Conversion of companies already registered.
19. Subsidiary company not to hold shares in its holding company.
20. Service of documents.
21. Authentication of documents, proceedings and contracts.
22. Execution of bills of exchange, etc.

CHAPTER III

PROSPECTUS AND ALLOTMENT OF SECURITIES

PART I.—Public offer

23. Public offer and private placement.
24. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc.
25. Document containing offer of securities for sale to be deemed prospectus.
26. Matters to be stated in prospectus.
27. Variation in terms of contract or objects in prospectus.
28. Offer of sale of shares by certain members of company.
29. Public offer of securities to be in dematerialised form.
30. Advertisement of prospectus.
31. Shelf prospectus.
32. Red herring prospectus.
33. Issue of application forms for securities.
34. Criminal liability for mis-statements in prospectus.
35. Civil liability for mis-statements in prospectus.

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SECTIONS

36. Punishment for fraudulently inducing persons to invest money.
37. Action by affected persons.
38. Punishment for personation for acquisition, etc., of securities.
39. Allotment of securities by company.
40. Securities to be dealt with in stock exchanges.
41. Global depository receipt.

PART II.—Private placement

42. Issue of shares on private placement basis.

CHAPTER IV

SHARE CAPITAL AND DEBENTURES

43. Kinds of share capital.
44. Nature of shares or debentures.
45. Numbering of shares.
46. Certificate of shares.
47. Voting rights.
48. Variation of shareholders’ rights.
49. Calls on shares of same class to be made on uniform basis.
50. Company to accept unpaid share capital, although not called up.
51. Payment of dividend in proportion to amount paid-up.
52. Application of premiums received on issue of shares.
53. Prohibition on issue of shares at discount.
54. Issues of sweat equity shares.
55. Issue and redemption of preference shares.
56. Transfer and transmission of securities.
57. Punishment for personation of shareholder.
58. Refusal of registration and appeal against refusal.
59. Rectification of register of members.
60. Publication of authorised, subscribed and paid-up capital.
61. Power of limited company to alter its share capital.
62. Further issue of share capital.
63. Issue of bonus shares.
64. Notice to be given to Registrar for alteration of share capital.
65. Unlimited company to provide for reserve share capital on conversion into limited company.
66. Reduction of share capital.
67. Restrictions on purchase by company or giving of loans by it for purchase of its shares.
68. Power of company to purchase its own securities.
69. Transfer of certain sums to capital redemption reserve account.
70. Prohibition for buy-back in certain circumstances.
71. Debentures.
72. Power to nominate.

CHAPTERV

ACCEPTANCE OF DEPOSITS BY COMPANIES

73. Prohibition on acceptance of deposits from public.
74. Repayment of deposits, etc., accepted before commencement of this Act.
75. Damages for fraud.

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SECTIONS

76. Acceptance of deposits from public by certain companies.
76A. Punishment for contravention of section 73 or section 76.

CHAPTER VI

REGISTRATION OF CHARGES

77. Duty to register charges, etc.
78. Application for registration of charge.
79. Section 77 to apply in certain matters.
80. Date of notice of charge.
81. Register of charges to be kept by Registrar.
82. Company to report satisfaction of charge.
83. Power of Registrar to make entries of satisfaction and release in absence of intimation from

company.

84. Intimation of appointment of receiver or manager.
85. Company’s register of charges.
86. Punishment for contravention.
87. Rectification by Central Government in Register of charges.

CHAPTER VII

MANAGEMENT AND ADMINISTRATION

88. Register of members, etc.
89. Declaration in respect of beneficial interest in any share.
90. Register of significant beneficial owners in a Company.
91. Power to close register of members or debenture holders or other security holders.
92. Annual return.
93. [Omitted.].
94. Place of keeping and inspection of registers, returns, etc.
95. Registers, etc., to be evidence.
96. Annual general meeting.
97. Power of Tribunal to call annual general meeting.
98. Power of Tribunal to call meetings of members, etc.
99. Punishment for default in complying with provisions of sections 96 to 98.
100. Calling of extraordinary general meeting.
101. Notice of meeting.
102. Statement to be annexed to notice.
103. Quorum for meetings.
104. Chairman of meetings.
105. Proxies.
106. Restriction on voting rights.
107. Voting by show of hands.
108. Voting through electronic means.
109. Demand for poll.
110. Postal ballot.
111. Circulation of members’ resolution.
112. Representation of President and Governors in meetings.
113. Representation of corporations at meeting of companies and of creditors.
114. Ordinary and special resolutions.
115. Resolutions requiring special notice.
116. Resolutions passed at adjourned meeting.
117. Resolutions and agreements to be filed.

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## SECTIONS

118. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and

resolutions passed by postal ballot.

119. Inspection of minute-books of general meeting.
120. Maintenance and inspection of documents in electronic form.
121. Report on annual general meeting.
122. Applicability of this Chapter to One Person Company.

CHAPTER VIII

DECLARATION AND PAYMENT OF DIVIDEND

123. Declaration of dividend.
124. Unpaid Dividend Account.
125. Investor Education and Protection Fund.
126. Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of

transfer of shares.

127. Punishment for failure to distribute dividends.

CHAPTER IX

ACCOUNTS OF COMPANIES

128. Books of account, etc., to be kept by company.
129. Financial statement.
129A. Periodical financial results.
130. Re-opening of accounts on court’s or Tribunal’s orders.
131. Voluntary revision of financial statements or Board’s report.
132. Constitution of National Financial Reporting Authority.
133. Central Government to prescribe accounting standards
134. Financial statement, Board’s report, etc.
135. Corporate Social Responsibility.
136. Right of member to copies of audited financial statement.
137. Copy of financial statement to be filed with Registrar.
138. Internal Audit.

CHAPTER X

AUDIT AND AUDITORS

139. Appointment of auditors.
140. Removal, resignation of auditor and giving of special notice.
141. Eligibility, qualifications and disqualifications of auditors.
142. Remuneration of auditors.
143. Powers and duties of auditors and auditing standards.
144. Auditor not to render certain services.
145. Auditor to sign audit reports, etc.
146. Auditors to attend general meeting.
147. Punishment for contravention.
148. Central Government to specify audit of items of cost in respect of certain companies.

CHAPTER XI

APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

149. Company to have Board of Directors.

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SECTIONS

150. Manner of selection of independent directors and maintenance of data bank of independent

directors.

151. Appointment of director elected by small shareholders.
152. Appointment of directors.
153. Application for allotment of Director Identification Number.
154. Allotment of Director Identification Number.
155. Prohibition to obtain more than one Director Identification Number.
156. Director to intimate Director Identification Number.
157. Company to inform Director Identification Number to Registrar.
158. Obligation to indicate Director Identification Number.
159. Penalty for default of certain provisions.
160. Right of persons other than retiring directors to stand for directorship.
161. Appointment of additional director, alternate director and nominee director.
162. Appointment of directors to be voted individually.
163. Option to adopt principle of proportional representation for appointment of directors.
164. Disqualifications for appointment of director.
165. Number of directorships.
166. Duties of directors.
167. Vacation of office of director.
168. Resignation of director.
169. Removal of directors.
170. Register of directors and key managerial personnel and their shareholding.
171. Members’ right to inspect.
172. Penalty.

CHAPTER XII

MEETINGS OF BOARD AND ITS POWERS

173. Meetings of Board.
174. Quorum for meetings of Board.
175. Passing of resolution by circulation.
176. Defects in appointment of directors not to invalidate actions taken.
177. Audit committee.
178. Nomination and Remuneration Committee and Stakeholders Relationship Committee.
179. Powers of Board.
180. Restrictions on powers of Board.
181. Company to contribute to bona fide and charitable funds, etc.
182. Prohibitions and restrictions regarding political contributions.
183. Power of Board and other persons to make contributions to national defence fund, etc.
184. Disclosure of interest by director.
185. Loan to directors, etc.
186. Loan and investment by company.
187. Investments of company to be held in its own name.
188. Related party transactions.
189. Register of contracts or arrangements in which directors are interested.
190. Contract of employment with managing or whole-time directors.
191. Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares.
192. Restriction on non-cash transactions involving directors.
193. Contract by One Person Company.
194. [Omitted.].
195. [Omitted.].

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CHAPTER XIII

APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

SECTIONS

196. Appointment of managing director, whole-time director or manager.
197. Overall maximum managerial remuneration and managerial remuneration in case of absence or

inadequacy of profits.

198. Calculation of profits.
199. Recovery of remuneration in certain cases.
200. Central Government or company to fix limit with regard to remuneration.
201. Forms of, and procedure in relation to, certain applications.
202. Compensation for loss of office of managing or whole-time director or manager.
203. Appointment of key managerial personnel.
204. Secretarial audit for bigger companies.
205. Functions of company secretary.

CHAPTER XIV

INSPECTION, INQUIRY AND INVESTIGATION

206. Power to call for information, inspect books and conduct inquiries.
207. Conduct of inspection and inquiry.
208. Report on inspection made.
209. Search and seizure.
210. Investigation into affairs of company.
211. Establishment of Serious Fraud Investigation Office.
212. Investigation into affairs of company by Serious Fraud Investigation Office.
213. Investigation into company’s affairs in other cases.
214. Security for payment of costs and expenses of investigation.
215. Firm, body corporate or association not to be appointed as inspector.
216. Investigation of ownership of company.
217. Procedure, powers, etc., of inspectors.
218. Protection of employees during investigation.
219. Power of inspector to conduct investigation into affairs of related companies, etc.
220. Seizure of documents by inspector.
221. Freezing of assets of company on inquiry and investigation.
222. Imposition of restrictions upon securities.
223. Inspector’s report.
224. Actions to be taken in pursuance of inspector’s report.
225. Expenses of investigation.
226. Voluntary winding up of company, etc., not to stop investigation proceedings.
227. Legal advisers and bankers not to disclose certain information.
228. Investigation, etc., of foreign companies.
229. Penalty for furnishing false statement, mutilation, destruction of documents.

CHAPTER XV

COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS

230. Power to compromise or make arrangements with creditors and members.
231. Power to Tribunal to enforce compromise or arrangement.
232. Merger and amalgamation of companies.
233. Merger or amalgamation of certain companies.
234. Merger or amalgamation of company with foreign company.

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SECTIONS

235. Power to acquire shares of shareholders dissenting from scheme or contract approved by

majority.

236. Purchase of minority shareholding.
237. Power of Central Government to provide for amalgamation of companies in public interest.
238. Registration of offer of schemes involving transfer of shares.
239. Preservation of books and papers of amalgamated companies.
240. Liability of officers in respect of offences committed prior to merger, amalgamation, etc.

CHAPTER XVI

PREVENTION OF OPPRESSION AND MISMANAGEMENT

241. Application to Tribunal for relief in cases of oppression, etc.
242. Powers of Tribunal.
243. Consequence of termination or modification of certain agreements.
244. Right to apply under section 241.
245. Class action.
246. Application of certain provisions to proceedings under section 241 or section 245.

CHAPTER XVII

REGISTERED VALUERS

247. Valuation by registered valuers.

CHAPTER XVIII

REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES

248. Power of Registrar to remove name of company from register of companies.
249. Restrictions on making application under section 248 in certain situations.
250. Effect of company notified as dissolved.
251. Fraudulent application for removal of name.
252. Appeal to Tribunal.

CHAPTER XIX

REVIVAL AND REHABILITATION OF SICK COMPANIES

253. [Omitted.].
254. [Omitted.].
255. [Omitted.].
256. [Omitted.].
257. [Omitted.].
258. [Omitted.].
259. [Omitted.].
260. [Omitted.].
261. [Omitted.].
262. [Omitted.].
263. [Omitted.].
264. [Omitted.].
265. [Omitted.].
266. [Omitted.].
267. [Omitted.].
268. [Omitted.].
269. [Omitted.].

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CHAPTER XX

WINDING UP

SECTIONS

270. Winding up by Tribunal.

PART I.—Winding up by the Tribunal

271. Circumstances in which company may be wound up by Tribunal.
272. Petition for winding up.
273. Powers of Tribunal.
274. Directions for filing statement of affairs.
275. Company Liquidators and their appointments.
276. Removal and replacement of liquidator.
277. Intimation to Company Liquidator, provisional liquidator and Registrar.
278. Effect of winding up order.
279. Stay of suits, etc., on winding up order.
280. Jurisdiction of Tribunal.
281. Submission of report by Company Liquidator.
282. Directions of Tribunal on report of Company Liquidator.
283. Custody of company’s properties.
284. Promoters, directors, etc., to cooperate with Company Liquidator.
285. Settlement of list of contributories and application of assets.
286. Obligations of directors and managers.
287. Advisory Committee.
288. Submission of periodical reports to Tribunal.
289. [Omitted.]
290. Powers and duties of Company Liquidator.
291. Provision for professional assistance to Company Liquidator.
292. Exercise and control of Company Liquidator’s powers.
293. Books to be kept by Company Liquidator.
294. Audit of Company Liquidator’s accounts.
295. Payment of debts by contributory and extent of set-off.
296. Power of Tribunal to make calls.
297. Adjustment of rights of contributories.
298. Power to order costs.
299. Power to summon persons suspected of having property of company, etc.
300. Power to order examination of promoters, directors, etc.
301. Arrest of person trying to leave India or abscond.
302. Dissolution of company by Tribunal.
303. Appeals from orders made before commencement of Act.

[Omitted.].

304. [Omitted.].
305. [Omitted.].
306. [Omitted.].
307. [Omitted.].
308. [Omitted.].
309. [Omitted.].
310. [Omitted.].
311. [Omitted.].
312. [Omitted.].
313. [Omitted.].

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SECTIONS

314. [Omitted.].
315. [Omitted.].
316. [Omitted.].
317. [Omitted.].
318. [Omitted.].
319. [Omitted.].
320. [Omitted.].
321. [Omitted.].
322. [Omitted.].
323. [Omitted.].

PART III.—Provisions applicable to every mode of winding up

324. Debts of all descriptions to be admitted to proof.
325. [Omitted.]
326. Overriding preferential payments.
327. Preferential payments.
328. Fraudulent preference.
329. Transfers not in good faith to be void.
330. Certain transfers to be void.
331. Liabilities and rights of certain persons fraudulently preferred.
332. Effect of floating charge.
333. Disclaimer of onerous property.
334. Transfers, etc., after commencement of winding up to be void.
335. Certain attachments, executions, etc., in winding up by Tribunal to be void.
336. Offences by officers of companies in liquidation.
337. Penalty for frauds by officers.
338. Liability where proper accounts not kept.
339. Liability for fraudulent conduct of business.
340. Power of Tribunal to assess damages against delinquent directors, etc.
341. Liability under sections 339 and 340 to extend to partners or directors in firms or companies.
342. Prosecution of delinquent officers and members of company.
343. Company Liquidator to exercise certain powers subject to sanction.
344. Statement that company is in liquidation.
345. Books and papers of company to be evidence.
346. Inspection of books and papers by creditors and contributories.
347. Disposal of books and papers of company.
348. Information as to pending liquidations.
349. Official Liquidator to make payments into public account of India.
350. Company Liquidator to deposit monies into scheduled bank.
351. Liquidator not to deposit monies into private banking account.
352. Company Liquidation Dividend and Undistributed Assets Account.
353. Liquidator to make returns, etc.
354. Meetings to ascertain wishes of creditors or contributories.
355. Court, tribunal or person, etc., before whom affidavit may be sworn.
356. Power of Tribunal to declare dissolution of company void.
357. Commencement of winding up by Tribunal.
358. Exclusion of certain time in computing period of limitation.

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PART IV.—Official Liquidators

SECTIONS

359. Appointment of Official Liquidator.
360. Powers and functions of Official Liquidator.
361. Summary procedure for liquidation.
362. Sale of assets and recovery of debts due to company.
363. Settlement of claims of creditors by Official Liquidator.
364. Appeal by creditor.
365. Order of dissolution of company.

CHAPTER XXI

PARTI.—Companies authorised to Register under this Act

366. Companies capable of being registered.
367. Certificate of registration of existing companies.
368. Vesting of property on registration.
369. Saving of existing liabilities.
370. Continuation of pending legal proceedings.
371. Effect of registration under this Part.
372. Power of Court to stay or restrain proceedings.
373. Suits stayed on winding up order.
374. Obligations of companies registering under this Part.

PART II.—Winding up of unregistered companies

375. Winding up of unregistered companies.
376. Power to wind up foreign companies although dissolved.
377. Provisions of Chapter cumulative.
378. Saving and construction of enactments conferring power to wind up partnership firm, association

or company, etc., in certain cases.

CHAPTER XXIA

PRODUCER COMPANIES

PART I

PRELIMINARY

378A. Definitions.

PART II

INCORPORATION OF PRODUCER COMPANIES AND OTHER MATTERS

378B. Objects of producer company.

378C. Formation of Producer Company and its registration.

378D. Membership and voting rights of Members of Producer Company.

378E. Benefits to Members.

378F. Memorandum of Producer Company.

378G.Articles of association.

378H. Amendment of memorandum.

378-I. Amendment of articles.

378J. Option to inter-State co-operative societies to become Producer Companies.

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SECTIONS

378K. Effect of incorporation of Producer Company.

378L.Vesting of undertaking in Producer Company.

378M. Concession, etc., to be deemed to have been granted to Producer Company.

378N. Provisions in respect of officers and other employees of inter-State co-operative society.

PART III

MANAGEMENT OF PRODUCER COMPANY

378-O. Number of directors.

378P. Appointment of directors.

378Q. Vacation of office by directors.

378R. Powers and functions of Board.

378S. Matters to be transacted at general meeting.

378T. Liability of directors.

378U. Committee of directors.

378V. Meetings of Board and quorum.

378W. Chief Executive and his functions.

378X. Secretary of Producer Company.

378Y. Quorum.

378Z. Voting rights.

PART IV

GENERAL MEETINGS

378ZA. Annual general meetings.

PART V

SHARE CAPITAL AND MEMBERS RIGHTS

378ZB. Share capital.

378ZC. Special user rights.

378ZD. Transferability of shares and attendant rights.

PART VI

FINANCE, ACCOUNTS AND AUDIT

378ZE. Books of account.

378ZF. Internal audit.

378ZG. Duties of auditor under this Chapter.

378ZH.Donation or subscription by Producer Company.

378Z-I. General and other reserves.

378ZJ. Issue of bonus shares.

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SECTIONS

PART VII

LOANS TO MEMBERS AND INVESTMENTS

378ZK. Loan, etc., to Members.

378ZL. Investment in other companies, formation of subsidiaries, etc.

PART VIII

PENALTIES

378ZM. Penalty for contravention.

PART IX

AMALGAMATION, MERGER OR DIVISION

378ZN. Amalgamation, merger or division, etc., to form new Producer Companies.

PART X

RESOLUTION OF DISPUTES

378Z-O. Disputes.

PART XI

MISCELLANEOUS PROVISIONS

378ZP. Strike off name of Producer Company.

378ZQ. Provisions of this Chapter to override other laws.

378ZR. Application of provisions relating to private companies.

PART XII

RE-CONVERSION OF PRODUCER COMPANY TO INTER-STATE CO-OPERATIVE SOCIETY

378ZS.Re-conversion of Producer Company to inter-State co-operative society.

378ZT. Power to modify Act in its application to Producer Companies.
378ZU. Power to make rules.

CHAPTER XXII

COMPANIES INCORPORATED OUTSIDE INDIA

379. Application of Act to foreign companies.
380. Documents, etc., to be delivered to Registrar by foreign companies.
381. Accounts of foreign company.
382. Display of name, etc., of foreign company.
383. Service on foreign company.
384. Debentures, annual return, registration of charges, books of account and their inspection.
385. Fee for registration of documents.
386. Interpretation.
387. Dating of prospectus and particulars to be contained therein.
388. Provisions as to expert’s consent and allotment.
389. Registration of prospectus.
390. Offer of Indian Depository Receipts.
391. Application of sections 34 to 36 and Chapter XX.
392. Punishment for contravention.
393. Company’s failure to comply with provisions of this Chapter not to affect validity of contracts,

etc.

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CHAPTER XXIII

GOVERNMENT COMPANIES

SECTIONS

394. Annual reports on Government companies.
395. Annual reports where one or more State Governments are members of companies.

CHAPTER XXIV

REGISTRATION OFFICES AND FEES

396. Registration offices.
397. Admissibility of certain documents as evidence.
398. Provisions relating to filing of applications, documents, inspection, etc., in electronic form.
399. Inspection, production and evidence of documents kept by Registrar.
400. Electronic form to be exclusive, alternative or in addition to physical form.
401. Provision of value added services through electronic form.
402. Application of provisions of Information Technology Act, 2000.
403. Fee for filing, etc.
404. Fees, etc., to be credited into public account.

CHAPTER XXV

COMPANIES TO FURNISH INFORMATION OR STATISTICS

405. Power of Central Government to direct companies to furnish information or statistics.

CHAPTER XXVI

_NIDHIS_

406. Provision relating to Nidhis and its application, etc.

CHAPTER XXVII

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL

407. Definitions.
408. Constitution of National Company Law Tribunal.
409. Qualification of President and Members of Tribunal.
410. Constitution of Appellate Tribunal.
411. Qualifications of Chairperson and members of Appellate Tribunal.
412. Selection of Members of Tribunal and Appellate Tribunal.
413. Term of office of President, Chairperson and other Members.
414. Salary, allowances and other terms and conditions of service of Members.
415. Acting President and Chairperson of Tribunal or Appellate Tribunal.
416. Resignation of Members.
417. Removal of Members.

417A. Qualifications, terms and conditions of service of Chairperson and Member.

418. Staff of Tribunal and Appellate Tribunal.
419. Benches of Tribunal.
420. Orders of Tribunal.
421. Appeal from orders of Tribunal.
422. Expeditious disposal by Tribunal and Appellate Tribunal.
423. Appeal to Supreme Court.
424. Procedure before Tribunal and Appellate Tribunal.
425. Power to punish for contempt.

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SECTIONS

426. Delegation of powers.
427. President, Members, officers, etc., to be public servants.
428. Protection of action taken in good faith.
429. Power to seek assistance of Chief Metropolitan Magistrate, etc.
430. Civil court not to have jurisdiction.
431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings.
432. Right to legal representation.
433. Limitation.
434. Transfer of certain pending proceedings.

CHAPTER XXVIII

SPECIAL COURTS

435. Establishment of Special Courts.
436. Offences triable by Special Courts.
437. Appeal and revision.
438. Application of Code to proceedings before Special Court.
439. Offences to be non-cognizable.
440. Transitional provisions.
441. Compounding of certain offences.
442. Mediation and Conciliation Panel.
443. Power of Central Government to appoint company prosecutors.
444. Appeal against acquittal.

445. Compensation for accusation without reasonable cause.

446. Application of fines.

446A. Factors for determining level of punishment.
446B. Lesser penalties for certain companies.

CHAPTER XXIX

MISCELLANEOUS

447. Punishment for fraud.
448. Punishment for false statement.
449. Punishment for false evidence.
450. Punishment where no specific penalty or punishment is provided.
451. Punishment in case of repeated default.
452. Punishment for wrongful withholding of property.
453. Punishment for improper use of “Limited” or “Private Limited”.
454. Adjudication of penalties.
454A. Penalty for repeated default.
455. Dormant company.
456. Protection of action taken in good faith.
457. Non-disclosure of information in certain cases.
458. Delegation by Central Government of its powers and functions.
459. Powers of Central Government of Tribunal to accord approval, etc., subject to conditions and to

prescribe fees on applications.

460. Condonation of delay in certain cases.
461. Annual report by Central Government.
462. Power to exempt class or classes of companies from provisions of this Act.
463. Power of court to grant relief in certain cases.
464. Prohibition of association or partnership of persons exceeding certain number.
465. Repeal of certain enactments and savings.
466. Dissolution of Company Law Board and consequential provisions.
467. Power of Central Government to amend Schedules.
468. Power of Central Government to make rules relating to winding up.

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SECTIONS

469. Power of Central Government to make rules.
470. Power to remove difficulties.

SCHEDULE I.
SCHEDULE II.
SCHEDULE III.
SCHEDULE IV.
SCHEDULE V.
SCHEDULE VI.
SCHEDULE VII.

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THE COMPANIES ACT, 2013

ACT NO. 18 OF 2013

An Act to consolidate and amend the law relating to companies.

BE it enacted by Parliament in the Sixty-fourth Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY



[29th August, 2013.]


**1. Short title, extent, commencement and application.—(1) This Act may be called the Companies Act, 2013.**

(2) It extends to the whole of India.

(3) This section shall come into force at once and the remaining provisions of this Act shall come into force on such date[1] as

the Central Government may, by notification in the Official Gazette, appoint and *different dates may

***1. 12th September, 2013 – S. 2(1),(3), (4), (5), (6), (8), (9), (10), (11), (12), (14), (15), (16), (17), (18), (19), (20), (21), (22), (24), (25), (26), (27), (28), (29) [except**
sub-clause (iv)], (30), (32), (33), (34), (35), (36), (37), (38), (39), (40), (43), (44), (45), (46), (49), (50), (51), (52), (53), (54), (55), (56), (57), (58), (59), (60), (61), (63),
(64), (65), (66), (67) [except sub-clause (ix)], (84), (86),(87) [except the proviso and Explanation (d)], (88), (89), (90), (91), (92), (93), (94), (95); s. 19, 21, 22, 23

[except clause (b) of sub-section (1) and sub-section (2)], 24, 25 [except sub-section (3)], 29, 30, 31, 32, 33 [except sub-section (3)], 34, 35 [except clause (e) of subsection (1)], 36, 37, 38 39 [except sub-section (4)], 40 [except sub-section (6)], 44, 45, 49, 50, 51, 57, 58, 59, 60, 65, 69, 70 [except sub-section (2)], 86, 91, 100 [except
sub-section (6)], 102, 103, 104, 105 [except the third and fourth provisos of sub-section (1) and sub-section (7)], 106, 107, 111, 112, 113 [except clause (b) of subsection (1)], 114, 116, 127, 133, 161 [except sub-section (2)], 162, 163, 176, 180, 181, 182, 183, 185, 192, 194,195, 202, 379, 382, 383, 386 [except clause (a)], 394,
405, 407, 408, 409, 410, 411, 412, 413, 414, 439, 443, 444, 445, 446, 447, 448, 449, 450, 451, 452, 453, 456, 457, 458, 459, 460, 461, 462, 463, 467, 468, 469, 470,
_vide notification No. S.O. 2754(E), dated 12th September, 2013, see Gazette of India, Extraordinary, Part II, sec. 3(ii)._
**1st April 2014 – S. 2(2), (7), (13), (31), (41), (42), (47), (48), (62), (83), (85) and Explanation (d) of clause (87); ss. 3, 4, 5, 6; s. 7 [except sub-section (7)]; s. 8 [except**
sub-section (9)]; ss. 9, 10, 11, 12 and 13; s. 14 [except second proviso to sub-section (1) and sub-section (2)]; ss. 15, 16, 17 and 18; section 20; clause (b) of sub-section
(1) and sub-section (2) of section 23; sub-section (3) of section 25; ss. 26, 27 and 28; sub-section (3) of s. 33; clause (e) of sub-section (1) of s. 35; sub-section (4) of s.
39; sub-section (6) of s. 40; ss. 41, 42 and 43; ss. 46 and 47; ss. 52, 53 and 54; s. 55 [except sub-section (3)]; s. 56; s. 61 [except proviso to clause (b) of sub-section (1)];
s. 62 [except sub-sections (4) to (6)]; ss. 63 and 64; ss. 67 and 68; sub-section (2) of section 70; s. 71 [except sub-sections (9) to (11)]; ss. 72 and 73; sub-section (1) of
s. 74; ss. 76, 77, 78, 79, 80, 81, 82, 83, 84 and 85; ss. 87, 88, 89 and 90; ss. 92, 93, 94, 95 and 96; sub-section (6) of s.100; s. 101; third and fourth provisos to subsection (1) and sub-section (7) of s. 105; ss. 108, 109 and 110; clause (b) of sub-section (1) of s. 113; s. 115; ss. 117and 118; s. 119 [except sub-section (4)]; ss. 120,
121, 122 and 123; s. 126; ss. 128 and 129; s.134; ss. 136, 137, 138 and 139; s. 140 [except second proviso to sub-section (4) and sub-section (5)]; ss. 141, 142, 143, 144,
145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159 and 160; sub-section (2) of s. 161; ss. 164, 165, 166, 167 and 168; s. 169 [except sub-section
(4)]; ss. 170, 171, 172, 173, 174 and 175; ss. 177, 178 and 179; s. 184; ss. 186, 187, 188, 189, 190 and 191; s. 193; ss. 196, 197, 198, 199, 200 and 201; ss. 203, 204,
205, 206, 207, 208, 209, 210 and 211; s. 212 [except references of sub-section (10) of s. 66, sub-section (5) of s. 140], s. 213, sub-section (1) of s. 251 and sub-section
(3) of s. 339 made in sub-section (6) and also sub-sections (8) to (10)]; ss. 214, 215; s. 216 [except sub-section (2)]; s. 217; ss. 219 and 220; s. 223; s. 224 [except subsections (2) and (5)]; s. 225; ss. 228 and 229; ss. 366, 367, 368and 369; s. 370 (except the proviso); s. 371; s. 374; ss. 380and 381; ss. 384and 385; clause (a) of s. 386;
ss. 387, 388, 389and 390; sub-section (1) of s. 391; ss. 392 and 393; ss. 395, 396, 397and 398; s. 399 [except reference of word Tribunal in sub-section (2)]; ss. 400,
401, 402, 403and 404; s. 406; s. 442; ss. 454and 455; s. 464; Schs. I, II, III, IV, V and VI, vide notification No. S.O. 902(E), dated 26th March, 2014, see Gazette of
India, Extraordinary, Part II, sec.3(ii).
**1st April, 2014 – S. 135 and Sch. VII, vide notification No. S.O. 582(E), dated 27th February, 2014, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**
**6th June, 2014 –Sub-sections (2) and (3) of s. 74, vide notification No. S.O. 1459(E), dated 6th June, 2014, see Gazette of India, Extraordinary, Part II, sec. 3(ii).**
**13th January, 2016–S. 125(5), (6) [except with respect to the manner of administration of the Investor Education and Protection Fund] and (7),** _vide notification No._
S.O. 125(E), see Gazette of India, Extraordinary, Part II, sec. 3(ii).
**18th May, 2016-S. 2(29) (iv), ss. 435 to 438 and s. 440, vide notification No. S.O. 1795(E), dated 18[th] May, 2016, see Gazette of India, Extraordinary, Part II, sec. 3(ii).**
**1st June, 2016-S. 7(7) [except clause (c) and (d)], s. 14(2), second proviso to sub-section (1) of s. 14, s. 55 (3), proviso to clause (b) of sub-section (1) of s. 61; s. 62 (4)**
to (6), s. 71 (9), (10) and (11), s. 75; s. 97; s. 98 and s. 99; S. 119 (4), s. 130 and 131; second proviso to sub-section (4) and (5) of s. 140, s. 169(4), s. 213, s. 216 (2), s.
218, s. 221, s. 222, s. 224 (5), ss. 241, 242 [except clause (b) of sub-section (1), cls. (c) and (g) of sub-section (2)], 243, 244 and 245; Reference of word “Tribunal” s.
399 (2),ss. 415 to 433, s. 434 (1) (a) and (b) & (2), s. 441and 466, vide notification No. S.O. 1934(E), dated 1[st] June, 2016, see Gazette of India, Extraordinary Part II,
sec. 3(ii).
**7th September, 2016-S. 124, s. 125 (1) to (4), (6) [with respect to the manner of administration of the Investor Education and Protection Fund] and (8) to (11)** _vide_
Notification No. S.O. 2866(E), dated 5[th] September, 2016, see Gazette of India, Extraordinary, Part II, sec. 3(ii).
**9th September, 2016- S. 227, 242 (1) (b), (2) (c) & (g), s. 246, Ss. 337 to 341 (to the extent of their applicability for s. 246), vide notification No. S.O. 2912(E), dated**
9[th] September, 2016, see Gazette of India, Extraordinary, Part II, sec. 3(ii).
**15th December, 2016-S. 2 (23), s.7 (7) (c) and (d), s. 8 (9), s. 48, s. 66, s. 224 (2), s. 226, s. 230 [except sub-section (11) and (12)], and ss. 231 to 233, ss. 235 to 240,**
ss. 270 to 288, ss. 290 to 303, ss. 324, ss. 326 to 365, proviso to s. 370, ss. 372 to 373, ss. 375 to 378, s. 391 (2), s. 434 (1) cl. (c) vide notification No. S.O. 3677(E),
dated 7[th] December, 2016, see Gazette of India, Extraordinary Part II, sec. 3 (ii).
**26th December, 2016-Ss. 248 to 252, vide notification No. S.Ó. 4167(E), dated 26[th] December, 2016, see Gazette of India, Extraordinary Part II, sec. 3 (ii).**
**13th April, 2017- S. 234, vide notification No. S.O. 1182(E),** dated 13[th] April, 2017, see Gazette of India, Extraordinary Part II, sec. 3 (ii).
**24th August, 2017-S. 212 (8), (9) and (10), vide notification No. S.O. 2751(E), dated 24[th] August, 2017, see Gazette of India, Extraordinary Part II, sec. 3 (ii).**
**20th September, 2017-Proviso to clause (87) of s. 2, vide notification No. S.O. 3086(E), dated 20[th] September, 2017, see Gazette of India, Extraordinary Part II, sec. 3 (ii).**
**18[th] October, 2017-S. 247, vide notification No. S.O. 3393(E), dated 18[th] October, 2017, see Gazette of India, Extraordinary Part II, sec. 3(ii).**
**21st March, 2018- S. 132 (3) and (11), vide notification No. S.O. 1316(E), dated 21[st] March, 2018, see Gazette of India, Extraordinary Part II, sec. 3(ii).**
**1st October, 2018- S.132** (1) and (12), vide notification No. S.O. 5098(E), dated 1[st] October, 2018, see Gazette of India, Extraordinary Part II, sec. 3(ii).
**24th October, 2018- S. 132 (2), (4), (5), (10), (13), (14) and (15) vide notification No. S.O. 5385(E), dated 24[th] October, 2018, see Gazette of India, Extraordinary Part**
II, sec. 3(ii).
**30th January, 2019- S.465 in so far as they relate to the repeal of the Companies Act, 1956 (1 of 1956) [that in except in so far as they relate to the repeal of the Registration of Companies (Sikkim)**
Act, 1961 (Sikkim Act 8 of 1961)] vide notification No. S.O. 560(E), dated 30th January 2019, see Gazette of India, Extraordinary Part II, sec. 3(ii).
**1st July, 2019-S. 81, vide notification No. S.O. 2269(E), dated 15th August, 2019, see Gazette of India, Extraordinary Part II, sec. 3(ii).**
**3rd February, 2020-S. 230 (11) and (12), vide notification No. S.O. 525(E), dated 3rd February, 2020, see Gazette of India, Extraordinary, Part II, sec. 3(ii).**
**21[st] December, 2020-S. 1, 3,6 to 10 (both inclusive), s. 12 to 17 (both inclusive), clauses (a) and (b) of s. 18, s. 19 to 21 (both inclusive), clause (i) of s. 22, 24,26, 28 to 31 (both inclusive), s. 33**
to 39 (both inclusive), s. 41 to 44 (both inclusive), s. 46 to 51 (both inclusive), s. 54, 57, 61 and 63, vide notification No. S.O. 4646(E), dated 21[st] December, 2020, see Gazette of India, Extraordinary,
Part II, sec. 3 (ii).
*. Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and Kashmir and the Union territory of  Ladakh.
**22[nd] January, 2021- Sections. 2, 11, clause (c) of sec. 18, Clause (ii) Sec. 22, Sections. 25, 27, 53, 55, 58, 60, 59, 62, 64, 65, vide notification No. S.O. 325(E), dated 21[st] January, 2021, see Gazette**
of India, Extraordinary, Part II, sec. 3 (ii).
**11[th] February, 2021- Sections. 52 & 66, vide notification No. S.O. 644(E), dated 11[th] February, 2021, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**
**18[th] March, 2021-Sections. 32 & 40, vide notification No. S.O. 1255(E), dated 18[th] March, 2021, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**
**1[st] September, 2021-Section. 4, vide notification No. S.O. 2904(E), dated 22[nd] July, 2021, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**
**1[st] July, 2022-Section. 56, vide notification No. S.O. 148(E), dated 11[th] January, 2022, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**
**30[th] October, 2023-Section. 5, vide notification No. S.O. 4744(E), dated 30[th] October, 2023, see Gazette of India, Extraordinary, Part II, sec. 3 (ii).**

16


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be appointed for different provisions of this Act and any reference in any provision to the commencement
of this Act shall be construed as a reference to the coming into force of that provision.

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

(a) companies incorporated under this Act or under any previous company law;
(b) insurance companies, except in so far as the said provisions are inconsistent with the provisions

of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act,
1999 (41 of 1999);

(c) banking companies, except in so far as the said provisions are inconsistent with the provisions

of the Banking Regulation Act, 1949 (10 of 1949);

(d) companies engaged in the generation or supply of electricity, except in so far as the said

provisions are inconsistent with the provisions of the Electricity Act, 2003 (36 of 2003);

(f) such body corporate, incorporated by any Act for the time being in force, as the Central

Government may, by notification, specify in this behalf, subject to such exceptions, modifications or
adaptation, as may be specified in the notification.

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

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

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

(2) “accounting standards” means the standards of accounting or any addendum thereto for

companies or class of companies referred to in section 133;

(3) “alter” or “alteration” includes the making of additions, omissions and substitutions;
(4) “Appellate Tribunal” means the National Company Law Appellate Tribunal constituted under

section 410;

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

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

(6) “associate company”, in relation to another company, means a company in which that other

company has a significant influence, but which is not a subsidiary company of the company having such
influence and includes a joint venture company.

1[Explanation.—For the purpose of this clause,—

(a) the expression “significant influence” means control of at least twenty per cent. of total voting

power, or control of or participation in business decisions under an agreement;

(b) the expression “joint venture” means a joint arrangement whereby the parties that have joint

control of the arrangement have rights to the net assets of the arrangement;]
(7) “auditing standards” means the standards of auditing or any addendum thereto for companies or

class of companies referred to in sub-section (10) of section 143;

(8) “authorised capital” or “nominal capital” means such capital as is authorised by the

memorandum of a company to be the maximum amount of share capital of the company;

(9) “banking company” means a banking company as defined in clause (c) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949);

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

directors of the company;

(11) “body corporate” or “corporation” includes a company incorporated outside India, but does not

include—

(i) a co-operative society registered under any law relating to co-operative societies; and
(ii) any other body corporate (not being a company as defined in this Act), which the Central

Government may, by notification, specify in this behalf;

(12) “book and paper” and “book or paper” include books of account, deeds, vouchers, writings,

documents, minutes and registers maintained on paper or in electronic form;

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

1. The Explanation subs. by Act 1 of 2018, s. 2 (w.e.f. 7-5-2018).

17


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(i) all sums of money received and expended by a company and matters in relation to which the

receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and

(iv) the items of cost as may be prescribed under section 148 in the case of a company which

belongs to any class of companies specified under that section;

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

company;

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

(16) “charge” means an interest or lien created on the property or assets of a company or any of its

undertakings or both as security and includes a mortgage;

(17) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1)

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

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

it;

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

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

(21) “company limited by guarantee” means a company having the liability of its members limited

by the memorandum to such amount as the members may respectively undertake to contribute to the
assets of the company in the event of its being wound up;

(22) “company limited by shares” means a company having the liability of its members limited by

the memorandum to the amount, if any, unpaid on the shares respectively held by them;

1[(23) “Company Liquidator” means a person appointed by the Tribunal as the Company Liquidator

in accordance with the provisions of section 275 for the winding up of a company under this Act;]

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

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

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

(26) “contributory” means a person liable to contribute towards the assets of the company in the

event of its being wound up.

_Explanation.—For the purposes of this clause, it is hereby clarified that a person holding fully paid-_

up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory
under the Act whilst retaining rights of such a contributory;

(27) “control” shall include the right to appoint majority of the directors or to control the management

or policy decisions exercisable by a person or persons acting individually or in concert, directly or
indirectly, including by virtue of their shareholding or management rights or shareholders agreements
or voting agreements or in any other manner;

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause (23) (w.e.f. 15-11-2016).

18


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1[(28) “Cost Accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of

the Cost and Works Accountants Act, 1959 (23 of 1959) and who holds a valid certificate of practice under
sub-section (1) of section 6 of that Act;]

(29) “court” means—

(i) the High Court having jurisdiction in relation to the place at which the registered office of the

company concerned is situate, except to the extent to which jurisdiction has been conferred on any
district court or district courts subordinate to that High Court under sub-clause (ii);

(ii) the district court, in cases where the Central Government has, by notification, empowered any

district court to exercise all or any of the jurisdictions conferred upon the High Court, within the scope
of its jurisdiction in respect of a company whose registered office is situate in the district;

(iii) the Court of Session having jurisdiction to try any offence under this Act or under any

previous company law;

(iv) the Special Court established under section 435;

(v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to

try any offence under this Act or under any previous company law;

(30) “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a

debt, whether constituting a charge on the assets of the company or not:

2[Provided that—

(a) the instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934 (2 of 1934);

and

(b) such other instrument, as may be prescribed by the Central Government in consultation with the

Reserve Bank of India, issued by a company,

shall not be treated as debenture;]

(31) “deposit” includes any receipt of money by way of deposit or loan or in any other form by a

company, but does not include such categories of amount as may be prescribed in consultation with the
Reserve Bank of India;

(32) “depository” means a depository as defined in clause (e) of sub-section (1) of section 2 of the

Depositories Act, 1996 (22 of 1996);

(33) “derivative” means the derivative as defined in clause (ac) of section 2 of the Securities

Contracts (Regulation) Act, 1956 (42 of 1956);

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

(35) “dividend” includes any interim dividend;

(36) “document” includes summons, notice, requisition, order, declaration, form and register,

whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force
or otherwise, maintained on paper or in electronic form;

(37) “employees’ stock option” means the option given to the directors, officers or employees of a

company or of its holding company or subsidiary company or companies, if any, which gives such
directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the
company at a future date at a pre-determined price;

1. Subs. by Act 1 of 2018, s. 2, for clause (28) (w.e.f. 9-2-2018).
2. The Proviso ins. by s. 2, ibid. (w.e.f. 9-2-2018).

19


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(38) “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost

accountant and any other person who has the power or authority to issue a certificate in pursuance of
any law for the time being in force;

(39) “financial institution” includes a scheduled bank, and any other financial institution defined or

notified under the Reserve Bank of India Act, 1934 (2 of 1934);

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

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit,

an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

(iv) a statement of changes in equity, if applicable; and

(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause

(i) to sub-clause (iv):

Provided that the financial statement, with respect to One Person Company, small company and

dormant company, may not include the cash flow statement;

(41) “financial year”, in relation to any company or body corporate, means the period ending on the

31st day of March every year, and where it has been incorporated on or after the 1st day of January of a
year, the period ending on the 31st day of March of the following year, in respect whereof financial
statement of the company or body corporate is made up:

1[Provided that where a company or body corporate, which is a holding company or a subsidiary

or associate company of a company incorporated outside India and is required to follow a different
financial year for consolidation of its accounts outside India, the Central Government may, on an
application made by that company or body corporate in such form and manner as may be prescribed,
allow any period as its financial year, whether or not that period is a year:

Provided further that any application pending before the Tribunal as on the date of commencement

of the Companies (Amendment) Act, 2019, shall be disposed of by the Tribunal in accordance with the
provisions applicable to it before such commencement;]

2[Provided also that] a company or body corporate, existing on the commencement of this Act,

shall, within a period of two years from such commencement, align its financial year as per the
provisions of this clause;

(42) “foreign company” means any company or body corporate incorporated outside India which—

(a) has a place of business in India whether by itself or through an agent, physically or through

electronic mode; and

(b) conducts any business activity in India in any other manner;

(43) “free reserves” means such reserves which, as per the latest audited balance sheet of a company,

are available for distribution as dividend:

Provided that—

(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether

shown as a reserve or otherwise, or

(ii) any change in carrying amount of an asset or of a liability recognised in equity, including

surplus in profit and loss account on measurement of the asset or the liability at fair value,

shall not be treated as free reserves;

1. The proviso subs. by Act 22 of 2019, s. 2 (w.e.f. 2-11-2018).
2. Subs. by s. 2, ibid., for “Provided further that” (w.e.f. 2-11-2018).

20


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(44) “Global Depository Receipt” means any instrument in the form of a depository receipt, by

whatever name called, created by a foreign depository outside India and authorised by a company
making an issue of such depository receipts;

(45) “Government company” means any company in which not less than fifty-one per cent. of the

paid-up share capital is held by the Central Government, or by any State Government or Governments,
or partly by the Central Government and partly by one or more State Governments, and includes a
company which is a subsidiary company of such a Government company;

(46) “holding company”, in relation to one or more other companies, means a company of which

such companies are subsidiary companies;

1[Explanation.—For the purposes of this clause, the expression “company” includes any body corporate;]

(47) “independent director” means an independent director referred to in sub-section (6) of section

149;

(48) “Indian Depository Receipt” means any instrument in the form of a depository receipt created

by a domestic depository in India and authorised by a company incorporated outside India making an
issue of such depository receipts;

2*    -    -    -    
(50) “issued capital” means such capital as the company issues from time to time for subscription;

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

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

(ii) the company secretary;

(iii) the whole-time director;

(iv) the Chief Financial Officer; [3]***

4[(v) such other officer, not more than one level below the directors who is in whole-time employment,

designated as key managerial personnel by the Board; and

(vi) such other officer as may be prescribed;]

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

stock exchange:

5[Provided that such class of companies, which have listed or intend to list such class of securities,

as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as
listed companies.]

(53) “manager” means an individual who, subject to the superintendence, control and direction of

the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a
company, and includes a director or any other person occupying the position of a manager, by whatever
name called, whether under a contract of service or not;

(54) “managing director” means a director who, by virtue of the articles of a company or an

agreement with the company or a resolution passed in its general meeting, or by its Board of Directors,
is entrusted with substantial powers of management of the affairs of the company and includes a director
occupying the position of managing director, by whatever name called.

1. The Explanation ins. by Act 1 of 2018, s. 2 (w.e.f. 9-2-2018).
2. Clause (49) omitted by s. 2, ibid. (w.e.f. 9-2-2018).
3. The word “and” omitted by s. 2, ibid. (w.e.f. 9-2-2018).
4. Subs. by s. 2, ibid., for sub-clause (v) (w.e.f. 9-2-2018).
5. The Proviso ins. by Act 29 of 2020, s. 2 (w.e.f. 22-1-2021).

21


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_Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature_

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

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

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to

become member of the company, and on its registration, shall be entered as member in its register of
members;

(ii) every other person who agrees in writing to become a member of the company and whose

name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner

in the records of a depository;

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

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

(57) “net worth” means the aggregate value of the paid-up share capital and all reserves created out

of the profits [1][, securities premium account and debit or credit balance of profit and loss account,] after
deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous
expenditure not written off, as per the audited balance sheet, but does not include reserves created out
of revaluation of assets, write-back of depreciation and amalgamation;

(58) “notification” means a notification published in the Official Gazette and the expression “notify”

shall be construed accordingly;

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

accordance with whose directions or instructions the Board of Directors or any one or more of the
directors is or are accustomed to act;

(60) “officer who is in default”, for the purpose of any provision in this Act which enacts that an

officer of the company who is in default shall be liable to any penalty or punishment by way of
imprisonment, fine or otherwise, means any of the following officers of a company, namely:—

(i) whole-time director;

(ii) key managerial personnel;

(iii) where there is no key managerial personnel, such director or directors as specified by the

Board in this behalf and who has or have given his or their consent in writing to the Board to such
specification, or all the directors, if no director is so specified;

(iv) any person who, under the immediate authority of the Board or any key managerial personnel,

is charged with any responsibility including maintenance, filing or distribution of accounts or
records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps
to prevent, any default;

(v) any person in accordance with whose advice, directions or instructions the Board of Directors

of the company is accustomed to act, other than a person who gives advice to the Board in a
professional capacity;

(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware

of such contravention by virtue of the receipt by him of any proceedings of the Board or participation

1. Subs. by Act 1 of 2018, s. 2, for “and securities premium account” (w.e.f. 9-2-2018).

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in such proceedings without objecting to the same, or where such contravention had taken place with
his consent or connivance;

(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents,

registrars and merchant bankers to the issue or transfer;

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

section 59;

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

(63) “ordinary or special resolution” means an ordinary resolution, or as the case may be, special

resolution referred to in section 114;

(64) “paid-up share capital” or “share capital paid-up” means such aggregate amount of money

credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and
also includes any amount credited as paid-up in respect of shares of the company, but does not include
any other amount received in respect of such shares, by whatever name called;

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

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

(67) “previous company law” means any of the laws specified below:—

(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866);

(ii) the Indian Companies Act, 1866 (10 of 1866);

(iii) the Indian Companies Act, 1882 (6 of 1882);

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

(v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942);

(vi) the Companies Act, 1956 (1 of 1956); and

(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force—

(A) in the merged territories or in a Part B State (other than the State of Jammu and

Kashmir*), or any part thereof, before the extension thereto of the Indian Companies Act, 1913
(7 of 1913); or

(B) in the State of Jammu and Kashmir*, or any part thereof, before the commencement of

the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking,
insurance and financial corporations are concerned, and before the commencement of the
Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other
corporations are concerned;

(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and

(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961);

(68) “private company” means a company having a minimum paid-up share capital [1]*** as may be

prescribed, and which by its articles,—

(i) restricts the right to transfer its shares;

(ii) except in case of One Person Company, limits the number of its members to two hundred:

Provided that where two or more persons hold one or more shares in a company jointly, they shall,

for the purposes of this clause, be treated as a single member:

1. The words “of one lakh rupees or such higher paid-up share capital” omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).
*. Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu
and Kashmir and the Union territory of Ladakh.

23


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Provided further that—

(A) persons who are in the employment of the company; and

(B) persons who, having been formerly in the employment of the company, were members of the

company while in that employment and have continued to be members after the employment ceased,

shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

(69) “promoter” means a person—

(a) who has been named as such in a prospectus or is identified by the company in the annual

return referred to in section 92; or

(b) who has control over the affairs of the company, directly or in directly whether as a share

holder, director or otherwise; or

(c) in accordance with whose advice, directions or instructions the Board of Directors of the

company is accustomed to act:

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional

capacity;

(70) “prospectus” means any document described or issued as a prospectus and includes a red herring

prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular,
advertisement or other document inviting offers from the public for the subscription or purchase of any
securities of a body corporate;

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

(a) is not a private company; [1][and]

(b) has a minimum paid-up share capital [2]*** as may be prescribed:

Provided that a company which is a subsidiary of a company, not being a private company, shall be

deemed to be public company for the purposes of this Act even where such subsidiary company
continues to be a private company in its articles ;

(72) “public financial institution” means—

(i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance

Corporation Act, 1956 (31 of 1956);

(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of

sub-section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465
of this Act;

(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal)

Act, 2002 (58 of 2002);

(iv) institutions notified by the Central Government under sub-section (2) of section 4A of the

Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;

(v) such other institution as may be notified by the Central Government in consultation with the

Reserve Bank of India:

Provided that no institution shall be so notified unless—

(A) it has been established or constituted by or under any Central or State Act [1][other than this

Act or the previous company law]; or

1. Ins. by Act 1 of 2018, s. 2 (w.e.f. 9-2-2018).
2. The words “of five lakh rupees or such higher paid-up capital,” omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).

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

Government or by any State Government or Governments or partly by the Central Government and
partly by one or more State Governments;

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

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

(74) “register of companies” means the register of companies maintained by the Registrar on paper

or in any electronic mode under this Act;

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

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

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

(i) a director or his relative;

(ii) a key managerial personnel or his relative;

(iii) a firm, in which a director, manager or his relative is a partner;

(iv) a private company in which a director or manager [1][or his relative] is a member or director;

(v) a public company in which a director or manager is a director [2][and holds] along with his

relatives, more than two per cent. of its paid-up share capital;

(vi) any body corporate whose Board of Directors, managing director or manager is accustomed

to act in accordance with the advice, directions or instructions of a director or manager;

(vii) any person on whose advice, directions or instructions a director or manager is accustomed

to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or

instructions given in a professional capacity;

3[(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;

(77) “relative”, with reference to any person, means any one who is related to another, if—

(i) they are members of a Hindu Undivided Family;

(ii) they are husband and wife; or

(iii) one person is related to the other in such manner as may be prescribed;

(78) “remuneration” means any money or its equivalent given or passed to any person for services

rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961);

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

1. Ins. by S.O. 1894 (E), dated 24th July, 2014.
2. Subs. by S.O. 1820 (E), dated 9th July, 2014 for “or holds” .
3. Subs. by Act 1 of 2018, s. 2, for sub-clause (viii) (w.e.f. 9-2-2018).

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(80) “scheduled bank” means the scheduled bank as defined in clause (e) of section 2 of the Reserve

Bank of India Act, 1934 (2 of 1934);

(81) “securities” means the securities as defined in clause (h) of section 2 of the Securities Contracts

(Regulation) Act, 1956 (42 of 1956);

(82) “Securities and Exchange Board” means the Securities and Exchange Board of India established

under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

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

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

(85) “small company” means a company, other than a public company,—

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may

be prescribed which shall not be more than [1][ten crore rupees]; [2][and]

(ii) turnover of which [3][as per profit and loss account for the immediately preceding financial

year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not
be more than [4][one hundred crore rupees]:

Provided that nothing in this clause shall apply to—

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act;

(86) “subscribed capital” means such part of the capital which is for the time being subscribed by the

members of a company;

(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the

holding company), means a company in which the holding company—

(i) controls the composition of the Board of Directors; or

(ii) exercises or controls more than one-half of the [5][total voting power] either at its own or

together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers

of subsidiaries beyond such numbers as may be prescribed.

_Explanation.—For the purposes of this clause,—_

(a) a company shall be deemed to be a subsidiary company of the holding company even if the

control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company;

(b) the composition of a company’s Board of Directors shall be deemed to be controlled by

another company if that other company by exercise of some power exercisable by it at its discretion
can appoint or remove all or a majority of the directors;

(c) the expression “company” includes any body corporate;

(d) “layer” in relation to a holding company means its subsidiary or subsidiaries;

1. Subs. by Act 1 of 2018, s. 2, for “five crore rupees” (w.e.f. 9-2-2018).
2. Subs. by notification No. S.O. 504(E), dated 13th February, 2015, for word “or” (w.e.f. 13-2-2015).
3. Subs. by Act 1 of 2018, s. 2, for “as per its last profit and loss account” (w.e.f. 9-2-2018).
4. Subs. by s. 2, ibid., for “twenty crore rupees”(w.e.f. 9-2-2018).
5. Subs. by s. 2, ibid., for “total share capital” (w.e.f. 7-5-2018).

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(88) “sweat equity shares” means such equity shares as are issued by a company to its directors or

employees at a discount or for consideration, other than cash, for providing their know-how or making
available rights in the nature of intellectual property rights or value additions, by whatever name called;

(89) “total voting power”, in relation to any matter, means the total number of votes which may be

cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their
proxies having a right to vote on that matter are present at the meeting and cast their votes;

(90) “Tribunal” means the National Company Law Tribunal constituted under section 408;

1[(91) “turnover” means gross amount of revenue recognised in the profit and loss account from the sale,

supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;]

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

(93) “voting right” means the right of a member of a company to vote in any meeting of the company

or by means of postal ballot;

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

2[(94A) “winding up” means winding up under this Act or liquidation under the Insolvency and

Bankruptcy Code, 2016 (31 of 2016), as applicable;]

(95) words and expressions used and not defined in this Act but defined in the Securities Contracts

(Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992         (15
of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to
them in those Acts.

CHAPTER II

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

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

(a) seven or more persons, where the company to be formed is to be a public company;

(b) two or more persons, where the company to be formed is to be a private company; or
(c) one person, where the company to be formed is to be One Person Company that is to say, a

private company,

by subscribing their names or his name to a memorandum and complying with the requirements of this Act
in respect of registration:

Provided that the memorandum of One Person Company shall indicate the name of the other person,

with his prior written consent in the prescribed form, who shall, in the event of the subscriber’s death or his
incapacity to contract become the member of the company and the written consent of such person shall also
be filed with the Registrar at the time of incorporation of the One Person Company along with its
memorandum and articles:

Provided further that such other person may withdraw his consent in such manner as may be prescribed:

Provided also that the member of One Person Company may at any time change the name of such other

person by giving notice in such manner as may be prescribed:

Provided also that it shall be the duty of the member of One Person Company to intimate the company

the change, if any, in the name of the other person nominated by him by indicating in the memorandum or
otherwise within such time and in such manner as maybe prescribed, and the company shall intimate the
Registrar any such change within such time and in such manner as may be prescribed:

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

the memorandum.

1. Subs. by Act 1 of 2018, s. 2, for clause (91) (w.e.f. 9-2-2018).
2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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

(a) a company limited by shares; or

(b) a company limited by guarantee; or

(c) an unlimited company.

**1[3A. Members severally liable in certain cases.-If at any time the number of members of a company**

is reduced, in the case of a public company, below seven, in the case of a private company, below two, and
the company carries on business for more than six months while the number of members is so reduced,
every person who is a member of the company during the time that it so carries on business after those six
months and is cognisant of the fact that it is carrying on business with less than seven members or two
members, as the case may be, shall be severally liable for the payment of the whole debts of the company
contracted during that time, and may be severally sued therefor.]

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

(a) the name of the company with the last word “Limited” in the case of a public limited company,

or the last words “Private Limited” in the case of a private limited company:

Provided that nothing in this clause shall apply to a company registered under section 8;
(b) the State in which the registered office of the company is to be situated;
(c) the objects for which the company is proposed to be incorporated and any matter considered

necessary in furtherance thereof;

(d) the liability of members of the company, whether limited or unlimited, and also state,—

(i) in the case of a company limited by shares, that liability of its members is limited to the

amount unpaid, if any, on the shares held by them; and

(ii) in the case of a company limited by guarantee, the amount up to which each member

undertakes to contribute—

(A) to the assets of the company in the event of its being wound up while he is a member

or within one year after he ceases to be a member, for payment of the debts and liabilities of
the company or of such debts and liabilities as may have been contracted before he ceases to
be a member, as the case may be; and

(B) to the costs, charges and expenses of winding up and for adjustment of the rights of the

contributories among themselves;

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

(i) the amount of share capital with which the company is to be registered and the division

thereof into shares of a fixed amount and the number of shares which the subscribers to the
memorandum agree to subscribe which shall not be less than one share; and

(ii) the number of shares each subscriber to the memorandum intends to take, indicated opposite

his name;
(f) in the case of One Person Company, the name of the person who, in the event of death of the

subscriber, shall become the member of the company.
(2) The name stated in the memorandum shall not—

(a) be identical with or resemble too nearly to the name of an existing company registered under

this Act or any previous company law; or

(b) be such that its use by the company—

(i) will constitute an offence under any law for the time being in force; or
(ii) is undesirable in the opinion of the Central Government.

(3) Without prejudice to the provisions of sub-section (2), a company shall not be registered with a

name which contains—

(a) any word or expression which is likely to give the impression that the company is in any way

connected with, or having the patronage of, the Central Government, any State Government, or any
local authority, corporation or body constituted by the Central Government or any State Government
under any law for the time being in force; or

1. Ins. by Act 1 of 2018, s. 3 (w.e.f. 9-2-2018).

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(b) such word or expression, as may be prescribed,

unless the previous approval of the Central Government has been obtained for the use of any such word or
expression.

(4) A person may make an application, in such form and manner and accompanied by such fee, as may

be prescribed, to the Registrar for the reservation of a name set out in the application as—

(a) the name of the proposed company; or

(b) the name to which the company proposes to change its name.

(5) [1][(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and

documents furnished along with the application, reserve the name for a period of twenty days from the date of approval
or such other period as may be prescribed:

Provided that in case of an application for reservation of name or for change of its name by an existing company,

the Registrar may reserve the name for a period of sixty days from the date of approval.]

(ii) Where after reservation of name under clause (i), it is found that name was applied by furnishing

wrong or incorrect information, then,—

(a) if the company has not been incorporated, the reserved name shall be cancelled and the person

making application under sub-section (4) shall be liable to a penalty which may extend to one lakh
rupees;

(b) if the company has been incorporated, the Registrar may, after giving the company an

opportunity of being heard—

(i) either direct the company to change its name within a period of three months, after passing

an ordinary resolution;

(ii) take action for striking off the name of the company from the register of companies; or

(iii) make a petition for winding up of the company.

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

in Schedule I as may be applicable to such company.

(7) Any provision in the memorandum or articles, in the case of a company limited by guarantee and

not having a share capital, purporting to give any person a right to participate in the divisible profits of the
company otherwise than as a member, shall be void.

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

company.

(2) The articles shall also contain such matters, as may be prescribed:

Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from

including such additional matters in its articles as may be considered necessary for its management.

(3) The articles may contain provisions for entrenchment to the effect that specified provisions of the

articles may be altered only if conditions or procedures as that are more restrictive than those applicable in
the case of a special resolution, are met or complied with.

(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on

formation of a company, or by an amendment in the articles agreed to by all the members of the company
in the case of a private company and by a special resolution in the case of a public company.

(5) Where the articles contain provisions for entrenchment, whether made on formation or by

amendment, the company shall give notice to the Registrar of such provisions in such form and manner as
may be prescribed.

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

Schedule I as may be applicable to such company.

1. Subs. by Act 1 of 2018, s. 4, for clause (i) (w.e.f. 26-1-2018).

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

such company.

(8) In case of any company, which is registered after the commencement of this Act, in so far as the

registered articles of such company do not exclude or modify the regulations contained in the model articles
applicable to such company, those regulations shall, so far as applicable, be the regulations of that company
in the same manner and to the extent as if they were contained in the duly registered articles of the company.

(9) Nothing in this section shall apply to the articles of a company registered under any previous

company law unless amended under this Act.

**6. Act to override memorandum, articles, etc.—Save as otherwise expressly provided in this Act—**

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained

in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution
passed by the company in general meeting or by its Board of Directors, whether the same be registered,
executed or passed, as the case may be, before or after the commencement of this Act; and

(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the

extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.
**7. Incorporation of company.—(1) There shall be filed with the Registrar within whose jurisdiction**

the registered office of a company is proposed to be situated, the following documents and information for
registration, namely:—

(a) the memorandum and articles of the company duly signed by all the subscribers to the

memorandum in such manner as may be prescribed;

(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or

company secretary in practice, who is engaged in the formation of the company, and by a person named
in the articles as a director, manager or secretary of the company, that all the requirements of this Act
and the rules made thereunder in respect of registration and matters precedent or incidental thereto have
been complied with;

(c) [1][a declaration] from each of the subscribers to the memorandum and from persons named as

the first directors, if any, in the articles that he is not convicted of any offence in connection with the
promotion, formation or management of any company, or that he has not been found guilty of any fraud
or misfeasance or of any breach of duty to any company under this Act or any previous company law
during the preceding five years and that all the documents filed with the Registrar for registration of
the company contain information that is correct and complete and true to the best of his knowledge and
belief;

(d) the address for correspondence till its registered office is established;
(e) the particulars of name, including surname or family name, residential address, nationality and

such other particulars of every subscriber to the memorandum along with proof of identity, as may be
prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;

(f) the particulars of the persons mentioned in the articles as the first directors of the company, their

names, including surnames or family names, the Director Identification Number, residential address,
nationality and such other particulars including proof of identity as may be prescribed; and

(g) the particulars of the interests of the persons mentioned in the articles as the first directors of

the company in other firms or bodies corporate along with their consent to act as directors of the
company in such form and manner as may be prescribed.
(2) The Registrar on the basis of documents and information filed under sub-section (1) shall register

all the documents and information referred to in that sub-section in the register and issue a certificate of
incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.

(3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2), the

Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the
company and which shall also be included in the certificate.

1. Subs. by Act 1 of 2018, s. 5, for “an affidavit” (w.e.f. 27-7-2018).

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(4) The company shall maintain and preserve at its registered office copies of all documents and

information as originally filed under sub-section (1) till its dissolution under this Act.

(5) If any person furnishes any false or incorrect particulars of any information or suppresses any

material information, of which he is aware in any of the documents filed with the Registrar in relation to
the registration of a company, he shall be liable for action under section 447.

(6) Without prejudice to the provisions of sub-section (5) where, at any time after the incorporation of

a company, it is proved that the company has been got incorporated by furnishing any false or incorrect
information or representation or by suppressing any material fact or information in any of the documents
or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters,
the persons named as the first directors of the company and the persons making declaration under clause
(b) of sub-section(1) shall each be liable for action under section 447.

(7) Without prejudice to the provisions of sub-section (6), where a company has been got incorporated

by furnishing any false or incorrect information or representation or by suppressing any material fact or
information in any of the documents or declaration filed or made for incorporating such company or by any
fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so
warrants,—

(a) pass such orders, as it may think fit, for regulation of the management of the company including

changes, if any, in its memorandum and articles, in public interest or in the interest of the company and
its members and creditors; or

(b) direct that liability of the members shall be unlimited; or

(c) direct removal of the name of the company from the register of companies; or

(d) pass an order for the winding up of the company; or

(e) pass such other orders as it may deem fit:

Provided that before making any order under this sub-section,—

(i) the company shall be given a reasonable opportunity of being heard in the matter; and

(ii) the Tribunal shall take into consideration the transactions entered into by the company,

including the obligations, if any, contracted or payment of any liability.

**8. Formation of companies with charitable objects, etc.—(1) Where it is proved to the satisfaction**

of the Central Government that a person or an association of persons proposed to be registered under this
Act as a limited company—

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social

welfare, religion, charity, protection of environment or any such other object;

(b) intends to apply its profits, if any, or other income in promoting its objects; and

(c) intends to prohibit the payment of any dividend to its members,

the Central Government may, by licence issued in such manner as may be prescribed, and on such
conditions as it deems fit, allow that person or association of persons to be registered as a limited company
under this section without the addition to its name of the word “Limited”, or as the case may be, the words
“Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such
person or association of persons as a company under this section.

(2) The company registered under this section shall enjoy all the privileges and be subject to all the

obligations of limited companies.

(3) A firm may be a member of the company registered under this section.
(4) (i) A company registered under this section shall not alter the provisions of its memorandum or

articles except with the previous approval of the Central Government.

(ii) A company registered under this section may convert itself into company of any other kind only

after complying with such conditions as may be prescribed.

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(5) Where it is proved to the satisfaction of the Central Government that a limited company registered

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

(6) The Central Government may, by order, revoke the licence granted to a company registered under

this section if the company contravenes any of the requirements of this section or any of the conditions
subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a manner
violative of the objects of the company or prejudicial to public interest, and without prejudice to any other
action against the company under this Act, direct the company to convert its status and change its name to
add the word” Limited” or the words “Private Limited”, as the case may be, to its name and thereupon the
Registrar shall, without prejudice to any action that may be taken under sub-section (7), on application, in
the prescribed form, register the company accordingly:

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

being heard:

Provided further that a copy of every such order shall be given to the Registrar.
(7) Where a licence is revoked under sub-section (6), the Central Government may, by order, if it is

satisfied that it is essential in the public interest, direct that the company be wound up under this Act or
amalgamated with another company registered under this section:

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

being heard.

(8) Where a licence is revoked under sub-section (6) and where the Central Government is satisfied

that it is essential in the public interest that the company registered under this section should be
amalgamated with another company registered under this section and having similar objects, then,
notwithstanding anything to the contrary contained in this Act, the Central Government may, by order,
provide for such amalgamation to form a single company with such constitution, properties, powers, rights,
interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in
the order.

(9) If on the winding up or dissolution of a company registered under this section, there remains, after

the satisfaction of its debts and liabilities, any asset, they may be transferred to another company registered
under this section and having similar objects, subject to such conditions as the Tribunal may impose, or
may be sold and proceeds thereof credited to [1][Insolvency and Bankruptcy Fund formed under section 224
of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)].

(10) A company registered under this section shall amalgamate only with another company registered

under this section and having similar objects.

(11) If a company makes any default in complying with any of the requirements laid down in this

section, the company shall, without prejudice to any other action under the provisions of this section, be
punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees
and the directors and every officer of the company who is in default shall be punishable [2]*** with fine
which shall not be less than twenty-five thousand rupees but which may extend to [3][twenty-five lakh
rupees]:

Provided that when it is proved that the affairs of the company were conducted fraudulently, every

officer in default shall be liable for action under section 447.

**9. Effect of registration.—From the date of incorporation mentioned in the certificate of incorporation,**

such subscribers to the memorandum and all other persons, as may, from time to time,   become members

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for “the Rehabilitation and Insolvency Fund formed under section

269” (w.e.f. 15-11-2016).

2. The words “with imprisonment for a term which may extend to three years or” omitted by Act 29 of 2020, s. 3 (w.e.f. 21-12
2020).

3. Subs. by Act 29 of 2020, s. 3, for “twenty-five lakh rupees, or with both” (w.e.f. 21-12-2020).

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of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising
all the functions of an incorporated company under this Act and having perpetual succession [1]*** with
power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to
contract and to sue and be sued, by the said name.

**10. Effect of memorandum and articles.—(1) Subject to the provisions of this Act, the memorandum**

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

(2) All monies payable by any member to the company under the memorandum or articles shall be a

debt due from him to the company.

2[10A. Commencement of business, etc.—(1) A company incorporated after the commencement of

the Companies (Amendment) Act, 2019 and having a share capital shall not commence any business or
exercise any borrowing powers unless—

(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of

incorporation of the company in such form and verified in such manner as may be prescribed, with the
Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken
by him on the date of making of such declaration; and

(b) the company has filed with the Registrar a verification of its registered office as provided in

sub-section (2) of section 12.

(2) If any default is made in complying with the requirements of this section, the company shall be

liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of
one thousand rupees for each day during which such default continues but not exceeding an amount of one
lakh rupees.

(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a

period of one hundred and eighty days of the date of incorporation of the company and the Registrar has
reasonable cause to believe that the company is not carrying on any business or operations, he may, without
prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company
from the register of companies under Chapter XVIII.]

**11. [Commencement of business, etc.]** _Omitted by the Companies_ (Amendment) _Act,_ 2015 (21 of

2015), s. 4 (w.e.f. 29-5-2015).

**12. Registered office of company.—(1) A company shall, [3][within thirty days of its incorporation] and**

at all times thereafter, have a registered office capable of receiving and acknowledging all communications
and notices as may be addressed to it.

(2) The company shall furnish to the Registrar verification of its registered office within a period of

thirty days of its incorporation in such manner as may be prescribed.

(3) Every company shall—

(a) paint or affix its name, and the address of its registered office, and keep the same painted or

affixed, on the outside of every office or place in which its business is carried on, in a conspicuous
position, in legible letters, and if the characters employed therefor are not those of the language or of
one of the languages in general use in that locality, also in the characters of that language or of one of
those languages;

4[(b) have its name engraved in legible characters on its seal, if any;]
(c) get its name, address of its registered office and the Corporate Identity Number along with

telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business
letters, billheads, letter papers and in all its notices and other official publications; and

1. The words “and a common seal” omitted by Act 21 of 2015, s. 3 (w.e.f. 29-5-2015).
2. Ins. by Act 22 of 2019, s. 3 (w.e.f. 2-11-2018).
3. Subs. by Act 1 of 2018, s. 6, for “on and from the fifteenth day of its incorporation”(w.e.f. 27-7-2018).
4. Subs. by Act 21 of 2015, s. 5, for clause (b) (w.e.f. 29-5-2015).

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(d) have its name printed on hundies, promissory notes, bills of exchange and such other documents

as may be prescribed:
Provided that where a company has changed its name or names during the last two years, it shall paint

or affix or print, as the case may be, along with its name, the former name or names so changed during the
last two years as required under clauses (a) and (c):

Provided further that the words “One Person Company” shall be mentioned in brackets below the name

of such company, wherever its name is printed, affixed or engraved.

(4) Notice of every change of the situation of the registered office, verified in the manner prescribed,

after the date of incorporation of the company, shall be given to the Registrar [1][within thirty days] of the
change, who shall record the same.

(5) Except on the authority of a special resolution passed by a company, the registered office of the

company shall not be changed,—

(a) in the case of an existing company, outside the local limits of any city, town or village where

such office is situated at the commencement of this Act or where it may be situated later by virtue of a
special resolution passed by the company; and

(b) in the case of any other company, outside the local limits of any city, town or village where

such office is first situated or where it may be situated later by virtue of a special resolution passed by
the company:

Provided that no company shall change the place of its registered office from the jurisdiction of one

Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by
the Regional Director on an application made in this behalf by the company in the prescribed manner.

(6) The confirmation referred to in sub-section (5) shall be communicated within a period of thirty days

from the date of receipt of application by the Regional Director to the company and the company shall file
the confirmation with the Registrar within a period of sixty days of the date of confirmation who shall
register the same and certify the registration within a period of thirty days from the date of filing of such
confirmation.

(7) The certificate referred to in sub-section (6) shall be conclusive evidence that all the requirements

of this Act with respect to change of registered office in pursuance of sub-section (5) have been complied
with and the change shall take effect from the date of the certificate.

(8) If any default is made in complying with the requirements of this section, the company and every

officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the
default continues but not exceeding one lakh rupees.

2[(9) If the Registrar has reasonable cause to believe that the company is not carrying on any business

or operations, he may cause a physical verification of the registered office of the company in such manner
as may be prescribed and if any default is found to be made in complying with the requirements of subsection (1), he may without prejudice to the provisions of sub-section (8), initiate action for the removal of
the name of the company from the register of companies under Chapter XVIII.]

**13. Alteration of memorandum.—(1) Save as provided in section 61, a company may, by a special**

resolution and after complying with the procedure specified in this section, alter the provisions of its
memorandum.

(2) Any change in the name of a company shall be subject to the provisions of sub-sections (2) and (3)

of section 4 and shall not have effect except with the approval of the Central Government in writing:

Provided that no such approval shall be necessary where the only change in the name of the company

is the deletion therefrom, or addition thereto, of the word “Private”, consequent on the conversion of any
one class of companies to another class in accordance with the provisions of this Act.

1. Subs. by Act 1 of 2018, s. 6, for “within fifteen days” (w.e.f. 27-7-2018).
2. Ins. by Act 22 of 2019, s. 4 (w.e.f. 2-11-2018).

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(3) When any change in the name of a company is made under sub-section (2), the Registrar shall

enter the new name in the register of companies in place of the old name and issue a fresh certificate of
incorporation with the new name and the change in the name shall be complete and effective only on the
issue of such a certificate.

(4) The alteration of the memorandum relating to the place of the registered office from one State to

another shall not have any effect unless it is approved by the Central Government on an application in such
form and manner as may be prescribed.

(5) The Central Government shall dispose of the application under sub-section (4) within a period of

sixty days and before passing its order may satisfy itself that the alteration has the consent of the creditors,
debenture-holders and other persons concerned with the company or that the sufficient provision has been
made by the company either for the due discharge of all its debts and obligations or that adequate security
has been provided for such discharge.

(6) Save as provided in section 64, a company shall, in relation to any alteration of its memorandum,

file with the Registrar—

(a) the special resolution passed by the company under sub-section (1);

(b) the approval of the Central Government under sub-section (2), if the alteration involves any

change in the name of the company.

(7) Where an alteration of the memorandum results in the transfer of the registered office of a company

from one State to another, a certified copy of the order of the Central Government approving the alteration
shall be filed by the company with the Registrar of each of the States within such time and in such manner
as may be prescribed, who shall register the same, and the Registrar of the State where the registered office
is being shifted to, shall issue a fresh certificate of incorporation indicating the alteration.

(8) A company, which has raised money from public through prospectus and still has any unutilised

amount out of the money so raised, shall not change its objects for which it raised the money through
prospectus unless a special resolution is passed by the company and—

(i) the details, as may be prescribed, in respect of such resolution shall also be published in the

newspapers (one in English and one in vernacular language) which is in circulation at the place where
the registered office of the company is situated and shall also be placed on the website of the company,
if any, indicating therein the justification for such change;

(ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and

shareholders having control in accordance with regulations to be specified by the Securities and
Exchange Board.

(9) The Registrar shall register any alteration of the memorandum with respect to the objects of the

company and certify the registration within a period of thirty days from the date of filing of the special
resolution in accordance with clause (a) of sub-section (6) of this section.

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

with the provisions of this section.

(11) Any alteration of the memorandum, in the case of a company limited by guarantee and not having

a share capital, purporting to give any person a right to participate in the divisible profits of the company
otherwise than as a member, shall be void.

**14. Alteration of articles.—(1) Subject to the provisions of this Act and the conditions contained in**

its memorandum, if any, a company may, by a special resolution, alter its articles including alterations
having the effect of conversion of—

(a) a private company into a public company; or

(b) a public company into a private company:

Provided that where a company being a private company alters its articles in such a manner that they

no longer include the restrictions and limitations which are required to be included in the articles of a private

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company under this Act, the company shall, as from the date of such alteration, cease to be a private
company:

1[Provided further that any alteration having the effect of conversion of a public company into a private

company shall not valid unless it its approved by an order of the Central Government on an application
made in such form and manner as may be prescribed:

Provided also that any application pending before the Tribunal, as on the date of commencement of the

Companies (amendment) Act, 2019, shall be disposed of by the Tribunal in accordance with the provisions
applicable to it before such commencement.]

(2) Every alteration of the articles under this section and a copy of the order of the [2][Central

Government] approving the alteration as per sub-section (1) shall be filed with the Registrar, together with
a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed,
who shall register the same.

(3) Any alteration of the articles registered under sub-section (2) shall, subject to the provisions of this

Act, be valid as if it were originally in the articles.

**15. Alteration of memorandum or articles to be noted in every copy.—(1) Every alteration made in**

the memorandum or articles of a company shall be noted in every copy of the memorandum or articles, as
the case may be.

(2) If a company makes any default in complying with the provisions of sub-section (1), the company

and every officer who is in default shall be liable to a penalty of one thousand rupees for every copy of the
memorandum or articles issued without such alteration.

**16. Rectification of name of company.—(1) If, through inadvertence or otherwise, a company on its**

first registration or on its registration by a new name, is registered by a name which,—

(a) in the opinion of the Central Government, is identical with or too nearly resembles the name by

which a company in existence had been previously registered, whether under this Act or any previous
company law, it may direct the company to change its name and the company shall change its name or
new name, as the case may be, within a period of three months from the issue of such direction, after
adopting an ordinary resolution for the purpose;

(b) on an application by a registered proprietor of a trade mark that the name is identical with or

too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999 (47
of 1999), made to the Central Government within three years of incorporation or registration or change
of name of the company, whether under this Act or any previous company law, in the opinion of the
Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct
the company to change its name and the company shall change its name or new name, as the case may
be, within a [3][period of three months] from the issue of such direction, after adopting an ordinary
resolution for the purpose.

(2) Where a company changes its name or obtains a new name under sub-section (1), it shall within a

period of fifteen days from the date of such change, give notice of the change to the Registrar along with
the order of the Central Government, who shall carry out necessary changes in the certificate of
incorporation and the memorandum.

4[(3) If a company is in default in complying with any direction given under sub-section (1), the Central

Government shall allot a new name to the company in such manner as may be prescribed and the Registrar
shall enter the new name in the register of companies in place of the old name and issue a fresh certificate
of incorporation with the new name, which the company shall use thereafter:

Provided that nothing in this sub-section shall prevent a company from subsequently changing its name

in accordance with the provisions of section 13.]

**17. Copies of memorandum, articles, etc., to be given to members.—(1) A company shall, on being**

so requested by a member, send to him within seven days of the request and subject to the payment of such
fees as may be prescribed, a copy of each of the following documents, namely:—

1. Subs. by Act 22 of 2019, s. 5, for the Proviso (w.e.f. 2-11-2018).
2. Subs. by s. 5, ibid., for “Tribunal” (w.e.f. 2-11-2018).
3. Subs. by Act 29 of 2020, s. 4, for “period of six months” (w.e.f.1-9-2021).
4. Subs. by s. 4, ibid., for sub-section (3) (w.e.f. 1-9-2021).

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(a) the memorandum;

(b) the articles; and

(c) every agreement and every resolution referred to in sub-section (1) of section117, if and in so

far as they have not been embodied in the memorandum or articles.

(2) If a company makes any default in complying with the provisions of this section, the company and

every officer of the company who is in default shall be liable for each default, to a penalty of one thousand
rupees for each day during which such default continues or one lakh rupees, whichever is less.

**18. Conversion of companies already registered.—(1) A company of any class registered under this**

Act may convert itself as a company of other class under this Act by alteration of memorandum and articles
of the company in accordance with the provisions of this Chapter.

(2) Where the conversion is required to be done under this section, the Registrar shall on an application

made by the company, after satisfying himself that the provisions of this Chapter applicable for registration
of companies have been complied with, close the former registration of the company and after registering
the documents referred to in sub-section (1), issue a certificate of incorporation in the same manner as its
first registration.

(3) The registration of a company under this section shall not affect any debts, liabilities, obligations or

contracts incurred or entered into, by or on behalf of the company before conversion and such debts,
liabilities, obligations and contracts may be enforced in the manner as if such registration had not been
done.

**19. Subsidiary company not to hold shares in its holding company.—(1) No company shall, either**

by itself or through its nominees, hold any shares in its holding company and no holding company shall
allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of
a company to its subsidiary company shall be void:

Provided that nothing in this sub-section shall apply to a case—

(a) where the subsidiary company holds such shares as the legal representative of a deceased

member of the holding company; or

(b) where the subsidiary company holds such shares as a trustee; or

(c) where the subsidiary company is a shareholder even before it became a subsidiary company of

the holding company:

Provided further that the subsidiary company referred to in the preceding proviso shall have a right to

vote at a meeting of the holding company only in respect of the shares held by it as a legal representative
or as a trustee, as referred to in clause (a) or clause (b) of the said proviso.

(2) The reference in this section to the shares of a holding company which is a company limited by

guarantee or an unlimited company, not having a share capital, shall be construed as a reference to the
interest of its members, whatever be the form of interest.

**20. Service of documents.—(1) A document may be served on a company or an officer thereof by**

sending it to the company or the officer at the registered office of the company by registered post or by
speed post or by courier service or by leaving it at its registered office or by means of such electronic or
other mode as may be prescribed:

Provided that where securities are held with a depository, the records of the beneficial ownership may

be served by such depository on the company by means of electronic or other mode.

(2) Save as provided in this Act or the rules made thereunder for filing of documents with the Registrar

in electronic mode, a document may be served on Registrar or any member by sending it to him by post or
by registered post or by speed post or by courier or by delivering at his office or address, or by such
electronic or other mode as may be prescribed:

Provided that a member may request for delivery of any document through a particular mode, for which

he shall pay such fees as may be determined by the company in its annual general meeting.

_Explanation.—For the purposes of this section, the term “courier” means a person or agency which_

delivers the document and provides proof of its delivery.

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**21. Authentication of documents, proceedings and contracts.—Save as otherwise provided in this**

Act,—

(a) a document or proceeding requiring authentication by a company; or
(b) contracts made by or on behalf of a company,

may be signed by any key managerial personnel or [1][an officer or employee of the company] duly authorised
by the Board in this behalf.

**22. Execution of bills of exchange, etc.—(1) A bill of exchange, hundi or promissory note shall be**

deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted, drawn,
or endorsed in the name of, or on behalf of or on account of, the company by any person acting under its
authority, express or implied.

(2) A company may, by writing [2][under its common seal, if any,] authorise any person, either generally

or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either
in or outside India:

3[Provided that in case a company does not have a common seal, the authorisation under this

sub-section shall be made by two directors or by a director and the Company Secretary, wherever the
company has appointed a Company Secretary.]

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

company [4]***.

CHAPTER III

PROSPECTUS AND ALLOTMENT OF SECURITIES

PART I.—Public offer

**23. Public offer and private placement.—(1) A public company may issue securities—**

(a) to public through prospectus (herein referred to as “public offer”) by complying with the

provisions of this Part; or

(b) through private placement by complying with the provisions of Part II of this Chapter; or
(c) through a rights issue or a bonus issue in accordance with the provisions of this Act and in case

of a listed company or a company which intends to get its securities listed also with the provisions of
the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and regulations made
thereunder.
(2) A private company may issue securities—

(a) by way of rights issue or bonus issue in accordance with the provisions of this Act; or
(b) through private placement by complying with the provisions of Part II of this Chapter.

5[(3) Such class of public companies may issue such class of securities for the purposes of listing on

permitted stock exchanges in permissible foreign jurisdictions or such other jurisdictions, as may be
prescribed.

(4) The Central Government may, by notification, exempt any class or classes of public companies

referred to in sub-section (3) from any of the provisions of this Chapter, Chapter IV, section 89, section 90
or section 127 and a copy of every such notification shall, as soon as may be after it is issued, be laid before
both Houses of Parliament.]

_Explanation.—For the purposes of this Chapter, “public offer” includes initial public offer or further_

public offer of securities to the public by a company, or an offer for sale of securities to the public by an
existing shareholder, through issue of a prospectus.

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

**etc.—(1) The provisions contained in this Chapter, Chapter IV and in section 127 shall,—**

(a) in so far as they relate to —

(i) issue and transfer of securities; and

1. Subs. by Act 1 of 2018, s. 7, for “an officer of the company” (w.e.f. 9-2-2018).
2. Subs. by Act 21 of 2015, s. 6, for “under its common seal” (w.e.f. 29-5-2015).
3. The proviso ins. by s. 6, ibid. (w.e.f. 29-5-2015).
4. The words “and have the effect as if it were made under its common seal” omitted by s. 6, ibid. (w.e.f. 29-5-2015).
5. Ins. by Act 29 of 2020, s. 5, (w.e.f. 30-10-2023).

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(ii) non-payment of dividend,

by listed companies or those companies which intend to get their securities listed on any recognised
stock exchange in India, except as provided under this Act, be administered by the Securities and
Exchange Board by making regulations in this behalf;

(b) in any other case, be administered by the Central Government.

_Explanation.—For the removal of doubts, it is hereby declared that all powers relating to all other_

matters relating to prospectus, return of allotment, redemption of preference shares and any other matter
specifically provided in this Act, shall be exercised by the Central Government, the Tribunal or the
Registrar, as the case may be.

(2) The Securities and Exchange Board shall, in respect of matters specified in sub-section (1) and the

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

**25. Document containing offer of securities for sale to be deemed prospectus.—(1) Where a**

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

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of,

or an agreement to allot, securities was made with a view to the securities being offered for sale to the
public if it is shown—

(a) that an offer of the securities or of any of them for sale to the public was made within six months

after the allotment or agreement to allot; or

(b) that at the date when the offer was made, the whole consideration to be received by the company

in respect of the securities had not been received by it.
(3) Section 26 as applied by this section shall have effect as if —

(i) it required a prospectus to state in addition to the matters required by that section to be stated in

a prospectus—

(a) the net amount of the consideration received or to be received by the company in respect of

the securities to which the offer relates; and

(b) the time and place at which the contract where under the said securities have been or are to

be allotted may be inspected;
(ii) the persons making the offer were persons named in a prospectus as directors of a company.

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be

sufficient if the document referred to in sub-section (1) is signed on behalf of the company or firm by two
directors of the company or by not less than one-half of the partners in the firm, as the case may be.

**26. Matters to be stated in prospectus.—(1) Every prospectus issued by or on behalf of a public**

company either with reference to its formation or subsequently, or by or on behalf of any person who is or
has been engaged or interested in the formation of a public company, shall be dated and signed and shall,
1[state such information and set out such reports on financial information as may be specified by the
Securities and Exchange Board in consultation with the Central Government:

Provided that until the Securities and Exchange Board specifies the information and reports on financial

information under this sub-section, the regulations made by the Securities and Exchange Board under the

1. Ins. by Act 1 of 2018, s. 8 (w.e.f. 7-5-2018).

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Securities and Exchange Board of India Act, 1992 (15 of 1992), in respect of such financial information or
reports on financial information shall apply]; —

1*  -  -  -  
(c) make a declaration about the compliance of the provisions of this Act and a statement to the

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

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

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

application relating to shares in or debentures of the company, whether an applicant has a right to
renounce the shares or not under sub-clause (ii) of clause (a) of sub-section (1) of section 62 in favour
of any other person; or

(b) to the issue of a prospectus or form of application relating to shares or debentures which are, or

are to be, in all respects uniform with shares or debentures previously issued and for the time being
dealt in or quoted on a recognised stock exchange.

(3) Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus or a form of

application, whether issued on or with reference to the formation of a company or subsequently.

_Explanation.—The date indicated in the prospectus shall be deemed to be the date of its publication._

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

unless on or before the date of its publication, there has been delivered to the Registrar for [2][filing], a copy
thereof signed by every person who is named there in as a director or proposed director of the company or
by his duly authorised attorney.

(5) A prospectus issued under sub-section (1) shall not include a statement purporting to be made by

an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation
or promotion or management, of the company and has given his written consent to the issue of the
prospectus and has not withdrawn such consent before the delivery of a copy of the prospectus to the
Registrar for [1][filing] and a statement to that effect shall be included in the prospectus.

(6) Every prospectus issued under sub-section (1) shall, on the face of it,—

(a) state that a copy has been delivered for [1][filing] to the Registrar as required under

sub-section (4); and

(b) specify any documents required by this section to be attached to the copy so delivered or refer

to statements included in the prospectus which specify these documents.

3*  -  -  -  
(8) No prospectus shall be valid if it is issued more than ninety days after the date on which a copy

thereof is delivered to the Registrar under sub-section (4).

(9) If a prospectus is issued in contravention of the provisions of this section, the company shall be

punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh
rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable [4]***
with fine which shall not be less than fifty thousand rupees but which may extend to [5][three lakh rupees].

1. Clauses (a), (b) and (d) omitted by Act 1 of 2018, s. 8 (w.e.f. 7-5-2018).
2. Subs. by Act 22 of 2019, s. 6, for “registration” (w.e.f. 15-8-2019).
3. Sub-section (7) omitted by s. 6, ibid. (w.e.f. 15-8-2019).
4. The words “with imprisonment for a term which may extend to three years or” omitted by Act 29 of 2020, s. 6 (w.e.f. 21-12
2020).

5. Subs. by s. 6, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).

40


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**27. Variation in terms of contract or objects in prospectus.—(1) A company shall not, at any time,**

vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued,
except subject to the approval of, or except subject to an authority given by the company in general meeting
by way of special resolution:

Provided that the details, as may be prescribed, of the notice in respect of such resolution to

shareholders, shall also be published in the newspapers (one in English and one in vernacular language) in
the city where the registered office of the company is situated indicating clearly the justification for such
variation:

Provided further that such company shall not use any amount raised by it through prospectus for buying,

trading or otherwise dealing in equity shares of any other listed company.

(2) The dissenting shareholders being those shareholders who have not agreed to the proposal to vary

the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or
controlling shareholders at such exit price, and in such manner and conditions as may be specified by the
Securities and Exchange Board by making regulations in this behalf.

**28. Offer of sale of shares by certain members of company.—(1) Where certain members of a**

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

(2) Any document by which the offer of sale to the public is made shall, for all purposes, be deemed to

be a prospectus issued by the company and all laws and rules made thereunder as to the contents of the
prospectus and as to liability in respect of mis-statements in and omission from prospectus or otherwise
relating to prospectus shall apply as if this is a prospectus issued by the company.

(3) The members, whether individuals or bodies corporate or both, whose shares are proposed to be

offered to the public, shall collectively authorise the company, whose shares are offered for sale to the
public, to take all actions in respect of offer of sale for and on their behalf and they shall reimburse the
company all expenses incurred by it on this matter.

**29. Public offer of securities to be in dematerialised form.—(1) Notwithstanding anything contained**

in any other provisions of this Act,—

(a) every company making public offer; and
(b) such other class or classes of [1]*** companies as may be prescribed,

shall issue the securities only in dematerialised form by complying with the provisions of the Depositories
Act, 1996 (22 of 1996) and the regulations made thereunder.

2[(1A) In case of such class or classes of unlisted companies as may be prescribed, the securities shall

be held or transferred only in dematerialised form in the manner laid down in the Depositories Act, 1996
and the regulations made thereunder.]

(2) Any company, other than a company mentioned in sub-section (1), may convert its securities into

dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or
in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and
the regulations made thereunder.

**30. Advertisement of prospectus.—Where an advertisement of any prospectus of a company is**

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

**31. Shelf prospectus.—(1) Any class or classes of companies, as the Securities and Exchange Board**

may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the
first offer of securities included therein which shall indicate a period not exceeding one year as the period
of validity of such prospectus which shall commence from the date of opening of the first offer of securities
under that prospectus, and in respect of a second or subsequent offer of such securities issued during the
period of validity of that prospectus, no further prospectus is required.

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

containing all material facts relating to new charges created, changes in the financial position of the

1. The word “public” omitted by Act 22 of 2019, s. 7 (w.e.f. 15-8-2019).
2. Ins. by s. 7, ibid. (w.e.f. 15-8-2019).

41


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company as have occurred between the first offer of securities or the previous offer of securities and the
succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the
prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus:

Provided that where a company or any other person has received applications for the allotment of

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

(3) Where an information memorandum is filed, every time an offer of securities is made under

sub-section (2), such memorandum together with the shelf prospectus shall be deemed to be a prospectus.

_Explanation.—For the purposes of this section, the expression “shelf prospectus” means a prospectus_

in respect of which the securities or class of securities included therein are issued for subscription in one or
more issues over a certain period without the issue of a further prospectus.

**32. Red herring prospectus.—(1) A company proposing to make an offer of securities may issue a**

red herring prospectus prior to the issue of a prospectus.

(2) A company proposing to issue a red herring prospectus under sub-section (1) shall file it with the

Registrar at least three days prior to the opening of the subscription list and the offer.

(3) A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any

variation between the red herring prospectus and a prospectus shall be highlighted as variations in the
prospectus.

(4) Upon the closing of the offer of securities under this section, the prospectus stating therein the total

capital raised, whether by way of debt or share capital, and the closing price of the securities and any other
details as are not included in the red herring prospectus shall be filed with the Registrar and the Securities
and Exchange Board.

_Explanation.—For the purposes of this section, the expression “red herring prospectus” means a_

prospectus which does not include complete particulars of the quantum or price of the securities included
therein.

**33. Issue of application forms for securities.—(1) No form of application for the purchase of any of**

the securities of a company shall be issued unless such form is accompanied by an abridged prospectus:

Provided that nothing in this sub-section shall apply if it is shown that the form of application was

issued—

(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement

with respect to such securities; or

(b) in relation to securities which were not offered to the public.

(2) A copy of the prospectus shall, on a request being made by any person before the closing of the

subscription list and the offer, be furnished to him.

(3) If a company makes any default in complying with the provisions of this section, it shall be liable

to a penalty of fifty thousand rupees for each default.

**34. Criminal liability for mis-statements in prospectus.—Where a prospectus, issued, circulated or**

distributed under this Chapter, includes any statement which is untrue or misleading in form or context in
which it is included or where any inclusion or omission of any matter is likely to mislead, every person who
authorises the issue of such prospectus shall be liable under section 447:

Provided that nothing in this section shall apply to a person if he proves that such statement or omission

was immaterial or that he had reasonable grounds to believe, and did up to the time of issue of the prospectus
believe, that the statement was true or the inclusion or omission was necessary.

**35. Civil liability for mis-statements in prospectus.—(1) Where a person has subscribed for securities**

of a company acting on any statement included, or the inclusion or omission of any matter, in the prospectus

42


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which is misleading and has sustained any loss or damage as a consequence thereof, the company and every
person who—

(a) is a director of the company at the time of the issue of the prospectus;

(b) has authorised himself to be named and is named in the prospectus as a director of the company,

or has agreed to become such director, either immediately or after an interval of time;

(c) is a promoter of the company;

(d) has authorised the issue of the prospectus; and

(e) is an expert referred to in sub-section (5) of section 26,

shall, without prejudice to any punishment to which any person may be liable under section 36, be liable to
pay compensation to every person who has sustained such loss or damage.

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

(a) that, having consented to become a director of the company, he withdrew his consent before the

issue of the prospectus, and that it was issued without his authority or consent; or

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware

of its issue, he forthwith gave a reasonable public notice that it was issued without his knowledge or
consent.

1[(c) that, as regards every misleading statement purported to be made by an expert or contained in

what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and
fair representation of the statement, or a correct copy of, or a correct and fair extract from, the report or
valuation; and he had reasonable ground to believe and did up to the time of the issue of the prospectus
believe, that the person making the statement was competent to make it and that the said person had
given the consent required by sub-section (5) of section 26 to the issue of the prospectus and had not
withdrawn that consent before [2][filing of a copy of the prospectus with the Registrar] or, to the
defendant's knowledge, before allotment thereunder.]

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

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

**36. Punishment for fraudulently inducing persons to invest money. —Any person who, either**

knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading,
or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into,—

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting

securities; or

(b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of the

parties from the yield of securities or by reference to fluctuations in the value of securities; or

(c) any agreement for, or with a view to obtaining credit facilities from any bank or financial

institution,

shall be liable for action under section 447.

**37. Action by affected persons.—A suit may be filed or any other action may be taken under section**

34 or section 35 or section 36 by any person, group of persons or any association of persons affected by
any misleading statement or the inclusion or omission of any matter in the prospectus.

**38. Punishment for personation for acquisition, etc., of securities.—(1) Any person who—**

(a) makes or abets making of an application in a fictitious name to a company for acquiring, or

subscribing for, its securities; or

1. Ins. by Act 1 of 2018, s. 9 (w.e.f. 9-2-2018).
2. Subs. by Act 22 of 2019, s. 8, for “delivery of a copy of the prospectus for registration” (w.e.f. 15-8-2019).

43


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(b) makes or abets making of multiple applications to a company in different names or in different

combinations of his name or surname for acquiring or subscribing for its securities; or

(c) otherwise induces directly or indirectly a company to allot, or register any transfer of, securities

to him, or to any other person in a fictitious name,

shall be liable for action under section 447.

(2) The provisions of sub-section (1) shall be prominently reproduced in every prospectus issued by a

company and in every form of application for securities.

(3) Where a person has been convicted under this section, the Court may also order disgorgement of

gain, if any, made by, and seizure and disposal of the securities in possession of, such person.

(4) The amount received through disgorgement or disposal of securities under sub-section (3) shall be

credited to the Investor Education and Protection Fund.

**39. Allotment of securities by company.—(1) No allotment of any securities of a company offered to**

the public for subscription shall be made unless the amount stated in the prospectus as the minimum amount
has been subscribed and the sums payable on application for the amount so stated have been paid to and
received by the company by cheque or other instrument.

(2) The amount payable on application on every security shall not be less than five per cent. of the

nominal amount of the security or such other percentage or amount, as may be specified by the Securities
and Exchange Board by making regulations in this behalf.

(3) If the stated minimum amount has not been subscribed and the sum payable on application is not

received within a period of thirty days from the date of issue of the prospectus, or such other period as may
be specified by the Securities and Exchange Board, the amount received under sub-section (1) shall be
returned within such time and manner as may be prescribed.

(4) Whenever a company having a share capital makes any allotment of securities, it shall file with the

Registrar a return of allotment in such manner as may be prescribed.

(5) In case of any default under sub-section (3) or sub-section (4), the company and its officer who is

in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which
such default continues or one lakh rupees, whichever is less.

**40. Securities to be dealt with in stock exchanges.—(1) Every company making public offer shall,**

before making such offer, make an application to one or more recognised stock exchange or exchanges and
obtain permission for the securities to be dealt with in such stock exchange or exchanges.

(2) Where a prospectus states that an application under sub-section (1) has been made, such prospectus

shall also state the name or names of the stock exchange in which the securities shall be dealt with.

(3) All monies received on application from the public for subscription to the securities shall be kept in

a separate bank account in a scheduled bank and shall not be utilised for any purpose other than—

(a) for adjustment against allotment of securities where the securities have been permitted to be

dealt with in the stock exchange or stock exchanges specified in the prospectus; or

(b) for the repayment of monies within the time specified by the Securities and Exchange Board,

received from applicants in pursuance of the prospectus, where the company is for any other reason
unable to allot securities.

(4) Any condition purporting to require or bind any applicant for securities to waive compliance with

any of the requirements of this section shall be void.

(5) If a default is made in complying with the provisions of this section, the company shall be punishable

with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees and every

44


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officer of the company who is in default shall be punishable [1]*** or with fine which shall not be less than
fifty thousand rupees but which may extend to [2][three lakh rupees].

(6) A company may pay commission to any person in connection with the subscription to its securities

subject to such conditions as may be prescribed.

**41. Global depository receipt.—A company may, after passing a special resolution in its general**

meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions,
as may be prescribed.

PART II.—Private placement

**3[42. Issue of shares on private placement basis.—(1) A company may, subject to the provisions of**

this section, make a private placement of securities.

(2) A private placement shall be made only to a select group of persons who have been identified by

the Board (herein referred to as “identified persons”), whose number shall not exceed fifty or such higher
number as may be prescribed [excluding the qualified institutional buyers and employees of the company
being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of
sub-section (1) of section 62], in a financial year subject to such conditions as may be prescribed.

(3) A company making private placement shall issue private placement offer and application in such

form and manner as may be prescribed to identified persons, whose names and addresses are recorded by
the company in such manner as may be prescribed:

Provided that the private placement offer and application shall not carry any right of renunciation.
_Explanation I.—”private placement” means any offer or invitation to subscribe or issue of securities to_

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

_Explanation II.—”qualified institutional buyer” means the qualified institutional buyer as defined in_

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

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

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

(4) Every identified person willing to subscribe to the private placement issue shall apply in the private

placement and application issued to such person alongwith subscription money paid either by cheque or
demand draft or other banking channel and not by cash:

Provided that a company shall not utilise monies raised through private placement unless allotment is

made and the return of allotment is filed with the Registrar in accordance with sub-section (8).

(5) No fresh offer or invitation under this section shall be made unless the allotments with respect to

any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or
abandoned by the company:

Provided that, subject to the maximum number of identified persons under sub-section (2), a company

may, at any time, make more than one issue of securities to such class of identified persons as may be
prescribed.

(6) A company making an offer or invitation under this section shall allot its securities within sixty days

from the date of receipt of the application money for such securities and if the company is not able to allot
the securities within that period, it shall repay the application money to the subscribers within fifteen days
from the expiry of sixty days and if the company fails to repay the application money within the aforesaid

1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 7 (w.e.f. 21-12
2020).

2. Subs. by s. 7, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).
3. Subs. by Act 1 of 2018, s. 10 (w.e.f. 7-8-2018).

45


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period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum from the
expiry of the sixtieth day:

Provided that monies received on application under this section shall be kept in a separate bank account

in a scheduled bank and shall not be utilised for any purpose other than—

(a) for adjustment against allotment of securities; or
(b) for the repayment of monies where the company is unable to allot securities.

(7) No company issuing securities under this section shall release any public advertisements or utilise

any media, marketing or distribution channels or agents to inform the public at large about such an issue.

(8) A company making any allotment of securities under this section, shall file with the Registrar a

return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed,
including a complete list of all allottees, with their full names, addresses, number of securities allotted and
such other relevant information as may be prescribed.

(9) If a company defaults in filing the return of allotment within the period prescribed under sub-section

(8), the company, its promoters and directors shall be liable to a penalty for each default of one thousand
rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.

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

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

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

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

CHAPTER IV

SHARE CAPITAL AND DEBENTURES

**43. Kinds of share capital.—The share capital of a company limited by shares shall be of two kinds,**

namely:—

(a) equity share capital—

(i) with voting rights; or

(ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as

may be prescribed; and

(b) preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference share holders who

are entitled to participate in the proceeds of winding up before the commencement of this Act.

_Explanation.—For the purposes of this section,—_

(i) “equity share capital”, with reference to any company limited by shares, means all share capital

which is not preference share capital;

(ii) “preference share capital”, with reference to any company limited by shares, means that part of

the issued share capital of the company which carries or would carry a preferential right with respect
to—

(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which

may either be free of or subject to income-tax; and

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

capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the
payment of any fixed premium or premium on any fixed scale, specified in the memorandum or
articles of the company;

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_(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or_

both of the following rights, namely:—

(a) that in respect of dividends, in addition to the preferential rights to the amounts specified in

sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent, with
capital not entitled to the preferential right aforesaid;

(b) that in respect of capital, in addition to the preferential right to the repayment, on a winding

up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate, whether
fully or to a limited extent, with capital not entitled to that preferential right in any surplus which
may remain after the entire capital has been repaid.

**44. Nature of shares or debentures.—The shares or debentures or other interest of any member in a**

company shall be movable property transferable in the manner provided by the articles of the company.

**45. Numbering of shares.—Every share in a company having a share capital shall be distinguished by**

its distinctive number:

Provided that nothing in this section shall apply to a share held by a person whose name is entered as

holder of beneficial interest in such share in the records of a depository.

**46. Certificate of shares.—(1) A certificate, [1][issued under the common seal, if any, of the company**

or signed by two directors or by a director and the Company Secretary, wherever the company has appointed
a Company Secretary], specifying the shares held by any person, shall be prima facie evidence of the title
of the person to such shares.

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

(a) is proved to have been lost or destroyed; or

(b) has been defaced, mutilated or torn and is surrendered to the company.

(3) Notwithstanding anything contained in the articles of a company, the manner of issue of a certificate

of shares or the duplicate thereof, the form of such certificate, the particulars to be entered in the register of
members and other matters shall be such as may be prescribed.

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

the interest of the beneficial owner.

(5) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be

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

**47. Voting rights.—(1) Subject to the [2][provisions of section 43, sub-section (2) of section 50 and sub-**

section (1) of section 188],—

(a) every member of a company limited by shares and holding equity share capital therein, shall

have a right to vote on every resolution placed before the company; and

(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital

of the company.

(2) Every member of a company limited by shares and holding any preference share capital therein

shall, in respect of such capital, have a right to vote only on resolutions placed before the company which
directly affect the rights attached to his preference shares and, any resolution for the winding up of the
company or for the repayment or reduction of its equity or preference share capital and his voting right on
a poll shall be in proportion to his share in the paid-up preference share capital of the company:

1. Subs. by Act 21 of 2015, s. 7, for “issued under the common seal of the company” (w.e.f. 29-5-2015).
2. Subs. by Act 1 of 2018, s. 11, for “provisions of section 43 and sub-section (2) of section 50” (w.e.f. 9-2-2018).

47


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Provided that the proportion of the voting rights of equity shareholders to the voting rights of the

preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity shares
bears to the paid-up capital in respect of the preference shares:

Provided further that where the dividend in respect of a class of preference shares has not been paid for

a period of two years or more, such class of preference shareholders shall have a right to vote on all the
resolutions placed before the company.

**48. Variations of shareholders’ rights.—(1) Where a share capital of the company is divided into**

different classes of shares, the rights attached to the shares of any class may be varied with the consent in
writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special
resolution passed at a separate meeting of the holders of the issued shares of that class,—

(a) if provision with respect to such variation is contained in the memorandum or articles of the

company; or

(b) in the absence of any such provision in the memorandum or articles, if such variation is not

prohibited by the terms of issue of the shares of that class:

Provided that if variation by one class of shareholders affects the rights of any other class of

shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the
provisions of this section shall apply to such variation.

(2) Where the holders of not less than ten per cent. of the issued shares of a class did not consent to

such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal
to have the variation cancelled, and where any such application is made, the variation shall not have effect
unless and until it is confirmed by the Tribunal:

Provided that an application under this section shall be made within twenty-one days after the date on

which the consent was given or the resolution was passed, as the case maybe, and may be made on behalf
of the shareholders entitled to make the application by such one or more of their number as they may appoint
in writing for the purpose.

(3) The decision of the Tribunal on any application under sub-section (2) shall be binding on the

shareholders.

(4) The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof

with the Registrar.

1* ***** ***** ***** *****

**49. Calls on shares of same class to be made on uniform basis.—Where any calls for further share**

capital are made on the shares of a class, such calls shall be made on a uniform basis on all shares falling
under that class.

_Explanation.—For the purposes of this section, shares of the same nominal value on which different_

amounts have been paid-up shall not be deemed to fall under the same class.

**50. Company to accept unpaid share capital, although not called up.—(1) A company may, if so**

authorised by its articles, accept from any member, the whole or a part of the amount remaining unpaid on
any shares held by him, even if no part of that amount has been called up.

(2) A member of the company limited by shares shall not be entitled to any voting rights in respect of

the amount paid by him under sub-section (1) until that amount has been called up.

**51. Payment of dividend in proportion to amount paid-up.—A company may, if so authorised by**

its articles, pay dividends in proportion to the amount paid-up on each share.

1. Sub-section (5) omitted by Act 29 of 2020, s. 8 (w.e.f. 21-12-2020).

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**52. Application of premiums received on issue of shares.—(1) Where a company issues shares at a**

premium, whether for cash or otherwise, a sum equal to the aggregate amount of the premium received on
those shares shall be transferred to a “securities premium account” and the provisions of this Act relating
to reduction of share capital of a company shall, except as provided in this section, apply as if the securities
premium account were the paid-up share capital of the company.

(2) Notwithstanding anything contained in sub-section (1), the securities premium account may be

applied by the company—

(a) towards the issue of unissued shares of the company to the members of the company as fully

paid bonus shares;

(b) in writing off the preliminary expenses of the company;

(c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of

shares or debentures of the company;

(d) in providing for the premium payable on the redemption of any redeemable preference shares

or of any debentures of the company; or

(e) for the purchase of its own shares or other securities under section 68.

