Assured Success Study Plan Exam Tips

Assured success Study Plan
For live batch students

Step 1  Attend all the lectures religiously, do not miss any lecture.
During the batch  In case you have missed any lecture/lectures for unavoidable reasons,
As soon as the batch ends, the first thing to do it to read those missed
topics and clear the doubts with me.
 Along with the batch ensure that your command over the main notes
is very good, revise earlier topics as and when time permits.
 (Do not read from the additional question book or module up till you
have completed the main notes thoroughly)
 Ensure that you are writing a few answers daily (minimum 2)
 Never hesitate in asking any doubt, that’s your right.
Step 2  As soon as the batch is over, now is the time to work hard.
(Immediately after  Start with Part B, then Part C and then Part A
the batch)  Now pick one chapter (example chapter 16), first read the chapter
from the main notes (uptill now you would automatically be very
confident about the main notes), then read the chapter from
additional question book, then read the chapter from Module.
 Now we can say that chapter is perfectly done.
 Similarly go for every chapter.
(A student who says I will read all the chapters from notes first, then I will read
all the chapters from Module, Never actually reads the Module, Hence read
the module chapter by chapter, immediately after reading the chapter from
notes and additional question book)
Step 3 Once you are done with step 2, now is the time to test yourself.
(During self-study) Compulsorily write the test series, (if your are not in pune, join any test series
in your local city or even online)
This makes all the difference.
See whether you are able to complete the paper in 3 hours or not, what are
the mistakes you make, so you are prepared at the time of actual examination.
Step 4 This is the most important phase of course,
(During Exams) If you have worked very hard for the entire year but you make a mistake here,
You are a fool then.
Follow these points religiously:
1. Sleep for at least 4-5 hours even during the examination, your mind
should be fresh to handle the difficult questions in the examination.
2. Eat fruits and mostly raw food during the exam, do not eat processed
food like chips/fries, they make you lethargic.
3. Do not study from any new notes or material during the exams, that
will make you panic.
4. Just revise what you have already studied, do not even read new
topics one day before the examination.
5. Most importantly, never discuss the paper after the exam, just start
preparing for the next exam, this would kill your confidence level and
you will end up spoiling your next paper.
6. Be confident, you have studied, you will kill it.
For Virtual students
Step 1  Watch all the lectures religiously, do not watch a lot of lectures back to
During the Lectures back.
 Along with the batch ensure that your command over the main notes
is very good, revise earlier topics as and when time permits.
(Do not read from the additional question book or module up till you
have completed all the lectures)
 Ensure that you are writing a few answers daily (minimum 2)
 Never hesitate in asking any doubt, that’s your right.
 You can Whatsapp you query on 8554883071, it will certainly take
some time for me to reply, be patient, but I assure you that your query
will be resolved in the best possible way.
Step 2  As soon as all the lecture are over, now is the time to work hard.
(Immediately after  Start with Part B, then Part C and then Part A.
the batch)  Now pick one chapter (example chapter 16), first read the chapter
from the main notes (up till now you would automatically be very
confident about the main notes), then read the chapter from
additional question book, then read the chapter from Module.
 Now we can say that chapter is perfectly done.
 Similarly go for every chapter.
(A student who says I will read all the chapters from notes first, then I will read
all the chapters from Module, Never actually reads the Module, Hence read
the module chapter by chapter, immediately after reading the chapter from
notes and additional question book)
Step 3 Once you are done with step 2, now is the time to test yourself.
(During self-study) Compulsorily write the test series, You can Whatsapp us and get a question
paper along with solution, write it stricty, check it from the solution and you
Whatsapp the answer sheet checked by you to me for my suggestions.
You can also join any online test series or any test series in your local city.
See whether you are able to complete the paper in 3 hours or not, what are
the mistakes you make, so you are prepared at the time of actual examination.
Step 4 This is the most important phase of course,
(During Exams) If you have worked very hard for the entire year but you make a mistake here,
You are a fool then.
Follow these points religiously:
1. Sleep for at least 4-5 hours even during the examination, your mind
should be fresh to handle the difficult questions in the examination.
2. Eat fruits and mostly raw food during the exam, do not eat processed
food like chips/fries, they make you lethargic.
3. Do not study from any new notes or material during the exams, that
will make you panic.
4. Just revise what you have already studied, do not even read new
topics one day before the examination.
5. Most importantly, never discuss the paper after the exam, just start
preparing for the next exam, this would kill your confidence level and
you will end up spoiling your next paper.
6. Be confident, you have studied, you will kill it.
Exam Tips!!
(a) The first question to be answered should be one in which you are 100% confident and would
take least time to answer.
(b) Attempt all the parts of one question simultaneously.
(c) Start the answer to every question or part of a question with a fresh page.
(d) Always write 'to the point'. Do not write such points as have not been asked in the question or
are not relevant.
(e) Do not use your own abbreviations. However, standard abbreviations (e.g. AGM, EGM, NCLT,
ROC etc.) may be used.
(f) Always write the answers in points, and avoid paragraphs. If necessary, use sub-points or / and
bullets.
(g) Write short and simple sentences. However, if a legal provision is negatively drafted, it is not
advisable to write such provision using positive language; write such provision using the
negative language.
(h) Use the 'keywords' as much as possible.
(i) Do not use examples or illustrations as they would make the answer unnecessarily lengthy.
However, if the content is very limited, you may use examples or illustrations so that the answer
does not appear to be too short, or you may elaborate the same point again by restating the
provision in different words.
(j) Underline the important keywords, time limits, monetary limits, names of the case laws, section
numbers, etc. as you write the answers. If you plan to underline after writing all the answers, it
would consume more time, and you might not be left with the time to underline; so keep on
underlining as you write. Do not use pencil or scale or a different coloured pen to underline as it
would result in, wastage of time. Underlining would help in proper evaluation of your answers
and, may help you score some bonus marks.
(k) Use headings and sub-headings, wherever possible.
(l) Try to attempt the entire paper. Even if you don't know the answer of a particular question, try
to attempt it by applying the knowledge of some related provisions and common sense, as there
is no negative marking. But, remember, attempt such question at the end.
All the best!!

Which language is to be used in writing the exams?
(a) Many students believe that they can secure good marks only by writing the language used in the
Bare Act. It is a myth.
(b) Many students believe that unless they write the same language as given in the publications of
ICSI (viz, study material, suggested answers and practice manual), they would not be able to
score good marks. It is also a myth.
(c) A student who writes the answers in his own language would also score good marks if his
answer is proper. The answer would be proper, if —
 Correct section number / Rule No. / Regulation No. (as applicable) is quoted;
 Relevant section / Rule / Regulation is adequately explained;
 Keywords, as used in the Bare Act are used (The student would witness that the language
used by the Author in this Book is of his own, which makes the study of law simple, but the
Author has used the same keywords in this Book as have been used in the Bare Act);
 The answer is written in points, and not in long paragraphs;
 The name of the case-law, if any, is quoted along with brief facts, the judgment and the
reasons for the judgment;
(d) In case of a case study / practical problem, the given case is compared with the provisions
contained in the Act, the given case study / practical problem is analysed, and the answer ends
with a clear conclusion.
(e) If a student obtains the certified copies from ICSI after the result is declared, he would get to
know that good marks have been allotted to him in all such answers where he has written the
'proper answer' as explained above, even though the language used is not of the Bare Act and
not of any `ICSI Publication'.
INDEX
Contents Page no.

ADDITIONAL QUESTIONS (very important for examination)
Chapter 1 1.1 – 1.6
Chapter 2 2.1 – 2.13
Chapter 3 3.1 – 3.5
Chapter 4 4.1 – 4.4
Chapter 5 5.1 – 5.2
Chapter 6 6.1 – 6.2
Chapter 7 7.1 – 7.2
Chapter 8 8.1 to 8.4
Chapter 9 9.1 – 9.3
Chapter 10 10.1 – 10.4
Chapter 11 11.1 – 11.2
Chapter 12 12.1 – 12.8
Chapter 13 13.1 – 13.4
Chapter 16 16.1 – 16.8
Chapter 17 17.1 – 17.2
Chapter 18 18.1 – 18.3
Chapter 19 19.1 – 19.9
Chapter 21 21.1 – 21.3
Chapter 22 22.1 – 22.1
GYAN (just for reference) (not for examination)
MATTERS REQUIRING APPROVAL OF MEMBERS BY ORDINARY RESOLUTION 1-7
MATTERS REQUIRING APPROVAL OF MEMBERS BY SPECIAL RESOLUTION 8-17
MATTERS REQUIRING SPECIAL NOTICE 18
RIGHTS WHICH CAN BE EXERCISED BY MEMBERS HAVING 10% OR MORE VOTING POWER 19-20
MATTERS TO BE PASSED BY POSTAL BALLOT 21-22
MATTERS REQUIRING TO BE AGREED TO BY ALL THE MEMBERS 24-25
MATTERS REQUIRING RESOLUTIONS TO BE PASSED BY BOARD OF DIRECTORS IN BOARD MEETING 26-29
ONLY
DIRECTOR’S REPORT DISCLOSURES PRIVATE COMPANY 30-38
DIRECTOR’S REPORT DISCLOSURES – UNLISTED PUBLIC COMPANY 39-48
DIRECTOR’S REPORT DISCLOSURES LISTED COMPANY 49-60
PRIVILEGES AND EXMPTIONS FOR PRIVATE COMPANY 61-65
PRIVILEGES AND EXEMPTIONS FOR SPECIFIED IFSC PRIVATE COMPANY 66-72
PRIVILEGES AND EXMPTIONS FOR SPECIFIED IFSC PUBLIC COMPANY 73-80
PRIVILEGES AND EXMPTIONS FOR SPECIFIED GOVERNMENT COMPANIES 81-89
PRIVILEGES AND EXEMPTIONS FOR NIDHI COMPANY 90-93
Chapter 1
Introduction to Company Law
Que. No. 1] what are the distinctions between a partnership firm and a Company?
The principal points of distinction between a partnership firm and a company are as follows:
Partnership Firm Company
A partnership firm is not distinct from the A company is a distinct legal person.
several persons who form the partnership.
In a partnership, the property of the firm is the In a company, it belongs to the company and
property of the individuals comprising it. not to the individuals who are its members
Creditors of a partnership firm are creditors of The creditors of a company can proceed only
individual partners and a decree against the against the company and not against its
firm can be executed against the partners members.
jointly and severally.
Partners are the agents of the firm. A partner Members of a company are not its agents. A
can dispose of the property and incur liabilities member of a company cannot dispose of the
as long as he acts in the course of the firm’s property and incur liabilities in the course of
business. the company’s business
A partner cannot contract with his firm. A member can contract with his company.
A partner cannot transfer his share and make A company’s share can ordinarily be transferred
the transferee a member of the firm without
the consent of the other partners.
A partner’s liability is always unlimited. The liability of shareholder may be limited

either by shares or a guarantee
The death or insolvency of a partner dissolves A company has perpetual succession, i.e. the
the firm, unless otherwise provided death or insolvency of a shareholder or all of
them does not affect the life of the company
The accounts of a firm are audited at the A company is required to have its accounts
discretion of the partners. audited annually by a chartered accountant.
A partnership firm, on the other hand, is the A company, being a creation of law, can only be
result of an agreement and can be dissolved at dissolved as laid down by law
any time by agreement among the partners.
1. 1 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 2] what is the difference between LLP and a Company.
The principal points of distinction between a partnership firm and a company are as follows
Limited Liability Partnership Company
Limited liability partnership means a Company means a company incorporated

partnership formed and registered under under the Companies Act, 2013 or under any
Limited Liability Partnership Act, 2008. previous company law.
Limited liability partnerships are governed by Companies are governed by the Companies
the Limited Liability Partnership Act, 2008. Act, 2013 and various Rules made there under.
Internal rules and regulation of LLFs are Internal rules and regulation of the companies
governed by the LLP agreement. are governed by the MOA & AOA.
In the LLP Act, there is no stipulation for Every company must hold AGM every year.
meeting of partners either periodically or Every company must hold 4 board meetings
compulsory at the year end. and gap between two meetings should not be
more than 3 months.
In an LLP, each partner has the authority to do In case of a company no individual director can
so unless expressly prohibited by the conduct the business of the company
partnership terms.
There are no provisions in the LLP Act, 2008 The Companies Act, 2013 regulates the
regulating the remuneration payable to remuneration payable to directors.
designated partners.
There are no restrictions on the borrowing There are restrictions on borrowings power on
powers on the LLP. the companies.
The LLP can choose to maintain the accounts Companies have to keep their accounts on
on cash basis/ accrual basis. accrual basis.
The audit of LLP is not compulsory if the capital Audit of a company is compulsory.
contributed or the turnover does not exceed
the limits prescribed under the Income Tax Act,
1961.
Cost audit is not applicable for LLPs. Certain companies are required to do cost
audit also.
The appointment of Company Secretaries is Certain companies are required to appoint

not provided in the LLP Act, 2008. Company Secretary.

Que. No. 3] what are the distinctions between a HUF and a Company?
The principal points of distinction between a HUF and a company are as follows:
Hindu Undivided Family Business Company
A Hindu Undivided Family Business consists of A company consists of heterogeneous (varied

homogenous (unvarying) members since it or diverse) members.
consists of members of the joint family itself
In a Hindu Undivided Family business the Karta There is no such system in a company.
(manager) has the sole authority to contract
debts for the purpose of the business, other
coparceners cannot do so.
A person becomes a member of a Hindu There is no provision to that effect in the

Undivided Family business by virtue of birth. company.
No registration is compulsory for carrying on Registration of a company is compulsory

business for gain by a Hindu Undivided Family
even if the number of members exceeds twenty
[Shyamlal Roy v. Madhusudan Roy, AIR 1959
Cal. 380 (385)].
Que. No. 4] Explain the scope and applicability of Companies Act, 2013?
 The Companies Act, 2013 extends to whole of India.

 This section shall come into force at once and the remaining provisions of this Act shall come into
force on such date as the Central Government may, by notification in the Official Gazette, appoint
and different dates may be appointed for different provisions of this Act and any reference in any
provision to the commencement of this Act shall be construed as a reference to the coming into
force of that provision.
 According to section 1 of the Companies Act, 2013, the Act extends to whole of India and the
provisions of the Act shall apply to the following:
(a) companies incorporated under this Act or under any previous company law;
(b) insurance companies, except in so far as the said provisions are inconsistent with
the provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory
and Development Authority Act, 1999 (41 of 1999);
(c) banking companies, except in so far as the said provisions are inconsistent with
the provisions of the Banking Regulation Act, 1949 (10 of 1949);
(d) companies engaged in the generation or supply of electricity, except in so far as

the said provisions are inconsistent with the provisions of the Electricity Act, 2003
(36 of 2003);
(e) any other company governed by any special Act for the time being in force,
except in so far as the said provisions are inconsistent with the provisions of such
special Act; and

(f) such body corporate, incorporated by any Act for the time being in force, as the
Central Government may, by notification, specify in this behalf, subject to such
exceptions, modifications or adaptation, as may be specified in the notification.
Que. No. 5] Common seal can be used by any employee irrespective of his designation. Comment.
On incorporation, a company acquires legal entity with perpetual succession and a common seal. Since
the company has no physical existence, all contracts entered into by its agents may be under the seal
of the company. The Common Seal acts as the official signature of a company.
Some important points relating to affixation of common seal are as under:
 The common seal should be affixed to any instrument only by authority of a resolution of the
Board or a committee authorized by the Board.
 The common seal should be affixed in the presence of managing director or any two directors,
and the company secretary or any other person as the Board may authorize for the purpose. The
Articles may provide for affixing of common seal in any other manner.
 The persons in whose presence the seal is affixed should sign every instrument to which the seal
of the company is so affixed.
Thus, it is incorrect to say that common seal can be used by any employee irrespective of his
designation.
Que. No. 6] what is a body corporate?
Body Corporate or Corporation [Section 2(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, which are specified by the Central Government by notification. The
expression corporation or body corporate is wider than the word company.
A corporation sole is a single individual constituted as a corporation in respect of some office held by
him or function performed by him. The Crown or a Bishop under the English law are examples of this
type of corporation. It may be noted that though a corporation sole is excluded from the definition
for the purposes of the Companies Act, it continues to be a legal person capable of holding property
and becoming a member of a company.
A society registered under the Societies Registration Act, 1860 has been held by the Supreme Court
not to come within the term 'body corporate' under the Companies Act, though it is a legal person
capable of holding property and becoming a member of a company. [Board of Trustees v. State of
Delhi A.I.R. 1962 S.C. 458]
An industrial society formed under Industrial and Provident Societies Acts is not a company. [Great
Northern Railway Co. v. Coal Co-operative Society (1896) I Ch. 187]

Que. No. 7] what do you understand by the term 'illegal association'? What are the rights and
liabilities of a member of illegal association?
In order to prevent the mischief arising from large trading undertakings being carried on by large
fluctuating bodies so that persons dealing with them did not know with whom they were contracting,
the law has put a ceiling on the number of persons constituting an association or partnership. An
unincorporated company, association or partnership consisting of large number of persons has been
declared illegal.
Prohibition of association or partnership of persons exceeding certain number [Section 464]: No
association or partnership consisting of more than prescribed persons shall be formed for the purpose
of carrying on any business, unless it is registered as a company or is formed under any other law for
the time being in force. The number of persons which may be prescribed under this section shall not
exceed 100.
Rule 10 of Companies (Miscellaneous) Rules, 2014 prescribes 50 persons in this regard.
Effects of an illegal association: An illegal association
(i) Cannot enter into any contract
(ii) Cannot sue any member, or outsider, not even if the company is subsequently registered
(iii) Cannot be sued by a member, or an outsider for recovery of any debts.
(iv) Cannot be wound up by an order of the Court. In fact, the Court cannot entertain a petition for
winding up as an unregistered company, for if it did, it would be indirectly according recognition to
the illegal association. [Raghubar Dayal v. Sarafa Chamber A.I.R. 1954 All. 555]
However, an illegal association is liable to be taxed. [Kumara Swamy Chattiarv. Income Tax Officer
(1957) I.T.R. 457],
The members of an illegal association are individually liable in respect of all acts or contracts made on
behalf of the association; they cannot either individually or collectively, bring an action to enforce any
contract so made, or to recover any debt due to the association. [Wilkinson v. Levison (1925) 42 T.L.R.
97],
Penalty: Every member of an illegal association shall be punishable with fine which may extend to 1
lakh and shall also be personally liable for all liabilities incurred in such business.
Que. No. 8] Mr. M holds all the shares (except one) in a private company engaged in timber and also
a substantial creditor. He gets company insured on his own name. In a fire all the timber get
destroyed by fire and claims loss from insurance company. Is insurance company liable to Mr. M?
A company being a legal person and entirely distinct from its members, is capable of owning, enjoying
and disposing of property in its own name. The company is the real person in which all its property is
vested, and by which it is controlled, managed and disposed of. No member can claim himself to be
the owner of the company's property during its existence or in its winding-up. A member does not
even have an insurable interest in the property of the company.
The facts of the given case are similar to Macaura v. Northern Assurance Co. Ltd., wherein it was held
that a member does not even have an insurable interest in the property of the company. Hence,
Insurance Company is not liable to reimbursement of loss.
Que. No. 9] NSZ Ltd. engaged in petroleum products and for last few years company is facing the
problem of liquidity and is struggling for its survival. Some difference arises between the workmen

and management of NSZ Ltd. The workmen of the company prepared video cassettes showing their
struggle against the company's management. Advice as a Company Secretary to the management
of NSZ Ltd. whether company can claim damages against their workers?
A company has a right to seek damages where a defamatory material published about it, affects its
business. In TVS Employees Federation v. TVS & Sons Ltd. (1996) 87 Com Cases 37, it was held that,
where video cassettes were prepared by the workmen of a company showing their struggle against
the company's management is not actionable unless it is shown that the cassette would be
defamatory. Thus, company cannot claim damages against their workers.
Que. No. 10] New Horizons Ltd. was formed as a joint venture by Thomson Press India Ltd. and Living
Media India Ltd. and the company have lot experience in publication business but the tender
submitted by the New Horizons Ltd. was rejected on the ground that company had nothing on
record to show that it had the technical experience required to be possessed to qualify for tender.
Comment.
The experience of a shareholder of a company can be regarded as experience of a company. The facts
of the given case are similar to New Horizons Ltd. v. Union of India (1995) 1 Comp. LJ 100 SC. In this
case, the tender of the company, New Horizons Ltd., for publication of telephone directory w ras not
accepted by the Tender Evaluation Committee on the ground that the company had nothing on record
to show that it had the technical experience required to be possessed to qualify for tender. On appeal
the rejection of tender was upheld by the Delhi High Court.
The judgment of the Delhi High Court was reversed by the Supreme Court which observed as under:
"Once it is held that NHL (New Horizons Ltd.) is a joint venture, as claimed by it in the tender, the
experience of its various constituents namely, TPI (Thomson Press India Ltd.), LMI (Living Media India
Ltd.) and WML (World
Media Ltd.) as well as IIPL (Integrated Information Pvt. Ltd.) had to be taken into consideration, if the
Tender Evaluation Committee had adopted the approach of a prudent businessman."
Thus, depending upon circumstances of the case experience of shareholders can be treated as
experience of company.
Que. No. 11] Two companies are incorporated with the same set of shareholders. Are they same or
distinct under the Companies Act, 2013? Discuss.
By registration a company becomes vested with corporate personality, which is independent and
distinct from its members. Even if two companies are incorporated with the same set of shareholders,
they are distinct and cannot to be treated as same company.

Chapter 2
Share Capital
Que. No. 1] Is publication of Authorised Capital mandatory?
It is provided under section 60 of the Act that 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.
In case of failure in complying with the afore mentioned requirements, 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.
Que. No. 2] What are the provisions for issue of share certificate?
 Board Resolution be passed and Letter of allotment or fractional coupons of requisite value,
must be surrendered to company. In case the letter of allotment is lost or destroyed the Board
may impose reasonable terms.
 Certificate shall be issued in Form No. SH-1 and shall specify the name of person in whose favour
the certificate is issued, shares to which it relates and the amount paid-up thereon.
 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 CS, wherever the company has
appointed CS.
 In case the company has a common seal it shall be affixed in the presence of persons required to
sign the certificate.
 In case of a One Person Company, it shall be sufficient if the certificate is signed by a director
and the CS or any other person authorised by the Board for the purpose.
 A director shall be deemed to have signed the share certificate if his signature is printed thereon
as facsimile signature by means of any machine, equipment or other mechanical means such as
engraving in metal or lithography or digitally signed, but not by means of rubber stamp,
provided that the director shall be personally responsible for permitting the affixation of his
signature thus and the safe custody of any machine, equipment or other material used for the
purpose.
 Particulars of shares certificates to be entered in the Register of Members
Que. No. 3] What are the provisions for issue of renewed or duplicate share certificate?
 Renewal to be made only on surrender of old certificate.

 Company may charge fee for duplicate share certificate as the board decides but not exceeding
Rs. 50 per certificate.
 Company shall not issue any duplicate share certificate in lieu of those lost or destroyed without
the prior consent of Board
 If the company is listed then the duplicate share certificates shall be issued within 45 days and if
the company is unlisted it shall issue the certificates within 3 months from the date of
submission of complete documents with the company

 The particulars of renewed and duplicate share certificate to be entered in Register of Renewed
and Duplicate Share Certificates maintained in Form No. SH.2.
 The register shall be kept at the registered office of the company or at such other place where
the Register of Members is kept and it shall be preserved permanently and shall be kept in the
custody of the company secretary of the company or any other person authorized by the Board
for the purpose.
 On fraudulent issue the company shall be punishable with: fine which shall not be less than five
times the face value of shares involved which may extend to ten times or rupees 10 crore
whichever is higher.
 Officer in default shall be liable under section 447.
Que. No. 4] Whether Share Certificate is an Official Publication?
 The question whether a share certificate is an official publication within the meaning of Section
12(3)(c) was considered by the Department of Company Affairs (Now, Ministry of Corporate
Affairs) and the Department has clarified vide Circular No. 3/73[8/10(47)]/72-CL-V dated
3.2.1973 as follows:
 “It will be seen that in terms of Section 82 [Corresponds to section 44 of the Companies Act,
2013], the shares in a company are movable property transferable in the manner provided in
the articles of the company.
 Section 84 [Corresponds to section 46 of the Companies Act, 2013] provides that a certificate
under the common seal of the company specifying any share held by any member shall be prima
facie evidence of the title of the member to such share. [With the Companies (Amendment) Act,
2015 coming into force the common seal is no more mandatory.]
 Thus, shares are movable property transferable in the manner provided in the articles of the
company and that the share certificates are certificates of title and are movable property but
are not publications in the nature of prospectus, balance sheet, profit and loss account, notice
or advertisement.
 The conclusion reached, therefore, is that the share certificate is not an official publication within
the meaning of Section 12(3)(c) of Companies Act, 2013.
Que. No. 5] What shall be the penalty for personation of shareholder?
 Where 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
i. thereby obtains or attempts to obtain any such security or interest or any such share warrant
or coupon, or
ii. receives or attempt to receive any money due to any such owner;
 He shall be punishable with imprisonment for a term which shall not be less than 1 year but
which may extend to 3 years and with fine which shall not be less than 1 lakh rupees but which
may extend to 5 lakh rupees.
 To ‘personate’ means to pretend to be someone else, especially for fraudulent purpose such as
casting a vote in another person’s name. Personation and impersonation imply the same thing.

Que. No. 6] What is the procedure for issue of Equity Shares with differential voting rights?
(1) Check whether the Articles of Association of the company authorizes issue of equity shares with
differential rights.
(2) Hold the Board meeting to issue the notice of general meeting for issuance of equity share with
differential rights
(3) Before issuing equity shares with differential rights as to dividend, voting or otherwise, ensure that
the conditions of issue are fully satisfied
(4) If the company is listed with any of the recognized stock exchange, then within 15 minutes of the
closure of the aforesaid Board Meeting intimate to the concerned Stock Exchange about the decision
taken at the Board Meeting.
(5) Pass the ordinary resolution in the general meeting or through Postal Ballot under section 110 of the
Act.
(6) Once the company makes any allotment then it shall, within 30 days thereafter, file with the Registrar
a return allotment in Form PAS-3, along with the fees as specified in the Companies (Registration
Offices and Fees) Rules, 2014.
(7) The company shall not convert its existing equity share capital with voting rights into equity share
capital carrying differential voting rights and vice–versa.
(8) In case of listed company, send copies of the notice and a copy of the proceedings of the general
meeting to the stock exchange within 24 hours of the occurrence of event. [Regulation 30 (6) of SEBI
(Listing Obligations and Disclosure Requirements), 2015]
(9) Complete all other proceedings for the issue of certificate of shares with differential voting rights
making necessary entries in various registers. In case of a company whose shares are dematerialized
form, inform the depositories about the same for credit to the respective accounts.
(10)Intimate the details of allotment of shares to the Depository immediately on allotment of such
shares.
(11)Maintain the Register of Members under section 88 containing all the relevant particulars
of the shares so issued along with details of the shareholders.
Que. No. 7] What happens to the ESOP’s in case of death/permanent disability/resignation of

employee?
Rule 12(8) states that in the event of the death of employee while in employment, all the options granted
to him till such date shall vest in the legal heirs or nominees of the deceased employee.
In case the employee suffers a permanent incapacity while in employment, all the options granted to him
as on the date of permanent incapacitation, shall vest in him on that day.
In the event of resignation or termination of employment, all options not vested in the employee as on
that day shall expire. However, the employee can exercise the options granted to him which are vested
within the period specified in this behalf, subject to the terms and conditions under the scheme granting
such options as approved by the Board.
Que. No. 8] What are the advantages of issuing Bonus Shares?
Advantages of Issuing Bonus Shares:

1. Fund flow is not affected adversely.
2. Market value of the company’s shares comes down to their nominal value by issue of bonus shares.
3. Market value of the members’ shareholdings increases with the increase in number of shares in the
company.

4. ‘Bonus shares’ is not an income. Hence, it is not a taxable income.
5. Paid-up share capital increases with the issue of bonus shares.
Que. No. 9] What are the allowed methods of Buy Back under The Companies Act, 2013?
Methods of buy-back [Section 68(5)]
Buy Back under section 68(1) may be :

1. From the existing shareholders or security holders on a proportionate basis.
2. From the open market
3. By purchasing the securities issued to employees of the company pursuant to a scheme of stock
option or sweat equity.
Que. No. 10] Buy Back is prohibited in certain circumstances. Explain

No company shall directly or indirectly purchase its own shares or other specified securities—
1. through any subsidiary company including its own subsidiary companies;
2. through any investment company or group of investment companies; or
3. if a default, is made by the company, in the repayment of deposits accepted either before or after
the commencement of this Act, interest payment thereon, redemption of debentures or
preference shares or payment of dividend to any shareholder, or repayment of any term loan or
interest payable thereon to any financial institution or banking company: However, 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. [Proviso to Section 70(1)]
4. 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 (Annual Return), section
123 (Declaration of Dividend), section 127 (punishment for failure to distribute dividend) and
section 129 (Financial Statement).
Que. No. 11] Diminution of share capital is not reduction of capital. Comment
As per section 61(1)(e) of the Companies Act, 2013, diminution of capital is the cancellation of the
unsubscribed part of the issued capital. It can be effected by an ordinary resolution provided articles of
the company authorises to do so. According to section 61(2), cancellation of shares under section 61(1)
shall not be deemed to be reduction of share capital. It does not need any confirmation of the Tribunal
under section 66.
(a) Redemption of redeemable preference shares.
(b) Purchase of shares of a member by the Company on order of the Tribunal under Section 242
of Companies Act, 2013.
(c) Buy-back of its own securities under Section 68.
In the following cases, the diminution of share capital is not to be treated as reduction of the capital:
(i) Where the company cancel shares which have not been taken or agreed to be taken by any
person [Section 61(1)(e) Companies Act, 2013];
(ii) Where redeemable preference shares are redeemed in accordance with the provisions of
Section 55 [Explanation to section 55(3) Companies Act, 2013];
(iii) Where any shares are forfeited for non-payment of calls and such forfeiture amounts to
reduction of capital;

(iv) Where the company buys-back its own shares under Section 68 of the Act [Section 66(6)];
(v) Where the reduction of share capital is effected in pursuance of the order of the Tribunal
sanctioning any compromise or arrangement under section 230.
Que. No. 12] What is right of pre-emption?
If a member wishes to sell some or all his shares, such shares shall first be offered to other existing
members of the company at a price determined by the directors or by the auditor of the company or by
the use of formula set out in the articles. If no existing member is determined to acquire shares, then
shares can be transferred by the transferor to the proposed transferee. A member is not bound to sell his
shares to other members under pre-emption clause unless any other member or members agree to buy
all the shares proposed to be sold. The transfer between the members is outside the purview of pre-
emption clause. The pre-emption clause cannot place a complete ban on right to transfer; they cannot
completely prohibit the transfer.
Valuation of Shares under Pre-emption clause: Articles of Association of private company provide that
the shares are to be sold under pre-emption clause at a fair price determined by the directors or the
auditor of the company. It may also be provided that the fair price would be certified by the auditor of
the company. If the pre-emption clause requires that the shares are required to be offered to other
members at a price certified by the directors or auditor(s), the court are not in a position to enquire into
the correctness of valuation, unless there is evidence that valuation was not correctly made. If the person
who made the valuation has acted negligently and failed to take into account all the necessary factors for
arriving at the value of share, in such case the transferor may sue for damages to the person who made
the valuation for difference between the value of the share, as computed by the valuer, and the real value
of shares
Que. No. 13] How does an investor avail services of a depository?
(a) In the case of existing securities:

An investor before availing the services of a depository, shall enter into an agreement with the depository
through a participant and then shall surrender security certificates to the issuer. The issuer on receipt of
security certificate shall cancel them and substitute in its records the name of the depository as the
registered owner in respect of that security and inform the depository accordingly. The depository shall
thereafter enter the name of the investor in its records as beneficial owner.
(b) In the case of fresh issue:
At the time of initial offer the investor would indicate his choice in the application form. If the investor
opts to hold a security in the depository mode, the issuer shall intimate the concerned depository about
the details of allotment of a security made in the favour of investors and records the depository as
registered owner of the securities. On receipt of such information, the depository shall enter in its records
the names of allottees as the beneficial owners. In such case a prior agreement by the investor with the
depository as well as an agreement between the issuer company and depository may be necessary.
(c) In the case of exit from the depository:
If a beneficial owner or a transferee of a security desires to take away a security from depository, he shall
inform the depository of his intention. The depository in turn shall make appropriate entries in its records
and inform the issuer. The issuer shall make arrangements for the issue of certificate of securities to the
investor within 30 days of the receipt of intimation from the depository.
(d) In the case of transfer within the depository:

The depository shall record all transfers of securities made among the beneficial owners on receipt of
suitable intimation to the effect that a genuine purchase transaction has been settled.
(e) In the case of pledge:
Before creation of any pledge or hypothecation in respect of a security, the beneficial owner is required
to obtain prior approval of the depository and on creation of pledge or hypothecation; the beneficial
owner shall give intimation of such pledge or hypothecation to the depository. The depository shall make
appropriate entries in its records which will be admissible as evidence.
Que. No. 14] What is the procedure for Dematerialisation of shares by the shareholders?
(1) For the purpose of Dematerialisation of the shares of a registered shareholder of a company, the
shareholder has to enter into an agreement with a depository through a participant in the manner
specified by the bye-laws, for availing of its services [Refer Section 5 of the Depositories Act.]
(2) Section 6(1) of the Act lays down that a person who has entered into an agreement under Section 5
shall surrender the certificate of the shares, for which he seeks to avail the services of a depository, to the
company in the manner specified in the SEBI (Depositories and Participants) Regulations, 1996.
(3) According to Sub-section (2) of Section 6 of the Act, the company, on receipt of the share certificate
under Sub-section (1) from such a shareholder, shall cancel the certificate, (which action is referred to as
Dematerialisation of shares) and substitute in its records, the name of the depository as the registered
owner in respect of those shares and accordingly inform the depository.
(4) On receipt of the information from the company under Sub-section (2), the depository shall enter the
name of the shareholder in its records as the beneficial owner of the shares and inform the company, who
shall in turn inform the shareholder that his shares have been dematerialized and his name has been
entered in the depository’s electronic records [Refer Sub-section (3) of Section 6 of Depositories Act, 1996.
(5) A Dematerialisation Request Form (DRF) issued by the Depository Participant is to be filled and
deposited with the concerned DP together with certificates after writing “Surrendered for
Dematerialisation” on the face of each certificate.
(6) The DP will send DRF along with the certificates to the concerned company for confirmation of its
genuineness simultaneously to Share Transfer Agents electronically through the Depository (NSDL or CDSL
as the case may be).
(7) After checking the genuineness of the certificates and DRF the company/ Share Transfer Agents
destroy the certificates and send a confirmation to the NSDL or CDSL which, in turns, confirm the
dematerialisation of securities to DPs.
(8) DPs on receipt of such confirmation should inform the investor accordingly.
Que. No. 15] What is the procedure for Dematerialisation of shares by the company?
A company proposing to have its shares dematerialized is required to take the following procedural steps:
(1) It should ensure that its articles of association do contain an article which authorizes the
company to have its securities dematerialized. If the articles of the company do not contain such
a provision, it shall be required to alter its articles by passing a special resolution in general
meeting in accordance with the provisions of Section 14 of the Companies Act, 2013 so as to
include such a provision and thereafter comply with the provisions of the Depositories Act, 1996
and the SEBI (Depositories and Participants) Regulations, 1996 for dematerialisation of its
securities.
(2) The said company, which is desirous of dematerialising any of its above-detailed securities,
after having altered its articles of association to incorporate an article to authorize the company

to dematerialize its securities, will have to approach a depository for the purpose. The depository
shall enter into an agreement with the company in respect of securities that are to be declared as
eligible to be held in dematerialized form. Further, no such agreements shall be required to be
entered into where the State or the Central Government is the issuer of such securities. [Refer
Regulation 29(1) of the said regulations].
(3) If the company has appointed a Registrar to the issue, in case of a new issue, or a share transfer
agent for transfer/transmission of its existing shares, who has been granted certificate of
registration by SEBI under Sub-section (1) of Section 12 of the Depositories Act, 1996, the
depository shall enter into a tripartite agreement with the company and the registrar to the issue
or share transfer agent, as the case may be, in respect of the securities to be declared by the
depository as eligible to be held in dematerialised form. [Sub-regulation (2) of Regulation 29 of
the said regulations].
(4) Thereafter, the shareholders may surrender their share certificates to the company and the
company shall inform the depository accordingly. According to Sub-section (2) of Section 6 of
the Act, the company, on receipt of the share certificates under Sub-section (1) from its
shareholders, shall cancel the certificates, (which action is referred to as dematerialisation of
shares) and substitute in its records, the name of the depository as the registered owner in
respect of all those shares and accordingly inform the depository.
(5) On receipt of the information from the company under Sub-section (2), the depository shall
enter the names of the shareholders in its records as the beneficial owners of the shares and
inform the company, who shall in turn inform the shareholders that their shares have been
dematerialised and their names have been entered in the depository’s electronic records as
beneficial owners of the shares [Sub-section (3) of Section 6 of Depositories Act, 1996].
(6) According to Regulation 30 of the said regulations, every depository shall have systems and
procedures which will enable it to coordinate with the company or its agent, and the
participants, to reconcile the records of ownership of securities with the company or its agent,
as the case may be, and with participants, on a daily basis.
(7) Every depository shall maintain continuous electronic means of communication with all its
participants, issuer companies or companies’ agents, as the case may be, clearing houses and
clearing corporations of the stock exchanges and with other depositories [Regulation 31].
(8) The depository shall satisfy the Board that it has a mechanism in place to ensure that the
interests of the persons buying and selling securities held in the depository are adequately
protected. [Regulation 32]
(9) Where records are kept electronically by the depository, it shall ensure that the integrity of
the automatic data processing systems is maintained at all times and take all precautions
necessary to ensure that the records are not lost, destroyed or tampered with and in the event
of loss or destruction, ensure that sufficient back up of records is available at all times at a
different place. [Regulation 37]

Que. No. 16] What is the procedure for Pledge or Hypothecation of Dematerialised Share?
A beneficial owner may, with the prior approval of the depository, pledge or hypothecate his shares held
in a depository. Upon receipt of intimation from the beneficial owner about the pledge or hypothecation
of his shares, the depository shall accordingly make entries in its records. Such an entry in the records of
a depository shall be evidence of a pledge or hypothecation [Section 12]. Both the pledger and pledgee
must have a depository account. The procedure for pledge or hypothecation of shares held in demat form
is as under:-
(i) Investor shall submit the details of shares to be pledged to the DP in the prescribed format.
(ii) DP shall verify the records and on being satisfied that the shares are available for pledge, make
a note in the records and forward the application to the Depository for approval.
(iii) Depository shall obtain confirmation from pledgee and record the pledge within 15 days of
application.
(iv) Depository shall send intimation to the DP of both the pledger and pledgee who will inform
the pledger and pledgee respectively.
(v) The pledgee may invoke the pledge in accordance with the terms of pledge and on such
invocation the name of pledgee is entered in the Register of Beneficial Owners by the Depository.
(vi) During the period the pledge is in force, the DP shall not give effect to transfer of any security
without the concurrence of the pledgee.
(vii) On closure of the loan, the pledger shall request the DP to close the pledge. The pledgee, on
getting payment, shall make a request for closure of pledge to his DP.
(viii) For making hypothecation of shares held in demat form the above procedure is to be
followed. However, before registering the hypothecatee as a beneficial owner, the Depository
should obtain the consent from the hypothecator.
Que. No. 17] What is the procedure for Rematerialisation of securities?
Rematerialisation is conversion of electronic securities into physical certificates of such securities. This
can be done in the following manner:
(1) Beneficial owner sends request to DP.
(2) DP intimates Depository (NSDL or CDSL) of such request electronically.
(3) Depository confirms rematerialisation request to the company’s Share Transfer Agents.
(4) Share Transfer Agent updates accounts, prints certificates and confirms the Depository.
(5) Depository updates accounts and downloads the details to the DP.
(6) Share Transfer Agent dispatches certificates to holder thereof.
(7) The DP also sends intimation about rematerialisation to its client.
Que. No. 18] Dinesh, one of the joint holders of shares of a company, sent a requisition to the company
to split the shares equally amongst him and the other joint holders, by issuing fresh share certificates.
State whether the company is bound to comply with this requisition.
Where the shares of the company are held in joint names and one of these joint holders makes a request
to the company to split the shares among the joint holders, the company shall not be bound to do so
unless the transfer deed duly executed jointly by the all the joint holders duly stamped and executed are
lodged with the company together with relevant share certificates in terms of Section 56 of the Companies
Act, 2013.

Que. No. 19] Anant buys 20 shares of a public company from Basant through a stock broker. Anant
receives the share certificate and the blank transfer deed countersigned by Basant but does not lodge
the transfer deed for registration. Examine the legal effect of unregistered transfer between the
transferor and the
transferee.
CS (Inter) - Dec 2007 (4 Marks)
There is binding contract and the title of the transferee is complete and he became equitable beneficial
owner of the shares even though the transfer has not been lodged with the company. However, it was
held that the transferee becomes the member of a company only when the transfer of shares is registered
by the company. Pending registration, the transferor is trustee of the shares for the transferee and the
transferor continues to be the holder of the shares until his name is struck off the register of member and
the name of the transferee entered in his place. [Hardoon v. Belilios]
Que. No. 20] Grace Ltd., a public limited company has received an application from Rosy for
transmission of certain shares in her name. Rosy, being a widow of a shareholder, applies for
transmission of the shares standing in the name of her deceased husband without producing a
succession certificate. Can the company transfer the shares of the deceased member? Discuss.
CS (Executive) - Dec 2009 (4 Marks)
If a widow applies for transmission of the shares standing in the name of her deceased husband without
producing a succession certificate and if the AOA of the company so authorizes, the directors may
dispense with the production of succession certificate, probate or letter of administration upon such
terms as to indemnity as the directors may consider necessary, and transmit the shares to the widow of
the deceased by obtaining an indemnity bond.
Thus, Grace Ltd. can transmit the shares of deceased husband to a widow without producing a succession
certificate.
Que. No. 21] 1,000 shares of Astro Ltd. are registered in the name of the three persons P, Q & R jointly.
Interestingly, the articles of the company provide that the survivors shall be the person to be recognized
by the company as having any title to the shares of the company. Unfortunately, P & Q died in an air
crash. In these circumstances, R, being the survivor claims to be the full owner of the said shares.
However, the legal heirs of P & Q are also making counter claims. Who will succeed? Explain.
In case some shares are registered in joint names and the articles of the company provide that the survivor
shall be the only person to be recognized by the company as having any title to the shares, the company
is justified in refusing to register the transmission of title by operation of law in favour of the son of the
deceased holder even though he may obtain succession certificate from the Court.
Que. No. 22] On receipt of 85% of the minimum subscription stated in the prospectus, Little Stars Ltd.
allotted 200 shares to Ranjit and the money was deposited in a scheduled bank. Later on, it was
revealed that 40% of the amount withdrawn was for acquisition of fixed assets for the company. Ranjit,

knowing these facts, refused to accept the allotment contending that the allotment was irregular under
the provisions of the Companies Act, 2013. As an expert on company law advise Ranjit.
 As per Section 39, 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.
 As per SEBIICDR Regulation, the minimum subscription for public company issuing shares to
public is 90%. So minimum subscription received must be 90% of the public issue. If the
subscription is less than 90%, shares cannot be allotted and application money received must be
refunded as stated below:
 Non-underwritten issue: Within 15 days from the date of closure of the issue.
 Underwritten Issue: Within 70 days from the date of closure of the issue if underwriters
fail to make up shortfall within 60 days of the closure of issue.
 If application money is not refunded within the period stated above, interest is payable for the
delay. Thus, allotment of shares to Ranjit is void and he can refuse to accept the shares.
Que. No. 23] The authorized signatory of a company issued a share certificate in favour of X, which
apparently complied with the company's article as it purported to be signed by two directors and the
secretary and it had the company's common seal affixed to it. In fact, the secretary had forged the
signatures of the directors and affixed the seal without any authority. Will the share certificate be
binding upon the company?
According to Rule 5 of the Companies (Share Capital & Debentures) Rules, 2014, every share certificate
shall be issued under the common seal, if any, of the company, which shall be affixed in the presence of,
and signed by-
(a) Two directors (one of whom should be person other than managing director or whole time director)
duly authorized by the Board of Directors and
(b) The Company Secretary or any person authorized by the Board for the purpose
However, if company does not have a common seal, the share certificate shall be signed by two directors
or by a director or the Company Secretary, if any.
If the signatures of directors are forged then share certificate will not be binding upon the company
because forgery is nullity at law. Thus, if forged the signatures of the directors appears on share certificate
it will not be binding upon the company.
Que. No. 24] A public limited company incorporated under the Companies Act, 2013 may amend its
articles of association so as to confer upon it power to forfeit the shares of those members who have
defaulted in the payment of calls made by the company.
A company may if authorized by its articles, forfeit shares for non-payment of calls and the same will not
require confirmation of the Court. Where power is given in the articles, it must be exercised strictly in
accordance with the regulations regarding notice, procedure and manner stated therein, otherwise the

forfeiture will be void. Forfeiture will be effected by means of Board resolution. The power of forfeiture
must be exercised bona fide and in the interest of the company.
Thus, a company may amend its article of association so as to confer it power to forfeit the shares of those
members who have defaulted in payment of calls made by the company.
Que. No. 25] Kailash, an employee of Sweetwill Ltd. met with an accident and died. The accident
occurred when Kailash was on company's duty. He held 100 shares partly paid. Normally the company
has a first and permanent lien on the shares. The Board of Directors however, relaxed the said provision
with regard to these shares as a goodwill gesture on the part of the company. Is the action of the
company valid? State the reasons.
Whether company's lien can be extended to dividends payable on such shares?
A company cannot have lien on shares unless provided in the AOA. As per Regulation 9 of Table F, the
company has first and paramount lien on every partly paid up share for all moneys payable to the
Company. However the Board of Directors may at any time exempt from the said provision.
Hence, the decision of the Board of Directors of Sweetwill Ltd. to relax the provisions of lien in respect of
shares held by Kailash is in order and valid as per Regulation 9 of Table F.
Further the company's lien is extended to all dividends payable on such shares.
Que. No. 26] Amar subscribed shares issued by Fast-track Ltd. The prospectus of Fast-track Ltd. included
a statement which was misleading in the forms and contents. On the faith of the prospectus believing
it to be true, Amar subscribed for shares and sustained loss. Can Amar sue compensation of loss? If so,
who will be sued for such loss?
The allottee may recover damages from the company for any loss he may have suffered if the invitation
to take shares is emanating from the company and the persons making it on behalf of the company have
fraudulently mis-represented material facts.
In actual practice, however, suits for damages against the company are rarely filed. Damages are generally
claimed from the directors, promoters and other persons who authorized the issue of the prospectus.
Que. No. 27] A deceitful prospectus was issued by the directors on behalf of company. Pavan received
a copy of it, but did not take any shares in the company. The allotment of shares to applicants was
completed. Several months later, Pavan bought shares from stock market. He proceeded with suit
against the directors of the issue of deceitful prospectus. Will he succeed?
CS (Executive) - Dec 2013 (4 Marks)
The right to claim compensation for any loss or damage sustained by reason of any untrue statement in a
prospectus is available only to a person who has "subscribed" for shares or debentures on the faith of the
prospectus containing untrue statement.
The word "subscribed" denotes that the shares were acquired directly from the company by allotment. A
subsequent purchaser of shares in the open market has no remedy against the company or the directors
or promoters.

Mr. X has purchased the shares form the stock exchange and he has not acquired shares directly from the
company; hence he cannot claims damages from the company for the loss suffered on the ground the
prospectus issued by the company contained a false statement.
Que. No. 28] A company increased its authorized capital from ` 7 Crore to ` 32 Crore by passing
appropriate resolution at general body meeting. But it did not file the notice in Form No. SH. 7 before
the ROC and also did not pay the requisite filing fee within the stipulated period or thereafter. Two
years later, the earlier resolution was rescinded and the share capital brought back to ` 7 Crore as it
originally stood. Is the company absolved from liability for failure to follow the procedure?
As per Section 64, when company increases authorized capital, the notice in Form SH-7 along with the
prescribed fee is required to be filed within 30 days of adopting the resolution.
The subsequent cancellation of the resolution to increase the share capital or adoption of the resolution
to reduce the share capital will not absolve the petitioners from their liability to file Form SH-7. [Amison
Foods Limited v. Registrar of Companies]
Que. No. 29] A company has taken a term loan from a financial institution and is regularly paying the
loan instalments and interest. The financial institution proposes to convert 20% of the loan into equity
shares of the company as per terms of the agreement. Advise the company, whether the financial
institution can enforce such a convertibility clause? Also examine the validity of such a clause.
If a financial institution provides a loan, the terms of issue may contain a clause to convert later such loan
into shares. It amounts to issue of further share capital and hence provisions of right issue contained in
Section 62 will have to be complied. To remove this difficulty Section 62(3) provides that - 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.
However, 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.
Thus, as per facts given in case a company can convert its loan into equity shares as per the terms of
agreement provided that the terms of loan containing such an option have been approved before raising
of loan by a special resolution passed by the company in general meeting.
Que. No. 30] The Board of directors of Aakash Ltd., a listed company, at its meeting held on 1st April,
2015 announced a proposal for issue of bonus shares to all equity shareholders of the company a` 1:1
ratio. On 1st May, 2015, the directors at another meeting passed a resolution to reverse the proposal
of bonus issue announced on 1st April, 2015. Discuss the validity of the proposal and the reversal.
As per Rule 14 of the Companies (Shares & Debentures) Rule, 2014, the company which has once
announced the decision of its Board recommending a bonus issue, shall not subsequently withdraw the
same.
Thus, a resolution passed by the director to reverse the bonus issue announced is not valid. The Board of
directors of Aakash Ltd. must issue bonus shares to the shareholder.

Chapter 3
Members and Shareholders
Que. No. 1] All shareholders of a company are members and all members of a company are
shareholders. Comment.
In the case of a company limited by shares, the shareholders are the members. The terms
“members” and “shareholders” are usually used interchangeably, being synonymous, as there can
be no membership except through the medium of shareholding. Thus, generally speaking every
shareholder is a member and every member is a shareholder.
However, there may be exceptions to this statement:
i. a person may be a holder of share(s) by transfer but will not become its member until
the transfer is registered in the books of the company in his favour and his name is
entered in the register of members.
ii. Similarly, a member who has transferred his shares, though he does not hold any shares
yet he continues to be member of the company until the transfer is registered and his
name is removed from the register of members maintained by the company under
Section 88 of the Companies Act, 2013.
iii. In a company limited by guarantee, the persons who are liable under the guarantee
clause in its Memorandum of Association are members of the company.
iv. In an unlimited company, the members are the persons who are liable to the company,
each in proportion to the extent of their interests in the company, to contribute the
sums necessary to discharge in full, the debts and liabilities of the company, in the event
of its being wound-up.
Que. No. 2] Subscribers to memorandum are deemed to be members of the company. Comment.
In the case of a subscriber, no application or allotment is necessary to become a member. By virtue

of his subscribing to the memorandum, he is deemed to have agreed to become a member and he
becomes ipso facto member on the incorporation of the company and is liable for the shares he has
subscribed.
A subscriber to the memorandum cannot rescind the contract for the purchase of shares even on
the ground of fraud by the promoters. All monies payable by any member to the company under the
memorandum or articles shall be debt due from him to the company. Further, a subscriber to the
memorandum must pay for his shares in cash even if the promoters have promised him the shares
for services rendered in connection with the promotion of the company. Again, he must take the
shares directly from the company, and not through transfer from other member(s). When a person
signs a memorandum for any number of shares he becomes absolutely bound to take those shares
and no delay will relieve him from that liability unless he fulfills the obligation. His liability remains
right up to the time when the company goes into liquidation and he is bound to bring the money for
which he is liable to pay to the creditors of the company.

Que. No. 3] what are the modalities of maintaining the register?
In the case of a company not having share capital, the register of members shall contain the
following particulars, in respect of each member –
i. name of the member; address (registered office address in case the member is a body
corporate); e-mail address; Permanent Account Number or CIN; Unique Identification
Number, if any; Father’s/Mother’s/Spouse’s name; Occupation; Status; Nationality; in case
member is a minor, name of the guardian and the date of birth of the member; name and
address of nominee;
ii. date of becoming member;
iii. date of cessation;
iv. amount of guarantee, if any;
v. any other interest if any; and
vi. Instructions, if any, given by the member with regard to sending of notices etc.
Authentication of the Register –

i. The entries in the registers maintained and index included therein shall be authenticated by
the company secretary of the company or by any other person authorised by the Board for
the purpose, and the date of the board resolution authorising the same shall be mentioned
ii. The entries in the foreign register shall be authenticated by the company secretary of the
company or person authorised by the Board by appending his signature to each entry.
Que. No. 4] Write a short note on: Place of keeping and inspection of the Registers.
Such registers are 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.
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
Inspection of Registers -
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 specified in the articles of association of the
company but not exceeding Rs. 50 for each inspection.
Consequences if inspection is refused –
According to Section 94(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.
Further section 94(5) provides that “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.”

Que. No. 5] Write short note on shareholders’ pre-emptive rights with regard to further issue of
share capital.
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 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 condition that 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 of offer shall contain a statement of this right.
Que. No. 6] Explain the following terms:
Veto A veto – Latin for "I forbid" – is the power to unilaterally stop an
official action, especially the enactment of legislation. A veto may
give power only to stop changes, thus allowing its holder to protect
the status quo.
Veto Power or Rights 1. A right is inherent. Shareholders rights refer to rights enshrined
in the constitutional document of the company or as provided by
the law. A power has its genesis under the provisions of law.
2. As per the provisions of the Companies Act, 2013 there are some
resemblance where the management can take decisions own
their own, by virtue of law. However, there are some instances
where the consent of the shareholders is mandatory to approve
any decision or transaction which is said to be as the veto power
or veto right of shareholders of the company.
Veto Power and Casting Veto power is different than casting vote of Chairman.
Vote
1. Casting vote is applicable on in case of equality of votes in
favour and against. In case of equality the Chairman may give
vote either in favour or against the resolution and it can be
carried accordingly.
2. Veto power has not been defined in Companies Act.
However, dictionary meaning of veto power is: "to refuse to
admit or approve; specifically: to refuse assent to (a
legislative bill) so as to prevent enactment or cause
reconsideration
Veto Rights and ‘Control’ The introduction of the concept of ‘control’ in the 2013 Act has
implications for investors in Indian companies. Under the 2013 Act,
‘control’ is understood to include the right to:
1. appoint a majority of directors; or
2. 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 shareholding agreements or voting
agreements, or in any other manner.

Que. No. 7] whether holder of Global Depository Receipts can be treated as member of the
company?
Ans.: As per Section 2(55) (i) & (ii) of the Companies Act, 2013 a person is a member of the company,
who is a subscriber to the Memorandum or whose name has been entered in the register of
members. Since, holder of Global Depository Receipts is neither the subscriber to the Memorandum
nor a holder of the shares, his name cannot be entered in the Register of Members. Therefore, a
holder of Global Depository Receipts cannot be called a member of the company.
Que. No. 8] Mohan applied for 4,000 shares in a company but no allotment was made to him.
Subsequently 4,000 shares were transferred to him without his request and his name was entered
in the register of members. Mohan knew it but took no steps for rectification of the register of
members. Subsequently, the company went into liquidation and he was held liable as a
contributory. Now Mohan wants to apply the Court for rectification of register of members. Can
he do so? Explain.
When a person knows that his name is included in the register of shareholders and he stands by and
allows his name to remain, he is holding out to the public that he is a shareholder and thereby he
loses his right to have his name removed". [Re. M.F.R.D. Cruz, A.I.R. 1939 Madras 803]
Thus, Mohan's application will be refused by the Court.
Que. No. 9] X had applied for the allotment of 1,000 shares in a company. No allotment of shares
was made to him by the company. Later on, without any further application from X, the company
transferred 1,000 partly-paid shares to him and placed his name in the Register of Members. X,
knowing that his name was placed in the Register of Members, took no steps to get his name
removed from the Register of members. The company later on made final call. X refuses to pay for
this call. Referring to the provisions of the Companies Act, 2013, examine whether his (X's) refusal
to pay for the call is tenable and whether he can escape himself from the liability as a member of
the company.
According to Section 95, the register of member is a prima facie evidence of the truth of its contents.
The contents of the register of members are of decisive importance in determining as to who were
the shareholders of the company at a crucial time. Accordingly, if a person's name, to his knowledge,
is entered in the register, he shall be deemed to be a member. In the given case X knows that his
name is included in the register of shareholders and stands by and allows his name to remain, he is
holding out to the public that he is shareholder and thereby he will be liable as shareholder.
Que. No. 10] A finance company lent a certain sum of money to Modern Garments Ltd., a
company manufacturing garments, at an agreed rate of interest, to be repaid as per the schedule
attached to loan agreement. The borrowing company made payments of the firs` 3 instalments
contained in the schedule and thereafter could not make any payment due to its working capital
problem. The lending company sent registered letters demanding the payments. It is contended by
the borrowing company that the lending company agreed in a meeting to accept shares of the
borrowing company in settlement of unpaid balance of the loan and accrued interest. Thereupon
the borrowing company allotted shares to the lending company and share certificate to that
company register post. The lending company seeks to get register of member of Modern Garments

Ltd. rectified and contends that it never applied for any shares in the borrowing company and it
was just unilateral allotment. Will the lending company succeed?
The facts of the given case are similar to Indglobal Investment & Finance Ltd. v. Rajasthan Breweries
Ltd., where in it was held that there was not written application for allotment of shares. Section 2
(55) stipulates that a person to become member should agree in writing for allotment of shares.
Non-compliance with provisions of law is a sufficient cause to order rectification of register of
members.
Thus, in above case, the borrowing company was directed to rectify the register of members by
cancelling the shares allotted and effect reduction of shares capital to that extent.

Chapter 4
Debt Capital
Que. No. 1] Borrowing can be classified in various categories. Comment.

A company uses various kinds of borrowing to finance its operations. The various types of borrowings can generally
be categorized into: 1) Long term/short term borrowing, 2) Secured/unsecured borrowing, 3) Syndicated/ Bilateral
borrowing, 4) Private/Public borrowing.
1A. Long Terms Borrowings - Funds borrowed for a period ranging for five years or more are termed as long-term
borrowings. A long term borrowing is made for getting a new project financed or for making big capital investment
etc. Generally Long term borrowing is made against charge on fixed Assets of the company.
1B. Short Term Borrowings - Funds needed to be borrowed for a short period say for a period up to one year or so
are termed as short term borrowings. This is made to meet the working capital need of the company. Short term
borrowing is generally made on hypothecation of stock and debtors.
1C. Medium Term Borrowings - Where the funds to be borrowed are for a period ranging from two to five years,
such borrowings are termed as medium term borrowings. The commercial banks normally finance purchase of
land, machinery, vehicles etc.
2A Secured/unsecured borrowing – A debt obligation is considered secured, if creditors have recourse to the
assets of the company on a proprietary basis or otherwise ahead of general claims against the company.
2B Unsecured debts comprise financial obligations, where creditors do not have recourse to the assets of the
company to satisfy their claims.
3A Syndicated borrowing – if a borrower requires a large or sophisticated borrowing facility this is commonly
provided by a group of lenders known as a syndicate under a syndicated loan agreement. The borrower uses one
agreement covering the whole group of banks and different types of facility rather than entering into a series of
separate loans, each with different terms and conditions.
3B Bilateral borrowing refers to a borrowing made by a company from a particular bank/financial institution. In
this type of borrowing, there is a single contract between the company and the borrower.
4A Private borrowing comprises bank-loan type obligations whereby the company takes loan from a bank/financial
Institution.
4B Public borrowing is a general definition covering all financial instruments that are freely tradable on a public
exchange or over the counter, with few if any restrictions i.e. Debentures, Bonds etc.
Que. No. 2] Who cannot be appointed as debenture trustee?

The disqualifications for debenture trustees are as under:
(a) beneficially holds shares in the company;
(b) is a promoter, director or key managerial personnel or any other officer or an employee of the company or its
holding, subsidiary or associate company;
(c) is beneficially entitled to moneys which are to be paid by the company otherwise than as remuneration payable
to the debenture trustee;
(d) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding
company;
(e) has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon;
(f) has any pecuniary relationship with the company amounting to 2% or more of its gross turnover or total income

or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately
preceding financial years or during the current financial year;
(g) is relative of any promoter or any person who is in the employment of the company as a director or key
managerial personnel.
Que. No. 3] What is the difference between Shares and Debentures?

Debentures Shares
Debentures constitute a loan. Shares are part of the capital of a company.
Debenture holders are creditors. Shareholders are members/owners of the company.
Debenture holder gets fixed interest which carries a Shareholder gets dividends with a varying rate.
priority over dividend
Debentures generally have a charge on the assets of Shares do not carry any such charge.
the company.
Debentures can be issued at a discount without Shares cannot be issued at a discount
restrictions.
The rate of interest is fixed in the case of debentures. Whereas on equity shares the dividend varies from
year to year depending upon the profit of the company
and the Board of directors decides to declare dividends
or not.
Debenture holders do not have any voting rights. Shareholders enjoy voting rights.
Interest on debenture is payable even if there are no Dividend can be paid to shareholders only out of the
profits i.e. even out of capital. profits of the company and not otherwise.
Interest paid on debenture is a business expenditure Dividend is not allowable deduction as business
and allowable deduction from profits. expenditure.
Que. No. 4] Prism Ltd. has accepted ` 10 lakhs as advance towards the supply of goods to certain parties. As per
the agreement, the company will supply the goods after two years from the date of deposit. Later on, internal
auditors qualified their report on the ground that the company has violated the provisions of the Companies
Act, 2013. Directors explained that this is required to complete the order. Examining the relevant provisions of
the Companies Act, 2013 state whether the explanation given by the directors is justified.
As per Section 2(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 RBI.
As per the Rule 2(1) (c)(xii)(d) of the Companies (Acceptance of Deposit) Rules, 2014, deposit does not include
any amount received in the course of or for the purposes of the business of the company as an advance for the
supply of goods or provision of services provided that such advance is appropriated against supply of goods or
provision of services within a period of 365 days from acceptance of such advance.
As per facts given in case Prism Ltd. has accepted ` 10 lakh as advance towards the supply of goods to certain
parties. As per the agreement, the company will supply the goods after two years from the date of deposit.
Thus, company has accepted advance for more than 365 days for the supply of goods and hence it is 'Deposit' as
per Section 2(31) read with Rule 2(l)(c)(xii)(d) of the Companies (Acceptance of Deposit) Rules, 2014. The Company
has defaulted in accepting deposit without complying the provision and hence remark passed by internal auditor
is correct and explanation given by the director is not sufficient.

Que. No. 5] Rose Ltd. raised a loan from a State Financial Institution by creating hypothecation of book debts
and also future debts of the company. Incidentally, the charge was not registered with the Registrar of
Companies concerned. State financial institution demanded a certificate of registration of charge for the amount
of loan so granted by it. The directors of the company replied to the State Financial Institution that the charge
need not be registered for hypothecation of book debts. Is the action of the directors valid? Give reasons.
Charge [Section 2(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. Thus, raising a loan from a State Financial Institution
by creating hypothecation of book debts and also future debts of the company amount to charge within the
meaning of Section 2(16) and such charge must be registered as per Section 77 in Form CHG-1.
Thus, contention of directors of Rose Ltd. is incorrect and not acceptable. If Rose Ltd. fails to register the charge,
State Financial Institution can get it registered as per Section 78.
Que. No. 6] A company created a charge on its assets in favour of Laxmi Bank Ltd. on 1st October, 2019. This
charge was filed with the ROC on 10th October, 2019. The ROC issued certificate of registration of charge on
15th October, 2019. The same company also created charge on the same assets in favour of Saraswati Bank Ltd.
on 9th October, 2019 and filed the charge with the ROC on 10th October, 2019. The ROC issued certificate of
registration of charge on 12th October, 2019. Which bank will have priority in recovering its dues by disposing
the assets?
For given case following two principal should be noted:

 A registered charge has priority over un-registered charge and
 When charge is registered it becomes effective from the date of creation of charge and not from the date of
registration.
Since, charge in favour of Saraswati Bank Ltd. was registered first on 12.10.2019 it gets priority and is effective
from the date of creation i.e. 9.10.2019.
However, charge in favour of Laxmi Bank Ltd. was registered on 15.10.2019 and it become effective from the date
of creation i.e. 1.10.2019.
Considering above views, it can be said that Laxmi Bank Ltd. will have priority in recovering its dues by disposing
the assets.
Que. No. 7] while sanctioning working capital limit, the rate of interest has been fixed at a specified percentage
above the bank rate as notified by the RBI. There was a change in the interest rate due to RBI notification issued
later. The bank insisted on filing a return of modification of charges. Is the stand of the bank correct? Discuss
with reasons.
Whenever the terms or conditions, or the extent or operation, of any charge registered are or is modified, it shall
be the duty of the company to send to the ROC the particulars of such modification within 30 days. For registration
of modification of charges Form CHG-1 has to be filed.
In the light of this provision the changes in the rate of interest constitutes modification, therefore, the stand of
bank is correct.
Que. No. 8] A person holding secured or unsecured debentures have remedies for enforcing his rights. Comment.
The Company is bound to pay interest and redeem the debentures in accordance with the terms and conditions of
their issue.
If a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures
when it is due, the Tribunal may, on the application of any or all of the debenture-holders, or debenture trustee

and, after hearing the parties concerned, direct, by order, the company to redeem the debentures forthwith on
payment of principal and interest due thereon.
If any default is made in complying with the order of the Tribunal, every officer of the company who is in default
shall be punishable with imprisonment for a term which may extend to 3 years or with fine which shall not be less
than ` 2 lakh but which may extend to ` 5 lakh, or with both.
This remedy is made available to the holders of debentures whether they are secured or unsecured. Any debenture
holder can apply to the Tribunal for passing an order of payment the company which has defaulted. The Tribunal
shall, while issuing order to the company, take into account the circumstances under which it has failed to redeem
the debentures and the order of the Tribunal shall mention about the ways and means for redemption of the
debentures by the company.

Chapter 5
Charge
Que. No. 1] what are the essential features of Charge?
The Charge here has the following essential features:

 There are minimum two parties to the transaction, the creator of the charge and the charge- holder.
 The subject- matter of charge may be on current or future assets and properties of the borrower.
 The intention of the borrower to offer one or more of its specific asset or properties as security for repayment
of the borrowed money together with payment of interest at the agreed rate etc. should manifest from an
agreement entered by him in favour of the lender, written or otherwise.
Que. No. 2] What is the difference between mortgage and charge?
Mortgage Charge
A mortgage is created by the act of the parties. A charge may be created either through the act of parties or
by operation of law.
A mortgage requires registration under the A charge created by operation of law does not require
Transfer of Property Act, 1882. registration. But a charge created by act of parties requires
registration.
A mortgage is for a fixed term. The charge may be in perpetuity.
A mortgage is a transfer of an interest in specific A charge only gives a right to receive payment out of a
immovable property. particular property.
A simple mortgage carries personal liability In case of charge, no personal liability is created. However,
unless excluded by express contract. where a charge is the result of a contract, there may be a
personal remedy.
A mortgage is a transfer of an interest in a specific There is no such transfer of interest in the case of a charge.
immovable property. Charge does not operate as transfer of an interest in the
property and a transferee of the property gets the property
free from the charge provided he purchases it for value
without notice of the charge.
Que. No. 3] Charge and Pledge are one and the same thing. Comment.
According to the generally accepted definition, a ‘pledge’ is a bailment of personal property as security for some
debt or engagement, redeemable on certain terms, and with an implied power of sale on default. It consists of a
delivery of goods by a debtor to his creditor as security for a debt or other obligation, to be held until the debt is
repaid along with interest or other obligation of the debtor is discharged, and then to be delivered back to the
pledger, the title not being changed during the continuance of the pledge.
Unlike a pledge, a ‘charge’ is not a transfer of property of one to another. It is a right created in favour of one,
referred to as “the lender” in the immovable property of another, referred to as “the borrower”, as security for
repayment of the loan and payment of interest on the terms and conditions contained in the loan documents
evidencing charge.
Both a pledge and a charge are the result of voluntary act of parties. Both create security but the nature of the
security is different.

Que. No. 4] Who can inspect the register of charges?
The register of charges and the instrument of charges kept by the company shall be open for inspection –
(a) by any member or creditor of the company without fees;
(b) by any other person on payment of fee subject to reasonable restriction as the company by its articles impose.
Que. No. 5] What are the particulars to be included in Register of Charge.
The following particulars in respect of each charge are required to be filed with the Registrar:
(a) date and description of instrument creating charge;
(b) total amount secured by the charge;
(c) date of the resolution authorising the creation of the charge; (in case of issue of secured debentures only);
(d) general description of the property charged;
(e) a copy of the deed/instrument containing the charge duly certified or if there is no such deed, any other
document evidencing the creation of the charge to be enclosed;
(f) list of the terms and conditions of the loan; and
(g) name and address of the charge holder.
Que. No. 6] A company filed Form CHG-4 duly signed by both the bank and company's authorized personnel for
the satisfaction of charges based on the bank's letter issued one week after the date of payment of charge (loan)
but within 30 days from this payment date. The Registrar of Companies insisted that the letter of the bank for
accepting the satisfaction of charge be filed with Form No. CHG- 4 and also insisted on issue of notice to the
holder of the charge, i.e., the bank. He also decided that the date of filing should be computed from the date of
bank's letter. Discuss the correctness of his views.
Section 82 requires that the company shall give intimation to the Registrar of the payment or satisfaction in full,
of any charge relating to the company within 30 days from the date of such payment or satisfaction. The company
shall intimate satisfaction of the charge in Form CHG-4 accompanied by appropriate fees.
In given case, the Registrar need not insist on the company to file a letter of bank or financial institution in support
of Form CHG-4.
The satisfaction of charge is to be filed within 30 days from the date of satisfaction of charge and not from the
issue of bank letter.

Chapter 6
Distribution of Profit
Que. No. 1] Can a shareholder claim dividend after the dividend has been transferred to IEPF? If Yes, How?
All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be
transferred by the company in the name of IEPF, but any claimant of shares transferred above shall be entitled to
claim the transfer of shares from IEPF by following the given procedure:
STEP 1:-Apply for refund to the Authority by submitting an online application in Form IEPF-5.
STEP 2:-Simultaneous application to the company- send IEPF Form duly signed by him along with, requisite
documents as enumerated in Form IEPF-5 to the nodal officers of the concerned company at its registered
office for verification of his claim.
STEP 3:- The company shall, within 15 days from the date of receipt of claim, send a verification report to the
Authority, along with all the documents submitted by the claimant. In case of non receipt of documents by the
Authority fter the expiry of ninety days from the date of filing of Form IEPF-5, the Authority may reject Form
IEPF-5, after giving an opportunity to the claimant to furnish response within a period of thirty days.
STEP 4:-After verification of the entitlement of the claimant- (a) to the amount claimed, the Authority and then
Drawing and Disbursement Officer of the Authority shall present a bill to the Pay and Accounts Office for e-
payment as per the guidelines, (b) to the shares claimed, the Authority shall issue a refund sanction order with
the approval of the Competent Authority and shall credit the shares to the DEMAT account of the claimant to
the extent of the claimant’s entitlement.
STEP 5:-An application received for refund of any claim under this rule duly verified by the concerned company
shall be disposed off by the Authority within sixty days from the date of receipt of the verification report from
the company, complete in all respects and any delay beyond sixty days shall be recorded in writing specifying
the reasons for the delay and the same shall be communicated to the claimant in writing or by electronic
means.
STEP 6:-In case, claimant is a legal heir or successor or administrator or nominee of the registered share
holder, he has to ensure that the transmission process is completed by the company before filing any claim
with the Authority.
STEP 7:- In case, claimant is a legal heir or successor or administrator or nominee of any other registered
security or in cases where request of transfer or transmission of shares is received after the transfer of shares
by company to the Authority, the company shall verify all requisite documents required for registering transfer
or transmission and shall issue letter to the claimant indicating his entitlement to the said security and furnish
a copy of the same to the Authority while verifying the claim of such claimant.
STEP 8: The claimant shall file only one consolidated claim in respect of a company in a financial year.
Que. No. 2] A company for the financial year 2014-2015 declared dividend on 19th September 2015 but failed to
pay the same within the prescribed time. A case was filed against director in this regard. The director has
contended that he had resigned before the declaration of dividend. Decide the fate of directors in the light of
relevant provisions of the Companies Act, 2013.
As per Section 124(1), a company has to pay dividend within 30 days of declaration of dividend. Failure to pay or
post dividend warrant within 30 days constitutes an offence and directors of the company are liable to punishment
as provided under Section 127.
However, in N. Kumar v. M.O. Roy, Assistant Director, S.F.I.O (2007) 80 SCL 55 (MAD), it was held that if the director
has resigned before declaration of dividend then he cannot be held liable for the default of non-payment of

dividend within 30 days of declaration of dividend as he may not be aware about the entire affairs of the company
after his resignation.
Que. No. 3] A resolution was passed by the shareholders in an annual general meeting approving final dividend
@ 20% for the financial year 2016-2017 and one month later the Board of directors decided to pay further
dividend @ 5% for the financial year 2016-2017.
Board of director of company recommends divided and it is approved by the shareholder in the AGM. Shareholder
can reduce the rate of dividend proposed by shareholder but cannot increase it.
Company can declare dividend in extraordinary general meeting (EOGM), if it could not declare dividend in annual
general meeting (AGM). [Department Circular No. 22 dated 25.9.1975]
However, if dividend is declared in AGM, it cannot be increased in further in subsequent EGM or board meeting.
Thus, decisions of directors to pay further dividend @5% for the financial year 2016-2017 for which already
dividend is declared @ 20% is invalid.
Que. No. 4] In Evergreen Ltd., the Board of directors declared an interim dividend but could not distribute the
dividend due to objections of audit committee that the accounts considered by the Board were false; and true
financial results were inflated by not incorporating outstanding liabilities and over-valuation of inventories. A
shareholder filed a suit for non-payment of dividend. One of the directors contended that he never attended
the Board meeting where the issue relating to payment of interim dividend was declared on the basis of false
accounts. Discuss about the validity of contention of the director.
As per Section 124(1), a company has to pay dividend within 30 days of declaration of dividend. Failure to pay or
post dividend warrant within 30 days constitutes an offence and directors of the company are liable to punishment
as provided under Section 127.
A dividend including interim dividend once declared becomes a debt and cannot be revoked, except with the
consent of the shareholders. But where a dividend has been illegally declared, the directors will be justified in
revoking the declared dividend.

Chapter 7
Corporate Social Responsibility
Que. No. 1] Write a short note on CSR Activities.
Some activities are specified in Schedule VII as the activities which may be included by companies in
their Corporate Social Responsibility Policies. The entries in the said Schedule VII must be
interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule.
The items enlisted in the amended Schedule VII of the Act, are broad-based and are intended to
cover a wide range of activities as illustratively. These are activities related to:
1. Eradicating hunger, poverty and malnutrition, promoting health care including preventive
health care and sanitation including contribution to the Swach Bharat Kosh set-up by the
Central Government for the promotion of sanitation and making available safe drinking
water.
2. Promoting education, including special education and employment enhancing vocation skills
especially among children, women, elderly and the differently abled and livelihood
enhancement projects.
3. 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;
4. Ensuring environmental sustainability, ecological balance, protection of flora and fauna,
animal welfare, agro forestry, conservation of natural resources and maintaining quality of
soil, air and water including contribution to the Clean Ganga Fund set-up by the Central
Government for rejuvenation of river Ganga;
5. 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;
6. Measures for the benefit of armed forces veteran, war widows and their dependents;
7. Training to promote rural sports, nationally recognized sports, para olympic sports and
Olympic sports;
8. Contribution to the Prime Minister's National Relief Fund or any other fund set up by the
Central Government for socio-economic development and relief and welfare of the
Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
9. contributions or funds provided to technology incubators located within academic
institutions which are approved by the Central Government;
10. Rural development projects.
11. Slum area development where ‘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.
12. Disaster management, including relief, rehabilitation and reconstruction activities.
However, in determining CSR activities to be undertaken, preference would need to be given to local
areas and the areas around where the company operates.
Que. No. 2] What are the mandatory requirements that need to be disclosed in Board’s annual
report on CSR?
It is mandatory for companies to disclose in Board’s Report, an annual report on CSR. The report of
the Board of Directors attached to the financial statements of the Company would also need to

include an annual report on the CSR activities of the company in the format prescribed containing
following particulars –
1. A brief outline of the company's CSR policy, including overview of projects or programs
proposed to be undertaken and a reference to the web-link to the CSR policy and projects or
programs.
2. The Composition of the CSR Committee.
3. Average net proflt of the company for last 3 financial years
4. Prescribed CSR Expenditure
5. Details of CSR spent during the financial year.
6. In case the company has failed to spend the 2% of the average net profit of the last 3
financial years or any part thereof, the company shall provide the reasons for not spending
the amount in its Board report.
7. A responsibility statement of the CSR Committee that the implementation and monitoring
of CSR Policy, is in compliance with CSR objectives and Policy of the company.
If the company has been unable to spend the minimum required on its CSR initiatives, the reasons
for not doing so are to be specified in the Board Report. If a company has a website, the CSR policy
and the report containing details of such activities have to be made available on the company’s
website for informational purposes.

Chapter 8
Accounts and Audit
Que. No. 1] CIF Techno-systems Private Ltd. is proposed to be incorporated in Bhubaneshwar, Orissa under the
Companies Act, 2013. The company will be a holding company of CIF Holding Private Ltd., already incorporated
in Brazil under the Company Law of Brazil. The company in Brazil follows financial year 1st January to 31st
December of a calendar year. Referring to the provisions of the Companies Act, 2013, state whether the financial
year of CIF Techno-system can also be 1st January to 31st December, in order to make it easier to prepare
consolidated financial statements.
As per Section 2(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.
However, on an application made by 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 Tribunal may, if it is satisfied, allow any period as its financial year,
whether or not that period is a year.
Keeping in view of above provisions, CIF Techno-system Private Ltd. a subsidiary of CIF Holding Private Ltd. can
adopt its financial year as 1st January to 31st December but only after obtaining approval of Tribunal.
Que. No. 2] XYZ Ltd. was registered in the year 2014 under Companies Act, 2013. There are allegations that the
3 directors who manage the affairs of the company are siphoning the funds of the company. The company has
not declared any dividends on the ground that company is incurring losses. Mr. A, who controls 51% of the share
capital of the company sends a notice to the management that he will inspect the books of account to verify the
allegations. Examine the right of Mr. A to carry out the inspection. State the persons who have the right to carry
out the inspection under the Companies Act, 2013.
As per provisions of the Companies Act, 2013 only following persons are entitled to inspect the books of account:
- Director of the company [Section 128(3)]
- Registrar of Company [Section 206]
- Authorized officer of the Central Government [Section 206]
- Officers of Serious Fraud Investigation Office (SFIO) [Section 212]
Thus, member of the company is not entitled to inspect the books of account.
Regulation 89 of. the Table F makes the following provisions for inspection of books of account by the members:
(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 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.
In the given case, Mr. A has not been authorized to inspect the books of account by the Board or by the members
in the general meeting. Thus, Mr. A.shall not have any right to inspect the books of account even if he holds 51 %
capital of the company.
Que. No. 3] Chatur is a director of Hopes Ltd., a public limited company, registered under the Companies Act,
1956. He wants to inspect the books of account and other books and papers of the company. Can he do so? Will
your answer be different, if the director wants to inspect the books of account through an agent?

As per Section 128(3), the books of account and other books and papers 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.
In Vakharia v. Supreme General Film Exchange Co. Ltd., it was held that a director is entitled to take inspection of
accounts personally or through an agent provided that there is no reasonable objection to the person chosen and
the agent undertakes not to utilize the information obtained by him for any purpose other than the purpose of his
principal.
Thus, Chatur will be allowed to inspect the books of account. He can also inspect the books of account through an
agent provided that there is no reasonable objection to the person chosen and the agent undertakes not to utilize
the information obtained by him for any purpose other than the purpose of his principal i.e. Chatur.
Que. No. 4] Vir is a director in DJA Ltd. (the company). The company holds 75% shares of MRN Ltd. Vir wants to
inspect the books of MRN Ltd. Examining the provisions of the Companies Act, 2013 advise whether Vir, the
director of DJA Ltd. can be allowed to inspect the books of MRN Ltd.
As per Section 128(3), the inspection in respect of any subsidiary of the company shall be done only by the person
authorized in this behalf by a resolution of the Board of Directors of holding company.
Thus, Vir can inspect the books of account of MRN Ltd. (subsidiary of DJA Ltd.) if he is authorized by the resolution
of the Board of Directors of DJA Ltd.
Que. No. 5] Suresh, a member of Ruchi Ltd., wants to inspect the register of deposits maintained by the company
as required under the provisions of the Companies Act, 2013. The company refused to provide the register for
inspection without assigning any reason. Referring to the provisions of the Act, examine the validity of the
company's refusal. What shall be your answer if the same Register is demanded by the statutory auditors of the
company for inspection and for their audit?
A member of the company is not entitled to inspect the books of account of the company.
Register of deposit is part of the books of account and hence are not normally open for inspection by members of
the company. Hence, Suresh a member of company cannot inspect the Register of deposit and company can refuse
to inspection of the register without giving any reason.
The auditor enjoys the right of accessibility to books and records because he has to mention in his report whether,
proper books and records are maintained. Thus, company cannot refuse inspection of Register of deposit to
statutory auditor.
Que. No. 6] The Board of directors of Grow More Ltd., a public company, has duly delegated its power to approve
the financial statement of the company for the year 2014-2015 to a committee of directors. The said committee
considered the financial statement and approved the same before the financial statement were handed over to
the statutory auditor of the company. Will you accept such approval of financial statement?
The financial statements are required to be placed only at an AGM and not at any other meeting. The board of
directors cannot delegate power to approve the financial statements to a committee of directors. In case the
financial statements are not ready for laying at the AGM, the company may adjourn the said AGM to a subsequent
date when the financial statements are expected to be ready for laying. This may be done by adopting a suitable
resolution adjourning the said AGM to a specified date. However, the adjourned AGM should, be held within
statutory time limit.
Que. No. 7] Director of the company along with another director were prosecuted under for their failure to file
return, annual accounts and audited balance sheet required to be laid before the annual general meeting. The
director moved the Court to quash the prosecution initiated by the ROC. As a Company Secretary in Practice
advise in the matter.

The facts of the given case are similar to Kishan Prasad Palaypu v. Registrar of Companies [(2008) 83 SCL 376 (AP)].
A director of the company along with another director were prosecuted for their failure to file return, annual
accounts and audited balance sheet required to be laid before the annual general meeting. The director moved
the Court under Section 482 of the Code of Criminal Procedure for quashing the proceedings contending that the
complaints filed were barred by limitation. Dismissing the petition, the Court held that Section provides for penalty
at the rate of ` 1,000 for every day till the default continues, it was held that default in complying with the provisions
is a continuing default covered by Section 472 of the Code of Criminal Procedure. The contravention is a continuing
offence and the period of limitation prescribed under Section 468 of the Code does not apply to the prosecution
launched against the company. Thus, the Court will reject to quash the prosecution initiated by the ROC.
Que. No.8] Grow More Ltd. is a government company in which the Central Government and many State
Governments in India are members. The company has recently convened its annual general meeting at its
registered office. Does the legislature have any access to the annual reports of such a company? Give your
advice.
As per Sections 394 & 395, in case of Government Companies, the Central Government must place before both
the Houses of Parliament an annual report on the working and affairs of each Government company within three
months of its annual general meeting together with a copy of the audit report and any comments upon or
supplement to such report made by the Comptroller and Auditor General of India. Where a State Government is a
member of a Government company, the annual report is likewise to be placed before the State Legislature.
Que. No. 9] On recommendation of the Board of Directors of DJA Ltd. (listed company), Mr. R is appointed at
the AGM held on 1st October, 2014 as the company's auditor for a period of 10 years. A resolution to this effect
was passed unanimously with no vote against the resolution. Explaining the provisions of the Companies Act,
2013 relating to the appointment and re-appointment of auditors:
(i) Examine the validity of the above resolution.
(ii) What shall be your answer in case an audit firm Messrs R & Associate is appointed as the company's
auditor?
As per Section 139(2), an individual shall not appointed or re-appointed as auditor for more than one term of 5
consecutive years. Thus, the appointment of Mr. R as auditor of the company for 10 years is not valid.
As per Section 139(2), an audit firm shall not appointed or re-appointed as auditor for more than two term of 5
consecutive years. This means that a firm can be appointed for 5 years and thereafter may be reappointed for
further 5 years. The total period for which a firm can be appointed is 10 years. A firm cannot be appointed as
auditor for 10 years by a single resolution. Thus, the appointment of Messrs R & Associate as the company's auditor
for ten years by a single resolution is not valid.
Que. No. 10] Mr. A is a part-time Practicing Chartered Accountant and is the financial controller of X Ltd. The
company wants to appoint him as its auditor in the ensuing annual general meeting. Offer your comments in
the matter.
As per Section 141(3), an officer or employees of the company are not qualified for appointment as auditor of a
company. In the present case Mr. A is the financial controller and thus an officer of the company. Therefore, he is
disqualified for appointment as an auditor of the company.
Que. No. 11] Ram and Hanuman Associates, Chartered Accountants in practice have been appointed as Statutory
Auditor of Krishna Ltd. for the accounting year 2014-2015. Mr. Hanuman holds 100 equity shares of Shiva Ltd.,
a subsidiary company of Krishna Ltd.

As per Section 141(3)(d), a person who is holding any security of the company or its subsidiary is disqualified for
appointment as auditor.
In the present case, Mr. Hanuman, a partner of M/ s. Ram and Hanuman Associates, holds 100 equity shares of
Shiva Ltd., which is a subsidiary of Krishna Ltd. As such, the firm, M/s. Ram and Hanuman Associates would be
disqualified to be appointed as statutory auditor of Shiva Ltd. Thus, firm is also disqualified for appointment of
auditor in Krishna Ltd. (i.e. Holding Company)
Que. No. 12] Amol & Co., a proprietary firm of Amol, a Chartered Accountant in practice, has been appointed as
the statutory auditor by a private limited company. Subsequently, it came to light that Mr. Amol has been
holding less than 1% of the shares of that company. Will this vitiate the appointment of the statutory auditor?
Answer with reasons.
As per Section 141(3)(d), a person who is holding any security of the company or its subsidiary is disqualified for
appointment as auditor. Since Mr. Amol has been holding some shares of the company, he is disqualified for
appointment as auditor and his appointment is not valid.
Que. No. 13] Sanjay, a Chartered Accountant, is the financial controller of Sonik Industries (Pvt.) Ltd. for the last
five years. The company now wants to appoint him as the statutory auditor of the company. Examining the
provisions of the Companies Act, 2013, advise whether the company can appoint Sanjay as its statutory auditor.
As per Section 141(1), a person shall be eligible for appointment as an auditor of a company only if he is a Chartered
Accountant.
As per Section 141(3), an officer or employee of the company is disqualified for appointment as an auditor.
As per facts given in case, Sanjay is employee of Sonik Industries Ltd. working as financial controller and he is
disqualified for appointment as an auditor.
Que. No. 14] List out eight industry covered by the Companies (Cost Records & Audit) Rules, 2014.
Some of the industries covered by Rule 3 of the Companies (Cost Records & Audit) Rules, 2014 are:
 Cement
 Sugar and industrial alcohol
 Tyres & tubes
 Paper
 Electricals or electronic machinery
 Plastics and polymers
 Coffee and tea
 Milk powder
 Drugs and pharmaceuticals
 Jute and jute products

Chapter 9
Transparency and Disclosures
Que. No. 1] What are the additional disclosures under SEBI(LODR) Reg, 2015 ?
A. Related Party Disclosure

Sr. no. In the accounts of Disclosures of amounts at the year end and the
maximum amount of loans/ advances/ Investments
outstanding during the year
1 Holding Company Loans and advances in the nature of loans to subsidiaries
by name and amount.
Loans and advances in the nature of loans to associates by
name and amount.
Loans and advances in the nature of loans to
firms/companies in which directors are interested by
name and amount.
2 Subsidiary Same disclosures as applicable to the parent company in
the accounts of subsidiary company
3 Holding Company Investments by the loanee in the shares of parent
company and subsidiary company, when the company has
made a loan or advance in the nature of loan.
Disclosures of transactions of the listed entity with any person or entity belonging to the
promoter/promoter group which hold(s) 10% or more shareholding in the listed entity, in
the format prescribed in the relevant accounting standards for annual results.
B. Management Discussion and Analysis
1. This section shall include discussion on the following matters within the limits set by the
listed entity’s competitive position:
a) Industry structure and developments.

b) Opportunities and Threats.
c) Segment–wise or product-wise performance.
d) Outlook
e) Risks and concerns.
f) Internal control systems and their adequacy.
g) Discussion on financial performance with respect to operational performance.
h) Material developments in Human Resources / Industrial Relations front,
including number of people employed.
i) Details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios, along with detailed
explanations.
j) Details of any change in Return on Net Worth as compared to the immediately
previous financial year along with a detailed explanation thereof.
2. Disclosure of Accounting Treatment: Where in the preparation of financial statements,
a treatment different from that prescribed in an Accounting Standard has been
followed, the fact shall be disclosed in the financial statements, together with the

management’s explanation as to why it believes such alternative treatment is more
representative of the true and fair view of the underlying business transaction.
C. Corporate Governance Report
1. A brief statement on listed entity’s philosophy on code of governance
2. Board of directors
3. Audit committee
4. Nomination and Remuneration Committee
5. Remuneration of Directors
6. Stakeholders' grievance committee
7. General body meetings
8. Means of communication
9. General shareholder information
10. Other Disclosures
11. Non-compliance of any requirement of corporate governance report
12. The corporate governance report
13. The disclosures of the compliance with corporate governance
D. Declaration signed by the chief executive officer stating that the members of board of
directors and senior management personnel have affirmed compliance with the code of
conduct of board of directors and senior management.
E. Compliance certificate from either the auditors or practicing company secretaries
regarding compliance of conditions of corporate governance.
F. Disclosures with respect to demat suspense account/ unclaimed suspense account
Que. No. 2] Write a short note on :

A. Composition of Audit Committee.
The Board’s report shall disclose the following –

1. Composition of an Audit Committee
2. Where the Board had not accepted any recommendation of the Audit Committee, the
same shall be disclosed in the report along with the reasons therefor
B. Details of Vigil Mechanism
Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules,
2014 provides that every listed company and the following class or classes of companies
shall establish a vigil mechanism for their directors and employees to report their genuine
concerns or grievances-
i. Companies which accept deposits from the public;
ii. Companies which have borrowed money from banks and public financial institutions
in excess of Rs 50 crore .
C. Right Of Members To Receive Copies Of Financial Statements, Board’s Report
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 :
a. every member of the company,

b. every trustee for the debenture holder of any debentures issued by the company, and
c. all persons other than such member or trustee, being the person so entitled, not less
than 21 clear days before the date of the meeting.
D. Filing Of The Board’s Report
1. Section 137(1) of the Act provides that copies of financial statement along with all
documents required to be annexed should be filed with the Registrar of Companies
within 30 days along with the prescribed fees, after the financial statements, including
consolidated financial statements have been adopted at the annual general meeting.
The Board’s Report has to be attached to the financial statements.
2. In case a company does not hold an annual general meeting in any year, a statement of
facts and reasons along with financial statement and attachment shall be filed with
registrar.
3. The resolution for approving the Board’s Report is also required to be filed to the
Registrar within 30 days from the approval by the Board.
4. One Person Company should 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 180 days from the closure of the financial year.
5. 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.
Que. No. 3] Explain the Dividend Distribution Policy.
1. The Policy broadly specifies the external and internal factors including parameters that may
be considered while declaring dividend and the circumstances under which the shareholders
of the Company may or may not expect dividend.
2. The top five hundred listed entities based on market capitalization shall formulate a dividend
distribution policy which shall be disclosed in their annual reports and on their websites.
3. The dividend distribution policy shall include the following parameters:
a) the circumstances under which the shareholders of the listed entities may or may
not expect dividend;
b) the financial parameters that shall be considered while declaring dividend;
c) internal and external factors that shall be considered for declaration of dividend;
d) policy as to how the retained earnings shall be utilized; and
e) parameters that shall be adopted with regard to various classes of shares.
4. Where in cases the listed entity proposes to declare dividend on the basis of parameters in
addition to abovementioned clauses or proposes to change such additional parameters or the
dividend distribution policy contained in any of the parameters, it shall disclose such changes
along with the rationale for the same in its annual report and on its website. The listed entities
other than top five hundred listed entities based on market capitalization may disclose their
dividend distribution policies on a voluntary basis in their annual reports and on their websites.

Chapter 10
An overview of Inter-Corporate Loans, Investments, Guarantees
and Security, Related Party Transactions
Que. No. 1] Board of directors of Joy Ltd., by a resolution passed at its meeting, decide to provide a loan of ` 50
Crore to Happy Ltd. The paid-up share capital of Joy Ltd. on the date of resolution was ` 100 Crore and the
aggregate balancein the Free Reserves and Securities Premium Account stood at ` 40 Crore. Examining the
provisions of the Companies Act, 2013, decide whether the Board's resolution to provide a loan of ` 50 Crore to
Happy Ltd. is valid?
Paid-up capital : ` 100 Crores

Free Reserves & Securities Premium : ` 40 Crores
Calculation of overall limit: Higher of the following two.
- [100 + 40] x 60% = ` 84 Crores
- 40x 100% = ` 40 Crores
Proposed loan to Happy Ltd. : ` 50 Crores
Since, the proposed loan (` 50 Crore) does not exceeds prescribed limit, proposed loan can be given by passing a
unanimous resolution in a Board Meeting and prior approval by means of a special resolution passed at a general
meeting shall not be necessary.
Que. No. 2] XYZ Ltd., a company, has a paid up share capital of ` 60 Crores and free reserves of ` 25 Crores. It
desires to make a loan of ` 20 Crores to M Ltd. The company XYZ Ltd. has already made investments in many
other companies including loans to the extent of ` 35 Crores. Can the company go ahead with loan to M Ltd.?
Please advise the company about the procedure to be followed by it.
Loan and investment by company [Section 186 (2)]: A company can directly or indirectly give loan, guarantee or
provide security or make investment other body corporate or person up to higher of the following two limits:
- [Paid-up Capital + Free Reserves + Securities Premium Account] x 60% or
- [Free Reserves + Securities Premium Account] x 100%
Higher loan, guarantee or investment by passing special resolution [Section 186 (3)]: Where the giving of any
loan or guarantee or providing any security or the acquisition exceeds the limits specified Section 186 (2), prior
approval by means of a special resolution passed at a general meeting shall be necessary.
Paid-up capital : ` 60 Crore
Free Reserves : ` 25 Crore
Securities Premium : Nil
- [60 + 25] x 60% = ` 51 Crore
- 25x100% = ` 25 Crore
Existing investment and loan by XYZ Ltd. ` 35 Crore
Proposed loan by XYZ Ltd. to M Ltd. ` 20 Crore
Total ` 55 Crore
Since, proposed investment exceed prescribed limit, proposed investment can be made by taking prior approval
by means of a special resolution passed at a general meeting. [Section 186 (3)]
The XYZ Ltd. should also comply with other provisions of the Section 186 of the Companies Act, 2013.

Que. No. 3] Reliable Casing Ltd. is a subsidiary of Unique Machineries Ltd. and its Board of Director have
appointed on a consolidated monthly salary of ` 3,00,000 to Ram Singh, a director of Unique Machineries Ltd.,
as its Factory Manager. State the legal requirements to be complied with under the Companies Act, 2013 to give
effect to above appointment.
The term 'related party' is defined in Section 2(76) and legal requirements to be complied with by company for
entering 'related party transaction' are specified in Section 188. Keeping in view the provisions of Section 2(76) and
Section 188, answers to given problem is as follows:
A subsidiary company i.e. Reliable Casing Ltd. proposes to appoint Ram Singh, a director of its holding company i.e.
Unique Machineries Ltd. Such appointments amounts to holding office or place of profit and provisions of the
Section 188 get attracted. Thus, Ram Singh can be appointed as factory manager after complying the following
provisions:
(a) Consent of the Board is to be obtained by passing a resolution at a Board Meeting.
(b) The agenda of the Board Meeting in which the approval of the Board is to be obtained shall contain the
particulars prescribed under Rule 15(1) of the Companies (Meeting of Board and its Powers) Rule, 2014.
(c) The apportionment shall require the prior approval of members by a resolution as monthly remuneration is
exceeding ` 2,50,000.
(d) The explanatory statement annexed to the notice of general meeting in which special resolution is passed, shall
contain the prescribed particulars.
Que. No. 4] Rakesh Sharma, not related to any director of the Unique Machineries Ltd. appointed as Chief
Accountant on 1.6.2018, but his relative has been appointed as additional director of Unique Machineries Ltd.
w.e.f. 1.7.2018.
Rakesh Sharma is not a relative of director at the time of his appointment and thus he not related party at the time
of his appointment as per Section 2(76). Hence, provision of Section 188 is not attracted and he can be appointed
as Chief Accountant in Unique Machineries Ltd. at a monthly salary of ` 3,00,000 without requiring any compliance
with any legal requirement of Section 188.
Que. No. 5] Sweet Tea Ltd. wants to sell its tea by entering into contract with the following parties
(1) Tea Bros, a partnership firm in which a director of Sweet Tea Ltd. is a partner.
(2) R & T Pvt. Ltd. in which one of the director of Sweet Tea Ltd. is a member.
(3) Strong Tea Ltd. in which one of the directors of Sweet Tea Ltd. is a director holding 3% of the paid up capital
of Strong Tea Ltd.
Kdvise the steps that should be taken by Sweet Tea Ltd. taking into account the relevant provisions of the
Companies Act, 2013 for entering into contracts in which the directors are interested.
The term 'related party' is defined in Section 2(76) and legal requirements to be complied with by company for
entering 'related party transaction' are specified in Section 188. Keeping in view the provisions of Section 2(76) and
Section 188, answers to given problem is as follows:
(1) Tea Bros., a partnership firm in which a director of Sweet Tea Ltd. is a partner, is related party as per Section
2(76) and hence provisions of Section 188 are attracted.
(2) R & T Pvt. Ltd. in which one of the director of Sweet Tea Ltd. is a member, is related party as per Section
2(76) and hence provisions of Section 188 are attracted.
(3) Strong Tea Ltd. in which one of the directors of Sweet Tea Ltd. is a director holding 3% of the paid up capital
of Strong Tea Ltd., is related party as per Section 2(76) as holding of director is more than 2% and hence provisions
of Section 188 are attracted.
Following legal requirements are required to be complied with for sale of tea to any of the above parties:

(a) Consent of the Board is to be obtained by passing a resolution at a Board Meeting.
(b) The agenda of the Board Meeting in which the approval of the Board is to be obtained shall contain the
particulars prescribed under Rule 15(1) of the Companies (Meeting of Board and its Powers) Rule, 2014.
(c) If any director is interested in such contract or arrangement, he shall not be present at the Board Meeting
during discussion on any such contract or arrangement.
(d) The contract or arrangement shall require the prior approval of the member by a resolution if the value of the
contract or arrangement for sale, purchase or supply of any goods or materials exceeds 10% or more of the
turnover of the company or ` 100 Crore, whichever is lower
(e) The explanatory statement annexed to the notice of general meeting in which resolution is passed, shall
contain the prescribed particulars.
(f) If member is related party, he shall not vote on resolution.
Que. No. 6] A loan given to the wife of the managing director who is a bona fide employee of the company need
not necessarily be treated as loans given to relatives of directors of the company. Comment.
As per Section 185, the company cannot give any direct or indirect loan to director or to any other person in whom
the director is interested.
In the case of M.R. Electronics Components Ltd. & Others v. Assistant ROC (1986) 3 Comp. L.J. 28 (Mad.), it was held
that if the company gives advance salary to its employee, it does not amount to loan and there is no contravention
of Section 185. Thus, a loan given as advance salary to the wife of the managing director who is a bona fide
employee of the company need not necessarily be treated as loans given to relatives of directors of the company.
Que. No. 7] The Managing Director of a public limited company applied for purchasing a company's flat. The
price of the flat is ` 40 lakh. The Managing Director suggested that he may be allowed to pay ` 20 lakh and the
balance of ` 20 lakh may be recovered from his salary in 40 instalments. Accounts Department observed that it
will tantamount to providing house building advance to the Managing Director which is not covered by the rules
of the company. Being the Company Secretary of the company, you have been asked by the board of directors
to examine and submit a note stating the rules in this regard and action to be taken for considering the request.
In Fredie Ardeshir Mehta v. Union of India, (1991) 1 Comp LJ 437 (Bom.) it was held that if the company sells one
of its flats to one of its directors on receiving half the price in cash and agreeing to accept the balance in instalments
does not amount to giving of loan to the director.
In view of above, the observation made by Accounts Department that purchasing flat by MD will tantamount to
providing house building advance is not correct.
Que. No. 8] Gold Ltd. is a listed company with paid-up capital of ` 125 Crores and free reserves of ` 250 Crores.
Silver Pvt. Ltd. has approached Gold Ltd. for a loan of ` 300 Crore to set up a manufacturing plant. Comment
whether Gold Ltd. can give aforesaid loan to Silver Pvt. Ltd. keeping in view that Raman is a director in both the
companies.
As per Section 185, a company cannot directly or indirectly advance any loan, including any loan represented by a
book debt to its directors or to any other person in whom the director is interested.
The expression "to any other person in whom director is interested" included a private company of which any
director is a director or member.
Thus, Gold Ltd. cannot give loan to Silver Pvt. Ltd.

Que. No. 9] Mr. G, a Director of Sam Ltd. was interested in a contract to be entered into by the company. The
Articles of Association of Sam Ltd. contained a clause, which prohibited the directors from voting on the
resolution in respect of any contract in which he is interested. The matter in respect of the said contract was put
up for approval of the shareholders in a general meeting. The general meeting was attended by Mr. G and he
also voted on the resolution. Mr. G, claims that he has a right to vote on the resolution in the general meeting.
When a director exercises his voting right as a shareholder, he is free to vote in his own best interests like any other
shareholder. An article in the articles of association prohibiting a director from voting on a resolution in respect of
a contract in which he is interested does not debar him from voting thereon as a shareholder in a general meeting.
[East Pant Du United Lead Mining Co. Ltd. v. Merry Weather (13 WR 216)]
A shareholder may vote as he pleases even when his interests are different from or opposed to those of the
company. Shareholders are not trustees for the company or for one another. The restriction in the article pertaining
to voting applies only to the board meetings and not to the general meetings.
In view of the above legal pronouncements, there cannot be any restriction on the voting right of a director in a
general meeting where he is voting as a shareholder. Hence, the contention of Mr. G is correct.
Que. No. 10] PQR Ltd. having paid-up capital of ` 50 lakh, entered into a contract with the company XYZ Ltd. in
which director D was holding 20% shares. The director did not disclose interest at the time of approval of the
contract by the board. Comment.
As per Section 184(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
with a body corporate in which director or director with any other director, holds more than 2% shareholding of
that body corporate 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.
In the present case, the aggregate shareholding of 'D' is 20% which is more than 2% of the paid up share capital of
XYZ Ltd. and thus Section 184(2) is attracted. Hence, 'D' is required to disclose the nature of his interest i.e. their
shareholding in XYZ Ltd. in the Board meeting of PQR Ltd. in which the contract or arrangement between XYZ Ltd.
and PQR Ltd. is first discussed. Thus, by non disclosure 'D' has contravened Section 184(2).
Consequences of failure to disclose his interest are as follows:
(1) 'D' shall vacate the office of director [Section 167]
(2) The contract shall be voidable at the option of PQR Ltd. [Section 184(3)]
(3) 'D' shall be punishable -
- with imprisonment for a term which may extend to 1 year or
- with fine which shall not be less than ` 50,000 but which may extend to ` 1,00,000 or
- with both. [Section 184(4)]

Chapter 11
Registers and Records
Que. No. 1] Distinguish between: Statutory Books & Statistical Books.
Following are the main points of distinction between statutory books & statistical books:
Point Statutory Books Statistical Books
Meaning As per the provisions of different sections of In addition to books of account and statutory
the Companies Act, 2013 the certain books books, companies usually maintain the certain
must be maintained by the company which are books which are known as Statistical books.
known as statutory books.
Place Statutory books must be kept at the register Statistical books may be kept at any place other
office of the company. than register office of the company.
Compulsion Keeping of statutory books is compulsory. Keeping of Statistical books is optional.
Examples
- Register & index of members, debenture - Share call book

holders - Debenture call book
- Minutes of proceedings of general - Register of share transfers
meeting, meeting of Board of Directors
- Shareholders dividend book
- Register of investments not held in the
- Debenture interest book
company name
- Debenture transfer register
- Register of contracts or arrangements in
which directors are interested - Register of share certificates
- Register of directors and key managerial - Register of probates
personnel and their shareholding. - Register of share warrants
- Register of loans and investment made - Register of dividend mandates
other body corporate - Agenda book
- Register of charges - Share application & allotment book
- Register of sealed documents
- Register of powers of attorney
Que. No. 2] Write a short note on: Management Discussion and Analysis Report Priya, a nominee director on the
Board of Aroma Ltd., a listed company, informed the Board of directors during a Board meeting that the next
annual report of the company shall contain a 'Management Discussion and Analysis Report'. You being the
Company Secretary have been asked by the Board to prepare the said report. State the matters you would
include in the report.
As part of the Annual Report a Management Discussion and Analysis report should form part of the Annual Report
to the shareholders. This Management Discussion & Analysis should include discussion on the following matters
within the limits set by the company's competitive position:

♦ Industry structure and developments
♦ Opportunities and threats
♦ Segment/product wise performance
♦ Outlook
♦ Risks and concerns
♦ Internal control systems and their adequacy
♦ Discussion on financial performance with respect to operational performance.
♦ Material developments in Human Resources/Industrial Relations front, including number of people
employed.
Que. No. 3] State the compliance requirements under the SEBI (LODR) Regulations, 2015 relating to "Website".
The listed entity shall disseminate the following information on its website:
 Details of its business.
 Terms and conditions of appointment of independent directors.
 Composition of various committees of board of directors.
 Details of establishment of vigil mechanism/Whistle Blower Policy.
 Criteria of making payments to non-executive directors, if the same has not been disclosed in annual report.
 Policy on dealing with related party transactions.
 The e-mail address for grievance redressal and other relevant details;
 Shareholding pattern.
 New name and the old name of the listed entity for a continuous period of one year, from the date of the
last name change.

Chapter 12
An Overview of Corporate Reorganisation
Que. No. 1] Explain the role of SEBI (Listing Obligations & Disclosure Requirements) Regulations,
2015 as Regulatory Framework for Mergers and Amalgamations.
i. Regulation 37 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,

provides that the listed entity shall not file any scheme of arrangement with any Court or
Tribunal unless it has obtained observation letter or No-objection letter from the stock
exchange(s).
ii. Generally, stock exchanges raise several queries and on being satisfied that the scheme does
not violate any laws concerning securities such as the Takeover Code or the SEBI (ICDR)
Regulations, Stock Exchanges accord their approval.
iii. The listed entity shall place the Observation letter or No-objection letter of the stock
exchange(s) before the Court or Tribunal at the time of seeking approval of the scheme of
arrangement. The validity of the ‘Observation Letter’ or No-objection letter of stock
exchanges shall be 6 months from the date of issuance, within which the draft scheme of
arrangement shall be submitted to the Court or Tribunal.
iv. Securities and Exchange Board of India has also provided some compliance with regard to
the merger and amalgamation.
Que. No. 2] What material facts need to be disclosed by the applicant in an affidavit?
Section 230(2) states that the company or any other person, by whom an application is made, shall
disclose to the Tribunal by affidavit –
1. 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
2. reduction of share capital of the company, if any, included in the compromise or
arrangement
3. any scheme of corporate debt restructuring consented to by not less than 75% of the
secured creditors in value, including—
a. a creditors’ responsibility statement in the prescribed form;
b. safeguards for the protection of other secured and unsecured creditors;
c. 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;
d. where the company proposes to adopt the corporate debt restructuring guidelines
specified by the Reserve Bank of India, a statement to that effect; and
e. 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.
Que. No. 3] Write a short note on notice of the meeting.
When a meeting is proposed to be called in pursuance of an order of the Tribunal, 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. a statement disclosing the details of the compromise or arrangement,

b. a copy of the valuation report, if any, and
c. explaining their effect on creditors, key managerial personnel, promoters and non-promoter
members, and the debenture-holders, and
d. the effect of the compromise or arrangement on any material interests of the directors of the
company or the debenture trustees, and
e. such other matters as may be prescribed
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.
When 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.
Que. No. 4] Explain the power to acquire shares of shareholders dissenting from scheme or
contract approved by majority.
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 4 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.
Que. No. 5] Who are dissenting shareholder and what process of acquisition of shares from
dissenting shareholders is?
1. 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.
2. After the notice under section 235(1) of the Act, 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. 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 60 days.
Que. No. 6] What is the power of central government to provide for amalgamation of companies
in public interest?
1. If 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 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 may, within a period of 30 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.
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.
Que. No. 7] Write a short note on justification and advantages of the rule in Foss V. Harbottle.
The justification for the rule laid down in Foss v. Harbottle is that the will of the majority prevails. On
becoming a member of a company, a shareholder agrees to submit to the will of the majority. The

rule really preserves the right of the majority to decide how the company’s affairs shall be
conducted. If any wrong is done to the company, it is only the company itself, acting, as it must
always act, through its majority, that can seek to redress and not an individual shareholder.
Moreover, a company is a person at law, the action is vested in it and cannot be brought by a single
shareholder. Where there is a corporate body capable of filing a suit for itself to recover property
either from its directors or officers or from any other person then that corporate body is the proper
plaintiff and the only proper plaintiff.
The main advantages that flow from the Rule in Foss v. Harbottle are of a purely practical nature and
are as follows:
1. Recognition of the separate legal personality of company: If a company has suffered some injury,
and not the individual members, it is the company itself that should seek to redress.
2. Need to preserve right of majority to decide: The principle in Foss v. Harbottle preserves the right
of majority to decide how the affairs of the company shall be conducted. It is fair that the wishes of
the majority should prevail.
3. Multiplicity of futile suits avoided: Clearly, if every individual member were permitted to sue
anyone who had injured the company through a breach of duty, there could be as many suits as
there are shareholders. Legal proceedings would never cease, and there would be enormous
wastage of time and money.
4. Litigation at suit of a minority futile if majority does not wish it: If the irregularity complained of
is one which can be subsequently ratified by the majority it is futile to have litigation about it except
with the consent of the majority in a general meeting. In Mac Dougall v. Gardiner, (1875) 1 Ch. 13
(C.A.), the articles empowered the chairman, with the consent of the meeting, to adjourn a meeting
and also provided for taking a poll if demanded by the shareholders. The adjournment was moved,
and declared by the chairman to be carried; a poll was then demanded and refused by the chairman.
A shareholder brought an action for a declaration that the chairman’s conduct was illegal. Held, the
action could not be brought by the shareholder; if the chairman was wrong, the company alone
could sue.
Que. No. 8] What is the exception to the rule in Foss v. Harbottle?
The rule in Foss v. Harbottle is not absolute but is subject to certain exceptions. In other words, the
rule of supremacy of the majority is subject to certain exceptions and thus, minority shareholders
are not left helpless, but they are protected by:
(a) the common law; and
(b) the provisions of the Companies Act, 2013.
The cases in which the majority rule does not prevail are commonly known as exceptions to the rule
in Foss v. Harbottle and are available to the minority. In all these cases an individual member may
sue for declaration that the resolution complained of is void, or for an injunction to restrain the
company from passing it.
Que. No. 9] Explain the power of tribunal in alteration in memorandum or articles.
1. Where an order of the Tribunal makes any alteration in the memorandum or articles of a
company, then, 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.
2. 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.

3. A certified copy of every order altering, or giving leave to alter, a company’s memorandum
or articles, shall within 30 days after the making thereof, be filed by the company with the
Registrar who shall register the same.
4. However, if a company contravenes the provisions of Section 242, the company shall be
punishable with fine which shall not be less than1 lakh rupees but which may extend to 25
lakh rupees and every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to 6 months or with fine which shall not be less
than 25 thousand rupees but which may extend to 1 lakh rupees, or with both.
Que. No. 10] What are the requirements in considering an application for class action?
In considering an application for class action, 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
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—
 authorised by the company before it occurs; or
 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.
In case of admission of application
Section 245(5) provides that if an application filed for class action 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.
Que. No. 11] Who shall conduct the valuation?
1. Section 247(1) of the Companies Act, 2013 states that where a valuation is required to be
made in respect of any property, stocks, shares, debentures, securities or goodwill or any
other assets or net worth of a company or its liabilities under the provision of the Companies
Act, 2013, it shall be valued by a person having such qualifications and experience and
registered as a valuer 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 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 during a period of 3 years prior to his appointment as
valuer or 3 years after the valuation of assets was conducted by him.
Que. No. 12] What are the Power of Central Government to Direct Companies to Furnish
Information or Statistics.
1. Section 405 of the Companies, Act, 2013 states that the Central Government may, by order,
require companies or any class of companies, 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 such order shall be published in the Official Gazette and may be addressed to
companies or to any class of companies, in such manner, as the Central Government may
think fit and the date of such publication shall be deemed to be the date on which
requirement for information or statistics is made on such companies or class of companies,
as the case may be.
3. For the purpose of satisfying itself that any information or statistics furnished by a company
or companies in pursuance of any order stated above 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.
Que. No. 13] A meeting of members of XYZ Ltd. was convened under the orders of the Tribunal to
consider a scheme of compromise and arrangement. The meeting was attended by 200 members
holding 5,00,000 shares in aggregate. 75 members holding 4,00,000 shares voted for the scheme.
The remaining members voted against the scheme. Is the scheme approved in the eyes of law?
Approval of the scheme at the meeting [Section 230(6)]: The scheme of compromise or
arrangement shall be approved by majority of person representing 3/4th in value of the creditors,
or class of creditors or members or class of members, voting in person or by proxy or by postal
ballot. Thus, 51 % majority in number, and 75% in value present and voting at the meeting must
approve the scheme.
The majority is dual, in number and in value. A simple majority of those voting is sufficient, whereas
the '3/4th' requirement relates to value. The 3/4th value is to be computed with reference to paid-
up capital held by members (or to total amount owed by company to creditors) present and voting
at the meeting. [Re. Maknam Investments Ltd. (1995) 6 SCL 93 Cal; Re Mafatlal Industries Ltd. (1995)
84 Comp Cas 230 (Guj)]
The language of Section 230(6) is totally unambiguous and a plain reading of this provision clearly
shows that the majority in number by which a compromise or arrangement is approved should
represen` 3/4th in value of the creditors/shareholders who are 'present and voting' and not of the
total value of the shareholders or creditors of the company. [Hind Lever Chemicals Ltd. and Another
[2005] 58 SCL 211(Punj. & Har.)]
As per facts given in case, the scheme should be approved by 101 or more shareholders (51 % in
number) holding 3,75,000 shares or more (75% in value).

However, out of shareholders holding 5,00,000 shares only 75 shareholder (37.5% in number)
holding 4,00,000 shares (80% in value) voted in favour which is not in accordance with the provisions
of Section 230 (6) and thus, the scheme shall not be sanctioned by the Tribunal.
Broad Principles evolved in Sanctioning the Scheme:
(a) The resolutions should be passed by the statutory majority in accordance with 230(6) of
Companies Act, 2013 at a meeting(s) duly convened and held. The Tribunal should not usurp the
right of the members or creditors.
(b) Those who took part in the meetings are fair representative of the class and the meetings
should not coerce the minority in order to promote the adverse interest of those of the class whom
they purport to represent.
(c) The scheme as a whole, having regard to the general conditions and background and object of
the scheme, is a reasonable one; it is not for Tribunal to interfere with the collective wisdom of the
shareholders of the company. If the scheme as a whole is fair and reasonable, it is the duty of the
Tribunal not to launch an investigation upon the commercial merits or demerits of the scheme which
is the function of those who are interested in the arrangement.
(d) There is no lack of good faith on the part of the majority.
(e) The scheme is not contrary to public interest.
(f) The scheme should not be a device to evade law.
Que. No. 14] ABC Ltd. has 700 creditors (in number) representing total value of ` 100 Crore as per
its balance sheet. In a creditors meeting called under sections 230 to 232 for considering proposed
scheme of amalgamation with XYZ Ltd., out of total 700 creditors, only 150 creditors representing
value of ` 45 Crore were present. Out of said 150 creditors present at the said meeting, only 140
creditors representing value of ` 40 Crore voted in favour of the resolution, while 10 creditors
representing value of ` 5 Crore cast their dissenting vote against the scheme. Whether the motion
proposing the scheme of amalgamation should be treated as approved or not? Explain with
reference to relevant provisions of law and case law, if any.
Approval of the scheme at the meeting [Section 230(6)]: The scheme of compromise or
arrangement shall be approved by majority of person representing 3/4th in value of the creditors,
or class of creditors or members or class of members, voting in person or by proxy or by postal
ballot. Thus, 51 % majority in number, and 75% in value present and voting at the meeting must
approve the scheme.
The majority is dual, in number and in value. A simple majority of those voting is sufficient, whereas
the '3/4th' requirement relates to value. The 3/4th value is to be computed with reference to paid-
up capital held by members (or to total amount owed by company to creditors) present and voting
at the meeting. [Re. Maknam Investments Ltd. (1995) 6 SCL 93 Cal; Re Mafatlal Industries Ltd. (1995)
84 Comp Cas 230 (Guj)]
The language of Section 230(6) is totally unambiguous and a plain reading of this provision clearly
shows that the majority in number by which a compromise or arrangement is approved should
represen` 3/4th in value of the creditors/shareholders who are 'present and voting' and not of the
total value of the shareholders or creditors of the company. [Hind Lever Chemicals Ltd. and Another
[2005] 58 SCL 211(Punj. & Har.)[

In the given case, out of 150 creditors who were present and voting, 140 have voted in favour which
means that the first of the twin criteria has been satisfactorily met. In terms of value, those who
voted in favour were commanding a value of ` 40 Crores as against the value of those who voted
against who commanded a value of ` 5 Crores. In other words, more than three-fourths in value of
the votes of the creditors present and voting have voted in favour indicating clearly that the second
of the twin criteria has also been satisfactorily met. Thus the resolution approving the amalgamation
has been duly passed in accordance with the requirements of Section 230(6) of the Companies Act,
2013.
Que. No. 15] A scheme of amalgamation of Rani Ltd. with Minakshi Machine Tools Ltd. was
presented to the Tribunal for sanction after the scheme was approved by an overwhelming
majority of shareholders and secured as well as unsecured creditors of both the companies at
their respective meetings. While the scheme was pending before the Tribunal, some of the
members requisitioned an extraordinary general meeting for the purpose of requesting Rani Ltd.
to negotiate with Minakshi Machine Tools Ltd., as according to the requisitionists, the exchange
ratio was not fair and reasonable. Can the directors refuse to call the extraordinary general
meeting? Discuss.
In Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1996] 87 Comp. Cas. 792 (SC), it was held that, if
Share Exchange Ratio is fixed by Chartered Accountant upon consideration of various factors and
approved by majority of shareholders in meeting, the Tribunal will not disturb ratio.
It was also held that, unless the person who challenges the valuation satisfies the Tribunal that the
valuation is grossly unfair, the Tribunal will not disturb the scheme of amalgamation. [Piramal Spg. v.
Weaving Mills Ltd.]
If the valuation is confirmed to be fair by reputed firm of Chartered Accountants and is also
confirmed by majority of members. The objection raised by some shareholders of a small group
cannot be sustained. [Hindustan Lever Employees Union v. Hindustan Lever Ltd.]
Section 230(5) provides that a notice under Section 230(3) along with all the documents in such form
as may be prescribed shall also be sent to the Central Government.
The Tribunal should take into consideration the representations, if any, made to it by the
government before passing any order. The role played by the Central Government is that of
impartial observer who acts in public interest and advises the Tribunal whether it is or it is not
feasible for the two companies to amalgamate.
Considering the above judicial views, answer to given case is as follows:
(a) The objection raised by dissenting shareholder will be refused by the Tribunal unless it is
shown that valuation is grossly unfair.
(b) In case of objection by the Central Government, the Tribunal will refuse to interfere unless the
Central Government establishes that the exchange ratio was unfair and not in public interest.

Chapter 13
An Introduction to MCA 21and filing in XBRL
Que. No. 1] What are the benefits of MCA21 application?
The MCA21 application offers the following:

1. Enables the business community to register a company and file statutory documents quickly
and easily.
2. Provides easy access of public documents
3. Helps faster and effective resolution of public grievances
4. Helps registration and verification of charges easily
5. Ensures proactive and effective compliance with relevant laws and corporate governance
6. Enables the MCA employees to deliver best of breed services
Que. No. 2] Write a short note on Corporate Identity Number (CIN).
Every company is allocated a Corporate Identity Number (CIN). CIN can be found from the MCA-21
portal through search based on:
a) ROC Registration No.
b) Existing Company Name
c) Old Name of Company (in case of change of name, user is required to enter old name and
the system displays corresponding current name).
d) Inactive CIN [In case of change of CIN, the user is required to enter previous (inactive) CIN
Number].
Each Indian company (Listed or Unlisted) has a unique 21 Digit CIN. This is required to be quoted on
all e-forms. Once this number is filled, company details are automatically filled in E-Forms issued by
MCA by using pre-fill function.
As stated above, CIN is a 21 digit number assigned to every company incorporated on or after
November 1, 2000.The Corporate Identity Number allotted to a company indicates listing status,
economic activity(industry), state, year of incorporation, ownership and sequential number assigned
by ROC (Registration Number).
1st Digit Listing Status
Next 5 digits Economic Activity (industry)
Next 2 digits State
Next 4 digits Year of Incorporation
Next 3 digits Ownership. Status of the company ( Private (PTC)/ public ( PLC) /
government companies (GOI) etc
Last 6 digits Sequential number assigned by ROC (Registration Number)
13.1 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 3] Explain integrated process of name reservation, company incorporation, DIN
allotment and issuance of PAN &TAN through SPICe (form INC-32) by MCA-21.
1. An integrated process through which reservation of name, incorporation of a new company,

application for allotment of DIN and/or application for PAN and TAN can be applied
simultaneously through a single application e-Form i.e. Form INC-32 (SPICe).
2. After filing the SPICe Form and making payment the user is required to visit the MCA portal
and access the service ‘Submit application for PAN and TAN’. He has to download Form 49A
(PAN) and 49B (TAN) and upload them on the same screen after attaching his DSC. He has to
upload these forms (PAN &TAN) within 2 days of filing the SPICe form failing which the
entire SPICe form would be marked as ‘Invalid and Not to be taken on record’.
3. Once the e-Form is processed and found complete, company would be registered and CIN
would be allocated. DIN gets issued to the proposed Directors who do not have a valid DIN.
Maximum 3 proposed Directors are allowed using this integrated form for filing application
of allotment of DIN while incorporating a company. Also PAN and TAN would get issued to
the Company.
4. On approval of SPIC e forms, the Certificate of Incorporation (COI) is issued with PAN as
allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation
(COI) as an attachment along with PAN and TAN is also sent to the user. Further PAN card
shall be issued by the Income Tax Department.
5. After receipt of Certificate of Incorporation (with PAN indicated there in as allotted by the
Income Tax Department), in case of non-receipt of PAN card, stakeholders shall check the
status at www.TIN-NSDL.com
Que. No. 4] What are the guidelines for filling and filing E-forms.
While preparing the forms, documents, returns to be filed with the Registrar, the following points
are to be kept in view:
1. Each time we are required to file an e-Form, we should download the Form from the MCA
site to a void the wastage of time at a later stage because the forms are under revision and a
slight change in the form will result in it not getting uploaded at the stage of submitting on
the portal.
2. An e-Form contains certain standardized features. It starts with the Corporate Identity
Number (CIN), which works as a unique identifier of a company (in the case of an Indian
Company). In the case of foreign company, the foreign company Registration Number is
required to be filled-up. By entering the number, the company details to the extent these
are available in static form in the database are automatically filled in by using the pre-fill
functionality.
3. The e-Form contains a number of mandatory fields, marked with the red color star(*) which
are required to be filled in. Certain other fields are non-mandatory in nature, which may be
filled in as maybe relevant in any particular case.
4. An e-Form contains tool tips for context sensitive help.
5. An instruction kit is available for each e-Form, which contains details of the instructions for
properly filling the e-Form. It is important to go through it before filing the e-form.
6. An e-Form may be filled in either online or offline mode. Online filling implies that the e-
Form is filled while being still connected to MCA portal through the Internet. Offline filling
denotes that the e-Form is downloaded into the user’s computer and filled later without
being connected to the Internet.
7. An e-Form may require certain mandatory attachments to be filed along with it. Optional
attachments may also be filed with an e-Form. The list of such attachments is displayed in
thee-Form.

8. All documents/forms/returns, etc., are to be submitted in English or Hindi and where a
document is in any language other than English and Hindi, a translation of that document or
portion in to either English or Hindi certified by a responsible officer of the company to be
correct, shall be attached to each copy of the document which is furnished to the Registrar.
All such documents shall be converted into pdf format.
9. Next to attachment, there is a declaration that is sought from the person filing the e-Form to
the effect that the information given in the e-Form and the attachments is correct and
complete.
10. Most of the e-Forms require the digital signature of the Managing Director or Director,
Manager or Secretary of the company for successful filing/submission.
11. Scanned documents take more space and as far as possible MS-word file converted into pdf
file is preferred.
12. All electronic forms require, the date of board meeting to be specified under the head
verification. In the said column, the date of the board meeting at which the person is
authorised to sign and submit form shall be specified. Where it is mentioned in the form that
it has to be signed by specific person, it should be so digitally signed.
13. Further, the digital signature of a third party may also be required in certain cases. In the
case of an e- Form for creation or modification of charges, such digital signature is also
required from the Bank or Financial Institution.
14. In certain cases, a certificate from the Chartered Accountant or Cost Accountant or Company
Secretary in whole-time practice is also required to authenticate the particulars contained in
the e-Form. For example, this requirement is mandatory in the case of an e-Form for
appointment of director, change in the situation of the registered office, etc.
15. There are built-in facilities to check the filled in e-Form for requisite validations, to do pre-
scrutiny and to modify the e-Form when the same is required to be re-submitted.
16. Certain documents need physical filing in addition to e-filing. It needs to be noted that those
should preferably be free from corrections and erasure. If there is any correction or erasure,
it should be duly authenticated by the person signing the document or the return.
17. After the filling part is complete, the e-Form is ready for submitting into the MCA central
documentary repository and when the Submitted button is pressed, the e-Form gets
uploaded into the MCA central document repository.
18. Thereafter, the requisite fees as applicable for the e-Form should be paid either on-line or
off-line.
19. Once the e-Form has been accepted and payment of fees has been acknowledged, a work
item is created and assigned to the appropriate MCA employee based on pre-defined
assignment rules as part of MCA back office work flow automation.
20. In the case of an e-Form, the authorized officer affixes his/ her digital signature for
registering/ approving/rejecting the same.
21. After the processing of the e-Form is completed, an acknowledgement email is sent to the
user regarding its approval/rejection.
Once the e-form is filled, there would be need to validate the e-form using Pre-scrutiny button. Then
the relevant digital signatures have to be affixed and the form be saved. Internet connection is
required to carryout the pre-fill and pre-scrutiny functions .The filled up e-form as per relevant
instruction kit needs to be uploaded on the MCA21 portal. On successful upload, the Service request
number would be generated and it would be directed to make payment of the statutory fees. Once
the payment has been made the status of payment made and filing status can be tracked on the
MCA21 portal by using the “Track Your Payment Status” and “Track Your Transaction Status” link
respectively.

Que. No. 5] Write a short note on: Digital Signature Certificate.
The e-Forms are required to be authenticated by the authorized signatories using digital signatures
as defined under the Information Technology Act, 2000. A digital signature is the electronic signature
duly issued by a certifying authority that shows the authority of the person signing the same. It is an
electronic analogue of a written signature. Every user who is required to sign an e-form for
submission with MCA is required to obtain a Digital Signature Certificate. Under the MCA-21 system
the following four types of users are identified as users of Digital Signatures and are required to
obtain digital signature certificate:
1. MCA (Government) Employees.
2. Professionals (CS, CA, CWA & Lawyers) who interact with MCA and companies in the context of
Companies Act.
3. Authorized signatories of the company including Managing Director, Directors, Manager or
Secretary.
4. Representatives of Banks and Financial Institutions.
A person requiring a Digital Signature Certificate can approach any of the Certifying authorities
identified by the MCA for issuance of Digital Signature Certificate.
Que. No. 6] Distinguish between: Pre-scrutiny & Check Form.
The difference between check form and pre-scrutiny is that the Check Form is done by internal
features of the form which ensure that all the mandatory and required field are filled up and
attachment are made to the e-from, while Pre-Scrutiny is a complete legal and technical scrutiny of
an e-form done by the MCA portal before accepting the form.
Que. No. 7] Prudent General Insurance Company Ltd. is engaged in the general insurance business.
The company is not listed in any stock exchange in India but is a subsidiary of Reliable General
Insurance Company Ltd., listed at Bombay Stock Exchange. The turnover of Prudent General
Insurance Company Ltd. is ` 330 Crore. Examining the provisions of the Companies Act, 2013, state
whether the company is required to file XBRL enabled balance sheet.
Filing of financial statements with Registrar in XBRL Format: The following class of companies has
to file their Balance Sheet, Profit & Loss A/c and other documents with the Registrar using the
Extensible Business Reporting Language (XBRL) namely:
(1) All Companies listed with any Stock Exchange in India and their Indian subsidiaries.
(2) All Companies having paid-up capital of ` 5 Crore or above.
(3) All companies having turnover of ` 100 Crore or above.
(4) All companies which are required to prepare their financial statements in accordance with
Companies (Indian Accounting Standards) Rules, 2015.
The. companies which have filed their financial statements shall continue to file their financial
statements and other documents though they may not fall under the class of companies specified
therein in succeeding years
Companies in Banking, Insurance, Power Sectors and Non-Banking Financial companies are
exempted for Extensible Business Reporting Language (XBRL) filing.
Thus, Prudent General Insurance Company Ltd. being an insurance company is not required to file
their Balance Sheet and Profit & Loss A/c in XBRL.

Chapter 16
Directors
Special Points to know for Listed Companies.
 For listed entities SEBI vide recent notification provides that the board of directors of the top
1000 listed entities (with effect from April 1, 2019) and the top 2000 listed entities (with
effect from April 1, 2020) shall comprise of not less than six directors.
 No listed entity shall appoint a person or continue the directorship of any person as a non-
executive director who has attained the age of seventy five years unless a special resolution is
passed to that effect, in which case the explanatory statement annexed to the notice for such
motion shall indicate the justification for appointing such a person.
 With effect from April 1, 2020, the top 500 listed entities shall ensure that the Chairperson of
the board of such listed entity shall - (a) be a non-executive director; (b) not be related to the
Managing Director or the Chief Executive Officer as per the definition of the term “relative”
defined under the Companies Act, 2013:
 It is also provided that the Board of directors of the top 500 listed entities shall have at least
one independent woman director by April 1, 2019 and the Board of directors of the top 1000
listed entities shall have at least one independent woman director by April 1, 2020.
 For listed entities SEBI vide recent notification provides that the quorum for every meeting of
the board of directors of the top 1000 listed entities with effect from April 1, 2019 and of the
top 2000 listed entities with effect from April 1, 2020 shall be one-third of its total strength or
three directors, whichever is higher, including at least one independent director.
Que. No. 1] In a limited company, the Managing Director terminated an employee on the charge of various
misconducts. The aggrieved employee filed a writ petition before the High Court challenging the dismissal
contending that the Managing Director had no power to do so and the proper authority was the Board of
directors. During the pendency of writ, the Board of directors passed a resolution ratifying the action of the
Managing Director. The High Court while setting aside the Managing Director's dismissal order, allowed the writ
petition. Managing Director appealed to the Supreme Court. Decide the case having regard to the judicial
pronouncements in the matter.
In Maharashtra State Mining Corpn. v. Sunil (2006) 5 SCC 96, the appellant corporation's Managing Director
terminated respondent's services for various misconducts. The respondent filed a writ petition challenging the said
dismissal order on the ground that the Managing Director had no authority to do so since the same was vested in
the appellant's board of directors. While the said petition was pending, the Board of Directors passed a resolution
ratifying the managing director's impugned action.
The High Court, while setting aside the impugned termination order, allowed respondent's writ petition. Appellant
appealed to the Supreme Court. Appeal was allowed. According to the Supreme Court, the High Court was right
when it held that an act by a legally incompetent authority was invalid. But it was entirely wrong in holding that
such an invalid act cannot be subsequently rectified by ratification of the competent authority. Ratification, by
definition, means making valid an act already done.
Therefore, ratification assumed an invalid act, which was retrospectively validated. In the instant case, the
managing director's order dismissing the respondent from the service was admittedly ratified by the board of
directors and the board of directors unquestionably had the power to terminate the services of the respondent.
Since the order of the Managing Director had been ratified by the board of directors, such ratification related back
to the date of the order and validated it. Therefore, the instant appeal was allowed, the impugned judgment and
order of the High Court was quashed, and the dismissal order was upheld.

Que. No. 2] Mr. Sunil Goyal, a director of XYZ Limited wants to go on foreign trip. He wants to assign his office
to the Vice President of the company. Mr. Sunil Goyal seeks your advice whether he can do so. Referring to the
provisions of the Companies Act, 2013 advise him in the matter.
As per Section 166(6), a director of a company shall not assign his office and any assignment so made shall be void.
Thus, Mr. Sunil Goyal, a director of XYZ Ltd. cannot assign his office to Vice President of the company.
Que. No. 3] A whole-time director of a company made an invention during the course of his employment with
the company. He patented the invention in his own name and appropriated the benefits to himself. Can he do
so? Cite case law, if any.
The directors are liable to the company for all personal profits or gain made by them taking advantage of their
position as directors.
A director was held liable when a director patented and exploited in his own name an invention made during the
course of his employment with the company. [Cranleigh Precision Engineering Ltd. v. Bryan, (1964) All ER 289]
Que. No. 4] Nalin is a director of ABC Ltd. which has failed to repay matured deposit from 1st April, 2014 onwards
and the default continues. But ABC Ltd. is regular in filing annual accounts and annual returns. Nalin is also
director of PQR Ltd. and XYZ Ltd.
Answer the following question with reference to the relevant provisions of the Companies Act, 2013:
(i) Whether Nalin is disqualified and if so, whether he is required to vacate his office of director in PQR Ltd. and
XYZ Ltd.?
(ii) Is it possible for the board of director of DEF Ltd. to appoint Nalin as an additional director at the board
meeting to be held on 15th May 2015? Would your answer be different if Nalin ceased to be director of ABC Ltd.
by resignation on 1st March 2015?
As per Section 164(2), a person who is or has been a director of a company shall not be eligible to be re-appointed
as a director of that company or appointed in other company for a period of 5 years which 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 1 year or more.
In the given case ABC Ltd. has failed to repay its deposits on the due date i.e. 1.4.2014 and such default continues
for more than 1 year i.e. beyond 31.3.2015. Therefore -
- Nalin shall not be eligible to appointed as director in any other company after 31.3.2015 for a period of 5
years. Thus, DEF Ltd. cannot appoint Nalin as an additional director on 15.5.2015.
- As per Section 167(l)(a), due disqualification under Section 164, Nairn's office of director in ABC Ltd, PQR
Ltd. & XYZ Ltd. shall become vacant on the expiry of 31.3.2015.
If Nalin had ceased to be director of ABC Ltd. by resignation on 1.3.2015, he would have escaped the disqualification
specified in Section 164(2) and thus, DEF Ltd. could appoint Nalin as an additional director on 15.5.2015.
Que. No. 5] Mr. Ramanthan is a Director of Fraudulent Ltd., Honest Ltd. and Regular Ltd. For the financial year
ended on 31.3.2014 two irregularities were discovered against fraudulent Ltd. For the financial year ended on
31.3.2014 Fraudulent Ltd. did not file its annual accounts for the year ended 31.3.2014 and failed to pay interest
on loans taken from a financial institution for the las` 3 years.
On 1.6.2015 Mr. Ramanthan is proposed to be appointed as additional director of Goodwill Ltd., which company
has sought a declaration from Mr. Ramanthan and he also submitted the declaration stating that the
disqualification specified in Section 164 of the Companies Act, 2013 is not attracted in his case. Decide under the
provisions of the Companies Act, 2013:
(i) Whether the declaration submitted by Mr. Ramanthan to Goodwill Ltd. is in order?
(ii) Whether Mr. Ramanthan can continue as a Director in Honest Ltd. and Regular Ltd.?

The given problem is discussed as under:
(i) As per Section 164(2), a person who is or has been a director of a company shall not be eligible to be re-
appointed as a director of that company or appointed in other company for a period of 5 years which has not filed
financial statements or annual returns for any continuous period of 3 financial years. As per the facts given in case,
failure to file annual accounts has not been for 3 continues years and therefore Mr. Ramanthan is not disqualified
for his directorship and can be appointed as director in Goodwill Ltd.
The declaration submitted by Mr. Ramanthan to Goodwill Ltd. is in order and valid.
Failure to pay interest on loans taken from a financial institution is not covered in Section 164, since defaults
specified in 164 covers default of repayment of 'public deposit', 'interest on public deposit' and 'non-filing of annual
accounts or annual returns' and not non-payment of 'loan' or 'interest on loan' obtained from financial institution.
(ii) Since Mr. Ramanthan is not disqualified under Section 164, he is not required to vacate his office of
directorship in any company as per Section 167(l)(a).
Que. No. 6] Iqbal Sons Ltd. issued shares of the nominal value of ` 10 per share, out of which ` 5 was payable on
application and balance ` 5 was payable on call. The call money was invited by the Board of Directors but some
shareholders, including a non-executive director, failed to pay the same within the prescribed period. Explain
the status of director who defaulted in paying call money.
As per Section 164(1) (vi), person shall not be eligible for appointment as a director of a company, if he has not
paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and 6
months have elapsed from the last day fixed for the payment of the call
As per Section 167(1) (a), the office of a director shall become vacant in case he incurs any of the disqualifications
specified in Section 164.
Thus, due to disqualification u/s 164, non-executive director's office shall become vacant on the expiry of the last
day fixed for the payment Of the call. Further, he shall also be disqualified to be appointed as director in Iqbal Sons
Ltd.
Que. No. 7] Five Board meetings were held in Asha Ltd. during the period from January to June in the calendar
year 2017. Rajeev, an additional director, attended none of these meetings. For the first two meetings he sought
leave of absence from the Board but did not inform the Board for the remaining three meetings. Examining the
provisions of the Companies Act, 2013, decide whether he is disqualified to act as a director.
As per Section 161, the additional director shall hold office up to the date of the next AGM or the last date on
which the AGM should have been held, whichever is earlier.
As per Section 167, the office of a director shall become vacant if he absents himself from all the meetings of the
Board of Directors held during a period of 12 months with or without seeking leave of absence of the Board.
Thus, office of Rajeev, Director of Asha Ltd. will be vacated if he remains absent for all board meeting in calendar
year 2017. If he attends any board meeting during the period July 2017 to Dec 2017 his office will not be vacated.
However, he is not disqualified to become director as per Section 164.
Que. No. 8] LKG Ltd. was incorporated on 5th May, 2014 under the Companies Act, 2013. Mr. Ramanujam was
appointed as the first resident director of the company in the board meeting held on 30th September,
2014. Examine the validity owing appointments with reference to the provisions of the Companies Act, 2013.
As per Section 149(3), every company shall have at least one director who stays in India for a total period of not
less than 182 days during the financial year.
The MCA vide General Circular No. 25/2014 has given a clarification on applicability of requirement for resident
director in the current calendar/financial year. Regarding newly incorporated companies, it is clarified that

companies incorporated between 1st April, 2014 to 30th September, 2014 should have a resident director either
at the incorporation stage itself or within 6 months of their incorporation.
Since, LKG Ltd., was incorporated on 5th May 2014, it should have a resident director either at the incorporation
stage itself or within 6 months of their incorporation. Thus accordingly, the appointment of Mr. Ramanujam as a
first resident director of the company in the board meeting held on 30th September, 2014 is valid.
Que. No. 9] The Board of Directors of ABC Ltd., an unlisted company having a paid-up capital of ` 6 Crores
consisting of equity share capital of ` 5 Crores and preference share capital of ` 1 Crore and also 1,100 small
shareholders holding equity shares seeks your advice on the following:
(i) It is necessary for the company to appoint a director to represent the 'Small Shareholders'?
(ii) In case the company decides to appoint such a director. The procedure to be followed by the company for
such appointment and the period for which such appointment can be made.
Advise explaining the relevant provisions of the Companies Act, 2013 and the Rules.
(i) The provisions of Section 151 read with Rule 7 of the Companies (Appointment & Qualification) Rules, 2014
relating to appointment of small shareholder director is applicable only to listed company. Thus, ABC Ltd. being an
unlisted company need not appoint small shareholder director.
(ii) However, even unlisted company by making provision in its article can appoint small shareholder director.
(As there is no prohibition under the Companies Act, 2013 that unlisted company should not appoint small
shareholder director)
The small shareholder director will be appointed by the small shareholder in accordance with the provisions of the
Article of such unlisted company.
Que. No. 10] Mr. Solid, a young professional of 29 years, has stayed in India for 150 days in the previous financial
year. He does not hold any shares in Happy Retails Ltd., which is a quoted (listed) company. Small shareholders
have decided amongst themselves that he is proposed to be appointed as small shareholders director who shall
not be liable to retire by rotation and his tenure shall be for 5 years from the date of joining the office of director.
Examining the provisions of the Companies Act, 2013, state whether Mr. Solid can be so appointed as s mall
shareholders director.
As per Section 151, small Shareholder means a shareholder holding shares of nominal value of ` 20,000 or less or
such other sum as may be prescribed.
A listed company may have one director elected by small shareholders in prescribed manner and with prescribed
terms and conditions.
As per Rule 7 of the Companies (Appointment & Qualification) Rules, 2014, the appointment of small shareholders
director shall be subject to the provisions of Section 152 except that -
(a) He shall not be liable to retire by rotation.
(b) His tenure shall not exceed a period of 3 consecutive years.
(c) On the expiry of the tenure, small shareholder director shall not be eligible for re-appointment.
Keeping in view of above provisions, Mr. Solid can be appointed as small shareholder director for 3 years and not
for 5 years.
Que. No. 11] Mr. Naksh is already a director of 19 companies. Out of which, 10 are public companies and 5 are
private companies. He is being appointed as director of another company named XYZ Ltd. Advise Mr. Naksh.
As per Section 165, a person shall not hold office as a director, including any alternate directorship, in more than
20 companies at the same time. Further, a person can be appointed a director in maximum 10 companies.

Mr. Naksh is already a director of 10 public companies and if he is appointed a director in XYZ Ltd. (public company)
there will be contravention of provisions of the Section 165. Thus, he cannot be appointed as director in XYZ Ltd.
Que. No. 12] Mohan, who was appointed as additional director at the board meeting held on 15th June 2014
continues to be in his office on the ground that the AGM for the financial year 2013-2014 was not held as
required under the Act. Whether continuance of Mohan in the office is valid? Will your answer be different if
Mohan was also managing director for a period of five years with effect from 1st June 2014 at the same board
meeting?
As per Section 161(1), an additional director holds office up to the date of the next AGM or the last date on which
the AGM should have been held, whichever is earlier. Thus, Mohan would vacate the office of director on the last
day on which AGM ought to have been held.
Only director can be appointed as managing director. Since, Mohan vacates the office of director, the office of
managing director is also vacated irrespective of the fact that he was appointed as managing director for a period
of 5 years.
Que. No.13] The Board of directors of Zest Ltd. appoints Pavan as a director under section 161 by passing a
resolution by circulation. The appointee now seeks your advice about the tenure of his appointment. Advise
him.
According to Section 161(1), the articles of a company may confer on its board of directors the power to appoint
any person as an additional director at any time who shall hold office up to the date of the next AGM or the last
date on which the AGM should have been held, whichever is earlier. The appointment of additional director may
be made either at a meeting of the Board or by circular resolution.
Que. No. 14] Vinay was appointed as an additional director by the Board of directors of Prudent Ltd. in its
meeting held on 20th July, 2015. Further, Vinay was appointed as a director by members of the company in its
annual general meeting held on 2nd September, 2015. Comment whether Vinay is again required to file consent
to act as a director.
MCA has clarified that where an additional director is appointed as director of the company in the AGM, the nature
of his appointment changes radically. It would, therefore, be in the interest of such directors that such changes are
notified to the Registrar in Form No. DIR -12.
Que. No. 15] X was appointed as an additional director in the board meeting held on 15th January, 2015 of ABC
Ltd. and was to hold office until the next annual general meeting of the said company. The next annual general
meeting which should have been held by 30th September, 2015 could not be held due to circumstances beyond
control. The board declares that X should continue on the board after 30th September, 2015. Advice the board.
As per Section 161(1), an additional director holds office up to the date of the next AGM or the last date on which
the AGM should have been held, whichever is earlier. Thus, X would vacate the office of director on the last day
on which AGM ought to have been held.
In view of above X cease to be director on 30th September, 2015 and declaration by the board is not valid.
Que. No.16] X, an employee of the ABC Ltd. was appointed as an alternate director. In the meantime, the original
director returned and wanted to attend the board meeting. Advice.
As per Section 161(2), an alternate director shall not hold office of director for a longer period than that are
permissible to the original director. The alternate director shall vacate his office when original director return back

to India, irrespective of the fact that as to whether the original director attends the Board meetings or not. Thus,
after an original director comes to India, only he can attend the Board meetings. The alternate director would
automatically cease to be director.
Que. No. 17] Mr. Q a director of PQR Ltd. proceeding to a long foreign tour, appointed Mr. Y as an alternate
director to act for him during his absence. The article of the company contains the provision for appointment of
alternate director by the board of director. Mr. Q claims that he has right to appoint alternate director. Examine
the given case in the light of the provisions of the Companies Act, 2013.
The appointment of Mr. Y as alternate director by Mr. Q would amount to assignment of office which is prohibited
under Section 166(6) and therefore, the appointment of Mr. Y as an alternate director by Mr. Q is void. Further, as
per Section 161(2), the alternate director is appointed by the Board of Directors and not by the director in whose
place he is appointed.
Que. No.18] Mr. P who is not qualified to be appointed as an independent director is appointed by the Board of
Directors of XYZ Company Limited, for an independent director, as an alternate director. Comment.
As per Section 162, a person can be appointed as an alternate director for an independent director only if Jie is
qualified to be appointed as an independent director as per Section 149(6).
Thus, appointment of Mr. P as alternate director for an independent director is void.
Que. No. 19] On the request of bank providing financial assistance the board of directors of PQR Ltd. decides to
appoint on its Board Mr. Peter, as nominee director. Articles of Association of the Company do not confer upon
the Board of Director any such power. Further, there is no agreement between the company and the bank for
any such nomination.
According to Section 161(3), 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, subject to the articles of a company.
In the present case, on the request of bank providing financial assistance the board of directors of PQR Ltd. decides
to appoint on its Board Mr. Peter, as nominee director. Articles of the company do not confer upon the board of
directors any such power and further there is no agreement between the company and the bank. Thus, the
appointment of Mr. Peter as nominee director is not valid as Articles do not confer upon the board of directors any
such power.
Que. No. 20] Humlog Ltd. received a letter from IDBI on 1st March, 2015 which has financed the project
requesting the company to appoint Madhavan, General Manager (Operations), IDBI, as a director on its Board
with immediate effect, as per the terms of sanction. Does his appointment require any other approval? Is he
liable for retirement by rotation?
Nominee Directors appointed by the Public Financial Institutions and Companies established under the Acts of
Parliament having non-obstante provisions over the Companies Act, 2013, like IDBI, LIC, UTI, IIBI etc., in their
respective statutes. Such directors can be appointed by the companies even if there is no provision in their article.
They are governed by respective Acts under which they are appointed. After appointment the company has to take
note of such appointment in the board meeting.
In view of above appointment of Madhvan as nominee director is effective from the date of letter viz. 1.3.2015 is
received in the office of the company.
Que. No. 21] X, a director of a company, was appointed at the AGM. X resigned and casual vacancy was filled by
the appointment of Y at a meeting of the Board. Later on, Y resigned and the directors again invited X to fill the

vacancy created by the resignation of Y. Is the action of the Board in appointing X, in the second instance, in
accordance with the provisions of the Companies Act, 2013?
As per Section 164(4), in the case of a public company, if the office of any director appointed by the company in
general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may
be filled by the board of directors at a meeting of the Board.
Thus, casual vacancy created by the resignation of Y cannot be filled by the board of director. In such case X can be
appointed as additional director and in next AGM he can be appointed as regular director by complying provisions
of Section 160.
Que. No. 22] Mohan, a director of XYZ Ltd. died in air crash. It has been decided to appoint Murari in his place.
Will the company be required to call extraordinary general meeting to approve the latter's appointment as a
director? When appointed, how long Murari would be in office?
general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may
be filled by the board of directors at a meeting of the Board. Any person so appointed to fill the causal vacancy
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.
Thus, vacancy caused to death of Mohan can be filled up by board of directors at board meeting there is no need
to call extraordinary general meeting and Murari will continue in office up to the date up to which Mohan in whose
place he is appointed would have held office if it had not been vacated.
However, the appointment of Murari must be approved by members in immediate next general meeting.
Que. No. 23] In Bright Ltd., vacancy of a director is caused by the death of Mohan, a director of the company,
after 3 months of his joining the company as director. The Board of the company, therefore, appointed Sumit in
his place but did not seek approval of the company in general meeting. Referring to the provisions of the
Companies Act, 2013, examine the validity of Sumit's appointment.
Casual vacancy means any vacancy, which occurs by reason of death, resignation, disqualification, failure of an
elected director to accept the office or for any reason other than retirement by rotation.
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.
Any person so appointed to fill the causal vacancy 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.
In view of above provisions, vacancy caused by the death of Mohan can be filled by board of directors at board
meeting. However, the appointment of Sumit must be approved by members in immediate next general meeting.
Que. No. 24] Smart, a director, verbally resigned from his office at the board meeting. His resignation was
accepted although the article provided for resignation in writing. Is the resignation valid?
As per Section 168, a director may resign from his office by giving a notice in writing to the company. Thus, verbal
resignation given by Smart, a director at the board meeting is not valid even if it was accepted by meeting.
For valid resignation, the Smart is advised to give the resignation in writing to the company. He should also forward
a copy of his resignation giving reasons for the resignation in Form DIR-11 along with the prescribed fees to the
ROC.

Que. No. 25] A director, aged 71 years, due to retire by rotation in the AGM, declares at the AGM that he is
resigning due to old age and ill health when the resolution for his appointment is taken up. In spite of persuasion
by many shareholder, he does not agree to continue as director. However, he send his resignation in writing to
the board subsequently, till the next board meeting. Advice the chairman.
As per Section 168, a director may resign from his office by giving a notice in writing to the company. A declaration
at the AGM by the director that he is resigning is not valid.
However, written resignation sent subsequently before the next Board meeting is valid. He should also forward a
copy of his resignation along with reasons for the resignation in Form DIR-11 along with the prescribed fees to the
ROC.
The company shall within 30 days from the date of receipt of notice of resignation from a director, intimate the
Registrar in Form DIR-12 and post the information on its website, if any.
Que. No. 26] The Managing Director of Progressive Ltd. resigned on 6th May, 2015 as such, but the company
filed Form No. DIR-12 with the ROC stating the date of resignation as 15th March 2016. The company issued
various cheques to its investors in repayment of their deposits after 6th May, 2015 which were bounced. The
investors filed a complaint against the former managing director. Will the managing director be liable in the
instant case?
As per Section 168, the director who has resigned shall be liable even after his resignation for the offences which
occurred during his tenure. Thus, director is not liable for the transaction entered by the company after his
resignation.
As managing director of Progressive Ltd. has resigned on 6th May, 2015 he is not liable for the transaction entered
by the company after 6th May 2015.

Chapter 17
Key Managerial Personnel
Que. No. 1] Mrs. Beautiful, aged 40 years, is the Managing Director of Beauty Care Products Ltd. She has received
contribution to superannuation fund and leave encashment during her tenure with the company during the
financial year ending 31st March, 2017. The Manager (Accounts) of the company is not very confident, if these
perquisites are to be included in the computation of ceiling on remuneration specified in the Companies Act,
2013. Referring to the provisions of the Act, advice the Manager (Accounts).
As per Section IV of the Schedule V to the Companies Act, 2013, 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;
(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.
Keeping in view of above provisions, 'contribution to superannuation fund' and 'leave encashment' received by
Mrs. Beautiful should not be included in the computation of ceiling on remuneration specified in the Companies
Act, 2013.
Que. No. 2] Mr. Weldon was appointed as a director of Esquire Engineering Ltd. w.e.f. from 1st October, 2014.
Since the Company wanted to take full advantage of the wisdom and experience of Mr. Weldon, it offered him
attractive remuneration payable on monthly basis and made an application to the Central Government for
approval to pay such remuneration. Anticipating the approval of the Central Government. Esquire Engineering
Ltd. started paying such remuneration from the date of appointment and continued to do so till 31st March,
2015. The Central Government did not fully approve the remuneration proposed by the Company and restricted
the same to a lower amount. On scrutiny of accounts, the Company noticed that till 31st March, 2015 it has paid
to Mr. Weldon a total sum of ` 5.50 lakhs in excess of the remuneration sanctioned by the Central Government.
Explain the relevant provisions of the Companies Act, 2013, in respect of recovery and waiver of recovery of the
excess remuneration so paid.
As per Section 197(9), if any director draws or receives, directly or indirectly, by way of remuneration any such
sums in excess of the limit prescribed by this section or without the prior sanction of the Central Government,
where it is required, he shall refund such sums to the company and until such sum is refunded, hold it in trust for
the company.
Thus, Mr. Weldon cannot keep the excess remuneration of ` 5,50,000. He shall refund such excess remuneration
to company. Until such refund is made, he shall hold it in trust for the company. Further, company cannot waive
the recovery of excess remuneration unless the Central Government permits the waiver of recovery of excess
remuneration.
Que. No. 3] Mr. Doubtful was appointed as Managing Director of Carefree Industries Ltd. for a period of 5 years
w.e.f. 1.4.2014 on a salary of ` 12 lakhs p.a. with other perquisites. The Board of Directors of the company on
coming to know of certain questionable transactions, terminated the services of the Managing Director from
1.3.2017. Mr. Doubtful termed his removal as illegal and claimed compensation from the company. Meanwhile
the company paid a sum of ` 5 lakhs on ad hoc basis to Mr. Doubtful pending settlement of his dues.
Discuss whether:
(i) The company is bound to pay compensation to Mr. Doubtful and, if so, how much.

(ii) The company can recover the amount of ` 5 lakhs paid on the ground that Mr. Doubtful is not entitled to
any compensation, because he is guilty of corrupt practices.
Keeping in view of the provisions of the Companies Act, 2013 answer to given problem is as follows:
(i) As per Section 202(3), any compensation to a managing or whole-time director or manager shall be lower of the
following:
- Remuneration for unexpired residue of his term [25 months x 1,00,000 = ` 25,00,000]
- Remuneration for 3 years [36 months x 1,00,000 = ` 36,00,000]
Thus, compensation payable to Mr. Doubtful cannot exceed ` 25,00,000. If company has already paid ` 5,00,000
then remaining ` 20,00,000 is payable form the company.
(ii) As per Section 202(2) (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, he shall not be paid any compensation.
However, it was held by the House of Lords that after paying compensation if the company comes to know that
managerial personnel to whom the compensation has been paid was guilty of serious breaches of duty and corrupt
practices, the company cannot recover the same. [Bell v. Lever Bros 1932 AC 161]
Thus, if compensation has already been paid to Mr. Doubtful, the compensation cannot be recovered back as per
decision in Bell v. Lever Bros.
However, if breach of duty and corrupt practices of Mr. Doubtful comes to light at the time when his service is
terminated, the company is not liable to pay any compensation to him.

Chapter 18
Meeting of Board
Que. No. 1] During the year 2019, A Ltd. held four meetings of Board on 2nd January, 2019,10th May 2019, 16th
October, 2019, and 31st December, 2019. Examine whether he was in accordance with the provisions of the
Companies Act, 2013.
As per Section 173(1), every company shall hold a minimum 4 meetings of its Board of Directors every year. The
gap between two board meetings should not be more than 120 days.
As per facts given in case, gap between various meetings are shown below:
2nd January, 2019 to 10th May 2019 127 days
10th May 2019 to 16th October, 2019 158 days
16th October, 2019, to 31st December, 2019 75 days
Thus, from the above calculation, it is clear that company has contravened provisions of Section 173(1) for the
meetings held on 10th May 2019 & 16th October, 2019.
Que. No. 2] Following are the dates of Board Meetings held by the Jolly Ltd. during the year 2019:
First Meeting - 15.1.2019
Second Meeting - 25.4.2019
Third Meeting - 31.7.2019
Fourth Meeting - 21.10.2019
However, in fourth meeting was adjourned due to want of quorum and held on 10.11.2019. Do you think that
company has contravened provisions of Section 173(1) of the Companies Act, 2013?
As per facts given in case, gap between various meetings are shown below:
15.1.2019 to 25.4.2019 100 days
25.4.2019 to 31.7.2019 97 days
31.7.2019 to 21.10.2019 92 days
In case of fourth meeting date of original meeting will be taken and not the date of adjourned meeting. This is so
because adjourned meeting is mere continuance of original meeting.
Since Jolly Ltd. has held all the four Board Meeting during the calendar year 2019 and the gap between any two
meetings is not more than 120 days, it has not complied with Section 173(1).
Que. No. 3] Anubhav Ltd. held four board meeting in a calendar year with an interval of more than 3 months in
between two board meeting. Comment.
As per facts given in case gap of two meetings is more than 3 months (average 90 days) but if it has held the
meetings keeping gap of not be more than 120 days, the Anubhav Ltd. has complied the Section 173(1) of the Act.

Que. No. 4] The Board of directors of a company met thrice in the year 2015 and the fourth meeting was not
held for want of quorum. As a Company Secretary, examine the provisions of the Companies Act, 2013 and
decide with reasons whether the company has complied with the requirements of meetings to be held in a
calendar year or violated the requirements thereof?
If the gap between 1st & 2nd, 2nd & 3rd meeting is not more than 120 days then there is no default of Section
173(1).
In case of 4th meeting, it is stated in problem that, meeting was not held at all due to want of quorum and hence
there is default of Section 173(1).
Que. No. 5] XYZ Ltd. has 6 directors on its Board of Directors. Out of 6 directors, 5 are foreigners and they reside
in America. The company wants to convene its Board meeting in Mumbai but all the 5 directors are pre-occupied
and are not in a position to travel to India. Advice the company regarding conduct of such a Board meeting as
per provisions of the Companies Act, 2013 and relevant Rules. Will the same Rules or provisions be applicable in
case the company wants to approve annual financial statements in the Board meeting?
As per Section 173(2), the participation of directors in a meeting of the Board may be either in person (personally
present) or through video conferencing or other audio visual means.
The system of video conferencing or other audio visual means must be capable of recording and recognizing the
participation of the directors and of recording and storing the proceedings of such meetings along with date and
time.
As per Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 following matters shall not be
dealt with in a meeting through video conferencing or other audio visual means:
(i) The approval of the annual financial statements
(ii) The approval of the Board's report
(iii) The approval of the prospectus
(iv) The Audit Committee Meetings for consideration of accounts and
(v) The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
The company should also comply with the Rule 3 of the Companies (Meetings of Board and its Powers) Rules,
2014.
Thus, XYZ Ltd. can hold the meeting of its directors through video conferencing or other audio visual means.
However, it cannot pass motion relating to approval of the annual financial statements in such meeting.
Que. No. 6] Star Gen Ltd. held a meeting of its Board of directors on 31st October, 2019 at its registered office.
Though the company has 12 directors on its board, only 5 directors were present at the commencement of
meeting. Thereafter, even while the meeting was in progress, 2 more directors left the meeting and remaining
directors carried on the proceedings of the meeting. Discuss the validity of decisions, if any, taken by the
remaining 3 directors.
Quorum for meetings of Board [Section 174(1)]: The quorum for a meeting of the Board of Directors of a company
shall be higher of the following two:
- l/3rd of its total strength or (fraction rounded up to next)
- Two directors .
The article of the company may provide for higher quorum.

Presence of quorum throughout the meeting: In the case of a board meeting, the meeting cannot transact any
business, unless a quorum is present at the time of transacting the business. It is not enough that a quorum was
present at the commencement of the business.
The quorum of the board is required at every stage of the meeting and unless a quorum is present at every such
stage, the business transacted is void. [Balakrishna v. Balu Subudhi, AIR 1949 Pat 184]
As per facts given in case required quorum is present at the commencement of meeting bu` 2 directors left during
the meeting hence quorum is below required number and hence for subsequent business transacted without
required quorum are void.

Chapter 19
General Meeting
Que. No. 1] Accounting year of Devdatta Ltd. ends on 30th June, 2014. It is required to hold an AGM by 31st
December, 2014. Due to some reason, the AGM could not be held in December, 2014. On an application, the
ROC granted permission to hold the meeting in February, 2015. The AGM was duly held in February, 2015. Has
the company complied with the requirements of holding AGM every year? Will it amount to contravention of
the provisions of Section 96?
Ans.: As per Section 96, every company, other than OPC is required to hold an AGM every year. The AGM should
be held on the earliest of the following dates:
(1) 15 months frdm date of the last AGM
(2) The last day of the calendar year
(3) 6 months from the close of the financial year.
In the event of any difficulty in holding an AGM the ROC may grant an extension of time for any special reason by
3 months. In such situation if company doesn't hold AGM in particular year, it will not be treated that company has
contravened Section 96.
Thus, due to extension granted by ROC, if Devdatta Ltd. do not hold meeting in calendar year 2014, it will not
amount to contravention of Section 96.
Que. No. 2] Asia Pacific Co. Ltd., called its AGM on 30.9.2014 and adjourned it to 31.12.2014 due to delay in
completion of audit of accounts for the year ended 31.3.2014. At the adjourned meeting, the meeting was
further adjourned to 31.3.2015. Subsequently, the AGM was held on 28.1.2015. State whether the company has
complied with Section 96 and, if not, whether the company is liable to default and conviction.
As per Section 96, every company, other than OPC is required to hold an AGM every year. The AGM should be held
on the earliest of the following dates:
(1) 15 months from date of the last AGM
(2) The last day of the calendar year
(3) 6 months from the close of the financial year.
An AGM can be adjourned but such adjourned AGM should also be held within the latest day on which meeting
should have held.
In given case, since Asia Pacific Co. Ltd. has not held adjourned AGM within statutory time, the company is liable
to default and conviction.
Que. No. 3] There are seven shareholders in a private limited company having registered office in Chennai. Six
shareholders are French nationals and belong to the same family holding an aggregate of 95% voting rights.
These shareholders are unable to come down to Chennai and wish to hold the company's annual general
meeting in Paris. Advise whether the meeting can be held in Paris.
As per Section 96(2), an AGM can be held 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.
The Central Government is empowered to exempt any company from these provisions, subject to such conditions
as it may impose.
Thus, private company can held AGM outside India if it applies to the Central Government for relaxation of
provisions of Section 96 of the Companies Act, 2013.

Que. No. 4] Dev Ltd. issued a notice for holding of its AGM on 7th November, 2015. The notice was posted to
the members on 16.10.2015. Some members of the company allege that the company had not complied with
the provisions of the Companies Act, 2013 with regard to the period of notice and as such the meeting was not
validly called. Decide whether the meeting has been validly called?
If there is a short fall in the number of days by which the notice falls short of the statutory requirement, state
and explain by how many days does the notice fall short of the statutory requirement?
According to Section 101, a general meeting of a company may be called by giving not less than 21 clear days notice
either in writing or through electronic mode. Notice through electronic mode shall be given in such manner as may
be prescribed.
As per the facts given in case, Dev Ltd. issued notice of holding AGM on 16.10.2015 and up to 7.11.2015 only 19
clear days notice is served. Thus, the meeting is, therefore, not validly convened. Notice falls short by 2 clear days.
Que. No. 5] Agile Ltd. called its AGM on 28th September, 2014. The notice of the meeting was posted on 6th
September, 2014. With reference to the provisions of the Companies Act, 2013, examine whether the notice
given by the company was valid.
According to Section 101, a general meeting of a company may be called by giving not less than 21 clear days notice
either in writing or through electronic mode. Notice through electronic mode shall be given in such manner as may
be prescribed.
As per the facts given in case, Agile Ltd. issued notice of holding AGM on 6.9.2014 and up to 28.9.2014 only 19
clear days notice is served. Thus, the meeting is, therefore, not validly convened. Notice falls short by 2 clear days.
Que. No. 6] Articles of association of a company reserved the powers for calling the annual general meeting. The
Managing Director of the company, without reference to the Board, called an annual general meeting. Is the
annual general meeting validly called? If not, what should be done to make it valid? Discuss with reference to
case law, if any.
The annual general meeting of a company can be called by a proper authority i.e. board of directors in case of
company. However, the board of director can delegate the authority to call general meeting to the company
secretary. In such case meeting called by company secretary as per the direction of the board will be valid meeting.
However, it was held that, where a secretary or other officer issued notice calling a general meeting but he had no
power to do so under the AO A of the company, the notices were null & void and meeting held pursuant thereto
was also null & void. [Al-Amin Seatrans Ltd. v. Owners and Party Interested in Vessel M.V. 'Loyal Bird' (1996) 1
Comp. LJ 258 (Cal.)]
But, it will be valid if before the meeting is held the board ratifies the act. [Hooper v. Kevr Stuart & Co.
Que. No. 7] A disabled shareholder, aged 70 years arrives at the venue of the AGM, escorted by his driver, who
help him climbing the steps and occupying a seat. Shareholders grand daughter, who is also a joint holder,
follows with her son aged 3 years and a baby in her arm. The company's security personnel try to stop her from
entering the venue of the meeting and also ask the driver to go out of the venue of the AGM. Advice on the
action of security personnel.
Any meeting of the company can be attended by the persons who are entitled to receive the notice of the meeting.
Other person can attend the meeting with the prior permission of the chairman. Thus, after making the disabled
shareholder comfortable at his seat, his driver should be asked to leave the meeting. Granddaughter should be
allowed to attend the meeting as she is joint holder. However, she may be requested to make arrangement to
leave her son and baby outside the venue of the meeting.

Que. No. 8] XYZ Ltd. a public company dealing in cosmetic products having 4,750 members has scheduled its
25th annual general meeting on 18th July 2015 at 11 a.m. On the appointed at 11.35 a.m. only 17 persons are
present out of which 3 persons are proxies. Comment.
As per Section 103, quorum is required to be present within 30 minutes from the time appointed for holding a
meeting of the company.
In case of public company, if number of members as on the date of meeting is more than 1,000 but up to 5,000,
then 15 members personally present or higher number stated in Article will be the quorum.
As per facts stated in problem, only 14 members are personally present even after half-an-hour from the time
appointed for holding a meeting, hence meeting will be adjourned.
In case of an adjournment of meeting, the company shall give not less than 3 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.
Que. No. 9] At the start of the general meeting of XYZ Ltd. (which has adopted Table F as its article and having
1,250 shareholders) there was quorum present. One of the directors, who was member of the company in his
personal capacity. After the item of agenda was taken up for consideration, some members left the venue. There
were only five members present in person including the director. One member objected the continuance of the
meeting and declared that as there is no quorum, there is no meeting and, thus, the proceedings are invalid.
Advice the chairman.
As per Section 103, in case of public company, if number of members as on the date of meeting is more than 1,000
but up to 5,000, then 15 members personally present or higher number stated in Article will be the quorum.
Companies Act, 2013 is silent about the situation when quorum is available at the beginning of meeting but quorum
is reduced in the middle of the meeting.
In Hartely Baird In re (1955) Ch 143, it was held that it is sufficient if the quorum is present at the beginning of the
meeting and it not necessary that quorum should present throughout the meeting.
Thus, objection raised by the member is incorrect and proceeding at the meeting can be continued.
Que. No. 10] You are the Company Secretary of the Hardluck Pvt. Ltd. Its annual general meeting was fixed to
be held at 10 AM on 30th September, 2015 in the Grand Hall. Due to unusual traffic congestion, only one
shareholder Hari managed to arrive on time. He was only shareholder present for the first 10 minutes after the
meeting was due to start. The chairman of the meeting arrived after 40 minutes and by that time the quorum
for the meeting was also present. The chairman upon his arrival and finding that the quorum is present, called
the meeting to order. Hari was not certain whether the belated holding of the meeting would be valid. He
requests you to explain the legal position in this regard. Advise Hari.
As per Section 103, quorum is required to be present within 30 minutes from the time appointed for holding a
If the quorum is present but meeting could not start within half an hour as chairman was late, the meeting started
after arrival of chairman is valid. [Janaki Printing (P) Ltd. v. Nadar Press Ltd. (2000) 24 SCL 81]
In view of above, meeting continued by Hardluck Pvt. Ltd., upon his arrival of chairman 40 minutes after the
meeting was due to start is valid.
Que. No. 11] Innovative Energies Limited has 2,505 members as on the date of the company's extraordinary
general meeting. The Executive Director, Mr. Avinash has asked you, the Secretary of the Company, what is the
required quorum for the meeting. Referring to the provisions of the Companies Act, 2013, inform the Executive
Director, Mr. Avinash, the quorum that must be present for holding the Extra-Ordinary General Meeting of the
company. State whether the required quorum must be present throughout the meeting.

Quorum refers to the minimum number of members required to constitute a valid meeting.
As per Section 103, in case of public companies, unless the articles of the company provide for a larger number,
following shall be the quorum for a meeting of the company -
♦ 5 members personally present if the number of members as on the date of meeting is not more than
1,000
♦ 15 members personally present if the number of members as on the date of meeting is more than 1,000 but
up to 5,000
♦ 30 members personally present if the number of members as on the date of the meeting exceeds 5,000.
Innovative Energies Limited has 2,505 members. Thus, in its extra-ordinary general meeting 15 members must be
present personally in order constitute valid quorum.
Companies Act, 2013 is silent about the situation when quorum is available at the beginning of meeting but quorum
is reduced in the middle of the meeting.
In Hartely Baird In re (1955) Ch 143, it was held that it is sufficient if the quorum is present at the beginning of the
meeting and it not necessary that quorum should present throughout the meeting.
Note: Students should that quorum for general meeting is required at the beginning of the general meeting and it
is not necessary that quorum should present throughout the general meeting but for Board Meeting quorum should
be present throughout the board meeting.
Que. No. 12] The Articles of Association of X Ltd. require the personal presence of 7 members to constitute
quorum of general meetings. The following persons were present in the extra ordinary general meeting to
consider the appointment of Managing Director:
- A, the representative of Governor of Madhya Pradesh.
- B & C, shareholders of preference shares
- D, representing Y Ltd. & Z Ltd.
- E, F, G & H as proxies of shareholders
Can it be said that the quorum was present in the meeting?
For the purpose of quorum, only those members are counted who are entitled to vote on resolution proposed to
be passed in the meeting.
Only members present in person and not by proxy are to be counted.
As per Sections 112 & 113, representative of President or Governor and representative of company are deemed
to be a member present in person and counted for the purpose of quorum.
Where two or more companies which are members of another company, appoint a single person as their
representative then each such company will be counted as quorum at a meeting of the latter company.
As per Section 47(2), preference shareholders have voting rights only in respect of resolutions which directly affect
the rights attached to his preference shares.
In view of the above there are only three members are personally present.
'A' will be included for the purpose of quorum. B & C have to be excluded for the purpose of quorum because they
represent the preference shares and since the agenda being the appointment of Managing Director, their rights
cannot be said to be directly affected and therefore, they shall not have voting rights. D will have two votes for the
purpose of quorum as he represents two companies Y Ltd. and Z Ltd. E, F, G and H are not to be included as they
are not members but representing as proxies for the members.
Que. No. 13] A and B are joint holders of 1,000 equity shares in MNO Ltd. which adopted Table F as its article.
For the general meeting of the company, A whose name stands first in the order of names in the register of

members, execute a proxy authorizing X to attend the meeting. On the other hand B appoints Y as the proxy for
the meeting.
(i) Of the two proxies X and Y, who will have the right to attend and vote at the meeting?
(ii) Would it make any difference to you answer if A's proxy is registered with the company and thereafter B's
proxy is registered?
(iii) What would be your answer if B personally attends the meeting.
(i) As per Regulation 52 of the Table F, 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. For this
purpose, seniority shall be determined by the order in which the names stand in the register of members. Thus, of
the two proxies X and Y, proxy X will have the right to attend and vote at the meeting.
(ii) Normally, where two proxy instruments have been lodged in respect of same shares before the expiry of the
time for lodging the proxies, the second in time will be entertained. However, in view of specific provision of
Regulation 52 of Table F, answer will not change and still proxy X is valid and will have the right to attend and vote
at the meeting.
(iii) In Cousins v. International Bricks Co. Ltd., (1931) 2 Ch 90 (CA) at 101, it was held that there was nothing in the
articles of a company to stop a shareholder to attend a meeting and vote in person, even though he had appointed
a proxy to vote for him at the same meeting; the fact that the proxy was not revoked in the manner laid down in
the articles did not prevent the member recording his vote in person to the exclusion of the proxy holder. But in
Narayanan Chettiar's case (Supra), it was held that a shareholder's mere presence at the meeting will not have the
effect of revocation. The revocation should be communicated before the meeting. Thus, if B revoke the authority
of proxy and attends the meeting he will have right to vote at the meeting.
Que. No. 14] Abhijeet is a shareholder of Kutumb Ltd. on receipt of notice of an AGM to be held on 28th
September 2014, Abhijeet issued a proxy in favour of Baljeet on 25th September 2014. Abhijeet again issued
another proxy in favour of Charanjeet on 26th September 2014. Both Baljeet and Charanjeet attended the
meeting on 28th September 2014. Decide who is entitled to vote on a poll.
Every member of a company having share capital has a right to appoint a proxy to attend and vote at a general
meeting on his behalf. A member can appoint one or more proxies to vote in respect of the different shares held
by him or he may appoint one or more proxies in the alternative, so that if the first named proxy fails to vote, the
second one may do so, and so on.
When one person appoints two or more proxies, following rule will apply:
♦ Where two proxy instruments have been lodged in respect of same shares before the expiry of the time for
lodging the proxies, the second in time will be entertained.
♦ Where one is lodged before and other after the expiry of the time for lodging proxy, the former will be
accepted.
In present case, both the proxies were lodged in time, the second proxy i.e. C will be entertained.
Que. No. 15] The chairman of the meeting of a company received a proxy 54 hours before the time fixed for the
start of the meeting. He refused to consider it although company's article required to a proxy to be filed before
60 hours of the start of the meeting. Can the holder of the proxy compel the chairman to admit it?
According to Section 105, the instrument appointing the proxy must be deposited with the company, 48 hours
before the meeting. Any provision contained in the articles, requiring a longer period than 48 hours shall have
effect as if a period of 48 hours had been specified.
As per the facts given in case, since proxy form has been filed before 48 hours of the start of the meeting, proxy is
valid and chairman must allow the proxy to attend the meeting.

Que. No. 16] A proxy was appointed by a member on an instrument duly executed. Will the vote cast by the
proxy be valid in the following cases:
(a) When the member himself attended and cast his vote at the meeting without revoking the authority of
the proxy and
(b) When the member died in the meantime?
The relationship between the proxy and the person appointing him is that of an agent and principal, and the former
must act in accordance with the instructions of the latter. As their relationship is governed by the
law of agency, proxy can be revoked by the member at any time and is automatically revoked by the death or
insolvency of the member.
A member may revoke the proxy's authority by attending and voting himself before the proxy has voted. However,
a shareholder's mere presence at the meeting will not have the effect of revocation. [ICSI Guidance Note on General
Meeting]
The revocation should be communicated before the meeting. Revocation will be too late if communicated after
the meeting commenced. In such a case the votes cast by the proxy will be valid in a poll.
Que. No. 17] Yash, a member of Omar Ltd., appoints Jolly to attend a general meeting of the company. At the
meeting, voting takes place by show of hands. However, Jolly does not know whether he (as a proxy) can vote
by show of hands at the meeting. Advise.
As per Section 105, a proxy shall not have the right to speak at such meeting and shall not be entitled to vote
except on a poll. A proxy can vote on show of hands only if there is specific provision in the article of the company.
In view of above provisions, the Jolly as a proxy can vote by show of hands at the meeting if the article of the
company provides for the same.
Que. No. 18] A member of a company has statutory right to appoint proxy for attending the general meeting of
the company. Similarly, a director can also appoint his proxy for attending the meetings of Board of directors of
the company.
As per Section 105, 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.
However, same provision is not applicable for director and hence director cannot appoint proxy for attending board
meeting.
Que. No. 19] Robert, a member of MLM Ltd. submitted his proxy to the company before the scheduled time of
the Annual General Meeting. The Articles of the company provided that proxy can be submitted to the company
70 hours before the scheduled time of the meeting. The chairman of the company rejects the proxy on the
ground that it is in violation of the Articles. Referring to the provisions of the Companies Act, examine the validity
of the chairman's decision to reject the proxy.
As per Section 105, the instrument appointing the proxy must be deposited with the company, 48 hours before
the meeting. Any provision contained in the articles, requiring a longer period than 48 hours shall have effect as if
a period of 48 hours had been specified.
As per facts given in case, the Article of MLM Ltd. provided in its article that proxy can be submitted to the company
70 hours before the scheduled time of the meeting. Such provision is not valid.
As per Section 105 all the proxy form presented before 48 hours of the meeting are valid and must be accepted by
the company. Thus, Chairman's decision to reject the proxy form on the ground that it is not submitted before 70
hours before the scheduled time of the meeting is not valid.

Que. No. 20] Write a short note on: Voting rights of preference shareholders Jolly is one of the preference
shareholders of Jack & Jill Ltd., a company registered under the Companies Act, 2013. The annual general
meeting of the said company is scheduled to be held on 8th January, 2015. In this context, Jolly wants to exercise
his voting rights at the scheduled general meeting. Can he do so? If so, state whether he can vote on every
resolution placed before the meeting.
Voting rights of preference shareholders [Section 47(2)]: Preference shareholders have voting rights only in
respect of following:
(a) Resolutions which directly affect the rights attached to his preference shares.
(b) Any resolution for the winding up of the company or for the repayment or reduction of its equity or
preference share capital.
(c) Where the dividend in respect of a class of preference shares has not been paid for a period of 2 years or
more years.
In a poll, 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.
Que. No. 21] A company has 120 members. It sends notice of general meeting to all of them. 20 members did
not attend the meeting. Out of remaining 100 members who were present, 20 members abstained from voting.
Advice the company, how many members should vote in favour of a resolution, if it has to be passed as a special
resolution?
As per Section 114, 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 the Act has been duly given and
(c) The votes cast in favour of the resolution, are required to be not less than 3 times the number of the votes,
if any, cast against the resolution.
As per the facts given in case, a company has total 120 members. 20 members did not attend the meeting. Out of
reaming 100 members, 20 members abstained from voting.
Total number of members voting is 80. Thus, in order to pass special resolution company needs 60 or more votes
in favour of resolution.
Que. No. 22] Zolta Ltd., whose year ended on 31st March, held its annual general meeting on 30th September.
However, as the accounts were not ready, the meeting transacted all other business except accounts and
adjourned the meeting to 24th December for consideration of accounts. The Registrar of Companies issued a
show cause notice for violation of Section 129 of the Companies Act, 2013. Advise.
It was held that even adjourned meeting must be held within the time allowed under the Companies Act. Since
adjourned meeting is continuance of the original meeting, even adjourned meeting must be completed within time
specified under the Companies Act. [MD Mundra v. Assistance ROC (1986) 59 Comp Cas 822 (Cal)]
In AGM one point on agenda is adoption of audited accounts. Department has clarified that if audited accounts are
not ready, AGM can be adjourned. However, even adjourned meeting should be held within the stipulated time
or, within the extension allowed, if any.
One of the condition for the AGM is that, it must be held within 6 months from the end of the accounting year.
Since, Zolta Ltd. had not completed its adjourned meeting within 6 months from the end of the accounting period
it has committed the default of not holding the AGM within statutory time period.

Que. No. 23] The minutes of 24th Annual General Meeting of Poly Bank Ltd. are to be signed by the chairman.
However, the chairman of Poly Bank Ltd. met with an acciden` 2 days after the AGM was held. Minutes of AGM
are, therefore, pending for signatures. Advise the company secretary of Poly Bank Ltd. about the procedure for
signing of minutes in such a case as if the chairman has become permanently in capable of signing. Will your
answer be different if chairman suffers only minor injury and gets back to his office in one week?
Rule 25 of the Companies (Administration & Management) Rules, 2014 contains the following provisions with
regards to signing of minutes of meetings.
Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each
meeting or each report in such books shall be dated and signed by:
♦ In the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman
of the said meeting or the chairman of the next succeeding meeting;
♦ In the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the
aforesaid period of 30 days or in the event of the death or inability of that chairman within that period, by a director
duly authorized by the Board for the purpose;
♦ In case of every resolution passed by postal ballot, by the chairman of the Board within the aforesaid period
of 30 days or in the event of there being no chairman of the Board or the death or inability of that chairman within
that period, by a director duly authorized by the Board for the purpose.
The Chairman of the Poly Bank Ltd. met with acciden` 2 days after the AGM and become permanently in capable
of signing. Thus as per above provisions, in such case minutes of the AGM will be signed by the director duly
authorized by the Board for the purpose.
However, if the Chairman of the Poly Bank Ltd. suffers only minor injury and gets back to office in one week the
minutes of the AGM has to be signed by the Chairman of the AGM within the period of 30 days from the date of
AGM.
Que. No. 24] DEF Ltd., a company listed at Bombay Stock Exchange, failed to file its report on the AGM for the
financial year ended 31st March, 2013 with the ROC, Mumbai. The company further abstained from filing the
said report for another 2 years, viz. financial years ended 31st March, 2014 and 2015 respectively.
Examining the provisions of the Companies Act, 2013, state whether the default committed by the company
amounts to an offence. If so, to what extent it is possible to get the offences compounded.
As per Section 121, if the company fails to file the report on annual general meeting before the expiry of the period
specified-
 The company shall be punishable with fine which shall not be less than ` 1 lakh but which may extend to` 5
lakhs and
 Every officer of the company who is in default shall be punishable with fine which shall not be less than `
20,000 but which may extend to ` 1 lakh.
Section 441 deals with 'compounding of offences'. As per this section only offence punishable with fine can be
compounded.
If an offence is compounded in favour of a person and if that person commits the same offence once again within
a span of 3 years from the previous compounding, then the subsequent offence shall not be eligible for
compounding.
Thus, if offence of not filing of report on annual general meeting is compounded for the year ended 31st March,
2013, same offence for the year ending 31st March, 2014 & 2015 cannot be compounded.

Que. No. 25] The chairman at a Board meeting counts 6 votes in favour and 7 votes against the resolution. Can
the chairman cast his own vote, which he had not exercised earlier, in favour of the resolution and also the
casting vote which the articles of association authorize, and declare the resolution as passed?
As per Regulation 68 of the Table F, questions arising at any meeting of the Board shall be decided by a majority
of votes. In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting vote.
A casting vote is a second vote exercised by a chairman of a meeting in addition to his own vote as a member.
Casting vote can be given by chairman in case of equality of votes. In given case there is no equality of vote hence,
there is no case for excising casting vote. If Chairman does not vote at the time voting, then subsequently he cannot
give his vote after the result of voting.
Some important points relating to 'casting vote':
♦ Casting vote is additional vote in case of equality of vote. Chairperson has full discretion in using his casting
vote. He can vote in different way than in which he exercised first vote. He may even decide not to use his casting
vote.
♦ In case of ordinary resolution the chairperson has a casting vote. [Section 114(1)]
♦ In case of general meeting, chairperson has casting vote even if he is not member of the company.
♦ Casting vote can be exercised by the chairperson at the show of hands or by electronic mode or on a poll.
Que. No. 26] Amol, a non-member of Shristhi Ltd., has been appointed as a director of the company. Later on,
he has become the chairman of the company. In an annual general meeting of Shristhi Ltd., Amol presided over
the meeting. Zahir, a member of the company, objected to his chairmanship on the ground that Amol is not a
member of the company. Discuss the validity of the objection.
As per Section 104, 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.
As per Regulation 45 of the Table F, The chairperson, if any, of the Board shall preside as Chairperson at every
general meeting of the company.
 If Shristhi Ltd. has adopted Table F or its articles contains similar provision like that of Table F, then Amol can
be appointed as chairperson if he is also chairperson of the Board.
 If Shristhi Ltd. has not adopted Table F or its articles do not contains similar provision like that of Table F,
then Amol, being non-member cannot be appointed as chairperson as provided in Section 104.

Chapter 21
Legal Framework Governing Company Secretaries
Que. No. 1] Write a short note on the foundation of Company Secretaria.
1. The need to have a profession of Company Secretaries was first felt in early 50's, when the
business environment had started changing, that had necessitated the services of a
professional to bring Corporate Discipline.
2. The Government set up an Advisory Board on a non-statutory basis, to help it in
standardising the basic qualifications needed for manning the position of Company
Secretaries and to hold the qualifying examination.
3. Subsequently, the Department of Company Affairs conducting examination leading to
Government Diploma in Company Secretaryship (GDCS), marked the beginning of the
profession of Company Secretaries in an organised manner. Later in the wake of substantial
increase in the number of candidates for GDCS, the Institute of Company Secretaries of India
was set up and registered as a company on 4th October, 1968 under Section 25 of the
Companies Act, 1956 (i.e. not for profit company) with its registered office at New Delhi. The
work relating to Company Secretaries' Examination and all allied matters were taken over by
the Institute with effect from 1st January 1969.
4. In 1980, the Government moved the Company Secretaries Bill, 1980 to convert the Institute
into a statutory body.
Que. No. 2] Write a short note on appeal to authority.
1. Under section 22A of the Act the Appellate Authority shall be deemed to be the Appellate
Authority for the purposes of this Act, subject to certain modifications.
2. Accordingly, any member of the Institute aggrieved by any order of the Board of Discipline
or the Disciplinary Committee imposing on him any of the penalties may within 90 days
from the date on which the order is communicated to him, prefer an appeal to the
Authority.
3. The Authority may entertain any such appeal after the expiry of the said period of 90 days, if
it is satisfied that there was sufficient cause for not filing the appeal in time.
4. The Authority may, after calling for the records of any case, revise any order made by the
Board of Discipline or the Disciplinary may -
a) confirm, modify or set aside the order;
b) impose any penalty or set aside, reduce, or enhance the penalty imposed by the order;
c) remit the case to the Board of Discipline or Disciplinary Committee for such further
enquiry as the Authority considers proper in the circumstances of the case; or
d) pass such other order as the Authority thinks fit
Provided that the Authority shall give an opportunity of being heard to the parties
concerned before passing any order.

Que. No. 3] Write a short note on what would fall into the mischief of clause (6) of Professional
misconduct in relation to Company Secretaries in Practice (Part I of the First Schedule to the Act).
Following details falls into the mischief of clause (6):

1. Circular or advertisement in newspapers indicating the range of services offered by him.
2. A circular letter offering secretarial services and professional work.
3. Any circular, advertisement or communication which creates an impression that certain
professional work would be done much more expeditiously than is normally the case. Like
for instance, registration of a company in, say, two days’ time or registration of a charge in
one day’s time, etc.
4. Circular, advertisement or personal communication highlighting any provision of any law, to
person other than existing clients, which provides for certification/ authentication by a
Company Secretary in Practice of any form/return/application/document.
5. Issuing hand bills covering matters in (1) to (4) above.
6. Publication in the telephone directory, name and address in extra bold typeface or opting for
more than one listing. However, where separate sections are devoted in the telephone
directory (yellow pages, for instance) for a classified list, publishing the name and address by
a member in such sub-section in the directory would not be treated as misconduct. But any
kind of message or writing which indicates tall claims, supremacy and superiority in
professional attainments will tantamount to solicitation of clients, indirectly.
7. Communicating or holding out, as being prepared to provide professional services at fees
that are less than reasonable and appropriate in the circumstances, in order to obtain
professional work.
8. Communicating or describing himself as a ‘specialist’ in any branch of law/work or knowingly
permitting himself to be so described.
9. A member allowing a company to carry in its prospectus or other circular letters that ‘Mr. X a
specialist in corporate laws is the adviser to the company’ would offend clause (6). However
printing the name of Practicing Company Secretary as Secretarial Auditor in Annual Report
will not violate the provisions of the Act.
10. Requesting his client(s) to recommend his/their acquaintances to him for professional work.
11. Frequent press announcements or circulars about his not being available for professional
work for a certain period at the place whereat he normally has his office.
12. Highlighting or causing to be highlighted in public interviews over the television, AIR, etc.
their professional attainments, more than just necessary or warranted by the circumstances
of such an interview
The Professional Development Committee of the Council of the Institute has opined that
listing of services by a Company Secretary with a group for creation of network of affiliates
which is non-professional and not a group of company secretaries would amount to
commercialization of the profession and therefore such listing would amount to violation of
the Code of Conduct.
Que. No. 4] Write a short note on Procedure in enquiry before the Disciplinary committee
Applicable to the complaint or information pending before the Council or any inquiry initiated by the
Disciplinary Committee or any reference or appeal made to a High Court prior to 17.11.2006.

1. It shall be the duty of the Secretary to place before the Disciplinary Committee all facts
brought to his knowledge which are relevant for the purpose of any enquiry by the
Disciplinary Committee.
2. The Disciplinary Committee shall have the power to regulate its procedure in such manner
as it considers necessary and during the course of enquiry, may examine witnesses on oath
and receive evidences on affidavits and any other oral or documentary evidence,
exercising its powers
3. The Disciplinary Committee shall give the complainant and respondent a notice of the
meeting at which the case shall be considered by the Committee.
4. Such complainant and respondent may be allowed to defend themselves before the
Disciplinary Committee either in person or through a legal practitioner or any other member
of the Institute.
5. Where, in the course of a disciplinary enquiry, a change occurs in the composition of the
Disciplinary Committee, unless any of the parties to such enquiry makes a demand within 15
days of receipt of a notice of a meeting of such Disciplinary Committee, that the enquiry be
made de novo report of the Disciplinary Committee shall be called in question on the ground
that any member of the Disciplinary Committee did not possess sufficient knowledge of the
facts relating to such inquiry.
6. The Disciplinary Committee shall after investigation report the result of its enquiry to the
Council for its consideration.
Que. No. 4] Write a short note on procedure in a hearing before the Council.
1. The Council shall consider the report of the Disciplinary Committee and if in its opinion, a
further enquiry is necessary, may cause such further enquiry to be made and a further report
submitted by the Disciplinary Committee.
2. After considering such report or further report of the Disciplinary Committee, as the case may
be, where the Council finds that the respondent is not guilty of any professional or other
misconduct, it shall record its findings accordingly and direct that the proceedings shall be filed
or the complaint shall be dismissed as the case may be.
3. After considering such report or further report of the Disciplinary Committee, as the case may
be, where the Council finds that the respondent has been guilty of a professional or other
misconduct, it shall record its findings accordingly and shall proceed in the manner as laid
down in the succeeding sub-regulations.
4. Where the finding is that the member of the Institute has been guilty of a professional or other
misconduct, the Council shall afford to the member an opportunity of being heard before
orders are passed against him in the case. The Council after hearing the respondent, if he
appears in person or after considering the representations, if any, made by him, pass such
orders as it may think fit.
5. The orders passed by the Council shall be communicated to the complainant and the
respondent.

Chapter 22
Secretarial Standard Board
Que. No. 1] Introduction of Secretarial Standards by the Institute of Company Secretaries of India (ICSI) is a
unique and pioneering effort towards attainment of good Corporate Governance. Do you agree? Explain briefly.
The formulation of Secretarial Standards by the Secretarial Standards Board (SSB) of the ICSI is a unique and
pioneering step towards standardization of diverse secretarial practices prevalent in the corporate sector.
Companies follow diverse secretarial practices and, therefore, there is a need to integrate, harmonize and
standardize such practices so as to promote uniformity and consistency.
The SSB formulates Secretarial Standards taking into consideration the applicable laws, business environment and
the best secretarial practices prevalent.
Secretarial Standards are developed:
- in a transparent manner;
- after extensive deliberations, analysis, research; and
- after taking views of corporates, regulators and the public at large.
Que. No. 2] Mrs. Rukmini is the statutory auditor of Energies Ltd. Free reserves of the company are four times
more than the paid-up share capital. The company has Rohit, as secretarial auditor. There is a. cost auditor,
Amit, and an internal auditor, Sunil. Examining the provisions of the Companies Act, 2013 read with the
secretarial standards, advise the company as to who is/are required to be present at the forthcoming annual
general meeting of the company.
The Secretarial Auditor, unless exempted by the company shall, either by himself or through his authorized
representative, attend the Annual General Meeting and shall have the right to be heard at such Meeting on that
part of the business which concerns him as Secretarial Auditor.
The Chairman may invite the Secretarial Auditor or his authorized representative to attend any other General
Meeting, if he considers it necessary.
The authorized representative who attends the General Meeting of the company shall also be qualified to be a
Secretarial Auditor.
This Standard is applicable to all types of General Meetings of all companies incorporated under the Act except One
Person Company (OPC) and a company licensed under Section 8 of the Companies Act, 2013 or corresponding
provisions of any previous enactment thereof.
Considering the provisions of SS-2, following person should be present at the AGM:
(1) Chairman
(2) All directors
(3) Mrs. Rukmini - Statutory Auditor
(4) Rohit - Secretarial Auditor
(5) Amit - Cost Auditor
(6) Sunil - Internal Auditor
(7) Chairman of the Audit Committee, Nomination and Remuneration Committee and the Stakeholders
Relationship Committee, or any other Member of any such Committee authorized by the Chairman of the
Committee

DRAFTING
Que. No. 1] Board of directors of Desire Ltd. decides to go for creditors' winding-up of the company. For this
purpose the Board decides to call an extraordinary general meeting on 30th June, 2016. Draft a notice along with
explanatory statement for convening the meeting. Assume facts.
Ans.:
Young Indian Pvt. Ltd.
Registered Office: ....................
CIN: .................... Website: ....................
Phone No.: .................... Fax : ....................
NOTICE
Notice is hereby given that an extraordinary general meeting of the members of Young Indian Pvt. Ltd. shall
be held at Registered Office of the Company at .................... on 30th June, 2016 at 11 AM to transact the
following business:
SPECIAL BUSINESS:
1. To consider and if thought fit, to pass with or without modification(s), if any, the following resolution as
special resolution:
"RESOLVED THAT pursuant to provisions of Section 304 (b) of the Companies Act, 2013, the consent of the
members of the company be and is hereby accorded to wind-up the affairs of the company as the creditors
voluntary winding-up, w.e.f .................... "
special resolution:
"RESOLVED THAT pursuant to provisions of Section 304 (b) of the Companies Act, 2013, Shri Manmohan Gurmukh
Singh, Chartered Accountant of Delhi on the panel of the Central Government be and is hereby appointed as the
liquidator of the company for the purpose of the creditors voluntary winding- up of the affairs of the company."
RESOLVED FURTHER THAT subject to consent of creditors and committee of inspection, the consent of the
members of the company be and is hereby accorded to sanction the remuneration of liquidator of ` 5,000 (Rupees
five thousand only) in addition to the actual out of pocket expenses for the winding- up of the affairs of the
company.
RESOLVED FURTHER THAT Shri Manmohan Gurmukh Singh, the liquidator be and is hereby authorized to exercise
all the powers as per the provisions of the Companies Act, 2013 to effectively winding up the affairs of the
Company."
special resolution:
"RESOLVED THAT notwithstanding the appointment of liquidator the board of directors of the company be and is
hereby authorized to exercise all the powers in consideration with the liquidation of the company like filing of
statement of affairs with liquidator, filing of return with Registrar of Companies, filing up vacancy in the office of
liquidator and such other matter incidental to the liquidation of the company."
By the orders of the Board
Place: ....................
Date: .................... (Director)

Notes:
(a) A member entitled to attend and vote at the meeting, is entitled to appoint a proxy to attend and vote
instead of himself and the proxy need not to be a member. Proxy in order to be effective must be received by the
company not less than 48 hours before the meeting.
(b) Explanatory statement setting out the material facts in respect of Item Nos. 1 and 2 are annexed hereto.
(c) All documents referred to in the accompanying notice and explanatory statement are open for inspection at
the Registered Office of the company on all working days, except Saturdays, between 11.00 AM to 1.00 AM.
Annexure to the notice
Explanatory statement pursuant to the provisions of Section 102 of the Companies Act, 2013 in respect of the
special business
Item Nos. 1 and 2
The Company was formed for the purpose of dealing in chemicals, drugs, pharmaceuticals. Initially the business of
the company was quite remunerative and earned adequate profits on capital invested but form las` 4 four years
the company is running into losses and liabilities of the company are far more than assets of the company making
it insolvent.
The boards of director of the company considered the matter and were of the opinion that in view of nonavailability
of business prospectus and continuous losses there is no alternative but to put the company into voluntary
winding-up. Since company is not solvent and no declaration of solvency can be filed under the Companies Act,
2013 such voluntary winding-up has to be treated as creditor's voluntary winding-up.
Since, it is creditor's voluntary winding-up a separate meeting of creditors is also required to be held and separate
resolution is also required to be passed at the meeting of creditors.
Your approval is required to for the winding-up of the Company as given in Item No. 1.
Your approval is also required for appointment of Shri Manmohan Gurmukh Singh as a liquidator of the company
at a remuneration of ` 5,000 (Rupees five thousand only) in addition to the actual out of pocket expenses.
None of the director and KMP of your company and their relatives are interested in the proposed resolution, except
to the extent of their share holding in the company.

Place:
Date: (Director)

BOARD RESOLUTION:-
FORMAT
(PURPOSE)_____________________________________
Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT_______________________________________________________
_
________________________________________________________________________”
“ RESOLVED FURTHER THAT ____________________________________________
________________________________________________________________________”
Draft a resolution for adopting common seal of the company
Adoption of Common Seal : (Section 9)

“RESOLVED THAT the common seal of the Company as placed by the Chairman and
approved by this meeting and an impression of which has been taken at the margin of the
minutes be and is hereby adopted as the common seal of the Company.”
“RESOLVED THAT the common seal be kept under the safe custody of the Company
Secretary. The seal shall not be affixed to any document/instrument except, in presence of the
two directors and Company Secretary, who shall sign every document/instrument to which
seal is affixed in their Presence.”
WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)
460
Draft a resolution for change of Registered Office of the company within the city
Change of registered office of the company (Section 12 (2)) within the city/local limit.
“RESOLVED THAT the Registered Office of the company be shifted from…………….,
Pune, to ……………, Pune with effect from…………”
“RESOLVED FURTHER THAT the Company Secretary be and is hereby authorized to file
e- Form INC 22 with the Registrar of Companies, Pune.”
Draft a resolution for writing of certain expenses/losses from securities premium

account
Writing of certain expenses/Losses from Securities premium account : (Section 52)

“RESOLVED THAT Pursuant to the provisions of Section 52 (2) (d) read with Section 55 of
the Companies Act, 2013, a sum of Rs. 85,00,000 out of the “Securities Premium Account”,
of the Company in which sum of Rs. 90,00,000 is lying unutilized, be and is hereby utilized
in providing for the premium payable on the redemption of redemption of redeemable
preference shares to be made on dt.______ and also on the redemption of debentures to be
made by Company on dt.______
Draft a resolution for appointment of Secretary in whole-time practice for signing

annual return
Appointment of Secretary in whole-time practice for signing annual return (Section 92

(2)
“RESOLVED THAT Mr. ______, a Secretary in whole-time practice, of ______, be and is
hereby appointed, at a remuneration of Rs. 1,00,000 to sign the annual return of the Company
to be made up to the date of the ensuing Annual General Meeting of the Company,
i.e.,________”

461
Draft a resolution for convening of extra-ordinary general meeting by the board of
directors of your company
Convening of extra-ordinary general meeting : (Section 101)

Nature of the resolution – Resolution with simple majority
“RESOLVED THAT an Extra-Ordinary General Meeting of the members of the company be
convened on …… at 12.00 a.m. at …….. on a shorter notice”.
“RESOLVED FURTHER THAT the draft of the notice convening the Extra-Ordinary
General Meeting as stated above together with the relevant explanatory statement annexed
thereto be considered, approved and be issued to the members under the signatures of Mr.
_______ Company Secretary of the Company.”
“RESOLVED FURTHER THAT approval of the members be obtained for holding the
meeting at less that 21 days’ notice as required by Section 101 (1) of the Companies Act,
2013.”
Draft a resolution for recommending payment of dividend to shareholders
Payment of dividend : (Section 123)

Passing Authority - Board Meeting
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT a dividend @ Rs. 10.0 per share (i.e. 10%) out of the profits of the
financial year ending on 31st March, 2016 on 40,00,000 of Rs. 100 each fully paid up be
recommended to the shareholders for declaration in the ensuing Annual General Meeting of
the Compay.”
Draft a resolution for appointment of internal auditors
Appointment of internal auditor - (Section 138 (1))

Passing Authority - Board Meeting
“RESOLVED THAT Mr. ________, Chartered Accountant, (Reg.No………..) Satara, be and
are hereby appointed as an Internal Auditor of the Company for conducting internal audit of
financial year ended 31st March, 2017.”
“RESOLVED FURTHER THAT the Internal Audit Report received form the Auditor shall
be placed before the Audit Committee of the Board for its consideration and adoption.”

462
“RESOLVED FURTHER THAT Mr. _________, Director – Finance of the Company be and
is hereby authorized to fix the remuneration of Internal auditor.”
Draft a resolution for appointment of Additional Director
Appointment of Additional Director (Section 161)

Passing Authority - Board of Directors
“RESOLVED THAT Mr._______ (DIN ______) who has complied with the provisions of
Section 161 (1) of the Companies Act, 2013 be and is hereby appointed as an Additional
Director of the Company in terms of Article 125 of the Company’s Articles of Association
pursuant to the provisions of Section 161 of the Companies Act, 2013.”
“FURTHER RESLOVED THAT Mr._________, Company Secretary be and is hereby
authorized to file e-From DIR-12 with the Registrar of Companies and to make necessary
entries in the statutory registers to that effect.”
Draft a resolution for appointment of Alternate Director
Appointment of Alternate Director - (Section 161 (2))

“RESOLVED THAT Mr._____ (DIN _______), who has complied with the provisions of
Section 161 (2) of the Companies Act, 2013 be and is hereby appointed the Alternate
Director to Mr._____ (DIN ______) with effect from ______ pursuant to the provisions of
Section 161 (2) of the Companies Act, 2013 during the latter’s absence from india.”
“RESOLVED FURTHER THAT Mr._____, Company Secretary of the Company be and is
hereby authorized to file-e Form DIR-12 with the Registrar of Companies and communicate
the abovesaid status to the Bank, stock exchange and all the concerned authorities and make
necessary entries in the statutory registers as per requirement of the Companies Act, 2013.”
Draft a resolution for “vacation of office by director on account of unsound mind.”
Vacation of office by director on account of unsound mind - (Section 164 (1))

“RESOLVED THAT Mr. X, (DIN _____) Director being found to be of unsound mind by the
Calcutta High Court in its Order dated ______ and a copy of the same as placed before the
Board, pursuant to Section 164 (1) (a) of the Compnaies Act, 2013 be and is hereby deemed
to have vacated his office as director of the company w.e.f. _______”
“RESOLVED FURTHER THAT Mr._____ Company Secretary of the Company be and is
hereby instructed to file e-From DIR-12 with the Registrar of Companies to that effect.”

463
Draft a resolution for appointment of Company Secretary
Appointment of KMP – Company Secretary : - (Section 203)

Passing Authority - Board of Director
Nature of Resolution - Resolution with simple majority
“RESOLVED THAT M/s ______ & Co., Practicing Company Secretaries, be and is hereby
appointed as the Secretarial Auditors of the Company in terms of the provisions of Section
204 of the Companies Act, 2013 and to hold the office until the conclusion of the next annual
general meeting in remuneration of Rs. 1,00,000 plus out of pocket expense as may be
determined by the Board.”
GENERAL MEETING RESOLUTION :-

FORMAT
(PURPOSE)_____________________________________
Passing Authority – General Meeting
Nature of the Resolution – Special / Ordinary Resolution
“RESOLVED THAT_______________________________________________________
________________________________________________________________________”
“ RESOLVED FURTHER THAT ____________________________________________
________________________________________________________________________”
Explanatory Statement
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

464
Draft a resolution along with explanatory statement to change of Registered Office
within a State from the jurisdiction of one Registrar to another Registrar
Change of Registered Office within a State from the Jurisdiction of one Registrar to
another Registrar (Section 12 (5))
Passing Authority - General Meeting
Nature of the Resolution - Special Resolution
“RESOLVED THAT pursuant to the provisions of Section 12 (5) of the Companies Act,
2013 read with Rule 28 of the Companies (Incorporation) Rules, 2014, and subject to the
confirmation by the Regional Director concerned in the Ministry of Corporate Affairs, the
place of Registered Office of the Company presently situate at Mumbai, be and is hereby
changed to be situate at Pune.”
Presently, the Company’s Registered Office is located at ……… in the city of Mumbai. The
board of directors of your company at their meeting held on ………. Have decided to change
the location of the Registered Office form Mumbai to the city of Pune. According to Section
12 (5) of the Companies Act, 2013 read with Rule 28 of the Companies (Incorporation)
Rules, 2014, such a change should be confirmed by the Regional Director concerned in the
Ministry of Corporate Affairs. Necessary application in the e-Form INC 23 as prescribed in
this behalf shall be made to the Regional Director, along with the copy of the aforesaid
resolution for seeking the confirmation. Further, under the provision to Section 12 (5) of the
Companies Act, 2013, special resolution is required to be passed for shifting the Registered
Office outside the local limits of any city, town. Etc. Hence the special resolution is proposed
for your approval.
None of the directors and KMP and their relatives are interested in this resolution, except as
shareholders of the Company.
Draft a resolution along with explanatory statement to change of company
For change in the name of company (Section 13)

“RESLOVED THAT pursuant to the provisions of Section 4 read with section 13 of the
Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 if any and
subject to the approval of the RBI, the name of the Company be changed from…………
Leasing & Investments Ltd. To ………… Finance Ltd.”
“RESOLVED FURTHER THAT the Board of directors be and is hereby authorized to do all
such acts, deeds and things as may be deemed expedient and necessary to give effect to this
resolution.”

465
The present activities of the Company include leasing, hire purchase, investments, bill
discounting, loan syndication, portfolio management, etc. The Present name does not convey
the magnitude of operations of the Company and expresses only part of its activities.
For some time the directors have been giving thought to changing the name of the Company.
The new name proposed contain” ………….. “ which reflects our group identity and the full
name “………… Finance Limited” reflects the operations of the Company.”
The ROC ………… has confirmed that the new name is available upon the application of the
Company for change of the name of the Company and subject to the resolution the Board of
directors of the Company proposes to make an application to the ROC for confirmation to the
change of name. Since the Company is doing its business of financial activities in the name
of ………… Financial Services, which is well recognized by adopting the new name, the
Company will be well recognized in the field in which it operates. In view of the RBI
guidelines applicable for the NBFC Companies, your directors will also take necessary
approval from the RBI.
None of the Director and KMP and their relatives have any interest in this Resolution except
as a member of the Company.
Draft a resolution along with explanatory statement for variation in shareholders right.
Make suitable assumptions.
Variation of Shareholders right (Section 48)

“RESOLVED THAT the consent of Preference Shareholders be and is hereby accorded
pursuant to the provisions of Section 48 and other applicable provisions, if any, of the
Companies Act. 2013 and the Rules made there under, to the Board of Directors of the
Company for early redemption of 4,54,500 10% Redeemable Cumulative Preference Shares
of Rs. 100 each at a discounted rate of 8% p.a. compounded annually which are due for
redemption during the period………. To ………”
“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to do all
such acts, deeds and things and to sign all such documents as may be necessary. Expedient
and incidental thereto give effect to this resolution.”
In the context to improved cash flow it is proposed to redeem the preference shares before its
due date redemption i.e. during the period ………….. to ………… at the discounted rate of
8% p.a. compounded annually, other terms and conditions would be same as stipulated at the
time of issue of preference Shareholders of the Company and hence may be deemed to be
concerned or interested in the said resolution as set out above.

466
Save and except as above, none of the Directors and KMP of the Company and their relatives
is, in any way, concerned or interested in this resolution.
The Board of Directors according recommends the resolution set out above for your approval.
Draft a resolution along with explanatory statement for inviting deposits from the
public
Invitation of deposits (Section 73 & 76)

“RESOLVED THAT pursuant to the provisions of Section 73 and Section of the Companies
Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and other
applicable provisions, if any, and subject to such conditions, approvals, permissions, as may
be necessary, consent of the members of the Company be and is hereby accorded to
invite/accept/renew from time to time unsecured / secured deposits form public and/or
members of the Company up to permissible limits as prescribe under Rule 3 (4) of the
Companies (Acceptance of Deposits) Rules, 2014.”
“RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board
of Directors be and is hereby authorized to do such acts, deeds, things and matters as the
Board of Directors may in its absolute discretion consider necessary or appropriate for such
invitation/acceptance/renewal of Deposits by the Company.”
The members are hereby apprised that the Company had been accepting deposits from its
shareholders employee and other sections of public as permissible under the provisions of
companies Act, 2013 read with the corresponding Companies (Acceptance of Deposits)
Rules, 2014.
Approval of shareholders is required for inviting/accepting renewing deposits under Section
73 and Section 76 read with companies (Acceptance of Deposits) Rules, 2014. Under Rule 3
(4) of the Companies (Acceptance of Deposits) Rules, 2014, before
inviting/accepting/renewing deposits.
The Board of directors of your Company recommend the resolution as set out in the
accompanying notice for the approval of the members of the Company.
None of the Directors or KMP of the Company or their relatives is concerned or interested in
the Resolution except to the extent of their deposit holding and / or shareholding in the
Company, if any.

467
Draft a resolution along with explanatory statement for appointing new auditor instead
of retiring auditor.
Appointment of Auditors, a person other that retiring auditor (Section 140)

Nature of the Resolution - Ordinary Resolution
“RESOLVED THAT M/s _______ & Co, Chartered Accountants, __________ (Registration
No.___________) be and are hereby appointed Auditors of_______ of the company in place
of the retiring auditors to hold office from the conclusion of this Annual General Meeting
until conclusion of the 16th Annual General Meeting at the Remuneration of Rs._______ plus
out-of pocket expenses.”
The retiring auditors, namely, M/s _______ & Co., have given notice in writing of their
unwillingness to be re-appointed and that a special notice in terms of provisions of Section
115 of the Companies Act, 2013 read with Section 140 of the Act has also been received
from shareholders of the Company for the appointment of new Auditors M/s ___________-
& Co. in place of the retiring auditors M/s _______ & Co., Chartered Accountant. The
Company has forth with communicated to the retiring auditors of the Special Notice and that
the retiring auditors have made no representation against the said special notice. A written
certificate has been obtained from M/s _______ & Co., Chartered Accountant to the effect
that in case of their appointment as Auditors of the Company, the appointment will be in
accordance with the limits prescribed under section 139 (1) of the Act.
Your directors recommend the Resolution for your approval.
None of the Directors and KMP and their relatives are concerned or interested in this
resolution.
Draft a resolution along with explanatory statement for removal of director
Removal of Director (Section 169)

Nature of Resolution - Ordinary Resolution with special Notice
“RESOLVED THAT Mr. ______ (DIN _____) be and is hereby removed from the office of
director of the company w.e.f. _________”
The Company has received a special notice pursuant to the provisions of Section 169 of the
Companies Act, 2013 from members holding 25% equity shares of the Company Proposing
for a resolution for removal of Mr. ______ from submission of his representation, if any.

468
Your directors submit the above said resolution for consideration and do not purport to
support the same.
All the relevant documents are being placed at the Registered Office of the Company for
inspection till the date of the annual general meeting.
Except Mt._______ none of the directors and KMP of the Company and their relatives are
concerned or interested in the resolution.
Draft a resolution along with explanatory statement for voluntary winding – up of the
company
Voluntary winding-up (Section 304)

Appointing authority - General Meeting
Nature of Resolution - Special Resolution
“RESOLVED THAT pursuant to the provisions of Section 304 (1)(b) of the Companies Act,
2013, the Consent of the members of the Company be and is hereby accorded to wind up the
affairs of the Company as the member’s voluntary winding up, w.e.f. _______”
“RESOLVED FURTHER THAT pursuant to the provisions of Section 275 of the Companies
Act, 2013 Shri ______ s/o Shri________’ Chartered Accountant of _______, be and is
hereby appointed as ‘the Liquidator of the Company’ for the purpose of the member’s
voluntary winding up of the affairs of the Company.”
“RESOLVED FURTHER THAT the consent of the members of the Company be and is
hereby accorded to sanction the remuneration of liquidator of Rs. 50,000 only (Rupees Fifty
Thousand only) in addition to the actual out of pocket expenses for the winding up of the
affairs of the Company.”
“RESOLVED FURTHER THAT Shri_____,the liquidator be and is hereby authorized to
exercise all the powers as per the provisions of the Companies Act, 2013 to effectively
winging up the affairs of the Company.”
“RESOLVED FURTHER THAT notwithstanding the appointment of liquidator the Board of
Directors of the Company be and is hereby authorized exercise all te powers in consideration
with the liquidation of the Company like filing of statement of affairs with the liquidator,
filing of return with the Register of Companies, filling up vacancy in the office of liquidator
and such other matters incidental to the liquidation of the Company.”
The Company was formed for the purpose of dealing in cosmetic products. Initially the
business of the Company was quite remunerative and earned adequate profits on capital
invested. But as the members are aware the Company considered the matter and were of the
last 2-3 years. The Board of directors of the Company considered the matter and were of the
opinion that in view of the non-availability if business prospects, and long-term financial
resources it is not financially viable to carry on the business activities. It therefore does not
serve any fruitful purpose to maintain the status of the Company. The directors of the
Company feel that there is no alternative but to put the Company into voluntary winding-up,
realize the assets thereof and distribute the proceeds to the members.
469
The Board passed a resolution declaring solvency of the Company at a meeting held on the
______ and that such declaration shall be delivered to the Registrar accompanied by a report
of the auditors if the Company, as required under Section 488 of the Companies act, 2013.
Your approval is required for the voluntary winding up of the Company as given in Item
No…….
Your approval is also required for appointing Shri ______’ as liquidator of the Company at a
remuneration of 50,000 in addition to reimbursement of actual out of pocket expenses.
The above said declaration of solvency is available for inspection at the registered office of
the Company during business hours on any working day till the date of the meeting.
None of the directors of your Company and their relatives are interested in the proposed
resolution, expect to the extent of their share holding in the Company.
NOTICES FOR MEETING
Draft a notice for first board meeting
__________________Ltd.
Registered Office :_____________
CIN : _______ Website : _________ E-mail: _________ Tel:_______ Fax: ______
Date ________
Dear Sir/Ma’am,
I am directed to inform that the first meeting of the Board of Directors of the Company will
be held on _______ the______th day of _____ at the Registered Office of the Company at
10.a.m. to transact the business, set out in the Agenda, a copy of which is enclosed.
Your are requested to make it convenient to attend the Board Meeting.
Yours Faithfully
For _______________ Ltd.
Company Secretary
Encls. As above.

470
Draft a notice for subsequent Board Meeting
_____________ (P) Ltd.

Registered Office : ______________
CIN:______ Website:_______ E-mail : ________ Tel.: ________ Fax: _______
Date:_________
Dear Sir/ Ma’am,

NOTICE is hereby given that a meeting of the Board of Directors will be held at the
registered office of the company on _______ the_______th day of ________ at the
Registered Office of the Company at 10 a.m. to transact the business, set out in the Agenda, a
copy of which is enclosed.
You are requested to make it convenient to attend the meeting.
A copy of the agenda of the business to be transacted at the meeting is enclosed herewith.
Yours Faithfully,
New Infotech (P) Ltd.
Company Secretary
Encls. As above.

471
Draft a notice of general meeting for removal of auditor
ABC Ltd
Registered Office :_____________
CIN:______ Website:_______ E-mail : ________ Tel.: ________ Fax: _______
Date:_________
NOTICE
NOTICE is hereby given that an Extraordinary General Meeting of the Company will be held
at_____ on_______ day the_______ 2016 at _____ to transact the following business :-
1.To consider and, if thought fit, to pass, with or without modifications, the following
resolutions as an ordinary resolution, in respect of which a special notice has been received
by the Company from a member (s) pursuant to Section 139 read with Section 115 of the
Companies Act, 2013.
“RESOLVED THAT Mr. XYZ be and is hereby removed from the office of auditor of the
Company with effect from the conclusion of this meeting.”
A copy of the representation with respect to the resolution set out above for the removal of
Mr. XYZ as auditor has been received from members and same is enclosed to this notice.
For ABC Co. Ltd.
By Order of the Board,
Dated : ________
Company Secretary
Note :
1. Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend
and vote instead of himself and the proxy need not be a member.
2. The explanatory Statement pursuant to section 102 of the Companies Act, 2013, in respect
of special resolution set out above is annexed hereto.
Annexure
Explanatory statement pursuant to section 102 of the Companies Act, 2013
[Explanatory statement to the resolution to be set out here]

472
Board of directors of Desire Ltd. Decides to go for creditors’ winding-up of the
company. For this purpose the Board decides to call an extraordinary general meeting
on 30th June, 2016. Draft a notice along with explanatory statement for convening the
meeting. Assume facts. CS (Executive) – June 2016
Young Indian Pvt. Ltd.

Registered Office : __________
CIN : _________ Website : __________
Phone No.: _____________ Fax :_________
NOTICE
Notice is hereby given that an extra-ordinary general meeting of the members of Young
Indian Pvt. Ltd. Shall be held at Registered Office of the Company at ……………….. on
30th june, 2016 at 11 AM to transact the following business :
SPECIAL BUSINESS :
1. To consider and if thought fit, to pass with or without modifications (s), if any, the
following resolution as special resolution:
“RESOLVED THAT pursuant to provisions of Section 304(b) of the Companies Act,
2013, the consent of the members of the company be and is hereby accorded to wind-up
the affairs of the company as the creditors voluntary winding-up w.e.f. ……………….”
1. 2. To Consider and if thought fit, to pass with or without modifications (s) , if any, the
following resolution as special resolution.
2.
“RESOLVED THAT pursuant to provisions of Section 304 (b) of the Companies Act,
2013, Mr. A, Chartered Accountant of Pune, on the panel of the central Government be
and is hereby appointed as the liquidator of the company for the purpose of the creditors
voluntary winding-up of the affairs of the company.”
RESOLVED FURTHER THAT subject to consent of creditors and committee of

inspection, the consent of the members of the company be and is hereby accorded to
sanction the remuneration of liquidator of Rs. 5,000 (Rupees five thousand only) in
addition to the actual out of pocket expenses for the winding-up of the affairs of the
company.
“RESOLVED FURTHER THAT Mr. A, the liquidator be and is hereby authorized to

exercise all the powers as per the provisions of the Companies Act, to effectively winding
up the affairs of the company.
3. To consider and if thought fit, to pass with or without modification (s), if any, the
following resolution as special resolution.
“RESOLVED THAT notwithstanding the appointment of liquidator the board of directors
of the company be and is authorized to exercise all the powers in consideration with the
liquidation of the company like filling up vacancy in the office of liquidator and such
other matter incidental to the liquidation of the Company.”
Place : _________
Date : ___________ (Director)

473
Notes :
a. A member entitled to attend and vote at the meeting, is entitled to appoint a proxy to
attend and vote instead of himself and the proxy need to be a member. Proxy in order to
be effective must be received by the company not less than 48 hours before the meeting.
b. Explanatory statement setting out the material facts in respect of Item Nos. 1 and 2 are
annexed hereto.
c. All documents referred to in the accompanying notice and explanatory statement are
open for inspection at the Registered Office of the company on all working days, except
Saturdays, between 11.00 Am to 1.00 AM.
Annexure to the notice
Explanatory statement pursuant to the provisions of Section 102 of the Companies

Act, 2013 in respect of the special business
Item Nos. 1 and 2
The Company was formed for the purpose of dealing chemicals,drugs,pharmaceuticals.
Initially the business of the company was quite remunerative and earned adequate profits
on capital invested but from last 4 four years the company is running into losses and
liabilities of the company are far more than assets of the company making it insolvent.
The boards of director of the company considered the matter and were of the opinion that
in view of non-availability of business prospectus and continues losses there is no
alternative but out put the company into voluntary winding-up. Since company is not
solvent and no declaration of solvency can be filed under the Companies Act, 2013 such
voluntary winding up has to be treated as creditor’s voluntary winding-up.
Since, it is creditor’s voluntary winding-up a separate meeting of creditors is also required
to be held and separate resolution is also required to be passed at the meeting of creditors.
Your approval is required to for the winding-up of the Company as given in Item No. 1.
Your approval is also required for appointment of Mr. A, as a liquidator of the company
at a remuneration of Rs. 5,000 (Rupees five thousand only ) in addition to the actual out
of pocket expenses.
None of the director and KMP of your company and their relatives are interested in the
pro-posed resolution, except to the extent of their shareholding in the company.
Place : _________ By the orders of the Board
Date : _____________ (Director)

474
MINUTES
Draft minutes of the First Board Meeting. Assume facts
MINUTES OF THE PROCEEDINGS OF THE FIRST MEETING OF THE BOARD OF

DIRECTORS OF XYZ LTD, HELD AT 11.00 A.M. AND CONCLUDED AT 1.30 PM ON
_______THE _______ AT THE REGISTERED OFFICE OF THE COMPANY, AT ………
The following were present :
1. Mr. R in the Chair
2. Mr. B, Director
3. Mr. C, Director
1. Appointment of Chairman
a) Of the meeting : Mr. A was unanimously elected Chairman of the meeting.
b) Of the company : As per Article 55 of the articles of Association of the Company, the
Board may appoint a Chairman of the Company. The Board considered and it was
“RESOLVED THAT pursuant to Article 55 of the Articles of Association, Mr. A be
and is hereby appointed as the Chairman of the Board.”
2. Certificate of Incorporation
The Certificate of Incorporation bearing CIN. ________,dated________ issued by the
Registrar of Companies, Pune was placed on the table and taken on record by the Board.
3. Memorandum and Articles of Association

A printed copy of the Memorandum and Articles of Association of the Company, as
registered with the Registrar of Companies, was placed before the meeting. The Board
noted and taken on records the same. The following resolution was passed:
“RESOLVED THAT printed copy of the Original Memorandum and Articles of
Association of the Company laid before the meeting, and perused be taken on record and
Mr. R, Director of the Company be directed to keep the original copy of the Certificate of
Incorporation in safe custody.”
4. First Directors
The meeting took note of the first directors named in Article 78 of the Articles of
Association of the Company. It was noted that giving consent to act as Director of the
company, had already been filed along with e-Form DIR-12 with the Registrar of
Companies. It was also noted that the directors have paid for the qualification shares in
accordance with the Articles of Association.
“RESOLVED THAT necessary intimation already given to this effect to the Registrar of
Companies by filing e-For, DIR-12 for appointment of Mr. R (DIN……….) Mr. B
(DIN……….) and Mr. C. (DIN………….) pursuant to Section 170 (2) of the Companies
Act, 2013 be and is hereby approved and confirmed as the First Directors of the Company
from the date of its incorporation.”
s
475
5. Registered Office
It was noted that the Registered Office of the Company will be at……………. The
intimation of which had already been given in the e-Form INC.22 to the Registrar of
Companies from the date of incorporation of the Company.
6. Financial Year
The Board discussed the matter of fixing the Accounting year of the Company. The
following resolution was passed:
“RESOLVED THAT the financial year of company be and is hereby fixed from 1 st
April to 31st March, of the following and subsequent years and the first year’s
accounts be prepared for the period commencing from the date of incorporation i.e.
………………. Upto and including 31st March, 2015.”
7. Adoption of Common seal

The art work of the common seal was produced before the meeting and it was-
“RESOLVED THAT the art work of the common seal as per impression shown below be
and is hereby approved, and Mr. B, Company Secretary be instructed to get the common
seal prepared and place it before the Board.”
8. Vote of thanks
The meeting ended with vote of thanks.
Place:
Date : CHAIRMAN

476
Lesson 2 Share Capital 109
ANNEXURE I
SPECIMEN OF THE BOARD RESOLUTION APPROVING THE REGISTRATION OF TRANSFER OF

SHARES
“RESOLVED THAT Registration of transfer of.......fully paid equity shares of the company as per details in the
register of share transfers of the company entered on page....to........, entries Nos......to.......(both inclusive),
which was placed before the meeting and each page was initialed by the chairman of the meeting as a mark
of identification, be and is hereby approved; and
RESOLVED FURTHER THAT Shri........................,Company Secretary be and is hereby authorized to endorse

the relevant share certificates under his signature, arrange for their dispatch to the transferees of the shares
and make appropriate entries in the register of members and other records of the company.”
ANNEXURE II
SPECIMEN OF BOARD RESOLUTION APPROVING REGISTRATION OF TRANSMISSION OF SHARES
“RESOLVED THAT Transmission of...........………no.s of fully paid equity shares of the company bearing
distinctive numbers…....to….….(both numbers inclusive) presently registered in the name of Shri
………………..who has been reported as deceased on………..……in the district of..………which is situated
in the state of…………, in the name of Shri ……………son of Shri ………………resident of
…………………………………….be and is hereby approved.
RESOLVED FURTHER THAT since the company has received a letter from the said Shri….………............,
intimating to the company that he has decided to have the said shares registered in his name, the said
shares be registered in his name; and
RESOLVED FURTHER THAT Shri........………………............,Company Secretary, be and is hereby authorized

to enter the name of the said Shri................……….....,in the register of members of the company and send
the relevant share certificates to him after appropriately endorsing them in his name.
ANNEXURE III
SPECIMEN OF SPECIAL RESOLUTION FOR ALTERATION OF ARTICLES OF ASSOCIATION OF THE

COMPANY TO INCLUDE AN ARTICLE AUTHORISING THE COMPANY TO HAVE ITS SECURITIES
DEMATERIALISED
“RESOLVED THAT pursuant to Section 14 of the Companies Act, 2013, the articles of association of the
company be and are hereby altered in the following manner:
After article No..., the following be inserted as article... :
Article...Dematerialization of Securities
A. Definitions:
For the purpose of this article:-
‘Beneficial Owner’ means a person or persons whose name is recorded as such with a depository. ‘SEBI’
means the Securities and Exchange Board of India.
‘Depository’ means a company formed and registered under the Companies Act, 2013, and which has been
146 EP-CL
ASSIGNMENT OF SHARES IN A COMPANY
Section 44 of the Companies Act, 2013 defines the nature of property in the shares of a company. It lays
down: “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.”
The definition of “goods” in the Sale of Goods Act, 1930, specifically includes stocks and shares. Hence, it is
necessary to provide by the articles the manner in which transfer of shares are to be affected.
A “share” in a company is a right to a specified amount of the share capital of the company, carrying with it
certain rights and liabilities, while the company is a going concern and in the winding up. It represents the
interest of the holder measured for purposes of liability and dividend by a sum of a money.
A company cannot refuse to transfer shares except as provided by its articles*. It is well settled that unless
the articles otherwise provide, a shareholder has a free right to transfer his shares to whom he chooses. It is
not necessary to look to the articles for a power to transfer, since that power is given by the Act. It is only
necessary to look to the articles of association to ascertain the mode of transfer and the restrictions upon it.
As between buyer (transferee) and seller (transferor) of shares, the buyer is entitled to all dividends declared
after the contract of sale, unless otherwise agreed. Whatever may be the agreement, a transfer of shares
after declaration of dividend, does not, as against the company, carry the dividend, even though the transfer
may be cum-dividend.
ANNEXURE I
Specimen Shareholders Agreement

THIS AGREEMENT made the day of , 2013 BETWEEN MR. A residing at _____________ (hereinafter
referred to as “A”) (which expression shall, unless repugnant to the context or meaning hereof, mean and
include his heirs, executors, administrators and assigns) of the First Part.
And
MR. B residing at (hereinafter referred to as “B”) (which expression shall, unless repugnant to the context
or meaning hereof, mean and include his heirs executors, administrators and assigns) of the Second Part.
And
(P) LTD., a Company incorporated under the Companies Act, 2013 and having its registered office at
herein represented by its (hereinafter referred to as “XYZ”) which expression shall,
unless repugnant to the context or meaning hereof, include its successors and assigns) of the Third Part;
WHEREAS:
(A) A and B hereto have agreed to jointly manage a company in India named “XYZ Pvt Ltd.”;
(B) A and B have agreed to become Equity Partners by investing in the shares of the Company subject
to the condition that they shall enter into a Shareholders Agreement in terms of these presents;
(C) The Company “XYZ PVT. LTD. “ has been requested to, and has agreed to, join in the execution of
these presents and to take this Agreement on record so that it is aware of the rights and obligations of
A AND B, the parties hereto and ensure that they comply with the same;
(D) The parties hereto are desirous of recording the terms and conditions of their Agreement in writing;
Lesson 3 Members and Shareholders 147
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
1. (a) A and B shall jointly invest in the Company which is an existing company limited by shares under the
Companies Act, 2013 and known as “XYZ PVT LTD”.
(b)The registered office of the Company shall be situate at, or at such other places as may be mutually
agreed upon between the parties in writing.
(c) The Company shall carry on the business of running and managing restaurants and (Description of the
business and complete address), either by itself or through other agencies or company industries and may
carry on any other business as may be decided by B hereto and shall ensure that no other business activity
is undertaken by the Company at any time without the consent of A hereto.
2. The authorised share capital of the Company is Rs.______ /- (Rupees ___ ______ ______ only)
consisting of ( ) equity shares of Rs.10/- (Rupees ten) each.
3. The subscription by A hereto to the aforesaid authorised share capital of the Company shall be 1,00,000
(One lakh) equity shares of Rs.10/- (Rupees ten only) and the subscription by B to the aforesaid authorised
share capital of the Company shall be 1,00,000 (One lakh) equity shares of Rs.10/-(Rupees ten only).
4. There shall be no further issue of capital without the consent of both the parties hereto, and unless
otherwise agreed upon in writing further investment shall be as mutually decided by both parties.
5 (a) The Board of Directors of the Company shall consist of A and B
(b) A shall have the right to nominate two (2) Additional Directors onto the Board and B shall have the right
to nominate three or more Additional Directors on the Board. Both parties shall be entitled at any time to
remove any of the representatives on the Board by written notice to the other party and to appoint another or
other/s in their place.
(c) The day to day management of the Company shall be looked after by a Managing Director to be
appointed with the consent of B hereto. Any major acquisition of property, substantial expansion of business
activities or diversification or matters of policy shall be with the prior consent of B.
(d) It is agreed as between the parties hereto that the position of Chairperson of the Company shall be held
by B or a nominee of B. The Chairman of the Board shall also be the Chairman of all general meetings of the
Company.
6. A and B hereto jointly and severally shall vote and act as members of the Company and with respect to
the shares of the Company held by them, so as to ensure that Directors of the Company are at all times
appointed and maintained in office in conformity with the provisions of this Agreement. If at any time the
provisions of this Agreement are not fully complied with, A and B jointly and severally agree to promptly take
all necessary steps to ensure that the provisions of this Agreement hereof are fully implemented in letter and
spirit.
7 (a) The Auditors of the Company shall be M/s. .
(b) The Auditors of the Company shall not be changed without the prior written consent of both A and B.
8. Any sale or transfer of shares in the Company by either party shall be as provided in Clause
9. If at any time during the continuance of this Agreement either A or B, desire to sell or transfer all or any of
their respective shares held by them in the Company, they shall do so strictly in accordance with the
provisions hereinafter written.
148 EP-CL
10. If either A or B desires at any time to sell the whole or part of their shares in the Company, he shall first
offer such shares in writing to the other. If the other does not accept in writing the offer within 15 days of
receipt of the offer, the first party shall then be at liberty within 30 days thereafter to sell the shares so offered
to any other persons of its choice at the same price and on the same terms and conditions as contained in its
written offer to the other party hereto in the first instance, failing which the procedure contained in this sub-
clause will have to be repeated by a party desiring to sell his shares.
11. B will bring in further working capital to run an F & B Unit(s) at (Address of registered office). Bank had
advanced loans of about Rs. 1,10,00,000/-(Rupees One Crore Ten Lakhs Only) to XYZ which loans have to
be repaid by them. B will be bringing further moneys upto Rs. (Rupees Only) to repay the loan. The
Balance Rs. /- has been secured with the collateral security provided B. XYZ have entered into a
Management and Royalty Agreement with —————— (P) Ltd., for the operation and management of the F
& B unit(s) of XYZ and are entitled to receive their share of profit. A and B are equally entitled to this share of
profit being equal shareholders of XYZ. It is hereby agreed that A shall not be entitled to a percentage of the
profit which shall not exceed Rs. ———/-(Rupees Only) per month from XYZ out of his share of profit
subject to the terms contained herein and/or in any other document executed by him on behalf of XYZ. The
balance money attributable to A shall be utilized to repay the loans and interest outstanding to
____________ Bank, and the amount of Rs. /- brought in by B and interest thereon, and towards the
working capital brought in by B and interest thereon and any other loans of the XYZ. This arrangement will
continue till the entire sums (liabilities) together with the interest thereon have been repaid. However B will
be entitled to withdraw the profit attributable to his share.
12. B will be entitled to interest at the rate of 12% per annum on the sums brought in by him or his
Associates / concerns / businesses.
13. A and B agree and undertake not to disclose or divulge directly or indirectly to any third party any trade
or business secret or other secret or confidential information pertaining to the business, affairs or
transactions of each other or of the Company or of their clients or customers, that may have been disclosed,
imparted to or acquired by either of them from the other or from the Company.
14. A and B jointly and severally undertake:-
(a) that they shall ensure that they, their representatives, proxies and agents representing them at
general meetings of the shareholders of the Company shall at all times exercise their votes in such
manner so as to comply with, and to fully and effectually implement, the provisions of this
Agreement.
(b) that if any resolution is proposed contrary to the terms of this Agreement, the parties, their
representatives, proxies and agents representing them shall vote against it. If for any reason such a
resolution is passed, the parties will, if necessary, join together and convene an extraordinary,
general meeting of the Company in pursuance of section 100 of the Companies Act, 2013 for
implementing the terms of this Agreement.
15. A and B shall jointly and severally procure and/or ensure that the Director or Directors of its choice on
the board of the Company shall at all times fully and effectually implement and comply with (including by
exercise of voting rights at meetings of the Board or resolutions by circulation and on resolutions passed at a
meeting of any Committee of the Directors) the provisions of this Agreement.
16. If either A or B shall commit a breach of any of the terms or provisions of this Agreement and shall fail to
rectify such breach within Sixty (60) days from the receipt of written notice from the party complaining of the
breach, then the latter shall be entitled, without prejudice to its other rights and remedies under this
Agreement or at law, to terminate the Agreement recorded herein by written notice.
Lesson 3 Members and Shareholders 149
17. No modification of alteration of this Agreement or any of its terms or provisions shall be valid or binding
on A and/or B unless made in writing duly signed by both.
18. This Agreement is personal to A and B and shall not be transferred or assigned in whole or in part by
either party without the prior written consent of the other.
19. If any dispute or difference shall at any time arise between A and B as to any terms, provisions or
matters contained herein on as to their respective rights, claims, duties or liabilities hereunder or otherwise,
howsoever in relation to or arising out of or concerning this Agreement, such dispute or difference shall be
referred to the arbitration. The venue of such arbitration shall be in Bangalore unless otherwise agreed in
writing. Such arbitration shall be held under and in accordance with the provisions of the Arbitration and
Conciliation Act, 1996.
20. This Agreement represents the entire agreement between the parties hereto on the subject matter hereof
and cancels and supersedes all prior agreements, arrangements or understandings, if any, whether oral or in
writing, between the parties hereto on the subject matter hereof.
IN WITNESS WHEREOF the parties hereto have executed these presents the day and year first
hereinabove written.
SIGNED AND DELIVERD SIGNED AND DELIVERD
for and on behalf of XYZ in the presence of
By its SHAREHOLDERS AND AUTHORISED DIRECTORS ……… Signed and delivered by Mr B

Mr. A In presence of ……..
Mr. B
In presence of ……..
ANNEXURE II
A Specimen of Deed of Assignment of Shares in a Company
THIS ASSIGNMENT is made this ……………… day of …………………… between AB, son of
……………, resident of………………………… (hereinafter called “the Assignor”) of the one part, and CD, son
of…………………………, resident of ………………… (hereinafter called “the Assignee”) of the other part.
THE DEED WITNESSES:
That in consideration of the sum of Rs………………… (Rupees…………………) paid by the assignee to the
assignor, the receipt whereof the assignor hereby acknowledges, the said AB hereby assigns, sells and
transfers to the said CD………………… Equity Shares of Rs………………… each, fully paid up, bearing
consecutive Nos……………… to………………… (inclusive), which stand in the name of the assignor in the
Register of Members of…………………… Co. Ltd. TO HOLD the same to the assignee absolutely, subject
nevertheless to the conditions on which the assignor held the same up to date.
AND the assignee hereby agrees to take the said Equity Shares subject to such conditions.
IN WITNESS WHEREOF the assignor and the assignee do hereto affix their respective signatures on the
day, month and the year stated above.
150 EP-CL
Witness:
Assignor
Witness:
Assignee
LESSON ROUND-UP
• A Company is composed of members, though it has its own entity distinct from members.
• Every shareholder is a member and every member is a shareholder, however, there may be exceptions to this
statement.
• Section 2(55) of the Companies Act, 2013 provides the modes by which a person may acquire membership of
a Company.
- by subscribing to the Memorandum,
- by agreeing in writing to become a member,
- by holding equity share capital of a Company as beneficial owner in the records of a depository.
• A non-profit making Company licensed under Section 8 of the Companies Act can become member of any
other company.
• Foreigners, trade unions can hold shares in a company, and consequently become its members.
• Person ceases to be a member when his name is removed from register of members of a company.
• In accordance with Section 88, every Company shall keep register of its members. This register shall be kept
at the registered office of the Company subject to the provisions of Section 94 of the Companies Act, 2013.
• Every member of a public company limited by shares, holding equity shares, shall have votes in proportion to
his share of the paid-up equity share capital of the company. On the other hand, preference shareholders
ordinarily vote only on matters directly relating to rights attached to preference share capital and on any
resolution for winding up of the company or for the repayment or reduction of the equity or preference share
capital.
GLOSSARY
Ipso facto By that very fact or act.
Minor Person below the age of majority.
Estoppel The principle that precludes a person from asserting something contrary to what is
implied by a previous action or statement of that.
Cessation of A person ceases to be a member of a company when his name is removed from its
membership
register of members.
Joint Members If more than one person apply for shares in a company and shares are allotted to
them, each one of such applicant becomes a member.
Insolvent Insolvency is the inability of a debtor to pay their debt. If a person is unable to pay his
debt, he is said to be insolvent.
202 EP-CL
10. Incorporate changes in relation to creation, modification and satisfaction of charge in the register of
charges maintained by the company in Form No. CHG.7 and enter therein particulars of all the
charges registered with the Registrar on any of the property, assets or undertaking of the company
and the particulars of any property acquired subject to a charge as well as particulars of any
modification of a charge and satisfaction of charge. Such register is to be kept at the registered
office of the company.
11. All the entries in the register shall be authenticated by a director or the secretary of the company or
any other person authorised by the Board for the purpose.
12. The register of charges shall be preserved permanently and the instrument creating a charge or
modification thereon shall be preserved for a period of eight years from the date of satisfaction of
charge by the company.
13. Where the satisfaction of the charge is not filed with the Registrar within thirty days from the date on
such payment of satisfaction, an application for condonation of delay shall be filed with the Central
Government in Form No.CHG-8 along with the fee as prescribed under Annexure ‘B’ of Companies
(Registration Offices and Fees) Rules, 2014.
14. Where the instrument creating or modifying a charge is not filed with the Registrar within a period of
three hundred days from the date of its creation (including acquisition of a property subject to a
charge) or modification an application for condonation of delay shall be filed with the Central
Government in Form No.CHG-8 along with the fee as prescribed under Annexure ‘B’ of Companies
(Registration Offices and Fees) Rules, 2014.
15. The order passed by the Central Government shall be required to be filed with the Registrar in Form
No.INC.28 along with the fee as per the conditions stipulated in the said order.
16. For all other matters other than condonation of delay, application shall be made to the Central
Government in Form No.CHG-8 along with the fee.
ANNEXURES
(1) Specimen of special resolution under Section 180 (3) (c) authorising the Board to borrow for
company’s business upto a limit beyond paid up capital and free reserves
Special resolution
To consider and, if thought fit, to pass with or without modification(s), the following resolution as
Special Resolution:
“RESOLVED THAT pursuant to the provisions of Section 180(3)(c) and other applicable provisions, if any, of
the Companies Act, 2013, and subject to such approval as may be necessary, consent of the company be
and is hereby accorded to the Board of directors of the company for borrowing, from time to time, such sum
of money as may not exceed Rs. .................................. (Rupees ................................................................),
for the purpose of the business of the company, notwithstanding that the moneys to be borrowed together
with the monies already borrowed (apart from temporary loans obtained from the company’s bankers in the
ordinary course of business) will exceed the aggregate of the paid-up capital of the company and its free
reserves, that is to say, the reserves not set apart for any specific purpose, provided that the total amount
upto which the monies may be borrowed by the Board of directors of the company shall not exceed the
Lesson 5 Charges 203
aggregate of the paid-up capital and free reserves of the company by more than the sum of
Rs........................................ (Rupees ............................................................................................) at any one
time.
Resolved further that the Board be and is hereby authorized to do all the acts, deeed and things as it may in
its absolute discretion deem necessary and appropriate to give effect to the above resolution”
The shareholders of the company had, at the extraordinary general meeting of the company held on
........................, passed a special resolution under Section 180 (3) (c) for borrowing the maximum amount of
Rupees ........................, upto which the Board of directors of the company could borrow funds from financial
institutions and banks in excess of the company’s paid-up capital and free reserves. However, in view of the
increased business activities of the company, the said ceiling of Rupees (........................) has been found to
be inadequate. Your directors are of the opinion that the ceiling of borrowings by the Board be raised to
rupees one hundred crore.
Hence the proposed resolution for consideration and approval by the members of the company. None of the
directors is concerned or interested in the proposed resolution.
(2) Specimen of resolution under Section 180(1)(a) for creating charge on company’s assets and
properties
1. To consider and, if thought fit, to pass with or without modification(s), the following as Special
Resolution;
“RESOLVED THAT consent of the Company be and is hereby accorded in terms of Section 180(1) (a)
and other applicable provisions, if any, of the Companies Act, 2013 or any modification or re-enactment
thereof, to mortgaging and/or charging by the Board of directors of the Company by way of equitable
and/or legal mortgage on such immovable and movable properties of the Company, both present and
future, together with power to takeover the assets of the Company in certain events, to or in favour of
Industrial Development Bank of India (IDBI) and The Industrial Finance Corporation of India Ltd. (IFCI)
by way of first pari passu Charge to secure the Rupee Term Loans of `1000.00 lacs and ` 880.00 lacs
respectively granted to the Company together with interest at the agreed rate(s), liquidated damages,
front end fees, premia on pre payment, costs, charges, expenses and all other moneys payable by the
Company under the Loan Agreements, Deeds of Hypothecation and other documents executed/to be
executed by the Company in respect of the Term Loans of IDBI and IFCI.
RESOLVED FURTHER THAT the Board of directors be and is hereby authorised and shall always be
deemed to have been authorised to finalise with IDBI and IFCI the documents for creating the aforesaid
mortgage and/ or charge and to do all acts, deeds and things as may be necessary for giving effect to
the above resolution.”
2. To consider and, if thought fit, to pass with or without modification(s), the following as Special
Resolution;
“RESOLVED THAT consent of the Company be and is hereby accorded in terms of Section 180(1)(a)
and other applicable provisions, if any, of the Companies Act, 2013 or any modification or re-enactment
thereof, to mortgaging and/or charging by the Board of directors of the Company by way of equitable
and/or legal mortgage on such immovable and movable properties of the Company, both present and
204 EP-CL
future, in favour of State Bank of India, New Delhi the Company’s Bankers by way of Second Charge to
secure the various fund based/non-fund based credit facilities granted/to be granted to the Company
and the interest at the agreed rate, costs, charges, expenses and all other moneys payable by the
Company under the Deed(s) of Hypothecation and other documents executed/to be executed by the
Company in respect of credit facilities of State Bank of India, in such form and manner as may be
acceptable to State Bank of India.
RESOLVED FURTHER THAT the Board of directors be and is hereby authorised and shall always be
deemed to have been authorised to finalise with State Bank of India the documents for creating the
aforesaid mortgage and/or charge and to do all acts, deeds and things as may be necessary for giving
effect to the above resolution.”
Explanatory Statement Item No. 1 & 2
Industrial Development Bank of India (IDBI) and The Industrial Finance Corporation of India Ltd. (IFC) have
sanctioned Term Loans of `1000.00 lacs and `880.00 lacs respectively to the company. These loans are to
be secured by First Charge on immovable and movable properties of the Company, both present and future,
in the manner, as may be required by IDBI and IFCI. Such mortgage/charge shall rank first pari passu
Charge with the Charges already created/to be created in favour of the participating Institutions/Banks for
their assistances.
State Bank of India, New Delhi has also agreed to grant, in principle, various fund based/non-fund based
Cash Credit facilities to the Company. According to the conditions of granting such facilities to the Company,
these facilities are required to be secured by a second charge by way of equitable and/or legal mortgage on
all the immovable and movable properties of the Company, both present and future on such terms as may be
agreed to between the Company, State Bank of India and other existing lenders.
Section 180(1)(a) of the Companies Act, 2013 provides, inter alia, that the Board of directors of a public
company shall not, without the consent of a public company in general meeting, sell, lease or otherwise
dispose of the whole, or substantially the whole, of the undertaking(s) of the Company or where the
Company owns more than one undertaking, of the whole or substantially the whole of any such undertaking.
Mortgaging/charging of the immovable and movable properties of the Company as aforesaid to secure
Rupee Term Loans and the various Cash Credit facilities may be regarded as disposal of the whole or
substantially the whole of the said undertaking(s) of the Company and therefore requires consent of the
Company pursuant to Section 180(1)(a) of the Companies Act, 2013.
The Directors recommend the resolutions for approval of the shareholders as ordinary resolutions under
Section 180(1)(a) of the Companies Act, 2013.
None of the Directors are concerned or interested in the proposed resolutions.
(3) Specimen of the Board Resolution under Section 179(3)(d) to borrow Moneys within the
authority of the Board.
The Chairman informed the Board that The Industrial Finance Corporation of India Ltd. (IFCI), New Delhi,
has at the request of the company, sanctioned Rupee Term Loan of Rs................................................ to
meet a part of the cost of Modernisation-cum-Expansion scheme comprising replacement of the existing old
stainless steel Distillation plant by copper Distillation Plant, installation of an additional MS Digester and
construction of storage lagoons as stipulated by the Pollution Control Board at the Company’s existing
factory at .......................
Lesson 5 Charges 205
A copy of the letter of sanction no................. dated ............... received from IFCI (a copy whereof duly signed
by the Chairman for the purpose of identification was placed on the table of the meeting).
After some discussions, the following resolution was passed unanimously:-
(I) RESOLVED
1. That the Company do accept the offer of The Industrial Finance Corporation of India Ltd. (IFCI) vide
their letter no.............. dated ........................ to grant to the company rupee term loan of ‘............
(Rupees............................. only) (hereinafter referred to as ‘the said Term Loan’) on the terms and
conditions contained in the Letter of Intent no ..................... dated .................. received from IFCI
(copy whereof was placed on the table at the meeting).
2. That Shri......................... and Shri .................... be and are hereby authorised severally to convey to
IFCI acceptance on behalf of the Company of the said offer for financial assistance on the terms
and conditions contained in their Letter of Intent referred to above and agree to such changes and
modifications in the said terms and conditions as may be suggested and acceptable to IFCI from
time to time and to execute such deeds, documents and other writings as may be necessary or
required for this purpose.
3. That the company do borrow from IFCI the said term loan of ‘................. (Rupees......................
only) on the terms and conditions set out in the General Conditions No. GC-1-99 applicable to
assistance provided by IFCI (hereinafter referred to as ‘The General Conditions’) and in the
Standard Form of Loan Agreement for rupee term loan in addition to the special terms and
conditions mentioned in the Letter of Intent no....................... dated ................. received from IFCI
(Copies whereof were placed on the table at the meeting) and also avail of interim disbursement(s)
from time to time as may be allowed by IFCI.
4. That the IFCI will be at liberty to appoint and remove, at its sole discretion, Nominee Director(s) on
the Board of directors of the Company from the date of the passing of this resolution and that the
appointment of the Nominee director(s) shall not be construed as any commitment on the part of
IFCI to grant/ disburse and sanctioned assistance.
5. That the aforesaid Standard Forms of Loan Agreement(s) be and are hereby approved and
Shri....................... and Shri........................ be and are hereby severally authorised to accept on
behalf of the Company such modifications therein as may be acceptable to IFCI and finalise the
same.
6. That the Common Seal of the Company be affixed to the stamped engrossment(s) in duplicate of
the loan agreement(s) (as per the standard form(s) with such modifications as may be agreed to
between IFCI and the company) in the presence of one of the officers i.e. Shri ........................... and
Shri ................... who shall sign the same in token thereof.
7. That the Company shall execute the Loan Agreement(s) relating to the above facilities within the
period stipulated by IFCI, the condition being that till such agreement being executed there is no
binding obligation or commitment on the part of IFCI to advance any money or incur any obligation
thereunder.
8. That the standard forms of the following documents namely:
(i) Deed of Hypothecation
(ii) Undertaking for meeting shortfall/overrun
206 EP-CL
(iii) Undertaking regarding non-disposal of shareholdings

(iv) General Declaration and Undertaking(s) placed before the meeting be and are hereby approved
and that Shri....................... of the Company be and are hereby severally authorised to finalise,
on behalf of the company, the said documents and also to approve and finalise such other
deeds, documents and writings as may be required by IFCI in connection with the above
facilities.
9. That the Common Seal of the Company be affixed to the stamped engrossment(s) of the Deed of
Hypothecation and to such other documents as may be required to be executed under the Common
Seal of the company in favour of IFCI to secure the aforesaid facilities in the presence of one of the
officers i.e. Shri ............................... and Shri........................... who shall sign the same in token
thereof.
10. That Shri................................. and Shri................................ of the Company be and are hereby
severally authorised to accept amendments to such executed loan agreement/deed of
hypothecation and other documents as and when become necessary and to sign letter(s) of
undertakings, declarations, agreements and other papers which the company may be required to
sign for availing of the required facilities and, if so required, the Common Seal of the Company be
affixed thereto in the presence of any one of the said officers, who shall sign the same in token
thereof as required by the Articles of Association of the Company.
11. That the company do file the particulars of the charge(s) to be created in favour of the IFCI with the
concerned Registrar of Companies within the time prescribed by law therefor.
12. That the copies of foregoing resolutions certified to be true copy by the Company Secretary be
furnished to the IFCI and they be requested to act thereon.
LESSON ROUND UP
• A charge is a right created by any person including a company referred to as “the borrower” on its
assets and properties, present and future, in favour of a financial institution or a bank, referred to as “the
lender”, which has agreed to extend financial assistance. The power of the company to borrow includes
the power to give security also.
• Mortgage is created by the act of parties whereas a charge may be created either through the act of
parties or by operation of law.
• A company is required to file e-form CHG-1 or CHG-2 through MCA portal giving complete particulars
together with the instrument creating charge within 30 days of creation of charge under Section 77 of
the Companies Act, 2013.
• For intimating modification of charge, e-form CHG-1 or CHG-2 is required to be filed within 30 days of
modification. A variation in the rate of interest payable on the loan amount by the borrowing company to
the lending institution or the bank will constitute a modification of charge, unless the terms of variation
are covered in the original charge.
• A registration of charge constitutes a notice to whosoever acquires a future interest in the charged
assets.
• In e-governance era, there is a facility for inspection of charge through electronic means using internet.
• The certificate issued by the Registrar whether incase of registration of charge or registration of
modification, shall be conclusive evidence that the requirements of Chapter VI of the Act(Registration of
Lesson 6 Distribution of Profits 227
client ID, certificate number, beneficiary details etc. of the persons in respect of whom unpaid or unclaimed
amount has remained unpaid or unclaimed for a period of seven years and has been transferred to the Fund
and the Authority shall have the powers to inspect such records.
ANNEXURES
ANNEXURES-I
SPECIMEN OF BOARD RESOLUTION FOR DECLARATION OF INTERIM DIVIDEND ON

EQUITY SHARES
RESOLVED THAT an interim dividend of Rs. 2 (Rupees two) only on each fully paid.............no. of equity
shares of Rs.10 (Rupees ten) each of the company amounting to Rs.........................be paid out of the profits
of the company for the half year ended..............2014 to those members of the company whose names would
appear on the register of members of the company on the................day of.............., 2014.
RESOLVED FURTHER THAT a bank account to be designated as “Interim Equity Dividend (2015) Account
of ..........................Limited” be opened in the name of the company with..............Bank at its Branch
at................ and a sum of Rs..................,being the total interim dividend amount, be deposited in the said
account within five days.
RESOLVED FURTHER THAT Shri........................................., Managing Director and

Shri..............................., the Company Secretary be and are hereby authorized to open the bank account by
signing the account opening form and by furnishing to the said bank the required papers, documents,
information etc. and completing all other required formalities for the purpose of opening the bank account
and to make arrangements with the said bank for the payment at par, of the interim dividend within thirty
days from the date of this resolution.
RESOLVED FURTHER THAT Shri........................................., Managing director and

Shri......................................., Company Secretary of the company for the time being, be and are hereby
authorized to jointly sign the dividend warrants to be issued on the said bank and the said bank be and is
hereby authorized to honour the interim dividend warrants jointly signed by the said authorised signatories,
as and when presented for encashment.
ANNEXURE-II
SPECIMEN OF BOARD RESOLUTION FOR DECLARING INTERIM DIVIDEND ON

PREFERENCE SHARES
RESOLVED THAT dividend at the fixed rate of 8 per cent per annum on the (no. of shares) cumulative
redeemable preference shares of Rs.100 each of the company, for the six months commencing from July
1,.........2014 and ending on December 31,.........2014......aggregating Rs.............., be paid to the registered
holders thereof whose names would appear on the register of holders of the said shares on
the...................2014, the date of commencement of the closure of the share transfer books of the company.
RESOLVED FURTHER THAT a bank account to be designated as “Interim Preference Dividend (2015)
Account of................Limited” be opened in the name of the company with...............Bank at its Branch
at..............and a sum of Rs. .............,being the total interim dividend amount, be deposited in the said
account.
RESOLVED FURTHER THAT Shri...................., Managing Director and the Company Secretary,
228 EP-CL
Shri................., be and is hereby authorized to open the bank account by signing the account opening form
and by furnishing to the said bank the required papers, documents, information etc. and completing all other
required formalities for the purpose of opening the bank account and to make arrangements with the said
bank for the payment at par, of the interim dividend within 30 days from the date of this resolution.
RESOLVED FURTHER THAT Shri.............., Managing director and Shri..........,Company Secretary of the
company for the time being, be and are hereby authorised to jointly sign the dividend warrants to be issued
on the said bank and the said bank be and is hereby authorized to honour the interim dividend warrants
jointly signed by the said authorized signatories, as and when presented for encashment.
Name of Company:........................ Registered Office:........................
ANNEXURE-III
NOTICE OF BOOK CLOSURE

Notice
Pursuant to Section 91 of the Companies Act, 2013 and the applicable clauses of the SEBI(LODR)
Regulations, 2015, notice is hereby given that the register of members and the share transfer register of the
company will remain closed, for the purpose of payment of interim dividend/final dividend, from the...........th
day of.................(month),
................2014 to the.............th day of..................2015 (both days inclusive).
Members of the company are requested to intimate to the company at its registered office above, their latest
postal addresses, where the interim dividend warrants may be sent by the company.
Place:....................... For.................Limited
Date:....................... (..................................)
New Delhi-110 001. Company Secretary
Messrs........................ Advertising Agents,
Note for publication
Please arrange for the publication of the above company notice in the earliest editions of..........................,
English daily newspaper and..........................,Hindi daily newspaper, not later than the.........th day of...........,
2014. Kindly ensure that the Hindi newspaper must carry the notice in Hindi language after it is appropriately
translated into Hindi.
For Limited
Dated…….. (…………………..)
Company Secretary
Lesson 6 Distribution of Profits 229
ANNEXURE-IV
SPECIMEN OF BOARD RESOLUTION RECOMMENDING PAYMENT OF DIVIDEND ON

EQUITY SHARES OUT OF CURRENT PROFITS
“RESOLVED THAT in accordance with the provisions of Section 123 and other applicable provisions, if any,
of the Companies Act, 2013 and the Companies (Declaration and Payment of Dividend) Rules, 2014, the
Board of directors of the company do hereby recommend a dividend at the rate of Rs...................per equity
st
share out of the current profits of the company for the year ended on 31 March 2014 on the....................
fully paid equity shares of the company absorbing Rs....................out of the profits of the year and that,
subject to the declaration by the members of the company at the ensuing annual general meeting, such
dividend be paid to the registered holders of the equity shares whose names would appear on the register of
members on............2014.”
ANNEXURE-V
SPECIMEN EXTRACTS OF MINUTES CONTAINING THE BOARD RESOLUTION FOR

RECOMMENDING DECLARATION OF DIVIDEND OUT OF RESERVES
The Chairman informed the meeting that the profits of the current year, i.e. the financial year ended on the
st
31 March, 2014 are inadequate for payment of a reasonable amount of dividend to the members of the
company
He further informed that the free reserves of the company do, however, permit the distribution of dividend
not exceed the average of the rates at which dividend was declared by it in the three years immediately
preceding that year.
The directors considered the matter and passed the following resolution:
RESOLVED THAT the Board of directors of the company do hereby recommend to the members of the
company, the declaration and payment of a dividend at the rate of ten per cent on all the fully paid equity
shares of the company out of the free reserves of the company that stood in the books of the company
on............2014 absorbing a total of`............,with due compliance of the Companies (Declaration and
Payment of Dividend) Rules, 2014, and that, subject to the declaration by the members at the forthcoming
annual general meeting, to the holders of the equity shares whose names will appear on the register of
members on...........2014.
LESSON ROUND- UP
• Under Section 2(35) of the Companies Act, 2013, ‘dividend’ includes any interim dividend.
• Dividend is the share of the company’s profit distributed among the members.
• The Board may declare interim dividend during any financial year out of the surplus in the Profit and
Loss Account at any time between two AGM of the company.
• Final Dividend means a Dividend which declared at the Annual General Meeting of the company.
• In case of inadequacy of profits the company can declare the dividend with accordance with the Rule 3
of Companies (Declaration and Payment of Dividend) Rules 2014.
• The amount of dividend shall be deposited in a schedule bank in a separate account within 5 days from
the date of declaration.
• Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the
payment of dividend.
ज्ञान
(just for reference)
(not for examination)
MATTERS REQUIRING APPROVAL OF MEMBERS BY
ORDINARY RESOLUTION
Sr. No. Section Resolution Description

CHAPTER II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
READ WITH THE COMPANIES (INCORPORATION) RULES, 2014
1. Section 4(5)(ii)(b)(i) Ordinary resolution is required for changing
Memorandum the name of the company on direction of
the Registrar if it is found that the
application for the reservation of the name
with Registrar was applied for furnishing
false information.
2. Section 16(1) Ordinary resolution is required to change
Rectification of name the name of the company on direction of
of Company the Central Government, if the Central
Government is of the opinion that the name
of the company is similar to any other
company or to registered trademark on any
application made by the proprietor of the
registered trade work.
CHAPTER III
SHARE CAPITAL AND DEBENTURES READ WITH THE COMPANIES
(SHARE CAPITAL AND DEBENTURE) RULES, 2014
3. Section 43 : Kinds of The issue of equity shares with differential
share capital rights is required to be authorized by an
ordinary resolution passed at a general
meeting of the shareholders [Rule No.
4(1)(b) of the Companies (share Capital and
Debentures) Rules, 2014].
Pursuant to Notification No. G.S.R. 464(E),

dated 5th June, 2015 and Notification No.
G.S.R. 08(E), dated 4th January 2017,
issued under section 462 of the Companies
Act, 2013 provisions of section 43 shall not
apply where memorandum or articles of
association of a Private Company &
Specified IFSC public company so provide.
4. Section 61(1) : Power Ordinary resolution is required to alter the
of limited company to capital clause of Memorandum of
alter its share capital Association for a limited company having
share capital.
5. Section 61 : Power of Ordinary resolution is required by limited
limited company to company having share capital to convert all
alter its share capital
or any of its fully paid-up shares into stock,
and reconvert that stock into fully paid-up
shares of any denomination or consolidate
or sub-divide its shares or cancel shares
not taken up.
6. Section 62 : Further Pursuant to notification issued under
issue of shares section 462 of the Companies Act, 2013 a
Private Company & a Specified IFSC public
company can issue further shares to its
employees under a scheme of employees
stock option after passing an ordinary
resolution.
Pursuant to notification no G.S.R. 465(E),
dated 5th June, 2015, issued under section
462 of the Companies Act, 2013, provisions
of section 62 shall not apply to Nidhi
Company.
7. Section 63 : Issue of Ordinary resolution is required for issue of
bonus shares bonus shares
8. Section 65 : Ordinary resolution is required by
Unlimited Company to Unlimited Company for providing reserve
provide for reserve share capital on its re-registration as a
share capital on limited company.
conversion into
limited company.
CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES READ WITH THE
COMPANIES (ACCEPTANCE OF DEBENTURE) RULES, 2014
9. Section 73(2) : Ordinary resolution is required by the
Prohibition on Company (other then eligible company) to
acceptance of deposits accept the deposit from the members,
from public subject to certain conditions.
10. Section 76 : Eligible company, may accept deposits
Acceptance of deposits within the limit specified under clause (c) of
from public by certain sub-section (1) of section 180, by means of
companies any ordinary resolution.
[Rule No.2(1)(e)(provision) of The Companies
(Acceptance of Deposits Rules, 2014]
CHAPTER VII
MANAGEMENT AND ADMINISTRATION READ WITH THE COMPANIES
(MANAGEMENT AND ADMINISTRATION) RULES, 2014
11. Section 102 : To transact the following business at
Statement to be Annual General Meeting:
annexed to notice 1. The consideration of financial
statements and the reports of the
Board of Directors and auditors;
2. The declaration of any dividend;
3. The appointment of directors in place
of those retiring;
4. The appointment of, and the fixing of
the remuneration of, the auditors.
CHAPTER X
AUDIT AND AUDITORS READ WITH THE COMPANIES
(AUDIT AND AUDITORS) RULES, 2014
12. Section 139(6) : Ordinary resolution is required to be
Appointment of passed in the Extra Ordinary General
auditors Meeting for appointing the auditor, in case
of the companies other than government
companies, if the first auditor is not
appointed by the board within 30 days of
registration of the company.
13. Section 139(8) : Ordinary resolution is required for
Appointment of approving appointment of auditor made by
auditors the Board of Directors to fill the vacancy
caused due to the resignation of statutory
auditor in the company other auditor
appointment by Comptroller & Auditor
General, within months of the
recommendation of the Board.
14. Section 140(4) : To appoint a person other than the retiring
Removal, resignation of auditor as the audition or to expressly
auditor and giving of provide that the retiring auditor shall not
special notice. be re-appointed.
15. Section 142 : To fix the remuneration of the auditor
Remuneration of
auditor
16. Section 143 : Powers To appoint branch auditor
and duties of auditor
and auditing
standards
17. Section 148(3) : Ordinary resolution is required to be
Central Government to passed by the company for ratifying the
specify audit of items remuneration of cost auditor fixed by
of cost in respect of board or audit committee as the case may
certain companies be, [Rule No.14 of The Companies (Audit
and Auditors) Rules, 2014].
CHAPTER XI
APPOINTMENT AND QUALIFICATIONS OF DIRECTORS READ WITH THE
COMPANIES (APPOINTMENT AND QUALIFICATIONS OF DIRECTORS)
RULES, 2014
18. Section 149(9) : Ordinary resolution is required to be passed
Company to have by the members to approve any profit-related
Board of directors commission to be given to an Independent
Director.
19. Section 151 : Ordinary resolution is required to be passed
Appointment of by the company for appointing Small
director elected by Shareholders’ Director. [Rule No.7 of The
small shareholders Companies (Appointment and Qualification of
Directors) Rules, 2014].
20. Section 152 : Ordinary resolution is required to be passed
Appointment of by the company to appoint any Director.
directors
21. Section 161(2) : To authorize Board of Director in absence of
Appointment of any specific provision in the Articles, to
additional director, appoint an alternate director.
alternate director
and nominee
director
22. Section 169 : Ordinary resolution is required for removing
Removal of directors any director (other than Independent director
re-appointed for second term) before the
expiry of term, other than the director
appointed by the Tribunal under section 242,
Independent director re-appointed for second
term and appoint director in place of the
director so removed.
CHAPTER XII
MEETINGS OF BOARD AND ITS POWERS
23. Section 181 : Ordinary resolution is required for
Company to contributing to charitable and other funds, in
contribute to excess of the limit prescribed under the
bonafide and
section.
charitable funds etc.
24. Section 188 : Ordinary resolution is required for entering
Related Party into any specified contract or arrangement
Transaction with the related party, in case of companies
having prescribed paid up capital or the
amount of the transaction to be entered
exceeds the prescribed amount, as
mentioned below:
a) Sale, purchase or supply of any goods or
materials directly or through
appointment of agents amounting to
10% or more of the turnover of the
company or rupees one hundred crore,
whichever is lower as mentioned in
clause (a) and clause (b) respectively of
sub-section (1) of section 188.
b) Selling or otherwise disposing of or
buying property of any kind directly or
through appointment of agents
amounting to 10% or more of next worth
of the company or rupees one hundred
crore, whichever is lower as mentioned
in clause (a) and clause (b) respectively
of sub-section (1) of section 188.
c) Leasing of property of any kind
amounting to 10% or more of next worth
of the company or 10% or more turn of
the company or rupees one hundred
in clause (c) of sub-section (1) of section
188.
d) Availing or rending of any services
directly or through appointment of
agents amounting to 10% or more of the
turnover of the company or rupees fifty
in clause (d) and clause (e) respectively
of sub-section (1) of section 188.
e) Appointment to any office or place of
profit in the company, its subsidiary
company or associate company at a
monthly remuneration exceeding two
and half lakh rupees as mentioned in
clause (f) of sub-section (1) of section
188.
f) Remuneration for underwriting the
subscription of any securities or
derivatives thereof of the company
exceeding 1% of the net worth as
mentioned in clause (g) of sub-section (1)
of section 188. [Rule 3 of the Companies
(Meetings of Board and its Powers) Rules
2014].
Pursuant to Notification No.G.S.R. 463(E),
dated 5th June, 2015 issued under section
462 of the Companies Act, 2013, the
requirement related to ordinary resolution
shall not apply to:
a) A Government Company in respect of
contracts or arrangements entered into
by it with any other Government
Company.
b) A Government Company, other than a
listed company, in respect of contracts
or arrangements other than those
referred to in clause (a), in case such
company abtains approval of the
Ministry or Department of the Central
Government which is administratively
in charge of the company, or, as the
case may be, the State Government
before entering into such contract or
arrangement.
25. Section 191 : Ordinary resolution is required for payment
Payment to director to director for loss of office etc. in connection
for loss of office etc. with transfer of undertaking, property or
in connection with
shares [Rules No.17(1) of The Companies
transfer of
undertaking, (Meetings of Board and its Powers) Rules,
property or shares 2014].
26. Section 192 : Ordinary resolution is required for entering
Restriction on non- into an arrangement by which a director of
cash transactions the company or of its holding, subsidiary or
involving directors associate company or a person connected
with him acquires or is to acquire assets for
consideration other than cash, from the
company or the company acquires or is to
acquire assets for consideration other than
cash, such director or person so connected.
CHAPTER XIII
APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
27. Section 196 : Ordinary resolution is required for
Appointment of appointing a Managing Director, Whole-Time
managing director, Managing Director.
whole-time director
or manager Pursuant to Notification No.G.S.R. 464(E),
dated 5th June, 2015 and G.S.R. 08(E) dated
4th January, 2017, issued under section 462
of the Companies Act, 2013, the aforesaid
provision shall not apply to a private
company, a government company and a
Specified IFSC public company.
28. Section 197 : A company in general meeting may,
Overall maximum authorize the payment of remuneration
managerial exceeding 11% of the net profits of the
remuneration and company, subject to the provisions of
managerial Schedule V.
29. Section ___ :
Remuneration in
case of absence or
inadequacy of profits
CHAPTER XVI
PREVENTION OF OPPRESSION AND MISMANAGMENT
30. Section 245 : Subject to the provisions of this Act, the
Class Action Company Liquidator shall, in the
administration of the assets of the company
and the distribution thereof among the
creditors, have regard to any directions
which may be given by the ordinary
resolution of the creditors or contributories
at any general meeting or by the advisory
committee.
CHAPTER XXI
COMPANIES AUTHORISED TO REGISTER UNDER THE ACT
31. Section 366 : Ordinary resolution is required for the
Companies capable registration as a company limited by
of being registered guarantee, declaring that each member
undertakes to contribute to the assets of the
company, in the event of its being wound up.
SPECIAL RESOLUTION

CHAPTER II
1. Section 3: Formation A private company other than a company
of company registered under section 8 of the Act having
paid up share capital of fifty lakhs rupees
or less and average annual turnover during
the relevant period of two crore rupees of
less may convert itself into one person
company by passing a special resolution in
the general meeting [Rule No.7 of The
Companies (incorporation) Rules, 2014].
2. Section 5: Articles Special resolution is required for altering
Articles of Association of a public company
for providing that specified clauses can be
altered only if conditions or procedures
restrictive than those applicable in case of a
special resolution are met (For
entrenchment of certain articles).
3. Section 8: Formation Special resolution shall be passed if a
of companies with company registered under section 8 intends
charitable objects etc. to convert itself into a company of any other
kind [Rule No.21 of The Companies
(incorporation) Rules, 2014].
4. Section 12: Registered Special resolution is required for shifting
office of company the registered office outside the local limits
of any city, town or village.
5. Section 13: Alteration Special resolution is required for altering is
of memorandum objects clause, if a company has raised
money from public through prospectus for
such object and any amount out of money
so raised is still unutilized.
6. Section 14: Alteration Special resolution is required for altering
of articles the Articles of Association.
Section 18:  Special resolution is required for
Conversion of converting an unlimited liability
Companies already company with or without share capital
registered into a limited liability company by
shares or guarantee.
 Special resolution is required for
converting a company limited by
guarantee into a company limited share
[Rule No.37 and 39 of The Companies
(incorporation) Rules, 2014].
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITIES
READ WITH THE COMPANIES (PROSPECTUS AND ALLOTMENT OF
SECURITIES) RULES, 2014
7. Section 27: Variation Special resolution is required for altering
in terms of contract or the terms of contract referred to in or
objects in prospectus objects for which prospectus is issued at
any time by the company.
8. Section 41: Global Special resolution is required for issuing
Depository Receipt Global Depository Receipt by the company,
subject to other conditions.
Note:
Special resolution passed under section 62
for issue of shares underlying the
depository receipts, shall be deemed to be a
special resolution for the purpose of section
41 as well. [Proviso to Rule No.4(2) of The
Companies (issue of Global Depository
Receipt) Rules, 2014].
9. Section 42: Issue of Special resolution is required to be passed
shares on private by the company before making any offer of
placement basis securities or invitation to subscribe
securities through issue of a private
placement offer letter.
In case of offer or invitation for non-
convertible debentures, it shall be sufficient
if the company passes a previous special
resolution only once in a year for all the
offers or invitation for such debentures
during the year. [second proviso to Rule
14(2) of The Companies (Prospectus and
Allotment of Securities) Rules, 2014]
Pursuant to notification no G.S.R. 465(E),
dated 5th June, 2015, issued under section
462 of the Companies Act, 2013, a Nidhi
Company is not required to pass the
aforesaid special resolution.
CHAPTER IV
(SHARE CAPITAL AND DEBENTURE) RULES, 2014
10. Section 48(1): Variation of the rights attached to any class
Variation of of shares with the consent of the holders of
shareholders rights not less than three-fourths of the issued
shares of that class or by a special
resolution of that particular class meeting.
11. Section 54: Issue of Special resolution is required for issuing
sweat equity shares Sweat Equity Shares, subject to other
conditions.
12. Section 55: Issue and For issuing preference shares authorization
redemption of of shareholders is required by passing a
preference share special resolution. [Rule No.9(1)9a) The
Companies (Share Capital and Debentures)
Rules, 2014].
13. Section 62: Further Special resolution is required for issue of
issue of share capital further shares of employees under a
scheme of employees stock option, subject
Pursuant to notification to other conditions. [Rule No.12(1) of The
no G.S.R. 465(E), dated Companies (Share Capital and Debentures)
5th June, 2015, issued Rules, 2014].
under section 462 of the A company may by special resolution vary
Companies Act, 2013,
the terms of Employees Stock Option
provision of section 62
Scheme not yet exercised by the employees
shall not apply to a Nidhi
Company
provided such variation is not prejudicial to
the interests of the option holders. [Rule
No.12.5 of The Companies (Share Capital
and Debentures) Rules, 2014].
Special resolution is required for issue of
shares on preferential basis subject to other
conditions. [Rule No.13 of The Companies
(Share Capital and Debentures) Rules,
2014].
The terms of issue of debentures or loan
containing an option (to convert such
debentures or loans into shares in the
company) 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.
14. Section 66(1): Special resolution is required for
Reduction of share undertaking reduction of share capital
capital subject to approval by the Tribunal.
15. Section 67): The company shall not make a provision of
Restriction on money for the purchase of its own shares or
purchase by company of its holding company, by employees or by
or giving of loans by it trustee for the benefit of employees unless
for purchase of its approved by the members by passing
shares special resolution in a general meeting.
[Rule No.16(1) of The Companies (Share
Capital and Debentures) Rules, 2014].
462 of the Companies Act, 2013 provisions
of section 67 shall not be applicable to
Private Companies:
a) In whose share capital no other body
corporate has invested any money.
b) If the borrowings of such a company
from banks or financial institutions or
anybody corporate is less than twice
its paid up share capital or fifty crore
rupees whichever is lower; and
c) Such a company is not in default in
repayment of such borrowings
subsisting at the time of making
transactions under this section.
dated 4th January 2017, issued under
section 462 of the Companies Act, 2013
provisions of section 67 shall not be
applicable to s Specified IFSC Private
Company.
c) Such a company is not in default in
repayment of such borrowings
subsisting at the time of making
transactions under this section.
16. Section 68: Power of Special resolution is required for the buy-
company to purchase back of the shares and other specified
its own securities securities of the company.
Special resolution is not required if:
a) The buy-back is, 10% or less of the
total paid-up equity capital and free
reserve of the company and has been
authorized by resolution at board
meeting.
17. Section 71: Special resolution is required for issuing
Debentures debentures which are either or partly
convertible into shares at the time of
redemption.
CHAPTER V
ACCEPTANCE OF DEPOSITS COMPANIES READ WITH
THE COMPANIES (ACCEPTANCE OF DEPOSITS) RULES, 2014
18. Section 76: Eligible company shall before making any
Acceptance of deposits invitation to the public for acceptance of
from public by certain deposits shall obtain the prior consent of
companies the company in general meeting by way of
special resolution. However, an eligible
company, which is accepting deposits
within the limits specified under section
180(1)(c), may accept deposits by means of
an ordinary resolution.
[Rule No.2(1)(e) of The Companies
(Acceptance of Deposits) Rules, 2014].
CHAPTER VII
(MANAGEMENT AND ADMINISTRATION) RULES, 2014
19. Section 94: Place of Special resolution is required for keeping
keeping & inspection the registers and the annual return at any
of registers, returns other place in India in which more than
etc. one-tenth of the total number of members
entered in the register of members reside.
CHAPTER X
20. Section 139: Special resolution may be passed for
Appointment of appointing some other auditor or providing
auditors expressly that retiring auditor shall not be
re-appointed.
21. Section 140: Removal, Special resolution is required for removed of
resignation of auditorauditor from his office before the expiry of
and giving of special his term subject to the approval of the
notice Central Government.
22. Section 149: Company Special resolution is required by the
to have Board of company for appointing more than 15
directors Directors.
dated 5th June, 2015 & G.S.R. 484(E) dated
13th June, 2017 issued under section 462 of
the Companies Act, 2013, a government
company and section 8 the company is not
required to pass the aforesaid resolution.
Special resolution is required by the re-
appointment of an Independent Director
(Beyond five years).
dated 4th June, 2015 & G.S.R. 08(E) dated
13th January, 2017 issued under section
462 of the Companies Act, 2013, a
government company and section 8 the
company and a specified IFSC public
company is not required to pass the
aforesaid resolution.
23. Section 165: Number The members by special resolution may
of directorships decide lesser number of companies in
which a Director of the company may act as
Director.
24. Section 169 (Proviso): An independent director re-appointed for
Removal of directors 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.
CHAPTER X
MEETING OF BOARD AND ITS POWERS READ WITH THE COMPANIES
(MEETING OF BOARD AND ITS POWERS) RULES, 2014
25. Section 180: Special resolution is required to sell, lease
Restrictions on or otherwise dispose of the whole or
powers of Board substantially the whole of the undertaking
of the company or where the company owns
more than one undertaking of the whole or
Pursuant to substantially the whole of any of such
Notification No.G.S.R. undertakings.
464(E), dated 5th June,
2015 issued under Special resolution is required to invest,
section 462 of the
otherwise in trust securities, the amount of
Companies Act, 2013,
the Board of Directors compensation received by it as a result of
of private company any merger or amalgamation.
can exercise the Special resolution is required to borrow
powers prescribed u/s money exceeding the aggregate of its paid-
180 without passing a up share capital, free reserves and
special resolution. securities premium (excludes temporary
loans from banks).
Pursuant to
Notification No.G.S.R. Special resolution is required remit or gives
08(E), dated 4th time for the repayment of any debt due
January, 2017 issued from a director.
under section 462 of
the Companies Act,
2013, the Board of
Directors of Specified
public company can
exercise the powers
prescribed u/s 180
without passing a
special resolution
unless the articles of
the company provides
otherwise.
26. Section 188: Loan to A company may be advance any loan
directors etc. 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 by passing a
special resolution in general meeting.
dated 5th June 2015 issued under section
462 of the Companies Act, 2013, section
185 shall not apply to a private company:
Such a company is not in default in
repayment of such borrowings subsisting at
the time of making transactions.
462 of the Companies Act, 2013, section 185
shall not apply to government company in
case such company obtains approval of the
Government which is administratively in
charge of the company or, as the case may
be, the State Government before making any
loan or giving any guarantee or providing
any security.
shall not apply to Nidhi Company, provided
the loan is given to a director or his relative
in their capacity as members and such
transaction is disclosed in the annual
accounts by a note.
27. Section 189: Loan and Where the aggregate of the loan and
investment by investment so far made, the amount for
company 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), then no investment or loan
shall be made or guarantee shall be given
or security shall be provided without
obtaining the approval of shareholders by
way of special resolution.
shall not apply to:
a) Government Company engaged in
defence production.
b) A Government Company, other than a
listed company, in case such company
obtains approval of the Ministry or
Department of the Central Government
which is administratively in charge of
the company, or, as the case may be
the State Government before making
any loan or giving any guarantee or
providing any security or making any
investment under the section.
dated 4th January, 2017 & G.S.R. 09(E)
dated 4th January 2017, issued under
section 462 of the Companies Act, 2013,
Section 186(3) shall not apply to a Specified
IFSC public company and Specified IFSC
private company if a company passes a
resolution either at meeting of the Board of
Directors or by circulation.
CHAPTER XIII
READ WITH THE COMPANIES (APPOINTMENT AND REMUNERATION OF
MANAGERIAL PERSONNEL) RULES, 2014
28. Section 196: Special resolution is required to appoint
Appointment of any person as a Managing Director, Whole-
managing director, Time Director & Manager who has attained
whole-time director or the age of 70 years.
manager However, where no such special resolution
is passed but votes cast in favour of the
notice 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
70 years may be made.
29. Section 197: Overall  A company by passing a special
maximum managerial resolution pay managerial remuneration
remuneration and to directors in excess of the limits
managerial provided in second proviso to Section
remuneration is case 197(1).
of absence or  Special resolution is required for fixing
inadequacy of profits. the remuneration of any director or
manager, if Articles of Association so
require.
 Special resolution is required for waiving
the recovery of remuneration drawn in
excess of the limit prescribed by section
197 or where such remuneration is
drawn without approval required under
section 197, within two years from the
date the sum becomes refundable.
CHAPTER XIV
INSPECTION, INQUIRY AND INVESTIGATION READ WITH THE
COMPANIES (INSPECTION, INQUIRY AND INVESTIGATION) RULES, 2014
30. Section 210: Company may pass a special resolution to
Investigation into intimate the Central Government for
affairs of company investigate into the affairs of company.
31. Section 212: Company may pass a special resolution to
Investigation into the intimate the Central Government for
affairs of company by investigate into the affairs of company by
Serious Fraud the Serious Fraud Investigation Office
Investigation Office (SFIO).
CHAPTER XVIII
REMOVAL OF NAMES OF COMPANIES FROM
THE REGISTER OF COMPANIES
32. Section 248: Power of A company may, by special resolution or
registrar to remove consent of 75% members in terms of paid-
name of Company up share capital, file an application to the
from register of Registrar of Companies for removing in
Companies name form the register of companies on any
of the specified grounds.
CHAPTER XX
WINDING UP
33. Section 271: Special resolution is required for winding
Circumstances in up a company by the Tribunal.
which company may
be wound pay by
Tribunal
CHAPTER XXI
COMPANIES AUTHORISED TO REGISTER UNDER THE ACT
34. Section 371: Effect of Special resolution is required to be passed
registration under this for adopting Table ‘F’ in Schedule I after
part registering in pursuance of Chapter XXI of
the Act.
CHAPTER XXVI
NIDHIS READ WITH NIDHI RULES, 2014
35. Section 406: Power to Special resolution is required to be passed
modify Act in its and previous approval of the Regional
application to Nidhis Director is to be obtained in case Nidhi
company intends to acquire another
company by purchase of securities or
control the composition of the Board of
directors of any other company or enter into
any arrangement for the change of its
management [Rule No.6 of Nidhi Rules,
2014].
CHAPTER XXIX
MISCELLANEOUS READ WITH THE COMPANIES (MISCELLANEOUS)
RULES, 2014
36. Section 455: Dormant Special resolution is required by the
company company for making an application to the
Registrar of Companies for obtaining the
status of a Dormant Company [Rules No.3
of The Companies (Miscellaneous) Rules,
2014].
MATTERS REQUIRING SPECIAL NOTICE

CHAPTER X
1. Section 140: Subject to conditions, 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.
CHAPTER X
APPOINTMENT AND QUALIFICATIONS DIRECTORS READ WITH THE
COMPANIES (APPOINTMENT AND QUALIFICATIONS DIRECTORS)
RULES, 2014
2. Section 169: Special notice is to be given for removing
any director (other than appointed by
Tribunal under section 242) or to appoint
any person other than the removed
director.
RIGHTS WHICH CAN BE EXERCISED BY MEMBERS
HAVING 10% OR MORE VOTING POWER
Sr. No. Section Name Demand Description

CHAPTER VII
MANAGEMENT AND ADMINISTRATION
1. 100(2) : Calling of Rights of members under section 48(2)
Extraordinary General (a) In case of a company having a share
Meeting capital, the Board shall, at the
requisition made by members holding
10% or more paid-up share capital of
the company that carries the right of
voting, call an extraordinary general
(b) In case of a company not having a
share capital, the Board shall, at the
requisition made by members holding
10% or more of total voting power,
call an extraordinary general meeting
of the company.
2. 109(1) : Demand for The Chairman of the general meeting shall
poll order for poll to be taken on demand made
in that behalf:
 In case of 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 has been paid-up; and
 In 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.
related to section 109 shall apply to a
private company unless otherwise specified
in respective sections or the articles of the
company provide otherwise.
Specified IFSC public company unless
otherwise specified in articles of the
company.
CHAPTER XIV
INVESTIGATION, INQUIRY AND INVESTIGATION
3. 213: Investigation into In case of a company having share capital,
Company’s affairs in the Tribunal may order conducting an
other cases investigation into the affairs of the company
on an application made by members
holding not less than 10% of total voting
power or by not less than one hundred
members in case company having share
capital or not less than 20% of the
members in case company not having share
capital.
CHAPTER XIV
PREVENTION OF OPPRESSION AND MISMANAGEMENT
4. 244: Right to apply In case of a company having share capital,
under section 241 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 application or applicants
has or have paid all calls and other sums
due on his or their shares or in case of
company not having share capital, not less
than 20% of the total number of member,
may apply to the Tribunal, for relief in
cases of oppression.
CHAPTER XX
WINDING UP
5. 292 : Exercise and The Company Liquidator may summon
control of Company meetings of the creditors or contributories,
Liquidator’s powers whenever he thinks fit, for the purpose of
ascertaining their wishes; and 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.
MATTERS TO BE PASSED BY POSTAL BALLOT (or at a GM

where e-voting option has been given)
Sr. No. Section Resolutions (Rule No.)

CHAPTER II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL, THERETO
1. 12(5): Registered office Change of registered office of the company,
of company outside the local limits of any city, town or
village where such office is situated [Rule
No.22(16) of the Companies (Management
Administration) Rules 2014]
2. 13(8): Alteration of Alternation of the objects clause of the
Memorandum memorandum and in case of the company
in existence immediately before the
commencement of the Act, Alternation of
the objects clause of the memorandum.
[Rule No.22(16) of the Companies
(Management Administration) Rules 2014]
Change in objects for which a company has
raised money from public through
prospectus and still has any unutilized
amount out of the money so raised [Rule
Administration) Rules 2014]
3. 14: Alteration of Alteration of articles of association in
Articles relation to insertion removal of provisions
which, under sub-section (68) of section 2
are required to be included in the articles of
company in order to constitute it a private
company. [Rule No.22(16) of the Companies
(Management Administration) Rules 2014]
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITIES READ WITH THE
COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES)
RULES, 2014
4. 27: Variation in terms Variation in terms of contractor referred to
in the prospectus or objects for which
of contractor objects prospectus was issued and for which
in prospectus money is lying unutilized [Rule No.7(1) of
the Companies (Prospectus and Allotment of
Securities) Rules 2014]
CHAPTER IV
(SHARE CAPITAL AND DEBENTURES) RULES, 2014
5. 43(a)(ii): Kinds of Issue of shares with differential rights as to
share capital voting or dividend or otherwise [Rule
Administration) Rules 2014].
6. 43: Variation of Variation in the rights attached to the
shareholder’s rights shares or debentures or other securities of
any class [Rule No.22(16) of the Companies
(Management Administration) Rules 2014].
7. 68(1): Power of Buy-back of shares, [Rule No.22(16) of the
company to purchase Companies (Management Administration)
its own securities Rules 2014].
CHAPTER XI
APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
READ WITH THE COMPANIES
(APPOINTMENT AND QUALIFICATIONS OF DIRECTORS) RULES, 2014
8. 151: Appointment of Election of a director under section 151
director elected by [Rule No.22(16) of the Companies
small shareholder (Management Administration) Rules 2014].
CHAPTER XII
MEETINGS OF BOARD AND ITS POWERS READ WITH THE COMPANIES
(MEETINGS OF BOARD AND ITS POWERS) RULES, 2014
9. 180(1)(a): Restriction Sale of the whole or substantially the whole
on powers of board of an undertaking of a company under
section 180(1)(a) [Rule No.22(16) of the
Companies (Management Administration)
Rules 2014].
10. 180(1)(a): Loan and Giving loans or extending guarantee or
investment by providing security in excess of the limit
Company specified in section 186(3) [Rule No.22(16) of
the Companies (Management Administration)
Rules 2014].
One Person Company and other companies having member’s upto two
hundred are not required to transact any business through postal
ballot.
Note: Any item of business required to be transacted by means of

postal ballot may be transacted at a general meeting by a company
which is required to provide the facility to members to vote by electric
means under section 108 [section 110(1) proviso].
ORDINARY RESOLUTION

CHAPTER V
ACCEPTANCE OF DEPOSITS READ WITH THE COMPANIES
(ACCEPTANCE OF DEPOSITS) RULES, 2014
1. Section 73: For removal of depositors trustees from
Prohibition on office after the issue of circular of
acceptance of deposits advertisement and before the expiry of his
from public term [Rule No.22(16) of the Companies
(Acceptance of deposits) Rules 2014].
CHAPTER XII
2. Section 186: Loan and For making any investment or providing
investment by any loan or guarantee or security in
company connection with a loan, the resolution
sanctioning it must be passed at a meeting
of the Board with the consent of all the
directors present at the meeting.
requirement related to ordinary resolution
shall not apply to:
c) A Government Company engaged in
defence production.
d) A Government Company, other than a
listed company, in case such company
obtains approval of the Ministry of
Department of the Central Government
which is administratively in charge of
the company, or, as the case may be,
the State Government before making
any loan or giving any guarantee or
providing any security or making any
investment under the section.
CHAPTER XIII
3. Section 203: A company may appoint or employ a person
Appointment of key as its managing director, if he is the
managerial personnel managing director or and such
appointment of employment is made or
approved by a resolution passed at a
meeting of the Board or approved by a
resolution passed at a meeting of the Board
with the consent of all the directors present
at the meeting.
Pursuant to the notification G.S.R. 463(E),
aforesaid provision shall not apply to a
managing director or Chief Executive Officer
or manage and in their absence, a whole-
time director of the Government Company.
MATTERS REQUIRING TO BE AGREED TO BY ALL THE

MEMBERS
SI. No. Section Resolution Description

CHAPTER II
READ WITH THE COMPANIES (INCORPORATION OF COMPANY AND
MATTERS INCIDENTAL THERETO) RULES, 2014
1. Section 5: Articles An amendment in the articles to make
entrenchment of certain articles must be
agreed to by all the members in the case of
a private company.
CHAPTER IV
2. Section 68: Power of Where all members of a company agree, the
Company to Purchase offer for buy-back may remain open for a
its own Securities period less than fifteen days. Rule No.75(5)
of the Companies (Share Capital and
Debentures) Rules 2014].
CHAPTER VII
3. Section 96: Annual Annual general meeting of an unlisted
general meeting 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.
4. Section 100: Calling of In case of a Specified IFSC public company
extraordinary general & a Specified IFSC private company, the
meeting Board may subject to the consent of all the
shareholders, convene its extraordinary
general meeting at any place within or
outside India [Exemption Notification u/s
462 dated 04th January, 2017].
CHAPTER XI
APPOINTMENT AND QUALIFICATION OF DIRECTORS READ WITH THE
COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS)
RULES, 2014
5. Section 162: A motion for the appointment of two or
Appointment of more persons as directors by a single
directors to be voted resolution shall not be moved unless the
individually proposal to move such a resolution has first
been agreed to at the meeting without any
vote being cast against it.
Pursuant to notification no. G.S.R. 464(E),
private company.
related to section 162 shall apply to:
(a) A Government Company in which the
entire paid up share capital is held by
the Central Government, or by any
State Government or Governments or
by the Central Government and one or
more State Government;
(b) A subsidiary of a Government
company, referred to in (a) above, in
which the entire paid up share capital
is held by that Government company.
MATTERS REQUIRING RESOLUTIONS TO BE PASSED BY
BOARD OF DIRECTORS IN BOARD MEETING ONLY
SI. No. Section Business

CHAPTER XI
APPOINTMENT AND QUALIFICATIONS OF DIRECTIONS READ WITH THE
COMPANIES (APPOINTMENT AND QUALIFICATIONS OF DIRECTIONS)
RULES, 2014
1. 161(4): Appointment To fill casual vacancy in the office of any
director appointment by the company in
general meeting.
CHAPTER XII
MEETING OF BOARD AND ITS POWERS READ WITH THE COMPANIES
(MEETING OF BOARD AND ITS POWERS) RULES, 2014
2. 175(2): Passing of To note resolution passed by circulation at
resolution by a subsequent board meeting.
circulation
3. 179: Powers of Board To make calls on shareholders in respect of
read with rule no.8 of money unpaid on their shares.
4. the Companies To authorize buy back of securities under
(Meetings of Board section 68.
5. and its Powers) Rules, To issue securities, including debentures,
2014. whether in or outside India.
6. Pursuant to the To borrow monies.
7. notification G.S.R. To invest in funds of the company.
8. 08(E) & 09(E) dated 4 th
To grant loans or give guarantee or provide
January 2017 issued security in respect of loans.
9. under section 462 of To approve financial statement and the
the Companies Act Board’s report.
10. 2013, the Board can To diversify the business of the company.
11. exercise powers by To approve amalgamation, merger or
means of resolutions reconstruction.
12. passed at the To take over a company or acquire a
meetings of the Board controlling or substantial stake in another
or through resolutions company.
13. passed by circulation. To make political contributions;
14. To appoint or remove key managerial
Pursuant to the personnel (KMP);
15. notification G.S.R. To appoint internal auditors and secretarial
466(E) dated 4 June auditor;
th
2015 issued under

section 462 of the
Companies Act 2013,
a section 8 Company
transact matters
related to borrowing
money, to invest funds
of the company and to
grant loans or give
guarantee or provide
security in respect of
the loan by circulation
instead of at a meeting
[section 179(3)(d), € &
(f)].
16. 188(1): Related Party To enter into specified contracts or
Transactions arrangements with related partly.
CHAPTER XIII
17. 196(4): Appointment To appoint and fix the terms and conditions
of managing director, of Managing Director, Whole Time Director
whole-time director or or Manager.
manager.
18. 3rd Proviso to 203(3) : To appoint or employ a person as its
Appointment of Key managing director, if he is the managing
Managerial Personnel director or manager of one, and of not more
than one, other company.
government company is not required to
comply with the aforesaid provision. [Section
203(4A)].
19. 203(4) : Appointment To fill up casual vacancy in the office of
of Key Managerial whole-time Key Managerial Personnel.
Personnel Pursuant to notification no. G.S.R. 463(E),
government company is not required to
comply with the aforesaid provision. [Section
203(4A)].
20. Secretarial Standards To note Minutes of Meetings of Audit
1: Secretarial Committee and other Committees.
21. Standards on To approve financial statements and the
Meetings of the BODs. Board Report.
22. To consider the Compliance Certificate to
ensure compliance with the provisions of all
the laws applicable to the company.
23. To approve payment to Director for loss of
office.
24. To items arising out of separate meeting of
the Independent Directors if so decided by
the Independent Directors.
25. To approving amalgamation, merger or
reconstruction.
26. To take over another company or acquiring
controlling or substantial stake in another
company.
27. To Sale of subsidiaries.
28. To Purchase and Sale of material tangible/
intangible assets not in the ordinary course
of business.
29. To specifying list of laws applicable
specifically to the company.
30. To sanction for related party transactions
which are not in ordinary course of
business of which are not on arm’s length
basis.
31. Secretarial Standards Noting minutes of Board Meetings of the
1: Secretarial unlisted subsidiary.
32. Standards on Quarterly, half-yearly and annual financial
Meetings of the BODs results for the listed company.
33. (in case of listed Recruitment and recruitment of senior
companies) officers just below the level of the Board of
Directors.
34. Agreement by the company with existing
share transfer agent/the new share transfer
agent in the manner as specified by the
Board from time to time.
35. Statement of all significant transactions
and arrangements entered into by the
unlisted subsidiary.
36. Approving Annual operating plans and
budgets.
37. Capital budgets and any updates.
38. Information on remuneration of KMP.
39. Show cause, demand, prosecution notices
and penalty notices which are materially
problems.
40. Fatal or serious accidents, dangerous
occurrences, any material effluent or
pollution problem.
41. Any material default in financial obligations
to and by the company, or substantial non-
payment for goods sold by the company.
42. Any issue, which invoices possible public or
product liability claims of substantial
nature, including any judgment or order
which, may have passed strictures on the
conduct of the company or taken an
adverse view regarding another enterprise
that can have negative implications on the
company.
43. Details of any joint venture or collaboration
agreement.
44. Transactions that involve substantial
payment towards goodwill, brand equity, or
intellectual property.
45. Significant labour problems and their
proposed solutions. Any significant
development in Human Resources/
Industrial Relations front like signing of
wage agreement, implementation of
Voluntary Retirement Scheme etc.
46. Quarterly details of foreign exchange
exposures and the steps taken by
management to limit the risks of adverse
exchange rate movement, if material.
47. Non-compliance of any regulatory, statutory
or listing requirements and shareholder
services such as non-payment of dividend,
delay in share transfer etc.
DIRECTOR’S REPORT DISCLOSURES PRIVATE COMPANY
What has to be prescribed in Board’s Report

CHAPTER IV
161(4): Appointment Following disclosures are required:
1. The total number of shares allotted with
differential rights;
2. The details of the differential rights relating
to voting rights and dividends;
3. The percentage of the issue of shares with
differential rights to the total post issue
equity capital and percentage of voting right
which the equity share capital with
differential voting right shall capital with
differential voting right shall carry to the
total voting right of the aggregate equity
share capital;
4. The price at which such shares have been
issued;
5. The particulars of promoters, directors or
key managerial personnel to whom such
shares are issued;
6. The change in control, if any, in the
company consequent to the issue of equity
shares with differential voting rights;
7. The Diluted Earning Per Share pursuant to
the issue of such shares, calculated in
accordance with the applicable accounting
standards.
8. The pre and post issue shareholding pattern
along with voting rights in the format
specified under Rule No.4(2).
Pursuant to notification no. G.S.R. 464(E), dated

5th June 2015 issued under section 462 of the
Companies Act 2013, the aforesaid provision will
not apply to a private company, if the
memorandum and articles so provide.
Section 54(1)(d): Issue of Following disclosures are required:
sweat equity shares, read 1. The Class of director/employee to when
with Rule No.8(13) of the sweat equity shares were issued;
Companies (Share Capital 2. The class of shares issued as Sweat Shares;
and Debentures) Rules, 3. The Number of sweat equity shares issued to
2014. the directors, their relatives, key managerial
personnel or other employees showing to
them, if any, for consideration other than
cash and the individual names of allottee
sholding 1% or more of the issued share
capital;
4. The reasons/justification for the issue;
5. The Principal terms and conditions for issue
of sweat equity shares, including pricing
formula;
6. The total number of shares arising as a
result of issue of sweat equity shares.
7. The Percentage of the sweat equity shares of
the total post issued and paid up share
capital.
8. The Consideration (including consideration
other than cash) received or benefit accrued
to the company from the issue of sweat
equity shares;
9. The diluted Earnings Per Share (EPS)
pursuant to issuance of sweat equity shares.
Section 62(1)(b): Further Following disclosures are required:
issue of share capital, 1. Options granted;
read with Rule No.12(9) of 2. Options vested;
the Companies (Share 3. Options exercised;
Capital and Debentures) 4. The total number of shares arising as a
Rules, 2014 result of exercise of option;
5. Options lapsed;
6. The exercise price;
7. Variation of terms of options;
8. Money realized by exercise of options;
9. Total number of options in force;
10. Employee wise details of options granted to;
(a) Key managerial personnel;
(b) Any other employee who receives a
grant in any one year of option
amounting to 5% or more of option
granted during that year.
(c) Identified employees who were granted
option, during any one year, equal to or
exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the company at the
time of grant;
Section 67(3): Restrictions Following disclosures are required:
on purchase by company 1. The Names of the employees who have not
or giving of loans by it for exercised the voting rights directly;
purchase of its shares, 2. The Reasons for not voting directly;
read with Rule No.16(4) of 3. The Names of the person who is exercising
the Companies (Share such voting rights;
Capital and Debentures) 4. The number of shares held by or in favour of,
Rules, 2014. such employees and the percentage of such
shares to the total paid up capital of the
company;
5. The Date of the general meeting in which
such voting power was exercised;
6. The Resolution on which votes have been
cast by persons holdings such voting power;
7. The Percentage of such voting power to the
total voting power on each resolution;
8. Whether the votes were cast in favour of or
against the resolution.
Pursuant to notification no. G.S.R. 464(E), dated
5th June 2015 issued under section 462 of the
Companies Act 2013, the aforesaid provision will
not apply to a private company:
(a) In whose share capital no other body
corporate has invested any money;
(b) If the borrowings of such a company from
banks or financial institutions or anybody
corporate is less than twice its paid up share
capital or fifty crore rupees, whichever is
lower; and
(c) Such a company is not in default in
the time of making transactions under this
section.
CHAPTER X
ACCOUNTS OF COMPANIES READ WITH THE COMPANIES
(ACCOUNTS) RULES, 2014
Section 131(1): Voluntary The details reasons for revision of financial
revision of financial statement or board’s report.
statements or board’s
report
Section 134(3)(a): The web address, if any, of the company, where
Financial Statement, annual return referred to in sub-section (3) of
Board’s Report etc. section 92 has been placed.
Section 134(3)(b): Number of Board Meetings held during the
Financial Statement, financial year.
Board’s Report etc.
Section 134(3)(c): Directors Responsibility Statement:
Financial Statement, (a) In the preparation of the annual accounts,
Board’s Report etc. read the applicable accounting standards had
with section 134(5) been followed along with proper explanation
relating to material departments;
(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 any sufficient
care for the maintenance of adequate
accounting records in accordance with the
provisions of this Act for safeguarding the
assets of the company and for preventing and
detecting fraud and other irregularities;
(d) The directors had prepared the annual
accounts on a going concern basis; and
(e) The directors had devised proper system to
applicable laws and that such systems were
adequate and operating effectively.
Section 134(3)(ca): The details of fraud reported by the Auditor
Financial Statement, under section 143(12) other than those which
Board’s Report etc. are reportable to the Central Government.
Section 134(3)(f): Explanations or comments by the Board on every
Financial Statement, qualification, reservation or adverse remark or
Board’s Report etc. disclaimer made by the Auditor in his Report.
Secretarial Standards: 1 A statement on compliances of applicable
Secretarial Standards.
Section 134(3)(g): Particulars of loans, guarantees or investments
Financial Statement, u/s 186 i.e. Loan and Investment by Company;
Board’s Report etc. read
with Companies
(Accounts) Rules, 2014
Section 134(3)(h): Particulars of contracts or arrangements with
Financial Statement, related parties referred to in section 188(1) in the
Board’s Report etc. read Form AOC-2;
with Companies
Section 134(3)(i): The state of the company’s affairs;
Financial Statement,
Section 134(3)(j): The amounts, if any, which it proposes to carry
Financial Statement, to any reserves.
with Companies
Section 134(3)(k): The amounts, if any, which it recommends
Financial Statement, should be paid by way of dividend.
with Companies
Section 134(3)(l): Details of material changes and commitments, if
Financial Statement, any, affecting the financial position of the
Board’s Report etc. read company which have occurred between the end
with Companies of the financial year of the company to which the
(Accounts) Rules, 2014 financial statements ralate and the date of the
report;
Section 134(3)(m): (A) Conservation of energy:
Financial Statement, (i) Steps taken/impact on conversion of
Board’s Report etc. read energy.
with Companies (ii) Steps taken by the company for
(Accounts) Rules, 2014 utilizing alternate sources of energy.
(iii) Capital investment on energy
conversion equipment.
(B) Technology absorption:
1. The efforts, made towards technology
absorption.
2. The benefits derived like product
improvement, cost reduction, product
development, import substitution.
3. In case of imported technology
(imported during the last 3 years
reckoned from the beginning of the
financial year).
(a) Details of technology imported.
(b) Year of import.
(c) Whether the technology been fully
absorbed.
(d) If not fully absorbed, area where
absorption has not taken place,
and the reasons therefor; and
4. Expenditure incurred on Research and
Development.
(C) Foreign exchange earnings and Out go:
Foreign Exchange earned in term of actual
inflows during the year and Foreign
Exchange outgo during the year in terms
of actual outflows.
However, the requirement of furnishing information
and details this sub-rule shall not apply to a
Government company engaged in producing defence
equipment [Proviso to Rule 8(3)].
Section 134(3)(m): A statement indicating development and
Financial Statement, implementation of a risk management policy for
Board’s Report etc. the company including identification therein of
elements of risk, if any, which in the option of
the Board may threaten the existence of the
company.
Section 134(3)(o): The details about the policy developed and
Financial Statement, implemented by the company on Corporate
Board’s Report etc. read Social Responsibility initiatives taken during the
with Section 135: year, but where such Policy has been during the
Corporate Social company’s website, if any, then the salient
Responsibility read with features of the Policy and any change therein
Rule No.9 of the Company shall be disclosed and the web-address at which
(Accounts) Rule, 2014 and the complete policy is available, shall be
Rule 9 the Company disclosed.
Corporate Social Further other details as per annexure attached
Responsibility Rules) to the Companies (CSR Policy) Rules, 2014 shall
Rules, 2014 also be disclosed.
Section 134(3)(q): Highlights of performance of subsidiaries,
Financial Statement, associates and joint venture companies and their
Board’s Report etc. read contribution to the overall performance of
with Rule 8(1) of company during the financial year.
Companies (Accounts)
Rule, 2014
Section 134(3)(q): Financial summary of highlights;
Financial Statement, Change in the nature of business, if any;
Board’s Report etc. read Details of directors or key managerial personnel
with Rule No.8(5) of who were appointed or have resigned during the
Company (Accounts) Rule, year and fact of such resignation of director shall
2014 be disclosed in pursuant to Section 168 of the
Act.
Names of companies shall have become or
ceased to be its Subsidiaries, joint ventures or
associate companies during the year.
Details relating to Deposits covered under
Chapter V of the Act:
(a) Accepted during the year;
(b) Remained unpaid or unclaimed as at the end
of the year;
(c) Whether there has been any default in
repayment of deposits or payment of interest
thereon during the year and if so, number of
such cases and the total amount involved:
i. At the beginning of the year.
ii. Maximum of the year.
iii. At the end of the year.
Details of deposits which are not in compliance
with the requirements of Chapter V of the Act.
Details of significant and material orders passed
by the Regulators or courts or tribunals
impacting the going concern status and
company’s operations in future.
The details in respect of the adequacy of internal
financial controls with reference to the Financial
Statements.
 Where disclosures referred to in sub-section (3) have been included in the
financial statements, such disclosures shall be referred to instead of being
repeated in the Board’s Report;
 In case of Specified IFSC private company, if any information listed in sub-
section (3) is provided in the financial statement the company may not
include such information in the report; vide exemption notification no.09(E)
dated 04th January, 2017.
Section 135(2): Corporate Composition of the Corporate Social
Social Responsibility (if Responsibility Committee.
applicable)
CHAPTER XIII
Section 177(10): Audit Disclosure about the details of establishment of
Committee (if applicable) vigil mechanism.
Section 197(12): Overall A statement showing the name of the top ten
maximum managerial employees in terms of remuneration drawn and
remuneration and the name of every employee, who:
managerial remuneration 1. If employed throughout the financial year,
in case of absence or was in receipt of remuneration for that year
inadequacy of profits, which, in the aggregate, was not less than
read with Rule No.5(2) & one crore and two lakh rupees;
(3) of the Companies 2. If employed for a part of the financial year,
(Appointment and was in receipt of remuneration for any part of
Remuneration of that year, at a rate which, in the aggregate,
Managerial Personnel) was not less than eight lakh and fifty
Rules, 2014 thousand rupees per month;
3. If employed throughout the financial year or
part thereof, was in receipt of remuneration
in that year which, in the aggregate, or as the
case may be, at a rate which, in the
aggregate, is in excess of that drawn by the
managing director or whole-time director or
manager and holds by himself or long with
his spouse and dependent children, not less
than two percent of the equity shares of the
company.
The statement referred to above: Shall also
indicate:
(a) Designation of the employee;
(b) Remuneration received;
(c) Nature of employment, whether
contractual or otherwise;
(d) Qualification and experience of the
employee;
(e) Date of commencement of employment;
(f) The age of such employee;
(g) The last employment held by such
employee before joining the company;
(h) The percentage of equity shares held by
the employee in the company; and
(i) Whether any such employee is a relative of
any director or manager of the company
and if so, name of such director or
manager.
Pursuant to Notification No.G.S.R. 463(E), dated
5th June, 2015 issued under section 462 of the
Companies Act, 2013, the aforesaid provision will
not apply to a Government company.
Section 197(14): Overall Disclosure in respect of receiving any
maximum managerial remuneration or commission from any holding
remuneration and company or subsidiary company of the company
managerial remuneration where he is appointed as a managing or whole-
in case of absence or time director.
inadequacy of profits Pursuant to Notification No.G.S.R. 463(E), dated
DIRECTOR’S REPORT DISCLOSURES – UNLISTED PUBLIC
COMPANY
Section What has to be prescribed in Board’s Report

CHAPTER IV
Section 43: Kinds of share Following disclosures are required:
capital, read with Rule 1. The total number of shares allotted with
No.4(4) of the Companies differential rights;
(Share Capital and 2. The details of the differential rights relating
Debentures) Rules, 2014 to voting rights and dividends;
share capital;
issued;
shares are issued;
standards.
capital;
formula;
capital.
equity shares;
Section 62(1)(b): Further Following disclosures are required:
issue of share capital, 1. Options granted;
read with Rule No.12(2) of 2. Options vested;
the Companies (Share 3. Options exercised;
Capital and Debentures) 4. The total number of shares arising as a
Rules, 2014 result of exercise of option;
5. Options lapsed;
6. The exercise price;
7. Variation of terms of options;
8. Money realized by exercise of options;
9. Total number of options in force;
10. Employee wise details of options granted to;
(a) Key managerial personnel;
(b) Any other employee who receives a
grant in any one year of option
amounting to 5% or more of option
granted during that year.
(c) Identified employees who were granted
option, during any one year, equal to or
exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the company at the
time of grant;
Companies Act, 2013, provision of section 62 shall
not apply to a Nidhi company.
company;
Pursuant to notification no. G.S.R. 08(E), dated 4th
June 2017 issued under section 462 of the
Companies Act 2013, the provision of sec. 67 shall
not apply to a Specified IFSC public company:
lower; and
section.
CHAPTER IX
Section 131(1): Voluntary The details reasons for revision of financial
report
period;
(e) The directors had devised proper system to
Section 134(3)(ca): The details of fraud reported by the Auditor
Financial Statement, under section 143(12) other than those which
Board’s Report etc. are reportable to the Central Government.
Section 134(d): Financial A statement that independent directors have
Statement, Board’s Report given a declaration of independence as required
etc. under sub-section (6) of section 149.
Section 134(3)(e): Text of company’s policy on directors
Financial Statement, appointment and remuneration including criteria
Board’s Report etc. read for determining qualifications, positive attributes,
with Section independence of a director and other matters
178: Nomination and provided under sub-section (3) of section 178.
Remuneration Committee Where such policy has been posted on the
and Stakeholders website of the Company, if any, then the salient
Relationship Committee features of the policy, any change therein and
the web-address, at which the complete policy is
available, shall be disclosed.
Companies Act, 2013, the aforesaid discloser is
not required in case of a government company.
Section 134(3)(f): Explanations of comments by the Board on every
Board’s Report etc. disclaimer made:
i. By the Auditor in his Report; and
ii. By the company secretary in practice in his
secretarial audit report.
Secretarial Standards – 1 A statement of compliances of applicable
Financial Statement, u/s 186 i.e. Loan and investment by Company.
with Companies
with Companies
with Companies
with Companies
report;
absorption.
financial year).
(b) Year of import.
absorbed.
Development.
of actual outflows.
Section 134(3)(n): A statement indicating development and
company.
Section 134(3)(p): A statement indicating the manner in which
Financial Statement, formal annual evaluation of the performance of
Board’s Report etc. read the Board, its committees and of individual
with Rule 8(4) of directors has been made.
Companies (Accounts) Pursuant to notification no.G.S.R. 463(E), dated 5th
Rule, 2014 (if applicable) June, 2015 issued under section 462 of the
Companies Act, 2013, the provision related to
disclosure of the manner in which performance of
Board, its committee and Directors is evaluated
shall not apply to a government company in
Department of the Central Government which is
administratively in charge of the company, or, as
the case may be, the State Government, as per its
own evaluation methodology.
with Rule No.8(5) of company during the financial year.
Company (Accounts) Rule,
2014
Act.
of the year;
Statements.
Section 135(2) : Corporate Social Composition of the Corporate Social
Responsibility (if applicable) Responsibility Committee.
CHAPTER XII
RULES, 2014
149(10): Company to have If an independent director is re-appointed after
Board of directors (if holding office for a consecutive period of 5 years,
applicable) then such a fact has to be disclosed.
CHAPTER XII
Section 177(8): Audit Disclosures in respect of the followings:
Committee (if applicable) 1. The composition of Audit Committee.
2. Disclosure of the details of vigil mechanism
Directors and employees to report genuine
concerns.
CHAPTER XIII
company.
indicate:
employee;

manager.
Pursuant to Notification No.G.S.R. 08(E), dated 4th
January, 2017 issued under section 462 of the
not apply to a Specified IFSC public company.
Section 197(14): Overall Where any director who is in receipt of any
maximum managerial commission from the company and who is a
remuneration and managing or whole-time director of the company
managerial remuneration holding company or subsidiary company of such
in case of absence or company then necessary disclosure shall be
inadequacy of profits made in the Board’s report.
Pursuant to notification no.G.S.R. 463(E), dated 5th
June, 2015 issued under section 462 of the
Schedule V, Part II, Where remuneration to any managerial
Section II personnel is being paid under section II of Part II
of the Schedule V then following disclosures
shall be mentioned in the Board’s report under
the heading ‘Corporate Governance’, attached to
the financial statements:
 All elements of remuneration package such
as salary benefits, bonuses, stock options,
pension etc. of all the directors.
 Details of fixed component and performance
linked incentives along with the performance
criteria;
 Service contracts, notice period, severance
fees;
 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.
204(1): Secretarial Audit Secretarial Audit Report in Form MR-3, given by
Report, read with Rule a company secretary in practice.
No.9 of the Companies
(Appointment and
Remuneration of
Managerial Personnel)
Rules, 2014 (if applicable)
DIRECTOR’S REPORT DISCLOSURES LISTED COMPANY
Section What has to be prescribed in Board’s Report

CHAPTER IV
Section 43: Kinds of Following disclosures are required:
capital, read with Rule 1. The total number of shares allotted with
No.4(4) of the Companies differential rights;
(Share Capital and 2. The details of the differential rights relating
Debentures) Rules, 2014. to voting rights and dividends;
share capital;
issued;
shares are issued;
standards.
capital;
formula;
capital.
equity shares;
company;
Pursuant to notification no. G.S.R. 08(E), dated 4th
June 2017 issued under section 462 of the
Companies Act 2013, the provision of sec.67 shall
not be applicable to a Specified IFSC public
company:
lower; and
section.
CHAPTER X
Section 131(1): Voluntary Details reasons for revision of financial
report
period;
(e) The directors had laid down internal financial
controls to be followed by the company and
that such internal financial controls are
adequate and were operating effectively; and
(f) The directors had devised proper system to
Section 134(3)(ca): Details of fraud reported by the Auditor under
Financial Statement, section 143(12) other than those which are
Board’s Report etc. reportable to the Central Government.
Section 134(d): Financial A statement that independent directors has given
Statement, Board’s Report a declaration of independence as required under
etc. sub-section (6) of section 149.
Section 134(3)(e): Text of company’s policy on director’s
Financial Statement, appointment and remuneration including criteria
Board’s Report etc. read for determining qualifications, positive attributes,
with section 178 : independence of a director and other matters
Nomination and provided under sub-section (3) of section 178.
Remuneration Committee Where such policy has been posted on the
and Stakeholders website of the Company, if any, then the salient
Relationship Committee features of the policy, any change therein and
the web-address at which the complete policy is
available, shall be disclosed.
Section 134(3)(f): Explanations or comments by the Board on every
Board’s Report etc. disclaimer made:
i. By the Auditor in his Report; and
ii. By the company secretary in practice in his
secretarial audit report.
Secretarial Standards: 1 A statement on compliances of applicable
Financial Statement, u/s 186 i.e. Loan and Investment by Company;
with Companies
with Companies
with Companies
with Companies
report;
absorption.
financial year).
(b) Year of import.
absorbed.
Development.
of actual outflows.
Section 134(3)(n): A statement indicating development and
company.
Section 134(3)(p): A statement indicating the manner in which
Financial Statement, formal annual evaluation of the performance of
Board’s Report etc. Board, its committees and individual directors
has been made.
Companies Act, 2013, the provision related to
discloser of the manner in which performance of
the Board, its committee and directors is
evaluated shall not apply to a Government
company in case the directors are evaluated by
the Ministry or Department of the Central
Government which is administratively in charge of
the company, or, as the case may be, the State
Government, as per its own evaluation
methodology.
with Rule 8(1) of company during the financial year.
Companies (Accounts)
Rule, 2014
Act.
of the year;
Statements.
Section 135(2): Corporate Composition of the Corporate Social
Social Responsibility (if Responsibility Committee.
applicable)
CHAPTER XI
RULES, 2014
Section 149(10): Company If an independent director is re-appointed after
to have Board of directors. holding office for a consecutive period of 5 years,
then such a fact has to be disclosed.
CHAPTER XII
Section 177(8): Audit Disclosures in respect of the followings:
Committee 1. The composition of Audit Committee.
2. Disclosure of reasons for not accepting there
commendation of the Audit Committee.
Section 177(10): Audit Disclosure about the details of establishment of
Committee vigil mechanism.
CHAPTER XIII
Section 197(12): Overall Disclosure in respect of the following:
maximum managerial 1. The ratio of the remuneration of each director
remuneration and to the median remuneration of the employees
managerial remuneration of the company for the financial year;
in case of absence or 2. Percentage increase in remuneration of each
inadequacy of profits, director, CFO, CS, or Manager, if any in the
read with Rule No.5(1) of financial year;
the Companies 3. Percentage increase in the median
(Appointment and remuneration of employees in the financial
Remuneration of year;
Managerial Personnel) 4. Number of permanent employees on the rolls
Rules, 2014 of company;
5. Average percentile increase already made in
the salaries of employees other than the
managerial personnel in the last financial
year and its comparison with the percentile
increase in the managerial remuneration and
justification thereof and point out if there are
any exceptional circumstances for increase in
the managerial remuneration;
6. Affirmation that the remuneration is as per
the remuneration policy of the company.
company.
indicate:
employee;
manager.
Section 197(14): Overall Where any director who is in receipt of any
maximum managerial commission from the company and who is a
remuneration and commission or whole-time director of the
managerial remuneration company, receives any remuneration of
in case of absence or commission from any holding company or
inadequacy of profits subsidiary company of such company then
necessary disclosure shall be made in the
Board’s report.
Schedule V, Part II, Where remuneration to any managerial
Section II personnel is being paid under section II of Part II
of the Schedule V then following disclosures
shall be mentioned in the Board’s report under
the heading ‘Corporate Governance’, attached to
the financial statements:
 All elements of remuneration package such
as salary benefits, bonuses, stock options,
pension etc. of all the directors.
 Details of fixed component and performance
linked incentives along with the performance
criteria;
 Service contracts, notice period, severance
fees;
 Stock option details, if any, and whether the
same has been issued at a discount as well
as the period over which accrued and over
which exercisable.
Section 201(1): Secretarial Secretarial Audit Report in form MR-3, given by a
Audit Report, read with company secretary in practice.
Rule No.9 of the
Companies (Appointment
and Remuneration of
Managerial Personnel)
Rule, 2014
PRIVILEGES AND EXMPTIONS FOR PRIVATE COMPANY
Section 2(68): “Private Company” means a company having a

minimum paid-up share capital 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 more persons hold one or more
shares in a company jointly, they shall, for the purposes of
this clause, be treated as a single member:
Provided further that:
(A) Persons who are in the employment of the company;
and
(B) Persons who, having been formerly in the employment
of the company, were members of the company while
in that employment and have continued to be
members after the employment caused.
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.
Section Description
CHAPTER I
PRELIMINARY
Section 2(40): Definition The financial statement, with respect to one
of “Financial Statement” person company, small company, dormant
company and private company (if such private
company is a start-up) may not include the
cash flow statement [Sub-section (40) of
section 2; vide Notification G.S.R. 583(E)
dated 13th June, 2017]
Section 2(76): Definition Provision of section 2(76)(viii) i.e. Holding,
of Related party subsidiary or an associate company or a
subsidiary of holding company to which it is
also a subsidiary (fellow subsidiary) will not be
considered as related party for the purpose of
section 188 [Section 2(76)(viii)].
CHAPTER IV
SHARE CAPITAL AND DEBENTURES
Section 43: Kinds of Provision of section 43 shall not apply where
share capital memorandum or articles of association of a
Private Company so provides.
Section 47: Voting rights Provision of section 47 shall not apply where
memorandum or articles of association of a
Private Company so provides.
Section 62: Further issue A Private Company is not required to comply
of share capital with the provision with respect to minimum
time period to open an offer, if 90%, of the
members of a Private Company have given their
consent in writing or in electronic mode.
[Section 62(1)(a)(i) & 2].
Section 67: Restrictions Provisions of sec. 67 shall not be applicable
on purchase by company to Private Companies:
or giving of loans by it for (a) In whose share capital no other body
purchase of its shares corporate has invested any money;
corporate is less than twice its paid up
share capital or fifty crore rupees whichever
is lower; and
section.
CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES
Section 73: Prohibition Provisions of clauses (a) to (e) of sub-section
on acceptance of deposits (2), shall not apply to a Private Companies:
from public (A) Which accepts from its members monies
not exceeding 100% of aggregate of the
paid up share capital, free reserves and s
ecurities premium account; or
(B) Which is a start-up, for five years from
the date of its incorporation; or
(C) Which fulfills all of the following
conditions, namely:
(a) Which is not an associate or a
subsidiary company of any other
company;
(b) If the borrowings of such a company
from banks or financial institutions
or anybody corporate is less than
twice of its paid up share capital or
fifty crore rupees, whichever is
lower; and
(c) Such a company has not defaulted
in the repayment of such
borrowings subsisting at the time of
accepting deposits under this
section.
[Section 73(2)(a) to (e); vide Notification
G.S.R. 583(E) dated 13th June, 2017].
CHAPTER VII
Section 92: Annual return  Remuneration of directors and KMPs is not
required to be shown in annual return by
private company which are small companies.
[Clause (g) of sub-section (1) of section 92;
vide Notification G.S.R. 583(E) dated 13th
June, 2017].
 In relation to One Person Company, small
company and private company (if such
private company is a start-up), the annual
return shall be signed by the company
secretary, or where there is no company
secretary, by the director of the company
[Sub-section (1) of section 92; vide
Notification G.S.R.583(E) dated 13th June,
2017].
Section 101: Notice of Shall apply unless otherwise specified in
meeting section or the Articles of the company provide
any other regulation for the same.
Section 102: Statement Shall apply unless otherwise specified in
to be annexed to notice section or the Articles of the company provide
Section 103: Quorum for Shall apply unless otherwise specified in
meetings section or the Articles of the company provide
Section 104: Chairman of Shall apply unless otherwise specified in
meetings section or the Articles of the company provide
Section 105: Proxies Shall apply unless otherwise specified in
section or the Articles of the company provide
Section 106: Restriction Shall apply unless otherwise specified in
on voting rights section or the Articles of the company provide
Section 107: Voting by Shall apply unless otherwise specified in
show of hands section or the Articles of the company provide
Section 109: Demand for Shall apply unless otherwise specified in
poll section or the Articles of the company provide
Section 117: Resolutions Board resolutions passed u/s 179(3) are not
and agreements to be required to be filed with the Register in Form
filed MGT-14. [Section 117(3)(g)].
CHAPTER X
AUDIT AND AUDITORS
Section 141: Eligibility, An auditor or audit firm can audit one person
qualification and dis- company dormant company, small company
qualifications of auditors and private company having paid-up share
capital upto one hundred crore rupees without
counting them in the limit of twenty companies
[Section 141(3)(g)].
Section 143: Powers and The provision that an auditor’s report shall
duties of auditors and state as to whether the company has adequate
auditing standards internal financial controls system in place and
the operating effectiveness of such controls
shall not apply to a private company:
(i) Which is a one person company or a small
company; or
(ii) Which has turnover less than rupees fifty
crores as per latest audited financial
statement and which ha aggregate
borrowings from banks or financial
institutions or anybody corporate at any
point of time during the financial year less
than rupees twenty five crore.
[Clause (i) of sub-section (3) of section 143;
vide Notification G.S.R. 583(E) dated 13th
June, 2017].
CHAPTER XI
Section 160: Right of Shall not apply
persons other than
retiring directors to stand
for directorship
Section 162: Shall not apply
Appointment of directors
to be voted individually
CHAPTER XII
Section 173: Meetings of A one person company or a small company,
Board dormant company and a private company (if
such private company is a start-up) shall be
deemed to have complied with the provisions of
this section if at least one meeting of the Board
of Directors has been conducted in each half of
a calendar year and the gap between the two
meetings is not less than ninety days. However,
nothing contained in this sub-section and is
section 174 shall apply to One Person Company
in which there is only one director on its Board
[Sub-section (5) of section 173; vide
Notification G.S.R. 583(E) dated 13th June,
2017].
Section 174: Quorum for Shall apply to a private company with the
meetings of Board exception that the interested director may also
be counted towards quorum in such meeting
after discloser of his interest [Sub-section (5)
of section 174; vide Notification G.S.R.
583(E) dated 13th June, 2017].
Section 180: Restrictions Shall not apply
on powers of Board
Section 184: Discloser of The Director may participate at the meeting of
interest by director the Board in which the contract of arrangement
is discussed after disclosure of his interest
[Section 184(2)].
Section 185: Loan to Shall not apply to a private company:
Directors (a) In whose share capital no other body
banks or financial institutions or any body
corporate is less than twice of its paid up
share capital or fifty crore rupees whichever
is lower; and
(c) Such a company has no default in
section.
Section 188: Related Member who is a related party can vote on the
party transactions resolution in the shareholder’s meeting
[Section 188(1) second proviso].
CHAPTER XIII
Section 196: The provisions related to manner of
Appointment of managing appointment of managing director, whole time
director whole-time director or manager including the terms and
director or manager conditions of such appointment, remuneration
payable and filing of return of appointment
with the Registrar shall not apply [Section
196(4) & (5)].
Note: The exceptions, modifications and adaptations provided in the

aforesaid Table shall be applicable to a private company which has
not committed a default in filing its financial statements under section
137 or annual return under section 92 of the Companies Act, 2013
with the Registrar.
PRIVILEGES AND EXEMPTIONS FOR

SPECIFIED IFSC PRIVATE COMPANY
Notification No. G.S.R. 09(E) dated 4th January, 2017: “Specified

IFSC Private Company” means a Private Company which is licensed to
operate by the RBI or the SEBI or the IRDAI __ the International
Financial Services Centre located in a approved multi-services Special
Economic Zone set-up under the Special Economic Zone Act, 2005
read with the Special Economic Zone Rules, 2006.
Section Description
CHAPTER I
PRELIMINARY
Section 2(41): Definition In case of a Specified IFSC private company,
of “Financial Year” which is a subsidiary of a foreign company, the
financial year of its holding company and
approval of the Tribunal shall not be required.
[Sub-section (41) of Section 2].
CHAPTER II
INFORMATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Section 3: Formation of Specified IFSC private company shall be formed
Company only as a company limited by shares [Sub-
section (2) of Section 3].
Section 4: Memorandum  Specified IFSC private company shall have
the suffix “International Financial Service
Company” or “IFSC” as part of its name
[Clause (a) of Sub-section (1) of Section 4].
 Specified IFSC private company shall state its
objects to do financial services, as permitted
under the Special Economic Zones Act, 2005
read with the Special Economic Zones Act,
2006 and any matter considered necessary in
furtherance thereof, in accordance with
license to operate, from International
Financial Services Centre located in an
approved multi-services Special Economic
Zone, granted by the RBI or the SEBI or the
IRDAI. [Sub-section (c) of Sub-section (1) of
Section 4].
Section 12: Registered  Specified IFSC private company shall have its
office of company registered office at International Financial
Services Centre located in an approved multi-
services Special Economic Zone set-up under
the Special Economic Zones Act, 2005 read
with the Special Economic Zones Act, 2006,
where it is licensed to operate, at all times
 Specified IFSC private company shall furnish
to the Registrar verification of its registered
office within a period of sixty days of its
incorporation [Sub-section (2) of Section
12].
 Notice of every change of the situation of the
registered office of Specified IFSC private
company, after the date of incorporation of
the company, shall be given to the Registrar
within sixty days of the change.
 Provided that a Specified IFSC private
company shall not change the place of its
registered office to any other place outside
the said International Financial Services
Centre [Sub-section (5) of Section 12].
Section 21:  A document or proceeding requiring
Authentication of authentication by company or contracts
documents, proceedings made by or on behalf of a company may be
and contracts signed by and key managerial personnel or
an officer or any other person of the company
duly authorized by the Board in case of a
Specified IFSC private company.
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITES
Section 42: Offer or  Section 42(3) shall not apply.
invitation for  A Specified IFSC private company making an
subscription of securities offer or invitation shall allot its securities
on private placement
within ninety days from the date of receipt of
(before substitution of the
section) the application money for such securities.
 Section 42(7) shall not apply.
CHAPTER IV
Section 56: Transfer and Specified IFSC private company shall deliver
transmission of securities the certificates of all securities to subscribers
after incorporation, allotment, transfer or
transmission within a period of sixty days [Sub-
CHAPTER VI
REGISTRATION OF CHARGES
Section 82: Company to In case of a Specified IFSC private company,
report satisfaction of the Registrar may, on an application by the
charge company, allow registration of charge to be
made within a period of three hundred days of
such creation on payment of such additional
fees as may be prescribed [Sub-section (1) of
Section 82].
CHAPTER VII
Section 89: Declaration in The Specified IFSC private company shall make
respect of beneficial a return to the Registrar in respect of
interest in any share declaration under section 89 received by the
company within sixty days from the date of
receipt of declaration [Sub-section (6) of
Section 89].
Section 92: Annual return Sub-section (3) shall not apply to Specified
IFSC private company [Sub-section (3) of
Section 92].
Section 100: Calling of In case of a Specified IFSC private company,
extraordinary general the Board may subject to the consent of all the
meeting shareholders, convene its extraordinary general
meeting at any place within or outside India
Section 177: Resolutions A copy of every resolution or any agreement
and agreements to be shall be filled with the Registrar within sixty
filed days instead of thirty days [Sub-section (1) of
Section 117].
Section 118: Minutes of  In case of a Specified IFSC private company,
proceedings of general the minutes of every meeting of its Board of
meeting, meeting of Directors or of every committee of the Board,
Board of Directors and
to be prepared and signed in the manner at
other meeting and
resolutions passed by or before the next Board or Committee
postal ballot meeting and kept in books kept for that
purpose. [Sub-section (1) of Section 118].
 Specified IFSC private company is not
required to observe secretarial standards
with respect to general and Board meetings.
Section 134: Financial In case of a Specified IFSC private company, if
statement, Board’s report any information listed in this Sub-section is
etc. provided in the financial statement, the
company may not include such information in
the report of the Board of Directors [Sub-
Section 135: Corporate Provisions of CSR shall not apply for a period of
social responsibility five years from the commencement of business
of a Specified IFSC private company.
Section 138: Internal Internal audit shall apply if the articles of the
audit company provide for the same.
Section 139:  The Specified IFSC private company shall file
Appointment of auditors a notice of appointment of auditor with the
Registrar within thirty days of the meeting in
which the auditor is appointed [Sub-section
(1) of Section 139].
 All provisions to sub-section (2) shall not
apply to a Specified IFSC private company.
Section 140: Removal,  In case of a Specified IFSC private company,
resignation of auditor and where, after the submission of the
giving of special notice application to the Central Government by the
company for removal of auditor, and no
decision is communicated by the Central
Government, it would be deemed that the
Central Government has approved the
application and the company shall appoint
new auditor at a general meeting within three
months from the date of expiry of sixty days
period. [Sub-section (1) of Section 140].
CHAPTER XI
Section 149: Company to Provision of resident director shall apply to a
have Board of Directors Specified IFSC private company in respect of
financial years other than the first financial
year from the date of its incorporation [Sub-
Section 161: In case of Specified IFSC private company, the
Appointment of Board of appoint, any person nominated by any
additional director, institution or company or body corporate as a
alternate director and director in pursuance of the provisions of any
nominee director 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. [Sub-section (3) of
Section 161].
Section 170: Register of For a specified IFSC private company, return
directors and key containing particulars and documents of its
managerial personnel and directors and KMPs shall be filed with the
their shareholding Registrar within sixty days from their
appointment, and sixty days of any change
taking place. [Sub-section (2) of Section 170].
CHAPTER XII
MEETINGS OF BOARD AND ITS POWER
Section 173: Meeting of A Specified IFSC private company shall hold
the Board the first meeting of the Board of Directors
within sixty days of its incorporation and
thereafter hold at least one meeting of the
Board of Directors in each half of a calendar
year. [Sub-section (1) of Section 173].
Section 174: Quorum for A provision which says that, if the number of
meetings of Board interested directors exceeds or is equal to two-
thirds of the total strength of the BoD, the
number of directors who are not interested
directors and present at the meeting, being
minimum two, shall be the quorum during
such time, shall be applied to a Specified IFSC
private company with the exception that
interested director may participate in such
meeting provided the disclosure of his interest
is made by the concerned director either prior
or at the meeting. [Sub-section (3) of Section
174].
Section 179: Powers of In case of a Specified IFSC private company,
the Board the Board can exercise the powers by means of
resolutions passed at the meetings of the Board
or through resolutions passed by circulation.
Section 186: Loan and  A Specified IFSC private company can make
investment by company investment through more than two layers of
investment companies [Sub-section (1) of
Section 186].
 A Specified IFSC private company can bay
loan, guarantee and acquire by way of
subscription exceeding sixty percent, of its
paid-up share capital, free reserves and
securities premium account or one hundred
percent of its free reserves and securities
premium account, whichever is more, after
passing a resolution either at the meeting of
the Board of Directors or by circulation.
 [Sub-section (c) of Sub-section (2) of
Section 186].
 In case of a Specified IFSC private company,
the Board can exercise powers of making
investment by way of loan or guarantee or
security given by the company by means of
resolutions passed at meetings of the Board
of Directors or through resolutions passed by
circulation [Sub-section (5) of Section 186].
CHAPTER XXI
COMPANIES AUTHORIZED TO REGISTER UNDER THIS ACT
Section 384: Debentures,  Notwithstanding anything contained in this
annual return, Act, the exemptions provided under section
registration of charges, 92 to companies incorporated under the Act
books of account and
for the purpose of operating from the
their inspection
International Financial Services Centre
located in an approved multi-services Special
Economic Zone set-up under the Special
Economic Zone Act, 2005 and the Special
Economic Zone Rules, 2006, shall apply
mutatis mutandis to a foreign company
registered under Chapter XXII of the Act,
which has a place of business or which
conducts business activity from the
Economic Zone Rules, 2006 [Sub-section (2)
of Section 384].
 Notwithstanding anything contained in this
Act, the exemptions provided under Chapter
VI to companies incorporated under the Act
for the purpose of operating from the
Economic Zone Rules, 2006, shall apply
mutatis mutandis to a foreign company
registered under Chapter XXII of the Act,
which has a place of business or which
conducts business activity from the
Economic Zone Rules, 2006 [Sub-section (4)
of Section 384].
PRIVILEGES AND EXMPTIONS FOR SPECIFIED
IFSC PUBLIC COMPANY
Notification No. G.S.R. 08(E) dated 4th January, 2017: “Specified

IFSC public company” means unlisted public company which is
licensed to operate by the RBI or the SEBI or the IRDAI from the
International Financial Services Centre located in an approved multi-
services Special Economic Zone set-up under the Special Economic
Zone Act, 2005 and the Special Economic Zone Rules, 2006.
Section Description
CHAPTER I
PRELIMINARY
Section 2(41): Definition In case of a Specified IFSC public company,
of “financial year” which is a subsidiary of a foreign company, the
financial year of the subsidiary may be same as
the financial year of its holding company and
approval of the Tribunal shall not be required.
Section 2(76): Definition Shall not apply with respect to section 188.
of “related party”
CHAPTER II
Section 3: Formation of Specified IFSC public company shall be formed
company only as company limited by shares. [Sub-
Section 4: Memorandum  Specified IFSC private company shall have
the suffix “International Financial Service
Company” or “IFSC” as part of its name
[Clause (a) of Sub-section (1) of Section 4].
 A Specified IFSC private company shall state
its objects to do financial services, as
permitted under the Special Economic Zones
Act, 2005 read with the Special Economic
Zones Act, 2006 and any matter considered
necessary in furtherance thereof, in
accordance with license to operate, from
Economic Zone, granted by the RBI or the
SEBI or the IRDAI. [Sub-section (c) of Sub-
Section 12: Registered  Specified IFSC private company shall have its
office of company registered office at International Financial
Services Centre located in an approved multi-
services Special Economic Zone set-up under
the Special Economic Zones Act, 2005 read
with the Special Economic Zones Act, 2006,
where it is licensed to operate, at all times
 Specified IFSC private company shall furnish
to the Registrar verification of its registered
office within a period of sixty days of its
incorporation [Sub-section (2) of Section
12].
 Notice of every change of the situation of the
registered office of Specified IFSC private
company, after the date of incorporation of
the company, shall be given to the Registrar
within sixty days of the change. [Sub-section
(4) of Section 12].
 Provided that a Specified IFSC private
company shall not change the place of its
registered office to any other place outside
the said International Financial Services
Centre [Sub-section (5) of Section 12].
Section 21: A document or proceeding requiring
Authentication of authentication by company or contracts made
documents, proceedings by or on behalf of a company may be signed by
and contracts and key managerial personnel or an officer or
any other person of the company duly
authorized by the Board in case of a Specified
IFSC private company.
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITES
Section 42: Offer or  Section 42(3) shall not apply.
invitation for  A Specified IFSC private company making an
subscription of securities offer or invitation shall allot its securities
on private placement
within ninety days from the date of receipt of
(before substitution of the
section) the application money for such securities.
 Section 42(7) shall not apply.
CHAPTER IV
Section 47: Voting rights Provision of section 47 shall not apply where
memorandum or articles of association of a
Specified IFSC private company so provide.
Section 56: Transfer and Specified IFSC private company shall deliver
transmission of securities the certificates of all securities to subscribers
after incorporation, allotment, transfer or
transmission within a period of sixty days [Sub-
Section 62: Further issue  In case of a Specified IFSC private company,
of share capital the periods lesser than those specified in the
said sub-clause shall apply if ninety percent
of the members have given their consent in
writing or in electronic mode [Clause (a) of
Sub-section (4) of Section 56].
 Specified IFSC private company can issue
shares to its employees under ESOP after
passing an ordinary resolution [Clause (b) of
Sub-section (1) of Section 62].
Section 67: Restrictions Section 67 shall not apply to a Specified IFSC
on purchase by company private companies:
or giving of loans by it for (a) In whose share capital, no other body
purchase of its shares corporate has invested any money;
(b) If the borrowings of such company from
corporate is less than twice its paid up
share capital or fifty crore rupees,
whichever is lower; and
section.
CHAPTER V
Section 73: Prohibition Shall not apply to Specified IFSC private
on acceptance of deposits company which accepts from its members,
from public monies not exceeding 100% of aggregate of the
paid-up share capital and free reserves. [Clause
(a) to (e) of Sub-section (2) of Section 73].
CHAPTER VI
REGISTRATION OF CHARGES
Section 82: Company to In case of a Specified IFSC private company,
report satisfaction of the Registrar may, on an application by the
charge company, allow registration of charge to be
made within a period of three hundred days of
such creation on payment of such additional
fees as may be prescribed [Sub-section (1) of
Section 82].
CHAPTER VII
Section 89: Declaration in The Specified IFSC private company shall make
respect of beneficial a return to the Registrar in respect of
interest in any share declaration under section 89 received by the
company within sixty days from the date of
receipt of declaration [Sub-section (6) of
Section 89].
Section 92: Annual return Sub-section (3) shall not apply to Specified
IFSC private company [Sub-section (3) of
Section 92].
Section 100: Calling of In case of a Specified IFSC private company,
extraordinary general the Board may subject to the consent of all the
meeting shareholders, convene its extraordinary general
meeting at any place within or outside India
Section 101: Notice of Shall apply to a Specified IFSC private
meeting company; unless otherwise specified in the
articles of the company.
Section 102: Statement Shall apply to a Specified IFSC private
to be annexed to notice company; unless otherwise specified in the
Section 103: Quorum for Shall apply to a Specified IFSC private
meetings company; unless otherwise specified in the
Section 104: Chairman of Shall apply to a Specified IFSC private
meetings company; unless otherwise specified in the
Section 105: Proxies Shall apply to a Specified IFSC private
company, unless otherwise specified in the
Section 106: Restriction Shall apply to a Specified IFSC private
on voting rights company; unless otherwise specified in the
Section 107: Voting by Shall apply to a Specified IFSC private
show of hands company, unless otherwise specified in the
Section 109: Demand for Shall apply to a Specified IFSC private
poll company; unless otherwise specified in the
Section 117: Resolutions A copy of every resolution or any agreement
and agreements to be shall be filled with the Registrar within sixty
filed days instead of thirty days [Sub-section (1) of
Section 117(g) shall not apply].
Section 118: Minutes of  In case of a Specified IFSC private company,
proceedings of general the minutes of every meeting of its Board of
meeting, meeting of Directors or of every committee of the Board,
Board of Directors and
to be prepared and signed in the manner at
other meeting and
resolutions passed by or before the next Board or Committee
postal ballot meeting and kept in books kept for that
purpose. [Sub-section (1) of Section 118].
 Specified IFSC private company is not
required to observe secretarial standards
with respect to general and Board meetings.
CHAPTER IX
ACCOUNT OF COMPANIES
Section 134: Financial In case of a Specified IFSC private company, if
statement, Board’s report any information listed in this Sub-section is
etc. provided in the financial statement, the
company may not include such information in
the report of the Board of Directors [Sub-
Section 135: Corporate Provisions of CSR shall not apply for a period of
social responsibility five years from the commencement of business
of a Specified IFSC private company.
Section 138: Internal Internal audit shall apply if the articles of the
audit company provide for the same.
CHAPTER X
AUDIT AND AUDITORS
Section 139:  The Specified IFSC private company shall file
Appointment of auditors a notice of appointment of auditor with the
Registrar within thirty days of the meeting in
which the auditor is appointed [Sub-section
 All provisions to sub-section (2) shall not
apply to a Specified IFSC private company.
Section 140: Removal,  In case of a Specified IFSC private company,
resignation of auditor and where, after the submission of the
giving of special notice application to the Central Government by the
company for removal of auditor, and no
decision is communicated by the Central
Government, it would be deemed that the
Central Government has approved the
application and the company shall appoint
new auditor at a general meeting within three
months from the date of expiry of sixty days
period. [Sub-section (1) of Section 140].
CHAPTER XI
Section 149: Company to  It is not necessary for a Specified IFSC
have Board of Directors private company to have a one women
director on its Board. [Sub-section (1) of
Section 149].
 Provision of resident director shall apply to a
Specified IFSC private company in respect of
financial year other than first financial year
from the date of its incorporation [Sub-
 Provision of independent director shall not
apply.
Section 152:  Consent by a person to hold the office as the
Appointment of directors director of the company shall be filed with
the Registrar within sixty days of his
appointment. [Sub-section (5) of Section
152; vide Notification G.S.R. 08(E) dated
04th January, 2017].
 Provision of rotation directors shall not apply
on Specified IFSC private company [Sub-
section (6) and (7) of Section 152].
Section 160: Right of Provision of section 160 shall apply to Specified
persons other than IFSC private company as per the articles
retiring directors to stand framed by the company.
for directorship
Section 149: Company to Provision of resident director shall apply to a
have Board of Directors Specified IFSC private company in respect of
financial years other than the first financial
year from the date of its incorporation [Sub-
Section 161: In case of Specified IFSC private company, the
Appointment of Board of appoint, any person nominated by any
additional director, institution or company or body corporate as a
alternate director and director in pursuance of the provisions of any
nominee director 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. [Sub-section (3) of
Section 161].
Section 162: Shall not apply.
Section 170: Register of For a specified IFSC private company, a return
directors and key containing particulars and documents of its
managerial personnel and directors and KMPs shall be filed with the
their shareholding Registrar within sixty days from their
appointment, and sixty days of any change
taking place. [Sub-section (2) of Section 170].
CHAPTER XII
MEETINGS OF BOARD AND ITS POWER
Section 173: Meeting of A Specified IFSC private company shall hold
the Board the first meeting of the Board of Directors
within sixty days of its incorporation and
thereafter hold at least one meeting of the
Board of Directors in each half of a calendar
year. [Sub-section (1) of Section 173].
Section 174: Quorum for A provision which says that, if the number of
meetings of Board interested directors exceeds or is equal to two-
thirds of the total strength of the BoD, the
number of directors who are not interested
directors and present at the meeting, being
minimum two, shall be the quorum during
such time, shall be applied to a Specified IFSC
private company with the exception that
meeting provided the disclosure of his interest
is made by the concerned director either prior
or at the meeting. [Sub-section (3) of Section
174].
Section 177: Audit Not required to constitute Audit Committee.
Committee
Section 178: Nomination Not required to constitute Nomination and
and Remuneration Remuneration Committee and Stakeholders
Committee and Relationship Committee.
Stakeholders Relationship
Committee
Section 179: Powers of In case of a Specified IFSC private company,
the Board the Board can exercise the powers by means of
resolutions passed at the meetings of the Board
or through resolutions passed by circulation.
Section 180: Restrictions Shall apply in case of a Specified IFSC private
on powers of Board company, unless the articles of the company
provide otherwise.
Section 184: Disclosure of  Section 184(2) shall apply to a Specified IFSC
interest by director private company; with the exception that
meeting provided the disclosure of his
interest is made by the concerned director
either prior or at the meeting [Sub-section
Section 186: Loan and  A Specified IFSC private company can make
investment by company investment through more than two layers of
investment companies [Sub-section (1) of
Section 186].
 A Specified IFSC private company can bay
loan, guarantee and acquire by way of
subscription exceeding sixty percent, of its
paid-up share capital, free reserves and
securities premium account or one hundred
percent of its free reserves and securities
premium account, whichever is more, after
passing a resolution either at the meeting of
the Board of Directors or by circulation.
 [Sub-section (c) of Sub-section (2) of
Section 186].
 In case of a Specified IFSC private company,
the Board can exercise powers of making
investment by way of loan or guarantee or
security given by the company by means of
resolutions passed at meetings of the Board
of Directors or through resolutions passed by
circulation [Sub-section (5) of Section 186].
Section 188: Related Related party can vote on a resolution to
party transactions approve any contact or arrangement which may
be entered into by the company [Sub-section
CHAPTER XII
APPOINTMENT AND REMUNERATION OR MANAGERIAL PERSONNEL
Section 196: Provision of sub-section (4) of 196 shall not
Appointment of managing apply to Specified IFSC private company [Sub-
director, whole-time section (4) of Section 196].
director or manager
Section 197: Overall Provision of section 197 shall not apply to
maximum managerial Specified IFSC private company.
remuneration and
managerial remuneration
in case of absence or
PRIVILEGES AND EXMPTIONS FOR SPECIFIED
GOVERNMENT COMPANIES
Section 2(45): “Government company” means any company in

which not less than 51% of the paid-up share capital is held:
By any State Party by the

By the Central Government Central
Government or Government and
(OR) Governments (OR) partly by one or
more State
Governments
AND
Includes a company which is a subsidiary company of such a

Government Company
Section Description
CHAPTER II
Section 4(1)(a): The name of a Government company whether
Memorandum public limited or private limited shall end with
the word “Limited” [Exemption notification
issued under section 462 vide Notification
No.G.S.R. 463(E) dated 5th June 2015].
CHAPTER IV
Section 56: Transfer and  The requirement related to submission of
transmission of securities proper instrument of transfer duly stamped,
dated, executed for registering the transfer of
shares by the company shall not apply with
respect to the bonds issued by a Government
company, provided that an intimation by the
transferee specifying his name, address and
the occupation, if any, has been delivered to
the company along with the certificate
relating to the bond; and if no such certificate
is in existence, along with the letter of
allotment of the bond.
 The requirement related to submission of
proper instrument of transfer duly stamped,
dated, executed for registering the transfer of
shares by the company shall not apply in
respect of shares held by the nominee of the
Central Government.
[Exemption notification issued under
section 462 vide Notification No.G.S.R.
463(E) dated 5th June 2015].
CHAPTER VII
Section 89: Declaration in Shall not apply.
respect of Beneficial
interest in any share
Section 90: Investigation Shall not apply.
of beneficial ownership of
shares in certain cases
Section 96(2): Annual The annual general meeting shall, be held
general meeting either at the registered office or such other
place within the city, town or village in which
the registered office of the company is situate
or such other place as the Central Government
may approve in this behalf. [Exemption
notification issued under section 462 vide
Notification No.G.S.R. 463(E) dated 5th June
2015].
CHAPTER VIII
DECLARATION AND PAYMENT OF DIVIDEND
Section 123: Declaration The provisions related to declaration of
of dividend dividend out of accumulated profits earned by
the company in the previous years and
transferred to reserves, due to inadequacy or
absence of profits in any financial year shall
not apply to a Government Company in which
the entire paid up share capital is held by the
Central Government, or by any State
Government or Governments or by the Central
Government & one or more State Governments.
Section 123: Declaration The provisions related to deposit of the amount
of dividend of dividend including interim dividend in a
scheduled bank within 5 days of declaration of
such dividend shall not apply to a Government
Company in which the entire paid up share
capital is held by the Central Government, or
by any State Government or Governments or by
the Central Government & one or more State
Governments or by or more Government
Company. [Exemption notification issued
under section 462 vide Notification
CHAPTER IX
ACCOUNTS OF COMPANIES
Section 129: Financial Shall not apply to the Government companies
Statement engaged in defence production to the extent of
application of relevant Accounting Standard on
Segment Reporting. [Exemption notification
No.G.S.R. 802(E) dated 23rd February 2018].
Section 134(3)(e): The requirement related to disclosure of
Financial statement, company’s policy on director’s appointment and
Board’s report etc. remuneration including criteria for determining
qualification, positive attributes, independence
of a director and other matters provided under
sub-section (3) of section 178 shall not apply.
Section 134(3)(p): The requirement related to disclosure of the
Financial statement, manner in which performance of Board, its
Board’s report etc. committee and Directors is evaluated shall not
apply in case the directors are evaluated by the
Government which is administratively in charge
of the company, or as the case may be, the
State Government as per its own evaluation
methodology. [Exemption notification issued
CHAPTER XI
Section 149: Company to The provisions related to maximum number of
have Board of Directors directors on the Board and the requirement of
special resolution to increase the limit of
maximum number of directors shall not apply.
Section 149: Company to The independent director should in the opinion
have Board of Directors of Ministry or Department of the Central
Government which is administratively in charge
of the company, or as the case may be, the
State Government, be a person of integrity and
possess relevant expertise and experience.
[Section 149(6)(a) read with exemption
2015].
Section 149: Company to Section 149(6)(c), Shall not apply.
have Board of Directors [Exemption notification issued under
Section 152: The provisions related to obtaining consent to
Appointment of director act as director, filing of said consent with
Registrar and providing a statement in the
explanatory statement with respect to the
appointment of independent directors shall not
apply where appointment of such director is
done by Central Government or State
Government, as the case may be. [Exemption
2015].
Section 152: The provisions related to retirement of directors
Appointment of director and adjournment of the meeting where the
vacancy of retiring director is not so filed-up
and the meeting has not expressly resolved not
to fill the vacancy shall not apply to:
(a) A Government Company, which is not a
listed company, in which not less than fifty-
one percent of paid up share capital is held
by the Central Government or by any State
Government or Governments or by the
Central Government and one or more State
Governments;
(b) A subsidiary of a Government company,
referred to in (a) above. [Exemption
notification issued under section 462
vide Notification No.G.S.R. 582(E) dated
13th June 2017].
Section 160: Right of Shall not apply to:
persons other than (a) A Government Company in which the entire
retiring directors to stand paid up share capital is held by the Central
for directorship Government or by any State Government or
Governments or by the Central Government
and one or more State Governments;
referred to in (a) above, in which the entire
paid up share capital is held by that
Government Company.
Section 162: Shall not apply to:
Appointment of directors (a) A Government Company in which the entire
to be voted individually paid up share capital is held by the Central
Government or by any State Government or
Governments or by the Central Government
Government Company.
Section 163: Option to Shall not apply to:
adopt principle of (c) A Government Company in which the entire
proportional paid up share capital is held by the Central
representation for Government or by any State Government or
appointment of directors Governments or by the Central Government
(d) A subsidiary of a Government company,
Government Company.
Section 164(2): The disqualification of directors arising due to
Disqualification for failure of the company to file financial
appointment of director statements or annual returns for any
continuous period of three financial years or 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
not apply. [Exemption notification issued
Section 170: Register of Shall not apply to a Government Company in
directors and key which the entire share capital is held by the
managerial personnel and Central Government or by any State
their shareholding Government or Governments or by the Central
Government and one or more State
Governments. [Exemption notification issued
Section 171: Member’s Shall not apply to a Government Company in
right to inspect which the entire share capital is held by the
Central Government or by any State
Government or Governments or by the Central
Government and one or more State
Governments. [Exemption notification issued
No.G.S.R. 463(E) dated 5 June 2015].
th
CHAPTER XII
Section 177: Audit The audit committee shall only recommend the
Committee remuneration of the auditors and not the
appointment and term of appointment.
[Section 177(4)(i) read with exemption
2015].
Section 178(2), (3), (4): The provisions related to identification of
Nomination and persons who are qualified to become directors,
Remuneration Committee evaluation of every directors performance,
and Stakeholders formulation of criteria for determing
Relationship Committee qualification, positive attributes and
independence of a director, recommendation of
policy related to remuneration of directors, key
managerial personnel and other employee, and
matters to be not apply to Government
company except with regard to appointment of
senior management and other employees.
Section 186: Loan and Shall not apply to:
investment by company (a) A Government company engaged in defence
production;
(b) A Government company, other than a listed
company, in case such company obtains
approval of the Ministry or Department of
the Central Government which is
administratively in charge of the company,
or as the case may be the State Government
before making any loan or giving any
guarantee or providing any security of
making any investment under the section.
Section 188: Related The provisions related to obtaining the approval
Party Transaction of shareholders by way of special resolution in
case the transactions with the related party
exceed the prescribed limits and restriction
related to voting by related party in the
shareholders meeting, shall not apply to:
(a) A Government company in respect of
contracts or arrangements entered into by it
with any other Government company.
(b) A Government company, other than a listed
company, in respect of contracts or
arrangements other than those referred to
in clause (a), in case such company obtains
approval of the Ministry or Department of
the Central Government which is
administratively in charge of the company,
or as the case may be the State Government
before entering into such contract or
arrangements. [Exemption notification
issued under section 462 vide
Notification No.G.S.R. 463(E) dated 5th
June 2015].
CHAPTER XIII
Section 196(2), (4) & (5): The following provisions related to:
Appointment of managing  Appointment of managing director, manager
director whole-time and whole-time director for a period
director or manager exceeding five year and restriction on re-
appointment before the expiry of the one year
before the expiry of term;
 Appointment of managing director, manager
and whole-time director in accordance with
Schedule V by the Board of directors subject
to the approval of general meeting and by the
Central Government in case such
appointment is at variance to the conditions
specified in Part 1 of Schedule V;
 Validity of the act of managing director,
manager and whole-time director, where the
appointment is not approved by the general
meeting shall not apply. [Exemption
Notification No.G.S.R. 463(E) dated 5th
June 2015].
Section 197: Overall Provision of Section 197 shall not apply to
maximum managerial Government Company.
Remuneration and
managerial Remuneration
in case of absence or
Section 203: The following provisions related to:

Appointment of managing  Mandatory appointment of KMP;
key managerial personnel  Appointment of KMP by way of resolution
passed by the Board of Directors;
 Whole-time KMP shall not hold office is more
than one company except in its subsidiary
company;
 Filing of vacancy in the office of whole-time
KMP within six months from the date of
vacancy. Executive Officer or manager and in
their absence, a whole-time director of the
Government Company. [Section 203(4A)
read with exemption notification issued
CHAPTER XV
COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Section 230: Power to The word “Tribunal”, wherever it occurs, the
compromise or make words “Central Government” shall be
arrangements with substituted for a Government company.
creditors and members [Exemption notification issued under
Section 232: Merger and The word “Tribunal”, wherever it occurs, the
amalgamation of words “Central Government” shall be
companies substituted for a Government company.
Section 233: Merger and The word “Tribunal”, wherever it occurs, the
amalgamation of certain words “Central Government” shall be
companies substituted for a Government company.
CHAPTER XXVIII
SPECIAL COURTS
Section 439: Offences to The court shall only take cognizance of any
be non-cognizable offence under this Act which is alleged to have
been committed by the Government company
or any officer thereof, if the complainant is a
person authorized by the Central Government
in that behalf. [Exemption notification issued
th
Note: The exceptions, modifications and adaptations provided in the

aforesaid Table shall be applicable to a Government company which
has not committed a default in filing its financial statements under
section 137 or annual return under section 92 of the Companies Act,
2013 with the Registrar.
PRIVILEGES AND EXEMPTIONS FOR NIDHI COMPANY
Section Description
CHAPTER II
Section 20: Service of In case of a Nidhi company, the document may
documents be served only on members who hold shares of
more than 1,000 rupees in face value or more
than 1% of the total paid-up share capital of
the Nidhis, whichever is less.
For other shareholders, document may be
served by a public notice in newspaper
circulated in the district where the Registered
Office of the Nidhi is situated and publication of
the same on the notice board of the Nidhi.
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITIES
Section 42: Offer or Except sub-sec (1), explanation (II) to sub-sec
invitation for (2), sub-sec (4), (6), (8), (9) and (10) the entire
subscription of securities section shall not apply. [Exemption
on private placement notification issued under section 462 vide
2015].
CHAPTER IV
Section 47(1)(b): Voting No member shall exercise voting rights on poll
rights in excess of five percent, of total voting rights of
equity shareholders. [Exemption notification
Section 62: Further issue Shall not apply.
of share capital
Section 136: Right of Shall not apply, when shares are purchased by
member to copies of the company from a member on his ceasing to
audited financial be a depositor or borrower and it shall not be
statement considered as reduction of capital under
section 66 of the Companies Act, 2013.
CHAPTER V
Section 73: Prohibition Any amount accepted by a Nidhi company in
on acceptance of deposits accordance with the rules made under section
from public 406 shall not treat as deposits. [Section 73
read with rule 2(c)(xiv) of The Companies
(Acceptance of Deposits) Rules, 2014].
CHAPTER VII
Section 108: Voting A Nidhi is not required to provide the facility to
through electronic means vote by electronic means. [Section 108 read
with rule 20(2) of The Companies
(Management and Administration) Rules,
2014].
CHAPTER VIII
DECLARATION AND PAYMENT OF DIVIDEND
Section 123(5): Any dividend payable in cash may be paid by
Declaration of dividend crediting the same to the account of the
member, if the dividend is not claimed within
30 days from the date of declaration of the
dividend. [Exemption notification issued
th
Section 127: Punishment Where the dividend payable to a member is 100

for failure to Distribute rupees or less, it shall be sufficient compliance
dividends of the provisions of the section, if the
declaration of dividend is announced in the
local language in one local newspaper of wide
circulation and announcement of the said
declaration is also displayed on the notice
board of the Nidhis for at least three months.
CHAPTER IX
Section 136: Right of In the case of members who do not individually
member to copies of or jointly hold shares of more than 1,000
audited financial rupees in face value or more than 1% of the
statement total paid-up share capital whichever is less, it
shall be sufficient compliance with the
provisions of the section if an intimation with
the provisions of the section if an intimation is
sent by public notice in newspaper circulated
in the district in which the Registered Office of
the Nidhis situated stating the date, time and
venue of Annual General Meeting and the
financial statement with its enclosures can be
inspected at the registered office of the
company, and the financial statement with
enclosures are affixed in the Notice Board of
the company and a member is entitled to vote
either in person or through proxy. [Exemption
2015].
CHAPTER XI
APPOINTMENT AND QUALIFICATION OF DIRECTORS
Section 160: Right of While nominated any person for appointed as
persons other than director under section 160, the amount of
retiring directors to stand security required to be deposited shall be “ten
for Directorship thousand rupees” instead of “one lakh rupees”.
CHAPTER XII
Section 185: Loan to Shall not apply, provided the loan is given to a
Directors etc. director or his relative in their capacity as
members and such transaction is disclosed in
the annual accounts by a note. [Exemption
2015].
CHAPTER XIII
Section 197: Overall The remuneration of a director who is neither
maximum managerial managing director nor whole-time director or
Remuneration and manager for performing special services to the
managerial Remuneration Nidhis specified in the articles of association
in case of absence or may be paid by way of monthly payment
inadequacy of profits subject to the approval of the company in
general meeting and also in the provisions of
section 197:
Provided that no approval of the company in
general meeting shall be required where:
(a) A Nidhi does not have a managing director
or a whole-time director or a manager;
(b) The remuneration payment during a
financial year to all the directors of the
Nidhi does not exceed ten percent, of the
net profits of such Nidhi or fifteen lakh
rupees, whichever is less, and
(c) A remuneration payment under clause (b)
is approved by a special resolution passed
in this behalf by the Nidhi. [Exemption
notification issued under section 462
vide Notification No.G.S.R. 465(E) dated
5th June 2015].
CHAPTER XXIV
REGISTRATION OFFICES AND FEES
Section 403: Fee for The filling fees in respect of every return of
filling etc. allotment under sub-section (9) of section 42
shall be calculated at the rate of 1 rupees for
every 100 rupees or parts thereof on the face
value of the shares included in the return but
shall not exceed the amount of normal filling
fees payable.
PRIVILEGES AND EXEMPTIONS FOR SECTION - 8
COMPANY (NON-PROFIT)
Section Description
CHAPTER I
PRELIMINARY
Section 2(24): Definition The definition of the term Company Secretary
of Company Secretary shall not apply. In section 8 company, any
person can be appointed as Company
Secretary. [Exemption notification issued
th
Section 2(68): Definition The requirement of having minimum paid-up

of Private Company share capital shall not apply. [Exemption
2015].
Section 2(71): Definition The requirement of having minimum paid-up
of Public Company share capital shall not apply. [Exemption
2015].
CHAPTER II
INFORMATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Section 4: Memorandum The name of section 8 company is not required
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. [Proviso to sub-section (1) of
section 4].
CHAPTER VII
Section 96: Annual The requirement of holding the annual general
General Meeting meeting during business hours between 9 am
to 6 pm on a day that is not a national holiday
and 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 shall not apply where the time, date and
place of each annual general meeting are
decided upon before-hand by the board of
directors having regard to the directions, if any,
given in this regard by the company in its
general meeting. [Section 96(2) read with
exemption notification issued under section
462 vide Notification No.G.S.R. 466(E) dated
5th June 2015].
Section 96: Notice of The section shall not apply as a whole except
Meeting that minutes may be recorded within thirty
days of the conclusion of every meeting in case
of companies where the articles of association
provide for confirmation of minutes by
circulation. [Exemption notification issued
th
CHAPTER IX
Section 136: Right of Section 8 company shall send a copy of the
member to copies of financial statements, including consolidated
audited financial financial statements, if any, auditor’s report
statement and every other document required by law to be
annexed or attached to the financial
statements, to every member of the company,
to every trustee for the debenture-holder of any
debentures issued by the company, and to all
persons other than such member or trustee,
being the person so entitled, not less than
fourteen days instead of twenty one days before
the date of the meeting. [Section 136(1) read
with exemption notification issued under
CHAPTER X
AUDIT AND AUDITORS
Section 143: Powers and The auditor of a section 8 company shall not
duties of auditors include CARO report with his report.
auditing standards [The Companies (Auditor’s Report) Order,
2016].
CHAPTER XI
Section 149: Company to The provision related to maximum number of
have Board of Directors directors on the Board and the requirement of
special resolution to increase the limit of
maximum number of directors shall not apply.
[Section 149(1)(b) and 1st proviso to sub-
section (1) read with exemption notification
Section 149: Company to The provision related to mandatory
have Board of Directors appointment of independent directors in listed
company and other prescribed classes of public
companies and consequently all provisions
related to independent directors under the
section shall not apply. [Section 149(4), (5),
(6), (7), (8), (9), (10), (11), (12)(i) and (13) read
with exemption notification issued under
Section 150: Manner of Shall not apply. [Exemption notification
selection of independent issued under section 462 vide Notification
directors and No.G.S.R. 466(E) dated 5th June 2015].
maintenance of databack
of independent directors
Section 152: The provision related to obtaining consent to
Appointment of Directors act as director, filing of said consent with
Registrar and providing a statement in the
explanatory statement with respect to the
appointment of independent directors shall not
apply. [Section 152(5) and 1st proviso to sub-
section (1) read with exemption notification
Section 160: Right of Shall not apply to companies whose articles
persons other than provide for election of directors by ballot.
retiring directors to stand [Exemption notification issued under
for Directorship section 462 vide Notification No.G.S.R.
Section 165: Number of Section 8 company shall not be counted while
directorships calculating the maximum number of
directorships of any person. [Section 165(1)
read with exemption notification issued
th
CHAPTER XII
Section 173: Meetings of The Board of Directors of such Companies shall
Board hold at least one meeting within every six
calendar months. [Section 173(1) read with
exemption notification issued under section
462 vide Notification No.G.S.R. 466(E) dated
5th June 2015].

Assured Success Study Plan Exam Tips

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Assured Success Study Plan Exam Tips

Uploaded by

Copyright:

Available Formats

Assured success Study Plan

For live batch students

All the best!!

Contents Page no.

Partnership Firm Company

A partner’s liability is always unlimited. The liability of shareholder may be limited

1. 1 Shubhamm Sukhlecha (CA, CS, LLM)

Limited Liability Partnership Company

Limited liability partnership means a Company means a company incorporated

The appointment of Company Secretaries is Certain companies are required to appoint

1. 2 Shubhamm Sukhlecha (CA, CS, LLM)

Hindu Undivided Family Business Company

A Hindu Undivided Family Business consists of A company consists of heterogeneous (varied

A person becomes a member of a Hindu There is no provision to that effect in the

No registration is compulsory for carrying on Registration of a company is compulsory

 The Companies Act, 2013 extends to whole of India.

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

1. 3 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 6] what is a body corporate?

Body Corporate or Corporation [Section 2(11)]: "Body corporate" or "corporation" includes a

1. 4 Shubhamm Sukhlecha (CA, CS, LLM)

1. 5 Shubhamm Sukhlecha (CA, CS, LLM)

1. 6 Shubhamm Sukhlecha (CA, CS, LLM)

 Renewal to be made only on surrender of old certificate.

2. 1 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 4] Whether Share Certificate is an Official Publication?

Que. No. 5] What shall be the penalty for personation of shareholder?

2. 2 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 7] What happens to the ESOP’s in case of death/permanent disability/resignation of

Que. No. 8] What are the advantages of issuing Bonus Shares?

Advantages of Issuing Bonus Shares:

2. 3 Shubhamm Sukhlecha (CA, CS, LLM)

Methods of buy-back [Section 68(5)]

Buy Back under section 68(1) may be :

Que. No. 10] Buy Back is prohibited in certain circumstances. Explain

2. 4 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 12] What is right of pre-emption?

Que. No. 13] How does an investor avail services of a depository?

(a) In the case of existing securities:

2. 5 Shubhamm Sukhlecha (CA, CS, LLM)

2. 6 Shubhamm Sukhlecha (CA, CS, LLM)

2. 7 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 17] What is the procedure for Rematerialisation of securities?

2. 8 Shubhamm Sukhlecha (CA, CS, LLM)

CS (Inter) - Dec 2007 (4 Marks)

CS (Executive) - Dec 2009 (4 Marks)

2. 9 Shubhamm Sukhlecha (CA, CS, LLM)

2. 10 Shubhamm Sukhlecha (CA, CS, LLM)

2. 11 Shubhamm Sukhlecha (CA, CS, LLM)

2. 12 Shubhamm Sukhlecha (CA, CS, LLM)

However, there may be exceptions to this statement:

In the case of a subscriber, no application or allotment is necessary to become a member. By virtue

3. 1 Shubhamm Sukhlecha (CA, CS, LLM)

Authentication of the Register –

Consequences if inspection is refused –

3. 2 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 6] Explain the following terms:

3. 3 Shubhamm Sukhlecha (CA, CS, LLM)

3. 4 Shubhamm Sukhlecha (CA, CS, LLM)

3. 5 Shubhamm Sukhlecha (CA, CS, LLM)

Que. No. 1] Borrowing can be classified in various categories. Comment.

Que. No. 2] Who cannot be appointed as debenture trustee?

4. 1 Shubhamm Sukhlecha (CA, CS, LLM)