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Section
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Companies Act, 2013
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Companies (Amendment), 2017
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Remarks
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2(28)
Definition of cost accountant
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(28) “cost accountant” means a cost
accountant as defined in clause (b) of subsection (1) of
section 2 of the Cost and Works Accountants Act, 1959;
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'"Cost Accountant" means a cost accountant
as defined in clause (b)
of sub-section (1) of section 2 of the Cost
and Works Accountants Act, 1959 and
who holds a valid certificate of practice under sub-section (1) of
section 6 of that Act;
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Cost Accountant in practice added in cost accountant
definition
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2(30)
Debenture
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(30) “debenture” includes debenture stock,
bonds or any other instrument of a company evidencing a debt, whether
constituting a charge on the assets of the company or not;
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(30) “debenture” includes debenture stock,
bonds or any other instrument of a company evidencing a debt, whether
constituting a charge on the assets of the company or not;
Provided that—
(a) the instruments referred to in Chapter III-D of the Reserve
Bank
of India Act, 1934; and
(b) such other instrument, as may be prescribed by the Central Government
in consultation with Reserve Bank of India, issued by a
company, shall not be treated as debenture;";
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Exemption provided
to instruments under chapter III D of Reserve Bank of India and authority
given to CG to prescribe other instruments which will not be treated as
debentures
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2(41)
Financial Year
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Provided that on an application made by a company or
body corporate, which is a holding company or a subsidiary of a company
incorporated outside India and is required to follow a different financial
year for consolidation of its accounts outside India, the Tribunal may, if it
is satisfied, allow any period as its financial year, whether or not that
period is a year
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Provided that on an application made by a company or
body corporate, which is a holding company or a subsidiary or
associate company of a company incorporated outside India and is required
to follow a different financial year for consolidation of its accounts
outside India, the Tribunal may, if it is satisfied, allow any period as its
financial year, whether or not that period is a year
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Now even associate company of company or company
incorporated outside India can apply for change in
its Financial Year
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2(46)
Holding Company
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“holding
company”, in relation to one or more other companies, means a company of
which such companies are subsidiary companies
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the following Explanation shall be inserted,
namely:—
'Explanation.—For the
purposes of this clause, the expression "company"
includes any body corporate
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company incorporated outside India as well as LLP will be treated as holding
company
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2(49)
Interested Director
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means a
director who is in any way, whether by himself or through any of his
relatives or firm, body corporate or other association of individuals in
which he or any of his relatives is a partner, director or a member,
interested in a contract or arrangement, or proposed contract or arrangement,
entered into or to be entered into by or on behalf of a company;
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Omitted
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2(51) Key Managerial Personnel
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51) “key
managerial personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the
managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed
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51) “key
managerial personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the
managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v)
such other officer, not more than one level below the directors
who is in whole-time employment, designated as key managerial
personnel by the Board; and
(vi) such other officer as may be prescribed
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One more sub clause added to include other officer as KMP however , not more than one level below the directors
who is in
whole-time employment,
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2(57)
Net worth
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(57) “net worth” means the aggregate value of
the paid-up share capital and all reserves created out of the profits and
securities premium account, after deducting the aggregate value of the
accumulated losses, deferred expenditure and miscellaneous
expenditure not written off, as per the audited
balance sheet, but does not include reserves created out of revaluation of
assets, write-back of depreciation and amalgamation;
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(57) “net worth” means the aggregate value of
the paid-up share capital and all reserves created out of the profits and
securities premium account and debit
or credit balance of profit and loss account, after deducting the
aggregate value of the accumulated losses, deferred expenditure and
miscellaneous expenditure not written off, as per the audited balance sheet,
but does not include reserves created out of revaluation of assets,
write-back of depreciation and amalgamation;
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While calculating Net-worth, now onwards the credit
balance of P & L account is also required to taken into account
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2(71)
Public Company
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means a company
which—
(a) is
not a private company;
(b) has a minimum paid-up share capital of
five lakh rupees or such higher paid-up capital, as may be prescribed:
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means a company which—
(a) is
not a private company; and
(b) has a minimum paid-up share capital of
five lakh rupees or such higher paid-up capital, as may be prescribed:
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And is inserted in definition so that both the
conditions are taken care
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2(72)
Public Financial Institution
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Provided that no institution shall be so notified
unless—
(A) it has been established or constituted by
or under any Central or State Act; or
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Provided that no institution shall be so notified
unless—
(A) it has been established or constituted by
or under any Central or State Act other
than this Act or the previous company law; or
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2(76) Definition of Related Party in relation to a
company
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(viii) any company which is—
(A) a holding, subsidiary or an associate
company of such company; or
(B) a subsidiary of a holding company to
which it is also a subsidiary;
(ix) such other person as may be prescribed
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"(viii) any body corporate which is—
(A) a holding, subsidiary or an associate
company of such company;
(B) a subsidiary of a holding company to
which it is also a subsidiary;
Or (C) an investing company or the venturer of a the
company;"
Explanation- For the purpose of this clause, ‘the investing company or
the venture of a company” means a body corporate whose investment in the
company would result in the company becoming an associate company of the body
corporate
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Scope is widened to include body corporate which is a investing company or
the ventures company
In explanation – Definition is provided explaining Investing company or venture company
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2(85)
Small Company
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(85) ‘‘small company’’ means a company, other than a
public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore
rupees;
and
(ii) turnover of which as per its last profit and loss account does not
exceed two crore rupees or such higher amount as may be prescribed which
shall not be more than twenty crore rupees: Provided that nothing in this
clause shall apply to—
(A) a holding
company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any
special Act;
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(85) ‘‘small
company’’ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore 10 crore rupees;
and
(ii) turnover of which as per its last profit and loss account as
per profit and loss account for the immediately preceding financial year does
not exceed two crore rupees or such higher amount as may be prescribed which
shall not be more than twenty 100 crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any
special Act;
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Upper limit is increased for small company – 10
crore for paid up capital and 100 cr for turnover
AND
To check whether the company is small company or not
the turnover as per profit and loss account
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2(91)
Turnover
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means the aggregate value of the realisation of
amount made from the sale, supply or distribution of goods or on account of
services rendered, or both, by the company during a financial year;
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'(91) "turnover" means the gross amount of revenue
recognised in the
profit and loss account from the sale, supply, or distribution of
goods or on account of services rendered, or both, by a company during a
financial year;'.
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Turnover = as recognized in PNL account and not the realisation amt
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3A Members severally liable in certain cases
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No section earlier
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3A.If at any time the number of members of
a company is reduced, in the case of a public company, below seven, in the
case of a private company, below two, and the company carries on business for
more than six months while the number of members is so reduced, every person
who is a member of the company during the time that it so carries on business
after those six months and is cognisant of the fact that it is carrying on
business with less than seven members or two members, as the case may be,
shall be severally liable for the payment of the whole debts of the company
contracted during that time, and may be severally sued therefor
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Members liable for whole debts o fthe company in case the minimum no.
of members required are reduced and
company carries on business for more than 6 months while number is reduced.
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Section 21 Authentication
of
documents,
proceedings
and contracts.
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21. Save as
otherwise provided in this Act,—
(a) a document or proceeding requiring
authentication by a company; or
(b) contracts made by or on behalf of a
company, may be signed by any key managerial personnel or an officer of the
company duly authorized by the Board in this behalf
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21. Save as
otherwise provided in this Act,—
(a) a document or proceeding requiring
authentication by a company; or
(b) contracts made by or on behalf of a
company, may be signed by any key managerial personnel or an officer or employee of the company duly
authorized by the Board in this behalf
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Signing authority is extended to employee also
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Section35
``Civil liability
for misstatements
in prospectus.
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2) No person
shall be liable under sub-section (1), if he proves—
(a) that, having consented to become a
director of the company, he withdrew his consent before the issue of the
prospectus, and that it was issued without his authority
or consent
(b) that the prospectus was issued without
his knowledge or consent, and that on becoming aware of its issue, he
forthwith gave a reasonable public notice that it
was issued without his knowledge or consent.
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2) No person
shall be liable under sub-section (1), if he proves—
(a) that, having consented to become a
director of the company, he withdrew his consent before the issue of the
prospectus, and that it was issued without his authority or consent
(b) that the prospectus was issued without
his knowledge or consent, and that on becoming aware of its issue, he
forthwith gave a reasonable public notice that it was issued without his
knowledge or consent.
(c) that, as regards every misleading statement purported to be
made by an expert or contained in what purports to be a copy of or an extract
from a report or valuation of an
expert, it was a correct and fair representation of the statement, or a
correct copy of, or a correct and fair extract from, the report or valuation
; and he had reasonable ground to believe and did up to the time of the issue
of the prospectus believe, that the person making the statement was competent
to make it and that the said person had given the consent required by
sub-section (5) of section 26 to the issue of the prospectus and had
not withdrawn that consent before delivery of a copy of the prospectus for
registration or, to the defendant's knowledge, before allotment thereunder.
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Registered valuer required to give proof
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47. Voting rights.
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47. (1) Subject to the provisions of section 43
and sub-section (2) of section 50,—
(a) every member of a
company limited by shares and holding equity share capital therein, shall
have a right to vote on every resolution placed before the company; and
(b) his voting right on a
poll shall be in proportion to his share in the paid-up equity share capital
of the company.
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47. (1) Subject to the provisions of section 43
and sub-section (2) of section 50 and
sub section (1) of section 188,—
(a) every member of a
company limited by shares and holding equity share capital therein, shall
have a right to vote on every resolution placed before the company; and
(b) his voting right on a
poll shall be in proportion to his share in the paid-up equity share capital
of the company.
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Section 188 included
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53. Prohibition
on issue of
shares at
discount.
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53. (1) Except as provided in section
54, a company shall not issue shares at a discount. (2) Any share
issued by a company at a discounted price shall be void.
(2) Any share issued by a
company at a discounted price shall be void.
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53. (1) Except as provided in section 54, a
company shall not issue shares at a discount.
(2) Any share issued by a
company at a discounted price discount
shall be void.
"(2A) Notwithstanding
anything contained in sub-sections (1) and (2), a company may issue shares at
a discount to its creditors when its debt is converted into shares in
pursuance of any statutory resolution plan or debt restructuring scheme in
accordance with any guidelines or directions or regulations specified by the
Reserve Bank of India under the Reserve Bank of India Act, 1934 or the
Banking (Regulation) Act, 1949
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Company may issue shares at discount
to its creditors at the time of conversion of debt into shares
pursuant to
·
Statutory resolution plan;
or
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Debt restructuring scheme
Accordance with the guidelines specified by RBI
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62. Further issue
of share
capital
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62. (1) Where at any time, a company
having a share capital proposes to increase its
subscribed capital by the
issue of further shares, such shares shall be offered—
(c) to any
persons, if it is authorised by a special resolution, whether or not those
persons include the persons referred to in clause (a) or clause (b),
either for cash
or for a consideration
other than cash, if the price of such shares is determined by the valuation
report of a registered valuer subject to such conditions as may be prescribed.
(2) The notice
referred to in sub-clause (i) of clause (a) of sub-section (1)
shall be despatched through registered post or speed post or through
electronic mode to all the existing shareholders at least three days before
the opening of the issue.
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62. (1) Where at any time, a company
having a share capital proposes to increase its subscribed capital by the
issue of further shares, such shares shall be offered—
(c) to any
persons, if it is authorised by a special resolution, whether or not those
persons include the persons referred to in clause (a) or clause (b),
either for cash or for a consideration other than cash, if the price of such
shares is determined by the valuation report of a registered valuer subject
to the compliance with the applicable
provisions of Chapter III and any other conditions as may be
prescribed.
(2) The notice referred
to in sub-clause (i) of clause (a) of sub-section (1)
shall be despatched through registered post or speed post or through
electronic mode or courier or any
other mode having proof of delivery to all the existing shareholders at
least three days before the opening of the issue.
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Compliance of chapter III is required for issue of
shares to any other person other than shareholder and ESOP
For dispatch of notice- courier or any other mode
which has proof of deliver is included
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76A Punishment for contravention of section 73 or section 76
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(a) the company shall, in addition to the payment of the amount of
deposit or part thereof and the interest due, be punishable with fine which
shall not be less than 1,00,00,000 rupees but which may extend to 10,00,00,000;
and
(b) every officer of the company who is in default shall be punishable with
imprisonment which may extend to seven years or with fine which shall not be
less than 25,00,000 rupees but which may extend to 2,00,00,000 rupees, or
with both:
Provided that if it is proved that the officer of the company who is in
default, has contravened such provisions knowingly or wilfully with the
intention to deceive he company or its shareholders or depositors or
creditors or tax authorities, he shall be liable for action under section
447.”.
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(a) the company shall, in addition to the payment of the amount of
deposit or part thereof and the interest due, be punishable with fine which
shall not be less than 1,00,00,000 rupees or twice the amount of deposit accepted by the company, whichever is
lower but which may extend to 10,00,00,000 rupees; and
(b) every officer of the company who is in default shall be punishable with
imprisonment which may extend to 7 years and
with fine which shall not be less than 25,00,000 rupees but which may
extend to 2,00,00,000 rupees , or with both:
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Modified penal provisions for company as well as defaulting officer.
For company – lower of the following
1) 1 crore ; or
2) times of amount of deposit accepted by the company
Maximum – 10 crore
Defaulting officer will be punished with both i.e. Fine and
Imprisonment.
Earlier Fine or imprisonment or both was prescribed
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100. Calling of
extraordinary
general meeting.
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100. (1) The Board may, whenever it deems fit,
call an extraordinary general meeting of the company.
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100. (1) The Board may, whenever it deems fit, call an extraordinary
general meeting of the company.
Provided that an
extraordinary general meeting of the company, other than of the wholly owned
subsidiary of a company incorporated outside India, shall be held at a place
within India.".
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EGM of WOS of a company incorporated o/s India can be held at any
place
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Section 101(1)
Notice of meeting.
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(1) A general meeting of a company may be called by giving not
less than clear twenty-one days’ notice either in writing or through
electronic mode in such manner as maybe prescribed:
Provided that a general meeting may be called after giving a shorter
notice if consent is given in writing or by electronic mode by not less than
ninety-five per cent. of the members entitled to vote at such meeting.
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(1) A general meeting of a company may be called by
giving not less than clear twenty-one days’ notice either in writing or
through electronic mode in such manner as maybe prescribed:
"Provided that a general meeting may be called after giving
shorter notice if consent is given in writing or by electronic mode by not
less than ninety-five per cent. of the members entitled to vote at such
meeting. than that specified in this sub-section if consent, in writing
or by electronic mode, is accorded thereto—
(i) in the case of
an annual general meeting, by not less than 95%. of the members entitled to
vote thereat; and
(ii) in the case of
any other general meeting, by members of the company—
(a) holding, if the
company has a share capital, majority in number of members entitled to vote
and who represent not less than ninety five percent of such part of the
paid-up share capital of the company as gives a right to vote at the meeting;
or
(b) having, if the
company has no share capital, not less than 95% of the total voting power
exercisable at that meeting:
Provided further that
where any member of a company is entitled to vote only on some resolution or
resolutions to be moved at a meeting and not on the others, those members
shall be taken into account for the purposes of this sub-section in respect
of the former resolution or resolutions and not in respect of the
latter.".
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Shorter notice consent - in
case of AGM – Consent required from
95% of members entitled to vote.
In case of other general meeting:
Companies having share capital – Consent required from majority in
number of members representing nit less than 95% of paid up capital of
company which gives right to vote.
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110. Postal ballot
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(1) Notwithstanding anything contained in this Act, a company—
(a) shall, in respect of such items of business as the Central
Government may, by notification, declare to be transacted only by means of
postal ballot; and
(b) may, in respect of any item of business, other than
ordinary business and any business in respect of which directors or auditors
have a right to be heard at any meeting, transact by means of postal ballot,
in such manner as may be prescribed, instead of transacting such
business at a general meeting.
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(1) Notwithstanding anything contained in this Act, a company—
(a) shall, in respect of such items of business as the Central
Government may, by notification, declare to be transacted only by means of
postal ballot; and
(b) may, in respect of any item of business, other than
ordinary business and any business in respect of which directors or auditors
have a right to be heard at any meeting, transact by means of postal ballot,
in such manner as may be prescribed, instead of transacting such
business at a general meeting.
Provided that any item of
business required to be transacted by means of postal ballot under clause (a),
may be transacted at a general meeting by a company which is required to
provide the facility to members to vote by electronic means under section
108, in the manner provided in that section.
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A new proviso is inserted
Items to be transacted- postal ballot – can be transacted at general
meeting – if the company is required to provide electronic voting
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Section 123(1)
Declaration
of dividend.
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123. (1) No dividend shall be declared or paid by
a company for any financial year except—
(a) out of the profits of the company for that year arrived at
after providing for depreciation in accordance with the provisions of
sub-section (2), or out of the profits of the company for any previous
financial year or years arrived at after providing for depreciation in accordance
with the provisions of that sub-section and remaining undistributed, or out
of both; or
(b) out of money provided by the Central Government or a State
Government for
the payment of dividend by the company in pursuance of a guarantee
given by that
Government:
Provided that a company may, before the declaration of any dividend in
any financial
year, transfer such percentage of its profits for that financial year
as it may consider appropriate to the reserves of the company:
Provided further that where, owing to inadequacy or absence of profits
in any financial year, any company proposes to declare dividend out of the
accumulated profits earned by it in previous years and transferred by the
company to the reserves, such declaration of dividend shall not be made
except in accordance with such rules as may be prescribed in this behalf:
(3) The Board of Directors of a company may declare interim dividend
during any financial year out of the surplus in the profit and loss account
and out of profits of the financial year in which such interim dividend is
sought to be declared:
Provided that in case the company has incurred loss during the current
financial year up to the end of the quarter immediately preceding the date of
declaration of interim dividend, such interim dividend shall not be declared
at a rate higher than the average dividends declared by the company during
the immediately preceding three financial years.
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(1) No dividend shall be declared or paid by a company for any
financial year except—
(a) out of the profits of the company for
that year arrived at after providing for depreciation in accordance with the
provisions of sub-section (2), or out of the profits of the company
for any previous financial year or years arrived at after providing for
depreciation in accordance with the provisions of that sub-section and
remaining undistributed, or out of
both both; or
(b) out of money provided by the Central Government or a State
Government for
the payment of dividend by the company in pursuance of a guarantee
given by that
Government:
Provided that in computing
profits any amount representing unrealized gains, notional gains or
revaluation of assets and any change in carrying amount of an asset or of a
liability on measurement of the asset or the liability at fair value shall be
excluded; or
Provided that a company may, before the declaration of any dividend in
any financial year, transfer such percentage of its profits for that
financial year as it may consider appropriate to the reserves of the company:
Provided further that where, owing to inadequacy or absence of profits
in any financial year, any company proposes to declare dividend out of the
accumulated profits earned by it in previous years and transferred by the
company to the free reserves, such declaration of dividend shall
not be made except in accordance with such rules as may be prescribed in this
behalf:
(3) The Board of Directors
of a company may declare interim dividend during any financial year or at any
time during the period from closure of financial year till
holding of the annual
general meeting out of the surplus in the profit and loss account or out of
profits of the financial year for which such interim dividend is sought to be
declared or out of profits generated in the financial year till the quarter
preceding the
date of declaration of the
interim dividend:
Provided that in case the
company has incurred loss during the current financial year up to the end of
the quarter immediately preceding the date of declaration of interim
dividend, such interim dividend shall not be declared at a rate higher than
the average dividends declared by the company during immediately preceding
three financial years.".
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computing profits any amount representing unrealized gains, notional
gains or revaluation of assets and any change in carrying amount of an asset
or of a liability on measurement of the asset or the liability at fair value
shall be excluded.
Declaration of dividend out of free reserves only
specific mention about omissioned or not as
BI to enforce the insider trading and forward dealing provisions of the act
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Section 130- Reopening of
Accounts on Courts or Tribunal’s Order
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(1) A company shall not re-open its books of account and not recast
its financial statements, unless an application in this regard is made by the
Central Government, the Income-tax authorities, the Securities and Exchange
Board, any other statutory regulatory body or authority or any person
concerned and an order is made by a court of competent jurisdiction or the
Tribunal to the effect that—
(i) the relevant earlier accounts were prepared in a fraudulent
manner; or
(ii) the affairs of the company were mismanaged during the
relevant period, casting a doubt on the reliability of financial statements:
Provided that the court or the Tribunal, as the case may be, shall
give notice to the Central Government, the Income-tax authorities, the
Securities and Exchange Board or any other statutory regulatory body or
authority concerned and shall take into consideration the representations, if
any, made by that Government or the authorities, Securities and Exchange
Board or the body or authority concerned before passing any order under this
section.
(2) Without prejudice to the provisions contained in this Act
the accounts so revised or re-cast under sub-section (1) shall be
final.
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(1) A company shall not re-open its books of account and not
recast its financial statements, unless an application in this regard is made
by the Central Government, the Income-tax authorities, the Securities and
Exchange Board, any other statutory regulatory body or authority or any
person concerned and an order is made by a court of competent jurisdiction or
the Tribunal to the effect that—
(i) the relevant earlier accounts were prepared in a fraudulent
manner; or
(ii) the affairs of the company were mismanaged during the
relevant period, casting a doubt on the reliability of financial statements:
Provided that the court or the Tribunal, as the case may be, shall
give notice to the Central Government, the Income-tax authorities, the
Securities and Exchange Board or any other statutory regulatory body or
authority concerned or any other person concerned and
shall take into consideration the representations, if any, made by that
Government or the authorities, Securities and Exchange Board or the body or
authority concerned or any other
person concerned before passing any order under this section.
(2) Without prejudice to the provisions contained in this Act
the accounts so revised or re-cast under sub-section (1) shall be
final.
"(3) No order
shall be made under sub-section (1) in respect of re-opening of books
of account relating to a period earlier than eight financial years
immediately preceding the current financial year:
Provided that where a
direction has been issued by the Central Government under the proviso to
sub-section (5) of section 128 for keeping of books of account for a
period longer than eight years, the books of account may be ordered to be
re-opened within such longer period.
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Order for reopening
accounts can be made upto 8 F.Y. preceding the current financial year unless
direction has been issued by the Central Government under the proviso to
sub-section (5) of section 128 for keeping of books of account for a
period longer than eight years
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132. Constitution
of
National
Financial
Reporting
Authority.
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(4) Notwithstanding anything contained in any other law for the
time being in force, the National Financial Reporting Authority shall—
(c) where professional or other misconduct is proved, have the
power to make order for—
(A) imposing penalty of—
(I) not less than one lakh rupees, but which may extend to five
times
of the fees received, in case of individuals; and
(II) not less than ten lakh rupees, but which may extend to ten
times
of the fees received, in case of firms;
(B) debarring the member or the firm from engaging himself or
itself from practice as member of the Institute of Chartered Accountant of
India referred to in clause (e) of sub-section (1) of section 2
of the Chartered Accountants Act, 1949 for a minimum period of six months or
for such higher period not exceeding ten years as may be decided by the
National Financial Reporting Authority.
(5) Any person aggrieved
by any order of the National Financial Reporting Authority issued under
clause (c) of sub-section (4), may prefer an appeal before the
Appellate Authority constituted under sub-section (6) in such manner
as may be prescribed.
(6) The Central Government may, by notification, constitute, with
effect from such date as may be specified therein, an Appellate Authority
consisting of a chairperson and not more then two other members, to be
appointed by the Central Government, for hearing appeals arising out of the orders
of the National Financial Reporting Authority.
(7) The qualifications for appointment of the chairperson and members
of the Appellate Authority, the manner of selection, the terms and conditions
of their service and the requirement of the supporting staff and procedure
(including places of hearing the appeals, form and manner in which the
appeals shall be filed) to be followed by the Appellate Authority shall be
such as may be prescribed.
(8) The fee for filing the appeal shall be such as may be prescribed.
(9) The officer authorised by the Appellate Authority shall prepare in
such form and at such time as may be prescribed its annual report giving a
full account of its activities and forward a copy thereof to the Central
Government and the Central Government shall cause the annual report to be
laid before each House of Parliament.
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(4) Notwithstanding anything contained in any other
law for the time being in force, the National Financial Reporting Authority
shall—
(c) where professional or other misconduct is proved, have the
power to make order for—
(A) imposing penalty of—
(I) not less than one lakh rupees, but which may extend to five
times
of the fees received, in case of individuals; and
(II) not less than ten
Five lakh rupees, but which
may extend to ten times
of the fees received, in case of firms;
(B) debarring the member or the firm from engaging himself or
itself from practice as member of the Institute of Chartered Accountant of
India referred to in clause (e) of sub-section (1) of section 2
of the Chartered Accountants Act, 1949 for a minimum period of six months or
for such higher period not exceeding ten years as may be decided by the
National Financial Reporting Authority.
(5) Any person aggrieved by any order of the National Financial
Reporting Authority issued under clause (c) of sub-section (4),
may prefer an appeal before the Appellate Authority constituted under
sub-section (6) in such manner as may be prescribed.
the Appellate Tribunal in such manner and on payment of such fee as
may be
prescribed
Sub-Section (6), (7), (8)
and (9) omitted
(6) The Central Government may, by notification, constitute, with
effect from such date as may be specified therein, an Appellate Authority
consisting of a chairperson and not more then two other members, to be
appointed by the Central Government, for hearing appeals arising out of the
orders of the National Financial Reporting Authority.
(7) The qualifications for appointment of the chairperson and members
of the Appellate Authority, the manner of selection, the terms and conditions
of their service and the requirement of the supporting staff and procedure
(including places of hearing the appeals, form and manner in which the
appeals shall be filed) to be followed by the Appellate Authority shall be
such as may be prescribed.
(8) The fee for filing the appeal shall be such as may be prescribed.
(9) The officer authorised by the Appellate Authority shall prepare in
such form and at such time as may be prescribed its annual report giving a full
account of its activities and forward a copy thereof to the Central
Government and the Central Government shall cause the annual report to be
laid before each House of Parliament.
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NCLAT has power to hear
appeal against NFRA.
Sub-Section (6), (7), (8)
and (9) related to establishment of appeallate authority for NFRA omitted
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Section 136 Right of
member to copies of audited financial statement.
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136. (1) Without prejudice to the provisions of
section 101, a copy of the financial statements, including consolidated
financial statements, if any, auditor’s report and every other document
required by law to be annexed or attached to the financial statements, which
are to be laid before a company in its general meeting, shall be sent to
every member of the company, to every trustee for the debenture-holder of any
debentures issued by the company, and to all persons other than such member
or trustee, being the person so entitled, not less than twenty-one days
before the date of the meeting:
Provided that in the case of a listed company, the provisions of this
sub-section shall be deemed to be complied with, if the copies of the
documents are made available for inspection at its registered office during
working hours for a period of twenty-one days before the date
of the meeting and a statement containing the salient features of such
documents in the prescribed form or copies of the documents, as the company
may deem fit, is sent to every member of the company and to every trustee for
the holders of any debentures issued by the company not less than twenty-one
days before the date of the meeting unless the shareholders ask for full
financial statements:
Provided further that the Central Government may prescribe the manner
of circulation of financial statements of companies having such net worth and
turnover as may be prescribed:
Provided also that a listed company shall also place its financial
statements including consolidated financial statements, if any, and all other
documents required to be attached thereto, on its website, which is
maintained by or on behalf of the company:
Provided also that every company having a subsidiary or subsidiaries
shall,—
(a) place separate audited accounts in respect of each of its
subsidiary on its website, if any;
(b) provide a copy of separate audited financial statements in
respect of each of its subsidiary, to any shareholder of the company who asks
for it.
(2) A company shall allow every member or trustee of the holder
of any debentures issued by the company to inspect the documents stated under
sub-section (1) at its registered office during business hours.
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136. (1) Without prejudice to the provisions of
section 101, a copy of the financial statements, including consolidated
financial statements, if any, auditor’s report and every other document
required by law to be annexed or attached to the financial statements, which
are to be laid before a company in its general meeting, shall be sent to
every member of the company, to every trustee for the debenture-holder of any
debentures issued by the company, and to all persons other than such member
or trustee, being the person so entitled, not less than twenty-one days
before the date of the meeting:
"Provided that if the
copies of the documents are sent less than twenty-one days before the date of
the meeting, they shall, notwithstanding that fact, be deemed to have been
duly sent if it is so agreed by members—
(a) holding, if the
company has a share capital, majority in number entitled to vote and who
represent not less than ninety-five per cent. Of such part of the paid-up
share capital of the company as gives a right to vote at the meeting; or
(b) having, if the
company has no share capital, c:
Provided further that in
the case of a listed company, the provisions of this sub-section shall be
deemed to be complied with, if the copies of the documents are made available
for inspection at its registered office during working hours for a period of
twenty-one days before the date of the meeting and a statement containing the
salient features of such documents in the prescribed form or copies of the
documents, as the company may deem fit, is sent to every member of the
company and to every trustee for the holders of any debentures issued by the
company not less than twenty-one days before the date of the meeting unless
the shareholders ask for full financial statements:
Provided also further that the Central Government may prescribe
the manner of circulation of financial statements of companies having such
net worth and turnover as may be prescribed:
Provided also that a listed company shall also place its financial
statements including consolidated financial statements, if any, and all other
documents required to be attached thereto, on its website, which is
maintained by or on behalf of the company:
Provided also that every company having a subsidiary or subsidiaries
shall,—
(a) place separate audited accounts in respect of each of its
subsidiary on its website, if any;
(b) provide a copy of separate audited financial statements in
respect of each of its subsidiary, to any shareholder of the company who asks
for it.
Provided also that every
listed company having a subsidiary or subsidiaries shall place separate
audited accounts in respect of each of subsidiary on its website, if any:
Provided also that a
listed company which has a subsidiary incorporated outside India (herein
referred to as "foreign subsidiary")—
(a) where such
foreign subsidiary is statutorily required to prepare consolidated financial
statement under any law of the country of its incorporation, the requirement
of this proviso shall be met if consolidated financial statement of such
foreign subsidiary is placed on the website of the listed company;
(b) where such
foreign subsidiary is not required to get its financial statement audited
under any law of the country of its incorporation and which does not get such
financial statement audited, the holding Indian listed company may place such
unaudited financial statement on its website and where such financial
statement is in a language other than English, a translated copy of the
financial statement in English shall also be placed on the website.
(2) A company shall allow every member or trustee of the holder
of any debentures issued by the company to inspect the documents stated under
sub-section (1) at its registered office during business hours.
Provided that every
company having a subsidiary or subsidiaries shall provide a copy of separate
audited or unaudited financial statements, as the case may be, as prepared in
respect of each of its subsidiary to any member of the company who asks for
it.".
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Copies of financial
statement and other documents can be sent at shorter notice if agreed by
members
Company having share
capital – holding majority in number entitled to vote and who
represent not less than ninety-five per cent. Of such part of the paid-up
share capital of the company as gives a right to vote at the meeting
No share capital
Having not less than ninety five per cent. of the total voting power
exercisable at the meeting
Every listed company shall
place separate audited accounts in respect of each of subsidiary on its
website
Foreign Subsidiary
statutorily required to prepare consolidated financial statement under any
law of the country of its incorporation, the requirement of this proviso
shall be met if consolidated financial statement of such foreign subsidiary
is placed on the website of the listed company
the holding Indian listed
company may place such unaudited financial statement on its website, if such
foreign subsidiary is not required to get its financial statement audited
under any law of the country of its incorporation.
every company having a
subsidiary or subsidiaries shall provide a copy of separate audited or
unaudited financial statements, as the case may be, as prepared in respect of
each of its subsidiary to any member of the company who asks for it
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Section 140 Removal,
resignation of auditor and
giving of special notice.
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(3) If the auditor does not comply with sub-section (2),
he or it shall be punishable with fine which shall not be less than fifty
thousand rupees but which may extend to five lakh rupees.
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(3) If the auditor does not comply with sub-section (2),
he or it shall be punishable with fine which shall not be less than fifty
thousand rupees or the remuneration of
the auditor, whichever is Less but which may extend to five lakh rupees.
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Penalty revised in the
cases where the auditor fails to file his resignation with the Registrar
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Section 141 Eligibility,
qualifications
and disqualifications
of auditors.
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(3) The following persons shall not be eligible for appointment
as an auditor of a company, namely:—
(i) any person whose subsidiary or associate company or any
other form of entity, is engaged as on the date of appointment in consulting
and specialised services as provided in section 144.
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(3) The following persons shall not be eligible for appointment
as an auditor of a company, namely:—
(i) any person whose subsidiary or associate company or any
other form of entity, is engaged as on the date of appointment in consulting
and specialised services as provided in section 144.
(i) a person who,
directly or indirectly, renders any service referred to in section 144 to the
company or its holding company or its subsidiary company.
Explanation.—For the purposes of this
clause, the term "directly or indirectly" shall have the meaning
assigned to it in the Explanation to section 144.
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Person is not eligible to
appoint as auditor who directly or indirectly renders any services
referred in section 144 to
Company
Holding Company
Subsidiary company
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Section 143 Powers and
duties of auditors and
Auditing standards.
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(1) Every auditor of a company shall have a right of access at
all times to the books of account and vouchers of the company, whether kept
at the registered office of the
company or at any other place and shall be entitled to require from
the officers of the company such information and explanation as he may
consider necessary for the performance of his duties as auditor and amongst
other matters inquire into the following matters, namely:—
(a) whether loans and advances made by the company on the basis
of security have been properly secured and whether the terms on which they
have been made are
prejudicial to the interests of the company or its members;
(b) whether transactions of the company which are represented
merely by book entries are prejudicial to the interests of the company;
(c) where the company not being an investment company or a
banking company, whether so much of the assets of the company as consist of
shares, debentures and other securities have been sold at a price less than
that at which they were purchased by the company;
(d) whether loans and advances made by the company have been
shown as deposits;
(e) whether personal expenses have been charged to revenue
account;
(f) where it is stated in the books and documents of the
company that any shares have been allotted for cash, whether cash has
actually been received in respect of such allotment, and if no cash has
actually been so received, whether the position as stated in the account
books and the balance sheet is correct, regular and not misleading:
Provided that the auditor of a company which is a holding company
shall also have the right of access to the records of all its subsidiaries in
so far as it relates to the consolidation of its financial statements with
that of its subsidiaries.
(3) The auditor’s report shall also state—
(i) whether the company has adequate internal financial
controls system in place and the operating effectiveness of such controls;
(14) The provisions of this section shall mutatis mutandis apply
to—
(a) the cost accountant in practice conducting cost audit under
section 148; or
(b) the company secretary in practice conducting secretarial
audit under section 204.
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(1) Every auditor of a company shall have a right of access at
all times to the books of account and vouchers of the company, whether kept
at the registered office of the
company or at any other place and shall be entitled to require from
the officers of the company such information and explanation as he may
consider necessary for the performance of his duties as auditor and amongst
other matters inquire into the following matters, namely:—
(a) whether loans and advances made by the company on the basis
of security have been properly secured and whether the terms on which they
have been made are
prejudicial to the interests of the company or its members;
(b) whether transactions of the company which are represented
merely by book entries are prejudicial to the interests of the company;
(c) where the company not being an investment company or a banking
company, whether so much of the assets of the company as consist of shares,
debentures and other securities have been sold at a price less than that at
which they were purchased by the company;
(d) whether loans and advances made by the company have been
shown as deposits;
(e) whether personal expenses have been charged to revenue
account;
(f) where it is stated in the books and documents of the
company that any shares have been allotted for cash, whether cash has
actually been received in respect of such allotment, and if no cash has
actually been so received, whether the position as stated in the account
books and the balance sheet is correct, regular and not misleading:
Provided that the auditor of a company which is a holding company
shall also have the right of access to the records of all its subsidiaries
its subsidiaries and associate
companies in so far as it relates to the consolidation of its financial
statements with that of its subsidiaries.
(3) The auditor’s report shall also state—
(i) whether the company has adequate internal financial
controls system internal financial
controls with reference to financial statements in place and the
operating effectiveness of such controls;
(14) The provisions of this section shall mutatis mutandis apply
to—
(a) the cost accountant in practice cost
accountant conducting cost audit under section 148; or
(b) the company secretary in practice conducting secretarial
audit under section 204.
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Right of auditors of
holding company to have access to accounts of records of associate companies
alongwith subsidiary company
Auditors report to include
internal financial controls with reference to financial statements in place and the operating effectiveness of such controls
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Section 147 Punishment for
contravention.
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(2) If an auditor of a company contravenes any of the
provisions of section 139, section 143, section 144 or section 145, the
auditor shall be punishable with fine which shall
not be less than twenty-five thousand rupees but which may extend to
five lakh rupees:
Provided that if an auditor has contravened such provisions knowingly
or wilfully with the intention to deceive the company or its shareholders or
creditors or tax authorities, he shall be punishable with imprisonment for a
term which may extend to one year and with
fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees.
(3) Where an auditor has been convicted under sub-section (2),
he shall be liable to—
(i) refund the remuneration received by him to the
company; and
(ii) pay for damages to the company, statutory bodies or
authorities or to any other persons for loss arising out of incorrect or
misleading statements of particulars
made in his audit report.
(5) Where, in case of audit of a company being conducted by an
audit firm, it is proved that the partner or partners of the audit firm has
or have acted in a fraudulent manner or abetted or colluded in any fraud by,
or in relation to or by, the company or its directors or officers, the
liability, whether civil or criminal as provided in this Act or in any other
law for the time being in force, for such act shall be of the partner or
partners concerned of the audit firm and of the firm jointly and severally.
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(2) If an auditor of a company contravenes any of the
provisions of section 139, section 143, section 144 or section 145, the
auditor shall be punishable with fine which shall not be less than
twenty-five thousand rupees but which may extend to five lakh rupees or four times the remuneration of the
auditor, whichever is less:
Provided that if an auditor has contravened such provisions knowingly
or wilfully with the intention to deceive the company or its shareholders or
creditors or tax authorities, he shall be punishable with imprisonment for a
term which may extend to one year and with fine which shall not be less
than one lakh rupees but which
may extend to twenty-five lakh rupees. and with fine which shall not be less than fifty thousand rupees but
which may extend to twenty-five lakh rupees or eight times the remuneration
of the auditor, whichever is less
(3) Where an auditor has been convicted under sub-section (2),
he shall be liable to—
(i) refund the remuneration received by him to the
company; and
(ii) pay for damages to the company, statutory bodies or
authorities or to any other persons
or to members or creditors of
the company for loss arising out of incorrect or misleading statements of
particulars made in his audit report.
(5) Where, in case of audit of a company being conducted by an
audit firm, it is proved that the partner or partners of the audit firm has
or have acted in a fraudulent manner or abetted or colluded in any fraud by,
or in relation to or by, the company or its directors or officers, the liability,
whether civil or criminal as provided in this Act or in any other law for the
time being in force, for such act shall be of the partner or partners
concerned of the audit firm and of the firm jointly and severally.
Provided that in case of
criminal liability of an audit firm, in respect of liability other than fine,
the concerned partner or partners, who acted in a fraudulent manner or
abetted or, as the case may be, colluded in any fraud shall only be
liable.".
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Maximum fine imposed on an
auditor has been revised.
If auditor has contravened
provision of act wilfully – minimum
amount of fine reduced and maximum
fine related provisions revised
The liability of auditor
to pay damages for loss arising out of incorrect statements in audit report
is restricted to only member and
creditors.
Criminal liability of
audit firm – In case of liability other than fine – Concern partner involved
is only liable and not the whole firm or other partners
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Section 148- Central
Government to specify Audit of items of Cost in respect of certain companies
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(3) The audit under sub-section (2) shall be conducted
by a Cost Accountant in practice who shall be appointed by the Board on such
remuneration as may be determined by the members in such manner as may be
prescribed:
Provided that no person appointed under section 139 as an auditor of
the company shall be appointed for conducting the audit of cost records:
Provided further that the auditor conducting the cost audit shall
comply with the cost auditing standards.
Explanation.—For the purposes of this sub-section, the
expression “cost auditing standards” mean such standards as are issued by the
Institute of Cost and Works Accountants of India, constituted under the Cost
and Works Accountants Act, 1959, with the approval of the Central Government.
(5) The qualifications, disqualifications, rights, duties and
obligations applicable to auditors under this Chapter shall, so far as may be
applicable, apply to a cost auditor appointed under this section and it shall
be the duty of the company to give all assistance and facilities to the cost
auditor appointed under this section for auditing the cost records of the
company:
Provided that the report on the audit of cost records shall be
submitted by the cost accountant in practice to the Board of Directors of the
company.
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(3) The audit under sub-section (2) shall be conducted
by a Cost Accountant in practice cost
accountant who shall be appointed by the Board on such remuneration as
may be determined by the members in such manner as may be prescribed:
Provided that no person appointed under section 139 as an auditor of
the company shall be appointed for conducting the audit of cost records:
Provided further that the auditor conducting the cost audit shall
comply with the cost auditing standards.
Explanation.—For the purposes of this sub-section, the
expression “cost auditing standards” mean such standards as are issued by the
Institute of Cost and Works Accountants of India Institute of Cost Accountants of India, constituted under the
Cost and Works Accountants Act, 1959, with the approval of the Central
Government.
(5) The qualifications, disqualifications, rights, duties and
obligations applicable to auditors under this Chapter shall, so far as may be
applicable, apply to a cost auditor appointed under this section and it shall
be the duty of the company to give all assistance and facilities to the cost
auditor appointed under this section for auditing the cost records of the
company:
Provided that the report on the audit of cost records shall be
submitted by the cost accountant in practice cost accountant to the Board of Directors of the company.
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Section 152 Appointment of
Directors
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(3) No person shall be appointed as a director of a company
unless he has been allotted the Director Identification Number under section
154.
(4) Every person proposed to be appointed as a director by the
company in general meeting or otherwise, shall furnish his Director
Identification Number and a declaration that he is not disqualified to become
a director under this Act.
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(3) No person shall be appointed as a director of a company
unless he has been allotted the Director Identification Number under section
154 or any other number as may be
prescribed under section 153.
(4) Every person proposed to be appointed as a director by the
company in general meeting or otherwise, shall furnish his Director
Identification Number or such other
number as may be prescribed under section 153 and a declaration that he
is not disqualified to become a director under this Act.
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CG may prescribe another
number which can be used as DIN
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Section 153 Application
for allotment
of Director
Identification
Number.
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Every individual intending to be appointed as director of a company
shall make an application for allotment of Director Identification Number to
the Central Government in such form and manner and along with such fees as
may be prescribed
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Every individual intending to be appointed as director of a company
shall make an application for allotment of Director Identification Number to
the Central Government in such form and manner and along with such fees as
may be prescribed
"Provided that the
Central Government may prescribe any identification number which shall be
treated as Director Identification Number for the purposes of this Act and in
case any individual holds or acquires such identification number, the
requirement of this section shall not apply or apply in such manner as may be
prescribed
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CG may prescribe another
number which can be used as DIN
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Section 160 Right of persons other
than retiring
directors to
stand for
directorship
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(1) A person who is not a retiring director
in terms of section 152 shall, subject to the provisions of this Act, be
eligible for appointment to the office of a director at any general
meeting, if he,
or some member intending to propose him as a director, has, not less than
fourteen days before the meeting, left at the registered office of the
company, a notice in writing under his hand signifying his candidature as a
director or, as the case may be, the intention of such member to propose him
as a candidate for that office, along with the deposit of 3[one lakh rupees]
or such higher amount as may be prescribed which shall be refunded to such
person or, as the case may be, to the member, if the person proposed gets
elected as a director or gets more than twenty-five per cent. of total valid
votes cast either on show of hands or on poll on such resolution.
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(1) A person who
is not a retiring director in terms of section 152 shall, subject to the
provisions of this Act, be eligible for appointment to the office of a
director at any general
meeting, if he,
or some member intending to propose him as a director, has, not less than
fourteen days before the meeting, left at the registered office of the
company, a notice in writing under his hand signifying his candidature as a
director or, as the case may be, the intention of such member to propose him
as a candidate for that office, along with the deposit of 3[one lakh rupees]
or such higher amount as may be prescribed which shall be refunded to such
person or, as the case may be, to the member, if the person proposed gets
elected as a director or gets more than twenty-five per cent. of total valid
votes cast either on show of hands or on poll on such resolution.
Provided
that requirements of deposit of amount shall not apply in case of appointment
of an independent director or a director recommended by the Nomination
and
Remuneration Committee, if any, constituted under sub-section (1) of section
178 or a director recommended by the Board of Directors of the Company, in
the case of a company not required to constitute Nomination and Remuneration
Committee.”.
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A new proviso is inserted thereby removing the criteria for deposit
for Independent director and director recommended by NRC or BOD
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Section 161 Appointment of Additional Director alternate director and
nominee director
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(2) The Board of Directors of a company may,
if so authorised by its articles or by a resolution passed by the company in
general meeting, appoint a person, not being a person
holding any alternate directorship for any
other director in the company, to act as an alternate director for a director
during his absence for a period of not less than three months from India:
Provided that no person shall be appointed
as an alternate director for an independent director unless he is qualified
to be appointed as an independent director under the provisions of this Act:
Provided further that an alternate director
shall not hold office for a period longer than that permissible to the
director in whose place he has been appointed and shall vacate the office if
and when the director in whose place he has been appointed returns to India:
Provided also that if the term of office of
the original director is determined before he so returns to India, any provision
for the automatic re-appointment of retiring directors in default of another
appointment shall apply to the original, and not to the alternate director.
(4) In the case of a public company,
if the office of any director appointed by the company in general meeting is
vacated before his term of office expires in the normal course, the resulting
casual vacancy may, in default of and subject to any regulations in the
articles of the company, be filled by the Board of Directors at a meeting of
the Board:
Provided that any person so appointed shall
hold office only up to the date up to which the director in whose place he is
appointed would have held office if it had not been vacated.
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(2) The Board of Directors of a company may, if so authorised by its
articles or by a resolution passed by the company in general meeting, appoint
a person, not being a person
holding any alternate directorship for any
other director in the company or holding directorship in the same company,
to act as an alternate director for a director during his absence for a
period of not less than three months from India:
Provided that no person shall be appointed
as an alternate director for an independent director unless he is qualified
to be appointed as an independent director under the provisions of this Act:
Provided further that an alternate director
shall not hold office for a period longer than that permissible to the
director in whose place he has been appointed and shall vacate the office if
and when the director in whose place he has been appointed returns to India:
Provided also that if the
term of office of the original director is determined before he so returns to
India, any provision for the automatic re-appointment of retiring directors
in default of another appointment shall apply to the original, and not to the
alternate director.
(4) In the case of a public
company, if the office of any director appointed by the company in
general meeting is vacated before his term of office expires in the normal
course, the resulting casual vacancy may, in default of and subject to any
regulations in the articles of the company, be filled by the Board of
Directors at a meeting of the Board which shall be subsequently approved
by members in the immediate next general meeting:
Provided that any person
so appointed shall hold office only up to the date up to which the director
in whose place he is appointed would have held office if it had not been
vacated.
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Restriction imposed on a person if he holding directorship in same
company from appointment as an alternate director.
All companies may fill up casual vacancy in board meeting which should
be subsequently approve in immediately next GM
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Section 165 Number of directorships.
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(1) No person, after the commencement
of this Act, shall hold office as a director, including any alternate
directorship, in more than twenty companies at the same time:
Provided that the maximum number of public
companies in which a person can be appointed as a director shall not exceed
ten.
Explanation.— For reckoning the limit of public
companies in which a person can be appointed as director, directorship in
private companies that are either holding or subsidiary company of a public
company shall be included.
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(1) No person, after the commencement
of this Act, shall hold office as a director, including any alternate
directorship, in more than twenty companies at the same time:
Provided that the maximum number of public
companies in which a person can be appointed as a director shall not exceed
ten.
Explanation I.— For reckoning the limit of public
companies in which a person can be appointed as director, directorship in
private companies that are either holding or subsidiary company of a public
company shall be included.
Explanation II.—For reckoning the limit of directorships of twenty companies, the
directorship in a dormant company shall not be included
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Directorship in dormant company shall not be included in the limit of
directorship
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Section 180 Restrictions
on powers of
Board.
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(1) The Board of Directors of a
company shall exercise the following powers only with the consent of the
company by a special resolution, namely:—
(c) to borrow money, where the money
to be borrowed, together with the money already borrowed by the company will
exceed aggregate of its paid-up share capital and free reserves, apart from
temporary loans obtained from the company’s bankers in the ordinary course of
business:
Provided that the acceptance by a banking
company, in the ordinary course of its business, of deposits of money from
the public, repayable on demand or otherwise, and withdrawable by cheque,
draft, order or otherwise, shall not be deemed to be a borrowing of monies by
the banking company within the meaning of this clause.
Explanation.—For the purposes of this clause, the
expression “temporary loans” means loans repayable on demand or within six
months from the date of the loan such as short-term, cash credit
arrangements, the discounting of bills and the issue of other short-term
loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;
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(1) The Board of Directors of a
company shall exercise the following powers only with the consent of the
company by a special resolution, namely:—
(c) to borrow money, where the money
to be borrowed, together with the money already borrowed by the company will
exceed aggregate of its paid-up share capital and free reserves and securities
premium, apart from temporary loans obtained from the company’s bankers
in the ordinary course of business:
Provided that the acceptance by a banking
company, in the ordinary course of its business, of deposits of money from
the public, repayable on demand or otherwise, and withdrawable by cheque,
draft, order or otherwise, shall not be deemed to be a borrowing of monies by
the banking company within the meaning of this clause.
Explanation.—For the purposes of this clause, the
expression “temporary loans” means loans repayable on demand or within six
months from the date of the loan such as short-term, cash credit
arrangements, the discounting of bills and the issue of other short-term
loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;
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Now securities premium also included in calculation of maximum limit
on borrowing
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Section 184 Disclosure of
interest by
director
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(4) If a
director of the company contravenes the provisions of sub-section (1) or
subsection (2), such director shall be punishable with imprisonment for a
term which may extend to one year or with fine which shall not be less than
fifty thousand rupees but which may
extend to one lakh rupees,
or with both.
(5) Nothing in this
section—
(a) shall be taken to
prejudice the operation of any rule of law
restricting a director of a company from having any concern or
interest in any contract or arrangement
with the company;
(b) shall apply to any
contract or arrangement entered into or to be entered into between two
companies where any of the directors of the one company or two or more of
them together holds or hold not more than two per cent. of the paid-up share
capital in the other company.
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(4) If a director of the
company contravenes the provisions of sub-section (1) or subsection (2), such
director shall be punishable with imprisonment for a term which may extend to
one year or with fine which shall not be less than fifty thousand rupees
but which may extend to one lakh rupees, or with both.
(5) Nothing in this
section—
(a) shall be taken to
prejudice the operation of any rule of law
restricting a director of a company from having any concern or
interest in any contract or arrangement
with the company;
(b) shall apply to any
contract or arrangement entered into or to be entered into between two
companies or between one or more companies and one or more bodies corporate where any of the directors of the one
company or body
corporate or two or more of them together holds or
hold not more than two per cent. of the paid-up share capital in the other
company or the
body corporate.
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Omitted minimum penalty in case of failure of directors to disclose
interest
Exempted body corporate where ant director or 2 or more directors hold
not more than 2% of the paid up share capital
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Section 188 Related party transactions.
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(1) Except with the consent of the Board of
Directors given by a resolution at a meeting of the Board and subject to such
conditions as may be prescribed , no company shall enter into any contract or
arrangement with a related party with respect to—
(a) sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying, property of any kind;
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of goods, materials,
services or property;
(f) such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company; and
(g) underwriting the subscription of any securities or derivatives thereof,
of the company:
Provided that no contract or arrangement, in the case of a company having a
paid-up share capital of not less than such amount, or transactions not
exceeding such sums, as may be prescribed, shall be entered into except with
the prior approval of the company by a resolution :
Provided further that no member of the company shall vote on such resolution
, to approve any contract or arrangement which may be entered into by the
company, if such member is a related party:
Provided also that nothing in this sub-section shall
apply to any transactions entered into by the company in its ordinary course
of business other than transactions which are not on an arm’s length basis.
Provided also that the requirement of passing the resolution under
first proviso shall not be applicable for transactions entered into between a
holding company and its wholly owned subsidiary whose accounts are
consolidated with such holding company and placed before the shareholders at
the general meeting for approval.";
Explanation.— In this sub-section,—
(a) the expression “office or place of profit” means any office or place—
(i) where such office or place is held by a director, if the director holding
it receives from the company anything
by way of remuneration over and above the remuneration to which he is
entitled as director, by way of salary, fee, commission, perquisites, any
rent-free accommodation, or otherwise;
(ii) where such office or place is held by an
individual other than a director or by any firm, private company or other
body corporate, if the individual, firm, private company or body corporate
holding it receives from the company anything by way of remuneration, salary,
fee, commission, perquisites, any rent-free accommodation, or otherwise;
(b) the expression “arm’s length transaction” means
a transaction between two related parties that is conducted as if they were
unrelated, so that there is no conflict of
interest.
(3) Where any contract or arrangement is entered
into by a director or any other employee, without obtaining the consent of
the Board or approval by a resolution in the general meeting under
sub-section (1) and if it is not ratified by the Board or, as the case may
be, by the shareholders at a meeting within three months from the
date on which such contract or arrangement was entered into, such contract or
arrangement shall be voidable at the option of the Board and if the contract
or arrangement is with a related party to any director, or is authorised by any
other director, the directors concerned shall indemnify the company against
any loss incurred by it.
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(1) Except with the consent of the Board of
Directors given by a resolution at a meeting of the Board and subject to such
conditions as may be prescribed , no company shall enter into any contract or
arrangement with a related party with respect to—
(a) sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying, property of any kind;
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of goods, materials,
services or property;
(f) such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company; and
(g) underwriting the subscription of any securities or derivatives thereof,
of the company:
Provided that no contract or arrangement, in the case of a company having a
paid-up share capital of not less than such amount, or transactions not exceeding
such sums, as may be prescribed, shall be entered into except with the prior
approval of the company by a resolution :
Provided further that no member of the company shall vote on such resolution
, to approve any contract or arrangement which may be entered into by the
company, if such member is a related party:
Provided also that nothing contained in the second proviso shall apply
to a company in which ninety per cent. or more members, in number, are
relatives of promoters or are related parties:";
Provided also that nothing in this sub-section shall
apply to any transactions entered into by the company in its ordinary course
of business other than transactions which are not on an arm’s length basis.
Provided also that the requirement of passing the resolution under
first proviso shall not be applicable for transactions entered into between a
holding company and its wholly owned subsidiary whose accounts are
consolidated with such holding company and placed before the shareholders at
the general meeting for approval.";
Explanation.— In this sub-section,—
(a) the expression “office or place of profit” means any office or place—
(i) where such office or place is held by a director, if the director holding
it receives from the company anything
by way of remuneration over and above the remuneration to which he is
entitled as director, by way of salary, fee, commission, perquisites, any
rent-free accommodation, or otherwise;
(ii) where such office or place is held by an
individual other than a director or by any firm, private company or other
body corporate, if the individual, firm, private company or body corporate
holding it receives from the company anything by way of remuneration, salary,
fee, commission, perquisites, any rent-free accommodation, or otherwise;
(b) the expression “arm’s length transaction” means
a transaction between two related parties that is conducted as if they were
unrelated, so that there is no conflict of
interest.
(3) Where any contract or arrangement is entered into
by a director or any other employee, without obtaining the consent of the
Board or approval by a resolution in the general meeting under
sub-section (1) and if it is not ratified by the Board or, as the case may
be, by the shareholders at a meeting within three months from the
date on which such contract or arrangement was entered into, such contract or
arrangement shall be voidable at the option of the Board or, as the case may be, of the shareholders and if the contract
or arrangement is with a related party to any director, or is authorised by
any other director, the directors concerned shall indemnify the company
against any loss incurred by it.
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Restriction on voting by relatives in the general meeting shall not apply to a company in which 90%
or more members in numbers are relatives of promoters or related parties
Now transaction is voidable at the option of the board or shareholders
as the ratification is allowed by both board or shareholder as the case may
be
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Section 194 Prohibition
On forward
dealings in
securities of
company by
director or
key managerial personnel.
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(1) No director of a company or any of its key
managerial personnel shall buy in the company, or in its holding, subsidiary
or associate company—
(a) a right to call for delivery or a right to make
delivery at a specified price and within a specified time, of a specified
number of relevant shares or a specified amount of relevant debentures; or
(b) a right, as he may elect, to call for delivery
or to make delivery at a specified price and within a specified time, of a
specified number of relevant shares or a specified amount of relevant
Debentures
(2) If a director or any key managerial personnel of
the company contravenes the provisions of subsection (1), such director or
key managerial personnel shall be punishable with imprisonment for a term which
may extend to two years or with fine which shall not be less than one lakh
rupees but which may extend to five lakh rupees, or with both.
(3) Where a director or other key managerial
personnel acquires any securities in contravention of sub-section (1), he
shall, subject to the provisions contained in sub-section (2), be liable to
surrender the same to the company and the company shall not register the
securities so acquired in his name in the register, and if they are in
dematerialised form, it shall inform the depository not to record such acquisition
and such securities, in both the cases, shall continue to remain in the names
of the transferors
Explanation.—For the purposes of this section, “relevant
shares‘‘ and “relevant debentures‘‘ mean shares and debentures of the company
in which the concerned person is a whole-time director or other key
managerial personnel or shares and debentures of its holding and subsidiary
companies.
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Omitted
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Section 195 Prohibition
On insider
trading
of securities.
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(1) No person including any director or key
managerial personnel of a company shall enter into insider trading
Provided that nothing contained in this sub-section
shall apply to any communication required in the
ordinary course of business or profession or
employment or under any law.
Explanation.—For the purposes of this section,—
(a) “insider trading” means-
(i) an act of subscribing, buying, selling, dealing
or agreeing to subscribe, buy, sell or deal in any securities by any director
or key managerial personnel or any other officer of a company either as
principal or agent if such director or key managerial personnel or any other
officer of the company is reasonably expected to have access to any
non-public price sensitive information in respect of securities of company;
or
(ii) an act of counselling about procuring or
communicating directly or indirectly any nonpublic
price-sensitive information to any person;
(b) “price sensitive information” means any
information which relates, directly or indirectly, to a company and which if
published is likely to materially affect the price of securities of the
company
(2) If any person contravenes the provisions of this
section, he shall be punishable with imprisonment
for a term which may extend to five years or with
fine which shall not be less than five lakh rupees but which may extend to
twenty-five crore rupees or three times the amount of profits made out of
insider trading, whichever is higher, or with both.
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Omitted
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Section 223 Inspector’s report.
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(3) A copy of the
report made under sub-section (1) may be obtained by making an
application in this regard to the Central Government.
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(3) A copy of the
report made under sub-section (1) may be obtained by members,
creditors or any other person whose interest is likely to be affected by
making an application in this regard to the Central Government.
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Copy of inspection report
may be made available to members, creditors or any other person whose
interest is likely to be affected
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Section 236 Purchase of
Minority shareholding.
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(4) The majority
shareholders shall deposit an amount equal to the value of shares to be
acquired by them under sub-section (2) or sub-section (3), as
the case may be, in a separate bank account to be operated by the transferor
company for at least one year for payment to the minority shareholders and
such amount shall be disbursed to the entitled shareholders within sixty
days:
Provided that such
disbursement shall continue to be made to the entitled shareholders for a
period of one year, who for any reason had not been made disbursement within
the said period of sixty days or if the disbursement have been made within
the aforesaid period of sixty days, fail to receive or claim payment arising
out of such disbursement.
(5) In the event of
a purchase under this section, the transferor company shall act as a transfer
agent for receiving and paying the price to the minority shareholders
and for taking delivery of
the shares and delivering such shares to the majority, as the case may be.
(6) In the absence
of a physical delivery of shares by the shareholders within the time
specified by the company, the share certificates shall be deemed to be
cancelled, and the transferor company shall be authorised to issue shares in
lieu of the cancelled shares and complete the transfer in accordance with law
and make payment of the price out of deposit made under sub-section (4)
by the majority in advance to the minority by despatch of such payment.
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(4) The majority
shareholders shall deposit an amount equal to the value of shares to be
acquired by them under sub-section (2) or sub-section (3), as the
case may be, in a separate bank account to be operated by the transferor
company company whose shares are being transferred for at least
one year for payment to the minority shareholders and such amount shall be
disbursed to the entitled shareholders within sixty days:
Provided that such
disbursement shall continue to be made to the entitled shareholders for a
period of one year, who for any reason had not been made disbursement within
the said period of sixty days or if the disbursement have been made within
the aforesaid period of sixty days, fail to receive or claim payment arising
out of such disbursement.
(5) In the event of
a purchase under this section, the transferor company company whose shares are being
transferred shall act as a transfer agent for receiving and paying the
price to the minority shareholders and for taking delivery of the shares and
delivering such shares to the majority, as the case may be.
(6) In the absence
of a physical delivery of shares by the shareholders within the time
specified by the company, the share certificates shall be deemed to be
cancelled, and the transferor company company whose shares are
being transferred shall be authorised to issue shares in lieu of the
cancelled shares and complete the transfer in accordance with law and make
payment of the price out of deposit made under sub-section (4) by the
majority in advance to the minority by despatch of such payment.
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Section 247 Valuation by
registered
valuers.
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(2) The valuer
appointed under sub-section (1) shall,—
(a) make an
impartial, true and fair valuation of any assets which may be required to be
valued;
(b) exercise due
diligence while performing the functions as valuer;
(c) make the
valuation in accordance with such rules as may be prescribed; and
(d) not undertake
valuation of any assets in which he has a direct or indirect interest or
becomes so interested at any time during or after the valuation of assets.
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(2) The valuer
appointed under sub-section (1) shall,—
(a) make an
impartial, true and fair valuation of any assets which may be required to be
valued;
(b) exercise due
diligence while performing the functions as valuer;
(c) make the
valuation in accordance with such rules as may be prescribed; and
(d) not undertake
valuation of any assets in which he has a direct or indirect interest or
becomes so interested at any time during or after the valuation of assets.
during a period of three years prior to his appointment as valuer or three
years after the valuation of assets was conducted by him.
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Section 379 Application of Act to Foreign Companies
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Where not less than fifty
per cent. of the paid-up share capital, whether equity or preference or
partly equity and partly preference, of a foreign company is held by one or
more citizens of India or by one or more companies or bodies corporate
incorporated in India, or by one or more citizens of India and one or more
companies or bodies corporate incorporated in India, whether singly or in the
aggregate, such company shall comply with the provisions of this Chapter and
such other provisions of this Act as may be prescribed with regard to the
business carried on by it in India as if it were a company incorporated in
India.
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(1) Sections 380 to 386 (both inclusive)and
sections 392 and 393 shall apply to all foreign companies:
Provided that the Central Government may, by Order
published in the Official Gazette, exempt any class of foreign companies,
specified in the Order, from any of the provisions of sections 380 to 386 and
sections 392 and 393 and a copy of every such order shall, as soon as may be
after it is made, be laid before both Houses of Parliament.".
(2)Where not less than fifty per cent. of the paid-up share capital,
whether equity or preference or partly equity and partly preference, of a
foreign company is held by one or more citizens of India or by one or more
companies or bodies corporate incorporated in India, or by one or more
citizens of India and one or more companies or bodies corporate incorporated
in India, whether singly or in the aggregate, such company shall comply with
the provisions of this Chapter and such other provisions of this Act as may
be prescribed with regard to the business carried on by it in India as if it
were a company incorporated in India.
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Section 384 Debentures, annual return, registration of charges, books
of account and their inspection
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(2) The provisions
of section 92 shall, subject to such exceptions, modifications and
adaptations as may be made therein by rules made under this Act, apply to a
foreign company as they apply to a company incorporated in India.
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(2) The provisions
of section 92 and section 135 shall, subject to such exceptions,
modifications and adaptations as may be made therein by rules made under this
Act, apply to a foreign company as they apply to a company incorporated in
India.
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Section 391
Application of sections 34 to 36 and Chapter XX
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(1) The provisions of
sections 34 to 36 (both inclusive) shall apply to—
(i) the issue of a
prospectus by a company incorporated outside India under section 389 as they
apply to prospectus issued by an Indian company;
(ii) the issue of Indian
Depository Receipts by a foreign company.
(2) The provisions of
Chapter XX shall apply mutatis mutandis for closure of the place of business
of a foreign company in India as if it were a company incorporated in India.
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(1) The provisions of
sections 34 to 36 (both inclusive) shall apply to—
(i) the issue of a
prospectus by a company incorporated outside India under section 389 as they
apply to prospectus issued by an Indian company;
(ii) the issue of Indian
Depository Receipts by a foreign company.
(2) The provisions of
Chapter XX shall apply mutatis mutandis for closure of the place of business
of a foreign company in India as if it were a company incorporated in India.
(2) Subject to the provisions of Section 376, the
provisions of Chapter XX shall apply mutatis mutandis for closure of the
place of business of a foreign company in India as if it were a company
incorporated in India in case such foreign company has raised monies through
offer or issue of securities under this Chapter which have not been repaid or
redeemed.
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Section 409 Qualification of president and members of tribunal
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(3) A person shall
not be qualified for appointment as a Technical Member unless he—
(a) has, for at
least fifteen years been a member of the Indian Corporate Law Service or
Indian Legal Service out of which at least three years shall be in the pay
scale of Joint Secretary to the Government of India or equivalent or above in
that service; or
(b) is, or has
been, in practice as a chartered accountant for at least fifteen years; or
(c) is, or has
been, in practice as a cost accountant for at least fifteen years; or
(d) is, or has
been, in practice as a company secretary for at least fifteen years; or
(e) is a person of
proven ability, integrity and standing having special knowledge and
experience, of not less than fifteen years, in law, industrial finance,
industrial management or administration, industrial reconstruction,
investment, accountancy, labour matters, or such other disciplines related to
management, conduct of affairs, revival, rehabilitation and winding up of
companies; or
(f) is, or has
been, for at least five years, a presiding officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial Disputes Act,
1947.
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(3) A person shall
not be qualified for appointment as a Technical Member unless he—
(a) has, for at
least fifteen years been a member of the Indian Corporate Law Service or
Indian Legal Service out of which at least three years shall be in the pay
scale of Joint Secretary to the Government of India or equivalent or above in
that service and has been holding the rank of Secretary or Additional
Secretary to the Government of India; or
(b) is, or has
been, in practice as a chartered accountant for at least fifteen years; or
(c) is, or has
been, in practice as a cost accountant for at least fifteen years; or
(d) is, or has
been, in practice as a company secretary for at least fifteen years; or
(e) is a person of
proven ability, integrity and standing having special knowledge and
experience, of not less than fifteen years, in law, industrial finance,
industrial management or administration, industrial reconstruction,
investment, accountancy, labour matters, or such other disciplines related to
management, conduct of affairs, revival, rehabilitation and winding up of
companies; or
(e) is a person of proven ability, integrity
and standing having special knowledge and professional experience of not less
than fifteen years in industrial finance, industrial management, industrial
reconstruction, investment and accountancy.".
(f) is, or has
been, for at least five years, a presiding officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial Disputes Act,
1947.
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Section 411 Qualification of chairperson and members of Appellate
tribunal
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(3) A Technical Member shall be a person of
proven ability, integrity and standing having special knowledge and
experience, of not less than twenty-five years, in law, industrial finance,
industrial management or administration, industrial reconstruction,
investment, accountancy, labour matters, or such other disciplines related to
management, conduct of
affairs, revival,
rehabilitation and winding up of companies.
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(3) A technical member shall be a person of
proven ability, integrity and standing having special knowledge and
professional experience of not less than twenty-five years in industrial
finance, industrial management, industrial reconstruction, investment and
accountancy.
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Section 412 Selection of members of tribunal and Appellate tribunal
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(2) The Members of
the Tribunal and the Technical Members of the Appellate Tribunal shall be
appointed on the recommendation of a Selection Committee consisting of—
(a) Chief Justice
of India or his nominee—Chairperson;
(b) a senior Judge
of the Supreme Court or a Chief Justice of High Court— Member;
(c) Secretary in
the Ministry of Corporate Affairs—Member;
(d) Secretary in
the Ministry of Law and Justice—Member; and
(e) Secretary in
the Department of Financial Services in the Ministry of Finance— Member.
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"(2) The Members of the Tribunal and the
Technical Members of the Appellate Tribunal shall be appointed on the
recommendation of a Selection Committee consisting of—
(a) Chief Justice of India or his nominee -
Chairperson;
(b) a senior Judge of the Supreme Court or
Chief Justice of High Court - Member;
(c) Secretary in the Ministry of Corporate
Affairs - Member; and
(d) Secretary in the Ministry of Law and
Justice - Member.
(2A) Where in a meeting of the Selection Committee,
there is equality of votes on any matter, the Chairperson shall have a
casting vote.".
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Section 441 Compounding of certain offences
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(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973, any offence
punishable under this Act (whether committed by a company or any officer
thereof) with fine only, may, either before or after the institution of any
prosecution, be compounded by—
(a) the Tribunal;
or
(b) where the
maximum amount of fine which may be imposed for such offence does not exceed
five lakh rupees, by the Regional Director or any officer authorised by the
Central Government, on payment or credit, by the company or, as the case may
be, the officer, to the Central Government of such sum as that Tribunal or
the Regional Director or any officer authorised by the Central Government, as
the case may be, may specify:
Provided that the sum so
specified shall not, in any case, exceed the maximum amount of the fine which
may be imposed for the offence so compounded:
Provided further that in
specifying the sum required to be paid or credited for the compounding of an
offence under this sub-section, the sum, if any, paid by way of additional
fee under sub-section (2) of section 403 shall be taken into account:
Provided also that any
offence covered under this sub-section by any company or its officer shall
not be compounded if the investigation against such company has been
initiated or is pending under this Act.
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(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973, any offence
punishable under this Act (whether committed by a company or any officer
thereof) with fine only not being an offence punishable with
imprisonment only, or punishable with imprisonment and also with fine,
may, either before or after the institution of any prosecution, be compounded
by—
(a) the Tribunal;
or
(b) where the
maximum amount of fine which may be imposed for such offence does not exceed
five lakh rupees, by the Regional Director or any officer authorised by the
Central Government, on payment or credit, by the company or, as the case may
be, the officer, to the Central Government of such sum as that Tribunal or
the Regional Director or any officer authorised by the Central Government, as
the case may be, may specify:
Provided that the sum so
specified shall not, in any case, exceed the maximum amount of the fine which
may be imposed for the offence so compounded:
Provided further that in
specifying the sum required to be paid or credited for the compounding of an
offence under this sub-section, the sum, if any, paid by way of additional
fee under sub-section (2) of section 403 shall be taken into account:
Provided also that any
offence covered under this sub-section by any company or its officer shall
not be compounded if the investigation against such company has been
initiated or is pending under this Act.
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Section 446A Factors for
determining level of punishment
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446A. The court or the Special Court, while deciding
the amount of fine or
imprisonment under this Act, shall have due regard
to the following factors, namely:—
(a) size of the company;
(b) nature of business carried on by the
company;
(c) injury to public interest;
(d) nature of the default; and
(e) repetition of the default.
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Section 446B Lesser penalties for One person Companies and Small
Companies
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Notwithstanding anything contained in this Act, if a
One Person Company or a small company fails to comply with the provisions of
sub-section (5) of section 92, clause (c) of sub-section (2)
of section 117, sub-section (3) of section 137, such company and
officer in default of such company shall be punishable with fine or
imprisonment or fine and imprisonment, as the case may be, which shall not be
more than one-half of the fine or imprisonment or fine and imprisonment, as
the case may be, of the minimum or maximum fine or imprisonment or fine and
imprisonment, as the case may be, specified in such sections.".
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Section 447 Punishment for
Fraud
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447. Without prejudice to any liability including repayment of any debt
under this Act or any other law for the time being in force, any person who
is found to be guilty of fraud, shall be punishable with imprisonment for a
term which shall not be less than six months but
which may extend to ten
years and shall also be liable to fine which shall not be less than the
amount involved in the fraud, but which may extend to three times the amount
involved in the fraud:
Provided that where the
fraud in question involves public interest, the term of imprisonment shall
not be less than three years.
Explanation.—For the purposes of this section—
(i) “fraud” in
relation to affairs of a company or any body corporate, includes any act,
omission, concealment of any fact or abuse of position committed by any
person or any other person with the connivance in any manner, with intent to
deceive, to gain undue advantage from, or to injure the interests of, the
company or its shareholders or its creditors or any other person, whether or
not there is any wrongful gain or wrongful loss;
(ii) “wrongful gain”
means the gain by unlawful means of property to which the person gaining is
not legally entitled;
(iii) “wrongful
loss” means the loss by unlawful means of property to which the person losing
is legally entitled.
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447. Without prejudice to any liability including repayment of any debt
under this Act or any other law for the time being in force, any person who
is found to be guilty of fraud involving an amount of at least ten
lakh rupees or one percent. of the
turnover of the company, whichever is lower, shall be punishable with
imprisonment for a term which shall not be less than six months but which may
extend to ten years and shall also be liable to fine which shall not be less
than the amount involved in the fraud, but which may extend to three times the
amount involved in the fraud:
Provided that where the
fraud in question involves public interest, the term of imprisonment shall
not be less than three years.
"Provided further that where the fraud involves
an amount less than ten lakh rupees or one per cent. of the turnover of the
company, whichever is lower, and does not involve public interest, any person
guilty of such fraud shall be punishable with imprisonment for a term which
may extend to five years or with fine which may extend to twenty lakh rupees
or with both.".
Explanation.—For the purposes of this section—
(i) “fraud” in
relation to affairs of a company or any body corporate, includes any act,
omission, concealment of any fact or abuse of position committed by any
person or any other person with the connivance in any manner, with intent to
deceive, to gain undue advantage from, or to injure the interests of, the
company or its shareholders or its creditors or any other person, whether or
not there is any wrongful gain or wrongful loss;
(ii) “wrongful
gain” means the gain by unlawful means of property to which the person
gaining is not legally entitled;
(iii) “wrongful
loss” means the loss by unlawful means of property to which the person losing
is legally entitled.
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Section 458
Delegation by
Central
Government
of its powers
and
functions.
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(1) The Central
Government may, by notification, and subject to such conditions,limitations
and restrictions as may be specified therein, delegate any of its powers or
functions under this Act other than the power to make rules to such authority
or officer as may be specified in the notification:
Provided that the powers to enforce the
provisions contained in section 194 andsection 195 relating to forward
dealing and insider trading shall be delegated to Securitiesand Exchange
Board for listed companies or thecompanies which intend to get their
securities listed and in such case, any officer authorised by the Securities
and Exchange Board shall have the power to file a complaint in the court of
competent jurisdiction.
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(1) The Central
Government may, by notification, and subject to such conditions,limitations
and restrictions as may be specified therein, delegate any of its powers or
functions under this Act other than the power to make rules to such authority
or officer as may be specified in the notification:
Provided
that the powers to enforce the provisions contained in section 194 and
section 195 relating to forward dealing and insider trading shall be
delegated to Securities and Exchange Board for listed companies or the
companies which intend to get their securities listed and insuch case, any
officer authorised by the Securities and Exchange Board shall have the power
to file a complaint in the court of competent jurisdiction.
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Deletes the provision that provides power to SEBI to enforce the
insider trading and forward dealing provisions of the act
(The proviso to section 458(1) would become redundant as
section 194 (Prohibition on Forward dealing) and 195
(Prohibition of Insider trading) of CA-13 are proposed to be
omitted through CAB-16.)
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