(3) The securities premium account may, notwithstanding anything contained in sub-sections (1) and

(2), be applied by such class of companies, as may be prescribed and whose financial statement comply
with the accounting standards prescribed for such class of companies under section 133,—

(a) in paying up unissued equity shares of the company to be issued to members of the company as

fully paid bonus shares; or

(b) in writing off the expenses of or the commission paid or discount allowed on any issue of equity

shares of the company; or

(c) for the purchase of its own shares or other securities under section 68.

**53. Prohibition on issue of shares at discount.—(1) Except as provided in section 54, a company**

shall not issue shares at a discount.

(2) Any share issued by a company at a [1][discount] shall be void.

2[(2A) Notwithstanding anything contained in sub-sections (1) and (2), a company may issue shares at a

discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan
or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the
Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking (Regulation)
Act, 1949 (10 of 1949).]

3[(3) Where any company fails to comply with the provisions of this section, such company and every

officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount
raised through the issue of shares at a discount of five lakh rupees, whichever is less, and the company shall
also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the
date of issue of such shares to the persons to whom such shares have been issued.]

**54. Issue of sweat equity shares.—(1) Notwithstanding anything contained in section 53, a company**

may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled,
namely:—

_(a) the issue is authorised by a special resolution passed by the company;_

1. Subs. by Act 1 of 2018, s. 12, for “discounted price” (w.e.f. 9-2-2018).
2. Ins. by s. 12, ibid. (w.e.f. 9-2-2018).
3. Subs. by Act 22 of 2019, s. 9, for sub-section (3) (w.e.f. 2-11-2018).

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_(b) the resolution specifies the number of shares, the current market price, consideration, if any,_

and the class or classes of directors or employees to whom such equity shares are to be issued;

1*     -     -     -     
_(d) where the equity shares of the company are listed on a recognised stock exchange, the sweat_

equity shares are issued in accordance with the regulations made by the Securities and Exchange Board
in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such
rules as may be prescribed.

(2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity

shares shall be applicable to the sweat equity shares issued under this section and the holders of such shares
shall rank pari passu with other equity shareholders.

**55. Issue and redemption of preference shares.—(1) No company limited by shares shall, after the**

commencement of this Act, issue any preference shares which are irredeemable.

(2) A company limited by shares may, if so authorised by its articles, issue preference shares which are

liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such
conditions as may be prescribed:

Provided that a company may issue preference shares for a period exceeding twenty years for

infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an
annual basis at the option of such preferential shareholders:

Provided further that—

(a) no such shares shall be redeemed except out of the profits of the company which would

otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the
purposes of such redemption;

(b) no such shares shall be redeemed unless they are fully paid;

(c) where such shares are proposed to be redeemed out of the profits of the company, there shall,

out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to
a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act relating
to reduction of share capital of a company shall, except as provided in this section, apply as if the
Capital Redemption Reserve Account were paid-up share capital of the company; and

(d) (i) in case of such class of companies, as may be prescribed and whose financial statement

comply with the accounting standards prescribed for such class of companies under section 133, the
premium, if any, payable on redemption shall be provided for out of the profits of the company, before
the shares are redeemed:

Provided also that premium, if any, payable on redemption of any preference shares issued on or

before the commencement of this Act by any such company shall be provided for out of the profits of
the company or out of the company’s securities premium account, before such shares are redeemed.

(ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on redemption

shall be provided for out of the profits of the company or out of the company’s securities premium
account, before such shares are redeemed.

## (3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any,

on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed
preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares
and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable
preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed
preference shares, and on the issue of such further redeemable preference shares, the unredeemed
preference shares shall be deemed to have been redeemed:

1. Clause (c) omitted by Act 1 of 2018, s. 13 (w.e.f. 7-5-2018).

50


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Provided that the Tribunal shall, while giving approval under this sub-section, order the redemption

forthwith of preference shares held by such persons who have not consented to the issue of further
redeemable preference shares.

_Explanation.—For the removal of doubts, it is hereby declared that the issue of further redeemable_

preference shares or the redemption of preference shares under this section shall not be deemed to be an
increase or, as the case may be, a reduction, in the share capital of the company.

(4) The capital redemption reserve account may, notwithstanding anything in this section, be applied

by the company, in paying up unissued shares of the company to be issued to members of the company as
fully paid bonus shares.

_Explanation.—For the purposes of sub-section (2), the term “infrastructure projects” means the_

infrastructure projects specified in Schedule VI.

**56.Transfer and transmission of securities.—(1) A company shall not register a transfer of securities**

of the company, or the interest of a member in the company in the case of a company having no share
capital, other than the transfer between persons both of whose names are entered as holders of beneficial
interest in the records of a depository, unless a proper instrument of transfer, in such form as may be
prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and
specifying the name, address and occupation, if any, of the transferee has been delivered to the company
by the transferor or the transferee within a period of sixty days from the date of execution, along with the
certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment
of securities:

Provided that where the instrument of transfer has been lost or the instrument of transfer has not been

delivered within the prescribed period, the company may register the transfer on such terms as to indemnity
as the Board may think fit.

(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on receipt of an

intimation of transmission of any right to securities by operation of law from any person to whom such
right has been transmitted.

(3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer

shall not be registered, unless the company gives the notice of the application, in such manner as may be
prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from the
receipt of notice.

(4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or

other authority, deliver the certificates of all securities allotted, transferred or transmitted—

(a) within a period of two months from the date of incorporation, in the case of subscribers to the

memorandum;

(b) within a period of two months from the date of allotment, in the case of any allotment of any of

its shares;

(c) within a period of one month from the date of receipt by the company of the instrument of

transfer under sub-section (1) or, as the case may be, of the intimation of transmission under        subsection (2), in the case of a transfer or transmission of securities;

(d) within a period of six months from the date of allotment in the case of any allotment of

debenture:

Provided that where the securities are dealt with in a depository, the company shall intimate the details

of allotment of securities to depository immediately on allotment of such securities.

(5) The transfer of any security or other interest of a deceased person in a company made by his legal

representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the
holder at the time of the execution of the instrument of transfer.

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1[(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the

company and every officer of the company who is in default shall be liable to a penalty of fifty thousand
rupees.]

(7) Without prejudice to any liability under the Depositories Act, 1996 (22 of 1996), where any

depository or depository participant, with an intention to defraud a person, has transferred shares, it shall
be liable under section 447.

**57. Punishment for personation of shareholder.—If any person deceitfully personates as an owner**

of any security or interest in a company, or of any share warrant or coupon issued in pursuance of this Act,
and thereby obtains or attempts to obtain any such security or interest or any such share warrant or coupon,
or receives or attempts to receive any money due to any such owner, he shall be punishable with
imprisonment for a term which shall not be less than one year but which may extend to three years and with
fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

**58. Refusal of registration and appeal against refusal.—(1) If a private company limited by shares**

refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the
transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in
the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the
intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal
to the transfer or and the transferee or to the person giving intimation of such transmission, as the case may
be, giving reasons for such refusal.

(2) Without prejudice to sub-section (1), the securities or other interest of any member in a public

company shall be freely transferable:

Provided that any contract or arrangement between two or more persons in respect of transfer of

securities shall be enforceable as a contract.

(3) The transferee may appeal to the Tribunal against the refusal within a period of thirty days from the

date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days
from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was
delivered to the company.

(4) If a public company without sufficient cause refuses to register the transfer of securities within a

period of thirty days from the date on which the instrument of transfer or the intimation of transmission, as
the case may be, is delivered to the company, the transferee may, within a period of sixty days of such
refusal or where no intimation has been received from the company, within ninety days of the delivery of
the instrument of transfer or intimation of transmission, appeal to the Tribunal.

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or sub-section (4), may,

after hearing the parties, either dismiss the appeal, or by order—

_(a) direct that the transfer or transmission shall be registered by the company and the company shall_

comply with such order within a period of ten days of the receipt of the order; or

_(b) direct rectification of the register and also direct the company to pay damages, if any, sustained_

by any party aggrieved.

(6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with

imprisonment for a term which shall not be less than one year but which may extend to three years and with
fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

**59. Rectification of register of members.—(1) If the name of any person is, without sufficient cause,**

entered in the register of members of a company, or after having been entered in the register, is, without
sufficient cause, omitted there from, or if a default is made, or unnecessary delay takes place in entering in
the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any
member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal,

1. Subs. by Act 29 of 2020, s. 9, for sub-section (6) (w.e.f. 21-12-2020).

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or to a competent court outside India, specified by the Central Government by notification, in respect of
foreign members or debenture holders residing outside India, for rectification of the register.

(2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either

dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a
period of ten days of the receipt of the order or direct rectification of the records of the depository or the
register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved.

(3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such

securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights
have been suspended by an order of the Tribunal.

(4) Where the transfer of securities is in contravention of any of the provisions of the Securities

Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992
(15 of 1992) or this Act or any other law for the time being in force, the Tribunal may, on an application
made by the depository, company, depository participant, the holder of the securities or the Securities and
Exchange Board, direct any company or a depository to set right the contravention and rectify its register
or records concerned.

1*  -  -  - *.

**60. Publication of authorised, subscribed and paid-up capital.—(1) Where any notice,**

advertisement or other official publication, or any business letter, billhead or letter paper of a company
contains a statement of the amount of the authorised capital of the company, such notice, advertisement or
other official publication, or such letter, billhead or letter paper shall also contain a statement, in an equally
prominent position and in equally conspicuous characters, of the amount of the capital which has been
subscribed and the amount paid-up.

(2) If any default is made in complying with the requirements of sub-section (1), the company shall be

liable to pay a penalty of ten thousand rupees and every officer of the company who is in default shall be
liable to pay a penalty of five thousand rupees, for each default.

**61. Power of limited company to alter its share capital.—(1) A limited company having a share**

capital may, if so authorised by its articles, alter its memorandum in its general meeting to—

(a) increase its authorised share capital by such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into shares of a larger amount than its

existing shares:

Provided that no consolidation and division which results in changes in the voting percentage of

shareholders shall take effect unless it is approved by the Tribunal on an application made in the
prescribed manner;

_(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-_

up shares of any denomination;

_(d)_ sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the

memorandum, so, however, that in the sub-division the proportion between the amount paid and the
amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from
which the reduced share is derived;

_(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been_

taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount
of the shares so cancelled.

(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share

capital.

**62. Further issue of share capital.—(1) Where at any time, a company having a share capital proposes**

to increase its subscribed capital by the issue of further shares, such shares shall be offered—

1. Sub-section (5) omitted by Act 29 of 2020, s. 10 (w.e.f. 21-12-2020).

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(a) to persons who, at the date of the offer, are holders of equity shares of the company in

proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a
letter of offer subject to the following conditions, namely:—

(i) the offer shall be made by notice specifying the number of shares offered and limiting a time

not being less than fifteen days [1][or such lesser number of days as may be prescribed] and not
exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be
deemed to have been declined;

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed

to include a right exercisable by the person concerned to renounce the shares offered to him or any
of them in favour of any other person; and the notice referred to in clause (i) shall contain a
statement of this right;

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier

intimation from the person to whom such notice is given that he declines to accept the shares
offered, the Board of Directors may dispose of them in such manner which is not            disadvantageous to the share holders and the company;

(b) to employees under a scheme of employees’ stock option, subject to special resolution passed

by company and subject to such conditions as may be prescribed; or

(c) to any persons, if it is authorised by a special resolution, whether or not those persons include

the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash,
if the price of such shares is determined by the valuation report [2][of a registered valuer, subject to the
compliance with the applicable provisions of Chapter III and any other conditions as may be
prescribed].

3[(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through

registered post or speed post or through electronic mode or courier or any other mode having proof of
delivery to all the existing shareholders at least three days before the opening of the issue.]

(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by

the exercise of an option as a term attached to the debentures issued or loan raised by the company to
convert such debentures or loans into shares in the company:

Provided that the terms of issue of such debentures or loan containing such an option have been

approved before the issue of such debentures or the raising of loan by a special resolution passed by the
company in general meeting.

(4) Notwithstanding anything contained in sub-section (3), where any debentures have been issued, or

loan has been obtained from any Government by a company, and if that Government considers it necessary
in the public interest so to do, it may, by order, direct that such debentures or loans or any part thereof shall
be converted into shares in the company on such terms and conditions as appear to the Government to be
reasonable in the circumstances of the case even if terms of the issue of such debentures or the raising of
such loans do not include a term for providing for an option for such conversion:

Provided that where the terms and conditions of such conversion are not acceptable to the company, it

may, within sixty days from the date of communication of such order, appeal to the Tribunal which shall
after hearing the company and the Government pass such order as it deems fit.

(5) In determining the terms and conditions of conversion under sub-section (4), the Government shall

have due regard to the financial position of the company, the terms of issue of debentures or loans, as the
case may be, the rate of interest payable on such debentures or loans and such other matters as it may
consider necessary.

(6) Where the Government has, by an order made under sub-section (4), directed that any debenture or

loan or any part thereof shall be converted into shares in a company and where no appeal has been preferred
to the Tribunal under sub-section (4) or where such appeal has been dismissed, the memorandum of such

1. Ins. by Act 29 of 2020, s. 11 (w.e.f. 22-1-2021).
2. Subs. by Act 1 of 2018, s. 14, for “of a registered valuer subject to such conditions as may be prescribed” (w.e.f. 9-2-2018).
3. Subs. by s. 14, ibid., for sub-section (2) (w.e.f. 9-2-2018).

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company shall, where such order has the effect of increasing the authorised share capital of the company,
stand altered and the authorised share capital of such company shall stand increased by an amount equal to
the amount of the value of shares which such debentures or loans or part thereof has been converted into.

**63. Issue of bonus shares.—(1) A company may issue fully paid-up bonus shares to its members, in**

any manner whatsoever, out of—

(i) its free reserves;

(ii) the securities premium account; or

(iii) the capital redemption reserve account:
Provided that no issue of bonus shares shall be made by capitalising reserves created by the

revaluation of assets.

(2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus

shares under sub-section (1), unless—

(a) it is authorised by its articles;
(b) it has, on the recommendation of the Board, been authorised in the general meeting of the

company;

(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt

securities issued by it;

(d) it has not defaulted in respect of the payment of statutory dues of the employees, such as,

contribution to provident fund, gratuity and bonus;

(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up;

(f) it complies with such conditions as may be prescribed.

(3) The bonus shares shall not be issued in lieu of dividend.

**64. Notice to be given to Registrar for alteration of share capital.—(1) Where—**

(a) a company alters its share capital in any manner specified in sub-section (1) of section 61;

(b) an order made by the Government under sub-section (4) read with sub-section (6) of     section

62 has the effect of increasing authorised capital of a company; or

(c) a company redeems any redeemable preference shares,

the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of
such alteration or increase or redemption, as the case may be, along with an altered memorandum.

1[(2) where any company fails to comply with the provisions of sub-section (1), such company rupees

and every officer who is in default shall be liable to a penalty of [2][five hundred rupees] for each day during
which such default continues, [3][subject to a maximum of five lakh rupees in case of a company and one
lakh rupees in case of an officer who is in default].]

**65. Unlimited company to provide for reserve share capital on conversion into limited**

**company.—An unlimited company having a share capital may, by a resolution for registration as a limited**
company under this Act, do either or both of the following things, namely—

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of

its shares, subject to the condition that no part of the increased capital shall be capable of being called
up except in the event and for the purposes of the company being wound up;

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called

up except in the event and for the purposes of the company being wound up.

1. Subs. by Act 22 of 2019, s. 10, for sub-section (2) (w.e.f. 2-11-2018).
2. Subs. by Act 29 of 2020, s. 12, for “one thousand rupees” (w.e.f. 21-12-2020).
3. Subs. by s. 12, ibid., for “or five lakh rupees whichever is less” (w.e.f. 21-12-2020).

55


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**66. Reduction of share capital.—(1) Subject to confirmation by the Tribunal on an application by the**

company, a company limited by shares or limited by guarantee and having a share capital may, by a special
resolution, reduce the share capital in any manner and in particular, may—

(a) extinguish or reduce the liability on any of its shares in respect of the share capital not

paid-up; or

(b) either with or without extinguishing or reducing liability on any of its shares,—

(i) cancel any paid-up share capital which is lost or is unrepresented by available assets; or

(ii) pay off any paid-up share capital which is in excess of the wants of the company,

alter its memorandum by reducing the amount of its share capital and of its shares accordingly:

Provided that no such reduction shall be made if the company is in arrears in the repayment of any

deposits accepted by it, either before or after the commencement of this Act, or the interest payable thereon.

(2) The Tribunal shall give notice of every application made to it under sub-section (1) to the Central

Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the
creditors of the company and shall take into consideration the representations, if any, made to it by that
Government, Registrar, the Securities and Exchange Board and the creditors within a period of three months
from the date of receipt of the notice:

Provided that where no representation has been received from the Central Government, Registrar, the

Securities and Exchange Board or the creditors within the said period, it shall be presumed that they have
no objection to the reduction.

(3) The Tribunal may, if it is satisfied that the debt or claim of every creditor of the company has been

discharged or determined or has been secured or his consent is obtained, make an order confirming the
reduction of share capital on such terms and conditions as it deems fit:

Provided that no application for reduction of share capital shall be sanctioned by the Tribunal unless

the accounting treatment, proposed by the company for such reduction is in conformity with the accounting
standards specified in section 133 or any other provision of this Act and a certificate to that effect by the
company’s auditor has been filed with the Tribunal.

(4) The order of confirmation of the reduction of share capital by the Tribunal under sub-section (3)

shall be published by the company in such manner as the Tribunal may direct.

(5) The company shall deliver a certified copy of the order of the Tribunal under sub-section (3) and of

a minute approved by the Tribunal showing—

(a) the amount of share capital;

(b) the number of shares into which it is to be divided;
(c) the amount of each share; and
(d) the amount, if any, at the date of registration deemed to be paid-up on each share,

to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and
issue a certificate to that effect.

(6) Nothing in this section shall apply to buy-back of its own securities by a company under      section

68.

(7) A member of the company, past or present, shall not be liable to any call or contribution in respect

of any share held by him exceeding the amount of difference, if any, between the amount paid on the share,
or reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the
amount of the share as fixed by the order of reduction.

(8) Where the name of any creditor entitled to object to the reduction of share capital under this section

is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to
his debt or claim, not entered on the list of creditors, and after such reduction, the company [1][commits a

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for “is unable, within the meaning of sub-section (2) of section 271,

to pay the amount of his debt or claim,” (w.e.f. 15-11-2016).

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default, within the meaning of section 6 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in
respect of the amount of his debt or claim],—

(a) every person, who was a member of the company on the date of the registration of the order for

reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an amount
not exceeding the amount which he would have been liable to contribute if the company had
commenced winding up on the day immediately before the said date; and

(b) if the company is wound up, the Tribunal may, on the application of any such creditor and proof

of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and make and
enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories
in a winding up.

(9) Nothing in sub-section (8) shall affect the rights of the contributories among themselves.

(10) If any officer of the company—

(a) knowingly conceals the name of any creditor entitled to object to the reduction;

(b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or

(c) abets or is privy to any such concealment or misrepresentation as aforesaid,

he shall be liable under section 447.

1*  -  -  - *.

**67. Restriction on purchase by company or giving of loans by it for purchase of its shares.—(1)**

No company limited by shares or by guarantee and having a share capital shall have power to buy its own
shares unless the consequent reduction of share capital is effected under the provisions of this Act.

(2) No public company shall give, whether directly or indirectly and whether by means of a loan,

guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in
connection with, a purchase or subscription made or to be made, by any person of or for any shares in the
company or in its holding company.

(3) Nothing in sub-section (2) shall apply to—

_(a) the lending of money by a banking company in the ordinary course of its business;_

(b) the provision by a company of money in accordance with any scheme approved by company

through special resolution and in accordance with such requirements as may be prescribed, for the
purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the
purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such
shares held by the employee of the company;

(c) the giving of loans by a company to persons in the employment of the company other than its

directors or key managerial personnel, for an amount not exceeding their salary or wages for a period
of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the
company or its holding company to be held by them by way of beneficial ownership:

Provided that disclosures in respect of voting rights not exercised directly by the employees in respect

of shares to which the scheme relates shall be made in the Board's report in such manner as may be
prescribed.

(4) Nothing in this section shall affect the right of a company to redeem any preference shares issued

by it under this Act or under any previous company law.

(5) If a company contravenes the provisions of this section, it shall be punishable with fine which shall

not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the
company who is in default shall be punishable with imprisonment for a term which may extend to three
years and with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh
rupees.

1. Sub-section (11) omitted by Act 29 of 2020, s. 13 (w.e.f. 21-12-2020).

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**68. Power of company to purchase its own securities.—(1) Notwithstanding anything contained in**

this Act, but subject to the provisions of sub-section (2), a company may purchase its own shares or other
specified securities (hereinafter referred to as buy-back) out of—

(a) its free reserves;

(b) the securities premium account; or

(c) the proceeds of the issue of any shares or other specified securities:

Provided that no buy-back of any kind of shares or other specified securities shall be made out of the

proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.

(2) No company shall purchase its own shares or other specified securities under sub-section (1),

unless—

(a) the buy-back is authorised by its articles;

(b) a special resolution has been passed at a general meeting of the company authorising the

buy-back:

Provided that nothing contained in this clause shall apply to a case where—

(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the

company; and

(ii) such buy-back has been authorised by the Board by means of a resolution passed at its meeting;

(c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free reserves

of the company:

Provided that in respect of the buy-back of equity shares in any financial year, the reference to twenty
five per cent. in this clause shall be construed with respect to its total paid-up equity capital in that financial
year;

(d) the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back

is not more than twice the paid-up capital and its free reserves:

Provided that the Central Government may, by order, notify a higher ratio of the debt to capital and

free reserves for a class or classes of companies;

(e) all the shares or other specified securities for buy-back are fully paid-up;

(f) the buy-back of the shares or other specified securities listed on any recognized stock exchange

is in accordance with the regulations made by the Securities and Exchange Board in this behalf; and

(g) the buy-back in respect of shares or other specified securities other than those specified in clause

(f) is in accordance with such rules as may be prescribed:

Provided that no offer of buy-back under this sub-section shall be made within a period of one year

reckoned from the date of the closure of the preceding offer of buy-back, if any.

(3) The notice of the meeting at which the special resolution is proposed to be passed under clause (b)

of sub-section (2) shall be accompanied by an explanatory statement stating—

(a) a full and complete disclosure of all material facts;

(b) the necessity for the buy-back;

(c) the class of shares or securities intended to be purchased under the buy-back;

(d) the amount to be invested under the buy-back; and

(e) the time-limit for completion of buy-back.

(4) Every buy-back shall be completed within a period of one year from the date of passing of the

special resolution, or as the case may be, the resolution passed by the Board under clause (b) of
sub-section (2).

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(5) The buy-back under sub-section (1) may be—

(a) from the existing shareholders or security holders on a proportionate basis;

(b) from the open market;

(c) by purchasing the securities issued to employees of the company pursuant to a scheme of stock

option or sweat equity.

(6) Where a company proposes to buy-back its own shares or other specified securities under this

section in pursuance of a special resolution under clause (b) of sub-section (2) or a resolution under item
(ii) of the proviso thereto, it shall, before making such buy-back, file with the Registrar and the Securities
and Exchange Board, a declaration of solvency signed by atleast two directors of the company, one of
whom shall be the managing director, if any, in such form as may be prescribed and verified by an affidavit
to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the
company as a result of which they have formed an opinion that it is capable of meeting its liabilities and
will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board:

Provided that no declaration of solvency shall be filed with the Securities and Exchange Board by a

company whose shares are not listed on any recognised stock exchange.

(7) Where a company buys back its own shares or other specified securities, it shall extinguish and

physically destroy the shares or securities so bought back within seven days of the last date of completion
of buy-back.

(8) Where a company completes a buy-back of its shares or other specified securities under this section,

it shall not make a further issue of the same kind of shares or other securities including allotment of new
shares under clause (a) of sub-section (1) of section 62 or other specified securities within a period of six
months except by way of a bonus issue or in the discharge of subsisting obligations such as conversion of
warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity
shares.

(9) Where a company buys back its shares or other specified securities under this section, it shall

maintain a register of the shares or securities so bought, the consideration paid for the shares or securities
bought back, the date of cancellation of shares or securities, the date of extinguishing and physically
destroying the shares or securities and such other particulars as may be prescribed.

(10) A company shall, after the completion of the buy-back under this section, file with the Registrar

and the Securities and Exchange Board a return containing such particulars relating to the buy-back within
thirty days of such completion, as may be prescribed:

Provided that no return shall be filed with the Securities and Exchange Board by a company whose

shares are not listed on any recognised stock exchange.

(11) If a company makes any default in complying with the provisions of this section or any regulation

made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2), the company
shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three
lakh rupees and every officer of the company who is in default shall be punishable [1]*** with fine which
shall not be less than one lakh rupees but which may extend to [2][three lakh rupees].

_Explanation I.—For the purposes of this section and section 70, “specified securities” includes_

employees’ stock option or other securities as may be notified by the Central Government from time to
time.

_Explanation II.—For the purposes of this section, “free reserves” includes securities premium account._

**69. Transfer of certain sums to capital redemption reserve account.—(1) Where a company**

purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal

1. The words “with imprisonment for a term which may extend to three years or” omitted by Act 29 of 2020, s. 14 (w.e.f. 21-12
2020).

2. Subs. by s. 14, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).

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value of the shares so purchased shall be transferred to the capital redemption reserve account and details
of such transfer shall be disclosed in the balance sheet.

(2) The capital redemption reserve account may be applied by the company, in paying up unissued

shares of the company to be issued to members of the company as fully paid bonus shares.

**70. Prohibition for buy-back in certain circumstances.—(1) No company shall directly or indirectly**

purchase its own shares or other specified securities—

(a) through any subsidiary company including its own subsidiary companies;

(b) through any investment company or group of investment companies; or

(c) if a default, is made by the company, in the repayment of deposits accepted either before or after

the commencement of this Act, interest payment thereon, redemption of debentures or preference shares
or payment of dividend to any shareholder, or re payment of any term loan or interest payable thereon
to any financial institution or banking company:

Provided that the buy-back is not prohibited, if the default is remedied and a period of three years

has lapsed after such default ceased to subsist.

(2) No company shall, directly or indirectly, purchase its own shares or other specified securities in

case such company has not complied with the provisions of sections 92, 123,127 and section 129.

**71. Debentures.—(1) A company may issue debentures with an option to convert such debentures into**

shares, either wholly or partly at the time of redemption:

Provided that the issue of debentures with an option to convert such debentures into shares, wholly or

partly, shall be approved by a special resolution passed at a general meeting.

(2) No company shall issue any debentures carrying any voting rights.

(3) Secured debentures may be issued by a company subject to such terms and conditions as may be

prescribed.

(4) Where debentures are issued by a company under this section, the company shall create a debenture

redemption reserve account out of the profits of the company available for payment of dividend and the
amount credited to such account shall not be utilised by the company except for the redemption of
debentures.

(5) No company shall issue a prospectus or make an offer or invitation to the public or to its members

exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or
offer, appointed one or more debenture trustees and the conditions governing the appointment of such
trustees shall be such as may be prescribed.

(6) A debenture trustee shall take steps to protect the interests of the debenture-holders and redress their

grievances in accordance with such rules as may be prescribed.

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any contract with

the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of exempting
a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he fails to show
the degree of care and due diligence required of him as a trustee, having regard to the provisions of the trust
deed conferring on him any power, authority or discretion:

Provided that the liability of the debenture trustee shall be subject to such exemptions as may be agreed

upon by a majority of debenture-holders holding not less than three-fourths in value of the total debentures
at a meeting held for the purpose.

(8) A company shall pay interest and redeem the debentures in accordance with the terms and conditions

of their issue.

(9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are

insufficient or are likely to become in sufficient to discharge the principal amount as and when it becomes
due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the

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company and any other person interested in the matter, by order, impose such restrictions on the incurring
of any further liabilities by the company as the Tribunal may consider necessary in the interests of the
debenture-holders.

(10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest

on the debentures when it is due, the Tribunal may, on the application of any or all of the debenture-holders,
or debenture trustee and, after hearing the parties concerned, direct, by order, the company to redeem the
debentures forth with on payment of principal and interest due thereon.

1*  -  -  -  
(12) A contract with the company to take up and pay for any debentures of the company may be

enforced by a decree for specific performance.

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the

form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to obtain
copies thereof, quantum of debenture redemption reserve required to be created and such other matters.

**72. Power to nominate.—(1) Every holder of securities of a company may, at any time, nominate, in**

the prescribed manner, any person to whom his securities shall vest in the event of his death.

(2) Where the securities of a company are held by more than one person jointly, the joint holders may

together nominate, in the prescribed manner, any person to whom all the rights in the securities shall vest
in the event of death of all the joint holders.

(3) Notwithstanding anything contained in any other law for the time being in force or in any

disposition, whether testamentary or otherwise, in respect of the securities of a company, where a
nomination made in the prescribed manner purports to confer on any person the right to vest the securities
of the company, the nominee shall, on the death of the holder of securities or, as the case may be, on the
death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case may
be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless the
nomination is varied or cancelled in the prescribed manner.

(4) Where the nominee is a minor, it shall be lawful for the holder of the securities, making the

nomination to appoint, in the prescribed manner, any person to become entitled to the securities of the
company, in the event of the death of the nominee during his minority.

CHAPTER V

ACCEPTANCE OF DEPOSITS BY COMPANIES

**73. Prohibition on acceptance of deposits from public.—(1) On and after the commencement of this**

Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner
provided under this Chapter:

Provided that nothing in this sub-section shall apply to a banking company and non-banking financial

company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the
Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.

(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules

as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on
such terms and conditions, including the provision of security, if any, or for the repayment of such deposits
with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the
following conditions, namely:—

(a) issuance of a circular to its members including therein a statement showing the financial position

of the company, the credit rating obtained, the total number of depositors and the amount due towards
deposits in respect of any previous deposits accepted by the company and such other particulars in such
form and in such manner as may be prescribed;

(b) filing a copy of the circular along with such statement with the Registrar within thirty days

before the date of issue of the circular;

1. Sub-section (11) omitted by Act 29 of 2020, s. 15 (w.e.f. 21-12-2020).

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1[(c) depositing, on or before the thirtieth day of April each year, such sum which shall not be less

than twenty per cent. of the amount of its deposits maturing during the following financial year and
kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account;]

2*     -     -     -     
(e) certifying that the company has not committed any default in the repayment of deposits

accepted either before or after the commencement of this Act or payment of interest on,

3[such deposits and where a default had occurred, the company made good the default and a period of five
years had lapsed since the date of making good the default;] and

(f) providing security, if any for the due repayment of the amount of deposit or the interest thereon

including the creation of such charge on the property or assets of the company:

Provided that in case where a company does not secure the deposits or secures such deposits

partially, then, the deposits shall be termed as “unsecured deposits” and shall be so quoted in every
circular, form, advertisement or in any document related to invitation or acceptance of deposits.
(3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in

accordance with the terms and conditions of the agreement referred to in that sub-section.

(4) Where a company fails to repay the deposit or part thereof or any interest thereon under

sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to
pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such
other orders as the Tribunal may deem fit.

(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used

by the company for any purpose other than repayment of deposits.

**74. Repayment of deposits, etc., accepted before commencement of this Act.—(1) Where in respect**

of any deposit accepted by a company before the commencement of this Act, the amount of such deposit
or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any
time thereafter, the company shall—

(a) file, within a period of three months from such commencement or from the date on which such

payments, are due, with the Registrar a statement of all the deposits accepted by the company and sums
remaining unpaid on such amount with the interest payable thereon along with the arrangements made
for such repayment, notwithstanding anything contained in any other law for the time being in force or
under the terms and conditions subject to which the deposit was accepted or any scheme framed under
any law; and

4[(b) repay within three years from such commencement or on or before expiry of the period for

which the deposits were accepted, whichever is earlier:

Provided that renewal of any such deposits shall be done in accordance with the provisions of

Chapter V and the rules made thereunder.]
(2) The Tribunal may on an application made by the company, after considering the financial condition

of the company, the amount of deposit or part thereof and the interest payable thereon and such other
matters, allow further time as considered reasonable to the company to repay the deposit.

(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time

specified in sub-section (1) or such further time as may be allowed by the Tribunal under sub-section (2),
the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due,
be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore
rupees and every officer of the company who is in default shall be punishable with imprisonment which
may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may
extend to two crore rupees, or with both.

**75. Damages for fraud.—(1) Where a company fails to repay the deposit or part thereof or any interest**

thereon referred to in section 74 within the time specified in sub-section (1) of that section or such further
time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that the

1. Subs. by Act 1 of 2018, s. 15, for clause (c) (w.e.f. 15-8-2018).
2. Clause (d) omitted by s. 15, ibid. (w.e.f. 15-8-2018).
3. Subs. by s. 15, ibid., for “such deposits;” (w.e.f. 15-8-2018).
4. Subs. by s. 16, ibid., for clause (b) (w.e.f. 15-8-2018).

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deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer
of the company who was responsible for the acceptance of such deposit shall, without prejudice to the
provisions contained in sub-section (3) of that section and liability under section 447, be personally
responsible, without any limitation of liability, for all or any of the losses or damages that may have been
incurred by the depositors.

(2) Any suit, proceedings or other action may be taken by any person, group of persons or any

association of persons who had incurred any loss as a result of the failure of the company to repay the
deposits or part thereof or any interest thereon.

**76. Acceptance of deposits from public by certain companies.—(1) Notwithstanding anything**

contained in section 73, a public company, having such net worth or turnover as may be prescribed, may
accept deposits from persons other than its members subject to compliance with the requirements provided
in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation
with the Reserve Bank of India, prescribe:

Provided that such a company shall be required to obtain the rating (including its networth, liquidity

and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public
the rating given to the company at the time of invitation of deposits from the public which ensures adequate
safety and the rating shall be obtained for every year during the tenure of deposits:

Provided further that every company accepting secured deposits from the public shall within thirty days

of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted
in favour of the deposit holders in accordance with such rules as may be prescribed.

(2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from

public under this section.

1[76A. Punishment for contravention of section 73 or section 76.—Where a company accepts or

invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of
the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a
company fails to repay the deposit or part thereof or any interest due thereon within the time specified under
section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal
under section73,—

(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the

interest due, be punishable with fine which shall not be less than [2][one crore rupees or twice the amount
of deposit accepted by the company, whichever is lower] but which may extend to ten crore rupees;
and

(b) every officer of the company who is in default shall be punishable with imprisonment which

may extend to [3][seven years and with fine] which shall not be less than twenty-five lakh rupees but
which may extend to two crore rupees, [4]***:
Provided that if it is proved that the officer of the company who is in default, has contravened such

provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors
or creditors or tax authorities, he shall be liable for action under section 447.]

CHAPTER VI

REGISTRATION OF CHARGES

**77. Duty to register charges, etc.—(1) It shall be the duty of every company creating a charge within**

or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and
situated in or outside India, to register the particulars of the charge signed by the company and the chargeholder together with the instruments, if any, creating such charge in such form, on payment of such fees
and in such manner as may be prescribed, with the Registrar within thirty days of its creation:

5[Provided that the Registrar may, on an application by the company, allow such registration to be

made—

(a) in case of charges created before the commencement of the Companies (Amendment) Act,

2019, within a period of three hundred days of such creation; or

1. Ins. by Act 21 of 2015, s. 8 (w.e.f. 29-5-2015).
2. Subs. by Act 1 of 2018, s. 17, for “one crore rupees” (w.e.f. 9-2-2018).
3. Subs. by s. 17, ibid., for “seven years or with fine” (w.e.f. 9-2-2018).
4. The words “or with both” omitted by s. 17, ibid. (w.e.f. 9-2-2018).
5. Subs. by Act 22 of 2019, s. 11, for first and second provisos (w.e.f. 2-11-2018).

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(b) in case of charges created on or after the commencement of the Companies (Amendment) Act,

2019, within a period of sixty days of such creation,

on payment of such additional fees as may be prescribed:

Provided further that if the registration is not made within the period specified—

(a) in clause (a) to the first proviso, the registration of the charges shall be made within six months

from the date of commencement of the Companies (Amendment) Act, 2019, on payment of such
additional fees as may be prescribed and different fees may be prescribed for different classes of
companies;

(b) in clause (b) to the first proviso, the Registrar may, on an application, allow such registration to

be made within a further period of sixty days after payment of such _ad valorem fees as may be_
prescribed.]
Provided also that any subsequent registration of a charge shall not prejudice any right acquired in

respect of any property before the charge is actually registered:

1[Provided also that this section shall not apply to such charges as may be prescribed in consultation

with the Reserve Bank of India.]

(2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of

registration of such charge in such form and in such manner as may be prescribed to the company and, as
the case may be, to the person in whose favour the charge is created.

(3) Notwithstanding anything contained in any other law for the time being in force, no charge created

by a company shall be taken into account by the liquidator [2][appointed under this Act or the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), as the case may be,] or any other creditor unless it is duly registered
under sub-section (1) and a certificate of registration of such charge is given by the Registrar under subsection (2).

(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the money

secured by a charge.

**78. Application for registration of charge.—Where a company fails to [3][register the charge within**

the period of thirty days referred to in sub-section (1) of section 77] without prejudice to its liability in
respect of any offence under this Chapter, the person in whose favour the charge is created may apply to
the Registrar for registration of the charge along with the instrument created for the charge, within such
time and in such form and manner as may be prescribed and the Registrar may, on such application, within
a period of fourteen days after giving notice to the company, unless the company itself registers the charge
or shows sufficient cause why such charge should not be registered, allow such registration on payment of
such fees, as may be prescribed:

Provided that where registration is effected on application of the person in whose favour the charge is

created, that person shall be entitled to recover from the company the amount of any fees or additional fees
paid by him to the Registrar for the purpose of registration of charge.

**79. Section 77 to apply in certain matters.—The provisions of section 77 relating to registration of**

charges shall, so far as may be, apply to—

(a) a company acquiring any property subject to a charge within the meaning of that section; or
(b) any modification in the terms or conditions or the extent or operation of any charge registered

under that section.
**80. Date of notice of charge.—Where any charge on any property or assets of a company or any of its**

undertakings is registered under section 77, any person acquiring such property, assets, undertakings or part
thereof or any share or interest therein shall be deemed to have notice of the charge from the date of such
registration.

**81. Register of charges to be kept by Registrar.—(1) The Registrar shall, in respect of every**

company, keep a register containing particulars of the charges registered under this Chapter in such form
and in such manner as may be prescribed.

1. The proviso ins. by Act 1 of 2018, s. 18 (w.e.f. 7-5-2018).
2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
3. Subs. by Act 1 of 2018, s. 19, for “register the charge within the period specified in section 77” (w.e.f. 7-5-2018).

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(2) A register kept in pursuance of this section shall be open to inspection by any person on payment

of such fees as may be prescribed for each inspection.

**82. Company to report satisfaction of charge.—(1) A company shall give intimation to the Registrar**

in the prescribed form, of the payment or satisfaction in full of any charge registered under this Chapter
within a period of thirty days from the date of such payment or satisfaction [1]***.

2[Provided that the Registrar may, on an application by the company or the charge holder, allow such

intimation of payment or satisfaction to be made within a period of three hundred days of such payment or
satisfaction on payment of such additional fees as may be prescribed.]

(2) The Registrar shall, on receipt of intimation under sub-section (1), cause a notice to be sent to the

holder of the charge calling upon him to show cause within such time not exceeding fourteen days, as may
be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to
the Registrar, and if no cause is shown, by such holder of the charge, the Registrar shall order that a
memorandum of satisfaction shall be entered in the register of charges kept by him under section 81 and
shall inform the company that he has done so:

Provided that the notice referred to in this sub-section shall not be required to be sent, in case the

intimation to the Registrar in this regard is in the specified form and signed by the holder of charge.

(3) If any cause is shown, the Registrar shall record a note to that effect in the register of charges and

shall inform the company.

(4) Nothing in this section shall be deemed to affect the powers of the Registrar to make an entry in the

register of charges under section 83 or otherwise than on receipt of an intimation from the company.

**83. Power of Registrar to make entries of satisfaction and release in absence of intimation from**

**company.—(1) The Registrar may, on evidence being given to his satisfaction with respect to any**
registered charge,—

(a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or
(b) that part of the property or undertaking charged has been released from the charge or has ceased

to form part of the company’s property or undertaking,

enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of
the property or undertaking has been released from the charge or has ceased to form part of the company’s
property or undertaking, as the case may be, notwithstanding the fact that no intimation has been received
by him from the company.

(2) The Registrar shall inform the affected parties within thirty days of making the entry in the register

of charges kept under sub-section (1) of section 81.

**84. Intimation of appointment of receiver or manager.—(1) If any person obtains an order for the**

appointment of a receiver of, or of a person to manage, the property, subject to a charge, of a company or
if any person appoints such receiver or person under any power contained in any instrument, he shall, within
a period of thirty days from the date of the passing of the order or of the making of the appointment, give
notice of such appointment to the company and the Registrar along with a copy of the order or instrument
and the Registrar shall, on payment of the prescribed fees, register particulars of the receiver, person or
instrument in the register of charges.

(2) Any person appointed under sub-section (1) shall, on ceasing to hold such appointment, give to the

company and the Registrar a notice to that effect and the Registrar shall register such notice.

**85. Company’s register of charges.—(1) Every company shall keep at its registered office a register**

of charges in such form and in such manner as may be prescribed, which shall include there in all charges
and floating charges affecting any property or assets of the company or any of its undertakings, indicating
in each case such particulars as may be prescribed:

Provided that a copy of the instrument creating the charge shall also be kept at the registered office of

the company along with the register of charges.

1. Omitted by Act 1 of 2018, s. 20, for certain words (w.e.f. 5-7-2018).
2. The Proviso ins. by s. 20, ibid. (w.e.f. 5-7-2018).

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(2) The register of charges and instrument of charges, kept under sub-section (1) shall be open for

inspection during business hours—

(a) by any member or creditor without any payment of fees; or

(b) by any other person on payment of such fees as may be prescribed,

subject to such reasonable restrictions as the company may, by its articles, impose.

**86. Punishment for contravention.—[1][ [2][(1)] If any company is in default in complying with any of**

the provisions of this Chapter, the company shall be liable to a penalty of five lakh rupees and every officer
of the company who is in default shall be liable to a penalty of fifty thousand rupees].

3[(2) If any person willfully furnishes any false or incorrect information or knowingly suppresses any

material information, required to be registered in accordance with the provisions of section 77, he shall be
liable for action under section 447.]

4[87. Rectification by Central Government in Register of charges.—The Central Government on

being satisfied that—

(a) the omission to give intimate to the Registrar of the payment or satisfaction of a charge, within

the time required under this Chapter; or

(b) the omission or misstatement of any particulars, in any filing previously made to the Registrar

with respect to any charge or modification thereof or with respect to any memorandum of satisfaction
or other entry made in pursuance of section 82 or section 83,

was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the
position of creditors or shareholders of the company, it may, on the application of the company or any
person interested and on such terms and conditions as it deems just and expedient, direct that the time for
the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the
omission or misstatement shall be rectified.]

CHAPTER VII

MANAGEMENT AND ADMINISTRATION

**88. Register of members, etc.—(1) Every company shall keep and maintain the following registers in**

such form and in such manner as may be prescribed, namely:—

(a) register of members indicating separately for each class of equity and preference shares held by

each member residing in or outside India;

(b) register of debenture-holders; and

(c) register of any other security holders.

(2) Every register maintained under sub-section (1) shall include an index of the names included therein.

(3) The register and index of beneficial owners maintained by a depository under section 11 of the

Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the
purposes of this Act.

(4) A company may, if so authorised by its articles, keep in any country outside India, in such manner

as may be prescribed, a part of the register referred to in sub-section (1), called “foreign register” containing
the names and particulars of the members, debenture-holders, other security holders or beneficial owners
residing outside India.

5[(5) If a company does not maintain a register of members or debenture-holders or other security

holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the

1. Subs. by Act 29 of 2020, s. 16, for sub-section (1) (w.e.f. 21-12-2020).
2. Section 86 numbered as sub-section (1) thereof by Act 22 of 2019, s.12 (w.e.f. 2-11-2018).
3. Ins. by s. 12, ibid. (w.e.f. 2-11-2018).
4. Subs. by s. 13, ibid., for section 86 (w.e.f. 2-11-2018).
5. Subs. by Act 29 of 2020, s. 17, for sub-section (5) (w.e.f. 21-12-2020).

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company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default
shall be liable to a penalty of fifty thousand rupees.]

**89. Declaration in respect of beneficial interest in any share.—(1) Where the name of a person is**

entered in the register of members of a company as the holder of shares in that company but who does not
hold the beneficial interest in such shares, such person shall make a declaration within such time and in
such form as may be prescribed to the company specifying the name and other particulars of the person
who holds the beneficial interest in such shares.

(2) Every person who holds or acquires a beneficial interest in share of a company shall make a

declaration to the company specifying the nature of his interest, particulars of the person in whose name
the shares stand registered in the books of the company and such other particulars as may be prescribed.

(3) Where any change occurs in the beneficial interest in such shares, the person referred to in    sub
section (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from
the date of such change, make a declaration to the company in such form and containing such particulars
as may be prescribed.

(4) The Central Government may make rules to provide for the manner of holding and disclosing

beneficial interest and beneficial ownership under this section.

1[(5) If any person fails to make a declaration as required under sub-section (1) or sub-section (2) or

sub-section (3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure,
with a further penalty of two hundred rupees for each day after the first during which such failure continues,
subject to a maximum of five lakh rupees.]

(6) Where any declaration under this section is made to a company, the company shall make a note of

such declaration in the register concerned and shall file, within thirty days from the date of receipt of
declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with such
fees or additional fees as may be prescribed, [2]***.

3[(7) If a company, required to file a return under sub-section (6), fails to do so before the expiry of the

time specified therein, the company and every officer of the company who is in default shall be liable to a
penalty of one thousand rupees for each day during which such failure continues, subject to a maximum of
five lakh rupees in the case of a company and two lakh rupees in case of an officer who is in default.]

(8) No right in relation to any share in respect of which a declaration is required to be made under this

section but not made by the beneficial owner, shall be enforceable by him or by any person claiming through
him.

(9) Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend to

its members under this Act and the said obligation shall, on such payment, stand discharged.

4[(10) For the purposes of this section and section 90, beneficial interest in a share includes, directly or

indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or
together with any other person to—

(i) exercise or cause to be exercised any or all of the rights attached to such share; or
(ii) receive or participate in any dividend or other distribution in respect of such share.]

5[(11) The Central Government may, by notification, exempt any class or classes of persons from

complying with any of the requirements of this section, except sub-section (10), if it is considered necessary
to grant such exemption in the public interest and any such exemption may be granted either unconditionally
or subject to such conditions as may be specified in the notification.]

6[90. Register of significant beneficial owners in a company.—(1) Every individual, who acting

alone or together, or through one or more persons or trust, including a trust and persons resident outside
India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be
prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence

1. Subs. by Act 29 of 2020, s. 18, for sub-section (5) (w.e.f. 21-12-2020).
2. The words and figures “within the time specified under section 403” omitted by Act 1 of 2018, s. 21 (w.e.f. 7-5-2018).
3. Subs. by Act 29 of 2020, s. 18, for sub-section (7) (w.e.f. 21-12-2020).
4. Ins. by Act 1 of 2018, s. 21, (w.e.f. 13-6-2018).

5. Ins. by Act 29 of 2020, s. 18 (w.e.f. 22-1-2021).
6. Subs. by Act 1 of 2018, s. 22, for section 90 (w.e.f. 13-6-2018).

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or control as defined in clause (27) of section 2, over the company (herein referred to as “significant
beneficial owner”), shall make a declaration to the company, specifying the nature of his interest and other
particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any
change thereof, as may be prescribed:

Provided that the Central Government may prescribe a class or classes of persons who shall not be

required to make declaration under this sub-section.

(2) Every company shall maintain a register of the interest declared by individuals under            sub
section (1) and changes therein which shall include the name of individual, his date of birth, address, details
of ownership in the company and such other details as may be prescribed.

(3) The register maintained under sub-section (2) shall be open to inspection by any member of the

company on payment of such fees as may be prescribed.

(4) Every company shall file a return of significant beneficial owners of the company and changes

therein with the Registrar containing names, addresses and other details as may be prescribed within such
time, in such form and manner as may be prescribed.

1[(4A) Every company shall take necessary steps to identify an individual who is a significant beneficial

owner in relation to the company and require him to comply with the provisions of this section.]

(5) A company shall give notice, in the prescribed manner, to any person (whether or not a member of

the company) whom the company knows or has reasonable cause to believe—

(a) to be a significant beneficial owner of the company;
(b) to be having knowledge of the identity of a significant beneficial owner or another person likely

to have such knowledge; or

(c) to have been a significant beneficial owner of the company at any time during the three years

immediately preceding the date on which the notice is issued,

and who is not registered as a significant beneficial owner with the company as required under this section.

(6) The information required by the notice under sub-section (5) shall be given by the concerned person

within a period not exceeding thirty days of the date of the notice.

(7) The company shall,—

(a) where that person fails to give the company the information required by the notice within the time

specified therein; or

(b) where the information given is not satisfactory,

apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for
an order directing that the shares in question be subject to restrictions with regard to transfer of interest,
suspension of all rights attached to the shares and such other matters as may be prescribed.

(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of

being heard to the parties concerned, make such order restricting the rights attached with the shares within
a period of sixty days of receipt of application or such other period as may be prescribed.

2[(9) The company or the person aggrieved by the order of the Tribunal may make an application to the

Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year
from the date of such order:

Provided that if no such application has been filed within a period of one year from the date of the

order under sub-section (8), such shares shall be transferred, without any restrictions, to the authority
constituted under sub-section (5) of section 125, in such manner as may be prescribed;]

3[(9A) The Central Government may make rules for the purposes of this section.]

4[(10) If any person fails to make a declaration as required under sub-section (1), he shall be liable to a

penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one thousand

1. Ins. by Act 22 of 2019, s. 14 (w.e.f. 15-8-2019).
2. Subs. by Act 22 of 2019, s. 14, for sub-section (9) (w.e.f. 2-11-2018).
3. Ins. by s. 14, ibid. (w.e.f. 15-8-2019).
4. Subs.by Act 29 of 2020, s. 19, for sub-section (10) (w.e.f. 21-12-2020).

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rupees for each day after the first during which such failure continues, subject to a maximum of two lakh
rupees.]

1[(11) If a company, required to maintain register under sub-section (2) and file the information under

sub-section (4) [2][or required to take necessary steps under sub-section (4A)], fails to do so or denies
inspection as provided therein, the company shall be liable to a penalty of one lakh rupees and in case of
continuing failure, with a further penalty of five hundred rupees for each day, after the first during which
such failure continues, subject to a maximum of five lakh rupees and every officer of the company who is
in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with
a further penalty of two hundred rupees for each day, after the first during which such failure continues,
subject to a maximum of one lakh rupees.]

(12) If any person wilfully furnishes any false or incorrect information or suppresses any material

information of which he is aware in the declaration made under this section, he shall be liable to action
under section 447.]

**91. Power to close register of members or debenture-holders or other security holders.—(1) A**

company may close the register of members or the register of debenture-holders or the register of other
security holders for any period or periods not exceeding in the aggregate forty-five days in each year, but
not exceeding thirty days at any one time, subject to giving of previous notice of at least seven days or such
lesser period as may be specified by Securities and Exchange Board for listed companies or the companies
which intend to get their securities listed, in such manner as may be prescribed.

(2) If the register of members or of debenture-holders or of other security holders is closed without

giving the notice as provided in sub-section (1), or after giving shorter notice than that so provided, or for
a continuous or an aggregate period in excess of the limits specified in that sub-section, the company and
every officer of the company who is in default shall be liable to a penalty of five thousand rupees for every
day subject to a maximum of one lakh rupees during which the register is kept closed.

**92. Annual return.—(1) Every company shall prepare a return (hereinafter referred to as the annual**

return) in the prescribed form containing the particulars as they stood on the close of the financial year
regarding—

(a) its registered office, principal business activities, particulars of its holding, subsidiary and

associate companies;

(b) its shares, debentures and other securities and shareholding pattern;

2*     -     -     -     
(d) its members and debenture-holders along with changes therein since the close of the previous

financial year;

(e) its promoters, directors, key managerial personnel along with changes there in since the close

of the previous financial year;

(f) meetings of members or a class thereof, Board and its various committees along with attendance

details;

(g) remuneration of directors and key managerial personnel;
(h) penalty or punishment imposed on the company, its directors or officers and details of

compounding of offences and appeals made against such penalty or punishment;

(i) matters relating to certification of compliances, disclosures as may be prescribed;
(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional

Investors [3]***; and

(k) such other matters as may be prescribed,

and signed by a director and the company secretary, or where there is no company secretary, by a company
secretary in practice:

Provided that in relation to One Person Company and small company, the annual return shall be signed

by the company secretary, or where there is no company secretary, by the director of the company.

1. Subs. by Act 29 of 2020, s. 19, for sub-section (11) (w.e.f. 21-12-2020).
2. Clause (c) omitted by Act 1 of 2018, s. 23 (w.e.f. 5-3-2021).
3. The words “indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by

them” omitted by s. 23, ibid (w.e.f. 5-3-2021).

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1[Provided further that the Central Government may prescribe abridged form of annual return for “One

Person Company, small company and such other class of classes of companies as may be prescribed”.]

(2) [2][The annual return, filed by a listed company or, by a company having such paid-up capital or turnover

as may be prescribed] shall be certified by a company secretary in practice in the prescribed form, stating that
the annual return discloses the facts correctly and adequately and that the company has complied with all the
provisions of this Act.

(3) An extract of the annual return in such form as may be prescribed shall form part of the Board’s report.
(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date

on which the annual general meeting is held or where no annual general meeting is held in any year within sixty
days from the date on which the annual general meeting should have been held together with the statement
specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be
prescribed, [3]***.

4[(5) If any company fails to file its annual return under sub-section (4), before the expiry of the period

specified therein, such company and its every officer who is in default shall be liable to a penalty of [5][ten
thousand rupees] and in case of continuing failure, with a further penalty of one hundred rupees for each day
after the first during which such failure continues, subject to a maximum of [6][two lakh rupees in case of a
company and fifty thousand rupees in case of an officer who is an default].]

(6) If a company secretary in practice certifies the annual return otherwise than in conformity with the

requirements of this section or the rules made thereunder, he shall be [7][liable to a penalty of two lakh rupees].

**93. [Return to be filed with Registrar in case promoter’s stake changes.]** _Omitted by the Companies Act,_

2017 (1 of 2018), s. 24 (w.e.f. 13-6-2018).

**94. Place of keeping and inspection of registers, returns, etc.—(1) The registers required to be kept and**

maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept
at the registered office of the company:

Provided that such registers or copies of return may also be kept at any other place in India in which more

than one-tenth of the total number of members entered in the register of members reside, if approved by a
special resolution passed at a general meeting of the company [8]***:

Provided further that the period for which the registers, returns and records are required to be kept shall be

such as may be prescribed.

(2) The registers and their indices, except when they are closed under the provisions of this Act, and the

copies of all the returns shall be open for inspection by any member, debenture-holder, other security holder or
beneficial owner, during business hours without payment of any fees and by any other person on payment of
such fees as may be prescribed.

(3) Any such member, debenture-holder, other security holder or beneficial owner or any other person

may—

(a) take extracts from any register, or index or return without payment of any fee; or
(b) require a copy of any such register or entries therein or return on payment of such fees as may be

prescribed.

9[Provided that such particulars of the register or index or return as may be prescribed shall not be

available for inspection under sub-section (2) or for taking extracts or copies under this sub-section.].

1. Ins. by Act 1 of 2018, s. 23 (w.e.f. 5-3-2021).
2. Subs. by S.O. 1177 (E), dated 29th April, 2014 for certain words (w.e.f. 29-4-2014).
3. The words “within the time as specified, under section 403” omitted by Act 1 of 2018, s. 23 (w.e.f. 7-5-2018).
4. Subs. by Act 22 of 2019, s. 15, for sub-section (5) (w.e.f. 2-11-2018).
5. Subs. by Act 29 of 2020, s. 20, for “fifty thousand rupees” (w.e.f. 21-12-2020).
6. Subs. by s. 20, ibid., for “five lakh rupees” (w.e.f. 21-12-2020).
7. Subs. by s. 20, ibid., for “punishable with fine which shall not be less than fifty thousand rupees but which may extend to five

lakh rupees” (w.e.f. 21-12-2020).

8. The words “and the Registrar has been given a copy of the proposed special resolution in advance” omitted by Act 1 of 2018, s.

25 (w.e.f. 13-6-2018).

9. The proviso ins. by Act 1 of 2018, s. 25 (w.e.f. 13-6-2018).

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(4) If any inspection or the making of any extract or copy required under this section is refused, the

company and every officer of the company who is in default shall be liable, for each such default, to a
penalty of one thousand rupees for every day subject to a maximum of one lakh rupees during which the
refusal or default continues.

(5) The Central Government may also, by order, direct an immediate inspection of the document, or

direct that the extract required shall forthwith be allowed to be taken by the person requiring it.

**95. Registers, etc., to be evidence.—The registers, their indices and copies of annual returns**

maintained under sections 88 and 94 shall be prima facie evidence of any matter directed or authorised to
be inserted therein by or under this Act.

**96. Annual general meeting.—(1) Every company other than a One Person Company shall in each**

year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify
the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date
of one annual general meeting of a company and that of the next:

Provided that in case of the first annual general meeting, it shall be held within a period of nine months

from the date of closing of the first financial year of the company and in any other case, within a period of
six months, from the date of closing of the financial year:

Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be

necessary for the company to hold any annual general meeting in the year of its incorporation:

Provided also that the Registrar may, for any special reason, extend the time within which any annual

general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three
months.

(2) Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6

p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company
or at some other place within the city, town or village in which the registered office of the company is
situate:

1[Provided that annual general meeting of an unlisted company may be held at any place in India if

consent is given in writing or by electronic mode by all the members in advance:

Provided further that] the Central Government may exempt any company from the provisions of this

sub-section subject to such conditions as it may impose.

_Explanation.—For the purposes of this sub-section, “National Holiday” means and includes a day_

declared as National Holiday by the Central Government.

**97. Power of Tribunal to call annual general meeting.—(1) If any default is made in holding the**

annual general meeting of a company under section 96, the Tribunal may, notwithstanding anything
contained in this Act or the articles of the company, on the application of any member of the company, call,
or direct the calling of, an annual general meeting of the company and give such ancillary or consequential
directions as the Tribunal thinks expedient:

Provided that such directions may include a direction that one member of the company present in person

or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the

Tribunal, be deemed to be an annual general meeting of the company under this Act.

**98. Power of Tribunal to call meetings of members, etc.—(1) If for any reason it is impracticable to**

call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the
company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this
Act or the articles of the company, the Tribunal may, either suo motu or on the application of any director
or member of the company who would be entitled to vote at the meeting,—

(a) order a meeting of the company to be called, held and conducted in such manner as the Tribunal

thinks fit; and

1. Subs. by Act 1 of 2018, s. 26, for “Provided that” (w.e.f. 13-6-2018).

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(b) give such ancillary or consequential directions as the Tribunal thinks expedient, including

directions modifying or supplementing in relation to the calling, holding and conducting of the meeting,
the operation of the provisions of this Act or articles of the company:
Provided that such directions may include a direction that one member of the company present in person

or by proxy shall be deemed to constitute a meeting.

(2) Any meeting called, held and conducted in accordance with any order made under sub-section (1)

shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.

**99. Punishment for default in complying with provisions of sections 96 to 98.—If any default is**

made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in
complying with any directions of the Tribunal, the company and every officer of the company who is in
default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing
default, with a further fine which may extend to five thousand rupees for every day during which such
default continues.

**100. Calling of extraordinary general meeting.—(1) The Board may, whenever it deems fit, call an**

extraordinary general meeting of the company.

1[Provided that an extraordinary general meeting of the company, other than of the wholly owned

subsidiary of a company incorporated outside India, shall be held at a place within India.]

(2) The Board shall, at the requisition made by,—

(a) in the case of a company having a share capital, such number of members who hold, on the date

of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the
company as on that date carries the right of voting;

(b) in the case of a company not having a share capital, such number of members who have, on the

date of receipt of the requisition, not less than one-tenth of the total voting power of all the members
having on the said date a right to vote,

call an extraordinary general meeting of the company within the period specified in sub-section (4).

(3) The requisition made under sub-section (2) shall set out the matters for the consideration of which

the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the
company.

(4) If the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard

to any matter, proceed to call a meeting for the consideration of that matter on a day not later than fortyfive days from the date of receipt of such requisition, the meeting may be called and held by the
requisitionists themselves within a period of three months from the date of the requisition.

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in the same manner

in which the meeting is called and held by the Board.

(6) Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (4)

shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any
fee or other remuneration under section 197 payable to such of the directors who were in default in calling
the meeting.

**101. Notice of meeting.—(1) A general meeting of a company may be called by giving not less than**

clear twenty-one days’ notice either in writing or through electronic mode in such manner as maybe
prescribed:

2[Provided that a general meeting may be called after giving shorter notice than that specified in this

sub-section if consent, in writing or by electronic mode, is accorded thereto—

(i) in the case of an annual general meeting, by not less than ninty-five per cent. of the members

entitled to vote thereat; and

(ii) in the case of any other general meeting, by members of the company—

1. Ins. by Act 1 of 2018, s. 27 (w.e.f. 9-2-2018).
2. The proviso subs. by s. 28, ibid., (w.e.f. 9-2-2018).

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(a) holding, if the company has a share capital, majority in number of members entitled to vote and

who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company
as gives a right to vote at the meeting; or

(b) having, if the company has no share capital, not less than ninty-five per cent. of the total voting

power exercisable at that meeting:

Provided further that where any member of a company is entitled to vote only on some resolution or resolutions

to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this
sub-section in respect of the former resolution or resolutions and not in respect of the latter.]

(2) Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall

contain a statement of the business to be transacted at such meeting.

(3) The notice of every meeting of the company shall be given to—

(a) every member of the company, legal representative of any deceased member or the assignee of

an insolvent member;

(b) the auditor or auditors of the company; and

(c) every director of the company.

(4) Any accidental omission to give notice to, or the non-receipt of such notice by, any member or other

person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting.

**102. Statement to be annexed to notice.—(1) A statement setting out the following material facts**

concerning each item of special business to be transacted at a general meeting, shall be annexed to the
notice calling such meeting, namely:—

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of—

(i) every director and the manager, if any;

(ii) every other key managerial personnel; and

(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);

(b) any other information and facts that may enable members to understand the meaning, scope and

implications of the items of business and to take decision thereon.

(2) For the purposes of sub-section (1),—

(a) in the case of an annual general meeting, all business to be transacted thereat shall be deemed

special, other than—

(i) the consideration of financial statements and the reports of the Board of Directors and

auditors;

(ii) the declaration of any dividend;

(iii) the appointment of directors in place of those retiring;

(iv) the appointment of, and the fixing of the remuneration of, the auditors; and

(b) in the case of any other meeting, all business shall be deemed to be special:

Provided that where any item of special business to be transacted at a meeting of the company relates

to or affects any other company, the extent of shareholding interest in that other company of every promoter,
director, manager, if any, and of every other key managerial personnel of the first mentioned company shall,
if the extent of such shareholding is not less than two per cent. of the paid-up share capital of that company,
also be set out in the statement.

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(3) Where any item of business refers to any document, which is to be considered at the meeting, the

time and place where such document can be inspected shall be specified in the statement under          subsection (1).

(4) Where as a result of the non-disclosure or insufficient disclosure in any statement referred to in sub
section (1), being made by a promoter, director, manager, if any, or other key managerial personnel, any
benefit which accrues to such promoter, director, manager or other key managerial personnel or their
relatives, either directly or indirectly, the promoter, director, manager or other key managerial personnel,
as the case may be, shall hold such benefit in trust for the company, and shall, without prejudice to any
other action being taken against him under this Act or under any other law for the time being in force, be
liable to compensate the company to the extent of the benefit received by him.

1[(5) Without prejudice to the provisions of sub-section (4), if any default is made in complying with

the provisions of this section, every promoter, director, manager or other key managerial personnel of the
company who is in default shall be liable to a penalty of fifty thousand rupees or five times the amount of
benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives,
whichever is higher.]

**103. Quorum for meetings.—(1) Unless the articles of the company provide for a larger number,—**

(a) in case of a public company,—

(i) five members personally present if the number of members as on the date of meeting is not

more than one thousand;

(ii) fifteen members personally present if the number of members as on the date of meeting is

more than one thousand but up to five thousand;

(iii) thirty members personally present if the number of members as on the date of the meeting

exceeds five thousand;

(b) in the case of a private company, two members personally present, shall be the quorum for a

meeting of the company.

(2) If the quorum is not present within half-an-hour from the time appointed for holding a meeting of

the company—

(a) the meeting shall stand adjourned to the same day in the next week at the same time and place,

or to such other date and such other time and place as the Board may determine; or

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under

clause (a), the company shall give not less than three days notice to the members either individually or by
publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in
circulation at the place where the registered office of the company is situated.

(3) If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed

for holding meeting, the members present shall be the quorum.

**104. Chairman of meetings.—(1) Unless the articles of the company otherwise provide, the members**

personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of
hands.

(2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with

the provisions of this Act and the Chairman elected on a show of hands under sub-section (1) shall continue
to be the Chairman of the meeting until some other person is elected as Chairman as a result of the poll,
and such other person shall be the Chairman for the rest of the meeting.

1. Subs. by Act 22 of 2019, s. 16, for sub-section (5) (w.e.f. 2-11-2018).

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**105. Proxies.—(1) Any member of a company entitled to attend and vote at a meeting of the company**

shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf:

Provided that a proxy shall not have the right to speak at such meeting and shall not been titled to vote

except on a poll:

Provided further that, unless the articles of a company otherwise provide, this sub-section shall not

apply in the case of a company not having a share capital:

Provided also that the Central Government may prescribe a class or classes of companies whose

members shall not be entitled to appoint another person as a proxy:

Provided also that a person appointed as proxy shall act on behalf of such member or number of

members not exceeding fifty and such number of shares as may be prescribed.

(2) In every notice calling a meeting of a company which has a share capital, or the articles of which

provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that
a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more
proxies, to attend and vote instead of himself, and that a proxy need not be a member.

(3) If default is made in complying with sub-section (2), every officer of the company who is in default

shall be [1][liable to a penalty of five thousands rupees].

(4) Any provision contained in the articles of a company which specifies or requires a longer period

than forty-eight hours before a meeting of the company, for depositing with the company or any other
person any instrument appointing a proxy or any other document necessary to show the validity or otherwise
relating to the appointment of a proxy in order that the appointment may be effective at such meeting, shall
have effect as if a period of forty-eight hours had been specified in or required by such provision for such
deposit.

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of

a number of persons specified in the invitations are issued at the company’s expense to any member entitled
to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the company [2][who
issues the invitation as aforesaid or authorises or permits their issue, shall be liable to a penalty of fifty
thousand rupees]:

Provided that an officer shall not be [3][liable] under this sub-section by reason only of the issue to a

member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing
to act as proxies, if the form or list is available on request in writing to every member entitled to vote at the
meeting by proxy.

(6) The instrument appointing a proxy shall—

(a) be in writing; and

(b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a

body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it.

(7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on

the ground that it fails to comply with any special requirements specified for such instrument by the articles
of a company.

(8) Every member entitled to vote at a meeting of the company, or on any resolution to be moved

thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the
commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged,
at any time during the business hours of the company, provided not less than three days’ notice in writing
of the intention so to inspect is given to the company.

1. Subs. by Act 22 of 2019, s. 17, for “punishable with fine which may extend to five thousand rupees” (w.e.f. 2-11-2018).
2. Subs. by Act 29 of 2020, s. 21, for certain words (w.e.f. 21-12-2020).
3. Subs. by s. 21, ibid., for “punishable” (w.e.f. 21-12-2020).

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**106. Restriction on voting rights.—(1) Notwithstanding anything contained in this Act, the articles of**

a company may provide that no member shall exercise any voting right in respect of any shares registered
in his name on which any calls or other sums presently payable by him have not been paid, or in regard to
which the company has exercised any right of lien.

(2) A company shall not, except on the grounds specified in sub-section (1), prohibit any member from

exercising his voting right on any other ground.

(3) On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy,

where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his
votes or cast in the same way all the votes he uses.

**107. Voting by show of hands.—(1) At any general meeting, a resolution put to the vote of the meeting**

shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on
a show of hands.

(2) A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show

of hands under sub-section (1) and an entry to that effect in the books containing the minutes of the meeting
of the company shall be conclusive evidence of the fact of passing of such resolution or otherwise.

**108. Voting through electronic means.—The Central Government may prescribe the class or classes**

of companies and manner in which a member may exercise his right to vote by the electronic means.

**109. Demand for poll.—(1) Before or on the declaration of the result of the voting on any resolution**

on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion,
and shall be ordered to be taken by him on a demand made in that behalf,—

(a) in the case a company having a share capital, by the members present in person or by proxy,

where allowed, and having not less than one-tenth of the total voting power or holding shares on which
an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed has been
paid-up; and

(b) in the case of any other company, by any member or members present in person or by proxy,

where allowed, and having not less than one-tenth of the total voting power.

(2) The demand for a poll may be withdrawn at any time by the persons who made the demand.

(3) A poll demanded for adjournment of the meeting or appointment of Chairman of the meeting shall

be taken forthwith.

(4) A poll demanded on any question other than adjournment of the meeting or appointment of

Chairman shall be taken at such time, not being later than forty-eight hours from the time when the demand
was made, as the Chairman of the meeting may direct.

(5) Where a poll is to be taken, the Chairman of the meeting shall appoint such number of persons, as

he deems necessary, to scrutinise the poll process and votes given on the poll and to report thereon to him
in the manner as may be prescribed.

(6) Subject to the provisions of this section, the Chairman of the meeting shall have power to regulate

the manner in which the poll shall be taken.

(7) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which

the poll was taken.

**110. Postal ballot.—(1) Notwithstanding anything contained in this Act, a company—**

(a) shall, in respect of such items of business as the Central Government may, by notification,

declare to be transacted only by means of postal ballot; and

(b) may, in respect of any item of business, other than ordinary business and any business in respect

of which directors or auditors have a right to be heard at any meeting, transact by means of postal ballot,

in such manner as may be prescribed, instead of transacting such business at a general meeting:

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1[Provided that any item of business required to be transacted by means of postal ballot under

clause (a), may be transacted at a general meeting by a company which is required to provide the facility
to members to vote by electronic means under section 108, in the manner provided in that section.]

(2) If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot,

it shall be deemed to have been duly passed at a general meeting convened in that behalf.

**111. Circulation of members’ resolution.—(1) A company shall, on requisition in writing of such**

number of members, as required in section 100,—

(a) give notice to members of any resolution which may properly be moved and is intended to be

moved at a meeting; and

(b) circulate to members any statement with respect to the matters referred to in proposed resolution

or business to be dealt with at that meeting.

(2) A company shall not be bound under this section to give notice of any resolution or to circulate any

statement unless—

(a) a copy of the requisition signed by the requisitionists (or two or more copies which, between

them, contain the signatures of all the requisitionists) is deposited at the registered office of the
company,—

(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before

the meeting;

(ii) in the case of any other requisition, not less than two weeks before the meeting; and

(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the

company’s expenses in giving effect thereto:

Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the

registered office of the company, an annual general meeting is called on a date within six weeks after the
copy has been deposited, the copy, although not deposited within the time required by this sub-section,
shall be deemed to have been properly deposited for the purposes thereof.

(3) The company shall not be bound to circulate any statement as required by clause (b) of       sub
section (1), if on the application either of the company or of any other person who claims to be aggrieved,
the Central Government, by order, declares that the rights conferred by this section are being abused to
secure needless publicity for defamatory matter.

(4) An order made under sub-section (3) may also direct that the cost incurred by the company by virtue

of this section shall be paid to the company by the requisitionists, notwithstanding that they are not parties
to the application.

(5) If any default is made in complying with the provisions of this section, the company and every

officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees.

**112. Representation of President and Governors in meetings.—(1) The President of India or the**

Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his
representative at any meeting of the company or at any meeting of any class of members of the company.

(2) A person appointed to act under sub-section (1) shall, for the purposes of this Act, be deemed to be

a member of such a company and shall be entitled to exercise the same rights and powers, including the
right to vote by proxy and postal ballot, as the President or, as the case may be, the Governor could exercise
as a member of the company.

**113. Representation of corporations at meeting of companies and of creditors.—(1) A body**

corporate, whether a company within the meaning of this Act or not, may, —

1. The Proviso ins. by Act 1 of 2018, s. 29 (w.e.f. 9-2-2018).

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(a) if it is a member of a company within the meaning of this Act, by resolution of its Board of

Directors or other governing body, authorise such person as it thinks fit to act as its representative at
any meeting of the company, or at any meeting of any class of members of the company;

(b) if it is a creditor, including a holder of debentures, of a company within the meaning of this Act,

by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its
representative at any meeting of any creditors of the company held in pursuance of this Act or of any
rules made thereunder, or in pursuance of the provisions contained in any debenture or trust deed, as
the case may be.
(2) A person authorised by resolution under sub-section (1) shall be entitled to exercise the same rights

and powers, including the right to vote by proxy and by postal ballot, on behalf of the body corporate which
he represents as that body could exercise if it were an individual member, creditor or holder of debentures
of the company.

**114. Ordinary and special resolutions.—(1) A resolution shall be an ordinary resolution if the notice**

required under this Act has been duly given and it is required to be passed by the votes cast, whether on a
show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the
casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or where
proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by
members, so entitled and voting.

(2) A resolution shall be a special resolution when—

(a) the intention to propose the resolution as a special resolution has been duly specified in the

notice calling the general meeting or other intimation given to the members of the resolution;

(b) the notice required under this Act has been duly given; and
(c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a

poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by
postal ballot, are required to be not less than three times the number of the votes, if any, cast against
the resolution by members so entitled and voting.
**115. Resolutions requiring special notice.—Where, by any provision contained in this Act or in the**

articles of a company, special notice is required of any resolution, notice of the intention to move such
resolution shall be given to the company by such number of members holding not less than one per cent. of
total voting power or holding shares on which such aggregate sum not exceeding five lakh rupees, as may
be prescribed, has been paid-up and the company shall give its members notice of the resolution in such
manner as may be prescribed.

**116. Resolutions passed at adjourned meeting.—Where a resolution is passed at an adjourned**

meeting of—

(a) a company; or
(b) the holders of any class of shares in a company; or
(c) the Board of Directors of a company,

the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact
passed, and shall not be deemed to have been passed on any earlier date.

**117. Resolutions and agreements to be filed.—(1) A copy of every resolution or any agreement, in**

respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if
any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the
Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be
prescribed [1]***:

Provided that the copy of every resolution which has the effect of altering the articles and the copy of

every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles
issued after passing of the resolution or making of the agreement.

2[(2)  If any company fails to file the resolution or the agreement under sub-section (1) before the

expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and
in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during
which such failure continues, subject to a maximum of two lakh rupees and every officer of the company

1. The words and figures “within the time specified under section 403” omitted by Act 1 of 2018, s. 30 (w.e.f. 7-5-2018).
2. Subs. by Act 29 of 2020, s. 22, for sub-section (2) (w.e.f. 21-12-2020).

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who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand
rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the
first during which such failure continues, subject to a maximum of fifty thousand rupees.]

(3) The provisions of this section shall apply to—

(a) special resolutions;
(b) resolutions which have been agreed to by all the members of a company, but which, if not so

agreed to, would not have been effective for their purpose unless they had been passed as special
resolutions;

(c) any resolution of the Board of Directors of a company or agreement executed by a company,

relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of
appointment, of a managing director;

(d) resolutions or agreements which have been agreed to by any class of members but which, if not

so agreed to, would not have been effective for their purpose unless they had been passed by a specified
majority or otherwise in some particular manner; and all resolutions or agreements which effectively
bind such class of members though not agreed to by all those members;

1*     -     -     -     
(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of [2][section 59

of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)];

(g) resolutions passed in pursuance of sub-section (3) of section 179:[3]***

4[Provided that no person shall be entitled under section 399 to inspect or obtain copies of such

resolutions; [5]***]

6[Provided further that nothing contained in this clause shall apply in respect of a resolution passed

to grant loans, or give guarantee or provide security in respect of loans under clause (f) of  sub-section
(3) of section 179 in the ordinary course of its business by—

(a) a banking company;

(b) any class of non-banking financial company registered under Chapter IIIB of the Reserve

Bank of India Act, 1934 (2 of 1934), as may be prescribed in consultation with the Reserve Bank
of India;

(c) any class of housing finance company registered under the National Housing Bank Act,

1987 (53 of 1987), as may be prescribed in consultation with the National Housing Bank; and]

(h) any other resolution or agreement as may be prescribed and placed in the public domain.

**118. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting**

**and resolutions passed by postal ballot.—(1) Every company shall cause minutes of the proceedings of**
every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot
and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed
in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting
concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages
consecutively numbered.

(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
(3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the

meeting.

(4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall

also contain—

1. Clause (e) omitted by Act 1 of 2018, s. 30 (w.e.f. 7-5-2018).
2. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for “section 304” (w.e.f. 15-11-2016).
3. The word “and” omitted by Act 21 of 2015, s. 9 (w.e.f. 29-5-2015).
4. Ins. by s. 9, ibid. (w.e.f. 29-5-2015).
5. The “and” omitted by Act 1 of 2018, s. 30 (w.e.f. 7-5-2018).
6. The proviso subs. by Act 29 of 2020, s. 22 (w.e.f. 22-1-2021).

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(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the directors,

if any, dissenting from, or not concurring with the resolution.

(5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the

meeting,—

(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.

(6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any

matter in the minutes on the grounds specified in sub-section (5).

(7) The minutes kept in accordance with the provisions of this section shall be evidence of the

proceedings recorded therein.

(8) Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is

proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have
duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all
appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be
deemed to be valid.

(9) No document purporting to be a report of the proceedings of any general meeting of a company

shall be circulated or advertised at the expense of the company, unless it includes the matters required by
this section to be contained in the minutes of the proceedings of such meeting.

(10) Every company shall observe secretarial standards with respect to general and Board meetings

specified by the Institute of Company Secretaries of India constituted under section 3 of the Company
Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.

(11) If any default is made in complying with the provisions of this section in respect of any meeting,

the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company
who is in default shall be liable to a penalty of five thousand rupees.

(12) If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall

be punishable with imprisonment for a term which may extend to two years and with fine which shall not
be less than twenty-five thousand rupees but which may extend to one lakh rupees.

**119. Inspection of minute-books of general meeting.—(1) The books containing the minutes of the**

proceedings of any general meeting of a company or of a resolution passed by postal ballot, shall—

(a) be kept at the registered office of the company; and

(b) be open, during business hours, to the inspection by any member without charge, subject to

such reasonable restrictions as the company may, by its articles or in general meeting, impose, so,
however, that not less than two hours in each business day are allowed for inspection.

(2) Any member shall be entitled to be furnished, within seven working days after he has made a request

in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of any minutes
referred to in sub-section (1).

(3) If any inspection under sub-section (1) is refused, or if any copy required under sub-section (2) is

not furnished within the time specified therein, the company shall be liable to a penalty of twenty-five
thousand rupees and every officer of the company who is in default shall be liable to a penalty of five
thousand rupees for each such refusal or default, as the case may be.

(4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being

taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that the
copy required shall forthwith be sent to the person requiring it.

**120. Maintenance and inspection of documents in electronic form.—Without prejudice to any other**

provisions of this Act, any document, record, register, minutes, etc.,—

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(a) required to be kept by a company; or

(b) allowed to be inspected or copies to be given to any person by a company under this Act, may

be kept or inspected or copies given, as the case may be, in electronic form in such form and manner
as may be prescribed.

**121. Report on annual general meeting.—(1) Every listed public company shall prepare in the**

prescribed manner a report on each annual general meeting including the confirmation to the effect that the
meeting was convened, held and conducted as per the provisions of this Act and the rules made thereunder.

(2) The company shall file with the Registrar a copy of the report referred to in sub-section (1) within

thirty days of the conclusion of the annual general meeting with such fees as may be prescribed, or with
such additional fees as may be prescribed, [1]***.

**2[(3) If the company fails to file the report under sub-section (2) before the expiry of the period specified**

therein, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with
a further penalty of five hundred rupees for each day after the first during which such failure continues,
subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable
to a penalty which shall not be less than twenty-five thousand rupees and in case of continuing failure, with
a further penalty of five hundred rupees for each day after the first during which such failure continues,
subject to a maximum of one lakh rupees.]

**122. Applicability of this Chapter to One Person Company.—(1) The provisions of section 98 and**

sections 100 to 111 (both inclusive) shall not apply to a One Person Company.

(2) The ordinary businesses as mentioned under clause (a) of sub-section (2) of section 102 which a

company, other than a One Person Company, is required to transact at its annual general meeting, shall be
transacted, in case of One Person Company, as provided in sub-section (3).

(3) For the purposes of section 114, any business which is required to be transacted at an annual general

meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be
sufficient if, in case of One Person Company, the resolution is communicated by the member to the
company and entered in the minutes-book required to be maintained under section 118 and signed and dated
by the member and such date shall be deemed to be the date of the meeting for all the purposes under this
Act.

(4) Notwithstanding anything in this Act, where there is only one director on the Board of Director of

a One Person Company, any business which is required to be transacted at the meeting of the Board of
Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by
such director is entered in the minutes-book required to be maintained under section 118 and signed and
dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors
for all the purposes under this Act.

CHAPTER VIII

DECLARATION AND PAYMENT OF DIVIDEND

**123. Declaration of dividend.—(1) No dividend shall be declared or paid by a company for any**

financial year except—

(a) out of the profits of the company for that year arrived at after providing for depreciation in

accordance with the provisions of sub-section (2), or out of the profits of the company for any previous
financial year or years arrived at after providing for depreciation in accordance with the provisions of
that sub-section and remaining undistributed, or out of [3][both:]

1. The words and figures “within the time as specified, under section 403” omitted by Act 1 of 2018, s. 31 (w.e.f. 7-5-2018).
2. Subs. by Act 22 of 2019, s. 19, for sub-section (3) (w.e.f. 2-11-2018).
3. Subs. by Act 1 of 2018, s. 32, for “both; or” (w.e.f. 9-2-2018).

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1[Provided that in computing profits any amount representing unrealised gains, notional gains or

revaluation of assets and any change in carrying amount of an asset or of a liability on measurement of the
asset or the liability at fair value shall be excluded; or]

(b) out of money provided by the Central Government or a State Government for the payment of

dividend by the company in pursuance of a guarantee given by that Government:

Provided that a company may, before the declaration of any dividend in any financial year, transfer

such percentage of its profits for that financial year as it may consider appropriate to the reserves of the
company:

Provided further that where, owing to inadequacy or absence of profits in any financial year, any

company proposes to declare dividend out of the accumulated profits earned by it in previous years and
2[transferred by the company to the free reserves], such declaration of dividend shall not be made except in
accordance with such rules as may be prescribed in this behalf:

Provided also that no dividend shall be declared or paid by a company from its reserves other than free

reserves:

3[Provided also that no company shall declare dividend unless carried over previous losses and

depreciation not provided in previous year or years are set off against profit of the company for the current
year.]

(2) For the purposes of clause (a) of sub-section (1), depreciation shall be provided in accordance with

the provisions of Schedule II.

4[(3) The Board of Directors of a company may declare interim dividend during any financial year or

at any time during the period from closure of financial year till holding of the annual general meeting out
of the surplus in the profit and loss account or out of profits of the financial year for which such interim
dividend is sought to be declared or out of profits generated in the financial year till the quarter preceding
the date of declaration of the interim dividend:

Provided that in case the company has incurred loss during the current financial year up to the end of

the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall
not be declared at a rate higher than the average dividends declared by the company during immediately
preceding three financial years.]

(4) The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in

a separate account within five days from the date of declaration of such dividend.

(5) No dividend shall be paid by a company in respect of any share therein except to the registered

shareholder of such share or to his order or to his banker and shall not be payable except in cash:

Provided that nothing in this sub-section shall be deemed to prohibit the capitalisation of profits or

reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for
the time being unpaid on any shares held by the members of the company:

Provided further that any dividend payable in cash may be paid by cheque or warrant or in any

electronic mode to the shareholder entitled to the payment of the dividend.

(6) A company which fails to comply with the provisions of sections 73 and 74 shall not, so long as

such failure continues, declare any dividend on its equity shares.

**124. Unpaid Dividend Account.—(1) Where a dividend has been declared by a company but has not**

been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to the
payment of the dividend, the company shall, within seven days from the date of expiry of the said period
of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account

1. The proviso ins. by Act 1 of 2018, s. 32 (w.e.f. 9-2-2018).
2. Subs. by s. 32, ibid., for “transferred by the company to the reserves” (w.e.f. 9-2-2018).
3. The Proviso ins. by Act 21 of 2015, s. 10 (w.e.f. 29-5-2015).
4. Subs. by Act 1 of 2018, s. 32, for sub-section (3) (w.e.f. 9-2-2018).

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to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend
Account.

(2) The company shall, within a period of ninety days of making any transfer of an amount under sub
section (1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known
addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if
any, and also on any other website approved by the Central Government for this purpose, in such form,
manner and other particulars as may be prescribed.

(3) If any default is made in transferring the total amount referred to in sub-section (1) or any part

thereof to the Unpaid Dividend Account of the company, it shall pay, from the date of such default, interest
on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent. per
annum and the interest accruing on such amount shall ensure to the benefit of the members of the company
in proportion to the amount remaining unpaid to them.

(4) Any person claiming to be entitled to any money transferred under sub-section (1) to the Unpaid

Dividend Account of the company may apply to the company for payment of the money claimed.

(5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section

which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be
transferred by the company along with interest accrued, if any, thereon to the Fund established under
sub-section (1) of section 125 and the company shall send a statement in the prescribed form of the details
of such transfer to the authority which administers the said Fund and that authority shall issue a receipt to
the company as evidence of such transfer.

(6) All shares in respect of which [1][dividend has not been paid or claimed for seven consecutive years

or more shall be] transferred by the company in the name of Investor Education and Protection Fund along
with a statement containing such details as may be prescribed:

Provided that any claimant of shares transferred above shall be entitled to claim the transfer of shares

from Investor Education and Protection Fund in accordance with such procedure and on submission of such
documents as may be prescribed.

2[Explanation.— For the removal of doubts, it is hereby clarified that in case any dividend is paid or

claimed for any year during the said period of seven consecutive years, the share shall not be transferred to
Investor Education and Protection Fund.]

[3][(7) If a company fails to comply with any of the requirements of this section, such company shall be

liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred
rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh
rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand
rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the
first during which such failure continues, subject to a maximum of two lakh rupees.]

**125. Investor Education and Protection Fund.—(1) The Central Government shall establish a Fund**

to be called the Investor Education and Protection Fund (herein referred to as the Fund).

(2) There shall be credited to the Fund—

(a) the amount given by the Central Government by way of grants after due appropriation made by

Parliament by law in this behalf for being utilised for the purposes of the Fund;

(b) donations given to the Fund by the Central Government, State Governments, companies or any

other institution for the purposes of the Fund;

(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under

sub-section (5) of section 124;

(d) the amount in the general revenue account of the Central Government which had been

transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956
(1 of 1956), as it stood immediately before the commencement of the Companies (Amendment) Act,
1999 (21 of 1999), and remaining unpaid or unclaimed on the commencement of this Act;

1. Subs. by Act 21 of 2015, s. 11, for “unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be”
(w.e.f. 29-5-2015).
2. 2. The Explanation ins. by s. 11, ibid. (w.e.f. 29-5-2015).
3. Subs. by vide Notification No. S.O. 1303(E), for sub-section (7) (w.e.f. 24-3-2021).

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(e) the amount lying in the Investor Education and Protection Fund under section 205C of the

Companies Act, 1956 (1 of 1956);

(f) the interest or other income received out of investments made from the Fund;

(g) the amount received under sub-section (4) of section 38;

(h) the application money received by companies for allotment of any securities and due for refund;

(i) matured deposits with companies other than banking companies;

(j) matured debentures with companies;

(k) interest accrued on the amounts referred to in clauses (h) to (j);

(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and

amalgamation for seven or more years;

(m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more

years; and

(n) such other amount as may be prescribed:

Provided that no such amount referred to in clauses (h) to (j) shall form part of the Fund unless such

amount has remained unclaimed and unpaid for a period of seven years from the date it became due for
payment.

(3) The Fund shall be utilised for—

(a) the refund in respect of unclaimed dividends, matured deposits, matured debentures, the

application money due for refund and interest thereon;

(b) promotion of investors’ education, awareness and protection;

(c) distribution of any disgorged amount among eligible and identifiable applicants for shares or

debentures, shareholders, debenture-holders or depositors who have suffered losses due to wrong
actions by any person, in accordance with the orders made by the Court which had ordered
disgorgement;

(d) reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and

245 by members, debenture-holders or depositors as may be sanctioned by the Tribunal; and

(e) any other purpose incidental thereto,

in accordance with such rules as may be prescribed:

Provided that the person whose amounts referred to in clauses (a) to (d) of sub-section (2) of section

205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years
as per provisions of the Companies Act, 1956 (1 of 1956), shall be entitled to get refund out of the Fund in
respect of such claims in accordance with rules made under this section.

_Explanation.—The disgorged amount refers to the amount received through disgorgement or disposal_

of securities.

(4) Any person claiming to be entitled to the amount referred in sub-section (2) may apply to the

authority constituted under sub-section (5) for the payment of the money claimed.

(5) The Central Government shall constitute, by notification, an authority for administration of the Fund

consisting of a chairperson and such other members, not exceeding seven and a chief executive officer, as
the Central Government may appoint.

(6) The manner of administration of the Fund, appointment of chairperson, members and chief

executive officer, holding of meetings of the authority shall be in accordance with such rules as may be
prescribed.

(7) The Central Government may provide to the authority such offices, officers, employees and other

resources in accordance with such rules as may be prescribed.

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(8) The authority shall administer the Fund and maintain separate accounts and other relevant records

in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and
Auditor-General of India.

(9) It shall be competent for the authority constituted under sub-section (5) to spend money out of the

Fund for carrying out the objects specified in sub-section (3).

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor-General of India at such

intervals as may be specified by him and such audited accounts together with the audit report thereon shall
be forwarded annually by the authority to the Central Government.

(11) The authority shall prepare in such form and at such time for each financial year as may be

prescribed its annual report giving a full account of its activities during the financial year and forward a
copy thereof to the Central Government and the Central Government shall cause the annual report and the
audit report given by the Comptroller and Auditor-General of India to be laid before each House of
Parliament.

**126. Right to dividend, rights shares and bonus shares to be held in abeyance pending registration**

**of transfer of shares.—Where any instrument of transfer of shares has been delivered to any company for**
registration and the transfer of such shares has not been registered by the company, it shall, notwithstanding
anything contained in any other provision of this Act,—

(a) transfer the dividend in relation to such shares to the Unpaid Dividend Account referred to in

section 124 unless the company is authorised by the registered holder of such shares in writing to pay
such dividend to the transferee specified in such instrument of transfer; and

(b) keep in abeyance in relation to such shares, any offer of rights shares under clause (a) of

sub-section (1) of section 62 and any issue of fully paid-up bonus shares in pursuance of first proviso
to sub-section (5) of section 123.

**127. Punishment for failure to distribute dividends.—Where a dividend has been declared by a**

company but has not been paid or the warrant in respect thereof has not been posted within thirty days from
the date of declaration to any shareholder entitled to the payment of the dividend, every director of the
company shall, if he is knowingly a party to the default, be punishable with imprisonment which may extend
to two years and with fine which shall not be less than one thousand rupees for every day during which
such default continues and the company shall be liable to pay simple interest at the rate of eighteen per cent.
per annum during the period for which such default continues:

Provided that no offence under this section shall be deemed to have been committed:—

(a) where the dividend could not be paid by reason of the operation of any law;

(b) where a shareholder has given directions to the company regarding the payment of the dividend

and those directions cannot be complied with and the same has been communicated to him;

(c) where there is a dispute regarding the right to receive the dividend;

(d) where the dividend has been lawfully adjusted by the company against any sum due to it from

the shareholder; or

(e) where, for any other reason, the failure to pay the dividend or to post the warrant within the

period under this section was not due to any default on the part of the company.

CHAPTER IX

ACCOUNTS OF COMPANIES

**128. Books of account, etc., to be kept by company.—(1) Every company shall prepare and keep at**

its registered office books of account and other relevant books and papers and financial statement for every
financial year which give a true and fair view of the state of the affairs of the company, including that of its
branch office or offices, if any, and explain the transactions effected both at the registered office and its
branches and such books shall be kept on accrual basis and according to the double entry system of
accounting:

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Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such

other place in India as the Board of Directors may decide and where such a decision is taken, the company
shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that
other place:

Provided further that the company may keep such books of account or other relevant papers in

electronic mode in such manner as may be prescribed.

(2) Where a company has a branch office in India or outside India, it shall be deemed to have complied

with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the
branch office are kept at that office and proper summarized returns periodically are sent by the branch office
to the company at its registered office or the other place referred to in sub-section (1).

(3) The books of account and other books and papers maintained by the company within India shall be

open for inspection at the registered office of the company or at such other place in India by any director
during business hours, and in the case of financial information, if any, maintained outside the country,
copies of such financial information shall be maintained and produced for inspection by any director subject
to such conditions as may be prescribed:

Provided that the inspection in respect of any subsidiary of the company shall be done only by the

person authorised in this behalf by a resolution of the Board of Directors.

(4) Where an inspection is made under sub-section (3), the officers and other employees of the company

shall give to the person making such inspection all assistance in connection with the inspection which the
company may reasonably be expected to give.

(5) The books of account of every company relating to a period of not less than eight financial years

immediately preceding a financial year, or where the company had been inexistence for a period less than
eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such
books of account shall be kept in good order:

Provided that where an investigation has been ordered in respect of the company under Chapter XIV,

the Central Government may direct that the books of account may be kept for such longer period as it may
deem fit.

(6) If the managing director, the whole-time director in charge of finance, the Chief Financial Officer

or any other person of a company charged by the Board with the duty of complying with the provisions of
this section, contravenes such provisions, such managing director, whole-time director in charge of finance,
Chief Financial Officer or such other person of the company shall be punishable [1]*** with fine which shall
not be less than fifty thousand rupees but which may extend to five lakh rupees [2]***.

**129. Financial statement.—(1) The financial statements shall give a true and fair view of the state of**

affairs of the company or companies, comply with the accounting standards notified under section133 and
shall be in the form or forms as may be provided for different class or classes of companies in
Schedule III:

Provided that the items contained in such financial statements shall be in accordance with the

accounting standards:

Provided further that nothing contained in this sub-section shall apply to any insurance or banking

company or any company engaged in the generation or supply of electricity, or to any other class of
company for which a form of financial statement has been specified in or under the Act governing such
class of company:

Provided also that the financial statements shall not be treated as not disclosing a true and fair view of

the state of affairs of the company, merely by reason of the fact that they do not disclose—

1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 24 (w.e.f. 21-21
2020).

2. The words “or with both” omitted by s. 24, ibid. (w.e.f. 21-12-2020).

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(a) in the case of an insurance company, any matters which are not required to be disclosed by the

Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999
(41 of 1999);

(b) in the case of a banking company, any matters which are not required to be disclosed by the

Banking Regulation Act, 1949 (10 of 1949);

(c) in the case of a company engaged in the generation or supply of electricity, any matters which

are not required to be disclosed by the Electricity Act, 2003 (36 of 2003);

(d) in the case of a company governed by any other law for the time being in force, any matters

which are not required to be disclosed by that law.

(2) At every annual general meeting of a company, the Board of Directors of the company shall lay

before such meeting financial statements for the financial year.

1[(3) Where a company has one or more subsidiaries or associate companies, it shall, in addition to

financial statements provided under sub-section (2), prepare a consolidated financial statement of the
company and of all the subsidiaries and associate companies in the same form and manner as that of its
own and in accordance with applicable accounting standards, which shall also be laid before the annual
general meeting of the company along with the laying of its financial statement under sub-section (2):

Provided that the company shall also attach along with its financial statement, a separate statement

containing the salient features of the financial statement of its subsidiary or subsidiaries and associate
company or companies in such form as may be prescribed:

Provided further that the Central Government may provide for the consolidation of accounts of

companies in such manner as may be prescribed.]

(4) The provisions of this Act applicable to the preparation, adoption and audit of the financial

statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements
referred to in sub-section (3).

(5) Without prejudice to sub-section (1), where the financial statements of a company do not comply

with the accounting standards referred to in sub-section (1), the company shall disclose in its financial
statements, the deviation from the accounting standards, the reasons for such deviation and the financial
effects, if any, arising out of such deviation.

(6) The Central Government may, on its own or on an application by a class or classes of companies,

by notification, exempt any class or classes of companies from complying with any of the requirements of
this section or the rules made thereunder, if it is considered necessary to grant such exemption in the public
interest and any such exemption may be granted either unconditionally or subject to such conditions as may
be specified in the notification.

(7) If a company contravenes the provisions of this section, the managing director, the whole-time

director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the
duty of complying with the requirements of this section and in the absence of any of the officers mentioned
above, all the directors shall be punishable with imprisonment for a term which may extend to one year or
with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or
with both.

_Explanation.—For the purposes of this section, except where the context otherwise requires, any_

reference to the financial statement shall include any notes annexed to or forming part of such financial
statement, giving information required to be given and allowed to be given in the form of such notes under
this Act.

2[129A. Periodical financial results.—The Central Government may, require such class or classes of

unlisted companies, as may be prescribed,—

1. Subs. by Act 1 of 2018, s. 33, for sub-section (3) (w.e.f. 7-5-2018).
2. Ins. by Act 29 of 2020, s. 25 (w.e.f. 22-1-2021).

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(a) to prepare the financial results of the company on such periodical basis and in such form as may

be prescribed;

(b) to obtain approval of the Board of Directors and complete audit or limited review of such

periodical financial results in such manner as may be prescribed; and

(c) file a copy with the Registrar within a period of thirty days of completion of the relevant period

with such fees as may be prescribed.]
**130. Re-opening of accounts on court’s or Tribunal’s orders.—(1) A company shall not re-open its**

books of account and not recast its financial statements, unless an application in this regard is made by the
Central Government, the Income-tax authorities, the Securities and Exchange Board, any other statutory
regulatory body or authority or any person concerned and an order is made by a court of competent
jurisdiction or the Tribunal to the effect that—

(i) the relevant earlier accounts were prepared in a fraudulent manner; or

(ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the

reliability of financial statements:

Provided that the court or the Tribunal, as the case may be, shall give notice to the Central

Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory
regulatory body or authority concerned [1][or any other person concerned] and shall take into
consideration the representations, if any, made by that Government or the authorities, Securities and
Exchange Board or the body or authority concerned [1][or the other person concerned] before passing any
order under this section.

(2) Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under

sub-section (1) shall be final.

2[(3) No order shall be made under sub-section (1) in respect of re-opening of books of account relating

to a period earlier than eight financial years immediately preceding the current financial year:

Provided that where a direction has been issued by the Central Government under the proviso to

sub-section (5) of section 128 for keeping of books of account for a period longer than eight years, the
books of account may be ordered to be re-opened within such longer period.]

**131. Voluntary revision of financial statements or Board’s report.—(1) If it appears to the directors**

of a company that—

(a) the financial statement of the company; or

(b) the report of the Board,

do not comply with the provisions of section 129 or section 134 they may prepare revised financial
statement or a revised report in respect of any of the three preceding financial years after obtaining approval
of the Tribunal on an application made by the company in such form and manner as may be prescribed and
a copy of the order passed by the Tribunal shall be filed with the Registrar:

Provided that the Tribunal shall give notice to the Central Government and the Income-tax authorities

and shall take into consideration the representations, if any, made by that Government or the authorities
before passing any order under this section:

Provided further that such revised financial statement or report shall not be prepared or filed more than

once in a financial year:

Provided also that the detailed reasons for revision of such financial statement or report shall also be

disclosed in the Board’s report in the relevant financial year in which such revision is being made.

1. Ins. by Act 1 of 2018, s. 34 (w.e.f. 9-2-2018).
2. Ins. by s. 34, ibid. (w.e.f. 9-2-2018).

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(2) Where copies of the previous financial statement or report have been sent out to members or

delivered to the Registrar or laid before the company in general meeting, the revisions must be confined
to—

(a) the correction in respect of which the previous financial statement or report do not comply with

the provisions of section 129 or section 134; and

(b) the making of any necessary consequential alternation.

(3) The Central Government may make rules as to the application of the provisions of this Act in

relation to revised financial statement or a revised director's report and such rules may, in particular—

(a) make different provisions according to which the previous financial statement or report are

replaced or are supplemented by a document indicating the corrections to be made;

(b) make provisions with respect to the functions of the company's auditor in relation to the revised

financial statement or report;

(c) require the directors to take such steps as may be prescribed.

**132. Constitution of National Financial Reporting Authority.—(1) The Central Government may,**

by notification, constitute a National Financial Reporting Authority to provide for matters relating to
accounting and auditing standards under this Act.

1[(1A) The National Financial Reporting Authority shall perform its functions through such divisions

as may be prescribed.]

(2) Notwithstanding anything contained in any other law for the time being in force, the National

Financial Reporting Authority shall—

(a) make recommendations to the Central Government on the formulation and laying down of

accounting and auditing policies and standards for adoption by companies or class of companies or
their auditors, as the case may be;

(b) monitor and enforce the compliance with accounting standards and auditing standards in such

manner as may be prescribed;

(c) oversee the quality of service of the professions associated with ensuring compliance with such

standards, and suggest measures required for improvement in quality of service and such other related
matters as may be prescribed; and

(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of

eminence and having expertise in accountancy, auditing, finance or law to be appointed by the Central
Government and such other members not exceeding fifteen consisting of part-time and full-time members
as may be prescribed:

Provided that the terms and conditions and the manner of appointment of the chairperson and members

shall be such as may be prescribed:

Provided further that the chairperson and members shall make a declaration to the Central Government

in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their
appointment:

Provided also that the chairperson and members, who are in full-time employment with National

Financial Reporting Authority shall not be associated with any audit firm (including related consultancy
firms) during the course of their appointment and two years after ceasing to hold such appointment.

1[(3A) Each division of the National Financial Reporting Authority shall be presided over by the

Chairperson or a full-time Member authorized by the Chairperson.

1. Ins. by Act 22 of 2019, s. 20 (w.e.f. 15-8-2019).

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(3B) There shall be an executive body of the National Financial Reporting Authority consisting of the

Chairperson and full-time Members of such Authority for efficient discharge of its functions under
sub-section (2) [other than clause (a) and sub-section (4).]

(4) Notwithstanding anything contained in any other law for the time being in force, the National

Financial Reporting Authority shall—

(a) have the power to investigate, either _suo motu_ or on a reference made to it by the Central

Government, for such class of bodies corporate or persons, in such manners may be prescribed into the
matters of professional or other misconduct committed by any member or firm of chartered accountants,
registered under the Chartered Accountants Act, 1949 (38 of 1949):

Provided that no other institute or body shall initiate or continue any proceedings in such matters

of misconduct where the National Financial Reporting Authority has initiated an investigation under
this section;

(b) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908

(5 of 1908), while trying a suit, in respect of the following matters, namely:—

(i) discovery and production of books of account and other documents, at such place and at

such time as may be specified by the National Financial Reporting Authority;

(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii) inspection of any books, registers and other documents of any person referred to in clause

(b) at any place;

(iv) issuing commissions for examination of witnesses or documents;

(c) where professional or other misconduct is proved, have the power to make order for—

(A) imposing penalty of—

(I) not less than one lakh rupees, but which may extend to five times of the fees received,

in case of individuals; and

(II) not less than [1][five lakh rupees], but which may extend to ten times of the fees received,

in case of firms;

2[(B) debarring the member or the firm from—

I. being appointed as an auditor or internal auditor or undertaking any audit in respect t of

financial statements or internal audit of the functions and activities of any company or body
corporate; or

II. performing any valuation as provided under section 247,

for a minimum period of six months or such higher period not exceeding ten years as may be
determined by the National Financial Reporting Authority.]

_Explanation.—For the purposes of this sub-section, the expression “professional or other misconduct”_

shall have the same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949    (38
of 1949).

(5) Any person aggrieved by any order of the National Financial Reporting Authority issued under

clause (c) of sub-section (4), may prefer an appeal before [3][the Appellate Tribunal in such manner and on
payment of such fee as may be prescribed].

4*  -  -  -  
(10) The National Financial Reporting Authority shall meet at such times and places and shall observe

such rules of procedure in regard to the transaction of business at its meetings in such manner as may be
prescribed.

1. Subs. by Act 1 of 2018, s. 35, for “ten lakh rupees” (w.e.f. 9-2-2018).
2. Subs. by Act 22 of 2019, s. 20, for sub-clause (b) (w.e.f. 15-8-2019).
3. Subs. by s. 35, ibid., for “the Appellate Authority constituted under sub-section (6) in such manner as may be prescribed” (w.e.f.

9-2-2018).

4. Sub-sections (6), (7), (8) and (9) omitted by s. 35, ibid. (w.e.f. 9-2-2018).

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(11) The Central Government may appoint a secretary and such other employees as it may consider

necessary for the efficient performance of functions by the National Financial Reporting Authority under
this Act and the terms and conditions of service of the secretary and employees shall be such as may be
prescribed.

(12) The head office of the National Financial Reporting Authority shall be at New Delhi and the

National Financial Reporting Authority may, meet at such other places in India as it deems fit.

(13) The National Financial Reporting Authority shall cause to be maintained such books of account

and other books in relation to its accounts in such form and in such manner as the Central Government may,
in consultation with the Comptroller and Auditor-General of India prescribe.

(14) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller

and Auditor-General of India at such intervals as may be specified by him and such accounts as certified
by the Comptroller and Auditor-General of India together with the audit report thereon shall be forwarded
annually to the Central Government by the National Financial Reporting Authority.

(15) The National Financial Reporting Authority shall prepare in such form and at such time for each

financial year as may be prescribed its annual report giving a full account of its activities during the financial
year and forward a copy thereof to the Central Government and the Central Government shall cause the
annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before
each House of Parliament.

**133. Central Government to prescribe accounting standards.—The Central Government may**

prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of
Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949     (38
of 1949), in consultation with and after examination of the recommendations made by the National
Financial Reporting Authority:

1[Provided that until the National Financial Reporting Authority is constituted under section 132 of the

Companies Act, 2013 (18 of 2013), the Central Government may prescribe the standards of accounting or
any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted
under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after
examination of the recommendations made by National Advisory Committee on Accounting Standards
constituted under section 210A of the Companies Act, 1956 (1 of 1956).]

**134. Financial statement, Board’s report, etc.—[ 2][(1) The financial statement, including consolidated**

financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of
the Board by the chairperson of the company where he is authorised by the Board or by two directors out
of which one shall be managing director, if any, and the Chief Executive Officer, the Chief Financial Officer
and the company secretary of the company, wherever they are appointed, or in the case of One Person
Company, only by one director, for submission to the auditor for his report thereon.]

(2) The auditors’ report shall be attached to every financial statement.
(3) There shall be attached to statements laid before a company in general meeting, a report by its Board of

Directors, which shall include—

3[(a) the web address, if any, where annual return referred to in sub-section (3) of section 92 has been

placed;]

(b) number of meetings of the Board;
(c) Directors’ Responsibility Statement;
4[(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than

those which are reportable to the Central Government;]

(d) a statement on declaration given by independent directors under sub-section (6) of section 149;
(e) in case of a company covered under sub-section (1) of section 178, company’s policy on directors’

appointment and remuneration including criteria for determining qualifications, positive attributes,
independence of a director and other matters provided under sub-section (3) of section 178;

1. Ins. by notification No. S.O. 1227(E), dated 29th March, 2016 (w.e.f 1-4-2015).
2. Subs. by Act 1 of 2018, s. 36, sub-section (1) (w.e.f. 31-7-2018).
3. Subs. by s. 36, ibid., for clause (a) (w.e.f. 31-7-2018).
4. Ins. by Act 21 of 2015, s. 12 (w.e.f. 29-5-2015).

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(f) explanations or comments by the Board on every qualification, reservation or adverse remark or

disclaimer made—

(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;

(g) particulars of loans, guarantees or investments under section 186;
(h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of section

188 in the prescribed form;

(i) the state of the company’s affairs;
(j) the amounts, if any, which it proposes to carry to any reserves;
(k) the amount, if any, which it recommends should be paid by way of dividend;
(l) material changes and commitments, if any, affecting the financial position of the company which

have occurred between the end of the financial year of the company to which the financial statements relate
and the date of the report;

(m) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in such

manner as may be prescribed;

(n) a statement indicating development and implementation of a risk management policy for the

company including identification therein of elements of risk, if any, which in the opinion of the Board may
threaten the existence of the company;

(o) the details about the policy developed and implemented by the company incorporate social

responsibility initiatives taken during the year;

(p) in case of a listed company and every other public company having such paid-up share capital as

may be prescribed, a statement indicating the manner in which formal [1][annual evaluation of the
performance of the Board, its Committees and of individual directors has been made];

(q) such other matters as may be prescribed:
2[Provided that where disclosures referred to in this sub-section have been included in the financial

statements, such disclosures shall be referred to instead of being repeated in the Board's report:

Provided further that where the policy referred to in clause (e) or clause (o) is made available on

company's website, if any, it shall be sufficient compliance of the requirements under such clauses if the
salient features of the policy and any change therein are specified in brief in the Board's report and the webaddress is indicated therein at which the complete policy is available.]
3[(3A) The Central Government may prescribe an abridged Board's report, for the purpose of compliance

with this section by One Person Company or small company.]

