UNIT 2 - COMPANIES LAW 2013 and RDDBFI

UNIT 2 - COMPANIES LAW 2013 and RDDBFI

A group of person associated together for the attainment of common end, social or economic.
Definition: An artificial person created by law having common seal, perpetual succession, unlimited by its member, registered under law with
separate legal entity and limited liability and thus allowing free transfer of shares. (2 marks)
CHARACTERISTICS OF A COMPANY: (4 marks)
1. Separate legal entity: Independent corporate existence
2. Limited liability: Limited by shares and limited by guarantee
3. Perpetual succession: Men may come, Men may go but company exist forever. Not affected by death, insanity, insolvency or retirement of
members.
4. Common seal: Official signature
5. Transferability of shares:
6. Separate property: Company property is not member‘s property
7. Capacity to sue:
LIFTING OR PIERCING THE CORPORATE VEIL (4 marks)
Company is legal person distinct from its members. Human ingenuity should not affect company performance or existence. This principle is
referred as ―The Veil of Incorporation‖.
Cases in which corporate veil can be lifted:
1. Protection of revenue: Tax evasion
2. Prevention of fraud or defrauding creditors or improper conduct of members
3. Determination of character of company whether it is an enemy: Determine whether person dealt is enemy
4. Where the company is Sham: Not serving the purpose for which it is meant.
DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D
5. Company avoiding legal obligations:

6. Company acting as an agent of shareholders:
7. Avoidance of welfare legislations:
8. Not protecting public interest: transaction contrary to public policy.
TYPES OF COMPANIES: (13 marks)
A. Classification on the basis of incorporation
a. Statutory company: created by special act, mostly public utilities, Eg: RBI, LIC
b. Registered company: Registered under The Companies Act 2013
B. Classification on the basis of liability
a. Company with limited liability
i) Company limited by shares:
ii) Company limited by guarantee: undertake to contribute fixed amount. Usually company not formed not for profit. Promotion of arts, culture,
sports, charity etc.
b. Company with unlimited liability: Similar to partnership.
C. Classification on the basis of number of members
i. Private company: or Closed Corporation, Minimum paid up capital of Rs. 1, 00,000, restrict to transfer shares, Minimum 2 and Maximum
200 members excluding present and past employees, at least 2 directors, no invitation to public and accepts deposits from public, not necessarily
to register with registrar, enjoys some special privileges, managerial remuneration not exceeding 11% of net profit, minimum 5 members
required for meeting, can commence business immediately after incorporation.
Special privileges of Private Company: (2 marks)

Only 2 members, Allotment before subscription, Allot share without issuing prospectus, Issue any shares with voting right, Commence business
immediately on incorporation, No need to keep an index of members, not necessarily to register with registrar.
ii. Public limited company: Minimum paid up capital Rs. 5, 00, 000, free transfers of shares, Minimum 7 members and no limit with maximum
members, at least 3 directors, invitation to public and accepts deposits from public, must file with registrar, no special privileges, no restrictions
on managerial remuneration, quorum depends on total number of members (5 members – 1000, 15 – 1001 to 5000, 30 - >5000), can commence
business only after obtaining certificate of commencement.
When a private company does become public company? (8 marks)
i. Conversion by default: restriction on transfer of shares, exceeding maximum membership
ii. Conversion by operation of law: a. where not less than 25% of paid up share capital of private company held by one or more public
company, b. where the average annual turnover of private company is not less than 10 crores for 3 consecutive financial years (after 3 months
from last day of last financial year), c. where private company holds >25% paid shares of any public company, d. when private company invites,
accepts or renew deposits from public.
iii. Conversion by choice or violation of rules: If it alters articles beyond it provisions, it will ceases to be private company from the date of
alteration.
Conversion of public company to private company
a. By special resolution
b. An alteration in article have effect only when it is approved by central government
D. Classification on the basis of Control:
a. Holding Company: If it has control over other company.
b. Subsidiary Company: When control is exercised by holding company.
i. By composition of directors: Company has 7 directors out of 4 belong to company Holding company.
ii. Holding majority of shares:

iii. Subsidiary of another company:
E. Classification on the basis of Ownership:
i. Government Company: a) Central government, b) State government, c) Partly by CG&SG
ii. Non-Government Company:
iii. Foreign Company:
FORMATION OF COMPANY - For Incorporation of Company (13 marks)

Mode of forming Incorporated Company: Any 7 or more person associated for lawful purpose may form incorporated company with or
without liability
Company may be a) Limited by shares or b) Limited by guarantee or c) unlimited company
Documents to be filed with registrar: The following documents duly stamped together with the necessary fees are to be filed with the registrar:
a. MoA, duly signed by subscribers
b. AoA
c. Agreement if company proposes to enter into with any individual
d. List of directors
e. Declaration stating that all the requirements of Companies act and other formalities relating to registration
Such declaration shall be signed by any of following person:
An advocate of Supreme court or High court or Secretary or CA in whole time practice in India, Person named as Director or Manager or
Secretary in AoA.
Then within 30 days of date of incorporation of company, a notice of situation of registered office of company shall be given to registrar.
Certificate of Incorporation (COI): (4 marks)

If registrar is satisfied with filed statutory requirements and documents, ―Certificate of Incorporation‖ is issued. It is a conclusive evidence that
all the requirements of the company acts have been compiled with respect of registration. It is also a conclusive on following: a) Requirement of
registration have been complied with, b)Company is authorised to register, c) Date of COI is date of birth of company, d) It doesn‘t make illegal
into legal.
Effects of COI:a) Company becomes distinct legal entity, b) Acquires perpetual succession, c) Company property is not the property of
shareholders, d) Can commence business immediately.
PROMOTER (13 marks)
A Promoter is a person who does the necessary preliminary work incidental to the formation of a company. He is the person who undertakes to
bring existence of company. First person to control affairs, they are the one who conceive the idea of forming the company. He takes necessary
steps to incorporate the company. After basic work they hand over the company to director.
Functions of a promoter:
Decides its name, settles details of MoA&AoA, nominates directors, solicitors, bankers, auditors, secretary and registered office of company,
arranges for printing of MoA, registration of company and issue of prospectus.
Legal Status of promoter: Law of Agency is extended.
Fiduciary position of a promoter: Fiduciary relationRelationship which requires utmost good faith, trust and confidence.
a)No secret profit at the expense of company, b) Give benefit of negotiation to company, c) Full disclosure of profit, d) Not to make unfair use of
position.
Duty of promoter regards prospectus: Promoter must see: a) whether it contains necessary particulars, b) doesn‘t contain any untrue of
misleading statement or doesn‘t emit any material fact.
Remuneration: No right unless there is a contract.
He can claim remuneration in any of the following way: a) He may sell his own property at a profit to company for cash or fully paid shares, b)
He may be given an option to buy a certain number of shares in company at par, c) He may take a commission on shares sold, d) He may be paid
lump sum by the company.
PREINCORPORATION CONTRACT OR PRELIMINARY CONTRACT (4 marks)

The promoter of company usually enter into contract to acquire some property for company which is yet to be incorporated.
The promoter is not liable for acts of promoter done before its incorporation.
Position of promoter regards pre-incorporation:
a. Company not bound by pre-incorporation contract.
b. Company can‘t enforce pre-incorporation contract.
c. Promoters personally liable.
Ratification of Pre-incorporation contract: Legally Impossible.
MEMORANDUM OF ASSOCIATION (13 marks)
It contains fundamental conditions, basic fundamental document, the character of the company, RAISON D-ETRE‖- that is the reason for
existence, gives out area of operation.regulates external affairs, enable the shareholders & those dealing with the company to know the permitted
range of the company, it not only shows the object of formation but also gives utmost possible scope of company
Purpose of MoA: 2 Fold
i)Shareholders shall know purpose for which purpose money is going to be used and what risk they are undertaking in the investment,
ii) It helps the outsiders to know whether their contractual relationship within the company object
Printing & stationary of memorandum:
i. Printing must be on computer laser printing
ii. divided into paragraphs

iii. numbered consecutively
iv. signed by 7 members
v. each member shall sign with name, address, occupational description in the presence of at least one witness with name, address & occupational
description.
CONTENTS OF MEMORANDUM
1. The Name clause
The name of the company with ―Ltd‖ in case of public limited company and ―Pvt Ltd‖ in private limited company. Name selected subject to
following rules:
a)Undesirable name: In opinion of CG.
Too similar or misleading
b) Injunction
c) Prohibition of certain name or seal or emblem like WHO, UNO, Indian flag.
d) Use of key words based on authorised capital
S.No Authorised Capital Keywords in Name
A 5 Crores Corporation
B 1 Crore International, Globe, Universal, Continental, Asiatic, Asia

