Notes - Notes on Clauses - COMPANIES BILL, 2011

Notes on Clauses

Clause 1. — It has been made flexible to enforce various sections on different dates and different states. Sub-clause (4) makes position clear as to application of this Act.

Clause 2. — This clause corresponds to section 2 of the Companies Act, 1956 and defines various expressions used in the Bill.

Clause 3. — This clause corresponds to section 12 of the Companies Act, 1956 and seeks to provide minimum number of persons to form a public or private (including One Person Company) (OPC) for any lawful purpose, by subscribing their names to the memorandum. Memorandum of OPC shall indicate the name of a person who shall become member, in the event of death of the single member. However, the other person whose name would reflect in the Memorandum of OPC shall be required to give prior written consent in this regard. He shall have the right to withdraw his consent. It shall be duty of the member of the OPC to intimate the Registrar any change in name of person already mentioned in Memorandum. The companies formed under this clause may be limited by shares or limited by guarantee or an unlimited company.

Clause 4. —This clause corresponds to sections 13, 14 and 20 of the Companies Act, 1956 and seeks to provide for the requirements with respect to memorandum of a company. The memorandum shall mention the name of a company, State in which the registered office of the company is to be situated, objects for which the company is proposed to be incorporated, liability of members, etc. The memorandum of a company shall be in respective forms as per Tables A,B,C,D and E specified in Schedule I. Any provision in memorandum or articles of a company not having share capital shall not give any right to participate in the divisible profits otherwise than as member of the company.

Clause 5.— This clause corresponds to sections 26, 27, 28 and 29 of the Companies Act, 1956 and seeks to provide the contents and model of articles of association. The articles may contain an entrenchment provision also. Model articles for different types of companies shall be as per Tables F,G,H,I and J in Schedule I.

Clause 6. — This clause corresponds to section 9 of the Companies Act, 1956 and seeks to provide that the provisions of this Act shall have overriding effect on provisions contained in memorandum and articles of the company.

Clause 7.— This clause corresponds to section 33 of the Companies Act, 1956 and seeks to provide for the procedure to be followed for incorporation of a company. Memorandum and articles of association duly signed, a declaration in a prescribed form to the effect that the requirements of the Act in respect of registration have been complied with, affidavit from the subscribers to the memorandum and from the first directors, to the effect, that they are not convicted and have not been found guilty of any fraud or misfeasance, etc., under this Act during the last five years, complete details of name, address of the company, particulars of every subscriber and the persons named as first directors shall be given to the Registrar. Thereafter, the Registrar of companies shall register the company and issue a Certificate of Incorporation and allot a Corporate Identity Number. The persons furnishing false information in this connection shall be liable for punishment and the company which is registered shall be liable for punishment prescribed for fraud. Where a company has got incorporated by furnishing any false or incorrect information, the Tribunal may pass order as it thinks fit including removal of name from register or winding up of the company.

Clause 8. — This clause corresponds to section 25 of the Companies Act, 1956 and empowers the Central Government to register an association as limited company having charitable objects to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, etc., without adding to its name the words ‘Limited’, ‘Private Limited’. The profit or any income of the company shall be used for promoting the objects of the company. Payment of dividend to members is prohibited. The Central Government shall issue license on such terms and conditions as shall be prescribed by it for registration of such companies and these companies shall be subject to certain exemptions and restrictions. In the event of any violation of conditions on which a licence is issued, the Central Government may revoke the licence and order the company, after giving a reasonable opportunity of being heard, to be wound up or amalgamated with another company having similar objects. A firm may be allowed to become a member of such company. Where it is proved that the affairs of the company were conducted fraudulently, penal action for fraud shall be applicable to every officer of the company.

Clause 9. — This clause corresponds to section 34 of the Companies Act, 1956 and seeks to provide for the effect of registration of a company. The clause provides that from the date of incorporation, the subscribers become the members of the company. The company shall be a body corporate with a name, capable of exercising all the functions of an incorporated company under this Act and shall have perpetual succession and a common seal with power to acquire, hold and dispose of property, to contract, to sue and be sued, by the said name.

Clause 10. — This clause corresponds to section 36 of the Companies Act, 1956 and seeks to provide for the effect of memorandum and articles whereby the memorandum and articles shall be binding on the company and the members to the extent as if they respectively had been signed by the company and by each member. All moneys payable by members to the company shall be debt due from him to the company.

Clause 11. — This clause corresponds to section 149 of the Companies Act, 1956 and seeks to provide that the company having a share capital shall not commence business or exercise any borrowing powers unless a declaration is filed with Registrar by a director or subscriber that every subscriber to the memorandum has paid the value of shares taken by him (minimum five lakh rupees for public company and minimum one lakh rupees for private company) and the company has filed with the Registrar the verification of its registered office. The Registrar of companies may remove the name of the company from the register, if a company has not filed declaration within a period of one hundred and eighty two days of the date of incorporation and if he has reasonable cause to believe that the company is not carrying on business or operations.

Clause 12. — This clause corresponds to sections 146 and 147 of the Companies Act, 1956 and seeks to provide that from the date of incorporation and at all times thereafter, a company shall have a registered office capable of receiving and acknowledging all communications and notices addressed to it. In case of any change of the registered office, the company has to give notice to the Registrar of companies within a stipulated time. Where a company has changed its name in last two years, the company shall paint or affix its former names along with the name of the company. A private company which is OPC shall mention the words “OPC” in bracket below its name. Any change of registered office outside the local limits of any city, town or village shall be done only with the approval of members through special resolution. Any change of registered office of a company from the jurisdiction of one Registrar to another Registrar in the same state shall require confirmation of the Regional Director. The clause further provides that if a default is made in complying with the requirement in this clause the company and every officer of the company shall be liable to penalty.

Clause 13. — This clause corresponds to section 16 of the Companies Act, 1956 and seeks to provide that a company may alter the provisions of its memorandum with approval of the members through special resolution. No alteration shall have any effect unless it is registered with the Registrar. Where there is change in the name of a company, the Registrar shall issue a fresh certificate of incorporation. Any alteration of the memorandum relating to the place of registered office from one State to another shall be effective only with the approval of the Central Government on an application filed to it. A copy of the order to this effect has to be filed with the Registrar. This clause further provides that a company, which has raised money from public for one or more objects mentioned in the prospectus and is still having some unutilised money shall not change its object unless a special resolution is passed and exist option is given to dissenting shareholders.

Clause 14. — This clause corresponds to section 31 of the Companies Act, 1956 and seeks to provide for alteration of articles. A company may alter its articles including alterations having effect of conversion of a private company into a public company or a public company into private company with the approval of members through special resolution. Approval of the Tribunal shall be also required in case of conversion of a public company into a private company.. A copy of order of Tribunal shall be filed with the Registrar together with a printed copy of the altered articles.

Clause 15. — This clause corresponds to section 40 of the Companies Act, 1956 and seeks to provide that every alteration made in the memorandum or articles of a company shall be noted in every copy of the memorandum and articles of association.

Clause 16. — This clause corresponds to section 22 of the Companies Act, 1956 and seeks to empower the Central Government to give direction to the company to rectify its name if the name registered is identical with or too nearly resembles the name, by which a company in existence has been previously registered, or the name is identical with or too nearly resembling to a registered trade mark. The clause further provides that if default is made in complying with any direction given under sub-clause (1) the company and every officer who is in default shall be punishable with fine.

Clause 17. — This clause corresponds to section 39 of the Companies Act, 1956 and seeks to provide that every company shall on being so requested by a member, send copies of memorandum, and articles of association, agreement or resolution on payment of fees.

Clause 18. — This clause corresponds to section 32 of the Companies Act, 1956 and seeks to provide that a company may convert itself in some other class of company by altering its memorandum and articles of association. The conversion shall not affect any debts, liabilities, obligations or contracts incurred or entered into by the company.

Clause 19. — This clause corresponds to section 42 of the Companies Act, 1956 and seeks to provide that subsidiary company shall not hold shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void.

Clause 20. — This clause corresponds to section 51, 52 and 53 of the Companies Act, 1956 and seeks to provide for the mode in which documents may be served on the company, on the members and also on the Registrars.

Clause 21. — This clause corresponds to section 54 of the Companies Act, 1956 and seeks to provide for authentication of documents, proceedings and contracts, etc.

Clause 22. — This clause corresponds to section 47 of the Companies Act, 1956 and seeks to provide for execution of bills of exchange, hundi, promissory notes and other deeds. A company may, by writing under its common seal, authorise any person as its attorney to execute deeds on company’s behalf. Deed signed by such an attorney on behalf of the company and under his seal shall bind the company and have same effect as if it were made under its common seal.

Clause 23. — This is a new clause and seeks to provides the ways in which a public company or a private company may issue securities.

Clause 24. — This clause corresponds section 55A of the Companies Act, 1956, and seeks to provide that issue and transfer of securities and non-payment of dividend by listed companies or those companies which intend to get their securities listed shall be administered by the Securities and Exchange Board of India and in other cases shall be administered by Central Government.

Clause 25.— This clause corresponds to section 64 of the Companies Act, 1956 and seeks to provide that any document by which the offer or sale of shares or debentures to the public is made shall for all purposes be treated as prospectus.

Clause 26. — This clause corresponds to section 56 and Schedule II of the Companies Act, 1956 and seeks to provide for the matters to be stated and information to be given in the prospectus. Prospectus shall not be issued before the date of its publication. No statement of an expert shall be included in the prospectus unless he is engaged or interested in formation of a company and has given his written consent to the issue of prospectus before the delivery of a copy of the prospectus to the Registrar for registration. Registrar shall register the prospectus only after the registration requirements are complied with. Prospectus is to be issued within ninety days from the date of delivery of prospectus to the Registrar. The clause further provides that if the prospectus is issued in contravention of this clause the company and every person who is knowingly a party to the issue of such prospectus shall be punishable with fine on imprisonment.

Clause 27. — This clause corresponds to section 61 of the Companies Act, 1956 and seeks to provide a company shall not vary terms of a contract referred to in the prospectus or objects for which the prospectus was issued except by way of special resolution. Dissenting shareholders shall be given an exit offer by promoters or controlling shareholders subject to such manner and conditions as may be specified by Securities and Exchange Board of India.

Clause 28.— This is a new clause and seeks to provide for that member or members of a company, in consultation with Board of Directors, may offer a part of their holding of shares to the public. The document by which the offer of sale to the public is made shall be treated as prospectus issued by company.

Clause 29. — This clause corresponds to section 68B of the Companies Act, 1956 and seeks to provide that public company making public offer and such other class or classes of companies as may be prescribed, shall issue the securities only through dematerialised form. Other companies may issue securities in physical on in dematerialised form.

Clause 30. — This clause corresponds to section 66 of the Companies Act, 1956 and seeks to provide that where an advertisement of any prospectus of a company is published, it shall specify therein the contents of memorandum as regards to the objects, the liability of members and the amount of share capital, the names of the signatories and the number of shares subscribed by them and also its capital structure, etc.

Clause 31. — This clause corresponds to section 60A of the Companies Act, 1956 and seeks to provide that any class or classes of companies prescribed by the Securities and Exchange Board of India may file a shelf prospectus with the Registrar of companies at the stage of the first offer of securities for a period of one year. No further issue of prospectus is required in respect of a second or subsequent offer of securities included in such prospectus for a period of one year. Company shall also file information memorandum on new charges created, of any change in financial position with the Registrar of companies prior to the issue of a second or subsequent offer under shelf prospectus.

Clause 32. — This clause corresponds to section 60B of the Companies Act, 1956 and seeks to provide for issue of red-herring prospectus prior to issue of a prospectus. A company proposing to issue a red herring prospectus shall file it with Registrar at least three days prior to the opening of the subscription list and the offer. Upon closing of the offer of securities, the details of information to be filed with the Registrar and Securities and Exchange Board of India.

Clause 33. — This clause corresponds to sub-section (3) of section 56 of the Companies Act, 1956 and seeks to provide that every form of application issued for purchase of any securities of a company shall be accompanied by an abridged prospectus. If a company makes any default the company shall be punishable with fine.

Clause 34. — This clause corresponds to section 63 of the Companies Act, 1956 and provides for criminal liability for mis-statements in prospectus. The person who authorises the issue of such prospectus shall be punishable for fraud.

Clause 35. — This clause corresponds to section 62 of the Companies Act, 1956 and seeks to provide that in case any person subscribes for securities on the basis of misleading statements or inclusion or omission of any matter in the prospectus resulting in any loss or damage, the person who has authorised the issue of such prospectus or a director, promoter, whosoever is liable, shall have to compensate every person who has sustained such loss or damage.

Clause 36. — This clause corresponds to section 68 of the companies Act, 1956 and seeks to provide that such persons who fraudulently induces persons to invest money by making statement which is false, deceptive, misleading or deliberately conceals any facts, shall be punishable for fraud.

Clause 37. — This is a new clause which seeks to provide that a suit may be filed or any other action may be taken by any person, group of persons or any association of persons who have been affected by any misleading statement or the inclusion or omission of any matter in the prospectus.

Clause 38. — This clause corresponds to section 68A of the Companies Act, 1956 and seeks to provide that those persons who apply in fictitious name or makes multiple applications or otherwise induces companies to allot shares in fictitious name, shall be punishable for fraud. The clause further provides that Court may order disgorgement of any gains and seizure and disposal of such securities.

Clause 39. — This clause corresponds to section 69 of the Companies Act, 1956 prohibiting allotment of securities where the minimum amount has not been subscribed, the amount is to be refunded to all the applicants within a given time frame. This clause further provides that whenever a company having a share capital makes any allotment of securities, it shall file return of allotment with the registrar. In case of any default under sub-clause (3) and (4) the company and its officers who are in default shall be liable to fine.

Clause 40. — This clause corresponds to section 73 of the Companies Act, 1956 and seeks to provide that prospectus has to mention the name of the stock exchange where the securities are to be dealt with. Any allotment without permission of the stock exchange shall be void. All moneys received on application from the public for subscription to the securities shall be kept in a separate bank account. After allotment of shares, a return shall be filed with the Registrar. In case of default, the company and every officer of the company who is in default shall be punishable with fine or with imprisonment or with both. A company may pay commission to any person in connection with the subscription to its securities.

Clause 41. — This is a new clause which provides that a company may issue global depository receipts to be dealt with in a depository mode in any foreign country.

Clause 42. — This clause corresponds to section 67 of the Companies Act, 1956 and seeks to provide that without prejudice to provisions of section 25, a company may make an offer or invitation of securities by way of Private Placement. The clause further provides the conditions through which invitation can be made. The clause also provides that no fresh allotment to be made unless earlier allotment is completed, provisions of this Act, SCRA, SEBI shall apply to this placement. The monies payable on subscription of securities not to be made in cash. The clause further provides that company shall allot securities within 60 days from date of receipt of application money, if does not allot within 60 days then repay application money within 15 days after expiry of 60 days and if company does not pay money after the aforesaid period the company is liable to repay the money with interest at 12 % per annum from expiry of 60th day. The monies received shall be kept in separate bank account with a scheduled bank and to be used for some specific purposes only. The clause further provides that offer to be made only to such persons whose name is recorded prior to the invitation to subscribe, and complete record of offer and acceptance shall be given to Registrar within period of 30 days of circulation of private placement offer. Public at large about the offer and file a return of allotment with registrar in the prescribed manner. The clause further provides that Central Government may make rules under this clause.

Clause 43. — This clause corresponds to section 85 and seeks to provide that there shall be two kinds of share capital namely equity share capital ( includes equity shares with voting rights or equity shares with differential rights as to dividend, voting or otherwise) and preference share capital. Preferential share capital carries a preferential right with respect to payment of dividend and also for repayment of capital at the time of winding up.

Clause 44. — This clause corresponds to section 82 of the Companies Act, 1956 and seeks to provide that the shares and debentures are movable property transferable in a manner provided in the articles of a company.

Clause 45. — This clause corresponds to section 83 of the Companies Act, 1956 and seeks to provide that every share in a company having a share capital shall be distinguished by distinctive number. This clause does not apply to shares held with the depository.

Clause 46. — This clause corresponds to section 84 of the Companies Act, 1956 and seeks to provide that a certificate issued by a company shall be prima facie evidence of the title of the person to such shares. It provides the manner for issuance of duplicate share certificate and the particulars to be entered in the register of members. If a company issues duplicate shares with an intention to defraud public, penal provisions for fraud would be attracted for such violations.

Clause 47. — This clause corresponds to section 87 of the Companies Act, 1956 and seeks to provide that every member who is a holder of equity share shall have the right to vote on every resolution placed before the company. His voting right on a poll shall be in proportion to his share in the paid up equity share.

Clause 48. — This clause corresponds to section 106 and 107 of the Companies Act, 1956 and seeks to provide that where share capital is divided into different classes of shares, the rights attached to any class of shares may be varied with the written consent of the holders of not less than three-fourths of the issued shares or by special resolution. Where the holders of ten per cent. of the issued share capital did not consent to such variation, they may apply to Tribunal to have the variation cancelled. If default is made in complying with the provision of this clause the company and every officer of the company who is in default shall be punishable with fine or imprisonment or with both.

Clause 49. — This clause corresponds to section 91 of the Companies Act, 1956 and seeks to provide that where any calls for further share capital are made on the shares of a class, such call shall be made on uniform basis on all shares falling under that class.

Clause 50. — This clause corresponds to section 92 of the Companies Act, 1956 and seeks to provide that a company can accept from any member the whole or a part of the amount remaining unpaid on any shares without being called up and he will not be entitled to any voting rights on the amount paid by him unless amount has been called up.

Clause 51. — This clause corresponds to section 93 of the Companies Act, 1956 and seeks to provide that a company, if authorised by its articles, pay dividends in proportion to the amount paid up on each share.

Clause 52. — This clause corresponds to section 78 of the Companies Act, 1956 and seeks to provide that a company shall transfer the amount received by it as securities premium to securities premium account and state the means in which the amount in the account can be applied. Provisions on reduction of share capital shall apply to securities premium account. This Clause also seeks to provide the purpose for which Securities Premium Account can be applied by companies.

Clause 53. — This clause corresponds to section 79 of the Companies Act, 1956 and seeks to provide that companies are prohibited from issuing shares at a discount except in the case of issue of sweat equity shares and also provides that where a company contravenes the provisions of this clause, the company and every officer of the company in default shall be punishable with fine and imprisonment.

Clause 54. — This clause corresponds to section 79A of the Companies Act, 1956 and seeks to provide that on fulfilling certain conditions, a company may issue sweat equity shares of a class of shares already issued. The rights, limitations, restrictions and provisions applicable to equity shares shall be applicable to sweat equity shares and holders of such shares rank pari passu with other equity shareholders.

Clause 55. — This clause corresponds to section 80 and 80A of the Companies Act, 1956 and seeks to provide that no company limited by shares shall issue irredeemable preference shares. A company may issue preference shares for a period not exceeding twenty years. However, for infrastructural project preference shares can be issued for more than twenty years.

Clause 56. — This clause corresponds to section 108, 109B and 110 of the Companies Act, 1956 and seeks to provide that transfer of securities/interest of a member not to be registered except on production of instrument of transfer duly stamped, dated and executed. In case of loss of the instrument, the company may register the transfer in terms of indemnity. Where an application relates to partly paid up shares, the transfer shall not be registered unless a notice is issued to the transferee. In case of refusal of transfer of shares, transferee may appeal to the Tribunal.

Clause 57. — This clause corresponds to section 116 of the Companies Act, 1956 and seeks to provide penalty for a person who deceitfully personates the owner of any share or interest.

Clause 58. — This clause corresponds to sub-sections (1) and (2) of section 111 of the Companies Act, 1956 and seeks to provide for that if a company without sufficient cause refuses to register the transfer of shares, appeal against such refusal shall lie to the Tribunal. It is also provided that the securities of a public company, etc., are freely transferable subject to the provisions that any contract or arrangement between two or more persons shall be enforceable as contract.

Clause 59. — This clause corresponds to section 111A of the Companies Act, 1956 and seeks to provide that if the name of any person has been entered in or has been omitted from the register of members without sufficient cause, the member or the person aggrieved may appeal to the Tribunal or to a competent court outside India in respect of foreign members or debenture holders. The Tribunal may either dismiss the appeal or direct for rectification of register, transfer or transmission. The Tribunal may also direct to pay damages to the aggrieved party. The clause also provides for the provisions of this clause shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled for voting rights unless suspended by the Tribunal. The Tribunal may direct any company or a depository to set right any contravention and rectify register. The clause further provides that if any default is made in complying with the order of the Tribunal, the company and every officer who is in default shall be punishable with fine and imprisonment.

Clause 60. — This clause corresponds to section 148 of the Companies Act, 1956 and seeks to provide that where any notice, advertisement or other official publication, or any business letter, etc., 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 letters bill head or letter paper shall also state the subscribed and paid up capital and the clause further provides penalty for the company and every officer of company in default in case of any contravention.

Clause 61. — This clause corresponds to section 94 of the Companies Act, 1956 and seeks to provide that a limited company having a share capital may alter its capital clause of memorandum in its general meeting.

Clause 62. — This clause corresponds to section 81 of the Companies Act, 1956 and seeks to provide that a company having a share capital can increase its subscribed capital by the issue of further shares to its existing members by sending a letter of offer, containing certain conditions, to employees through employee’s stock option, subject to approval by special resolution, or to the general public, after having the shares valued by registered valuers. This provision does not apply to conversion of debentures or loans into shares of the company in certain cases.

Clause 63. — This is a new clause, which provides for condition and manner of issue of fully paid-up bonus shares to its members.

Clause 64. — This clause corresponds to sections 95 and 97 of the Companies Act, 1956 and seeks to provide for the companies to give notice to Registrar of alteration or increase of share capital along with an altered memorandum.

Clause 65. — This clause corresponds to section 32 of the Companies Act, 1956 and seeks to provide that an unlimited company having a share capital may be converted as a limited company by increasing the nominal amount of each share. This clause further provides that the company can not call unpaid portion of share capital except in the event of winding up.