(4) The report of the Board of Directors to be attached to the financial statement under this section shall, in

case of a One Person Company, mean a report containing explanations or comments by the Board on every
qualification, reservation or adverse remark or disclaimer made by the auditor in his report.

(5) The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) shall state that—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed

along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state
of affairs of the company at the end of the financial year and of the profit and loss of the company for
that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting

records in accordance with the provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud another irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, in the case of a listed company, had laid down internal financial controls to be

followed by the company and that such internal financial controls are adequate and were operating
effectively.

_Explanation.—For the purposes of this clause, the term “internal financial controls” means the_

policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its

1. Subs. by Act 1 of 2018, s. 36, for “annual evaluation has been made by the Board of its own performance and that of its

committees and individual directors” (w.e.f. 31-7-2018).

2. The provisos ins. by s. 36, ibid., (w.e.f. 31-7-2018).
3. Sub-section (3A) ins. by s. 36, ibid., (w.e.f. 31-7-2018).

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business, including adherence to company’s policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information;

(f) the directors had devised proper systems to ensure compliance with the provisions of all

applicable laws and that such systems were adequate and operating effectively.
(6) The Board’s report and any annexures thereto under sub-section (3) shall be signed by its

chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be
signed by at least two directors, one of whom shall be a managing director, or by the director where there
is one director.

(7) A signed copy of every financial statement, including consolidated financial statement, if any, shall

be issued, circulated or published along with a copy each of—

(a) any notes annexed to or forming part of such financial statement;
(b) the auditor’s report; and
(c) the Board’s report referred to in sub-section (3).

1[(8) If a company is in default in complying with the provisions of this section, the company shall be

liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to
a penalty of fifty thousand rupees.]

**135. Corporate Social Responsibility.—(1) Every company having net worth of rupees five hundred**

crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more
during [2][the immediately preceding financial year] shall constitute a Corporate Social Responsibility
Committee of the Board consisting of three or more directors, out of which at least one director shall be an
independent director:

3[Provided that where a company is not required to appoint an independent director under sub-section

(4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more directors.]

(2) The Board's report under sub-section (3) of section 134 shall disclose the composition of the

Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall

indicate the activities to be undertaken by the company [4][in areas or subject, specified in Schedule VII];

(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a);

and

(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social Responsibility

Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents
of such Policy in its report and also place it on the company’s website, if any, in such manner as may
be prescribed; and

(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the

company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends,

in every financial year, at least two per cent. of the average net profits of the company made during the
three immediately preceding financial years, [5][or where the company has not completed the period of three
financial years since its incorporation, during such immediately preceding financial years,] in pursuance of
its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas around it where it operates,

for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made

under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount

1. Subs. by Act 29 of 2020, s. 26, for sub-section (8) (w.e.f. 21-12-2020).
2. Subs. by Act 1 of 2018, s. 37, for “any financial year” (w.e.f. 19-9-2018).
3. The proviso ins. by s. 37, ibid., (w.e.f. 19-9-2018).
4. Subs. by s. 37, ibid., for “as specified in Schedule VII” (w.e.f. 19-9-2018).
5. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22-1-2021).

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1[and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer

such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of
the financial years].

2[Provided also that if the company spends an amount in excess of the requirements provided under this

sub-section, such company may set off such excess amount against the requirement to spend under this
sub-section for such number of succeeding financial years and in such manner, as may be prescribed.]

3[Explanation.—For the purposes of this section “net profit” shall not include such sums as may be

prescribed, and shall be calculated in accordance with the provisions of section 198.]

4[(6) Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling

such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social
Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of
the financial year to a special account to be opened by the company in that behalf for that financial year in
any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount
shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility
Policy within a period of three financial years from the date of such transfer, failing which, the company
shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of
completion of the third financial year.

5[(7) If a company is in default in complying with the provisions of sub-section (5) or sub-section (6),

the company shall be liable to a penalty of twice the amount required to be transferred by the company to
the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case
may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be
liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund
specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or
two lakh rupees, whichever is less.]

(8) The Central Government may give such general or special directions to a company or class of

companies as it considers necessary to ensure compliance of provisions of this section and such company
or class of companies shall comply with such directions.]

6[(9) Where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh

rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility
Committee shall not be applicable and the functions of such Committee provided under this section shall,
in such cases, be discharged by the Board of Directors of such company.]

**136. Right of member to copies of audited financial statement.—(1)** [7]*** a copy of the financial

statements, including consolidated financial statements, if any, auditor’s report and every other document
required by law to be annexed or attached to the financial statements, which are to be laid before a company
in its general meeting, shall be sent to every member of the company, to every trustee for the debentureholder of any debentures issued by the company, and to all persons other than such member or trustee,
being the person so entitled, not less than twenty-one days before the date of the meeting:

8[Provided that if the copies of the documents are sent less than twenty-one days before the date of the

meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by members—

(a) holding, if the company has a share capital, majority in number entitled to vote and who represent

not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a
right to vote at the meeting; or

(b) having, if the company has no share capital, not less than ninety-five per cent. of the total voting power

exercisable at the meeting:

Provided further that] in the case of a listed company, the provisions of this sub-section shall be deemed
to be complied with, if the copies of the documents are made available for inspection at its registered

1. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22-1-2021).
2. The Proviso ins. by s. 27, ibid. (w.e.f. 22-1-2021).
3. Subs. by Act 1 of 2018, s. 37, for the Explanation (w.e.f. 19-9-2018).
4. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22-1-2021).
5. Subs. by Act 29 of 2020, s. 27, for sub-section (7) (w.e.f. 22-1-2021).
6. Ins. by s. 27, ibid. (w.e.f. 22-1-2021).
7. The words and figures “Without prejudice to the provisions of section 101” omitted by Act 1 of 2018, s. 38, (w.e.f. 9-2-2018).
8. Subs. by s. 38, ibid., for “Provided that” (w.e.f. 9-2-2018).

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office during working hours for a period of twenty-one days before the date of the meeting and a
statement containing the salient features of such documents in the prescribed form or copies of the
documents, as the company may deem fit, is sent to every member of the company and to every trustee
for the holders of any debentures issued by the company not less than twenty-one days before the date
of the meeting unless the shareholders ask for full financial statements:

1[Provided also] that the Central Government may prescribe the manner of circulation of financial

statements of companies having such net worth and turnover as may be prescribed:

Provided also that a listed company shall also place its financial statements including consolidated

financial statements, if any, and all other documents required to be attached

thereto, on its website, which is maintained by or on behalf of the company:

2[Provided also that every listed company having a subsidiary or subsidiaries shall place separate audited

accounts in respect of each of subsidiary on its website, if any:

Provided also that a listed company which has a subsidiary incorporated outside India (herein referred

to as “foreign subsidiary”)—

(a) where such foreign subsidiary is statutorily required to prepare consolidated financial statement

under any law of the country of its incorporation, the requirement of this proviso shall be met if
consolidated financial statement of such foreign subsidiary is placed on the website of the listed company;

(b) where such foreign subsidiary is not required to get its financial statement audited under any law

of the country of its incorporation and which does not get such financial statement audited, the holding
Indian listed company may place such unaudited financial statement on its website and where such
financial statement is in a language other than English, a translated copy of the financial statement in
English shall also be placed on the website.]

(2) A company shall allow every member or trustee of the holder of any debentures issued by the

company to inspect the documents stated under sub-section (1) at its registered office during business hours.

3[Provided that every company having a subsidiary or subsidiaries shall provide a copy of separate

audited or unaudited financial statements, as the case may be, as prepared in respect of each of its subsidiary
to any member of the company who asks for it.]

(3) If any default is made in complying with the provisions of this section, the company shall be liable

to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be
liable to a penalty of five thousand rupees.

**137. Copy of financial statement to be filed with Registrar.—(1) A copy of the financial statements,**

including consolidated financial statement, if any, along with all the documents which are required to be or
attached to such financial statements under this Act, duly adopted at the annual general meeting of the
company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such
manner, with such fees or additional fees as may be prescribed [4]***:

Provided that where the financial statements under sub-section (1) are not adopted at annual general

meeting or adjourned annual general meeting, such unadopted financial statements along with the required
documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual
general meeting and the Registrar shall take them in his records as provisional till the financial statements
are filed with him after their adoption in the adjourned annual general meeting for that purpose:

Provided further that financial statements adopted in the adjourned annual general meeting shall be

filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such
fees or such additional fees as may be prescribed [1]***:

Provided also that a One Person Company shall file a copy of the financial statements duly adopted by

its member, along with all the documents which are required to be attached to such financial statements,
within one hundred eighty days from the closure of the financial year:

1. Subs. by Act 1 of 2018, s. 38, for “Provided further” (w.e.f. 9-2-2018).
2. Subs. by s. 38, ibid., for the Fourth proviso (w.e.f. 9-2-2018).
3. The proviso ins. by s. 38, ibid. (w.e.f. 9-2-2018).

4. The words and figures “within the time specified under section 403” omitted by s. 39, ibid., (w.e.f. 7-5-2018).

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Provided also that a company shall, along with its financial statements to be filed with the Registrar,

attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which
have not established their place of business in India.

1[Provided also that in the case of a subsidiary which has been incorporated outside India (herein

referred to as “foreign subsidiary”), which is not required to get its financial statement audited under any
law of the country of its incorporation and which does not get such financial statement audited, the
requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial
statement along with a declaration to this effect and where such financial statement is in a language other
than English, along with a translated copy of the financial statement in English.]

(2) Where the annual general meeting of a company for any year has not been held, the financial

statements along with the documents required to be attached under sub-section (1), duly signed along with
the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar
within thirty days of the last date before which the annual general meeting should have been held and in
such manner, with such fees or additional fees as may be prescribed [2]***.

(3) If a company fails to file the copy of the financial statements under sub-section (1) or

sub-section (2), as the case may be, before the expiry of the period specified [3][therein] the company shall
be [4][liable to a penalty] of [5][ten thousand rupees and in case of continuing failure, with a further penalty of
one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh
rupees,] and the managing director and the Chief Financial Officer of the company, if any, and, in the
absence of the managing director and the Chief Financial Officer, any other director who is charged by the
Board with the responsibility of complying with the provisions of this section, and, in the absence of any
such director, all the directors of the company, shall be [6][shall be liable to a penalty of [7][ten thousand rupees]
and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first
during which such failure continues, subject to a maximum of [8][fifty thousand rupees.]

**138. Internal audit.—(1) Such class or classes of companies as may be prescribed shall be required**

to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such
other professional as may be decided by the Board to conduct internal audit of the functions and activities
of the company.

(2) The Central Government may, by rules, prescribe the manner and the intervals in which the internal

audit shall be conducted and reported to the Board.

CHAPTER X

AUDIT AND AUDITORS

**139. Appointment of auditors.—(1) Subject to the provisions of this Chapter, every company shall,**

at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from
the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the
conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members
of the company at such meeting shall be such as may be prescribed:

9*  -  -  -  
Provided further that before such appointment is made, the written consent of the auditor to such

appointment, and a certificate from him or it that the appointment, if made, shall be in accordance with the
conditions as may be prescribed, shall be obtained from the auditor:

1. The proviso ins. by Act 1 of 2018, s. 39 (w.e.f. 7-5-2018).
2. The words and figures “within the time specified, under section 403” omitted by s. 39, ibid. (w.e.f. 7-5-2018).
3. Subs. by s. 39, ibid., for “in section 403” (w.e.f. 7-5-2018).
4. Subs. by Act 22 of 2019, s. 22, for “punishable with fine” (w.e.f. 2-11-2018).
5. Subs. by Act 29 of 2020, s. 28, for “one thousand rupees for every day during which the failure continues but which shall not

be more than ten lakh rupees” (w.e.f. 21-12-2020).

6. Subs. by Act 22 of 2019, s. 22, for “punishable with imprisonment for a term which may extend to six months or with fine

which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both” (w.e.f. 2-11-2018).

7. Subs. by Act 29 of 2020, s. 28, for “one lakh rupees” (w.e.f. 21-12-2020).
8. Subs. by s. 28, ibid., for “five lakh rupees” (w.e.f. 21-12-2020).
9. The first proviso omitted by Act 1 of 2018, s. 40 (w.e.f. 7-5-2018).

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Provided also that the certificate shall also indicate whether the auditor satisfies the criteria provided in

section 141:

Provided also that the company shall inform the auditor concerned of his or its appointment, and also

file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor
is appointed.

_Explanation.—For the purposes of this Chapter, “appointment” includes re-appointment._

(2) No listed company or a company belonging to such class or classes of companies as may be

prescribed, shall appoint or re-appoint—

(a) an individual as auditor for more than one term of five consecutive years; and

(b) an audit firm as auditor for more than two terms of five consecutive years:

Provided that—

(i) an individual auditor who has completed his term under clause (a) shall not be eligible for

re-appointment as auditor in the same company for five years from the completion of his term;

(ii) an audit firm which has completed its term under clause (b), shall not be eligible for

re-appointment as auditor in the same company for five years from the completion of such term:

Provided further that as on the date of appointment no audit firm having a common partner or partners

to the other audit firm, whose tenure has expired in a company immediately preceding the financial year,
shall be appointed as auditor of the same company for a period of five years:

1[Provided also that every company, existing on or before the commencement of this Act which is

required to comply with the provisions of this sub-section, shall comply with requirement of this
sub-section within a period which shall not be later than the date of the first annual general meeting of the
company held, within the period specified under sub-section (1) of section 96, after three years from the
date of commencement of this Act:]

Provided also that, nothing contained in this sub-section shall prejudice the right of the company to

remove an auditor or the right of the auditor to resign from such office of the company.

(3) Subject to the provisions of this Act, members of a company may resolve to provide that—

(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at such

intervals as may be resolved by members; or

(b) the audit shall be conducted by more than one auditor.

(4) The Central Government may, by rules, prescribe the manner in which the companies shall rotate

their auditors in pursuance of sub-section (2).

_Explanation.—For the purposes of this Chapter, the word “firm” shall include a limited liability_

partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009).

(5) Notwithstanding anything contained in sub-section (1), in the case of a Government company or

any other company owned or controlled, directly or indirectly, by the Central Government, or by any State
Government or Governments, or partly by the Central Government and partly by one or more State
Governments, the Comptroller and Auditor-General of India shall, in respect of a financial year, appoint an
auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of one
hundred and eighty days from the commencement of the financial year, who shall hold office till the
conclusion of the annual general meeting.

(6) Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a

Government company, shall be appointed by the Board of Directors within thirty days from the date of
registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform
the members of the company, who shall within ninety days at an extraordinary general meeting appoint
such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.

1. Subs. by notification No. S.O. 2264(E), dated 30th June, 2016, for the proviso (w.e.f.1-4-2014).

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(7) Notwithstanding anything contained in sub-section (1) or sub-section (5), in the case of a

Government company or any other company owned or controlled, directly or indirectly, by the Central
Government, or by any State Government, or Governments, or partly by the Central Government and partly
by one or more State Governments, the first auditor shall be appointed by the Comptroller and AuditorGeneral of India within sixty days from the date of registration of the company and in case the Comptroller
and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors
of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board
to appoint such auditor within the next thirty days, it shall inform the members of the company who shall
appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the
conclusion of the first annual general meeting.

(8) Any casual vacancy in the office of an auditor shall—

(i) in the case of a company other than a company whose accounts are subject to audit by an auditor

appointed by the Comptroller and Auditor-General of India, be filled by the Board of Directors within
thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment
shall also be approved by the company at a general meeting convened within three months of the
recommendation of the Board and he shall hold the office till the conclusion of the next annual general
meeting;

(ii) in the case of a company whose accounts are subject to audit by an auditor appointed by the

Comptroller and Auditor-General of India, be filled by the Comptroller and Auditor-General of India
within thirty days:

Provided that in case the Comptroller and Auditor-General of India does not fill the vacancy within

the said period, the Board of Directors shall fill the vacancy within next thirty days.

(9) Subject to the provisions of sub-section (1) and the rules made thereunder, are tiring auditor may be

re-appointed at an annual general meeting, if—

(a) he is not disqualified for re-appointment;

(b) he has not given the company a notice in writing of his unwillingness to be re-appointed; and

(c) a special resolution has not been passed at that meeting appointing some other auditor or

providing expressly that he shall not be re-appointed.

(10) Where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor

shall continue to be the auditor of the company.

(11) Where a company is required to constitute an Audit Committee under section 177, all

appointments, including the filling of a casual vacancy of an auditor under this section shall be made after
taking into account the recommendations of such committee.

**140. Removal, resignation of auditor and giving of special notice.—(1) The auditor appointed under**

section 139 may be removed from his office before the expiry of his term only by a special resolution of
the company, after obtaining the previous approval of the Central Government in that behalf in the
prescribed manner:

Provided that before taking any action under this sub-section, the auditor concerned shall be given a

reasonable opportunity of being heard.

(2) The auditor who has resigned from the company shall file within a period of thirty days from the

date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of
companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the
Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with
regard to his resignation.

1[(3) If the auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a

penalty of fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less,

1. Subs. by Act 22 of 2019, s. 23, for sub-section (3) (w.e.f. 2-11-2018).

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and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first
during which such failure continues, subject to a maximum of [1][two lakh rupees].]

(4) (i) Special notice shall be required for a resolution at an annual general meeting appointing as auditor

a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be
re-appointed, except where the retiring auditor has completed a consecutive tenure of five years or, as the
case may be, ten years, as provided under sub-section (2) of section 139.

(ii) On receipt of notice of such a resolution, the company shall forthwith send a copy thereof to the

retiring auditor.

(iii) Where notice is given of such a resolution and the retiring auditor makes with respect thereto

representation in writing to the company (not exceeding a reasonable length) and requests its notification
to members of the company, the company shall, unless the representation is received by it too late for it to
do so,—

(a) in any notice of the resolution given to members of the company, state the fact of the

representation having been made; and

(b) send a copy of the representation to every member of the company to whom notice of the

meeting is sent, whether before or after the receipt of the representation by the company,

and if a copy of the representation is not sent as aforesaid because it was received too late or because of the
company’s default, the auditor may (without prejudice to his right to be heard orally) require that the
representation shall be read out at the meeting:

Provided that if a copy of representation is not sent as aforesaid, a copy thereof shall be filed with the

Registrar:

Provided further that if the Tribunal is satisfied on an application either of the company or of any other

aggrieved person that the rights conferred by this sub-section are being abused by the auditor, then, the
copy of the representation may not be sent and the representation need not be read out at the meeting.

(5) Without prejudice to any action under the provisions of this Act or any other law for the time being

in force, the Tribunal either suo motu or on an application made to it by the Central Government or by any
person concerned, if it is satisfied that the auditor of a company has, whether directly or in directly, acted
in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors
or officers, it may, by order, direct the company to change its auditors:

Provided that if the application is made by the Central Government and the Tribunal is satisfied that

any change of the auditor is required, it shall within fifteen days of receipt of such application, make an
order that he shall not function as an auditor and the Central Government may appoint another auditor in
his place:

Provided further that an auditor, whether individual or firm, against whom final order has been passed

by the Tribunal under this section shall not be eligible to be appointed as an auditor of any company for a
period of five years from the date of passing of the order and the auditor shall also be liable for action under
section 447.

_Explanation I.—It is hereby clarified that the case of a firm, the liability shall be of the firm and that of_

every partner or partners who acted in a fraudulent manner or abetted or colluded in any fraud by, or in
relation to, the company or its director or officers.

_Explanation II.—For the purposes of this Chapter the word “auditor” includes a firm of auditors._

**141. Eligibility, qualifications and disqualifications of auditors.—(1) A person shall be eligible for**

appointment as an auditor of a company only if he is a chartered accountant:

Provided that a firm whereof majority of partners practising in India are qualified for appointment as

aforesaid may be appointed by its firm name to be auditor of a company.

1. Subs. by Act 29 of 2020, s. 29, for “five lakh rupees” (w.e.f. 21-12-2020).

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(2) Where a firm including a limited liability partnership is appointed as an auditor of a company, only

the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm.

(3) The following persons shall not be eligible for appointment as an auditor of a company, namely:—

(a) a body corporate other than a limited liability partnership registered under the Limited Liability

Partnership Act, 2008 (6 of 2009);

(b) an officer or employee of the company;

(c) a person who is a partner, or who is in the employment, of an officer or employee of the

company;

(d) a person who, or his relative or partner—

(i) is holding any security of or interest in the company or its subsidiary, or of its holding or

associate company or a subsidiary of such holding company:

Provided that the relative may hold security or interest in the company office value not

exceeding one thousand rupees or such sum as may be prescribed;

(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a

subsidiary of such holding company, in excess of such amount as may be prescribed; or

(iii) has given a guarantee or provided any security in connection with the indebtedness of any

third person to the company, or its subsidiary, or its holding or associate company or a subsidiary
of such holding company, for such amount as may be prescribed;

(e) a person or a firm who, whether directly or indirectly, has business relationship with the company,

or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate
company of such nature as may be prescribed;

(f) a person whose relative is a director or is in the employment of the company as a director or key

managerial personnel;

(g) a person who is in full time employment elsewhere or a person or a partner of a firm holding

appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment
holding appointment as auditor of more than twenty companies;

(h) a person who has been convicted by a court of an offence involving fraud and a period of ten

years has not elapsed from the date of such conviction;

1[(i) a person who, directly or indirectly, renders any service referred to in section 144 to the company

or its holding company or its subsidiary company.

_Explanation.—For the purposes of this clause, the term “directly or indirectly” shall have the meaning_

assigned to it in the Explanation to section 144.]

(4) Where a person appointed as an auditor of a company incurs any of the disqualifications mentioned

in sub-section (3) after his appointment, he shall vacate his office as such auditor and such vacation shall
be deemed to be a casual vacancy in the office of the auditor.

**142. Remuneration of auditors.—(1) The remuneration of the auditor of a company shall be fixed in**

its general meeting or in such manner as may be determined therein:

Provided that the Board may fix remuneration of the first auditor appointed by it.

(2) The remuneration under sub-section (1) shall, in addition to the fee payable to an auditor, include

the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility
extended to him but does not include any remuneration paid to him for any other service rendered by him
at the request of the company.

1. Subs. by Act 1 of 2018, s. 42, for clause (i) (w.e.f. 9-2-2018).

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**143. Powers and duties of auditors and auditing standards.—(1) Every auditor of a company shall**

have a right of access at all times to the books of account and vouchers of the company, whether kept at the
registered office of the company or at any other place and shall be entitled to require from the officers of
the company such information and explanation as he may consider necessary for the performance of his
duties as auditor and amongst other matters inquire into the following matters, namely:—

(a) whether loans and advances made by the company on the basis of security have been properly

secured and whether the terms on which they have been made are prejudicial to the interests of the
company or its members;

(b) whether transactions of the company which are represented merely by book entries are

prejudicial to the interests of the company;

(c) where the company not being an investment company or a banking company, whether so much

of the assets of the company as consist of shares, debentures and other securities have been sold at a
price less than that at which they were purchased by the company;

(d) whether loans and advances made by the company have been shown as deposits;

(e) whether personal expenses have been charged to revenue account;
(f) where it is stated in the books and documents of the company that any shares have been allotted

for cash, whether cash has actually been received in respect of such allotment, and if no cash has
actually been so received, whether the position as stated in the account books and the balance sheet is
correct, regular and not misleading:
Provided that the auditor of a company which is a holding company shall also have the right of access

to the records of all [1][its subsidiaries and associate companies] in so far as it relates to the consolidation of
its financial statements with that of [1][its subsidiaries and associate companies.]

(2) The auditor shall make a report to the members of the company on the accounts examined by him

and on every financial statements which are required by or under this Act to be laid before the company in
general meeting and the report shall after taking into account the provisions of this Act, the accounting and
auditing standards and matters which are required to be included in the audit report under the provisions of
this Act or any rules made thereunder or under any order made under sub-section (11) and to the best of his
information and knowledge, the said accounts, financial statements give a true and fair view of the state of
the company’s affairs as at the end of its financial year and profit or loss and cash flow for the year and
such other matters as may be prescribed.

(3) The auditor’s report shall also state—

(a) whether he has sought and obtained all the information and explanations which to the best of

his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and
the effect of such information on the financial statements;

(b) whether, in his opinion, proper books of account as required by law have been kept by the

company so far as appears from his examination of those books and proper returns adequate for the
purposes of his audit have been received from branches not visited by him;

(c) whether the report on the accounts of any branch office of the company audited under sub
section (8) by a person other than the company’s auditor has been sent to him under the proviso to that
sub-section and the manner in which he has dealt with it in preparing his report;

(d) whether the company’s balance sheet and profit and loss account dealt within the report are in

agreement with the books of account and returns;

(e) whether, in his opinion, the financial statements comply with the accounting standards;
(f) the observations or comments of the auditors on financial transactions or matters which have

any adverse effect on the functioning of the company;

(g) whether any director is disqualified from being appointed as a director under sub-section (2) of

section 164;

(h) any qualification, reservation or adverse remark relating to the maintenance of accounts and

other matters connected therewith;

1. Subs. by Act 1 of 2018, s. 43, for “its subsidiaries” (w.e.f. 9-2-2018).

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(i) whether the company has adequate [1][internal financial controls with reference to financial

statements] in place and the operating effectiveness of such controls;

(j) such other matters as may be prescribed.

(4) Where any of the matters required to be included in the audit report under this section is answered

in the negative or with a qualification, the report shall state the reasons therefor.

(5) [2][In the case of a Government company or any other company owned or controlled, directly or

indirectly, by the Central Government, or by any State Government or Governments, or partly by the
Central Government and partly by one or more State Governments, the Comptroller and Auditor General
of India shall appoint the auditor under sub-section (5) or sub-section (7) of Section 139 and direct such
auditor the manner in which the accounts of the company are required to be audited and] thereupon the
auditor so appointed shall submit a copy of the audit report to the Comptroller and Auditor-General of India
which, among other things, include the directions, if any, issued by the Comptroller and
Auditor-General of India, the action taken thereon and its impact on the accounts and financial statement
of the company.

(6) The Comptroller and Auditor-General of India shall within sixty days from the date of receipt of

the audit report under sub-section (5) have a right to,—

(a) conduct a supplementary audit of the financial statement of the company by such person or

persons as he may authorise in this behalf; and for the purposes of such audit, require information or
additional information to be furnished to any person or persons, so authorised, on such matters, by such
person or persons, and in such form, as the Comptroller and Auditor-General of India may direct; and

(b) comment upon or supplement such audit report:

Provided that any comments given by the Comptroller and Auditor-General of India upon, or

supplement to, the audit report shall be sent by the company to every person entitled to copies of audited
financial statements under sub section (1) of section 136 and also be placed before the annual general
meeting of the company at the same time and in the same manner as the audit report.

(7) Without prejudice to the provisions of this Chapter, the Comptroller and Auditor-General of India

may, in case of any company covered under sub-section (5) or sub-section (7) of section 139, if he considers
necessary, by an order, cause test audit to be conducted of the accounts of such company and the provisions
of section 19A of the Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act,
1971 (56 of 1971), shall apply to the report of such test audit.

(8) Where a company has a branch office, the accounts of that office shall be audited either by the

auditor appointed for the company (herein referred to as the company’s auditor) under this Act or by any
other person qualified for appointment as an auditor of the company under this Act and appointed as such
under section 139, or where the branch office is situated in a country outside India, the accounts of the
branch office shall be audited either by the company’s auditor or by an accountant or by any other person
duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that
country and the duties and powers of the company’s auditor with reference to the audit of the branch and
the branch auditor, if any, shall be such as may be prescribed:

Provided that the branch auditor shall prepare a report on the accounts of the branch examined by him

and send it to the auditor of the company who shall deal with it in his report in such manner as he considers
necessary.

(9) Every auditor shall comply with the auditing standards.

(10) The Central Government may prescribe the standards of auditing or any addendum thereto, as

recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the
Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the
recommendations made by the National Financial Reporting Authority:

1. Subs. by Act 1 of 2018, s. 43, for “internal financial controls system” (w.e.f. 9-2-2018).
2. Subs. by notification No. S.O. 2226(E), dated 4[th] September, 2014 for certain words (w.e.f. 4-9-2014).

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Provided that until any auditing standards are notified, any standard or standards of auditing specified

by the Institute of Chartered Accountants of India shall be deemed to be the auditing standards.

(11) The Central Government may, in consultation with the National Financial Reporting Authority,

by general or special order, direct, in respect of such class or description of companies, as may be specified
in the order, that the auditor’s report shall also include a statement on such matters as may be specified
therein:

1[Provided that until the National Financial Reporting Authority is constituted under section 132, the

Central Government may hold consultation required under this sub-section with the Committee chaired by
an officer of the rank of Joint Secretary or equivalent in the Ministry of Corporate Affairs and the
Committee shall have the representatives from the Institute of Chartered Accountants of India and Industry
Chambers and also special invitees from the National Advisory Committee on Accounting Standards and
the office of the Comptroller and Auditor-General.]

2[(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of

the performance of his duties as auditor, has reason to believe that an offence of fraud involving such
amount or amounts as may be prescribed, is being or has been committed in the company by its officers or
employees, the auditor shall report the matter to the Central Government within such time and in such
manner as may be prescribed:

Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the

matter to the audit committee constituted under section 177 or to the Board in other cases within such time
and in such manner as may be prescribed:

Provided further that the companies, whose auditors have reported frauds under this sub-section to the

audit committee or the Board but not reported to the Central Government, shall disclose the details about
such frauds in the Board's report in such manner as may be prescribed.]

(13) No duty to which an auditor of a company may be subject to shall be regarded as having been

contravened by reason of his reporting the matter referred to in sub-section (12) if it is done in good faith.

(14) The provisions of this section shall mutatis mutandis apply to—

(a) the [3][cost accountant] conducting cost audit under section 148; or

(b) the company secretary in practice conducting secretarial audit under section 204.

4[(15) If any auditor, cost accountant, or company secretary in practice does not comply with the

provisions of sub-section (12), he shall, —

(a) in case of a listed company, be liable to a penalty of five lakh rupees; and

(b) in case of any other company, be liable to a penalty of one lakh rupees.]

**144. Auditor not to render certain services.—An auditor appointed under this Act shall provide to**

the company only such other services as are approved by the Board of Directors or the audit committee, as
the case may be, but which shall not include any of the following services (whether such services are
rendered directly or indirectly to the company), or its holding company or subsidiary company, namely:—

(a) accounting and book keeping services;

(b) internal audit;

(c) design and implementation of any financial information system;

(d) actuarial services;

(e) investment advisory services;

(f) investment banking services;

1. Ins. by notification No. S.O. 1226(E), dated 29th March, 2016 (w.e.f. 10-4-2015).
2. Subs. by Act 21 of 2015, s. 13, for sub-section (12) (w.e.f. 14-12-2015).
3. Subs. by Act 1 of 2018, s. 43, for “cost accountant in practice” (w.e.f. 9-2-2018).
4. Subs. by Act 29 of 2020, s. 30, for sub-section (15) (w.e.f. 21-12-2020).

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(g) rendering of outsourced financial services;

(h) management services; and

(i) any other kind of services as may be prescribed:

Provided that an auditor or audit firm who or which has been performing any non-audit services on or

before the commencement of this Act shall comply with the provisions of this section before the closure of
the first financial year after the date of such commencement.

_Explanation.—For the purposes of this sub-section, the term “directly or indirectly” shall include_

rendering of services by the auditor,—

(i) in case of auditor being an individual, either himself or through his relative or any other person

connected or associated with such individual or through any other entity, whatsoever, in which such
individual has significant influence or control, or whose name or trade mark or brand is used by such
individual;

(ii) in case of auditor being a firm, either itself or through any of its partners or through its parent,

subsidiary or associate entity or through any other entity, whatsoever, in which the firm or any partner
of the firm has significant influence or control, or whose name or trade mark or brand is used by the
firm or any of its partners.

**145. Auditor to sign audit reports, etc.—The person appointed as an auditor of the company shall**

sign the auditor’s report or sign or certify any other document of the company in accordance with the
provisions of sub-section (2) of section 141, and the qualifications, observations or comments on financial
transactions or matters, which have any adverse effect on the functioning of the company mentioned in the
auditor’s report shall be read before the company in general meeting and shall be open to inspection by any
member of the company.

**146. Auditors to attend general meeting.—All notices of, and other communications relating to, any**

general meeting shall be forwarded to the auditor of the company, and the auditor shall, unless otherwise
exempted by the company, attend either by himself or through his authorised representative, who shall also
be qualified to be an auditor, any general meeting and shall have right to be heard at such meeting on any
part of the business which concerns him as the auditor.

**147. Punishment for contravention.—(1) If any of the provisions of sections 139 to 146 (both**

inclusive) is contravened, the company shall be punishable with fine which shall not be less than
twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company
who is in default shall be punishable [1]*** with fine which shall not be less than ten thousand rupees but
which may extend to [2][one lakh rupees].

(2) If an auditor of a company contravenes any of the provisions of section 139, section 143, section

144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five
thousand rupees but which may extend to five lakh rupees [3][or four times the remuneration of the auditor,
whichever is less]:

Provided that if an auditor has contravened such provisions knowingly or willfully with the intention

to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with
imprisonment for a term which may extend to one year [4][and with fine which shall not be less than fifty
thousand rupees but which may extend to twenty-five lakh rupees or eight times the remuneration of the
auditor, whichever is less].

(3) Where an auditor has been convicted under sub-section (2), he shall be liable to—

_(i) refund the remuneration received by him to the company; and_

1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 31 (w.e.f. 21-12
2020).

2. Subs. by s. 31, ibid., for “one lakh rupees, or with both” (w.e.f. 21-12-2020).
3. Ins. by Act 1 of 2018, s. 44 (w.e.f. 9-2-2018).
4. Subs. by Act 1 of 2018, s. 44, for “and with fine which shall not be less than one lakh rupees but which may extend to twenty
five lakh rupees” (w.e.f. 9-2-2018).

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(ii) pay for damages to the company, statutory bodies or authorities [1][or to members or creditors of

the company] for loss arising out of incorrect or misleading statements of particulars made in his audit
report.

(4) The Central Government shall, by notification, specify any statutory body or authority or an officer

for ensuring prompt payment of damages to the company or the persons under clause (ii) of
sub-section (3) and such body, authority or officer shall after payment of damages to such company or
persons file a report with the Central Government in respect of making such damages in such manner as
may be specified in the said notification.

(5) Where, in case of audit of a company being conducted by an audit firm, it is proved that the partner

or partners of the audit firm has or have acted in a fraudulent manner or a betted or colluded in any fraud
by, or in relation to or by, the company or its directors or officers, the liability, whether civil or criminal as
provided in this Act or in any other law for the time being in force, for such act shall be of the partner or
partners concerned of the audit firm and of the firm jointly and severally.

2[Provided that in case of criminal liability of an audit firm, in respect of liability other than fine, the

concerned partner or partners, who acted in a fraudulent manner or abetted or, as the case may be, colluded
in any fraud shall only be liable.]

**148. Central Government to specify audit of items of cost in respect of certain companies.—(1)**

Notwithstanding anything contained in this Chapter, the Central Government may, by order, in respect of
such class of companies engaged in the production of such goods or providing such services as may be
prescribed, direct that particulars relating to the utilisation of material or labour or to other items of cost as
may be prescribed shall also be included in the books of account kept by that class of companies:

Provided that the Central Government shall, before issuing such order in respect of any class of

companies regulated under a special Act, consult the regulatory body constituted or established under such
special Act.

(2) If the Central Government is of the opinion, that it is necessary to do so, it may, by order, direct that

the audit of cost records of class of companies, which are covered under sub-section (1) and which have a
net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed, shall
be conducted in the manner specified in the order.

(3) The audit under sub-section (2) shall be conducted by a [3][cost accountant] who shall be appointed

by the Board on such remuneration as may be determined by the members in such manner as may be
prescribed:

Provided that no person appointed under section 139 as an auditor of the company shall be appointed

for conducting the audit of cost records:

Provided further that the auditor conducting the cost audit shall comply with the cost auditing standards.

_Explanation.—For the purposes of this sub-section, the expression “cost auditing standards” mean such_

standards as are issued by the [4][Institute of Cost Accountants of India], constituted under the Cost and
Works Accountants Act, 1959 (23 of 1959), with the approval of the Central Government.

(4) An audit conducted under this section shall be in addition to the audit conducted under section 143.

(5) The qualifications, disqualifications, rights, duties and obligations applicable to auditors under this

Chapter shall, so far as may be applicable, apply to a cost auditor appointed under this section and it shall
be the duty of the company to give all assistance and facilities to the cost auditor appointed under this
section for auditing the cost records of the company:

Provided that the report on the audit of cost records shall be submitted by the [5][cost accountant] to the

Board of Directors of the company.

1. Subs. by Act 1 of 2018, s. 44, for “or to any other persons” (w.e.f. 9-2-2018).
2. The proviso ins. by s. 44, ibid., (w.e.f. 9-2-2018).
3. Subs. by s. 45, ibid., for “Cost Accountant in practice”(w.e.f. 9-2-2018).
4. Subs. by s. 45, ibid., for “Institute of Cost and Works Accountants of India” (w.e.f. 9-2-2018).
5. Subs. by s. 45, ibid., for “cost accountant in practice”(w.e.f. 9-2-2018).

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(6) A company shall within thirty days from the date of receipt of a copy of the cost audit report prepared

in pursuance of a direction under sub-section (2) furnish the Central Government with such report along
with full information and explanation on every reservation or qualification contained therein.

(7) If, after considering the cost audit report referred to under this section and the information and

explanation furnished by the company under sub-section (6), the Central Government is of the opinion that
any further information or explanation is necessary, it may call for such further information and explanation
and the company shall furnish the same within such time as may be specified by that Government.

(8) If any default is made in complying with the provisions of this section,—

(a) the company and every officer of the company who is in default shall be punishable in the

manner as provided in sub-section (1) of section 147;

(b) the cost auditor of the company who is in default shall be punishable in the manner as provided

in sub-sections (2) to (4) of section 147.

CHAPTER XI

APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

**149. Company to have Board of Directors.—(1) Every company shall have a Board of Directors**

consisting of individuals as directors and shall have—

(a) a minimum number of three directors in the case of a public company, two directors in the case

of a private company, and one director in the case of a One Person Company; and

(b) a maximum of fifteen directors:

Provided that a company may appoint more than fifteen directors after passing a special resolution:

Provided further that such class or classes of companies as may be prescribed, shall have at least one

woman director.

(2) Every company existing on or before the date of commencement of this Act shall within one year

from such commencement comply with the requirements of the provisions of sub-section (1).

1[(3) Every company shall have at least one director who stays in India for a total period of not less than

one hundred and eighty-two days during the financial year:

Provided that in case of a newly incorporated company the requirement under this sub-section shall

apply proportionately at the end of the financial year in which it is incorporated];

(4) Every listed public company shall have at least one-third of the total number of directors as

independent directors and the Central Government may prescribe the minimum number of independent
directors in case of any class or classes of public companies.

_Explanation.—For the purposes of this sub-section, any fraction contained in such one-third number_

shall be rounded off as one.

(5) Every company existing on or before the date of commencement of this Act shall, within one year

from such commencement or from the date of notification of the rules in this regard as may be applicable,
comply with the requirements of the provisions of sub-section (4).

(6) An independent director in relation to a company, means a director other than managing director or

a whole-time director or a nominee director,—

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and

experience;

(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;

(ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate

company;

1. Subs. by Act 1 of 2018, s. 46, for sub-section (3) (w.e.f. 7-5-2018).

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(c) who has or had no [1][pecuniary relationship, other than remuneration as such director or having

transaction not exceeding ten per cent. of his total income or such amount as may be prescribed,] with
the company, its holding, subsidiary or associate company, or their promoters, or directors, during the
two immediately preceding financial years or during the current financial year;

2[(d) none of whose relatives—

(i) is holding any security of or interest in the company, its holding, subsidiary or associate

company during the two immediately preceding financial years or during the current financial year:

Provided that the relative may hold security or interest in the company of face value not exceeding

fifty lakh rupees or two per cent. of the paid-up capital of the company, its holding, subsidiary or
associate company or such higher sum as may be prescribed;

(ii) is indebted to the company, its holding, subsidiary or associate company or their promoters,

or directors, in excess of such amount as may be prescribed during the two immediately preceding
financial years or during the current financial year;

(iii) has given a guarantee or provided any security in connection with the indebtedness of any

third person to the company, its holding, subsidiary or associate company or their promoters, or
directors of such holding company, for such amount as may be prescribed during the two immediately
preceding financial years or during the current financial year; or

(iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its

holding or associate company amounting to two per cent. or more of its gross turnover or total income
singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii);]

(e) who, neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been employee of

the company or its holding, subsidiary or associate company in any of the three financial years
immediately preceding the financial year in which he is proposed to be appointed;

3[Provided that in case of a relative who is an employee, the restriction under this clause shall

not apply for his employment during preceding three financial years.]

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years

immediately preceding the financial year in which he is proposed to be appointed, of—

(A) a firm of auditors or company secretaries in practice or cost auditors of the company or

its holding, subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with the company, its

holding, subsidiary or associate company amounting to ten per cent. or more of the gross
turnover of such firm;

(iii) holds together with his relatives two per cent. or more of the total voting power of the

company; or

(iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation

that receives twenty-five per cent. or more of its receipts from the company, any of its promoters,
directors or its holding, subsidiary or associate company or that holds two per cent. or more of the
total voting power of the company; or

(f) who possesses such other qualifications as may be prescribed.

(7) Every independent director shall at the first meeting of the Board in which he participates as a

director and thereafter at the first meeting of the Board in every financial year or whenever there is any
change in the circumstances which may affect his status as an independent director, give a declaration that
he meets the criteria of independence as provided in sub-section (6).

1. Subs. by Act 1 of 2018, s. 46, for “pecuniary relationship” (w.e.f. 7-5-2018).
2. Subs. by s. 46, ibid., for clause (d) (w.e.f. 7-5-2018).
3. The proviso ins. by s. 46, ibid., (w.e.f. 7-5-2018).

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_Explanation.—For the purposes of this section, “nominee director” means a director nominated by any_

financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement,
or appointed by any Government, or any other person to represent its interests.

(8) The company and independent directors shall abide by the provisions specified in Schedule IV.
(9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of

sections 197 and 198, an independent director shall not be entitled to any stock option and may receive
remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for
participation in the Board and other meetings and profit related commission as may be approved by the members.

1[Provided that if a company has no profits or its profits are inadequate, an independent director may receive

remuneration, exclusive of any fees payable under sub-section (5) of section 197, in accordance with the
provisions of Schedule V.]

(10) Subject to the provisions of section 152, an independent director shall hold office for a term up to five

consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special
resolution by the company and disclosure of such appointment in the Board's report.

(11) Notwithstanding anything contained in sub-section (10), no independent director shall hold office for

more than two consecutive terms, but such independent director shall be eligible for appointment after the
expiration of three years of ceasing to become an independent director:

Provided that an independent director shall not, during the said period of three years, be appointed in or be

associated with the company in any other capacity, either directly or indirectly.

_Explanation.—For the purposes of sub-sections (10) and (11), any tenure of an independent director on the_

date of commencement of this Act shall not be counted as a term under those sub-sections.

(12) Notwithstanding anything contained in this Act,—

(i) an independent director;
(ii) a non-executive director not being promoter or key managerial personnel,

shall be held liable, only in respect of such acts of omission or commission by a company which had occurred
with his knowledge, attributable through Board processes, and with his consent or connivance or where he had
not acted diligently.

(13) The provisions of sub-sections (6) and (7) of section 152 in respect of retirement of directors by rotation

shall not be applicable to appointment of independent directors.

**150. Manner of selection of independent directors and maintenance of databank of independent**

**directors.—(1) Subject to the provisions contained in sub-section (6) of section 149, an independent director**
may be selected from a data bank containing names, addresses and qualifications of persons who are eligible and
willing to act as independent directors, maintained by any body, institute or association, as may be notified by
the Central Government, having expertise in creation and maintenance of such data bank and put on their website
for the use by the company making the appointment of such directors:

Provided that responsibility of exercising due diligence before selecting a person from the data bank referred

to above, as an independent director shall lie with the company making such appointment.

(2) The appointment of independent director shall be approved by the company in general meeting as

provided in sub-section (2) of section 152 and the explanatory statement annexed to the notice of the general
meeting called to consider the said appointment shall indicate the justification for choosing the appointee for
appointment as independent director.

(3) The data bank referred to in sub-section (1), shall create and maintain data of persons willing to act as

independent director in accordance with such rules as may be prescribed.

(4) The Central Government may prescribe the manner and procedure of selection of independent directors

who fulfil the qualifications and requirements specified under section 149.

**151. Appointment of director elected by small shareholders.—A listed company may have one**

director elected by such small shareholders in such manner and with such terms and conditions as may be
prescribed.

1. Ins. by Act 29 of 2020, s. 32 (w.e.f. 18-3-2021).

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_Explanation.—For the purposes of this section “small shareholders” means a shareholder holding_

shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed.

**152. Appointment of directors.—(1) Where no provision is made in the articles of a company for the**

appointment of the first director, the subscribers to the memorandum who are individuals shall be deemed
to be the first directors of the company until the directors are duly appointed and in case of a One Person
Company an individual being member shall be deemed to be its first director until the director or directors
are duly appointed by the member in accordance with the provisions of this section.

(2) Save as otherwise expressly provided in this Act, every director shall be appointed by the company

in general meeting.

(3) No person shall be appointed as a director of a company unless he has been allotted the Director

Identification Number under section 154 [1][or any other number as may be prescribed under section 153].

(4) Every person proposed to be appointed as a director by the company in general meeting or

otherwise, shall furnish his Director Identification Number [1][or such other number as may be prescribed
under section 153] and a declaration that he is not disqualified to become a director under this Act.

(5) A person appointed as a director shall not act as a director unless he gives his consent to hold the

office as director and such consent has been filed with the Registrar within thirty days of his appointment
in such manner as may be prescribed:

Provided that in the case of appointment of an independent director in the general meeting, an

explanatory statement for such appointment, annexed to the notice for the general meeting, shall include a
statement that in the opinion of the Board, he fulfils the conditions specified in this Act for such an
appointment.

(6) (a) Unless the articles provide for the retirement of all directors at every annual general meeting,

not less than two-thirds of the total number of directors of a public company shall—

(i) be persons whose period of office is liable to determination by retirement of directors by rotation;

and

(ii) save as otherwise expressly provided in this Act, be appointed by the company in general

meeting.

(b) The remaining directors in the case of any such company shall, in default of, and subject to any

regulations in the articles of the company, also be appointed by the company in general meeting.

(c) At the first annual general meeting of a public company held next after the date of the general meeting

at which the first directors are appointed in accordance with clauses (a) and (b) and at every subsequent
annual general meeting, one-third of such of the directors for the time being as are liable to retire by rotation,
or if their number is neither three nor a multiple of three, then, the number nearest to one-third, shall retire
from office.

(d) The directors to retire by rotation at every annual general meeting shall be those who have been

longest in office since their last appointment, but as between persons who became directors on the same
day, those who are to retire shall, in default of and subject to any agreement among themselves, be
determined by lot.

(e) At the annual general meeting at which a director retires as aforesaid, the company may fill up the

vacancy by appointing the retiring director or some other person thereto.

_Explanation.—For the purposes of this sub-section, “total number of directors” shall not include_

independent directors, whether appointed under this Act or any other law for the time being in force, on the
Board of a company.

(7) (a) If the vacancy of the retiring director is not so filled-up and the meeting has not expressly

resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the

1. Ins. by Act 1 of 2018, s. 47 (w.e.f. 9-2-2018).

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same time and place, or if that day is a national holiday, till the next succeeding day which is not a holiday,
at the same time and place.

(b) If at the adjourned meeting also, the vacancy of the retiring director is not filled up and that meeting

also has not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have been reappointed at the adjourned meeting, unless—

(i) at that meeting or at the previous meeting a resolution for the re-appointment of such director

has been put to the meeting and lost;

(ii) the retiring director has, by a notice in writing addressed to the company or its Board of

directors, expressed his unwillingness to be so re-appointed;

(iii) he is not qualified or is disqualified for appointment;

(iv) a resolution, whether special or ordinary, is required for his appointment or re-appointment by

virtue of any provisions of this Act; or

(v) section 162 is applicable to the case.

_Explanation.—For the purposes of this section and section 160, the expression “retiring director” means_

a director retiring by rotation.

**153. Application for allotment of Director Identification Number.—Every individual intending to**

be appointed as director of a company shall make an application for allotment of Director Identification
Number to the Central Government in such form and manner and along with such fees as may be prescribed:

1[Provided that the Central Government may prescribe any identification number which shall be treated as Director

Identification Number for the purposes of this Act and in case any individual holds or acquires such identification number,
the requirement of this section shall not apply or apply in such manner as may be prescribed.]

**154. Allotment of Director Identification Number.—The Central Government shall, within one**

month from the receipt of the application under section 153, allot a Director Identification Number to an
applicant in such manner as may be prescribed.

**155. Prohibition to obtain more than one Director Identification Number.—No individual, who**

has already been allotted a Director Identification Number under section 154, shall apply for, obtain or
possess another Director Identification Number.

**156. Director to intimate Director Identification Number.—Every existing director shall, within one**

month of the receipt of Director Identification Number from the Central Government, intimate his Director
Identification Number to the company or all companies wherein he is a director.

**157. Company to inform Director Identification Number to Registrar.—(1) Every company shall,**

within fifteen days of the receipt of intimation under section 156, furnish the Director Identification Number
of all its directors to the Registrar or any other officer or authority as may be specified by the Central
Government with such fees as may be prescribed or with such additional fees as may be prescribed [2]***
and every such intimation shall be furnished in such form and manner as may be prescribed.

3[(2) If any company fails to furnish the Director Identification Number under sub-section (1), such

company shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with
a further penalty of one hundred rupees for each day after the first during which such failure continues,
subject to a maximum of one lakh rupees, and every officer of the company who is in default shall be liable
to a penalty of not less than twenty-five thousand rupees and in case of continuing failure, with a further
penalty of one hundred rupees for each day after the first during which such failure continues, subject to a
maximum of one lakh rupees.]

**158. Obligation to indicate Director Identification Number.—Every person or company, while**

furnishing any return, information or particulars as are required to be furnished under this Act, shall mention
the Director Identification Number in such return, information or particulars in case such return,
information or particulars relate to the director or contain any reference of any director.

1. The proviso ins. by Act 1 of 2018, s. 48 (w.e.f. 9-2-2018).
2. The words and figures “within the time specified under section 403” omitted by Act 1 of 2018, s. 49 (w.e.f. 7-5-2018).
3. Subs. by Act 22 of 2019, s. 24, for sub-section (2) (w.e.f. 2-11-2018).

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**1[159.** **Penalty for default of certain provisions.—If any individual or director of a company makes**

any default in complying with any of the provisions of section 152, section 155 and section 156, such
individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees
and where the default is a continuing one, with a further penalty which may extend to five hundred rupees
for each day after the first during which such default continues.]

**160. Right of persons other than retiring directors to stand for directorship.— (1) A person who**

is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for
appointment to the office of a director at any general meeting, if he, or some member intending to propose
him as a director, has, not less than fourteen days before the meeting, left at the registered office of the
company, a notice in writing under his hand signifying his candidature as a director or, as the case may be,
the intention of such member to propose him as a candidate for that office, along with the deposit of one
lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the
case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five
per cent. of total valid votes cast either on show of hands or on poll on such resolution.

2[Provided that requirements of deposit of amount shall not apply in case of appointment of an

independent director or a director recommended by the Nomination and Remuneration Committee, if any,
constituted under sub-section (1) of section 178 or a director recommended by the Board of Directors of
the Company, in the case of a company not required to constitute Nomination and Remuneration
Committee.]

(2) The company shall inform its members of the candidature of a person for the office of director under

sub-section (1) in such manner as may be prescribed.

**161. Appointment of additional director, alternate director and nominee director.—(1) The**

articles of a company may confer on its Board of Directors the power to appoint any person, other than a
person who fails to get appointed as a director in a general meeting, as an additional director at any time
who shall hold office up to the date of the next annual general meeting or the last date on which the annual
general meeting should have been held, whichever is earlier.

(2) The Board of Directors of a company may, if so authorised by its articles or by a resolution passed

by the company in general meeting, appoint a person, not being a person holding any alternate directorship
for any other director in the company [3][or holding directorship in the same company], to act as an alternate
director for a director during his absence for a period of not less than three months from India:

Provided that no person shall be appointed as an alternate director for an independent director unless

he is qualified to be appointed as an independent director under the provisions of this Act:

Provided further that an alternate director shall not hold office for a period longer than that permissible

to the director in whose place he has been appointed and shall vacate the office if and when the director in
whose place he has been appointed returns to India:

Provided also that if the term of office of the original director is determined before he so returns to

India, any provision for the automatic re-appointment of retiring directors in default of another appointment
shall apply to the original, and not to the alternate director.

(3) Subject to the articles of a company, the Board may appoint any person as a director nominated by

any institution in pursuance of the provisions of any law for the time being in force or of any agreement or
by the Central Government or the State Government by virtue of its shareholding in a Government
company.

(4) [4]*** If the office of any director appointed by the company in general meeting is vacated before his

term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to
any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board
1[which shall be subsequently approved by members in the immediate next general meeting]:

1. Subs. by Act 22 of 2019, s. 25, for section 159 (w.e.f. 2-11-2018).
2. The proviso ins. by Act 1 of 2018, s. 50 (w.e.f. 9-2-2018).
3. Ins. by Act 1 of 2018, s. 51 (w.e.f. 9-2-2018).
4. The words “In the case of a public company,” omitted by s. 51, ibid. (w.e.f. 9-2-2018).

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Provided that any person so appointed shall hold office only up to the date up to which the director in

whose place he is appointed would have held office if it had not been vacated.

**162. Appointment of directors to be voted individually.—(1) At a general meeting of a company, a**

motion for the appointment of two or more persons as directors of the company by a single resolution shall
not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any
vote being cast against it.

(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not any objection

was taken when it was moved.

(3) A motion for approving a person for appointment, or for nominating a person for appointment as a

director, shall be treated as a motion for his appointment.

**163. Option to adopt principle of proportional representation for appointment of     directors.—**

Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment
of not less than two-thirds of the total number of the directors of a company in accordance with the principle
of proportional representation, whether by the single transferable vote or by a system of cumulative voting
or otherwise and such appointments may be made once in every three years and casual vacancies of such
directors shall be filled as provided in sub-section (4) of section 161.

**164. Disqualifications for appointment of director.—(1) A person shall not be eligible for**

appointment as a director of a company, if —

(a) he is of unsound mind and stands so declared by a competent court;

(b) he is an undischarged insolvent;

(c) he has applied to be adjudicated as an insolvent and his application is pending;

(d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise,

and sentenced in respect thereof to imprisonment for not less than six months and a period of five years
has not elapsed from the date of expiry of the sentence:

Provided that if a person has been convicted of any offence and sentenced in respect thereof to

imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director
in any company;

(e) an order disqualifying him for appointment as a director has been passed by a court or Tribunal

and the order is in force;

(f) he has not paid any calls in respect of any shares of the company held by him, whether alone or

jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

(g) he has been convicted of the offence dealing with related party transactions under section 188

at any time during the last preceding five years; or

(h) he has not complied with sub-section (3) of section 152.

1[(i) he has not complied with the provisions of sub-section (1) of section 165.]

(2) No person who is or has been a director of a company which—

(a) has not filed financial statements or annual returns for any continuous period of three financial

years; or

(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures

on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or
redeem continues for one year or more,

shall be eligible to be re-appointed as a director of that company or appointed in other company for a period
of five years from the date on which the said company fails to do so:

1. Ins. by Act 22 of 2019, s. 26 (w.e.f. 2-11-2018).

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1[Provided that where a person is appointed as a director of a company which is in default of clause (a) or

clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.]

(3) A private company may by its articles provide for any disqualifications for appointment as a director

in addition to those specified in sub-sections (1) and (2).

2[Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall

continue to apply even if the appeal or petition has been filed against the order of conviction or
disqualification.]

**165. Number of directorships.—(1) No person, after the commencement of this Act, shall hold office**

as a director, including any alternate directorship, in more than twenty companies at the same time:

Provided that the maximum number of public companies in which a person can be appointed as a

director shall not exceed ten.

3[Explanation I ].— For reckoning the limit of public companies in which a person can be appointed as

director, directorship in private companies that are either holding or subsidiary company of a public
company shall be included.

4[Explanation II.—For reckoning the limit of directorships of twenty companies, the directorship in a

dormant company shall not be included.]

(2) Subject to the provisions of sub-section (1), the members of a company may, by special resolution,

specify any lesser number of companies in which a director of the company may act as directors.

(3) Any person holding office as director in companies more than the limits as specified in         sub
section (1), immediately before the commencement of this Act shall, within a period of one year from such
commencement,—

(a) choose not more than the specified limit of those companies, as companies in which he wishes

to continue to hold the office of director;

(b) resign his office as director in the other remaining companies; and

(c) intimate the choice made by him under clause (a), to each of the companies in which he was

holding the office of director before such commencement and to the Registrar having jurisdiction in
respect of each such company.

(4) Any resignation made in pursuance of clause (b) of sub-section (3) shall become effective

immediately on the despatch thereof to the company concerned.

(5) No such person shall act as director in more than the specified number of companies,—

(a) after despatching the resignation of his office as director or non-executive director thereof, in

pursuance of clause (b) of sub-section (3); or

(b) after the expiry of one year from the commencement of this Act,

whichever is earlier.

5[(6) If a person accepts an appointment as a director in violation of this section, he shall be liable to a

penalty of two thousand rupees for each day after the first during which such violation continues, subject
to a maximum of two lakh rupees.]

**166. Duties of directors.—(1) Subject to the provisions of this Act, a director of a company shall act**

in accordance with the articles of the company.

1. The proviso ins. by Act 1 of 2018, s. 52 (w.e.f. 7-5-2018).
2. The proviso subs. by Act 1 of 2018, s. 52 (w.e.f. 7-5-2018).
3. The Explanation renumbered as Explanation I thereof by s. 53, ibid. (w.e.f. 9-2-2018).
4. Ins. by s. 53, ibid. (w.e.f. 9-2-2018).
5. Subs. by Act 29 of 2020, s. 33, for sub-section (6) (w.e.f. 21-12-2020).

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(2) A director of a company shall act in good faith in order to promote the objects of the company for

the benefit of its members as a whole, and in the best interests of the company, its employees, the
shareholders, the community and for the protection of environment.

(3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence

and shall exercise independent judgment.

(4) A director of a company shall not involve in a situation in which he may have a direct or indirect

interest that conflicts, or possibly may conflict, with the interest of the company.

(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either

to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue
gain, he shall be liable to pay an amount equal to that gain to the company.

(6) A director of a company shall not assign his office and any assignment so made shall be void.

(7) If a director of the company contravenes the provisions of this section such director shall be

punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

**167. Vacation of office of director.—(1) The office of a director shall become vacant in case—**

(a) he incurs any of the disqualifications specified in section 164:

1[Provided that where he incurs disqualification under sub-section (2) of section 164, the office of

the director shall become vacant in all the companies, other than the company which is in default under
that sub-section];

(b) he absents himself from all the meetings of the Board of Directors held during a period of twelve

months with or without seeking leave of absence of the Board;

(c) he acts in contravention of the provisions of section 184 relating to entering into contracts or

arrangements in which he is directly or indirectly interested;

(d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly

interested, in contravention of the provisions of section 184;

(e) he becomes disqualified by an order of a court or the Tribunal;

(f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and

sentenced in respect thereof to imprisonment for not less than six months:

2[Provided that the office shall not be vacated by the director in case of orders referred to in   clauses

(e) and (f)—

(i) for thirty days from the date of conviction or order of disqualification;
(ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction

resulting in sentence or order, until expiry of seven days from the date on which such appeal or
petition is disposed of; or

(iii) where any further appeal or petition is preferred against order or sentence within seven days,

until such further appeal or petition is disposed of.]

(g) he is removed in pursuance of the provisions of this Act;

(h) he, having been appointed a director by virtue of his holding any office or other employment in

the holding, subsidiary or associate company, ceases to hold such office or other employment in that
company.

1. The proviso ins. by Act 1 of 2018, s. 54 (w.e.f. 7-5-2018).
2. The proviso subs. by Act 1 of 2018, s. 54 (w.e.f. 7-5-2018).

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(2) If a person, functions as a director even when he knows that the office of director held by him has

become vacant on account of any of the disqualifications specified in sub-section (1), he shall be punishable
1*** with fine which shall not be less than one lakh rupees but which may extend to 2[five lakh rupees].

(3) Where all the directors of a company vacate their offices under any of the disqualifications specified

in sub-section (1), the promoter or, in his absence, the Central Government shall appoint the required
number of directors who shall hold office till the directors are appointed by the company in the general
meeting.

(4) A private company may, by its articles, provide any other ground for the vacation of the office of a

director in addition to those specified in sub-section (1).

**168. Resignation of director.—(1) A director may resign from his office by giving a notice in writing**

to the company and the Board shall on receipt of such notice take note of the same and the company shall
intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall
also place the fact of such resignation in the report of directors laid in the immediately following general
meeting by the company:

Provided that a [3][director may also forward] a copy of his resignation along with detailed reasons for

the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed.

(2) The resignation of a director shall take effect from the date on which the notice is received by the

company or the date, if any, specified by the director in the notice, whichever is later:

Provided that the director who has resigned shall be liable even after his resignation for the offences

which occurred during his tenure.

(3) Where all the directors of a company resign from their offices, or vacate their offices under section

167, the promoter or, in his absence, the Central Government shall appoint the required number of directors
who shall hold office till the directors are appointed by the company in general meeting.

**169. Removal of directors.—(1) A company may, by ordinary resolution, remove a director, not being**

a director appointed by the Tribunal under section 242, before the expiry of the period of his office after
giving him a reasonable opportunity of being heard:

4[Provided that an independent director re-appointed for second term under sub-section (10) of section

149 shall be removed by the company only by passing a special resolution and after giving him a reasonable
opportunity of being heard:]

5[Provided further that] nothing contained in this sub-section shall apply where the company has availed

itself of the option given to it under section 163 to appoint not less than two-thirds of the total number of
directors according to the principle of proportional representation.

(2) A special notice shall be required of any resolution, to remove a director under this section, or to

appoint somebody in place of a director so removed, at the meeting at which he is removed.

(3) On receipt of notice of a resolution to remove a director under this section, the company shall

forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of
the company, shall be entitled to be heard on the resolution at the meeting.

(4) Where notice has been given of a resolution to remove a director under this section and the director

concerned makes with respect thereto representation in writing to the company and requests its notification
to members of the company, the company shall, if the time permits it to do so,—

(a) in any notice of the resolution given to members of the company, state the fact of the

representation having been made; and

(b) send a copy of the representation to every member of the company to whom notice of the

meeting is sent (whether before or after receipt of the representation by the company),

1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 34 (w.e.f. 21-12
2020).

2. Subs. by s. 34, ibid., for “five lakh rupees, or with both” (w.e.f. 21-12-2020).
3. Subs. by Act 1 of 2018, s. 55, for “director shall also forward” (w.e.f. 7-5-2018).
4. The proviso ins. by Notification No. S.O. 768(E), dated 21[st] February, 2018 (w.e.f. 21-2-2018).
5. Subs. by ibid., for “Provided that”(w.e.f. 21-2-2018).

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and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s
default, the director may without prejudice to his right to be heard orally require that the representation
shall be read out at the meeting:

Provided that copy of the representation need not be sent out and the representation need not be read

out at the meeting if, on the application either of the company or of any other person who claims to be
aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure
needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application
to be paid in whole or in part by the director notwithstanding that he is not a party to it.

(5) A vacancy created by the removal of a director under this section may, if he had been appointed by

the company in general meeting or by the Board, be filled by the appointment of another director in his
place at the meeting at which he is removed, provided special notice of the intended appointment has been
given under sub-section (2).

(6) A director so appointed shall hold office till the date up to which his predecessor would have held

office if he had not been removed.

(7) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance

with the provisions of this Act:

Provided that the director who was removed from office shall not be re-appointed as a director by the

Board of Directors.

(8) Nothing in this section shall be taken—

(a) as depriving a person removed under this section of any compensation or damages payable to

him in respect of the termination of his appointment as director as per the terms of contract or terms of
his appointment as director, or of any other appointment terminating with that as director; or

(b) as derogating from any power to remove a director under other provisions of this Act.

**170. Register of directors and key managerial personnel and their shareholding.—(1) Every**

company shall keep at its registered office a register containing such particulars of its directors and key
managerial personnel as may be prescribed, which shall include the details of securities held by each of
them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate
companies.

(2) A return containing such particulars and documents as may be prescribed, of the directors and the

key managerial personnel shall be filed with the Registrar within thirty days from the appointment of every
director and key managerial personnel, as the case may be, and within thirty days of any change taking
place.

**171. Members’ right to inspect.—(1) The register kept under sub-section (1) of section 170,—**

(a) shall be open for inspection during business hours and the members shall have a right to take

extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost
within thirty days; and

(b) shall also be kept open for inspection at every annual general meeting of the company and shall

be made accessible to any person attending the meeting.

(2) If any inspection as provided in clause (a) of sub-section (1) is refused, or if any copy required

under that clause is not sent within thirty days from the date of receipt of such request, the Registrar shall
on an application made to him order immediate inspection and supply of copies required thereunder.

**1[172. Penalty.—** If a company is in default in complying with any of the provisions of this Chapter

and for which no specific penalty or punishment is provided therein, the company and every officer of the
company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing
failure, with a further penalty of five hundred rupees for each day during which such failure continues,
subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer
who is in default.]

1. Subs. by Act 29 of 2020, s. 35, for section 35 (w.e.f. 21-12-2020).

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CHAPTER XII

MEETINGS OF BOARD AND ITS POWERS

**173. Meetings of Board.—(1) Every company shall hold the first meeting of the Board of Directors**

within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings
of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall
intervene between two consecutive meetings of the Board:

Provided that the Central Government may, by notification, direct that the provisions of this      sub
section shall not apply in relation to any class or description of companies or shall apply subject to such
exceptions, modifications or conditions as may be specified in the notification.

(2) The participation of directors in a meeting of the Board may be either in person or through video

conferencing or other audio visual means, as may be prescribed, which are capable of recording and
recognising the participation of the directors and of recording and storing the proceedings of such meetings
along with date and time:

Provided that the Central Government may, by notification, specify such matters which shall not be

dealt with in a meeting through video conferencing or other audio visual means.

1[Provided further that where there is quorum in a meeting through physical presence of directors, any

other director may participate through video conferencing or other audio visual means in such meeting on
any matter specified under the first proviso.]

(3) A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every

director at his address registered with the company and such notice shall be sent by hand delivery or by
post or by electronic means:

Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject

to the condition that at least one independent director, if any, shall be present at the meeting:

Provided further that in case of absence of independent directors from such a meeting of the Board,

decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification
thereof by at least one independent director, if any.

(4) Every officer of the company whose duty is to give notice under this section and who fails to do so

shall be liable to a penalty of twenty-five thousand rupees.

_(5) A One Person Company, small company and dormant company shall be deemed to have complied_

with the provisions of this section if at least one meeting of the Board of Directors has been conducted in
each half of a calendar year and the gap between the two meetings is not less than ninety days:

Provided that nothing contained in this sub-section and in section 174 shall apply to One Person

Company in which there is only one director on its Board of Directors.

**174. Quorum for meetings of Board.—(1) The quorum for a meeting of the Board of Directors of a**

company hall be one-third of its total strength or two directors, whichever is higher, and the participation
of the directors by video conferencing or by other audio visual means shall also be counted for the purposes
of quorum under this sub-section.

(2) The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as

their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing
directors or director may act for the purpose of increasing the number of directors to that fixed for the
quorum, or of summoning a general meeting of the company and for no other purpose.

(3) Where at any time the number of interested directors exceeds or is equal to two-thirds of the total

strength of the Board of Directors, the number of directors who are not interested directors and present at
the meeting, being not less than two, shall be the quorum during such time.

1. The proviso ins. by Act 1 of 2018, s. 56 (w.e.f. 7-5-2018).

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_Explanation.—For the purposes of this sub-section, “interested director” means a director within the_

meaning of sub-section (2) of section 184.

(4) Where a meeting of the Board could not be held for want of quorum, then, unless the articles of the

company otherwise provide, the meeting shall automatically stand adjourned to the same day at the same
time and place in the next week or if that day is a national holiday, till the next succeeding day, which is
not a national holiday, at the same time and place.

_Explanation.—For the purposes of this section,—_

(i) any fraction of a number shall be rounded off as one;

(ii) “total strength” shall not include directors whose places are vacant.

**175. Passing of resolution by circulation.—(1) No resolution shall be deemed to have been duly**

passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in
draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the
case may be, at their addresses registered with the company in India by hand delivery or by post or by
courier, or through such electronic means as may be prescribed and has been approved by a majority of the
directors or members, who are entitled to vote on the resolution:

Provided that, where not less than one-third of the total number of directors of the company for the time

being require that any resolution under circulation must be decided at a meeting, the chairperson shall put
the resolution to be decided at a meeting of the Board.

(2) A resolution under sub-section (1) shall be noted at a subsequent meeting of the Board or the

committee thereof, as the case may be, and made part of the minutes of such meeting.

**176. Defects in appointment of directors not to invalidate actions taken.—No act done by a person**

as a director shall be deemed to be invalid, notwithstanding that it was subsequently noticed that his
appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any
provision contained in this Act or in the articles of the company:

Provided that nothing in this section shall be deemed to give validity to any act done by the director

after his appointment has been noticed by the company to be invalid or to have terminated.

**177. Audit Committee.—(1) The Board of Directors of [1][every listed public company] and such other**

class or classes of companies, as may be prescribed, shall constitute an Audit Committee.

(2) The Audit Committee shall consist of a minimum of three directors with independent directors

forming a majority:

Provided that majority of members of Audit Committee including its Chairperson shall be persons with

ability to read and understand, the financial statement.

(3) Every Audit Committee of a company existing immediately before the commencement of this Act

shall, within one year of such commencement, be reconstituted in accordance with sub-section (2).

(4) Every Audit Committee shall act in accordance with the terms of reference specified in writing by

the Board which shall, inter alia, include,—

(i) the recommendation for appointment, remuneration and terms of appointment of auditors of the

company;

(ii) review and monitor the auditor’s independence and performance, and effectiveness of audit

process;

(iii) examination of the financial statement and the auditors’ report thereon;

(iv) approval or any subsequent modification of transactions of the company with related parties:

1. Subs. by Act 1 of 2018, s. 57, for “every listed company” (w.e.f. 7-5-2018).

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1[Provided that the Audit Committee may make omnibus approval for related party transactions

proposed to be entered into by the company subject to such conditions as may be prescribed;]

2[Provided further that in case of transaction, other than transactions referred to in section 188, and

where Audit Committee does not approve the transaction, it shall make its recommendations to the
Board:

Provided also that in case any transaction involving any amount not exceeding one crore rupees is

entered into by a director or officer of the company without obtaining the approval of the Audit
Committee and it is not ratified by the Audit Committee within three months from the date of the
transaction, such transaction shall be voidable at the option of the Audit Committee and if the
transaction is with the related party to any director or is authorised by any other director, the director
concerned shall indemnify the company against any loss incurred by it:

Provided also that the provisions of this clause shall not apply to a transaction, other than a

transaction referred to in section 188, between a holding company and its wholly owned subsidiary
company.]

(v) scrutiny of inter-corporate loans and investments;

(vi) valuation of undertakings or assets of the company, wherever it is necessary;

(vii) evaluation of internal financial controls and risk management systems;

(viii) monitoring the end use of funds raised through public offers and related matters.

(5) The Audit Committee may call for the comments of the auditors about internal control systems, the

scope of audit, including the observations of the auditors and review of financial statement before their
submission to the Board and may also discuss any related issues with the internal and statutory auditors and
the management of the company.

(6) The Audit Committee shall have authority to investigate into any matter in relation to the items

specified in sub-section (4) or referred to it by the Board and for this purpose shall have power to obtain
professional advice from external sources and have full access to information contained in the records of
the company.

(7) The auditors of a company and the key managerial personnel shall have a right to be heard in the

meetings of the Audit Committee when it considers the auditor’s report but shall not have the right to vote.

(8) The Board’s report under sub-section (3) of section 134 shall disclose the composition of an Audit

Committee and where the Board had not accepted any recommendation of the Audit Committee, the same
shall be disclosed in such report along with the reasons therefor.

(9) Every listed company or such class or classes of companies, as may be prescribed, shall establish a

vigil mechanism for directors and employees to report genuine concerns in such manner as may be
prescribed.

(10) The vigil mechanism under sub-section (9) shall provide for adequate safeguards against

victimisation of persons who use such mechanism and make provision for direct access to the chairperson
of the Audit Committee in appropriate or exceptional cases:

Provided that the details of establishment of such mechanism shall be disclosed by the company on its

website, if any, and in the Board’s report.

**178.** **Nomination** **and** **Remuneration** **Committee** **and** **Stakeholders** **Relationship**

**Committee.—(1) The Board of Directors of [3][every listed public company] and such other class or classes**
of companies, as may be prescribed shall constitute the Nomination and Remuneration Committee
consisting of three or more non-executive directors out of which not less than one-half shall be independent
directors:

1. The proviso ins. by Act 21 of 2015, s. 14 (w.e.f. 14-12-2015).
2. Ins. by Act 1 of 2018, s. 57 (w.e.f. 7-5-2018).
3. Subs. by Act 1 of 2018, s. 58, for “every listed company” (w.e.f. 7-5-2018).

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Provided that the chairperson of the company (whether executive or non-executive) may be appointed

as a member of the Nomination and Remuneration Committee but shall not chair such Committee.

(2) The Nomination and Remuneration Committee shall identify persons who are qualified to become

directors and who may be appointed in senior management in accordance with the criteria laid down,
recommend to the Board their appointment and removal and [1][shall specify the manner for effective
evaluation of performance of Board, its committees and individual directors to be carried out either by the
Board, by the Nomination and Remuneration Committee or by an independent external agency and review
its implementation and compliance].

(3) The Nomination and Remuneration Committee shall formulate the criteria for determining

qualifications, positive attributes and independence of a director and recommend to the Board a policy,
relating to the remuneration for the directors, key managerial personnel and other employees.

(4) The Nomination and Remuneration Committee shall, while formulating the policy under

sub-section (3) ensure that—

(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and

motivate directors of the quality required to run the company successfully;

(b) relationship of remuneration to performance is clear and meets appropriate performance

benchmarks; and

(c) remuneration to directors, key managerial personnel and senior management involves a balance

between fixed and incentive pay reflecting short and long-term performance objectives appropriate to
the working of the company and its goals:

2[Provided that such policy shall be placed on the website of the company, if any, and the salient

features of the policy and changes therein, if any, along with the web address of the policy, if any, shall
be disclosed in the Board's report.]

(5) The Board of Directors of a company which consists of more than one thousand shareholders,

debenture-holders, deposit-holders and any other security holders at anytime during a financial year shall
constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a        nonexecutive director and such other members as may be decided by the Board.

(6) The Stakeholders Relationship Committee shall consider and resolve the grievances of security

holders of the company.

(7) The chairperson of each of the committees constituted under this section or, in his absence, any

other member of the committee authorised by him in this behalf shall attend the general meetings of the
company.

(8) In case of any contravention of the provisions of section 177 and this section, the company shall be

punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees
and every officer of the company who is in default shall be [3][liable to a penalty of five lakh rupees and
every officer of the company who is in default shall be liable to a penalty of one lakh rupees]:

Provided that [4][inability to resolve or consider any grievance] by the Stakeholders Relationship

Committee in good faith shall not constitute a contravention of this section.

_Explanation.—The expression “senior management” means personnel of the company who are_

members of its core management team excluding Board of Directors comprising all members of
management one level below the executive directors, including the functional heads.

**179. Powers of Board.—(1) The Board of Directors of a company shall be entitled to exercise all such**

powers, and to do all such acts and things, as the company is authorised to exercise and do:

1. Subs. by s. 58, ibid., for “shall carry out evaluation of every director’s performance” (w.e.f. 7-5-2018).
2. Subs. by Act 1 of 2018, s. 58, for the proviso (w.e.f. 7-5-2018).
3. Subs. by Act 29 of 2020, s. 36, for certain words (w.e.f. 21-12-2020).
4. Subs. by Act 1 of 2018, s. 58, for “non-consideration of resolution of any grievance” (w.e.f. 7-5-2018).

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Provided that in exercising such power or doing such act or thing, the Board shall be subject to the

provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not
inconsistent therewith and duly made thereunder, including regulations made by the company in general
meeting:

Provided further that the Board shall not exercise any power or do any act or thing which is directed or

required, whether under this Act or by the memorandum or articles of the company or otherwise, to be
exercised or done by the company in general meeting.

(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board

which would have been valid if that regulation had not been made.

(3) The Board of Directors of a company shall exercise the following powers on behalf of the company

by means of resolutions passed at meetings of the Board, namely:—

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board’s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed:

Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of

directors, the managing director, the manager or any other principal officer of the company or in the case
of a branch office of the company, the principal officer of the branch office, the powers specified in clauses
(d) to (f) on such conditions as it may specify:

Provided further that the acceptance by a banking company in the ordinary course of its business of

deposits of money from the public repayable on demand or otherwise and withdraw able by cheque, draft,
order or otherwise, or the placing of monies on deposit by a banking company with another banking
company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of monies
or, as the case may be, a making of loans by a banking company within the meaning of this section.

_Explanation I.—Nothing in clause (d) shall apply to borrowings by a banking company from other_

banking companies or from the Reserve Bank of India, the State Bank of India or any other banks
established by or under any Act.

_Explanation II.—In respect of dealings between a company and its bankers, the exercise by the_

company of the power specified in clause (d) shall mean the arrangement made by the company with its
bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual dayto-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is
actually availed of.

(4) Nothing in this section shall be deemed to affect the right of the company in general meeting to

impose restrictions and conditions on the exercise by the Board of any of the powers specified in this
section.

**180. Restrictions on powers of Board.—(1) The Board of Directors of a company shall exercise the**

following powers only with the consent of the company by a special resolution, namely:—

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(a) to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of

the company or where the company owns more than one undertaking, of the whole or substantially the
whole of any of such undertakings.

_Explanation.—For the purposes of this clause,—_

(i) “undertaking” shall mean an undertaking in which the investment of the company exceeds

twenty per cent. of its net worth as per the audited balance sheet of the preceding financial year or
an undertaking which generates twenty per cent. of the total income of the company during the
previous financial year;

(ii) the expression “substantially the whole of the undertaking” in any financial year shall mean

twenty per cent. or more of the value of the undertaking as per the audited balance sheet of the
preceding financial year;

(b) to invest otherwise in trust securities the amount of compensation received by it as a result of

any merger or amalgamation;

(c) to borrow money, where the money to be borrowed, together with the money already borrowed

by the company will exceed aggregate of its [1][paid-up share capital, free reserves and securities
premium], apart from temporary loans obtained from the company’s bankers in the ordinary course of
business:

Provided that the acceptance by a banking company, in the ordinary course of its business, of

deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque,
draft, order or otherwise, shall not be deemed to be a borrowing of monies by the banking company
within the meaning of this clause.

_Explanation.—For the purposes of this clause, the expression “temporary loans” means loans_

repayable on demand or within six months from the date of the loan such as short-term, cash credit
arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character,
but does not include loans raised for the purpose of financial expenditure of a capital nature;

(d) to remit, or give time for the repayment of, any debt due from a director.

(2) Every special resolution passed by the company in general meeting in relation to the exercise of the

powers referred to in clause (c) of sub-section (1) shall specify the total amount up to which monies may
be borrowed by the Board of Directors.

(3) Nothing contained in clause (a) of sub-section (1) shall affect—

(a) the title of a buyer or other person who buys or takes on lease any property, investment or

undertaking as is referred to in that clause, in good faith; or

(b) the sale or lease of any property of the company where the ordinary business of the company

consists of, or comprises, such selling or leasing.

(4) Any special resolution passed by the company consenting to the transaction as is referred to in

clause (a) of sub-section (1) may stipulate such conditions as may be specified in such resolution, including
conditions regarding the use, disposal or investment of the sale proceeds which may result from the
transactions:

Provided that this sub-section shall not be deemed to authorise the company to effect any reduction in

its capital except in accordance with the provisions contained in this Act.

(5) No debt incurred by the company in excess of the limit imposed by clause (c) of sub-section (1)

shall be valid or effectual, unless the lender proves that he advanced the loan in good faith and without
knowledge that the limit imposed by that clause had been exceeded.

**181. Company to contribute to bona fide and charitable funds, etc.—The Board of Directors of a**

company may contribute to bona fide charitable and other funds:

1. Subs. by Act 1 of 2018, s. 59, for “paid-up share capital and free reserves” (w.e.f. 9-2-2018).

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Provided that prior permission of the company in general meeting shall be required for such

contribution in case any amount the aggregate of which, in any financial year, exceed five per cent. of its
average net profits for the three immediately preceding financial years.

**182. Prohibitions and restrictions regarding political contributions.—(1) Notwithstanding**

anything contained in any other provision of this Act, a company, other than a Government company and
a company which has been in existence for less than three financial years, may contribute any amount
directly or indirectly to any political party:

1*  -  -  -  
Provided [2]*** that no such contribution shall be made by a company unless a resolution authorising

the making of such contribution is passed at a meeting of the Board of Directors and such resolution shall,
subject to the other provisions of this section, be deemed to be justification in law for the making [3]*** of
the contribution authorised by it.
(2) Without prejudice to the generality of the provisions of sub-section (1),—

(a) a donation or subscription or payment caused to be given by a company on its behalf or on its

account to a person who, to its knowledge, is carrying on any activity which, at the time at which such
donation or subscription or payment was given or made, can reasonably be regarded as likely to affect
public support for apolitical party shall also be deemed to be contribution of the amount of such
donation, subscription or payment to such person for a political purpose;

(b) the amount of expenditure incurred, directly or indirectly, by a company on an advertisement

in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the like,
shall also be deemed,—

(i) where such publication is by or on behalf of a political party, to be a contribution of such

amount to such political party, and

(ii) where such publication is not by or on behalf of, but for the advantage of a political party,

to be a contribution for a political purpose.

4[(3) Every company shall disclose in its profit and loss account the total amount contributed by it under

this section during the financial year to which the account relates.

(3A) Notwithstanding anything contained in sub-section (1), the contribution under this section shall not

be made except by an account payee cheque drawn on a bank or an account payee bank draft or use of
electronic clearing system through a bank account:

Provided that a company may make contribution through any instrument, issued pursuant to any scheme

notified under any law for the time being in force, for contribution to the political parties.]

(4) If a company makes any contribution in contravention of the provisions of this section, the company

shall be punishable with fine which may extend to five times the amount so contributed and every officer
of the company who is in default shall be punishable with imprisonment for a term which may extend to
six months and with fine which may extend to five times the amount so contributed.

_Explanation.—For the purposes of this section, “political party” means a political party registered under_

section 29A of the Representation of the People Act, 1951 (43 of 1951).

**183. Power of Board and other persons to make contributions to national defence fund,**

**etc.—(1) The Board of Directors of any company or any person or authority exercising the powers of the**
Board of Directors of a company, or of the company in general meeting, may, notwithstanding anything
contained in sections 180, 181 and section 182 or any other provision of this Act or in the memorandum,
articles or any other instrument relating to the company, contribute such amount as it thinks fit to the
National Defence Fund or any other Fund approved by the Central Government for the purpose of national
defence.

(2) Every company shall disclose in its profits and loss account the total amount or amounts contributed

by it to the Fund referred to in sub-section (1) during the financial year to which the amount relates.

1. The proviso omitted by Act 7 of 2017, s. 154 (w.e.f. 31-3-2017).
2. The word “further” omitted by Act 7 of 2017, s. 154 (w.e.f. 31-3-2017).
3. The words “and the acceptance” omitted by s. 154, ibid. (w.e.f. 31-3-2017).
4. Subs. by s. 154, ibid. for sub-section (3) (w.e.f. 31-3-2017).

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**184. Disclosure of interest by director.—(1) Every director shall at the first meeting of the Board in**

which he participates as a director and thereafter at the first meeting of the Board in every financial year or
whenever there is any change in the disclosures already made, then at the first Board meeting held after
such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or
other association of individuals which shall include the shareholding, in such manner as may be prescribed.

(2) Every director of a company who is in any way, whether directly or indirectly, concerned or

interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered
into—

(a) with a body corporate in which such director or such director in association with any other

director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager,
Chief Executive Officer of that body corporate; or

(b) with a firm or other entity in which, such director is a partner, owner or member, as the case

may be,

shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or
arrangement is discussed and shall not participate in such meeting:

Provided that where any director who is not so concerned or interested at the time of entering into such

contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement
is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the
first meeting of the Board held after he becomes so concerned or interested.

(3) A contract or arrangement entered into by the company without disclosure under sub-section (2) or

with participation by a director who is concerned or interested in any way, directly or indirectly, in the
contract or arrangement, shall be voidable at the option of the company.

(4) If a director of the company contravenes the provisions of sub-section (1) or sub-section (2), such

director shall be [1][liable to a penalty of one lakh rupees].

(5) Nothing in this section—

(a) shall be taken to prejudice the operation of any rule of law restricting a director of a company

from having any concern or interest in any contract or arrangement with the company;

2[(b) shall apply to any contract or arrangement entered into or to be entered into between two

companies or between one or more companies and one or more bodies corporate where any of the directors
of the one company or body corporate or two or more of them together holds or hold not more than two per
cent. of the paid-up share capital in the other company or the body corporate.]

**3[185. Loans to directors, etc.—(1) No company shall, directly or indirectly, advance any loan,**

including any loan represented by a book debt to, or give any guarantee or provide any security in
connection with any loan taken by,—

(a) any director of company, or of a company which is its holding company or any partner or relative

of any such director; or

(b) any firm in which any such director or relative is a partner.

(2) A company may advance any loan including any loan represented by a book debt, or give any

guarantee or provide any security in connection with any loan taken by any person in whom any of the
director of the company is interested, subject to the condition that—

(a) a special resolution is passed by the company in general meeting:

Provided that the explanatory statement to the notice for the relevant general meeting shall disclose

the full particulars of the loans given, or guarantee given or security provided and the purpose for which

1. Subs. by Act 29 of 2020, s. 37, for certain words (w.e.f. 21-12-2020).
2. Subs. by Act 1 of 2018, s. 60, for clause (b) (w.e.f. 9-2-2018).
3. Subs. by s. 61, ibid., for section 185 (w.e.f. 7-5-2018).

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the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or
security and any other relevant fact; and

(b) the loans are utilised by the borrowing company for its principal business activities.

_Explanation.—For the purposes of this sub-section, the expression “any person in whom any of the_

director of the company is interested” means—

(a) any private company of which any such director is a director or member;

(b) any body corporate at a general meeting of which not less than twenty-five per cent. of the total

voting power may be exercised or controlled by any such director, or by two or more such directors,
together; or

(c) any body corporate, the Board of directors, managing director or manager, whereof is accustomed

to act in accordance with the directions or instructions of the Board, or of any director or directors, of
the lending company.

(3) Nothing contained in sub-sections (1) and (2) shall apply to—

(a) the giving of any loan to a managing or whole-time director—

(i) as a part of the conditions of service extended by the company to all its employees; or

(ii) pursuant to any scheme approved by the members by a special resolution; or

(b) a company which in the ordinary course of its business provides loans or gives guarantees or

securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate
not less than the rate of prevailing yield of one year, three years, five years or ten years Government
security closest to the tenor of the loan; or

(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee

given or security provided by a holding company in respect of any loan made to its wholly owned
subsidiary company; or

(d) any guarantee given or security provided by a holding company in respect of loan made by any

bank or financial institution to its subsidiary company:

Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its

principal business activities.

(4) If any loan is advanced or a guarantee or security is given or provided or utilised in contravention

of the provisions of this section,—

(i) the company shall be punishable with fine which shall not be less than five lakh rupees but which

may extend to twenty-five lakh rupees;

(ii) every officer of the company who is in default shall be punishable with imprisonment for a term

which may extend to six months or with fine which shall not be less than five lakh rupees but which
may extend to twenty-five lakh rupees; and

(iii) the director or the other person to whom any loan is advanced or guarantee or security is given

or provided in connection with any loan taken by him or the other person, shall be punishable with
imprisonment which may extend to six months or with fine which shall not be less than five lakh rupees
but which may extend to twenty-five lakh rupees, or with both.]

**186. Loan and investment by company.—(1) Without prejudice to the provisions contained in this**

Act, a company shall unless otherwise prescribed, make investment through not more than two layers of
investment companies:

Provided that the provisions of this sub-section shall not affect,—

(i) a company from acquiring any other company incorporated in a country outside India if such

other company has investment subsidiaries beyond two layers as per the laws of such country;

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(ii) a subsidiary company from having any investment subsidiary for the purposes of meeting the

requirements under any law or under any rule or regulation framed under any law for the time being in
force.

(2) No company shall directly or indirectly —

(a) give any loan to any person or other body corporate;

(b) give any guarantee or provide security in connection with a loan to any other body corporate or

person; and

(c) acquire by way of subscription, purchase or otherwise, the securities of any other body

corporate,

exceeding sixty per cent. of its paid-up share capital, free reserves and securities premium account or one
hundred per cent. of its free reserves and securities premium account, whichever is more.

1[Explanation.—For the purposes of this sub-section, the word “person” does not include any individual

who is in the employment of the company.]

2[(3) Where the aggregate of the loans and investment so far made, the amount for which guarantee or

security so far provided to or in all other bodies corporate along with the investment, loan, guarantee or
security proposed to be made or given by the Board, exceed the limits specified under sub-section (2), no
investment or loan shall be made or guarantee shall be given or security shall be provided unless previously
authorised by a special resolution passed in a general meeting:

Provided that where a loan or guarantee is given or where a security has been provided by a company

to its wholly owned subsidiary company or a joint venture company, or acquisition is made by a holding
company, by way of subscription, purchase or otherwise of, the securities of its wholly owned subsidiary
company, the requirement of this sub-section shall not apply:

Provided further that the company shall disclose the details of such loans or guarantee or security or

acquisition in the financial statement as provided under sub-section (4).]

(4) The company shall disclose to the members in the financial statement the full particulars of the

loans given, investment made or guarantee given or security provided and the purpose for which the loan
or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security.

(5) No investment shall be made or loan or guarantee or security given by the company unless the

resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at
the meeting and the prior approval of the public financial institution concerned where any term loan is
subsisting, is obtained:

Provided that prior approval of a public financial institution shall not be required where the aggregate

of the loans and investments so far made, the amount for which guarantee or security so far provided to or
in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made
or given does not exceed the limit as specified in sub-section (2), and there is no default in repayment of
loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public
financial institution.

(6) No company, which is registered under section 12 of the Securities and Exchange Board of India

Act, 1992 (15 of 1992) and covered under such class or classes of companies as may be prescribed, shall
take inter-corporate loan or deposits exceeding the prescribed limit and such company shall furnish in its
financial statement the details of the loan or deposits.

(7) No loan shall be given under this section at a rate of interest lower than the prevailing yield of one

year, three year, five year or ten year Government Security closest to the tenor of the loan.

1. Ins. by Act 1 of 2018, s. 62 (w.e.f. 7-5-2018).
2. Subs. by s. 62, ibid., for sub-section (3) (w.e.f. 7-5-2018).

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(8) No company which is in default in the repayment of any deposits accepted before or after the

commencement of this Act or in payment of interest thereon, shall give any loan or give any guarantee or
provide any security or make an acquisition till such default is subsisting.

(9) Every company giving loan or giving a guarantee or providing security or making an acquisition

under this section shall keep a register which shall contain such particulars and shall be maintained in such
manner as may be prescribed.

(10) The register referred to in sub-section (9) shall be kept at the registered office of the company and

—

(a) shall be open to inspection at such office; and

(b) extracts may be taken therefrom by any member, and copies thereof may be furnished to any

member of the company on payment of such fees as may be prescribed.

1[(11) Nothing contained in this section, except sub-section (1), shall apply—

(a) to any loan made, any guarantee given or any security provided or any investment made by a

banking company, or an insurance company, or a housing finance company in the ordinary course of its
business, or a company established with the object of and engaged in the business of financing industrial
enterprises, or of providing infrastructural facilities;

(b) to any investment—

(i) made by an investment company;

(ii) made in shares allotted in pursuance of clause (a) of sub-section (1) of section 62 or in shares

allotted in pursuance of rights issues made by a body corporate;

(iii) made, in respect of investment or lending activities, by a non-banking financial company

registered under Chapter III-B of the Reserve Bank of India Act, 1934 (2 of 1934) and whose
principal business is acquisition of securities.]

(12) The Central Government may make rules for the purposes of this section.

(13) If a company contravenes the provisions of this section, the company shall be punishable with fine

which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and
every officer of the company who is in default shall be punishable with imprisonment for a term which may
extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.

_Explanation.—For the purposes of this section,—_

(a) the expression “investment company” means a company whose principal business is the

acquisition of shares, debentures or other securities [2][and a company will be deemed to be principally
engaged in the business of acquisition of shares, debentures or other securities, if its assets in the form
of investment in shares, debentures or other securities constitute not less than fifty per cent. of its total
assets, or if its income derived from investment business constitutes not less than fifty per cent. as a
proportion of its gross income.];

(b) the expression “infrastructure facilities” means the facilities specified in Schedule VI.

**187. Investments of company to be held in its own name.—(1) All investments made or held by a**

company in any property, security or other asset shall be made and held by it in its own name:

Provided that the company may hold any shares in its subsidiary company in the name of any nominee

or nominees of the company, if it is necessary to do so, to ensure that the number of members of the
subsidiary company is not reduced below the statutory limit.

(2) Nothing in this section shall be deemed to prevent a company—

1. Subs. by Act 1 of 2018, s. 62, for sub-section (11) (w.e.f. 7-5-2018).
2. Ins. by Act 1 of 2018, s. 62 (w.e.f. 7-5-2018).

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(a) from depositing with a bank, being the bankers of the company, any shares or securities for the

collection of any dividend or interest payable thereon; or

(b) from depositing with, or transferring to, or holding in the name of, the State Bank of India or a

scheduled bank, being the bankers of the company, shares or securities, in order to facilitate the transfer
thereof:

Provided that if within a period of six months from the date on which the shares or securities are

transferred by the company to, or are first held by the company in the name of, the State Bank of India
or a scheduled bank as aforesaid, no transfer of such shares or securities takes place, the company shall,
as soon as practicable after the expiry of that period, have the shares or securities re-transferred to it
from the State Bank of India or the scheduled bank or, as the case may be, again hold the shares or
securities in its own name; or

(c) from depositing with, or transferring to, any person any shares or securities, by way of security

for the repayment of any loan advanced to the company or the performance of any obligation
undertaken by it;

(d) from holding investments in the name of a depository when such investments are in the form of

securities held by the company as a beneficial owner.

(3) Where in pursuance of clause (d) of sub-section (2), any shares or securities in which investments

have been made by a company are not held by it in its own name, the company shall maintain a register
which shall contain such particulars as may be prescribed and such register shall be open to inspection by
any member or debenture-holder of the company without any charge during business hours subject to such
reasonable restrictions as the company may by its articles or in general meeting impose.

1[(4) If a company is in default in complying with the provisions of this section, the company shall be

liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to
a penalty of fifty thousand rupees.]

**188. Related party transactions.— (1) Except with the consent of the Board of Directors given by a**

resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall
enter into any contract or arrangement with a related party with respect to—

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind;

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services or property;

_(f) such related party's appointment to any office or place of profit in the company, its subsidiary_

company or associate company; and

(g) underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that no contract or arrangement, in the case of a company having a paid-up share capital of

not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into
except with the prior approval of the company by a[2][resolution]:

Provided further that no member of the company shall vote on such [1][resolution], to approve any

contract or arrangement which may be entered into by the company, if such member is a related party:

3[Provided also that nothing contained in the second proviso shall apply to a company in which ninety

per cent. or more members, in number, are relatives of promoters or are related parties:]

1. Subs. by Act 29 of 2020, s. 38, for sub-section (4) (w.e.f. 21-12-2020).
2. Subs. by Act 21 of 2015, s. 16, for “special resolution” (w.e.f. 29-5-2015).
3. The proviso ins. by Act 1 of 2018, s. 63 (w.e.f. 9-2-2018).

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Provided also that nothing in this sub-section shall apply to any transactions entered into by the

company in its ordinary course of business other than transactions which are not on an arm’s length basis:

1[Provided also that the requirement of passing the resolution under first proviso shall not be applicable

for transactions entered into between a holding company and its wholly owned subsidiary whose accounts
are consolidated with such holding company and placed before the shareholders at the general meeting for
approval.]

_Explanation.— In this sub-section,—_

(a) the expression “office or place of profit” means any office or place—

_(i) where such office or place is held by a director, if the director holding it receives from the_

company anything by way of remuneration over and above the remuneration to which he is entitled
as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or
otherwise;

_(ii) where such office or place is held by an individual other than a director or by any firm,_

private company or other body corporate, if the individual, firm, private company or body corporate
holding it receives from the company anything by way of remuneration, salary, fee, commission,
perquisites, any rent-free accommodation, or otherwise;

_(b) the expression “arm’s length transaction” means a transaction between two related parties that_

is conducted as if they were unrelated, so that there is no conflict of interest.

(2) Every contract or arrangement entered into under sub-section (1) shall be referred to in the Board’s

report to the shareholders along with the justification for entering into such contract or arrangement.

(3) Where any contract or arrangement is entered into by a director or any other employee, without

obtaining the consent of the Board or approval by a [1][resolution] in the general meeting under         subsection (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting
within three months from the date on which such contract or arrangement was entered into, such contract
or arrangement [2][shall be voidable at the option of the Board or, as the case may be, of the shareholders]
and if the contract or arrangement is with a related party to any director, or is authorised by any other
director, the directors concerned shall indemnify the company against any loss incurred by it.

(4) Without prejudice to anything contained in sub-section (3), it shall be open to the company to

proceed against a director or any other employee who had entered into such contract or arrangement in
contravention of the provisions of this section for recovery of any loss sustained by it as a result of such
contract or arrangement.

(5) Any director or any other employee of a company, who had entered into or authorized the contract

or arrangement in violation of the provisions of this section shall,—

(i) in case of listed company, be [3][liable to a penalty of twenty-five lakh rupees]; and

(ii) in case of any other company, be [4][liable to a penalty of five lakh rupees]].

**189. Register of contracts or arrangements in which directors are interested.—(1) Every company**

shall keep one or more registers giving separately the particulars of all contracts or arrangements to which
sub-section (2) of section 184 or section 188 applies, in such manner and containing such particulars as
may be prescribed and after entering the particulars, such register or registers shall be placed before the
next meeting of the Board and signed by all the directors present at the meeting.

(2) Every director or key managerial personnel shall, within a period of thirty days of his appointment,

or relinquishment of his office, as the case may be, disclose to the company the particulars specified in subsection (1) of section 184 relating to his concern or interest in the other associations which are required to
be included in the register under that sub-section or such other information relating to himself as may be
prescribed.

1. The proviso ins. by Act 21 of 2015, s. 16 (w.e.f. 29-5-2015).
2. Subs. by Act 1 of 2018, s. 63, for “shall be voidable at the option of the Board” (w.e.f. 9-2-2018).
3. Subs. by Act 29 of 2020, s. 39, for certain words (w.e.f. 21-12-2020).
4. Subs. by s. 39, ibid., for certain words (w.e.f. 21-12-2020).

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(3) The register referred to in sub-section (1) shall be kept at the registered office of the company and

it shall be open for inspection at such office during business hours and extracts may be taken therefrom,
and copies thereof as may be required by any member of the company shall be furnished by the company
to such extent, in such manner, and on payment of such fees as may be prescribed.

(4) The register to be kept under this section shall also be produced at the commencement of every

annual general meeting of the company and shall remain open and accessible during the continuance of the
meeting to any person having the right to attend the meeting.

(5) Nothing contained in sub-section (1) shall apply to any contract or arrangement—

(a) for the sale, purchase or supply of any goods, materials or services if the value of such goods

and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any year;
or

(b) by a banking company for the collection of bills in the ordinary course of its business.

(6) Every director who fails to comply with the provisions of this section and the rules made thereunder

shall be liable to a penalty of twenty-five thousand rupees.

**190. Contract of employment with managing or whole-time director.—(1) Every company shall**

keep at its registered office,—

(a) where a contract of service with a managing or whole-time director is in writing, a copy of the

contract; or

(b) where such a contract is not in writing, a written memorandum setting out its terms.

(2) The copies of the contract or the memorandum kept under sub-section (1) shall be open to inspection

by any member of the company without payment of fee.

(3) If any default is made in complying with the provisions of sub-section (1) or sub-section (2), the

company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who
is in default shall be liable to a penalty of five thousand rupees for each default.

(4) The provisions of this section shall not apply to a private company.

**191. Payment to director for loss of office, etc., in connection with transfer of undertaking,**

**property or shares.—(1) No director of a company shall, in connection with—**

(a) the transfer of the whole or any part of any undertaking or property of the company; or

(b) the transfer to any person of all or any of the shares in a company being a transfer resulting

from—

(i) an offer made to the general body of shareholders;

(ii) an offer made by or on behalf of some other body corporate with a view to a company

becoming a subsidiary company of such body corporate or a subsidiary company of its holding
company;

(iii) an offer made by or on behalf of an individual with a view to his obtaining the right to

exercise, or control the exercise of, not less than one-third of the total voting power at any general
meeting of the company; or

(iv) any other offer which is conditional on acceptance to a given extent, receive any payment

by way of compensation for loss of office or as consideration for retirement from office, or in
connection with such loss or retirement from such company or from the transferee of such
undertaking or property, or from the transferees of shares or from any other person, not being such
company, unless particulars as may be prescribed with respect to the payment proposed to be made
by such transferee or person, including the amount thereof, have been disclosed to the members of
the company and the proposal has been approved by the company in general meeting.

(2) Nothing in sub-section (1) shall affect any payment made by a company to a managing director or

whole-time director or manager of the company by way of compensation for loss of office or as

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consideration for retirement from office or in connection with such loss or retirement subject to limits or
priorities, as may be prescribed.

(3) If the payment under sub-section (1) or sub-section (2) is not approved for want of quorum either

in a meeting or an adjourned meeting, the proposal shall not be deemed to have been approved.

(4) Where a director of a company receives payment of any amount in contravention of sub-section (1)

or the proposed payment is made before it is approved in the meeting, the amount so received by the director
shall be deemed to have been received by him in trust for the company.

1[(5) If a director of the company makes any default in complying with the provisions of this section,

such director shall be liable to a penalty of one lakh rupees.]

(6) Nothing in this section shall be taken to prejudice the operation of any law requiring disclosure to

be made with respect to any payment received under this section or such other like payments made to a
director.

**192. Restriction on non-cash transactions involving directors.—(1) No company shall enter into an**

arrangement by which—

(a) a director of the company or its holding, subsidiary or associate company or a person connected

with him acquires or is to acquire assets for consideration other than cash, from the company; or

(b) the company acquires or is to acquire assets for consideration other than cash, from such director

or person so connected,

unless prior approval for such arrangement is accorded by a resolution of the company in general meeting
and if the director or connected person is a director of its holding company, approval under this        subsection shall also be required to be obtained by passing a resolution in general meeting of the holding
company.

(2) The notice for approval of the resolution by the company or holding company in general meeting

under sub-section (1) shall include the particulars of the arrangement along with the value of the assets
involved in such arrangement duly calculated by a registered valuer.

(3) Any arrangement entered into by a company or its holding company in contravention of the

provisions of this section shall be voidable at the instance of the company unless—

(a) the restitution of any money or other consideration which is the subject matter of the

arrangement is no longer possible and the company has been indemnified by any other person for any
loss or damage caused to it; or

(b) any rights are acquired _bona fide_ for value and without notice of the contravention of the

provisions of this section by any other person.
**193. Contract by One Person Company.—(1) Where One Person Company limited by shares or by**

guarantee enters into a contract with the sole member of the company who is also the director of the
company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer
are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors
of the company held next after entering into contract:

Provided that nothing in this sub-section shall apply to contracts entered into by the company in the

ordinary course of its business.

(2) The company shall inform the Registrar about every contract entered into by the company and

recorded in the minutes of the meeting of its Board of Directors under sub-section (1) within a period of
fifteen days of the date of approval by the Board of Directors.

**194.** [Prohibition on forward dealings in securities of company by director or key managerial

_personnel.] Omitted by the Companies (Amendment) Act, 2017 (1 of 2018), s. 64 (w.e.f. 9-2-2018)._

**195. [Prohibition on insider trading of securities.] Omitted by s. 65, ibid. (w.e.f. 9-2-2018).**

1. Subs. by Act 22 of 2019, s. 28, for sub-section (5) (w.e.f. 2-11-2018).

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CHAPTER XIII

APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

**196. Appointment of managing director, whole-time director or manager.—(1) No company shall**

appoint or employ at the same time a managing director and a manager.

(2) No company shall appoint or re-appoint any person as its managing director, whole-time director

or manager for a term exceeding five years at a time:

Provided that no re-appointment shall be made earlier than one year before the expiry of his term.
(3) No company shall appoint or continue the employment of any person as managing director, whole
time director or manager who —

(a) is below the age of twenty-one years or has attained the age of seventy years:
Provided that appointment of a person who has attained the age of seventy years may be made by

passing a special resolution in which case the explanatory statement annexed to the notice for such
motion shall indicate the justification for appointing such person;

1[Provided further that where no such special resolution is passed but votes cast in favour of the

motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an
application made by the Board, that such appointment is most beneficial to the company, the
appointment of the person who has attained the age of seventy years may be made.]”;

(b) is an undischarged insolvent or has at any time been adjudged as an insolvent;
(c) has at any time suspended payment to his creditors or makes, or has at any time made, a

composition with them; or

(d) has at any time been convicted by a court of an offence and sentenced for a period of more than

six months.
(4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director

or manager shall be appointed and the terms and conditions of such appointment and remuneration payable
be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the
next general meeting of the company and by the Central Government in case such appointment is at variance
to the conditions [2][specified in Part I of that Schedule]:

Provided that a notice convening Board or general meeting for considering such appointment shall

include the terms and conditions of such appointment, remuneration payable and such other matters
including interest, of a director or directors in such appointments, if any:

Provided further that a return in the prescribed form shall be filed within sixty days of such appointment

with the Registrar.

(5) Subject to the provisions of this Act, where an appointment of a managing director, whole-time

director or manager is not approved by the company at a general meeting, any act done by him before such
approval shall not be deemed to be invalid.

**197. Overall maximum managerial remuneration and managerial remuneration in case of**

**absence or inadequacy of profits.—(1) The total managerial remuneration payable by a public company,**
to its directors, including managing director and whole-time director, and its manager in respect of any
financial year shall not exceed eleven per cent. of the net profits of that company for that financial year
computed in the manner laid down in section 198 except that the remuneration of the directors shall not be
deducted from the gross profits:

Provided that the company in general meeting may, [3]*** authorise the payment of remuneration

exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V:

Provided further that, except with the approval of the company in general meeting, [4][by a special

resolution,]—

(i) the remuneration payable to any one managing director; or whole-time director or manager shall

not exceed five per cent. of the net profits of the company and if there is more than one such director
remuneration shall not exceed ten per cent. of the net profits to all such directors and manager taken
together;

1. The proviso ins. by Act 1 of 2018, s. 66 (w.e.f. 12-9-2018).
2. Subs. by s. 66, ibid., for “specified in that Schedule” (w.e.f. 12-9-2018).
3. The words “with the approval of the Central Government,” omitted by Act 1 of 2018, s. 67 (w.e.f. 12-9-2018).
4. Ins. by s. 67, ibid. (w.e.f. 12-9-2018).

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(ii) the remuneration payable to directors who are neither managing directors nor whole-time

directors shall not exceed,—

(A) one per cent. of the net profits of the company, if there is a managing or whole-time director

or manager;

(B) three per cent. of the net profits in any other case.

1[Provided also that, where the company has defaulted in payment of dues to any bank or public

financial institution or non-convertible debenture holders or any other secured creditor, the prior approval
of the bank or public financial institution concerned or the non-convertible debenture holders or other
secured creditor, as the case may be, shall be obtained by the company before obtaining the approval in the
general meeting.]

(2) The percentages aforesaid shall be exclusive of any fees payable to directors under sub-section (5).

(3) Notwithstanding anything contained in sub-sections (1) and (2), but subject to the provisions of

Schedule V, if, in any financial year, a company has no profits or its profits are inadequate, the company
shall not pay to its directors, including any managing or whole-time director or manager, [2][or any other
non-executive director, including an independent director] by way of remuneration any sum exclusive of
any fees payable to directors under sub-section (5) hereunder except in accordance with the provisions of
Schedule V [3]***.