being first word

C 50 lakhs Any words in (B) used within name other than first
D 50 lakhs Hindustan, India, Bharat being first word
E 5 lakhs Any words in (D) used within name other than first
F 10 lakhs Enterprise, Product, Business and Manufacturing
G 1 crore Industry or Udyog
Publication of name:
a) Paint or affix name and address of registered office, outside every office where business is carried on.
b) Engraved legibly
c) Mention in all business letters, bill head, invoices etc.
2. Register office clause:
State in which the registered office of a company is to be situated, can have registered office 30 days from its incorporation, all communication
must be sent there. Any change must be informed to registrar within 30 days of change, any default – fine of Rs. 50 per day.
3. The Object clause:
a) Main object: Object incidental to attainment of main objects
b) Other objects: Set forth in MoA
Purpose of Object Clause: i) Shareholders shall know purpose for which purpose money is going to be used and what risk they are undertaking
in the investment,
ii) It helps the outsiders to know whether their contractual relationship within the company object.
4. Capital clause: State amount of share capital and division of shares into fixed amount. The capital with company registered is called,
‗registered‘ or ‗authorised‘ or nominal capital. Company can‘t issue more shares than authorised capital, Shares can be equity or preference.
5. Liability clause: MoA states the liability may be limited by shares or limited by guarantee. The company may call only uncalled or unpaid or
maximum amount they have guaranteed.
6. Association clause: It states the subscribers are desire to form a company and agree to take shares in it.
ALTERATION OF MEMORANDUM
1. Change of name
a. By special resolution: with approval of CG
b.By ordinary resolution: sometimes inadvertently company name may be identical, in opinion of CG, when company change its name,
registrar issue fresh COI.
2. Change of registered office
a. within the state: Company has to make application to Regional Director for confirmation. The confirmation has to be communicated within 4
weeks. Company files confirmation to registrar within 2 months with altered MoA, Registrar register within one month of filing.
b. from one state to another: By special resolution at general meeting, Notice to affected parties, Notice to Registrar (registrar shall be given
reasonable opportunity to appear before company law board to state his objection), Confirmation of change by Company law board. Copy of
special resolution (must be made within 1 month) and order of company law board filed with registrar within 3 months and registrar will give
fresh COI within 1 month from date of filing.
3. Alteration of object: Most important clause. Powers of alteration is subject to two limits, namely
a. Substantive or physical limit: altered by special resolution.
i) To carry on its business more economically or more efficiently,
ii) To attain main purpose by new or improved means,
iii) To enlarge or change the local area of its operation,

iv)To carry on some business which may conveniently or advantageously be combined,
v) To restrict or abandon any of the objects specified in MoA,
vi) To sell or dispose whole or part of undertaking,
vii) To amalgamate with other company.
b. Procedural limit
Special resolution in general meeting, Copy of special resolution to be filed with registrar within 1 month from date of filing.
4. Change in liability clause: NO change, unless all members agree in writing, either before or after change.
5. Change in capital clause: Change involves increase, decrease or re-organization of capital. Re-organization includes consolidate, sub-divide.
Cancel by ordinary resolution
Reduce by special resolution, application to court, Registration of court order with registrar and to obtain certification of registration.
Allotment of new shares or conversion of debentures
DOCTRINE OF ULTRA-VIRES - Beyond Powers (8 marks)
A company has power to do all such things as are:
a) Authorise to be done by Companies Act
b) Essential to the attainment of its objects specified in MoA
c) Reasonably & fairly incidental to its objects.
Everything else is ULTRA VIRE
It means doing an act which is beyond legal powers and authority of a company.
Purpose of Ultra-vires: To protect the investor of the company so that they may know where their money is employed.
Ensuring creditors that funds are not wasted in unauthorised activities.
Ultra vire act doesn‘t create legal relationship, it is absolutely void, even whole body of shareholders can‘t ratify it, it need not be necessarily
illegal, if part can‘t be ratified whole transaction is affected, it is determined by construction of MoA.
Ultra vire by Director: Beyond powers of directors but within the powers of Company
Shareholders can ratify in a general meeting or by common acceptance.
Ultra vire of Articles: can ratify by altering the article by special resolution and validated by consent of shareholders. The ratification should
not bind or affect the third party.
ARTICLES OF ASSOCIATION (8 marks)
It states about rules, regulations and by-laws for internal management.
They are framed with the aim of carrying out objects set out in MoA.
They are subordinate to and controlled by MoA.
Care must be taken that regulation framed don‘t go beyond powers of company.
MoAvsAoA (2 marks)
Memorandum of Association Articles of Association
Charter indicating nature of business Regulation of internal management
Supreme document Subordinate document
Defines scope Rules for carrying business
Alteration requires sanction of company law Altered by special resolutioon

board

Ultra vire act is wholly void Ultra vire of AoA but intra vire of AoA can
be confirmed by shareholders
Every company must have Company ltd by shares need not have.
Contents of articles of association: Share capital, Rights of shareholders, Payment of commission, Share certificates, Call on shares, Transfer
of shares, Forfeiture of shares, Conversion of shares, Alteration of capital, General meeting & procedures, Voting rights, Appointment and
remuneration, qualification, power of directors, managers, secretary, auditors, Accounts and audit, Borrowing powers, Dividends and reserves,
Capitalisation of Profits and Winding up.
Printing: Printing rules are similar to MoA.
Procedure for alteration of articles: Have wide power to alter article, By passing special resolution, copy must be filed to registrar within 30
days and attach every copy of articles thereof.
Limitations to alteration: must be in consistent with law, not conflict with MoA, not illegal, must be benefit of company, not increase liability
of members, not in breach of any contract – if so can claim damages, alteration may be with retrospective effect.
DOCTRINE OF INDOOR MANAGEMENT (4 marks)
The outsiders dealing with the company are entitled to assume that ―as far as the internal proceedings of the company are concerned everything
has been regularly done‖ This is called Doctrine of Constructive Notice (the person dealing the company not bound to enquire into regularity
of the internal proceedings). Limitation to this is called Doctrine of Indoor Management. Former protect company against outsiders and latter
protects outsiders against company.
Exception: Knowledge of Irregularity, Negligence, Relies on forged contract and Acts outside the scope of apparent authority.
PROSPECTUS (8 marks)
It invites deposits from the public. It is the window of the company . Central theme is raising money. Prospectus must be in writing, oral or
advertisement in TV is not prospectus. Should be signed by the proposed directors. Date of prospectus is date of publication.
Registration of prospectus:
 Registration must be made on or before date of publication
 It must be issued within 90 days from date of registration.
 If is not registered every person is punishable with fine up to 50000.
Object of prospectus:
 To keep an authenticated record of terms and conditions.
 To point the responsibility of person issuing of the prospectus.
Contents of prospectus:
Prospectus must secure the fullest disclosure of all material and essential particulars and lay the same in full view of all intending purchaser.
Contents of Prospectus
i. State the matters specified in Part I of Schedule II, andii. Set out the reports specified in Part II of Schedule II.
Part I of Schedule II—Matters to be Specified:
(a) The contents of the Memorandum:It expresses the name of the company, objects, nature of business, share capital and its division, liability
of members, names and addresses of the signatories and the number of shares subscribed by them.
(b) The qualification shares of the Directors:If the Articles of the company provides that certain minimum number of shares to be possessed
by the directors as qualification, in that case, a person shall not be qualified to act as a director unless he holds such number of shares.
(c) No. of redeemable preference shares:Particulars regarding debentures and redeemable preference shares with their date of redemption must
be stated.
(d) Remuneration of the Directors and Promoters:The prospectus must contain the rate of remuneration for attending meetings and for other
services of the Directors and Promoters.
(e) The names, descriptions and addresses of the Directors and Managing Directors:The names, addresses, descriptions, occupations of the
Directors, Managing Directors, Managers and the provisions regarding their appointment must be stated.
(f) The Minimum Subscription:The minimum subscription on which the directors may proceed to allotment and the amount payable on
application, allotment etc. on each share should also be stated in the prospectus.
(g) Time of opening:The time of the opening of subscription list should also be stated.
(h) Names and Addresses:The names and addresses of vendors, if any, and the mode of payment of purchase price and goodwill should also be
contained in the prospectus.
(i) Underwriting Commission, Brokerage etc.:The names of underwriters and the opinion of the directors regarding their financial position
and business integrity should also be stated clearly.
(j) Names of the auditors with their addresses:The reputation of the auditors is also an important factor necessary for public patronage.
(k) Particular of Contracts:The dates of and parties to every material contract, and reasonable time and place of its inspection are also
significant.
(l) Preliminary Expenses:The estimated amount of preliminary expenses to be incurred should also be furnished.
(m) Particulars of Directors:Full particulars of the nature and interest of every director or promoter in the promotion of or in the property
proposed to be acquired by the company within two years with statement of all sums paid or agreed to be paid to him in cash or shares for
service rendered.
(n) Disclosure:Full disclosure on these matters should also be made in the prospectus.
(o) Expected rate of dividend and voting rights:

The rights of shareholders relating to voting, meeting and dividends along with the nature and extent of restrictions to be imposed by Articles on
their right to transfer shares should also be stated in clear and convincing terms.
(p) Capitalisation of Profits and Surplus from revaluation of assets:
Capitalisation of profits/reserves of a company or if any of its subsidiaries have been capitalized (i.e. issuing bonus shares), particular of such
capitalisation and also surplus, if any, assets from the revaluation of assets should also be stated.
(q) Inspection of Balance Sheet and Profit and Loss Account:
The following reports are to be annexed:
Part II of Schedule II— Reports to be set out:
(a) Report by the Auditor:
An audit report of the company relating to:
(i) Its profits .and losses, assets and liabilities,
(ii) The dividend paid by the company during the five financial years preceding the issue of prospectus should also be furnished.
(b) Report by the Accountant:
The accountant should also state a report relating to profits or losses and assets and liabilities on a date which must not be more than 120 days
before the date of issue of the prospectus.
Deemed prospectus: (2 marks)
Provision relating to prospectus are very stringent, these requirements are evaded by company by allotting whole issue through issue houses at
certain price, the issue houses publish advertisement in nature of offering the shares for sale, this document is called “offer for sale or deemed
prospectus”.
MISSTATEMENTS IN PROSPECTUS (13 marks)

A) Civil Liability
A person who has been induced to subscribe for shares on faith of misleading prospectus has remedies:
a) Remedies against the company:
If there is a misstatement or withholding material information and if it induced any shareholder to purchase, he can

i) Rescind the contract: can apply to court for rescission, should apply within reasonable time, before liquidation, but have to surrender shares
allotted, name is removed from register and gets back money along with interest
Conditions to be satisfied:
 The statement must be a material misrepresentation of fact: Statement of fact must be distinguished from mere opinion or expectation.
 The statement must have induced the shareholder to take shares.
 The statement must be untrue.
 The deceived shareholder must be aallotee and must have relied on statement in prospectus.
 The omission of material fact must be misleading.
ii) Claim for damages:
To sue for damages, he can‘t retain shares, repudiating shares after discovering fraud.
b) Remedies against the directors, promoters and experts:
The following person are liable to pay compensation for any loss or damages:
Directors, at the time of issuing prospectus, authorised to be names as directors, promoters, any person who have authority to issue prospectus.
This can be classified under
i) Liability of Damages
Defences or Exceptions:
A director or any other person shall not be liable if he puts up following:
a) Withdrawal of consent before issue of prospectus,
b) Absence of consent: without knowledge of director,
c) Ignorance of untrue statement,
d) Reasonable ground for belief,
e) Statement of expert
Every person who becomes liable, may recover contribution from other guilty person who are liable for fraudulent misrepresentation.
ii)Liability for Non-compliance
Omission of matter which is required to be included.
Even omission doesn‘t leads to false or misstatement, director is seems to be liable.
iii)Liability under general law
Can hold all or any person responsible statement which is fraud and made knowingly or without belief or recklessly
Remedy under general law are right of rescission.
B) CRIMINAL LIABILITY
 Any untrue statement, every person who authorised, is punishable with imprisonment which may extend to 2 years or fine maximum 50, 000 or
both.
 Issuing application for shares without MoARs. 50,000.
 Either knowingly or recklessly promise which is false, deceptive or false or any dishonest concealment of material fact of any agreement for
acquiring, disposing, subscribing for or underwriting or securing profit  1,00,000 or 5 years or both
 Application in fictitious name or allot or transfer shares in fictitious name  5 years imprisonment.
STATEMENT IN LIEU OF PROSPECTUS (2 marks)
When a company does not invite public to subscribe but arranges to get money from private sources. In this case company need not issue
prospectus, but they are required to prepare a draft of prospectus called “Statement in lieu of prospectus”.
Underwriting commission:
In the event of under subscription a person agrees to take shares or debentures for a consideration that is commission. This process is called
underwriting. A person who gives guarantee is underwriter.
Brokerage: This means payment for a person who is procuring subscription for the company. Brokers are mediation between company and
customer. They include subscribers to invest; they do not take up any shares or debentures.
POWERS, DUTIES AND LIABILITEIS OF DIRECTORS (13 marks):
Powers of Directors: Powers can be General powers, Powers exercised in board meeting and powers exercised in general meeting.
General Powers of board: The powers of board of directors are co-extensive with powers of the company,
Subject to 2 conditions:
i. Board shall not do any act that to be done by company in general meeting.
ii. Board shall exercise its power subject to the provisions contained in MoA or AoA or any regulation in general meeting.
Powers to be exercised in board meeting:
1. Make calls on unpaid money.
2. Issue debentures.
3. Borrow money.
4. Invest funds.
5. Avail loans.
Powers to be exercised in general meeting:
 To sell, lease or dispose whole or part of undertaking
 To remit or give time for repayment of any debt due
 To invest amount of compensation received
 To borrow money from premium account, general reserve, profit & loss account, capital redemption account
 To contribute to charitable & other funds: Amount may be 50,000 or 5% of average of net profit of 3 preceding financial years whichever is
higher.
Political contribution: Resolution has to be passed at board of director of meeting, disclose in P&L account, amount contributed, name of the
party or person mentioned.
Duties of directors:
1. Fiduciary duties: exercise their powers honestly and for the benefit of company as whole, not to place them in conflict between their duties to
company and personal duties, not to make any secret profit, fiduciary duty limited to company not to shareholders.
2. Duties of care, skill and diligence: Reasonable knowledge, care, skill and diligence
Standard care on: type and nature of work, division of powers between directors and other offices, general usages & customs in that type of
business and whether directors work gratuitously or remuneratively.
3. Other duties: to attend board meeting, not to delegate his function except authorised, to disclose his interest.
Liabilities of directors:
a) Liability to third party
i) Under the act:
Director may also incur personal liability
a) On the failure to repay application money, if the minimum subscription has not been reached.
b) On an irregular allotment if shares.
c) On failure to repay application money, if application is refused.
d) On failure by company to pay a bill of exchange, promissory note, cheque.
ii) Independent of the act: Directors are not personally liable except he signs NI without company name and he act in his own name.
b) Liability of the company
i) Ultra vires act
ii) Negligence: Negligence here means not reasonable care, skills, diligence taken
iii) Breach of trust: Act best interest of company, No secret profits.

iv)Misfeasance: Wilful misconduct.
ii) Liability for breach of statutory duties: Especially duties relate to maintenance of proper account, filing of returns, observance of statutory
formalities. It not performed they are liable for penalties.
iv) Liability for the acts of co-directors: not liable, he has no knowledge or he is not party of it. Not liable for his agents act
WINDING UP (OR) LIQUIDATION (13 marks)
 Last stage in its life
 Its proceeding is dissolved
 Assets disposed, debts paid off and surplus if any distributed
 An administered called liquidator is appointed and he takes the control of the company
Modes of winding up:
1. Winding up by tribunal or Compulsory winding up
i) Special resolution of the company: not so common as members normally prefer to wind up voluntarily instead by passing resolution.
ii) Default in delivery the statutory report to registrar or holding statutory meeting:
Petition can be made by Registrar or Contributory. Later ought to file petition only after expiry of 14 days from date of which statutory meeting
to have been held.
Petitions can be filed by: a)Company, b) Creditor or Creditors, c) Contributory or Contributories, d) By all or any of prior parties together or
separately, e) Registrar, f) Central government.
Petition by Contributory or Contributories: A Contributory means a person liable to contribute to the assets of company. He can present
petition in cases like: membership below statutory level, if he s original allottee of shares, share devolved on him due to death of former share
holder.
Petition by Registrar: Any default, non-commencement of business, reduction in membership, unable to pay debt, Just & equitable
Petition by Central government: defraud creditors, fraudulent or unlawful purpose, person concerned with formation of company have been
guilty or fraud, misfeasance or other misconduct.
iii) Failure to commence or suspension of business: If no intention or not possible or if not begun business within a year from incorporation or
suspends business for one whole year.
Tribunal will not wind up if there is a reasonable prospects of starting business within a reasonable time or there are good reason for delay and
suspension is satisfactorily accounted.
iv)Reduction in membership: Below 7 in public and below 2 in private for more than 6 months.
v) Inability to pay its debt: Existing and probable assets would be insufficient to meet existing liabilities. Commercially impossible if company
is unable to pay debts or liabilities as they arise in ordinary course of business.
vi) Just and equitable: It depends on each listed below:
a) When object has substantially failed or impracticable.
b) When company has no hope of attaining profit
c) Basis of survival is gone
d) When existing assets are insufficient to meet existing liability
e) When minority interest is oppressed or disregarded
f) Deadlock in management
g) When public interest is damaged
h) When company is mere bubble & doesn‘t carry on any business or business is illegal
i) Sick company
j) Against interest of state
2. Voluntary winding up: Voluntary winding up can be carried out by Passing an Ordinary resolution and/or by passing special resolution.
i) Members voluntary winding up
Declaration of solvency: In board meeting they have declare, Company has no debt or can pay debt in 3 years from commencement of winding
up
Provision applicable to Members Voluntary winding up:
1. Appointment & remuneration of Liquidator.
2. Board power ceases
3. Powers to fill vacancy in office of liquidator
4. Notice of appointment of Liquidator to Registrar
5. Power of Liquidator to accept shares as consideration
6. Duty of liquidator to call for creditors meeting in case of insolvency
7. Duty to call general meeting at end of each year, if winding up process goes for more than a year.
8. Final meeting & dissolution
9. Annual and final meeting in case of solvency
ii) Creditors voluntary winding up
Provision applicable to Creditors Voluntary winding up:
1. Meeting of Creditors
2. Notice of resolution to registrar.
3. Appointment of liquidator
4. Appointment of committee of inspection
5. Liquidator remuneration
6. Board power ceases.

