TMI BlogNotes on ClausesX X X X Extracts X X X X X X X X Extracts X X X X ..... oned 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 Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorise 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licate 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 pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 vot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany 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 secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... men 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatus 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 dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies 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 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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