(4) The remuneration payable to the directors of a company, including any managing or whole-time

director or manager, shall be determined, in accordance with and subject to the provisions of this section,
either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution,
passed by the company in general meeting and the remuneration payable to a director determined aforesaid
shall be inclusive of the remuneration payable to him for the services rendered by him in any other capacity:

Provided that any remuneration for services rendered by any such director in other capacity shall not

be so included if—

(a) the services rendered are of a professional nature; and

(b) in the opinion of the Nomination and Remuneration Committee, if the company is covered

under sub-section (1) of section 178, or the Board of Directors in other cases, the director possesses the
requisite qualification for the practice of the profession.

(5) A director may receive remuneration by way of fee for attending meetings of the Board or

Committee thereof or for any other purpose whatsoever as may be decided by the Board:

Provided that the amount of such fees shall not exceed the amount as may be prescribed:

Provided further that different fees for different classes of companies and fees in respect of independent

director may be such as may be prescribed.

(6) A director or manager may be paid remuneration either by way of a monthly payment or at a

specified percentage of the net profits of the company or partly by one way and partly by the other.

4*  -  -  -  -  
(8) The net profits for the purposes of this section shall be computed in the manner referred to in section

198.

5[(9) If any director draws or receives, directly or indirectly, by way of remuneration any such sums in

excess of the limit prescribed by this section or without approval required under this section, he shall refund
such sums to the company, within two years or such lesser period as may be allowed by the company, and
until such sum is refunded, hold it in trust for the company.]

1. The proviso ins. by Act 1 of 2018, s. 67 (w.e.f. 12-9-2018).
2. Ins. by Act 29 of 2020, s. 40 (w.e.f. 18-3-2021).
3. The words “and if it is not able to comply with such provisions, with the previous approval of the Central Government”

omitted by s. 67, ibid. (w.e.f.12-9-2018).

4. Sub-section (7) omitted by Act 22 of 2019, s. 29 (w.e.f. 2-11-2018).
5. Subs. by Act 1 of 2018, s. 67 (w.e.f. 12-9-2018).

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(10) The company shall not waive the recovery of any sum refundable to it under sub-section (9) unless

1[approved by the company by special resolution within two years from the date the sum becomes
refundable].

2[Provided that where the company has defaulted in payment of dues to any bank or public financial

institution or non-convertible debenture holders or any other secured creditor, the prior approval of the bank
or public financial institution concerned or the non-convertible debenture holders or other secured creditor,
as the case may be, shall be obtained by the company before obtaining approval of such waiver.]

(11) In cases where Schedule V is applicable on grounds of no profits or inadequate profits, any

provision relating to the remuneration of any director which purports to increase or has the effect of
increasing the amount thereof, whether the provision be contained in the company’s memorandum or
articles, or in an agreement entered into by it, or in any resolution passed by the company in general meeting
or its Board, shall not have any effect unless such increase is in accordance with the conditions specified in
that Schedule [3]***.

(12) Every listed company shall disclose in the Board’s report, the ratio of the remuneration of each

director to the median employee’s remuneration and such other details as may be prescribed.

(13) Where any insurance is taken by a company on behalf of its managing director, whole-time

director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying
any of them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach
of trust for which they may be guilty in relation to the company, the premium paid on such insurance shall
not be treated as part of the remuneration payable to any such personnel:

Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated

as part of the remuneration.

(14) Subject to the provisions of this section, any director who is in receipt of any commission from the

company and who is a managing or whole-time director of the company shall not be disqualified from
receiving any remuneration or commission from any holding company or subsidiary company of such
company subject to its disclosure by the company in the Board’s report.

4[(15) If any person makes any default in complying with the provisions of this section, he shall be

liable to a penalty of one lakh rupees and where any default has been made by a company, the company
shall be liable to a penalty of five lakh rupees.]

5[(16) The auditor of the company shall, in his report under section 143, make a statement as to whether

the remuneration paid by the company to its directors is in accordance with the provisions of this section,
whether remuneration paid to any director is in excess of the limit laid down under this section and give
such other details as may be prescribed.

(17) On and from the commencement of the Companies (Amendment) Act, 2017, any application made

to the Central Government under the provisions of this section [as it stood before such commencement],
which is pending with that Government shall abate, and the company shall, within one year of such
commencement, obtain the approval in accordance with the provisions of this section, as so amended.]

**198. Calculation of profits.—(1) In computing the net profits of a company in any financial year for**

the purpose of section 197,—

(a) credit shall be given for the sums specified in sub-section (2), and credit shall not be given for

those specified in sub-section (3); and

(b) the sums specified in sub-section (4) shall be deducted, and those specified in sub-section (5)

shall not be deducted.

1. Subs. by Act 1 of 2018, s. 67, for “permitted by the Central Government” (w.e.f. 12-9-2018).
2. The proviso ins. by s. 67, ibid., (w.e.f. 12-9-2018).
3. The words “and if such conditions are not being complied, the approval of the Central Government had been obtained” by

s. 67, ibid., (w.e.f. 12-9-2018).

4. Subs. by Act 22 of 2019, s. 29, for sub-section (15) (w.e.f. 2-11-2018).
5. Ins. by Act 1 of 2018, s. 67 (w.e.f. 12-9-2018).

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(2) In making the computation aforesaid, credit shall be given for the bounties and subsidies received

from any Government, or any public authority constituted or authorised in this behalf, by any Government,
unless and except in so far as the Central Government otherwise directs.

(3) In making the computation aforesaid, credit shall not be given for the following sums, namely:—

(a) profits, by way of premium on shares or debentures of the company, which are issued or sold

by the company [1][unless the company is an investment company as referred to in clause (a) of the
Explanation to section 186];

(b) profits on sales by the company of forfeited shares;
(c) profits of a capital nature including profits from the sale of the undertaking or any of the

undertakings of the company or of any part thereof;

(d) profits from the sale of any immovable property or fixed assets of a capital nature comprised in

the undertaking or any of the undertakings of the company, unless the business of the company consists,
whether wholly or partly, of buying and selling any such property or assets:

Provided that where the amount for which any fixed asset is sold exceeds the written-down value

thereof, credit shall be given for so much of the excess as is not higher than the difference between the
original cost of that fixed asset and its written-down value;

(e) any change in carrying amount of an asset or of a liability recognised inequity reserves including

surplus in profit and loss account on measurement of the asset or the liability at fair value.

2[(f) any amount representing unrealised gains, notional gains or revaluation of assets.]

(4) In making the computation aforesaid, the following sums shall be deducted, namely:—

(a) all the usual working charges;
(b) directors’ remuneration;
(c) bonus or commission paid or payable to any member of the company’s staff, or to any engineer,

technician or person employed or engaged by the company, whether on a whole-time or on a part-time
basis;

(d) any tax notified by the Central Government as being in the nature of a tax on excess or abnormal

profits;

(e) any tax on business profits imposed for special reasons or in special circumstances and notified

by the Central Government in this behalf;

(f) interest on debentures issued by the company;
(g) interest on mortgages executed by the company and on loans and advances secured by a charge

on its fixed or floating assets;

(h) interest on unsecured loans and advances;
(i) expenses on repairs, whether to immovable or to movable property, provided the repairs are not

of a capital nature;

(j) outgoings inclusive of contributions made under section 181;
(k) depreciation to the extent specified in section 123;
(l) the excess of expenditure over income, which had arisen in computing the net profits in

accordance with this section in any year [3]***, in so far as such excess has not been deducted in any
subsequent year preceding the year in respect of which the net profits have to be ascertained;

(m) any compensation or damages to be paid in virtue of any legal liability including a liability

arising from a breach of contract;

(n) any sum paid by way of insurance against the risk of meeting any liability such as is referred to

in clause (m);

(o) debts considered bad and written off or adjusted during the year of account.

(5) In making the computation aforesaid, the following sums shall not be deducted, namely:—

(a) income-tax and super-tax payable by the company under the Income-tax Act, 1961        (43

of 1961), or any other tax on the income of the company not falling under clauses (d) and (e) of subsection (4);

1. Ins. by Act 1 of 2018, s. 68 (w.e.f. 12-9-2018).
2. Clause (f) ins. by s. 68, ibid. (w.e.f. 12-9-2018).
3. The words “which begins at or after the commencement of this Act” omitted by s. 68, ibid. (w.e.f. 12-9-2018).

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(b) any compensation, damages or payments made voluntarily, that is to say, otherwise than in

virtue of a liability such as is referred to in clause (m) of sub-section (4);

(c) loss of a capital nature including loss on sale of the undertaking or any of the undertakings of

the company or of any part thereof not including any excess of the written-down value of any asset
which is sold, discarded, demolished or destroyed over its sale proceeds or its scrap value;

(d) any change in carrying amount of an asset or of a liability recognised inequity reserves including

surplus in profit and loss account on measurement of the asset or the liability at fair value.
**199. Recovery of remuneration in certain cases.—Without prejudice to any liability incurred under**

the provisions of this Act or any other law for the time being in force, where a company is required to
re-state its financial statements due to fraud or non-compliance with any requirement under this Act and
the rules made thereunder, the company shall recover from any past or present managing director or
whole-time director or manager or Chief Executive Officer (by whatever name called) who, during the
period for which the financial statements are required to be re-stated, received the remuneration
(including stock option) in excess of what would have been payable to him as per restatement of financial
statements.

**200. Central Government or company to fix limit with regard to remuneration.—Notwithstanding**

anything contained in this Chapter, [1]*** a company may, while according its approval under section 196,
to any appointment or to any remuneration under section 197 in respect of cases where the company has
inadequate or no profits, fix the remuneration within the limits specified in this Act, at such amount or
percentage of profits of the company, as it may deem fit and while fixing the remuneration, [1]*** the
company shall have regard to—

(a) the financial position of the company;
(b) the remuneration or commission drawn by the individual concerned in any other capacity;
(c) the remuneration or commission drawn by him from any other company;
(d) professional qualifications and experience of the individual concerned;
(e) such other matters as may be prescribed.

**201. Forms of, and procedure in relation to, certain applications.—(1) Every application made to**

the Central Government under [2][section 196] shall be in such form as may be prescribed.

(2) (a) Before any application is made by a company to the Central Government under [3][section 196],

there shall be issued by or on behalf of the company a general notice to the members thereof, indicating the
nature of the application proposed to be made.

(b) Such notice shall be published at least once in a newspaper in the principal language of the district

in which the registered office of the company is situate and circulating in that district, and at least once in
English in an English newspaper circulating in that district.

(c) The copies of the notices, together with a certificate by the company as to the due publication

thereof, shall be attached to the application.

**202. Compensation for loss of office of managing or whole-time director or manager.—(1) A**

company may make payment to a managing or whole-time director or manager, but not to any other
director, by way of compensation for loss of office, or as consideration for retirement from office or in
connection with such loss or retirement.

(2) No payment shall be made under sub-section (1) in the following cases, namely:—

(a) where the director resigns from his office as a result of the reconstruction of the company, or of

its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing
or whole-time director, manager or other officer of the reconstructed company or of the body corporate
resulting from the amalgamation;

(b) where the director resigns from his office otherwise than on the reconstruction of the company

or its amalgamation as aforesaid;

(c) where the office of the director is vacated under sub-section (1) of section 167;
(d) where the company is being wound up, whether by an order of the Tribunal or voluntarily,

provided the winding up was due to the negligence or default of the director;

1. The words “the Central Government or” omitted by Act 1 of 2018, s. 69 (w.e.f. 12-9-2018).
2. The words “this Chapter” omitted by s. 70, ibid. (w.e.f. 12-9-2018).
3. Subs. by s. 70, ibid. for “any of the sections aforesaid” (w.e.f. 12-9-2018).

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(e) where the director has been guilty of fraud or breach of trust in relation to, or of gross negligence

in or gross mismanagement of, the conduct of the affairs of the company or any subsidiary company or
holding company thereof; and

(f) where the director has instigated, or has taken part directly or indirectly in bringing about, the

termination of his office.
(3) Any payment made to a managing or whole-time director or manager in pursuance of sub-section

(1) shall not exceed the remuneration which he would have earned if he had been in office for the remainder
of his term or for three years, whichever is shorter, calculated on the basis of the average remuneration
actually earned by him during a period of three years immediately preceding the date on which he ceased
to hold office, or where he held the office for a lesser period than three years, during such period:

Provided that no such payment shall be made to the director in the event of the commencement of the

winding up of the company, whether before or at any time within twelve months after, the date on which
he ceased to hold office, if the assets of the company on the winding up, after deducting the expenses
thereof, are not sufficient to repay to the shareholders the share capital, including the premiums, if any,
contributed by them.

(4) Nothing in this section shall be deemed to prohibit the payment to a managing or whole-time

director, or manager, of any remuneration for services rendered by him to the company in any other
capacity.

**203. Appointment of key managerial personnel.—(1) Every company belonging to such class or**

classes of companies as may be prescribed shall have the following whole-time key managerial
personnel,—

(i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time

director;

(ii) company secretary; and
(iii) Chief Financial Officer:
Provided that an individual shall not be appointed or reappointed as the chairperson of the company,

in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer
of the company at the same time after the date of commencement of this Act unless,—

(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:
Provided further that nothing contained in the first proviso shall apply to such class of

companies engaged in multiple businesses and which has appointed one or more Chief Executive
Officers for each such business as may be notified by the Central Government.

(2) Every whole-time key managerial personnel of a company shall be appointed by means of a

resolution of the Board containing the terms and conditions of the appointment including the remuneration.

(3) A whole-time key managerial personnel shall not hold office in more than one company except in

its subsidiary company at the same time:

Provided that nothing contained in this sub-section shall disentitle a key managerial personnel from

being a director of any company with the permission of the Board:

Provided further that whole-time key managerial personnel holding office in more than one company

at the same time on the date of commencement of this Act, shall, within a period of six months from such
commencement, choose one company, in which he wishes to continue to hold the office of key managerial
personnel:

Provided also that a company may appoint or employ a person as its managing director, if he is the

managing director or manager of one, and of not more than one, other company and such appointment or
employment is made or approved by a resolution passed at a meeting of the Board with the consent of all
the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific
notice has been given to all the directors then in India.

(4) If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be

filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

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1[(5) If any company makes any default in complying with the provisions of this section, such company

shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the
company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a
continuing one, with a further penalty of one thousand rupees for each day after the first during which such
default continues but not exceeding five lakh rupees.]

**204. Secretarial audit for bigger companies.—(1) Every listed company and a company belonging**

to other class of companies as may be prescribed shall annex with its Board’s report made in terms of subsection (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form
as may be prescribed.

(2) It shall be the duty of the company to give all assistance and facilities to the company secretary in

practice, for auditing the secretarial and related records of the company.

(3) The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain

in full any qualification or observation or other remarks made by the company secretary in practice in his
report under sub-section (1).

(4) If a company or any officer of the company or the company secretary in practice, contravenes the

provisions of this section, the company, every officer of the company or the company secretary in practice,
who is in default, shall be [2][liable to a penalty of two lakh rupees].

**205. Functions of company secretary.—(1) The functions of the company secretary shall include,—**

(a) to report to the Board about compliance with the provisions of this Act, the rules made

thereunder and other laws applicable to the company;

(b) to ensure that the company complies with the applicable secretarial standards;

(c) to discharge such other duties as may be prescribed.

_Explanation.—For the purpose of this section, the expression “secretarial standards” means_

secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of
the Company Secretaries Act, 1980 (56 of 1980) and approved by the Central Government.

(2) The provisions contained in section 204 and section 205 shall not affect the duties and functions of

the Board of Directors, chairperson of the company, managing director or whole-time director under this
Act, or any other law for the time being in force.

CHAPTER XIV

INSPECTION, INQUIRY AND INVESTIGATION

**206. Power to call for information, inspect books and conduct inquiries.—(1) Where on a scrutiny**

of any document filed by a company or on any information received by him, the Registrar is of the opinion
that any further information or explanation or any further documents relating to the company is necessary,
he may by a written notice require the company—

(a) to furnish in writing such information or explanation; or

(b) to produce such documents,

within such reasonable time, as may be specified in the notice.

(2) On the receipt of a notice under sub-section (1), it shall be the duty of the company and of its officers

concerned to furnish such information or explanation to the best of their knowledge and power and to
produce the documents to the Registrar within the time specified or extended by the Registrar:

Provided that where such information or explanation relates to any past period, the officers who had

been in the employment of the company for such period, if so called upon by the Registrar through a notice
served on them in writing, shall also furnish such information or explanation to the best of their knowledge.

1. Subs. by Act 22 of 2019, s. 30, for sub-section (5) (w.e.f. 2-11-2018).
2. Subs. by Act 29 of 2020, s. 41, for certain words (w.e.f. 21-12-2020).

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(3) If no information or explanation is furnished to the Registrar within the time specified under sub
section (1) or if the Registrar on an examination of the documents furnished is of the opinion that the
information or explanation furnished is in adequate or if the Registrar is satisfied on a scrutiny of the
documents furnished that an unsatisfactory state of affairs exists in the company and does not disclose a
full and fair statement of the information required, he may, by another written notice, call on the company
to produce for his inspection such further books of account, books, papers and explanations as he may
require at such place and at such time as he may specify in the notice:

Provided that before any notice is served under this sub-section, the Registrar shall record his reasons

in writing for issuing such notice.

(4) If the Registrar is satisfied on the basis of information available with or furnished to him or on a

representation made to him by any person that the business of a company is being carried on for a fraudulent
or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of investors
are not being addressed, the Registrar may, after informing the company of the allegations made against it
by a written order, call on the company to furnish in writing any information or explanation on matters
specified in the order within such time as he may specify therein and carry out such inquiry as he deems fit
after providing the company a reasonable opportunity of being heard:

Provided that the Central Government may, if it is satisfied that the circumstances so warrant, direct

the Registrar or an inspector appointed by it for the purpose to carry out the inquiry under this sub-section:

Provided further that where business of a company has been or is being carried on for a fraudulent or

unlawful purpose, every officer of the company who is in default shall be punishable for fraud in the manner
as provided in section 447.

(5) Without prejudice to the foregoing provisions of this section, the Central Government may, if it is

satisfied that the circumstances so warrant, direct inspection of books and papers of a company by an
inspector appointed by it for the purpose.

(6) The Central Government may, having regard to the circumstances by general or special order,

authorise any statutory authority to carry out the inspection of books of account of a company or class of
companies.

(7) If a company fails to furnish any information or explanation or produce any document required

under this section, the company and every officer of the company, who is in default shall be punishable
with a fine which may extend to one lakh rupees and in the case of a continuing failure, with an additional
fine which may extend to five hundred rupees for everyday after the first during which the failure continues.

**207.Conduct of inspection and inquiry.—(1) Where a Registrar or inspector calls for the books of**

account and other books and papers under section 206, it shall be the duty of every director, officer or other
employee of the company to produce all such documents to the Registrar or inspector and furnish him with
such statements, information or explanations in such form as the Registrar or inspector may require and
shall render all assistance to the Registrar or inspector in connection with such inspection.

(2) The Registrar or inspector, making an inspection or inquiry under section 206 may, during the

course of such inspection or inquiry, as the case may be,—

(a) make or cause to be made copies of books of account and other books and papers; or

(b) place or cause to be placed any marks of identification in such books in token of the inspection

having been made.

(3) Notwithstanding anything contained in any other law for the time being in force or in any contract

to the contrary, the Registrar or inspector making an inspection or inquiry shall have all the powers as are
vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of
the following matters, namely:—

(a) the discovery and production of books of account and other documents, at such place and time

as may be specified by such Registrar or inspector making the inspection or inquiry;

_(b) summoning and enforcing the attendance of persons and examining them on oath; and_

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_(c) inspection of any books, registers and other documents of the company at any place._

(4) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the

inspector under this section, the director or the officer shall be punishable with imprisonment which may
extend to one year and with fine which shall not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.

(ii) If a director or an officer of the company has been convicted of an offence under this section, the

director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated
his office as such and on such vacation of office, shall be disqualified from holding an office in any
company.

**208. Report on inspection made.—The Registrar or inspector shall, after the inspection of the books**

of account or an inquiry under section 206 and other books and papers of the company under section 207,
submit a report in writing to the Central Government along with such documents, if any, and such report
may, if necessary, include a recommendation that further investigation into the affairs of the company is
necessary giving his reasons in support.

**209. Search and seizure.—(1) Where, upon information in his possession or otherwise, the Registrar**

or inspector has reasonable ground to believe that the books and papers of a company, or relating to the key
managerial personnel or any director or auditor or company secretary in practice if the company has not
appointed a company secretary, are likely to be destroyed, mutilated, altered, falsified or secreted, he may,
after obtaining an order from the Special Court for the seizure of such books and papers,—

(a) enter, with such assistance as may be required, and search, the place or places where such books

or papers are kept; and

(b) seize such books and papers as he considers necessary after allowing the company to take copies

of, or extracts from, such books or papers at its cost.

(2) The Registrar or inspector shall return the books and papers seized under sub-section (1), as soon

as may be, and in any case not later than one hundred and eightieth day after such seizure, to the company
from whose custody or power such books or papers were seized:

Provided that the books and papers may be called for by the Registrar or inspector for a further period

of one hundred and eighty days by an order in writing if they are needed again:

Provided further that the Registrar or inspector may, before returning such books and papers as

aforesaid, take copies of, or extracts from them or place identification marks on them or any part thereof or
deal with the same in such other manner as he considers necessary.

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures

shall apply, mutatis mutandis, to every search and seizure made under this section.

**210. Investigation into affairs of company.—(1) Where the Central Government is of the opinion,**

that it is necessary to investigate into the affairs of a company,—

(a) on the receipt of a report of the Registrar or inspector under section 208;

(b) on intimation of a special resolution passed by a company that the affairs of the company ought

to be investigated; or

(c) in public interest,

it may order an investigation into the affairs of the company.

(2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of

a company ought to be investigated, the Central Government shall order an investigation into the affairs of
that company.

(3) For the purposes of this section, the Central Government may appoint one or more persons as

inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central
Government may direct.

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**211. Establishment of Serious Fraud Investigation Office.—(1) The Central Government shall, by**

notification, establish an office to be called the Serious Fraud Investigation Office to investigate frauds
relating to a company:

Provided that until the Serious Fraud Investigation Office is established under sub-section (1), the

Serious Fraud Investigation Office set-up by the Central Government in terms of the Government of India
Resolution No. 45011/16/2003-Adm-I, dated the 2nd July, 2003 shall be deemed to be the Serious Fraud
Investigation Office for the purpose of this section.

(2) The Serious Fraud Investigation Office shall be headed by a Director and consist of such number

of experts from the following fields to be appointed by the Central Government from amongst persons of
ability, integrity and experience in,—

(i) banking;

(ii) corporate affairs;

(iii) taxation;

(iv) forensic audit;

(v) capital market;

(vi) information technology;

(vii) law; or

(viii) such other fields as may be prescribed.

(3) The Central Government shall, by notification, appoint a Director in the Serious Fraud Investigation

Office, who shall be an officer not below the rank of a Joint Secretary to the Government of India having
knowledge and experience in dealing with matters relating to corporate affairs.

(4) The Central Government may appoint such experts and other officers and employees in the Serious

Fraud Investigation Office as it considers necessary for the efficient discharge of its functions under this
Act.

(5) The terms and conditions of service of Director, experts, and other officers and employees of the

Serious Fraud Investigation Office shall be such as may be prescribed.

**212. Investigation into affairs of Company by Serious Fraud Investigation Office.—(1) Without**

prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is
necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office—

(a) on receipt of a report of the Registrar or inspector under section 208;

(b) on intimation of a special resolution passed by a company that its affairs are required to be

investigated;

(c) in the public interest; or

(d) on request from any Department of the Central Government or a State Government,

the Central Government may, by order, assign the investigation into the affairs of the said company to the
Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may
consider necessary for the purpose of such investigation.

(2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation

Office for investigation under this Act, no other investigating agency of Central Government or any State
Government shall proceed with investigation in such case in respect of any offence under this Act and in
case any such investigation has already been initiated, it shall not be proceeded further with and the
concerned agency shall transfer the relevant documents and records in respect of such offences under this
Act to Serious Fraud Investigation Office.

(3) Where the investigation into the affairs of a company has been assigned by the Central Government

to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and follow the

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procedure provided in this Chapter; and submit its report to the Central Government within such period as
may be specified in the order.

(4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company to be

investigated by an Investigating Officer who shall have the power of the inspector under section 217.

(5) The company and its officers and employees, who are or have been in employment of the company

shall be responsible to provide all information, explanation, documents and assistance to the Investigating
Officer as he may require for conduct of the investigation.

(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), [1][offence

covered under section 447] of this Act shall be cognizable and no person accused of any offence under
those sections shall be released on bail or on his own bond unless—

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release;

and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are

reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit
any offence while on bail:

Provided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may

be released on bail, if the Special Court so directs:

Provided further that the Special Court shall not take cognizance of any offence referred to this sub
section except upon a complaint in writing made by—

(i) the Director, Serious Fraud Investigation Office; or

(ii) any officer of the Central Government authorised, by a general or special order in writing in

this behalf by that Government.

(7) The limitation on granting of bail specified in sub-section (6) is in addition to the limitations under

the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting
of bail.

(8) [2][If any officer not below the rank of Assistant Director] of Serious Fraud Investigation Office

authorised in this behalf by the Central Government by general or special order, has on the basis of material
in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has
been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such
person and shall, as soon as may be, inform him of the grounds for such arrest.

(9) [3][The officer authorized under sub-section (8) shall, immediately after arrest of such person under

such sub-section], forward a copy of the order, along with the material in his possession, referred to in that
sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be
prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as
may be prescribed.

(10) Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a [4][Special

Court or Judicial Magistrate] or a Metropolitan Magistrate, as the case may be, having jurisdiction:

Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the

place of arrest to the [5][Special Court or Magistrate's court].

(11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an

interim report to the Central Government.

1. Subs. by Act 21 of 2015, s. 17, for certain words, brackets and figures (w.e.f. 29-5-2015).
2. Subs. by Act 22 of 2019, s. 31, for “If the Director, Additional Director or Assistant Director” (w.e.f. 15-8-2019).
3. Subs. s. 31, ibid., for “The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall,

immediately after arrest of such person under sub-section (8)” (w.e.f. 15-8-2019).

4. Subs. by s. 31, ibid., for “Judicial Magistrate” (w.e.f. 15-8-2019).
5. Subs. by s. 31, ibid., for “Magistrate’s Court” (w.e.f. 15-8-2019).

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(12) On completion of the investigation, the Serious Fraud Investigation Office shall submit the

investigation report to the Central Government.

(13) Notwithstanding anything contained in this Act or in any other law for the time being in force, a

copy of the investigation report may be obtained by any person concerned by making an application in this
regard to the court.

(14) On receipt of the investigation report, the Central Government may, after examination of the report

(and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to
initiate prosecution against the company and its officers or employees, who are or have been in employment
of the company or any other person directly or indirectly connected with the affairs of the company.

1[(14A) Where the report under sub-section (11) or sub-section (12) states that fraud has taken place in

a company and due to such fraud any director, key managerial personnel, other officer of the company or
any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property
or cash or in any other manner, the Central Government may file an application before the Tribunal for
appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such
director, key managerial personnel, other officer or any other person liable personally without any limitation
of liability.]

(15) Notwithstanding anything contained in this Act or in any other law for the time being in force, the

investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed
by a police officer under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974).

(16) Notwithstanding anything contained in this Act, any investigation or other action taken or initiated

by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of 1956) shall
continue to be proceeded with under that Act as if this Act had not been passed.

(17) (a) In case Serious Fraud Investigation Office has been investigating any offence under this Act,

any other investigating agency, State Government, police authority, income-tax authorities having any
information or documents in respect of such offence shall provide all such information or documents
available with it to the Serious Fraud Investigation Office;

(b) The Serious Fraud Investigation Office shall share any information or documents available with it,

with any investigating agency, State Government, police authority or income-tax authorities, which may be
relevant or useful for such investigating agency, State Government, police authority or income-tax
authorities in respect of any offence or matter being investigated or examined by it under any other law.

**213. Investigation into company’s affairs in other cases.—The Tribunal may,—**

(a) on an application made by—

(i) not less than one hundred members or members holding not less than one-tenth of the total

voting power, in the case of a company having a share capital; or

(ii) not less than one-fifth of the persons on the company’s register of members, in the case of

a company having no share capital,

and supported by such evidence as may be necessary for the purpose of showing that the applicants have
good reasons for seeking an order for conducting an investigation into the affairs of the company; or

(b) on an application made to it by any other person or otherwise, if it is satisfied that there are

circumstances suggesting that—

(i) the business of the company is being conducted with intent to defraud its creditors, members or

any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any
of its members or that the company was formed for any fraudulent or unlawful purpose;

(ii) persons concerned in the formation of the company or the management of its affairs have in

connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or
towards any of its members; or

1. Ins. by Act 22 of 2019, s. 31 (w.e.f. 15-8-2019).

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(iii) the members of the company have not been given all the information with respect to its affairs

which they might reasonably expect, including information relating to the calculation of the
commission payable to a managing or other director, or the manager, of the company,

order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the
company ought to be investigated by an inspector or inspectors appointed by the Central Government and
where such an order is passed, the Central Government shall appoint one or more competent persons as
inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon
to it in such manner as the Central Government may direct:
Provided that if after investigation it is proved that—

(i) the business of the company is being conducted with intent to defraud its creditors, members or

any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed
for any fraudulent or unlawful purpose; or

(ii) any person concerned in the formation of the company or the management of its affairs have in

connection therewith been guilty of fraud,

then, every officer of the company who is in default and the person or persons concerned in the formation
of the company or the management of its affairs shall be punishable for fraud in the manner as provided in
section 447.

**214. Security for payment of costs and expenses of investigation.—Where an investigation is**

ordered by the Central Government in pursuance of clause (b) of sub-section (1) of section 210, or in
pursuance of an order made by the Tribunal under section 213, the Central Government may before
appointing an inspector under sub-section (3) of section 210 or clause (b) of section 213, require the
applicant to give such security not exceeding twenty-five thousand rupees as may be prescribed, as it may
think fit, for payment of the costs and expenses of the investigation and such security shall be refunded to
the applicant if the investigation results in prosecution.

**215. Firm, body corporate or association not to be appointed as inspector.—No firm, body**

corporate or other association shall be appointed as an inspector.

**216. Investigation of ownership of company.—(1) Where it appears to the Central Government that**

there is a reason so to do, it may appoint one or more inspectors to investigate and report on matters relating
to the company, and its membership for the purpose of determining the true persons—

(a) who are or have been financially interested in the success or failure, whether real or apparent,

of the company; or

(b) who are or have been able to control or to materially influence the policy of the [1][company;

or].

2[(c) who have or had beneficial interest in shares of a company or who are or have been beneficial

owners or significant beneficial owner of a company].

(2) Without prejudice to its powers under sub-section (1), the Central Government shall appoint one or

more inspectors under that sub-section, if the Tribunal, in the course of any proceeding before it, directs by
an order that the affairs of the company ought to be investigated as regards the membership of the company
and other matters relating to the company, for the purposes specified in sub-section (1).

(3) While appointing an inspector under sub-section (1), the Central Government may define the scope

of the investigation, whether as respects the matters or the period to which it is to extend or otherwise, and
in particular, may limit the investigation to matters connected with particular shares or debentures.

(4) Subject to the terms of appointment of an inspector, his powers shall extend to the investigation of

any circumstances suggesting the existence of any arrangement or understanding which, though not legally
binding, is or was observed or is likely to be observed in practice and which is relevant for the purposes of
his investigation.

1. Subs. by Act 1 of 2018, s. 71, for “company” (w.e.f. 13-6-2018).
2. Ins. by s. 71, ibid. (w.e.f. 13-6-2018).

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**217. Procedure, powers, etc., of inspectors.—(1) It shall be the duty of all officers and other**

employees and agents including the former officers, employees and agents of a company which is under
investigation in accordance with the provisions contained in this Chapter, and where the affairs of any other
body corporate or a person are investigated under section 219, of all officers and other employees and
agents including former officers, employees and agents of such body corporate or a person—

(a) to preserve and to produce to an inspector or any person authorised by him in this behalf all

books and papers of, or relating to, the company or, as the case may be, relating to the other body
corporate or the person, which are in their custody or power; and

(b) otherwise to give to the inspector all assistance in connection with the investigation which they

are reasonably able to give.

(2) The inspector may require any body corporate, other than a body corporate referred to in sub-section

(1), to furnish such information to, or produce such books and papers before him or any person authorised
by him in this behalf as he may consider necessary, if the furnishing of such information or the production
of such books and papers is relevant or necessary for the purposes of his investigation.

(3) The inspector shall not keep in his custody any books and papers produced under sub-section (1) or

sub-section (2) for more than one hundred and eighty days and return the same to the company, body
corporate, firm or individual by whom or on whose behalf the books and papers were produced:

Provided that the books and papers may be called for by the inspector if they are needed again for a

further period of one hundred and eighty days by an order in writing.

(4) An inspector may examine on oath—

(a) any of the persons referred to in sub-section (1); and

(b) with the prior approval of the Central Government, any other person,

in relation to the affairs of the company, or other body corporate or person, as the case may be, and for that
purpose may require any of those persons to appear before him personally:

Provided that in case of an investigation under section 212, the prior approval of Director, Serious

Fraud Investigation Office shall be sufficient under clause (b).

(5) Notwithstanding anything contained in any other law for the time being in force or in any contract

to the contrary, the inspector, being an officer of the Central Government, making an investigation under
this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908
(5 of 1908), while trying a suit in respect of the following matters, namely:—

(a) the discovery and production of books of account and other documents, at such place and time

as may be specified by such person;

(b) summoning and enforcing the attendance of persons and examining them on oath; and

(c) inspection of any books, registers and other documents of the company at any place.

(6) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the

inspector under this section, the director or the officer shall be punishable with imprisonment which may
extend to one year and with fine which shall not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.

(ii) If a director or an officer of the company has been convicted of an offence under this section, the

director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated
his office as such and on such vacation of office, shall be disqualified from holding an office in any
company.

(7) The notes of any examination under sub-section (4) shall be taken down in writing and shall be read

over to, or by, and signed by, the person examined, and may thereafter be used in evidence against him.

(8) If any person fails without reasonable cause or refuses—

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(a) to produce to an inspector or any person authorised by him in this behalf any book or paper

which is his duty under sub-section (1) or sub-section (2) to produce;

(b) to furnish any information which is his duty under sub-section (2) to furnish;

(c) to appear before the inspector personally when required to do so under sub-section (4) or to

answer any question which is put to him by the inspector in pursuance of that sub-section; or

(d) to sign the notes of any examination referred to in sub-section (7),

he shall be punishable with imprisonment for a term which may extend to six months and with fine which
shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, and also with
a further fine which may extend to two thousand rupees for every day after the first during which the failure
or refusal continues.

(9) The officers of the Central Government, State Government, police or statutory authority shall

provide assistance to the inspector for the purpose of inspection, inquiry or investigation, which the
inspector may, with the prior approval of the Central Government, require.

(10) The Central Government may enter into an agreement with the Government of a foreign State for

reciprocal arrangements to assist in any inspection, inquiry or investigation under this Act or under the
corresponding law in force in that State and may, by notification, render the application of this Chapter in
relation to a foreign State with which reciprocal arrangements have been made subject to such
modifications, exceptions, conditions and qualifications as may be deemed expedient for implementing the
agreement with that State.

(11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure, 1973(2 of

1974) if, in the course of an investigation into the affairs of the company, an application is made to the
competent court in India by the inspector stating that evidence is, or may be, available in a country or place
outside India, such court may issue a letter of request to a court or an authority in such country or place,
competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted
with the facts and circumstances of the case, to record his statement made in the course of such examination
and also to require such person or any other person to produce any document or thing, which may be in his
possession pertaining to the case, and to forward all the evidence so taken or collected or the authenticated
copies thereof or the things so collected to the court in India which had issued such letter of request:

Provided that the letter of request shall be transmitted in such manner as the Central Government may

specify in this behalf:

Provided further that every statement recorded or document or thing received under this sub-section

shall be deemed to be the evidence collected during the course of investigation.

(12) Upon receipt of a letter of request from a court or an authority in a country or place outside India,

competent to issue such letter in that country or place for the examination of any person or production of
any document or thing in relation to affairs of a company under investigation in that country or place, the
Central Government may, if it thinks fit, forward such letter of request to the court concerned, which shall
thereupon summon the person before it and record his statement or cause any document or thing to be
produced, or send the letter to any inspector for investigation, who shall thereupon investigate into the
affairs of company in the same manner as the affairs of a company are investigated under this Act and the
inspector shall submit the report to such court within thirty days or such extended time as the court may
allow for further action:

Provided that the evidence taken or collected under this sub-section or authenticated copies thereof or

the things so collected shall be forwarded by the court, to the Central Government for transmission, in such
manner as the Central Government may deem fit, to the court or the authority in country or place outside
India which had issued the letter of request.

**218. Protection of employees during investigation.—(1) Notwithstanding anything contained in any**

other law for the time being in force, if—

(a) during the course of any investigation of the affairs and other matters of or relating to a

company, other body corporate or person under section 210, section 212, section 213 or section 219 or

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of the membership and other matters of or relating to a company, or the ownership of shares in or
debentures of a company or body corporate, or the affairs and other matters of or relating to a company,
other body corporate or person, under section 216; or

(b) during the pendency of any proceeding against any person concerned in the conduct and

management of the affairs of a company under Chapter XVI,

such company, other body corporate or person proposes—

(i) to discharge or suspend any employee; or

(ii) to punish him, whether by dismissal, removal, reduction in rank or otherwise; or

(iii) to change the terms of employment to his disadvantage,

the company, other body corporate or person, as the case may be, shall obtain approval of the Tribunal of
the action proposed against the employee and if the Tribunal has any objection to the action proposed, it
shall send by post notice thereof in writing to the company, other body corporate or person concerned.

(2) If the company, other body corporate or person concerned does not receive within thirty days of

making of application under sub-section (1), the approval of the Tribunal, then and only then, the company,
other body corporate or person concerned may proceed to take against the employee, the action proposed.

(3) If the company, other body corporate or person concerned is dissatisfied with the objection raised

by the Tribunal, it may, within a period of thirty days of the receipt of the notice of the objection, prefer an
appeal to the Appellate Tribunal in such manner and on payment of such fees as may be prescribed.

(4) The decision of the Appellate Tribunal on such appeal shall be final and binding on the Tribunal

and on the company, other body corporate or person concerned.

(5) For the removal of doubts, it is hereby declared that the provisions of this section shall have effect

without prejudice to the provisions of any other law for the time being in force.

**219. Power of inspector to conduct investigation into affairs of related companies, etc.—If an**

inspector appointed under section 210 or section 212 or section 213 to investigate into the affairs of a
company considers it necessary for the purposes of the investigation, to investigate also the affairs of—

(a) any other body corporate which is, or has at any relevant time been the company’s subsidiary

company or holding company, or a subsidiary company of its holding company;

(b) any other body corporate which is, or has at any relevant time been managed by any person as

managing director or as manager, who is, or was, at the relevant time, the managing director or the
manager of the company;

(c) any other body corporate whose Board of Directors comprises nominees of the company or is

accustomed to act in accordance with the directions or instructions of the company or any of its
directors; or

(d) any person who is or has at any relevant time been the company’s managing director or manager

or employee,

he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs
of the other body corporate or of the managing director or manager, in so far as he considers that the results
of his investigation are relevant to the investigation of the affairs of the company for which he is appointed.

**220. Seizure of documents by inspector.—(1) Where in the course of an investigation under this**

Chapter, the inspector has reasonable grounds to believe that the books and papers of, or relating to, any
company or other body corporate or managing director or manager of such company are likely to be
destroyed, mutilated, altered, falsified or secreted, the inspector may—

(a) enter, with such assistance as may be required, the place or places where such books and papers

are kept in such manner as may be required; and

(b) seize books and papers as he considers necessary after allowing the company to take copies of,

or extracts from, such books and papers at its cost for the purposes of his investigation.

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(2) The inspector shall keep in his custody the books and papers seized under this section for such a

period not later than the conclusion of the investigation as he considers necessary and thereafter shall return
the same to the company or the other body corporate, or, as the case may be, to the managing director or
the manager or any other person from whose custody or power they were seized:

Provided that the inspector may, before returning such books and papers as aforesaid, take copies of,

or extracts from them or place identification marks on them or any part thereof or deal with the same in
such manner as he considers necessary.

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches or seizures

shall apply mutatis mutandis to every search or seizure made under this section.

**221. Freezing of assets of company on inquiry and investigation.—(1) Where it appears to the**

Tribunal, on a reference made to it by the Central Government or in connection with any inquiry or
investigation into the affairs of a company under this Chapter or on any complaint made by such number
of members as specified under sub-section (1) of section 244 or a creditor having one lakh amount
outstanding against the company or any other person having a reasonable ground to believe that the
removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner
that is prejudicial to the interests of the company or its shareholders or creditors or in public interest, it may
by order direct that such transfer, removal or disposal shall not take place during such period not exceeding
three years as may be specified in the order or may take place subject to such conditions and restrictions as
the Tribunal may deem fit.

(2) In case of any removal, transfer or disposal of funds, assets, or properties of the company in

contravention of the order of the Tribunal under sub-section (1), the company shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every
officer of the company who is in default shall be punishable with imprisonment for a term which may
extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend
to five lakh rupees, or with both.

**222. Imposition of restrictions upon securities.—(1) Where it appears to the Tribunal, in connection**

with any investigation under section 216 or on a complaint made by any person in this behalf, that there is
good reason to find out the relevant facts about any securities issued or to be issued by a company and the
Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit,
are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it
may deem fit for such period not exceeding three years as may be specified in the order.

(2) Where securities in any company are issued or transferred or acted upon in contravention of an order

of the Tribunal under sub-section (1), the company shall be punishable with fine which shall not be less
than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company
who is in default shall be punishable with imprisonment for a term which may extend to six months or with
fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or
with both.

**223. Inspector’s report.—(1) An inspector appointed under this Chapter may, and if so directed by**

the Central Government shall, submit interim reports to that Government, and on the conclusion of the
investigation, shall submit a final report to the Central Government.

(2) Every report made under sub-section (1) shall be in writing or printed as the Central Government

may direct.

(3) A copy of the report made under sub-section (1) may be obtained [1][by members, creditors or any

other person whose interest is likely to be affected] by making an application in this regard to the Central
Government.

(4) The report of any inspector appointed under this Chapter shall be authenticated either—

(a) [2][by the seal, if any] of the company whose affairs have been investigated; or

1. Ins. by Act 1 of 2018, s. 72 (w.e.f. 9-2-2018).
2. Subs. by Act 21 of 2015, s. 18, for “by the seal” (w.e.f. 29-5-2015).

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(b) by a certificate of a public officer having the custody of the report, as provided under section

76 of the Indian Evidence Act, 1872 (1 of 1872),

and such report shall be admissible in any legal proceeding as evidence in relation to any matter contained
in the report.

(5) Nothing in this section shall apply to the report referred to in section 212.

**224. Actions to be taken in pursuance of inspector’s report.—(1) If, from an inspector’s report,**

made under section 223, it appears to the Central Government that any person has, in relation to the
company or in relation to any other body corporate or other person whose affairs have been investigated
under this Chapter been guilty of any offence for which he is criminally liable, the Central Government
may prosecute such person for the offence and it shall be the duty of all officers and other employees of the
company or body corporate to give the Central Government the necessary assistance in connection with the
prosecution.

(2) If any company or other body corporate is liable to be wound up under this Act [1][or under the

Insolvency and Bankruptcy Code, 2016 (31 of 2016)] and it appears to the Central Government from any
such report made under section 223 that it is expedient so to do by reason of any such circumstances as are
referred to in section 213, the Central Government may, unless the company or body corporate is already
being wound up by the Tribunal, cause to be presented to the Tribunal by any person authorised by the
Central Government in this behalf—

(a) a petition for the winding up of the company or body corporate on the ground that it is just and

equitable that it should be wound up;

(b) an application under section 241; or

(c) both.

(3) If from any such report as aforesaid, it appears to the Central Government that proceedings ought,

in the public interest, to be brought by the company or any body corporate whose affairs have been
investigated under this Chapter—

(a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in

connection with the promotion or formation, or the management of the affairs, of such company or
body corporate; or

(b) for the recovery of any property of such company or body corporate which has been misapplied

or wrongfully retained,

the Central Government may itself bring proceedings for winding up in the name of such company or body
corporate.

(4) The Central Government, shall be indemnified by such company or body corporate against any

costs or expenses incurred by it in, or in connection with, any proceedings brought by virtue of sub-section
(3).

(5) Where the report made by an inspector states that fraud has taken place in a company and due to

such fraud any director, key managerial personnel, other officer of the company or any other person or
entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any
other manner, the Central Government may file an application before the Tribunal for appropriate orders
with regard to disgorgement of such asset, property, or cash, as the case may be, and also for holding such
director, key managerial personnel, officer or other person liable personally without any limitation of
liability.

**225. Expenses of investigation.—(1) The expenses of, and incidental to, an investigation by an**

inspector appointed by the Central Government under this Chapter other than expenses of inspection under
section 214 shall be defrayed in the first instance by the Central Government, but shall be reimbursed by
the following persons to the extent mentioned below, namely:—

(a) any person who is convicted on a prosecution instituted, or who is ordered to pay damages or

restore any property in proceedings brought, under section 224, to the extent that he may in the same

1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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proceedings be ordered to pay the said expenses as may be specified by the court convicting such
person, or ordering him to pay such damages or restore such property, as the case may be;

(b) any company or body corporate in whose name proceedings are brought as aforesaid, to the

extent of the amount or value of any sums or property recovered by it as a result of such proceedings;

(c) unless, as a result of the investigation, a prosecution is instituted under section 224,—

(i) any company, body corporate, managing director or manager dealt with by the report of the

inspector; and

(ii) the applicants for the investigation, where the inspector was appointed under section 213,

to such extent as the Central Government may direct.

(2) Any amount for which a company or body corporate is liable under clause (b) of sub-section (1)

shall be a first charge on the sums or property mentioned in that clause.

**226. Voluntary winding up of company, etc., not to stop investigation proceedings.—An**

investigation under this Chapter may be initiated notwithstanding, and no such investigation shall be
stopped or suspended by reason only of, the fact that—

(a) an application has been made under section 241;

(b) the company has passed a special resolution for voluntary winding up; or

(c) any other proceeding for the winding up of the company is pending before the Tribunal:

Provided that where a winding up order is passed by the Tribunal in a proceeding referred to in clause

(c), the inspector shall inform the Tribunal about the pendency of the investigation proceedings before him
and the Tribunal shall pass such order as it may deem fit:

Provided further that nothing in the winding up order shall absolve any director or other employee of

the company from participating in the proceedings before the inspector or any liability as a result of the
finding by the inspector.

**227. Legal advisors and bankers not to disclose certain information.—Nothing in this Chapter shall**

require the disclosure to the Tribunal or to the Central Government or to the Registrar or to an inspector
appointed by the Central Government—

(a) by a legal adviser, of any privileged communication made to him in that capacity, except as

respects the name and address of his client; or

(b) by the bankers of any company, body corporate, or other person, of any information as to the

affairs of any of their customers, other than such company, body corporate, or person.

**228. Investigation, etc., of foreign companies.—The provisions of this Chapter shall apply mutatis**

_mutandis to inspection, inquiry or investigation in relation to foreign companies._

**229. Penalty for furnishing false statement, mutilation, destruction of documents.—Where a**

person who is required to provide an explanation or make a statement during the course of inspection,
inquiry or investigation, or an officer or other employee of a company or other body corporate which is also
under investigation,—

(a) destroys, mutilates or falsifies, or conceals or tampers or unauthorised removes, or is a party to

the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of,
documents relating to the property, assets or affairs of the company or the body corporate;

(b) makes, or is a party to the making of, a false entry in any document concerning the company or

body corporate; or

(c) provides an explanation which is false or which he knows to be false,

he shall be punishable for fraud in the manner as provided in section 447.

CHAPTER XV

COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS

**230. Power to compromise or make arrangements with creditors and members.—(1) Where a**
compromise or arrangement is proposed—

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(a) between a company and its creditors or any class of them; or

(b) between a company and its members or any class of them,

the Tribunal may, on the application of the company or of any creditor or member of the company, or in
the case of a company which is being wound up, of the liquidator,[1][appointed under this Act or under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] order a meeting of the creditors
or class of creditors, or of the members or class of members, as the case may be, to be called, held and
conducted in such manner as the Tribunal directs.

_Explanation.—For the purposes of this sub-section, arrangement includes a reorganisation of the_

company’s share capital by the consolidation of shares of different classes or by the division of shares into
shares of different classes, or by both of those methods.

(2) The company or any other person, by whom an application is made under sub-section (1), shall

disclose to the Tribunal by affidavit—

(a) all material facts relating to the company, such as the latest financial position of the company,

the latest auditor’s report on the accounts of the company and the pendency of any investigation or
proceedings against the company;

(b) reduction of share capital of the company, if any, included in the compromise or arrangement;

(c) any scheme of corporate debt restructuring consented to by not less than seventy-five per cent.

of the secured creditors in value, including—

(i) a creditor’s responsibility statement in the prescribed form;

(ii) safeguards for the protection of other secured and unsecured creditors;

(iii) report by the auditor that the fund requirements of the company after the corporate debt

restructuring as approved shall conform to the liquidity test based upon the estimates provided to
them by the Board;

(iv) where the company proposes to adopt the corporate debt restructuring guidelines specified

by the Reserve Bank of India, a statement to that effect; and

(v) a valuation report in respect of the shares and the property and all assets, tangible and

intangible, movable and immovable, of the company by a registered valuer.

(3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal under      sub
section (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the
members or class of members and the debenture-holders of the company, individually at the address
registered with the company which shall be accompanied by a statement disclosing the details of the
compromise or arrangement, a copy of the valuation report, if any, and explaining their effect on creditors,
key managerial personnel, promoters and non-promoter members, and the debenture-holders and the effect
of the compromise or arrangement on any material interests of the directors of the company or the debenture
trustees, and such other matters as may be prescribed:

Provided that such notice and other documents shall also be placed on the website of the company, if

any, and in case of a listed company, these documents shall be sent to the Securities and Exchange Board
and stock exchange where the securities of the companies are listed, for placing on their website and shall
also be published in newspapers in such manner as may be prescribed:

Provided further that where the notice for the meeting is also issued by way of an advertisement, it shall

indicate the time within which copies of the compromise or arrangement shall be made available to the
concerned persons free of charge from the registered office of the company.

(4) A notice under sub-section (3) shall provide that the persons to whom the notice is sent may vote in

the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or
arrangement within one month from the date of receipt of such notice:

1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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Provided that any objection to the compromise or arrangement shall be made only by persons holding

not less than ten per cent. of the shareholding or having outstanding debt amounting to not less than five
per cent. of the total outstanding debt as per the latest audited financial statement.

(5) A notice under sub-section (3) along with all the documents in such form as may be prescribed shall

also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the Securities
and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the Competition
Commission of India established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of
2003), if necessary, and such other sectoral regulators or authorities which are likely to be affected by the
compromise or arrangement and shall require that representations, if any, to be made by them shall be made
within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed
that they have no representations to make on the proposals.

(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing three
fourths in value of the creditors, or class of creditors or members or class of members, as the case may be,
voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such
compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the
company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in
case of a company being wound up, on the liquidator [1][appointed under this act or under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), as the case may be,] and the contributories of the company.

(7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the following

matters, namely:—

(a) where the compromise or arrangement provides for conversion of preference shares into equity

shares, such preference shareholders shall be given an option to either obtain arrears of dividend in cash
or accept equity shares equal to the value of the dividend payable;

(b) the protection of any class of creditors;
(c) if the compromise or arrangement results in the variation of the shareholders’ rights, it shall be

given effect to under the provisions of section 48;

(d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any

proceedings pending before the Board for Industrial and Financial Reconstruction established under
section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall abate;

(e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion

of the Tribunal necessary to effectively implement the terms of the compromise or arrangement:
Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate

by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any,
proposed in the scheme of compromise or arrangement is in conformity with the accounting standards
prescribed under section 133.

(8) The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty

days of the receipt of the order.

(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such

creditors or class of creditors, having at least ninety per cent. value, agree and confirm, by way of affidavit,
to the scheme of compromise or arrangement.

(10) No compromise or arrangement in respect of any buy-back of securities under this section shall be

sanctioned by the Tribunal unless such buy-back is in accordance with the provisions of section 68.

(11) Any compromise or arrangement may include takeover offer made in such manner as may be

prescribed:

Provided that in case of listed companies, takeover offer shall be as per the regulations framed by the

Securities and Exchange Board.

(12) An aggrieved party may make an application to the Tribunal in the event of any grievances with

respect to the takeover offer of companies other than listed companies in such manner as may be prescribed
and the Tribunal may, on application, pass such order as it may deem fit.

1. Ins. by Act 31 of 2016, s. 255 and The Eleventh Schedule (w.e.f. 15-11-2016).

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_Explanation.—For the removal of doubts, it is hereby declared that the provisions of section 66 shall_

not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this
section.

**231. Power of Tribunal to enforce compromise or arrangement.—(1) Where the Tribunal makes**

an order under section 230 sanctioning a compromise or an arrangement in respect of a company, it—

(a) shall have power to supervise the implementation of the compromise or arrangement; and
(b) may, at the time of making such order or at any time thereafter, give such directions in regard

to any matter or make such modifications in the compromise or arrangement as it may consider
necessary for the proper implementation of the compromise or arrangement.
(2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under section 230 cannot

be implemented satisfactorily with or without modifications, and the company is unable to pay its debts as
per the scheme, it may make an order for winding up the company and such an order shall be deemed to be
an order made under section 273.

(3) The provisions of this section shall, so far as may be, also apply to a company in respect of which

an order has been made before the commencement of this Act sanctioning a compromise or an arrangement.

**232. Merger and amalgamation of companies.—(1) Where an application is made to the Tribunal**

under section 230 for the sanctioning of a compromise or an arrangement proposed between a company
and any such persons as are mentioned in that section, and it is shown to the Tribunal—

(a) that the compromise or arrangement has been proposed for the purposes of, or in connection

with, a scheme for the reconstruction of the company or companies involving merger or the
amalgamation of any two or more companies; and

(b) that under the scheme, the whole or any part of the undertaking, property or liabilities of any

company (hereinafter referred to as the transferor company) is required to be transferred to another
company (hereinafter referred to as the transferee company), or is proposed to be divided among and
transferred to two or more companies,

the Tribunal may on such application, order a meeting of the creditors or class of creditors or the members
or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal
may direct and the provisions of sub-sections (3) to (6) of section 230 shall apply mutatis mutandis.

(2) Where an order has been made by the Tribunal under sub-section (1), merging companies or the

companies in respect of which a division is proposed, shall also be required to circulate the following for
the meeting so ordered by the Tribunal, namely:—

(a) the draft of the proposed terms of the scheme drawn up and adopted by the directors of the

merging company;

(b) confirmation that a copy of the draft scheme has been filed with the Registrar;
(c) a report adopted by the directors of the merging companies explaining effect of compromise on

each class of shareholders, key managerial personnel, promoters and non-promoter shareholders laying
out in particular the share exchange ratio, specifying any special valuation difficulties;

(d) the report of the expert with regard to valuation, if any;
(e) a supplementary accounting statement if the last annual accounts of any of the merging company

relate to a financial year ending more than six months before the first meeting of the company
summoned for the purposes of approving the scheme.
(3) The Tribunal, after satisfying itself that the procedure specified in sub-sections (1) and (2) has been

complied with, may, by order, sanction the compromise or arrangement or by a subsequent order, make
provision for the following matters, namely:—

(a) the transfer to the transferee company of the whole or any part of the undertaking, property or

liabilities of the transferor company from a date to be determined by the parties unless the Tribunal, for
reasons to be recorded by it in writing, decides otherwise;

(b) the allotment or appropriation by the transferee company of any shares, debentures, policies or

other like instruments in the company which, under the compromise or arrangement, are to be allotted
or appropriated by that company to or for any person:

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Provided that a transferee company shall not, as a result of the compromise or arrangement, hold

any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its
subsidiary or associate companies and any such shares shall be cancelled or extinguished;

(c) the continuation by or against the transferee company of any legal proceedings pending by or

against any transferor company on the date of transfer;

(d) dissolution, without winding-up, of any transferor company;

(e) the provision to be made for any persons who, within such time and in such manner as the

Tribunal directs, dissent from the compromise or arrangement;

(f) where share capital is held by any non-resident shareholder under the foreign direct investment

norms or guidelines specified by the Central Government or in accordance with any law for the time
being in force, the allotment of shares of the transferee company to such shareholder shall be in the
manner specified in the order;

(g) the transfer of the employees of the transferor company to the transferee company;

(h) where the transferor company is a listed company and the transferee company is an unlisted

company,—

(A) the transferee company shall remain an unlisted company until it becomes a listed company;

(B) if shareholders of the transferor company decide to opt out of the transferee company,

provision shall be made for payment of the value of sharesheld by them and other benefits in
accordance with a pre-determined price formula or after a valuation is made, and the arrangements
under this provision may be made by the Tribunal:

Provided that the amount of payment or valuation under this clause for anyshare shall not be less

than what has been specified by the Securities and Exchange Board under any regulations framed by
it;

(i) where the transferor company is dissolved, the fee, if any, paid by the transferor company on its

authorised capital shall be set-off against any fees payable by the transferee company on its authorised
capital subsequent to the amalgamation; and

(j) such incidental, consequential and supplemental matters as are deemed necessary to secure that

the merger or amalgamation is fully and effectively carried out:

Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate

by the company’s auditor has been filed with the Tribunal to the effect that the accounting treatment,
if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting
standards prescribed under section 133.

(4) Where an order under this section provides for the transfer of any property or liabilities, then, by

virtue of the order, that property shall be transferred to the transferee company and the liabilities shall be
transferred to and become the liabilities of the transferee company and any property may, if the order so
directs, be freed from any charge which shall by virtue of the compromise or arrangement, cease to have
effect.

(5) Every company in relation to which the order is made shall cause a certified copy of the order to be

filed with the Registrar for registration within thirty days of the receipt of certified copy of the order.

(6) The scheme under this section shall clearly indicate an appointed date from which it shall be

effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the
appointed date.

(7) Every company in relation to which the order is made shall, until the completion of the scheme, file

a statement in such form and within such time as may be prescribed with the Registrar every year duly
certified by a chartered accountant or a cost accountant or a company secretary in practice indicating
whether the scheme is being complied with in accordance with the orders of the Tribunal or not.

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1[(8) If a company fails to comply with sub-section (5), the company and every officer of the company

who is in default shall be liable to a penalty of twenty thousand rupees, and where the failure is a continuing
one, with a further penalty of one thousand rupees for each day after the first during which such failure
continues, subject to a maximum of three lakh rupees.]

_Explanation.—For the purposes of this section,—_

(i) in a scheme involving a merger, where under the scheme the undertaking, property and

liabilities of one or more companies, including the company in respect of which the compromise
or arrangement is proposed, are to be transferred to another existing company, it is a merger by
absorption, or where the undertaking, property and liabilities of two or more companies, including
the company in respect of which the compromise or arrangement is proposed, are to be transferred
to a new company, whether or not a public company, it is a merger by formation of a new company;

(ii) references to merging companies are in relation to a merger by absorption, to the transferor

and transferee companies, and, in relation to a merger by formation of a new company, to the
transferor companies;

(iii) a scheme involves a division, where under the scheme the undertaking, property and

liabilities of the company in respect of which the compromise or arrangement is proposed are to be
divided among and transferred to two or more companies each of which is either an existing
company or a new company; and

(iv) property includes assets, rights and interests of every description and liabilities include

debts and obligations of every description.

**233. Merger or amalgamation of certain companies.—(1) Notwithstanding the provisions of section**

230 and section 232, a scheme of merger or amalgamation may be entered into between two or more small
companies or between a holding company and its wholly-owned subsidiary company or such other class or
classes of companies as may be prescribed, subject to the following, namely:—

(a) a notice of the proposed scheme inviting objections or suggestions, if any, from the Registrar

and Official Liquidators where registered office of the respective companies are situated or persons
affected by the scheme within thirty days is issued by the transferor company or companies and the
transferee company;

(b) the objections and suggestions received are considered by the companies in their respective

general meetings and the scheme is approved by the respective members or class of members at a
general meeting holding at least ninety per cent. of the total number of shares;

(c) each of the companies involved in the merger files a declaration of solvency, in the prescribed

form, with the Registrar of the place where the registered office of the company is situated; and

(d) the scheme is approved by majority representing nine-tenths in value of the creditors or class

of creditors of respective companies indicated in a meeting convened by the company by giving a notice
of twenty-one days along with the scheme to its creditors for the purpose or otherwise approved in
writing.

(2) The transferee company shall file a copy of the scheme so approved in the manner as may be

prescribed, with the Central Government, Registrar and the Official Liquidator where the registered office
of the company is situated.

(3) On the receipt of the scheme, if the Registrar or the Official Liquidator has no objections or

suggestions to the scheme, the Central Government shall register the same and issue a confirmation thereof
to the companies.

(4) If the Registrar or Official Liquidator has any objections or suggestions, he may communicate the

same in writing to the Central Government within a period of thirty days:

1. Subs. by Act 29 of 2020, s. 42, for sub-section (8) (w.e.f. 21-12-2020).

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Provided that if no such communication is made, it shall be presumed that he has no objection to the

scheme.

(5) If the Central Government after receiving the objections or suggestions or for any reason is of the

opinion that such a scheme is not in public interest or in the interest of the creditors, it may file an application
before the Tribunal within a period of sixty days of the receipt of the scheme under sub-section (2) stating
its objections and requesting that the Tribunal may consider the scheme under section 232.

(6) On receipt of an application from the Central Government or from any person, if the Tribunal, for

reasons to be recorded in writing, is of the opinion that the scheme should be considered as per the procedure
laid down in section 232, the Tribunal may direct accordingly or it may confirm the scheme by passing
such order as it deems fit:

Provided that if the Central Government does not have any objection to the scheme or it does not file

any application under this section before the Tribunal, it shall be deemed that it has no objection to the
scheme.

(7) A copy of the order under sub-section (6) confirming the scheme shall be communicated to the

Registrar having jurisdiction over the transferee company and the persons concerned and the Registrar shall
register the scheme and issue a confirmation thereof to the companies and such confirmation shall be
communicated to the Registrars where transferor company or companies were situated.

(8) The registration of the scheme under sub-section (3) or sub-section (7) shall be deemed to have the

effect of dissolution of the transferor company without process of winding-up.

(9) The registration of the scheme shall have the following effects, namely:—

(a) transfer of property or liabilities of the transferor company to the transferee company so that

the property becomes the property of the transferee company and the liabilities become the liabilities
of the transferee company;

(b) the charges, if any, on the property of the transferor company shall be applicable and enforceable

as if the charges were on the property of the transferee company;

(c) legal proceedings by or against the transferor company pending before any court of law shall

be continued by or against the transferee company; and

(d) where the scheme provides for purchase of shares held by the dissenting shareholders or

settlement of debt due to dissenting creditors, such amount, to the extent it is unpaid, shall become the
liability of the transferee company.

(10) A transferee company shall not on merger or amalgamation, hold any shares in its own name or in

the name of any trust either on its behalf or on behalf of any of its subsidiary or associate company and all
such shares shall be cancelled or extinguished on the merger or amalgamation.

(11) The transferee company shall file an application with the Registrar along with the scheme

registered, indicating the revised authorised capital and pay the prescribed fees due on revised capital:

Provided that the fee, if any, paid by the transferor company on its authorised capital prior to its merger

or amalgamation with the transferee company shall be set-off against the fees payable by the transferee
company on its authorised capital enhanced by the merger or amalgamation.

(12) The provisions of this section shall mutatis mutandis apply to a company or companies specified

in sub-section (1) in respect of a scheme of compromise or arrangement referred to in section 230 or division
or transfer of a company referred to clause (b) of sub-section (1) of section 232.

(13) The Central Government may provide for the merger or amalgamation of companies in such

manner as may be prescribed.

(14) A company covered under this section may use the provisions of section 232 for the approval of

any scheme for merger or amalgamation.

**234. Merger or amalgamation of company with foreign company.—(1) The provisions of this**

Chapter unless otherwise provided under any other law for the time being in force, shall apply _mutatis_

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_mutandis_ to schemes of mergers and amalgamations between companies registered under this Act and
companies incorporated in the jurisdictions of such countries as may be notified from time to time by the
Central Government:

Provided that the Central Government may make rules, in consultation with the Reserve Bank of India,

in connection with mergers and amalgamations provided under this section.

(2) Subject to the provisions of any other law for the time being in force, a foreign company, may with

the prior approval of the Reserve Bank of India, merge into a company registered under this Act or _vice_
_versa_ and the terms and conditions of the scheme of merger may provide, among other things, for the
payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts,
or partly in cash and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up
for the purpose.

_Explanation.—For the purposes of sub-section (2), the expression “foreign company” means any_

company or body corporate incorporated outside India whether having a place of business in India or not.

**235. Power to acquire shares of shareholders dissenting from scheme or contract approved by**

**majority.—(1) Where a scheme or contract involving the transfer of shares or any class of shares in a**
company (the transferor company) to another company (the transferee company) has, within four months
after making of an offer in that behalf by the transferee company, been approved by the holders of not less
than nine-tenths in value of the shares whose transfer is involved, other than shares already held at the date
of the offer by, or by a nominee of the transferee company or its subsidiary companies, the transferee
company may, at any time within two months after the expiry of the said four months, give notice in the
prescribed manner to any dissenting shareholder that it desires to acquire his shares.

(2) Where a notice under sub-section (1) is given, the transferee company shall, unless on an application

made by the dissenting shareholder to the Tribunal, within one month from the date on which the notice
was given and the Tribunal thinks fit to order otherwise, be entitled to and bound to acquire those shares
on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be
transferred to the transferee company.

(3) Where a notice has been given by the transferee company under sub-section (1) and the Tribunal

has not, on an application made by the dissenting shareholder, made an order to the contrary, the transferee
company shall, on the expiry of one month from the date on which the notice has been given, or, if an
application to the Tribunal by the dissenting shareholder is then pending, after that application has been
disposed of, send a copy of the notice to the transferor company together with an instrument of transfer, to
be executed on behalf of the shareholder by any person appointed by the transferor company and on its own
behalf by the transferee company, and pay or transfer to the transferor company the amount or other
consideration representing the price payable by the transferee company for the shares which, by virtue of
this section, that company is entitled to acquire, and the transferor company shall—

(a) thereupon register the transferee company as the holder of those shares; and

(b) within one month of the date of such registration, inform the dissenting shareholders of the fact

of such registration and of the receipt of the amount or other consideration representing the price
payable to them by the transferee company.

(4) Any sum received by the transferor company under this section shall be paid into a separate bank

account, and any such sum and any other consideration so received shall be held by that company in trust
for the several persons entitled to the shares in respect of which the said sum or other consideration were
respectively received and shall be disbursed to the entitled shareholders within sixty days.

(5) In relation to an offer made by a transferee company to shareholders of a transferor company before

the commencement of this Act, this section shall have effect with the following modifications, namely:—

(a) in sub-section (1), for the words “the shares whose transfer is involved other than shares already

held at the date of the offer by, or by a nominee of, the transferee company or its subsidiaries,”, the
words “the shares affected” shall be substituted; and

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(b) in sub-section (3), the words “together with an instrument of transfer, to be executed on behalf

of the shareholder by any person appointed by the transferee company and on its own behalf by the
transferor company” shall be omitted.

_Explanation.—For the purposes of this section, “dissenting shareholder” includes a shareholder who_

has not assented to the scheme or contract and any shareholder who has failed or refused to transfer his
shares to the transferee company in accordance with the scheme or contract.

**236. Purchase of minority shareholding.—(1) In the event of an acquirer, or a person acting in concert**

with such acquirer, becoming registered holder of ninety per cent. or more of the issued equity share capital
of a company, or in the event of any person or group of persons becoming ninety per cent. majority or
holding ninety per cent. of the issued equity share capital of a company, by virtue of an amalgamation,
share exchange, conversion of securities or for any other reason, such acquirer, person or group of persons,
as the case may be, shall notify the company of their intention to buy the remaining equity shares.

(2) The acquirer, person or group of persons under sub-section (1) shall offer to the minority

shareholders of the company for buying the equity shares held by such shareholders at a price determined
on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed.

(3) Without prejudice to the provisions of sub-sections (1) and (2), the minority shareholders of the

company may offer to the majority shareholders to purchase the minority equity shareholding of the
company at the price determined in accordance with such rules as may be prescribed under sub-section (2).

(4) The majority shareholders shall deposit an amount equal to the value of shares to be acquired by

them under sub-section (2) or sub-section (3), as the case may be, in a separate bank account to be operated
by the [1][company whose shares are being transferred] for at least one year for payment to the minority
shareholders and such amount shall be disbursed to the entitled shareholders within sixty days:

Provided that such disbursement shall continue to be made to the entitled shareholders for a period of

one year, who for any reason had not been made disbursement within the said period of sixty days or if the
disbursement have been made within the aforesaid period of sixty days, fail to receive or claim payment
arising out of such disbursement.

(5) In the event of a purchase under this section, the [2][company whose shares are being transferred]

shall act as a transfer agent for receiving and paying the price to the minority shareholders and for taking
delivery of the shares and delivering such shares to the majority, as the case may be.

(6) In the absence of a physical delivery of shares by the shareholders within the time specified by the

company, the share certificates shall be deemed to be cancelled, and the [1][company whose shares are being
transferred] shall be authorised to issue shares in lieu of the cancelled shares and complete the transfer in
accordance with law and make payment of the price out of deposit made under sub-section (4) by the
majority in advance to the minority by dispatch of such payment.

(7) In the event of a majority shareholder or shareholders requiring a full purchase and making payment

of price by deposit with the company for any shareholder or shareholders who have died or ceased to exist,
or whose heirs, successors, administrators or assignees have not been brought on record by transmission,
the right of such shareholders to make an offer for sale of minority equity shareholding shall continue and
be available for a period of three years from the date of majority acquisition or majority shareholding.

(8) Where the shares of minority shareholders have been acquired in pursuance of this section and as

on or prior to the date of transfer following such acquisition, the shareholders holding seventy-five per cent.
or more minority equity shareholding negotiate or reach an understanding on a higher price for any transfer,
proposed or agreed upon, of the shares held by them without disclosing the fact or likelihood of transfer
taking place on the basis of such negotiation, understanding or agreement, the majority shareholders shall
share the additional compensation so received by them with such minority shareholders on a pro rata basis.

1. Subs. by Act 1 of 2018, s. 73, for “transferor company” (w.e.f. 9-2-2018).
2. Subs. by Act 1 of 2018, s. 73, for “transferor company” (w.e.f. 9-2-2018).

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_Explanation.—For the purposes of this section, the expressions “acquirer” and “person acting in_

concert” shall have the meanings respectively assigned to them in clause (b) and clause (e) of       subregulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997.

(9) When a shareholder or the majority equity shareholder fails to acquire full purchase of the shares

of the minority equity shareholders, then, the provisions of this section shall continue to apply to the residual
minority equity shareholders, even though,—

(a) the shares of the company of the residual minority equity shareholder had been delisted; and

(b) the period of one year or the period specified in the regulations made by the Securities and

Exchange Board under the Securities and Exchange Board of India Act, 1992 (15 of 1992), had elapsed.

**237. Power of Central Government to provide for amalgamation of companies in public**

**interest.—(1) Where the Central Government is satisfied that it is essential in the public interest that two**
or more companies should amalgamate, the Central Government may, by order notified in the Official
Gazette, provide for the amalgamation of those companies into a single company with such constitution,
with such property, powers, rights, interests, authorities and privileges, and with such liabilities, duties and
obligations, as may be specified in the order.

(2) The order under sub-section (1) may also provide for the continuation by or against the transferee

company of any legal proceedings pending by or against any transferor company and such consequential,
incidental and supplemental provisions as may, in the opinion of the Central Government, be necessary to
give effect to the amalgamation.

(3) Every member or creditor, including a debenture holder, of each of the transferor companies before

the amalgamation shall have, as nearly as may be, the same interest in or rights against the transferee
company as he had in the company of which he was originally a member or creditor, and in case the interest
or rights of such member or creditor in or against the transferee company are less than his interest in or
rights against the original company, he shall be entitled to compensation to that extent, which shall be
assessed by such authority as may be prescribed and every such assessment shall be published in the Official
Gazette, and the compensation so assessed shall be paid to the member or creditor concerned by the
transferee company.

(4) Any person aggrieved by any assessment of compensation made by the prescribed authority under

sub-section (3) may, within a period of thirty days from the date of publication of such assessment in the
Official Gazette, prefer an appeal to the Tribunal and thereupon the assessment of the compensation shall
be made by the Tribunal.

(5) No order shall be made under this section unless—

(a) a copy of the proposed order has been sent in draft to each of the companies concerned;

(b) the time for preferring an appeal under sub-section (4) has expired, or where any such appeal

has been preferred, the appeal has been finally disposed off; and

(c) the Central Government has considered, and made such modifications, if any, in the draft order

as it may deem fit in the light of suggestions and objections which may be received by it from any such
company within such period as the Central Government may fix in that behalf, not being less than two
months from the date on which the copy aforesaid is received by that company, or from any class of
shareholders therein, or from any creditors or any class of creditors thereof.

(6) The copies of every order made under this section shall, as soon as may be after it has been made,

be laid before each House of Parliament.

**238. Registration of offer of schemes involving transfer of shares.—(1) In relation to every offer of**

a scheme or contract involving the transfer of shares or any class of shares in the transferor company to the
transferee company under section 235,—

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(a) every circular containing such offer and recommendation to the members of the transferor

company by its directors to accept such offer shall be accompanied by such information and in such
manner as may be prescribed;

(b) every such offer shall contain a statement by or on behalf of the transferee company, disclosing

the steps it has taken to ensure that necessary cash will be available; and

(c) every such circular shall be presented to the Registrar for registration and no such circular shall

be issued until it is so registered:

Provided that the Registrar may refuse, for reasons to be recorded in writing, to register any such

circular which does not contain the information required to be given under clause (a) or which sets out such
information in a manner likely to give a false impression, and communicate such refusal to the parties
within thirty days of the application.

(2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to register any circular

under sub-section (1).

(3) The director who issues a circular which has not been presented for registration and registered under

clause (c) of sub-section (1), shall be [1][liable to a penalty of one lakh rupees.]

**239. Preservation of books and papers of amalgamated companies.—The books and papers of a**

company which has been amalgamated with, or whose shares have been acquired by, another company
under this Chapter shall not be disposed of without the prior permission of the Central Government and
before granting such permission, that Government may appoint a person to examine the books and papers
or any of them for the purpose of ascertaining whether they contain any evidence of the commission of an
offence in connection with the promotion or formation, or the management of the affairs, of the transferor
company or its amalgamation or the acquisition of its shares.

**240. Liability of officers in respect of offences committed prior to merger, amalgamation, etc.—**

Notwithstanding anything in any other law for the time being in force, the liability in respect of offences
committed under this Act by the officers in default, of the transferor company prior to its merger,
amalgamation or acquisition shall continue after such merger, amalgamation or acquisition.

CHAPTER XVI

PREVENTION OF OPPRESSION AND MISMANAGEMENT

**241. Application to Tribunal for relief in cases of oppression, etc.—(1) Any member of a company**

who complains that—

(a) the affairs of the company have been or are being conducted in a manner prejudicial to public

interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner
prejudicial to the interests of the company; or

(b) the material change, not being a change brought about by, or in the interests of, any creditors,

including debenture holders or any class of shareholders of the company, has taken place in the
management or control of the company, whether by an alteration in the Board of Directors, or manager,
or in the ownership of the company’s shares, or if it has no share capital, in its membership, or in any
other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company
will be conducted in a manner prejudicial to its interests or its members or any class of members,

may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under
this Chapter.

(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted

in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.

1. Subs. by Act 22 of 2019, s. 32, for “punishable with fine which shall not be less than twenty-five thousand rupees but which

may extend to five lakh rupees” (w.e.f. 2-11-2018).

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1[Provided that the applicants under this sub-section, in respect of such company or class of companies,

as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with
by such Bench.]

1[(3) Where in the opinion of the Central Government there exist circumstances suggesting that—

(a) any person concerned in the conduct and management of the affairs of a company is or has been

in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out
his obligations and functions under the law or of breach of trust;

(b) the business of a company is not or has not been conducted and managed by such person in

accordance with sound business principle or prudent commercial practices;

(c) a company is or has been conducted and managed by such person in a manner which likely to

cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which
such company pertains; or

(d) the business of a company is or has been conducted and managed by such person with intent to

default its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or
in a manner prejudicial to public interest,

the Central Government may intiate a case against such person and refer the same to the Tribunal with a
request that the Tribunal may inquire into the case and record a decision as to whether or not such person
is a fit and proper person to hold the officer of director or any other office connected with the conduct and
management of any company.

(4) The person against whom a case is referred to the Tribunal under sub-section (3), shall be jointed

as a respondent to the application.

(5) Every application under sub-section (3)—

(a) shall contain a concise statement of such circumstances and materials as the Central

Government may consider necessary for the purpose of the inquiry; and

(b) shall be signed and verified in the manner laid down in the Code of Civil Procedure (5 of

1908), for the signature and verification of a plaint in a suit by the Central Government.]

**242. Powers of Tribunal.—(1) If, on any application made under section 241, the Tribunal is of the**

opinion—

(a) that the company’s affairs have been or are being conducted in a manner prejudicial or

oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the
interests of the company; and

(b) that to wind up the company would unfairly prejudice such member or members, but that

otherwise the facts would justify the making of a winding-up order on the ground that it was just and
equitable that the company should be wound up,

the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks
fit.

(2) Without prejudice to the generality of the powers under sub-section (1), an order under that     sub
section may provide for—

(a) the regulation of conduct of affairs of the company in future;

(b) the purchase of shares or interests of any members of the company by other members thereof

or by the company;

(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of

its share capital;

(d) restrictions on the transfer or allotment of the shares of the company;

1. Ins. by Act 22 of 2019, s. 33 (w.e.f. 15-8-2019).

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(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between

the company and the managing director, any other director or manager, upon such terms and conditions
as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case;

(f) the termination, setting aside or modification of any agreement between the company and any

person other than those referred to in clause (e):

Provided that no such agreement shall be terminated, set aside or modified except after due notice

and after obtaining the consent of the party concerned;

(g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to

property made or done by or against the company within three months before the date of the application
under this section, which would, if made or done by or against an individual, be deemed in his
insolvency to be a fraudulent preference;

(h) removal of the managing director, manager or any of the directors of the company;

(i) recovery of undue gains made by any managing director, manager or director during the period

of his appointment as such and the manner of utilisation of the recovery including transfer to Investor
Education and Protection Fund or repayment to identifiable victims;

(j) the manner in which the managing director or manager of the company may be appointed

subsequent to an order removing the existing managing director or manager of the company made under
clause (h);

(k) appointment of such number of persons as directors, who may be required by the Tribunal to

report to the Tribunal on such matters as the Tribunal may direct;

(l) imposition of costs as may be deemed fit by the Tribunal;

(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision

should be made.

(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company

with the Registrar within thirty days of the order of the Tribunal.

(4) The Tribunal may, on the application of any party to the proceeding, make any interim order which

it thinks fit for regulating the conduct of the company’s affairs upon such terms and conditions as appear
to it to be just and equitable.

1[(4A) At the conclusion of the hearing of the case in respect of sub-section (3) of section 241, the

Tribunal shall record its decision stating therein specifically as to whether or not respondent is a fit and
proper person to hold the officer of director or any other officer connected with the conduct and
management of any company.]

(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or

articles of a company, then, notwithstanding any other provision of this Act, the company shall not have
power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any
alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.

(6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum

or articles of a company shall, in all respects, have the same effect as if they had been duly made by the
company in accordance with the provisions of this Act and the said provisions shall apply accordingly to
the memorandum or articles so altered.

(7) A certified copy of every order altering, or giving leave to alter, a company’s memorandum or

articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who
shall register the same.

(8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with

fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every

1. Ins. by Act 22 of 2019, s. 34 (w.e.f. 15-8-2019).

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officer of the company who is in default shall be punishable [1]*** with fine which shall not be less than
twenty-five thousand rupees but which may extend to [2][one lakh rupees].

**243. Consequence of termination or modification of certain agreements.—(1) Where an order made**

under section 242 terminates, sets aside or modifies an agreement such as is referred to in sub-section (2)
of that section,—

(a) such order shall not give rise to any claims whatever against the company by any person for

damages or for compensation for loss of office or in any other respect either in pursuance of the
agreement or otherwise;

(b) no managing director or other director or manager whose agreement is so terminated or set aside

shall, for a period of five years from the date of the order terminating or setting aside the agreement,
without the leave of the Tribunal, be appointed, or act, as the managing director or other director or
manager of the company:

Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to apply

for leave has been served on the Central Government and that Government has been given a reasonable
opportunity of being heard in the matter.

3[(1A) The person who is not a fit and proper person pursuant to sub-section (4A) of section 242 shall

not hold the officer of a director or any other officer connected with the conduct and management of the
affairs of any other officer connected with the conduct and management of the affairs of any company for
a period of five years from the date of the said decision:

Provided that the Central Government may, with the leave of the Tribunal, permit such person to hold

any such office before the expiry of the said period of five years.

(1B) Notwithstanding anything contained in any other provisions of this Act, or any other law for the

time being in force, or any contract, memorandum or articles, on the removal of a person from the officer
of a director or any other officer connected with the conduct and management of the affairs of the company,
that person shall not be entitled to, or be paid, any compensation for the loss or termination of officer.]

(2) Any person who knowingly acts as a managing director or other director or manager of a company

in contravention of clause (b) of sub-section (1)[ 4][or sub-section (1A)], and every other director of the
company who is knowingly a party to such contravention, shall be punishable [5]*** with fine which may
extend to [6][five lakh rupees].

**244. Right to apply under section 241.—(1) The following members of a company shall have the**

right to apply under section 241, namely:—

(a) in the case of a company having a share capital, not less than one hundred members of the

company or not less than one-tenth of the total number of its members, whichever is less, or any member
or members holding not less than one-tenth of the issued share capital of the company, subject to the
condition that the applicant or applicants has or have paid all calls and other sums due on his or their
shares;

(b) in the case of a company not having a share capital, not less than one-fifth of the total number

of its members:

Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the

requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241.

_Explanation.—For the purposes of this sub-section, where any share or shares are held by two or more_

persons jointly, they shall be counted only as one member.

1. The words “with imprisonment for a term which may extend to six months or” omitted by Act 29 of 2020, s. 43

(w.e.f. 21-12-2020).

2. Subs. by s. 43, ibid., for “one lakh rupees, or with both” (w.e.f. 21-12-2020).
3. Ins. by Act 22 of 2019, s. 35 (w.e.f. 15-8-2019).
4. Ins. by Act 22 of 2019, s. 35 (w.e.f. 15-8-2019).
5. The words “with imprisonment for a term which may extend to six months or” omitted by Act 29 of 2020, s. 44

(w.e.f. 21-12-2020).

6. Subs. by s. 44, ibid., for “five lakh rupees, or with both” (w.e.f. 21-12-2020).

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(2) Where any members of a company are entitled to make an application under sub-section (1), any

one or more of them having obtained the consent in writing of the rest, may make the application on behalf
and for the benefit of all of them.

**245. Class action.—(1) Such number of member or members, depositor or depositors or any class of**

them, as the case may be, as are indicated in sub-section (2) may, if they are of the opinion that the
management or conduct of the affairs of the company are being conducted in a manner prejudicial to the
interests of the company or its members or depositors, file an application before the Tribunal on behalf of
the members or depositors for seeking all or any of the following orders, namely:—

(a) to restrain the company from committing an act which is ultra vires the articles or memorandum

of the company;

(b) to restrain the company from committing breach of any provision of the company’s

memorandum or articles;

(c) to declare a resolution altering the memorandum or articles of the company as void if the

resolution was passed by suppression of material facts or obtained by mis-statement to the members or
depositors;

(d) to restrain the company and its directors from acting on such resolution;

(e) to restrain the company from doing an act which is contrary to the provisions of this Act or any

other law for the time being in force;

(f) to restrain the company from taking action contrary to any resolution passed by the members;

(g) to claim damages or compensation or demand any other suitable action from or against—

(i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or

conduct or any likely act or omission or conduct on its or their part;

(ii) the auditor including audit firm of the company for any improper or misleading statement

of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct;
or

(iii) any expert or advisor or consultant or any other person for any incorrect or misleading

statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any
likely act or conduct on his part;

(h) to seek any other remedy as the Tribunal may deem fit.

(2) Where the members or depositors seek any damages or compensation or demand any other suitable

action from or against an audit firm, the liability shall be of the firm as well as of each partner who was
involved in making any improper or misleading statement of particulars in the audit report or who acted in
a fraudulent, unlawful or wrongful manner.
(3) (i) The requisite number of members provided in sub-section (1) shall be as under:—

(a) in the case of a company having a share capital, not less than one hundred members of the

company or not less than such percentage of the total number of its members as may be prescribed,
whichever is less, or any member or members holding not less than such percentage of the issued share
capital of the company as may be prescribed, subject to the condition that the applicant or applicants
has or have paid all calls and other sums due on his or their shares;

(b) in the case of a company not having a share capital, not less than one-fifth of the total number

of its members.

(ii) The requisite number of depositors provided in sub-section (1) shall not be less than one hundred

depositors or not less than such percentage of the total number of depositors as may be prescribed,
whichever is less, or any depositor or depositors to whom the company owes such percentage of total
deposits of the company as may be prescribed.

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(4) In considering an application under sub-section (1), the Tribunal shall take into account, in

particular—

(a) whether the member or depositor is acting in good faith in making the application for seeking

an order;

(b) any evidence before it as to the involvement of any person other than directors or officers of the

company on any of the matters provided in clauses (a) to (f) of sub-section (1);

(c) whether the cause of action is one which the member or depositor could pursue in his own right

rather than through an order under this section;

(d) any evidence before it as to the views of the members or depositors of the company who have

no personal interest, direct or indirect, in the matter being proceeded under this section;

(e) where the cause of action is an act or omission that is yet to occur, whether the act or omission

could be, and in the circumstances would be likely to be—

(i) authorised by the company before it occurs; or

(ii) ratified by the company after it occurs;

(f) where the cause of action is an act or omission that has already occurred, whether the act or

omission could be, and in the circumstances would be likely to be, ratified by the company.

(5) If an application filed under sub-section (1) is admitted, then the Tribunal shall have regard to the

following, namely:—

(a) public notice shall be served on admission of the application to all the members or depositors

of the class in such manner as may be prescribed;

(b) all similar applications prevalent in any jurisdiction should be consolidated into a single

application and the class members or depositors should be allowed to choose the lead applicant and in
the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall
have the power to appoint a lead applicant, who shall be in charge of the proceedings from the
applicant’s side;

(c) two class action applications for the same cause of action shall not be allowed;

(d) the cost or expenses connected with the application for class action shall be defrayed by the

company or any other person responsible for any oppressive act.

(6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors

and auditor including audit firm or expert or consultant or advisor or any other person associated with the
company.

(7) Any company which fails to comply with an order passed by the Tribunal under this section shall

be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five
lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for
a term which may extend to three years and with fine which shall not be less than twenty-five thousand
rupees but which may extend to one lakh rupees.

(8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for

reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to
the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order.

(9) Nothing contained in this section shall apply to a banking company.
(10) Subject to the compliance of this section, an application may be filed or any other action may be

taken under this section by any person, group of persons or any association of persons representing the
persons affected by any act or omission, specified in sub-section (1).

**246. Application of certain provisions to proceedings under section 241 or section 245.—The**

provisions of sections 337 to 341 (both inclusive) shall apply mutatis mutandis, in relation to an application
made to the Tribunal under section 241 or section 245.

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CHAPTER XVII

REGISTERED VALUERS

**247. Valuation by registered valuers.—(1) Where a valuation is required to be made in respect of any**

property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the
assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by [1][a
person having such qualifications and experience, registered as a valuer and being a member of an
organisation recognised, in such manner, on such terms and conditions as may be prescribed] and appointed
by the audit committee or in its absence by the Board of Directors of that company.

(2) The valuer appointed under sub-section (1) shall,—

(a) make an impartial, true and fair valuation of any assets which may be required to be valued;
(b) exercise due diligence while performing the functions as valuer;
(c) make the valuation in accordance with such rules as may be prescribed; and
(d) not undertake valuation of any assets in which he has a direct or indirect interest or becomes so

interested at any time [2][during a period of three years prior to his appointments as valuer or three years
after the valuation of assets was conducted by him].
(3) If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall

be [3][liable to a penalty of fifty thousand rupees]:

Provided that if the valuer has contravened such provisions with the intention to defraud the company

or its members, he shall be punishable with imprisonment for a term which may extend to one year and
with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

(4) Where a valuer has been convicted under sub-section (3), he shall be liable to—

(i) refund the remuneration received by him to the company; and
(ii) pay for damages to the company or to any other person for loss arising out of incorrect or

misleading statements of particulars made in his report.

CHAPTER XVIII

REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES

**248. Power of Registrar to remove name of company from register of companies.—(1) Where the**

Registrar has reasonable cause to believe that—

(a) a company has failed to commence its business within one year of its incorporation;[4][or]

5*     -     -     -     
(c) a company is not carrying on any business or operation for a period of two immediately

preceding financial years and has not made any application within such period for obtaining the status
of a dormant company under [6][section 455; or]

7[(d) the subscribers to the memorandum have not paid the subscription which they had undertaken

to pay at the time of incorporation of a company and a declaration to this effect has not been filed within
one hundred and eighty days of its incorporation under sub-section (1) of section 10A; or

(e) the company is not carrying on any business or operations, as revealed after the physical

verification carried out under sub-section (9) of section 12.]

he shall send a notice to the company and all the directors of the company, of his intention to remove
the name of the company from the register of companies and requesting them to send their
representations along with copies of the relevant documents, if any, within a period of thirty days from
the date of the notice.

1. Subs. by Notification No. S.O. 3400(E), s. 2 for certain words (w.e.f. 23-10-2017).
2. Subs. by Act 1 of 2018, s. 74, for “during or after the valuation of assets” (w.e.f. 9-2-2018).
3. Subs. by vide Notification No. S.O. 1303(E), for certain words (w.e.f. 24-3-2021).
4. Ins. by Act 21 of 2015, s. 19 (w.e.f. 29-5-2015).
5. Clause (b) omitted by s. 19, ibid. (w.e.f. 29-5-2015).
6. Subs. by Act 22 of 2019, s. 36, for “section 455,” (w.e.f. 2-11-2018).
7. Ins. by s. 36, ibid. (w.e.f. 2-11-2018).

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(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its

liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share
capital, file an application in the prescribed manner to the Registrar for removing the name of the company
from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar
shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:

Provided that in the case of a company regulated under a special Act, approval of the regulatory body

constituted or established under that Act shall also be obtained and enclosed with the application.

(3) Nothing in sub-section (2) shall apply to a company registered under section 8.

(4) A notice issued under sub-section (1) or sub-section (2) shall be published in the prescribed manner

and also in the Official Gazette for the information of the general public.

(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is

shown by the company, strike off its name from the register of companies, and shall publish notice thereof
in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand
dissolved.

(6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient

provision has been made for the realisation of all amount due to the company and for the payment or
discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain
necessary undertakings from the managing director, director or other persons in charge of the management
of the company:

Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company

shall be made available for the payment or discharge of all its liabilities and obligations even after the date
of the order removing the name of the company from the register of companies.

(7) The liability, if any, of every director, manager or other officer who was exercising any power of

management, and of every member of the company dissolved under sub-section (5), shall continue and may
be enforced as if the company had not been dissolved.

(8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of

which has been struck off from the register of companies.

**249. Restrictions on making application under section 248 in certain situations.—(1) An**

application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time
in the previous three months, the company—

(a) has changed its name or shifted its registered office from one State to another;

(b) has made a disposal for value of property or rights held by it, immediately before cesser of trade

or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading
or otherwise carrying on of business;

(c) has engaged in any other activity except the one which is necessary or expedient for the purpose

of making an application under that section, or deciding whether to do so or concluding the affairs of
the company, or complying with any statutory requirement;

(d) has made an application to the Tribunal for the sanctioning of a compromise or arrangement

and the matter has not been finally concluded; or

1[(e) is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy

Code, 2016 (31 of 2016).]

(2) If a company files an application under sub-section (2) of section 248 in violation of sub-section

(1), it shall be punishable with fine which may extend to one lakh rupees.

(3) An application filed under sub-section (2) of section 248 shall be withdrawn by the company or

rejected by the Registrar as soon as conditions under sub-section (1) are brought to his notice.

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause (e) (w.e.f. 15-11-2016).

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**250. Effect of company notified as dissolved.—Where a company stands dissolved under section 248,**

it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate
as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from
such date except for the purpose of realising the amount due to the company and for the payment or
discharge of the liabilities or obligations of the company.

**251. Fraudulent application for removal of name.—(1) Where it is found that an application by a**

company under sub-section (2) of section 248 has been made with the object of evading the liabilities of
the company or with the intention to deceive the creditors or to defraud any other persons, the persons in
charge of the management of the company shall, notwithstanding that the company has been notified as
dissolved—

(a) be jointly and severally liable to any person or persons who had incurred loss or damage as a

result of the company being notified as dissolved; and

(b) be punishable for fraud in the manner as provided in section 447.

(2) Without prejudice to the provisions contained in sub-section (1), the Registrar may also recommend

prosecution of the persons responsible for the filing of an application under sub-section (2) of section 248.

**252. Appeal to Tribunal.—(1) Any person aggrieved by an order of the Registrar, notifying a company**

as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the
date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the
company from the register of companies is not justified in view of the absence of any of the grounds on
which the order was passed by the Registrar, it may order restoration of the name of the company in the
register of companies:

Provided that before passing any order under this section, the Tribunal shall give a reasonable

opportunity of making representations and of being heard to the Registrar, the company and all the persons
concerned:

Provided further that if the Registrar is satisfied, that the name of the company has been struck off from

the register of companies either inadvertently or on the basis of incorrect information furnished by the
company or its directors, which requires restoration in the register of companies, he may within a period of
three years from the date of passing of the order dissolving the company under section 248, file an
application before the Tribunal seeking restoration of name of such company.

(2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within

thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the
company to be restored in the register of companies and shall issue a fresh certificate of incorporation.

(3) If a company, or any member or creditor or workman thereof feels aggrieved by the company having

its name struck off from the register of companies, the Tribunal on an application made by the company,
member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette
of the notice under sub-section (5) of section 248 may, if satisfied that the company was, at the time of its
name being struck off, carrying on business or in operation or otherwise it is just that the name of the
company be restored to the register of companies, order the name of the company to be restored to the
register of companies, and the Tribunal may, by the order, give such other directions and make such
provisions as deemed just for placing the company and all other persons in the same position as nearly as
may be as if the name of the company had not been struck off from the register of companies.

CHAPTER XIX

REVIVAL AND REHABILITATION OF SICK COMPANIES

**253. [Determination of sickness.] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016),**

_s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

**254. [Application for revival and rehabilitation.] Omitted by s. 255 and the Eleventh Schedule, ibid.**

(w.e.f. 15-11-2016).

**255. [Exclusion of certain time in computing period of limitation.] Omitted by s. 255 and the Eleventh**

_Schedule, ibid. (w.e.f. 15-11-2016)._

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**256.** [Appointment of interim administrator.]Omitted by s. 255 and the Eleventh Schedule, ibid.

(w.e.f. 15-11-2016).

**257. [Committee of creditors.] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).**
**258. [Order of Tribunal.]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).**
**259. [Appointment of administrator.]Omitted by s. 255 and the Eleventh Schedule, ibid.         (w.e.f.**

15-11-2016).

**260. [Powers and duties of company administrator.] Omitted by s. 255 and the Eleventh Schedule, ibid.**

(w.e.f. 15-11-2016).

**261.** [Scheme of revival and rehabilitation.] _Omitted by s._ 255 and the Eleventh Schedule, ibid.

(w.e.f. 15-11-2016).

**262. [Sanction of scheme.] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).**
**263. [Scheme to be binding.] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).**
**264. [Implementation of scheme.] Omitted by s. 255 and the Eleventh Schedule, ibid.            (w.e.f.**

15-11-2016).

**265. [Winding up of company on report of company administrator.] Omitted by s. 255 and the Eleventh**

_Schedule, ibid.(w.e.f. 15-11-2016)._

**266. [Power of Tribunal to assess damages against delinquent directors, etc.] Omitted by the Insolvency**

_and Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

**267.[Punishment for certain offences.] Omitted by s. 255 and the Eleventh Schedule, ibid.      (w.e.f.**

15-11-2016).

**268. [Bar of jurisdiction.] Omitted by s. 255 and the Eleventh Schedule, ibid.(w.e.f. 15-11-2016).**
**269.[Rehabilitation and insolvency fund.]** _Omitted by s._ 255 and the Eleventh Schedule, ibid.

(w.e.f. 15-11-2016).

CHAPTER XX

WINDING UP

**1[270.Winding up by Tribunal.—The provisions of Part I shall apply to the winding up of a company**

by the Tribunal under this Act.]

PART I.—Winding up by the Tribunal

**2[271. Circumstances in which company may be wound up by Tribunal.—A company may, on a**

petition under section 272, be wound up by the Tribunal,—

(a) if the company has, by special resolution, resolved that the company be wound up by the

Tribunal;

(b) if the company has acted against the interests of the sovereignty and integrity of India, the

security of the State, friendly relations with foreign States, public order, decency or morality;

(c) if on an application made by the Registrar or any other person authorised by the Central

Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company
have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful
purpose or the persons concerned in the formation or management of its affairs have been guilty of
fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be
wound up;

(d) if the company has made a default in filing with the Registrar its financial statements or annual

returns for immediately preceding five consecutive financial years; or

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 270 (w.e.f. 15-11-2016).
2. Subs. by s. 255 and the Eleventh Schedule, ibid., for section 271 (w.e.f. 15-11-2016).

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(e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound

up.]

1[272. Petition for winding up.—(1) Subject to the provisions of this section, a petition to the Tribunal

for the winding up of a company shall be presented by—

(a) the company;

(b) any contributory or contributories;

(c) all or any of the persons specified in clauses (a) and (b);

(d) the Registrar;

(e) any person authorised by the Central Government in that behalf; or

(f) in a case falling under clause (b) of section 271, by the Central Government or a State

Government.

(2) A contributory shall be entitled to present a petition for the winding up of a company,

notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets
at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its
liabilities, and shares in respect of which he is a contributory or some of them were either originally allotted
to him or have been held by him, and registered in his name, for at least six months during the eighteen
months immediately before the commencement of the winding up or have devolved on him through the
death of a former holder.

(3) The Registrar shall be entitled to present a petition for winding up under section 271, except on the

grounds specified in clause (a) [2][of that section]:

Provided that the Registrar shall obtain the previous sanction of the Central Government to the

presentation of a petition:

Provided further that the Central Government shall not accord its sanction unless the company has been

given a reasonable opportunity of making representations.

(4) A petition presented by the company for winding up before the Tribunal shall be admitted only if

accompanied by a statement of affairs in such form and in such manner as may be prescribed.

(5) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar

shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt
of such petition.]

**273. Powers of Tribunal.—(1) The Tribunal may, on receipt of a petition for winding up under section**

272 pass any of the following orders, namely:—

(a) dismiss it, with or without costs;

(b) make any interim order as it thinks fit;

(c) appoint a provisional liquidator of the company till the making of a winding up order;

(d) make an order for the winding up of the company with or without costs; or

(e) any other order as it thinks fit:

Provided that an order under this sub-section shall be made within ninety days from the date of

presentation of the petition:

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 272 (w.e.f. 15-11-2016).
2. Subs. by Act 22 of 2019, s. 37, for “or clause (e) of that sub-section” (w.e.f. 15-8-2019).

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Provided further that before appointing a provisional liquidator under clause (c), the Tribunal shall give

notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless
for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice:

Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that the

assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the
company has no assets.

(2) Where a petition is presented on the ground that it is just and equitable that the company should be

wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other
remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company
wound up instead of pursuing the other remedy.

**274. Directions for filing statement of affairs.—(1) Where a petition for winding up is filed before**

the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case
for winding up of the company is made out, by an order direct the company to file its objections along with
a statement of its affairs within thirty days of the order in such form and in such manner as may be
prescribed:

Provided that the Tribunal may allow a further period of thirty days in a situation of contingency or

special circumstances:

Provided further that the Tribunal may direct the petitioner to deposit such security for costs as it may

consider reasonable as a precondition to issue directions to the company.

(2) A company, which fails to file the statement of affairs as referred to in sub-section (1), shall forfeit

the right to oppose the petition and such directors and officers of the company as found responsible for such
non-compliance, shall be liable for punishment under sub-section (4).

(3) The directors and other officers of the company, in respect of which an order for winding up is

passed by the Tribunal under clause (d) of sub-section (1) of section 273, shall, within a period of thirty
days of such order, submit, at the cost of the company, the books of account of the company completed and
audited up to the date of the order, to such liquidator and in the manner specified by the Tribunal.

(4) If any director or officer of the company contravenes the provisions of this section, the director or

the officer of the company who is in default shall be punishable with imprisonment for a term which may
extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may
extend to five lakh rupees, or with both.

(5) The complaint may be filed in this behalf before the Special Court by Registrar, provisional

liquidator, Company Liquidator or any person authorised by the Tribunal.

**275. Company Liquidators and their appointments.—(1) For the purposes of winding up of a**

company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint
an Official Liquidator or a liquidator from the panel maintained under sub-section (2) as the Company
Liquidator.

1[(2) The provisional liquidator or the Company Liquidator, as the case may, shall be appointed by the

Tribunal from amongst the insolvency professionals registered under the Insolvency and Bankruptcy Code,
2016 (31 of 2016);]

(3) Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his

powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same
powers as a liquidator.

2*  -  -  -  
1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub-section (2) (w.e.f. 15-11-2016).
2. Sub-section (4) omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).

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(5) The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the

fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed,
experience, qualification of such liquidator and size of the company.

(6) On appointment as provisional liquidator or Company Liquidator, as the case may be, such

liquidator shall file a declaration within seven days from the date of appointment in the prescribed form
disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the Tribunal
and such obligation shall continue throughout the term of his appointment.

(7) While passing a winding up order, the Tribunal may appoint a provisional liquidator, if any,

appointed under clause (c) of sub-section (1) of section 273, as the Company Liquidator for the conduct of
the proceedings for the winding up of the company.

**276. Removal and replacement of liquidator.—(1) The Tribunal may, on a reasonable cause being**

shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company
Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely:—

(a) misconduct;

(b) fraud or misfeasance;

(c) professional incompetence or failure to exercise due care and diligence in performance of the

powers and functions;

(d) inability to act as provisional liquidator or as the case may be, Company Liquidator;

(e) conflict of interest or lack of independence during the term of his appointment that would justify

removal.

(2) In the event of death, resignation or removal of the provisional liquidator or as the case may be,

Company Liquidator, the Tribunal may transfer the work assigned to him or it to another Company
Liquidator for reasons to be recorded in writing.

(3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any loss or damage

to the company due to fraud or misfeasance or failure to exercise due care and diligence in the performance
of his or its powers and functions, the Tribunal may recover or cause to be recovered such loss or damage
from the liquidator and pass such other orders as it may think fit.

(4) The Tribunal shall, before passing any order under this section, provide a reasonable opportunity of

being heard to the provisional liquidator or, as the case may be, Company Liquidator.

**277. Intimation to Company Liquidator, provisional liquidator and Registrar.—(1) Where the**

Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it
shall, within a period not exceeding seven days from the date of passing of the order, cause intimation
thereof to be sent to the Company Liquidator or provisional liquidator, as the case may be, and the Registrar.

(2) On receipt of the copy of order of appointment of provisional liquidator or winding up order, the

Registrar shall make an endorsement to that effect in his records relating to the company and notify in the
Official Gazette that such an order has been made and in the case of a listed company, the Registrar shall
intimate about such appointment or order, as the case may be, to the stock exchange or exchanges where
the securities of the company are listed.

(3) The winding up order shall be deemed to be a notice of discharge to the officers, employees and

workmen of the company, except when the business of the company is continued.

(4) Within three weeks from the date of passing of winding up order, the Company Liquidator shall

make an application to the Tribunal for constitution of a winding up committee to assist and monitor the
progress of liquidation proceedings by the Company Liquidator in carrying out the function as provided in
sub-section (5) and such winding up committee shall comprise of the following persons, namely:—

(i) Official Liquidator attached to the Tribunal;

(ii) nominee of secured creditors; and

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(iii) a professional nominated by the Tribunal.

(5) The Company Liquidator shall be the convener of the meetings of the winding up committee which

shall assist and monitor the liquidation proceedings in following areas of liquidation functions, namely:—

(i) taking over assets;

(ii) examination of the statement of affairs;

(iii) recovery of property, cash or any other assets of the company including benefits derived

therefrom;

(iv) review of audit reports and accounts of the company;

(v) sale of assets;

(vi) finalisation of list of creditors and contributories;

(vii) compromise, abandonment and settlement of claims;

(viii) payment of dividends, if any; and

(ix) any other function, as the Tribunal may direct from time to time.

(6) The Company Liquidator shall place before the Tribunal a report along with minutes of the meetings

of the committee on monthly basis duly signed by the members present in the meeting for consideration till
the final report for dissolution of the company is submitted before the Tribunal.

(7) The Company Liquidator shall prepare the draft final report for consideration and approval of the

winding up committee.

(8) The final report so approved by the winding up committee shall be submitted by the Company

Liquidator before the Tribunal for passing of a dissolution order in respect of the company.

**278. Effect of winding up order.—The order for the winding up of a company shall operate in favour**

of all the creditors and all contributories of the company as if it had been made out on the joint petition of
creditors and contributories.

**279. Stay of suits, etc., on winding up order.—(1) When a winding up order has been passed or a**

provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if
pending at the date of the winding up order, shall be proceeded with, by or against the company, except
with the leave of the Tribunal and subject to such terms as the Tribunal may impose:

Provided that any application to the Tribunal seeking leave under this section shall be disposed of by

the Tribunal within sixty days.

(2) Nothing in sub-section (1) shall apply to any proceeding pending in appeal before the Supreme

Court or a High Court.

**1[280. Jurisdiction of Tribunal.—The Tribunal shall, notwithstanding anything contained in any other**

law for the time being in force, have jurisdiction to entertain, or dispose of,—

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company, including claims by or against any of its branches

in India;

(c) any application made under section 233;

(d) any question of priorities or any other question whatsoever, whether of law or facts, including

those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties,
responsibilities, obligations or in any matter arising out of, or in relation to winding up of the company,

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or
arises or such application has been made or is made or such scheme has been submitted, or is submitted,
before or after the order for the winding up of the company is made.]

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 280 (w.e.f. 15-11-2016).

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**281. Submission of report by Company Liquidator.—(1) Where the Tribunal has made a winding**

up order or appointed a Company Liquidator, such liquidator shall, within sixty days from the order, submit
to the Tribunal, a report containing the following particulars, namely:—

(a) the nature and details of the assets of the company including their location and value, stating

separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held
by the company:

Provided that the valuation of the assets shall be obtained from registered valuers for this purpose;

(b) amount of capital issued, subscribed and paid-up;

(c) the existing and contingent liabilities of the company including names, addresses and

occupations of its creditors, stating separately the amount of secured and unsecured debts, and in the
case of secured debts, particulars of the securities given, whether by the company or an officer thereof,
their value and the dates on which they were given;

(d) the debts due to the company and the names, addresses and occupations of the persons from

whom they are due and the amount likely to be realised on account thereof;

(e) guarantees, if any, extended by the company;

(f) list of contributories and dues, if any, payable by them and details of any unpaid call;

(g) details of trade marks and intellectual properties, if any, owned by the company;

(h) details of subsisting contracts, joint ventures and collaborations, if any;

(i) details of holding and subsidiary companies, if any;

(j) details of legal cases filed by or against the company; and

(k) any other information which the Tribunal may direct or the Company Liquidator may consider

necessary to include.

(2) The Company Liquidator shall include in his report the manner in which the company was promoted

or formed and whether in his opinion any fraud has been committed by any person in its promotion or
formation or by any officer of the company in relation to the company since the formation thereof and any
other matters which, in his opinion, it is desirable to bring to the notice of the Tribunal.

(3) The Company Liquidator shall also make a report on the viability of the business of the company

or the steps which, in his opinion, are necessary for maximising the value of the assets of the company.

(4) The Company Liquidator may also, if he thinks fit, make any further report or reports.

(5) Any person describing himself in writing to be a creditor or a contributory of the company shall be

entitled by himself or by his agent at all reasonable times to inspect the report submitted in accordance with
this section and take copies thereof or extracts therefrom on payment of the prescribed fees.

**282. Directions of Tribunal on report of Company Liquidator.—(1) The Tribunal shall, on**

consideration of the report of the Company Liquidator, fix a time limit within which the entire proceedings
shall be completed and the company be dissolved:

Provided that the Tribunal may, if it is of the opinion, at any stage of the proceedings, or on examination

of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator,
creditors or contributories or any other interested person, that it will not be advantageous or economical to
continue the proceedings, revise the time limit within which the entire proceedings shall be completed and
the company be dissolved.