7. Power to fill vacancy in office of liquidator
8. Power to liquidator to accept shares
9, Duty of liquidator to call meeting at end of each year, if winding up process goes for more than a year.
10. Final meeting and dissolution.
Members Voluntary Winding up Creditors Voluntary Winding up
Declaration of solvency No such declaration required
In members control In creditors control
No meeting arranged Meeting of creditors
Liquidator appointed by company and Appointed by creditors and remuneration

remuneration is fixed fixed by committee
No committee of inspection Committee of inspection is appointed
Liquidator can exercise power with sanction Can sanction with consent of Tribunal or
of special resolution committee of inspection
Board has power Creditors has power
Winding up and dissolution:

Former is process where by all assets of company are realized and used to pay off liabilities.
Latter takes place after entries process of winding up. It puts an end to life of company. Court issues death certificate of the company.
COMPANY LAW AMENDMENTS AND RDDBFI ACT 1993
COMPANY LAW AMENDMENTS
1 FINANCIAL YEAR FOR A COMPANY INCORPORATED OUTSIDE INDIA:- Where a company, 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 in such form and manner as may be
prescribed, allow any period as its financial year.
2 Company having a share capital shall not commence any business or exercise any borrowing powers unless—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. If any default is made in complying with the requirements, 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. 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 registrar may without prejudice initiate
action for the removal of the name of the company from the register of companies.
3 The time limit of compliance of direction given by the Central Government to change the name of company has
been reduced from 6 months to 3 months.
4 The Central Government is empowered to prescribe days lesser than 15, for deeming decline of offer of rights
issue. This will reduce the timelines for applying for rights issues. Earlier it was 15 days
5 The Central Government is empowered to exempt any class of NBFCs and any class of HFCs (Housing Finance
Corporation) from filing of resolutions passed to grant loans or give guaran tees or to provide security in respect
of loans in the ordinary course of their business . Earlier, onl y Banking Companies were exempted.
6 Where any company fails to comply with the provisions such company and every officer who is in default shall be liable to a penalty which
may extend to an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less, and
the company shall also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the date of issue
of such shares to the persons to whom such shares have been issued.‖.
7 The Central Government on being satisfied that—

a. the omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required
8 If any company fails to file its annual, before the expiry of the period specified therein, such company and its every officer who is in default
shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each
day after the first during which such failure continues, subject to a maximum of five lakh rupees.”.
9 Any amount remaining unspent pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in
persuance 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.
10 Changes to offenses: The bill removes the penalty, imprisonment for certain offenses, and reduces the amount of fine payable in certain
cases. However, Under the Act, one-person companies or small companies are only liable to pay up to 50% of the penalty for certain
offences.
11 De-criminalization of minor offences: By way of the Amendment, imprisonment as a consequence of contravention of certain provisions of the
Act has been done away with for over 46 offences under the Act, in addition to reducing, modifying and omitting the fines/penalties for these
offences. By way of example, imprisonment has been removed as a punishment for contravention of provisions in relation to buyback of
securities, disclosure of interest by directors, financial statements and Boards' report, formation of companies with charitable objects,
disqualification of directors and constitution of audit, stakeholder relationship and nomination and remuneration committee. Similarly,
penalties and fines have been omitted/modified/reduced for contravention of provisions in relation to filing of annual return with
Registrar, variation of shareholder rights, transfer of securities, alteration of share capital and reduction of share capital, among others.
12 Periodic financial results: Empowers the Central Government to require a certain class of unlisted public companies (which is yet to be
prescribed) to prepare periodic financial results. Such periodic financial results are in addition to preparation of annual financial results
prescribed under the Act and would need to be approved by the Board of Directors and audited (or subjected to a limited review) by the
statutory auditors, in addition to filing periodic financial results with the Registrar
13 Reduced timeframe for rectification of name and powers granted to the Central Government thereunder: Prior to the Amendment, if the
Central Government is of the opinion, on an application made to it by a registered proprietor of a trademark, that the name of a company is
identical with or too closely resembles an existing trade mark, the company is required to change its name within a period of 6 months
from date of directions issued by the Central Government in this regard. The Amendment now reduces this timeframe to 3 months.
Additionally, Central Government is now empowered to allot a new name to the company (manner to be prescribed) if the company defaults in
complying with directions issued by it and the Registrar is entitled to enter such 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 must use thereafter. However, none of the above changes
restrict a company from subsequently changing its name, in accordance with the provisions laid down in the Act.
14 Corporate Social Responsibility (CSR): Pursuant to the Amendment, companies that have spent an amount in excess of the requirements
prescribed under the Act (i.e., at least 2% of the average net profits of the company made during the 3 immediately preceding financial
years) are now permitted to set off such excess amount in succeeding financial years as may be prescribed by the Central Government. Further,
companies that are not required to spend more than INR 50,00,000 towards CSR under the provisions of the Act, are now exempted from
constituting a CSR Committee and the Board of Directors may discharge the functions of such Committee.
15 Offence: In case a company fails to file notice of alteration or increase or redemption of share capital along with
an altered memorandum with the Registrar within 30 days. Changes: The amount of penalt y on company and every
officer who is in default has been reduced from Rs. 1,000 to Rs. 500 for each day during which default continues.
Further, the maximum amount of penalt y has been reduced from Rs. 5 lakh to Rs. 1 lakh.
16 Offence: In case a company fails to file its annual return within specified period (i.e. 60 days from AGM).
Changes: The amount of penalty on company and every officer who is in default has been reduced from Rs. 50
thousand to Rs. 10 thousand . Further, the maximum amo unt of penalty has been reduced from Rs. 5 lakh to Rs. 2
lakh in case of a company and Rs. 50 thousand in case of an officer who is in default.
17 Offence: In case any company fails to file the resolution or the agreement with the Registrar within specified t ime
(i.e. 30 days from the date of passing the resolution). Changes: The amount of penalty on company has been
reduced from Rs. 1 lakh to Rs. 10 thousand & in case of continuing failure, each day penalty has been reduced
from Rs. 500 to Rs. 100 and the maximum amount of penalty has been reduced from Rs. 25 lakh to Rs. 2 lakh. The
amount of penalty on officer who is in default has been reduced from Rs. 50 thousand to Rs. 10 thousand & in

case of continuing failure, each day penalty has been reduced from Rs. 500 to Rs. 100 and the maximum amount of
penalty has been reduced from Rs. 5 lakh to Rs. 50 thousand.
18 Offence: In case a company fails to file the copy of the financial statements with the Registrar within the time
specified therein (i.e. within 30 days fr om the date of AGM) . Changes: The amount of penalt y on company has been
reduced from Rs. 1,000 to Rs. 100 for each day during which the failure continues and maximum amount of penalty
has been reduced from Rs. 10 lakh to Rs. 2 lakh . The amount of penalty on MD/ CFO/ directors has been reduced
from Rs. 1 lakh to Rs. 10 thousand and maximum amount of penalt y has been reduced from Rs. 5 lakh to Rs. 50
thousand .
19 Offence: In case the auditor fails to file his resignation with the Registrar within the time speci fied therein (i.e. 30 days
from the date of resignation). Changes: The maximum amount of penalt y on auditor has been reduced from Rs. 5
lakh to Rs. 2 lakh.
20 Offence: In case a person holds office as a director in more than the limit specified therein. Changes: The amount of
penalt y on such person has been reduced from Rs. 5,000 to Rs. 2,000 for each day after the first during which such
violation continues and maximum amount of penalt y restricted to Rs. 2 lakh.
Default in compl ying with the requirements rela ting to formation of companies with charitable objects, etc.
Old Penal Provision New Penal Provision
Director and every officer of the company who is Director and every officer of the company who
in default shall be punishable with: is in default shall be punishable with:

Imprisonment: Fine:
Maximum- 3 years Minimum- Rs. 25 thousand;
OR Maximum- Rs. 25 lakh.
Fine:
Minimum- Rs. 25 thousand;
Maximum- Rs. 25 lakh.
OR
Both
Contravention of provisions relating to issue of a prospectus.
Every person who is knowingly a party to the issue

of such prospectus shall be punishable with: Every person who is knowingly a party to the
Imprisonment: issue of such prospectus shall be punishable
Maximum- 3 years with:
OR Fine:
Fine: Minimum- Rs. 50 thousand;
Minimum- Rs. 50 thousand; Maximum- Rs. 3 lakh.