Clause 66. — This clause corresponds to sections 100 to 105 of the Companies Act, 1956 and seeks to provide that on the confirmation by the Tribunal a limited company may provides that the Tribunal shall give notice to the Registrar, Central Government and to the SEBI and consider the representations received in this behalf. The company shall deliver a certified copy of the order of the Tribunal to the Registrar who shall issue a certificate to this effect to the company. The clause does not apply to buy back of its own securities by a company. The clause further provides that if a company does not comply with the provision of this clause the company shall be punishable with fine.

Clause 67. — This clause corresponds to section 77 of the Companies Act, 1956 and seeks to provide the restrictions on purchase by companies or giving loans to others for purchase of its own shares. This clause further provides that the company’s right to redeem any preference shares issued by it is not affected by such restriction. If a company contravenes the provision of this clause the company andevery officer in default shall be punishable with fine and imprisonment.

Clause 68. — This clause corresponds to section 77A of the Companies Act, 1956 and seeks to provide that a company may purchase its own shares out of its free reserves, the securities premium account or from the proceeds of the issue of any shares or other specified securities. The clause provides for the conditions to be fulfilled for buy-back of securities. Every buy-back should be completed within one year from the date of passing of the special resolution. A declaration of solvency has to be filed by the company to the Registrar and SEBI before the buy-back is proposed. After completion of buy-back a return has to be filed with ROC and Securities and Exchange Board of India. After buying back, the company shall physically destroy all the shares. If a company makes any default in complying with the provisions of this clause the company and every officer in default shall be punishable with fine and imprisonment.

Clause 69. — This clause corresponds to section 77AA of the Companies Act, 1956 and seeks to provide that in case of buy-back of shares out of free reserves, a sum equal to the nominal value of the shares so purchased shall be transferred to capital redemption reserve account. The said account may be applied in paying up unissued shares of the company to be issued to the company as fully paid bonus shares.

Clause 70. — This clause corresponds to section 77B of the Companies Act, 1956 and seeks to prohibit buy-back through any subsidiary company, through any investment company or through such company which has defaulted in making repayment of deposits, interest thereon, redemption of debentures, payment of dividend, etc.

Clause 71. — This clause corresponds to sections 117, 117A, 117B and 117C of the Companies Act, 1956 and seeks to provide that a company may issue debentures with an option to convert into shares, wholly or partly, at the time of redemption but cannot issue debentures with voting rights. On issue of debentures, the company shall create a Debenture Redemption Reserve Account. The company shall not issue prospectus to more than five hundred persons without appointing a debenture trustee. The duty of the debenture trustee is to protect the interest of the debenture holders and redress their grievances. This clause further provides that in the event of the failure of the company in making repayment of maturity value of debentures or to pay interest, the tribunal may, on an application, pass such order to make the payment to the matured debenture holders and interest due thereon. If any default is made in complying with the order of the Tribunal under this clause every officer of the company shall be punishable with fine or imprisonment or both.

Clause 72. — This clause corresponds to section 109A of the Companies Act, 1956 and seeks to provide that every share holder or debenture holder may appoint a nominee or a joint nominee who shall be the owner of the instrument in the event of death of the holder or the joint holder unless the nomination is varied or cancelled.

Clause 73. — This clause corresponds to section 58A of the Companies Act, 1956 and seeks to provide that no company shall invite, accept or renew deposits from public. It can do so only from members of the company subject to fulfillment of certain conditions. In case of failure to repay the deposit or interest thereon the Tribunal may order for repayment or pay for any loss or damage incurred by him.

Clause 74. — This is a new clause which seeks to provide that the deposit accepted before this Act comes into force by the company or any interest due thereon shall be repaid within one year. Extension of time for repayment may be granted by the Tribunal on an application.

Clause 75. — This is a new clause, which seeks to provide that in case the company fails to pay the deposit or any interest thereon and it is proved that the deposits had been accepted with intent to defraud the depositors, every officer who was responsible for acceptance of deposits shall be personally responsible, without any limitation of liability for all losses or damages incurred by the depositors.

Clause 76. – This is a new clause, which seeks to provide that a public company, having net worth and turnover of certain amount as provided in the clause, may accept deposits from persons other than its members subject to compliance with provisions of Clause 73 (2) and the rules, to be prescribed, after consultation with the Reserve Bank of India.

Clause 77. — This clause correspond to section 125 of the Companies Act, 1956 and seeks to provide that a company creating a charge within or outside India, shall, register the said charge with the Registrar within thirty days. The Registrar after registering the charge, shall issue a certificate of registration. The liquidator or any other creditor shall not take into account any charge created unless registered with the Registrar.

Clause 78. — This clause corresponds to section 134 of the Companies Act 1956, seeks to provide that where a company fails to register the charge, the person in whose favour the charge is created may apply to the Registrar for registration of charges.

Clause 79. — This clause corresponds to sections 127 and 135 of the Companies Act, 1956 and seeks to provide that the requirement of registering the charge shall also apply to a company acquiring any property subject to charge or any modification in terms and conditions of any charge already registered.

Clause 80. — This clause corresponds to section 126 of the Companies Act, 1956 and seeks to provide that if any person acquires a property, assets or undertaking for which a charge is already registered, it would be deemed that he has complete knowledge of charge from the date the charge is registered.

Clause 81. — This clause corresponds to section 130 of the Companies Act, 1956 and seeks to provide that the Registrar shall, in respect of every company, keep a register containing particular of charges so registered. The register shall be open for inspection on payment of fee.

Clause 82. — This clause corresponds to section 138 of the Companies Act, 1956 and seeks to provide that a company shall intimate to Registrar about the payment or satisfaction in full of any charge so registered. The Registrar shall issue notice to holder of the charge calling a show cause why payment or satisfaction should not be recorded and in case of no reply, the memorandum of satisfaction shall be entered in the register of charges.

Clause 83. — This is a new clause, which seeks to provide that the Registrar on being satisfied may enter in the register of charges that the charges are satisfied and also inform affected parties about the satisfaction in the absence of intimation from the company.

Clause 84. — This clause corresponds to section 137 of the Companies Act, 1956 and seeks to provide that if a person obtains an order for the appointment of a receiver or a person to manage the property subject to charge, he shall, within thirty days, give notice to the company and the Registrar about such an order. The person appointed as receiver shall also give notice to the company and the Registrar on his ceasing to hold such appointment.

Clause 85. — This clause corresponds to section 143 of the Companies Act, 1956 and seeks to provide that every company shall keep a register of charges at its registered office and this register shall be open for inspection during business hours by members or creditors without fee and by any other person with fee. A copy of instrument creating the charge shall also be kept at the registered office of the company along with the register of charges.

Clause 86. — This clause corresponds to section 142 of the Companies Act, 1956 and seeks to provide for the penal provisions for contravening any of the provisions of the chapter.

Clause 87. — This clause corresponds to section 141 of the companies Act, 1956 and seeks to provide that Central government on being satisfied that on omission to file with Registrar any particulars of charge created or modified, omission of registration within time period or omission to give intimation about satisfaction of charge, omission or misstatement of any particular of charge created, modified and memorandum of satisfaction or any other entry was accidental or due to inadvertence or other sufficient cause or in nature of being prejudice to creditors and shareholders, on any ground, it is just and equitable to grant relief it may on the application direct the extension of time for filling particulars of creating charge, any modification or satisfaction of charge and misstatement to be rectified. The clause further provides that the order for extension of time shall not be prejudice any right in the property before the charge is actually registered.

Clause 88. — This clause corresponds to sections 150, 151, 152 and 152A of the Companies Act, 1956 and seeks to provide that every company shall keep and maintain the register of members, register of debenture holders and register of any other security holders. This clause further provides that every register shall include an index of the name. A company, if authorised by its articles, may keep a foreign register outside India. This clause also provides that a company shall file with the Registrar, the particulars and situation of place where the register is to be kept and any changes in the situation of such place. If a company does not maintain the register under this clause the company and every officer of the company who is in default shall be punishable with the fine.

Clause 89. — This clause corresponds to section 187C of the Companies Act, 1956 and seeks to provide that a declaration is to be given to the company by any person who is a member but not holding the beneficial interest in such shares. Further, the person holding beneficial interest shall declare the nature of his interest and other particulars on those shares to the company. Any changes in the beneficial interest is also to be declared. This clause also provides that the company shall make a note of all the declaration made to it and file a return with Registrar. Where a company required to file a return under clause 403 the company and every officer of the company in default shall be punishable with fine.

Clause 90. — This clause corresponds to section 187D of the Companies Act, 1956 and seeks to provide that the Central Government may appoint one or more competent persons to investigate and report as to the beneficial ownership with regard to any share or class of shares.

Clause 91. — This clause corresponds to section 154 of the Companies Act, 1956 and seeks to provide that a company may close the register of members, debenture holders and other security holders by giving minimum seven days notice or such lesser period as may be specified by SEBI. If default is made in complying with the provisions of this clause the company and every officer of the company shall be punishable with fine.

Clause 92.— This clause corresponds to sections 159, 161 and 162 of the Companies Act, 1956 and seeks to provide that every company shall prepare an annual return containing certain particulars such as registered office, principal business activities, particulars of holding, subsidiary and associate companies, its shares, debentures and other securities, members, promoters, Key managerial personnal alongwith changes therein, penalty or punishment imposed in company directors appeals made against such penalty or punishment details of shares held by or on behalf of Foreign Institutional Investors etc. The annual return shall be signed by a director and a Company Secretary. Where there is no Company Secretary the return shall be signed by the Company Secretary in whole-time practice. In case of a listed company or the company having such paid-up capital and turnover as may be prescribed, Annual return shall be required to be certified by company secretary in practice in the prescribed form. Company secretary in practice shall be punished if he certifies other- wise than in conformity of this section or relevant rules.

Clause 93. — This is a new clause which seeks to provide that in case of change in number of shares held by promoters and top ten shareholders in a listed company, then such company shall file a return with the Registrar about such change.

Clause 94. — This clause corresponds to section 163 of the Companies Act, 1956 and seeks to provide that register of members, debenture holders and any other security holders and copies of annual returns shall be kept at the registered office and can also be kept at any place other than registered office where more than one-tenth of total number of members reside, if approved by special resolution. The clause provides for Central Government to have power to prescribe rules for the period for which the registers, returns, records etc. have to be kept. This clause further provides that the registers and the indices shall be open to inspection and any person can take extracts during any business hours without payment of any fee or can also get copies thereof with payment of fee and if it is refused the company and every officer of the company shall be punishable with fine . The Central Government may by order direct inspection of documents and to have an extract or copy of such registers by any person.

Clause 95.— This clause corresponds to section 164 of the Companies Act, 1956 and seeks to provide that the registers, indices and copies of annual return shall be prima facie evidence of any matter.

Clause 96.— This clause corresponds to section 166 of the Companies Act, 1956 and seeks to provide for that every company other than One Person Company in addition to any other meeting shall hold a general meeting as its annual general meeting. There should not be a gap of more than fifteen months between two annual general meetings. This clause further provides that first annual general meeting shall be held within a period of nine months from the closing of first financial year and within a period of six months of closure of financial years in all other cases. This clause also provides that annual general meeting shall be called on any day which is not a National Holiday and may be held either at registered office of a company or at some other place within the city, town or village where the registered office of the company is situated. The clause defines the term ‘National Holiday’. The Central Government may exempt any company from compliance of this clause subject to any conditions.

Clause 97.— This clause corresponds to section 167 of the Companies Act, 1956 and seeks to provide that in case of any default in holding annual general meeting of a company, the Tribunal on the application of any member of the company, call or direct the calling of an annual general meeting. The Tribunal may also direct that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

Clause 98.— This clause corresponds to section 186 of the Companies Act, 1956 and seeks to provide that if for any reason, it is impracticable to call a meeting of a company other than an annual general meeting, the Tribunal shall have the power to order for calling the meeting either suo motu or on the application of any director of the company or of any member of a company.

Clause 99.— This clause corresponds to section 168 of the Companies Act, 1956 and seeks to provide that if any default is made in holding a general meeting of the company or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine.

Clause 100.— This clause corresponds to section 169 of the Companies Act, 1956 and seeks to provide that the Board may call an extraordinary general meeting on its own and shall call such meeting in case of company having share capital on a request from such number of members holding not less than one-tenth of paid-up capital of the company. In case of company not having a share capital, such number of members having not less than one-tenth of the total voting power of all the members may call an extraordinary general meeting. In case the Board does not call the meeting within twenty-one days, requisitionists may call the meeting. This clause further provides that any reasonable expenses incurred by the requisitionists shall be reimbursed.

Clause 101.— This clause corresponds to sections 171 and 172 of the Companies Act, 1956 and seeks to provide that general meeting may be called by giving not less than clear twenty-one days’ notice to all members, legal representative of any deceased member or the assignee of the insolvent members, the auditors and directors in writing or through electronic mode. A shorter notice may also be given with the consent of ninety-five per cent. Of the members entitled to vote.

Clause 102.— This clause corresponds to section 173 of the Companies Act, 1956 and seeks to provide that a statement setting out all the material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting. This clause further provides for the businesses that shall be deemed to be special. In case of non-disclosure or insufficient disclosure in any statement made by promoter, director, manager or other key managerial personnel which results into any benefit for themselves or their relatives, shall have to be compensated. Penal provision has been provided for any default in compliance.

Clause 103.— This clause corresponds to section 174 of the Companies Act, 1956 and seeks to provide that unless the articles of the company provide for a larger number, in case of a public company the quorum shall depend on number of members as on the date of a meeting. In case such number is not more than one thousand, then quorum shall be five members personally present. If such number is more than one thousand but upto five thousand, then quorum shall be fifteen members personally present. If such number exceeds five thousand, then thirty members personally present shall be the quorum. In case of a private company, two members personally present shall be the quorum for a meeting. This clause further provides that if the quorum is not present within half-an-hour, the meeting shall stand adjourned for the next week at the same time and place or such other time and place as decided by the Board. However, the meeting called by requisitionist shall stand cancelled in the absence of quorum. In case of adjournment or of change of day, time and place of meeting, the company shall give not less than three days’ notice to the members. Where quorum is not present in the adjourned meeting also, the members present shall be the quorum.

Clause 104.— This clause corresponds to section 175 of the Companies Act, 1956 and seeks to provide that members shall elect one among themselves to be the chairman by show of hands. The clause further provides that if a poll is demanded on the election of the Chairman, the Chairman elected by show of hands shall continue to be the Chairman of the meeting until some other person is elected as Chairman as a result of poll.

Clause 105.— This clause corresponds to section 176 of the Companies Act, 1956 and seeks to provide that a member who is entitled to attend and vote can appoint another person as a proxy to attend and vote at the meeting on his behalf. However, proxy shall not have the right to speak at a meeting and shall not be entitled to vote except on poll. The members of prescribed class of companies shall not be entitled to appoint proxy. A person appointed as proxy shall act on behalf of prescribed number of members not exceeding fifty and prescribed number of shares. The clause also provides for the manner of appointing proxy.

Clause 106.— This clause corresponds to sections 181, 182 and 183 of the Companies Act, 1956 and seeks to provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or on which company has exercised any right or lien. No member can be prohibited from exercising his voting right on any other ground.

Clause 107.— This clause corresponds to sections 177 and 178 of the Companies Act, 1956 and seeks to provide that at general meeting, a resolution put to vote shall, unless a poll is demanded or the voting is carried out electronically, be decided on a show of hands. A declaration by the Chairman and an entry in the minutes book is conclusive evidence that resolution is passed.

Clause 108.— This is a new clause and it provides that a member in the prescribed class of companies may exercise his right to vote by electronic means.

Clause 109.— This clause corresponds to sections 179, 180, 184 and 185 of the Companies Act, 1956 and seeks to provide that before or on declaration of result of the voting on any resolution by a show of hands, the Chairman of the meeting on his own or on demand made by specified members order for a poll. This clause further provides that the demand for poll may be withdrawn by the persons who made the demand. The Chairman of the meeting shall appoint scrutinizer for observing the poll process and votes given on poll and to report thereon. The result of the poll shall be deemed to be the decision of the meeting on the resolution. The Chairman shall regulate the manner in which poll shall be taken.

Clause 110.— This clause corresponds to section 192A of the Companies Act, 1956 and seeks to provide that the Central Government may declare items of business that can be transacted only by postal ballot and also in respect of any item of business other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting may also be transacted through postal ballot.

Clause 111.— This clause corresponds to section 188 of the Companies Act, 1956 and seeks to provide that a company shall, on requisition in writing of certain number of members, give notice or circulate statement to members on proposed resolution intended to be moved in the meeting. The statement need not be circulated if the Central Government declares that the right conferred is being abused to secure needless publicity for defamatory matters. If default is made the company and every officer of the company shall be punishable with fine.

Clause 112.— This clause corresponds to section 187A of the Companies Act, 1956 and seeks to provide that President of India or the Governor of a State, if he is a member of a company, may appoint such person as he thinks fit, to act as his representative at any meeting and to vote by proxy and postal ballot as member of the company.

Clause 113.— This clause corresponds to section 187 of the Companies Act, 1956 and seeks to provide that where a body corporate is a member or a creditor including a holder of debentures of the company and it authorises any person as its representative at any meeting of the company or any class of members of the company or at any meeting of creditors of the company, such representative shall be entitled to exercise the same rights and powers including right to vote by proxy and by postal ballot on behalf of the body corporate which he represents.

Clause 114.— This clause corresponds to section 189 of the Companies Act, 1956 and seeks to provide that a resolution shall be an ordinary resolution if the votes cast in favour of the resolution exceeds the votes, if any, cast against the resolution by the members. A resolution shall be special when it is duly specified in the notice, calling the general meeting and votes cast in favour is three times the votes cast against the resolution.

Clause 115.— This clause corresponds to section 190 of the Companies Act, 1956 and seeks to provide that where a special notice is required of any resolution, notice of the intention to move such resolution is to be given by such number of members holding not less than one per cent. of total voting power or holding shares on which an aggregate sum of not less than one lakh rupees has been paid-up in such manner as may be prescribed.

Clause 116.— This clause corresponds to section 191 of the Companies Act, 1956 and seeks to provide that where a resolution is passed at an adjourned meeting, the resolution shall be treated as passed on the day it was actually passed and not on any earlier date.

Clause 117.— This clause corresponds to section 192 of the Companies Act, 1956 and seeks to provide that a copy of every resolution and an agreement in respect of matters specified therein together with a explanatory statement shall be filed with the Registrar within thirty days of its passing. The Registrar shall register the same and in case of any default, a company and every officer who is in default including the liquidator shall be liable for punishment.

Clause. 118.— This clause corresponds to sections 193, 194, 195 and 197 of the Companies Act, 1956 and seeks to provide that every company shall prepare, sign and keep minutes of proceedings of every general meeting, including the meeting called by the requisitionists and all proceedings of meeting of any class of share holders or creditors or Board of Directors or committee of the Board and also resolution passed by postal ballot within thirty days of the conclusion of every such meeting concerned. In case of meeting of Board of Directors or of a committee of Board, the minutes shall contain name of the directors present and also name of dissenting director or a director who has not concurred the resolution. The chairman shall exercise his absolute discretion in respect of inclusion or non-inclusion of the matters which is regarded as defamatory of any person, irrelevant or detrimental to company’s interest in the minutes. Minutes kept shall be evidence of the proceedings recorded in a meeting. This clause also seeks to provide that every company shall observe secretarial standards with respect to general and Board meeting. The clause also provides penalty for the company as well as the person who is found guilty of tampering with the minutes of the meeting.

Clause 119. — This clause corresponds to section 196 of the Companies Act, 1956 and seeks to provide that the minutes book of general meetings shall be kept at the registered office of a company and shall be open for inspection to members during business hours without any charge subject to such restrictions as the company may impose. A member shall be entitled for a copy of any minutes subject to payment of fees. The copy should be made available to him within seven days of his making request. Where the company refuses inspection or fails to furnish a copy of minutes within specified time, the Tribunal is empowered to direct immediate inspection or sending a copy of minutes in the matter and the company and every officer of the company shall be punishable with fine.

Clause 120. — This is a new clause which seeks to provide that any document, record, register or minute, etc., required to be kept or allowed to be inspected or copies given may be kept or inspected or copies given in the electronic form in the prescribed manner.

Clause 121.— This new clause seeks to provide that every listed company shall prepare a report on each annual general meeting including the confirmation to the effect that the meeting was convened, held and conducted as per the provision of the Act and the rules made thereunder. A copy of this report shall be filed with the Registrar. The clause also provide penalty if company fails to file the report under this clause before the expiry of the period specified under clause 403.

Clause 122.— This new clause seeks to provide that the provisions of some sections of Chapter VII i.e. Management and Administration, shall be applicable to One Person Company to the extent and the manner as provided under the clause.

Clause 123. — This clause corresponds to section 205 of the Companies Act, 1956 and seeks to provide that dividend shall be declared by a company for any financial year at a general meeting out of the profits for that year or any previous year or years arrived at after providing for depreciation or out of money provided by the Central Government or a State Government for the payment of dividend and no dividend shall be declared or paid by company from its reserves other than free reserves. However, before the declaration of any dividend certain percentage of profit may be transferred to the reserves of the company. In case of inadequacy of profits or absence of profit in any financial year subject to dividend can be declared out of accumulated profits transferred to reserves such rules as may be made by the Central Government in this behalf. The clause provides that the depreciation shall be provided in accordance with Schedule II to the Act. The Board may declare interim dividend out of profits. The amount of dividend shall be deposited in a scheduled bank in separate account within five days. Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the payment of dividend. No dividend can be declared in the event of failure to repay the deposits accepted by company. Capitalization of profits for issuing bonus shares is not prohibited.