(2) The Tribunal may, on examination of the reports submitted to it by the Company Liquidator and

after hearing the Company Liquidator, creditors or contributories or any other interested person, order sale
of the company as a going concern or its assets or part thereof:

Provided that the Tribunal may, where it considers fit, appoint a sale committee comprising such

creditors, promoters and officers of the company as the Tribunal may decide to assist the Company
Liquidator in sale under this sub-section.

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(3) Where a report is received from the Company Liquidator or the Central Government or any person

that a fraud has been committed in respect of the company, the Tribunal shall, without prejudice to the
process of winding up, order for investigation under section 210, and on consideration of the report of such
investigation it may pass order and give directions under sections 339 to 342 or direct the Company
Liquidator to file a criminal complaint against persons who were involved in the commission of fraud.

(4) The Tribunal may order for taking such steps and measures, as may be necessary, to protect,

preserve or enhance the value of the assets of the company.

(5) The Tribunal may pass such other order or give such other directions as it considers fit.

**283. Custody of company’s properties.—(1) Where a winding up order has been made or where a**

provisional liquidator has been appointed, the Company Liquidator or the provisional liquidator, as the case
may be, shall, on the order of the Tribunal, forthwith take into his or its custody or control all the property,
effects and actionable claims to which the company is or appears to be entitled to and take such steps and
measures, as may be necessary, to protect and preserve the properties of the company.

(2) Notwithstanding anything contained in sub-section (1), all the property and effects of the company

shall be deemed to be in the custody of the Tribunal from the date of the order for the winding up of the
company.

(3) On an application by the Company Liquidator or otherwise, the Tribunal may, at any time after the

making of a winding up order, require any contributory for the time being on the list of contributories, and
any trustee, receiver, banker, agent, officer or other employee of the company, to pay, deliver, surrender or
transfer forthwith, or within such time as the Tribunal directs, to the Company Liquidator, any money,
property or books and papers in his custody or under his control to which the company is or appears to be
entitled.

**284. Promoters, directors, etc., to cooperate with Company Liquidator.—(1) The promoters,**

directors, officers and employees, who are or have been in employment of the company or acting or
associated with the company shall extend full cooperation to the Company Liquidator in discharge of his
functions and duties.

1[(2) If any person required to assist or cooperate with the Company Liquidator under sub-section (1)

does not assist or cooperate, the Company Liquidator may make an application to the Tribunal for necessary
directions.

(3) On receiving an application under sub-section (2), the Tribunal shall, by an order, direct the person

required to assist or cooperate with the Company Liquidator to comply with the instructions of the Company
Liquidator and to cooperate with him in discharging his functions and duties.]

**285. Settlement of list of contributories and application of assets.—(1) As soon as may be after the**

passing of a winding up order by the Tribunal, the Tribunal shall settle a list of contributories, cause
rectification of register of members in all cases where rectification is required in pursuance of this Act and
shall cause the assets of the company to be applied for the discharge of its liability:

Provided that where it appears to the Tribunal that it would not be necessary to make calls on or adjust

the rights of contributories, the Tribunal may dispense with the settlement of a list of contributories.

(2) In settling the list of contributories, the Tribunal shall distinguish between those who are

contributories in their own right and those who are contributories as being representatives of, or liable for
the debts of, others.

(3) While settling the list of contributories, the Tribunal shall include every person, who is or has been

a member, who shall be liable to contribute to the assets of the company an amount sufficient for payment
of the debts and liabilities and the costs, charges and expenses of winding up, and for the adjustment of the
rights of the contributories among themselves, subject to the following conditions, namely:—

(a) a person who has been a member shall not be liable to contribute if he has ceased to be a member

for the preceding one year or more before the commencement of the winding up;

1. Subs. by Act 29 of 2020, s. 46, for sub-section (2) (w.e.f. 21-12-2020).

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(b) a person who has been a member shall not be liable to contribute in respect of any debt or

liability of the company contracted after he ceased to be a member;

(c) no person who has been a member shall be liable to contribute unless it appears to the Tribunal

that the present members are unable to satisfy the contributions required to be made by them in
pursuance of this Act;

(d) in the case of a company limited by shares, no contribution shall be required from any person,

who is or has been a member exceeding the amount, if any, unpaid on the shares in respect of which he
is liable as such member;

(e) in the case of a company limited by guarantee, no contribution shall be required from any

person, who is or has been a member exceeding the amount undertaken to be contributed by him to the
assets of the company in the event of its being wound up but if the company has a share capital, such
member shall be liable to contribute to the extent of any sum unpaid on any shares held by him as if the
company were a company limited by shares.

**286. Obligations of directors and managers.—In the case of a limited company, any person who is**

or has been a director or manager, whose liability is unlimited under the provisions of this Act, shall, in
addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution
as if he were at the commencement of winding up, a member of an unlimited company:

Provided that —

(a) a person who has been a director or manager shall not be liable to make such further

contribution, if he has ceased to hold office for a year or upwards before the commencement of the
winding up;

(b) a person who has been a director or manager shall not be liable to make such further contribution

in respect of any debt or liability of the company contracted after he ceased to hold office;

(c) subject to the articles of the company, a director or manager shall not be liable to make such

further contribution unless the Tribunal deems it necessary to require the contribution in order to satisfy
the debts and liabilities of the company, and the costs, charges and expenses of the winding up.

**287. Advisory committee.—(1) The Tribunal may, while passing an order of winding up of a company,**

direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the
Tribunal on such matters as the Tribunal may direct.

(2) The advisory committee appointed by the Tribunal shall consist of not more than twelve members,

being creditors and contributories of the company or such other persons in such proportion as the Tribunal
may, keeping in view the circumstances of the company under liquidation, direct.

(3) The Company Liquidator shall convene a meeting of creditors and contributories, as ascertained

from the books and documents, of the company within thirty days from the date of order of winding up for
enabling the Tribunal to determine the persons who may be members of the advisory committee.

(4) The advisory committee shall have the right to inspect the books of account and other documents,

assets and properties of the company under liquidation at a reasonable time.

(5) The provisions relating to the convening of the meetings, the procedure to be followed thereat and

other matters relating to conduct of business by the advisory committee shall be such as may be prescribed.

(6) The meeting of advisory committee shall be chaired by the Company Liquidator.

**288. Submission of periodical reports to Tribunal.—(1) The Company Liquidator shall make**

periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to
the progress of the winding up of the company in such form and manner as may be prescribed.

(2) The Tribunal may, on an application by the Company Liquidator, review the orders made by it and

make such modifications as it thinks fit.

**289. [Power of Tribunal on application for stay of winding up.]** _Omitted by the Insolvency and_

_Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

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**290. Powers and duties of Company Liquidator.—(1) Subject to directions by the Tribunal, if any,**

in this regard, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the
power—

(a) to carry on the business of the company so far as may be necessary for the beneficial winding

up of the company;

(b) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and

other documents, and for that purpose, to use, when necessary, the company’s seal;

(c) to sell the immovable and movable property and actionable claims of the company by public

auction or private contract, with power to transfer such property to any person or body corporate, or to
sell the same in parcels;

(d) to sell the whole of the undertaking of the company as a going concern;

(e) to raise any money required on the security of the assets of the company;
(f) to institute or defend any suit, prosecution or other legal proceeding, civil or criminal, in the

name and on behalf of the company;

(g) to invite and settle claim of creditors, employees or any other claimant and distribute sale

proceeds in accordance with priorities established under this Act;

(h) to inspect the records and returns of the company on the files of the Registrar or any other

authority;

(i) to prove rank and claim in the insolvency of any contributory for any balance against his estate,

and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the
insolvent, and rate ably with the other separate creditors;

(j) to draw, accept, make and endorse any negotiable instruments including cheque, bill of

exchange, hundi or promissory note in the name and on behalf of the company, with the same effect
with respect to the liability of the company as if such instruments had been drawn, accepted, made or
endorsed by or on behalf of the company in the course of its business;

(k) to take out, in his official name, letters of administration to any deceased contributory, and to

do in his official name any other act necessary for obtaining payment of any money due from a
contributory or his estate which cannot be conveniently done in the name of the company, and in all
such cases, the money due shall, for the purpose of enabling the Company Liquidator to take out the
letters of administration or recover the money, be deemed to be due to the Company Liquidator himself;

(l) to obtain any professional assistance from any person or appoint any professional, in discharge

of his duties, obligations and responsibilities and for protection of the assets of the company, appoint
an agent to do any business which the Company Liquidator is unable to do himself;

(m) to take all such actions, steps, or to sign, execute and verify any paper, deed, document,

application, petition, affidavit, bond or instrument as may be necessary,—

(i) for winding up of the company;

(ii) for distribution of assets;

(iii) in discharge of his duties and obligations and functions as Company Liquidator; and

(n) to apply to the Tribunal for such orders or directions as may be necessary for the winding up of

the company.

(2) The exercise of powers by the Company Liquidator under sub-section (1) shall be subject to the

overall control of the Tribunal.

(3) Notwithstanding the provisions of sub-section (1), the Company Liquidator shall perform such other

duties as the Tribunal may specify in this behalf.

**291. Provision for professional assistance to Company Liquidator.—(1) The Company Liquidator**

may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries

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or cost accountants or legal practitioners or such other professionals on such terms and conditions, as may
be necessary, to assist him in the performance of his duties and functions under this Act.

(2) Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed

form any conflict of interest or lack of independence in respect of his appointment.

**292. Exercise and control of Company Liquidator’s powers.—(1) Subject to the provisions of this**

Act, the Company Liquidator shall, in the administration of the assets of the company and the distribution
thereof among its creditors, have regard to any directions which may be given by the resolution of the
creditors or contributories at any general meeting or by the advisory committee.

(2) Any directions given by the creditors or contributories at any general meeting shall, in case of

conflict, be deemed to override any directions given by the advisory committee.

(3) The Company Liquidator—

(a) may summon meetings of the creditors or contributories, whenever he thinks fit, for the purpose

of ascertaining their wishes; and

(b) shall summon such meetings at such times, as the creditors or contributories, as the case may

be, may, by resolution, direct, or whenever requested in writing to do so by not less than one-tenth in
value of the creditors or contributories, as the case may be.

(4) Any person aggrieved by any act or decision of the Company Liquidator may apply to the Tribunal,

and the Tribunal may confirm, reverse or modify the act or decision complained of and make such further
order as it thinks just and proper in the circumstances.

**293. Books to be kept by Company Liquidator.—(1) The Company Liquidator shall keep proper**

books in such manner, as may be prescribed, in which he shall cause entries or minutes to be made of
proceedings at meetings and of such other matters as may be prescribed.

(2) Any creditor or contributory may, subject to the control of the Tribunal, inspect any such books,

personally or through his agent.

**294. Audit of Company Liquidator’s accounts.—(1) The Company Liquidator shall maintain proper**

and regular books of account including accounts of receipts and payments made by him in such form and
manner as may be prescribed.

(2) The Company Liquidator shall, at such times as may be prescribed but not less than twice in each

year during his tenure of office, present to the Tribunal an account of the receipts and payments as such
liquidator in the prescribed form in duplicate, which shall be verified by a declaration in such form and
manner as may be prescribed.

(3) The Tribunal shall cause the accounts to be audited in such manner as it thinks fit, and for the

purpose of the audit, the Company Liquidator shall furnish to the Tribunal with such vouchers and
information as the Tribunal may require, and the Tribunal may, at any time, require the production of, and
inspect, any books of account kept by the Company Liquidator.

(4) When the accounts of the company have been audited, one copy thereof shall be filed by the

Company Liquidator with the Tribunal, and the other copy shall be delivered to the Registrar which shall
be open to inspection by any creditor, contributory or person interested.

(5) Where an account referred to in sub-section (4) relates to a Government company, the Company

Liquidator shall forward a copy thereof—

(a) to the Central Government, if that Government is a member of the Government company; or

(b) to any State Government, if that Government is a member of the Government company; or

(c) to the Central Government and any State Government, if both the Governments are members

of the Government company.

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(6) The Company Liquidator shall cause the accounts when audited, or a summary thereof, to be printed,

and shall send a printed copy of the accounts or summary thereof by post to every creditor and every
contributory:

Provided that the Tribunal may dispense with the compliance of the provisions of this sub-section in

any case it deems fit.

**295. Payment of debts by contributory and extent of set-off.—(1) The Tribunal may, at any time**

after passing of a winding up order, pass an order requiring any contributory for the time being on the list
of contributories to pay, in the manner directed by the order, any money due to the company, from him or
from the estate of the person whom he represents, exclusive of any money payable by him or the estate by
virtue of any call in pursuance of this Act.

(2) The Tribunal, in making an order, under sub-section (1), may,—

(a) in the case of an unlimited company, allow to the contributory, by way of set-off, any money

due to him or to the estate which he represents, from the company, on any independent dealing or
contract with the company, but not any money due to him as a member of the company in respect of
any dividend or profit; and

(b) in the case of a limited company, allow to any director or manager whose liability is unlimited,

or to his estate, such set-off.

(3) In the case of any company, whether limited or unlimited, when all the creditors have been paid in

full, any money due on any account whatever to a contributory from the company may be allowed to him
by way of set-off against any subsequent call.

**296. Power of Tribunal to make calls.—The Tribunal may, at any time after the passing of a winding**

up order, and either before or after it has ascertained the sufficiency of the assets of the company,—

(a) make calls on all or any of the contributories for the time being on the list of the contributories,

to the extent of their liability, for payment of any money which the Tribunal considers necessary to
satisfy the debts and liabilities of the company, and the costs, charges and expenses of winding up, and
for the adjustment of the rights of the contributories among themselves; and

(b) make an order for payment of any calls so made.

**297. Adjustment of rights of contributories.—The Tribunal shall adjust the rights of the**

contributories among themselves and distribute any surplus among the persons entitled thereto.

**298. Power to order costs.—The Tribunal may, in the event of the assets of a company being**

insufficient to satisfy its liabilities, make an order for the payment out of the assets, of the costs, charges
and expenses incurred in the winding up, in such order of priority inter se as the Tribunal thinks just and
proper.

**299. Power to summon persons suspected of having property of company, etc.—(1) The Tribunal**

may, at any time after the appointment of a provisional liquidator or the passing of a winding up order,
summon before it any officer of the company or person known or suspected to have in his possession any
property or books or papers, of the company, or known or suspected to be indebted to the company, or any
person whom the Tribunal thinks to be capable of giving information concerning the promotion, formation,
trade, dealings, property, books or papers, or affairs of the company.

(2) The Tribunal may examine any officer or person so summoned on oath concerning the matters

aforesaid, either by word of mouth or on written interrogatories or on affidavit and may, in the first case,
reduce his answers to writing and require him to sign them.

(3) The Tribunal may require any officer or person so summoned to produce any books and papers

relating to the company in his custody or power, but, where he claims any lien on books or papers produced
by him, the production shall be without prejudice to such lien, and the Tribunal shall have power to
determine all questions relating to that lien.

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(4) The Tribunal may direct the liquidator to file before it a report in respect of debt or property of the

company in possession of other persons.

(5) If the Tribunal finds that—

(a) a person is indebted to the company, the Tribunal may order him to pay to the provisional

liquidator or, as the case may be, the liquidator at such time and in such manner as the Tribunal may
consider just, the amount in which he is indebted, or any part thereof, either in full discharge of the
whole amount or not, as the Tribunal thinks fit, with or without costs of the examination;

(b) a person is in possession of any property belonging to the company, the Tribunal may order him

to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part
thereof, at such time, in such manner and on such terms as the Tribunal may consider just.

(6) If any officer or person so summoned fails to appear before the Tribunal at the time appointed

without a reasonable cause, the Tribunal may impose an appropriate cost.

(7) Every order made under sub-section (5) shall be executed in the same manner as decrees for the

payment of money or for the delivery of property under the Code of Civil Procedure, 1908 (5 of 1908).

(8) Any person making any payment or delivery in pursuance of an order made under sub-section (5)

shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability
whatsoever in respect of such debt or property.

**300. Power to order examination of promoters, directors, etc.—(1) Where an order has been made**

for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the
Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the
promotion, formation, business or conduct of affairs of the company since its formation, the Tribunal may,
after considering the report, direct that such person or officer shall attend before the Tribunal on a day
appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the
business of the company or as to his conduct and dealings as an officer thereof.

(2) The Company Liquidator shall take part in the examination, and for that purpose he or it may, if

specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by
the Tribunal.

(3) The person shall be examined on oath and shall answer all such questions as the Tribunal may put,

or allow to be put, to him.
(4) A person ordered to be examined under this section—

(a) shall, before his examination, be furnished at his own cost with a copy of the report of the

Company Liquidator; and

(b) may at his own cost employ chartered accountants or company secretaries or cost accountants

or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to
put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain
or qualify any answers given by him.

(5) If any such person applies to the Tribunal to be exculpated from any charges made or suggested

against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application
and call the attention of the Tribunal to any matters which appear to the Company Liquidator to be relevant.

(6) If the Tribunal, after considering any evidence given or hearing witnesses called by the Company

Liquidator, allows the application made under sub-section (5), the Tribunal may order payment to the
applicant of such costs as it may think fit.

(7) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed

by, the person examined, a copy be supplied to him and may thereafter be used in evidence against him,
and shall be open to inspection by any creditor or contributory at all reasonable times.

(8) The Tribunal may, if it thinks fit, adjourn the examination from time to time.

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(9) An examination under this section may, if the Tribunal so directs, be held before any person or

authority authorised by the Tribunal.

(10) The powers of the Tribunal under this section as to the conduct of the examination, but not as to

costs, may be exercised by the person or authority before whom the examination is held in pursuance of
sub-section (9).

**301. Arrest of person trying to leave India or abscond.—At any time either before or after**

passing a winding up order, if the Tribunal is satisfied that a contributory or a person having property,
accounts or papers of the company in his possession is about to leave India or otherwise to abscond, or
is about to remove or conceal any of his property, for the purpose of evading payment of calls or of
avoiding examination respecting the affairs of the company, the Tribunal may cause—

(a) the contributory to be detained until such time as the Tribunal may order; and

(b) his books and papers and movable property to be seized and safely kept until such time as

the Tribunal may order.

**302. Dissolution of company by Tribunal.—(1) When the affairs of a company have been completely**

wound up, the Company Liquidator shall make an application to the Tribunal for dissolution of such
company.

(2) The Tribunal shall on an application filed by the Company Liquidator under sub-section (1) or when

the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for
the dissolution of the company should be made, make an order that the company be dissolved from the date
of the order, and the company shall be dissolved accordingly.

1[(3) The Tribunal shall, within a period of thirty days form the date of the order, —

(a) forward a copy of the order to the Registrar who shall record in the register relating to the

company a minute of the dissolution of the company; and

(b) direct the Company Liquidator to forward a copy of the order to the Registrar who shall record

in the register relating to the company a minute of the dissolution of the company.]

**2*** ***** ***** ***** *****

**303. Appeals from orders made before commencement of Act.—Nothing in this Chapter shall affect**

the operation or enforcement of any order made by any Court in any proceedings for the winding up of a
company immediately before the commencement of this Act and an appeal against such order shall be filed
before such authority competent to hear such appeals before such commencement.

[Part II.—Voluntary winding up] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016),

_s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

**304.[Circumstances in which company may be wound up voluntarily.]** _Omitted by s. 255_ _and the_

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**305.[Declaration of solvency in case of proposal to wind up voluntarily.] Omitted by s. 255 and the**

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**306.[Meeting of creditors.]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016).**

**307.[Publication of resolution to wind up voluntarily.] Omitted by s. 255and the Eleventh Schedule,**

_ibid.(w.e.f. 15-11-2016)._

**308.[Commencement of voluntary winding up.]** _Omitted by s. 255_ _and the Eleventh Schedule, ibid._

(w.e.f. 15-11-2016).

**309.[Effect of voluntary winding up.]** _Omitted by s. 255_ _and the Eleventh Schedule, ibid._

(w.e.f. 15-11-2016).

1. Subs. by Act 29 of 2020, s. 47, for sub-section (3) (w.e.f. 21-212020).
2. Sub-section (4) omitted by s. 47, ibid. (w.e.f. 21-12-2020).

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**310.[Appointment of Company Liquidator.]** _Omitted by s. 255_ _and the Eleventh Schedule, ibid._

(w.e.f. 15-11-2016).

**311.[Power to remove and fill vacancy of Company Liquidator.] Omitted by s. 255 and the Eleventh**

_Schedule, ibid.(w.e.f. 15-11-2016)._

**312.[Notice of appointment of Company Liquidator to be given to Registrar.]Omitted by s. 255 and the**

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**313.[Cesser of Board’s powers on appointment of Company Liquidator.]Omitted by s. 255** _and the_

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**314.[Powers and duties of Company Liquidator in voluntary winding up.]Omitted by s. 255 and the**

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**315.[Appointment of committees.]Omitted by s. 255** _and the Eleventh Schedule, ibid.(w.e.f. 15-11-_

2016).

**316.[Company Liquidator to submit report on progress of winding up.] Omitted by the Insolvency and**

_Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

**317.[Report of Company Liquidator to Tribunal for examination of persons.] Omitted by s. 255 and the**

_Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**318.[Final meeting and dissolution of company.]** _Omitted by s. 255_ _and the Eleventh Schedule,_

_ibid.(w.e.f. 15-11-2016)._

**319.[Power of Company Liquidator to accept shares, etc., as consideration for sale of property of**

_company.] Omitted by s. 255 and the Eleventh Schedule, ibid.(w.e.f. 15-11-2016)._

**320. [Distribution of property of company.]** _Omitted by s. 255_ _and the Eleventh Schedule, ibid._

(w.e.f. 15-11-2016).

**321. [Arrangement when binding on company and creditors.] Omitted by the Insolvency and**

_Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016)._

**322. [Power to apply to Tribunal to have questions determined, etc.] Omitted by s. 255 and the Eleventh**

_Schedule, ibid.(w.e.f. 15-11-2016)._

**323.[Costs of voluntary winding up.]Omitted by s. 255 and the Eleventh Schedule, ibid.        (w.e.f.**

15-11-2016).

PART III.—Provisions applicable to every mode of winding up

**324. Debts of all descriptions to be admitted to proof.— In every winding up (subject, in the case of**

insolvent companies, to the application in accordance with the provisions of this Act or of the law of
insolvency), all debts payable on a contingency, and all claims against the company, present or future,
certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the
company, a just estimate being made, so far as possible, of the value of such debts or claims as may be
subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain
value.

**325.[Application of insolvency rules in winding up of insolvent companies.] Omitted by the Insolvency**

_and Bankruptcy Code, 2016 (31 of 2016) s. 255 and the Eleventh Schedule  (w.e.f. 15-11-2016)._

**1[326. Overriding preferential payments.—(1) In the winding up of a company under this Act, the**

following debts shall be paid in priority to all other debts:—

(a) workmen’s dues; and

(b) where a secured creditor has realised a secured asset, so much of the debts due to such secured

creditor as could not be realised by him or the amount of the workmen's portion in his security (if
payable under the law), whichever is less, pari passu with the workmen's dues:

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 326 (w.e.f. 15-11-2016).

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Provided that in case of the winding up of a company, the sums referred to in sub-clauses (i) and

(ii) of clause (b) of the Explanation, which are payable for a period of two years preceding the winding
up order or such other period as may be prescribed, shall be paid in priority to all other debts (including
debts due to secured creditors), within a period of thirty days of sale of assets and shall be subject to
such charge over the security of secured creditors as may be prescribed.

(2) The debts payable under the proviso to sub-section (1) shall be paid in full before any payment is

made to secured creditors and thereafter debts payable under that sub-section shall be paid in full, unless
the assets are insufficient to meet them, in which case they shall abate in equal proportions.

_Explanation.—For the purposes of this section, and section 327—_

(a) “workmen”, in relation to a company, means the employees of the company, being workmen

within the meaning of clause (s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947);

(b) “workmen's dues”, in relation to a company, means the aggregate of the following sums due

from the company to its workmen, namely:—

(i) all wages or salary including wages payable for time or piece work and salary earned wholly

or in part by way of commission of any workman in respect of services rendered to the company
and any compensation payable to any workman under any of the provisions of the Industrial
Disputes Act, 1947 (14 of 1947);

(ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his

death, to any other person in his right on the termination of his employment before or by the effect
of the winding up order or resolution;

(iii) unless the company is being wound up voluntarily merely for the purposes of

reconstruction or amalgamation with another company or unless the company has, at the
commencement of the winding up, under such a contract with insurers as is mentioned in section
14 of the Workmen's Compensation Act, 1923 (19 of 1923), rights capable of being transferred to
and vested in the workmen, all amount due in respect of any compensation or liability for
compensation under the said Act in respect of the death or disablement of any workman of the
company;

(iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund

or any other fund for the welfare of the workmen, maintained by the company;

(c) “workmen's portion”, in relation to the security of any secured creditor of a company, means

the amount which bears to the value of the security the same proportion as the amount of the workmen's
dues bears to the aggregate of the amount of workmen's dues and the amount of the debts due to the
secured creditors.

_Illustration_

The value of the security of a secured creditor of a company is Rs. 1,00,000. The total amount of the workmen's

dues is Rs. 1,00,000. The amount of the debts due from the company to its secured creditors is Rs.3,00,000. The
aggregate of the amount of workmen's dues and the amount of debts due to secured creditors is Rs. 4,00,000. The
workmen's portion of the security is, therefore, one-fourth of the value of the security, that is Rs. 25,000.]

**327. Preferential payments.—(1) In a winding up, subject to the provisions of section 326, there shall**

be paid in priority to all other debts,—

(a) all revenues, taxes, cesses and rates due from the company to the Central Government or a State

Government or to a local authority at the relevant date, and having become due and payable within the
twelve months immediately before that date;

(b) all wages or salary including wages payable for time or piece work and salary earned wholly or

in part by way of commission of any employee in respect of services rendered to the company and due
for a period not exceeding four months within the twelve months immediately before the relevant date,
subject to the condition that the amount payable under this clause to any workman shall not exceed
such amount as may be notified;

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(c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death,

to any other person claiming under him, on the termination of his employment before, or by the winding
up order, or, as the case may be, the dissolution of the company;

(d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or

amalgamation with another company, all amount due in respect of contributions payable during the
period of twelve months immediately before the relevant date by the company as the employer of
persons under the Employees’ State Insurance Act, 1948 (34 of 1948) or any other law for the time
being in force;

(e) unless the company has, at the commencement of winding up, under such a contract with any

insurer as is mentioned in section 14 of the Workmen’s Compensation Act, 1923 (8 of 1923), rights
capable of being transferred to and vested in the workmen, all amount due in respect of any
compensation or liability for compensation under the said Act in respect of the death or disablement of
any employee of the company:

Provided that where any compensation under the said Act is a weekly payment, the amount payable

under this clause shall be taken to be the amount of the lump sum for which such weekly payment
could, if redeemable, be redeemed, if the employer has made an application under that Act;

(f) all sums due to any employee from the provident fund, the pension fund, the gratuity fund or

any other fund for the welfare of the employees, maintained by the company; and

(g) the expenses of any investigation held in pursuance of sections 213 and 216, in so far as they

are payable by the company.

(2) Where any payment has been made to any employee of a company on account of wages or salary

or accrued holiday remuneration, himself or, in the case of his death, to any other person claiming through
him, out of money advanced by some person for that purpose, the person by whom the money was advanced
shall, in a winding up, have a right of priority in respect of the money so advanced and paid-up to the
amount by which the sum in respect of which the employee or other person in his right would have been
entitled to priority in the winding up has been reduced by reason of the payment having been made.

(3) The debts enumerated in this section shall—

(a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet

them, in which case they shall abate in equal proportions; and

(b) so far as the assets of the company available for payment to general creditors are insufficient to

meet them, have priority over the claims of holders of debentures under any floating charge created by
the company, and be paid accordingly out of any property comprised in or subject to that charge.

(4) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding

up, the debts under this section shall be discharged forthwith so far as the assets are sufficient to meet them,
and in the case of the debts to which priority is given under clause (d) of sub-section (1), formal proof
thereof shall not be required except in so far as may be otherwise prescribed.

(5) In the event of a landlord or other person distaining or having distained on any goods or effects of

the company within three months immediately before the date of a winding up order, the debts to which
priority is given under this section shall be a first charge on the goods or effects so distrained on or the
proceeds of the sale thereof:

Provided that, in respect of any money paid under any such charge, the landlord or other person shall

have the same rights of priority as the person to whom the payment is made.

(6) Any remuneration in respect of a period of holiday or of absence from work on medical grounds

through sickness or other good cause shall be deemed to be wages in respect of services rendered to the
company during that period.

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1[(7) Sections 326 and 327 shall not be applicable in the event of liquidation under the Insolvency and

Bankruptcy Code, 2016 (31 of 2016).]

_Explanation.—For the purposes of this section,—_

(a) the expression “accrued holiday remuneration” includes, in relation to any person, all sums

which, by virtue either of his contract of employment or of any enactment including any order made or
direction given thereunder, are payable on account of the remuneration which would, in the ordinary
course, have become payable to him in respect of a period of holiday, had his employment with the
company continued until he became entitled to be allowed the holiday;

(b) the expression “employee” does not include a workman; and

2[(c) the expression “relevant date” means in the case of a company being wound up by the

Tribunal, the date of appointment or first appointment of a provisional liquidator, or if no such
appointment was made, the date of the winding up order, unless, in either case, the company had
commenced to be wound up voluntarily before that date under the Insolvency and Bankruptcy Code,
2016 (31 of 2016).]

**328. Fraudulent preference.—(1) Where a company has given preference to a person who is one of**

the creditors of the company or a surety or guarantor for any of the debts or other liabilities of the company,
and the company does anything or suffers anything done which has the effect of putting that person into a
position which, in the event of the company going into liquidation, will be better than the position he would
have been in if that thing had not been done prior to six months of making winding up application, the
Tribunal, if satisfied that, such transaction is a fraudulent preference may order as it may think fit for
restoring the position to what it would have been if the company had not given that preference.

(2) If the Tribunal is satisfied that there is a preference transfer of property, movable or immovable, or

any delivery of goods, payment, execution made, taken or done by or against a company within six months
before making winding up application, the Tribunal may order as it may think fit and may declare such
transaction invalid and restore the position.

3[329. Transfers not in good faith to be void.—Any transfer of property, movable or immovable, or

any delivery of goods, made by a company, not being a transfer or delivery made in the ordinary course of
its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if
made within a period of one year before the presentation of a petition for winding up by the Tribunal under
this Act shall be void against the Company Liquidator.]

**330. Certain transfers to be void.—Any transfer or assignment by a company of all its properties or**

assets to trustees for the benefit of all its creditors shall be void.

**331. Liabilities and rights of certain persons fraudulently preferred.—(1) Where a company is**

being wound up and anything made, taken or done after the commencement of this Act is invalid under
section 328 as a fraudulent preference of a person interested in property mortgaged or charged to secure the
company’s debt, then, without prejudice to any rights or liabilities arising, apart from this provision, the
person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had
undertaken to be personally liable as a surety for the debt, to the extent of the mortgage or charge on the
property or the value of his interest, whichever is less.

(2) The value of the interest of the person preferred under sub-section (1) shall be determined as at the

date of the transaction constituting the fraudulent preference, as if the interest were free of all encumbrances
other than those to which the mortgage or charge for the debt of the company was then subject.

(3) On an application made to the Tribunal with respect to any payment on the ground that the payment

was a fraudulent preference of a surety or guarantor, the Tribunal shall have jurisdiction to determine any
questions with respect to the payment arising between the person to whom the payment was made and the
surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do

1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
2. Subs. by s. 255 and the Eleventh Schedule, ibid., for clause (c) (w.e.f. 15-11-2016).
3. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 329 (w.e.f. 15-11-2016).

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for the purposes of the winding up, and for that purpose, may give leave to bring in the surety or guarantor
as a third party as in the case of a suit for the recovery of the sum paid.

(4) The provisions of sub-section (3) shall apply mutatis mutandis in relation to transactions other than

payment of money.

**332. Effect of floating charge.—Where a company is being wound up, a floating charge on the**

undertaking or property of the company created within the twelve months immediately preceding the
commencement of the winding up, shall, unless it is proved that the company immediately after the creation
of the charge was solvent, be invalid, except for the amount of any cash paid to the company at the time of,
or subsequent to the creation of, and in consideration for, the charge, together with interest on that amount
at the rate of five per cent. per annum or such other rate as may be notified by the Central Government in
this behalf.

**333. Disclaimer of onerous property.—(1) Where any part of the property of a company which is**

being wound up consists of—

(a) land of any tenure, burdened with onerous covenants;

(b) shares or stocks in companies;

(c) any other property which is not saleable or is not readily saleable by reason of the possessor

thereof being bound either to the performance of any onerous act or to the payment of any sum of
money; or

(d) unprofitable contracts,

the Company Liquidator may, notwithstanding that he has endeavoured to sell or has taken possession of
the property or exercised any act of ownership in relation thereto or done anything in pursuance of the
contract, with the leave of the Tribunal and subject to the provisions of this section, by writing signed by
him, at any time within twelve months after the commencement of the winding up or such extended period
as may be allowed by the Tribunal, disclaim the property:

Provided that where the Company Liquidator had not become aware of the existence of any such

property within one month from the commencement of the winding up, the power of disclaiming the
property may be exercised at any time within twelve months after he has become aware thereof or such
extended period as may be allowed by the Tribunal.

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and

liabilities of the company in or in respect of the property disclaimed, but shall not, except so far as is
necessary for the purpose of releasing the company and the property of the company from liability, affect
the rights, interest or liabilities of any other person.

(3) The Tribunal, before or on granting leave to disclaim, may require such notices to be given to

persons interested, and impose such terms as a condition of granting leave, and make such other order in
the matter as the Tribunal considers just and proper.

(4) The Company Liquidator shall not be entitled to disclaim any property in any case where an

application in writing has been made to him by any person interested in the property requiring him to decide
whether he will or will not disclaim and the Company Liquidator has not, within a period of twenty-eight
days after the receipt of the application or such extended period as may be allowed by the Tribunal, give
notice to the applicant that he intends to apply to the Tribunal for leave to disclaim, and in case the property
is under a contract, if the Company Liquidator after such an application as aforesaid does not within the
said period or extended period disclaim the contract, he shall be deemed to have adopted it.

(5) The Tribunal may, on the application of any person who is, as against the Company Liquidator,

entitled to the benefit or subject to the burden of a contract made with the company, make an order
rescinding the contract on such terms as to payment by or to either party of damages for the           nonperformance of the contract, or otherwise as the Tribunal considers just and proper, and any damages
payable under the order to any such person maybe proved by him as a debt in the winding up.

(6) The Tribunal may, on an application by any person who either claims any interest in any disclaimed

property or is under any liability not discharged under this Act in respect of any disclaimed property, and

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after hearing any such persons as it thinks fit, make an order for the vesting of the property in, or the delivery
of the property to, any person entitled thereto or to whom it may seem just that the property should be
delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as
the Tribunal considers just and proper, and on any such vesting order being made, the property comprised
therein shall vest accordingly in the person named therein in that behalf without any conveyance or
assignment for the purpose:

Provided that where the property disclaimed is of a leasehold nature, the Tribunal shall not make a

vesting order in favour of any person claiming under the company, whether as under-lessee or as mortgagee
or holder of a charge by way of demise, except upon the terms of making that person—

(a) subject to the same liabilities and obligations as those to which the company was subject under

the lease in respect of the property at the commencement of the winding up; or

(b) if the Tribunal thinks fit, subject only to the same liabilities and obligations as if the lease had

been assigned to that person at that date,

and in either event as if the lease had comprised only the property comprised in the vesting order, and any
mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all
interest in, and security upon the property, and, if there is no person claiming under the company who is
willing to accept an order upon such terms, the Tribunal shall have power to vest the estate and interest of
the company in the property in any person liable, either personally or in a representative character, and
either alone or jointly with the company, to perform the covenants of the lessee in the lease, free and
discharged from all estates, encumbrances and interests created therein by the company.

(7) Any person affected by the operation of a disclaimer under this section shall be deemed to be a

creditor of the company to the amount of the compensation or damages payable in respect of such effect,
and may accordingly prove the amount as a debt in the winding up.

**1[334. Transfers, etc., after commencement of winding up to be void.—In the case of a winding up**

by the Tribunal, any disposition of the property including actionable claims, of the company and any
transfer of shares in the company or alteration in the status of its members, made after the commencement
of the winding up shall, unless the Tribunal otherwise orders, be void.]

**335. Certain attachments, executions, etc., in winding up by Tribunal to be void.—(1) Where any**

company is being wound up by the Tribunal,—

(a) any attachment, distress or execution put in force, without leave of the Tribunal against the

estate or effects of the company, after the commencement of the winding up; or

(b) any sale held, without leave of the Tribunal of any of the properties or effects of the company,

after such commencement,

shall be void.

(2) Nothing in this section shall apply to any proceedings for the recovery of any tax or impost or any

dues payable to the Government.

**336. Offences by officers of companies in liquidation.—(1) If any person, who is or has been an**

officer of a company which, at the time of the commission of the alleged offence, is being wound up, [2][by
the Tribunal under this Act or which is subsequently ordered to be wound up by the Tribunal under this
Act],—

(a) does not, to the best of his knowledge and belief, fully and truly disclose to the Company

Liquidator all the property, movable and immovable, of the company, and how and to whom and for
what consideration and when the company disposed of any part thereof, except such part as has been
disposed of in the ordinary course of the business of the company;

(b) does not deliver up to the Company Liquidator, or as he directs, all such part of the movable

and immovable property of the company as is in his custody or under his control and which he is
required by law to deliver up;

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 334 (w.e.f. 15-11-2016).
2. Subs. by s. 255 and the Eleventh Schedule, ibid., for “whether by the Tribunal or voluntarily, or which is subsequently ordered

to be wound up by the Tribunal or which subsequently passes a resolution for voluntary winding up” (w.e.f. 15-11-2016).

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(c) does not deliver up to the Company Liquidator, or as he directs, all such books and papers of

the company as are in his custody or under his control and which he is required by law to deliver up;

(d) within the twelve months immediately before the commencement of the winding up or at any

time thereafter,—

(i) conceals any part of the property of the company to the value of one thousand rupees or

more, or conceals any debt due to or from the company;

(ii) fraudulently removes any part of the property of the company to the value of one thousand

rupees or more;

(iii) conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction,

mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of
the company;

(iv) makes, or is privy to the making of, any false entry in any book or paper affecting or relating

to, the property or affairs of the company;

(v) fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting

with, altering or making of any omission in, any book or paper affecting or relating to the property
or affairs of the company;

(vi) by any false representation or other fraud, obtains on credit, for or on behalf of the

company, any property which the company does not subsequently pay for;

(vii) under the false pretence that the company is carrying on its business, obtains on credit, for

or on behalf of the company, any property which the company does not subsequently pay for; or

(viii) pawns, pledges or disposes of any property of the company which has been obtained on

credit and has not been paid for, unless such pawning, pledging or disposing of the property is in
the ordinary course of business of the company;

(e) makes any material omission in any statement relating to the affairs of the company;

(f) knowing or believing that a false debt has been proved by any person under the winding up, fails

for a period of one month to inform the Company Liquidator thereof;

(g) after the commencement of the winding up, prevents the production of any book or paper

affecting or relating to the property or affairs of the company;

(h) after the commencement of the winding up or at any meeting of the creditors of the company

within the twelve months next before the commencement of the winding up, attempts to account for
any part of the property of the company by fictitious losses or expenses; or

(i) is guilty of any false representation or fraud for the purpose of obtaining the consent of the

creditors of the company or any of them, to an agreement with reference to the affairs of the company
or to the winding up,

he shall be punishable with imprisonment for a term which shall not be less than three years but which may
extend to five years and with fine which shall not be less than one lakh rupees but which may extend to
three lakh rupees:

Provided that it shall be a good defence if the accused proves that he had no intent to defraud or to

conceal the true state of affairs of the company or to defeat the law.

(2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an

offence under sub-clause (viii) of clause (d) of sub-section (1), every person who takes in pawn or pledge
or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances
as aforesaid, shall be punishable with imprisonment for a term which shall not be less than three years but
which may extend to five years and with fine which shall not be less than three lakh rupees but which may
extend to five lakh rupees.

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_Explanation.—For the purposes of this section, the expression “officer” includes any person in_

accordance with whose directions or instructions the directors of the company have been accustomed to
act.

**337. Penalty for frauds by officers.—If any person, being at the time of the commission of the alleged**

offence an officer of a company which is subsequently ordered to be wound up by the Tribunal [1][under this
Act]—

(a) has, by false pretences or by means of any other fraud, induced any person to give credit to the

company;

(b) with intent to defraud creditors of the company or any other person, has made or caused to be

made any gift or transfer of, or charge on, or has caused or connived at the levying of any execution
against, the property of the company; or

(c) with intent to defraud creditors of the company, has concealed or removed any part of the

property of the company since the date of any unsatisfied judgment or order for payment of money
obtained against the company or within two months before that date,

he shall be punishable with imprisonment for a term which shall not be less than one year but which may
extend to three years and with fine which shall not be less than one lakh rupees but which may extend to
three lakh rupees.

**338. Liability where proper accounts not kept.—(1) Where a company is being wound up, if it is**

shown that proper books of account were not kept by the company throughout the period of two years
immediately preceding the commencement of the winding up, or the period between the incorporation of
the company and the commencement of the winding up, whichever is shorter, every officer of the company
who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the
business of the company was carried on, the default was excusable, be punishable with imprisonment for a
term which shall not be less than one year but which may extend to three years and with fine which shall
not be less than one lakh rupees but which may extend to three lakh rupees.

(2) For the purposes of sub-section (1), it shall be deemed that proper books of account have not been

kept in the case of any company,—

(a) if such books of account as are necessary to exhibit and explain the transactions and financial

position of the business of the company, including books containing entries made from day-to-day in
sufficient detail of all cash received and all cash paid, have not been kept; and

(b) where the business of the company has involved dealings in goods, statements of the annual

stock takings and, except in the case of goods sold by way of ordinary retail trade, of all goods sold and
purchased, showing the goods and the buyers and the sellers thereof in sufficient detail to enable those
goods and those buyers and sellers to be identified, have not been kept.

**339. Liability for fraudulent conduct of business.—(1) If in the course of the winding up of a**

company, it appears that any business of the company has been carried on with intent to defraud creditors
of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the
Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it
thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the
company or any persons who were knowingly parties to the carrying on of the business in the manner
aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or
other liabilities of the company as the Tribunal may direct:

Provided that on the hearing of an application under this sub-section, the Official Liquidator or the

Company Liquidator, as the case may be, may himself give evidence or call witnesses.

(2) Where the Tribunal makes any such declaration, it may give such further directions as it thinks

proper for the purpose of giving effect to that declaration and, in particular,—

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for “or which subsequently passes a resolution for voluntary winding

up,” (w.e.f. 15-11-2016).

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(a) make provision for making the liability of any such person under the declaration a charge on

any debt or obligation due from the company to him, or on any mortgage or charge or any interest in
any mortgage or charge on any assets of the company held by or vested in him, or any person on his
behalf, or any person claiming as assignee from or through the person liable or any person acting on
his behalf;

(b) make such further order as may be necessary for the purpose of enforcing any charge imposed

under this sub-section.

(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned

in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner
aforesaid, shall be liable for action under section 447.

(4) This section shall apply, notwithstanding that the person concerned may be punishable under any

other law for the time being in force in respect of the matters on the ground of which the declaration is to
be made.

_Explanation.—For the purposes of this section,—_

(a) the expression “assignee” includes any person to whom or in whose favour, by the directions

of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the
interest was created, but does not include an assignee for valuable consideration, not including
consideration by way of marriage, given in good faith and without notice of any of the matters on the
ground of which the declaration is made;

(b) the expression “officer” includes any person in accordance with whose directions or instructions

the directors of the company have been accustomed to act.

**340. Power of Tribunal to assess damages against delinquent directors, etc.—(1) If in the course**

of winding up of a company, it appears that any person who has taken part in the promotion or formation
of the company, or any person, who is or has been a director, manager, Company Liquidator or officer of
the company—

(a) has misapplied, or retained, or become liable or accountable for, any money or property of the

company; or

(b) has been guilty of any misfeasance or breach of trust in relation to the company,

the Tribunal may, on the application of the Official Liquidator, or the Company Liquidator, or of any
creditor or contributory, made within the period specified in that behalf in sub-section (2), inquire into the
conduct of the person, director, manager, Company Liquidator or officer aforesaid, and order him to repay
or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal
considers just and proper, or to contribute such sum to the assets of the company by way of compensation
in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal considers just and
proper.

(2) An application under sub-section (1) shall be made within five years from the date of the winding

up order, or of the first appointment of the Company Liquidator in the winding up, or of the misapplication,
retainer, misfeasance or breach of trust, as the case may be, whichever is longer.

(3) This section shall apply, notwithstanding that the matter is one for which the person concerned may

be criminally liable.

**341. Liability under sections 339 and 340 to extend to partners or directors in firms or**

**companies.—Where a declaration under section 339 or an order under section 340 is made in respect of a**
firm or body corporate, the Tribunal shall also have power to make a declaration under section 339, or pass
an order under section 340, as the case may be, in respect of any person who was at the relevant time a
partner in that firm or a director of that body corporate.

**342. Prosecution of delinquent officers and members of company.—(1) If it appears to the Tribunal**

in the course of a winding up by the Tribunal, that any person, who is or has been an officer, or any member,
of the company has been guilty of any offence in relation to the company, the Tribunal may, either on the

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application of any person interested in the winding up or suo motu, direct the liquidator to prosecute the
offender or to refer the matter to the Registrar.

1*  -  -  -  
(5) When any prosecution is instituted under this section, it shall be the duty of the liquidator and of

every person, who is or has been an officer and agent of the company to give all assistance in connection
with the prosecution which he is reasonably able to give.

_Explanation.—For the purposes of this sub-section, the expression “agent”, in relation to a company,_

shall include any banker or legal adviser of the company and any person employed by the company as
auditor.

2*  -  -  -  
**343. Company Liquidator to exercise certain powers subject to sanction.—[3][(1) The Company**

Liquidator may, with the sanction of the Tribunal, when the company is being wound up by the Tribunal,—

(i) pay any class of creditors in full;

(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or

having or alleging themselves to have any claim, present or future, certain or contingent, against the
company, or whereby the company may be rendered liable; or

(iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt, and

any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting
or alleged to subsist between the company and a contributory or alleged contributory or other debtor or
person apprehending liability to the company, and all questions in any way relating to or affecting the
assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any
security for the discharge of any such call, debt, liability or claim, and give a complete discharge in
respect thereof.]

(2) Notwithstanding anything contained in sub-section (1), in the case of a winding up by the Tribunal,

the Central Government may make rules to provide that the Company Liquidator may, under such
circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be
prescribed, exercise any of the powers referred to in sub-clause (ii) or sub-clause (iii) of clause (b) of
sub-section (1) without the sanction of the Tribunal.

(3) Any creditor or contributory may apply in the manner prescribed to the Tribunal with respect to any

exercise or proposed exercise of powers by the Company Liquidator under this section, and the Tribunal
shall after giving a reasonable opportunity to such applicant and the Company Liquidator, pass such orders
as it may think fit.

**344. Statement that company is in liquidation.—(1) Where a company is being wound up, whether**

by the Tribunal or voluntarily, every invoice, order for goods or business letter issued by or on behalf of
the company or a Company Liquidator of the company, or a receiver or manager of the property of the
company, being a document on or in which the name of the company appears, shall contain a statement that
the company is being wound up.

(2) If a company contravenes the provisions of sub-section (1), the company, and every officer of the

company, the Company Liquidator and any receiver or manager, who wilfully authorises or permits the
non-compliance, shall be punishable with fine which shall not be less than fifty thousand rupees but which
may extend to three lakh rupees.

**345. Books and papers of company to be evidence.—Where a company is being wound up, all books**

and papers of the company and of the Company Liquidator shall, as between the contributories of the
company, be prima facie evidence of the truth of all matters purporting to be recorded therein.

1. Sub-sections (2), (3) and (4) omitted by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
2. Sub-section (6) omitted by Act 29 of 2020, s. 48 (w.e.f. 21-12-2020).
3. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub-section (1) (w.e.f. 15-11-2016).

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**346. Inspection of books and papers by creditors and contributories.—(1) At any time after the**

making of an order for the winding up of a company by the Tribunal, any creditor or contributory of the
company may inspect the books and papers of the company only in accordance with, and subject to such
rules as may be prescribed.

(2) Nothing contained in sub-section (1) shall exclude or restrict any rights conferred by any law for

the time being in force—

(a) on the Central Government or a State Government;

(b) on any authority or officer thereof; or

(c) on any person acting under the authority of any such Government or of any such authority or

officer.

**347. Disposal of books and papers of company.—[1][(1) When the affairs of a company have been**

completely wound up and it is about to be dissolved, the books and papers of such company and those of
the Company Liquidator may be disposed of in such manner as the Tribunal directs.]

(2) After the expiry of five years from the dissolution of the company, no responsibility shall devolve

on the company, the Company Liquidator, or any person to whom the custody of the books and papers has
been entrusted, by reason of any book or paper not being forthcoming to any person claiming to be
interested therein.

(3) The Central Government may, by rules,—

(a) prevent for such period as it thinks proper the destruction of the books and papers of a company

which has been wound up and of its Company Liquidator; and

(b) enable any creditor or contributory of the company to make representations to the Central

Government in respect of the matters specified in clause (a) and to appeal to the Tribunal from any
order which may be made by the Central Government in the matter.

(4) If any person acts in contravention of any rule framed or an order made under sub-section (3), he

shall be punishable [2]*** with fine which may extend to [3][fifty thousand rupees].

**348. Information as to pending liquidations.—[4][(1) If the winding up of a company is not concluded**

within one year after its commencement, the Company Liquidator shall, unless he is exempted from so
doing, either wholly or in part by the Central Government, within two months of the expiry of such year
and thereafter until the winding up is concluded, at intervals of not more than one year or at such shorter
intervals, if any, as may be prescribed, file a statement in such form containing such particulars as may be
prescribed, duly audited, by a person qualified to act as auditor of the company, with respect to the
proceedings in, and position of, the liquidation, with the Tribunal:

Provided that no such audit as is referred to in this sub-section shall be necessary where the provisions

of section 294 apply.]

(2) When the statement is filed with the Tribunal under clause (a) of sub-section (1), a copy shall

simultaneously be filed with the Registrar and shall be kept by him along with the other records of the
company.

(3) Where a statement referred to in sub-section (1) relates to a Government company in liquidation,

the Company Liquidator shall forward a copy thereof—

(a) to the Central Government, if that Government is a member of the Government company;

(b) to any State Government, if that Government is a member of the Government company; or

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub-section (1) (w.e.f. 15-11-2016).
2. The words “with imprisonment for a term which may extend to six months or” omitted by Act 29 of 2020, s. 49 (w.e.f. 21-12
2020).

3. Subs. by s. 49, ibid., for “fifty thousand rupees, or with both” (w.e.f. 21-12-2020).
4. Subs. by s. 255 and the Eleventh Schedule, ibid., for sub-section (1) (w.e.f. 15-11-2016).

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(c) to the Central Government and any State Government, if both the Governments are members

of the Government company.

(4) Any person stating himself in writing to be a creditor or contributory of the company shall be

entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the
statement referred to in sub-section (1), and to receive a copy thereof or an extract there from.

(5) Any person fraudulently stating himself to be a creditor or contributory under sub-section (4) shall

be deemed to be guilty of an offence under section 182 of the Indian Penal Code (45 of 1860), and shall,
on the application of the Company Liquidator, be punishable accordingly.

1[(6) Where a Company Liquidator, who is an insolvency professional registered under the Insolvency

and Bankrupt Code, 2016 (31 of 2016) is in default in complying with the provisions of this section, then
such default shall be deemed to be a contravention of the provisions of the said Code, and the rules and
regulations made thereunder for the purpose of proceedings under chapter VI of Part IV of that Code.]

2*  -  -  -  
**349. Official Liquidator to make payments into public account of India.—Every Official**

Liquidator shall, in such manner and at such times as may be prescribed, pay the monies received by him
as Official Liquidator of any company, into the public account of India in the Reserve Bank of India.

**350. Company Liquidator to deposit monies into scheduled bank.—(1) Every Company Liquidator**

of a company shall, in such manner and at such times as may be prescribed, deposit the monies received by
him in his capacity as such in a scheduled bank to the credit of a special bank account opened by him in
that behalf:

Provided that if the Tribunal considers that it is advantageous for the creditors or contributories or the

company, it may permit the account to be opened in such other bank specified by it.

(2) If any Company Liquidator at any time retains for more than ten days a sum exceeding five thousand

rupees or such other amount as the Tribunal may, on the application of the Company Liquidator, authorise
him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall—

(a) pay interest on the amount so retained in excess, at the rate of twelve per cent. per annum and

also pay such penalty as may be determined by the Tribunal;

(b) be liable to pay any expenses occasioned by reason of his default; and

(c) also be liable to have all or such part of his remuneration, as the Tribunal may consider just and

proper, disallowed, or may also be removed from his office.

**351. Liquidator not to deposit monies into private banking account.—Neither the Official**

Liquidator nor the Company Liquidator of a company shall deposit any monies received by him in his
capacity as such into any private banking account.

**352. Company Liquidation Dividend and Undistributed Assets Account.—(1) Where any company**

is being wound up and the liquidator has in his hands or under his control any money representing—

(a) dividends payable to any creditor but which had remained unpaid for six months after the date

on which they were declared; or

(b) assets refundable to any contributory which have remained undistributed for six months after

the date on which they become refundable,

the liquidator shall forthwith deposit the said money into a separate special account to be known as the
Company Liquidation Dividend and Undistributed Assets Account maintained in a scheduled bank.

(2) The liquidator shall, on the dissolution of the company, pay into the Company Liquidation Dividend

and Undistributed Assets Account any money representing unpaid dividends or undistributed assets in his
hands at the date of dissolution.

1. Subs. by Act 29 of 2020, s. 50, for sub-section (6) (w.e.f. 21-12-2020).
2. Sub-section (7) omitted by Act 29 of 2020, s. 50 (w.e.f. 21-12-2020).

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(3) The liquidator shall, when making any payment referred to in sub-sections (1) and (2), furnish to

the Registrar, a statement in the prescribed form, setting forth, in respect of all sums included in such
payment, the nature of the sums, the names and last known addresses of the persons entitled to participate
therein, the amount to which each is entitled and the nature of his claim thereto, and such other particulars
as may be prescribed.

(4) The liquidator shall be entitled to a receipt from the scheduled bank for any money paid to it under

sub-sections (1) and (2), and such receipt shall be an effectual discharge of the Company Liquidator in
respect thereof.

(5) Where a company is being wound up voluntarily, the Company Liquidator shall, when filing a

statement in pursuance of sub-section (1) of section 348, indicate the sum of money which is payable under
sub-sections (1) and (2) of this section during the six months preceding the date on which the said statement
is prepared, and shall, within fourteen days of the date of filing the said statement, pay that sum into the
Company Liquidation Dividend and Undistributed Assets Account.

(6) Any person claiming to be entitled to any money paid into the Company Liquidation Dividend and

Undistributed Assets Account, whether paid in pursuance of this section or under the provisions of any
previous company law may apply to the Registrar for payment thereof, and the Registrar, if satisfied that
the person claiming is entitled, may make the payment to that person of the sum due:

Provided that the Registrar shall settle the claim of such person within a period of sixty days from the

date of receipt of such claim, failing which the Registrar shall make a report to the Regional Director giving
reasons of such failure.

(7) Any money paid into the Company Liquidation Dividend and Undistributed Assets Account in

pursuance of this section, which remains unclaimed thereafter for a period of fifteen years, shall be
transferred to the general revenue account of the Central Government, but a claim to any money so
transferred may be preferred under sub-section (6) and shall be dealt with as if such transfer had not been
made and the order, if any, for payment on the claim will be treated as an order for refund of revenue.

(8) Any liquidator retaining any money which should have been paid by him into the Company

Liquidation Dividend and Undistributed Assets Account under this section shall—

(a) pay interest on the amount so retained at the rate of twelve per cent. per annum and also pay

such penalty as may be determined by the Registrar:

Provided that the Central Government may in any proper case remit either in part or in whole the

amount of interest which the liquidator is required to pay under this clause;

(b) be liable to pay any expenses occasioned by reason of his default; and

(c) where the winding up is by the Tribunal, also be liable to have all or such part of his

remuneration, as the Tribunal may consider just and proper, to be disallowed, and to be removed from
his office by the Tribunal.

**353. Liquidator to make returns, etc.—(1) If any Company Liquidator who has made any default in**

filing, delivering or making any return, account or other document, or in giving any notice which he is by
law required to file, deliver, make or give, fails to make good the default within fourteen days after the
service on him of a notice requiring him to do so, the Tribunal may, on an application made to it by any
contributory or creditor of the company or by the Registrar, make an order directing the Company
Liquidator to make good the default within such time as may be specified in the order.

(2) Any order under sub-section (1) may provide that all costs of, and incidental to, the application shall

be borne by the Company Liquidator.

(3) Nothing in this section shall prejudice the operation of any enactment imposing penalties on a

Company Liquidator in respect of any such default as aforesaid.

**354. Meetings to ascertain wishes of creditors or contributories.—(1) In all matters relating to the**

winding up of a company, the Tribunal may—

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(a) have regard to the wishes of creditors or contributories of the company, as proved to it by any

sufficient evidence;

(b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or

contributories to be called, held and conducted in such manner as the Tribunal may direct; and

(c) appoint a person to act as chairman of any such meeting and to report the result thereof to the

Tribunal.

(2) While ascertaining the wishes of creditors under sub-section (1), regard shall be had to the value of

each debt of the creditor.

(3) While ascertaining the wishes of contributories under sub-section (1), regard shall be had to the

number of votes which may be cast by each contributory.

**355. Court, tribunal or person, etc., before whom affidavit may be sworn.—(1) Any affidavit**

required to be sworn under the provisions, or for the purposes, of this Chapter may be sworn—

(a) in India before any court, tribunal, judge or person lawfully authorised to take and receive

affidavits; and

(b) in any other country before any court, judge or person lawfully authorised to take and receive

affidavits in that country or before an Indian diplomatic or consular officer.

(2) All tribunals, judges, Justices, commissioners and persons acting judicially in India shall take

judicial notice of the seal, stamp or signature, as the case may be, of any such court, tribunal, judge, person,
diplomatic or consular officer, attached, appended or subscribed to any such affidavit or to any other
document to be used for the purposes of this Chapter.

**356. Powers of Tribunal to declare dissolution of company void.—(1) Where a company has been**

dissolved, whether in pursuance of this Chapter or of section 232 or otherwise, the Tribunal may at any
time within two years of the date of the dissolution, on application by the Company Liquidator of the
company or by any other person who appears to the Tribunal to be interested, make an order, upon such
terms as the Tribunal thinks fit, declaring the dissolution to be void, and thereupon such proceedings may
be taken as if the company had not been dissolved.

1[(2) The Tribunal shall—

(a) forward a copy of the order, within thirty days from the date thereof, to the Registrar who shall

record the same; and

(b) direct the Company Liquidator or the person on whose application the order was made, to file

a certified copy of the order, within thirty days from the date thereof such further period as allowed by
the Tribunal, with the Registrar who shall record the same.]

2[357. Commencement of winding up by Tribunal.—The winding up of a company by the Tribunal

under this Act shall be deemed to commence at the time of the presentation of the petition for the winding
up.]

**358. Exclusion of certain time in computing period of limitation.—Notwithstanding anything in the**

Limitation Act, 1963 (36 of 1963), or in any other law for the time being in force, in computing the period
of limitation specified for any suit or application in the name and on behalf of a company which is being
wound up by the Tribunal, the period from the date of commencement of the winding up of the company
to a period of one year immediately following the date of the winding up order shall be excluded.

PART IV.—Official Liquidators

**359. Appointment of Official Liquidator.—(1) For the purposes of this Act, so far as it relates to the**

winding up of companies by the Tribunal, the Central Government may appoint as many Official
Liquidators, Joint, Deputy or Assistant Official Liquidators as it may consider necessary to discharge the
functions of the Official Liquidator.

1. Subs.by Act 29 of 2020, s. 51, for sub-section (2) (w.e.f. 21-12-2020).
2. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 357 (w.e.f. 15-11-2016).

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(2) The liquidators appointed under sub-section (1) shall be whole-time officers of the Central

Government.

(3) The salary and other allowances of the Official Liquidator, Joint Official Liquidator, Deputy Official

Liquidator and Assistant Official Liquidator shall be paid by the Central Government.

**360. Powers and functions of Official Liquidator.—(1) The Official Liquidator shall exercise such**

powers and perform such duties as the Central Government may prescribe.

(2) Without prejudice to the provisions of sub-section (1), the Official Liquidator may—

(a) exercise all or any of the powers as may be exercised by a Company Liquidator under the

provisions of this Act; and

(b) conduct inquiries or investigations, if directed by the Tribunal or the Central Government, in

respect of matters arising out of winding up proceedings.

**361. Summary procedure for liquidation.—(1) Where the company to be wound up under this**

Chapter, —

(i) has assets of book value not exceeding one crore rupees; and

(ii) belongs to such class or classes of companies as may be prescribed,

the Central Government may order it to be wound up by summary procedure provided under this Part.

(2) Where an order under sub-section (1) is made, the Central Government shall appoint the Official

Liquidator as the liquidator of the company.

(3) The Official Liquidator shall forthwith take into his custody or control all assets, effects and

actionable claims to which the company is or appears to be entitled.

(4) The Official Liquidator shall, within thirty days of his appointment, submit a report to the Central

Government in such manner and form, as may be prescribed, including a report whether in his opinion, any
fraud has been committed in promotion, formation or management of the affairs of the company or not.

(5) On receipt of the report under sub-section (4), if the Central Government is satisfied that any fraud

has been committed by the promoters, directors or any other officer of the company, it may direct further
investigation into the affairs of the company and that a report shall be submitted within such time as may
be specified.

(6) After considering the investigation report under sub-section (5), the Central Government may order

that winding up may be proceeded under Part I of this Chapter or under the provision of this Part.

**362. Sale of assets and recovery of debts due to company.—(1) The Official Liquidator shall**

expeditiously dispose of all the assets whether movable or immovable within sixty days of his appointment.

(2) The Official Liquidator shall serve a notice within thirty days of his appointment calling upon the

debtors of the company or the contributories, as the case may be, to deposit within thirty days with him the
amount payable to the company.

(3) Where any debtor does not deposit the amount under sub-section (2), the Central Government may,

on an application made to it by the Official Liquidator, pass such orders as it thinks fit.

(4) The amount recovered under this section by the Official Liquidator shall be deposited in accordance

with the provisions of section 349.

**363. Settlement of claims of creditors by Official Liquidator.—(1) The Official Liquidator within**

thirty days of his appointment shall call upon the creditors of the company to prove their claims in such
manner as may be prescribed, within thirty days of the receipt of such call.

(2) The Official Liquidator shall prepare a list of claims of creditors in such manner as may be

prescribed and each creditor shall be communicated of the claims accepted or rejected along with reasons
to be recorded in writing.

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**364. Appeal by creditor.—(1) Any creditor aggrieved by the decision of the Official Liquidator under**

section 363 may file an appeal before the Central Government within thirty days of such decision.

(2) The Central Government may after calling the report from the Official Liquidator either dismiss the

appeal or modify the decision of the Official Liquidator.

(3) The Official Liquidator shall make payment to the creditors whose claims have been accepted.

(4) The Central Government may, at any stage during settlement of claims, if considers necessary, refer

the matter to the Tribunal for necessary orders.

**365. Order of dissolution of company.—(1) The Official Liquidator shall, if he is satisfied that the**

company is finally wound up, submit a final report to—

(i) the Central Government, in case no reference was made to the Tribunal under sub-section (4) of

section 364; and

(ii) in any other case, the Central Government and the Tribunal.

(2) The Central Government, or as the case may be, the Tribunal on receipt of such report shall order

that the company be dissolved.

(3) Where an order is made under sub-section (2), the Registrar shall strike off the name of the company

from the register of companies and publish a notification to this effect.

CHAPTER XXI

PART I.— Companies Authorised to Register under this Act

**366. Companies capable of being registered.—(1) For the purposes of this Part, the word “company”**

includes any partnership firm, limited liability partnership, cooperative society, society or any other
business entity formed under any other law for the time being in force which applies for registration under
this Part.

(2) With the exceptions and subject to the provisions contained in this section, any company formed,

whether before or after the commencement of this Act, in pursuance of any Act of Parliament other than
this Act or of any other law for the time being in force or being otherwise duly constituted according to
law, and consisting of [1][two or more members], may at any time register under this Act as an unlimited
company, or as a company limited by shares, or as a company limited by guarantee, in such manner as may
be prescribed and the registration shall not be invalid by reason only that it has taken place with a view to
the company’s being wound up:

Provided that—

(i) a company registered under the Indian Companies Act, 1882 (6 of 1882) or under the Indian

Companies Act, 1913 (7 of 1913) or the Companies Act, 1956 (1 of 1956), shall not register in
pursuance of this section;

(ii) a company having the liability of its members limited by any Act of Parliament other than this

Act or by any other law for the time being in force, shall not register in pursuance of this section as an
unlimited company or as a company limited by guarantee;

(iii) a company shall be registered in pursuance of this section as a company limited by shares only

if it has a permanent paid-up or nominal share capital of fixed amount divided into shares, also of fixed
amount, or held and transferable as stock, or divided and held partly in the one way and partly in the
other, and formed on the principle of having for its members the holders of those shares or that stock,
and no other persons;

(iv) a company shall not register in pursuance of this section without the assent of a majority of

such of its members as are present in person, or where proxies are allowed, by proxy, at a general
meeting summoned for the purpose;

(v) where a company not having the liability of its members limited by any Act of Parliament or

any other law for the time being in force is about to register as a limited company, the majority required
to assent as aforesaid shall consist of not less than three-fourths of the members present in person, or
where proxies are allowed, by proxy, at the meeting;

1. Subs. by Act 1 of 2018, s. 75, for “seven or more members” (w.e.f. 15-8-2018).

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(vi) where a company is about to register as a company limited by guarantee, the assent to its being

so registered shall be accompanied by a resolution declaring that each member undertakes to contribute
to the assets of the company, in the event of its being wound up while he is a member, or within one
year after he ceases to be a member, for payment of the debts and liabilities of the company or of such
debts and liabilities as may have been contracted before he ceases to be a member, and of the costs,
charges and expenses of winding up, and for the adjustment of the rights of the contributories among
themselves, such amount as may be required, not exceeding a specified amount.

1[(vii) a company with less than seven members shall register as a private company.]

(3) In computing any majority required for the purposes of sub-section (1), when a poll is demanded,

regard shall be had to the number of votes to which each member is entitled according to the regulations of
the company.

**367. Certificate of registration of existing companies.—On compliance with the requirements of this**

Chapter with respect to registration, and on payment of such fees, if any, as are payable under section 403,
the Registrar shall certify under his hand that the company applying for registration is incorporated as a
company under this Act, and in the case of a limited company that it is limited and thereupon the company
shall be so incorporated.

**368. Vesting of property on registration.—All property, movable and immovable (including**

actionable claims), belonging to or vested in a company at the date of its registration in pursuance of this
Part, shall, on such registration, pass to and vest in the company as incorporated under this Act for all the
estate and interest of the company therein.

**369. Saving of existing liabilities.—The registration of a company in pursuance of this Part shall not**

affect its rights or liabilities in respect of any debt or obligation incurred, or any contract entered into, by,
to, with, or on behalf of, the company before registration.

**370. Continuation of pending legal proceedings.—All suits and other legal proceedings taken by or**

against the company, or any public officer or member thereof, which are pending at the time of the
registration of a company in pursuance of this Part, may be continued in the same manner as if the
registration had not taken place:

Provided that execution shall not issue against the property or persons of any individual member of the

company on any decree or order obtained in any such suit or proceeding; but, in the event of the property
of the company being insufficient to satisfy the decree or order, an order may be obtained for winding up
the company [2][in accordance with the provisions of this Act or of the Insolvency and Bankruptcy Code,
2016 (31 of 2016)].

**371. Effect of registration under this Part.—(1) When a company is registered in pursuance of this**

Part, sub-sections (2) to (7) shall apply.

(2) All provisions contained in any Act of Parliament or any other law for the time being in force, or

other instrument constituting or regulating the company, including, in the case of a company registered as
a company limited by guarantee, the resolution declaring the amount of the guarantee, shall be deemed to
be conditions and regulations of the company, in the same manner and with the same incidents as if so
much thereof as would, if the company had been formed under this Act, have been required to be inserted
in the memorandum, were contained in a registered memorandum, and the residue thereof were contained
in registered articles.

(3) All the provisions of this Act shall apply to the company and the members, contributories and

creditors thereof, in the same manner in all respects as if it had been formed under this Act, subject as
follows:—

(a) Table F in Schedule I shall not apply unless and except in so far as it is adopted by special

resolution;

(b) the provisions of this Act relating to the numbering of shares shall not apply to any company

whose shares are not numbered;

1. Ins. by Act 1 of 2018, s. 75 (w.e.f. 15-8-2018).
2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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(c) in the event of the company being wound up, every person shall be a contributory, in respect of

the debts and liabilities of the company contracted before registration, who is liable to pay or contribute
to the payment of any debt or liability of the company contracted before registration, or to pay or
contribute to the payment of any sum for the adjustment of the rights of the members among themselves
in respect of any such debt or liability, or to pay or contribute to the payment of the costs, charges and
expenses of winding up the company, so far as relates to such debts or liabilities as aforesaid;

(d) in the event of the company being wound up, every contributory shall be liable to contribute to

the assets of the company, in the course of the winding up, all sums due from him in respect of any
such liability as aforesaid; and in the event of the death or insolvency of any contributory, the provisions
of this Act with respect to the legal representatives of deceased contributories, or with respect to the
assignees of insolvent contributories, as the case may be, shall apply.

(4) The provisions of this Act with respect to—

(a) the registration of an unlimited company as a limited company;

(b) the powers of an unlimited company on registration as a limited company, to increase the

nominal amount of its share capital and to provide that a portion of its share capital shall not be capable
of being called-up except in the event of winding up;

(c) the power of a limited company to determine that a portion of its share capital shall not be

capable of being called-up except in the event of winding up,

shall apply, notwithstanding anything in any Act of Parliament or any other law for the time being in force,
or other instrument constituting or regulating the company.

(5) Nothing in this section shall authorise the company to alter any such provisions contained in any

instrument constituting or regulating the company as would, if the company had originally been formed
under this Act, have been required to be contained in the memorandum and are not authorised to be altered
by this Act.

(6) None of the provisions of this Act (apart from those of section 242) shall derogate from any power

of altering its constitution or regulations which may be vested in the company, by virtue of any Act of
Parliament or any other law for the time being in force, or other instrument constituting or regulating the
company.

(7) In this section, the expression “instrument” includes deed of settlement, deed of partnership, or

limited liability partnership.

**372. Power of Court to stay or restrain proceedings.—The provisions of this Act** [1][or of the

Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] with respect to staying and
restraining suits and other legal proceedings against a company at any time after the presentation of a
petition for winding up and before the making of a winding up order, shall, in the case of a company
registered in pursuance of this Part, where the application to stay or restrain is by a creditor, extend to suits
and other legal proceedings against any contributory of the company.

**373. Suits stayed on winding up order.—Where an order has been made for winding up, or a**

provisional liquidator has been appointed for, a company registered in pursuance of this Part, no suit or
other legal proceeding shall be proceeded with or commenced against the company or any contributory of
the company in respect of any debt of the company, except by leave of the Tribunal and except on such
terms as the Tribunal may impose.

**374. Obligations of companies registering under this Part.—Every company which is seeking**

registration under this Part shall,—

(a) ensure that secured creditors of the company, prior to its registration under this Part, have either

consented to or have given their no objection to company's registration under this Part;

(b) publish in a newspaper, advertisement one in English and one in vernacular language in such

form as may be prescribed giving notice about registration under this Part, seeking objections and
address them suitably;

1. The proviso ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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(c) file an affidavit, duly not arised, from all the members or partners to provide that in the event

of registration under this Part, necessary documents or papers shall be submitted to the registering or
other authority with which the company was earlier registered, for its dissolution as partnership firm,
limited liability partnership, cooperative society, society or any other business entity, as the case may
be.

(d) comply with such other conditions as may be prescribed.

1[Provided that upon registration as a company under this Part a limited liability partnership incorporated under

the Limited Liability Partnership Act, 2008 (6 of 2009) shall be deemed to have been dissolved under that Act without
any further act or deed.]

PART II.—Winding up of unregistered companies

**375. Winding up of unregistered companies.—(1) Subject to the provisions of this Part, any**

unregistered company may be wound up under this Act, in such manner as may be prescribed, and all the
provisions of this Act, with respect to winding up shall apply to an unregistered company, with the
exceptions and additions mentioned in sub-sections (2) to (4).

(2) No unregistered company shall be wound up under this Act voluntarily.
(3) An unregistered company may be wound up under the following circumstances, namely:—

(a) if the company is dissolved, or has ceased to carry on business, or is carrying on business only

for the purpose of winding up its affairs;

(b) if the company is unable to pay its debts;

(c) if the Tribunal is of opinion that it is just and equitable that the company should be wound up.

(4) An unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its

debts—

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding

one lakh rupees then due, has served on the company, by leaving at its principal place of business, or
by delivering to the secretary, or some director, manager or principal officer of the company, or by
otherwise serving in such manner as the Tribunal may approve or direct, a demand under his hand
requiring the company to pay the sum so due, and the company has, for three weeks after the service
of the demand, neglected to pay the sum or to secure or compound for it to the satisfaction of the
creditor;

(b) if any suit or other legal proceeding has been instituted against any member for any debt or

demand due, or claimed to be due, from the company, or from him in his character as a member, and
notice in writing of the institution of the suit or other legal proceeding having been served on the
company by leaving the same at its principal place of business or by delivering it to the secretary, or
some director, manager or principal officer of the company or by otherwise serving the same in such
manner as the Tribunal may approve or direct, the company has not, within ten days after service of the
notice,—

(i) paid, secured or compounded for the debt or demand;

(ii) procured the suit or other legal proceeding to be stayed; or

(iii) indemnified the defendant to his satisfaction against the suit or other legal proceeding, and

against all costs, damages and expenses to be incurred by him by reason of the same;

(c) if execution or other process issued on a decree or order of any Court or Tribunal in favour of a

creditor against the company, or any member thereof as such, or any person authorised to be sued as
nominal defendant on behalf of the company, is returned unsatisfied in whole or in part;

(d) if it is otherwise proved to the satisfaction of the Tribunal that the company is unable to pay its

debts.

_Explanation.—For the purposes of this Part, the expression “unregistered company”—_

1. The proviso ins. by Act 1 of 2018, s. 76 (w.e.f. 15-8-2018).

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(a) shall not include—

(i) a railway company incorporated under any Act of Parliament or other Indian law or any Act

of Parliament of the United Kingdom;

(ii) a company registered under this Act; or

(iii) a company registered under any previous companies law and not being a company the

registered office whereof was in Burma, Aden, Pakistan immediately before the separation of that
country from India; and

(b) save as aforesaid, shall include any partnership firm, limited liability partnership or society or

co-operative society, association or company consisting of more than seven members at the time when
the petition for winding up the partnership firm, limited liability partnership or society or co-operative
society, association or company, as the case may be, is presented before the Tribunal.

**376. Power to wind up foreign companies, although dissolved.— Where a body corporate**

incorporated outside India which has been carrying on business in India, ceases to carry on business in
India, it may be wound up as an unregistered company under this Part, notwithstanding that the body
corporate has been dissolved or otherwise ceased to exist as such under or by virtue of the laws of the
country under which it was incorporated.

**377. Provisions of Chapter cumulative.—(1) The provisions of this Part, with respect to unregistered**

companies shall be in addition to and not in derogation of, any provisions hereinbefore in this Act contained
with respect to the winding up of companies by the Tribunal.

(2) The Tribunal or Official Liquidator may exercise any powers or do any act in the case of

unregistered companies which might be exercised or done by the Tribunal or Official Liquidator in winding
up of companies formed and registered under this Act:

Provided that an unregistered company shall not, except in the event of its being wound up, be deemed

to be a company under this Act, and then only to the extent provided by this Part.

**378. Saving and construction of enactments conferring power to wind up partnership firm,**

**association or company, etc., in certain cases.—Nothing in this Part, shall affect the operation of any**
enactment which provides for any partnership firm, limited liability partnership or society or co-operative
society, association or company being wound up, or being wound up as a company or as an unregistered
company, under the Companies Act, 1956 (1 of 1956), or any Act repealed by that Act:

Provided that references in any such enactment to any provision contained in the Companies Act, 1956

(1 of 1956) or in any Act repealed by that Act shall be read as references to the corresponding provision, if
any, contained in this Act.

1[CHAPTER XXIA

PRODUCER COMPANIES

PART I

PRELIMINARY

**378A. Definitions.— In this Chapter, unless the context otherwise requires,—**

(a) “active Member” means a Member who fulfils the quantum and period of patronage of the

Producer Company as may be required by the articles;

(b) “Chief Executive” means an individual appointed as such under sub-section (1) of section

378W;

(c) “inter-State co-operative society” means a multi-State co-operative society as defined in clause

(p) of section 3 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) and includes any co
1. Ins. by Act 29 of 2020, s. 52 (w.e.f. 11-2-2021).

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operative society registered under any other law for the time being in force, which has, subsequent to
its formation, extended any of its objects to more than one State by enlisting the participation of persons
or by extending any of its activities outside the State, whether directly or indirectly or through an
institution of which it is a constituent;

(d) “limited return” means the maximum dividend as may be specified by the articles;

(e) “Member” means a person or Producer Institution (whether incorporated or not) admitted as a

Member of a Producer Company and who retains the qualifications necessary for continuance as such;

(f) “mutual assistance principles” means the principles set out in sub-section (2) of section 378G;

(g) “officer” includes any director or Chief Executive or Secretary or any person in accordance

with whose directions or instructions part or whole of the business of the Producer Company is carried
on;

(h) “patronage” means the use of services offered by the Producer Company to its Members by

participation in its business activities;

(i) “patronage bonus” means payments made by a Producer Company out of its surplus income to

the Members in proportion to their respective patronage;

(j) “primary produce” means —

(i) produce of farmers, arising from agriculture (including animal husbandry, horticulture,

floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming
plantation products), or from any other primary activity or service which promotes the interest of the
farmers or consumers; or

(ii) produce of persons engaged in handloom, handicraft and other cottage industries; or

(iii) any product resulting from any of the above activities, including by-products of such products;

or

(iv) any product resulting from an ancillary activity that may assist or promote any of the aforesaid

activities or anything ancillary thereto; or

(v) any activity which is intended to increase the production of anything referred to in sub-clauses

(i) to (iv) or improve the quality thereof;

(k) “producer” means any person engaged in any activity connected with or relatable to any primary

produce;

(l) “Producer Company” means a body corporate having objects or activities specified in section

378B and registered as Producer Company under this Act or under the Companies Act, 1956
(1 of 1956);

(m) “Producer Institution” means a Producer Company or any other institution having only

producer or producers or Producer Company or Producer Companies as its member whether
incorporated or not having any of the objects referred to in section 378B and which agrees to make use
of the services of the Producer Company or Producer Companies as provided in its articles;

(n) “withheld price” means part of the price due and payable for goods supplied by any Member to

the Producer Company; and as withheld by the Producer Company for payment on a subsequent date.

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PART II

INCORPORATION OF PRODUCER COMPANIES AND OTHER MATTERS

**378B. Objects of Producer Company.—(1) The objects of the Producer Company shall relate to all**

or any of the following matters, namely:—

(a) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of

primary produce of the Members or import of goods or services for their benefit:

Provided that the Producer Company may carry on any of the activities specified in this clause

either by itself or through other institution;

(b) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of

produce of its Members;

(c) manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;

(d) providing education on the mutual assistance principles to its Members and others;

(e) rendering technical services, consultancy services, training, research and development and all

other activities for the promotion of the interests of its Members;

(f) generation, transmission and distribution of power, revitalisation of land and water resources,

their use, conservation and communications relatable to primary produce;

(g) insurance of producers or their primary produce;

(h) promoting techniques of mutuality and mutual assistance;

(i) welfare measures or facilities for the benefit of Members as may be decided by the Board;

(j) any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i)

or other activities which may promote the principles of mutuality and mutual assistance amongst the
Members in any other manner;

(k) financing of procurement, processing, marketing or other activities specified in clauses (a) to

(j) which include extending of credit facilities or any other financial services to its Members.’’.

(2) Every Producer Company shall deal primarily with the produce of its active Members for carrying

out any of its objects specified in this section.

**378C. Formation of Producer Company and its registration.—(1) Any ten or more individuals,**

each of them being a producer or any two or more Producer Institutions, or a combination of ten or more
individuals and Producer Institutions, desirous of forming a Producer Company having its objects specified
in section 378B and otherwise complying with the requirements of this Chapter and the provisions of this
Act in respect of registration, may form an incorporated company as a Producer Company under this Act.

(2) If the Registrar is satisfied that all the requirements of this Act have been complied with in respect

of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the
documents required for registration, register the memorandum, the articles and other documents, if any, and
issue a certificate of incorporation under this Act.

(3) A Producer Company so formed shall have the liability of its Members limited by the memorandum

to the amount, if any, unpaid on the shares respectively held by them and be termed a company limited by
shares.

(4) The Producer Company may reimburse to its promoters all other direct costs associated with the

promotion and registration of the company including registration, legal fees, printing of a memorandum

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and articles and the payment thereof shall be subject to the approval at its first general meeting of the
Members.

(5) On registration under sub-section (2), the Producer Company shall become a body corporate as if it

is a private limited company to which the provisions contained in this Chapter apply, without, however,
any limit to the number of Members thereof, and the Producer Company shall not, under any circumstance,
whatsoever, become or be deemed to become a public limited company under this Act.

**378D. Membership and voting rights of Members of Producer Company.— (1)(a) In a case where**

the membership consists solely of individual Members, the voting rights shall be based on a single vote for
every Member, irrespective of his shareholding or patronage of the Producer Company.

(b) In a case where the membership consists of Producer Institutions only, the voting rights of such

Producer Institutions shall be determined on the basis of their participation in the business of the Producer
Company in the previous year, as may be specified by articles:

Provided that during the first year of registration of a Producer Company, the voting rights shall be

determined on the basis of the shareholding by such Producer Institutions.

(c) In a case where the membership consists of individuals and Producer Institutions, the voting rights

shall be computed on the basis of a single vote for every Member.

(2) The articles of any Producer Company may provide for the conditions, subject to which a Member

may continue to retain his membership, and the manner in which voting rights shall be exercised by the
Members.

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), any Producer Company

may, if so authorised by its articles, restrict the voting rights to active Members, in any special or general
meeting.

(4) No person, who has any business interest which is in conflict with business of the Producer

Company, shall become a Member of that Company.

(5) A Member, who acquires any business interest which is in conflict with the business of the Producer

Company, shall cease to be a Member of that Company and be removed as a Member in accordance with
the articles.

**378E. Benefits to Members.—(1) Subject to the provisions made in articles, every Member shall**

initially receive only such value for the produce or products pooled and supplied as the Board of Producer
Company may determine, and the withheld price may be disbursed later in cash or in kind or by allotment
of equity shares, in proportion to the produce supplied to the Producer Company during the financial year
to such extent and in such manner and subject to such conditions as may be decided by the Board.

(2) Every Member shall, on the share capital contributed, receive only a limited return:

Provided that every such Member may be allotted bonus shares in accordance with the provisions

contained in section 378ZJ.

(3) The surplus if any, remaining after making provision for payment of limited return and reserves

referred to in section 378ZI, may be disbursed as patronage bonus, amongst the Members, in proportion to
their participation in the business of the Producer Company, either in cash or by way of allotment of equity
shares, or both, as may be decided by the Members at the general meeting.

**378F. Memorandum of Producer Company.—The memorandum of association of every Producer**

Company shall state—

(a) the name of the company with "Producer Company Limited" as the last words of the name of

such Company;

(b) the State in which the registered office of the Producer Company is to situate;

(c) the main objects of the Producer Company shall be one or more of the objects specified in

section 378B;

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(d) the names and addresses of the persons who have subscribed to the memorandum;

(e) the amount of share capital with which the Producer Company is to be registered and division

thereof into shares of a fixed amount;

(f) the names, addresses and occupations of the subscribers being producers, who shall act as the

first directors in accordance with sub-section (2) of section 378J;

(g) that the liability of its members is limited;

(h) against the subscriber's name, the number of shares each subscriber takes:

Provided that no subscriber shall take less than one share;

(i) that in case the objects of the Producer Company are not confined to one State, the States to

whose territories the objects extend.

**378G. Articles of association.—(1) There shall be presented, for registration to the Registrar of the**

State to which the registered office of the Producer Company is, stated by the memorandum of association,
to be situate—

(a) memorandum of the Producer Company;

(b) its articles duly signed by the subscribers to the memorandum.

(2) The articles shall contain the following mutual assistance principles, namely:—

(a) the membership shall be voluntary and available, to all eligible persons who, can participate or

avail of the facilities or services of the Producer Company, and are willing to accept the duties of
membership;

(b) each Member shall, save as otherwise provided in this Chapter, have only a single vote

irrespective of the shareholding;

(c) the Producer Company shall be administered by a Board consisting of persons elected or

appointed as directors in the manner consistent with the provisions of this Chapter and the Board shall
be accountable to the Members;

(d) particulars on limited return on share capital;

(e) the surplus arising out of the operations of the Producer Company shall be distributed in an

equitable manner by—

(i) providing for the development of the business of the Producer Company;

(ii) providing for common facilities; and

(iii) distributing amongst the Members, as may be admissible in proportion to their respective

participation in the business;

(f) provision for the education of Members, employees and others, on the principles of mutuality

and techniques of mutual assistance;

(g) the Producer Company shall actively co-operate with other Producer Companies (and other

organisations following similar principles) at local, national or international level so as to best serve
the interest of their Members and the communities it purports to serve.

(3) Without prejudice to the generality of the foregoing provisions of sub-sections (1) and (2), the

articles shall contain the following provisions, namely:—

(a) the qualifications for membership, the conditions for continuance or cancellation of membership

and the terms, conditions and procedure for transfer of shares;

(b) the manner of ascertaining the patronage and voting right based on patronage;

(c) subject to the provisions contained in sub-section (1) of section 378N, the manner of constitution

of the Board, its powers and duties, the minimum and maximum number of directors, manner of election

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and appointment of directors and retirement by rotation, qualifications for being elected or continuance
as such and the terms of office of the said directors, their powers and duties, conditions for election or
co-option of directors, method of removal of directors and the filling up of vacancies on the Board, and
the manner and the terms of appointment of the Chief Executive;

(d) the election of the Chairman, term of office of directors and the Chairman, manner of voting at

the general or special meetings of Members, procedure for voting, by directors at meetings of the Board,
powers of the Chairman and the circumstances under which the Chairman may exercise a casting vote;

(e) the circumstances under which, and the manner in which, the withheld price is to be determined

and distributed;

(f) the manner of disbursement of patronage bonus in cash or by issue of equity shares, or both;

(g) the contribution to be shared and related matters referred to in sub-section (2) of section 378ZI;

(h) the matters relating to issue of bonus shares out of general reserves as set out in section 378ZJ;

(i) the basis and manner of allotment of equity shares of the Producer Company in lieu of the whole

or part of the sale proceeds of produce or products supplied by the Members;

(j) the amount of reserves, sources from which funds may be raised, limitation on raising of funds,

restriction on the use of such funds and the extent of debt that may be contracted and the conditions
thereof;

(k) the credit, loans or advances which may be granted to a Member and the conditions for the grant

of the same;

(l) the right of any Member to obtain information relating to general business of the company;

(m) the basis and manner of distribution and disposal of funds available after meeting liabilities in

the event of dissolution or liquidation of the Producer Company;

(n) the authorisation for division, amalgamation, merger, creation of subsidiaries and the entering

into joint ventures and other matters connected therewith;

(o) laying of the memorandum and articles of the Producer Company before a special general

meeting to be held within ninety days of its registration;

(p) any other provision, which the Members may, by special resolution recommend to be included

in the articles.

**378H. Amendment of memorandum.—(1) A Producer Company shall not alter the conditions**

contained in its memorandum except in the cases, by the mode and to the extent for which express provision
is made in this Act.

(2) A Producer Company may, by special resolution, not inconsistent with section 378B, alter its objects

specified in its memorandum.

(3) A copy of the amended memorandum, together with a copy of the special resolution duly certified

by two directors, shall be filed with the Registrar within thirty days from the date of adoption of any
resolution referred to in sub-section (2):

Provided that in the case of transfer of the registered office of a Producer Company from the jurisdiction

of one Registrar to another, certified copies of the special resolution certified by two directors shall be filed
with both the Registrars within thirty days, and each Registrar shall record the same, and thereupon the
Registrar from whose jurisdiction the office is transferred, shall forthwith forward to the other Registrar all
documents relating to the Producer Company.

(4) The alteration of the provisions of memorandum relating to the change of the place of its registered

office from one State to another shall not take effect unless it is approved by the Central Government on an
application in such form and manner as may be prescribed.

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**378-I. Amendment of articles.— (1) Any amendment of the articles shall be proposed by not less than**

two-thirds of the elected directors or by not less than one-third of the Members of the Producer Company,
and adopted by the Members by a special resolution.

(2) A copy of the amended articles together with the copy of the special resolution, both duly certified

by two directors, shall be filed with the Registrar within fifteen days from the date of its adoption.

**378J. Option to inter-State co-operative societies to become Producer Companies.—(1)**

Notwithstanding anything contained in sub-section (1) of section 378C, any inter-State co-operative society
with objects not confined to one State may make an application to the Registrar for registration as Producer
Company under this Chapter.

(2) Every application under sub-section (1) shall be accompanied by—

(a) a copy of the special resolution, of not less than two-thirds of total members of inter-State co
operative society, for its incorporation as a Producer Company under this Act;

(b) a statement showing—

(i) names and addresses or the occupation of the directors and the Chief Executive, if any, by

whatever name called, of such co-operative; and

(ii) list of members of such inter-State co-operative society;

(c) a statement indicating that the inter-State co-operative society is engaged in any one or more of

the objects specified in section 378B;

(d) a declaration by two or more directors of the inter-State co-operative society certifying that

particulars given in clauses (a) to (c) are correct.

(3) When an inter-State co-operative society is registered as a Producer Company, the words “Producer

Company Limited” shall form part of its name with any word or expression to show its identity preceding
it.

(4) On compliance with the requirements of sub-sections (1) to (3), the Registrar shall, within a period

of thirty days of the receipt of application, certify under his hand that the inter-State co-operative society
applying for registration is registered and thereby incorporated as a Producer Company under this Chapter.

(5) A co-operative society formed by producers, by federation or union of co-operative societies of

producers or co-operatives of producers, registered under any law for the time being in force which has
extended its objects outside the State, either directly or through a union or federation of co-operatives of
which it is a constituent, as the case may be, and any federation or unions of such co-operatives, which has
so extended any of its objects or activities outside the State, shall be eligible to make an application under
sub-section (1) and to obtain registration as a Producer Company under this Chapter.

(6) The inter-State co-operative society shall, upon registration under sub-section (1), stand transformed

into a Producer Company, and thereafter shall be governed by the provisions of this Chapter to the exclusion
of the law by which it was earlier governed, save in so far as anything done or omitted to be done before
its registration as a Producer Company, and notwithstanding anything contained in any other law for the
time being in force, no person shall have any claim against the co-operative institution or the company by
reason of such conversion or transformation.

(7) Upon registration as a Producer Company, the Registrar of Companies who registers the company

shall forthwith intimate the Registrar with whom the erstwhile inter-State co-operative society was earlier
registered for deletion of the society from its register.

**378K. Effect of incorporation of Producer Company.—Every shareholder of the inter-State co-**

operative society immediately before the date of registration of Producer Company (hereafter in this
Chapter referred to as the date of transformation) shall be deemed to be registered on and from that date as
a shareholder of the Producer Company to the extent of the face value of the shares held by such
shareholder.

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**378L. Vesting of undertaking in Producer Company.—(1) All properties and assets, movable and**

immovable, of, or belonging to, the inter-State co-operative society as on the date of transformation, shall
vest in the Producer Company.

(2) All the rights, debts, liabilities, interests, privileges and obligations of the inter-State co-operative

society as on the date of transformation shall stand transferred to, and be the rights, debts, liabilities,
interests, privileges and obligations of, the Producer Company.

(3) Without prejudice to the provisions contained in sub-section (2), all debts, liabilities and obligations

incurred, all contracts entered into and all matters and things engaged to be done by, with or for, the society
as on the date of transformation for or in connection with their purposes, shall be deemed to have been
incurred, entered into, or engaged to be done by, with or for, the Producer Company.

(4) All sums of money due to the inter-State co-operative society immediately before the date of

transformation, shall be deemed to be due to the Producer Company.

(5) Every organisation, which was being managed immediately before the date of transformation by

the inter-State co-operative society shall be managed by the Producer Company for such period, to such
extent and in such manner as the circumstances may require.

(6) Every organisation which was getting financial, managerial or technical assistance from the inter
State co-operative society, immediately before the date of transformation, may continue to be given
financial, managerial or technical assistance, as the case may be, by the Producer Company, for such period,
to such extent and in such manner as that company may deem fit.

(7) The amount representing the capital of the erstwhile inter-State co-operative society shall form part

of the capital of the Producer Company.

(8) Any reference to the inter-State co-operative society in any law other than this Act or in any contract

or other instrument, shall be deemed to be reference to the Producer Company.

(9) If, on the date of transformation, there is pending any suit, arbitration, appeal or other legal

proceeding of whatever nature by or against the inter-State co-operative society, the same shall not abate,
be discontinued or be in any way prejudicially affected by reason of the incorporation of the Producer
Company under section 378C or transformation of the inter-State co-operative society as a Producer
Company under section 378J, as the case may be, but the suit, arbitration, appeal or other proceeding, may
be continued, prosecuted and enforced by or against the Producer Company in the same manner and to the
same extent as it would have, or may have been continued, prosecuted and enforced by or against the interState co-operative society as if the provisions contained in this Chapter had not come into force.

**378M. Concession etc., to be deemed to have been granted to Producer Company.—With effect**

from the date of transformation, all fiscal and other concessions, licences, benefits, privileges and
exemptions granted to the inter-State co-operative society in connection with the affairs and business of the
inter-State co-operative society under any law for the time being in force shall be deemed to have been
granted to the Producer Company.

**378N. Provisions in respect of officers and other employees of inter-State co-operative society.—**

(1) Notwithstanding anything contained in section 378-O, all the directors in the inter-State co-operative
society before the incorporation of the Producer Company shall continue in office for a period of one year
from the date of transformation and in accordance with the provisions of this Act.

(2) Every officer or other employee of the inter-State co-operative society (except a director of the

Board, Chairman or Managing Director) serving in its employment immediately before the date of
transformation shall, in so far as such officer or other employee is employed in connection with the interState co-operative society which has vested in the Producer Company by virtue of this Act, become, as
from the date of transformation, an officer or, as the case may be, other employee of the Producer Company
and shall hold his office or service therein by the same tenure, at the same remuneration, upon the same
terms and conditions, with the same obligations and with the same rights and privileges as to leave, leave
travel concession, welfare scheme, medical benefit scheme, insurance, provident fund, other funds,
retirement, voluntary retirement, gratuity and other benefits as he would have held under the erstwhile inter
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State co-operative society if its undertaking had not vested in the Producer Company and shall continue to
do so as an officer or, as the case may be, other employee of the Producer Company.

(3) Where an officer or other employee of the inter-State co-operative society opts under sub-section

(2) not to be in employment or service of the Producer Company, such officer or other employee shall be
deemed to have resigned.

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any

other law for the time being in force, the transfer of the services of any officer or other employee of the
inter-State co-operative society to the Producer Company shall not entitle such officer or other employee
to any compensation under this Act or under any other law for the time being in force and no such claim
shall be entertained by any court, tribunal or other authority.

(5) The officers and other employees who have retired before the date of transformation from the

service of the inter-State co-operative society and are entitled to any benefits, rights or privileges, shall be
entitled to receive the same benefits, rights or privileges from the Producer Company.

(6) The trusts of the provident fund or the gratuity fund of the inter-State co-operative society and any

other bodies created for the welfare of officers or employees shall continue to discharge functions in the
Producer Company as was being done hitherto in the inter-State co-operative society and any tax exemption
granted to the provident fund or the gratuity fund would continue to be applied to the Producer Company.

(7) Notwithstanding anything contained in this Act or in any other law for the time being in force or in

the regulations of the inter-State co-operative society, no director of the Board, Chairman, Managing
Director or any other person entitled to manage the whole or substantial part of the business and affairs of
the inter-State co-operative society shall be entitled to any compensation against the inter-State co-operative
society or the Producer Company for the loss of office or for the premature termination of any contract of
management entered into by him with the inter-State co-operative society.

PART III

MANAGEMENT OF PRODUCER COMPANY

**378-O. Number of directors.—Every Producer Company shall have at least five and not more than**

fifteen directors:

Provided that in the case of an inter-State co-operative society incorporated as a Producer Company,

such company may have more than fifteen directors for a period of one year from the date of its
incorporation as a Producer Company.

**378P. Appointment of directors.— (1)Save as otherwise provided in section 378N, the Members who**

sign the memorandum and the articles may designate therein the Board of Directors, not less than five, who
shall govern the affairs of the Producer Company until the directors are elected in accordance with the
provisions of this section.

(2) The election of directors shall be conducted within a period of ninety days of the registration of the

Producer Company:

Provided that in the case of an inter-State co-operative society which has been registered as a Producer

Company under sub-section (4) of section 378J in which at least five directors [including the directors
continuing in office under sub-section (1) of section 378N] hold office as such on the date of registration
of such company, the provisions of this sub-section shall have effect as if for the words "ninety days", the
words "three hundred and sixty-five days" had been substituted.

(3) Every person shall hold office of a director for a period not less than one year but not exceeding

five years as may be specified in the articles.

(4) Every director, who retires in accordance with the articles, shall be eligible for re-appointment as a

director.

(5) Save as otherwise provided in sub-section (2), the directors of the Board shall be elected or

appointed by the Members in the annual general meeting.

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(6) The Board may co-opt one or more expert directors or an additional director not exceeding one
fifth of the total number of directors or appoint any other person as additional director for such period as
the Board may deem fit:

Provided that the expert directors shall not have the right to vote in the election of the Chairman but

shall be eligible to be elected as Chairman, if so provided by its articles:

Provided further that the maximum period, for which the expert director or the additional director holds

office, shall not exceed such period as may be specified in the articles.

**378Q. Vacation of office by directors.— (1) The office of the director of a Producer Company shall**

become vacant if,—

(a) he is convicted by a court of any offence involving moral turpitude and sentenced in respect

thereof to imprisonment for not less than six months;

(b) the Producer Company, in which he is a director, has made a default in repayment of any

advances or loans taken from any company or institution or any other person and such default continues
for ninety days;

(c) he has made a default in repayment of any advances or loans taken from the Producer Company

in which he is a director;

(d) the Producer Company, in which he is a director—

(i) has not filed the annual accounts and annual return for any continuous three financial years;

or

(ii) has failed to, repay its deposit or withheld price or patronage bonus or interest thereon on

due date, or pay dividend and such failure continues for one year or more;

(e) default is made in holding election for the office of director, in the Producer Company in which

he is a director, in accordance with the provisions of this Act and articles;

(f) the annual general meeting or extraordinary general meeting of the Producer Company, in which

he is a director, is not called in accordance with the provisions of this Act except due to natural calamity
or such other reason.

(2) The provisions of sub-section (1) shall, as far as may be, apply to the director of a Producer

Institution which is a member of a Producer Company.

**378R. Powers and functions of Board.—(1) Subject to the provisions of this Act and articles, the**

Board of Directors of a Producer Company shall exercise all such powers and to do all such acts and things,
as that Company is authorised so to do.

(2) In particular and without prejudice to the generality of the foregoing powers, such powers may

include all or any of the following matters, namely:—

(a) determination of the dividend payable;

(b) determination of the quantum of withheld price and recommend patronage to be approved at

general meeting;

(c) admission of new Members;

(d) pursue and formulate the organisational policy, objectives, establish specific long-term and

annual objectives, and approve corporate strategies and financial plans;

(e) appointment of a Chief Executive and such other officers of the Producer Company, as may be

specified in the articles;

(f) exercise superintendence, direction and control over Chief Executive and other officers

appointed by it;

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(g) cause proper books of account to be maintained; prepare annual accounts to be placed before

the annual general meeting with the report of the auditor and the replies on qualifications, if any, made
by the auditors;

(h) acquisition or disposal of property of the Producer Company in its ordinary course of business;

(i) investment of the funds of the Producer Company in the ordinary course of its business;

(j) sanction any loan or advance, in connection with the business activities of the Producer

Company to any Member, not being a director or his relative;

(k) take such other measures or do such other acts as may be required in the discharge of its

functions or exercise of its powers.

(3) All the powers specified in sub-sections (1) and (2) shall be exercised by the Board, by means of

resolution passed at its meeting on behalf of the Producer Company.

_Explanation.—For the removal of doubts, it is hereby declared that a director or a group of directors,_

who do not constitute the Board, shall not exercise any of the powers exercisable by it.

**378S. Matters to be transacted at general meeting.— The Board of Directors of a Producer Company**

shall exercise the following powers on behalf of that Company, and it shall do so only by means of
resolutions passed at the annual general meeting of its Members, namely:—

(a) approval of budget and adoption of annual accounts of the Producer Company;

(b) approval of patronage bonus;

(c) issue of bonus shares;

(d) declaration of limited return and decision on the distribution of patronage;

(e) specify the conditions and limits of loans that may be given by the Board to any director; and

(f) approval of any transaction of the nature as is to be reserved in the articles for approval by the

Members.

**378T. Liability of directors.— (1) When the directors vote for a resolution, or approve by any other**

means, anything done in contravention of the provisions of this Act or any other law for the time being in
force or articles, they shall be jointly and severally liable to make good any loss or damage suffered by the
Producer Company.

(2) Without prejudice to the provisions contained in sub-section (1), the Producer Company shall have

the right to recover from its director—

(a) where such director has made any profit as a result of the contravention specified in

sub-section (1), an amount equal to the profit so made;

(b) where the Producer Company incurred a loss or damage as a result of the contravention specified

in sub-section (1), an amount equal to that loss or damage.

(3) The liability imposed under this section shall be in addition to and not in derogation of a liability

imposed on a director under this Act or any other law for the time being in force.

**378U. Committee of directors.—(1) The Board may constitute such number of committees as it may**

deem fit for the purpose of assisting the Board in the efficient discharge of its functions:

Provided that the Board shall not delegate any of its powers or assign the powers of the Chief Executive,

to any committee.

(2) A committee constituted under sub-section (1) may, with the approval of the Board, co-opt such

number of persons as it deems fit as members of the committee:

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Provided that the Chief Executive appointed under section 378W or a director of the Producer Company

shall be a member of such committee.

(3) Every such committee shall function under the general superintendence, direction and control of the

Board, for such duration, and in such manner as the Board may direct.

(4) The fee and allowances to be paid to the members of the committee shall be such as may be

determined by the Board.

(5) The minutes of each meeting of the committee shall be placed before the Board at its next meeting.

**378V.Meetings of Board and quorum.—(1) A meeting of the Board shall be held not less than once**

in every three months and at least four such meetings shall be held in every year.

(2) Notice of every meeting of the Board of Directors shall be given in writing to every director for the

time being in India, and at his usual address in India to every other director.

(3) The Chief Executive shall give notice as aforesaid not less than seven days prior to the date of the

meeting of the Board and if he fails to do so, he shall be liable to a penalty of five thousand rupees:

Provided that a meeting of the Board may be called at shorter notice and the reasons thereof shall be

recorded in writing by the Board.

(4) The quorum for a meeting of the Board shall be one-third of the total strength of directors, subject

to a minimum of three.

(5) Save as provided in the articles, directors including the co-opted director, may be paid such fees

and allowances for attendance at the meetings of the Board, as may be decided by the Members in the
general meeting.

**378W. Chief Executive and his functions.— (1) Every Producer Company shall have a full time Chief**

Executive, by whatever name called, to be appointed by the Board from amongst persons other than
Members.

(2) The Chief Executive shall be ex officio director of the Board and such director shall not retire by

rotation.

(3) Save as otherwise provided in articles, the qualifications, experience and the terms and conditions

of service of the Chief Executive shall be such as may be determined by the Board.

(4) The Chief Executive shall be entrusted with substantial powers of management as the Board may

determine.

(5) Without prejudice to the generality of sub-section (4), the Chief Executive may exercise the powers

and discharge the functions, namely:—

(a) do administrative acts of a routine nature including managing the day-to-day affairs of the

Producer Company;

(b) operate bank accounts or authorise any person, subject to the general or special approval of the

Board in this behalf, to operate the bank account;

(c) make arrangements for safe custody of cash and other assets of the Producer Company;

(d) sign such documents as may be authorised by the Board, for and on behalf of the company;

(e) maintain proper books of account; prepare annual accounts and audit thereof; place the audited

accounts before the Board and in the annual general meeting of the Members;

(f) furnish Members with periodic information to apprise them of the operation and functions of

the Producer Company;

(g) make appointments to posts in accordance with the powers delegated to him by the Board;

(h) assist the Board in the formulation of goals, objectives, strategies, plans and policies;

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(i) advise the Board with respect to legal and regulatory matters concerning the proposed and

ongoing activities and take necessary action in respect thereof;

(j) exercise the powers as may be necessary in the ordinary course of business;

(k) discharge such other functions, and exercise such other powers, as may be delegated by the

Board.

(6) The Chief Executive shall manage the affairs of the Producer Company under the general

superintendence, direction and control of the Board and be accountable for the performance of the Producer
Company.

**378X. Secretary of Producer Company.— (1) Every Producer Company having an average annual**

turnover exceeding five crore rupees or such other amount as may be prescribed in each of three consecutive
financial years shall have a whole-time secretary.

(2) No individual shall be appointed as whole-time secretary unless he possesses membership of the

Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of
1980).

(3) If a Producer Company fails to comply with the provisions of sub-section (1), the Company and

every officer of the Company who is in default, shall be liable to a penalty of one hundred rupees for every
day during which the default continues subject to a maximum of rupees one lakh:

Provided that in any proceedings against a person in respect of a default under this sub-section, no

penalty shall be imposed if it is shown that all reasonable efforts to comply with the provisions of
sub-section (1) were taken or that the financial position of the Company was such that it was beyond its
capacity to engage a whole-time secretary.

**378Y. Quorum.— Unless the articles require a larger number, one-fourth of the total membership shall**

constitute the quorum at a general meeting.

**378Z. Voting rights.— Save as otherwise provided in sub-sections (1) and (3) of section 378D, every**

Member shall have one vote and in the case of equality of votes, the Chairman or the person presiding shall
have a casting vote except in the case of election of the Chairman.

PART IV

GENERAL MEETINGS

**37ZA. Annual general meetings.—(1) Every Producer Company shall in each year, hold, in addition**

to any other meetings, a general meeting, as its annual general meeting and shall specify the meeting as
such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual
general meeting of a Producer Company and that of the next:

Provided that the Registrar may, for any special reason, permit extension of the time for holding any

annual general meeting (not being the first annual general meeting) by a period not exceeding three months.

(2) A Producer Company shall hold its first annual general meeting within a period of ninety days from

the date of its incorporation.

(3) The Members shall adopt the articles of the Producer Company and appoint directors of its Board

in the annual general meeting.

(4) The notice calling the annual general meeting shall be accompanied by the following documents,

namely:—

(a) the agenda of the annual general meeting;

(b) the minutes of the previous annual general meeting or the extraordinary general meeting;

(c) the names of candidates for election, if any, to the office of director including a statement of

qualifications in respect of each candidate;

(d) the audited balance-sheet and profit and loss accounts of the Producer Company and its

subsidiary, if any, together with a report of the Board of Directors of such Company with respect to—

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(i) the state of affairs of the Producer Company;

(ii) the amount proposed to be carried to reserve;

(iii) the amount to be paid as limited return on share capital;

(iv) the amount proposed to be disbursed as patronage bonus;

(v) the material changes and commitments, if any, affecting the financial position of the

Producer Company and its subsidiary, which have occurred in between the date of the annual
accounts of the Producer Company to which the balance-sheet relates and the date of the report of
the Board;

(vi) any other matter of importance relating to energy conservation, environmental protection,

expenditure or earnings in foreign exchanges;

(vii) any other matter which is required to be, or may be, specified by the Board;

(e) the text of the draft resolution for appointment of auditors;

(f) the text of any draft resolution proposing amendment to the memorandum or articles to be

considered at the general meeting, alongwith the recommendations of the Board.

(5) The Board of Directors shall, on the requisition made in writing, duly signed and setting out the

matters for the consideration, made by one-third of the Members entitled to vote in any general meeting,
proceed to call an extraordinary general meeting in accordance with the relevant provisions contained in
Chapter VII.

(6) Every annual general meeting shall be called, for a time during business hours, on a day that is not

a public holiday and shall be held at the registered office of the Producer Company or at some other place
within the city, town or village in which the registered office of the Company is situate.