OR
Both
Default in compl ying with the provisions of this section relation to securities to be dealt with in stock
exchanges.
Every officer of the company who is in default

shall be punishable with:
Imprisonment:
Maximum- 1 year
OR
Fine:
Fine:
OR
Both
If a company makes any default in complying with the provisions of this section or any regulation made by
SEBI.


Imprisonment:
Maximum- 3 years
OR
Fine:
Fine:
Minimum- Rs. 1 lakh;
OR
Both
If MD, WTD in charge of finance, CFO or any other person of a company charged by the Board with the
dut y of compl ying with the provisions of this section, contravenes the provisions of the section.
Such MD, WTD in charge of finance, CFO or such Such MD, WTD in charge of finance, CFO or
other person of the company shall be punishable such other person of the company shall be
with: punishable with:
Imprisonment: Fine:

Maximum- 1 year Minimum- Rs. 50 thousand;

Fine:
OR
Both
If any of the provisions of sections 139 to 146 (both inclusive) (Audit and Auditors) is contravened.

Imprisonment: Every officer of the company who is in default
Maximum- 1 year shall be punishable with:
OR Fine:
Fine: Minimum- Rs. 10 thousand;
Minimum- Rs. 10 thousand; Maximum- Rs. 1 lakh.
OR

Both
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 this section.
Such person shall be punishable with:

Imprisonment:
Maximum- 1 year
OR
Fine:
Fine:
OR
Both
Contravention of the order of NC LT relating to alterations in MOA or AOA.
Every officer of the company who is in default Every officer of the company who is in default

shall be punishable with: shall be punishable with:

Imprisonment: Fine:
Maximum- 6 months Minimum- Rs. 25 thousand;
Fine:
OR
Both
Any person or director of the company who knowingl y acts as a managing director or other director or
manager of a company in contravention of clause (b) of sub -section (1) or sub -section (1A) of this section.
Such person and director shall be punishable with:

Imprisonment: Such person and director shall be punishable
Maximum- 6 months with:
OR Fine:
Fine: Maximum- Rs. 5 lakh.

OR
Both
If any person acts in contravention of any rule framed or an order made under sub -section (3) of this
section.

Imprisonment:
Maximum- 6 months
OR
Fine:
Fine:
Maximum- Rs. 50 thousand.
OR
Both
If a foreign company contravenes the provisions of Chapter XXII relating to ‗Companies Incorporated
outside India‘.

Every officer of the foreign company who is in

default shall be punishable with:
Imprisonment:
Every officer of the foreign company who is
Maximum- 6 months
in default shall be punishable with:
OR
Fine:
Fine:
OR
Both
If any officer or other employee of the company who fails to compl y with any order made by NC LT or RD
under this section.
Such officer or employee shall be punishable with: Such officer or employee shall be punishable
Imprisonment: with:
Maximum- 6 months Fine:
OR Maximum- twice the amount provided in the
Fine: corresponding section in which punishment for

Maximum- Rs. 1 lakh. such offence is provided.

OR
Both
Default in compl ying with any direction of the Central Government for rectification of name of company.
Old Penal Provision (now omitted)
Company shall be punishable with:

Fine:
Maximum – Rs. 1,000 for every day during which the default continues.
Every officer of the company who is in default shall be punishable with:
Fine:
Default in compl ying with the provisions relating to variation of shareholders‘ rights.

Fine:


Imprisonment:
Maximum- 6 months
OR
Fine:
OR
Both
Default in compl ying with the order of NCLT relating to rectification of register of members.

Fine:

Imprisonment:
Maximum- 1 year
OR
Fine:
OR
Both
If a company fails to publish the confirmation order of the reduction of share capital by the Tribunal.

Fine:
Default in compl ying with the order of Tribunal relating to redemption of debentures.


Imprisonment:
Maximum- 3 years
OR
Fine:
OR
Both
Where any person, without reasonable cause, fails to cooperate with the company liquidator under this
section.

Imprisonment:
Maximum- 6 months
OR
Fine:

OR
Both
If the Company Liquidator makes a default in forwarding a copy of the order to the Registrar within the
period specified therein.
Such Company Liquidator shall be punishable with:

Fine:
Maximum- Rs. 5,000 for every day during which the default continues.
If a person fails or neglects to give assistance required under this section.
Such person shall be liable to pay:

Fine:
If a Company Liquidator contravenes the provisions of this section.

Such Company Liquidator shall be punishable with:

Fine:
Maximum- Rs. 5,000 for every day during which the failure continues.
If a Company Liquidator makes wilful default in filing the statement referred to in sub -section (1) of this
section.
Company Liquidator shall be punishable with:

Imprisonment:
Maximum- 6 months
OR
Fine:
OR
Both
If the Company Liquidator or the person fails to file the certified copy of the order with the Registrar under
this section.

Such Company Liquidator or the person shall be punishable with:

Fine:
Maximum- Rs. 10,000 for every day during which the failure continues.
Where any default is made in compl ying with the provisions of this section.

Fine:
Maximum- Rs. 5 lakh. Company and every officer of the company who
Every officer of the company who is in default is in default shall be liable to a penalt y of Rs. 50
shall be punishable with: thousand.
Fine:
If any company contravenes any provision of Chapter VI relating to Registration of Charges.


Fine:
shall be punishable with: Company shall be liable to a penalt y of Rs. 5
Imprisonment: lakh and every officer of the company who is in
Maximum- 6 months default shall be liable to a penalt y of Rs. 50
OR thousand.
Fine:
OR
Both
If a company does not maintain a register of members or debenture -holders or other securit y holders or fails
to maintain them in accordance with the provisions of this section.


Fine:
Minimum: Rs. 50 thousand;
Maximum: Rs. 3 lakh and where the failure is a
continuing one, with a further fine which may
extend to Rs. 1,000 for every day, after the first
during which the failure continues. Company shall be liable to a penalt y of Rs. 3 lakh
Every officer of the company who is in default and every officer of the company who is in default
shall be punishable with: shall be liable to a penalt y of Rs. 50 thousand.
Fine:
Minimum: Rs. 50 thousand;
Maximum: Rs. 3 lakh and where the failure is a
continuing one, with a further fine which may
extend to Rs. 1,000 for every day, after the first
during which the failure continues.
If any person fails, to make a declaration as required under this section.
Such person shall be punishable with: Such person shall be liable to a penalt y of Rs. 50

Fine: thousand and in case of continuing failure, with a

Maximum- Rs. 5 thousand and where the failure is a further penalt y of Rs. 200 for each day after the
continuing one, with a further fine which may first during which such failure continues, subject to
extend to Rs. 1,000 for every day after the first a maximum of Rs. 5 lakh.
during which the failure continues.
If a company, required to file a return under this section, fails to do so before the expiry of the time
specified.

Fine:
Minimum- Rs. 500; Company and every officer of the company who
Maximum- Rs. 1,000 and where the failure is a is in default shall be liable to a penalty of Rs.
continuing one, with a further fine which may extend 1,000 for each day during which such failure
to one thousand rupees for every day after the first continues, subject to a maximum of Rs. 5 lakh in
during which the failure continues; the case of a company and Rs. 2 lakh in case of
Every officer of the company who is in default an officer who is in default.
Fine:

Minimum- Rs. 500;

Maximum- Rs. 1,000 and where the failure is a
continuing one, with a further fine which may extend
to one thousand rupees for every day after the first
during which the failure continues;
If any person fails to make a declaration of SBO as required under this section.

Fine: Such person shall be liable to a penalt y of Rs. 50
Minimum: Rs. 1 lakh; thousand and in case of continuing failure, with a
Maximum: Rs. 10 lakh and where the failure is a further penalt y of Rs. 1,000 for each day after the
continuing one, with a further fine which may extend first during which such failure continues, subject
to Rs. 1,000 for every day after the first during which to a maximum of Rs. 2 lakh.
the failure continues.
If a company, required to maintain register or file the information or required to take necessary steps under
this section, fails to do so or denies inspection as provided therein.