Clause 124. — This clause corresponds to section 205A of the Companies Act, 1956 and seeks to provide that where the dividend is not paid or claimed within thirty days, the company shall, within seven days, transfer the total unpaid or unclaimed amount to a Unpaid Dividend Account to be opened by the company in a scheduled bank. The company shall prepare a statement of names and unpaid dividend and place on the web-site of the company and also on any other web-site approved by Central Government in the prescribed manner. In case of any default in transferring the amount, the company shall be liable to pay interest on the amount as has not been transferred. The amount remaining unpaid or unclaimed along with interest accrued thereon for seven years shall be transferred to Investor Education and Protection Fund. A statement of such amount is required to be sent to the Authority administrating the Fund. The shares in respect of which unpaid or unclaimed dividend has been transferred shall be transferred in the name of investor education and protection fund. Any claimant of shares so transferred shall be entitled to claim them in accordance with prescribed procedure. If company fails to comply with the provisions of this clause the company and every officer of the company who is in default shall be punishable with fine.

Clause 125.— This clause corresponds to section 205C of the Companies Act, 1956 and seeks to provide that the Central Government shall establish a fund to be called the Investor Education and Protection Fund. The Fund shall be credited with amounts specified in the clause. The Fund shall be utilised for refund of unclaimed dividends application monies due for refund and interest thereon, the promotion of investors’ education, awareness and protection, distribution of any disgorged amount among eligible and identifiable applicants who have suffered losses due to wrong actions by any person in accordance with the Court order, reimbursement of legal expenses incurred in pursuing class action. The shareholders shall be entitled to get refund of unclaimed and unpaid dividend from the fund in accordance with the rules. To administer the fund, the Central Government shall constitute an authority consisting of Chairperson and maximum of seven members. The manner of administration of the fund, appointment of Chairperson, members and chief executive officer, shall be as prescribed under rules. The Accounts of the Fund would be audited by Comptroller and Auditor General of India. The audit report along with duly certified accounts to be forwarded to the Central Government. The authority shall prepare its annual report and the annual report along with audit report given by the Comptroller and Auditor general of India to be laid before each House of Parliament by the Central Government.

Clause 126. — This clause corresponds to section 206A of the Companies Act, 1956 and seeks to provide that where any instrument of transfer of shares is not registered, the amount of dividend shall be transferred to the Unpaid Dividend Account and to keep in abeyance the rights to any right shares or bonus shares.

Clause 127.— This clause corresponds to section 207 of the Companies Act, 1956 and seeks to provide that where the dividend has been declared but has not been paid or the warrants have not been posted within thirty days of declaration, every director who is knowingly party to the default shall be punishable with imprisonment up to two years and with fine and the company shall be liable to pay interest of eighteen per cent. per annum thereon.

Clause 128.— This clause corresponds to section 209 of the Companies Act, 1956 and seeks to provide that every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statements annually which give a true and fair view of the state of the affairs of the company and its branch offices. However, if Board decides to keep books and other papers at any other place in India, a notice to this effect shall be given to the Registrar and relevant books and paper can also be kept in electronic mode. For branch offices of the company in India or outside, it shall be deemed to have complied with the provisions of this section, if summarised returns are sent periodically to the registered office. The books of accounts and other books and papers maintained by the company shall be open for inspection by any director. The inspection of books of accounts of subsidiaries companies can be done only by any person duly authorised by the board. This clause further provides that books of accounts of every company shall be kept for eight years. In case, an investigation has been ordered, the Central Government shall have power to ask the company to keep the books of accounts for a period longer than eight years. The clause also provides penalty for the Managing director, Whole time director, Chief finance officer or any other person charged by board with a duty to comply with the provisions and if he does not comply with.

Clause 129.— This clause corresponds to section 211 of the Companies Act, 1956 and seeks to provide that the financial statements shall give a true and fair view of the state of affairs of the companies in the form as may be provided for different class or classes in Schedule III and shall comply with accounting standards. Insurance companies, banking company, companies engaged in generation / supply of electricity or any other class of companies shall make financial statements in the form as has been specified in or under the Act governing such companies. The financial statement shall be laid in the annual general meeting of that financial year. In case of subsidiary companies, the company shall prepare a consolidated financial statement of the Company and all subsidiaries and lay before the annual general meeting. The Central Government shall have the power to exempt a class or classes of companies from any of the requirement of this section. The clause also provide the penalty where company contravenes the provision of this section.

Clause 130. – This is a new clause which seeks to provide for the re-opening of books of accounts and recasting its financial statements on an order by the competent court or Tribunal if it was found that earlier accounts were prepared in fraudulent manner or financial statements are not reliable due to mismanagement of affairs of the company.

Clause 131.—This is a new clause which allows the directors to prepare revised financial statement or a revised Board’s report if it appears to them that the company’s financial statement or the Board’s Report did not comply with the requirement of clause 129 or clause 134 after obtaining approval of the Tribunal. Tribunal shall take into account the representations if any, of the Central Government and of the Income Tax Department. Such revised financial statement or report shall not be prepared or filed more than once in financial year. Further, where copies of financial statement or report has been sent out to members or delivered to registrar or laid before general meeting, the revisions must be confined to specified limits provided in the Clause. Such revised financial statement or report shall be subject to rules prepared by Central Government.

Clause 132.— This clause corresponds to section 210 A of the Companies Act, 1956 and seeks to provide that the Central Government may by notification constitute the National Financial Reporting Authority to provide for matters relating to accounting and auditing standards. It shall perform the functions as specified under the clause including monitoring the compliance and overseeing the quality of service of professionals associated with ensuring the compliance with such standards. The authority shall have power to investigate the matters of misconduct committed by any member of Institute of Charted Accountants of India ,Institute of Cost and Work Accountants of India or Institute of Company Secretaries of India or any other prescribed profession. The clause further provides for the members, their qualification, terms and conditions of appointment, who shall constitute the Authority. The clause also provides maintenance of books of accounts and other books in relation of its accounts in the manner prescribed by the Central Government in consultation with Comptroller and Auditor General of India.

Clause 133.— This clause corresponds to section 211(3C) of the Companies Act, 1956 and it seeks to provide that the Central Government may, after consultation with the National Financial Reporting Authority, prescribe the accounting standards as recommended by the Institute of Charted Accountants of India for adoption by companies.

Clause 134.—This clause corresponds to sections 215, 216 and 217 of the Companies Act, 1956 and seeks to provide that the financial statement including consolidated financial statements should be approved by the Board of Directors before they are signed and submitted to auditors for their report. The auditor’s report is to be attached to every financial statement. A report by the Board of Directors containing details on the matters specified including directors responsibility statement shall be attached to every financial statement laid before company. The Board’s report and every annexure has to be duly signed. A signed copy of every financial statement shall be circulated, issued or published along with all notes or documents, the auditor’s report and Board’s report. The clause also provides for penal provisions for the company and every officer of the company in case of any contravention.

Clause 135.—This new clause seeks to provide that every company having specified networth or turnover or net profit during any financial year shall constitute the Corporate Social Responsibility Committee of the Board. The composition of the committee shall be included in the Board’s Report. The Committee shall formulate policy including the activities specified in Schedule VII. The Board shall disclose the content of policy in its report and place on website, if any of the company. The clause further provides that the Board shall endeavour to ensure that atleast two per cent of average net profits of the company made during three immediately preceding financial years shall be spent on such policy every year. If the company fails to spend such amount the Board shall give in its report the reasons for not spending.

Clause 136.— This clause corresponds to section 219 of the Companies Act, 1956 and seeks to provide that a copy of financial statement including consolidated financial statement, if any, auditor’s report along with annexure/ attachments shall be sent to every member, every trustee for the debenture holder, and all other persons who are so entitled twenty one days before the date of general meeting. A specific manner of circulation may be prescribed by the Central Government. Listed company shall place its financial statement including consolidated financial statement on its website. Every company having subsidiary company shall place separate audited accounts of each of its subsidiary on the website. Every member, trustee, etc. is allowed to inspect the financial statements and auditor’s report, etc., at the registered office of the company during any business hours. This clause also provided for penal provisions in case of any default.

Clause 137. — This clause corresponds to section 220 of the Companies Act, 1956 and seeks to provide that copies of financial statement including consolidated financial statement, if any, and all such documents which are annexed to the financial statement and adopted at the annual general meeting shall be filed with Registrar. 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 has to be filed with the Registrar. This clause further provides that in case the accounts are not adopted at annual general meeting or in adjourned meeting, the unadopted accounts shall be filed with the Registrar and the Registrar shall take them in his records as provisional till the final accounts are filed. The clause further provides penalty for company and Managing director and Chief Finance Officer of the company or any director in a company fails to comply with the provision of this clause.

Clause 138. – This is a new clause and seeks to provide that prescribed Companies shall be required to conduct internal audit of functions and activities of the company by internal auditor appointed by the company. Manner of conducting internal audit shall be prescribed by the Central Government.

Clause 139. — This clause corresponds to section 224 of the Companies Act, 1956 and seeks to provide that a company shall appoint an individual or a firm as an auditor at annual general meeting subject to his written consent who shall hold office till conclusion of sixth annual general meeting. The manner and procedure of selection committee shall be prescribed by the Central Government. A notice of appointment should be filed with the Registrar. The clause provides for the provisions for rotation of auditors. The Central Government may prescribe the manner in which the companies shall rotate their auditors. The Comptroller and Auditor-General of India appoints auditor of Government Companies. First auditor of a company, other than a Government company is appointed by Board within 30 days of registration and in case of failure to appoint, the members at a general meeting shall appoint. In case of a Government Company or a Company owned or controlled by Government Comptroller and Auditor-General of India shall appoint auditor. In case of their failure, the Board shall appoint first auditor and in case of failure members of company in general meeting will appoint.

Clause 140.— This clause corresponds to Clause 225 of the Companies Act, the Clause seeks to provide for the provisions for removal of auditor before the expiry of his terms. It provides that the auditor concerned shall be given a reasonable opportunity of being heard. The Clause provides for the provisions for resignation by auditor. If further provides that special notice shall be required for appointing a person as auditor other than a retiring auditor. The tribunal is empowered to change the auditor of a Company in case of in any fraudulent activities by auditor. An Auditor, Company Secretary in practice, or Cost Accountant in practice shall immediately report to the Central Government, if they have reason to believe in pursuance of their duties that an offence involving fraud is being committed against the company.

Clause 141. — This clause corresponds to sections 224(1B) and 226 of the Companies Act, 1956 and seeks to provide for appointment of only Chartered Accountant in practice as auditors. The firm whereof majority of partners practicing in India are qualified for appointment , may be appointed by its firm name to be auditor of a company. The clause further provides for the persons who are not eligible for appointment as an auditor of a company. The clause further provides that the members of the company may restrict the number of companies beyond which the auditor or audit firm shall not be auditor. An auditor who is disqualified subsequent to his appointment, has to vacate office.

Clause 142.— This clause corresponds to section 224 of the Companies Act, 1956 and seeks to provide for remuneration of auditors of the company. The remuneration is to be fixed in the general meeting. The clause further defines the term “remuneration”.

Clause 143.— This clause corresponds to section 227 of the Companies Act, 1956 and seeks to provide for the powers and duties of auditors. Every auditor can access books of accounts, vouchers and seek such information and explanation from the company and enquire such matters as he consider necessary including the particular matters specified in the clause. In case of financial statements, auditor of holding company can access records of subsidiaries. The auditor has to make a report to the members on that accounts, financial statement or other documents required to be laid in general meeting give a true and fair view of the state of the company’s affairs, about the company having adequate internal financial controls system in place and other specified matters . The report shall state reasons for negative and qualified remarks. The clause also provides the manner in which audit report of a Government company shall be finalised by the Comptroller and Auditor General. This clause also provides to notify the auditing standard by the Central Government. This clause further provides that the Central Government may in respect of specified class of companies direct to include a statement on specified matters in the auditor’s report. The clause also provides penalty for the auditor, cost accountant or company secretary in practice for non compliance.

Clause 144. — This is a new clause and it seeks to provide that an auditor can do such other services as approved by the Board or audit committee. The clause further provides for the services which the auditor cannot perform, directly or indirectly to the company or its holding company, subsidiary company or associate company.

Clause 145. — This clause corresponds to section 229 of the Companies Act, 1956 and seeks to provide that its auditor’s report can be signed by the person appointed as an auditor of the company. He shall also sign or certify any other document of the company.

Clause 146.— This clause corresponds to section 231 of the Companies Act, 1956 and seeks to provide that auditor or his representative, qualified to be an auditor, shall get all the notices of general meetings and shall attend the same and be heard on any part of the business concerning him as the auditor.

Clause 147. — This clause corresponds to sections 232 and 233 of the Companies Act, 1956 and seeks to provide for the penalties for contravention of provisions of the clauses 139 to 146. In case an auditor contravenes the provisions with the intention to deceive the company or its shareholders or creditors or any other person concerned, he shall be punishable with imprisonment and with fine. The Auditor is also required to refund remuneration received by him to company and for any damages to the company or to any person suffered due to misleading or incorrect statements of particulars made in his report. In case the audit is being conducted by an audit firm and the partners of audit firm acted in a fraudulent manner, then partners shall be punishable in the manner as provided in section 447 relating to fraud.

Clause 148. — This clause corresponds to section 233B of the Companies Act, 1956 and seeks to empower the Central Government after consultation with regulatory body to direct class of companies engaged in production of such goods or providing such services as may be prescribed to include in the books of accounts particulars relating to utilisation of material or labour or to such other items of cost. The Central Government may direct the audit of cost records of the company by Cost Accountant in practice appointed by Board and on such remuneration as determined by the members. The auditor conducting the cost audit shall comply with the cost auditing standards. The clause further provides that the qualifications, disqualifications, rights, duties and obligations as apply to auditor shall also be applicable to cost auditor as well. The Central Government may call for further information and explanation if necessary after considering cost audit report. The clause further defines cost auditing standards. The clause also provides penalty for the company, every officer of the company, cost auditor of the company who is in default, if any default is made in compliance with the provision.

Clause 149.— This clause corresponds to some of the provisions of sections 252, 253 and 259 of the Companies Act, 1956 and some new provisions. It seeks to provide that every company shall have a Board of Directors and prescribes the minimum and maximum number of directors. Prescribed class or classes of companies shall have atleast one women director. he clause also seeks to provide that every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty –two days in the previous calendar year. The clause further provides the minimum number of independent directors in the prescribed companies. The clause also seeks to define the terms “independent director”. The company and independent director shall abide by the provisions specified in Schedule IV. The clause seeks to provide that an independent director shall not be entitled to any remuneration, other than sitting fee, reimbursement of expenses for participation in Board meeting and profit related commission as approved by the members. The clause further provides for the provisions of rotation of independent director. Further the provision of retirement of directors by rotation shall not be applicable to appointment of independent directors. The clause also provides that an independent director or a Non-executive director who is not a promoter or key managerial personnel shall be held liable for acts of omission or commission by a company which has occurred by his knowledge.

Clause 150.— This is a new clause which seeks to provide the manner and selection of independent directors and maintenance of databank by any body, institute or association as may be notified by the Central Government. The responsibility of exercising due diligence before selecting a person from the databank shall lie with the company making such appointment. This clause also provide for prescription power to Central Government for manner and procedure of selection of independent directors.

Clause 151.— This clause corresponds to the proviso to sub-section (1) of section 252 of the Companies Act, 1956. The clause seeks to provide for appointment of a small shareholder’s director in every listed company.

Clause 152. — This clause corresponds to some of the provisions of sections 254 to 256 and 264 of the Act and some new provisions and seeks to provide the manner in which the directors including the first directors shall be appointed by a company. The clause seeks to provide that other than first directors, the directors shall be appointed in general meetings. The clause further provides that every director would obtain Director Identification Number from the Central Government before he acts as a director in any company. Every proposed director shall furnish his DIN, a declaration that he is not disqualified to become a director and a consent to hold office as director before he is appointed. Further in case of independent directors, the explanatory statement for his appointment shall provide that in the opinion of the Board, every independent directors appointed fulfils the conditions specified for his appointment. The clause also provides for the manner in which rotation of directors shall take place.

Clause153. — This clause corresponds to section 266A of the Companies Act, 1956 and seeks to provide that every individual intending to be appointed as director shall make an application for allotment of Director Identification Number (DIN) to the Central Government along with fee.

Clause 154.— This clause corresponds to section 266B of the Companies Act, 1956 and seeks to provide that the Central Government shall allot Director Identification Number (DIN) to the applicant within one month from the receipt of the application.

Clause 155.— This clause corresponds to section 266C of the Companies Act, 1956 and seeks to provide that no individual, who has already been allotted a Director Identification Number shall apply, obtain or possess another Director Identification Number.

Clause 156.— This clause corresponds to section 266D of the Companies Act, 1956 and seeks to provide that every existing director shall, intimate his Director Identification Number within one month of its receipt to the company or all companies wherein he is a director.

Clause 157.— This clause corresponds to section 266E of the Companies Act, 1956 and seeks to provide that every company shall furnish the Director Identification Numbers of all its directors to the Registrar or any other officer or authority as specified by the Central Government. The clause further provides penal provision for company if company fails to furnish Director Identification Number under sub-clause (1).

Clause 158.— This clause corresponds to section 266F of the Companies Act, 1956 and seeks to provide that every person or company, while furnishing any return, information or particulars shall mention the Director Identification Number in such return, information or particulars in case of any reference of any director.

Clause 159.— This clause corresponds to section 266G of the Companies Act, 1956 and seeks to provide that if any individual or director or a company contravenes any of the provisions, of clauses 152, 155 and 156 shall be punishable with imprisonment or fine and where the contravention is a continuing one, with a further fine.

Clause 160.— This clause corresponds to section 257 of the Companies Act, 1956 and seeks to provide that a person, not being a retiring director shall be eligible for appointment as a director at any general meeting. The clause further provides the manner in which the persons other than retiring director can stand for directorship and the company shall inform its members of the candidature of a person for the office of director.

Clause 161.— This clause corresponds to sections 260, 262 and 313 of the Companies Act, 1956 and contains some new provisions. The Board if authorised by articles may appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time. The clause further seeks to provide that the Board may, if so authorised by its articles or by a resolution passed by the company, appoint a person, to act as an alternate director for a director during his absence for a period of not less than three months from India. The clause also seeks to provide that only a person, who is qualified to be appointed as an independent director, shall be eligible to be appointed as an alternate director in place of an independent director. The clause provides that an alternate director shall not hold office larger than permissible and shall vacate the office if and when the director in whose place he has been appointed returns to India. The clause further provides that in the case of a public company or a private company which is a subsidiary of a public company, the casual vacancy may be filled by the Board of Directors at a meeting of the Board. The clause also provides that any person so appointed shall hold office 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.

Clause 162.— This clause corresponds to section 263 of the Companies Act, 1956 and seeks to provide that at a general meeting of a company, a motion for the appointment of two or more persons as directors by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it.

Clause 163. — This clause corresponds to section 265 of the Companies Act, 1956 and seeks to provide that the articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors in accordance with the principle of proportional representation.

Clause 164.— This clause corresponds to section 274 of the Companies Act, 1956 and seeks to provide the circumstances and situations under which a person shall not be eligible for appointment as a director of a company. The clause further provides for the situations in which a director shall not be eligible to be re-appointed as a director of that company or appointed in other public company for a period of five years. The clause also provides that a private company may by its articles provide for any other disqualifications in addition to those specified in this clause.

Clause 165.— This clause corresponds to section 275 of the Companies Act, 1956 and seeks to provide that no person, shall hold office as a director, in more than twenty companies at the same time. Further the clause provides for the maximum number of public companies and private companies in which a person can be appointed as director. The members may restrict the number of companies in which a director may act as director. The clause further provides penal provision for the person who accepts an appointment as director in contravention of sub-clause (1).

Clause 166.— This is a new clause and seeks to provide that a director of a company shall act in accordance with the company’s articles. It further seeks to provide for various duties of directors. In case of contravention, director is punishable with fine and if a director is found guilty of making any undue gain either to himself or to his relatives, partners or associates, he shall also be liable to pay an amount, equal to that gain, to the company. The clause further provides penalty for director of a company if he contravenes provisions of this clause.

Clause 167.— This clause corresponds to section 283 of the Companies Act, 1956 and seeks to provide the grounds and circumstances under which the office of a director shall become vacant. The clause further provides that where a person acts as a director after he is aware that the office of director held by him has become vacant on account of any disqualification, he shall be punishable imprisonment or with fine. Where all the directors vacate their offices under any of the disqualifications, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed in the general meeting. The clause also provides that a private company may provide for any other ground for vacation of office.

Clause 168. — This is a new clause and seeks to provide that a director may resign from his office by giving a notice in writing and the Board shall, on receipt of such notice take note of the same and the company shall intimate the Registrar and place such resignation in the subsequent general meeting of the company. The director shall also forward copy of resignation with reasons to Registrar. The clause further provides for the date on which the notice of resignation shall take effect. The director shall be liable for the offences occurred during his tenure.

Clause 169.— This clause corresponds to section 284 of the Companies Act, 1956 and seeks to provide that a company may, by ordinary resolution remove a director (not being a director appointed by the Tribunal under section 242). Where the company has availed itself of the option given to it under section 163 to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation, then the provisions of this section shall not apply. Special notice by specified number of members shall be required of any resolution, to remove a director or to appoint somebody in place of a director so removed. The clause further provides that the director shall be entitled to be heard on the resolution at the meeting. A vacancy created by the removal of a director may be filled by the appointment of another director in his place by the meeting at which he is removed. The clause seeks to provide that the director who was removed from office shall not be reappointed as a director by the Board of Directors.

Clause 170. — This clause corresponds to sections 303 and 307 of the Companies Act, 1956 and seeks to provide that every company shall keep at its registered office a register containing particulars of its directors and the key managerial personnel including the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate companies. A return containing particulars and documents of appointment or any change in the directors and the key managerial personnel shall be filed with the Registrar.

Clause 171.—This clause corresponds to section 304 of the Companies Act, 1956 and also seeks to provide the manner in which register kept under clause 170 shall be open for inspection. The members shall take extracts therefrom and obtain copies thereof free of cost. The clause seeks to provide that if any inspection as provided in this clause is refused, or if any copy required thereunder is not sent within thirty days from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required thereunder.

Clause 172.— This clause is a new clause which seeks to provide that where a company contravenes any of the provisions of this Chapter and no specific punishment is provided therein, the company, and every officer who is in default shall be punishable with fine.