(7) A general meeting of the Producer Company shall be called by giving not less than fourteen days

prior notice in writing.

(8) The notice of the general meeting indicating the date, time and place of the meeting shall be sent to

every Member and auditor of the Producer Company.

(9) Unless the articles of the Producer Company provide for a larger number, one-fourth of the total

number of members of the Producer Company shall be the quorum for its annual general meeting.

(10) The proceedings of every annual general meeting alongwith the report of the Board of Directors,

the audited balance-sheet and the profit and loss account shall be filed with the Registrar within sixty days
of the date on which the annual general meeting is held, with an annual return alongwith the filing fees as
applicable under the Act.

(11) In the case where a Producer Company is formed by Producer Institutions, such Institutions shall

be represented in the general body through the Chairman or the Chief Executive thereof who shall be
competent to act on its behalf:

Provided that a Producer Institution shall not be represented if such Institution is in default or failure

referred to in clauses (d) to (f) of sub-section (1) of section 378Q.

PART V

SHARE CAPITAL AND MEMBERS RIGHTS

**378ZB. Share capital.—(1) The share capital of a Producer Company shall consist of equity shares**

only.

(2) The shares held by a Member in a Producer Company, shall as far as may be, be in proportion to

the patronage of that company.

**378ZC. Special user rights.— (1) The producers, who are active Members may, if so provided in the**

articles, have special rights and the Producer Company may issue appropriate instruments to them in respect
of such special rights.

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(2) The instruments of the Producer Company issued under sub-section (1) shall, after obtaining

approval of the Board in that behalf, be transferable to any other active Member of that Producer Company.

_Explanation.—For the purposes of this section, the expression “special right” means any right relating_

to supply of additional produce by the active Member or any other right relating to his produce which may
be conferred upon him by the Board.

**378ZD.Transferability of shares and attendant rights.—(1) Save as otherwise provided in**

sub-sections (2) to (4), the shares of a Member of a Producer Company shall not be transferable.

(2) A Member of a Producer Company may, after obtaining the previous approval of the Board, transfer

the whole or part of his shares alongwith any special rights, to an active Member at par value.

(3) Every Member shall, within three months of his becoming a Member in the Producer Company,

nominate, in the manner specified in articles, a person to whom his shares in the Producer Company shall
vest in the event of his death.

(4) The nominee shall, on the death of the Member, become entitled to all the rights in the shares of the

Producer Company and the Board of that Company shall transfer the shares of the deceased Member to his
nominee:

Provided that in a case where such nominee is not a producer, the Board shall direct the surrender of

shares together with special rights, if any, to the Producer Company at par value or such other value as may
be determined by the Board.

(5) Where the Board of a Producer Company is satisfied that—

(a) any Member has ceased to be a primary producer; or

(b) any Member has failed to retain his qualifications to be a Member as specified in articles,

the Board shall direct the surrender of shares together with special rights, if any, to the Producer Company
at par value or such other value as may be determined by the Board:

Provided that the Board shall not direct such surrender of shares unless the Member has been served

with a written notice and given an opportunity of being heard.

PART VI

FINANCE, ACCOUNTS AND AUDIT

**378ZE. Books of account.—** (1) Every Producer Company shall keep at its registered office proper

books of account with respect to—

(a) all sums of money received and expended by the Producer Company and the matters in

respect of which the receipts and expenditure take place;

(b) all sales and purchase of goods by the Producer Company;

(c) the instruments of liability executed by or on behalf of the Producer Company;

(d) the assets and liabilities of the Producer Company;

(e) in case of a Producer Company engaged in production, processing and manufacturing, the

particulars relating to utilisation of materials or labour or other items of costs.

(2) The balance-sheet and profit and loss accounts of the Producer Company shall be prepared, as far

as may be, in accordance with the provisions contained in section 129.

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**378ZF.Internal audit.— Every Producer Company shall have internal audit of its accounts carried**

out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined
in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949).

**378ZG. Duties of auditor under this Chapter.—Without prejudice to the provisions contained in**

section 143, the auditor shall report on the following additional matters relating to the Producer Company,
namely:—

(a) the amount of debts due alongwith particulars of bad debts, if any;

(b) the verification of cash balance and securities;

(c) the details of assets and liabilities;

(d) all transactions which appear to be contrary to the provisions of this Chapter;

(e) the loans given by the Producer Company to the directors;

(f) the donations or subscriptions given by the Producer Company;

(g) any other matter as may be considered necessary by the auditor.

**378ZH. Donation or subscription by Producer Company.—A Producer Company may, by special**

resolution, make donation or subscription to any institution or individual for the purposes of—

(a) promoting the social and economic welfare of Producer Members or producers or general

public; or

(b) promoting the mutual assistance principles:

Provided that the aggregate amount of all such donations and subscriptions in any financial year

shall not exceed three per cent. of the net profit of the Producer Company in the financial year
immediately preceding the financial year in which the donation or subscription was made:

Provided further that no Producer Company shall make directly or indirectly to any political party

or for any political purpose to any person any contribution or subscription or make available any
facilities including personnel or material.

**378Z-I. General and other reserves.—(1) Every Producer Company shall maintain a general reserve**

in every financial year, in addition to any reserve maintained by it as may be specified in articles.

(2) In a case where the Producer Company does not have sufficient funds in any financial year for

transfer to maintain the reserves as may be specified in articles, the contribution to the reserve shall be
shared amongst the Members in proportion to their patronage in the business of that Company in that year.

**378ZJ. Issue of bonus Shares.— Any Producer Company may, upon recommendation of the Board**

and passing of resolution in the general meeting, issue bonus shares by capitalisation of amounts from
general reserves referred to in section 378Z-I in proportion to the shares held by the Members on the date
of the issue of such shares.

PART VII

LOANS TO MEMBERS AND INVESTMENTS

**378ZK. Loan, etc., to Members.— The Board may, subject to the provisions made in articles, provide**

financial assistance to the Members of the Producer Company by way of—

(a) credit facility, to any Member, in connection with the business of the Producer Company, for a

period not exceeding six months;

(b) loans and advances, against security specified in articles to any Member, repayable within a

period exceeding three months but not exceeding seven years from the date of disbursement of such
loan or advances:

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Provided that any loan or advance to any director or his relative shall be granted only after the approval

by the Members in general meeting.

**378ZL. Investment in other companies, formation of subsidiaries etc.— (1) The general reserves**

of any Producer Company shall be invested to secure the highest returns available from approved securities,
fixed deposits, units, bonds issued by the Government or co-operative or scheduled bank or in such other
mode as may be prescribed.

(2) Any Producer Company may, for promotion of its objectives acquire the shares of another Producer

Company.

(3) Any Producer Company may subscribe to the share capital of, or enter into any agreement or other

arrangement, whether by way of formation of its subsidiary company, joint venture or in any other manner
with any body corporate, for the purpose of promoting the objects of the Producer Company by special
resolution in this behalf.

(4) Any Producer Company, either by itself or together with its subsidiaries, may invest, by way of

subscription, purchase or otherwise, shares in any other company, other than a Producer Company,
specified under sub-section (2), or subscription of capital under sub-section (3), for an amount not
exceeding thirty per cent. of the aggregate of its paid-up capital and free reserves:

Provided that a Producer Company may, by special resolution passed in its general meeting and with

prior approval of the Central Government, invest in excess of the limits specified in this section.

(5) All investments by a Producer Company may be made if such investments are consistent with the

objects of the Producer Company.

(6) The Board of a Producer Company may, with the previous approval of Members by a special

resolution, dispose of any of its investments referred to in sub-sections (3) and (4).

(7) Every Producer Company shall maintain a register containing particulars of all the investments,

showing the names of the companies in which shares have been acquired, number and value of shares; the
date of acquisition; and the manner and price at which any of the shares have been subsequently disposed
of.

(8) The register referred to in sub-section (7) shall be kept at the registered office of the Producer

Company and the same shall be open to inspection by any Member who may take extracts therefrom.

PART VIII

PENALTIES

**378ZM. Penalty for contravention.—(1) If any person, other than a Producer Company registered**

under this Chapter, carries on business under any name which contains the words "Producer Company
Limited", he shall be punishable with fine which may extend to ten thousand rupees for every day during
which such name has been used by him.

(2) If a director or an officer of a Producer Company, who wilfully fails to furnish any information

relating to the affairs of the Producer Company required by a Member or a person duly authorised in this
behalf, he shall be liable to imprisonment for a term which may extend to six months and with fine
equivalent to five per cent. of the turnover of that Company during the preceding financial year.

(3) If a director or officer of a Producer Company—

(a) fails to hand over the custody of books of account and other documents or property in his

custody to the Producer Company of which he is a director or officer; or

(b) fails to convene annual general meeting or other general meetings,

he shall be punishable with fine which may extend to one lakh rupees, and in the case of a continuing default
or failure, with an additional fine which may extend to ten thousand rupees for every day during which such
default or failure continues.

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PART IX

AMALGAMATION, MERGER OR DIVISION

**378ZN. Amalgamation merger or division, etc. to form new Producer Companies.—(1) A**

Producer Company may, by a resolution passed at its general meeting,—

(a) decide to transfer its assets and liabilities, in whole or in part, to any other Producer Company,

which agrees to such transfer by a resolution passed at its general meeting, for any of the objects
specified in section 378B;

(b) divide itself into two or more new Producer Companies.

(2) Any two or more Producer Companies may, by a resolution passed at any general or special

meetings of its Members, decide to—

(a) amalgamate and form a new Producer Company; or

(b) merge one Producer Company (hereafter in this Chapter referred to as "merging company")

with another Producer Company (hereafter in this Chapter referred to as "merged company").

(3) Every resolution of a Producer Company under this section shall be passed at its general meeting

by a majority of total Members, with right of vote not less than two-thirds of its Members present and voting
and such resolution shall contain all particulars of the transfer of assets and liabilities, or division,
amalgamation, or merger, as the case may be.

(4) Before passing a resolution under this section, the Producer Company shall give notice thereof in

writing together with a copy of the proposed resolution to all the Members and creditors who may give
their consent.

(5) Notwithstanding anything contained in articles or in any contract to the contrary, any Member, or

any creditor not consenting to the resolution shall, during the period of one month of the date of service of
the notice on him, have the option,—

(a) in the case of any such Member, to transfer his shares with the approval of the Board to any

active Member thereby ceasing to continue as a Member of that Company; or

(b) in the case of a creditor, to withdraw his deposit or loan or advance, as the case may be.

(6) Any Member or creditor, who does not exercise his option within the period specified in sub-section

(5), shall be deemed to have consented to the resolution.

(7) A resolution passed by a Producer Company under this section shall not take effect until the expiry

of one month or until the assent thereto of all the Members and creditors has been obtained, whichever is
earlier.

(8) The resolution referred to in this section shall provide for—

(a) the regulation of conduct of the affairs of the Producer Company in future;

(b) the purchase of shares or interest of any Members of the Producer Company by other Members

or by the Producer Company;

(c) the consequent reduction of its share capital, in case of purchase of shares of one Producer

Company by another Producer Company;

(d) termination, setting aside or modification of any agreement, howsoever arrived between the

company on the one hand and the directors, secretaries and manager on the other hand, apart from such
terms and conditions as may, in the opinion of the majority of shareholders, be just and equitable in the
circumstances of the case;

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(e) termination, setting aside or modification of any agreement between the Producer Company and

any person not referred to in clause (d):

Provided that no such agreement shall be terminated, set aside or modified except after giving due

notice to the party concerned:

Provided further that no such agreement shall be modified except after obtaining the consent of the

party concerned;

(f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to

property, made or done by or against the Producer Company within three months before the date of
passing of the resolution, which would if made or done against any individual, be deemed in his
insolvency to be a fraudulent preference;

(g) the transfer to the merged company of the whole or any part of the undertaking, property or

liability of the Producer Company;

(h) the allotment or appropriation by the merged company of any shares, debentures, policies, or

other like interests in the merged company;

(i) the continuation by or against the merged company of any legal proceedings pending by or

against any Producer Company;

(j) the dissolution, without winding up, of any Producer Company;

(k) the provision to be made for the Members or creditors who make dissent;

(l) the taxes, if any, to be paid by the Producer Company;

(m) such incidental, consequential and supplemental matters as are necessary to secure that the

division, amalgamation or merger shall be fully and effectively carried out.

(9) When a resolution passed by a Producer Company under this section takes effect, the resolution

shall be a sufficient conveyance to vest the assets and liabilities in the transferee.

(10) The Producer Company shall make arrangements for meeting in full or otherwise satisfying all

claims of the Members and the creditors who exercise the option, within the period specified in sub-section
(4), not to continue as the Member or creditor, as the case may be.

(11) Where the whole of the assets and liabilities of a Producer Company are transferred to another

Producer Company in accordance with the provisions of sub-section (9), or where there is merger under
sub-section (2), the registration of the first mentioned Company or the merging company, as the case may
be, shall stand cancelled and that Company shall be deemed to have been dissolved and shall cease to exist
forthwith as a corporate body.

(12) Where two or more Producer Companies are amalgamated into a new Producer Company in

accordance with the provisions of sub-section (2) and the Producer Company so formed is duly registered
by the Registrar, the registration of each of the amalgamating companies shall stand cancelled forthwith on
such registration and each of the Companies shall thereupon cease to exist as a corporate body.

(13) Where a Producer Company divides itself into two or more Producer Companies in accordance

with the provisions of clause (b) of sub-section (1) and the new Producer Companies are registered in
accordance with the provisions of this Chapter, the registration of the erstwhile Producer Company shall
stand cancelled forthwith and that Company shall be deemed to have been dissolved and cease to exist as a
corporate body.

(14) The amalgamation, merger or division of companies under the foregoing sub-sections shall not in

any manner whatsoever affect the pre-existing rights or obligations and any legal proceedings that might

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have been continued or commenced by or against any erstwhile company before the amalgamation, merger
or division, may be continued or commenced by, or against, the concerned resulting company, or merged
company, as the case may be.

(15) The Registrar shall strike off the names of every Producer Company deemed to have been

dissolved under sub-sections (11) to (14).

(16) Any member or creditor or employee aggrieved by the transfer of assets, division, amalgamation

or merger may, within thirty days of the passing of the resolution, prefer an appeal to the Tribunal.

(17) The Tribunal shall, after giving a reasonable opportunity to the person concerned, pass such orders

thereon as it may deem fit.

(18) Where an appeal has been filed under sub-section (16), the transfer of assets, division,

amalgamation or merger of the Producer Company shall be subject to the decision of the Tribunal.

PART X

RESOLUTION OF DISPUTES

**378Z-O. Disputes.—(1) Where any dispute relating to the formation, management or business of a**

Producer Company arises—

(a) amongst Members, former Members or persons claiming to be Members or nominees of

deceased Members; or

(b) between a Member, former Member or a person claiming to be a Member, or nominee of

deceased Member and the Producer Company, its Board of Directors, office-bearers, or liquidator, past
or present; or

(c) between the Producer Company or its Board, and any director, office-bearer or any former

director, or the nominee, heir or legal representative of any deceased director of the Producer Company,

such dispute shall be settled by conciliation or by arbitration as provided under the Arbitration and
Conciliation Act, 1996 (26 of 1996) as if the parties to the dispute have consented in writing for
determination of such disputes by conciliation or by arbitration and the provisions of the said Act shall
apply accordingly.

_Explanation.—For the purposes of this section, a dispute shall include—_

(a) a claim for any debt or other amount due;

(b) a claim by surety against the principal debtor, where the Producer Company has recovered from

the surety amount in respect of any debtor or other amount due to it from the principal debtor as a result
of the default of the principal debtor whether such debt or amount due be admitted or not;

(c) a claim by Producer Company against a Member for failure to supply produce as required of

him;

(d) a claim by a Member against the Producer Company for not taking goods supplied by him.

(2) If any question arises whether the dispute relates to formation, management or business of the

Producer Company, the question shall be referred to the arbitrator, whose decision thereon shall be final.

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PART XI

MISCELLANEOUS PROVISIONS

**378ZP. Strike off name of Producer Company.— (1) Where a Producer Company fails to commence**

business within one year of its registration or ceases to transact business with the Members or if the
Registrar is satisfied, after making such inquiry as he thinks fit, that the Producer Company is no longer
carrying on any of its objects specified in section 378B, he shall make an order striking off the name of the
Producer Company, which shall thereupon cease to exist forthwith:

Provided that no such order cancelling the registration as aforesaid shall be passed until a notice to

show cause has been given by the Registrar to the Producer Company with a copy to all its directors on the
proposed action and reasonable opportunity to represent its case has been given.

(2) Where the Registrar has reasonable cause to believe that a Producer Company is not maintaining

any of the mutual assistance principles specified, he shall strike its name off the register in accordance with
the provisions contained in section 248.

(3) Any Member of a Producer Company, who is aggrieved by an order made under sub-section (1),

may appeal to the Tribunal within sixty days of the order.

(4) Where an appeal is filed under sub-section (3), the order of striking off the name shall not take effect

until the appeal is disposed of.

**378ZQ. Provisions of this Chapter to override other laws.— The provisions of this Chapter shall**

have effect notwithstanding anything inconsistent therewith contained in this Act or any other law for the
time being in force or any instrument having effect by virtue of any such law; but the provisions of any
such Act or law or instrument in so far as the same are not varied by, or are inconsistent with, the provisions
of this Chapter shall apply to the Producer Company.

**378ZR. Application of provisions relating to private companies.— All the limitations, restrictions**

and provisions of this Act, other than those specified in this Chapter, applicable to a private company, shall,
as far as may be, apply to a Producer Company, as if it is a private limited company under this Act in so far
as they are not in conflict with the provisions of this Chapter.

PART XII

RE-CONVERSION OF PRODUCER COMPANY TO INTER-STATE CO-OPERATIVE SOCIETY

**378ZS. Re-conversion of Producer Company to inter-State co-operative society.—(1) Any**

Producer Company, being an erstwhile inter-State co-operative society, formed and registered under this
Chapter, may make an application—

(a) after passing a resolution in the general meeting by not less than twothirds of its Members

present and voting; or

(b) on request by its creditors representing three-fourths value of its total creditors, to the Tribunal

for its re-conversion to the inter-State co-operative society.

(2) The Tribunal shall, on the application made under sub-section (1), direct holding meeting of its

Members or such creditors, as the case may be, to be conducted in such manner as it may direct.

(3) If a majority in number representing three-fourths in value of the creditors, or Members, as the case

may be, present and voting in person at the meeting conducted in pursuance of the directions of the Tribunal
under sub-section (2), agree for re-conversion, if sanctioned by the Tribunal, be binding on all the Members
and all the creditors, as the case may be, and also on the company which is being converted:

Provided that no order sanctioning re-conversion shall be made by the Tribunal unless the Tribunal is

satisfied that the company or any other person by whom an application has been made under sub-section
(1) has disclosed to the Tribunal, by affidavit or otherwise, all material facts relating to the company, such
as the latest financial position of the company, the latest report of the auditor on the accounts of the
company, the pendency of any investigation proceedings in relation to the company under Chapter XIV,
and the like.

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(4) An order made by the Tribunal under sub-section (3) shall have no effect until a certified copy of

the order has been filed with the Registrar.

(5) A copy of every such order shall be annexed to every copy of the memorandum of the company

issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having
a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the
company.

(6) If default is made in complying with sub-section (4), the company, and every officer of the company

who is in default, shall be punishable with fine which may extend to one hundred rupees, for each copy in
respect of which default is made.

(7) The Tribunal may, at any time after an application has been made to it under this section, stay the

commencement or continuation of any suit or proceeding against the company on such terms as the Tribunal
thinks fit, until the application is finally disposed of.

(8) Every Producer Company, which has been sanctioned re-conversion by the Tribunal, shall make an

application under the Multi-State Co-operative Societies Act, 2002 (39 of 2002) or any other law for the
time being in force for its registration as multi-State co-operative society or co-operative society, as the
case may be, within six months of sanction by the Tribunal and file a report thereof to the Tribunal and the
Registrar of Companies and to the Registrar of the Co-operative Societies under which it has been registered
as a multi-State co-operative society or co-operative society, as the case may be.

**378ZT. Power to modify Act in its application to Producer Companies.—(1) The Central**

Government may, by notification, direct that any of the provisions of this Act (other than those contained
in this Chapter) specified in the said notification—

(a) shall not apply to the Producer Companies or any class or category thereof; or

(b) shall apply to the Producer Companies or any class or category thereof with such exception or

adaptation as may be specified in the notification.

(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before

each House of Parliament, while it is in session, for a total period of thirty days which may be comprised
in one session or in two or more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of
the notification or both Houses agree in making any modification in the notification, the notification shall
not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by
both the Houses.

**378ZU. Power to make rules.—The Central Government may make rules for carrying out the purposes**

of this Chapter.]

CHAPTER XXII

COMPANIES INCORPORATED OUTSIDE INDIA

**379. Application of Act to foreign companies.—[1][(1) Sections 380 to 386 (both inclusive) and sections**

392 and 393 shall apply to all foreign companies:

2*  -  -  -  
3[(2)] Where not less than fifty per cent. of the paid-up share capital, whether equity or preference or

partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one
or more companies or bodies corporate incorporated in India, or by one or more citizens of India and one
or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, such
company shall comply with the provisions of this Chapter and such other provisions of this Act as may be
prescribed with regard to the business carried on by it in India as if it were a company incorporated in India.

1. Ins. by Act 1 of 2018, s. 77 (w.e.f. 9-2-2018).
2. The Proviso omitted by Act 29 of 2020, s. 53 (w.e.f. 22-1-2021).
3. Section 379 renumbered as sub-section (2) thereof by s. 77, ibid. (w.e.f. 9-2-2018).

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**380. Documents, etc., to be delivered to Registrar by foreign companies.—(1) Every foreign**

company shall, within thirty days of the establishment of its place of business in India, deliver to the
Registrar for registration—

(a) a certified copy of the charter, statutes or memorandum and articles, of the company or other

instrument constituting or defining the constitution of the company and, if the instrument is not in the
English language, a certified translation thereof in the English language;

(b) the full address of the registered or principal office of the company;

(c) a list of the directors and secretary of the company containing such particulars as may be

prescribed;

(d) the name and address or the names and addresses of one or more persons resident in India

authorised to accept on behalf of the company service of process and any notices or other documents
required to be served on the company;

(e) the full address of the office of the company in India which is deemed to be its principal place

of business in India;

(f) particulars of opening and closing of a place of business in India on earlier occasion or occasions;

(g) declaration that none of the directors of the company or the authorised representative in India

has ever been convicted or debarred from formation of companies and management in India or abroad;
and

(h) any other information as may be prescribed.

(2) Every foreign company existing at the commencement of this Act shall, if it has not delivered to the

Registrar before such commencement, the documents and particulars specified in sub-section (1) of section
592 of the Companies Act, 1956 (1 of 1956), continue to be subject to the obligation to deliver those
documents and particulars in accordance with that Act.

(3) Where any alteration is made or occurs in the documents delivered to the Registrar under this

section, the foreign company shall, within thirty days of such alteration, deliver to the Registrar for
registration, a return containing the particulars of the alteration in the prescribed form.

**381. Accounts of foreign company.—(1) Every foreign company shall, in every calendar year,—**

(a) make out a balance sheet and profit and loss account in such form, containing such particulars

and including or having annexed or attached thereto such documents as may be prescribed; and

(b) deliver a copy of those documents to the Registrar:

Provided that the Central Government may, by notification, direct that, in the case of any foreign

company or class of foreign companies, the requirements of clause (a) shall not apply, or shall apply subject
to such exceptions and modifications as may be specified in that notification.

(2) If any such document as is mentioned in sub-section (1) is not in the English language, there shall

be annexed to it a certified translation thereof in the English language.

(3) Every foreign company shall send to the Registrar along with the documents required to be delivered

to him under sub-section (1), a copy of a list in the prescribed form of all places of business established by
the company in India as at the date with reference to which the balance sheet referred to in sub-section (1)
is made out.

**382. Display of name, etc., of foreign company.—Every foreign company shall—**

(a) conspicuously exhibit on the outside of every office or place where it carries on business in

India, the name of the company and the country in which it is incorporated, in letters easily legible in
English characters, and also in the characters of the language or one of the languages in general use in
the locality in which the office or place is situate;

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(b) cause the name of the company and of the country in which the company is incorporated, to be

stated in legible English characters in all business letters, billheads and letter paper, and in all notices,
and other official publications of the company; and

(c) if the liability of the members of the company is limited, cause notice of that fact—

(i) to be stated in every such prospectus issued and in all business letters, bill-heads, letter

paper, notices, advertisements and other official publications of the company, in legible English
characters; and

(ii) to be conspicuously exhibited on the outside of every office or place where it carries on

business in India, in legible English characters and also in legible characters of the language or
one of the languages in general use in the locality in which the office or place is situate.

**383. Service on foreign company.—Any process, notice, or other document required to be served on**

a foreign company shall be deemed to be sufficiently served, if addressed to any person whose name and
address have been delivered to the Registrar under section 380 and left at, or sent by post to, the address
which has been so delivered to the Registrar or by electronic mode.

**384. Debentures, annual return, registration of charges, books of account and their inspection.—**

(1) The provisions of section 71 shall apply mutatis mutandis to a foreign company.

(2) The provisions of section 92 [1][and section 135] shall, subject to such exceptions, modifications and

adaptations as may be made therein by rules made under this Act, apply to a foreign company as they apply
to a company incorporated in India.

(3) The provisions of section 128 shall apply to a foreign company to the extent of requiring it to keep

at its principal place of business in India, the books of account referred to in that section, with respect to
monies received and spent, sales and purchases made, and assets and liabilities, in the course of or in relation
to its business in India.

(4) The provisions of Chapter VI shall apply _mutatis mutandis_ to charges on properties which are

created or acquired by any foreign company.

(5) The provisions of Chapter XIV shall apply _mutatis mutandis to the Indian business of a foreign_

company as they apply to a company incorporated in India.

**385. Fee for registration of documents.—There shall be paid to the Registrar for registering any**

document required by the provisions of this Chapter to be registered by him, such fee, as may be prescribed.

**386. Interpretation.—For the purposes of the foregoing provisions of this Chapter,—**

(a) the expression “certified” means certified in the prescribed manner to be a true copy or a correct

translation;

(b) the expression “director”, in relation to a foreign company, includes any person in accordance

with whose directions or instructions the Board of Directors of the company is accustomed to act; and

(c) the expression “place of business” includes a share transfer or registration office.

**387. Dating of prospectus and particulars to be contained therein.—(1) No person shall issue,**

circulate or distribute in India any prospectus offering to subscribe for securities of a company incorporated
or to be incorporated outside India, whether the company has or has not established, or when formed will
or will not establish, a place of business in India, unless the prospectus is dated and signed, and—

(a) contains particulars with respect to the following matters, namely:—

(i) the instrument constituting or defining the constitution of the company;

(ii) the enactments or provisions by or under which the incorporation of the company was

effected;

1. Ins. by Act 1 of 2018, s. 78 (w.e.f. 9-2-2018).

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(iii) address in India where the said instrument, enactments or provisions, or copies thereof,

and if the same are not in the English language, a certified translation thereof in the English
language can be inspected;

(iv) the date on which and the country in which the company would be or was incorporated;

and

(v) whether the company has established a place of business in India and, if so, the address of

its principal office in India; and

(b) states the matters specified under section 26:

Provided that sub-clauses (i), (ii) and (iii) of clause (a) of this sub-section shall not apply in the case of

a prospectus issued more than two years after the date at which the company is entitled to commence
business.

(2) Any condition requiring or binding an applicant for securities to waive compliance with any

requirement imposed by virtue of sub-section (1), or purporting to impute him with notice of any contract,
documents or matter not specifically referred to in the prospectus, shall be void.

(3) No person shall issue to any person in India a form of application for securities of such a company

or intended company as is mentioned in sub-section (1), unless the form is issued with a prospectus which
complies with the provisions of this Chapter and such issue does not contravene the provisions of section
388:

Provided that this sub-section shall not apply if it is shown that the form of application was issued in

connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to
securities.

(4) This section —

(a) shall not apply to the issue to existing members or debenture holders of a company of a

prospectus or form of application relating to securities of the company, whether an applicant for
securities will or will not have the right to renounce in favour of other persons; and

(b) except in so far as it requires a prospectus to be dated, to the issue of a prospectus relating to

securities which are or are to be in all respects uniform with securities previously issued and for the
time being dealt in or quoted on a recognised stock exchange,

but, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on
or with reference to the formation of a company or subsequently.

(5) Nothing in this section shall limit or diminish any liability which any person may incur under any

law for the time being in force in India or under this Act apart from this section.

**388. Provisions as to expert’s consent and allotment.—(1) No person shall issue, circulate or**

distribute in India any prospectus offering for subscription in securities of a company incorporated or to be
incorporated outside India, whether the company has or has not been established, or when formed will or
will not establish, a place of business in India,—

(a) if, where the prospectus includes a statement purporting to be made by an expert, he has not

given, or has before delivery of the prospectus for registration withdrawn, his written consent to the
issue of the prospectus with the statement included in the form and context in which it is included, or
there does not appear in the prospectus a statement that he has given and has not withdrawn his consent
as aforesaid; or

(b) if the prospectus does not have the effect, where an application is made in pursuance thereof,

of rendering all persons concerned bound by all the provisions of sections 33 and 40, so far as
applicable.

(2) For the purposes of this section, a statement shall be deemed to be included in a prospectus, if it is

contained in any report or memorandum appearing on the face thereof or by reference incorporated therein
or issued therewith.

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**389. Registration of prospectus.—No person shall issue, circulate or distribute in India any prospectus**

offering for subscription in securities of a company incorporated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not establish, a place of
business in India, unless before the issue, circulation or distribution of the prospectus in India, a copy thereof
certified by the chairperson of the company and two other directors of the company as having been approved
by resolution of the managing body has been delivered for registration to the Registrar and the prospectus
states on the face of it that a copy has been so delivered, and there is endorsed on or attached to the copy,
any consent to the issue of the prospectus required by section 388 and such documents as may be prescribed.

**390. Offer of Indian Depository Receipts.—Notwithstanding anything contained in any other law for**

the time being in force, the Central Government may make rules applicable for—

(a) the offer of Indian Depository Receipts;

(b) the requirement of disclosures in prospectus or letter of offer issued in connection with Indian

Depository Receipts;

(c) the manner in which the Indian Depository Receipts shall be dealt with in a depository mode

and by custodian and underwriters; and

(d) the manner of sale, transfer or transmission of Indian Depository Receipts,

by a company incorporated or to be incorporated outside India, whether the company has or has not
established, or will or will not establish, any place of business in India.

**391. Application of sections 34 to 36 and Chapter XX.—(1) The provisions of sections 34 to 36 (both**

inclusive) shall apply to—

(i) the issue of a prospectus by a company incorporated outside India under section 389 as they

apply to prospectus issued by an Indian company;

(ii) the issue of Indian Depository Receipts by a foreign company.

1[(2) Subject to the provisions of section 376, the provisions of Chapter XX shall apply _mutatis_

_mutandis_ for closure of the place of business of a foreign company in India as if it were a company
incorporated in India in case such foreign company has raised monies through offer or issue of securities
under this Chapter which have not been repaid or redeemed.]

**392. Punishment for contravention.—Without prejudice to the provisions of section 391, if a foreign**

company contravenes the provisions of this Chapter, the foreign company shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to three lakh rupees and in the case of a
continuing offence, with an additional fine which may extend to fifty thousand rupees for every day after
the first during which the contravention continues and every officer of the foreign company who is in default
shall be punishable [2]*** with fine which shall not be less than twenty-five thousand rupees but which may
extend to [3][five lakh rupees].

**393. Company’s failure to comply with provisions of this Chapter not to affect validity of**

**contracts, etc.—Any failure by a company to comply with the provisions of this Chapter shall not affect**
the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in
respect thereof, but the company shall not be entitled to bring any suit, claim any set-off, make any counterclaim or institute any legal proceeding in respect of any such contract, dealing or transaction, until the
company has complied with the provisions of this Act applicable to it.

**4[393A. Exemptions under this Chapter.—The Central Government may, by notification, exempt**

any class of—

(a) foreign companies;

1. Subs. by Act 1 of 2018, s. 79, for sub-section (2) (w.e.f. 9-2-2018).
2. The words “with imprisonment for a term which may extend to six months or” omitted by Act 29 of 2020, s. 54 (w.e.f. 21-12
2020).

3. Subs. by s. 54, ibid., for “fifty thousand rupees, or with both” (w.e.f. 21-12-2020).
4. Ins. by s. 55, ibid. (w.e.f. 22-1-2021).

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(b) companies incorporated or to be incorporated outside India, whether the company has or has

not established, or when formed may or may not establish, a place of business in India,

as may be specified in the notification, from any of the provisions of this Chapter and a copy of every
such notification shall, as soon as may be after it is made, be laid before both Houses of Parliament.]

CHAPTER XXIII

GOVERNMENT COMPANIES

**394. Annual reports on Government companies.—(1) Where the Central Government is a member**

of a Government company, the Central Government shall cause an annual report on the working and affairs
of that company to be—

(a) prepared within three months of its annual general meeting before which the comments given

by the Comptroller and Auditor-General of India and the audit report is placed under the proviso to
sub-section (6) of section 143; and

(b) as soon as may be after such preparation, laid before both Houses of Parliament together with

a copy of the audit report and comments upon or supplement to the audit report, made by the
Comptroller and Auditor-General of India.

(2) Where in addition to the Central Government, any State Government is also a member of a

Government company, that State Government shall cause a copy of the annual report prepared under  subsection (1) to be laid before the House or both Houses of the State Legislature together with a copy of the
audit report and the comments upon or supplement to the audit report referred to in sub-section (1).

**395. Annual reports where one or more State Governments are members of companies.—(1)**

Where the Central Government is not a member of a Government company, every State Government which
is a member of that company, or where only one State Government is a member of the company, that State
Government shall cause an annual report on the working and affairs of the company to be—

(a) prepared within the time specified in sub-section (1) of section 394; and

(b) as soon as may be after such preparation, laid before the House or both Houses of the State

Legislature together with a copy of the audit report and comments upon or supplement to the audit
report referred to in sub-section (1) of that section.

(2) The provisions of this section and section 394 shall, so far as may be, apply to a Government

company in liquidation as they apply to any other Government company.

CHAPTER XXIV

REGISTRATION OFFICES AND FEES

**396. Registration offices.—(1) For the purposes of exercising such powers and discharging such**

functions as are conferred on the Central Government by or under this Act or under the rules made there
under and for the purposes of registration of companies under this Act, the Central Government shall, by
notification, establish such number of offices at such places as it thinks fit, specifying their jurisdiction.

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(2) The Central Government may appoint such Registrars, Additional, Joint, Deputy and Assistant

Registrars as it considers necessary for the registration of companies and discharge of various functions
under this Act, and the powers and duties that may be exercisable by such officers shall be such as may be
prescribed.

(3) The terms and conditions of service, including the salaries payable to persons appointed under sub
section (2), shall be such as may be prescribed.

(4) The Central Government may direct a seal or seals to be prepared for the authentication of

documents required for, or connected with, the registration of companies.

**397. Admissibility of certain documents as evidence.—Notwithstanding anything contained in any**

other law for the time being in force, any document reproducing or derived from returns and documents
filed by a company with the Registrar on paper or in electronic form or stored on any electronic data storage
device or computer readable media by the Registrar, and authenticated by the Registrar or any other officer
empowered by the Central Government in such manner as may be prescribed, shall be deemed to be a
document for the purposes of this Act and the rules made thereunder and shall be admissible in any
proceedings thereunder without further proof or production of the original as evidence of any contents of
the original or of any fact stated therein of which direct evidence is admissible.

**398. Provisions relating to filing of applications, documents, inspection, etc., in electronic form.—**

(1) Notwithstanding anything to the contrary contained in this Act, and without prejudice to the provisions
contained in section 6 of the Information Technology Act, 2000 (21 of 2000), the Central Government may
make rules so as to require from such date as may be prescribed in the rules that—

(a) such applications, balance sheet, prospectus, return, declaration, memorandum, articles,

particulars of charges, or any other particulars or document as may be required to be filed or delivered
under this Act or the rules made thereunder, shall be filed in the electronic form and authenticated in
such manner as may be prescribed;

(b) such document, notice, any communication or intimation, as may be required to be served or

delivered under this Act, in the electronic form and authenticated in such manner as may be prescribed;

(c) such applications, balance sheet, prospectus, return, register, memorandum, articles, particulars

of charges, or any other particulars or document and return filed under this Act or rules made thereunder
shall be maintained by the Registrar in the electronic form and registered or authenticated, as the case
may be, in such manner as may be prescribed;

(d) such inspection of the memorandum, articles, register, index, balance sheet, return or any other

particulars or document maintained in the electronic form, as is otherwise available for inspection under
this Act or the rules made thereunder, may be made by any person through the electronic form in such
manner as may be prescribed;

(e) such fees, charges or other sums payable under this Act or the rules made thereunder shall be

paid through the electronic form and in such manner as may be prescribed; and

(f) the Registrar shall register change of registered office, alteration of memorandum or articles,

1*** issue certificate of incorporation, register such document, issue such certificate, record the notice,
receive such communication as may be required to be registered or issued or recorded or received, as
the case may be, under this Act or the rules made thereunder or perform duties or discharge functions
or exercise powers under this Act or the rules made thereunder or do any act which is by this Act

1. The word “prospectus” omitted by Act 22 of 2019, s. 38 (w.e.f. 15-8-2019).

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directed to be performed or discharged or exercised or done by the Registrar in the electronic form in
such manner as may be prescribed.

_Explanation.— For the removal of doubts, it is hereby clarified that the rules made under this section_

shall not relate to imposition of fines or other pecuniary penalties or demand or payment of fees or
contravention of any of the provisions of this Act or punishment therefor.

(2) The Central Government may, by notification, frame a scheme to carry out the provisions of

sub-section (1) through the electronic form.

**399. Inspection, production and evidence of documents kept by Registrar.—(1) Save as otherwise**

provided elsewhere in this Act, any person may—

(a) inspect by electronic means any documents kept by the Registrar in accordance with the rules

made, being documents filed or registered by him in pursuance of this Act, or making a record of any
fact required or authorised to be recorded or registered in pursuance of this Act, on payment for each
inspection of such fees as may be prescribed;

(b) require a certificate of the incorporation of any company, or a copy or extract of any other

document or any part of any other document to be certified by the Registrar, on payment in advance of
such fees as may be prescribed:

Provided that the rights conferred by this sub-section shall be exercisable—

(i) in relation to documents delivered to the Registrar with a prospectus in pursuance of section

26, only during the fourteen days beginning with the date of publication of the prospectus; and at
other times, only with the permission of the Central Government; and

(ii) in relation to documents so delivered in pursuance of clause (b) of sub-section (1) of section

388, only during the fourteen days beginning with the date of the prospectus; and at other times,
only with the permission of the Central Government.

(2) No process for compelling the production of any document kept by the Registrar shall issue from

any court or the Tribunal except with the leave of that court or the Tribunal and any such process, if issued,
shall bear thereon a statement that it is issued with the leave of the court or the Tribunal.

(3) A copy of, or extract from, any document kept and registered at any of the offices for the registration

of companies under this Act, certified to be a true copy by the Registrar (whose official position it shall not
be necessary to prove), shall, in all legal proceedings, be admissible in evidence as of equal validity with
the original document.

**400. Electronic form to be exclusive, alternative or in addition to physical form.—The Central**

Government may also provide in the rules made under section 398 and section 399 that the electronic form
for the purposes specified in these sections shall be exclusive, or in the alternative or in addition to the
physical form, therefor.

**401. Provision of value added services through electronic form.—The Central Government may**

provide such value added services through the electronic form and levy such fee thereon as may be
prescribed.

**402. Application of provisions of Information Technology Act, 2000.—All the provisions of the**

Information Technology Act, 2000 (21 of 2000) relating to the electronic records, including the manner and
format in which the electronic records shall be filed, in so far as they are not inconsistent with this Act,
shall apply in relation to the records in electronic form specified under section 398.

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**403. Fee for filing, etc.—(1) Any document, required to be submitted, filed, registered or recorded, or**

any fact or information required or authorised to be registered under this Act, shall be submitted, filed,
registered or recorded within the time specified in the relevant provision on payment of such fee as may be
prescribed:

1[Provided that where any document, fact or information required to be submitted, filed, registered or

recorded, as the case may be, under section 92 or 137 is not submitted, filed, registered or recorded, as the
case may be, within the period provided in those sections, without prejudice to any other legal action or
liability under this Act, it may be submitted, filed, registered or recorded, as the case may be, after expiry
of the period so provided in those sections, on payment of such additional fee as may be prescribed, which
shall not be less than one hundred rupees per day and different amounts may be prescribed for different
classes of companies:]

2[Provided further that where the document, fact or information, as the case may be, in cases other than

referred to in the first proviso, is not submitted, filed, registered or recorded, as the case may be, within the
period provided in the relevant section, it may, without prejudice to any other legal action or liability under
this Act, be submitted, filed, registered or recorded as the case may be, on payment of such additional fee
as may be prescribed and different fees may be prescribed for different classes of companies:

3[Provided also that where there is default on two or more occasions in submitting, filing, registering

or recording of such document, fact or information, as may be prescribed, it may, without prejudice to any
other legal action or liability under this Act, be submitted, filed, registered or recorded, as the case may be,
on payment of such higher additional fee, as may be prescribed.]]

4[(2) Where a company fails or commits any default to submit, file, register or record any document,

fact or information under sub-section (1) before the expiry of the period specified in the relevant section,
the company and the officers of the company who are in default, shall, without prejudice to the liability for
the payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for
such failure or default.]

**404. Fees, etc., to be credited into public account.—All fees, charges and other sums received by any**

Registrar, Additional, Joint, Deputy or Assistant Registrar or any other officer of the Central Government
in pursuance of any provision of this Act shall be paid into the public account of India in the Reserve Bank
of India.

CHAPTER XXV

COMPANIES TO FURNISH INFORMATION OR STATISTICS

**405. Power of Central Government to direct companies to furnish information or statistics.—(1)**

The Central Government may, by order, require companies generally, or any class of companies, or any
company, to furnish such information or statistics with regard to their or its constitution or working, and
within such time, as may be specified in the order.

(2) Every order under sub-section (1) shall be published in the Official Gazette and may be addressed

to companies generally or to any class of companies, in such manner, as the Central Government may think
fit and the date of such publication shall be deemed to be the date on which requirement for information or
statistics is made on such companies or class of companies, as the case may be.

1. Subs. by Act 1 of 2018, s. 80, for the first proviso (w.e.f. 7-5-2018).
2. Subs. by, s. 80, ibid, for second and third proviso (w.e.f. 1-7-2022).
3. Subs. by Act 29 of 2020, s. 56, for the third proviso (w.e.f. 1-7-2022).
4. Subs. by Act 1 of 2018, s. 80, for sub-section (2) (w.e.f. 7-5-2018).

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(3) For the purpose of satisfying itself that any information or statistics furnished by a company or

companies in pursuance of any order under sub-section (1) is correct and complete, the Central Government
may by order require such company or companies to produce such records or documents in its possession
or allow inspection thereof by such officer or furnish such further information as that Government may
consider necessary.

1[(4) If any company fails to comply with an order made under sub-section (1) or sub-section (3), or

furnishes any information or statistics which is incorrect or incomplete in any material respect, the company
and every officer of the company who is in default, shall be liable to a penalty of twenty thousand rupees
and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first
during which such failure continues, subject to a maximum of three lakh rupees.]

(5) Where a foreign company carries on business in India, all references to a company in this section

shall be deemed to include references to the foreign company in relation, and only in relation, to such
business.

CHAPTER XXVI

_NIDHIS_

2[406. Provision relating to Nidhis and its application, etc.—(1) In this section, “Nidhi” or “Mutual

Benefit Society” means a company which the Central Government may, by notification in the Official
Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be.

(2) The Central Government may, by notification in the Official Gazette, direct that any of the

provisions of this Act specified in the notification—

(a) shall not apply to any Nidhi or Mutual Benefit Society; or

(b) shall apply to any Nidhi or Mutual Benefit Society with such exceptions, modifications and

adaptations as may be specified in the notification.

(3) A copy of every notification proposed to be issued under sub-section (2), shall be laid in draft before

each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree
in disapproving the issue of notification or both Houses agree in making any modification in the
notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified
form as may be agreed upon by both the Houses.

(4) In reckoning any such period of thirty days as is referred to in sub-section (3), no account shall be

taken of any period during which the House referred to in sub-section (3) is prorogued or adjourned for
more than four consecutive days.

(5) The copies of every notification issued under this section shall, as soon as may be after it has been

issued, be laid before each House of Parliament.]

1. Subs. by Act 29 of 2020, s. 57, for sub-section (4) (w.e.f. 21-12-2020).
2. Subs. by Act 1 of 2018, s. 81, for section 406 (w.e.f. 15-8-2019).

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CHAPTER XXVII

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL

**407. Definitions.—In this Chapter, unless the context otherwise requires,—**

(a) “Chairperson” means the Chairperson of the Appellate Tribunal;
(b) “Judicial Member” means a member of the Tribunal or the Appellate Tribunal appointed as

such and includes the President or the Chairperson, as the case may be;

(c) “Member” means a member, whether Judicial or Technical of the Tribunal or the Appellate

Tribunal and includes the President or the Chairperson, as the case may be;

(d) “President” means the President of the Tribunal;
(e) “Technical Member” means a member of the Tribunal or the Appellate Tribunal appointed as

such.

**408. Constitution of National Company Law Tribunal.—The Central Government shall, by**

notification, constitute, with effect from such date as may be specified therein, a Tribunal to be known as
the National Company Law Tribunal consisting of a President and such number of Judicial and Technical
members, as the Central Government may deem necessary, to be appointed by it by notification, to exercise
and discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other
law for the time being in force.

**409. Qualification of President and Members of Tribunal.—(1) The President shall be a person who**

is or has been a Judge of a High Court for five years.

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

(a) is, or has been, a judge of a High Court; or

(b) is, or has been, a District Judge for at least five years; or

(c) has, for at least ten years been an advocate of a court.

_Explanation.—For the purposes of clause (c), in computing the period during which a person has_

been an advocate of a court, there shall be included any period during which the person has held judicial
office or the office of a member of a tribunal or any post, under the Union or a State, requiring special
knowledge of law after he become an advocate.

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

(a) has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian

Legal Service [1][and has been holding the rank of Secretary or Additional Secretary to the Government
of India]; or

(b) is, or has been, in practice as a chartered accountant for at least fifteen years; or

(c) is, or has been, in practice as a cost accountant for at least fifteen years; or

(d) is, or has been, in practice as a company secretary for at least fifteen years; or

2[(e) is a person of proven ability, integrity and standing having special knowledge and professional experience

of not less than fifteen years in industrial finance, industrial management, industrial reconstruction, investment
and accountancy.]

(f) is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National

Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947).

**410. Constitution of Appellate Tribunal.—The Central Government shall, by notification, constitute,**

with effect from such date as may be specified therein, an Appellate Tribunal to be known as the National
Company Law Appellate Tribunal consisting of a chairperson and such number of Judicial and Technical

1. Subs. by Act 1 of 2018, s. 82, for “out of which at least three years shall be in the pay scale of Joint Secretary to the Government

of India or equivalent or above in that service” (w.e.f 9-2-2018).

2. Subs. by Act 1 of 2018, s. 82, for clause (e) (w.e.f. 9-2-2018).

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Members, [1]***, as the Central Government may deem fit, to be appointed by it by notification, [2][for hearing
appeals against—

(a) the [3][orders of the Tribunal or of the National Financial Reporting Authority] under this Act; and

(b) any direction, decision or order referred to in [4][section 53A] of the Competition Act, 2002

(12 of 2002) in accordance with the provisions of that Act].

**411. Qualifications of chairperson and Members of Appellate Tribunal.—(1) The chairperson shall**

be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court.

(2) A Judicial Member shall be a person who is or has been a Judge of a High Court or is a Judicial

Member of the Tribunal for five years.

5[(3) A technical member shall be a person of proven ability, integrity and standing having special

knowledge and professional experience of not less than twenty-five years in industrial finance, industrial
management, industrial reconstruction, investment and accountancy.]

**412. Selection of Members of Tribunal and Appellate Tribunal.— (1) The President of the Tribunal**

and the chairperson and Judicial Members of the Appellate Tribunal, shall be appointed after consultation
with the Chief Justice of India.

6[(2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be

appointed on the recommendation of a Selection Committee consisting of—

(a) Chief Justice of India or his nominee—Chairperson;

(b) a senior Judge of the Supreme Court or Chief Justice of High Court— Member;

(c) Secretary in the Ministry of Corporate Affairs—Member; and

(d) Secretary in the Ministry of Law and Justice—Member.

(2A) Where in a meeting of the Selection Committee, there is equality of votes on any matter, the

Chairperson shall have a casting vote.]

(3) The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection Committee.

(4) The Selection Committee shall determine its procedure for recommending persons under     sub
section (2).

(5) No appointment of the Members of the Tribunal or the Appellate Tribunal shall be invalid merely

by reason of any vacancy or any defect in the constitution of the Selection Committee.

**413. Term of office of President, chairperson and other Members.— (1) The President and every**

other Member of the Tribunal shall hold office as such for a term of five years from the date on which he
enters upon his office, but shall be eligible for re-appointment for another term of five years.

(2) A Member of the Tribunal shall hold office as such until he attains,—

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

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

Provided that a person who has not completed fifty years of age shall not be eligible for appointment

as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department,

as the case may be, while holding office as such for a period not exceeding one year.

1. The words “not exceeding eleven” omitted by Act 29 of 2020, s. 58 (w.e.f. 22-1-2021).
2. Subs. by Act 7 of 2017, s. 172, for “for hearing appeals against the orders to the Tribunal” (w.e.f. 26-5-2017).
3. Subs. by Act 1 of 2018, s. 83 for “orders of the Tribunal” (w.e.f. 7-5-2018).
4. Subs. by Act 29 of 2020, s. 58, for “section 53N” (w.e.f. 22-1-2021).
5. Subs. by Act 1 of 2018, s. 84, for sub-section (3) (w.e.f. 9-2-2018).
6. Subs. by s. 85, ibid., for sub-section (2) (w.e.f. 9-2-2018).

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(3) The chairperson or a Member of the Appellate Tribunal shall hold office as such for a term of five

years from the date on which he enters upon his office, but shall be eligible for re-appointment for another
term of five years.

(4) A Member of the Appellate Tribunal shall hold office as such until he attains,—

(a) in the case of the Chairperson, the age of seventy years;

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

Provided that a person who has not completed fifty years of age shall not be eligible for appointment

as Member:

Provided further that the Member may retain his lien with his parent cadre or Ministry or Department,

as the case may be, while holding office as such for a period not exceeding one year.

**414. Salary, allowances and other terms and conditions of service of Members.—The salary,**

allowances and other terms and conditions of service of the Members of the Tribunal and the Appellate
Tribunal shall be such as may be prescribed:

Provided that neither the salary and allowances nor the other terms and conditions of service of the

Members shall be varied to their disadvantage after their appointment.

**415. Acting President and Chairperson of Tribunal or Appellate Tribunal.—(1) In the event of the**

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

(2) When the President or the Chairperson is unable to discharge his functions owing to absence, illness

or any other cause, the senior-most Member shall discharge the functions of the President or the
Chairperson, as the case may be, until the date on which the President or the Chairperson resumes his duties.

**416. Resignation of Members.—The President, the Chairperson or any Member may, by notice in**

writing under his hand addressed to the Central Government, resign from his office:

Provided that the President, the Chairperson, or the Member shall continue to hold office until the

expiry of three months from the date of receipt of such notice by the Central Government or until a person
duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is
earliest.

**417. Removal of Members.—(1) The Central Government may, after consultation with the Chief**

Justice of India, remove from office the President, Chairperson or any Member, who—

(a) has been adjudged an insolvent; or

(b) has been convicted of an offence which, in the opinion of the Central Government, involves

moral turpitude; or

(c) has become physically or mentally incapable of acting as such President, the Chairperson, or

Member; or

(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as

such President, the Chairperson or Member; or

(e) has so abused his position as to render his continuance in office prejudicial to the public interest:

Provided that the President, the Chairperson or the Member shall not be removed on any of the grounds

specified in clauses (b) to (e) without giving him a reasonable opportunity of being heard.

(2) Without prejudice to the provisions of sub-section (1), the President, the Chairperson or the Member

shall not be removed from his office except by an order made by the Central Government on the ground of
proved misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated by
the Chief Justice of India on a reference made to him by the Central Government in which such President,

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the Chairperson or Member had been informed of the charges against him and given a reasonable
opportunity of being heard.

(3) The Central Government may, with the concurrence of the Chief Justice of India, suspend from

office, the President, the Chairperson or Member in respect of whom reference has been made to the Judge
of the Supreme Court under sub-section (2) until the Central Government has passed orders on receipt of
the report of the Judge of the Supreme Court on such reference.

(4) The Central Government shall, after consultation with the Supreme Court, make rules to regulate

the procedure for the inquiry on the ground of proved misbehaviour or incapacity referred to in         subsection (2).

1[417A. Qualifications, terms and conditions of service of Chairperson and Member.—Notwithstanding

anything contained in this Act, the qualifications, appointment, term of office, salaries and allowances,
resignation, removal and other terms and conditions of service of the Chairperson and other Members of
the Appellate Tribunal appointed after the commencement of [2][the Tribunals Reforms Act, 2021, shall be
governed by the provisions of Chapter II of the said Act]:

Provided that the Chairperson and Member appointed before the commencement of Part XIV of

Chapter VI of the Finance Act, 2017, shall continue to be governed by the provisions of this Act and the
rules made thereunder as if the provisions of section 184 of the Finance Act, 2017 had not come into force.]

**418. Staff of Tribunal and Appellate Tribunal.—(1) The Central Government shall, in consultation**

with the Tribunal and the Appellate Tribunal, provide the Tribunal and the Appellate Tribunal, as the case
may be, with such officers and other employees as may be necessary for the exercise of the powers and
discharge of the functions of the Tribunal and the Appellate Tribunal.

(2) The officers and other employees of the Tribunal and the Appellate Tribunal shall discharge their

functions under the general superintendence and control of the President, or as the case may be, the
Chairperson, or any other Member to whom powers for exercising such superintendence and control are
delegated by him.

(3) The salaries and allowances and other conditions of service of the officers and other employees of

the Tribunal and the Appellate Tribunal shall be such as may be prescribed.

3[418A. Benches of Appellate Tribunal.—(1) The powers of the Appellate Tribunal may be exercised

by the Benches thereof to be constituted by the Chairperson:

Provided that a Bench of the Appellate Tribunal shall have at least one Judicial Member and one

Technical Member.

(2) The Benches of the Appellate Tribunal shall ordinarily sit at New Delhi or such other places as the

Central Government may, in consultation with the Chairperson, notify:

Provided that the Central Government may, by notification, after consultation with the Chairperson,

establish such number of Benches of the Appellate Tribunal, as it may consider necessary, to hear appeals
against any direction, decision or order referred to in section 53A of the Competition Act, 2002 (12 of 2003)
and under section 61 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).]

**419. Benches of Tribunal.—(1) There shall be constituted such number of Benches of the Tribunal,**

as may, by notification, be specified by the Central Government.

(2) The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the

President of the Tribunal.

(3) The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom

one shall be a Judicial Member and the other shall be a Technical Member:

1. Ins. by Act 7 of 2017, s. 172 (w.e.f. 26-5-5017).
2. Subs. by Act 33 of 2021, s. 28, for “Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), shall be governed by the

provisions of the section 184 of that Act” (w.e.f. 4-4-2021).

3. Ins. by Act 29 of 2020, s. 59 (w.e.f. 22-1-2021).

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Provided that it shall be competent for the Members of the Tribunal authorised in this behalf to function

as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of
such class of cases or such matters pertaining to such class of cases, as the President may, by general or
special order, specify:

Provided further that if at any stage of the hearing of any such case or matter, it appears to the Member

that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members,
the case or matter may be transferred by the President, or, as the case may be, referred to him for transfer,
to such Bench as the President may deem fit.

1[(4) The Central Government shall, by notification, establish such number of benches of the Tribunal,

as it may consider necessary, to exercise the jurisdiction, powers and authority of the Adjudicating
Authority conferred on such Tribunal by or under Part II of the Insolvency and Bankruptcy Code, 2016 (31
of 2016).]

(5) If the Members of a Bench differ in opinion on any point or points, it shall be decided according to

the majority, if there is a majority, but if the Members are equally divided, they shall state the point or
points on which they differ, and the case shall be referred by the President for hearing on such point or
points by one or more of the other Members of the Tribunal and such point or points shall be decided
according to the opinion of the majority of Members who have heard the case, including those who first
heard it.

**420. Orders of Tribunal.—(1) The Tribunal may, after giving the parties to any proceeding before it,**

a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.

(2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying

any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if
the mistake is brought to its notice by the parties:

Provided that no such amendment shall be made in respect of any order against which an appeal has

been preferred under this Act.

(3) The Tribunal shall send a copy of every order passed under this section to all the parties concerned.

**421. Appeal from orders of Tribunal.—(1) Any person aggrieved by an order of the Tribunal may**

prefer an appeal to the Appellate Tribunal.

_(2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent_

of parties.

_(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on_

which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such
form, and accompanied by such fees, as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty
five days from the date aforesaid, but within a further period not exceeding forty-five days, if it is satisfied
that the appellant was prevented by sufficient cause from filing the appeal within that period.

_(4) On the receipt of an appeal under sub-section_ _(1), the Appellate Tribunal shall, after giving the_

parties to the appeal a reasonable opportunity of being heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and the parties

to appeal.

**422. Expeditious disposal by Tribunal and Appellate Tribunal.—(1) Every application or petition**

presented before the Tribunal and every appeal filed before the Appellate Tribunal shall be dealt with and
disposed of by it as expeditiously as possible and every endeavour shall be made by the Tribunal or the
Appellate Tribunal, as the case may be, for the disposal of such application or petition or appeal within

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub-section (4) (w.e.f. 15-11-2016).

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three months from the date of its presentation before the Tribunal or the filing of the appeal before the
Appellate Tribunal.

(2) Where any application or petition or appeal is not disposed of within the period specified in sub
section (1), the Tribunal or, as the case may be, the Appellate Tribunal, shall record the reasons for not
disposing of the application or petition or the appeal, as the case may be, within the period so specified; and
the President or the Chairperson, as the case may be, may, after taking into account the reasons so recorded,
extend the period referred to in sub-section (1) by such period not exceeding ninety days as he may consider
necessary.

**423. Appeal to Supreme Court.—Any person aggrieved by any order of the Appellate Tribunal may**

file an appeal to the Supreme Court within sixty days from the date of receipt of the order of the Appellate
Tribunal to him on any question of law arising out of such order:

Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient

cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding
sixty days.

**424. Procedure before Tribunal and Appellate Tribunal.—(1) The Tribunal and the Appellate**

Tribunal shall not, while disposing of any proceeding before it or, as the case may be, an appeal before it,
be bound by the procedure laid down in the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice, and, subject to the other provisions of this Act [1][or of the Insolvency
and Bankruptcy Code, 2016 (31 of 2016)] and of any rules made hereunder, the Tribunal and the Appellate
Tribunal shall have power to regulate their own procedure.

(2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions

under this Act[ 1][or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)], the same powers as are
vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of
the following matters, namely:—

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act,1872 (1 of 1872),

requisitioning any public record or document or a copy of such record or document from any office;

(e) issuing commissions for the examination of witnesses or documents;

(f) dismissing a representation for default or deciding it ex parte;

(g) setting aside any order of dismissal of any representation for default or any order passed by it

_ex parte; and_

(h) any other matter which may be prescribed.

(3) Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the

same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the
Tribunal or the Appellate Tribunal to send for execution of its orders to the court within the local limits of
whose jurisdiction,—

(a) in the case of an order against a company, the registered office of the company is situate; or

(b) in the case of an order against any other person, the person concerned voluntarily resides or

carries on business or personally works for gain.

(4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial

proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian
Penal Code (45 of 1860), and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for
the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).

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**425. Power to punish for contempt.— The Tribunal and the Appellate Tribunal shall have the same**

jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may
exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act, 1971(70 of
1971),which shall have the effect subject to modifications that—

(a) the reference therein to a High Court shall be construed as including a reference to the Tribunal

and the Appellate Tribunal; and

(b) the reference to Advocate-General in section 15 of the said Act shall be construed as a reference

to such Law Officers as the Central Government may, specify in this behalf.

**426. Delegation of powers.—The Tribunal or the Appellate Tribunal may, by general or special order,**

direct, subject to such conditions, if any, as may be specified in the order, any of its officers or employees
or any other person authorised by it to inquire into any matter connected with any proceeding or, as the case
may be, appeal before it and to report to it in such manner as may be specified in the order.

**427. President, Members, officers, etc., to be public servants.—The President, Members, officers**

and other employees of the Tribunal and the Chairperson, Members, officers and other employees of the
Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian
Penal Code (45 of 1860).

**428. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall**

lie against the Tribunal, the President, Member, officer or other employee, or against the Appellate
Tribunal, the Chairperson, Member, officer or other employees thereof or liquidator or any other person
authorised by the Tribunal or the Appellate Tribunal for the discharge of any function under this Act in
respect of any loss or damage caused or likely to be caused by any act which is in good faith done or
intended to be done in pursuance of this Act.

**429. Power to seek assistance of Chief Metropolitan Magistrate, etc.—[1][(1) The Tribunal may, in**

any proceedings for winding up of a company under this Act or in any proceedings under the Insolvency
and Bankruptcy Code, 2016 (31 of 2016), in order to take into custody or under its control all property,
books of account or other documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial
Magistrate or the District Collector within whose jurisdiction any such property, books of account or other
documents of such company under this Act or of corporate persons under the said Code, are situated or
found, to take possession thereof, and the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the
District Collector, as the case may be, shall, on such request being made to him,—

(a) take possession of such property, books of account or other documents; and

(b) cause the same to be entrusted to the Tribunal or other persons authorised by it.]

(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief

Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector may take or cause to be taken
such steps and use or cause to be used such force as may, in his opinion, be necessary.

(3) No act of the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector done

in pursuance of this section shall be called in question in any court or before any authority on any ground
whatsoever.

**430. Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit**

or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to
determine by or under this Act or any other law for the time being in force and no injunction shall be granted
by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by
or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.

**431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings.—No act or proceeding**

of the Tribunal or the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence
of any vacancy or defect in the constitution of the Tribunal or the Appellate Tribunal, as the case may be.

**432. Right to legal representation.—A party to any proceeding or appeal before the Tribunal or the Appellate**

Tribunal, as the case may be, may either appear in person or authorise one or more chartered accountants or company

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 429 (w.e.f. 15-11-2016).

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secretaries or cost accountants or legal practitioners or any other person to present his case before the Tribunal or the
Appellate Tribunal, as the case may be.

**433. Limitation.—The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to**

proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case maybe.

**1[434. Transfer of certain pending proceedings.—(1) On such date as may be notified by the Central**

Government in this behalf,—

(a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in

this section referred to as the Company Law Board) constituted under sub-section (1) of section 10E of the
Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred to the Tribunal and the
Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act;

(b) any person aggrieved by any decision or order of the Company Law Board made before such date may

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

Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause from

filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty days; and

(c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to arbitration,

compromise, arrangements and reconstruction and winding up of companies, pending immediately before such
date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed
to deal with such proceedings from the stage before their transfer:

Provided that only such proceedings relating to the winding up of companies shall be transferred to the

Tribunal that are at a stage as may be prescribed by the Central Government:

2[Provided further that any party or parties to any proceedings relating to the winding up of companies

pending before any Court immediately before the commencement of the Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2018, may file an application of transfer of such proceedings and the Court may by
order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the
Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016).

3[Provided further that only such proceedings relating to cases other than winding-up, for which orders for

allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal

4[Provided also that]—

(i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of

companies that are reserved for orders for allowing or otherwise such proceedings; or

(ii) the proceedings relating to winding up of companies which have not been transferred from the High

Courts;

shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules,
1959.]

5[Provided also that proceedings relating to cases of voluntary winding up of a company where notice of

the resolution by advertisement has been given under sub-section (1) of section 485 of the Companies Act,
1956 but the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in
accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.]

(2) The Central Government may make rules consistent with the provisions of this Act to ensure timely

transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the
Tribunal under this section.]

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 434 (w.e.f. 15-11-2016).
2. Ins. by Act 26 of 2018, s. 39 (w.e.f. 6-6-2018).
3. Ins. by Notification No. S.O. 3676(E), dated 7[th] December 2016 (w.e.f. 15-12-2016).
4. Subs. by Notification No. S.O. 2042(E), dated 29[th] June 2017 for “Provided further that” (w.e.f. 29-6-2017).
5. Ins., ibid. (w.e.f. 29-6-2017).

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CHAPTER XXVIII

SPECIAL COURTS

**1[435. Establishment of Special Courts.— (1) The Central Government may, for the purpose of**

providing speedy trial of [2][offences under this Act, except under section 452, by notification] establish or
designate as many Special Courts as may be necessary.

(2) A Special Court shall consist of—

(a) a single judge holding office as Session Judge or Additional Session Judge, in case of offences

punishable under this Act with imprisonment of two years or more; and

(b) a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of other offences,

who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High
Court within whose jurisdiction the judge to be appointed is working.]

**436. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of**

Criminal Procedure, 1973 (2 of 1974),—

(a) [3][all offences specified under sub-section (1) of section 435] shall be triable only by the Special

Court established or designated for the area in which the registered office of the company in relation to
which the offence is committed or where there are more Special Courts than one for such area, by such
one of them as may be specified in this behalf by the High Court concerned;

(b) where a person accused of, or suspected of the commission of, an offence under this Act is

forwarded to a Magistrate under sub-section (2) or sub-section (2A) of section 167 of the Code of
Criminal Procedure, 1973 (2 of 1974), such Magistrate may authorise the detention of such person in
such custody as he thinks fit for a period not exceeding fifteen days in the whole where such Magistrate
is a Judicial Magistrate and seven days in the whole where such Magistrate is an Executive Magistrate:

Provided that where such Magistrate considers that the detention of such person upon or before the

expiry of the period of detention is unnecessary, he shall order such person to be forwarded to the
Special Court having jurisdiction;

(c) the Special Court may exercise, in relation to the person forwarded to it under clause (b), the

same power which a Magistrate having jurisdiction to try a case may exercise under section 167 of the
Code of Criminal Procedure, 1973 (2 of 1974) in relation to an accused person who has been forwarded
to him under that section; and

(d) a Special Court may, upon perusal of the police report of the facts constituting an offence under

this Act or upon a complaint in that behalf, take cognizance of that offence without the accused being
committed to it for trial.
(2) When trying an offence under this Act, a Special Court may also try an offence other than an offence

under this Act with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974) be
charged at the same trial.

(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the

Special Court may, if it thinks fit, try in a summary way any offence under this Act which is punishable
with imprisonment for a term not exceeding three years:

Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term

exceeding one year shall be passed:

Provided further that when at the commencement of, or in the course of, a summary trial, it appears to

the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding
one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the
Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses
who may have been examined and proceed to hear or rehear the case in accordance with the procedure for
the regular trial.

**437. Appeal and revision.—The High Court may exercise, so far as may be applicable, all the powers**

conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974) on a High

1. Subs. by Act 1 of 2018, s. 86, for “section 435” (w.e.f. 7-5-2018).
2. Subs. by Act 29 of 2020, s. 60, for “offences under this Act, by notification” (w.e.f. 22-1-2021).
3. Subs. by Act 21 of 2015, s. 22, for “all offences under this Act” (w.e.f. 29-5-2015).

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Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of
Session trying cases within the local limits of the jurisdiction of the High Court.

**438. Application of Code to proceedings before Special Court.—Save as otherwise provided in this**

Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the proceedings
before a Special Court and for the purposes of the said provisions, the Special Court shall be [1][deemed to
be a Court of Session or the court of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as
the case may be,] and the person conducting a prosecution before a Special Court shall be deemed to be a
Public Prosecutor.

**439. Offences to be non-cognizable.—(1) Notwithstanding anything in the Code of Criminal**

Procedure, 1973 (2 of 1974), every offence under this Act except the offences referred to in sub-section (6)
of section 212 shall be deemed to be non-cognizable within the meaning of the said Code.

(2) No court shall take cognizance of any offence under this Act which is alleged to have been

committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a
shareholder [2][or a member] of the company, or of a person authorised by the Central Government in that
behalf:

Provided that the court may take cognizance of offences relating to issue and transfer of securities and

non-payment of dividend, on a complaint in writing, by a person authorised by the Securities and Exchange
Board of India:

Provided further that nothing in this sub-section shall apply to a prosecution by a company of any of

its officers.

(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),where

the complainant under sub-section (2) is the Registrar or a person authorised by the Central Government,
the presence of such officer before the Court trying the offences shall not be necessary unless the court
requires his personal attendance at the trial.

(4) The provisions of sub-section (2) shall not apply to any action taken by the liquidator of a company

in respect of any offence alleged to have been committed in respect of any of the matters in Chapter XX or
in any other provision of this Act relating to winding up of companies.

_Explanation.—The liquidator of a company shall not be deemed to be an officer of the company within_

the meaning of sub-section (2).

**440. Transitional provisions.—Any offence committed under this Act, which is triable by a Special**

Court shall, until a Special Court is established, be tried by a [3][Court of Session or the Court of Metropolitan
Magistrate or a Judicial Magistrate of the First Class, as the case may be] exercising jurisdiction over the
area, notwithstanding anything contained in the Code of Criminal Procedure, 1973  (2 of 1974):

Provided that nothing contained in this section shall affect the powers of the High Court under section

407 of the Code to transfer any case or class of cases taken cognizance by a [1][Court of Session or the Court
of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be] under this section.

**441. Compounding of certain offences.—(1) Notwithstanding anything contained in the Code of**

Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a
company or any officer thereof) [4][not being an offence punishable with imprisonment only, or punishable
with imprisonment and also with fine], may, either before or after the institution of any prosecution, be
compounded by—

(a) the Tribunal; or
(b) where the maximum amount of fine which may be imposed for such offence [5][does not exceed

twenty-five lakh rupees], by the Regional Director or any officer authorised by the Central Government,
on payment or credit, by the company or, as the case may be, the officer, to the Central Government of

1. Subs. by Act 1 of 2018, s. 87 for “deemed to be a Court of Session” (w.e.f. 7-5-2018).
2. Ins. by Act 1 of 2018, s. 88 (w.e.f. 7-5-2018).
3. Subs. by s. 89, ibid., for “Court of Session” (w.e.f. 7-5-2018).
3. Subs. by s. 90, ibid., for “with fine only”(w.e.f. 9-2-2018).
4. Subs. by Act 22 of 2019, s. 39, for “does not exceed five lakh rupees” (w.e.f. 2-11-2018).

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such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government,
as the case may be, may specify:
Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine which

may be imposed for the offence so compounded:

Provided further that in specifying the sum required to be paid or credited for the compounding of an

offence under this sub-section, the sum, if any, paid by way of additional fee under sub-section (2) of section
403 shall be taken into account:

Provided also that any offence covered under this sub-section by any company or its officer shall not

be compounded if the investigation against such company has been initiated or is pending under this Act.

(2) Nothing in sub-section (1) shall apply to an offence committed by a company or its officer within a

period of three years from the date on which a similar offence committed by it or him was compounded
under this section.

_Explanation.—For the purposes of this section,—_

(a) any second or subsequent offence committed after the expiry of a period of three years from the

date on which the offence was previously compounded, shall be deemed to be a first offence;

(b) “Regional Director” means a person appointed by the Central Government as a Regional

Director for the purposes of this Act.
(3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall

forward the same, together with his comments thereon, to the Tribunal or the Regional Director or any
officer authorised by the Central Government, as the case may be.

(b) Where any offence is compounded under this section, whether before or after the institution of any

prosecution, an intimation thereof shall be given by the company to the Registrar within seven days from
the date on which the offence is so compounded.

(c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be

instituted in relation to such offence, either by the Registrar or by any share holder of the company or by
any person authorised by the Central Government against the offender in relation to whom the offence is
so compounded.

(d) Where the compounding of any offence is made after the institution of any prosecution, such

compounding shall be brought by the Registrar in writing, to the notice of the court in which the prosecution
is pending and on such notice of the compounding of the offence being given, the company or its officer in
relation to whom the offence is so compounded shall be discharged.

(4) The Tribunal or the Regional Director or any officer authorised by the Central Government, as the

case may be, while dealing with a proposal for the compounding of an offence for a default in compliance
with any provision of this Act which requires a company or its officer to file or register with, or deliver or
send to, the Registrar any return, account or other document, may direct, by an order, if it or he thinks fit to
do so, any officer or other employee of the company to file or register with, or on payment of the fee, and
the additional fee, required to be paid under section 403, such return, account or other document within
such time as may be specified in the order.

1[(5) If any officer or other employee of the company who fails to comply with any order made by the

Tribunal or the Regional Director or any officer authorised by the Central Government under sub-section
(4), the maximum amount of fine for the offence proposed to be compounded under this section shall be
twice the amount provided in the corresponding section in which punishment for such offence is provided.]

2[(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any

offence which is punishable under this Act with imprisonment only or with imprisonment and also with
fine shall not be compoundable.]

(7) No offence specified in this section shall be compounded except under and in accordance with the

provisions of this section.

1. Subs. by Act 29 of 2020, s. 61, for sub-section (5) (w.e.f. 21-12-2020).
2. Subs. by Act 22 of 2019, s. 39, for sub-section (6) (w.e.f. 2-11-2018).

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**442. Mediation and Conciliation Panel.—(1) The Central Government shall maintain a panel of**

experts to be called as the Mediation and Conciliation Panel consisting of such number of experts having
such qualifications as may be prescribed for mediation between the parties during the pendency of any
proceedings before the Central Government or the Tribunal or the Appellate Tribunal under this Act.

(2) Any of the parties to the proceedings may, at any time during the proceedings before the Central

Government or the Tribunal or the Appellate Tribunal, apply to the Central Government or the Tribunal or
the Appellate Tribunal, as the case may be, in such form along with such fees as may be prescribed, for
referring the matter pertaining to such proceedings to the Mediation and Conciliation Panel and the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be, shall appoint one or more experts
from the panel referred to in sub-section (1).

(3) The Central Government or the Tribunal or the Appellate Tribunal before which any proceeding is

pending may, suo motu, refer any matter pertaining to such proceeding to such number of experts from the
Mediation and Conciliation Panel as the Central Government or the Tribunal or the Appellate Tribunal, as
the case may be, deems fit.

(4) The fee and other terms and conditions of experts of the Mediation and Conciliation Panel shall be

such as may be prescribed.

(5) The Mediation and Conciliation Panel shall follow such procedure as may be prescribed and dispose

of the matter referred to it within a period of three months from the date of such reference and forward its
recommendations to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be.

(6) Any party aggreived by the recommendation of the Mediation and Conciliation Panel may file

objections to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be.

**443. Power of Central Government to appoint company prosecutors.—Notwithstanding anything**

contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Central Government may appoint
generally, or for any case, or in any case, or for any specified class of cases in any local area, one or more
persons, as company prosecutors for the conduct of prosecutions arising out of this Act and the persons so
appointed as company prosecutors shall have all the powers and privileges conferred by the Code on Public
Prosecutors appointed under section 24 of the Code.

**444. Appeal against acquittal.—Notwithstanding anything contained in the Code of Criminal**

Procedure, 1973 (2 of 1974), the Central Government may, in any case arising under this Act, direct any
company prosecutor or authorise any other person either by name or by virtue of his office, to present an
appeal from an order of acquittal passed by any court, other than a High Court, and an appeal presented by
such prosecutor or other person shall be deemed to have been validly presented to the appellate court.

**445. Compensation for accusation without reasonable cause.—The provisions of section 250 of the**

Code of Criminal Procedure, 1973 (2 of 1974) shall apply mutatis mutandis to compensation for accusation
without reasonable cause before the Special Court or the Court of Session.

**446. Application of fines.—The court imposing any fine under this Act may direct that the whole or**

any part thereof shall be applied in or towards payment of the costs of the proceedings, or in or towards the
payment of a reward to the person on whose information the proceedings were instituted.

**1[446A. Factors for determining level of punishment.—The court or the Special Court, while deciding**

the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namely:—

(a) size of the company;
(b) nature of business carried on by the company;
(c) injury to public interest;
(d) nature of the default; and
_(e) repetition of the default._

**2[446B. Lesser penalties for certain companies.—Notwithstanding anything contained in this Act, if**

penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small
company, start-up company or Producer Company, or by any of its officer in default, or any other person
in respect of such company, then such company, its officer in default or any other person, as the case may

1. Ins. by Act 1 of 2018, s. 91 (w.e.f. 9-2-2018).
2. Subs. by Act 29 of 2020, s. 62, for section 446B (w.e.f. 22-1-2021).

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be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such
provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of
an officer who is in default or any other person, as the case may be.

_Explanation.—For the purposes of this section,—_

(a) “Producer Company” means a company as defined in clause (l) of section 378A;

(b) “start-up company” means a private company incorporated under this Act or under the

Companies Act, 1956 (1 of 1956) and recognised as start-up in accordance with the notification issued
by the Central Government in the Department for Promotion of Industry and Internal Trade.]

CHAPTER XXIX

MISCELLANEOUS

**447. Punishment for fraud.—Without prejudice to any liability including repayment of any debt under**

this Actor any other law for the time being in force, any person who is found to be guilty of fraud,
1[involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever
is lower] shall be punishable with imprisonment for a term which shall not be less than six months but
which may extend to ten years and shall also be liable to fine which shall not be less than the amount
involved in the fraud, but which may extend to three times the amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of imprisonment shall not

be less than three years.

2[Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of

the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of
such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine
which may extend to [3][fifty lakh rupees] or with both.]

_Explanation.—For the purposes of this section—_

(i) “fraud”, in relation to affairs of a company or any body corporate, includes any act, omission,

concealment of any fact or abuse of position committed by any person or any other person with the
connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the
interests of, the company or its shareholders or its creditors or any other person, whether or not there is
any wrongful gain or wrongful loss;

(ii) “wrongful gain” means the gain by unlawful means of property to which the person gaining is

not legally entitled;

(iii) “wrongful loss” means the loss by unlawful means of property to which the person losing is

legally entitled.
**448. Punishment for false statement.— Save as otherwise provided in this Act, if in any return, report,**

certificate, financial statement, prospectus, statement or other document required by, or for, the purposes
of any of the provisions of this Act or the rules made thereunder, any person makes a statement,—

(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,

he shall be liable under section 447.

**449. Punishment for false evidence.—Save as otherwise provided in this Act, if any person**

intentionally gives false evidence—

(a) upon any examination on oath or solemn affirmation, authorised under this Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company

under this Act, or otherwise in or about any matter arising under this Act,

he shall be punishable with imprisonment for a term which shall not be less than three years but which may
extend to seven years and with fine which may extend to ten lakh rupees.

**450. Punishment where no specific penalty or punishment is provided.—If a company or any**

officer of a company or any other person contravenes any of the provisions of this Act or the rules made

1. Ins. by Act 1 of 2018, s. 92 (w.e.f. 9-2-2018).
2. The proviso ins. by s. 92, ibid. (w.e.f. 9-2-2018).
3. Subs. by Act 22 of 2019, s. 41, for “twenty lakh rupees” (w.e.f. 2-11-2018).

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thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent,
confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or
granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every
officer of the company who is in default or such other person shall be [1][liable to a penalty of ten thousand
rupees, and in case of continuing contravention, with a further penalty of on thousand rupees for each day
after the first during which the contravention continue, subject to a maximum of two lakh rupees in case of
a company and fifty thousand rupees in case of an officer who is in default or any other person].

**451. Punishment in case of repeated default.—If a company or an officer of a company commits an**

offence punishable either with fine or with imprisonment and where the same offence is committed for the
second or subsequent occasions within a period of three years, then, that company and every officer thereof
who is in default shall be punishable with twice the amount of fine for such offence in addition to any
imprisonment provided for that offence.

**452. Punishment for wrongful withholding of property.—(1) If any officer or employee of a**

company—

(a) wrongfully obtains possession of any property, including cash of the company; or
(b) having any such property including cash in his possession, wrongfully withholds it or knowingly

applies it for the purposes other than those expressed or directed in the articles and authorised by this
Act,3

he shall, on the complaint of the company or of any member or creditor or contributory thereof, be
punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

(2) The Court trying an offence under sub-section (1) may also order such officer or employee to deliver

up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully
withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in
default, to undergo imprisonment for a term which may extend to two years.

2[Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered

for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not
paid to that officer or employee, as the case may be, any amount relating to-
(a) provident fund, pension fund, gratuity fund or any other fund for the welfare of its officers or

employees, maintained by the company;


(b) compensation or liability for compensation under the Workmen's Compensation Act, 1923 (19

of 1923) in respect of death or disablement.]
**453. Punishment for improper use of “Limited” or “Private Limited”.—If any person or persons**

trade or carry on business under any name or title, of which the word “Limited” or the words “Private
Limited” or any contraction or imitation thereof is or are the last word or words, that person or each of those
persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private
company with limited liability, as the case may be, punishable with fine which shall not be less than five
hundred rupees but may extend to two thousand rupees for every day for which that name or title has been
used.

**454. Adjudication of penalties.—(1) The Central Government may, by an order published in the**

Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as
adjudicating officers for adjudging penalty under the provisions of this Act in the manner as may be
prescribed.

(2) The Central Government shall while appointing adjudicating officers, specify their jurisdiction in

the order under sub-section (1).

3[(3) The adjudicating officer may, by an order—

(a) impose the penalty on the company, the officer who is in default, or any other person, as the

case may be, stating therein any non-compliance or default under the relevant provisions of this Act;
and

4. Subs. by Act 29 of 2020, s. 63, for certain words (w.e.f. 21-12-2020).
1. Ins. by Act 29 of 2020, s. 64 (w.e.f. 22-1-2021).
2. Subs. by Act 22 of 2019, s. 42, for sub-section (3) (w.e.f. 2-11-2018).

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(b) direct such company, or officer who is in default, or any other person, as the case may be, to

rectify the default, wherever he considers fit.]

1[Provided that in case the default relates to non-compliance of sub-section (4) of section 92 or sub
section (1) or sub-section (2) of section 137 and such default has been rectified either prior to, or within
thirty days of, the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard
and all proceedings under this section in respect of such default shall be deemed to be concluded.]

(4) The adjudicating officer shall, before imposing any penalty, give a reasonable opportunity of being

heard to [2][such company, the officer who is in default or any other person].

(5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer

an appeal to the Regional Director having jurisdiction in the matter.

(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy

of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form,
manner and be accompanied by such fees as may be prescribed.

(7) The Regional Director may, after giving the parties to the appeal an opportunity of being heard,

pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against.

(8) (i) Where company [3][fails to comply with the order made under sub-section (3) or sub-section (7),

as the case may be,] within a period of ninety days from the date of the receipt of the copy of the order, the
company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which
may extend to five lakh rupees.

(ii) [4][Where an officer of a company or any other person] who is in default [5][fails to comply with the

order made under sub-section (3) or sub-section (7), as the case may be,] within a period of ninety days
from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment
which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but
which may extend to one lakh rupees, or with both.

6[454A.Penalty for repeated default.—Where a company or an officer of a company or any other

person having already been subjected to penalty for default under any provisions of this Act, again commits
such default within a period of three years from the date of order imposing such penalty passed by the
adjudicating officer or the Regional Director, as the case may be, it or he shall be liable for the second or
subsequent defaults for an amount equal to twice the amount of penalty provided for such default under the
relevant provisions of this Act.]

**455. Dormant company.—(1) Where a company is formed and registered under this Act for a future**

project or to hold an asset or intellectual property and has no significant accounting transaction, such a
company or an inactive company may make an application to the Registrar in such manner as may be
prescribed for obtaining the status of a dormant company.

_Explanation.—For the purposes of this section,—_

(i) “inactive company” means a company which has not been carrying on any business or operation,

or has not made any significant accounting transaction during the last two financial years, or has not
filed financial statements and annual returns during the last two financial years;

(ii) “significant accounting transaction” means any transaction other than—

(a) payment of fees by a company to the Registrar;

(b) payments made by it to fulfil the requirements of this Act or any other law;

(c) allotment of shares to fulfil the requirements of this Act; and

(d) payments for maintenance of its office and records.

3. Ins. by Act 29 of 2020, s. 65 (w.e.f. 22-1-2021).
1. Subs. by Act 22 of 2019, s. 42, for “such company and the officer who is in default” (w.e.f. 2-11-2018).
2. Subs. by s. 42, ibid., for “does not pay the penalty imposed by the adjudicating officer or the Regional Director” (w.e.f. 2-11
2018).

3. The words “Where an officer of a company or any other person” omitted by s. 42, ibid., (w.e.f. 2-11-2018).
4. The words “does not pay the penalty” omitted by s. 42, ibid. (w.e.f.. 2-11-2018).
5. Ins. by s. 43, ibid. (w.e.f. 2-11-2018).

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(2) The Registrar on consideration of the application shall allow the status of a dormant company to the

applicant and issue a certificate in such form as may be prescribed to that effect.

(3) The Registrar shall maintain a register of dormant companies in such form as maybe prescribed.
(4) In case of a company which has not filed financial statements or annual returns for two financial

years consecutively, the Registrar shall issue a notice to that company and enter the name of such company
in the register maintained for dormant companies.

(5) A dormant company shall have such minimum number of directors, file such documents and pay

such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may
become an active company on an application made in this behalf accompanied by such documents and fee
as may be prescribed.

(6) The Registrar shall strike off the name of a dormant company from the register of dormant

companies, which has failed to comply with the requirements of this section.

**456. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall**

lie against the Government or any officer of the Government or any other person in respect of anything
which is in good faith done or intended to be done in pursuance of this Act or of any rules or orders made
thereunder, or in respect of the publication by or under the authority of the Government or such officer, of
any report, paper or proceedings.

**457. Non-disclosure of information in certain cases.—Notwithstanding anything contained in any**

other law for the time being in force, the Registrar, any officer of the Government or any other person shall
not be compelled to disclose to any court, Tribunal or other authority, the source from where he got any
information which—

(a) has led the Central Government to order an investigation under section 210; or

(b) is or has been material or relevant in connection with such investigation.

**458. Delegation by Central Government of its powers and functions.—(1) The Central Government**

may, by notification, and subject to such conditions, limitations and restrictions as may be specified therein,
delegate any of its powers or functions under this Act other than the power to make rules to such authority
or officer as may be specified in the notification:

1*  -  -  -  
(2) A copy of every notification issued under sub-section (1) shall, as soon as may be after it is issued,

be laid before each House of Parliament.

**459. Powers of Central Government of Tribunal to accord approval, etc., subject to conditions**

**and to prescribe fees on applications.—(1) Where the Central Government or the Tribunal is required or**
authorised by any provision of this Act—

(a) to accord approval, sanction, consent, confirmation or recognition to, or in relation to, any

matter; or

(b) to give any direction in relation to any matter; or

(c) to grant any exemption in relation to any matter,

then, the Central Government or the Tribunal may in the absence of anything to the contrary contained in
that provision or any other provision of this Act, accord, give or grant such approval, sanction, consent,
confirmation, recognition, direction or exemption, subject to such conditions, limitations or restrictions as
it may think fit to impose and may, in the case of a contravention of any such condition, limitation or
restriction, rescind or withdraw such approval, sanction, consent, confirmation, recognition, direction or
exemption.

(2) Save as otherwise provided in this Act, every application which may be, or is required to be, made

to the Central Government or the Tribunal under any provision of this Act—

(a) in respect of any approval, sanction, consent, confirmation or recognition to be accorded by that

Government or the Tribunal to, or in relation to, any matter; or

1. The proviso omitted by Act 1 of 2018, s. 93 (w.e.f. 9-2-2018).

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(b) in respect of any direction or exemption to be given or granted by that Government or the

Tribunal in relation to any matter; or

(c) in respect of any other matter,

shall be accompanied by such fees as may be prescribed:

Provided that different fees may be prescribed for applications in respect of different matters or in case

of applications by different classes of companies.

**460. Condonation of delay in certain cases.—Notwithstanding anything contained in this Act,—**

(a) where any application required to be made to the Central Government under any provision of

this Act in respect of any matter is not made within the time specified therein, that Government may,
for reasons to be recorded in writing, condone the delay; and

(b) where any document required to be filed with the Registrar under any provision of this Act is

not filed within the time specified therein, the Central Government may, for reasons to be recorded in
writing, condone the delay.
**461. Annual report by Central Government.—The Central Government shall cause a general annual**

report on the working and administration of this Act to be prepared and laid before each House of Parliament
within one year of the close of the year to which the report relates.

**462. Power to exempt class or classes of companies from provisions of this Act.—(1) The Central**

Government may in the public interest, by notification direct that any of the provisions of this Act,—

(a) shall not apply to such class or classes of companies; or
(b) shall apply to the class or classes of companies with such exceptions, modifications and

adaptations as may be specified in the notification.

1[(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft

before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses
agree in disapproving the issue of notification or both Houses agree in making any modification in the
notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified
form as may be agreed upon by both the Houses.

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be

taken of any period during which the House referred to in sub-section (2) is prorogued or adjourned for
more than four consecutive days.

(4) The copies of every notification issued under this section shall, as soon as may be after it has been

issued, be laid before each House of Parliament.]

**463. Power of court to grant relief in certain cases.—(1) If in any proceeding for negligence, default,**

breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing
the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or
breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances
of the case, including those connected with his appointment, he ought fairly to be excused, the court may
relieve him, either wholly or partly, from his liability on such term, as it may think fit:

Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant

relief from any civil liability which may attach to an officer in respect of such negligence, default, breach
of duty, misfeasance or breach of trust.

(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against

him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to
the High Court for relief and the High Court on such application shall have the same power to relieve him
as it would have had if it had been a court before which a proceedings against that officer for negligence,
default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1).

(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has,

by notice served in the manner specified by it, required the Registrar and such other person, if any, as it
thinks necessary, to show cause why such relief should not be granted.

1. Subs. by Act 21 of 2015, s. 23, for sub-section (2) (w.e.f. 29-5-2015).

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**464. Prohibition of association or partnership of persons exceeding certain number.—(1) No**

association or partnership consisting of more than such number of persons as may be prescribed shall be
formed for the purpose of carrying on any business that has for its object the acquisition of gain by the
association or partnership or by the individual members thereof, unless it is registered as a company under
this Act or is formed under any other law for the time being in force:

Provided that the number of persons which may be prescribed under this sub-section shall not exceed

one hundred.

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

(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals who are governed by special Acts.

(3) Every member of an association or partnership carrying on business in contravention of         sub
section (1) shall be punishable with fine which may extend to one lakh rupees and shall also be personally
liable for all liabilities incurred in such business.

**465. Repeal of certain enactments and savings.—(1) The Companies Act, 1956 (1 of 1956) and the**

Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section referred to
as the repealed enactments) shall stand repealed:

1*  -  -  -  
2[Provided that] until a date is notified by the Central Government under sub-section (1) of Section 434

for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the Companies Act, 1956
(1 of 1956) in regard to the jurisdiction, powers, authority and functions of the Board of Company Law
Administration and court shall continue to apply as if the Companies Act, 1956 has not been repealed:

3[Provided further that] provisions of the Companies Act, 1956 (1 of 1956) referred in the notification

issued under section 67 of the Limited Liability Partnership Act, 2008 (6 of 2009) shall, until the relevant
notification under such section applying relevant corresponding provisions of this Act to limited liability
partnerships is issued, continue to apply as if the Companies Act, 1956 has not been repealed.

(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments,—

(a) anything done or any action taken or purported to have been done or taken, including any rule,

notification, inspection, order or notice made or issued or any appointment or declaration made or any
operation undertaken or any direction given or any proceeding taken or any penalty, punishment,
forfeiture or fine imposed under the repealed enactments shall, insofar as it is not inconsistent with the
provisions of this Act, be deemed to have been done or taken under the corresponding provisions of
this Act;

(b) subject to the provisions of clause (a), any order, rule, notification, regulation, appointment,

conveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction
given, proceeding taken, instrument executed or issued, or thing done under or in pursuance of any
repealed enactment shall, if in force at the commencement of this Act, continue to be in force, and shall
have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance
of this Act;

(c) any principle or rule of law, or established jurisdiction, form or course of pleading, practice or

procedure or existing usage, custom, privilege, restriction or exemption shall not be affected,
notwithstanding that the same respectively may have been in any manner affirmed or recognised or
derived by, in, or from, the repealed enactments;

(d) any person appointed to any office under or by virtue of any repealed enactment shall be deemed

to have been appointed to that office under or by virtue of this Act;

(e) any jurisdiction, custom, liability, right, title, privilege, restriction, exemption, usage, practice,

procedure or other matter or thing not in existence or in force shall not be revised or restored;

(f) the offices existing on the commencement of this Act for the registration of companies shall

continue as if they have been established under the provisions of this Act;

1. The first proviso omitted by Act 29 of 2020, s. 66 (w.e.f. 11-2-2021).
2. Subs. by s. 66, ibid., for “Provided further that” (w.e.f. 11-2-2021).
3. Subs. by s.66, ibid., for “Provided also that” (w.e.f. 11-2-2021).

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(g) the incorporation of companies registered under the repealed enactments shall continue to be

valid and the provisions of this Act shall apply to such companies as if they were registered under this
Act;

(h) all registers and all funds constituted and established under the repealed enactments shall be

deemed to be registers and funds constituted or established under the corresponding provisions of this
Act;

(i) any prosecution instituted under the repealed enactments and pending immediately before the

commencement of this Act before any Court shall, subject to the provisions of this Act, continue to be
heard and disposed of by the said Court;

(j) any inspection, investigation or inquiry ordered to be done under the Companies Act, 1956

(1 of 1956) shall continue to be proceeded with as if such inspection, investigation or inquiry has been
ordered under the corresponding provisions of this Act; and

(k) any matter filed with the Registrar, Regional Director or the Central Government under the

Companies Act, 1956 (1 of 1956) before the commencement of this Act and not fully addressed at that
time shall be concluded by the Registrar, Regional Director or the Central Government, as the case may
be, in terms of that Act, despite its repeal.
(3) The mention of particular matters in sub-section (2) shall not be held to prejudice the general

application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal of
the repealed enactments as if the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961)
were also a Central Act.

**466. Dissolution of Company Law Board and consequential provisions.—(1) Notwithstanding**

anything contained in section 465, the Board of Company Law Administration constituted under the
Companies Act, 1956 (1 of 1956) (hereafter in this section referred to as the Company Law Board) shall
stand dissolved on the constitution of the Tribunal and the Appellate Tribunal:

Provided that until the Tribunal and the Appellate Tribunal is constituted, the Chairman,           Vice
Chairman and Members of the Company Law Board immediately before the constitution of the Tribunal
and the Appellate Tribunal, who fulfil the qualifications and requirements provided under this Act regarding
appointment as President or Chairperson or Member of the Tribunal or the Appellate Tribunal, shall
function as President, Chairperson or Member of the Tribunal or the Appellate Tribunal:

Provided further that every officer or other employee, who had been appointed on deputation basis to

the Company Law Board, shall, on such dissolution,—

(i) become officer or employee of the Tribunal or the Appellate Tribunal, if he fulfils the

qualifications and requirements under this Act; and

(ii) stand reverted to his parent cadre, Ministry or Department, in any other case:

Provided also that every officer and the other employee of the Company Law Board, employed on

regular basis by that Board, shall become, on and from such dissolution the officer and other employee,
respectively, of the Tribunal or the Appellate Tribunal with the same rights and privileges as to pension,
gratuity and other like benefits as would have been admissible to him if he had continued to serve that
Board and shall continue to do so unless and until his employment in the Tribunal or the Appellate Tribunal
is duly terminated or until his remuneration, terms and conditions of employment are duly altered by the
Tribunal or the Appellate Tribunal, as the case may be:

Provided also that notwithstanding anything contained in the Industrial Disputes Act, 1947       (14

of 1947) or in any other law for the time being in force, any officer or other employee who becomes an
officer or other employee of the Tribunal or the Appellate Tribunal under the preceding proviso shall not
be entitled to any compensation under this Act or under any other law for the time being in force and no
such claim shall be entertained by any court, tribunal or other authority:

Provided also that where the Company Law Board has established a provident fund, superannuation

fund, welfare fund or other fund for the benefit of the officers and other employees employed in that Board,
the monies relatable to the officers and other employees who have become officers or employees of the
Tribunal or the Appellate Tribunal shall, out of the monies standing to the credit of such provident fund,
superannuation fund, welfare fund or other fund, stand transferred to, and vest in, the Tribunal or the

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Appellate Tribunal, as the case may be, and such monies which stand so transferred shall be dealt with by
the Tribunal or the Appellate Tribunal in such manner as may be prescribed.

(2) The persons holding the offices of Chairman, Vice-Chairman and Members, and officers and other

employees of the Company Law Board immediately before the constitution of the Tribunal and the
Appellate Tribunal who are not covered under proviso to sub-section(1) shall vacate their respective offices
on such constitution and no such Chairman, Vice-Chairman and Members and officers or other employees
shall be entitled to claim any compensation for the premature termination of the term of his office or of any
contract of service, if any.

**467. Power of Central Government to amend Schedules.—(1) Subject to the provisions of this**

section, the Central Government may, by notification, alter any of the regulations, rules, Tables, forms and
other provisions contained in any of the Schedules to this Act.

(2) Any alteration notified under sub-section (1) shall have effect as if enacted in this Act and shall

come into force on the date of the notification, unless the notification otherwise directs:

Provided that no such alteration in Table F of Schedule I shall apply to any company registered before

the date of such alteration.

(3) Every alteration made by the Central Government under sub-section (1) shall be laid as soon as may

be after it is made before each House of Parliament while it is in session for a total period of thirty days
which may be comprised in one session or in two or more successive sessions, and if, before the expiry of
the session immediately following the session or the successive sessions aforesaid, both Houses agree in
making any modification in the alteration, or both Houses agree that the alteration should not be made, the
alteration shall thereafter have effect only in such modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be without prejudice to the validity of anything
previously done in pursuance of that alteration.

**468. Powers of Central Government to make rules relating to winding up.—(1) The Central**

Government shall, make rules consistent with the Code of Civil Procedure, 1908 (5 of 1908) providing for
all matters relating to the winding up of companies, which by this Act, are to be prescribed, and may make
rules providing for all such matters, as may be prescribed.

1[(2) In particular, and without prejudice to the generality of the foregoing power, such rules may

provide for all or any of the following matters, namely:—

(i) as to the mode of proceedings to be held for winding up of a company by the Tribunal under

this Act;

(ii) for the holding of meetings of creditors and members in connection with proceedings under

section 230;

(iii) for giving effect to the provisions of this Act as to the reduction of the capital;
(iv) generally for all applications to be made to the Tribunal under the provisions of this Act;
(v) the holding and conducting of meetings to ascertain the wishes of creditors and contributories;
(vi) the settling of lists of contributories and the rectifying of the register of members where

required, and collecting and applying the assets;

(vii) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers

to the liquidator;

(viii) the making of calls; and

(ix) the fixing of a time within which debts and claims shall be proved.]

(3) All rules made by the Supreme Court on the matters referred to in this section as it stood immediately

before the commencement of this Act and in force at such commencement, shall continue to be in force, till
such time the rules are made by the Central Government and any reference to the High Court in relation to
winding up of a company in such rules shall be construed as a reference to the Tribunal.

**469. Power of Central Government to make rules.—(1) The Central Government may, by**

notification, make rules for carrying out the provisions of this Act.

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub-section (2) (w.e.f. 15-11-2016).

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(2) Without prejudice to the generality of the provisions of sub-section (1), the Central Government

may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or
in respect of which provision is to be or may be made by rules.

(3) Any rule made under sub-section (1) may provide that a contravention thereof shall be punishable

with fine which may extend to five thousand rupees and where the contravention is a continuing one, with
a further fine which may extend to five hundred rupees for every day after the first during which such
contravention continues.

(4) Every rule made under this section and every regulation made by Securities and Exchange Board

under this Act, shall be laid, as soon as may be after it is made, before each House of Parliament, while it
is in session, for a total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or
both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of anything previously done under that
rule or regulation.

**470. Power to remove difficulties.—(1) If any difficulty arises in giving effect to the provisions of**

this Act, the Central Government may, by order published in the Official Gazette, make such provisions,
not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for removing
the difficulty:

Provided that no such order shall be made after the expiry of a period of five years from the date of

commencement of section 1 of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each

House of Parliament.

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**TABLE –A**


SCHEDULE I

(See sections 4 and 5)

MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES


1st The name of the company is “..................................Limited / Private Limited”.

2nd The registered office of the company will be situated in the State of...................................

3rd (a) The objects to be pursued by the company on its incorporation are:—

(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—

4th The liability of the member(s) is limited and this liability is limited to the amount unpaid, if any,
on the shares held by them.

5th The share capital of the company is..................................rupees, divided

into..................................shares of..................................rupees each.

6th We, the several persons, whose names and addresses are subscribed, are desirous of being formed
into a company in pursuance of this memorandum of association, and we respectively agree to take
the number of shares in the capital of the company set against our respective names:—


Names, addresses,
descriptions and
occupations of subscribers


No. of Shares taken
by each subscriber


Signature of
subscriber


Signature, names, addresses,
descriptions and occupations
of witnesses


A.B. of........Merchant .............. Signed before me:

Signature......................

C.D. of........Merchant .............. Signed before me:

Signature......................

E.F. of........Merchant .............. Signed before me:

Signature......................

G.H. of........Merchant .............. Signed before me:

Signature......................

I.J. of........Merchant .............. Signed before me:

Signature......................

K.L. of........Merchant .............. Signed before me:

Signature......................

M.N. of........Merchant .............. Signed before me:

Signature......................

Total shares taken: _____________

_____________

253


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7th I, whose name and address is given below, am desirous of forming a company in pursuance of this
memorandum of association and agree to take all the shares in the capital of the company (Applicable in case
of one person company):—


Name, address, description
and occupation of
subscriber


Signature of subscriber Signature, name, address, description
and occupation of witness


A.B. ........Merchant Signed before me:

Signature......................

8th Shri/Smt.................., son/daughter of ......................., resident of............ aged............ years shall be the
nominee in the event of death of the sole member (Applicable in case of one person company)

Dated........................................ the day of ..........................

**TABLE –B**

MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY

GUARANTEE AND NOT HAVING A SHARE CAPITAL

1st The name of the company is “..................................Limited/Private Limited”.

2nd The registered office of the company will be situated in the State of..................................

3rd (a) The objects to be pursued by the company on its incorporation are:—

(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—

4th The liability of the member(s) is limited.

5th Every member of the company undertakes to contribute:

(i) to the assets of the company in the event of its being wound up while he is a member, or within one year

after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and

liabilities as may have been contracted before he ceases to be a member; and

(ii) to the costs, charges and expenses of winding up (and for the adjustment of the rights of the contributories
among themselves),

such amount as may be required, not exceeding..................................rupees.

6th We, the several persons, whose names and addresses are subscribed, are desirous of being formed into a

company in pursuance of this memorandum of association.


Names, addresses, descriptions
and occupations of subscribers


Signature of subscriber Signature, names, addresses,
descriptions and occupations of
witnesses


A.B. of........Merchant Signed before me:

Signature......................

C.D. of........Merchant Signed before me:

Signature......................

E.F. of........Merchant Signed before me:

Signature......................

G.H. of........Merchant Signed before me:

Signature......................


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I.J. of........Merchant Signed before me:

Signature......................

K.L. of........Merchant Signed before me:

Signature......................

M.N. of........Merchant Signed before me:

Signature......................

7th I, whose name and address is given below, am desirous of forming a company in pursuance of this

memorandum of association (Applicable in case of one person company):—


Name, address, description
and occupation of subscriber


Signature of subscriber Signature, name, address, description
and occupation of witness


A.B. ........Merchant Signed before me:

Signature......................

8th Shri/Smt............., son/daughter of .................., resident of............ aged............ years shall be the nominee in
the event of death of the sole member (Applicable in case of one person company)

Dated............................ the day of ..............................

**TABLE -C**

MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY

GUARANTEE AND HAVING A SHARE CAPITAL

1st The name of the company is “..................................Limited/Private Limited”.

2nd The registered office of the company will be situated in the State of..................................

3rd (a) The objects to be pursued by the company on its incorporation are:—

(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—

4th The liability of the member(s) is limited.

5th Every member of the company undertakes to contribute:

(i) to the assets of the company in the event of its being wound up while he is a member, or within one year
after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and
liabilities as may have been contracted before he ceases to be a member; and

(ii) to the costs, charges and expenses of winding up (and for the adjustment of the rights of the contributories
among themselves),

such amount as may be required, not exceeding..................................rupees.

6th The share capital of the company is..................................rupees, divided into..................................shares
of..................................rupees each

7th We, the several persons, whose names, addresses are subscribed, are desirous of being formed into a company
in pursuance of this memorandum of association and we respectively agree to take the number of shares in
the capital of the company set against our respective names:—


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Names, addresses,
descriptions and
occupations of subscribers


No. of Shares taken
by each subscriber


Signature of
subscriber


Signature, names, addresses,
descriptions and occupations
of witnesses


A.B. of........Merchant .............. Signed before me:
Signature......................

C.D. of........Merchant .............. Signed before me:
Signature......................

E.F. of........Merchant .............. Signed before me:
Signature......................

G.H. of........Merchant .............. Signed before me:
Signature......................

I.J. of........Merchant .............. Signed before me:
Signature......................

K.L. of........Merchant .............. Signed before me:
Signature......................

M.N. of........Merchant .............. Signed before me:
Signature......................

8th I, whose name and address is given below, am desirous of forming a company in pursuance of this
memorandum of association and agree to take all the shares in the capital of the company (Applicable in case
of one person company):—


Name, address, description
and occupation of subscriber


Signature of subscriber Signature, name, address, description
and occupation of witness


A.B. of ........Merchant Signed before me:
Signature......................

9th Shri/Smt.............., son/daughter of .................., resident of............ aged............ years shall be the nominee in
the event of death of the sole member (Applicable in case of one person company)

Dated............................ the day of...........................

**TABLE -D**

MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY

AND NOT HAVING SHARE CAPITAL

1st The name of the company is “..................................Company”.

2nd The registered office of the company will be situated in the State of..................................

3rd (a) The objects to be pursued by the company on its incorporation are:—

(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—

4th The liability of the member(s) is unlimited.

5th We, the several persons, whose names and addresses are subscribed are desirous of being formed into a
company in pursuance of this memorandum of association.


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Names, addresses, descriptions
and occupations of subscribers


Signature of subscriber Signature, names, addresses,
descriptions and occupations of
witness


A.B. of........Merchant Signed before me:

Signature......................

C.D. of........Merchant Signed before me:

Signature......................

E.F. of........Merchant Signed before me:

Signature......................

G.H. of........Merchant Signed before me:

Signature......................

I.J. of........Merchant Signed before me:

Signature......................

K.L. of........Merchant Signed before me:

Signature......................

M.N. of........Merchant Signed before me:

Signature......................

6th I, whose name and address is given below, am desirous of forming a company in pursuance of this
memorandum of association (Applicable in case of one person company):—


Name, address, description
and occupation of subscriber


Signature of subscriber Signature, name, address, description
and occupation of witness


A.B. ........Merchant Signed before me:

Signature......................

7th Shri/Smt.........., son/daughter of ....................., resident of............ aged............ years shall be the nominee in
the event of death of the sole member (Applicable in case of one person company)

Dated...................... the day of....................

**TABLE -E**

MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY

AND HAVING SHARE CAPITAL

1st The name of the company is “..................................Company”.

2nd The registered office of the company will be situated in the State of...................................

3rd (a) The objects to be pursued by the company on its incorporation are:—

(b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:—


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4th The liability of the member(s) is unlimited.

5th The share capital of the company is..................................rupees, divided into..................................shares
of..................................rupees each.

6th We, the several persons, whose names, and addresses are subscribed, are desirous of being formed into a
company in pursuance of this memorandum of association and we respectively agree to take the number of
shares in the capital of the company set against our respective names:—


Names, addresses,
descriptions and
occupations of subscribers


No. of Shares taken
by each subscriber


Signature of
subscriber


Signature, names, addresses,
descriptions and occupations
of witnesses


A.B. of........Merchant .............. Signed before me:

Signature......................

C.D. of........Merchant .............. Signed before me:

Signature......................

E.F. of........Merchant .............. Signed before me:

Signature......................

G.H. of........Merchant .............. Signed before me:

Signature......................

I.J. of.........Merchant .............. Signed before me:

Signature......................

K.L. of........Merchant .............. Signed before me:

Signature......................

M.N. of........Merchant .............. Signed before me:

Signature......................

7th I, whose name and address is given below, am desirous of forming a company in pursuance of this
memorandum of association and agree to take all the shares in the capital of the company (Applicable in case
of one person company):—


Name, address, description
and occupation of subscriber


Signature of subscriber Signature, name, address, description
and occupation of witness


A.B. ........Merchant Signed before me:

Signature......................

8th Shri/Smt..........., son/daughter of ...................., resident of............ aged............ years shall be the nominee in
the event of death of the sole member (Applicable in case of one person company)

Dated.............................. the day of .............................


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**TABLE -F**

ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY SHARES

**_Interpretation_**

**I. (1) In these regulations—**

(a) “the Act” means the Companies Act, 2013,

(b) “the seal” means the common seal of the company.