Fine:
Minimum: Rs. 10 lakh; Company shall be liable to a penalt y of Rs. 1
Maximum: Rs. 50 lakh and where the failure is a lakh and in case of continuing failure, with a
continuing one, with a further fine which may extend further penalt y of Rs. 500 for each day, after the
to Rs. 1,000 for every day after the first during which first during which such failure continues, subject
the failure continues. to a maximum of Rs. 5 lakh and every officer of
Every officer of the company who is in default the company who is in default shall be liable to a
shall be punishable with: penalt y of Rs. 25 thousand and in case of
Fine: continuing failure, with a further penalty of Rs.
Minimum: Rs. 10 lakh; 200 for each day, after the first during which such
Maximum: Rs. 50 lakh and where the failure is a failure continues, subject to a maximum of Rs. 1
continuing one, with a further fine which may extend lakh.
to Rs. 1,000 for every day after the first during which
the failure continues.
If a company secretary in practice certifies the annual return otherwise than in conformit y with the
requirements of this section or the rules made thereunder.

Such company secretary in practice shall be

punishable with:
Such company secretary in practice shall be
Fine:
liable to a penalt y of Rs. 2 lakh.
If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number
of persons specified in the invitations are issued at the company‘s expense to any member entitled to have a
notice of the meeting sent to him and to vote thereat by proxy.
Every officer of the company who knowingly issues

Every officer of the company who issues the
the invitations as aforesaid or willfully authorises
invitation as aforesaid or authorises or permits
or permits their issue shall be punishable with:
their issue shall be liable to a penalt y of Rs. 50
Fine:
thousand.
If a company fails to compl y with any of the requirements of this section.

Company shall be liable to a penalt y of Rs. 1

lakh and in case of continuing failure, with a
further penalt y of Rs. 500 for each day after the
Fine:
first during which such failure continues, subject
to a maximum of Rs. 1 0 lakh and every officer of
the company who is in default shall be liable to a
Every officer of the company who is default shall
penalt y of Rs. 25 thousand and in case of
be punishable with fine:
continuing failure, with a further penalty of Rs.
Minimum- Rs. 1 lakh
100 for each day after the first during which such
failure continues, subject to a ma ximum of Rs. 2
lakh.
If a company fails to compl y with the provisions regarding signing of financial statement and contents &
signing of Board‘s Report.
Company shall be punishable with: Company shall be liable to a penalt y of Rs. 3

Fine: lakh and every officer of the company who is in
Minimum- Rs. 50 thousand; default shall be liable to a penalt y of Rs. 50
Maximum- Rs. 25 lakh. thousand.


Imprisonment:
Maximum- 3 years
OR
Fine:
OR
Both
If a company fails to spend CSR amount or transfer such amount to a fund specified in Schedule VII or the
Unspent CSR Account, as the case may be.
Company shall be punishable with: Company shall be liable to a penalt y of twice the
Fine: amount required to be transferred by the company
Minimum- Rs. 50 thousand; to the Fund specified in Schedule VII or the
Maximum- Rs. 25 lakh. Unspent CSR Account, as the case may be, or Rs.
Every officer of the company who is in default 1 crore, whichever is les s, and every officer of

shall be punishable with: the company who is in default shall be liable to a

Imprisonment: penalt y of one-tenth of the amount required to be
Maximum- 3 years transferred by the company to such Fund specified
OR in Schedule VII, or the Unspent CSR Account, as
Fine: the case may be, or Rs. 2 lakh, w hichever is less.
OR
Both
If any auditor, cost accountant or company secretary in practice does not compl y with the provisions
regarding reporting of fraud.
Such professional shall be punishable with:

Such professional shall be liable to a penalt y:
Fine:
 In case of a listed company: Rs. 5 lakh;
Minimum- Rs. 1 Lakh;
 In case of any other company: Rs. 1 lakh.
If a company contravenes any of the provisions of Chapter XI and for which no specific punishment is
provided therein.


Fine: Company and every officer of the company who is
Minimum- Rs. 50 thousand; in default shall be liable to a penalt y of Rs. 50
Maximum- Rs. 5 lakh. thousand, and in case of continuing failure, with a
Every officer of the company who is default shall further penalt y of Rs. 500 for each day during
be punishable with: which such failure continues , subject to a maximum
Fine: of Rs. 3 lakh in case of a company and Rs. 1 lakh in
Minimum- Rs. 50 thousand; case of an officer who is in default.
In case of any contravention of the provisions of sections 177 and 178.

Fine:
Company shall be liable to a penalt y of Rs. 5 lakh
and every officer of the company who is in default
shall be liable to a penalt y of Rs. 1 lakh.

Imprisonment:
Maximum- 1 year
OR
Fine:
OR
Both
If a director of the company does not disclose the nature of his interest under this section.
Such director shall be punishable with:

Imprisonment:
Maximum- 1 year
OR Such director shall be liable to a penalty of Rs. 1
Fine: lakh.
OR
Both

If a company contravenes the provisions of this section.

Fine:
Company shall be liable to a penalt y of Rs. 5 lakh
Imprisonment:
and every officer of the company who is in default
Maximum- 6 months
shall be liable to a penalt y of Rs. 50 thousand.
OR
Fine:
OR
Both
Any director or any other employee of a company, who had entered into or authorised the contract or
arrangement in violation of the provisions of this section.

In case of listed company

Such director or employee shall be punishable
with:
Imprisonment:
Maximum- 1 year
OR
Fine:
Such director or employee shall be liable to a
penalt y of Rs. 25 lakh.
OR
Such director or employee shall be liable to a
Both
penalt y of Rs. 5 lakh.
In case of company other than listed
Such director or employee shall be punishable
with:
Fine:
If a company or any officer of the company or the company secretary in practice, contravenes the

provisions of this section.
Company, every officer of the company or the

company secretary in practice, who is in default,
Company, every officer of the company or the
company secretary in practice, who is in
Fine:
default, shall be liable to a penalt y of Rs. 2 lakh.
If a transferor company or a transferee company contravenes the provisions of this section.
Such transferor company or the transferee

Company and every officer of the company who
company, as the case may be, shall be punishable
is in default shall be liable to a penalt y of Rs. 20
with:
thousand, and where the failure is a continuing
Fine:
one, with a further penalt y of Rs. 1,000 for each
day after the first during which such failure
continues, subject to a maximum of Rs. 3 lakh.
Every officer of such transferor or transferee

company who is in default shall be punishable

with:
Imprisonment:
Maximum- 1 year
OR
Fine:
OR
Both
If a valuer contravenes the provisions of this section or the rules made thereunder.
Such valuer shall be punishable with:

Fine: Such valuer shall be liable to a penalt y of Rs. 50
Minimum: Rs. 25 thousand; thousand.
Maximum- Rs- 1 lakh.
If any company fails to compl y with an order made under this section, or knowingl y furnishes any
information or statistics which is incorrect or incomplete in any material respect.


Fine:
is in default shall be liable to a penalt y of Rs. 20
Imprisonment:
thousand and in case of continuing failure, with a
Maximum- 6 months
further penalt y of Rs. 1,000 for eac h day after the
OR
first during which such failure continues, subject
Fine:
to a maximum of Rs. 3 lakh.
OR
Both
If a company or any officer of a company or any other person contravenes any of the provisions of this Act
or the rules made thereunder, or any condition, limitation or restriction subject to which any approval,
sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been
accorded, given or granted, and for which no penalt y or punishment is provided elsewhere in thi s Act.


Company and every officer of the company who is
is in default or such other person shall be liable
in default or such other person shall be punishable
to a penalt y of Rs. 10 thousand and in case of
with:
continuing contravention, with a further penalt y
Fine:
of Rs. 1,000 for each day after the first during
Maximum- Rs. 10,000 and where the contravention is
which the contravention continues, subject to a
continuing one, with a further fine which may extend
maximum of Rs. 2 lakh in case of company and
to Rs. 1,000 for every day after the first during which
Rs. 50 thousand in case of an officer who is in
the contravention continues.
default or any other person .

THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993
INTRODUCTION
Banks and financial institutions have been experiencing considerable difficulties in recovering loans and enforcement of securities charge
with them. The procedure for recovery of debts due to the banks and financial institutions, which is being followed, has resulted in a significant
portion of the funds being blocked.
The Committee on the Financial System has considered the setting up of the Special Tribunals with special powers for adjudication of
such matters and speedy recovery as critical to the successful implementation of the financial sector reforms. An urgent need was, therefore, felt
to work out a suitable mechanism through which the dues, to the banks and financial institutions could be realised. In 1981, a Committee
under the Chairmanship of Shri T. Tiwari had examined the legal and other difficulties faced by banks and financial institutions and suggested
remedial measures including changes in law. This committee also suggested setting up of Special Tribunals for recovery of dues of the banks
and financial institutions by following a summary procedure. Keeping in view the recommendations of the above Committees, the Recovery of
Debts due to Bank and Financial Institutions Bill, 1993 was introduced in the Parliament.
STATEMENT OF OBJECTS AND REASONS
Whereas on 30th September, 1990 more than fifteen lakhs of cases filed by the public sector banks and about 304 cases filed by the
financial institutions were pending in various courts, recovery of debts involved more than Rs.5622 crores in dues of Public Sector Banks and
about Rs.391 crores of dues of the financial institutions. The locking up of such huge amount of public money in litigation prevents proper
utilisation and recycling of the funds for the development of the country.
The Recovery of Debts Due to Banks and Financial Institutions Bill having been passed by both the Houses of Parliament received the
assent of the President on 27th August 1993. It came on the Statute Book as THE RECOVERY OF DEBTS DUE TO BANKS AND
FINANCIAL INSTITUTIONS ACT, 1993 (51 of 1993).
LIST OF AMENDING ACTS
1. The Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 1995 (28 of 1995).
2. The Recovery of Debts Due to Banks and Financial Institutions (Amendment) Act, 2000 (1 of 2000)
PRELIMINARY
1. Short title, extent, commencement and application.—(1) This Act may be called the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993.
(2) It extends to the whole of India
(3) It shall be deemed to come into force on the 24th day of June, 1993.
(4) The provisions of this Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks
or financial institutions is less then ten lakh rupees or such other amount,
(a) ―bank‖ means—
(i) banking company;
(ii) a corresponding new bank;
(iii) State Bank of India;
(iv) a subsidiary bank; or
(v) a Regional Rural Bank;
[(g) ―debt‖ means any liability (inclusive of interest) which is claimed as due from any person by a bank of a financial institution or by a consortium of

banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium
under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or
order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the
application;]
(h) ―financial institution‖ means—
(i) a public financial institution within the meaning of Section 4A of the Companies Act, 1956 (1 of 1956);
(ii) such other institution as the Central Government may, having regard to its business activity and the area of its operation in India
by notification, specify;
―banking company‖ means any company which transacts the business of banking in India.
(iii) Banking Regulation Act, 1949 defines the expression ―corresponding new bank‖ as follows:--―corresponding new bank‖ means a
corresponding new bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1980
(iv) Section 4A of the Companies Act, 1956 (1 of 1956) states that each of the following financial institutions shall be regarded as a
public financial institution, namely:--
(i) the Industrial Credit and Investment Corporation of India Limited, a company formed and registered under the Indian
Companies Act, 1913;
(ii) the Industrial Finance Corporation of India, established under the Industrial Financial Corporation Act, 1948;
(iii) the Industrial Development Bank of India, established under the Industrial Development Bank of India Act, 1964;
(iv) the Life Insurance Corporation of India, established under the Life Insurance Corporation Act, 1956;
(v) the Unit Trust of India, established under Unit Trust of India Act, 1963.

The Central Government may by notification in the Official Gazette specify such other institution as it may think fit to be a Public financial
institution:
Provided that no institution shall be so specified unless—
(i) it has been established or constituted by or under any Central Act; or

(ii) not less than fifty-one per cent of the paid-up share capital of such institution is held or controlled by the Central Government.
ESTABLISHMENT OF TRIBUNAL AND APPELLATE TRIBUNAL
Establishment of Tribunal.—(1) The Central Government shall, by notification, establish one or more Tribunals, to be known as the Debts
Recovery Tribunal, to exercise the jurisdiction, powers and authority conferred on such Tribunal by or under this Act.
Composition of Tribunal.—(1) A Tribunal shall consist of one person only (hereinafter referred to as the Presiding Officer) to be appointed by
notification, by the Central Government.
Qualifications for appointment as Presiding Officer.—A person shall not be qualified for appointment as the Presiding Officer of a Tribunal
unless he is, or has been, or is qualified to be, a District Judge.
Term of Office.—The Presiding Officer of a Tribunal shall hold office for a term of five years from the date on which he enters upon his office
or until he attains the age of 1[sixty-two years], whichever is earlier.
Staff of Tribunal.—
1 The Central Government shall provide the Tribunal [with one or more Recovery Officers] and such other officers and employees as that
Government may think fit.
[The Recovery Officers] and other officers and employees of a Tribunal shall discharge their functions under the general superintendence of the
Presiding Officer.
2. The salaries and allowances and other conditions of service of the [Recovery Officers] and other officers and employees of a Tribunal shall be
such as may be prescribed
Establishment of Appellate Tribunal.—(1) The Central Government shall, by notification, establish one or more Appellate Tribunals, to be
known as the Debts Recovery Appellate Tribunal, to exercise the jurisdiction, powers and authority conferred on such Tribunal by or under this
Act.
Composition of Appellate Tribunal.—An Appellate Tribunal shall consist of one person only (hereinafter referred to as [the Chairperson of the
Appellate Tribunal] to be appointed, by notification, by the Central Government.
Qualifications for appointment as [Chairperson of the Appellate Tribunal].—A person shall not be qualified for appointment as [the
Chairperson of an Appellate Tribunal] unless he—
(a) is, or has been, or is qualified to be, a Judge of a High Court; or

(b) has been a member of the Indian Legal Service and has held a post in Grade I of that service for at least three years; or
(c) has held office as the Presiding Officer of a Tribunal for at least three years.
Method of appointment. –(1) For the purpose of appointment to the post of a (Chairperson), there shall be a Selection Committee consisting of-
(i) The Chief Justice of India or a Judge of the Supreme Court of India as nominated by the Chief Justice of India;
(ii) The Secretary to the Government of India in the Ministry of Finance (Department of Economic Affairs)‘

(iii) The Secretary to the Government of India in the Ministry of Law and Justice;
(iv) The Governor of the Reserve Bank or the Deputy Governor of the Reserve Bank nominated by the Governor of the Reserve Bank;
(v) Special Additional Secretary to the Government of India in the Ministry of Finance, Department of Economic Affairs (Banking Division) or an
officer not below the rank of Joint Secretary in the Banking Division nominated by the Special Additional Secretary in the Banking Division.
(2) The Chief Justice of India or the Judge of the Supreme Court shall be the Chairman of the Selection Committee.
(3) Any three members of the Committee including the Chairman shall form a quorum for meeting of the Committee.
(4) The Selection Committee may devise its own procedure including interview for selection and appointment of Chairperson
Provided that the procedure of interview shall not apply in case of a judge of a High Court nominated by the Chief Justice of such High Court.
(5) The Selection Committee shall recommend persons for appointment of Chairperson,_
(i) from amongst the persons from the list of candidates prepared by the Ministry of Finance after inviting necessary
applications; and
(ii) from amongst the Judges of High Court nominated by the Chief Justice of such High Courts.)
Medical fitness. - No person shall be appointed as a (Chairperson) unless he is declared medically fit by a Medical Board to be constituted by
the Central Government for the purpose unless he has already been declared fit by an equivalent authority.
Term of Office.—[The Chairperson of an Appellate Tribunal] shall hold office for a term of five years from the date on which he enters upon
his office or until he attains the age of [sixty-five years], whichever is earlier.
Salary and allowances and other terms and conditions of service of Presiding Officers.—The salary and allowances payable to and the other
terms and conditions of service (including pension, gratuity and other retirement benefits) of, [the Presiding Officer of a Tribunal or the
Chairperson of an Appellate Tribunal] shall be such as may be prescribed:
Filling up of vacancies.—If, for any reason other than temporary absence, any vacancy occurs in the officer of [the Presiding Officer of a
Tribunal or the Chairperson of an Appellate Tribunal], then the Central Government shall appoint another person in accordance with the
provisions of this Act to fill the vacancy and the proceedings may be continued before the Tribunal or the Appellate Tribunal from the stage at
which the vacancy is filled.
Resignation and removal.—(1) 1[The Presiding Officer of a Tribunal or the Chairperson of an Appellate Tribunal] may, by notice in writing
under his hand addressed to the Central Government, resign his office:
Provided that [the Presiding Officer of a Tribunal or the Chairperson of an Appellate Tribunal] shall, unless he is permitted by the Central
Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or
until a person duly appointed as his successor enters upon his office or until the expiry of his term of officer, whichever is the earliest.
[The Presiding Officer of a Tribunal or the Chairperson of an Appellate Tribunal] 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 inquiry,--
(a) in the case of the Presiding Officer of a Tribunal, made by a Judge of a High Court;
(b) in the case of [the Chairperson of an Appellate Tribunal], made by a Judge of the Supreme Court, in which 2[the Presiding Officer of a Tribunal
or the Chairperson of an Appellate Tribunal] has been informed of the charges against him and given a reasonable opportunity of being heard in
respect of these charges.
(2) The Central Government may, by rules, regulate the procedure for the investigation of misbehaviour or incapacity of [the Presiding
Officer of a Tribunal or the Chairperson of an Appellate Tribunal].
Orders constituting Tribunal or an Appellate Tribunal to be final and not to invalidate its proceedings.—No order of the Central
Government appointing any person as [the Presiding Officer of a Tribunal or Chairperson of an Appellate Tribunal] shall be called in question in