Clause 173.— This clause corresponds to sections 285 and 286 of the Companies Act, 1956 and seeks to provide that every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and hold a minimum number of four meetings of its Board of Directors every year. The participation of directors in a meeting of the Board may be either in person or through video conferencing or such other audio visual means. The clause further provides that a notice of the meeting of Board shall be given to every director at his address registered with the company failing which officers shall be liable for penalty. The meeting of the Board may be called at shorter notice to transact urgent business where at least one independent director, if any, shall be present.

Clause 174.— This clause corresponds to sections 287 and 288 of the Companies Act, 1956 and seeks to provide that the quorum for a meeting of the Board of Directors of a company shall be one-third of its total strength or two directors, whichever is higher, and the directors participating by video conferencing or other audio visual means shall be counted for quorum. It further provides that where the number of interested directors exceeds, or is equal to, two-thirds of the total strength of the Board, the number of directors who are not interested and present at the meeting, being not less than two, shall be the quorum. The clause further provides that the meeting shall stand adjourned if it could not be held for want of quorum.

Clause 175.— This clause corresponds to section 289 of the Companies Act, 1956 and seeks to provide that no resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation unless the resolution has been circulated in draft, to all the directors, or members of the committee at their addresses registered with the company in India and has been approved by majority. The clause also provides that such a resolution shall be noted and made part of minutes at a subsequent meeting.

Clause 176. — This clause corresponds to section 290 of the Companies Act, 1956 and seeks to provide that any act done by a person as a director shall not be invalid if it is subsequently discovered that his appointment was invalid. The clause further provides that nothing shall be given validity to any act done by the director after his appointment has been noticed by the company to be invalid or to have terminated.

Clause 177. — This clause contains some provisions of section 292A of the Companies Act, 1956 and seeks to provide the requirement and manner of constituting audit committee. The Audit Committee shall consist of a minimum of three directors with independent directors forming a majority and majority of members must have ability to read and understand, financial statement. The clause further provides the functions of audit committee. The clause also provides for the establishment of vigil mechanism in every listed and prescribed class of companies. The establishment of such mechanism shall be disclosed at the website of the company and in the Board’s report of the company.

Clause 178. — This is a new clause and seeks to provide requirement and manner of constituting nomination and Remuneration committee and Stakeholders Relationship Committees of the Board. Nomination and Remuneration Committee shall consist of three or more non-executive directors as appointed by the Board out of which not less than one half shall be an independent director. Such Nomination and Remuneration Committee shall determine the company’s policies relating to the nomination and evaluation of every director’s performance. It shall also determine company’s policies relating to remuneration of the directors, key managerial personnel and other employees. The clause further provides that the Board having a combined membership of the shareholders, debenture holders, deposit holders and other security holders of more than one thousand at any time during a financial year shall constitute a Stakeholders Relationship Committee which shall consist of a chairman who is a non-executive director and such other members of the Board as decided by the Board. Stakeholders Relationship Committee shall consider and resolve the grievances of securities holders. The clause further provides punishment for company and every officer of the company in case of contravention of provisions of clause 173 and this clause.

Clause 179. — This clause corresponds to sections 291 and 292 of the Companies Act, 1956 and seeks to provide that the Board of Directors shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do except those that are to be exercised or done by the company in general meeting. The clause further specifies the powers to be exercised by the Board of Directors on behalf of the company.

Clause 180. — This clause corresponds to section 293 of the Companies Act, 1956 and seeks to provide for the powers of the Board of Directors of a company to be exercised only with the consent of the company by a special resolution.

Clause 181. — This clause corresponds to section 293(1)(e) of the Companies Act, 1956. It seeks to provide that the Board of Directors of the company may contribute to bona fide charitable and other funds. It requires prior permission of company in general meeting if such contribution exceeds certain limits specified in the clause.

Clause 182.— This clause corresponds to section 293A of the Companies Act, 1956. It seeks to provide the manner and limits up to which a company shall be able to contribute the amount to any political party or to any person for a political purpose. The clause further provides the manner in which every company shall disclose in its profit and loss account any amount so contributed by it during any financial year. This clause further provides penal provision in case company contravens the provision.

Clause 183. — This clause corresponds to section 293B of the Companies Act, 1956. It seeks to provide any person or authority authorized by Board of Directors or by general meeting may contribute such amount as it thinks fit to National Defence Fund for the purpose of national defence. Every company shall disclose the amount so contributed in its profits and loss account.

Clause 184.— This clause corresponds to section 299 of the Companies Act, 1956 and seeks to provide the manner and periodicity in which every director shall make disclosures of his concern or interest in any company or bodies corporate, firms, or other association of individuals. It also seeks to provide that every director of a company who is concerned or interested in a contract or arrangement shall disclose the nature of his concern or interest at the meeting of the Board and shall not participate in such meeting. The clause further provides that a contract or arrangement entered into by the company without disclosure or with participation by a director who is so concerned or interested shall be voidable at the option of the company. This clause further provides for penal provision for director of the company in case of any contravention.

Clause 185.— This clause corresponds to section 295 of the Companies Act, 1956 and seeks to provide the circumstances and manner in which a company shall advance any loan to any of its directors or to any other person in whom he is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person. The clause also defines the expression ‘to any other person in whom director is interested’. The clause also provides for penal provision for the company and for the director to whom the loans is advanced in case of contravention of sub-clause (1).

Clause 186. — This clause corresponds to section 372A of the Companies Act, 1956 and seeks to provide the manner in which and limits up to which a company shall give any loan or give any guarantee or provide security in connection with a loan to any other body corporate or person and acquire by way of subscription, purchase or otherwise, the securities of any other body corporate. The clause further provides that the companies as providing or associating loans shall disclose in financial statements full particulars of the loans given investments made or guarantees or securities provided. The clause also provides for the manner in which registers will be kept by a company to record transactions and the manner in which such registers shall be available for inspection. The clause exempts certain categories of companies from the provisions of this clause. For the purpose of this section, the Central Government may prescribe rules. This clause also provides for punishment for the company and every officer of the company in case of any contravention.

Clause 187. — This clause corresponds to section 49 of the Companies Act, 1956 and seeks to provide that all investments made or held by a company in any property, security or other asset shall be made and held by it in its own name. It also seeks to provide that the company may hold any shares in its subsidiary company in the name of any nominee of the company, if it is necessary to ensure that the number of members of the subsidiary company is not reduced below the statutory limit. The clause provides certain exemptions to these provisions. The clause further provides that where any securities in which investments have been made by a company are not held by it in its own name, the company shall maintain a register containing such particulars and such register shall be open for inspection. The clause also provides for punishment for company and every officer in default in case of any contravention.

Clause 188.— This clause corresponds to section 297 of the companies Act, 1956 and seeks to provide the manner in which contracts or arrangements by a company with related parties shall be made and disclosed. It provides for the matter that requires the consent of Board of Directors of company or prior approval by special resolution. It seeks to provide that every such contract or arrangement shall be referred to in the Board’s Report to the shareholders along with the justification. It provides that the member who is related party to the any contract or arrangement shall not vote on the special resolution for approval of such contract or arrangement. It also provides that where any contract or arrangement is entered into by a director or any other employee, without complying with the provisions and if it is not ratified by the approving authority, such contract or arrangement shall be voidable at the option of the Board. The clause also provides penalty for director or other employee of a company who had entered into or authorized the contract or agreement in violation of the provisions in case of listed company or unlisted company.

Clause 189.— This clause corresponds to section 301 of the Companies Act, 1956 and seeks to provide the particulars and the manner in which such particulars shall be entered by the company in the registers of contracts or arrangements in which directors are concerned or interested. It also provides that such registers shall be placed before next board meeting, after entering the particulars and signed by all the directors present at the meeting. It further provides that the register kept under this clause shall be kept at the registered office of the company and open for inspection. The register shall also be produced at every annual general meeting of the company and shall remain open and accessible during the meeting to any person having the right to attend the meeting. The clause further provides penalty for the directors who fails to comply with the provisions.

Clause 190.— This clause corresponds to section 302 of the Companies Act, 1956 and seeks to provide that every company shall keep at its registered office a copy of contract of service entered into by it with a managing or whole-time director or where such a contract is not in writing, a written memorandum setting out its terms shall be kept. It also provides that copies of such contract and the memorandum shall be open to inspection by any member. The provisions of this clause shall not apply to any private company. The clause also provides penalty for company and every officer of the company, if default is made in complying with the provisions of this clause.

Clause 191.— This clause corresponds to sections 319 and 320 of the Companies Act, 1956 and seeks to provide the circumstances and manner in which a director of a company shall receive any payment by way of compensation for loss of office or as consideration for retirement from office, etc. It further provides that where a director of a company receives payment of any amount in contravention of this clause or the proposed payment is made before it is approved by the meeting, the amount so received by the director shall be deemed to have been received by him in trust for the company. The clause further provides penalty for director of a company who receives payment at any amount in contravention of sub-clause (1).

Clause 192.— This is a new clause and seeks to provide for the manner in respect of regulation of arrangements between a company and its directors in respect of acquisition of assets for consideration other than cash. The clause provides that such arrangements shall require prior approval by a resolution in general meeting and if the director or connected person is a director of its holding company, approval is required to be obtained by passing a resolution in general meeting of the holding company. The clause also provides the circumstances when an arrangement entered into by a company or its holding company in contravention of the provisions is voidable at the instance of the company.

Clause 193.— This is a new clause and seeks to provide for the manner in which certain transactions or contracts are entered between a one person company and its sole member. It seeks to provide that where a One Person Company Limited by shares or by guarantee enters into a contract with the sole member of the company who is also director, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first Board meeting held after entering into the contract and every such contract shall be informed to the Registrar.

Clause 194.— This is a new clause and seeks to prohibit whole-time director or any of its key managerial personnel from buying certain kinds of future contracts in relation to securities of the company. It has also provided for punishment for contravention of the requirement this clause and further provides that where whole-time director or key managerial personnel acquires any securities in contravention of this clause he shall, surrender such securities and the company shall not register the same in his name in the register and if they are in dematerialised form, it shall inform the depository not to record such acquisition.

Clause 195.— This is a new clause and seeks to prohibit directors or key managerial person of the company to deal in securities of a company, or counsel, procure or communicate, directly or indirectly, about any non-public price-sensitive information to any person. This clause further provided for penal provision in case of contravention.

Clause 196.— This clause corresponds to sections 197A, 267, 269, 317, 384, 385 and 388 of the Companies Act, 1956 and seeks to provide that no company shall appoint or employ a managing director and manager at the same time and further that no company shall appoint or reappoint any person as its managing director, whole-time director or manager for a term exceeding five years at a time. It also provides that no company shall appoint any firm, body corporate, or other association as its manager. The clause also provides the disqualification in respect of appointment of managing director, whole-time director or manager. It also seeks to provide the manner in which a managing director, whole-time director or manager shall be appointed.

Clause 197.— This clause corresponds to sections 198 and 309 of the Companies Act, 1956 seeks to provide that remuneration to managerial personnel shall not exceed eleven per cent. of the net profits of the company computed in the manner as provided in clause 198. The clause further provides limit of remuneration payable to one managing director, whole- time director or manager. The limit of remuneration to the directors who are neither managing directors nor whole-time directors is provided. Further, the clause provides manner of remuneration in case of no profits or inadequate profits. Director may receive remuneration by way of fee for attending meetings of the Board or committees thereof, which shall not exceed the prescribed amount. Managerial personnel can be paid either by way of a monthly payment or at a specified percentage of the net profits, or partly by monthly payment and partly by the percentage of net profits. The clause further provides that where any director draws or receives any sum as remuneration in excess, he shall refund such sum to the company. Every listed company to disclose in its Board’s report, the ratio of remuneration of each director to median employee’s remuneration. It further provides that where any insurance is taken by a company on behalf of its managing director, whole-time director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying any of them against any liability in respect of any negligence, default, etc., for which they may be guilty, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. The clause further provides penalty if any person contravenes the provisions of this clause.

Clause 198.— This clause corresponds to section 349 of the Companies Act, 1956 and seeks to provide manner of calculation of net profits of company.

Clause 199. — This clause corresponds to section 637A of the Companies Act, 1956 and seeks to provide power of Central Government or Tribunal to accord approval, sanction, consent, confirmation in relation to any matter subject to conditions and to prescribe fees on applications.

Clause 200. — This clause corresponds to section 637AA of the Companies Act, 1956 and seeks to provide the power of the Central Government or company to fix limit with regard to remuneration within the limits specified in this Act.

Clause 201. — This clause corresponds to section 640B of the Companies Act, 1956 and seeks to provide forms of and procedure in relation to certain applications made to Central Government.

Clause 202.— This clause corresponds to section 318 of the Companies Act, 1956 and seeks to provide the circumstances and manner in which any managing or whole-time director or manager, shall be entitled to receive payment by way of compensation for loss of office, or as consideration for retirement from office or in connection with such loss or retirement. The clause also specifies the quantum of such compensation.

Clause 203.— This is a new clause and seeks to provide that every company belonging to such class or description of companies, as prescribed by the Central Government, shall have managing director, or chief executive officer or manager and in their absence, a whole time director and a Company Secretary, as whole-time key managerial personnel. It also seeks to provide that a whole-time key managerial personnel shall not hold office in more than one company (expect in a subsidiary at the same time except that of a director if company permits him in this regard. This clause further provides for punishment in case of contravention.

Clause 204. — This is a new clause and seeks to provide that every listed company and companies belonging to prescribed class or classes of companies shall annex a secretarial audit report given by a Company Secretary in practice with its Board’s report. The form of such report shall be prescribed by the Central Government. The Board in its report shall explain any qualifications or other remarks made by the Company Secretary in practice. The clause further provides penalty for the company or any officer of the company or the Company Secretary in practice.

Clause 205. — This is a new clause and seeks to provide the functions of company secretary appointed by the company. The functions are inclusive in nature and inter alia provides for ensuring compliance with the applicable secretarial standards. The clause further provides that specified functions shall not affect the duties and functions of Board of Directors, chairperson, managing director or whole-time director.

Clause 206. — This clause corresponds to sections 209A and 234 of the Companies Act, 1956 and seeks to empower Registrar to call for any information, explanation or documents and to inspect books of account of the company, etc. The company and its officers shall furnish the information or explanation in documents within the specific time. Where the Registrar is satisfied on the basis of information in documents that the business of the company is conducted in a fraudulent manner, he may order an inquiry. Further, the Central Government can also order inquiry by the Registrar or by an inspector appointed by it. The Central Government may authorize any authority to inspect books of account of specified companies. Stringent punishment for fraud has been proposed. The clause further provides penalty for the company and every officer of the company who is in default.

Clause 207. — This clause corresponds to section 209A of the Companies Act, 1956 and seeks to provide the procedure to be adopted for inspection or inquiries to be made by the Registrar or inspector. Every director, officer or employee of the company shall be bound to provide the information or the documents called for. It empowers the Registrar and inspector with the powers of the Civil Court under the Code of Civil Procedures, 1908 for discovery and production of books of account and other documents, summoning, examining on oath, inspection of books and other documents, etc. If any director wilfully disobeys the directions issued by the Registrar, punishment with imprisonment is provided for. The clause further provides penalty for the director or officer of the company who disobeys the directions issued by the Registrar.

Clause 208. — This clause corresponds to section 209A of the Companies Act, 1956 and seeks to provide that the Registrar or Inspector shall submit a report to the Central Government after inspection of books of account or the examining any person as the case may be and will include in his recommendations for further investigation, if necessary, duly supported by reasons or documents.

Clause 209. — This clause corresponds to section 234A of the Companies Act, 1956 and seeks to provide for search and seizure of documents by the Registrar if he has reasonable ground to believe that the same is likely to be destroyed, mutilated, altered, falsified, etc., with the permission of special court. The Registrar has to return the seized documents within 180 days to the company from whose custody the documents were seized.

Clause 210. — This clause corresponds to section 235 of the Companies Act, 1956 and seeks to empower the Central Government to order an investigation into the affairs of a company either on the report of Registrar or on special resolution passed by a company or in public interest. Further, this clause also empowers Court or the Tribunal to order that the affairs of a company ought to be investigated. For the purpose of investigation, the Central Government has the power to appoint Inspector(s) and seek report.

Clause 211. — This is a new clause and seeks to provide that the Central Government shall constitute Serious Fraud Investigation Office (SFIO). The SFIO will be headed by a director and will consist of experts from various disciplines. The Central Government shall also appoint a Director in the SFIO not below the rank of Joint Secretary and may also appoint such experts and other officers as it considers necessary for efficient discharge of functions.

Clause 212. — This is a new clause and seeks to provide statutory status to SFIO. It shall investigate into such cases of companies involved in frauds as may be assigned to it by Central Government. It shall have adequate powers to investigate cases referred to it. The clause further provides that the investigation report of SFIO filed with the Court for framing of charges shall be treated as a report filed by a Police Officer under the Code of Criminal Procedure, 1973. It is also proposed that SFIO shall have power to arrest in respect of certain offences of the Bill which attract the punishment for fraud. It is also being proposed that such offences shall be cognizable and the person accused of any such offence shall be released on bail subject to certain conditions as provided in this clause.

Clause 213. — This clause corresponds to section 237 of the Companies Act, 1956 and seeks to empower the Tribunal to order an investigation by the Central Government in case an application is made by at least 100 members or by member having one-tenth of total voting power or one-fifth of the members in case of company with no share capital seek an investigation into the affairs of the company or on an application suggesting fraud, misfeasance or misconduct or when any information is withheld. This clause further empowers the Central Government to appoint Inspector(s) and seek report. Stringent punishment for fraud has been proposed.

Clause 214. — This clause corresponds to sections 236 and 245 of the Companies Act, 1956 and seeks to provide that the company or the applicants have to give security for payment of the costs and expenses of the investigation and shall deposit an amount not exceeding twenty-five thousand as security towards the cost and expenses of investigation. It provides that on completion of investigation, the cost of investigation and security amount would be refundable if the investigation results into prosecution.

Clause 215. — This clause corresponds to section 238 of the Companies Act, 1956 and seeks to provide bar on firm, body corporate or other association for appointment as Inspector.

Clause 216. — This clause corresponds to section 247 of the Companies Act, 1956 and seeks to empower the Central Government to appoint one or more Inspectors to investigate and report on the membership of the company. Such an investigation shall include any arrangement or understanding observed in practice relevant for the purpose of investigation.

Clause 217. — This clause corresponds to section 240 of the Companies Act, 1956 and seeks to provide that it shall be the duty of all officer and employees of the company which is under investigation to produce books and papers and give all assistance to the Inspector. The clause provides for the powers of the Inspector. The Inspector may examine any person on oath and notes of such examination shall be taken in writing. Further the inspector shall have the powers of civil court in respect of discovery and production of documents, summoning and enforcing the attendance of persons, examining of persons on oath, inspection of books and register. In case of failure to furnish information or to appear for examination on oath, the offence is punishable with imprisonment and fine. In case of default in meeting the requirements of this section, the company and officer shall be punishable with fine and imprisonment. Further in case of conviction under this section, a director or officer shall be deemed to have vacated his office from the date of conviction and shall also be disqualified from holding office in any company. Also a court in India may also issue a letter of request to a court in a country outside India to record a statement of person who is supposed to be acquainted with the case and also to direct him to produce a document or thing in his possession pertaining to the case.

Clause 218. — This is a new clause and seeks to provide protection to the employees of the company during investigation. If a company during the pendency of any investigation into the affairs of the company or during the pendency of any proceeding against the company, proposes to discharge or suspend, terminate, change the terms of employment, dismiss or reduce in rank any employee, it shall send by post to the Tribunal previous intimation in writing of the action proposed to be taken against the concerned employee. If the Tribunal has any objection to the proposed action then it may give notice to the company. If the company does not receive within thirty days any notice of objection from the company, it may proceed to take against the employee the action proposed.

Clause 219. — This clause corresponds to section 239 of the Companies Act, 1956 and seeks to empower the Inspector to investigate the affairs of any other body corporate where such corporate body is or has been a holding company or subsidiary company or has the same Managing Director or Manager or where Board of Directors act on the directions of such company, and if necessary subject to prior approval of the Central Government, he can investigate into the affairs of such body corporate or Managing Director or Manager, etc., be done.

Clause 220. — This clause corresponds to section 240A of the Companies Act, 1956 and seeks to deal with seizure of documents by the Inspector when he has reasonable ground to believe that they are likely to be destroyed, mutilated, altered, falsified, etc. The Inspector has to return the seized documents after conclusion of investigation. It empowers the Inspector to conduct search, seize books or papers in terms of the provisions of the Code of Criminal Procedure, 1973.

Clause 221. — This is a new clause and seeks to provide that where in connection with inquiry or investigation into the affairs of the company or a reference by the Central Government or on complaint by such number of members as prescribed under sub-section (1) of section 241 or a creditor having one lakh amount outstanding against the company or any other person having reasonable ground to believe that transfer or disposal of funds, properties or assets is likely to take place which is prejudicial to the interest of company, its shareholders, creditors or in public interest, then Tribunal may order that such transfer, removal or disposal shall not take place for a maximum period of three years subject to such conditions as it may deem fit.

Clause 222. — This clause corresponds to section 250 of the Companies Act, 1956 and seeks to provide for imposition of restrictions by the Tribunal in connection with investigation under clause 187 on the securities of the company for a period not exceeding three years.

Clause 223.— This clause corresponds to sections 241 and 246 of the Companies Act, 1956 and seeks to provide for submission of the interim and final report of investigation to the Central Government. Such a report shall be in writing or printed. A copy of the report may be obtained by making application in this regard to the Central Government. Such report shall be authenticated by the seal of the company or by public officer having custody of the report in accordance with Evidence Act. Further, such a report can be submitted as evidence in any legal proceedings.

Clause 224 .— This clause corresponds to sections 242, 243 and 244 of the Companies Act, 1956 and seeks to empowers the Central Government to prosecute such person for the offence and cast duty on officers, employees or the company or body corporate to provide necessary assistance in connection with the prosecution. This clause further deals with action to be taken on the investigation report which includes winding up, misfeasance, recovery proceedings, etc. Where a investigation report states that a fraud has taken place and any director, key managerial personnel or officer has taken undue advantage or benefit, then the Central Government may file an application before Tribunal with regard to disgorgement and such director, key managerial personnel or officer may be held personally liable without any limitation of liability.

Clause 225 .— This clause corresponds to section 245 of the Companies Act, 1956 and seeks to provide that expenses of investigation shall be borne by the Central Government in the first instance. Thereafter, it shall be borne by person so convicted on a prosecution instituted or who is ordered to pay damages or restore the property to the extent he may be ordered to pay the said expenses as specified by the Court. Further, any amount which company is liable to pay shall be the first charge on the property.

Clause 226.— This clause corresponds to section 250A of the Companies Act, 1956 and seeks to provide with continuation of investigation even after voluntary winding up or application is pending before the Tribunal. Further, it provides that winding up order shall not absolve director or employee from participating in the proceedings before the Inspector or any liability as a result of findings by Inspector.

Clause 227.— This clause corresponds to section 251 of the Companies Act, 1956 and seeks to provide the rights of the Legal Advisers or bankers of the body corporate or other person, not to disclose to the Tribunal or to the Central Government or to the Registrar or to the Inspector any information as to the affairs of any of their customers, other than such company or body corporate.

Clause 228.— This is a new clause and seeks to provide that the provisions relating inspection or investigation under Chapter XIV shall also apply mutatis mutandis to inspection or investigation of foreign companies.

Clause 229.— This clause is a new clause which seeks to provide punishment for furnishing false statements, mutilation or destruction, concealment, tampering or unauthorized removal of documents during the course of inspection or investigation.

Clause 230.— This clause corresponds to section 391 of the Companies Act, 1956 and seeks to provide powers to Tribunal to make order on the application of the company or any creditor or member or in case of company being wound up, of liquidator for the proposed compromise or arrangements including debt restructuring, etc., between company, its creditors and members. An application by affidavit shall disclose all material facts relating to company, reduction of share capital, etc. Where a meeting is called, a notice shall be sent to all creditors, members, debenture holders individually or by advertisement which shall be accompanied by statement disclosing the details of compromise or arrangement. The order of the Tribunal sanctioning compromises or arrangement shall be filed with the Registrar. The accounting treatment proposed in the scheme of compromise or arrangement should not be in violation of clause 133. Takeover of companies have been included in compromises or arrangements. An aggrieved party may appeal to the Tribunal in the event of any grievances with respect to the takeover offer in case of companies other than listed companies.

Clause 231. — This clause corresponds to section 392 of the Companies Act, 1956 and seeks to provide powers to Tribunal to enforce compromise or arrangements with creditors and members as ordered under clause 230. The clause also provides that, if the Tribunal is satisfied that such compromise or arrangement cannot be implemented satisfactorily with or without modifications, and the company is unable to pay its debts as per the scheme, it may make an order for winding up of the company.

Clause 232.— This clause corresponds to section 394 of the Companies Act, 1956 and seeks to provide powers to Tribunal to order for holding meeting of the creditors or the members and to make orders on the proposed reconstruction, merger or amalgamation of companies. The clause provides for the manner and procedure in which the meeting so ordered by the Tribunal to be held. Where the Tribunal orders for transfer of any property or liability, that property or liability shall be transferred to and become the property or the liabilities of the transferee company and any property may, if the orders so directs, be freed from of any charge by virtue of compromises or arrangement. The accounting treatment proposed in the scheme of compromise or arrangement should not be in violation of clause 133. Every company shall file a certified copy of the order within thirty days with the Registrar for registration. Further the company shall also file a statement in prescribed form and time every year duly certified by a chartered accountant or cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not. The clause further provides penalty for transferor or transferee company in case transferor or transferee company contravenes provisions of the clause.

Clause 233. — This is a new clause and seeks to provide for merger or amalgamation between two small companies or between a holding company and its wholly owned subsidiary company or prescribed class or class of companies by giving a notice of the proposed scheme inviting comments or objections or suggestions by both the transferor and the transferee company and Registrar, Official Liquidator or persons affected by the scheme. The scheme is to be approved by the respective members at a general meeting holding ninety per cent of total number of shares and also by nine-tenth in value of the creditors of respective companies. Both the transferor and transferee company has to file declaration of solvency. Transferee company shall file a copy of the approved scheme with the Central Government. If the Central Government is of the opinion that such a scheme is not in public interest or in interest of the creditors, it may file an application before the Tribunal stating its objections and requesting it to consider the scheme under clause 232. On registration of the scheme, the transferor company shall be deemed to be dissolved. This clause also provides for effects of registration of the scheme with the Registrar. The Central Government may make rules for merger or amalgamation of companies.

Clause 234.— This is a new clause and seeks to provide the mode of merger or amalgamation between registered companies under the proposed legislation and companies incorporated in the jurisdictions of such countries, as notified from time to time by the Central Government, by mutual agreement. The Central Government may, in consultation with Reserve Bank make rules for the purpose of merger or amalgamation provided under this clause. This clause further provides that foreign company, subject to the prior approval of Reserve Bank, may merge or amalgamate into a company registered under this Act or vice versa and the terms and conditions of the scheme of merger or amalgamation may provide for the payment of consideration to the shareholders of the merging company in cash or partly in cash or partly in Indian Depository Receipts.

Clause 235. — This clause corresponds to section 395 of the Companies Act, 1956 and seeks to provide the manner in which the transferee company shall acquire shares of the shareholders dissenting from the scheme or contract as approved by the majority shareholders holding not less than nine-tenths in value of the shares whose transfer is involved. The transferee company shall send a copy of the notice to the transferor company together with an instrument of transfer, to be executed and pay the consideration representing the price payable by the transferee company for the shares. Such consideration received by transferor company shall be paid into separate bank account and any other consideration shall be held by company in trust and shall be disbursed to the entitled shareholders.

Clause 236. — This clause corresponds to section 395 of the Companies Act, 1956 and seeks to provide the procedure and manner in which the registered holder of at least 90 per cent. shares of a company shall notify the company of their intention to buy the remaining equity shares of minority shareholders, by virtue of an amalgamation, share exchange, conversion of securities, etc., provision for valuation of shares have been provided by a registered valuer. This clause provides for the procedure to be followed for acquiring shares held by minority shareholders.

Clause 237.— This clause corresponds to section 396 of the Companies Act, 1956 and seeks to provide power to Central Government to provide for amalgamation of two or more companies in public interest by passing an order to be notified in the Official Gazette. Every member or creditor or debenture holder shall have same interest or rights against transferee company as he had in original company and where the interest or right is less than his interest or right, he shall be entitled to compensation by transferee company. Any aggrieved person may approach Tribunal for reassessment of compensation.

Clause 238.— This clause seeks to provide mode of registration of offer of schemes or contract involving the transfer of shares. Every circular containing such offer and recommendation and containing a statement shall be accompanied by requisite information and must be registered with the Registrar before issue. The Registrar may refuse to register any such circular which does not contain the requisite information. This clause further seeks to provide that power to appeal shall lie with Tribunal in the event of refusal of registration of offer of scheme by Registrar of companies.

Clause 239.— This clause corresponds to section 396A of the Companies Act, 1956 and seeks to provide that no company which has been amalgamated or whose shares has been acquired by another company to dispose of its books of account and papers without the prior permission of the Central Government. The Government may appoint a person to examine books and papers to ascertain whether they contain any evidence of commission of offence in connection with promotion, formation, management, etc., of the company.

Clause 240.— This clause seeks to provide that the liability in respect of offences committed by the officers in default of transferor company prior to its merger or amalgamation or acquisition shall continue after such merger or amalgamation or acquisition.

Clause 241.— This clause corresponds to section 397 of the Companies Act, 1956 and seeks to provide the circumstances in which an application may be made to the Tribunal by any member of a company or by the Central Government for relief in cases of oppression and mismanagement in the affairs of the company.

Clause 242.— This clause corresponds to sections 397, 398, 402, 403 and 404 of the Companies Act, 1956 and seeks to provide for powers of Tribunal to pass an order with a view to bring to an end the matters complained of oppression and mismanagement. The clause provides that a certified copy of order of Tribunal shall be filed with the Registrar. The Tribunal may make any interim order as it thinks just and equitable. Where Tribunal’s order require alteration of articles, a certified copy of the same is to be filed with the Registrar. The company shall be punishable with fine.

Clause 243. — This clause corresponds to section 407 of the Companies Act, 1956 and seeks to provide for consequence of termination or modifications of certain agreements by an order passed by the Tribunal. Such order shall not give rise to any claims against the company by any person for damages or compensation for loss of office. Further, no such managing director or director or manager whose agreement is so terminated shall be appointed as such for a period of five years from the date of the order without the leave of the Tribunal. Any of the above person who acts in contravention of this clause shall be punishable with imprisonment or fine or with both.

Clause 244.— This clause corresponds to section 399 of the Companies Act, 1956 and seeks to provide that the members of a company not less than one hundred in number or not less than one-tenth of the total number of members whichever is less or any member(s) holding not less than one-tenth of the issued share capital and in case of company without share capital not less than one-fifth of the total number of its members can file an application to the Tribunal for relief in cases of oppression and mismanagement. The clause further provides that the Tribunal may waive all or any of the requirements specified therein.

Clause 245. — This is a new clause and seeks to provide that in case of company having a share capital not less than one hundred members of the company or not less than such present as may be prescribed of the total number of its members, whichever is less, or any member or members holding not less than such present as may be prescribed of the issued share capital of the company, and in the case of a company not having a share capital, not less than one-fifth of the total number of its members or may file an application before the Tribunal if they are of the opinion that the management or control of the affairs of company are being conducted in a manner prejudicial to the interests of the company or its members or depositors to restrain the company from oppression or mismanagement. The order passed by the Tribunal shall be binding on the company and all its members, depositors, auditor including audit firm or expert or consultant or advisor or any other person associated with the company. Stringent imprisonment and fine shall be imposed on the company in case of default. An application for class action may also be filed by a person or association of persons representing the affected persons.

Clause 246. — This clause seeks to provide that clauses 337 to 341(both inclusive) relating to power to punish for contempt of the Tribunal, etc., shall apply in relation to a fraudulent application made to the Tribunal for oppression and mismanagement.

Clause 247.— This is a new clause and seeks to provide that valuation in respect of any property, stocks, shares, debentures, securities, goodwill or any other assets or net worth of a company or its assets or liabilities shall be valued by a person having such qualification and experience and registered as a valuer, in accordance with such rules as may be prescribed. Such valuer shall be appointed by the audit committee or in its absence by the Board of Directors of the company. The valuer shall make an impartial valuation and exercise due diligence in making valuation. Stringent fine and punishment for fraud by valuer has been provided for.

Clause 248. — This clause corresponds to section 560 of the Companies Act, 1956 and seeks to provide the circumstances under which the Registrar shall send a notice to the company and all the directors of the company of his intention to remove the name of the company from the register of companies. The clause further provides that a company may by a special resolution or with the consent of seventy-five per cent. members in terms of paid up share capital may also file an application to the Registrar for removing the name of the company from the register of companies. Where company is regulated under special law, approval of the regulatory body constituted, shall also be obtained and enclosed with application. The clause further seeks to provide that at the expiry of the time mentioned in the notice, the Registrar may strike of the name of the company from the register of companies, and on the publication in the Official Gazette of this notice, the company shall stand dissolved. However, the Registrar, before passing an order shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The liability of every director, manager or other officer exercising any power of management and every member of company dissolved shall continue and may be enforced as if company had not been dissolved.

Clause 249. —This is a new clause and seeks to provide certain situations in which no application can be made by the company under sub-clause (2) of clause 248 for removing its name from the register. It further provides penalty if a company files an application in violation of the conditions prescribed. An application filed by a company for removing its name shall be withdrawn by the company or rejected by the Registrar as soon as conditions for removing name of the company from register is brought to his notice.

Clause 250. — This clause seeks to provide that where a company is dissolved it shall cease to operate as a company and the Certificate of Incorporation is deemed to have been cancelled except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

Clause 251.—This is a new clause and seeks to provide penalty in case fraudulent application is made for removal of name of the company from the register of companies with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons. Stringent punishment for fraud has been provided for. Further, the Registrar may also recommend prosecution against the persons responsible for the filing of such applications.

Clause 252.—This clause corresponds to sub-section (6) of section 560 of the Companies Act, 1956 and seeks to provide that any person, aggrieved by an order of the Registrar notifying a company as dissolved under clause 248 can file an appeal to the Tribunal within 3 years for restoration of the name of the company in the register of companies. If Tribunal is of the opinion that removal of name is not justified or in the absence of any ground, may order for restoration of the name. The company shall file the copy of order with Registrar and the Registrar shall restore the name and issue a fresh Certificate of Incorporation. The clause further provides that where the name of the company is struck off from the register of companies, the name of the company may be restored, if the Tribunal, on an application by the company, any member or creditor, is satisfied that the company was carrying on business or was in operation or otherwise and it is just to restore the name of company to the register of companies before the expiry of twenty years.

Clause 253. — This clause corresponds to section 424A of the Companies Act, 1956 and seeks to provide the manner in which a company be declared sick. In case a company fails to pay its debt, the creditor may file an application to the Tribunal for determination that the company be declared as a sick company. An applicant may at any time apply for stay of proceedings of winding up. The Tribunal may pass an order on the application. The company at its own may also file an application to the Tribunal for declaring it as a sick company. The Central Government or State Government or Reserve Bank or public financial institution or State level financial institution or scheduled Bank, if it has sufficient reasons to believe may also make a reference under this clause for determination of measures with respect to a sick company. After filing application before the Tribunal the company shall not dispose of its assets except as required in the normal course of business and the Board of Directors shall not take any steps likely to prejudice the interests of the creditors. The Tribunal shall determine whether the company is sick or not within a period of sixty days. If the Tribunal is satisfied that the company is a sick company, it may make order whether it is practicable for the company to make repayment of debts within a reasonable time and if it makes such order it shall give such time to the company as it may deem fit to make repayment of debt.

Clause 254. — This clause seeks to provide that any secured creditor of sick company or the company may make an application to the Tribunal for the determination of the measures that may be adopted with respect to the revival and rehabilitation of such company. This clause provides for certain situations under which such reference shall abate or shall not be made under this clause. Further it provides for certain conditions to be fulfilled in case the financial assets of the sick company had been acquired as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002. An application shall be accompanied by audited financial statements of the company and a draft scheme of revival and rehabilitation of the company along with fee.

Clause 255. — This is a new clause and seeks to provide that in computing the period of limitation specified for any suit or application for which an application has been made to the Tribunal under sub-clause (1) of clause 253, the period during which the stay order as provided under sub-clause (3) of clause 253, was applicable, shall be excluded.

Clause 256. — This is a new clause and seeks to provide that the Tribunal shall fix a date of hearing not later than ninety days from date of the receipt of an application and appoint an interim administrator to convene a meeting of creditors of the company to ascertain whether it is possible to revive and rehabilitate the sick company. In case, no draft scheme is filed by the company, the Tribunal may direct the interim administrator to take over the management of the company to protect and preserve the assets of the sick company and for its proper management.

Clause 257.— This is a new clause and seeks to provide that the interim administrator shall appoint a committee of creditors having not more than seven members including a representative of every class of creditor, if any. The interim administrator may direct any promoter, director or any other key managerial personnel to attend any meeting of the committee of creditors and to furnish such information as considered necessary by the interim administrator.

Clause 258.— This is a new clause and seeks to provide that if the Tribunal is satisfied with the report of the interim administrator wherein the creditors representing three-fourths in value of the amount outstanding against the sick company present and voting have resolved that it is not possible to revive and rehabilitate such company, the Tribunal shall order that the proceedings for the winding up of the company be initiated. In case where they have resolved for revival of the company or shall appoint a company administrator for the company and advice such administrator to prepare a scheme of revival and rehabilitation of the sick company. The Tribunal may, appoint an interim administrator as the company administrator.

Clause 259.— This is a new clause and seeks to provide that the interim administrator or company administrator shall be appointed by the Tribunal from a databank maintained by Central Government in a manner as may be prescribed consisting of the names of company secretaries, chartered accountants, cost accountants, or other professionals. The Tribunal may direct the company administrator to take over the assets or management of the company to assist him in the management of the company. The company administrator may engage the services of suitable experts with the approval of the Tribunal.

Clause 260.— This clause corresponds to section 424H of the Companies Act, 1956 and seeks to provide that the company administrator shall prepare a complete inventory of all assets and liabilities, all books of account, a list of shareholders and creditors, a valuation report in respect of the shares and assets in order to arrive at the reserve price for the sale of any industrial undertaking of the company or for the fixation of the lease rent or share exchange ratio, proforma accounts of company where audited accounts are not available and a list of workmen of the company.

Clause 261.— This clause corresponds to section 424D of the Companies Act, 1956 and seeks to provide that the company administrator shall prepare a scheme of revival and rehabilitation of the sick company. The clause further provides for the various measures to be considered while preparing the scheme.

Clause 262.— This clause corresponds to section 424D of the Companies Act, 1956 and seeks to provide that the scheme prepared by the company administrator will be placed before the separately convened meetings of secured and unsecured creditors of the sick company. If the scheme is approved by the unsecured and secured creditors, the company administrator shall submit the scheme before the Tribunal for sanctioning the scheme. Where the scheme relates to amalgamation of the sick company with any other company, such scheme shall be laid before the general meetings of the companies for approval by their shareholders and separately in the meetings of secured and unsecured creditors. The scheme shall be examined by the Tribunal and it may also cause the draft scheme to be published in newspapers, etc., for objections and suggestions, if any. The Tribunal may also make necessary modifications in the scheme in the light of suggestions and objections. On the receipt of the scheme, the Tribunal after satisfying that the scheme had been validly approved pass an order sanctioning such scheme. The Tribunal may review any sanctioned scheme and may make such modifications in such scheme as it may deem fit or it may also direct the company administrator to prepare a fresh scheme. The sanction accorded by the Tribunal shall be conclusive evidence and a copy of the sanctioned scheme shall be filed with the Registrar by the sick company.

Clause 263.—This clause seeks to provide that on and from the date of the coming into operation of the sanctioned scheme, its provisions shall be binding on the sick company and the transferee company and also on the shareholders, employees, creditors and guarantors of the said companies.

Clause 264.—This clause corresponds to section 424G of the Companies Act, 1956 and seeks to provide that the Tribunal for effective implementation of the scheme may authorize the company administrator to implement a sanctioned scheme. Where it is difficult to implement the scheme for any reason or the scheme fails due to non-implementation of obligations by the parties concerned, the company administrator or in his absence, the company, the secured creditors, or the transferee company in a case of amalgamation, may make an application before the Tribunal for modification of the scheme or to declare the scheme as failed, as the case may be, and may request that the company may be wound up. The Tribunal shall, pass an order for modification of the scheme or declaring the scheme as failed and pass an order for the winding up of the company. Further if the secured creditors representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the sick company have taken any measures to recover their secured debt, such application shall abate.

Clause 265.— This is a new clause and seeks to provide that if the scheme is not approved by the creditors in the manner specified, the company administrator shall submit a report to the Tribunal within fifteen days and the Tribunal shall order for the winding up of the sick company.

Clause 266.— This clause corresponds to section 424K of the Companies Act, 1956 and seeks to provides that if it appears to the Tribunal in the course of scrutiny or implementation of any scheme that any person who has taken part in the promotion, formation or management of the sick company or its undertaking has misapplied or retained, or become liable or accountable for, any money or property of the sick company; or has been guilty of any misfeasance, malfeasance or non-feasance or breach of trust in relation to the sick company, the Tribunal may by order, direct him to repay or restore the money or property, with or without interest, as it thinks just, or to contribute to the assets of the sick company. Further, if the Tribunal is satisfied on the basis of the information and evidence with respect to any person who by himself or along with others had diverted the funds or property or had managed the affairs of the company in a manner highly detrimental to the interests of the company, the Tribunal shall, direct the public financial institutions, scheduled banks and State level institutions not to provide, any financial assistance for a maximum period of ten years to such person or any firm of which such person is a partner or any company or other body corporate of which such person is a director or to disqualify a person from being appointed as a director for a period of six years.

Clause 267.— This clause corresponds to section 424L of the Companies Act, 1956 and seeks to provide the punishment if any person violates the provisions relating to the revival and rehabilitation of sick companies or any scheme, or any order, of the Tribunal or makes a false statement or gives false evidence or attempts to tamper with the records of reference or appeal filed under this Act.

Clause 268.— This is a new clause and seeks to provide that no appeal shall lie and no injunction shall be granted by any court or other authority in respect of any action taken or proposed to be taken in pursuance of any power conferred by or under this Chapter. Further, no civil court shall have any jurisdiction in respect of matter which Tribunal is empowered.

Clause 269.— This clause corresponds to section 441C of the Companies Act, 1956 and seeks to provide that a Fund to be called the Rehabilitation and Insolvency Fund shall be formed for the purposes of rehabilitation, revival and liquidation of sick companies. The clause provides for the amounts to be credited to the Fund. The Fund shall be managed by an administrator to be appointed by the Central Government. The Fund can be utilised only by the companies who contributed to the Fund to the extent to its contribution for making payment to the workmen, protecting the assets of company, etc.

Clause 270. — This clause corresponds to section 425 of the companies Act 1956. The clause seeks to provide two modes of winding up such as by the Tribunal or voluntary.

Clause 271. — This clause corresponds to sections 433 and 434 of the Companies Act, 1956. The clause seeks to provide the circumstances under which a company may be wound up by the Tribunal. The clause further seeks to define the circumstances when a company is deemed to be unable to pay its debts.

Clause 272. — This clause corresponds to section 439 of the Companies Act, 1956 and seeks to authorise the persons or Authority who can file or present a petition to the Tribunal for the winding up of a company. This clause further seeks to authorise a secured creditor, holder of any debenture, trustee for the holders of debentures and contributory to file the petition for winding up of a company. A petition filed by the company for winding up shall be accompanied by a statement of affairs of the company.

Clause 273. — This clause corresponds to section 443 of the Companies Act, 1956 and seeks to provide the time within which the Tribunal may pass an order either dismissing the petition for winding up or make an order for winding up; or make any interim order or appoint a provisional liquidator. The clause further provides that when a petition is presented on just and equitable ground, the Tribunal may refuse it if it is of opinion that any other remedy is available.

Clause 274. — This clause corresponds to section 439A of the Companies Act, 1956 and seeks to empower the Tribunal to direct the company to file its objections along with a statement of its affairs when a petition is made by a person other than the company. Failure to file the statement of affairs will forfeit the right to oppose the petition and the directors and officers as found responsible for such non-compliance, shall be punishable. The clause further seeks to provide punishment to the directors and other officers of the company who have contravened the provisions of this clause such as non-filing of the statement of affairs and audited books of account of the company. The clause further provides that the complaint may be filed before Special Court by Registrar, Provisional Liquidator, Company Liquidator or any authorised person.

Clause 275. — This clause corresponds to sections 448,449 and 450 of the Companies Act, 1956 and seeks to provide for the appointment of official liquidator or the liquidator for the purpose of winding up of a company from a panel of professionals maintained by the Central Government. Such professional must be having at least ten years of experience in company matters or such other qualifications. The clause also empowers the Central Government to remove the name of a person from the panel of professionals on the ground of misconduct, fraud, etc., after giving him an opportunity of being heard. The clause further provides that the Tribunal shall specify the terms and conditions and fee payable to the liquidator.

Clause 276. — This is a new clause and seeks to provide the grounds on which the Tribunal may remove the provisional liquidator or the Company Liquidator as liquidator of the company on the grounds of misconduct, fraud or misfeasance. In case of death, resignation or removal, the Tribunal may transfer the work assigned to another Company Liquidator after recording the reasons in writing. The clause also authorizes the Tribunal to recover such loss or damage from the liquidator who fails to perform his duty after providing him a reasonable opportunity of being heard.

Clause 277. — This clause corresponds to sections 444 and 445 of the Companies Act,1956 and seeks to provide for the order for the tribunal for the appointment of provisional liquidator or for winding up of a company intimation to be sent to the Company Liquidator and the registrar within a period of seven days from the date of passing of such order. The registrar on receipt of orders shall make an endorsement of it in its record and notify the same in the Official Gazette. The order of the Tribunal would be deemed to be a notice of discharge to the officers, employees and workmen of the company except when the business of the company is continued.

Clause 278. — This clause corresponds to section 447 of the Companies Act, 1956 and seeks to provide that the winding up order shall operate in favour of all the creditors and contributories of the company.

Clause 279. — This clause corresponds to section 446 of the Companies Act, 1956 and seeks to provide that on passing of winding up order or appointment of provisional liquidator, all suits, etc., by or against the company shall not be commenced or if pending, to be proceeded, except with the leave of the Tribunal. However, this opinion shall not apply to any proceedings pending in appeal before the Supreme Court or a High Court.

Clause 280. — This clause seeks to provide the jurisdiction of Tribunal to entertain or dispose of any suit or proceedings, any claim by or against the company and also to entertain or dispose of any question of law or fact or any other matter arising out of or in relation to winding up of the Company.

Clause 281. — This clause corresponds to section 455 of the Companies Act,1956 and seeks to provide for submission of report containing the particulars of the nature and details of assets, liabilities, debts, etc., of the company, amount of issued, subscribed and paid-up capital, etc., to the Tribunal by Company Liquidator within sixty days from the date of order of the Tribunal. The clause also seeks to provide that the Company Liquidator shall include in his report the manner in which the company was promoted or formed and whether any fraud has been committed by any person in its promotion or formation. The Company Liquidator shall also report on the viability of the business of the company or the steps which are necessary for maximizing the values of the assets of the company. The clause also entitles the creditor or a contributory of the company to inspect the report submitted and to take copies thereof or extract therefrom on payment of the fee.

Clause 282. — This is a new clause and seeks to empower the tribunal to consider the report of Company Liquidator and fix a time limit or revise the time limit already fixed within which the entire proceedings shall be completed and the company dissolved. The clause further seeks to empower the Tribunal after hearing the Company Liquidator, Creditors or Contributories, to order for sale of assets of the company or appoint sale committee to assist the Company Liquidator in sale. The clause seeks to empower the Tribunal, to order for investigation where a report is received from the Company Liquidator or the Central Government or any person that a fraud has been committed in respect of the company and also order such steps as may be necessary to protect, preserve or enhance the value of the assets of the company.

Clause 283. — This clause corresponds to section 456 of the Companies Act, 1956 and seeks to cast duty upon provisional liquidator or the liquidator on the order of the Tribunal to take into his custody all the property, effects and actionable claims to which the company to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the company. This clause further provides that all the property and affects of the company shall be deemed to be in the custody of the tribunal from the date of the order for the winding up of the company. This clause also provides for filling of an application by the company liquidator seeking directions of the Tribunal with regard to surrender or transfer any money, property, books and papers by any trustee, receiver, banker, agent, officer of other employee to the company in liquidation.

Clause 284. — This is a new clause and seeks to provide for co-operation by the promoters, directors, officers and employees, past and present, of the company to the company liquidator in discharge of his functions and duties. This clause further seeks to provide that if any of the aforesaid person fails to discharge his obligations, he shall be punishable with imprisonment or with fine or with both.

Clause 285. — This clause corresponds to section 467 of the Companies Act,1956 and seeks to provide for settlement of list of contributories, rectification of register of members, to make calls on or adjust the rights of contributories, etc. This clause further provides for adoption of procedure by the Tribunal while settling the list and rights of contributories.

Clause 286. — This is a new clause and seeks to put obligations on directors and managers of limited company whose liability is unlimited and seeks to provide that such a director or manager, shall, in addition to his liability to contribute as an ordinary member, be liable to make further contribution as if he were at the commencements of winding up a member of an unlimited company.

Clause 287. — This clause corresponds to section 464 and 465 of the companies Act, 1956 and seeks to provide for the constitution of advisory committee to advice the company liquidator and to report to the tribunal on matters as the tribunal may direct. This clause further provides the maximum number of members not more than twelve, being creditors or contributories or other persons as directed by tribunal, who can become members of the committee. The clause also seeks to direct Company Liquidator to convene a meeting of the creditors and contributories to ascertain the composition of the advisory committee. It finally seeks to provide that the meeting of advisory committee shall be chaired by the company Liquidator.

Clause 288. — This is a new clause and seeks to provide that the Company Liquidator shall make quarterly reports to the tribunal with respect to the progress of the winding up of the company. The clause further provides that the tribunal may, on an application by the Company Liquidator, review the orders made by it and make such modifications as it thinks fit.

Clause 289. — This clause corresponds to section 466 of the companies Act,1956 and seeks to empower the tribunal to stay the proceedings of winding up for such time not exceeding one hundred and eighty days and on after satisfying itself that it is fair and just to revive and rehabilitate the company. The clause also provides that before making an order, the Tribunal may require the Company Liquidator to furnish a report to any relevant facts or matter. The clause further cast duty upon the Company Liquidator to forward a copy of every order to the registrar who shall make an endorsement of the order in the books and records relating to the company.

Clause 290. — This clause corresponds to section 457 of the companies Act,1956 and seeks to provide the powers exercisable by the Company Liquidator viz. power to carry on the business of the company, to sell the movable and immovable property of the company, to defend or institute any suit, to raise any money on the security of assets of the company, etc. The clause finally provides that the Company Liquidator shall perform the duties as may be specified by the Tribunal.

Clause 291. — This clause corresponds to section 459 of the Companies Act, 1956 and seeks to allow the Company Liquidator, with the sanction of the tribunal, to appoint charted accountants or company secretaries or cost accountants or legal practitioners or such other professionals as may be necessary to assist him in the performance of his duties and functions. The clause further seeks for disclosure by the person to the tribunal of any conflict of interest or lack of independence in respect of his appointment.

Clause 292. — This clause corresponds to section 460 of the Companies Act, 1956 and seeks to allow Company Liquidator to administer the distribution of assets among its creditors in accordance with the directions given by the resolution of the creditors or contributories at any general meeting or by the advisory committee. In case of conflict, the directions given by the creditors or contributories at any general meeting are deemed to override any directions given by the advisory committee. The clause further seeks to empower the Company Liquidator to summon meetings of the creditors or contributories. Any person aggrieved by any act or decision of the Company Liquidator may apply to the Tribunal who may confirm, reverse or modify the Act or decision and make such further order as it think just in the circumstances.

Clause 293. — This clause corresponds to section 461 of the Companies Act, 1956 and seeks to provide that the Company Liquidator shall keep proper books and make necessary entries. He shall also prepare the minutes of the proceedings at meetings. The clause urther provides that the books may be inspected by any creditor or contributory or through his agent.

Clause 294. — This clause corresponds to section 462 of the Companies Act, 1956 and seeks to provide for the maintenance of books of account by the Company Liquidator. The Company Liquidator shall present to the tribunal a receipt and payments account in duplicate duly verified by a declaration, twice in each year during his tenure of office. It also seeks for filing of copy of such audited accounts with the registrar and the tribunal. This clause further seeks to provide that the Company Liquidator shall send the printed copy of the audited accounts to every creditor and every contributory. This clause also provides for forwarding a copy of accounts to Central or State Government in case of a Government Company.

Clause 295. — This clause corresponds to section 469 of the Companies Act, 1956 and seeks to provide that the contributory shall contribute any amount due by him. This clause further provides in case of an unlimited company, contributory can set off any amount payable to him by the company. A director or manager can similarly set off the amount when their liability is unlimited in a limited company. This clause finally provides that such set off facility shall also be given to a contributory after all the creditors have been repaid in full irrespective of whether the company is limited or unlimited.

Clause 296.— This clause corresponds to section 470 of the Companies Act, 1956 and seeks to provide that the Tribunal may, at any time after the passing of a winding up order, make calls on all or any of the contributories to the extent of their liability, for payment of any money which the Tribunal considers necessary to satisfy the debts and liabilities of the company.

Clause 297.— This clause corresponds to section 475 of the Companies Act, 1956 and seeks to empower the Tribunal to adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled.

Clause 298.— This clause corresponds to section 476 of the Companies Act, 1956 and seeks to empower the Tribunal to order for payment out of the assets, of the costs, charges and expenses incurred in winding up in order of priority, when the assets of the company are insufficient to satisfy its liabilities.

Clause 299.— This clause corresponds to section 477 of the Companies Act, 1956 and seeks to empower the Tribunal to summon and examining before it any officer of the company or person known or suspected to have in his possession any property or books or papers, of the company, or known or suspected to be indebted to the company or capable of giving information relating to formation, promotion or affairs of the company and tribunal may examine the person on oath either by word of mouth or on written investigation or on an affidavit an may in the first case, reduce his answers to writing and enquiry him to sign them. This clause further provides that the Tribunal may direct the Liquidator to file before it a report in respect of property, debt, etc., of the company in possession of other persons. It also seeks to empower Tribunal to impose an appropriate cost if any officer or person so summoned fails to appear before the Tribunal at the appointed time without a reasonable cause.

Clause 300.— This clause corresponds to section 478 of the Companies Act, 1956 and seeks to empower the Tribunal to order examination of any person on the report made by the Company Liquidator that in his opinion, a fraud has been committed by such person in promotion or formation or the conduct of the affairs of the company. The person shall be examined on oath and shall answer all the questions as put by the Tribunal. It provides that Company Liquidator shall take part in the examination and undertake such legal assistance as may be sanctioned by the Tribunal.

Clause 301.— This clause corresponds to section 479 of the Companies Act, 1956 and seeks to provide that the Tribunal may pass an order at any time either before or after passing a winding up order, to detained a contributory or any person having property, accounts or papers who is about to abscond or quit India or is about to remove or conceal any of his property, for the purpose of evading payment of calls or to avoid examination of affairs of the company. It further seeks to provide that the books and papers and movable property shall be seized and kept safely until Tribunal orders.

Clause 302.— This clause corresponds to section 481 of the Companies Act, 1956 and seeks to provide that the Company Liquidator shall make an application to the Tribunal for dissolution of a company which has been completely wound up. The Tribunal shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly. A copy of the order shall be filed by the Company Liquidator within thirty days with the Registrar who shall record in the register. This clause further seeks to provide punishment with fine for failure on the part of Liquidator in forwarding copy to Registrar.

Clause 303.— This clause corresponds to section 483 of the Companies Act, 1956 and seeks to provide that the provisions contained in Chapter XX shall have no effect in case of any order made by any Court in any proceedings for the winding up of a company immediately before the commencement of this Act and an appeal against such order shall be filed before such authority competent to hear such appeals before the commencement of the Act.

Clause 304.— This clause corresponds to section 484 of the Companies Act, 1956 and seeks to provide the circumstances for voluntarily winding up of a company. This clause provides that the company may be wound up if the company passes a resolution requiring the company to be wound up voluntarily as a result of the expiry of the period for its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company should be dissolved. Alternatively, thecompany may be voluntarily wound up by passing a special resolution.

Clause 305.— This clause corresponds to section 488 of the Companies Act, 1956 and seeks to provide for making declaration of solvency by the company director at least five weeks before the date of passing of resolution to winding up of the company and delivered to the Registrar for registration. The declaration shall be accompanied by a copy of auditor's report on the Profit and Loss Account and Balance Sheet of the company and a copy of report by registered valuer on the assets of the company. This clause further seeks to provide that where the declaration of the directors proved to be wrong, such directors shall be punishable with imprisonment or with fine or with both.

Clause 306.— This clause corresponds to section 500 of the Companies Act, 1956 and seeks to provide for calling of meeting of the company and its creditors at which the resolution for the voluntary winding up is to be proposed. This clause provides that where two- thirds creditors are of the opinion that the company be wound up voluntarily, it shall be wound up voluntarily and where they pass a resolution that the company be wound up by Tribunal, an application be filed with the Tribunal. The company may not be able to pay for its debts it full from the proceeds of assets sold in voluntary winding up and pass the resolution that company is wound up by the tribunal in accordance with the provision of part 1 of the chapter. The resolution so passed at a creditors meeting is required to be filed with the Registrar within ten days of the passing thereof. This clause seeks to provide punishment with fine or imprisonment or with both.

Clause 307.— This clause corresponds to section 485 of the Companies Act, 1956 and seeks to provide for publication of resolution to wind up voluntarily by advertisement in the Official Gazette and also in some newspaper circulating in the district where the registered office or the principal office of the company is situated. Company and every officer of the company who is in default shall be punishable with fine.

Clause 308.— This clause corresponds to section 486 of the Companies Act, 1956 and seeks to give effect that the date of commencement of voluntary winding up shall be the date of passing of the resolution for the same.

Clause 309.— This clause corresponds to section 487 of the Companies Act, 1956 and seeks to restrict the company to carry on the business except to the extent necessary for its beneficial winding up.

Clause 310.— This clause corresponds to section 502 of the Companies Act, 1956 and seeks to provide that in case of voluntary winding up, the company shall appoint a Company Liquidator in general meeting from panel prepared by the Central Government. In case creditors do not approve the appointment of such Company Liquidator, creditors shall appoint another Company Liquidator. This clause further seeks to provide for filing of a declaration within 7 days of the date of appointment by such Liquidator disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the company and the creditors and such obligation shall continue throughout the term of appointment.

Clause 311.— This clause corresponds to section 492 of the Companies Act, 1956 and seeks to provide for removal of Liquidator by the Company or creditor where the appointment has been made by company or creditor respectively. This clause also seeks to provide for vacation of office by Liquidator and appointment of Company Liquidator in case of vacancy occuring as a result of death, resignation, removal or otherwise.

Clause 312.— This clause corresponds to section 493 of the Companies Act, 1956 and seeks to provide for giving of notice to the Registrar of the appointment of a Company Liquidator along with the name and particulars of the Company Liquidator. In case of contravention company and every officer of the company who is in default shall be punishable with fine.

Clause 313.— This clause corresponds to section 491 of the Companies Act, 1956 and seeks to provide that on the appointment of a Company Liquidator, all the powers of the Board of directors and of the managing or whole-time directors and manager, if any, shall cease, except for the purpose of giving notice of such appointment to the Registrar.

Clause 314.— This clause corresponds to section 512 of the Companies Act, 1956 and seeks to provide the powers and duties of a Liquidator in a voluntary winding up such as settlement of the list of contributories, call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, maintain regular and proper books of account, prepare quarterly statement of accounts, pay the debts of the company and shall adjust the rights of the contributories among themselves and observe due care and diligence in the discharge of his duties. This clause seeks to provide for punishment with fine on the part of Company Liquidator in case of failure to comply with the provisions.

Clause 315.— This clause corresponds to section 503 of the Companies Act, 1956 and seeks to provide for appointment of committee by the company in general meeting or by the creditors as the case may be to supervise the voluntary liquidation and assist the Company Liquidator in discharging his or its functions.

Clause 316.— This clause corresponds to section 508 of the Companies Act, 1956 and seeks to provide for submission of quarterly report on progress of winding up of company by the Company Liquidator, The clause further provides that a meeting of the members and the creditors be called as and when necessary but at least one meeting each of creditors and members be held in every quarter and apprise them of the progress of the winding up of the company. This clause further seeks to provide punishment with a fine, if the Company Liquidator fails to comply with the provisions of this clause.

Clause 317.— This clause corresponds to section 519 of the Companies Act, 1956 and seeks to empower the Tribunal to consider the report of the Company Liquidator and order for investigation, if the report specifies that a fraud has been committed by any person in respect of the company. It also seeks for examination and attendance of any person indulging in the promotion or formation or the conduct of business of the company.

Clause 318.— This clause corresponds to section 509 of the Companies Act, 1956 and seeks to provide for preparation of report by the Company Liquidator regarding winding up of company showing that the property and assets of the company have been disposed of and its debt are fully discharged or discharged to the satisfaction of the creditors and call a general meeting of the company for the purpose of laying the final winding up accounts before it, and passing of resolution for company’s dissolution. Company Liquidator is required to file the report along with copy of the final winding up accounts alongwith the books and papers of the company relating to the winding up and resolution passed in the meeting with the Registrar. It also seeks to provide for filing of application by the Liquidator with the Tribunal with the request for passing of order dissolving the company and the Tribunal shall pass such order within sixty days from the date of receipt of such application. It further seeks to provide for filing of the order of Tribunal with the Registrar within thirty days. This clause seeks to cast duty upon the Registrar for publication of a notice in the Official Gazette that the company is dissolved. This clause seeks to provide punishment with fine on the part of Company Liquidator, if, he fails to comply with the provisions.

Clause 319.—This clause corresponds to section 494 of the Companies Act, 1956 and seeks to empower the Company Liquidator of the transferor company to accept shares, etc., by way of compensation wholly or in part for sale of property, etc., of the company where the transferor company is proposed to be wound up voluntarily and the whole or any part of its business or property is proposed to be transferred or sold to the transferee company. This clause further seeks to provide that the Liquidator may abstain from carrying the resolution into effect or to purchase his interest at a price to be determined by agreement or the registered valuer, where any member of the transferor company did not vote in favour of the special resolution and expresses his dissent in writing addressed to the Company Liquidator within seven days after passing of the resolution. It also seeks to provide that if the Company Liquidator elects to purchase the member’s interest, the purchase money, raised by him in such manner as may be determined by a special resolution, shall be paid before the company is dissolved.

Clause 320.—This clause corresponds to section 511 of the Companies Act, 1956 and seeks to provide for distribution of property of the company on its winding up in satisfaction of its liabilities pari passu unless the articles of the company otherwise provides.

Clause 321.—This clause corresponds to section 517 of the Companies Act, 1956 and seeks to empower Tribunal to amend, vary, confirm or set aside the arrangement entered into between a company and its creditors. The arrangement as aforesaid shall be sanctioned by a special resolution and also by the creditors holding three-fourths in value of debt.

Clause 322.—This clause corresponds to section 518 of the Companies Act, 1956 and seeks to allow Company Liquidator or anyj contributory or creditor to apply to the Tribunal for determination of any question arising in the course of winding up of a company or in respect of the enforcing of calls, the staying of proceedings or any other matter. The Tribunal may pass an order staying the proceedings in the winding up forthwith to the Registrar who shall make a minute of the order in his books relating to the company.

Clause 323.—This clause corresponds to section 520 of the Companies Act, 1956 and seeks to provide for the payment of all costs, charges and expenses properly incurred in the winding up, including the fee of the Company Liquidator out of the assets of the company in priority to all other claims.

Clause 324.—This clause corresponds to section 528 of the Companies Act, 1956 and seeks to provide to admit all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained otherwise shall be admissible as proof against the company, subject to the provision of clause 325.

Clause 325.—This clause corresponds to section 529 of the Companies Act, 1956 and seeks to provide for application of insolvency rules in winding up of insolvent companies with regard to debts, valuation of annuities, etc. This clause further seeks to provide that the Liquidator shall enforce such charge on the security of secured creditors representing workmen’s portion therein. Any person entitled to any dividend may make his claim.

Clause 326.—This clause corresponds to section 529A of the Companies Act, 1956 and seeks to provide that workmen’s dues and debts due to secured creditors shall be paid in priority to all other debts.

Clause 327.—This clause corresponds to section 530 of the Companies Act, 1956 and seeks to provide for payment of various outstanding claims or dues which will be paid in priority of other debts such as all revenues, taxes, cesses due to the Central Government or State Government, all wages as salary for the time work or payable by way of commission, amount due under Employees State Insurance Act and Workmen’s Compensation Act, sum due under provident, pension and gratuity fund subject to the condition that the amount payable shall not exceed such amount as may be notified. The debts mentioned in this clause shall be paid in full forthwith. If the goods of the company being distrained by any person, such debts shall be given first priority.

Clause 328.—This clause corresponds to section 531 of the Companies Act, 1956 and seeks to empower the Tribunal, after satisfying itself, to declare the transaction relating to preference transfer of property, movable or immovable, or any delivery of goods, payment, execution made, taken or done by or against a company within six months before making winding up application as fraudulent preference and restore the position as if the company had not given that preference.

Clause 329.—This clause corresponds to section 531A of the Companies Act, 1956 and seeks to empower the Tribunal to declare any transfer of property, movable or immovable, or any delivery of goods, etc., made by a company within a period of one year before the presentation of a petition for winding up, as void against the Company Liquidator being such transfer was not in good faith.

Clause 330.—This clause corresponds to section 532 of the Companies Act, 1956 and seeks to provide for declaration of any transfer or assignment by a company of all its properties or assets to trustees for the benefit of all its creditors shall be void.

Clause 331.—This clause corresponds to section 533 of the Companies Act, 1956 and seeks to provide protection to the creditor of a company which is being wound up and where the creditor or the person preferred has been paid by the company with the fraudulent motive on the part of the company to relieve from liability or reduce the liability of a person who has stood surety or guarantee to the creditor on behalf of the company.

Clause 332.—This clause corresponds to section 534 of the Companies Act, 1956 and seeks to prohibit companies which are in insolvent condition from creating any floating charges on their assets, with a view to securing past liabilities. It also empowers the Central Government to prescribe by rules regarding the rate of floating charge.

Clause 333.—This clause corresponds to section 535 of the Companies Act, 1956 and seeks to provide to save an insolvent company’s assets from further losses and enable the Company Liquidator to get rid of onerous property by disclaiming it. This clause further seeks to provide the time schedule within which the Company Liquidator and Tribunal are required to complete such actions as necessary. The Tribunal before or on granting leave to disclaim may require such notices to be given to persons interested and impose such terms and conditions of granting leave, and make such other order in the matter as the Tribunal considers just.

Clause 334.—This clause corresponds to section 536 of the Companies Act, 1956 and seeks to empower the Company Liquidator in voluntary winding up to sanction transfers after winding up and declare any alteration in the status of members of the company made after the commencement of the winding up as void. This clause further seeks to provide declaration of any disposition of the property, etc., as void, if the same is made without the order of the Tribunal in the case of a winding up by the Tribunal.

Clause 335.—This clause corresponds to section 537 of the Companies Act, 1956 and seeks to prohibit any attachment, sale, distress, etc., without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up. This clause provides for non-applicability of above provisions to the proceedings for recovery of any tax or impost or any dues payable to the Government.

Clause 336.—This clause corresponds to section 538 of the Companies Act, 1956 and seeks to provide that if any past or present officer of the company commits certain offences, such as not delivering movable and immovable property of the company, not delivering books and papers of the company, not giving true disclosures, being guilty of fraud, etc., shall be punishable with imprisonment or with fine or with both. The clause further provides punishment to any person who pawns, pledges or disposes of any property in circumstances which amount to an offence and who takes or otherwise receives the property, knowing it to be pawned, etc., shall be punishable with imprisonment and with fine.

Clause 337.—This clause corresponds to section 540 of the Companies Act, 1956 and seeks to provide that if any person who is found to have given false pretences or by means of any other fraud, induced any person to give credit to the company, to defraud the creditors, conceal or removed any part of the property is punishable with imprisonment and with fine.

Clause 338.—This clause corresponds to section 541 of the Companies Act, 1956 and seeks to provide that a company is being wound up should keep proper books of account throughout the period of two years immediately preceding the commencement of the winding up this clause further provided for the situation where it will be deemed as no proper books of account have kept.

Clause 339—This clause corresponds to section 542 of the Companies Act, 1956 and seeks to provide that for frauds by past or present officers and liability for fraudulent conduct of business is punishable with imprisonment or with fine or with both. This clause further seeks to confer power upon Tribunal to fix the responsibility of erring directors or officer of the company for fraudulent conduct of business and that shall be liable for option under clause 444.

Clause 340.—This clause corresponds to section 543 of the Companies Act, 1956 and seeks to confer power upon the Tribunal to assess the damages against delinquent directors, manager, liquidator or officer of the company for misapplication, retainer, misfeasance or breach of trust.

Clause 341.—This clause corresponds to section 544 of the Companies Act, 1956 and seeks to confer power upon the Tribunal to extend the liability of partners or directors of the company under clause 339 relating to fraudulent conduct of business or under clause 340 relating to misfeasance or breach of trust.

Clause 342.—This clause corresponds to section 545 of the Companies Act, 1956 and seeks to empower the Tribunal to prosecute the delinquent officers and members of the company for being guilty of offence in relation to the company. The clause also provides for fine on the part of person who fails or neglect to give assistance.

Clause 343.—This clause corresponds to section 546 of the Companies Act, 1956 and seeks to provide that the Company Liquidator shall exercise general powers of winding up of the company’s affairs relating to compromising, settling, collecting debts and paying out claims, etc., subject to the sanction of the Tribunal.

Clause 344.—This clause corresponds to section 547 of the Companies Act, 1956 and seeks to provide that in case of every invoice, business letters, etc., issued by the company after the winding up of the company shall contain a statement that the company is wound up. In case of any contravention company and every officer of the company who is in default, Company Liquidator and every receiver or manager who permits noncompliance shall be punishable with fine .

Clause 345.—This clause corresponds to section 548 of the Companies Act, 1956 and seeks to provide that the books and papers of the company be prima facie evidence of the truth of all matters purporting to be recorded therein, in case a company is wound up.

Clause 346.—This clause corresponds to section 549 of the Companies Act, 1956 and seeks to provide for inspection of books and papers relating to winding up of a company by the creditors and contributories. It finally provides that the above provisions shall not exclude or restrict any right conferred by any law on the Central Government or State Gov- ernment or any officer or authority of the Government.

Clause 347.—This clause corresponds to section 550 of the Companies Act, 1956 and seeks to provide for disposal of books and papers after the affairs of a company have been completely wound up and it is about to be dissolved. It further provides that no responsibility shall be imposed upon regarding the books and papers after expiry of five years from the dissolution of the company. It also seeks to empower the Central Government to prescribe by rules the period, form and manner of retention of such books and papers of company which has been wound up. Any contravention of this clause by a person shall be punishable with impressments or fine or with both.

Clause 348.—This clause corresponds to section 551 of the Companies Act, 1956 and seeks to provide for furnishing of information or statement in such form containing such particulars as may be prescribe where the winding up of a company is not concluded within one year after its commencement and duly audited by a person qualified to act as auditor of the company, within two months after the expiry of the year. Such statement shall be filed periodically. It also seeks to empower the Central Government to prescribe by rules such form and manner in which the statement is to be filed by the Company Liquidator. This clause further provide for punishment for Company Liquidator in case of contravention.

Clause 349.—This clause corresponds to section 552 of the Companies Act, 1956 and seeks to provide for making payments into the Public Accounts of India in the Reserve Bank of India by the Official Liquidator.

Clause 350.—This clause corresponds to section 553 of the Companies Act, 1956 and seeks to provide that the Company Liquidator shall make payments into a scheduled Bank and credit it into a Special Bank Account known as the Company Liquidation Account opened by him of the monies received by him as Liquidator. The clause finally provide for payment of interest and penalty, in case, of the Liquidators retains any specified sum for more than the prescribed period.

Clause 351.—This clause corresponds to section 554 of the Companies Act, 1956 and seeks to provide that the funds of the company in winding up shall not be kept in private sector banks.

Clause 352.—This clause corresponds to section 555 of the Companies Act, 1956 and seeks to provide that unpaid dividends and undistributed assets of the companies being wound up which are in the hands of the Liquidator shall be paid by the Liquidator into the Company Liquidation Dividend and Undistributed Assets Account. The clause also seeks to provide that the above provisions shall also be applied in case of dissolution of a company. It also seeks to provide that the Liquidator shall forthwith furnish a statement to the Registrar . This clause also seeks to provide that the Liquidator shall be given a receipt from the Reserve Bank of India for the money paid by him. This clause also seeks to provide that the Registrar may pass an order for the payment of required sum to the claimant out of the said account.

Clause 353.—This clause corresponds to section 556 of the Companies Act, 1956 and seeks to provide that if the Company Liquidator fails to make good the defaults committed by him within fourteen days from the date of service of notice on him, the Tribunal may make an order to make good the default on request by any creditor, contributory, .or by the Registrar.

Clause 354.—This clause corresponds to section 557 of the Companies Act, 1956 and seeks to empower the Tribunal, in all matters relating to winding up of a company, to ascertain the wishes of creditors or contributories by calling their meetings.

Clause 355.—This clause corresponds to section 558 of the Companies Act, 1956 and seeks to provide for filing affidavit before any court, Tribunal, Judge or person lawfully authorised to receive affidavits in India and in any other country, as the case may be.

Clause 356.—This clause corresponds to section 559 of the Companies Act, 1956 and seeks to empower the Tribunal to declare dissolution of company void on an application made by the Company Liquidator of the company or by any other person at any time within two years from the date of dissolution. It also seeks to provide for filing of order of the Tribunal, with the Registrar who shall register the same and if the Company Liquidator such person fails so to do, he shall be punishable with fine.

Clause 357.—This clause corresponds to section 441 of the Companies Act, 1956 and seeks to provide that where before the presentation of petition for winding up by the Tribunal, a resolution for voluntary winding up has been passed, the proceedings of voluntary winding up of a company shall commence from the date of passing of the resolution, unless the Tribunal, on proof of fraud or mistake, thinks otherwise. It also seeks to provide that in any other case, the winding up of a company by the Tribunal shall be deemed to commence at the time of the presentation of the petition for the winding up.

Clause 358.—This clause corresponds to section 458A of the Companies Act, 1956 and seeks to provide that while computing the period of limitation specified for any suit or application in the name and on behalf of a company which is being wound up by the Tribunal, the period from the date of commencement of the winding up of the company to a period of one year immediately following the date of the winding up order shall be excluded.

Clause 359.—This is a new clause which seeks to empower the Central Government for appointment of as many Official Liquidators Joint Deputy or Assistant Official Liquidator as it may consider necessary and may also appoint Joint, Deputy or Assistant Official Liquidators to assist him in discharge of his functions in relation to the winding up of companies by the Tribunal. It also seeks to provide that the salary and allowances to the Official Liquidator, etc., shall be paid by the Central Government.

Clause 360.—This clause corresponds to section 457 of the Companies Act, 1956 and seeks to provide for the powers and duties of the Official Liquidator. The Official Liquidator shall exercise powers such as conducting inquiries or investigations, maintaining information and records, etc., of the companies under winding up.

Clause 361.—This is a new clause which seeks to provide for winding up of company through Summary procedure having assets of book value not exceeding one crore and in any other case, it obtains the consent of all the creditors whether secured or unsecured. This clause also seeks to empower the Central Government to appoint Official Liquidator as the Liquidator of the company, who shall submit a report to the Central Government indicating whether any fraud has been committed in promotion, formation or management of affairs of the company. It also seeks to provide that the Central Government if satisfied that fraud has been committed, may order for the investigation of the affairs of the company.

Clause 362.—This is a new clause which seeks to provide that the Official Liquidator shall dispose of all the assets whether movable or immovable and collect the amount pay- able to the company from the debtors and contributories. It also seeks to provide that the Official Liquidator shall deposit the amount recovered into the public account of India in the Reserve Bank of India.

Clause 363.—This is a new clause which seeks to provide for settlement of claims in such manner as may be prescribe of creditors by the Official Liquidator within 30 days of his appoint.

Clause 364.—This is a new clause which seeks to provide that any creditor aggrieved by the decision of the Official Liquidator may apply to the Central Government who shall either dismiss the application or modify order of Official Liquidator. If the claim has been accepted, the Official Liquidator shall make payment to the creditors. The clause further provides at any stage during settlement of claim Central Government may referred case to Tribunal

Clause 365. — This is a new clause which seeks to provide for submission of final report to the Central Government if the reference made to Tribunal by the Official Liquidator when he is satisfied that the company can be finally wound up. The Central Government or as the case may be, the Tribunal shall on receiving the report order for the dissolution of the company. After the order is passed, the Registrar shall strike off the name of the company from the register of companies and a notification to this effect be published in the Official Gazette.

Clause 366. — This clause corresponds to section 565 of the companies Act, 1956 and seeks to provide that any company, whether before or after the commencement of the Act, in pursuance of any Act of parliament, duly constituted according to law and consisting of seven or more members may at any time register under this Act as unlimited Company, company limited by share or as company limited by guarantee. The clause further provides that in computing any majority, regard shall be to the number of vote to which each member is entitled.

Clause 367. — This clause corresponds to section 574 of companies Act, 1956 and seeks to provide that on compliance of the requirements and payment of fee the registrar shall certify the company to be incorporate under this Act and in the case of Limited Companies that it is limited and thereupon the company shall be so incorporated.

Clause 368. — This clause corresponds to section 575 of companies Act, 1956 and seeks to provide that all the property movable or immovable belongs/vests to the company which is in pursuance of registration shall after the registration pass to the company as incorporated under this Act for all estate and interest of the company therein.

Clause 369. — This clause corresponds to section 576 of the companies Act, 1956 and seeks to provide that all the rights or liabilities of any debt or obligation incurred or any contract entered into, by, to, with, or on behalf of the company before the registration shall not be affected by the registration.

Clause 370. — This clause corresponds to section 577 of the companies Act, 1956 and seeks to provide that all suits and other legal proceedings by or against the company shall be unaffected by the registration. The clause also provides that execution shall not issue against the property or member of the company on any decree or order obtained in any suit or proceeding, but if property of company is being insufficient winding up order may be obtained.

Clause 371. — This clause corresponds to 578 of the Companies Act, 1956 and seeks to provide that all the provision of any Act of Parliament or other constituting or regulating the company including a company limited by guarantee, the resolution declaring the amount of the guarantee shall be the conditions and regulations of the company, in the same manner, if the company had been formed under this Act. This clause further provides that all the provisions to apply to contributories and creditors in same manner as if the company is formed under this Act with some exceptions mention under the clauses. The clause further provides that the provision related to registration of Unlimited Company as a Limited Company, to increase in the nominal amount of share capital, power of limited company to determine portion of share capital that shall not be called up except in the event of winding up shall apply, notwithstanding to any provision contained in any Act of parliament or other Indian law or other instrument constituting or regulating the company. The clause further provides that company shall not alter any provision that required to be contained in memorandum. The clause further provides that none of the provision shall derogate from any power of altering its constitution or regulations by company. This clause also provides the expression” instrument” includes deed of settlement, deed of partnership or Limited Liability Partnership.

Clause 372. — This clause corresponds to section 586 of the companies Act, 1956 and seeks to provide that staying and restraining of suits and other legal proceedings against a company at any time after making petition of winding up but before winding up order, shall, in case of registered company and where the application to stay is by a creditor, extend to suits and other legal proceedings against any contributory of the company.

Clause 373. — This clause corresponds to section 587 of the companies Act, 1956 seeks to provide that where order for winding up has been made or provisional liquidator has been appointed for a company registered under this Act, no suits or other legal proceedings can be proceeded or commenced against company or any contributory, except by leave of tribunal with such terms as Tribunal may impose.

Clause 374. — This is a new clause. This clause seeks to provide that every company which is seeking registration under this part of the Bill shall have to meet certain obligations provided under this clause and also proposed to cover through rules.

Clause 375. — This clause corresponds to section 583 of Companies Act, 1956 and seeks to provide that every Unregistered Company may be wound up under this Act with such exceptions and some additions.

Clause 376. — This clause corresponds to section 584 and seeks to provide that a body corporate incorporated outside India may be wound up as an unregistered company if it ceases to carry on business in India. Whether the body corporate has been dissolved or otherwise ceased to exist as per the law under which it was incorporated.

Clause 377. — This clause corresponds to section 589 of the companies Act, 1956 and seeks to provide that the provision of this clause is in addition only to the provisions related to winding up of the company previously in this Act. The clause further provides the the Tribunal or official Liquidator may exercise same power as exercised by them in respect of winding up of companies registered under this Act. The clause also provides that a unregistered company shall not, except in the event of its being wound up, be deemed to be a company under this Act only.

Clause 378. — This clause seeks to provide that nothing in this part shall affect the operation of any enactment or any partnership, limited liability partnership or society or cooperative society, association or company being wound up as a company or as an unregistered company under Companies Act, 1956, or any Act repealed by the Act.

Clause 379.—This clause corresponds to section 591 of the Companies Act, 1956 and seeks to provide that where not less than 50 per cent. of the paid up capital of a foreign company is held by one or more citizens of India such company shall comply with provisions as if it were a company incorporated in India.

Clause 380.—This clause corresponds to sections 592 and 593 of the Companies Act, 1956 and seeks to provide the documents which every foreign company shall deliver to the Registrar for registration after the establishment of their place of business in India. It also seeks to provide that if any alterations are made or occur in the documents, the foreign company shall deliver a return in this regard to the Registrar.

Clause 381. — This clause corresponds to section 594 of the Companies Act, 1956 and seeks to provide that every foreign company shall, in every calendar year prepare a balance sheet and profit and loss account in such form a and containing such particulars an including or having annexed or attached thereto such documents as may be prescribe and deliver a copy of such documents to the Registrar. In case such document is not in English, a certified translation thereof in English shall also be filed. Further every foreign company shall also file a list of the places of business in India as at the date of its balance sheet.

Clause 382.—This clause corresponds to section 595 of the Companies Act, 1956 and seeks to provide that every foreign company shall exhibit on the outside of every office or place where it carries on business in India, the name of the company and the country in which it is incorporated, in English and in local languages in general use in the locality in which the office or place is situated. The foreign company will write its name, liability of its members and name of the country in which it is incorporated in legible English characters in all business letters, billheads, letter paper, and prospectus, etc.

Clause 383.—This clause corresponds to section 596 of the Companies Act, 1956 and seeks to provide the manner in which documents which are required to be served on a foreign company shall be deemed to be sufficiently served.

Clause 384. — This clause corresponds to section 600 of the Companies Act, 1956 and seeks to provide that the provisions relating to issue of debentures, preparation and filing of annual return, preparation of books of account and manner in which they may be kept, registration of charges and inspection and investigation of books of account shall apply mutatis mutandis to a foreign company.

Clause 385.—This clause corresponds to section 601 of the Companies Act, 1956 and seeks to provide the fee which a foreign company will have to pay to the Registrar for registering any document.

Clause 386. — This clause corresponds to section 602 of the Companies Act, 1956 and seeks to define the expressions “certified”, “director” and “place of business” for foreign companies.

Clause 387.—This clause corresponds to section 603 of the Companies Act, 1956 and seeks to provide the guidelines for issue of prospectus in India offering to subscribe for securities of a company incorporated outside India. The condition requiring or binding an applicant for securities to waive compliance with any requirement shall be treated as void. This clause further provides that in case of non-compliance, a director or other person responsible for issue of prospectus shall not incur any liability by reason of non-compliance or contravention if it is proved that he had no knowledge or contravention was an honest mistake of fact. This section shall not apply in case the prospectus is issued to existing members or debenture holders of a company.

Clause 388. — This clause corresponds to section 604 of the Companies Act, 1956 and seeks to provide that if the prospectus includes a statement purporting to be made by an expert, such statement must be included in the prospectus in the form and context in which it is included and there does not appear in the prospectus, a statement that he has given and has not withdrawn his consent.

Clause 389. — This clause corresponds to section 605 of the Companies Act, 1956 and seeks to provide that a copy of the prospectus of a company incorporated or to be incorporated outside India certified by the Chairman and two other directors of the company as having been approved by resolution of the managing body has to be delivered to the Registrar for registration along with the required documents.

Clause 390. — This clause corresponds to section 605A of the Companies Act, 1956 and seeks to provide rules applicable for the offer of Indian Depository Receipts, the requirement of disclosures in prospectus or letter of offer issued in connection with Indian Depository Receipts, the manner in which the Indian Depository Receipts shall be dealt with in a depository mode and by custodian and underwriters; and the manner of sale, transfer or transmission of Indian Depository Receipts by a company incorporated or to be incorporated outside India

Clause 391. — This clause corresponds to sections 606 and 607 of the companies Act, 1956, provides that provisions of clauses 34 to 36 shall apply to applicability of clause 389 for issue of prospectus by a company incorporated outside India or apply to Indian Company and issue of Indian Depository Receipt by foreign Company. The clause further provides that chapter XX shall apply mutatis mutandis to the foreign companies closing its place of business in India.

Clause 392. — This clause corresponds to section 598 of the Companies Act, 1956 and seeks to provide that where a foreign company fails to comply with any of the provisions relating to companies incorporated outside India, the company and every officer of in foreign company shall be punishable with fine.

Clause 393.—This clause corresponds to section 599 of the Companies Act, 1956 and seeks to provide that any failure by a company to comply with the provisions of the Chapter relating to companies incorporated outside India shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof. However, the company will not be entitled to bring any suit, claim, set-off, etc., until it has complied with the provisions of this Chapter.

Clause 394.—This clause corresponds to section 619A of the Companies Act, 1956 and seeks to provide that where the Central Government is a member of a Government company, it shall arrange to prepare an annual report on the working and affairs of the company along with audit report and comments of Comptroller and Auditor General and laid before both Houses of Parliament. It also seeks to provide that where a State Government is a member of a Government Company, it shall also prepare an annual report along with aforesaid enclosures and laid before both the Houses of the State Legislature.

Clause 395.—This clause corresponds to section 620 of the Companies Act, 1956 and states to provide that every State Government or one State Government who is a member of a company where no Central Government is a member shall cause annual reports to be prepared within time specified in clause 394 and lay before both the house of state legislature. The clause further provides that provisions of 395 and 394 to apply to Government Company in liquidation as they apply to any other Government Company.

Clause 396.—This clause corresponds to section 609 of the Companies Act, 1956 and seeks to provide that for the purpose of registration of companies, the Central Government shall establish such number of offices at such places and with such jurisdiction as it thinks fit. It further seeks to provide that the Central Government may appoint such number of officers as it considers necessary, for the registration of companies and discharge of various function under this Act. This clause also provides for the terms and conditions of service, including the salaries payable to persons aforesaid. It finally provides that the Central Government may direct the preparation of seal or seals for authentication of documents required in connection with the registration of companies.

Clause 397. — This clause corresponds to section 610A of the Companies Act, 1956 and seeks to permit companies to file returns and documents on paper or in electronic form or stored on any electronic data storage device or computer readable media by the Registrar and further seeks to provide that such filings shall also be deemed to be a document for the purposes of this Act and shall be admissible as evidence in any proceedings thereunder.

Clause 398. — This clause corresponds to section 610B of the Companies Act, 1956 and seeks to empower the Central Government to make rules in regard to filing of various applications, documents, returns, etc., service or delivery of any document, notice or communication, etc., maintenance of various applications, documents and returns filed, manner of inspection of the various documents, payment of fees, charges or other sums payable in the electronic form and the manner in which various registry functions viz. Alteration of memorandum, articles, prospectus, issuing certificate of incorporation, etc., shall be performed by Registrar in electronic form. This clause also seeks to provide that the Central Government may notify a scheme to carry out the provisions of this clause through the electronic form.

Clause 399. — This clause corresponds to section 610 of the Companies Act,1956 which provides that the documents in electronic form kept by Registrar may be inspected or making a record, etc., from such documents on payment of fees or obtaining certificate from Registrar in respect of incorporation of companies. This clause further provides that any document issued by Court and kept by Registrar may not be shared or part with except with the leave of Court. Any certified document issued by Registrar shall admissible as evidence.

Clause 400. — This clause corresponds to section 610D of the Companies Act, 1956 and seeks to provide that the Central Government may provide in the rules made under clause 398 and clause 399 such value added services through the electronic form and levy fee thereon.

Clause 401.— This clause corresponds to section 611 of the Companies Act, 1956 and seeks to provide that any document to be filed, registered or recorded under this Act shall be on payment of fee and charges.

Clause 402.— This clause corresponds to section 610E of the Companies Act, 1956 and seeks to provide that all the provisions of the Information Technology Act, 2000 relating to the electronic records, shall apply in relation to the records in electronic form as specified under this Act.

Clause 403. — This clause provides that any documents to be submitted, filed, registered or recorded or any fact or information required or authorised to be registered under this Act shall be submitted, filed, registered within specific time with specific fee or with additional fee after 270 days after the specified time. The clause further provides the penalty if default is made to submit, file, register or record any document, fact or information.

Clause 404. — This clause corresponds to section 612 of the Companies Act, 1956 and seeks to provide that all fees, charges and other sums received by any Registrar, Additional, Joint, Deputy, or Assistant Registrar, or any other officer of the Central Government shall be paid into the public account of India in the Reserve Bank of India.

Clause 405.—This clause corresponds to section 615 of the Companies Act, 1956 and seeks to provide that the Central Government may order any company, to furnish such information or statistics with regard to its constitution or working, within specified time. Such an order shall be published in the Official Gazette. This clause further seeks to provide that the Central Government for the purpose of satisfying itself may order such company or companies to produce such records or documents or allow inspection thereof or furnish such further information as that Government may consider necessary. This clause also seeks to provide that where a foreign company carries on business in India, all the references in this section shall be applicable to the foreign company as well. Failure to comply with an order under this clause or knowingly furnishing of any incorrect or in complete information will lead to imposition of fine on company and every officer of the company who is in default shall be punishable with imprisonment or fine or both.

Clause 406. — This clause corresponds to section 620A of the Companies Act, 1956 and seeks to provide that the Central Government may notify a company to be a Nidhi company and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies The Central Government may also notify the provisions of this Act which shall not apply or shall apply with such exception or modification and adoptation as may be specified in that notification to a Nidhi Company or Nidhi of any class or description as may be specified in that notification This clause finally provides that the notification proposed to be issued shall be laid before each House of Parliament.

Clause 407. — This clause corresponds to section 10FD and 10FR of the Companies Act, 1956 and seeks to provide definitions of Chairperson, Judicial Members, Member, President, Technical Member in Appellate Tribunal and Tribunal.

Clause 408. — This clause corresponds to section 10FB of the Companies Act, 1956 and seeks to deal with the constitution of National Company Law Tribunal (NCLT). The NCLT shall consist of President and such number of Judicial and Technical Members as the the Central Government may deem necessary.

Clause 409. — This clause corresponds to section 10FD of the Companies Act, 1956 and seeks to provide the qualifications of President and Members of the Tribunal.

Clause 410.— This clause corresponds to section 10FR of the Companies Act, 1956 and seeks to deal with the formation of the National Company Law Appellate Tribunal (NCALT) consisting of Chairperson and Judicial and Technical Members which shall not exceed eleven.

Clause 411.—This clause corresponds to section 10FR of the Companies Act, 1956 and seeks to provide that Chairperson of (NCLAT) shall be a judge of Supreme Court or Chief Justice of High Court, the Judicial Member shall be a judge of High Court or Judicial Member of Tribunal for 5 years. The Technical Member shall be a person having at least experience of 25 years in banking, management, economics, etc.

Clause 412.—This clause provides that the President, Chairperson and Judicial Member of the tribunal shall be appointed in consultation with Chief Justice of India. It further provides that the members of the tribunal and the technical members of the Appellate Tribunal shall be appointed on the recommendation of Selection Committee.

Clause 413. — This clause corresponds to sections 10FE and 10FT of the Companies Act, 1956 and seeks to provide the terms of office of President, Chairperson and Members of the Tribunal or Appellate Tribunal.

Clause 414.— This clause corresponds to sections 10FG and 10FW of the Companies Act, 1956 and seeks to provide the salary, allowances and other terms and conditions of service of Members of the Tribunal or Appellate Tribunal.

Clause 415. — This clause corresponds to sections 10FH and10FS of the Companies Act, 1956 and seeks to provide that in the event of death, resignation, absence, etc., of the President or Chairperson, the senior-most Member of the Tribunal or Appellate Tribunal shall discharge the duties of President or Chairperson, as the case may be.

Clause 416.— This clause corresponds to sections 10FI and 10FU of the Companies Act, 1956 and seeks to deal with the resignation of President, Members. It provides that President, Chairperson or member may address his resignation to the Central Government.

Clause 417. — This clause corresponds to sections 10FJ and 10FV of the Companies Act, 1956 and seeks to provide the grounds for removal of the Chairperson or President or Members of the Appellate Tribunal or Tribunal by the Central Government in consultation with the Chief Justice of India. It provides removal on the ground of insolvency, conviction of offence involving moral turpitude, on being mentally or physically incapable, etc. The Central Government in consultation with the Supreme Court will regulate the procedure for the inquiry, if any, of the alleged misbehaviour of the members.

Clause 418. — This clause corresponds to sections 10FK and 10GA of the Companies Act, 1956 and seeks to deal with the staff of the Tribunal and Appellate Tribunal. It provides that the Central Government in consultation with Tribunal and Appellate Tribunal provide the officers and staff of the Tribunal or Appellate Tribunal who shall discharge their function under the superintendence and control of the Chairperson or President or Members, as the case may be.

Clause 419. — This clause corresponds to section 10FL of the Companies Act, 1956 and seeks to deal with the number of Benches of the Tribunal. It provides that the Principal Bench shall be at New Delhi. Further, it provides that powers of the Principal Bench shall be exercised by two Members and a single Member may also function as a Bench in certain cases. The Central Government in consultation with the President may for disposal of the such class or classes of case(s) as may be prescribed relating to rehabilitation, restructuring or reviving the winding up of companies may constitute Special Benches consisting of three or more members. Lastly, in case of difference of opinion, matter shall be decided by the majority.

Clause 420. — This clause corresponds to section 10FM of the Companies Act, 1956 and seeks to deal with orders passed by the Tribunal. It provides that the Tribunal may rectify any mistake within two years from the date of order. This clause further provides that a copy of each order shall be sent to all the concerned parties by the Tribunal.

Clause 421. — This clause corresponds to section 10FQ of the Companies Act, 1956 and seeks to provide appeal against the order of the Tribunal in the Appellate Tribunal. It provides that appeal may be filed within 45 days from the date of order and in case Appellate Tribunal is satisfied that delay is justified then further period of 45 days is allowed. The Appellate Tribunal after according an opportunity of hearing may confirm, modify or set aside order of the Tribunal and provide copy of order to the Tribunal and parties to appeal.

Clause 422. — This is a new clause which deals with expeditious disposal of cases before Tribunal or Appellate Tribunal. It provides that the Tribunal or the Appellate Tribunal shall make every effort to dispose of cases within three months from the date of commencement of proceedings before Tribunal or filing of appeal before Appellate Tribunal. If any application or petition or appeal is not disposed off with in the period specified, the Tribunal/Appellate Tribunal Shall record the reasons for not disposing the same and President/Chairperson may take into consideration in reasons and extend the period not exceeding ninety days.

Clause 423.— This clause corresponds to section 10GF of the Companies Act, 1956 and seeks to provide that an appeal against the order of the Appellate Tribunal shall be filed before the Supreme Court within sixty days and in case of justified delay within a further period of sixty days only on any question of law arising from such an order.

Clause 424. — This clause corresponds to section 10FZA of the Companies Act, 1956 and seeks to deal with the procedure to be adopted by the Tribunal or Appellate Tribunal to dispose of any proceeding. It provides that Tribunal or Appellate Tribunal shall not follow the Code of Civil Procedure, 1908 but would be guided by the principles of natural justice. The Tribunal or the Appellate Tribunal may regulate their own procedure. However, while discharging their functions, it would have the power vested with the Civil Court in respect of any suit for summoning and enforcing the attendance of any person, examining him on oath, etc. Orders passed by it shall be enforced as a decree passed by the court and may be sent for execution to the court under whose jurisdiction, the company or the person, as the case may be, has registered office or resides respectively.

Clause 425.— This clause corresponds to section 10G of the Companies Act, 1956 and seeks to provide that the Tribunal or the Appellate Tribunal shall have the same powers of contempt as that of High Court under the provisions of the Contempt of Courts Act, 1971.

Clause 426.— This clause deals with delegation of powers. It provides that the Tribunal or the Appellate Tribunal may by general or special order authorise any person to inquire into the matter connected with any proceeding and report to it.

Clause 427— This clause corresponds to section 10FY of the Companies Act, 1956 and seeks to provide that the President, Chairperson, Members, Officers and employees of the Tribunal and the Appellate Tribunal shall be treated as public servants within the meaning of section 21 of the Indian Penal Code.

Clause 428.— This clause corresponds to section 10FZ of the Companies Act, 1956 and seeks to deal with the protection of action taken in good faith by the President, Chairperson, members, officers, etc., of the Tribunal or Appellate Tribunal.

Clause 429. — This clause corresponds to section 10FP of the Companies Act, 1956 and seeks to deal with the power to take the assistance of Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector by the Tribunal for taking into custody all property, books of account, etc. The above acts shall not be questioned in any court or before any authority in case of a sick company or winding up of any company.

Clause 430. — This clause corresponds to section 10GB of the Companies Act, 1956. This clause deals with exclusive jurisdiction of the Tribunal or the Appellate Tribunal and provides that no civil court shall have jurisdiction in respect of any matters that are assigned to the Tribunal or the Appellate Tribunal.

Clause 431. — This clause corresponds to section 10GC of the Companies Act, 1956 and seeks to provide that proceedings of the Tribunal or Appellate Tribunal shall not be invalid merely on the ground of existence of any vacancy or defect in its constitution.

Clause 432. — This clause corresponds to section 10GD of the Companies Act, 1956 and seeks to provide that a party to the proceeding may appear in person or authorise a Chartered Accountant, Cost Accountant, Company Secretary or Legal Practitioner to present athe case before the Tribunal or the Appellate Tribunal.

Clause 433. — This clause corresponds to section 10GE of the Companies Act, 1956 and seeks to provide that provisions of the Limitations Act, 1963 shall apply to the proceedings before the Tribunal or the Appellate Tribunal.

Clause 434. — This clause corresponds to sections 10FA and 647A of the Companies Act, 1956 and seeks to provide that on formation of Tribunal, all matters pending before CLB shall stand transferred to the Tribunal. Similarly, all proceedings relating to compromise, arrangements and reconstruction and winding up of the companies pending before District Courts and High Courts shall be transferred to the Tribunal except winding up proceedings pending before District Courts or High Courts.

Clause 435. — This is a new clause which deals with the establishment of Special Courts by the Central Government in consultation with the Chief Justice of the High Court within whose jurisdiction the Judge is to be appointed. It further provides that person so appointed as Judge of Special Court shall be one who immediately before such appointment was a Sessions Judge or an Additional Sessions Judge.

Clause 436. — This is a new clause which seeks to provide that all offences under this Act shall be triable by the Special Courts. However, where an accused is produced before Magistrate, the Magistrate may order detention of such person and if he considers the detention unnecessary, he shall forward the case to the Special Court. The Special Court would have the liberty to try summary proceedings for offences punishable with imprisonment for a term not exceeding three years although it may order for the regular trial.

Clause 437. — This is a new clause which seeks to deal with appeal and revision. It provides that High Courts shall have the power of appeal or revision as if special courts were Court of Session trying cases within the local limits of the jurisdiction of the High Court.

Clause 438. — This is a new clause which deal with application of code to the proceedings before the Special Court. It provides that Special Court shall be deemed to be a Court of Session and the provisions of the Code of Criminal Procedure, 1973 shall apply to the Special Court.

Clause 439. — This clause corresponds to some of the provisions of sections 621 to 631 of the Companies Act, 1956 and seeks to provide that every offence punishable under this Act shall be non-cognizable. Court shall take cognizance only on complaint made by Registrar, shareholder of the company or a person authorised by Central Government.

Clause 440. — This is a new clause which deals with transitional power. It provides that till such time Special Courts are established the existing Court of Session will continue to exercise jurisdiction. However, it will not affect the powers of High Court to transfer any case.

Clause 441. — This clause provides for the compounding of certain offences by Tribunal or regional director in certain cases before the investigation has been initiated or is pending under this Act. It further provides the procedure followed for compounding of offence. It clause also provides penalty for any officer or other employee of the company who fails to comply with the order of Tribunal or Regional Director.

Clause 442. — In this clause Central Government is authorised to maintain a panel of experts to be called as ‘Mediation Panel’ for mediation between parties during the pendency of any proceedings before the Central Government or Tribunal. The clause further provides that any of the parties to proceeding or Central Government or Tribunal Suo Motu refer any matter pertaining to proceeding to such number of experts from the mediation panel as they deem fit. The clause further provides that any person not agreed with recommendation of the mediation panel may file objection to Central Government or Tribunal. .

Clause 443.— This clause corresponds to section 624A of the Companies Act, 1956 and seeks to provide that the Central Governments may appoint any number of Company Prosecutors who shall have the same powers and privileges as that of Public Prosecutor.

Clause 444. — In this clause the Central Government is authorised to direct any company prosecutor or any authorised person to present and appeal from an order of acquittal passed by any court other than High Court.

Clause 445. — This is a new clause which deals with compensation for accusation without reasonable cause before the Special Court or Court of Session.

Clause 446. — This clause corresponds to section 626 of the Companies Act, 1956 and seeks to provide that any fine imposed or any part thereof may be applied towards payment of cost of proceedings or towards payment of reward to person on whose information the proceedings were instituted.

Clause 447. — This clause provides penalty for the person who is found to be guilty of fraud and this clause also provides definitionsfor fraud, wrongful gain and wrongful loss.

Clause 448.— This clause corresponds to section 628 of the Companies Act, 1956 and seeks to deal with penalty for false statement. It provides that if in any return, report, etc., required by, or for, the purpose of the provisions of this Act, any person who makes a false statement or omits material facts, shall be liable for action under section 444.

Clause 449.— This clause corresponds to section 629 of the Companies Act, 1956 and seeks to provide that in case of giving false evidence, the concerned person shall be liable to imprisonment and fine.

Clause 450. — This clause corresponds to section 629A of the Companies Act, 1956 and seeks to provide penalty where no specific penalty is provided elsewhere in the Companies Act.

Clause 451.— This clause seeks to provide that if any default is committed for the second or subsequent occasion within a period of 3 years, it shall be punishable with imprisonment as provided and twice the amount of fine for such default.

Clause 452.— This clause corresponds to section 630 of the Companies Act, 1956 and seeks to provide penalty for wrongful procession or holding of the property of the company by any officer or employee of company. The clause further provides the refund of the benefits that have been derived from such property or cash or in default to undergo imprisonment for a term which may extend to two years.

Clause 453.— This clause corresponds to section 631 of the Companies Act, 1956 and seeks to provide punishment for improper use of the title words, ‘limited’, ‘private limited’ or ‘OPC limited’ with fine which shall not be less than five hundred but may extend to two thousand for everyday on which that name has been used.

Clause 454. — This is a new clause which provides that Central Government may appoint adjudicating officers for adjudging penalty under the provision of this Act. The company or officer shall be given an opportunity to be heard before imposing any penalty. Aggrieved person may appeal to Regional Director. Any person not paying penalty shall be punished with imprisonment or fine or with both.

Clause 455.— This is a new clause and seeks to deal with dormant company. It provides that a dormant company shall be one which has not been carrying any business or has not made any significant accounting transaction in the last two financial years. Such a company may make an application to Registrar for obtaining the status of a dormant company. The Registrar shall maintain the register of dormant company, which shall keep the minimum number of directors and pay annual fees. This clause further provides that in case of a company which has not filed Balance Sheet, Profit and Loss Account or annual return for two financial years, the Registrar shall enter the name in the register maintained for dormant company. However, if the dormant company fails to comply with the requirements of this clause then the Registrar shall have the power to strike off its name. This clause also provides all the definition of in act company, and significant accounting transaction.

Clause 456.— This clause seeks to provide that no suit, prosecution or other legal proceedings shall lie against the Government or any other person authorised by the Government for acts done or intended to be done in good faith.

Clause 457. — This clause corresponds to section 635AA of the Companies Act, 1956 and seeks to provide that no official shall be compelled to disclose to any court, tribunal or other authority the source of any information which has led to an order of investigation into the affairs of the company.

Clause 458. — This clause corresponds to section 637 of the Companies Act, 1956 and seeks to empower the Central Government to delegate any of its powers or functions to any authority or officer by notification. It provides that any power can be delegated other than power to make rules. It further provides that a copy of notification shall be placed before both the Houses of Parliament. This clause also provides for that SEBI to have power under relevant provisions of this Act to file a complaint in court of competant jurisdiction for listed companies in respect of forward dealing and insider training.

Clause 459.— This clause corresponds to section 637A of the Companies Act, 1956 and seeks to provide that while according approval, sanction, consent, confirmation etc., giving directions or granting exemptions the Central Government or the Tribunal may impose suchconditions or restrictions as it thinks fit subject to the payment of fee.

Clause 460.— This clause corresponds to section 637B of the Companies Act, 1956 and seeks to provide that whenever any application is to be made to Central Government or any document is required to be filed with Registrar within specified time, the Central Government may, after recording the reasons for delay, condone the delay.

Clause 461.— This clause corresponds to section 638 of the Companies Act, 1956 and seeks to provide that the Central Government shall prepare annual report on the working of the Act and lay before both the Houses of Parliament.

Clause 462.— This clause gives power to Central Government by notification directs that any provisions of this Act to apply or not to apply to such class or classes of companies as specified in the public interest. The notification to be laid in both the Houses of Parliament for modification and such shall be issued.

Clause 463. — This clause corresponds to section 633 of the Companies Act,1956 and seeks to provide about the power of Court to grant relief to an officer of a company in respect of negligence, default, breach of duty, misfeasance or breach of trust provided that he has acted honestly and reasonably and having regard to all the circumstances of the case.

Clause 464.— This clause corresponds to section 11 of the Companies Act, 1956 and seeks to provide that the number of persons in any association or partnership shall not exceed one hundred. This clause further provides that the above restriction shall not apply to an association or partnership, constituted by professionals. The provision shall not apply to Hindu Undivided Family.

Clause 465.— This clause deals with repealing of Companies Act, 1956 and Registration of Companies (Sikkim) Act, 1961. However, the provisions relating to producer companies shall be applicable mutatis mutandis as if Companies Act has not been repealed. It further provides that till the formation of Tribunal and Appellate Tribunal, the provisions of Companies Act, 1956 with regard to Company Law Board shall continue to apply.

Clause 466. — This clause corresponds to section 10FA of the Companies Act, 1956 and seeks to provide that on the constitution of the Tribunal and Appellate Tribunal, the Company Law Board shall stand dissolved. It provides that consequent upon formation of the Tribunal or Appellate Tribunal, the persons holding the office of Chairman, Vice-Chairman or Members shall stand vacated without any compensation for premature termination. Further, the officials on deputation shall be reverted to their parent cadre and the officials of the Board shall become officials of the Central Government with the same rights and privileges.

Clause 467.— This clause gives power to Central Government to amend Schedule to this Act. The alteration laid by the Central Government shall be made before both Houses of Parliament for any modification or annulment to have effect.

Clause 468. — This clause corresponds to section 643 of Companies Act, 1956 and seeks to provide that Central Government may make rules relating to the matters of winding up of companies. The clause further provides that without prejudice to the generality of the foregoing power, the rule may provide for the matters specified in clause. The clause also provides the Rules made by Supreme Court on the matter referred in this clause shall continue to be in force till Central Government makes Rules.

Clause 469 . — This clause corresponds to section 642 of Companies Act, 1956 and seeks to provide that Central Government may make rules for the purpose of this Act. This Clause further provides that Central Government may make rule for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provision is to be made. The clause further provides the penalty for the contravention and clause also provides that every rule made under this section and regulation made by Security Exchange Board of India to be laid before each House of Parliament for any modification or annulment.

Clause 470. — This is a new clause and seeks to empower Central Government to remove difficulty by publishing order in the Official Gazette in case of any difficulty arises in giving effect to the provision of this Act before the expiry of 3 years from the date of commencement of clause 1 of this Act. The clause further provides that every order made to be laid before each House of Parliament as soon as possible.