(2) Unless the context otherwise requires, words or expressions contained in these regulations shall bear the same

meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become
binding on the company.

**_Share capital and variation of rights_**

**II. 1. Subject to the provisions of the Act and these Articles, the shares in the capital of the company shall be**

under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such
persons, in such proportion and on such terms and conditions and either at a premium or at par and at such time as
they may from time to time think fit.

**2. (i) Every person whose name is entered as a member in the register of members shall be entitled to receive**

within two months after incorporation, in case of subscribers to the memorandum or after allotment or within one
month after the application for the registration of transfer or transmission or within such other period as the conditions
of issue shall be provided,—

(a) one certificate for all his shares without payment of any charges; or

(b) several certificates, each for one or more of his shares, upon payment of twenty rupees for each certificate

after the first.

1[(ii) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be

signed by two directors or by a director and the company secretary, wherever the company has appointed a company
secretary:

Provided that in case the company has a common seal it shall be affixed in the presence of the persons required

to sign the certificate.

_Explanation.—For the purposes of this item, it is hereby clarified that in case of an One Person Company, it shall_

be sufficient if the certificate is signed by a director and the company secretary, wherever the company has appointed
a company secretary, or any other person authorised by the Board for the purpose.]

(iii) In respect of any share or shares held jointly by several persons, the company shall not be bound to issue

more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient
delivery to all such holders.

**3. (i) If any share certificate be worn out, defaced, mutilated or torn or if there be no further space on the back for**

endorsement of transfer, then upon production and surrender thereof to the company, a new certificate may be issued
in lieu thereof, and if any certificate is lost or destroyed then upon proof thereof to the satisfaction of the company
and on execution of such indemnity as the company deem adequate, a new certificate in lieu thereof shall be given.
Every certificate under this Article shall be issued on payment of twenty rupees for each certificate.

(ii) The provisions of Articles (2) and (3) shall mutatis mutandis apply to debentures of the company.

**4. Except as required by law, no person shall be recognised by the company as holding any share upon any trust,**

and the company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof)
any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or
(except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an
absolute right to the entirety thereof in the registered holder.


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**5. (i) The company may exercise the powers of paying commissions conferred by sub-section (6) of section 40,**

provided that the rate per cent. or the amount of the commission paid or agreed to be paid shall be disclosed in the
manner required by that section and rules made thereunder.

(ii) The rate or amount of the commission shall not exceed the rate or amount prescribed in rules made under sub
section (6) of section 40.

(iii) The commission may be satisfied by the payment of cash or the allotment of fully or partly paid shares or

partly in the one way and partly in the other.

**6. (i) If at any time the share capital is divided into different classes of shares, the rights attached to any class**

(unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of section
48, and whether or not the company is being wound up, be varied with the consent in writing of the holders of threefourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of
the holders of the shares of that class.

(ii) To every such separate meeting, the provisions of these regulations relating to general meetings shall mutatis

_mutandis apply, but so that the necessary quorum shall be at least two persons holding at least one-third of the issued_
shares of the class in question.

**7. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not,**

unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.

**8. Subject to the provisions of section 55, any preference shares may, with the sanction of an ordinary resolution,**

be issued on the terms that they are to be redeemed on such terms and in such manner as the company before the issue
of the shares may, by special resolution, determine.

**_Lien_**

**9. (i) The company shall have a first and paramount lien—**

(a) on every share (not being a fully paid share), for all monies (whether presently payable or not) called, or

payable at a fixed time, in respect of that share; and

(b) on all shares (not being fully paid shares) standing registered in the name of a single person, for all monies

presently payable by him or his estate to the company:

Provided that the Board of directors may at any time declare any share to be wholly or in part exempt from

the provisions of this clause.

(ii) The company’s lien, if any, on a share shall extend to all dividends payable and bonuses declared from time

to time in respect of such shares.

**10. The company may sell, in such manner as the Board thinks fit, any shares on which the company has a lien:**

Provided that no sale shall be made—

(a) unless a sum in respect of which the lien exists is presently payable; or

(b) until the expiration of fourteen days after a notice in writing stating and demanding payment of such part

of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder
for the time being of the share or the person entitled thereto by reason of his death or insolvency.

**11. (i) To give effect to any such sale, the Board may authorise some person to transfer the shares sold to the**

purchaser thereof.

(ii) The purchaser shall be registered as the holder of the shares comprised in any such transfer.

(iii) The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the

shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

**12. (i) The proceeds of the sale shall be received by the company and applied in payment of such part of the**

t i t f hi h th li i t i tl bl


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(ii) The residue, if any, shall, subject to a like lien for sums not presently payable as existed upon the shares before

the sale, be paid to the person entitled to the shares at the date of the sale.

**_Calls on shares_**

**13. (i) The Board may, from time to time, make calls upon the members in respect of any monies unpaid on their**

shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of
allotment thereof made payable at fixed times:

Provided that no call shall exceed one-fourth of the nominal value of the share or be payable at less than one

month from the date fixed for the payment of the last preceding call.

(ii) Each member shall, subject to receiving at least fourteen days’ notice specifying the time or times and place

of payment, pay to the company, at the time or times and place so specified, the amount called on his shares.

(iii) A call may be revoked or postponed at the discretion of the Board.

**14. A call shall be deemed to have been made at the time when the resolution of the Board authorising the call**

was passed and may be required to be paid by instalments.

**15. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.**

**16. (i) If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the**

person from whom the sum is due shall pay interest thereon from the day appointed for payment thereof to the time
of actual payment at ten per cent. per annum or at such lower rate, if any, as the Board may determine.

(ii) The Board shall be at liberty to waive payment of any such interest wholly or in part.

**17. (i) Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date, whether**

on account of the nominal value of the share or by way of premium, shall, for the purposes of these regulations, be
deemed to be a call duly made and payable on the date on which by the terms of issue such sum becomes payable.

(ii) In case of non-payment of such sum, all the relevant provisions of these regulations as to payment of interest

and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made
and notified.

**18. The Board—**

(a) may, if it thinks fit, receive from any member willing to advance the same, all or any part of the monies

uncalled and unpaid upon any shares held by him; and

(b) upon all or any of the monies so advanced, may (until the same would, but for such advance, become

presently payable) pay interest at such rate not exceeding, unless the company in general meeting shall otherwise
direct, twelve per cent. per annum, as may be agreed upon between the Board and the member paying the sum in
advance.

**_Transfer of shares_**

**19.** (i) The instrument of transfer of any share in the company shall be executed by or on behalf of both the

transferor and transferee.

(ii) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in

the register of members in respect thereof.

**20. The Board may, subject to the right of appeal conferred by section 58 decline to register—**

(a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or

(b) any transfer of shares on which the company has a lien.

**21. The Board may decline to recognise any instrument of transfer unless—**

(a) the instrument of transfer is in the form as prescribed in rules made under sub-section (1) of section 56;


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(b) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other

evidence as the Board may reasonably require to show the right of the transferor to make the transfer; and

(c) the instrument of transfer is in respect of only one class of shares.

**22. On giving not less than seven days’ previous notice in accordance with section 91and rules made thereunder,**

the registration of transfers may be suspended at such times and for such periods as the Board may from time to time
determine:

Provided that such registration shall not be suspended for more than thirty days at any one time or for more than

forty-five days in the aggregate in any year.

**_Transmission of shares_**

**23. (i) On the death of a member, the survivor or survivors where the member was a joint holder, and his nominee**

or nominees or legal representatives where he was a sole holder, shall be the only persons recognised by the company
as having any title to his interest in the shares.

(ii) Nothing in clause (i) shall release the estate of a deceased joint holder from any liability in respect of any

share which had been jointly held by him with other persons.

**24. (i) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon**

such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter
provided, elect, either—

(a) to be registered himself as holder of the share; or

(b) to make such transfer of the share as the deceased or insolvent member could have made.

(ii) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if

the deceased or insolvent member had transferred the share before his death or insolvency.

**25. (i) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall deliver**

or send to the company a notice in writing signed by him stating that he so elects.

(ii) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of

the share.

(iii) All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the

registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or
insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member.

**26. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to**

the same dividends and other advantages to which he would been titled if he were the registered holder of the share,
except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the company:

Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered

himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter
withhold payment of all dividends, bonuses or other monies payable in respect of the share, until the requirements of
the notice have been complied with.

**27. In case of a One Person Company—**

(i) on the death of the sole member, the person nominated by such member shall be the person recognised by

the company as having title to all the shares of the member;

(ii) the nominee on becoming entitled to such shares in case of the member’s death shall be informed of such

event by the Board of the company;

(iii) such nominee shall be entitled to the same dividends and other rights and liabilities to which such sole

member of the company was entitled or liable;


-----

(iv) on becoming member, such nominee shall nominate any other person with the prior written consent of

such person who, shall in the event of the death of the member, become the member of the company.

**_Forfeiture of shares_**

**28. If a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the Board**

may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on
him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have
accrued.

**29. The notice aforesaid shall—**

(a) name a further day (not being earlier than the expiry of fourteen days from the date of service of the

notice) on or before which the payment required by the notice is to be made; and

(b) state that, in the event of non-payment on or before the day so named, the shares in respect of which the

call was made shall be liable to be forfeited.

**30. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the**

notice has been given may, at any time thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Board to that effect.

**31. (i) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Board**

thinks fit.

(ii) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on such terms as it

thinks fit.

**32. (i) A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares,**

but shall, notwithstanding the forfeiture, remain liable to pay to the company all monies which, at the date of
forfeiture, were presently payable by him to the company in respect of the shares.

(ii) The liability of such person shall cease if and when the company shall have received payment in full of all

such monies in respect of the shares.

**33. (i) A duly verified declaration in writing that the declarant is a director, the manager or the secretary, of the**

company, and that a share in the company has been duly forfeited on a date stated in the declaration, shall be
conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share;

(ii) The company may receive the consideration, if any, given for the share on any sale or disposal thereof and

may execute a transfer of the share in favour of the person to whom the share is sold or disposed of;

(iii) The transferee shall thereupon be registered as the holder of the share; and

(iv) The transferee shall not be bound to see to the application of the purchase money, if any, nor shall his title to

the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal
of the share.

**34. The provisions of these regulations as to forfeiture shall apply in the case of non-payment of any sum which,**

by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the
share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.


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**_Alteration of capital_**

**35. The company may, from time to time, by ordinary resolution increase the share capital by such sum, to be**

divided into shares of such amount, as may be specified in the resolution.

**36. Subject to the provisions of section 61, the company may, by ordinary resolution,—**

(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(b) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares

of any denomination;

(c) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the

memorandum;

(d) cancel any shares which, at the date of the passing of the resolution, have-not been taken or agreed to be

taken by any person.

**37. Where shares are converted into stock,—**

(a) the holders of stock may transfer the same or any part thereof in the same manner as, and subject to the

same regulations under which, the shares from which the stock arose might before the conversion have been
transferred, or as near thereto as circumstances admit:

Provided that the Board may, from time to time, fix the minimum amount of stock transferable, so, however,

that such minimum shall not exceed the nominal amount of the shares from which the stock arose.

(b) the holders of stock shall, according to the amount of stock held by them, have the same rights, privileges

and advantages as regards dividends, voting at meetings of the company, and other matters, as if they held the
shares from which the stock arose; but no such privilege or advantage (except participation in the dividends and
profits of the company and in the assets on winding up) shall be conferred by an amount of stock which would
not, if existing in shares, have conferred that privilege or advantage.

(c) such of the regulations of the company as are applicable to paid-up shares shall apply to stock and the

words “share” and “shareholder” in those regulations shall include “stock” and “stock-holder” respectively.

**38.** The company may, by special resolution, reduce in any manner and with, and subject to, any incident

authorised and consent required by law,—

(a) its share capital;

(b) any capital redemption reserve account; or

(c) any share premium account.

**_Capitalisation of profits_**

**39. (i) The company in general meeting may, upon the recommendation of the Board, resolve—**

(a) that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of

the company’s reserve accounts, or to the credit of the profit and loss account, or otherwise available for
distribution; and

(b) that such sum be accordingly set free for distribution in the manner specified in clause (ii) amongst the

members who would have been entitled thereto, if distributed by way of dividend and in the same proportions.

(ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained in clause

(iii), either in or towards—

(A) paying up any amounts for the time being unpaid on any shares held by such members respectively;

(B) paying up in full, unissued shares of the company to be allotted and distributed, credited as fully paid-up,


-----

(C) partly in the way specified in sub-clause (A) and partly in that specified in sub-clause (B);

(D) A securities premium account and a capital redemption reserve account may, for the purposes of this

regulation, be applied in the paying up of unissued shares to be issued to members of the company as fully paid
bonus shares;

(E) The Board shall give effect to the resolution passed by the company in pursuance of this regulation.

**40. (i) Whenever such a resolution as aforesaid shall have been passed, the Board shall—**

(a) make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and

all allotments and issues of fully paid shares if any; and

(b) generally do all acts and things required to give effect thereto.

(ii) The Board shall have power—

(a) to make such provisions, by the issue of fractional certificates or by payment in cash or otherwise as it

thinks fit, for the case of shares becoming distributable infractions; and

(b) to authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the

company providing for the allotment to them respectively, credited as fully paid-up, of any further shares to which
they may be entitled upon such capitalisation, or as the case may require, for the payment by the company on
their behalf, by the application thereto of their respective proportions of profits resolved to be capitalised, of the
amount or any part of the amounts remaining unpaid on their existing shares;

(iii) any agreement made under such authority shall be effective and binding on such members.

**_Buy-back of shares_**

**41. Notwithstanding anything contained in these articles but subject to the provisions of sections 68 to 70 and any**

other applicable provision of the Act or any other law for the time being in force, the company may purchase its own
shares or other specified securities.

**_General meetings_**

**42. All general meetings other than annual general meeting shall be called extraordinary general meeting.**

**43. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.**

(ii) If at any time directors capable of acting who are sufficient in number to form a quorum are not within India,

any director or any two members of the company may call an extraordinary general meeting in the same manner, as
nearly as possible, as that in which such a meeting may be called by the Board.

**_Proceedings at general meetings_**

**44. (i) No business shall be transacted at any general meeting unless a quorum of members is present at the time**

when the meeting proceeds to business.

(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as provided in section 103.

**45. The Chairperson, if any, of the Board shall preside as Chairperson at every general meeting of the company.**

**46. If there is no such Chairperson, or if he is not present within fifteen minutes after the time appointed for**

holding the meeting, or is unwilling to act as Chairperson of the meeting, the directors present shall elect one of their
members to be Chairperson of the meeting.

**47. If at any meeting no director is willing to act as Chairperson or if no director is present within fifteen minutes**

after the time appointed for holding the meeting, the members present shall choose one of their members to be
Chairperson of the meeting.

**48. In case of a One Person Company—**


-----

(i) the resolution required to be passed at the general meetings of the company shall be deemed to have been

passed if the resolution is agreed upon by the sole member and communicated to the company and entered in the
minutes book maintained under section 118;

(ii) such minutes book shall be signed and dated by the member;

(iii) the resolution shall become effective from the date of signing such minutes by the sole member.

**_Adjournment of meeting_**

**49.** (i) The Chairperson may, with the consent of any meeting at which a quorum is present, and shall, if so

directed by the meeting, adjourn the meeting from time to time and from place to place.

(ii) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting

from which the adjournment took place.

(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the

case of an original meeting.

(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary to give any notice of an

adjournment or of the business to be transacted at an adjourned meeting.

**_Voting rights_**

**50. Subject to any rights or restrictions for the time being attached to any class or classes of shares,—**

(a) on a show of hands, every member present in person shall have one vote; and

(b) on a poll, the voting rights of members shall be in proportion to his share in the paid-up equity share

capital of the company.

**51. A member may exercise his vote at a meeting by electronic means in accordance with section 108 and shall**

vote only once.

**52. (i) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall**

be accepted to the exclusion of the votes of the other joint holders.

(ii) For this purpose, seniority shall be determined by the order in which the names stand in the register of

members.

**53. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction**

in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such
committee or guardian may, on a poll, vote by proxy.

**54. Any business other than that upon which a poll has been demanded may be proceeded with, pending the**

taking of the poll.

**55. No member shall be entitled to vote at any general meeting unless all calls or other sums presently payable**

by him in respect of shares in the company have been paid.

**56. (i) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting**

at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all
purposes.

(ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, whose decision shall

be final and conclusive.


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**_Proxy_**

**57. The instrument appointing a proxy and the power-of-attorney or other authority, if any, under which it is**

signed or a notarised copy of that power or authority, shall be deposited at the registered office of the company not
less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the
instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for the taking
of the poll; and in default the instrument of proxy shall not be treated as valid.

**58. An instrument appointing a proxy shall be in the form as prescribed in the rules made under section 105.**

**59.** A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the

previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy
was executed, or the transfer of the shares in respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by

the company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used.

**_Board of Directors_**

**60.** The number of the directors and the names of the first directors shall be determined in writing by the

subscribers of the memorandum or a majority of them.

**61. (i) The remuneration of the directors shall, in so far as it consists of a monthly payment, be deemed to accrue**

from day-to-day.

(ii) In addition to the remuneration payable to them in pursuance of the Act, the directors may be paid all

travelling, hotel and other expenses properly incurred by them—

(a) in attending and returning from meetings of the Board of Directors or any committee thereof or general

meetings of the company; or

(b) in connection with the business of the company.

**62. The Board may pay all expenses incurred in getting up and registering the company.**

**63. The company may exercise the powers conferred on it by section 88 with regard to the keeping of a foreign**

register; and the Board may (subject to the provisions of that section) make and vary such regulations as it may thinks
fit respecting the keeping of any such register.

**64. All cheques, promissory notes, drafts,** _hundis, bills of exchange and other negotiable instruments, and all_

receipts for monies paid to the company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the
case may be, by such person and in such manner as the Board shall from time to time by resolution determine.

**65. Every director present at any meeting of the Board or of a committee thereof shall sign his name in a book to**

be kept for that purpose.

**66. (i) Subject to the provisions of section 149, the Board shall have power at any time, and from time to time, to**

appoint a person as an additional director, provided the number of the directors and additional directors together shall
not at any time exceed the maximum strength fixed for the Board by the articles.

(ii) Such person shall hold office only up to the date of the next annual general meeting of the company but shall

be eligible for appointment by the company as a director at that meeting subject to the provisions of the Act.

**_Proceedings of the Board_**

**67. (i) The Board of Directors may meet for the conduct of business, adjourn and otherwise regulate its meetings,**

as it thinks fit.

(ii) A director may, and the manager or secretary on the requisition of a director shall, at any time, summon a


-----

**68. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be**

decided by a majority of votes.

(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting vote.

**69. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number**

is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act
for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting
of the company, but for no other purpose.

**70. (i) The Board may elect a Chairperson of its meetings and determine the period for which he is to hold office.**

(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after

the time appointed for holding the meeting, the directors present may choose one of their number to be Chairperson
of the meeting.

**71. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting**

of such member or members of its body as it thinks fit.

(ii) Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that

may be imposed on it by the Board.

**72. (i) A committee may elect a Chairperson of its meetings.**

(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after

the time appointed for holding the meeting, the members present may choose one of their members to be Chairperson
of the meeting.

**73. (i) A committee may meet and adjourn as it thinks fit.**

(ii) Questions arising at any meeting of a committee shall be determined by a majority of votes of the members

present, and in case of an equality of votes, the Chairperson shall have a second or casting vote.

**74. All acts done in any meeting of the Board or of a committee thereof or by any person acting as a director,**

shall, notwithstanding that it may be afterwards discovered that there was some defect in the appointment of any one
or more of such directors or of any person acting as aforesaid, or that they or any of them were disqualified, be as
valid as if every such director or such person had been duly appointed and was qualified to be a director.

**75. Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the**

Board or of a committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee,
shall be valid and effective as if it had been passed at a meeting of the Board or committee, duly convened and held.

**76. In case of a One Person Company—**

(i) where the company is having only one director, all the businesses to be transacted at the meeting of the

Board shall be entered into minutes book maintained under section 118;

(ii) such minutes book shall be signed and dated by the director;

(iii) the resolution shall become effective from the date of signing such minutes by the director.

**_Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer_**

**77. Subject to the provisions of the Act,—**

(i) A chief executive officer, manager, company secretary or chief financial officer may be appointed by the

Board for such term, at such remuneration and upon such conditions as it may thinks fit; and any chief executive
officer, manager, company secretary or chief financial officer so appointed may be removed by means of are
solution of the Board;

(ii) A director may be appointed as chief executive officer, manager, company secretary or chief financial

officer.


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**78. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and**

chief executive officer, manager, company secretary or chief financial officer shall not be satisfied by its being done
by or to the same person acting both as director and as, or in place of, chief executive officer, manager, company
secretary or chief financial officer.

**_The Seal_**

**79. (i) The Board shall provide for the safe custody of the seal.**

(ii) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the

Board or of a committee of the Board authorised by it in that behalf, and except in the presence of at least two directors
and of the secretary or such other person as the Board may appoint for the purpose; and those two directors and the
secretary or other person aforesaid shall sign every instrument to which the seal of the company is so affixed in their
presence.

1[Explanation.—For the purposes of this sub-paragraph it is hereby clarified that on and from the commencement

of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not
be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the
provisions of this sub-paragraph shall not be applicable.]

**_Dividends and Reserve_**

**80.** The company in general meeting may declare dividends, but no dividend shall exceed the amount

recommended by the Board.

**81. Subject to the provisions of section 123, the Board may from time to time pay to the members such interim**

dividends as appear to it to be justified by the profits of the company.

**82. (i) The Board may, before recommending any dividend, set aside out of the profits of the company such sums**

as it thinks fit as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to
which the profits of the company may be properly applied, including provision for meeting contingencies or for
equalizing dividends; and pending such application, may, at the like discretion, either be employed in the business of
the company or be invested in such investments (other than shares of the company) as the Board may, from time to
time, thinks fit.

(ii) The Board may also carry forward any profits which it may consider necessary not to divide, without setting

them aside as a reserve.

**83. (i) Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends**

shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the
dividend is paid, but if and so long as nothing is paid upon any of the shares in the company, dividends may be
declared and paid according to the amounts of the shares.

(ii) No amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this

regulation as paid on the share.

(iii) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the

shares during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued
on terms providing that it shall rank for dividend as from a particular date such share shall rank for dividend
accordingly.

**84. The Board may deduct from any dividend payable to any member all sums of money, if any, presently payable**

by him to the company on account of calls or otherwise in relation to the shares of the company.

**85. (i) Any dividend, interest or other monies payable in cash in respect of shares may be paid by cheque or**

warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the register of members, or to such person
and to such address as the holder or joint holders may in writing direct.

(ii) Every such cheque or warrant shall be made payable to the order of the person to whom it is sent.

**86. Any one of two or more joint holders of a share may give effective receipts for any dividends, bonuses or**

other monies payable in respect of such share.


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**87. Notice of any dividend that may have been declared shall be given to the persons entitled to share therein in**

the manner mentioned in the Act.

**88. No dividend shall bear interest against the company.**

**_Accounts_**

**89. (i) The Board shall from time to time determine whether and to what extent and at what times and places and**

under what conditions or regulations, the accounts and books of the company, or any of them, shall be open to the
inspection of members not being directors.

(ii) No member (not being a director) shall have any right of inspecting any account or book or document of the

company except as conferred by law or authorised by the Board or by the company in general meeting.

**_Winding up_**

**90. Subject to the provisions of Chapter XX of the Act and rules made thereunder—**

(i) If the company shall be wound up, the liquidator may, with the sanction of a special resolution of the

company and any other sanction required by the Act, divide amongst the members, in specie or kind, the whole
or any part of the assets of the company, whether they shall consist of property of the same kind or not.

(ii) For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be

divided as aforesaid and may determine how such division shall be carried out as between the members or
different classes of members.

(iii) The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such

trusts for the benefit of the contributories if he considers necessary, but so that no member shall be compelled to
accept any shares or other securities whereon there is any liability.

**_Indemnity_**

**91.** Every officer of the company shall be indemnified out of the assets of the company against any liability

incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or
in which he is acquitted or in which relief is granted to him by the court or the Tribunal.

_Note: The Articles shall be signed by each subscriber of the memorandum of association who shall add his address,_
description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall
likewise add his address, description and occupation, if any, and such signatures shall be in form specified below:


Names, addresses, descriptions

and occupations of subscribers


Witnesses (along with names, addresses,

descriptions and occupations)


A.B. of………….Merchant Signed before me

Signature…………….

C.D. of………….Merchant Signed before me

Signature…………….

E.F. of…………. Merchant Signed before me

Signature…………….

G.H. of………….Merchant Signed before me

Signature…………….


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I.J. of………….Merchant Signed before me

Signature…………….

K.L. of………….Merchant Signed before me

Signature…………….

M.N. of………….Merchant Signed before me

Signature…………….

Dated the……..day of ………20……

Place: ................................

**TABLE – G**

ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND

HAVING A SHARE CAPITAL

**1. The number of members with which the company proposes to be registered is hundred, but the Board of**

Directors may, from time to time, register an increase of members.

**2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be deemed to be incorporated**

with these articles and to apply to the company.

**TABLE - H**

ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT

HAVING SHARE CAPITAL

**_Interpretation_**

**I. (1) In these regulations—**

(a) “the Act” means the Companies Act, 2013;

(b) “the seal” means the common seal of the company.

(2) Unless the context otherwise requires, words or expressions contained in these regulations shall have the same

meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become
binding on the company.

**_Members_**

**II. 1. The number of members with which the company proposes to be registered is hundred, but the Board of**

Directors may, from time to time, whenever the company or the business of the company requires it, register an
increase of members.

**2. The subscribers to the memorandum and such other persons as the Board shall admit to membership shall be**

members of the company.

**_General meetings_**

**3. All general meetings other than annual general meeting shall be called extraordinary general meeting.**

**4. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.**

(ii) If at any time directors capable of acting who are sufficient in number to form a quorum are not within India,

any director or any two members of the company may call an extraordinary general meeting in the same manner, as
nearly as possible, as that in which such a meeting may be called by the Board.


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**_Proceedings at general meetings_**

**5. (i) No business shall be transacted at any general meeting unless a quorum of members is present at the time**

when the meeting proceeds to business.

(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as provided in section 103.

**6. The Chairperson, if any, of the Board shall preside as Chairperson at every general meeting of the company.**

**7. If there is no such Chairperson, or if he is not present within fifteen minutes after the time appointed for holding**

the meeting, or is unwilling to act as Chairperson of the meeting, the directors present shall elect one of their members
to be Chairperson of the meeting.

**8. If at any meeting no director is willing to act as Chairperson or if no director is present within fifteen minutes**

after the time appointed for holding the meeting, the members present shall choose one of their members to be
Chairperson of the meeting.

**_Adjournment of meeting_**

**9. (i) The Chairperson may, with the consent of any meeting at which a quorum is present, and shall, if so directed**

by the meeting, adjourn the meeting from time to time and from place to place.

(ii) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting

from which the adjournment took place.

(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the

case of an original meeting.

(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary to give any notice of an

adjournment or of the business to be transacted at an adjourned meeting.

**_Voting rights_**

**10. Every member shall have one vote.**

**11. A member of unsound mind, or in respect of whom an order has been made by any Court having**

jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian,
and any such committee or guardian may, on a poll, vote by proxy.

**12. No member shall be entitled to vote at any general meeting unless all sums presently payable by him to the**

company have been paid.

**13. (i) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting**

at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for
all purposes.

(ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, whose decision

shall be final and conclusive.

**14.** A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the

previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy
was executed, or the transfer of the shares in respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by

the company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used.

**15. A member may exercise his vote at a meeting by electronic means in accordance with section 108 and shall**

vote only once.

**16. Any business other than that upon which a poll has been demanded may be proceeded with, pending the**

taking of the poll.


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**17.** The number of the directors and the names of the first directors shall be determined in writing by the

subscribers of the memorandum or a majority of them.

**18. (i) The remuneration of the directors shall, in so far as it consists of a monthly payment, be deemed to accrue**

from day-to-day.

(ii) In addition to the remuneration payable to them in pursuance of the Act, the directors may be paid all

travelling, hotel and other expenses properly incurred by them—

(a) in attending and returning from meetings of the Board of Directors or any committee thereof or general

meetings of the company; or

(b) in connection with the business of the company.

**_Proceedings of the Board_**

**19. (i) The Board of Directors may meet for the conduct of business, adjourn and otherwise regulate its meetings,**

as it thinks fit.

(ii) A director may, and the manager or secretary on the requisition of a director shall, at any time, summon a

meeting of the Board.

**20. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be**

decided by a majority of votes.

(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting vote.

**21. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number**

is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act
for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting
of the company, but for no other purpose.

**22. (i) The Board may elect a Chairperson of its meetings and determine the period for which he is to hold office.**

(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after

the time appointed for holding the meeting, the directors present may choose one of their members to be Chairperson
of the meeting.

**23. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting**

of such member or members of its body as it thinks fit.

(ii) Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that

may be imposed on it by the Board.

**24. (i) A committee may elect a Chairperson of its meetings.**

(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after

the time appointed for holding the meeting, the members present may choose one of their members to be Chairperson
of the meeting.

**25. (i) A committee may meet and adjourn as it thinks proper.**

(ii) Questions arising at any meeting of a committee shall be determined by a majority of votes of the members

present, and in case of an equality of votes, the Chairman shall have a second or casting vote.

**26. All acts done by any meeting of the Board or of a committee thereof or by any person acting as a director,**

shall, notwithstanding that it may be afterwards discovered that there was some defect in the appointment of any one
or more of such directors or of any person acting as aforesaid, or that they or any of them were disqualified, be as
valid as if every such director or such person had been duly appointed and was qualified to be a director.

**27. Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the**

Board or of a committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee,


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**_Chief Executive Officer, Manager, Company Secretary or_**

**_Chief Financial Officer_**

**28. Subject to the provisions of the Act,—**

(i) A chief executive officer, manager, company secretary or chief financial officer may be appointed by the

Board for such term, at such remuneration and upon such conditions as it thinks fit; and any chief executive
officer, manager, company secretary or chief financial officer so appointed may be removed by means of a
resolution of the Board.

(ii) A director may be appointed as chief executive officer, manager, company secretary or chief financial

officer.
**29. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and**

chief executive officer, manager, company secretary or chief financial officer shall not be satisfied by its being done
by or to the same person acting both as director and as, or in place of, chief executive officer, manager, company
secretary or chief financial officer.

**_The Seal_**

**30. (i) The Board shall provide for the safe custody of the seal.**
(ii) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the

Board or of a committee of the Board authorised by it in that behalf, and except in the presence of at least two directors
and of the secretary or such other person as the Board may appoint for the purpose; and those two directors and the
secretary or other person aforesaid shall sign every instrument to which the seal of the company is so affixed in their
presence.

1[Explanation.—For the purposes of this sub-paragraph it is hereby clarified that on and from the commencement

of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not
be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the
provisions of this sub-paragraph shall not be applicable.]
_Note: The Articles shall be signed by each subscriber of the memorandum of association who shall add his address,_
description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall
likewise add his address, description and occupation, if any, and such signatures shall be in form specified below:


Names, addresses, descriptions
and occupations of subscribers


Witnesses (along with names, addresses,
descriptions and occupations)


A.B. of………….Merchant Signed before me
Signature…………….

C.D. of………….Merchant Signed before me
Signature…………….

E.F. of…………. Merchant Signed before me
Signature…………….

G.H. of………….Merchant Signed before me
Signature…………….

I.J. of………….Merchant Signed before me
Signature…………….

K.L. of………….Merchant Signed before me
Signature…………….

M.N. of………….Merchant Signed before me


-----

Dated the……..day of ………20……
Place: ................................


Signature…………….

**TABLE – I**


ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND

HAVING A SHARE CAPITAL

**1. The number of members with which the company proposes to be registered is hundred, but the Board of**

Directors may, from time to time, register an increase of members.

**2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be deemed to be incorporated**

with these articles and to apply to the company.

**TABLE - J**

ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND

NOT HAVING SHARE CAPITAL

**1.** The number of members with which the company proposes to be registered is hundred, but the Board of

Directors may, from time to time, whenever the company or the business of the company requires it, register an
increase of members.

**2. The subscribers to the memorandum and such other persons as the Board shall admit to membership shall be**

members of the company.

**3. All the articles of Table H in Schedule I annexed to the Companies Act, 2013 shall be deemed to be incorporated**

with these articles and to apply to the company.


-----

SCHEDULE II

(See section 123)

**USEFUL LIVES TO COMPUTE DEPRECIATION**

**PART ‘A’**

1. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The

depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The
useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number
of production or similar units expected to be obtained from the asset by the entity.

2. For the purpose of this Schedule, the term depreciation includes amortisation.

3. Without prejudice to the foregoing provisions of paragraph 1,—

1[(i) The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the

residual value of an asset shall not be more than five per cent. of the original cost of the asset:

Provided that where a company adopts a useful life different from what is specified in Part C or uses a residual

value different from the limit specified above, the financial statements shall disclose such difference and provide
justification in this behalf duly supported by technical advice.]

2[(ii) 3[For intangible assets, the relevant Indian Accounting Standards (Ind As) shall apply. Where a company

is not required to comply with the Indian Accounting Standards (Ind As), it shall comply with relevant Accounting
Standards under Companies (Accounting Standards) Rules, 2006] except in case of intangible assets (Toll Roads)
created under 'Build, Operate and Transfer', 'Build, Own, Operate and Transfer' or any other form of public private
partnership route in case of road projects. Amortisation in such cases may be done as follows:—

(a) Mode of amortization


Amortisation Rate =

Amortisation Amount=

Cost of Intangible Assets (A) x


Amorisation Amount

Cost of Intangible Assets (A)

Actual Revenue for the year (B)

Projected Revenue from Intangible Asset

(till the end of the concession period) (C)


x 100


(b) Meaning of particulars are as follows :—

Cost of Intangible Assets (A) = Cost incurred by the company in accordance with
the accounting standards.

Actual Revenue for the year (13) = Actual revenue (Toll Charges) received during the
accounting year.

Projected Revenue from Intangible Total projected revenue from the Intangible Assets
Asset (C) as provided to the project lender at the time of
financial closure/agreement.

The amortisation amount or rate should ensure that the whole of the cost of the intangible asset is amortised over
the concession period.

1 S b b N tifi ti N G S R 627(E) d t d 29th A t 2014 f b h (i) f h 3 ( f 29 8 2014)


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Revenue shall be reviewed at the end of each financial year and projected revenue shall be adjusted to reflect
such changes, if any, in the estimates as will lead to the actual collection at the end of the concession period.

(c) Example:—

Cost of creation of Intangible Assets          : Rs. 500 Crores

Total period of Agreement                  : 20 Years

Time used for creation of Intangible Assets    : 2 Years

Intangible Assets to be amortised in          : 18 Years

Assuming that the Total revenue to be generated out of Intangible Assets over the period would be Rs.
600 Crores, in the following manner:—

Year No. Revenue( In Rs. Crores) Remarks

Year 1 5 Actual

Year 2 7.5 Estimate *

Year 3 10 Estimate *

Year 4 12.5 Estimate *

Year 5 17.5 Estimate *

Year 6 20 Estimate *

Year 7 23 Estimate *

Year 8 27 Estimate *

Year 9 31 Estimate *

Year 10 34 Estimate *

Year 11 38 Estimate *

Year 12 41 Estimate *

Year 13 46 Estimate *

Year 14 50 Estimate *

Year 15 53 Estimate *

Year 16 57 Estimate *

Year 17 60 Estimate*

Year 18 67.5 Estimate *

Total 600

‘*’ will be actual at the end of financial year.

Based on this the charge for first year would be Rs. 4.16 Crore (approximately) (i.e. Rs. 5/Rs. 600 x Rs. 500
Crores) which would be charged to profit and loss and 0.83% (i.e. Rs. 4.16 Crore/ Rs. 500 Crore x 100) is the
amortisation rate for the first year.

Where a company arrives at the amortisation amount in respect of the said Intangible Assets in accordance with
any method as per the applicable Accounting Standards, it shall disclose the same.]

**PART ‘B’**

4. The useful life or residual value of any specific asset, as notified for accounting purposes by a Regulatory

Authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the
depreciation to be provided for such asset irrespective of the requirements of this Schedule.

|Year No.|Revenue( In Rs. Crores)|Remarks|
|---|---|---|
|Year 1|5|Actual|
|Year 2|7.5|Estimate *|
|Year 3|10|Estimate *|
|Year 4|12.5|Estimate *|
|Year 5|17.5|Estimate *|
|Year 6|20|Estimate *|
|Year 7|23|Estimate *|
|Year 8|27|Estimate *|
|Year 9|31|Estimate *|
|Year 10|34|Estimate *|
|Year 11|38|Estimate *|
|Year 12|41|Estimate *|
|Year 13|46|Estimate *|
|Year 14|50|Estimate *|
|Year 15|53|Estimate *|
|Year 16|57|Estimate *|
|Year 17|60|Estimate*|
|Year 18|67.5|Estimate *|
|Total|600||


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**PART ‘C’**

5. Subject to Parts A and B above, the following are the useful lives of various tangible assets:

**Nature of assets** **Useful Life**

**I.** **Buildings [NESD]**

_(a)_ Buildings (other than factory buildings) RCC Frame Structure 60 Years


_(b)_ Buildings (other than factory buildings) other than RCC Frame

Structure


30 Years


_(c)_ Factory buildings -do
_(d)_ Fences, wells, tube wells 5 Years

_(e)_ Others (including temporary structure, etc.) 3 Years

**II.** **Bridges, culverts, bunders, etc. [NESD]** 30 Years

**III.** **Roads [NESD]**

_(a)_ Carpeted roads

_(i)_ Carpeted Roads-RCC 10 Years

_(ii)_ Carpeted Roads-other than RCC 5 Years

_(b)_ Non-carpeted roads 3 Years

**IV.** **Plant and Machinery**

_(i)_ **General rate applicable to plant and machinery not covered**

**under special plant and machinery**


_(a)_ Plant and Machinery other than continuous process plant not

covered under specific industries

1[(b) continuous process plant for which no special rate has been

prescribed under (ii) below [NESD]

_(ii)_ **Special Plant and Machinery**

_(a)_ Plant and Machinery related to production and exhibition of

Motion Picture Films

1. Cinematograph films—Machinery used in the production and

exhibition of cinematograph films, recording and reproducing
equipments, developing machines, printing machines, editing
machines, synchronizers and studio lights except bulbs


15 Years

25 Years]

13 Years


2. Projecting equipment for exhibition of films -do
_(b)_ Plant and Machinery used in glass manufacturing


1. Plant and Machinery except direct fire glass melting furnaces

—Recuperative and regenerative glass melting furnaces

2. Plant and Machinery except direct fire glass melting furnaces

—Moulds[NESD]


13 Years

8 Years


3. Float Glass Melting Furnaces [NESD] 10 Years


_(c)_ Plant and Machinery used in mines and quarries—Portable

underground machinery and earth moving machinery used in
open cast mining [NESD]

_(d)_ Plant and Machinery used in Telecommunications [NESD]


8 Years


-----

1. Towers 18 Years


2. Telecom transceivers, switching centres, transmission and other

network equipment


13 Years


3. Telecom—Ducts, Cables and optical fibre 18 Years

4. Satellites -do
_(e)_ Plant and Machinery used in exploration, production and

refining oil and gas [NESD]

1. Refineries 25 Years


2. Oil and gas assets (including wells), processing plant and

facilities


-do

3. Petrochemical Plant -do
4. Storage tanks and related equipment -do
5. Pipelines 30 Years

6. Drilling Rig -do

7. Field operations (above ground) Portable boilers, drilling tools,

well-head tanks, etc.


8 Years


8. Loggers -do
_(f)_ Plant and Machinery used in generation, transmission and

distribution of power [NESD]

1. Thermal/ Gas/ Combined Cycle Power Generation Plant 40 Years

2. Hydro Power Generation Plant -do
3. Nuclear Power Generation Plant -do
4. Transmission lines, cables and other network assets -do
5. Wind Power Generation Plant 22 Years

6. Electric Distribution Plant 35 Years

7. Gas Storage and Distribution Plant 30 Years

8. Water Distribution Plant including pipelines -do
_(g)_ Plant and Machinery used in manufacture of steel

1. Sinter Plant 20 Years

2. Blast Furnace -do
3. Coke ovens -do
4. Rolling mill in steel plant -do
5. Basic oxygen Furnace Converter 25 Years

_(h)_ Plant and Machinery used in manufacture of non-ferrous metals

1. Metal pot line [NESD] 40 Years

2. Bauxite crushing and grinding section [NESD] -do
3. Digester Section [NESD] -do

-----

5. Equipments for Calcination [NESD] -do
6. Copper Smelter [NESD] -do
7. Roll Grinder 40 Years

8. Soaking Pit 30 Years

9. Annealing Furnace -do
10. Rolling Mills -do
11. Equipments for Scalping, Slitting, etc. [NESD] -do
12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years

13. Copper refining plant [NESD] -do
_(i)_ Plant and Machinery used in medical and surgical operations

[NESD]


1. Electrical Machinery, X-ray and electrotherapeutic apparatus

and accessories thereto, medical, diagnostic equipments,
namely, Cat-scan, Ultrasound Machines, ECG Monitors, etc.


13 Years


2. Other Equipments. 15 Years

_(j)_ Plant and Machinery used in manufacture of pharmaceuticals

and chemicals [NESD]

1. Reactors 20 Years

2. Distillation Columns -do
3. Drying equipments/Centrifuges and Decanters -do
4. Vessel/storage tanks -do
_(k)_ Plant and Machinery used in civil construction


1. Concreting, Crushing, Piling Equipments and Road Making

Equipments

2. Heavy Lift Equipments—


12 Years


Cranes with capacity of more than 100 tons 20 Years

Cranes with capacity of less than 100 tons 15 Years

3. Transmission line, Tunneling Equipments [NESD] 10 Years

4. Earth-moving equipments 9 Years


5. Others including Material Handling/Pipeline/Welding

Equipments [NESD]


12 Years


_(l)_ Plant and Machinery used in salt works [NESD] 15 Years

**V.** **Furniture and fittings [NESD]**

_(i)_ General furniture and fittings 10 Years


_(ii)_ Furniture and fittings used in hotels, restaurants and boarding

houses, schools, colleges and other educational institutions,
libraries; welfare centres; meeting halls, cinema houses;
theatres and circuses; and furniture and fittings let out on hire
for use on the occasion of marriages and similar functions.

**VI.** **Motor Vehicles [NESD]**


8 Years


1 M t l t d th d 10 Years


-----

2. Motor buses, motor lorries, motor cars and motor taxies used in

a business of running them on hire

3. Motor buses, motor lorries and motor cars other than those used

in a business of running them on hire


6 Years

8 Years


4. Motor tractors, harvesting combines and heavy vehicles -do

5. Electrically operated vehicles including battery powered or fuel

cell powered vehicles

**VII.** **Ships [NESD]**

1. Ocean-going ships


8 Years


_(i)_ Bulk Carriers and liner vessels 25 Years


_(ii)_ Crude tankers, product carriers and easy chemical carriers with

or without conventional tank coatings.

_(iii)_ Chemicals and Acid Carriers:


20 Years


_(a)_ With Stainless steel tanks 25 Years

_(b)_ With other tanks 20 Years

_(iv)_ Liquified gas carriers 30 Years


_(v)_ Conventional large passenger vessels which are used for cruise

purpose also


-do

_(vi)_ Coastal service ships of all categories -do
_(vii)_ Offshore supply and support vessels 20 Years

_(viii)Catamarans and other high speed passenger for ships or boats_ -do
_(ix)_ Drill ships 25 Years

_(x)_ Hovercrafts 15 Years

_(xi)_ Fishing vessels with wooden hull 10 Years


_(xii)_ Dredgers, tugs, barges, survey launches and other similar ships

used mainly for dredging purposes

2. Vessels ordinarily operating on inland waters—


14 Years


_(i)_ Speed boats 13 Years

_(ii)_ Other vessels 28 Years

**VIII.** **Aircrafts or Helicopters [NESD]** 20 Years


**IX.** **Railways sidings, locomotives, rolling stocks, tramways and**
**railways used by concerns, excluding railway concerns**

**[NESD]**


15 Years


**X.** **Ropeway structures [NESD]** 15 Years

**XI.** **Office equipment [NESD]** 5 Years

**XII.** **Computers and data processing units [NESD]**

_(i)_ Servers and networks 6 Years

_(ii)_ End user devices, such as, desktops, laptops, etc. 3 Years

**XIII.** **Laboratory equipment [NESD]**


-----

_(ii)_ Laboratory equipments used in educational institutions 5 Years

**XIV.** **Electrical Installations and Equipment [NESD]** 10 years

**XV.** **Hydraulic works, pipelines and sluices [NESD]** 15 Years

**Notes.—**

1. “Factory buildings” does not include offices, godowns, staff quarters.

2. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold,

discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the
date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished
or destroyed.

3. The following information shall also be disclosed in the accounts, namely:—

(i) depreciation methods used; and

(ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the

Schedule.

1[4(a) Useful life specified in Part C of the Schedule is for whole of the asset and where cost of a part of the asset is significant

to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant
part shall be determined separately.

(b) The requirement under sub-paragraph (a) shall be voluntary in respect of the financial year commencing on or

after the 1st April, 2014 and mandatory for financial statements in respect of financial years commencing on or after
the 1st April, 2015.]

2*  -  -  -  
6. The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift

working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C
above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that
period and incase of the triple shift the depreciation shall be calculated on the basis of 100% for that period.

7. From the date this Schedule comes into effect, the carrying amount of the asset as on that date—

(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;

(b) after retaining the residual value, [3][may be recognised] in the opening balance of retained earnings where

the remaining useful life of an asset is nil.

8. “Continuous process plant” means a plant which is required and designed to operate for twenty-four hours a

day.

1 S b b N tifi ti N G S R 627(E) d t d 29th A t 2014 f h 4 ( f 29 8 2014)


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SCHEDULE III

(See section 129)

1[Division I

**FINANCIAL STATEMENTS FOR A COMPANY WHOSE FINANCIAL STATEMENTS ARE**

**REQUIRED TO COMPLY WITH THE COMPANIES (ACCOUNTING STANDARDS) RULES, 2006**

General Instructions for Preparation of Balance Sheet and Statement of Profit and Loss of a Company.]

**GENERAL INSTRUCTIONS**

1. Where compliance with the requirements of the Act including Accounting Standards as applicable to the

companies require any change in treatment or disclosure including addition, amendment, substitution or deletion in
the head or sub-head or any changes, inter se, in the financial statements or statements forming part thereof, the same
shall be made and the requirements of this Schedule shall stand modified accordingly.

2. The disclosure requirements specified in this Schedule are in addition to and not in substitution of the disclosure

requirements specified in the Accounting Standards prescribed under the Companies Act, 2013. Additional
disclosures specified in the Accounting Standards shall be made in the notes to accounts or by way of additional
statement unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as
required by the Companies Act shall be made in the notes to accounts in addition to the requirements set out in this
Schedule.

3. (i) Notes to accounts shall contain information in addition to that presented in the Financial Statements and

shall provide where required (a) narrative descriptions or disaggregations of items recognised in those statements;
and (b) information about items that do not qualify for recognition in those statements.

(ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall be cross-referenced to any

related information in the notes to accounts. In preparing the Financial Statements including the notes to accounts, a
balance shall be maintained between providing excessive detail that may not assist users of financial statements and
not providing important information as a result of too much aggregation.

4. (i) Depending upon the [2][Total Income] of the company, the figures appearing in the Financial Statements

3[Shall] be rounded off as given below:—

**2[Total Income]** **Rounding off**

_(a)_ less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or
millions, or decimals thereof.

_(b)_ one hundred crore rupees or more To the nearest lakhs, millions or crores, or decimals
thereof.

(ii) Once a unit of measurement is used, it [4][should] be used uniformly in the Financial Statements.

5. Except in the case of the first Financial Statements laid before the Company (after its incorporation) the

corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the
Financial Statements including notes shall also be given.

6. For the purpose of this Schedule, the terms used herein shall be as per the applicable Accounting Standards.

Note:— This part of Schedule sets out the minimum requirements for disclosure on the face of the Balance Sheet,

and the Statement of Profit and Loss (hereinafter referred to as “Financial Statements” for the purpose of this
Schedule) and Notes. Line items, sub-line items and sub-totals shall be presented as an addition or substitution

1. Subs. by G.S.R. 404(E), dated 6th April, 2016, for “GENERAL INSTURCTIONS FOR PREPARATION OF BALANCE SHEET AND STATEMENT OF PROFIT

AND LOSS OF A COMPANY”.

2 Subs by G S R 207(E) dated 24th March 2021 for “Turnover” (w e f 1-4-2021)


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on the face of the Financial Statements when such presentation is relevant to an understanding of the
company’s financial position or performance or to cater to industry/sector-specific disclosure requirements
or when required for compliance with the amendments to the Companies Act or under the Accounting
Standards.

**PART I — BALANCE SHEET**

_Name of the Company……………………._

_Balance Sheet as at ………………………_

(Rupees in…………)


Particulars Note

No.


Figures as at the

end of current

reporting period


Figures as at the end

of the previous

reporting period


1 2 3 4

**I.** **EQUITY AND LIABILITIES**

(1) **Shareholders’ funds**

_(a)_ Share capital

_(b)_ Reserves and surplus

_(c)_ Money received against share

warrants

(2) **Share application money pending**

**allotment**

(3) **Non-current liabilities**

_(a)_ Long-term borrowings

_(b)_ Deferred tax liabilities (Net)

_(c)_ Other Long-term liabilities

_(d)_ Long-term provisions

(4) **Current liabilities**

_(a)_ Short-term borrowings

1[(b) Trade payables

(A) total outstanding dues of

micro enterprises and small

enterprises; and

(B) total outstanding dues of

creditors other than micro

enterprises and small enterprises.]

(c) Other current liabilities

(d) Short-term provisions

**TOTAL**


-----

1 2 3 4

**II.** **ASSETS**

**Non-current assets**

(1) (a) [1][Property, Plant and Equipment

2[and Intangible assets]]

_(i)_ [3][Property, Plant and

Equipment]

_(ii)_ Intangible assets

_(iii)_ Capital work-in-progress

_(iv)_ Intangible assets under

development

_(b)_ Non-current investments

_(c)_ Deferred tax assets (net)

_(d)_ Long-term loans and advances

_(e)_ Other non-current assets

(2) **Current assets**

_(a)_ Current investments

_(b)_ Inventories

_(c)_ Trade receivables

_(d)_ Cash and cash equivalents

_(e)_ Short-term loans and advances

_(f)_ Other current assets

**TOTAL**

**_See accompanying notes to the Financial Statements._**
**_Notes_**

**GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET**

1. An asset shall be classified as current when it satisfies any of the following criteria:—

(a) it is expected to be realised in, or is intended for sale or consumption in, the company’s normal operating

cycle;

(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within twelve months after the reporting date; or

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at

least twelve months after the reporting date.

All other assets shall be classified as non-current.

2. An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or

cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of twelve
months.

3. A liability shall be classified as current when it satisfies any of the following criteria:—

(a) it is expected to be settled in the company’s normal operating cycle;

1 Subs by Notification No G S R 1022(E) dated 11th October 2018 for “Fixed assets” (w e f 11-10-2018)


-----

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within twelve months after the reporting date; or

(d) the company does not have an unconditional right to defer settlement of the liability for at least twelve

months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not affect its classification.

All other liabilities shall be classified as non-current.

4. A receivable shall be classified as a “trade receivable” if it is in respect of the amount due on account of goods

sold or services rendered in the normal course of business.

5. A payable shall be classified as a “trade payable” if it is in respect of the amount due on account of goods

purchased or services received in the normal course of business.

6. A company shall disclose the following in the notes to accounts.

**A. Share Capital**

For each class of share capital (different classes of preference shares to be treated separately):

(a) the number and amount of shares authorised;

(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;

(c) par value per share;

(d) a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting

period;

(e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the

distribution of dividends and the repayment of capital;

(f) shares in respect of each class in the company held by its holding company or its ultimate holding

company including shares held by or by subsidiaries or associates of the holding company or the ultimate
holding company in aggregate;

(g) shares in the company held by each shareholder holding more than 5 per cent. shares specifying the

number of shares held;

(h) shares reserved for issue under options and contracts/commitments for the sale of

shares/disinvestment, including the terms and amounts;

(i) for the period of five years immediately preceding the date as at which the Balance Sheet is prepared:

(A) Aggregate number and class of shares allotted as fully paid-up pursuant to contract (s) without

payment being received in cash.

(B) Aggregate number and class of shares allotted as fully paid-up by way of bonus shares.

(C) Aggregate number and class of shares bought back.

(j) terms of any securities convertible into equity/preference shares issued along with the earliest date of

conversion in descending order starting from the farthest such date;

(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);

(l) forfeited shares (amount originally paid-up).

1[(m) A company shall disclose Shareholding of Promoters* as below:

Shares held by promoters at the end of the year % Change during the year***

S.No Promoter No. of % of total
name Shares** shares **

Total

*Promoter here means promoter as defined in the Companies Act, 2013.

** Details shall be given separately for each class of shares

|Shares held by promoters at the end of the year|Col2|Col3|Col4|% Change during the year***|
|---|---|---|---|---|
|S.No|Promoter name|No. of Shares**|% of total shares **||
|Total|||||


-----

*** percentage change shall be computed with respect to the number at the beginning of the year or if

issued during the year for the first time then with respect to the date of issue.]

**B. Reserves and Surplus**

(i) Reserves and Surplus shall be classified as:

(a) Capital Reserves;

(b) Capital Redemption Reserve;

(c) Securities Premium [1]***;

(d) Debenture Redemption Reserve;

(e) Revaluation Reserve;

(f) Share Options Outstanding Account;

(g) Other Reserves–(specify the nature and purpose of each reserve and the amount in respect thereof);

(h) Surplus i.e., balance in Statement of Profit and Loss disclosing allocations and appropriations such

as dividend, bonus shares and transfer to/ from reserves, etc.;

(Additions and deductions since last balance sheet to be shown under each of the specified heads);

(ii) A reserve specifically represented by earmarked investments shall be termed as a “fund”.

(iii) Debit balance of statement of profit and loss shall be shown as a negative figure under the head “Surplus”.

Similarly, the balance of “Reserves and Surplus”, after adjusting negative balance of surplus, if any, shall be
shown under the head “Reserves and Surplus” even if the resulting figure is in the negative.

**C. Long-Term Borrowings**

(i) Long-term borrowings shall be classified as:

(a) Bonds/debentures;

(b) Term loans:

(A) from banks.

(B) from other parties.

(c) Deferred payment liabilities;

(d) Deposits;

(e) Loans and advances from related parties;

(f) Long term maturities of finance lease obligations;

(g) Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified

separately in each case.

(iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each

head shall be disclosed.

(iv) Bonds/debentures (along with the rate of interest and particulars of redemption or conversion, as the case

may be) shall be stated in descending order of maturity or conversion, starting from farthest redemption or
conversion date, as the case may be. Where bonds/debentures are redeemable by instalments, the date of maturity
for this purpose must be reckoned as the date on which the first instalment becomes due.


-----

(v) Particulars of any redeemed bonds/debentures which the company has power to reissue shall be disclosed.

(vi) Terms of repayment of term loans and other loans shall be stated.

(vii) Period and amount of continuing default as on the balance sheet date in repayment of loans and interest,

shall be specified separately in each case.

**D. Other Long-term Liabilities**

Other Long-term Liabilities shall be classified as:

(a) Trade payables;

(b) Others.

**E. Long-term provisions**

The amounts shall be classified as:

(a) Provision for employee benefits;

(b) Others (specify nature).

**F. Short-term borrowings**

(i) Short-term borrowings shall be classified as:

(a) Loans repayable on demand;

(A) from banks.

(B) from other parties.

(b) Loans and advances from related parties;

(c) Deposits;

(d) Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified

separately in each case.

(iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each

head shall be disclosed.

(iv) Period and amount of default as on the balance sheet date in repayment of loans and interest, shall be

specified separately in each case.

1[(v) current maturities of Long term borrowings shall be disclosed separately.]

2[FA. Trade Payable:—

The following details relating to Micro, Small and Medium Enterprises shall be disclosed in the notes:

(a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any

supplier at the end of each accounting year;

(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium

Enterprises Development Act, 2006 (7 of 2006), along with the amount of the payment made to the supplier
beyond the appointed day during each accounting year;

(c) the amount of interest due and payable for the period of delay in making payment (which have been

paid but beyond the appointed day during the year) but without adding the interest specified under the Micro,
Small and Medium Enterprises Development Act, 2006;

(d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and

(e) the amount of further interest remaining due and payable even in the succeeding years, until such date

when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a
deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act,
2006;


-----

_Explanation.-The terms 'appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small enterprise’ and_

‘supplier’, shall have the same meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n)
respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006.]

**1[FB. Trade payables due for payment**

The following ageing schedule shall be given for Trade payable due for payment:
Trade Payables ageing schedule

Particulars Outstanding for following periods from due date of
payment#

Less than 1-2 2-3 years More than 3 Total
1 year years years

(i) MSME

(ii) Others

(iii) Disputed dues

MSME

(iv) Disputed duesothers

#similar information shall be given where no due date of payment is specified in that case disclosure shall be

from the date of the transaction.

Unbilled dues shall be disclosed separately;]

**G. Other current liabilities**

The amounts shall be classified as:

2***

(b) Current maturities of finance lease obligations;

(c) Interest accrued but not due on borrowings;

(d) Interest accrued and due on borrowings;

(e) Income received in advance;

(f) Unpaid dividends;

(g) Application money received for allotment of securities and due for refund and interest accrued

thereon. Share application money includes advances towards allotment of share capital. The terms and
conditions including the number of shares proposed to be issued, the amount of premium, if any, and the
period before which shares shall be allotted shall be disclosed. It shall also be disclosed whether the company
has sufficient authorised capital to cover the share capital amount resulting from allotment of shares out of
such share application money. Further, the period for which the share application money has been pending
beyond the period for allotment as mentioned in the document inviting application for shares along with the
reason for such share application money being pending shall be disclosed. Share application money not
exceeding the issued capital and to the extent not refundable shall be shown under the head Equity and share
application money to the extent refundable, _i.e., the amount in excess of subscription or in case the_
requirements of minimum subscription are not met, shall be separately shown under “Óther current
liabilities”;

(h) Unpaid matured deposits and interest accrued thereon;

(i) Unpaid matured debentures and interest accrued thereon;

(j) Other payables (specify nature).

**H. Short-term provisions**

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) MSME (ii) Others (iii) Disputed dues MSME (iv) Disputed dues- others||||||


-----

The amounts shall be classified as:

(a) Provision for employee benefits.

(b) Others (specify nature).

**I. [1][Property, Plant and Equipment]**

(i) Classification shall be given as:

(a) Land;

(b) Buildings;

(c) Plant and Equipment;

(d) Furniture and Fixtures;

(e) Vehicles;

(f) Office equipment;

(g) Others (specify nature).

(ii) Assets under lease shall be separately specified under each class of asset.

2[(iii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end

of the reporting period showing additions, disposals, acquisitions through business combinations, amount of
change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of
Property, Plant and Equipment) and other adjustments and the related depreciation and impairment
losses/reversals shall be disclosed separately.]

(iv) Where sums have been written-off on a reduction of capital or revaluation of assets or where sums have

been added on revaluation of assets, every balance sheet subsequent to date of such write-off, or addition shall
show the reduced or increased figures as applicable and shall by way of a note also show the amount of the
reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of
such reduction or increase.

**J. Intangible assets**

(i) Classification shall be given as:

(a) Goodwill;

(b) Brands /trademarks;

(c) Computer software;

(d) Mastheads and publishing titles;

(e) Mining rights;

(f) Copyrights, and patents and other intellectual property rights, services and operating rights;

(g) Recipes, formulae, models, designs and prototypes;

(h) Licences and franchise;

(i) Others (specify nature).

3[(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end

of the reporting period showing additions, disposals, acquisitions through business combinations, amount of
change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of

1 Subs by Notification No G S R 207(E) dated 24th March 2021 for “Tangible Assets” (w e f 1-4-2021)


-----

intangible assets) and other adjustments and the related depreciation and impairment losses or reversals shall be
disclosed separately.]

(iii) Where sums have been written-off on a reduction of capital or revaluation of assets or where sums have

been added on revaluation of assets, every balance sheet subsequent to date of such write-off, or addition shall
show the reduced or increased figures as applicable and shall by way of a note also show the amount of the
reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of
such reduction or increase.

**K. Non-current investments**

(i) Non-current investments shall be classified as trade investments and other investments and further

classified as:

(a) Investment property;

(b) Investments in Equity Instruments;

(c) Investments in preference shares;

(d) Investments in Government or trust securities;

(e) Investments in debentures or bonds;

(f) Investments in Mutual Funds;

(g) Investments in partnership firms;

(h) Other non-current investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate indicating separately

whether such bodies are (i) subsidiaries, (ii) associates,(iii) joint ventures, or (iv) controlled special purpose
entities in whom investments have been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly-paid). In regard to investments in the capital of
partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each
partner) shall be given.

(ii) Investments carried at other than at cost should be separately stated specifying the basis for valuation

thereof;

(iii) The following shall also be disclosed:

(a) Aggregate amount of quoted investments and market value thereof;

(b) Aggregate amount of unquoted investments;

(c) Aggregate provision for diminution in value of investments.

**L. Long-term loans and advances**

(i) Long-term loans and advances shall be classified as:

(a) Capital Advances;

1***

(c) Loans and advances to related parties (giving details thereof);

(d) Other loans and advances (specify nature).

(ii) The above shall also be separately sub-classified as:

(a) Secured, considered good;

(b) Unsecured, considered good;

(c) Doubtful.

(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the relevant heads

separately.


-----

(iv) Loans and advances due by directors or other officers of the company or any of them either severally or

jointly with any other persons or amounts due by firms or private companies respectively in which any director
is a partner or a director or a member should be separately stated.

**M. Other non-current assets**

Other non-current assets shall be classified as:

(i) Long-term Trade Receivables (including trade receivables on deferred credit terms);

1[(ia) Security Deposits;]

(ii) Others (specify nature);

(iii) Long term Trade Receivables, shall be sub-classified as:

(A) (a) Secured, considered good;

(B) Unsecured, considered good;

(C) Doubtful.

(b) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.

(c) Debts due by directors or other officers of the company or any of them either severally or jointly

with any other person or debts due by firms or private companies respectively in which any director is a
partner or a director or a member should be separately stated.

[ 1][(iv) For trade receivables outstanding, following ageing schedule shall be given:

**Trade Receivables ageing schedule**

(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment#

Less than 6 6 months- 1-2 years 2-3 More than 3 Total
months 1 year years years

(i) Undisputed Trade
receivables-considered
good

(ii) Undisputed Trade
Receivablesconsidered doubtful

(iii) Disputed Trade
Receivables
considered good

(iv) Disputed Trade
Receivables
considered doubtful

#similar information shall be given where no due date of payment is specified, in that case disclosure

shall be from the date of the transaction.

Unbilled dues shall be disclosed separately.]

**N. Current Investments**

(i) Current investments shall be classified as:

(a) Investments in Equity Instruments;

(b) Investments in Preference Shares;

(c) Investments in Government or trust securities;

(d) Investments in debentures or bonds;

(e) Investments in Mutual Funds;

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
||Less than 6 months|6 months- 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) Undisputed Trade receivables-considered good (ii) Undisputed Trade Receivables- considered doubtful (iii) Disputed Trade Receivables considered good (iv) Disputed Trade Receivables considered doubtful|||||||


-----

(f) Investments in partnership firms;

(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate [indicating separately

whether such bodies are: (i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose
entities] in whom investments have been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly paid). In regard to investments in the capital of
partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each
partner) shall be given.

(ii) The following shall also be disclosed:

(a) The basis of valuation of individual investments;

(b) Aggregate amount of quoted investments and market value thereof;

(c) Aggregate amount of unquoted investments;

(d) Aggregate provision made for diminution in value of investments.

**O. Inventories**

(i) Inventories shall be classified as:

(a) Raw materials;

(b) Work-in-progress;

(c) Finished goods;

(d) Stock-in-trade (in respect of goods acquired for trading);

(e) Stores and spares;

(f) Loose tools;

(g) Others (specify nature).

(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.

(iii) Mode of valuation shall be stated.

**P. Trade Receivables**

1[(i) For trade receivables outstanding, the following ageing schedules shall be given:

**Trade Receivables ageing schedule**

(Amount in Rs.)

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
||Less than 6 months|6 months- 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) Undisputed Trade receivables-considered good (ii) Undisputed Trade Receivables-considered doubtful (iii) Disputed Trade Receivables considered good (iv) Disputed Trade Receivables considered doubtful|||||||


-----

#similar information shall be given where no due date of payment is specified in that case disclosure shall be

from the date of the transaction.

Unbilled dues shall be disclosed separately.]

(ii) Trade receivables shall be sub-classified as:

(a) Secured, considered good;

(b) Unsecured, considered good;

(c) Doubtful.

(iii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.

(iv) Debts due by directors or other officers of the company or any of them either severally or jointly with

any other person or debts due by firms or private companies respectively in which any director is a partner or a
director or a member should be separately stated.

**Q. Cash and cash equivalents**

(i) Cash and cash equivalents shall be classified as:

(a) Balances with banks;

(b) Cheques, drafts on hand;

(c) Cash on hand;

(d) Others (specify nature).

(ii) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated.

(iii) Balances with banks to the extent held as margin money or security against the borrowings, guarantees,

other commitments shall be disclosed separately.

(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated.

(v) Bank deposits with more than twelve months maturity shall be disclosed separately.

**R. Short-term loans and advances**

(i) Short-term loans and advances shall be classified as:

(a) Loans and advances to related parties (giving details thereof);

(b) Others (specify nature).

(ii) The above shall also be sub-classified as:

(a) Secured, considered good;

(b) Unsecured, considered good;

(c) Doubtful.

(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the relevant heads

separately.

(iv) Loans and advances due by directors or other officers of the company or any of them either severally or

jointly with any other person or amounts due by firms or private companies respectively in which any director is
a partner or a director or a member shall be separately stated.

**S. Other current assets (specify nature)**

This is an all-inclusive heading, which incorporates current assets that do not fit into any other asset

categories.

**T. Contingent liabilities and commitments (to the extent not provided for)**

(i) Contingent liabilities shall be classified as:

(a) Claims against the company not acknowledged as debt;

(b) Guarantees;


-----

(ii) Commitments shall be classified as:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for;

(b) Uncalled liability on shares and other investments partly paid;

(c) Other commitments (specify nature).

**U. The amount of dividends proposed to be distributed to equity and preference shareholders for the period**

and the related amount per share shall be disclosed separately. Arrears of fixed cumulative dividends on
preference shares shall also be disclosed separately.

**V. Where in respect of an issue of securities made for a specific purpose, the whole or part of the amount has**

not been used for the specific purpose at the balance sheet date, there shall be indicated by way of note how such
unutilised amounts have been used or invested.

**1[VA. Where the company has not used the borrowings from banks and financial institutions for the specific**

purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they
have been used.]

**W. If, in the opinion of the Board, any of the assets other than [2][Property, Plant and Equipment] [3][,Intangible**

assets] and non-current investments do not have a value on realisation in the ordinary course of business at least
equal to the amount at which they are stated, the fact that the Board is of that opinion, shall be stated.

[4]*                  *                     *                    *               *

**5[Y. Additional Regulatory Information**

(i) Title deeds of Immovable Property not held in name of the Company

The company shall provide the details of all the immovable property (other than properties where the Company is
the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the
name of the company in format given below and where such immovable property is jointly held with others, details
are required to be given to the extent of the company’s share.

Relevant line item Description Gross Title deeds Whether title deed Property Reason for
in the Balance of item of carrying held in the holder is a held since not being
sheet property value name of promoter, director which date held in the

or relative# of name of the
promoter*/director company**
or employee of
promoter/director

PPE- Land - - - - ** also
Building indicate if in

dispute

Investment Land
property- Building

PPE retired from Land
active use and held Building
for disposal 
others

#Relative here means relative as defined in the Companies Act, 2013.

*Promoter here means promoter as defined in the Companies Act, 2013.

1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1-4-2021).
2. Subs. by Notification No. G.S.R. (E), dated 11th October, 2018, for “fixed assets” (w.e.f. 11-10-2018).
3 Ins by Notification No G S R 207(E) dated 24th March 2021 (w e f 1-4-2021)

|Relevant line item in the Balance sheet|Description of item of property|Gross carrying value|Title deeds held in the name of|Whether title deed holder is a promoter, director or relative# of promoter*/director or employee of promoter/director|Property held since which date|Reason for not being held in the name of the company**|
|---|---|---|---|---|---|---|
|PPE-|Land Building|-|-|-|-|** also indicate if in dispute|
|Investment property-|Land Building||||||
|PPE retired from active use and held for disposal -|Land Building||||||
|others|||||||


-----

(ii)Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether

the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered
Valuers and Valuation) Rules, 2017.

(iii) Following disclosures shall be made where Loans or Advances in the nature of loans are granted to promoters,

directors, KMPs and the related parties (as defined under Companies Act, 2013,) either serverally or jointly with any
other person, that are:

(a) repayable on demand or

(b) without specifying any terms or period of repayment

Type of Borrower Amount of loan or advance in Percentage to the total Loans and Advances in
the nature of loan outstanding the nature of loans

Promoters

Directors

KMPs

Related Parties

(iv) Capital-Work-in Progress (CWIP)

(a) For Capital-work-in progress, following ageing schedule shall be given:

CWIP aging schedule

(Amount in Rs.)

CWIP Amount in CWIP for a period of Total*

Less than 1 1-2 years 2-3 years More than 3 years
year

Projects in
progress

Projects
temporarily
suspended

*Total shall tally with CWIP amount in the balance sheet.

(b) For capital-work-in progress, whose completion is overdue or has exceeded its cost compared to its original

plan, following CWIP completion schedule shall be given**:

(Amount in Rs.)

CWIP To be completed in

Less than 1 year 1-2 years 2-3 years More than 3 years

Project 1
Project 2”

** Details of projects where actively has been suspended shall be given separately.

(v) Intangible assets under development:

(a) For Intangible assets under development, following ageing schedule shall be given:

**Intangible assets under development aging schedule**

(Amount in Rs.)

Amount in CWIP for a period of Total*

|Type of Borrower|Amount of loan or advance in the nature of loan outstanding|Percentage to the total Loans and Advances in the nature of loans|
|---|---|---|
|Promoters|||
|Directors|||
|KMPs|||
|Related Parties|||

|Col1|Col2|Col3|Col4|Col5|(Amount in Rs.|
|---|---|---|---|---|---|
|CWIP|Amount in CWIP for a period of||||Total*|
||Less than 1 year|1-2 years|2-3 years|More than 3 years||
|Projects in progress Projects temporarily suspended||||||

|CWIP|To be completed in|Col3|Col4|Col5|
|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|
|Project 1 Project 2”|||||


-----

|Intangible assets under development|Less than 1 year|1-2 years|2-3 years|More than 3 years|Col6|
|---|---|---|---|---|---|
|Projects in progress Projects temporarily suspended||||||


*Total shall tally with the amount of Intangible assets under development in the balance sheet.

(b) For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its
original plan, following Intangible assets under development completion schedule shall be given**:

(Amount in Rs.)

Intangible assets To be completed in
under development

Less than 1 year 1-2 years 2-3 years More than 3 years

Project 1

Project 2

** Details of projects where activity has been suspended shall be given separately.

**(vi) Details of Benami Property held**

Where any proceedings have been initiated or pending against the company for holding any benami
property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made
thereunder, the company shall disclose the following:
(a) Details of such property, including year of acquisition,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If property is in the books, then reference to the item in the Balance Sheet,

(e) If property is not in the books, then the fact shall be stated with reasons,

(f) Where there are proceedings against the company under this law as an abetter of the transaction or as the

transferor then the details shall be provided,

(g) Nature of proceedings, status of same and company’s view on same.

(vii) Where the Company has borrowings from banks or financial institutions on the basis of security of current
assets, it shall disclose the following:
(a) whether quarterly returns or statements of current assets filed by the Company with banks or financial

institutions are in agreement with the books of accounts.

(b) if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

**(viii) Wilful Defaulter***

Where a company is a declared willful defaulter by any bank or financial Institution or other lender, following

details shall be given:

(a) Date of declaration as willful defaulter,

(b) Details of defaults (amount and nature of defaults),

  - “willful defaulter” here means a person or an issuer who or which is categorized as a willful defaulter by any

bank or financial institution (as defined under the Act) or consortium thereof, in accordance with the guidelines on
willful defaulters issued by the Reserve Bank of India.

|Intangible assets under development|To be completed in|Col3|Col4|Col5|
|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|
|Project 1 Project 2|||||


-----

Where the company has any transactions with companies struck off under section 248 of the Companies Act,

2013 or section 560 of Companies Act, 1956, the Company shall disclose the following details:
Name of struck off Nature of transactions Balance Relationship with the Struck off
Company with struck off Company outstanding company, if any, to be disclosed

Investments in securities

Receivables

Payables

Shares held by stuck off
company

Other outstanding
balances (to be specified)

**(x) Registration of charges or satisfaction with Registrar of Companies**

Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period,

details and reasons thereof shall be disclosed.

**(xi) Compliance with number of layers of companies**

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the

Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies
beyond the specified layers and the relationship/extent of holding of the company in such downstream companies
shall be disclosed.

**(xii) Following Ratios to be disclosed:-**

(a) Current Ratio,

(b) Debt-Equity Ratio,

(c) Debt Service Coverage Ratio,

(d) Return on Equity Ratio,

(e) Inventory turnover ratio,

(f) Trade Receivables turnover ratio,

(g) Trade payables turnover ratio,

(h) Net capital turnover ratio,

(i) Net profit ratio,

(j) Return on Capital employed,

(k) Return on investment.

The company shall explain the items included in numerator and denominator for computing the above ratios.

Further explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding
year.

**(xiii) Compliance with approved Scheme(s) of Arrangements**

Where any Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230

to 237 of the Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements
have been accounted for in the books of account of the Company ‘in accordance with the Scheme’ and ‘in
accordance with accounting standards’ and deviation in this regard shall be explained.

**(xiv) Utilisation of Borrowed funds and share premium:**

(A) Where company has advanced or loaned or invested funds (either borrowed funds or share premium or

any other sources or kind of funds) to any other person(s) or entity (ies), including foreign entities (Intermediaries)
with the understanding (whether recorded in writing or otherwise) that the Intermediary shall

|Name of struck off Company|Nature of transactions with struck off Company|Balance outstanding|Relationship with the Struck off company, if any, to be disclosed|
|---|---|---|---|
||Investments in securities|||
||Receivables|||
||Payables|||
||Shares held by stuck off company|||
||Other outstanding balances (to be specified)|||


-----

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or

on behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

the company shall disclose the following:
(I) date and amount of fund advanced or loaned or invested in Intermediaries with complete details of

each Intermediary.

(II) date and amount of fund further advanced or loaned or invested by such Intermediaries to other

intermediaries or Ultimate Beneficiaries alongwith complete details of the ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate

Beneficiaries.

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999)

and Companies Act has been complied with for such transactions and the transactions are not violative of the
Prevention of Money-Laundering act, 2002 (15 of 2003);

(B) Where a company has received any fund from any persons (s) or entity(ies), including foreign entities

(Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or

on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries, the company shall

disclose the following:
(I) date and amount of fund received from Funding parties with complete details of each Funding party.

(II) date and amount of fund further advanced or loaned or invested other intermediaries or Ultimate

Beneficiaries alongwith complete details of the other intermediaries’ or ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate

Beneficiaries

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999)

and Companies Act has been complied with for such transactions and the transactions are not violative of the
Prevention of Money-Laundering act, 2002 (15 of 2003).]

**PART II – STATEMENT OF PROFIT AND LOSS**

_Name of the Company……………………._

_Profit and loss statement for the year ended ………………………_

(Rupees in…………)


Figures as at the end

of the previous

reporting period


Particulars Note

No.


Figures as at the end

of current reporting

period


1 2 3 4

I. Revenue from operations xxx xxx

II. Other income xxx xxx

III. Total [1][Income] (I + II) xxx xxx

IV. Expenses:

Cost of materials consumed

Purchases of Stock-in-Trade


-----

Changes in inventories of

finished goods


xxx xxx


work-in-progress and xxx xxx

Stock-in-Trade xxx xxx

Employee benefits expense xxx xxx

Finance costs

Depreciation and amortisation

expense

Other expenses

1 2 3 4

Total expenses xxx xxx


V. Profit before exceptional and

extraordinary items and tax (III IV)


xxx xxx


VI. Exceptional items xxx xxx


VII. Profit before extraordinary items

and tax (V - VI)


xxx xxx


VIII. Extraordinary items xxx xxx

IX. Profit before tax (VII- VIII) xxx xxx

X. Tax expense:

(1) Current tax xxx xxx

(2) Deferred tax xxx xxx


XI. Profit (Loss) for the period from

continuing operations (VII-VIII)

XII. Profit/(loss) from discontinuing

operations

XIII. Tax expense of discontinuing

operations

XIV. Profit/(loss) from Discontinuing

operations (after tax) (XII-XIII)

XV. Profit (Loss) for the period (XI +

XIV)

XVI. Earnings per equity share:


xxx xxx

xxx xxx

xxx xxx

xxx xxx

xxx xxx


(1) Basic xxx xxx

(2) Diluted xxx xxx


-----

**_See accompanying notes to the financial statements._**

**GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF**

**PROFIT AND LOSS**

1. The provisions of this Part shall apply to the income and expenditure account referred to in      sub-clause

(ii) of clause (40) of section 2 in like manner as they apply to a statement of profit and loss.

2. (A) In respect of a company other than a finance company revenue from operations shall disclose separately in

the notes revenue from—

(a) Sale of products;

(b) Sale of services;

1[(ba) Grants or donations received (relevant in case of section 8 companies only)]

(c) Other operating revenues;

_Less:_

(d) Excise duty.

(B) In respect of a finance company, revenue from operations shall include revenue from—

(a) Interest; and

(b) Other financial services.

Revenue under each of the above heads shall be disclosed separately by way of notes to accounts to the extent

applicable.

3. Finance Costs

Finance costs shall be classified as:

(a) Interest expense;

(b) Other borrowing costs;

(c) Applicable net gain/loss on foreign currency transactions and translation.

4. Other income

Other income shall be classified as:

(a) Interest Income (in case of a company other than a finance company);

(b) Dividend Income;

(c) Net gain/loss on sale of investments;

(d) Other non-operating income (net of expenses directly attributable to such income).

5. Additional Information

A Company shall disclose by way of notes additional information regarding aggregate expenditure and income

on the following items:—

(i) (a) Employee Benefits Expense [showing separately (i) salaries and wages,

(ii) contribution to provident and other funds, (iii) expense on Employee Stock Option Scheme (ESOP) and

Employee Stock Purchase Plan (ESPP), (iv) staff welfare expenses].

(b) Depreciation and amortisation expense;

(c) Any item of income or expenditure which exceeds one per cent. of the revenue from operations or

Rs.1,00,000, whichever is higher;


-----

(d) Interest Income;

(e) Interest expense;

(f) Dividend income;

(g) Net gain/loss on sale of investments;

(h) Adjustments to the carrying amount of investments;

(i) Net gain or loss on foreign currency transaction and translation (other than considered as finance cost);

(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for company law matters; (d) for

management services; (e) for other services; and (f) for reimbursement of expenses;

(k) In case of Companies covered under section 135, amount of expenditure incurred on corporate social

responsibility activities;

(l) Details of items of exceptional and extraordinary nature;

(m) Prior period items;

(ii) (a) In the case of manufacturing companies,—

(1) Raw materials under broad heads.

(2) goods purchased under broad heads.

(b) In the case of trading companies, purchases in respect of goods traded in by the company under broad

heads.

(c) In the case of companies rendering or supplying services, gross income derived from services rendered or

supplied under broad heads.

(d) In the case of a company, which falls under more than one of the categories mentioned in (a), (b) and (c)

above, it shall be sufficient compliance with the requirements herein if purchases, sales and consumption of raw
material and the gross income from services rendered is shown under broad heads.

(e) In the case of other companies, gross income derived under broad heads.

(iii) In the case of all concerns having works in progress, works-in-progress under broad heads.

(iv) (a) The aggregate, if material, of any amounts set aside or proposed to be set aside, to reserve, but not

including provisions made to meet any specific liability, contingency or commitment known to exist at the date
as to which the balance sheet is made up.

(b) The aggregate, if material, of any amounts withdrawn from such reserves.

(v) (a) The aggregate, if material, of the amounts set aside to provisions made for meeting specific liabilities,

contingencies or commitments.

(b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer required.

(vi) Expenditure incurred on each of the following items, separately for each item:—

(a) Consumption of stores and spare parts;

(b) Power and fuel;

(c) Rent;

(d) Repairs to buildings;

(e) Repairs to machinery;

(f) Insurance;


-----

(h) Miscellaneous expenses,

(vii) (a) Dividends from subsidiary companies.

(b) Provisions for losses of subsidiary companies.

(viii) The profit and loss account shall also contain by way of a note the following information, namely:—

(a) Value of imports calculated on C.I.F basis by the company during the financial year in respect of—

I. Raw materials;

II. Components and spare parts;

III. Capital goods;

(b) Expenditure in foreign currency during the financial year on account of royalty, know-how,

professional and consultation fees, interest, and other matters;

(c) Total value if all imported raw materials, spare parts and components consumed during the financial

year and the total value of all indigenous raw materials, spare parts and components similarly consumed and
the percentage of each to the total consumption;

(d) The amount remitted during the year in foreign currencies on account of dividends with a specific

mention of the total number of non-resident shareholders, the total number of shares held by them on which
the dividends were due and the year to which the dividends related;

(e) Earnings in foreign exchange classified under the following heads, namely:—

I. Export of goods calculated on F.O.B. basis;

II. Royalty, know-how, professional and consultation fees;

III. Interest and dividend;

IV. Other income, indicating the nature thereof.

Note:— Broad heads shall be decided taking into account the concept of materiality and presentation of true and

fair view of financial statements.

1[(ix) Undisclosed income:
The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered

or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or
survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under
any scheme and also shall state whether the previously unrecorded income and related assets have been properly
recorded in the books of account during the year.;

(x) Corporate Social Responsibility (CSR)

Where the company covered under section 135 of the companies act, the following shall be disclosed with regard

to CSR activities:
(a) amount required to be spent by the company during the year,

(b) amount of expenditure incurred,

(c) shortfall at the end of the year,

(d) total of previous years shortfall,

(e) reason for shortfall,

(f) nature of CSR activities

(g) details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR

expenditure as per relevant Accounting Standard,

(h) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the

movements in the provision during the year should be shown separately.


-----

(xi) Details of Crypto Currency of Virtual Currency

Where the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the

following shall be disclosed:
(a) profit or loss on transactions involving Crypto currency or Virtual Currency

(b) amount or currency held as at the reporting date,

(c) deposits or advances from any person for the purpose of trading or investing in Crypto Currency/virtual

currency.]

**GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED**

**FINANCIAL STATEMENTS**

1. Where a company is required to prepare Consolidated Financial Statements, i.e., consolidated balance sheet

and consolidated statement of profit and loss, the company shall _mutatis mutandis follow the requirements of this_
Schedule as applicable to a company in the preparation of balance sheet and statement of profit and loss. In addition,
the consolidated financial statements shall disclose the information as per the requirements specified in the applicable
Accounting Standards including the following:

(i) Profit or loss attributable to “minority interest” and to owners of the parent in the statement of profit and

loss shall be presented as allocation for the period.

(ii) “Minority interests” in the balance sheet within equity shall be presented separately from the equity of

the owners of the parent.

2. In Consolidated Financial Statements, the following shall be disclosed by way of additional information:


Name of the entity in

the


Net Assets, i.e., total assets minus total

liabilities


Share in profit or loss


As % of

consolidated net

assets


Amount As % of

consolidated profit

or loss


Amount


1 2 3 4 5

Parent
Subsidiaries
Indian

1.

2.

3.

.

.

Foreign

1.

2.


-----

1 2 3 4 5

3.

.

.

Minority
Interest in
all subsidiaries
Associates
(Investment
as per the equity
method)
Indian
1.

2.

3.

.

.

Foreign

1.

2.

3.

.

.

Joint Ventures
(as per proportionate
consolidation/
investment
as per the
equity method)
Indian ________________________________ _______________________________

1.

2.

3.

.

.

Foreign

1.

2.

3.

.

.

Total


-----

3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be covered under consolidated

financial statements.

4. An entity shall disclose the list of subsidiaries or associates or joint ventures which have not been consolidated

in the consolidated financial statements along with the reasons of not consolidating.

1[Division II

Financial Statements for a company whose financial statements are drawn up in compliance of the Companies
(Indian Accounting Standards) Rules, 2015.

**_GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A COMPANY_**
**_REQUIRED TO COMPLY WITH Ind AS_**

1. Every company to which Indian Accounting Standards apply, shall prepare its financial statements in accordance

with this Schedule or with such modification as may be required under certain circumstances.

2. Where compliance with the requirements of the Act including Indian Accounting Standards (except the option

of presenting assets and liabilities in the order of liquidity as provided by the relevant Ind AS) as applicable to the
companies require any change in treatment or disclosure including addition, amendment, substitution or deletion in
the head or sub-head or any changes inter se, in the financial or statements forming part thereof, the same shall be
made and the requirements under this Schedule shall stand modified accordingly.

3. The disclosure requirements specified in the Schedule are in addition to and not in substitution of the disclosure

requirements specified in the Indian Accounting Standards. Additional disclosures specified in the Indian Accounting
Standards shall be made in the Notes or by way of additional statement or statements unless required to be disclosed
on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies Act, 2013 shall
be made in the Notes in addition to the requirements set out in this Schedule.

4. (i) Notes shall contain information in addition to that presented in the Financial Statements and shall provide

where required

(a) narrative descriptions or disaggregations of items recognised in those statements; and

(b) information about items that do not qualify for recognition in those statements.

(ii) Each item on the face of the Balance Sheet, Statement of Changes in Equity and Statement of Profit and Loss

shall be cross-referenced to any related information in the Notes. In preparing the Financial Statements including the
Notes, a balance shall be maintained between providing excessive detail that may not assist users of Financial
Statements and not providing important information as a result of too much aggregation.


5. Depending upon the [2][Total Income] of the company, the figures appearing in the Financial Statements shall

be rounded off as below:

**2[Total Income]** **Rounding off**

(i) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or
millions, or decimals thereof.

(ii) one hundred crore rupees or more To the nearest, lakhs, millions or crores, or
decimals thereof.

Once a unit of measurement is used, it should be used uniformly in the Financial Statements.

6. Financial Statements shall contain the corresponding amounts (comparatives) for the immediately preceding

reporting period for all items shown in the Financial Statements including Notes except in the case of first Financial
Statements laid before the company after incorporation.

|2[Total Income]|Rounding off|
|---|---|
|(i) less than one hundred crore rupees|To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.|
|(ii) one hundred crore rupees or more|To the nearest, lakhs, millions or crores, or decimals thereof.|


-----

7. Financial Statements shall disclose all ‘material’ items, i.e., the items if they could, individually or collectively,

influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the
size or nature of the item or a combination of both, to be judged in the particular circumstances.

8. For the purpose of this Schedule, the terms used herein shall have the same meanings assigned to them in Indian

Accounting Standards.

9. Where any Act or Regulation requires specific disclosures to be made in the standalone financial statements of

a company, the said disclosures shall be made in addition to those required under this Schedule.

**Note: This Schedule sets out the minimum requirements for disclosure on the face of the Financial Statements,**

_i.e., Balance Sheet, Statement of Changes in Equity for the period, the Statement of Profit and Loss for the period_
(The term ‘Statement of Profit and Loss’ has the same meaning as ‘Profit and Loss Account’) and Notes. Cash flow
statement shall be prepared, where applicable, in accordance with the requirements of the relevant Indian Accounting
Standard.

Line items, sub-line items and sub-totals shall be presented as an addition or substitution on the face of the Financial
Statements when such presentation is relevant to an understanding of the company’s financial position or
performance or to cater to industry or sector-specific disclosure requirements or when required for compliance with
the amendments to the Companies Act, 2013 or under the Indian Accounting Standards.

**_PART I –BALANCE SHEET_**

_Name of the Company ......................_

_Balance Sheet as at ............................_

(Rupees in ............... )

**_Particulars_** **Note No.** **Figures as at the end of** **Figures as at the end of**
**current reporting**

**the previous reporting**

**period**

**period**

**1** 2 3 4

(1) **ASSETS**
**Non-current assets**

(a) Property, Plant and
Equipment

(b) Capital work-in-progress

(c) Investment Property

(d) Goodwill

(e) Other Intangible assets

(f) Intangible assets under
development

(g) Biological Assets other
than bearer plants

(h) Financial Assets

(i) Investments

(ii) Trade receivables

(iii) Loans

(iv) Others (to be

specified)

(i) Deferred tax assets (net)
(j) Other non-current assets

(2)

**Current assets**

(a) Inventories

(b) Financial Assets

(i) Investments

(ii) Trade receivables

(iii) Cash and cash
equivalents
(iv) Bank balances
other than (iii) above
(v) Loans

(vi) Others (to be
specified)

(c) Current Tax Assets (Net)

(d) Other current assets

|Col1|Particulars|Note No.|Figures as at the end of current reporting period|Figures as at the end of the previous reporting period|
|---|---|---|---|---|
||1|2|3|4|
|(1)|ASSETS Non-current assets||||
|(2)|(a) Property, Plant and Equipment (b) Capital work-in-progress (c) Investment Property (d) Goodwill (e) Other Intangible assets (f) Intangible assets under development (g) Biological Assets other than bearer plants (h) Financial Assets (i) Investments (ii) Trade receivables (iii) Loans (iv) Others (to be specified) (i) Deferred tax assets (net) (j) Other non-current assets Current assets (a) Inventories (b) Financial Assets (i) Investments (ii) Trade receivables (iii) Cash and cash equivalents (iv) Bank balances other than (iii) above (v) Loans (vi) Others (to be specified) (c) Current Tax Assets (Net) (d) Other current assets||||


-----

**Total Assets**

1[Trade Payables

(A) total outstanding dues of micro

enterprises and small enterprises;
and

(B) total outstanding dues of creditors

other than micro enterprises and

(1) small enterprises.]

(a) **EQUITY and**

**LIABILITIES**

**Non-current liabilities**

(a) Financial Liabilities

(i) Borrowings

2[(ia)   Lease liabilities]

1[Trade Payables

(A) total outstanding dues of

micro enterprises and small
enterprises; and

(B) total outstanding dues of

creditors other than micro
enterprises and small

(2) enterprises.]

(iii) Other financial
liabilities (other than
those specified in item
(b), to be specified)

(b) Provisions

(c) Deferred tax liabilities

(Net)

(d) Other non-current

liabilities

**Current liabilities**

(a) Financial Liabilities

(i) Borrowings

2[(ia)   Lease liabilities]

(ii) Trade payables

(iii) Other financial

liabilities (other than those
specified in item (c)

(b) Other current liabilities

(c) Provisions

(d) Current Tax Liabilities
(Net)

**Total Equity and Liabilities**

**See accompanying notes to the financial statements**

**3[STATEMENT OF CHANGES IN EQUITY**

Name of the Company ...............................

A. Equity Share Capital

(1) Current reporting period

Balance at the Changes in Equity Restated balance at Changes in equity
beginning of the Share Capital due to the beginning of the share capital
current reporting prior period errors current reporting during the current
period period year

1 Subs by Notification No G S R 1022(E) dated 11-10-2018 for "(b) Trade payables" (w e f 11-10-2018)

|Col1|Total Assets|Col3|Col4|Col5|
|---|---|---|---|---|
|(1) (2)|1[Trade Payables (A) total outstanding dues of micro enterprises and small enterprises; and (B) total outstanding dues of creditors other than micro enterprises and small enterprises.] (a) EQUITY and LIABILITIES Non-current liabilities (a) Financial Liabilities (i) Borrowings 2[(ia) Lease liabilities] 1[Trade Payables (A) total outstanding dues of micro enterprises and small enterprises; and (B) total outstanding dues of creditors other than micro enterprises and small enterprises.] (iii) Other financial liabilities (other than those specified in item (b), to be specified) (b) Provisions (c) Deferred tax liabilities (Net) (d) Other non-current liabilities Current liabilities (a) Financial Liabilities (i) Borrowings 2[(ia) Lease liabilities] (ii) Trade payables (iii) Other financial liabilities (other than those specified in item (c) (b) Other current liabilities (c) Provisions (d) Current Tax Liabilities (Net)||||
||Total Equity and Liabilities||||

|Balance at the beginning of the current reporting period|Changes in Equity Share Capital due to prior period errors|Restated balance at the beginning of the current reporting period|Changes in equity share capital during the current year|Balance at the end of the current reporting period|
|---|---|---|---|---|
||||||


-----

(2) Previous reporting period

Balance at the
beginning of the
previous reporting
period

B. Other Equity
(1) Current reporting period

Share Equity

applica- component

tion

of compound

money Capital

financial

pending Reserve

instruments

allotment

Balance at the

beginning of the

current reporting

period

Changes in
accounting

policy or prior

period errors

Restated

balance at

the

beginning

of the current

reporting

period

Total

Comprehensive
Income for the
Current year

Dividends

Transfer to

retained
earnings

Any other

change (to be

specified)

Balance at the

end of the

current reporting

period

(2) Previous reporting period

Share Equity
application componen

Capital

money t of

Reserve

pending compound
allotment financial

instrument
s

Balance at the

Beginning of

the previous

reporting

period

|Balance at the beginning of the previous reporting period|Changes in Equity Share Capital due to prior period errors|Restated balance at the beginning of the previous reporting period|Changes in equity share capital during the previous year|Balance at the end of the previous reporting period|
|---|---|---|---|---|
||||||

|Col1|Share applica- tion money pending allotment|Equity component of compound financial instruments|Reserves and Surplus|Col5|Col6|Col7|Debt instru- ments through Other Comprehensive Income|Equity Instru- ments through Other Comprehensive Income|Effective portion of Cash Flow Hedges|Revaluat ion Surplus|Exchange differences on trans- lating the financial state- ments of a foreign operation|Other items of Other Compre- hensive Income (specify nature)|Money received against share warrants|Total|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||||Capital Reserve|1[Securities Premium Reserve]|Other Reserv es (specif y nature)|Retained Earnings|||||||||
|Balance at the beginning of the current reporting period|||||||||||||||
|Changes in accounting policy or prior period errors|||||||||||||||
|Restated balance at the beginning of the current reporting period|||||||||||||||
|Total Comprehensive Income for the Current year|||||||||||||||
|Dividends|||||||||||||||
|Transfer to retained earnings|||||||||||||||
|Any other change (to be specified)|||||||||||||||
|Balance at the end of the current reporting period|||||||||||||||


Total

|Col1|Share application money pending allotment|Equity componen t of compound financial instrument s|Reserves and Surplus|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Col14|Col15|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||||Capital Reserve|Securities Premium|Other Reserves (specify nature)|Retained Earnings|Debt instruments through Other Comprehen sive Income|Equity Instruments through Other Comprehen sive Income|Effective portion of Cash Flow Hedges|Revaluation Surplus|Exchange difference s on translating the financial statements of a foreign operation|Other items of Other Compre hensive Income (specify nature)|Money received against share warrants|Total|
|Balance at the|||||||||||||||
|Beginning of the previous reporting period|||||||||||||||


-----

|Changes in accounting policy/prior period errors|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Col14|Col15|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Restated balance at the beginning of the previous reporting period|||||||||||||||
|Total Comprehensiv e Income for the previous year|||||||||||||||
|Dividends|||||||||||||||
|Transfer to retained earnings|||||||||||||||
|Any other change (to be specified)|||||||||||||||
|Balance at the end of the previous reporting period|||||||||||||||


Note: Remeasurement of defined benefit plans and fair value changes relating to own credit risk of financial liabilities
designated at fair value through profit or loss shall be recognized as a part of retained earnings with separate disclosure of
such items alongwith the relevant amounts in the Notes or shall be shown as a separate column under Reserves and Surplus.]

**_Notes:_**

**_GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET_**

1. An entity shall classify an asset as current when
(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;

(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realise the asset within twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least

twelve months after the reporting period.

An entity shall classify all other assets as non-current.

2. The operating cycle of an entity is the time between the acquisition of assets for processing and their realisation in cash or cash

equivalents. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months.

3. An entity shall classify a liability as current when
(a) it expects to settle the liability in its normal operating cycle;

(b) it holds the liability primarily for the purpose of trading;

(c) the liability is due to be settled within twelve months after the reporting period; or

(d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do
not affect its classification.

An entity shall classify all other liabilities as non-current.

4. A receivable shall be classified as a ‘trade receivable’ if it is in respect of the amount due on account of goods sold or services

rendered in the normal course of business.

5. A payable shall be classified as a ‘trade payable’ if it is in respect of the amount due on account of goods purchased or services

received in the normal course of business.

6 A company shall disclose the following in the Notes:


-----

# A. Non-Current Assets

I. Property, Plant and Equipment :

(i) Classification shall be given as:

(a) Land

(b) Buildings

(c) Plant and Equipment

(d) Furniture and Fixtures

(e) Vehicles

(f) Office equipment

(g) Bearer Plants

(h) Others (specify nature)

(ii) Assets under lease shall be separately specified under each class of assets.
1[(iii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting
period showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if
change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other
adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately.]

II. Investment Property:

A reconciliation of the gross and net carrying amounts of each class of property at the beginning and end of the reporting period
showing additions, disposals, acquisitions through business combinations and other adjustments and the related depreciation and
impairment losses or reversals shall be disclosed separately.

III Goodwill:

A reconciliation of the gross and net carrying amount of goodwill at the beginning and end of the reporting period showing

additions, impairments, disposals and other adjustments.

IV. Other Intangible assets:

(i) Classification shall be given as:

(a) Brands or trademarks

(b) Computer software

(c) Mastheads and publishing titles

(d) Mining rights

(e) Copyrights, patents, other intellectual property rights, services and operating rights

(f) Recipes, formulae, models, designs and prototypes

(g) Licenses and franchises

(h) Others (specify nature)

2[(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period

showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if change is 10% or
more in the aggregate of the net carrying value of each class of intangible assets) and other adjustments and the related amortization
and impairment losses or reversals shall be disclosed separately.]

V. Biological Assets other than bearer plants:

A reconciliation of the carrying amounts of each class of assets at the beginning and end of the reporting period showing additions,
disposals, acquisitions through business combinations and other adjustments shall be disclosed separately.


-----

VI. Investments:

(i) Investments shall be classified as:

(a) Investments in Equity Instruments;

(b) Investments in Preference Shares;

(c) Investments in Government or trust securities;

(d) Investments in debentures or bonds;

(e) Investments in Mutual Funds;

(f) Investments in partnership firms; or

(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate that are
(i) subsidiaries,

(ii) associates,

(iii) joint ventures, or

(iv) structured entities,

in whom investments have been made and the nature and extent of the investment so made in each such body corporate (showing
separately investments which are partly-paid). Investments in partnership firms along alongwith names of the firms, their partners,
total capital and the shares of each partner shall be disclosed separately.

The following shall also be disclosed:

(a) Aggregate amount of quoted investments and market value thereof;

(b) Aggregate amount of unquoted investments; and

(c) Aggregate amount of impairment in value of investments.

VII. Trade Receivables:

1[(i) Trade receivables shall be sub-classified as:

(a) Trade Receivables considered good – Secured;

(b) Trade Receivables considered good – Unsecured;

(c) Trade Receivables which have significant increase in Credit Risk; and

(d) Trade Receivables - credit impaired.]

(ii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.

(iii) Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts
due by firms or private companies respectively in which any director is a partner or a director or a member should be separately
stated.

2[(iv) Trade Receivables ageing schedule

(Amount in Rs.)

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
||Less than 6 months|6 months -1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) Undisputed Trade Receivables - considered good (ii) Undisputed Trade Receivables- which have significant increase in credit risk|||||||


-----

|(iii) Undisputed Trade Receivables- credit impaired (iv) Disputed Trade Receivables- considered good (v) Disputed Trade Receivables – which have significant increase in credit risk (vi) Disputed Trade Receivables- credit impaired|Col2|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|


#similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date of the
transaction.

Unbilled dues shall be disclosed separately;]

VIII. Loans:

(i) Loans shall be classified as
1***

(b) Loans to related parties (giving details thereof); and

(c) Other loans (specify nature).

2[(ii) Loans Receivables shall be sub-classified as:

(a) Loans Receivables considered good – Secured;

(b) Loans Receivables considered good - Unsecured;

(c) Loans Receivables which have significant increase in Credit Risk; and

(d) Trade Receivables - credit impaired.]

(iii) Allowance for bad and doubtful loans shall be disclosed under the relevant heads separately.

(iv) Loans due by directors or other officers of the company or any of them either severally or jointly with any other persons or

amounts due by firms or private companies respectively in which any director is a partner or a director or a member should be
separately stated.

3[IX. Other financial assets

(i) Security Deposits

(ii) Bank deposits with more than 12 months maturity

(iii) others (to be specified)]

IX. Other non-current assets: Other non-current assets shall be classified as
(i) Capital Advances; and

(ii) Advances other than capital advances;

(1) Advances other than capital advances shall be classified as:

(a) Security Deposits;

(b) Advances to related parties (giving details thereof); and

(c) Other advances (specify nature).

(2) Advances to directors or other officers of the company or any of them either severally or jointly with any other persons or

advances to firms or private companies respectively in which any director is a partner or a director or a member should be separately
stated. In case advances are of the nature of a financial asset as per relevant Ind AS, these are to be disclosed under ‘other financial
assets’ separately.

1 Sub item (a) omitted by Notification No G S R 207(E) dated 24th March 2021 (w e f 1 4 2021)


-----

(iii) Others (specify nature).

# B. Current Assets

I. Inventories:

(i) Inventories shall be classified as
(a) Raw materials;

(b) Work-in-progress;

(c) Finished goods;

(d) Stock-in-trade (in respect of goods acquired for trading);

(e)Stores and spares;

(f) Loose tools; and
(g) Others (specify nature).

(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.

(iii) Mode of valuation shall be stated.

II. Investments:

(i) Investments shall be classified as
(a) Investments in Equity Instruments;

(b) Investment in Preference Shares;

(c) Investments in government or trust securities;
(d) Investments in debentures or bonds;

(e) Investments in Mutual Funds;

(f) Investments in partnership firms; and

(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate that are
(i) subsidiaries,

(ii) associates,

(iii) joint ventures, or

(iv) structured entities,

in whom investments have been made and the nature and extent of the investment so made in each such body corporate (showing
separately investments which are partly-paid).

(ii) The following shall also be disclosed
(a) Aggregate amount of quoted investments and market value thereof;

(b) Aggregate amount of unquoted investments;

(c) Aggregate amount of impairment in value of investments.

III. Trade Receivables:

1[(i) Trade receivables shall be sub-classified as:

(a) Loans Receivables considered good – Secured;

(b) Loans Receivables considered good - Unsecured;

(c) Loans Receivables which have significant increase in Credit Risk; and

(d) Trade Receivables - credit impaired.]

(ii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.

(iii) Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or

debts due by firms or private companies respectively in which any director is a partner or a director or a member should be separately
stated.


-----

1[(iv) For trade receivable outstanding, following ageing schedule shall be given:

**Trade Receivables ageing schedule**

**(Amount in Rs.)**

Particulars Outstanding for following periods from due date of payment#

Less than 6 months 6 months - 1-2 2-3 More than Total
1 year years years 3 years

(i) Undisputed Trade

receivables- considered good

(ii) Undisputed Trade Receivables
-which have significant increase
in credit risk

(iii) Undisputed Trade

Receivables-credit impaired

(iv) Disputed Trade Receivablesconsidered good

(v) Disputed Trade Receivableswhich have significant increase in
credit risk

(iv) Disputed Trade Receivables credit impaired

# similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date of
the transaction.

Unbilled dues shall be disclosed separately.]

IV. Cash and cash equivalents: Cash and cash equivalents shall be classified as
a. Balances with Banks (of the nature of cash and cash equivalents);

b. Cheques, drafts on hand;

c. Cash on hand; and

d. Others (specify nature).

V. Loans:

(i) Loans shall be classified as:

(a) 2***

(b) Loans to related parties (giving details thereof); and

(c) Others (specify nature).

3[(ii) Trade receivables shall be sub-classified as:

(a) Loans Receivables considered good – Secured;

(b) Loans Receivables considered good - Unsecured;

(c) Loans Receivables which have significant increase in Credit Risk; and

(d) Trade Receivables - credit impaired.]

(iii) Allowance for bad and doubtful loans shall be disclosed under the relevant heads separately.

(iv) Loans due by directors or other officers of the company or any of them either severally or jointly with any other person or

amounts due by firms or private companies respectively in which any director is a partner or a director or a member shall be separately
stated.

1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1-4-2021).
2 Sub item (a) omitted by Notification No G S R 207(E) dated 24th March 2021 (w e f 1 4 2021)

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
||Less than 6 months|6 months - 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) Undisputed Trade receivables- considered good (ii) Undisputed Trade Receivables -which have significant increase in credit risk (iii) Undisputed Trade Receivables-credit impaired (iv) Disputed Trade Receivables- considered good (v) Disputed Trade Receivables- which have significant increase in credit risk (iv) Disputed Trade Receivables - credit impaired|||||||


-----

1[VA. Other Financial Assets: This is an all-inclusive heading, which incorporates financial assets that do not fit into any other
financial asset categories, such as, Security Deposits.]

VI. Other current assets (specify nature): This is an all-inclusive heading, which incorporates current assets that do not fit into any

other asset categories. Other current assets shall be classified as
(i) Advances other than capital advances

(1) Advances other than capital advances shall be classified as:

(a) Security Deposits;

(b) Advances to related parties (giving details thereof);

(c) Other advances (specify nature).

(2) Advances to directors or other officers of the company or any of them either severally or jointly with any other persons or

advances to firms or private companies respectively in which any director is a partner or a director or a member should be separately
stated.

(ii) Others (specify nature)

# C. Cash and Bank balances: The following disclosures with regard to cash and bank balances shall be made:

(a) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated.

(b) Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other commitments
shall be disclosed separately.

(c) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated.

# D. Equity

**I.** Equity Share Capital: For each class of equity share capital:

(a) the number and amount of shares authorised;

(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;

(c) par value per share;

(d) a reconciliation of the number of shares outstanding at the beginning and at the end of the period;

(e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and
the repayment of capital;

(f) shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held
by subsidiaries or associates of the holding company or the ultimate holding company in aggregate;

(g) shares in the company held by each shareholder holding more than five per cent. shares specifying the number of shares held;

(h) shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment, including the terms
and amounts;

(i) for the period of five years immediately preceding the date at which the Balance Sheet is prepared
 - aggregate number and class of shares allotted as fully paid up pursuant to contract without payment being received in cash;

 - aggregate number and class of shares allotted as fully paid up by way of bonus shares; and

 - aggregate number and class of shares bought back;

(j) terms of any securities convertible into equity shares issued along with the earliest date of conversion in descending order
starting from the farthest such date;

(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);

(l) forfeited shares (amount originally paid up).

2[(m) A company shall disclose Shareholding of Promoters* as under:

Shares held by promoters at the end of the year % Change during the year***

S.No Promoter name No. of Shares*** %of total shares

Total

*Promoter hare means promoter as defined in the Companies Act, 2013.

|2[(m) A company shall disclose Shareholding of Promoters* as under:|Col2|Col3|Col4|Col5|
|---|---|---|---|---|
|Shares held by promoters at the end of the year||||% Change during the year***|
|S.No|Promoter name|No. of Shares***|%of total shares||
|Total|||||


-----

** Details shall be given separately for each class of shares

*** percentage change shall be computed with respect to the number at the beginning of the year or if issued during the year for the
first time then with respect to the date of issue.]

II. Other Equity:

(i) ‘Other Reserves’ shall be classified in the notes as
(a) Capital Redemption Reserve;

(b) Debenture Redemption Reserve;

(c) Share Options Outstanding Account; and

(d) Others– (specify the nature and purpose of each reserve and the amount in respect thereof); (Additions and deductions

since last balance sheet to be shown under each of the specified heads)

(ii) Retained Earnings represents surplus i.e. balance of the relevant column in the Statement of Changes in Equity;

(iii) A reserve specifically represented by earmarked investments shall disclose the fact that it is so represented;

(iv) Debit balance of Statement of Profit and Loss shall be shown as a negative figure under the head ‘retained earnings’.

Similarly, the balance of ‘Other Equity’, after adjusting negative balance of retained earnings, if any, shall be shown under the head
‘Other Equity’ even if the resulting figure is in the negative; and

(v) Under the sub-head ‘Other Equity’, disclosure shall be made for the nature and amount of each item.

# E. Non-Current Liabilities

I. Borrowings:

(i) borrowings shall be classified as
(a) Bonds or debentures

(b) Term loans

(I) from banks

(II) from other parties

(c) Deferred payment liabilities

(d) Deposits

(e) Loans from related parties

1***

(g) Liability component of compound financial instruments

(h) Other loans (specify nature);

(ii) borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in each

case.

(iii) where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be

disclosed;

(iv) bonds or debentures (along with the rate of interest, and particulars of redemption or conversion, as the case may be) shall

be stated in descending order of maturity or conversion, starting from farthest redemption or conversion date, as the case may be.
Where bonds/debentures are redeemable by installments, the date of maturity for this purpose must be reckoned as the date on which
the first installment becomes due;

(v) particulars of any redeemed bonds or debentures which the company has power to reissue shall be disclosed;

(vi) terms of repayment of term loans and other loans shall be stated; and

(vii) period and amount of default as on the balance sheet date in repayment of borrowings and interest shall be specified

separately in each case.


-----

II. Provisions: The amounts shall be classified as
(a) Provision for employee benefits; and

(b) Others (specify nature).

III. Other non-current liabilities;

(a) Advances; and

(b)  Others (specified nature).

# F. Current Liabilities

I. Borrowings:

(i) Borrowings shall be classified as
(a) Loans repayable on demand

(I) from banks

(II) from other parties

(b) Loans from related parties

(c) Deposits

(d) Other loans (specify nature);

(ii) borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in each

case;

(iii) where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be

disclosed;

(iv)    period and amount of default as on the balance sheet date in repayment of borrowings and interest, shall be specified
separately in each case.

1[(v) Current maturities of Long term borrowing shall be disclosed separately.]

II. Other Financial Liabilities: Other Financial liabilities shall be classified as
2***

(c) Interest accrued;

(d) Unpaid dividends;

(e) Application money received for allotment of securities to the extent refundable and interest accrued thereon;

(f) Unpaid matured deposits and interest accrued thereon;

(g) Unpaid matured debentures and interest accrued thereon; and

(h) Others (specify nature).

‘Long term debt’ is a borrowing having a period of more than twelve months at the time of origination

III. Other current liabilities:

The amounts shall be classified as
(a) revenue received in advance;

(b) other advances (specify nature); and

(c) others (specify nature);


-----

IV. Provisions: The amounts shall be classified as
(i) provision for employee benefits; and

(ii) others (specify nature).


1[FA.  Trade Payables


The following details relating to Micro, Small and Medium Enterprises shall be disclosed in the notes:

(a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each

accounting year;

(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act,

2006 (27 of 2006), along with the amount of the payment made to the supplier beyond the appointed day during each accounting
year;

(c) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed

day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act,
2006;


(d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and


(e) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues

above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of
the Micro, Small and Medium Enterprises Development Act, 2006.

_Explanation.-The terms 'appointed day', 'buyer',' enterprise', 'micro enterprise', 'small enterprise' and 'supplier', shall have the same_

meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium Enterprises
Development Act, 2006.]


2[FB. For trade payables due for payment, following ageing schedule shall be given:


**Trade payable aging schedule**


(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment#

Less than 1 year 1-2 years 2-3 years More than 3 Total

years

(i) MSME

(ii) Others

(iii) Disputed dues- MSME

(iv) Disputed dues- Others

#similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date of the

transaction.

Unbilled dues shall be disclosed separately]

# G. The presentation of liabilities associated with group of assets classified as held for sale and non-current assets classified as

held for sale shall be in accordance with the relevant Indian Accounting Standards (Ind ASs).
# H. Contingent Liabilities and Commitments: 

(to the extent not provided for)

(i) Contingent Liabilities shall be classified as
(a) claims against the company not acknowledged as debt;

(b) guarantees excluding financial guarantees; and

(c) other money for which the company is contingently liable.

1 Ins by Notification No G S R 1022(E) dated 11th October 2018 (w e f 11 10 2018)

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) MSME (ii) Others (iii) Disputed dues- MSME (iv) Disputed dues- Others||||||


-----

(ii) Commitments shall be classified as
(a) estimated amount of contracts remaining to be executed on capital account and not provided for;

(b) uncalled liability on shares and other investments partly paid; and

(c) other commitments (specify nature).

**I.** The amount of dividends proposed to be distributed to equity and preference shareholders for the period and the related

amount per share shall be disclosed separately. Arrears of fixed cumulative dividends on irredeemable preference shares shall
also be disclosed separately.

**J.** Where in respect of an issue of securities made for a specific purpose the whole or part of amount has not been used

for the specific purpose at the Balance Sheet date, there shall be indicated by way of note how such unutilised amounts have
been used or invested.

**1[JA. Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which**
it was taken at the balance sheet date, the company shall disclose the details of where they have been used.]

**[2]*** ***** ***** ***** *****

[3][L. Additional Regulatory Information

(i) Title deeds of Immovable Properties not held in name of the Company

The company shall provide the details of all the immovable properties (other than properties where the Company is the lessee
and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the company in
following format and where such immovable property is jointly held with others, details are required to be given to the extent
of the company’s share.

Relevant line item Description Gross Title Whether title deed Property Reason for not being
in the Balance of item of carrying deeds holder is a promoter, held held in the name of

sheet property value held in director or relative# since the company**

the name of promoter*/director which
of or employee of date

promoter/director

PPE Land - - - - **also indicate if in

dispute

 - Building

Investment Land
property

 - Building

Non-current asset Land
held for sale

Building

 
others

#Relative here means relative as defined in the Companies Act, 2013.

1 Ins by Notification No G S R 207(E) dated 24th March 2021 (w e f 1-4-2021)

|Relevant line item in the Balance sheet|Description of item of property|Gross carrying value|Title deeds held in the name of|Whether title deed holder is a promoter, director or relative# of promoter*/director or employee of promoter/director|Property held since which date|Reason for not being held in the name of the company**|
|---|---|---|---|---|---|---|
|PPE - Investment property|Land Building Land|-|-|-|-|**also indicate if in dispute|
|- Non-current asset held for sale - others|Building Land Building||||||


-----

*Promoter here means promoter as defined in the Companies Act, 2013.

(ii) The Company shall disclose as to whether the fair value of investment property (as measured for disclosure purposes in the
financial statements) is based on the valuation by a registered valuer as defined under rule 2 of Companies (Registered Valuers
and Valuation) Rules, 2017.

(iii) Where the Company has revalued its Property, Plant and Equipment (including Right-of-Use Assets), the company shall
disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of Companies
(Registered Valuers and Valuation) Rules, 2017.

(iv)Where the company has revalued its intangible assets, the company shall disclose as to whether the revaluation is based on
the valuation by a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

(v) The following disclosures shall be made where Loans or Advances in the nature of loans are granted to promoters, director,
KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are:

(a) repayable on demand; or

(b) without specifying any terms or period of repayment,

Type of Borrower Amount of loan or advance in the nature Percentage to the total Loans and
of loan outstanding Advances in the nature of loans

Promoter

Directors

KMPs

Related Parties

(vi) Capital-Work-in Progress (CWIP)

**(a) For Capital-work-in progress, following ageing schedule shall be given:**

**CWIP aging schedule**

(Amount in Rs.)

CWIP Amount in CWIP for a period of Total*

Less than 1 year 1-2 years 2-3 years More than 3 years

Projects in

progress

Projects
temporarily
suspended

*Total shall tally with CWIP amount in the balance sheet.

(b) For capital-work in progress, whose completion is overdue or has exceeded its cost compared to its original plan, following
CWIP completion schedule shall be given**:

(Amount in Rs.)

CWIP To be completed in

Less than 1 year 1-2 years 2-3 years More than 3 years

|Type of Borrower|Amount of loan or advance in the nature of loan outstanding|Percentage to the total Loans and Advances in the nature of loans|
|---|---|---|
|Promoter|||
|Directors|||
|KMPs|||
|Related Parties|||

|CWIP|Amount in CWIP for a period of|Col3|Col4|Col5|Total*|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years||
|Projects in progress Projects temporarily suspended||||||


-----

|Project 2”|Col2|Col3|Col4|Col5|
|---|---|---|---|---|


** Details of projects where activity has been suspended shall be given separately.

**(vii) Intangible assets under development:**

(a) For Intangible assets under development, following ageing schedule shall be given:

**Intangible assets under development aging schedule**

(Amount in Rs.)

Intangible assets Amount in CWIP for a period of Total*
under
development

Less than 1 year 1-2 year 2-3 years More than 3 years

Projects in

progress

Projects
temporarily
suspended

*Total shall tally with the amount of Intangible assets under development in the balance sheet.

(b) For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan,
the following Intangible assets under development completion schedule shall be given**:

(Amount in Rs.)

Intangible To be completed in
assets under
development Less than 1 year 1-2 years 2-3 years More than 3 years

Project 1

Project 2”

** Details of projects where activity has been suspended shall be given separately.

**(viii) Details of Benami Property held**

Where any proceeding has been initiated or pending against the company for holding any benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder, the company shall disclose the following:
(a) Details of such property,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If property is in the books, then reference to the item in the Balance Sheet,

(e) If property is not in the books, then the fact shall be stated with reasons,

(f) Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor then

the details shall be provided,

(g) Nature of proceedings, status of same and company‘s view on same.

(ix) where the Company has borrowings from banks or financial institutions on the basis of security of current assets it shall

|Intangible assets under development|Amount in CWIP for a period of|Col3|Col4|Col5|Total*|
|---|---|---|---|---|---|
||Less than 1 year|1-2 year|2-3 years|More than 3 years||
|Projects in progress Projects temporarily suspended||||||

|Intangible assets under development|To be completed in|Col3|Col4|Col5|
|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|
|Project 1 Project 2”|||||


-----

(a) whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in

agreement with the books of accounts;

(b) if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

**(x) Wilful Defaulter***

Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, following details shall
be given:

(a) Date of declaration as willful defaulter,

(b) Details of defaults (amount and nature of defaults)

  - wilful defaulter‖ here means a person or an issuer who or which is categorized as a willful defaulter by any bank or
financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on
wilful defaulters issued by the Reserve Bank of India.

**(xi) Relationship with Struck off Companies**

Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section
560 of Companies Act, 1956, the Company shall disclose the following details, namely:
Name of struck off Nature of transactions with struck- Balance outstanding Relationship with the Struck off
Company off Company company, if any, to be disclosed

Investment in securities

Receivables

Payables

Shares held by stuck off company

Other outstanding balances (to be
specified)

**(xii) Registration of charges or satisfaction with Registrar of Companies (ROC)**

Where any charges or satisfaction yet to be registered with ROC beyond the statutory period, details and reasons thereof shall
be disclosed.

**(xiii) Compliance with number of layers of companies**

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
the Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers
and the relationship or extent of holding of the company in such downstream companies shall be disclosed.

**(xiv) Following Ratios to be disclosed:-**

(a) Current Ratio,

(b) Debt-Equity Ratio,

(c) Debt Service Coverage Ratio,

(d) Return on Equity Ratio,

(e) Inventory turnover ratio,

(f) Trade Receivables turnover ratio,

(g) Trade payables turnover ratio,

(h) Net capital turnover ratio,

|Name of struck off Company|Nature of transactions with struck- off Company|Balance outstanding|Relationship with the Struck off company, if any, to be disclosed|
|---|---|---|---|
||Investment in securities|||
||Receivables|||
||Payables|||
||Shares held by stuck off company|||
||Other outstanding balances (to be specified)|||


-----

(j) Return on Capital employed,

(k) Return on investment.

The company shall explain the items included in numerator and denominator for computing the above ratios. Further
explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding year.

**(xv) Compliance with approved Scheme(s) of Arrangements**

Where the Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the

Companies Act, 2013, the company shall disclose that the effect of such Scheme of Arrangements have been accounted for in
the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standards’ and any
deviation in this regard shall be explained.

**(xvi) Utilisation of Borrowed funds and share premium:**

(A) Where company has advanced or loaned or invested funds (either borrowed funds or share premium or any other sources
or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding
(whether recorded in writing or otherwise) that the Intermediary shall

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

the company shall disclose the following:
(I) date and amount of fund advanced or loaned or invested in Intermediaries with complete details of each Intermediary.

(II) date and amount of fund further advanced or loaned or invested by such Intermediaries to other intermediaries or Ultimate
Beneficiaries alongwith complete details of the ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act
has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering
act, 2002 (15 of 2003).;

(B) Where a company has received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the company shall

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries, the company shall disclose the
following:
(I) date and amount of fund received from Funding parties with complete details of each Funding party.

(II) date and amount of fund further advanced or loaned or invested other intermediaries or Ultimate Beneficiaries alongwith
complete details of the other intermediaries‘ or ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act
has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering
act, 2002 (15 of 2003).

7. When a company applies an accounting policy retrospectively or makes a restatement of items in the financial statements or

when it reclassifies items in its financial statements, the company shall attach to the Balance Sheet, a “Balance Sheet” as at the
beginning of the earliest comparative period presented.

8. Share application money pending allotment shall be classified into equity or liability in accordance with relevant Indian Accounting

Standards. Share application money to the extent not refundable shall be shown under the head Equity and share application money to
the extent refundable shall be separately shown under ‘Other financial liabilities’.

9 Preference shares including premium received on issue shall be classified and presented as ‘Equity’ or ‘Liability’ in accordance


-----

1[plain vanilla], redeemable preference shares shall be classified and presented under ‘non-current liabilities’ as ‘borrowings’ and the
disclosure requirements in this regard applicable to such borrowings shall be applicable mutatis mutandis to redeemable preference
shares.

10. Compound financial instruments such as convertible debentures, where split into equity and liability components, as per the
requirements of the relevant Indian Accounting Standards, shall be classified and presented under the relevant heads in ‘Equity’ and
‘Liabilities’

11. Regulatory Deferral Account Balances shall be presented in the Balance Sheet in accordance with the relevant Indian

Accounting Standards.

_PART II – STATEMENT OF PROFIT AND LOSS_

_Name of the Company ..........................._

_Statement of Profit and Loss for the period ended ..............................._

(Rupees in ............... )

**Particulars** **Note No.** **Figures for** **Figures for**
**the current** **the**
**reporting** **previous**
**period** **reporting**

**period**

I Revenue From Operations

II Other Income

III Total Income (I+II)

IV **EXPENSES**

Cost of materials consumed

Purchases of Stock-in-Trade

Changes in inventories of finished goods,
Stock-in -Trade and work-in-progress

Employee benefits expense

Finance costs

Depreciation and amortization expense

Other expenses

Total expenses (IV)

V Profit/(loss) before exceptional items
and tax (I- IV)

VI Exceptional Items

VII Profit/(loss) before tax
(V-VI)

VIII Tax expense:

(1) Current tax

(2) Deferred tax

IX Profit (Loss) for the period from
continuing operations (VII-VIII)

X Profit/(loss) from discontinued operations

XI Tax expense of discontinued operations

XII Profit/(loss) from Discontinued operations
(after tax) (X-XI)

|Col1|Particulars|Note No.|Col4|Figures for the current reporting period|Col6|Figures for the previous reporting period|
|---|---|---|---|---|---|---|
|I|Revenue From Operations||||||
|II|Other Income||||||
|III|Total Income (I+II)||||||
|IV|EXPENSES Cost of materials consumed||||||
||Purchases of Stock-in-Trade||||||
||Changes in inventories of finished goods, Stock-in -Trade and work-in-progress||||||
||Employee benefits expense||||||
||Finance costs||||||
||Depreciation and amortization expense||||||
||Other expenses||||||
||Total expenses (IV)||||||
|V|Profit/(loss) before exceptional items and tax (I- IV)||||||
|VI|Exceptional Items||||||
|VII|Profit/(loss) before tax (V-VI)||||||
|VIII|Tax expense: (1) Current tax (2) Deferred tax||||||
|IX|Profit (Loss) for the period from continuing operations (VII-VIII)||||||
|X|Profit/(loss) from discontinued operations||||||
|XI|Tax expense of discontinued operations||||||


-----

|XIII|Profit/(loss) for the period (IX+XII)|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|XIV|Other Comprehensive Income A (i) Items that will not be reclassified to profit or loss (ii) Income tax relating to items that will not be reclassified to profit or loss B (i) Items that will be reclassified to profit or loss (ii) Income tax relating to items that will be reclassified to profit or loss||||||
|XV|Total Comprehensive Income for the period (XIII+XIV)(Comprising Profit (Loss) and Other Comprehensive Income for the period)||||||
|XVI|Earnings per equity share (for continuing operation): (1) Basic (2) Diluted||||||
|XVII|Earnings per equity share (for discontinued operation): (1) Basic (2) Diluted||||||
|XVIII|Earnings per equity share(for discontinued & continuing operations) (1) Basic (2) Diluted||||||


**See accompanying notes to the financial statements**

**_Notes:_**

**_GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS_**

1. The provisions of this Part shall apply to the income and expenditure account, in like manner as they apply to a

Statement of Profit and Loss.

2. The Statement of Profit and Loss shall include:

(1) Profit or loss for the period;

(2) Other Comprehensive Income for the period.

The sum of (1) and (2) above is ‘Total Comprehensive Income’.

3. Revenue from operations shall disclose separately in the notes

(a) sale of products (including Excise Duty);

(b) sale of services; [1]***

2[(ba) Grants or donations received (relevant in case of section 8 companies only); and]

(c) other operating revenues.

4. Finance Costs: Finance costs shall be classified as
(a) interest;

(b) dividend on redeemable preference shares;

(c) exchange differences regarded as an adjustment to borrowing costs; and

(d) other borrowing costs (specify nature).

5 Other income: Other income shall be classified as

-----

(a) interest Income;

(b) dividend Income; and

(c) other non-operating income (net of expenses directly attributable to such income).

6. Other Comprehensive Income shall be classified into
(A) Items that will not be reclassified to profit or loss

(i) Changes in revaluation surplus;

(ii) Remeasurements of the defined benefit plans;

(iii) Equity Instruments through Other Comprehensive Income;

(iv) Fair value changes relating to own credit risk of financial liabilities designated at fair value through profit or loss;

(v) Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent not to be classified into profit or

loss; and

(vi) Others (specify nature).

(B) Items that will be reclassified to profit or loss;

(i) Exchange differences in translating the financial statements of a foreign operation;

(ii) Debt Instruments through Other Comprehensive Income;

(iii) The effective portion of gains and loss on hedging instruments in a cash flow hedge;

(iv) Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent to be classified into

profit or loss; and

(v) Others (specify nature).

7. Additional Information: A Company shall disclose by way of notes, additional information regarding aggregate expenditure

and income on the following items:

(a) employee Benefits expense [showing separately (i) salaries and wages, (ii) contribution to provident and other funds,

(iii) share based payments to employees, (iv) staff welfare expenses].

(b) depreciation and amortisation expense;

(c) any item of income or expenditure which exceeds one per cent of the revenue from operations or Rs.10,00,000,

whichever is higher, in addition to the consideration of ‘materiality’ as specified in clause 7 of the General Instructions for
Preparation of Financial Statements of a Company;

(d) interest Income;

(e) interest Expense;

(f) dividend income;

(g) net gain or loss on sale of investments;

(h) net gain or loss on foreign currency transaction and translation (other than considered as finance cost);

(i) payments to the auditor as (a) auditor, (b) for taxation matters, (c) for company law matters, (d) for other

services, (e) for reimbursement of expenses;

(j) in case of companies covered under section 135, amount of expenditure incurred on corporate social

responsibility activities; and

(k) d t il f it f ti l t


-----

1[(l) Undisclosed income

The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any
other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under any scheme and shall
also state whether the previously unrecorded income and related assets have been properly recorded in the books of account
during the year.

(m) Corporate Social Responsibility (CSR)

Where the company covered under section 135 of the Companies Act, the following shall be disclosed with regard to CSR
activities:
(i) amount required to be spent by the company during the year,

(ii) amount of expenditure incurred,

(iii) shortfall at the end of the year,

(iv) total of previous years shortfall,

(v) reason for shortfall,

(vi) nature of CSR activities,

(vii) details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR expenditure

as per relevant Accounting Standard,

(viii) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements

in the provision during the year shall be shown separately.

(n) details of Crypto Currency or Virtual Currency

Where the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the following shall
be disclosed:
(i) profit or loss on transactions involving Crypto currency or Virtual Currency,

(ii) amount of currency held as at the reporting date,

(iii) deposits or advances from any person for the purpose of trading or investing in Crypto Currency or virtual currency.]

8. Changes in Regulatory Deferral Account Balances shall be presented in the Statement of Profit and Loss in
accordance with the relevant Indian Accounting Standards.

**_PART III- GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED FINANCIAL_**
**_STATEMENTS_**

1. Where a company is required to prepare Consolidated Financial Statements, i.e., consolidated balance sheet,

consolidated statement of changes in equity and consolidated statement of profit and loss, the company shall mutatis
_mutandis follow the requirements of this Schedule as applicable to a company in the preparation of balance sheet,_
statement of changes in equity and statement of profit and loss. In addition, the consolidated financial statements shall
disclose the information as per the requirements specified in the applicable Indian Accounting Standards notified
under the Companies (Indian Accounting Standards) Rules 2015, including the following, namely:

(i) Profit or loss attributable to ‘non-controlling interest’ and to ‘owners of the parent’ in the statement of profit

and loss shall be presented as allocation for the period. Further, ‘total comprehensive income’ for the period
attributable to ‘non-controlling interest’ and to ‘owners of the parent’ shall be presented in the statement of profit
and loss as allocation for the period. The aforesaid disclosures for ‘total comprehensive income’ shall also be made
in the statement of changes in equity. In addition to the disclosure requirements in the Indian Accounting
Standards, the aforesaid disclosures shall also be made in respect of ‘other comprehensive income’.

(ii) ‘Non-controlling interests’ in the Balance Sheet and in the Statement of Changes in Equity, within equity,

shall be presented separately from the equity of the ‘owners of the parent’.

(iii) Investments accounted for using the equity method.


-----

2. In Consolidated Financial Statements, the following shall be disclosed by way of additional information:

**Name of the entity in the** **Net Assets, i.e., total** **Share in profit or** **Share** **in** **other** **Share** **in** **total**
**Group** **loss**

**assets minus total** **comprehensive** **comprehensive**
**liabilities** **income** **income**

Amount

As % of Amount As % of Amount As % of Amount As % of total

comprehensi

consolidate

consolidate consolidated ve income

d net assets

d profit or other
loss comprehensi

ve income

Parent

Subsidiaries

Indian

1.

2.

3.

.

.

Foreign

1.

2.

3.

.

.

Non-controlling
Interests in

all

subsidiaries

Associates (Investment as
per the equity method)

Indian

|Name of the entity in the Group|Net Assets, i.e., total assets minus total|Col3|Share in profit or loss|Col5|Share in other comprehensive income|Col7|Share in total comprehensive income|Col9|
|---|---|---|---|---|---|---|---|---|
||liabilities As % of consolidate d net assets|Amount|||||||
||||As % of consolidate d profit or|Amount|As % of consolidated other|Amount|As % of total comprehensi ve income|Amount|
|Parent Subsidiaries Indian 1. 2. 3. . . Foreign 1. 2. 3. . . Non-controlling Interests in all|||loss||comprehensi ve income||||


-----

|Foreign 1. 2. 3. . . Joint Ventures (investment as per the equity method) Indian 1. 2. 3. . . Foreign 1. 2. 3. . .|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Total|||||||||


3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be covered under consolidated

financial statements.

4. An entity shall disclose the list of subsidiaries or associates or joint ventures which have not been consolidated

in the consolidated financial statements along with the reasons of not consolidating.]

**1[Division III**

Financial Statements for a Non-Banking Financial Company (NBFC) whose financial statements are drawn up in
compliance of the Companies (Indian Accounting Standards) Rules, 2015.

**_GENERAL INSTURCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A NON-BANKING_**
**_FINANCIAL COMPANY (NBFC) THAT IS REQUIRED TO COMPLY WITH INDIAN ACCOUNTING STAND-_**
**_ARDS (Ind AS)_**

1. Every Non-Banking Financial company as defined in the Companies (Indian Accounting Standards) (Amend
ment) Rules, 2016 to which Indian Accounting Standards apply, shall prepare its financial statements in
accordance with this Schedule or with such modification as may be required under certain circumstances.

2. Where compliance with the requirements of relevant Act, Regulations, Guidelines or Circulars issued by the

relevant regulator from time to time including Indian Accounting Standards (Ind AS) (except the option of presenting assets and liabilities in accordance with current, non-current classification as provided by relevant Ind AS)
as applicable to the NBFCs require any change in treatment or disclosure including addition, amendment,
substitution or deletion in the head or sub-head or any changes inter se, in the financial statements or statements
forming part thereof, the same shall be made and the requirements under this Schedule shall stand modified
accordingly.

3. The disclosure requirements specified in this Schedule are in addition to and not in substitution of the disclosure

requirements specified in the Indian Accounting Standards. Additional disclosures specified in the Indian Accounting Standards shall be made in the Notes or by way of additional statement or statements unless required to
be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies
Act, 2013 shall be made in the Notes in addition to the requirements set out in this Schedule.


-----

4. (i) Notes shall contain information in addition to that presented in the Financial Statements and shall provide

where required
(a) narrative descriptions or disaggregations of items recognised in those statements; and

(b) information about items that do not qualify for recognition in those statements.

(ii) Each item on the face of the Balance Sheet, Statement of Changes in Equity and Statement of Profit and Loss
shall be cross-referenced to any related information in the Notes. In preparing the Financial Statements  including
the Notes, a balance shall be maintained between providing excessive details that may not assist users of Financial
Statements and not providing important information as a result of too much aggregation.

5. Depending upon the total income of the NBFC, the figures appearing in the Financial Statements shall be rounded

off as below:

Total Income Rounding off

(i) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or millions, or
decimals thereof.

(ii) one hundred crore rupees or more To the nearest, lakhs, millions or crores, or decimals
thereof.

Once a unit of measurement is used, it should be used uniformly in the Financial Statements.

6. Financial Statements shall contain the corresponding amounts (comparatives) for the immediately preceding

reporting period for all items shown in the Financial Statements including Notes except in the case of first
Financial Statements after incorporation.

7. Financial Statements shall disclose all ‘material’ items, i.e., the items if they could, individually or collectively,

influence the economic decisions that users make on the basis of the financial statements. Materiality depends on
the size or nature of the item or a combination of both, to be judged in the particular circumstances.

8. For the purpose of this Schedule, the terms used herein shall have the same meanings assigned to them in Indian

Accounting Standards.

9. Where any Act, Regulation, Guidelines or Circulars issued by the relevant regulators from time to time requires

specific disclosures to be made in the standalone financial statements of an NBFC, the said disclosures shall be
made in addition to those required under this Schedule.

10. The NBFCs preparing financial statements as per this Schedule may change the order of presentation of line items

on the face of financial statements or order of line items within the schedules in order of liquidity, if appropriate,
considering the operations performed by the NBFC.

**Note: This Schedule sets out the minimum requirements for disclosure on the face of the Financial Statements, i.e., Balance**
Sheet, Statement of Changes in Equity for the period, the Statement of Profit and Loss for the period (The term ‘Statement of
Profit and Loss’ has the same meaning as ‘Profit and Loss Account’) and Notes. Cash flow statement shall be prepared, where
applicable, in accordance with the requirements of the relevant Indian Accounting Standard.

Line items, sub-line items and sub-totals shall be presented as an addition or substitution on the face of the Financial Statements
when such presentation is relevant to an understanding of the NBFC’s financial position or performance or to cater to
categories of NBFCs as prescribed by the relevant regulator or sector-specific disclosure requirements or when required for
compliance with the amendments to the relevant statutes or under the Indian Accounting Standards.

|Total Income|Rounding off|
|---|---|
|(i) less than one hundred crore rupees|To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.|
|(ii) one hundred crore rupees or more|To the nearest, lakhs, millions or crores, or decimals thereof.|


-----

**_PART I –BALANCE SHEET_**

_Name of the Non-Banking Financial Company……………………._

_Balance Sheet as at ………………………_

|Col1|Particulars|Note No.|Figures as at the end of current reporting period|Figures as at the end of the previous reporting period|
|---|---|---|---|---|
||1||2|3|
||ASSETS||||
|(1)|Financial Assets||||
|(a)|Cash and cash equivalents||||
|(b)|Bank Balance other than (a) above||||
|(c)|Derivative financial instruments||||
|(d)|Receivables||||
||(I) Trade Receivables||||
||(II) Other Receivables||||
|(e)|Loans||||
|(f)|Investments||||
|(g)|Other Financial assets (to be specified)||||
||||||
|(2)|Non-financial Assets||||
|(a)|Inventories||||
|(b)|Current tax assets (Net)||||
|(c)|Deferred tax Assets (Net)||||
|(d)|Investment Property||||
|(e)|Biological assets other than bearer plants||||
|(f)|Property, Plant and Equipment||||
|(g)|Capital work-in-progress||||
|(h)|Intangible assets under development||||
|(i)|Goodwill||||
|(j)|Other Intangible assets||||
|(k)|Other non-financial assets (to be specified)||||
||Total Assets||||


-----

**Total Liabilities and**
**Equity**

**See accompanying notes to the financial statements**

**1[STATEMENT OF CHANGES IN EQUITY**

_Name of the Company……………………._

A. Equity Share Capital

(1) Current reporting period

|Col1|LIABILITIES AND EQUITY|Col3|Col4|Col5|
|---|---|---|---|---|
||LIABILITIES||||
|(1)|Financial Liabilities||||
|(a)|Derivative financial instruments||||
|(b)|Payables||||
||(I)Trade Payables||||
||(i) total outstanding dues of micro enterprises and small enterprises||||
||(ii) total outstanding dues of creditors other than micro enterprises and small enterprises||||
||(II) Other Payables||||
||(i) total outstanding dues of micro enterprises and small enterprises||||
||(ii) total outstanding dues of creditors other than micro enterprises and small enterprises||||
|(c)|Debt Securities||||
|(d)|Borrowings (Other than Debt Securities)||||
|(e)|Deposits||||
|(f)|Subordinated Liabilities||||
|(g)|Other financial liabilities(to be specified)||||
|(2)|Non-Financial Liabilities||||
|(a)|Current tax liabilities (Net)||||
|(b)|Provisions||||
|(c)|Deferred tax liabilities (Net)||||
|(d)|Other non-financial liabilities(to be specified)||||
||||||
|(3)|EQUITY||||
|(a)|Equity Share capital||||
|(b)|Other Equity||||
||Total Liabilities and Equity||||


Balance at the end of the
Current reporting period

|Balance at the beginning of the current reporting period|Changes in Equity Shares Capital due to prior period errors|Restated balance at the beginning of the current reporting period|Changes in equity share capital during the current year|Balance at the end of the Current reporting period|
|---|---|---|---|---|
||||||


-----

(2) Previous reporting period

Balance at the beginning
of the previous reporting
period period errors

B. Other Equity

(1) Current reporting period

Share Equity
application Component
Money of
pending compound
allotment financial

instruments

Balance at
the beginning of
the current
reporting period

Changes in
accounting
Policy/prior
Period errors

Restated
balance
at the beginning
of the current
reporting period

Total
Comprehensive
Income for the
current year

Dividends

Transfer to
retained
earnings

Any other
Change (to be
specified)

Balance at the
end of the
current
Reporting period

(2) Previous reporting period

Share Equity
application Component
Money of
pending compound
allotment financial

instruments

Balance at
the beginning of
the previous
reporting period

Changes in
accounting
policy/prior
Period errors

Restated balance
at the beginning
of the previous
reporting
period

T t l

|Balance at the beginning of the previous reporting period|Changes in Equity Shares Capital due to prior period errors|Restated balance at the beginning of the previous reporting period|Changes in equity share capital during the previous year|Balance at the end of the previous reporting period|
|---|---|---|---|---|
||||||

|Col1|Share application Money pending allotment|Equity Component of compound financial instruments|Reserves and Surplus|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Money received against share warrants|Total|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||||Capital Reserve|Securities Premium|Other Reserves (specify nature)|Retained Earnings|Debt instrument through Other Comprehens ive Income|Equity Instruments through Other Comprehens ive Income|Effective Portion of Cash Flow Hedges|Revaluati on Surplus|Exchange Differences On translating the financial statements of a foreign|Other items of other Compreh ensive Income (specify nature)|||
|Balance at the beginning of the current reporting period|||||||||||||||
|Changes in accounting Policy/prior Period errors|||||||||||||||
|Restated balance at the beginning of the current reporting period|||||||||||||||
|Total Comprehensive Income for the current year|||||||||||||||
|Dividends|||||||||||||||
|Transfer to retained earnings|||||||||||||||
|Any other Change (to be specified)|||||||||||||||
|Balance at the end of the current Reporting period|||||||||||||||

|Col1|Share application Money pending allotment|Equity Component of compound financial instruments|Reserves and Surplus|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Money received against share warrants|Total|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||||Capital Reserve|Securities Premium|Other Reserves (specify nature)|Retained Earnings|Debt instrument through Other Comprehens ive Income|Equity Instruments through Other Comprehens ive Income|Effective Portion of Cash Flow Hedges|Revaluati on Surplus|Exchange Differences On translating the financial statements of a foreign|Other items of other Compreh ensive Income (specify nature)|||
|Balance at the beginning of the previous reporting period|||||||||||||||
|Changes in accounting policy/prior Period errors|||||||||||||||
|Restated balance at the beginning of the previous reporting period|||||||||||||||


-----

|Income for the previous year|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Col14|Col15|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Dividends|||||||||||||||
|Transfer to retained earnings|||||||||||||||
|Any other change (to be specified)|||||||||||||||
|Balance at the end of the previous reporting period|||||||||||||||


Note: Remeasurement of defined benefit plans and fair value changes relating to own credit risk of financial liabilities designated
at fair value through profit or loss shall be recognised as a part of retained earnings with separate disclosure of such items
alongwith the relevant amounts in the Notes or shall be shown as a separate column under Reserves and Surplus.]

**_Notes_**

**_GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET_**

A Non-Banking Financial company shall disclose the following in the notes to accounts:

**(A)** **Cash and cash equivalents: Cash and cash equivalents shall be classified as:**

(i) Cash on hand

(ii) Balances with Banks (of the nature of cash and cash equivalents);

(iii) Cheques, drafts on hand; and

(iv) Others (specify nature).

**Cash and Bank balances: The following disclosures with regard to cash and bank balances shall be made:**

(i) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated.

(ii) Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other

commitments shall be disclosed separately.

(iii) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated.

**(B)** **Derivative financial Instruments**

_1_ _Explain use of derivatives_

_2_ _Cross-reference to Financial Risks section for management of risks arising from derivatives_

**(Current Year)** **(Previous Year)**

**Part I** **Notional amounts** **Fair Value -** **Fair Value -** **Notional amounts** **Fair Value -** **Fair Value -**

**Assets** **Liabilities** **Assets** **Liabilities**

**(i)Currency**
**derivatives:**

-Spot and forwards

-Currency Futures

-Currency swaps

-Options purchased

-Options sold (written)

-Others

**Sub total (i)**

**(ii)Interest rate**
**derivatives**

-Forward Rate
Agreements and
Interest Rate Swaps

|Part I|(Current Year)|Col3|Col4|(Previous Year)|Col6|Col7|
|---|---|---|---|---|---|---|
||Notional amounts|Fair Value - Assets|Fair Value - Liabilities|Notional amounts|Fair Value - Assets|Fair Value - Liabilities|
|(i)Currency derivatives:|||||||
|-Spot and forwards|||||||
|-Currency Futures|||||||
|-Currency swaps|||||||
|-Options purchased|||||||
|-Options sold (written)|||||||
|-Others|||||||
|Sub total (i)|||||||
||||||||
|(ii)Interest rate derivatives|||||||


-----

|-Options sold (written)|Col2|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|-Futures|||||||
|-Others|||||||
|Subtotal(ii)|||||||
|(iii)Credit derivatives|||||||
|(iv) Equity linked derivatives|||||||
|(v) Other derivatives (Please specify)|||||||
||||||||
|Total Derivative Financial Instruments (i)+(ii)+(iii)+(iv)+(v)|||||||
|Part II|||||||
||||||||
|Included in above (Part I) are derivatives held for hedging and risk management purposes as follows:|||||||
|(i)Fair value hedging:|||||||
|- Currency derivatives|||||||
|- Interest rate derivatives|||||||
|- Credit derivatives|||||||
|- Equity linked derivatives|||||||
|- Others|||||||
|Sub total (i)|||||||
|(ii)Cash flow hedging:|||||||
|- Currency derivatives|||||||
|- Interest rate derivatives|||||||
|- Credit derivatives|||||||



- Equity linked
derivatives


-----

  - Others

Sub total (ii)

(iii)Net investment
hedging:

(iv) Undesignated
Derivatives

Total Derivative
Financial
Instruments (i)+
(ii)+(iii)+(iv)

With respect to hedges and hedge accounting, NBFCs may provide a description in accordance with the requirements of Indian
Accounting Standards, of how derivatives are used for hedging, explain types of hedges recognized for accounting purposes and
their usage/application by the entity.
**(C)** **Receivables:**

(i) Receivables shall be sub-classified as:

(a) Receivables considered good - Secured;

(b) Receivables considered good - Unsecured;

(c) Receivables which have significant increase in Credit Risk; and

(d) Receivables - credit impaired

(ii) Allowance for impairment loss allowance shall be disclosed under the relevant heads separately.

(iii) Debts due by directors or other officers of the NBFC or any of them either severally or jointly with any other person
or debts due by firms including limited liability partnerships (LLPs), private companies respectively in which any director
is a partner or a director or a member should be separately stated.

1[(iv) For trade receivable outstanding, following ageing schedule shall be given:

**Trade Receivables aging schedule**

(Amount in Rs.)

|- Others|Col2|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|Sub total (ii)|||||||
|(iii)Net investment hedging:|||||||
|(iv) Undesignated Derivatives|||||||
|Total Derivative Financial Instruments (i)+ (ii)+(iii)+(iv)|||||||

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
||Less than 6 months|6 months - 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) Undisputed Trade receivables - Considered good (ii) Undisputed Trade Receivable – which have significant increase in credit risk (iii) Undisputed Trade Receivables – credit Impaired (iv) Disputed Trade Receivables-considered good (v)Disputed Trade Receivables- which have significant increase in credit risk (vi) Disputed Trade Receivables – credit impaired|||||||


-----

#similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date
of the transaction.

Unbilled dues shall be disclosed separately]

**(D)** **Loans**

|Col1|(Current Year)|Col3|Col4|Col5|Col6|Col7|(Previous Year)|Col9|Col10|Col11|Col12|Col13|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
||Amor- tised cost|At Fair Value|||Sub total|Total|Amor- tised cost|At Fair Value|||Sub total|Total|
|||Through Other Compre- hensive Income|Through profit or loss|Designat- ed at fair value through profit or loss||||Through Other Comprehen- sive Income|Through profit or loss|Designat- ed at fair value through profit or loss|||
||(1)|(2)|(3)|(4)|(5=2+ 3+4)|(6=1 + 5)|(7)|(8)|(9)|(10)|(11=8+ 9+10)|(12=(7) + (11)|
|Loans|||||||||||||
|(A) (i) Bills Purchased and Bills Discounted|||||||||||||
|(ii) Loans repayable on Demand|||||||||||||
|(iii) Term Loans|||||||||||||
|(iv) Leasing|||||||||||||
|(v) Factoring|||||||||||||
|(vi) Others (to be specified)|||||||||||||
|Total (A) -Gross|||||||||||||
|Less: Impairment loss allowance|||||||||||||
|Total (A) - Net|||||||||||||
||||||||||||||
|(B) (i) Secured by tangible assets|||||||||||||
|(ii)Secured by intangible assets|||||||||||||
|(iii) Covered by Bank/Government Guarantees|||||||||||||
|(iv) Unsecured|||||||||||||
|Total (B)-Gross|||||||||||||
|Less: Impairment loss allowance|||||||||||||
|Total (B)-Net|||||||||||||
|(C) (I) Loans in India|||||||||||||
|(i) Public Sector|||||||||||||
|(ii) Others (to be specified)|||||||||||||
|Total (C)- Gross|||||||||||||
|Less: Impairment loss allowance|||||||||||||
|Total(C) (I)-Net|||||||||||||
|(C) (II)Loans outside India|||||||||||||
|Less: Impairment|||||||||||||
|loss allowance|||||||||||||


-----

**(E)** **Investments**

**Investments**

**Amor-**
**tised**

**Invest-**

**cost**

**vest- ments**

**(1)** **(2)**

Mutual
funds

Government
securi- ties

Other approved
securi- ties

Debt
securi- ties

Equity

instruments

Subsidiaries

Associates

Joint
Ventures

Others
(specify)

**Total –**
**Gross (A)**

(i) Investments
outside
India

(ii) Investments in
India

**Total (B)**

Total
(A) to tally
with (B)

Less: Allowance for
Impair- pairment loss (C)

Total – Net
D= (A)-(C)

|Investments|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|Col10|Col11|Col12|Col13|Col14|Col15|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Invest- vest- ments|(Current Year)|||||||(Previous Year)|||||||
||Amor- tised cost|At Fair Value|||Sub- Total|Oth- ers*|Total|Amor- tised cost|At Fair Value|||Sub-Total|Oth- ers*|Total|
|||Through Other Compre- hensive Income|Thro ugh profit or loss|Desig- nated at fair value through profit or loss|||||Through Other Compre- hensive Income|Thro ugh profit or loss|Desig- nated at fair value throug h profit or loss||||
||(1)|(2)|(3)|(4)|(5)=(2)+ (3)+(4)|(6)|(7)=(1) + (5)+(6)|(8)|(9)|(10)|(11)|(12)=(9)+ (10)+(11)|(13)|(14)=(8)+ (12)+(13)|
|Mutual funds|||||||||||||||
|Gov- ernment securi- ties|||||||||||||||
|Other ap- proved securi- ties|||||||||||||||
|Debt securi- ties|||||||||||||||
|Equity instru- ments|||||||||||||||
|Subsid- iaries|||||||||||||||
|Associates|||||||||||||||
|Joint Ven- tures|||||||||||||||
|Others (specify)|||||||||||||||
|Total – Gross (A)|||||||||||||||
|(i) Invest- ments outside India|||||||||||||||
|(ii) Invest- ments in India|||||||||||||||
|Total (B)|||||||||||||||
|Total (A) to tally with (B)|||||||||||||||
|Less: Allow- ance for Impair- pair- ment loss (C)|||||||||||||||


-----

- Other basis of measurement such as cost may be explained as a footnote

**(F)** **Investment Property**

A reconciliation of the gross and net carrying amounts of each class of property at the beginning and end of the reporting
period showing additions, disposals, acquisitions through business combinations and other adjustments and the related
depreciation and impairment losses or reversals shall be disclosed separately.

**(G)** **Biological Assets other than bearer plants:**

A reconciliation of the carrying amounts of each class of assets at the beginning and end of the reporting period showing
additions, disposals, acquisitions through business combinations and other adjustments shall be disclosed separately.

**(H)** **Property, Plant and Equipment**

(i) Classification shall be given as:

(a) Land

(b) Buildings

(c) Plant and Equipment

(d) Furniture and Fixtures

(e) Vehicles

(f) Office equipment

(g) Bearer Plants

(h) Others (specify nature)

(ii) Assets under lease shall be separately specified under each class of asset.

1[(iii) reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting

period showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if change
is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other adjustments
and the related depreciation and impairment losses or reversals shall be disclosed separately.]

**(I)** **Goodwill**

A reconciliation of the gross and net carrying amount of goodwill at the beginning and end of the reporting period showing
additions, impairments, disposals and other adjustments.

**(J)** **Other Intangible assets**

(iii) Classification shall be given as:

(a) Brands or trademarks

(b) Computer software

(c) Mastheads and publishing titles

(d) Mining rights

(e) Copyrights, patents, other intellectual property rights, services and operating rights

(f) Recipes, formulae, models, designs and prototypes

(g) Licenses and franchises

(h) Others (specify nature

2[(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the
reporting period showing additions, disposals, acquisitions through business combinations, amount of change due to
revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of intangible assets) and
other adjustments and the related amortization and impairment losses or reversals shall be disclosed separately.]

**(K)** **Payables**

The following details relating to Micro, Small and Medium Enterprises shall be disclosed:

(a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the


-----

end of each accounting year;

(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises

Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed day
during each accounting year;

(c) the amount of interest due and payable for the period of delay in making payment (which have been paid but

beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and
Medium Enterprises Development Act, 2006;

(d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and

(e) the amount of further interest remaining due and payable even in the succeeding years, until such date when the

interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible
expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

_Explanation.— The terms ‘appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small enterprise’ and ‘supplier’,_
shall have the same meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of
the Micro, Small and Medium Enterprises Development Act, 2006.”

1[(KA) For trade payables due for payment, following ageing schedule shall be given:

**Trade Payables aging schedule**

(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment#

Less 1-2 years 2-3 years More than 3 Total
than 1 years
year

(i) MSME

(ii) Others

(iii) Disputed duesMSME

(iv) Disputed duesOthers

#similar information shall be given where no due date of payment is specified in that case disclosure shall
be from the date of the transaction.

Unbilled dues shall be disclosed separately]

**(L)** **Debt Securities**

**(Current Year)** **(Previous Year)**

**At Amortised** **At** **Fair** **Designated at** **Total** **At Amortised** **At** **Fair** **Designated at** **Total**
**Cost** **Value** **fair value** **Cost** **Value** **fair value**

**Through** **through profit** **Through** **through profit**
**profit** **or** **or loss** **profit** **or** **or loss**

**loss** **loss**

(1) (2) (3) (4)=(1)+(2)+(3) (5) (6) (7) (8)=(5)+(6)+(7)

|Particulars|Outstanding for following periods from due date of payment#|Col3|Col4|Col5|Col6|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|Total|
|(i) MSME (ii) Others (iii) Disputed dues- MSME (iv) Disputed dues- Others||||||

|Col1|(Current Year)|Col3|Col4|Col5|(Previous Year)|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
||At Amortised Cost|At Fair Value Through profit or loss|Designated at fair value through profit or loss|Total|At Amortised Cost|At Fair Value Through profit or loss|Designated at fair value through profit or loss|Total|
||(1)|(2)|(3)|(4)=(1)+(2)+(3)|(5)|(6)|(7)|(8)=(5)+(6)+(7)|
|Liability component of compound financial instruments|||||||||
|Others (Bonds/ Debenture etc.)|||||||||
|Total (A)|||||||||
|Debt securities in India|||||||||
|Debt securities outside India|||||||||


-----

|Total (B) to tally with (A)|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|


(i) bonds or debentures (along with the rate of interest, and particulars of redemption or conversion, as the case may be)

shall be stated in descending order of maturity or conversion, starting from earliest redemp- tion or conversion date,
as the case may be. Where bonds/debentures are redeemable by installments, the date of maturity for this purpose
must be reckoned as the date on which the first installment becomes due;

(ii) particulars of any redeemed bonds or debentures which the NBFC has power to reissue shall be disclosed.

**(M)** **Borrowings (Other than Debt Securities)**

**(Current Year)** **(Previous Year)**

**At** **At fair value** **Designated at** **Total** **At** **At fair value** **Designated at** **Total**
**Amortised** **Through** **fair** **value** **Amortised** **Through** **fair** **value**
**Cost** **profit or loss** **through profit** **Cost** **profit or loss** **through profit**

**or loss** **or loss**

**(1)** **(2)** **(3)** **(4)=(1)+(2)+(3) (1)** **(2)** **(3)** **(4)=(1)+(2)+(3)**

(a)Term loans

(i)from banks

(ii)from other parties

(b)Deferred payment
liabilities

(c)Loans from related
parties

(d) Finance lease
obligations

(e)Liability
component of
compound financial
instruments

(f)Loans repayable on
demand

(i)from banks

(ii)from other parties

(g) Other loans

(specify nature)

**Total (A)**

Borrowings in India

Borrowings outside

India

**Total (B) to tally**
**with (A)**

(i) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in
each case.

(ii) Where borrowings have been guaranteed by directors or others, the aggregate amount of such borrowings under each

head shall be disclosed;

(iii) terms of repayment of term loans and other loans shall be stated; and

(iv) period and amount of default as on the balance sheet date in repayment of borrowings and interest shall be specified

separately in each case.

**(N)** **Deposits**

**(Current Year)** **(Previous Year)**

**At Amortised** **At fair** **Designated at** **Total** **At Amortised** **At fair** **Designated at** **Total**
**Cost** **value** **fair value** **Cost** **value** **fair value**

**through** **through profit** **through** **through profit**
**profit or** **or loss** **profit or** **or loss**
**loss** **loss**

(1) (2) (3) (4)=(1)+(2)+(3) (5) (6) (7) (8)=(5)+(6)+(7)

Deposits

(i) Public

|Col1|(Current Year)|Col3|Col4|Col5|(Previous Year)|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
||At Amortised Cost|At fair value Through profit or loss|Designated at fair value through profit or loss|Total|At Amortised Cost|At fair value Through profit or loss|Designated at fair value through profit or loss|Total|
||(1)|(2)|(3)|(4)=(1)+(2)+(3)|(1)|(2)|(3)|(4)=(1)+(2)+(3)|
|(a)Term loans|||||||||
|(i)from banks|||||||||
|(ii)from other parties|||||||||
|(b)Deferred payment liabilities|||||||||
|(c)Loans from related parties|||||||||
|(d) Finance lease obligations|||||||||
|(e)Liability component of compound financial instruments|||||||||
|(f)Loans repayable on demand|||||||||
|(i)from banks|||||||||
|(ii)from other parties|||||||||
|(g) Other loans (specify nature)|||||||||
|Total (A)|||||||||
|Borrowings in India|||||||||
|Borrowings outside India|||||||||
|Total (B) to tally with (A)|||||||||

|Col1|(Current Year)|Col3|Col4|Col5|(Previous Year)|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
||At Amortised Cost|At fair value through profit or loss|Designated at fair value through profit or loss|Total|At Amortised Cost|At fair value through profit or loss|Designated at fair value through profit or loss|Total|
||(1)|(2)|(3)|(4)=(1)+(2)+(3)|(5)|(6)|(7)|(8)=(5)+(6)+(7)|
|Deposits|||||||||


-----

|(ii) From Banks|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|(iii)From Others|||||||||
|Total|||||||||


**(O)** **Subordinated Liabilities**

**(Current Year)** **(Previous Year)**

**At** **At fair** **Designated** **Total** **At** **At fair** **Designated at** **Total**
**Amortised** **value** **at fair** **Amortised** **value** **fair value**
**Cost** **through** **value** **Cost** **through** **through**

**profit or** **through** **profit or** **profit or loss**

**loss** **profit or** **loss**

**loss**

(1) (2) (3) (4)=(1)+(2)+(3) (5) (6) (7) (8)=(5)+ (6)+(7)

Perpetual Debt
Instruments to the
extent that do not
qualify as equity

Preference Shares
other than those
that qualify as
Equity

Others (specifying
the nature and type
of instrument
issued)

**Total (A)**

Subordinated
Liabilities in India

Subordinated
Liabilities outside
India

**Total (B) to tally**
**with (A)**

**(P)** **Other Financial Liabilities (to be specified): Other Financial liabilities shall be classified as-**

(a) Interest accrued;

(b) Unpaid dividends;

(c) Application money received for allotment of securities to the extent refundable and interest accrued thereon;

(d) Unpaid matured deposits and interest accrued thereon;

(e) Unpaid matured debentures and interest accrued thereon;

(f) Margin money (to be specified);and

(g) Others (specify nature)

**(Q)** **Provisions: The amounts shall be classified as-**

(a) Provision for employee benefits; and

(b) Others (specify nature)

**(R)** **Other Non-financial liabilities (to be specified):**

|Col1|(Current Year)|Col3|Col4|Col5|(Previous Year)|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
||At Amortised Cost|At fair value through profit or loss|Designated at fair value through profit or loss|Total|At Amortised Cost|At fair value through profit or loss|Designated at fair value through profit or loss|Total|
||(1)|(2)|(3)|(4)=(1)+(2)+(3)|(5)|(6)|(7)|(8)=(5)+ (6)+(7)|
|Perpetual Debt Instruments to the extent that do not qualify as equity|||||||||
|Preference Shares other than those that qualify as Equity|||||||||
|Others (specifying the nature and type of instrument issued)|||||||||
|Total (A)|||||||||
||||||||||
|Subordinated Liabilities in India|||||||||
|Subordinated Liabilities outside India|||||||||
|Total (B) to tally with (A)|||||||||


-----

(c) Others (specify nature).

**(S)** **Equity Share Capital : For each class of equity share capital:**

(a) the number and amount of shares authorized;

(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;

(c) par value per share;

(d) a reconciliation of the number of shares outstanding at the beginning and at the end of the period;

(e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution

of dividends and the repayment of capital;

(f) shares in respect of each class in the company held by its holding company or its ultimate holding company

including shares held by or by subsidiaries or associates of the holding company or the ultimate holding company
in aggregate;

(g) shares in the company held by each shareholder holding more than five percent shares specifying the number of

shares held;

(h) shares reserved for issue under options and contracts/commitments for the sale of shares or disinvestment,

including the terms and amounts;

(i) For the period of five years immediately preceding the date at which the Balance Sheet is prepared:

       - Aggregate number and class of shares allotted as fully paid up pursuant to contract without payment
being received in cash;

       - Aggregate number and class of shares allotted as fully paid up by way of bonus shares; and

       - Aggregate number and class of shares bought back;

(j) terms of any securities convertible into equity shares issued along with the earliest date of conversion in

descending order starting from the farthest such date;

(k) calls unpaid (showing aggregate value of calls unpaid by directors and officers);

(l) forfeited shares (amount originally paid up)

(m) An NBFC shall disclose information that enables users of its financial statements to evaluate the NBFC’s

objectives, policies and processes for managing capital.

1[(n) A Company shall disclose Shareholding of Promoter* as below:

Shares held by promoters at the end of the year % Change during the year***

S.No Promoter Name No. of %of
Shares** total

shares**

Total

*Promoter here means promoter as defined in the Companies Act, 2013.

** Details shall be given separately for each class of shares

*** percentage change shall be computed with respect to the number at the beginning of the year or if issued during
the year for the first time then with respect to the date of issue.]

**(T)** **Other Equity**

(i) Other Reserves’ shall be classified in the notes as:

(a) Capital Redemption Reserve;
(b) Debenture Redemption Reserve;
(c) Share Options Outstanding Account;

(d) Statutory Reserves; and

(e) Others – (specify the nature and purpose of each reserve and the amount in respect thereof);
(Additions and deductions since last balance sheet to be shown under each of the specified heads)

(iii) Retained Earnings represents surplus i.e. balance of the relevant column in the Statement of Changes in

|1[(n) A Company shall disclose Shareholding of Promoter* as below:|Col2|Col3|Col4|Col5|
|---|---|---|---|---|
|Shares held by promoters at the end of the year||||% Change during the year***|
|S.No|Promoter Name|No. of Shares**|%of total shares**||
|Total|||||


-----

Equity;

(iv) A reserve specifically represented by earmarked investments shall disclose the fact that it is so represented;
(v) Debit balance of Statement of Profit and Loss shall be shown as a negative figure under the head ‘retained
earnings’. Similarly, the balance of ‘Other Equity’, after adjusting negative balance of retained earnings, if
any, shall be shown under the head ‘Other Equity’ even if the resulting figure is in the negative;

(vi) Under the sub-head ‘Other Equity’, disclosure shall be made for the nature and amount of each item; and

(vii) Under the sub-head ‘Other Equity’, disclosure shall be made for conditions or restrictions for distribution

attached to statutory reserves.

**(U)** **Contingent Liabilities and commitments (to the extent not provided for)**
(i) Contingent Liabilities shall be classified as:

(a) Claims against the company not acknowledged as debt;

(b) Guarantees excluding financial guarantees; and

(c) Other money for which the company is contingently liable

(ii) Commitments shall be classified as:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for;

(b) Uncalled liability on shares and other investments partly paid;

(c) Other commitments (specify nature).

**(V)** The amount of dividends proposed to be distributed to equity and preference shareholders for the period and the related

amount per share shall be disclosed separately. Arrears of fixed cumulative dividends on irredeemable preference
shares shall also be disclosed separately.

**(W)** Where in respect of an issue of securities made for a specific purpose the whole or part of amount has not

been used for the specific purpose at the Balance Sheet date, there shall be indicated by way of note how
such unutilized amounts have been used or invested.

1[(WA) Where the company has not used the borrowings from banks and financial institution for the specific

purpose for which it was taken at the balance sheet date, the company shall disclose the details of where
they have been used;

(WB) Additional Regulatory Information

(i) Title deeds of Immovable Properties not held in name of the Company

The company shall provide the details of all the immovable property (other than properties where the
Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds
are not held in the name of the company in following format and where such immovable property is jointly
held with others, details are required to be given to the extent of the company‘s share.

|Relevant line item in the Balance sheet|Description of item of property|Gross carrying value|Title deeds held in the name of|Whether title deed holder is promoter, director or relative # of promoter/director or employee of promoter/director|Property held since which date|Reason for not being held in the name of the company**|
|---|---|---|---|---|---|---|
|PPE - Investment Property - Non- current asset held for sale|Land Building Land Building Land Building|-|-|-|-|*** also Indicate if in dispute|


-----

|others|Col2|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|


#Relative here means relative as defined in the Companies Act, 2013.

*Promoter here means promoter as defined in the Companies Act, 2013.

(ii) The company shall disclose as to whether the fair value of investment property (as measured for disclosure

purposes in the financial statements) is based on the valuation by a registered valuer as defined under rule 2 of
Companies (Registered Valuers and Valuation) Rules, 2017.

(iii) Where the Company has revalued its Property, Plant and Equipment (including Right-of-Use Assets), the

company shall disclose as to whether the revaluation is based on valuation by a Registered Valuer as defined under
rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017.

(iv) Where the Company has revalued its Intangible assets, the company shall disclose as to whether the

revaluation is based on valuation by a Registered Valuer as defined under rule 2 of Companies (Registered Valuers
and Valuation) Rules, 2017.

(v) Following disclosures shall be made where loans or advances in the nature of loans are granted to promoters,

directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with
any other person that are:

(a) repayable on demand or

(b) without specifying any terms or period of repayment

Type of Borrower Amount of loan or advances in the nature Percentage to the total
of loan outstanding

Loans and Advances in the
nature of loans

Promoter

Directors

KMPs

Related parties

**(iv) Capital-work-in Progress (CWIP)**

**(a) For Capital-work-in progress, following ageing schedule shall be given:**

**CWIP aging schedule**

(Amount in Rs.)

CWIP Amount in CWIP for a period of Total*

Less than 1 year 1-2 years 2-3 years More than 3

years

Projects in

progress

Projects
temporarily
suspended

*Total shall tally with CWIP amount in the balance sheet.

(b) For capital-work-in progress, whose completion is overdue or has exceeded its cost compared to its original

plan, following CWIP completion schedule shall be given**:

|Type of Borrower|Amount of loan or advances in the nature of loan outstanding|Percentage to the total Loans and Advances in the nature of loans|
|---|---|---|
|Promoter|||
|Directors|||
|KMPs|||
|Related parties|||

|CWIP|Amount in CWIP for a period of|Col3|Col4|Col5|Total*|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years||
|Projects in progress Projects temporarily suspended||||||

|Col1|(Amount in Rs.)|Col3|Col4|Col5|
|---|---|---|---|---|
|CWIP|To be completed in||||
||Less than 1 year|1-2 years|2-3 years|More than 3 years|


-----

|Project 2”|Col2|Col3|Col4|Col5|
|---|---|---|---|---|


** Details of projects where activity has been suspended shall be given separately.

**(vii) Intangible assets under development:**

(a) For Intangible assets under development, following ageing schedule shall be given:

**Intangible assets under development aging schedule**

(Amount in Rs.)

Intangible assets Amount in CWIP for a period of Total*

under development

Less than 1 year 1-2 years 2-3 years More than 3
years

Projects in

progress

Projects
temporarily
suspended

*Total shall tally with the amount of Intangible assets under development in the balance sheet.

(b) For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its
original plan, following Intangible assets under development completion schedule shall be given**:

(Amount in Rs.)

Intangible assets under To be completed in
development

Less than 1 1-2 years 2-3 years More than 3 years
year

Project 1

Project 2

**Details of projects where activity has been suspended shall be given separately.

**(viii) Details of Benami Property held**

Where any proceedings have been initiated or pending against the company for holding any benami property under the
Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder, the company shall disclose the
following:
(a) Details of such property,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If property is in the books, then reference to the item in the Balance Sheet,

(e) If property is not in the books, then the fact shall be stated with reasons,

(f) Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor

then the details shall be provided.

(g) Nature of proceedings, status of same and company‘s view on same.

**(ix) Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall**

disclose the following:
(a) whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions

are in agreement with the books of accounts,

(b) if not summary of reconciliation and reasons of material discrepancies if any to be adequately disclosed

|Intangible assets under development|Amount in CWIP for a period of|Col3|Col4|Col5|Total*|
|---|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years||
|Projects in progress Projects temporarily suspended||||||

|Intangible assets under development|To be completed in|Col3|Col4|Col5|
|---|---|---|---|---|
||Less than 1 year|1-2 years|2-3 years|More than 3 years|
|Project 1 Project 2|||||


-----

**(X) Wilful Defaulter***

Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, following details
shall be given, namely:
(a) date of declaration as wilful defaulter,

(b) details of defaults (amount and nature of defaults).

*wilful defaulter‖ here means a person or an issuer who or which is categorized as a willful defaulter by any bank or
financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines
on wilful defaulters issued by the Reserve Bank of India.

**(xi) Relationship with Struck off Companies**

Where the company has any transactions with the companies struck off under section 248 of Companies Act, 2013 or section
560 of Companies Act, 1956, the Company shall disclose the following details,

Name of struck off Nature of transactions with Balance outstanding Relationship with the Struck

Company struck-off Company off company, if any, to be

disclosed

Investment in securities

Receivables

Payables

Shares held by stuck off
company

Other outstanding balances
(to be specified)

**(xii) Registration of charges or satisfaction with Registrar of Companies (ROC)**

Where any charges or satisfaction yet to be registered with ROC beyond the statutory period, details and reasons thereof shall be
disclosed.

**(xiii) Compliance with number of layers of companies**

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with
Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and
the relationship/extent of holding of the company in such downstream companies shall be disclosed.

**(xiv) Following Ratios shall be disclosed**

(a) Capital to risk-weighted assets ration (CRAR)

(b) Tier I CRAR

(C) Tier II CRAR

(d) Liquidity Coverage Ratio

**(xv) Compliance with approved Scheme(s) of Arrangements**

Where any Scheme of Arrangements has been approval by the Competent Authority in terms of section 230 to 237 of the
Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements have been accounted for in
the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standards’. Any
deviation in this regard shall be explained.

**(xvi) Utilisation of Borrowed funds and share premium:**

(A) Where company has advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or
kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether
recorded in writing or otherwise) that the Intermediary shall

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the

|Name of struck off Company|Nature of transactions with struck-off Company|Balance outstanding|Relationship with the Struck off company, if any, to be disclosed|
|---|---|---|---|
||Investment in securities|||
||Receivables|||
||Payables|||
||Shares held by stuck off company|||
||Other outstanding balances (to be specified)|||


-----

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

the company shall disclose the following:
(I) date and amount of fund advanced or loaned or invested in Intermediaries with complete details of each Intermediary.

(II) date and amount of fund further advanced or loaned or invested by such Intermediaries to other intermediaries or

Ultimate Beneficiaries alongwith complete details of the ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies

Act has been complied with for such transactions and the transactions are not violative of the Prevention of MoneyLaundering act, 2002 (15 of 2003).;

(B) Where a company has received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)

with the understanding (whether recorded in writing or otherwise) that the company shall

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of

the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries, the company shall disclose the

following:
(I) date and amount of fund received from Funding parties with complete details of each Funding party.

(II) date and amount of fund further advanced or loaned or invested other intermediaries or Ultimate Beneficiaries

alongwith complete details of the other intermediaries‘ or ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies

Act has been complied with for such transactions and the transactions are not violative of the Prevention of MoneyLaundering act, 2002 (15 of 2003).;]

**(X)** **Other Classification related General Instructions**

1. When an NBFC applies an accounting policy retrospectively or makes a restatement of items in the

financial statements or when it reclassifies items in its financial statements, the NBFC shall attach to
the Balance Sheet, a “Balance Sheet” as at the beginning of the earliest comparative period presented.

2. Share application money pending allotment shall be classified into equity or liability in accordance with

relevant Indian Accounting Standards. Share application money to the extent not refundable shall be
shown under the head Equity and share application money to the extent refundable shall be separately
shown under ‘Other financial liabilities’.

3. Preference shares including premium received on issue, shall be classified and presented as ‘Equity’ or

‘Liability’ in accordance with the requirements of the relevant Indian Accounting Standards.
Accordingly, the disclosure and presentation requirements in this regard applicable to the relevant class
of equity or liability shall be applicable mutatis mutandis to the preference shares. For instance, plain
vanila redeemable preference shares shall be classified and presented under ‘liabilities’ as ‘borrowings’
or ‘subordinated liability’ and the disclosure requirements in this regard applicable to such borrowings
shall be applicable mutatis mutandis to redeemable preference shares.

4. Compound financial instruments such as convertible debentures, where split into equity and liability

components, as per the requirements of the relevant Indian Accounting Standards, shall be classified
and presented un- der the relevant heads in ‘‘Liabilities and Equity’.

5. Regulatory Deferral Account Balances shall be presented in the Balance Sheet in accordance with the

relevant Indian Accounting Standards.


-----

**_PART II – STATEMENT OF PROFIT AND LOSS_**

_Name of the Non-Banking Financial Company……………………._

_Statement of Profit and Loss for the period ended ………………………_

**Particulars** **Note No.** **Figures for the current**

**Revenue from operations**

(i) Interest Income

(ii) Dividend Income

(iii) Rental Income

(iv) Fees and commission Income

(v) Net gain on fair value changes

(vi) Net gain on derecognition of financial instruments under
amortised cost category

(vii) Sale of products(including Excise Duty)

(viii) Sale of services

(ix) Others (to be specified)

(I) **Total Revenue from operations**

(II) Other Income (to be specified)

(III) **Total Income (I+II)**

**Expenses**

(i) Finance Costs

(ii) Fees and commission expense

(iii) Net loss on fair value changes

(iv) Net loss on derecognition of financial instruments under
amortised cost category

(v) Impairment on financial instruments

(vi) Cost of materials consumed

(vii) Purchases of Stock-in-trade

(viii) Changes in Inventories of finished goods, stock-in-trade
and work-in- progress

(ix) Employee Benefits Expenses

(x) Depreciation, amortization and impairment

(xi) Others expenses (to be specified)

(IV ) **Total Expenses (IV)**

(V ) Profit / (loss) before exceptional items and tax (III-IV)

(VI ) Exceptional items

(VII ) Profit/(loss) before tax (V -VI )

(VIII) Tax Expense:

(1) Current Tax

(2) Deferred Tax


(Rupees in ...................... )

|Col1|Particulars|Note No.|Figures for the current reporting period|Figures for the previous reporting period|
|---|---|---|---|---|
||Revenue from operations||||
|(i)|Interest Income||||
|(ii)|Dividend Income||||
|(iii)|Rental Income||||
|(iv)|Fees and commission Income||||
|(v)|Net gain on fair value changes||||
|(vi)|Net gain on derecognition of financial instruments under amortised cost category||||
|(vii)|Sale of products(including Excise Duty)||||
|(viii)|Sale of services||||
|(ix)|Others (to be specified)||||
|(I)|Total Revenue from operations||||
||||||
|(II)|Other Income (to be specified)||||
|(III)|Total Income (I+II)||||
||||||
||Expenses||||
|(i)|Finance Costs||||
|(ii)|Fees and commission expense||||
|(iii)|Net loss on fair value changes||||
|(iv)|Net loss on derecognition of financial instruments under amortised cost category||||
|(v)|Impairment on financial instruments||||
|(vi)|Cost of materials consumed||||
|(vii)|Purchases of Stock-in-trade||||
|(viii)|Changes in Inventories of finished goods, stock-in-trade and work-in- progress||||
|(ix)|Employee Benefits Expenses||||
|(x)|Depreciation, amortization and impairment||||
|(xi)|Others expenses (to be specified)||||
|(IV )|Total Expenses (IV)||||
||||||
|(V )|Profit / (loss) before exceptional items and tax (III-IV)||||
|(VI )|Exceptional items||||
|(VII )|Profit/(loss) before tax (V -VI )||||


-----

|Col1|Particulars|Note No.|Figures for the current reporting period|Figures for the previous reporting period|
|---|---|---|---|---|
||Revenue from operations||||
|(IX)|Profit / (loss) for the period from continuing operations(VII-VIII)||||
|(X)|Profit/(loss) from discontinued operations||||
|(XI)|Tax Expense of discontinued operations||||
|(XII)|Profit/(loss) from discontinued operations(After tax) (X- XI)||||
|(XIII)|Profit/(loss) for the period (IX+XII)||||
||||||
|(XIV)|Other Comprehensive Income||||
||(A) (i) Items that will not be reclassified to profit or loss (specify items and amounts)||||
||(ii) Income tax relating to items that will not be reclassified to profit or loss||||
||Subtotal (A)||||
||(B) (i) Items that will be reclassified to profit or loss (specify items and amounts)||||
||(ii) Income tax relating to items that will be reclassified to profit or loss||||
||Subtotal (B)||||
||Other Comprehensive Income (A + B)||||
||||||
|(XV)|Total Comprehensive Income for the period (XIII+XIV) (Comprising Profit (Loss) and other Comprehensive Income for the period)||||
||||||
|(XVI)|Earnings per equity share (for continuing operations)||||
||Basic (Rs.)||||
||Diluted (Rs.)||||
||||||
|(XVII)|Earnings per equity share (for discontinued operations)||||
||Basic (Rs.)||||
||Diluted (Rs.)||||
||||||
|(XVIII)|Earnings per equity share (for continuing and discontinued operations)||||
||Basic (Rs.)||||
||Diluted (Rs.)||||


**See accompanying notes to the financial statements**


-----

**_Notes_**

**_GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS_**

**1.** The provisions of this Part shall apply to the income and expenditure account, in like manner as they apply to a
Statement of Profit and Loss.

**2.** The Statement of Profit and Loss shall include:

(A) Profit or loss for the period;

(B) Other Comprehensive Income for the period.

The sum of (A) and (B) above is ‘Total Comprehensive Income’.

**3.** **Interest Income**

**(Current Year)** **(Previous Year)**

**Particulars** On Financial On Financial Assets Interest On Financial On Financial Interest

Assets measured measured at Income on Assets Assets measured Income on
at fair value Amortised Cost Financial measured at at Amortised Cost Financial
through OCI Assets fair value Assets

classified at through OCI classified at
fair value fair value
through profit through profit
or loss or loss

Interest on Loans

Interest income from
investments

Interest on deposits with
Banks

Other interest Income

Total

**4.** **Net gain/ (loss) on fair value changes***

**Particulars** **(Current Year)** **(Previous Year)**

(A) Net gain/ (loss) on financial instruments at fair
value through profit or loss

(i) On trading portfolio

 - Investments

 - Derivatives

 - Others

(ii) On financial instruments designated at fair value
through profit or loss

(B) Others ( to be specified)

Total Net gain/(loss) on fair value changes (C)

Fair Value changes:

-Realised

-Unrealised

Total Net gain/(loss) on fair value changes(D) to tally
with (C)

*Fair value changes in this schedule are other than those arising on account of accrued interest income/expense.

|3. Interest Income|Col2|Col3|Col4|Col5|Col6|Col7|
|---|---|---|---|---|---|---|
|Particulars|(Current Year)|||(Previous Year)|||
||On Financial Assets measured at fair value through OCI|On Financial Assets measured at Amortised Cost|Interest Income on Financial Assets classified at fair value through profit or loss|On Financial Assets measured at fair value through OCI|On Financial Assets measured at Amortised Cost|Interest Income on Financial Assets classified at fair value through profit or loss|
|Interest on Loans|||||||
|Interest income from investments|||||||
|Interest on deposits with Banks|||||||
|Other interest Income|||||||
|Total|||||||

|4. Net gain/ (loss) on fair value changes*|Col2|Col3|
|---|---|---|
|Particulars|(Current Year)|(Previous Year)|
|(A) Net gain/ (loss) on financial instruments at fair value through profit or loss|||
|(i) On trading portfolio|||
|- Investments|||
|- Derivatives|||
|- Others|||
|(ii) On financial instruments designated at fair value through profit or loss|||
|(B) Others ( to be specified)|||
|Total Net gain/(loss) on fair value changes (C)|||
|Fair Value changes: -Realised -Unrealised|||
|Total Net gain/(loss) on fair value changes(D) to tally with (C)|||


-----

**5.** **Other Income (to be specified)**

**Particulars** **(Current Year)** **(Previous Year)**

Net gain/(loss) on ineffective portion of hedges

Net gain/(loss) on derecognition of property, plant and equipment

Net gain or loss on foreign currency transaction and translation (other than

considered as finance cost)( to be specified)

Others ( to be specified)*

Total

 - Any item under the subhead ‘Others’ which exceeds one per cent of the total income to be presented separately.

**6.** **Finance Costs**

**Particulars** **(Current Year)** **(Previous Year)**

On Financial On Financial liabilities On Financial On Financial

liabilities measured at Amortised liabilities measured liabilities measured

measured at fair Cost at fair value through at Amortised Cost

value through profit or loss

profit or loss

Interest on deposits

Interest on borrowings

Interest on debt securities

Interest on subordinated liabilities

Other interest expense

Total

**7.** **Employee Benefits Expenses**

**Particulars** **(Current Year)** **(Previous Year)**

Salaries and wages

Contribution to provident and other funds

Share Based Payments to employees

Staff welfare expenses

Others (to be specified)

Total

**8.** **Impairment on financial instruments**

|Particulars|(Current Year)|(Previous Year)|
|---|---|---|
|Net gain/(loss) on ineffective portion of hedges|||
|Net gain/(loss) on derecognition of property, plant and equipment|||
|Net gain or loss on foreign currency transaction and translation (other than considered as finance cost)( to be specified)|||
|Others ( to be specified)*|||
|Total|||

|Particulars|(Current Year)|Col3|(Previous Year)|Col5|
|---|---|---|---|---|
||On Financial liabilities measured at fair value through profit or loss|On Financial liabilities measured at Amortised Cost|On Financial liabilities measured at fair value through profit or loss|On Financial liabilities measured at Amortised Cost|
|Interest on deposits|||||
|Interest on borrowings|||||
|Interest on debt securities|||||
|Interest on subordinated liabilities|||||
|Other interest expense|||||
|Total|||||

|Particulars|(Current Year)|(Previous Year)|
|---|---|---|
|Salaries and wages|||
|Contribution to provident and other funds|||
|Share Based Payments to employees|||
|Staff welfare expenses|||
|Others (to be specified)|||
|Total|||

|Particulars|(Current Year)|Col3|(Previous Year)|Col5|
|---|---|---|---|---|
||On Financial instruments measured at fair value through OCI|On Financial instruments measured at Amortised Cost|On Financial instruments measured at fair value through OCI|On Financial instruments measured at Amortised Cost|
|Loans|||||
|Investments|||||
|Others (to be specified)|||||
|Total|||||


-----

**9.** **Other expenses (to be specified)**

**Particulars** **(Current Year)** **(Previous Year)**

Rent, taxes and energy costs

Repairs and maintenance

Communication Costs

Printing and stationery

Advertisement and publicity

Director’s fees, allowances and expenses

Auditor’s fees and expenses

Legal and Professional charges

Insurance

Other expenditure

Total

- Any item under the subhead ‘Others expenditure’ which exceeds one per cent of the total income to be presented
separately.

**10. Other Comprehensive Income shall be classified into-**

(A) Items that will not be reclassified to profit or loss

i. Changes in revaluation surplus;

ii. Remeasurements of the defined benefit plans;

iii. Equity Instruments through Other Comprehensive Income;

iv. Fair value changes relating to own credit risk of financial liabilities designated at fair value through
profit or loss;

v. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent not to be classified into profit or loss; and

vi. Others (specify nature).

(B) Items that will be reclassified to profit or loss;

i. Exchange differences in translating the financial statements of a foreign operation;

ii. Debt Instruments through Other Comprehensive Income;

iii. The effective portion of gains and loss on hedging instruments in a cash flow hedge;

iv. Share of Other Comprehensive Income in Associates and Joint Ventures, to the extent to be classified
into profit or loss; and

v. Others (specify nature).

**11.** **Additional Information: An NBFC shall disclose by way of notes, additional information regarding aggregate**

expenditure and income on the following items:

i. Depreciation, amortisation and impairment

ii. payments to the auditor as (a) auditor, (b) for taxation matters, (c) for company law matters, (d) for other

services, (e) for reimbursement of expenses;

iii. in case of NBFCs covered under section 135, amount of expenditure incurred on corporate social responsi
bility activities; and

iv. details of items of exceptional nature

1[v. undisclosed income

|9. Other expenses (to be specified)|Col2|Col3|
|---|---|---|
|Particulars|(Current Year)|(Previous Year)|
|Rent, taxes and energy costs|||
|Repairs and maintenance|||
|Communication Costs|||
|Printing and stationery|||
|Advertisement and publicity|||
|Director’s fees, allowances and expenses|||
|Auditor’s fees and expenses|||
|Legal and Professional charges|||
|Insurance|||
|Other expenditure|||
|Total|||


-----

The Company shall give details of any transactions not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such
as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for
disclosure under any scheme. Also, state whether the previously unrecorded income and related assets have been
properly recorded in the books of account during the year.

vi. Corporate Social Responsibility (CSR)

Where the company (NBFC) covered under section 135 of the Companies Act, the following shall be disclosed with
regard to CSR activated:
(a) amount required to be spent by the company during the year,

(b) amount of expenditure incurred,

(c) shortfall at the end of the year,

(d) total of previous years shortfall,

(e) reason for shortfall,

(f) nature of CSR activities,

(g) details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR
expenditure as per relevant Accounting Standard,

(h) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the
movements in the provision during the year shall be shown separately.

vii details of Crypto Currency or Virtual Currency

Where the Company has traded or invested in Crypto currency or virtual Currency during the financial year, the following
shall be disclosed:
(a) profit or loss on transactions involving Crypto currency or Virtual Currency.

(b) amount of currency held as at the reporting date.

(c) deposits or advances from any person for the purpose of trading or investing in Crypto Currency or virtual

currency.]

**PART III-** **_GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED_**

**_FINANCIAL STATEMENTS_**

**(1)** Where a Non-Banking Financial Company (NBFC) is required to prepare Consolidated Financial

Statements, i.e., consolidated balance sheet, consolidated statement of changes in equity and
consolidated statement of profit and loss, the NBFC shall mutatis mutandis follow the requirements of
this Schedule as applicable to an NBFC in the preparation of balance sheet, statement of changes in
equity and statement of profit and loss. However, where the consolidated financial statements contains
elements pertaining to NBFCs and other than NBFCs, mixed basis of presentation may be followed for
consolidated financial statements where both kinds of opera- tions are significant. In addition, the
consolidated financial statements shall disclose the information as per the requirements specified in the
applicable Indian Accounting Standards notified under the Companies (Indian Ac- counting Standards)
Rules 2015, including the following, namely:
(i) Profit or loss attributable to ‘non-controlling interest’ and to ‘owners of the parent’ in the statement

of profit and loss shall be presented as allocation for the period. Further, ‘total comprehensive
income’ for the period attributable to ‘non-controlling interest’ and to ‘owners of the parent’ shall
be presented in the statement of profit and loss as allocation for the period. The aforesaid
disclosures for ‘total comprehensive income’ shall also be made in the statement of changes in
equity. In addition to the disclosure requirements in the Indian Accounting Standards, the aforesaid
disclosures shall also be made in respect of ‘other comprehensive income’.

(ii) ‘Non-controlling interests’ in the Balance Sheet and in the Statement of Changes in Equity, within

equity, shall be presented separately from the equity of the ‘owners of the parent’.

(iii) Investments accounted for using the equity method.


-----

**(2)** In Consolidated Financial Statements, the following shall be disclosed by way of additional information:

|(2) In Co|onsolidated Financial Stateme|Col3|ents, the following shall be discl|Col5|losed by way of additional i|Col7|information:|Col9|
|---|---|---|---|---|---|---|---|---|
|Name of the entity in the Group|Net Assets, i.e., total assets minus total liabilities||Share in profit or loss||Share in other comprehensive income||Share in total comprehensive income||
||As % of consolidated net assets|Amount|||||||
||||As % of consolidated profit or loss|Amount|As % of consolidated other comprehensive income|Amount|As % of total comprehensive income|Amount|
|ent Subsidiaries Indian 1. 2. 3. . . Foreign 1. 2. 3. . . Non- controlling Interests in all subsidiaries Associates (Investment as per the equity method) Indian 1. 2. 3. . . Foreign 1. 2. 3. . . Joint|||||||||


-----

|Ventures(as per the equity method) Indian 1. 2. 3. . . Foreign 1. 2. 3. . .|Col2|Col3|Col4|Col5|Col6|Col7|Col8|Col9|
|---|---|---|---|---|---|---|---|---|
|Total|||||||||


**(3)** All subsidiaries, associates and joint ventures (whether Indian or foreign) will be covered under consolidated

financial statements.

**(4)** An entity shall disclose the list of subsidiaries or associates or joint ventures which have not been

consolidated in the consolidated financial statements along with the reasons of not consolidating.]

357


-----

SCHEDULE IV

[See section 149(8)]

**CODE FOR INDEPENDENT DIRECTORS**

The Code is a guide to professional conduct for independent directors. Adherence to these standards by

independent directors and fulfilment of their responsibilities in a professional and faithful manner will
promote confidence of the investment community, particularly minority shareholders, regulators and
companies in the institution of independent directors.

**I. Guidelines of professional conduct:**

An independent director shall:

(1) uphold ethical standards of integrity and probity;
(2) act objectively and constructively while exercising his duties;
(3) exercise his responsibilities in a bona fide manner in the interest of the company;
(4) devote sufficient time and attention to his professional obligations for informed and balanced

decision making;

(5) not allow any extraneous considerations that will vitiate his exercise of objective independent

judgment in the paramount interest of the company as a whole, while concurring in or dissenting
from the collective judgment of the Board in its decision making;

(6) not abuse his position to the detriment of the company or its shareholders or for the purpose of

gaining direct or indirect personal advantage or advantage for any associated person;

(7) refrain from any action that would lead to loss of his independence;
(8) where circumstances arise which make an independent director lose his independence, the

independent director must immediately inform the Board accordingly;

(9) assist the company in implementing the best corporate governance practices.

**II. Role and functions:**

The independent directors shall:

(1) help in bringing an independent judgment to bear on the Board’s deliberations especially on issues

of strategy, performance, risk management, resources, key appointments and standards of conduct;

(2) bring an objective view in the evaluation of the performance of board and management;
(3) scrutinise the performance of management in meeting agreed goals and objectives and monitor the

reporting of performance;

(4) satisfy themselves on the integrity of financial information and that financial controls and the

systems of risk management are robust and defensible;

(5) safeguard the interests of all stakeholders, particularly the minority shareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of executive directors, key managerial personnel and

senior management and have a prime role in appointing and where necessary recommend removal
of executive directors, key managerial personnel and senior management;

(8) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between

management and shareholder’s interest.

**III. Duties :**

The independent directors shall—

(1) undertake appropriate induction and regularly update and refresh their skills, knowledge and

familiarity with the company;

358


-----

(2) seek appropriate clarification or amplification of information and, where necessary, take and follow

appropriate professional advice and opinion of outside experts at the expense of the company;

(3) strive to attend all meetings of the Board of Directors and of the Board committees of which he is

a member;

(4) participate constructively and actively in the committees of the Board in which they are

chairpersons or members;

(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed action, ensure that these

are addressed by the Board and, to the extent that they are not resolved, insist that their concerns
are recorded in the minutes of the Board meeting;

(7) keep themselves well informed about the company and the external environment in which it

operates;

(8) not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;
(9) pay sufficient attention and ensure that adequate deliberations are held before approving related

party transactions and assure themselves that the same are in the interest of the company;

(10) ascertain and ensure that the company has an adequate and functional vigil mechanism and to

ensure that the interests of a person who uses such mechanism are not prejudicially affected on
account of such use;

(11) report concerns about unethical behavior, actual or suspected fraud or violation of the company’s

code of conduct or ethics policy;

(12) [1][act within their authority], assist in protecting the legitimate interests of the company,

shareholders and its employees;

(13) not disclose confidential information, including commercial secrets, technologies, advertising and

sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly
approved by the Board or required by law.

**IV. Manner of appointment:**

(1) Appointment process of independent directors shall be independent of the company management;

while selecting independent directors the Board shall ensure that there is appropriate balance of
skills, experience and knowledge in the Board so as to enable the Board to discharge its functions
and duties effectively.

(2) The appointment of independent director(s) of the company shall be approved at the meeting of the

shareholders.

(3) The explanatory statement attached to the notice of the meeting for approving the appointment of

independent director shall include a statement that in the opinion of the Board, the independent
director proposed to be appointed fulfils the conditions specified in the Act and the rules made
thereunder and that the proposed director is independent of the management.

(4) The appointment of independent directors shall be formalised through a letter of appointment,

which shall set out :
(a) the term of appointment;

(b)the expectation of the Board from the appointed director; the Board-level committee(s) in which
the director is expected to serve and its tasks;

(c) the fiduciary duties that come with such an appointment along with accompanying liabilities;

(d)provision for Directors and Officers (D and O) insurance, if any;

(e) the Code of Business Ethics that the company expects its directors and employees to follow;

(f) the list of actions that a director should not do while functioning as such in the company; and

1. Subs. by Notification No. S.O. 2113(E), dated 5[th] July 2017, for “ acting within his authority” .

359


-----

(g)the remuneration, mentioning periodic fees, reimbursement of expenses for participation in the
Boards and other meetings and profit related commission, if any.

(5) The terms and conditions of appointment of independent directors shall be open for inspection at

the registered office of the company by any member during normal business hours.

(6) The terms and conditions of appointment of independent directors shall also be posted on the

company’s website.

**V. Re-appointment:**

The re-appointment of independent director shall be on the basis of report of performance evaluation.

**VI. Resignation or removal:**

(1) The resignation or removal of an independent director shall be in the same manner as is provided

in sections 168 and 169 of the Act.

(2) An independent director who resigns or is removed from the Board of the company shall be

replaced by a new independent director within [1][three months] from the date of such resignation or
removal, as the case may be.

(3) Where the company fulfils the requirement of independent directors in its Board even without

filling the vacancy created by such resignation or removal, as the case may be, the requirement of
replacement by a new independent director shall not apply.

**VII. Separate meetings:**

(1) The independent directors of the company shall hold at least one meeting [2][in a financial year],

without the attendance of non-independent directors and members of management;

(2) All the independent directors of the company shall strive to be present at such meeting;
(3) The meeting shall:

(a) review the performance of non-independent directors and the Board as a whole;
(b) review the performance of the Chairperson of the company, taking into account the views of

executive directors and non-executive directors;

(c) assess the quality, quantity and timeliness of flow of information between the company

management and the Board that is necessary for the Board to effectively and reasonably
perform their duties.

**VIII. Evaluation mechanism:**

(1) The performance evaluation of independent directors shall be done by the entire Board of Directors,

excluding the director being evaluated.

(2) On the basis of the report of performance evaluation, it shall be determined whether to extend or

continue the term of appointment of the independent director.

3[Note: The Provisions of sub-paragraph (2) and (7) of paragraph II, paragraph IV, paragraph V, clauses

(a) and (b) of sub-paragraph (3) of paragraph VI and paragraph VIII shall not apply in the case of a
Government company as defined under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013),
if the requirements in respect of matters specified in these paragraph are specified by the concerned
Ministries or Departments of the Central Government or as the case may be, the State Governments and
such requirements are complied with by the Government companies.]

1. Subs. by Notification No. S.O. 2113(E), dated 5th July 2017, for “a period of not more than one hundred and eight days”

(w.e.f. 5-7-2017).

2. Subs. by ibid., for “in a year” (w.e.f. 5-7-2017).
3. Ins. by ibid.(w.e.f. 5-7-2017).

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SCHEDULE V

(See sections 196 and 197)

**PART I**

CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR

WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE CENTRAL

GOVERNMENT APPOINTMENTS

No person shall be eligible for appointment as a managing or whole-time director or a manager

(hereinafter referred to as managerial person) of a company unless he satisfies the following conditions,
namely:—

(a) he had not been sentenced to imprisonment for any period, or to a fine exceeding one thousand

rupees, for the conviction of an offence under any of the following Acts, namely:—

(i) the Indian Stamp Act, 1899 (2 of 1899);

(ii) the Central Excise Act, 1944 (1 of 1944);

(iii) the Industries (Development and Regulation) Act, 1951 (65 of 1951);

(iv) the Prevention of Food Adulteration Act, 1954 (37 of 1954);

(v) the Essential Commodities Act, 1955 (10 of 1955);

1[(vi) the Companies Act, 2013 (18 of 2013) or any previous company law;]

(vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(viii) the Wealth-tax Act, 1957 (27 of 1957);

(ix) the Income-tax Act, 1961 (43 of 1961);

(x) the Customs Act, 1962 (52 of 1962);

(xi) the Competition Act, 2002 (12 of 2003);

(xii) the Foreign Exchange Management Act, 1999 (42 of 1999);

(xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);

(xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);

(xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003);

2[(xvii) the Insolvency and Bankruptcy Code, 2016 (31 of 2016);

(xviii) the Goods and Services Tax Act, 2017 (12 of 2017);

(xix) the Fugitive Economic Offenders Act, 2018 (17 of 2018).]

(b) he had not been detained for any period under the Conservation of Foreign Exchange and

Prevention of Smuggling Activities Act, 1974 (52 of 1974):

Provided that where the Central Government has given its approval to the appointment of a person

convicted or detained under sub-paragraph (a) or sub-paragraph (b), as the case may be, no further approval
of the Central Government shall be necessary for the subsequent appointment of that person if he had not
been so convicted or detained subsequent to such approval.

(c) he has completed the age of twenty-one years and has not attained the age of seventy years:

1. Subs. by Notification No. G.S.R. 2922(E), dated 12th September, 2016, for sub-paragraph (vi).
2. Ins. by Notification No. S.O. 4822(E), dated 12th September, 2018 (w.e.f. 12-9-2018).

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Provided that where he has attained the age of seventy years; and where his appointment is approved

by a special resolution passed by the company in general meeting, no further approval of the Central
Government shall be necessary for such appointment;

(d) where he is a managerial person in more than one company, he draws remuneration from one

or more companies subject to the ceiling provided in section V of Part II;

(e) he is resident of India.

_Explanation I.—For the purpose of this Schedule, resident in India includes a person who has been_

staying in India for a continuous period of not less than twelve months immediately preceding the date
of his appointment as a managerial person and who has come to stay in India,—

(i) for taking up employment in India; or
(ii) for carrying on a business or vacation in India.

_Explanation II.—This condition shall not apply to the companies in Special Economic Zones as_

notified by Department of Commerce from time to time:

Provided that a person, being a non-resident in India shall enter India only after obtaining a proper

Employment Visa from the concerned Indian mission abroad. For this purpose, such person shall be
required to furnish, along with the visa application form, profile of the company, the principal employer
and terms and conditions of such person’s appointment.

**PART II**

REMUNERATION

**Section I.— Remuneration payable by companies having profits:**

Subject to the provisions of section 197, a company having profits in a financial year may pay

remuneration to a managerial person or persons [1][or other director or directors] not exceeding the limits
specified in such section.

**2[Section II.— Remuneration payable by companies having no profit or inadequate profit 3***:**

Where in any financial year during the currency of tenure of a managerial person [1][or other director], a

company has no profits or its profits are inadequate, it may, [3]***, pay remuneration to the managerial person
1[or other director] not exceeding the limits under (A) and (B) given below:—

4[(A):

(1) (2) (3)

**SI. No.** **Where the effective capital (in** **Limit of yearly remuneration payable** **Limit** **of** **yearly**
**rupees) is** **shall not exceed (in Rupees) in case of a** **remuneration** **payable**

**managerial person** **shall not exceed (in rupees)**

**in case of other director**

(i) Negative or less than 5 60 lakhs 12 Lakhs
crores.

(ii) 5 crores and above but less than 100 84 lakhs 17 Lakhs
crores.

(iii) 100 crores and above but less than 120 lakhs 24 Lakhs
250 crores.

(iv) 250 crores and above. 120 lakhs plus 0.01% of the effective 24 Lakhs plus 0.01% of the
capital in excess of Rs. 250 crores: effective capital in excess of

Rs. 250 crores:]

5[Provided that the remuneration in excess of above limits may be paid] if the resolution passed

by the shareholders is a special resolution.

1. Ins. by Notification No. S.O. 1256(E), dated 18th March, 2021 (w.e.f. 18-3-2021).
2. Subs. by Notification No. S.O. 2922(E), dated 12th September 2016, for Section II.
3. The words “without Central Government approval” omitted by Notification No. S.O. 4822(E), dated 12th September, 2018

(w.e.f. 12-9-2018).

4. Subs. by Notification No. S.O. 1256(E), for Table (A) dated 18th March, 2021 (w.e.f. 18-3-2021).
5. Subs. by Notification No. S.O. 4822(E), for “Provided that the above limits shall be doubled” (w.e.f. 12-9-2018).

362

|4[(A):|Col2|Col3|Col4|
|---|---|---|---|
||(1)|(2)|(3)|
|SI. No.|Where the effective capital (in rupees) is|Limit of yearly remuneration payable shall not exceed (in Rupees) in case of a managerial person|Limit of yearly remuneration payable shall not exceed (in rupees) in case of other director|
|(i)|Negative or less than 5 crores.|60 lakhs|12 Lakhs|
|(ii)|5 crores and above but less than 100 crores.|84 lakhs|17 Lakhs|
|(iii)|100 crores and above but less than 250 crores.|120 lakhs|24 Lakhs|
|(iv)|250 crores and above.|120 lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores:|24 Lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores:]|


-----

_Explanation.— It is hereby clarified that for a period less than one year, the limits shall be pro-rated._

(B) In case of a managerial person who is functioning in a professional capacity, [1][remuneration as

per item (A) may be paid], if such managerial person is not having any interest in the capital of the
company or its holding company or any of its subsidiaries directly or indirectly or through any other
statutory structures and not having any direct or indirect interest or related to the directors or promoters
of the company or its holding company or any of its subsidiaries at any time during the last two years
before or on or after the date of appointment and possesses graduate level qualification with expertise and
specialised knowledge in the field in which the company operates:

Provided that any employee of a company holding shares of the company not exceeding 0.5% of its paid up share

capital under any scheme formulated for allotment of shares to such employees including Employees Stock Option
Plan or by way of qualification shall be deemed to be a person not having any interest in the capital of the company:

Provided further that the limits specified under items (A) and (B) of this section shall apply, if
(i) payment of remuneration is approved by a resolution passed by the Board and, in the case of a
company covered under sub-section (1) of section 178 also by the Nomination and
Remuneration Committee;

(ii) 2[the company has not committed any default in payment of dues to any bank or public financial
institution or non-convertible debenture holders or any other secured creditor, and in case of default,
the prior approval of the bank or public financial institution concerned or the non-convertible
debenture holders or other secured creditor, as the case may be, shall be obtained by the company
before obtaining the approval in the general meeting;]

(iii) an ordinary resolution or a special resolution, as the case may be, has been passed for payment
of remuneration as per [3]*** item (A) or a special resolution has been passed for payment of
remuneration as per item (B), at the general meeting of the company for a period not exceeding
three years.

(iv) a statement along with a notice calling the general meeting referred to in clause (iii) is given to
the shareholders containing the following information, namely:
I. General information:

(1) Nature of industry

(2) Date or expected date of commencement of commercial production

(3) In case of new companies, expected date of commencement of activities as per project approved

by financial institutions appearing in the prospectus

(4) Financial performance based on given indicators

(5) Foreign investments or collaborations, if any.

II. Information about the appointee:

(1) Background details

(2) Past remuneration

(3) Recognition or awards

(4) Job profile and his suitability

(5) Remuneration proposed

(6) Comparative remuneration profile with respect to industry, size of the company, profile of the
position and person (in case of expatriates the relevant details would be with respect to the country of
his origin)

(7) Pecuniary relationship directly or indirectly with the company, or relationship with the managerial
personnel, if any.

1. Subs. by Notification No. S.O. 4822(E), dated 12th September, 2018, for “no approval of Central Government is required”

(w.e.f. 12-9-2018).

2. Subs. by ibid., for clause (ii) (w.e.f. 12-9-2018).
3. The words “the limits laid down in” omitted by ibid., (w.e..f 12-9-2018).

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III. Other information:

(1) Reasons of loss or inadequate profits

(2) Steps taken or proposed to be taken for improvement

(3) Expected increase in productivity and profits in measurable terms

IV. Disclosures:

The following disclosures shall be mentioned in the Board of Director’s report under the heading “Corporate
Governance”, if any, attached to the financial statement:

(i) all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all
the directors;

(ii) details of fixed component and performance linked incentives along with the performance criteria;

(iii) service contracts, notice period, severance fees; and

(iv) stock option details, if any, and whether the same has been issued at a discount as well as the period over

which accrued and over which exercisable.

**_Explanation: For the purposes of Section II of this part, “Statutory Structure” means any entity which is entitled_**
to hold shares in any company formed under any statute. ]

**Section III.— Remuneration payable by companies having no profit or inadequate** [1]***profit in
**certain special circumstances:**

In the following circumstances a company may, [1]***, pay remuneration to a managerial person [2][or

other director] in excess of the amounts provided in Section II above:—

(a) where the remuneration in excess of the limits specified in Section I or Section II is paid by any

other company and that other company is either a foreign company or has got the approval of its
shareholders in general meeting to make such payment, and treats this amount as managerial
remuneration for the purpose of section 197 and the total managerial remuneration payable by such
other company to its managerial persons including such amount or amounts is within permissible
limits under section 197.

3[(b) where the company—

(i) is a newly incorporated company, for a period of seven years from the date of its

incorporation, or

(ii) is a sick company, for whom a scheme of revival or rehabilitation has been ordered by the

Board for Industrial and Financial Reconstruction for a period of five years from the date of
sanction of scheme of revival, or

(iii) is a company in relation to which a resolution plan has been approved by the National

Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) for a period
of five years from the date of such approval,

it may pay [4][any remuneration to its managerial persons [2][or other directors]].]

(c) where remuneration of a managerial person [2][or other director] exceeds the limits in Section II but

the remuneration has been fixed by the Board for Industrial and Financial Reconstruction or the
National Company Law Tribunal:

Provided that the limits under this Section shall be applicable subject to meeting all the conditions

specified under Section II and the following additional conditions:—

1. The words “without Central Government approval” omitted by Notification No. S.O. 4822(E), dated 12th September, 2018

(w.e.f. 12-9-2018).

2. Ins. by Notification No. S.O. 1256(E), dated 18[th] March, 2021 (w.e.f. 18-3-2021).
3. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause (b) (w.e.f. 15-11-2016).
4. Subs. by Notification No. S.O. 4822(E), dated 12th September, 2018, for “remuneration up to two times the amount permissible

under Section II” (w.e.f. 12-9-2018).

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(i) except as provided in para (a) of this Section, the managerial person is not receiving

remuneration from any other company;

(ii) the auditor or Company Secretary of the company or where the company has not appointed a

Secretary, a Secretary in whole-time practice, certifies that all secured creditors and term
lenders have stated in writing that they have no objection for the appointment of the managerial
person [1][or other director] as well as the quantum of remuneration and such certificate is filed
along with the return as prescribed under sub-section (4) of section 196.

(iii) the auditor or Company Secretary or where the company has not appointed a secretary, a

secretary in whole-time practice certifies that there is no default on payments to any creditors,
and all dues to deposit holders are being settled on time.

**2*** ***** ***** ***** *****

1[Explanation.-For the purposes of Section I, Section II and Section III, the term “or other director”

shall mean a non-executive director or an independent director.]

**Section IV.— Perquisites not included in managerial remuneration:**

1. A managerial person shall be eligible for the following perquisites which shall not be included in the

computation of the ceiling on remuneration specified in Section II and Section III:—

(a) contribution to provident fund, superannuation fund or annuity fund to the extent these either singly

or put together are not taxable under the Income-tax Act, 1961(43 of 1961);

(b) gratuity payable at a rate not exceeding half a month’s salary for each completed year of service;

and

(c) encashment of leave at the end of the tenure.
2. In addition to the perquisites specified in paragraph 1 of this section, an expatriate managerial person

(including a non-resident Indian) shall be eligible to the following perquisites which shall not be included
in the computation of the ceiling on remuneration specified in Section II or Section III—

(a) Children’s education allowance: In case of children studying in or outside India, an allowance

limited to a maximum of Rs. 12,000 per month per child or actual expenses incurred, whichever is less.
Such allowance is admissible up to a maximum of two children.

(b) Holiday passage for children studying outside India or family staying abroad: Return holiday

passage once in a year by economy class or once in two years by first class to children and to the
members of the family from the place of their study or stay abroad to India if they are not residing in
India, with the managerial person.

(c) Leave travel concession: Return passage for self and family in accordance with the rules specified

by the company where it is proposed that the leave be spent in home country instead of anywhere in
India.

_Explanation I.— For the purposes of Section II of this Part, “effective capital” means the aggregate_

of the paid-up share capital (excluding share application money or advances against shares); amount, if
any, for the time being standing to the credit of share premium account; reserves and surplus (excluding
revaluation reserve); long-term loans and deposits repayable after one year (excluding working capital
loans, overdrafts, interest due on loans unless funded, bank guarantee, etc., and other short-term
arrangements) as reduced by the aggregate of any investments (except in case of investment by an
investment company whose principal business is acquisition of shares, stock, debentures or other
securities),accumulated losses and preliminary expenses not written off.

_Explanation II.— (a) Where the appointment of the managerial person is made in the year in which_

company has been incorporated, the effective capital shall be calculated as on the date of such
appointment;

(b) In any other case the effective capital shall be calculated as on the last date of the financial year

preceding the financial year in which the appointment of the managerial person is made.

1. Ins. by Notification No. S.O. 1256(E), dated 18[th] March, 2021 (w.e.f. 18-3-2021).
2. Clause (d) omitted by Notification No. S.O. 4822(E), dated 12th September, 2018 (w.e.f. 12-9-2018).

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_Explanation III.— For the purposes of this Schedule, “family” means the spouse, dependent children_

and dependent parents of the managerial person.

_Explanation IV.— The Nomination and Remuneration Committee while approving the remuneration_

under Section II or Section III, shall—

(a) take into account, financial position of the company, trend in the industry, appointee’s

qualification, experience, past performance, past remuneration, etc.;

(b) be in a position to bring about objectivity in determining the remuneration package while

striking a balance between the interest of the company and the shareholders.

_Explanation V.— For the purposes of this Schedule, “negative effective capital” means the effective_

capital which is calculated in accordance with the provisions contained in Explanation I of this Part is
less than zero.

_Explanation VI.— For the purposes of this Schedule:—_

1*     -     -     -     
(B) “Remuneration” means remuneration as defined in clause (78) of section 2 and includes

reimbursement of any direct taxes to the managerial person.

**Section V. —Remuneration payable to a managerial person in two companies:**

Subject to the provisions of sections I to IV, a managerial person shall draw remuneration from one or

both companies, provided that the total remuneration drawn from the companies does not exceed the higher
maximum limit admissible from any one of the companies of which he is a managerial person.

**PART III**

**Provisions applicable to Parts I and II of this Schedule**

1. The appointment and remuneration referred to in Part I and Part II of this Schedule shall be subject

to approval by a resolution of the shareholders in general meeting.

2. The auditor or the Secretary of the company or where the company is not required to appointed a

Secretary, a Secretary in whole-time practice shall certify that the requirement of this Schedule have been
complied with and such certificate shall be incorporated in the return filed with the Registrar under subsection (4) of section 196.

**PART IV**

The Central Government may, by notification, exempt any class or classes of companies from any of

the requirements contained in this Schedule.

1. Clause (A) omitted by Notification No S.O. 4822(E), dated 12th September, 2018 (w.e.f. 12-9-2018).

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SCHEDULE VI

(See sections 55 and 186)

The term “infrastructural projects” or “infrastructural facilities” includes the following projects

or activities:—

(1) Transportation (including inter modal transportation), includes the following:—

(a) roads, national highways, state highways, major district roads, other district roads

and village roads, including toll roads, bridges, highways, road transport providers and
other road-related services;

(b) rail system, rail transport providers, metro rail roads and other railway related

services;

(c) ports (including minor ports and harbours), inland waterways, coastal shipping

including shipping lines and other port related services;

(d) aviation, including airports, heliports, airlines and other airport related services;

(e) logistics services.

(2) Agriculture, including the following, namely:—

(a) infrastructure related to storage facilities;

(b) construction relating to projects involving agro-processing and supply of inputs to

agriculture;

(c) construction for preservation and storage of processed agro-products, perishable

goods such as fruits, vegetables and flowers including testing facilities for quality.

(3) Water management, including the following, namely:—

(a) water supply or distribution;

(b) irrigation;

(c) water treatment.

(4) Telecommunication, including the following, namely:—

(a) basic or cellular, including radio paging;

(b) domestic satellite service (i.e., satellite owned and operated by an Indian company

for providing telecommunication service);

(c) network of trunking, broadband network and internet services.

(5) Industrial, commercial and social development and maintenance, including the

following, namely:—

(a) real estate development, including an industrial park or special economic zone;

(b) tourism, including hotels, convention centres and entertainment centres;

(c) public markets and buildings, trade fair, convention, exhibition, cultural centres,

sports and recreation infrastructure, public gardens and parks;

(d) construction of educational institutions and hospitals;

(e) other urban development, including solid waste management systems, sanitation

and sewerage systems.

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(6) Power, including the following:—

(a) generation of power through thermal, hydro, nuclear, fossil fuel, wind and other

renewable sources;

(b) transmission, distribution or trading of power by laying a network of new

transmission or distribution lines.
(7) Petroleum and natural gas, including the following:—

(a) exploration and production;
(b) import terminals;
(c) liquefaction and re-gasification;
(d) storage terminals;
(e) transmission networks and distribution networks including city gas infrastructure.

(8) Housing, including the following:—

(a) urban and rural housing including public / mass housing, slum rehabilitation, etc;
(b) other allied activities such as drainage, lighting, laying of roads, sanitation and

facilities.
(9) Other miscellaneous facilities/services, including the following:—

(a) mining and related activities;
(b) technology related infrastructure;
(c) manufacturing of components and materials or any other utilities or facilities

required by the infrastructure sector like energy saving devices and metering devices;

(d) environment related infrastructure;
(e) disaster management services;
(f) preservation of monuments and icons;
(g) emergency services (including medical, police, fire and rescue).

(10) such other facility service as may be prescribed.

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SCHEDULE VII
(See section 135)

Activities which may be included by companies in their Corporate Social Responsibility Policies

Activities relating to:—

1[(i) eradicating hunger, poverty and malnutrition, 2[promoting health care including preventive

health] and sanitation [3][Including contribution to the Swatch Bharat Kosh set-up by the Central
Government for the promotion of sanitation] and making available safe drinking water;

(ii) promoting education, including special education and employment enhancing vocation skills

especially among children, women, elderly, and the differently abled and livelihood enhancement
projects;

(ii) promoting gender equality, empowering women, setting up homes and hostels for women and

orphans; setting up old age homes, day care centres and such other facilities for senior citizens and
measures for reducing inequalities faced by socially and economically backward groups;

(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal

welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water
4[including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation
of river Ganga];

(v) protection of national heritage, art and culture including restoration of buildings and sites of

historical importance and works of art; setting up public libraries; promotion and development of
traditional arts and handicrafts;

(vi) measures for the benefit of armed forces veterans, war widows and their dependents;
(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic

sports;

(viii) contribution to the Prime Minister's National Relief Fund [5][or Prime Minister’s Citizen

Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by
the Central Government for socio-economic development and relief and welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities and women;

6[(ix)(a) Contribution to incubators or research and development projects in the field of science,

technology, engineering and medicine, funded by the Central Government or State Government or
Public Sector Undertaking or any agency of the Central Government or State Government; and

(b) Contributions to public funded Universities; Indian Institute of Technology (IITs); National

Laboratories and autonomous bodies established under Department of Atomic Energy (DAE);
Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of
Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy
(AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Defense
Research and Development Organisation (DRDO); Indian Council of Agricultural Research (ICAR);
Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR),
engaged in conducting research in science, technology, engineering and medicine aimed at promoting
Sustainable Development Goals (SDGs)]

(x) rural development projects.]

7[(xi) slum are development.

1. Subs. by Notification No. G.S.R. 130(E), dated 27th February 2014, for item (i) to (x) (w.e.f. 1-4-2014).
2. Subs. by Notification No. G.S.R. 261(E), dated 31st March 2014 for “promoting preventive health care” (w.e.f. 31-3
2014).

3. Ins. by Notification No. G.S.R. 741(E), dated by 24th October, 2014 (w.e.f. 24-10-2014).
4. Ins. by ibid. (w.e.f. 24-10-2014).
5. Ins. by Notification No. G.S.R. 313(E), dated 26th May, 2020 (w.e.f. 28-03-2020).
6. Subs. by Notification No. G.S.R. 525(E), dated 24[th] August, 2020 (w.e.f. 24-08-2020).
7. Ins. by Notification No. G.S.R. 568(E), dated by 6th August 2016.

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_Explanation.— For the purposes of this item, the term ‘slum area’ shall mean any area declared as_

such by the Central Government or any State Government or any other competent authority under any
law for the time being in force.]

1[(xii) disaster management, including relief, rehabilitation and reconstruction activities.]

1. Ins. by Notification No. G.S.R. 390(E), dated 30th May, 2019 (w.e.f. 30-5-2019).

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