any manner, and no act or proceeding before a Tribunal or an Appellate Tribunal shall be called in question in any manner on the ground merely
of any defect in the constitution of a Tribunal or an Appellate Tribunal.
JURISDICTION, POWERS AND AUTHORITY OF TRIBUNALS
Jurisdiction, powers and authority of Tribunals.—(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and
authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial
institutions.
Power of Chairperson of Appellate Tribunal.—(1) The Chairperson of an Appellate Tribunal shall exercise general power of superintendence
and control over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of
Presiding Officers.
(2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own
motion after notice to the parties and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal.]
Bar of Jurisdiction.—On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers
or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the
matters specified in section 17.
PROCEDURE OF TRIBUNALS
Application to the Tribunal.—(1) Where a bank or a financial institution has to recover any debt from any person, it may make an application
to the Tribunal within the local limits of whose jurisdiction—
(a) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides or
carries on business or personally works for gain; or
2.Where a bank or a financial institution, which has to recover its debt from any person, has filed an application to the Tribunal under sub-
section (1) and against the same person another bank or financial institution also has claim to recover its debt, then, the later bank or financial
institution may join the applicant bank or financial institution at any stage of the proceedings, before the final order is passed, by making an
application to that Tribunal.
On receipt of the application the Tribunal shall issue summons requiring the defendant to show cause within thirty days of the service of
summons as to why the relief prayed for should not be granted.
The defendant shall, at or before the first hearing or within such time as the Tribunal may permit, present a written statement of his defence.
Where the defendant claims to set-off against the applicant‘s demand any ascertained sum of money legally recoverable by him from such
applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written
statement containing the particulars of the debt sought to be set-off.
The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from
transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the
Tribunal.
(2) (A) Where, at any stage of the proceedings, the Tribunal is satisfied, by affidavit or otherwise, that the defendant, with intent to
obstruct or delay or frustrate the execution of any order for the recovery of debt that may be passed against him,--
(i) is about to dispose of the whole or any part of his property; or
(ii) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Tribunal; or
(iii) is likely to cause any damage or mischief to the property or affect its value by misuse or creating third party interest,
(B)Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by
the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties
secured in his favour or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt.
(3) The applicant shall, unless the Tribunal otherwise directs, specify the property required to be attached and the estimated value
thereof.
(4) The Tribunal may also in the order direct the conditional attachment of the whole or any portion of the property specified.
(5) If an order of attachment is made without complying with the provisions of such attachment shall be void.
(6) In the case of disobedience of an order made by the Tribunal r breach of any of the terms on which the order was made, the
Tribunal may order the properties of the person guilty of such disobedience or breach to be attached an may also order such person to be
detained in the civil prison for a term not exceeding three months, unless in the meantime the Tribunal directs his release.
(7) Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order—
(a) appoint a receiver of any property, whether before or after grant of certificate for recovery of debt;
(b) remove any person from the possession or custody of the property;
(c) commit the same to the possession, custody or management of the receiver;
(d) confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending application before the Tribunal
and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the
application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the
Tribunal thinks fit; and
(e) appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof.
(8) The Tribunal may, after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order,
including the order for payment of interest from the date on or before which payment of the amount is found due up to the date of realization or
actual payment, on the application as it thinks fit to meet the ends of justice.
(9) The Tribunal shall send a copy of every order passed by it to the applicant and the defendant.
(10) The Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer
for recovery of the amount of debt specified in the certificate.
(11) Where the Tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the
jurisdiction of two or more Tribunals, it may send the copies of the certificate of recovery for execution to such other Tribunals where the
property is situated:
Provided that in a case where the Tribunal to which the certificate of recovery is sent for execution finds that it has no jurisdiction to
comply with the certificate of recovery, it shall return the same to the Tribunal which has issued it.
(12) Endeavour shall be made by it to dispose of the application finally within one hundred and eighty days from the date of receipt of
the application.
(13) The Tribunal may made such orders and give such directions as may be necessary or expedient to give effect to its orders or to
prevent abuse of its process or to secure the ends of justice.]
20. Appeal to the Appellate Tribunal
Within a period of forty-five days from the date on which a copy of the order made, or deemed to have been made, by the Tribunal is received by
him and it shall be in such form and be accompanied by such fee as may be prescribed:
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there
was sufficient cause for not filing it within that period.
On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being

heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.
The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Tribunal.
Deposit of amount of debt due, on filing appeal.—Where an appeal is preferred by any person from whom the amount of debt is due to a bank
or a financial institution or a consortium of banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless
such person has deposited with the Appellate Tribunal seventy-five per cent of the amount of debt so due from him as determined by the
Tribunal.
For preferring an appeal it is necessary to deposit with the Appellate Tribunal 75% of the amount of debt due from him as determined by the
Tribunal under section 19.
Functions of Tribunal
(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) issuing commissions for the examination of witnesses or documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default or any order passed by it ex parte;
(h) any other matter which may be prescribed.
RECOVERY OF DEBT DETERMINED BY TRIBUNAL

Modes of recovery of debts.—The Recovery Officer shall, on receipt of the copy of the, proceed to recover the amount of debt specified in the
certificate by one or more of the following modes, namely:--
(a) attachment and sale of the movable or immovable property of the defendant;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the defendant.
Recovery Officer shall stay the proceedings until the expiry of the time so granted.
Where a certificate for the recovery of amount has been issued, the Presiding Officer shall keep the Recovery Officer informed of any amount
paid or time granted for payment, subsequent to the issue of such certificate to the Recovery Officer.
A copy of the notice shall be forwarded to the defendant at his last address known to the Recovery Officer and in the case of a joint account to
all the joint holders at their last addresses known to the Recovery Officer.
Officer to the extent of his own liability to the defendant on the date of the notice, or to the extent of the defendant‘s liability for any sum due
under this Act, whichever is less.
The Recovery Officer may, at any time or from time to time, amend or revoke any notice under this sub-section or extend the time for making
any payment in pursuance of such notice.
The Recovery Officer may recover any amount of debt due from the defendant by distraint (seizure of someone‘s property for payment of money
owed) and sale of his movable property in the manner laid down in the Third Schedule to the Income-Tax Act, 1961
Appeal against the order of Recovery Officer.— any person aggrieved by an order of the Recovery Officer made under this Act may, within
thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.


UNIT 2 - COMPANIES LAW 2013 and RDDBFI

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UNIT 2 - COMPANIES LAW 2013 and RDDBFI

UNIT 2 - COMPANIES LAW 2013 and RDDBFI

5. Company avoiding legal obligations:

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

ii. Holding majority of shares:

FORMATION OF COMPANY - For Incorporation of Company (13 marks)

Certificate of Incorporation (COI): (4 marks)

PREINCORPORATION CONTRACT OR PRELIMINARY CONTRACT (4 marks)

ii. divided into paragraphs

S.No Authorised Capital Keywords in Name

B 1 Crore International, Globe, Universal, Continental, Asiatic, Asia

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

D 50 lakhs Hindustan, India, Bharat being first word

F 10 lakhs Enterprise, Product, Business and Manufacturing

G 1 crore Industry or Udyog

iii) To enlarge or change the local area of its operation,

Charter indicating nature of business Regulation of internal management

Supreme document Subordinate document

Defines scope Rules for carrying business

Alteration requires sanction of company law Altered by special resolutioon

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

iii) Breach of trust: Act best interest of company, No secret profits.

6. Board power ceases.

Declaration of solvency No such declaration required

In members control In creditors control

No meeting arranged Meeting of creditors

Liquidator appointed by company and Appointed by creditors and remuneration

No committee of inspection Committee of inspection is appointed

Board has power Creditors has power

Winding up and dissolution:

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

COMPANY LAW AMENDMENTS AND RDDBFI ACT 1993

COMPANY LAW AMENDMENTS

7 The Central Government on being satisfied that—

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Old Penal Provision New Penal Provision

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Contravention of provisions relating to issue of a prospectus.

Old Penal Provision New Penal Provision

Every person who is knowingly a party to the issue

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Old Penal Provision New Penal Provision

Every officer of the company who is in default

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Old Penal Provision New Penal Provision

Every officer of the company who is in default

Old Penal Provision New Penal Provision

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Maximum- 1 year Minimum- Rs. 50 thousand;

Old Penal Provision New Penal Provision

Every officer of the company who is in default

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

Old Penal Provision New Penal Provision

Such person shall be punishable with:

Contravention of the order of NC LT relating to alterations in MOA or AOA.

Old Penal Provision New Penal Provision

DR K S USMAN MOHIDEEN, B.Com, M.B.A, M.H.R.M, M.Com, M.Sc(Psychology), Ph.D

shall be punishable with: shall be punishable with:

Old Penal Provision New Penal Provision

Such person and director shall be punishable with: