New Addition - MLJ Civil Court Manual
This manual is a unique treatise, comprising 56 chapters, which contain topic-wise concise commentary on those sections of the Companies Act 1956 which are of practical importance to all those who deal with the Act. It sets out detailed procedures and advice for compliance on various requirements under the Companies Act, with numerous precedents and forms. It deals with law and procedures, and, therefore, stands out from other books on the subject. Apart from procedures for compliance, numerous specimens and precedents have been incorporated at relevant places, including resolutions which are frequently passed at board, committee and general meetings. This Manual will be useful not only to company secretaries and chartered accountants but all those corporate executives who have the responsibility of compliance with the Companies Act. It will also prove to be of immense value to the judiciary, law practitioners and officers working in regulatory authorities like Ministry of Company Affairs, Regional Directors, Registrars of Companies, Company Law Board, Stock Exchanges, Securities and Exchange Board of India, etc, and students of professional examinations of law courses and in particular, the Institutes of Company Secretaries, Chartered Accountants and Cost & Works Accountants.
Preface ....................................................................................................... v
Preface to the First Edition ........................................................................ vii
Contents .................................................................................................... ix
Table of Cases ........................................................................................... xlv
CHAPTER 1
Company: Meaning and Effect of Incorporation .......................... 1
WHAT DOES ‘COMPANY’ MEAN? ..................................................... 1
WHAT ARE THE SALIENT FEATURES OF A COMPANY? ........................ 2
WHAT IS MEANT BY ‘INCORPORATION’ OF A COMPANY? ................ 11
WHAT IS THE EFFECT OF INCORPORATION OF A COMPANY? .......... 11
WHAT ARE THE IMPORTANT PRINCIPLES RELATING TO
INCORPORATION OF A COMPANY? ......................................... 13
WHICH ARE THE PROMINENT CASES THAT HAVE DEALT WITH
PRINCIPLES OF INCORPORATION OF A COMPANY? ................... 15
IS COMPANY A CITIZEN? .............................................................. 20
WHAT DOES ‘CONCLUSIVENESS OF CERTIFICATE OF
INCORPORATION’ MEAN? ....................................................... 22
WHICH TYPES OF COMPANIES CAN BE INCORPORATED
UNDER THE COMPANIES ACT 1956? ...................................... 23
CHAPTER 2
The Private Company ................................................................. 25
WHAT IS THE MEANING AND DEFINITION OF ‘PRIVATE COMPANY’? 25
WHAT ARE THE ADVANTAGES OF HAVING A PRIVATE LIMITED
COMPANY AS BUSINESS ORGANISATION? .................................. 29
HOW DOES A PRIVATE COMPANY HAVE A UNIQUE POSITION
IN THE SCHEME OF THE COMPANIES ACT 1956? ................... 30
WHAT ARE THE EXEMPTIONS AND PRIVILEGES OF PRIVATE
COMPANIES UNDER THE COMPANIES ACT 1956? .................... 35
WHAT ARE OTHER PROVISIONS OF THE ACT AFFECTING
PRIVATE COMPANIES? ............................................................. 40
IN WHAT WAY CAN A PRIVATE COMPANY ISSUE ITS SHARES? ........... 43
ARE PRIVATE ARRANGEMENTS BETWEEN SHAREHOLDERS OF
A PRIVATE COMPANY BINDING ON THE COMPANY? ................ 44
CHAPTER 3
The Holding and Subsidiary Company ....................................... 49
WHAT IS THE MEANING OF ‘SUBSIDIARY COMPANY’ AND
‘HOLDING COMPANY’? .......................................................... 49
WHAT ARE THE IMPORTANT PROVISIONS OF THE
COMPANIES ACT 1956 AS REGARDS
HOLDING-SUBSIDIARY RELATIONSHIP? ..................................... 50
WHAT TESTS ARE APPLIED TO DETERMINE
HOLDING-SUBSIDIARY RELATIONSHIP? ..................................... 50
HOW IS THE HOLDING-SUBSIDIARY RELATIONSHIP CREATED
BY CONTROLLING THE COMPOSITION OF THE BOARD? .......... 52
WHAT ARE THE NORMS TO ASCERTAIN WHETHER HOLDING
COMPANY CONTROLS THE COMPOSITION OF THE
SUBSIDIARY’S BOARD? ............................................................ 53
HOW IS THE HOLDING-SUBSIDIARY RELATIONSHIP CREATED
BY SHAREHOLDING? .............................................................. 54
WHAT IS MEANT BY ‘WHOLLY-OWNED SUBSIDIARY’?
HOW IS IT CREATED? ............................................................ 56
CAN ONE COMPANY BE A HOLDING COMPANY OF ANOTHER
WITHOUT HOLDING SHARES IN THAT COMPANY OR
CONTROLLING THE COMPOSITION OF ITS BOARD? ................. 56
WHAT IS THE PROCEDURE FOR FORMATION OF A
COMPANY AS A SUBSIDIARY? .................................................. 58
WHAT IS THE PROCEDURE FOR MAKING ANOTHER
EXISTING COMPANY, SUBSIDIARY, BY ACQUISITION
OF EQUITY SHARES? .............................................................. 58
HOW DOES ONE ASCERTAIN THE STATUS OF AN INDIAN
COMPANY BEING A HOLDING OR SUBSIDIARY OF
FOREIGN COMPANY? ............................................................. 59
HOW DOES ONE ASCERTAIN THE STATUS OF AN INDIAN
PRIVATE COMPANY BEING WHOLLY-OWNED SUBSIDIARY
OF A FOREIGN COMPANY? .................................................... 61
WHAT ARE THE REQUIREMENTS UNDER THE COMPANIES
ACT 1956 REGARDING DISCLOSURE OF INFORMATION
CONCERNING A SUBSIDIARY IN THE ANNUAL
ACCOUNTS OF ITS HOLDING COMPANY? ................................ 62
WHAT ARE THE PROVISIONS OF THE COMPANIES
ACT 1956 THAT CONCERN THE HOLDING-SUBSIDIARY
RELATIONSHIP? ...................................................................... 63
IN WHICH CASES IS A SUBSIDIARY OF A PUBLIC
COMPANY EQUATED WITH A PUBLIC COMPANY? ..................... 66
CHAPTER 4
Company Name: Selection, Change and Publication .................. 71
WHAT ARE THE REQUIREMENTS OF THE COMPANIES ACT 1956
REGARDING NAME OF A COMPANY? ...................................... 71
WHAT ARE THE BASIC RULES FOR SELECTION OF NAME FOR A
NEW COMPANY? ................................................................... 72
WHAT ARE THE REQUIREMENTS OF THE EMBLEMS AND
NAMES (PREVENTION OF IMPROPER USE) ACT 1950
WHICH HAVE TO BE COMPLIED WITH IN SELECTING
A COMPANY NAME? .............................................................. 73
WHAT IS THE PROCEDURE FOR MAKING AN APPLICATION
FOR ASCERTAINING AVAILABILITY OF NAME? ........................... 74
WHAT ARE THE BASIC PROVISIONS OF THE COMPANIES
ACT 1956 REGARDING CHANGE OF NAME OF
A COMPANY? ........................................................................ 75
WHAT IS THE PROCEDURE FOR CHANGING NAME OF A
COMPANY OTHER THAN ADDITION OR DELETION
OF THE WORD ‘PRIVATE’? ..................................................... 76
IN WHICH CASES CAN THE NAME OF A COMPANY BE
CHANGED BY RECTIFICATION? ............................................... 78
WHAT ARE THE STEPS INVOLVED IN CHANGING THE NAME
OF A COMPANY BY RECTIFICATION ON COMPANY’S
APPLICATION? ....................................................................... 79
IN WHICH CASES MUST A COMPANY CHANGE ITS NAME BY
RECTIFICATION IF IT IS IDENTICAL WITH OR TOO
NEARLY RESEMBLES A REGISTERED TRADEMARK OF
SUCH PROPRIETOR? ............................................................... 80
WHAT IS THE LEGAL EFFECT OF CHANGE OF NAME? .................... 81
WHAT ARE REQUIREMENTS OF THE COMPANIES ACT 1956
REGARDING DISPLAY AND PUBLICATION OF A
COMPANY’S NAME? ............................................................... 84
WHAT ARE REQUIREMENTS OF THE COMPANIES ACT 1956
REGARDING PUBLICATION OF AUTHORISED, SUBSCRIBED
AND PAID-UP SHARE CAPITAL? ............................................... 85
CHAPTER 5
The Memorandum of Association..............................................103
WHAT DOES ‘MEMORANDUM OF ASSOCIATION’ MEAN? ............... 103
WHAT DOES ‘SUBSCRIBING TO MEMORANDUM’ MEAN? HOW
IS A MEMORANDUM SUBSCRIBED TO? .................................. 104
HOW ARE THE VARIOUS CLAUSES OF MEMORANDUM
FRAMED? ............................................................................ 106
WHAT IS THE ULTRA VIRES DOCTRINE? ....................................... 109
WHAT IS THE IMPACT OF SECTION 9 ON
THE MEMORANDUM? .......................................................... 111
WHAT ARE THE ‘CONDITIONS’ AND ‘NON-CONDITIONS’
INCLUDED IN A MEMORANDUM AND HOW ARE
THEY ALTERED? .................................................................. 113
A. ALTERATION OF THE MEMORANDUM WITH
RESPECT TO THE OBJECTS
WHAT ARE THE CRITERIA FOR ALTERATION OF THE OBJECTS
CLAUSE OF THE MEMORANDUM? ......................................... 115
WHAT IS THE PROCEDURE FOR ALTERATION OF THE OBJECTS
CLAUSE OF THE MEMORANDUM? ......................................... 116
B. ALTERATION OF THE MEMORANDUM FOR CHANGING
THE PLACE OF THE REGISTERED OFFICE FROM
ONE STATE TO ANOTHER
WHAT ARE THE CRITERIA FOR ALTERATION OF THE
DOMICILE CLAUSE OF MEMORANDUM? ................................ 118
WHAT IS THE PROCEDURE FOR ALTERATION OF THE
MEMORANDUM TO SHIFT THE REGISTERED OFFICE
FROM ONE STATE TO ANOTHER? ......................................... 118
C. INCORPORATION OF ALTERATION IN MEMORANDUM,
ARTICLES, RESOLUTIONS AND AGREEMENTS IN
EACH COPY THEREOF
WHAT IS A COMPANY’S DUTY REGARDING INCORPORATING
ALTERATION IN THE MEMORANDUM AND ARTICLES? ............. 124
D. FURNISHING COPIES OF MEMORANDUM, ARTICLES,
RESOLUTIONS AND AGREEMENTS TO MEMBERS
WHAT IS A COMPANY’S DUTY AS REGARDS GIVING ITS
MEMBERS COPIES OF MEMORANDUM, ETC? ......................... 125
CHAPTER 6
The Articles of Association .........................................................171
WHAT DOES THE TERM ‘ARTICLES OF ASSOCIATION’ MEAN? ........ 171
WHICH SPECIFIC PROVISIONS OF THE COMPANIES ACT 1956
SHOULD THE ARTICLES CONTAIN? ....................................... 172
WHAT IS THE IMPACT OF SECTION 9 ON THE ARTICLES? ............. 178
WHAT IS THE DIFFERENCE BETWEEN THE MEMORANDUM
AND ARTICLES? ................................................................... 179
WHY ARE THE ARTICLES CALLED A CONTRACT? .......................... 179
WHAT ARE THE MODEL ARTICLES SUGGESTED BY THE
COMPANIES ACT 1956? ....................................................... 181
WHAT ARE THE PROVISIONS REGARDING ARTICLES OF A PRIVATE
COMPANY LIMITED BY SHARES? ............................................ 182
WHAT ARE THE PROVISIONS REGARDING ARTICLES OF
AN UNLIMITED COMPANY? .................................................. 183
WHAT ARE THE PROVISIONS REGARDING ARTICLES OF A
GUARANTEE COMPANY NOT HAVING A SHARE CAPITAL? ........ 183
WHAT ARE THE PROVISIONS REGARDING ARTICLES OF A
GUARANTEE COMPANY HAVING A SHARE CAPITAL? ................ 184
WHAT ARE THE PROVISIONS REGARDING ARTICLES OF
A PUBLIC LIMITED COMPANY? ............................................. 184
IN WHAT MANNER SHOULD THE ARTICLES BE PREPARED FOR
SUBMITTING TO THE REGISTRAR? ......................................... 185
WHAT ARE THE PROVISIONS REGARDING SIGNING AND
ATTESTATION OF ARTICLES? ................................................. 185
WHAT IS THE ‘DOCTRINE OF CONSTRUCTIVE NOTICE’
AND WHAT IS THE ‘RULE OF INDOOR MANAGEMENT’? ......... 185
WHAT ARE THE PROVISIONS REGARDING ALTERATION
OF ARTICLES? ..................................................................... 186
HOW MAY ALTERATIONS IN THE ARTICLES BE DRAFTED? .............. 188
WHAT IS THE PROCEDURE FOR ALTERATION OF ARTICLES
OF THE COMPANY? ............................................................ 189
CHAPTER 7
The Incorporation of a Company ..............................................193
WHAT ARE THE REQUIREMENTS UNDER THE COMPANIES
ACT 1956 REGARDING FORMATION OF A PRIVATE
LIMITED COMPANY? ............................................................ 193
WHAT IS THE PROCEDURE FOR INCORPORATION OF A
PRIVATE LIMITED COMPANY? ................................................ 193
WHAT ARE THE REQUIREMENTS REGARDING FORMATION
OF A PUBLIC LIMITED COMPANY? ....................................... 196
WHAT IS THE PROCEDURE INVOLVED FOR INCORPORATION
OF A PUBLIC LIMITED COMPANY? ....................................... 197
WHAT ARE THE REQUIREMENTS REGARDING FORMATION
OF A GUARANTEE COMPANY HAVING A SHARE CAPITAL? ....... 199
WHAT IS THE PROCEDURE FOR INCORPORATION OF A
GUARANTEE COMPANY HAVING A SHARE CAPITAL? ................ 200
WHAT ARE THE REQUIREMENTS REGARDING FORMATION
OF A GUARANTEE COMPANY NOT HAVING A
SHARE CAPITAL? .................................................................. 202
WHAT ARE THE FEATURES AND ADVANTAGES OF A
NOT-FOR-PROFIT COMPANY VIS-À-VIS A SOCIETY? ................. 202
WHAT ARE THE EXEMPTIONS AVAILABLE TO SECTION 25
COMPANIES UNDER THE COMPANIES ACT 1956? .................. 206
WHAT IS THE PROCEDURE FOR FORMATION AND
INCORPORATION OF A COMPANY TO BE LICENSED
UNDER SECTION 25 OF THE COMPANIES ACT 1956? ........... 209
WHAT IS THE PROCEDURE FOR OBTAINING A LICENSE
UNDER SECTION 25 OF THE COMPANIES ACT 1956
FOR A COMPANY ALREADY REGISTERED? ............................... 213
WHAT ARE THE REQUIREMENTS REGARDING FORMATION
OF AN UNLIMITED COMPANY? ............................................ 217
WHAT IS THE PROCEDURE FOR INCORPORATION OF AN
UNLIMITED COMPANY? ........................................................ 218
CHAPTER 8
Conversion of a Company from
One Form to Another ..........................................................227
HOW IS A PUBLIC COMPANY VOLUNTARILY CONVERTED INTO
A PRIVATE COMPANY? .......................................................... 227
HOW IS A PRIVATE COMPANY VOLUNTARILY CONVERTED INTO
A PUBLIC COMPANY? .......................................................... 230
WHAT IS THE EFFECT OF CONVERSION OF A COMPANY
FROM ONE FORM INTO ANOTHER? ...................................... 234
CHAPTER 9
The Company Membership and the Register of Members ........239
WHO IS A MEMBER OF A COMPANY? ......................................... 239
HOW DOES A PERSON BECOME A MEMBER OF A
COMPANY HAVING SHARE CAPITAL? ...................................... 240
WHAT IS THE DIFFERENCE BETWEEN ‘MEMBER’, ‘SHAREHOLDER’
AND ‘HOLDER OF A SHARE’? .............................................. 243
WHAT IS THE EFFECT OF REDUCTION OF NUMBER OF
MEMBERS BELOW LEGAL MINIMUM? ..................................... 244
WHO IS ELIGIBLE TO BECOME A COMPANY MEMBER? .................. 247
CAN A SUBSIDIARY BE A MEMBER OF THE
HOLDING COMPANY? .......................................................... 249
IN WHAT CIRCUMSTANCES DOES A PERSON CEASE TO BE
A MEMBER OF A COMPANY? ............................................... 251
CAN A COMPANY EXPEL ITS MEMBER? ......................................... 252
WHAT ARE THE RIGHTS CONFERRED ON MEMBERS UNDER
THE COMPANIES ACT 1956? ............................................... 253
WHAT ARE THE DUTIES AND LIABILITIES OF THE MEMBERS
OF A COMPANY? ................................................................ 263
WHAT IS MEANT BY ‘REGISTER OF MEMBERS’? WHY ARE THE
COMPANIES REQUIRED TO MAINTAIN IT? WHAT ARE ITS
CONTENTS? ........................................................................ 265
WHAT DOES ‘INDEX OF MEMBERS’ MEAN? WHICH
COMPANIES ARE REQUIRED TO KEEP THIS INDEX? ................. 267
HOW ARE REGISTER OF MEMBERS AND INDEX OF MEMBERS
KEPT IN THE CASE OF DEMATERIALISED SHARES? .................. 267
IN WHICH FORM AND MODE SHOULD A COMPANY
MAINTAIN THE REGISTER OF MEMBERS? .............................. 268
WHAT IS MEANT BY ‘FOREIGN REGISTER OF MEMBERS’? .............. 268
WHAT IS THE STATUS OF FOREIGN REGISTER OF MEMBERS
VIS-À-VIS MAIN REGISTER OF MEMBERS? .............................. 269
CAN A COMPANY DISCONTINUE KEEPING FOREIGN REGISTER
OF MEMBERS? .................................................................... 269
AT WHICH PLACE SHOULD A COMPANY KEEP REGISTER
OF MEMBERS AND OTHER DOCUMENTS? ............................. 270
WHAT IS ‘TRUST’? CAN A COMPANY ENTER TRUST
SHAREHOLDING IN THE REGISTER OF MEMBERS? .................. 271
WHAT ARE THE PROVISIONS OF THE COMPANIES ACT 1956
REGARDING DECLARATION OF BENEFICIAL INTEREST
IN SHARES? ......................................................................... 273
WHAT IS MEANT BY ‘JOINT SHAREHOLDING’? WHAT ARE
THE PROVISIONS OF THE COMPANIES ACT 1956
CONCERNING JOINT SHAREHOLDING? .................................. 277
WHAT ARE THE RIGHTS AND DUTIES OF JOINT
SHAREHOLDERS? .................................................................. 280
WHY, WHEN AND HOW IS THE REGISTER OF
MEMBERS CLOSED? ............................................................. 281
WHAT RIGHTS ARE AVAILABLE REGARDING INSPECTION OF THE
REGISTER OF MEMBERS AND HAVING EXTRACTS FROM
OR A COPY OF THE REGISTER? ........................................... 283
WHAT IS THE NATURE AND SCOPE OF THE RIGHTS
STATED ABOVE? ................................................................... 283
WHAT IS THE PROCEDURE FOR MAKING A PETITION TO
COMPANY LAW BOARD FOR AN ORDER DIRECTING
INSPECTION/EXTRACT/COPY? ............................................... 285
CHAPTER 10
Class Rights and their Variation .................................................291
WHAT DOES ‘CLASS RIGHTS’ MEAN? ........................................... 291
WHAT ARE THE PRINCIPAL RIGHTS ATTACHED TO DIFFERENT
TYPES OF SHARES? .............................................................. 293
WHAT DOES ‘VARIATION OF CLASS RIGHTS’ MEAN? .................... 294
WHAT IS THE SOURCE OF AUTHORITY FOR VARIATION OF
CLASS RIGHTS? .................................................................... 296
WHAT IS THE METHOD FOR EFFECTING VARIATION OF
CLASS RIGHTS? .................................................................... 297
WHAT IS THE PROCEDURE FOR VARIATION OF CLASS RIGHTS
WITHOUT HOLDING A CLASS MEETING? .............................. 298
WHAT IS THE PROCEDURE FOR VARIATION OF CLASS RIGHTS
AT A CLASS MEETING? ........................................................ 299
WHAT ARE THE RIGHTS OF DISSENTING SHAREHOLDERS
WHO HAVE NOT APPROVED A VARIATION
OF CLASS RIGHTS? .............................................................. 300
CHAPTER 11
Share, Share Capital and Share Certificate .................................309
WHAT DO THE EXPRESSIONS ‘SHARE’ AND ‘SHARE
CAPITAL’ MEAN? ................................................................. 309
HOW IS THE SHARE CAPITAL PRESENTED IN A
BALANCE SHEET? ................................................................. 312
WHAT DIFFERENT KINDS OF SHARES CAN A
COMPANY ISSUE? ................................................................. 314
WHAT DOES ‘PREFERENCE SHARE’ MEAN? WHAT ARE THE
FEATURES OF PREFERENCE SHARE CAPITAL? ........................... 315
CAN A PRIVATE COMPANY ISSUE DIFFERENT TYPES
OF SHARES? ........................................................................ 317
WHAT IS THE FUNCTION OF A SHARE CERTIFICATE? .................... 317
WHAT ARE THE REQUIREMENTS REGARDING PRINTING,
NUMBERING AND ISSUE OF SHARE CERTIFICATES? ................. 319
WHAT IS THE STAMP DUTY PAYABLE ON SHARE CERTIFICATE? ....... 322
IS ANY STAMP DUTY PAYABLE ON SUB-DIVIDED,
CONSOLIDATED AND DUPLICATE SHARE CERTIFICATES? .......... 323
WHAT ARE THE REQUIREMENTS REGARDING SEALING
AND SIGNING OF THE SHARE CERTIFICATE? ......................... 324
FROM WHICH PLACE CAN A SHARE CERTIFICATE BE ISSUED? ........ 325
HOW IS A SHARE CERTIFICATE DELIVERED TO SHAREHOLDER? ...... 327
WHAT IS THE REMEDY FOR A SHAREHOLDER OR DEBENTURE
HOLDER AGAINST FAILURE TO DELIVER SHARE
CERTIFICATE OR DEBENTURE CERTIFICATE? ........................... 327
WHAT IS THE NEED FOR ISSUE OF NEW SHARE CERTIFICATE
IN LIEU OF AN EXISTING ONE? ........................................... 329
WHAT PRECAUTIONS MUST A COMPANY TAKE REGARDING
ISSUE OF DUPLICATE SHARE CERTIFICATE? ............................. 329
WHAT IS THE STAMP DUTY ON SUB-DIVIDED,
CONSOLIDATED AND DUPLICATE SHARE CERTIFICATE? ........... 331
WHAT DOES THE EXPRESSION ‘ALTERATION OF SHARE
CAPITAL’ MEAN? WHAT ARE THE MODES OF
ALTERATION OF SHARE CAPITAL? .......................................... 331
WHAT IS THE PROCEDURE FOR INCREASING AUTHORISED
SHARE CAPITAL? .................................................................. 332
WHAT IS ‘RESERVE CAPITAL’? ....................................................... 334
WHAT IS THE PROCEDURE FOR CREATION OF RESERVE
CAPITAL? ............................................................................ 335
CHAPTER 12
The Depository and the Company Membership ........................345
WHAT DOES ‘DEPOSITORY SYSTEM’ MEAN? .................................. 345
WHAT IS THE LEGAL FRAMEWORK CONCERNING THE
DEPOSITORY SYSTEM? ........................................................... 346
WHAT DOES ‘DEMATERIALISATION AND FUNGIBILITY OF
SECURITIES’ MEAN? ............................................................. 348
WHAT IS THE STAMP DUTY PAYABLE ON TRANSACTIONS
CONCERNING SECURITIES IN DEMATERIALISED FORM? ............ 349
WHAT IS THE ACCOUNT STRUCTURE OF THE DEPOSITORY? .......... 352
WHAT ARE THE PROVISIONS REGARDING REGISTER OF
MEMBERS AND OTHER RECORDS? ........................................ 353
WHAT ARE THE RIGHTS OF DEPOSITORY AND
BENEFICIAL OWNER? ........................................................... 354
WHAT ARE THE PROVISIONS REGARDING PLEDGE OR
HYPOTHECATION OF SECURITIES? ......................................... 355
WHAT ARE THE PROVISIONS REGARDING INDEMNIFICATION OF
LOSS BY DEPOSITORY? ......................................................... 355
BANKERS’ BOOKS EVIDENCE ACT TO APPLY TO DEPOSITORIES ....... 356
CHAPTER 13
Debenture ..................................................................................357
WHAT IS MEANT BY ‘DEBENTURE’? ............................................. 357
WHAT DOES A ‘BOND’ MEAN? WHAT IS THE DIFFERENCE
BETWEEN DEBENTURE AND BOND? ...................................... 361
WHAT IS THE DIFFERENCE BETWEEN SHARE AND
DEBENTURE? ....................................................................... 362
WHAT IS THE DIFFERENCE BETWEEN DEBENTURE AND
DEBENTURE STOCK? ............................................................ 363
WHAT IS THE DIFFERENCE BETWEEN DEBENTURE
AND DEPOSIT? .................................................................... 364
WHAT ARE THE DIFFERENT TYPES OF DEBENTURES? ..................... 367
WHAT ARE THE REQUIREMENTS REGARDING ISSUE OF
DEBENTURE (CERTIFICATE)? ................................................. 368
WHAT IS THE STAMP DUTY PAYABLE ON DEBENTURE? .................. 370
HOW IS A DEBENTURE (CERTIFICATE) DELIVERED TO THE
DEBENTURE HOLDER? ......................................................... 373
WHAT IS THE REMEDY FOR A COMPANY IF IT CANNOT DELIVER
DEBENTURE WITHIN THE TIME FIXED UNDER LAW? ............. 374
CHAPTER 14
Reduction of Share Capital .........................................................385
WHAT DOES ‘REDUCTION OF SHARE CAPITAL’ MEAN? WHAT
ARE THE CONDITIONS TO BE FULFILLED FOR THE
REDUCTION OF SHARE CAPITAL? .......................................... 385
WHAT ARE THE VARIOUS MODES OF REDUCTION
OF CAPITAL? ...................................................................... 387
WHAT IS THE PROCEDURE FOR SECURING MEMBERS’
APPROVAL TO REDUCTION OF SHARE CAPITAL? ..................... 391
WHAT IS THE PROCEDURE FOR SECURING COURT’S
CONFIRMATION TO REDUCTION OF CAPITAL? ...................... 392
WHAT IS THE SPECIAL PROCEDURE WHERE REDUCTION
INVOLVES DIMINUTION OF LIABILITY OR REPAYMENT
OF CAPITAL? ...................................................................... 394
WHAT IS THE PROCEDURE TO BE FOLLOWED AFTER
THE COURT PASSES AN ORDER FOR REDUCTION
OF SHARE CAPITAL? ............................................................ 396
CHAPTER 15
Buying and Providing Financial Assistance for Buying
Company’s Own Shares .......................................................401
A. PROHIBITION AGAINST BUYING AND PROVIDING FINANCIAL
ASSISTANCE FOR BUYING A COMPANY’S OWN SHARES
WHAT ARE THE PROVISIONS REGARDING PROHIBITION
AGAINST A COMPANY BUYING ITS OWN SHARES? .................. 401
WHAT ARE THE PROVISIONS REGARDING PROHIBITION
AGAINST GIVING FINANCIAL ASSISTANCE TO PURCHASE
OR SUBSCRIBE TO SHARES OF THE COMPANY? WHAT
ARE THE EXCEPTIONS TO THIS PROHIBITION? ...................... 402
WHAT ARE THE RESTRICTIONS ON A COMPANY GIVING
A LOAN TO ITS EMPLOYEES TO PURCHASE OR
SUBSCRIBE TO SHARES OF THE COMPANY? ........................... 403
B. BUYBACK OF SHARES AND OTHER SECURITIES
BY A LISTED COMPANY
WHAT ARE THE PROVISIONS OF THE COMPANIES ACT 1956
REGARDING BUYBACK BY A COMPANY OF ITS OWN
SECURITIES? ........................................................................ 404
WHAT ARE THE CONDITIONS FOR BUYBACK OF SECURITIES? ........ 409
WHAT ARE THE DIFFERENT METHODS OF BUYING BACK
EQUITY SHARES? .................................................................. 414
WHAT ARE THE GENERAL OBLIGATIONS OF THE COMPANY AND
MERCHANT BANKER REGARDING BUYBACK OF SHARES? ......... 417
WHAT IS THE IDEAL ACTIVITY SCHEDULE AND TIMETABLE FOR
BUYBACK OF EQUITY SHARES BY A LISTED COMPANY? ........... 417
WHAT ARE THE REQUIREMENTS REGARDING BUYBACK
OF SHARES AND OTHER SECURITIES BY AN
UNLISTED COMPANY? .......................................................... 421
CHAPTER 16
Transfer and Transmission of Shares and Debentures ..............449
A. TRANSFER OF SHARES
ARE SHARES IN A COMPANY TRANSFERABLE? WHAT IS THE LAW
RELATING TO TRANSFER OF A SHARE? ................................. 449
WHAT ARE THE BASIC REQUIREMENTS FOR
TRANSFER OF SHARES? ........................................................ 450
WHEN IS A TRANSFER OF SHARES COMPLETE AND
EFFECTIVE? ......................................................................... 450
WHAT ARE THE VARIOUS STATUTORY AND NON-STATUTORY
INSTRUMENTS WHICH RESTRICT TRANSFER OF SHARES? ......... 452
WHAT ARE THE ESSENTIAL CONDITIONS TO BE FULFILLED
FOR TRANSFER OF SHARES? ................................................. 453
WHAT IS THE PROCEDURE FOR APPROVAL AND REGISTRATION
OF TRANSFER OF SHARES, WHICH ARE IN
PHYSICAL MODE? ................................................................ 459
WHAT IS ‘CERTIFICATION OF INSTRUMENT OF TRANSFER’? ........... 462
HOW ARE SHARES TRANSFERRED BY GIFT? ................................... 463
WHAT ARE THE RULES REGARDING TRANSFER IN THE CASE
OF JOINT SHAREHOLDING? .................................................. 464
WHAT IS PLEDGE OF SHARES? HOW ARE PLEDGED SHARES
TRANSFERRED? .................................................................... 465
B. RESTRICTIONS ON TRANSFER OF SHARES OF
A PRIVATE COMPANY
WHAT ARE THE RESTRICTIONS ON THE TRANSFER OF
SHARES IN A PRIVATE COMPANY? .......................................... 466
WHAT IS THE COMMON FORM OF PROVISIONS IN THE
ARTICLES OF PRIVATE COMPANIES IMPOSING RESTRICTIONS
ON TRANSFER OF SHARES? .................................................. 468
WHAT ARE THE OBLIGATIONS UNDER THE ‘PRE-EMPTION
PROVISIONS’ IN THE ARTICLES OF A PRIVATE COMPANY? ....... 470
C. TRANSFER OF DEBENTURES
WHAT IS THE PROCEDURE FOR TRANSFER OF DEBENTURES? ......... 471
D. NOMINATION BY A MEMBER OR DEBENTURE HOLDER
WHAT IS THE PROCEDURE FOR APPOINTING A NOMINEE BY
SHAREHOLDER/DEBENTURE HOLDER? ................................... 473
WHAT ARE THE ADVANTAGES OF NOMINATION? .......................... 475
WHAT IS THE PROCEDURE FOR A CHANGE IN
NOMINATION? .................................................................... 477
WHAT IS THE EFFECT OF NOMINATION? ..................................... 477
WHAT ARE THE RIGHTS OF A NOMINEE? ................................... 477
WHAT IS THE PROCEDURE FOR MAKING A NOMINATION
IN RESPECT OF DEMAT SHARES? ........................................... 478
E. TRANSMISSION OF SHARES AND DEBENTURES
WHAT IS MEANT BY ‘TRANSMISSION’? ......................................... 478
WHAT ARE THE RIGHTS OF A LEGAL REPRESENTATIVE
REGARDING SHARES OF A DECEASED SHAREHOLDER? ............. 479
WHAT IS THE PROCEDURE FOR REGISTRATION OF
TRANSMISSION OF SHARES? ................................................. 480
WHAT IS THE PROCEDURE FOR REGISTRATION OF
TRANSMISSION IN THE CASE OF NOMINATION? .................... 482
WHAT ARE THE ADVANTAGES OF NOMINATION TO
NOMINEE WHEN THE NOMINATOR DIES? ............................ 483
F. REMEDIES AGAINST REFUSAL TO REGISTER TRANSFER OR
TRANSMISSION OF SHARES BY A PRIVATE COMPANY
CAN A PRIVATE COMPANY REFUSE TO REGISTER A
TRANSFER OF ITS SHARE? .................................................... 484
WHAT IS THE PROCEDURE FOR REFUSAL TO REGISTER
TRANSFER OR TRANSMISSION OF SHARES OF A
PRIVATE COMPANY? ............................................................. 485
WHAT ARE THE AGGRIEVED PERSON’S REMEDIES AGAINST
REFUSAL OR NEGLECT BY A PRIVATE COMPANY TO
REGISTER TRANSFER OF SHARES? .......................................... 486
G. REFUSAL TO REGISTER TRANSFER OF SHARES BY A PUBLIC COMPANY
AND PROCEDURE FOR MAKING A PETITION TO THE COMPANY LAW
BOARD UNDER SECTION 111A
WHAT ARE THE REMEDIES OF AN AGGRIEVED PERSON ON
COMPANY’S REFUSAL TO REGISTER TRANSFER OR
TRANSMISSION OF SHARES OF A PUBLIC COMPANY? ............. 489
CHAPTER 17
Debentures: The Issue and Creation of Security and
the Register of Debenture Holders ......................................515
A. COMPANY’S POWER TO ISSUE DEBENTURES
WHAT ARE THE PROVISIONS OF THE COMPANIES ACT 1956
THAT APPLY/DO NOT APPLY WITH REGARD TO
ISSUE OF DEBENTURES? ........................................................ 515
WHAT ARE THE REQUIREMENTS CONCERNING REDEMPTION
OF DEBENTURES? ................................................................ 518
B. ISSUE OF SECURED DEBENTURES AND CREATION OF SECURITY
HOW ARE DEBENTURES SECURED? ............................................... 518
WHAT DOES ‘DEBENTURE TRUST DEED’ MEAN? WHAT IS ITS
FUNCTION? ........................................................................ 521
WHAT ARE THE CONTENTS OF A DEBENTURE TRUST DEED? ........ 522
WHAT ARE THE REQUIREMENTS FOR EXECUTION OF TRUST
DEED AND STAMP DUTY? .................................................... 525
WHAT ARE THE REQUIREMENTS REGARDING REGISTRATION OF
CHARGE SECURING DEBENTURES? ......................................... 526
C. ISSUE AND CONVERSION OF CONVERTIBLE DEBENTURES
WHAT DOES ‘CONVERTIBLE DEBENTURE’ MEAN? .......................... 527
WHAT ARE THE REQUIREMENTS OF SECTION 81 AS REGARDS
ISSUE OF DEBENTURES WITH AN OPTION TO CONVERT
THEM INTO OR SUBSCRIBE FOR SHARES? .............................. 528
WHAT IS THE PROCEDURE FOR MAKING AN APPLICATION TO
THE CENTRAL GOVERNMENT UNDER SECTION 81(3)(B),
PROVISO, CLAUSE (B)? ......................................................... 530
D. ISSUE OF DEBENTURES BY A PRIVATE COMPANY
HOW ARE DEBENTURES ISSUED IN A PRIVATE COMPANY? ............... 531
WHAT IS THE PROCEDURE FOR ISSUE OF DEBENTURES IN
A PRIVATE COMPANY? .......................................................... 532
E. RIGHTS OF DEBENTURE HOLDERS
WHAT ARE THE GENERAL RIGHTS OF DEBENTURE HOLDERS? ....... 532
WHAT ARE THE RIGHTS OF A DEBENTURE HOLDER
REGARDING TRUST DEED? ................................................... 535
WHAT RIGHTS ARE USUALLY CONFERRED ON DEBENTURE
HOLDERS BY OFFER DOCUMENT? ........................................ 536
WHAT ARE THE STATUTORY PROVISIONS APPLICABLE
TO DEBENTURE HOLDERS’ MEETINGS? ................................. 539
DOES A DEBENTURE HOLDER HAVE A RIGHT TO OBTAIN
COPIES OF ANNUAL ACCOUNTS? .......................................... 540
F. DUTIES OF DEBENTURE TRUSTEES
WHAT ARE THE DUTIES OF A DEBENTURE TRUSTEE UNDER
THE COMPANIES ACT 1956? ............................................... 541
WHAT ARE THE DUTIES OF A DEBENTURE TRUSTEE UNDER
SEBI (DEBENTURE TRUSTEES) REGULATIONS 1993? ............... 542
WHAT MEASURES ARE TAKEN FOR THE PROTECTION OF
DEBENTURE HOLDERS’ INTERESTS IN THE EVENT
OF DEFAULT? ..................................................................... 544
WHAT IS THE LIABILITY OF TRUSTEES FOR
DEBENTURE HOLDERS? ........................................................ 546
G. REGISTER OF DEBENTURE HOLDERS
WHAT ARE THE REQUIREMENTS AS REGARDS REGISTER OF
DEBENTURE HOLDERS? ........................................................ 547
WHAT ARE THE REQUIREMENTS REGARDING FOREIGN
REGISTER OF DEBENTURE HOLDERS? .................................... 549
WHERE SHOULD A COMPANY KEEP ITS REGISTER OF
DEBENTURE HOLDERS? ........................................................ 549
WHAT ARE THE REQUIREMENTS REGARDING INSPECTION OF
REGISTER OF DEBENTURE HOLDERS? .................................... 549
WHAT ARE THE REQUIREMENTS REGARDING CLOSURE OF
REGISTER OF DEBENTURE HOLDERS? .................................... 549
CHAPTER 18
Invitation or Acceptance of Deposits by Non-banking
Non-financial Companies ....................................................555
A. INVITATION OR ACCEPTANCE OF DEPOSITS
WHAT ARE THE BASIC CONDITIONS FOR INVITING DEPOSITS
FROM THE PUBLIC BY A NON-BANKING NON-FINANCIAL
COMPANY? ......................................................................... 555
WHAT ARE THE REQUIREMENTS REGARDING ADVERTISEMENT
FOR INVITING DEPOSITS FROM THE PUBLIC? ........................ 562
WHAT ARE THE BASIC CONDITIONS FOR ACCEPTING
DEPOSITS WITHOUT INVITATION? ......................................... 563
WHAT IS THE PROCEDURE FOR ACCEPTING DEPOSITS
WITHOUT INVITATION? ........................................................ 564
WHAT ARE THE OTHER REQUIREMENTS OF THE COMPANIES
(ACCEPTANCE OF DEPOSITS) RULES 1975? ............................ 565
B. SEEKING AN ORDER OF THE COMPANY LAW BOARD FOR REPAYMENT
OF OVERDUE DEPOSITS
WHAT IS THE REMEDY WHEN A COMPANY HAS FAILED TO
REPAY ANY DEPOSIT ON TIME? ............................................ 568
C. REQUIREMENTS AS REGARDS SMALL DEPOSITS
WHAT ARE THE REQUIREMENTS UNDER THE COMPANIES
ACT 1956 REGARDING SMALL DEPOSITS? .............................. 569
D. APPLICATION TO THE CENTRAL GOVERNMENT FOR
EXTENSION OF TIME TO COMPLY WITH, OR FOR EXEMPTION FROM,
THE PROVISIONS OF SECTION 58A
IN WHICH CASES CAN THE CENTRAL GOVERNMENT GRANT
EXTENSION/EXEMPTION? WHAT IS THE PROCEDURE FOR
APPLYING TO THE CENTRAL GOVERNMENT? .......................... 571
E. NOMINATION BY A DEPOSITOR
HOW DOES A DEPOSITOR MAKE A NOMINATION? ....................... 572
CHAPTER 19
Inter-corporate Investments, Loans, Guarantees
and Securities .......................................................................579
A. STATUTORY FRAMEWORK
WHAT ARE THE PROVISIONS OF THE COMPANIES ACT 1956
REGARDING INTER-CORPORATE INVESTMENTS, LOANS,
GUARANTEES AND SECURITIES? ............................................. 579
WHICH INTER-CORPORATE INVESTMENTS/LOANS/GUARANTEES/
SECURITIES ARE EXEMPTED UNDER SECTION 372A? .............. 582
WHAT ARE THE REQUIREMENTS OF SECTION 37A REGARDING
RECORD OF INTER-CORPORATE INVESTMENTS, LOANS,
GUARANTEES AND SECURITIES? ............................................. 586
WHAT IS THE PROCEDURE FOR BOARD’S APPROVAL TO AN
INTER-CORPORATE INVESTMENT/LOAN/GUARANTEE/
SECURITY? .......................................................................... 587
WHAT ARE THE LIMITS ON THE AMOUNT OF
INTER-CORPORATE INVESTMENT/LOAN/GUARANTEE/SECURITY? 589
B. SPECIAL PROVISIONS REGARDING INTER-CORPORATE INVESTMENTS
WHAT ARE THE SPECIFIC REQUIREMENTS REGARDING INTERCORPORATE
INVESTMENTS UNDER SECTION 372A? ................. 592
WHAT ARE THE REQUIREMENTS REGARDING INVESTMENTS OF
COMPANY TO BE HELD IN ITS OWN NAME? ........................ 594
WHAT ARE THE DOCUMENTS AND RECORDS RELATING TO
SHARES AND OTHER SECURITIES, WHICH A COMPANY IS
REQUIRED TO KEEP? ........................................................... 595
C. SPECIAL PROVISIONS REGARDING INTER-CORPORATE LOANS
WHAT ARE THE SPEIFIC REQUIREMENTS REGARDING
INTER-CORPORATE LOANS UNDER SECTION 372A? ................ 596
D. SPECIAL PROVISIONS REGARDING INTER-CORPORATE
GUARANTEES AND SECURITIES
WHAT ARE THE SPECIFIC REQUIREMENTS REGARDING
INTER-CORPORATE GUARANTEES AND SECURITIES
UNDER SECTION 372A? ...................................................... 597
CHAPTER 20
The Concepts of Issue of Shares and Debentures by
Private Placement and Public Offer .....................................607
A. TESTS TO DETERMINE WHAT IS PUBLIC OFFER AND
WHAT IS PRIVATE PLACEMENT OF SHARES
OR DEBENTURES
WHAT ARE THE VARIOUS METHODS OF ISSUE OF
SHARES OR DEBENTURES? .................................................... 607
WHAT ARE THE TESTS TO DETERMINE WHAT IS A PUBLIC
ISSUE AND WHAT IS PRIVATE PLACEMENT? ............................. 608
WHAT ARE THE PRINCIPLES GOVERNING BOARD’S POWERS
TO ISSUE SHARES? ............................................................... 611
B. ISSUE OF SHARES AT A PREMIUM
WHAT DOES ‘ISSUE OF SHARES AT A PREMIUM’ IMPLY? ................. 621
ARE THERE ANY RULES AS TO AT WHAT PRICE A COMPANY
SHOULD ISSUE SHARES? ........................................................ 621
WHAT ARE THE REQUIREMENTS REGARDING RESTRICTION
ON THE USE OF SHARE PREMIUM? ...................................... 622
C. ISSUE OF SHARES AT A DISCOUNT
WHAT ARE THE CONDITIONS FOR ISSUE OF SHARES AT
A DISCOUNT? ..................................................................... 623
WHAT IS THE PROCEDURE FOR ISSUE OF SHARES
AT A DISCOUNT? ................................................................ 624
CHAPTER 21
Methods of Issue of Shares and Debentures ..............................627
A. ISSUE OF SHARES OR DEBENTURES BY PRIVATE PLACEMENT
BY A PUBLIC COMPANY
HOW DOES A PUBLIC COMPANY OFFER FURTHER SHARES
BY PRIVATE PLACEMENT OTHER THAN RIGHTS OFFER? .......... 627
WHAT ARE THE SEBI’S GUIDELINES ON PREFERENTIAL ISSUES? ..... 628
WHAT ARE RESERVE BANK OF INDIA’S GUIDELINES
FOR DETERMINING ISSUE PRICE IN RESPECT OF
PREFERENTIAL OFFER OF SHARES TO NON-RESIDENTS? .......... 630
WHAT IS THE PROCEDURE FOR ISSUE OF SHARES ON A PRIVATE
PLACEMENT BASIS? .............................................................. 631
B. ISSUE OF SHARES AND DEBENTURES BY PUBLIC OFFER—
THE PROSPECTUS, ITS CONTENTS, REGISTRATION AND ISSUE
WHAT DOES ‘PROSPECTUS’ MEAN? WHAT ARE THE BASIC
REQUIREMENTS CONCERNING PROSPECTUS FOR ISSUE
OF SHARES OR DEBENTURES BY PUBLIC OFFER? ................... 632
WHAT ARE THE REQUIREMENTS REGARDING CONTENTS
OF A PROSPECTUS? ............................................................. 633
WHAT ARE THE REQUIREMENTS AS REGARDS APPROVAL AND
REGISTRATION OF A PROSPECTUS? ........................................ 636
WHAT IS ‘ABRIDGED PROSPECTUS’? WHAT ARE ITS
CONTENTS? ........................................................................ 639
C. CIVIL AND CRIMINAL LIABILITIES FOR MISSTATEMENTS
ON PROSPECTUS
WHAT IS THE CIVIL LIABILITY FOR MISSTATEMENTS
IN PROSPECTUS? .................................................................. 640
WHAT ARE THE DEFENCES AVAILABLE TO THE PERSON
AGAINST WHOM AN ACTION FOR CIVIL LIABILITY
UNDER SECTION 62 HAS BEEN TAKEN? ................................ 641
WHAT ARE THE DEFENCES AVAILABLE TO AN EXPERT? ................. 642
WHO IS ENTITLED TO BE INDEMNIFIED AND LIABLE TO
INDEMNIFY IN RESPECT OF CIVIL LIABILITY
UNDER SECTION 62? .......................................................... 643
WHAT IS RIGHT TO CLAIM CONTRIBUTION BY A PERSON
WHO HAS BECOME LIABLE UNDER SECTION 62? .................. 643
D. CRIMINAL LIABILITY
WHAT IS THE CRIMINAL LIABILITY FOR MISSTATEMENTS IN
PROSPECTUS? WHO IS ENTITLED TO MAKE A COMPLAINT
AND AGAINST WHOM CAN A COMPLAINT BE MADE
UNDER SECTION 63? .......................................................... 644
E. ISSUE OF SHARES AND DEBENTURES
ON RIGHTS BASIS
WHAT IS THE LEGAL FRAMEWORK REGARDING RIGHTS ISSUE? ........ 645
WHAT ARE THE CONDITIONS TO BE FULFILLED FOR
MAKING A RIGHTS ISSUE? .................................................... 646
WHAT IS THE PROCEDURE FOR ISSUE OF SHARES BY AN
UNLISTED PUBLIC COMPANY ON RIGHTS BASIS? ................... 647
F. ISSUE OF SHARES ON A RIGHTS BASIS BY A LISTED PUBLIC COMPANY
TO ITS SHAREHOLDERS
WHAT IS THE PROCEDURE FOR ISSUE OF SHARES BY A
LISTED PUBLIC COMPANY ON RIGHTS BASIS? ........................ 649
G. OFFER FOR SALE OF SHARES AND DEBENTURES
WHAT IS THE CONCEPT OF ‘OFFER FOR SALE’? ........................... 652
FOR WHAT PURPOSES MAY AN OFFER FOR SALE BE
RESORTED TO? ................................................................... 653
WHAT ARE THE STEPS INVOLVED IN MAKING AN OFFER
FOR SALE? .......................................................................... 654
CHAPTER 22
Allotment of Shares and Debentures .........................................671
A. ALLOTMENT OF SHARES
WHAT DOES ‘ALLOTMENT’ MEAN? .............................................. 671
WHAT IS THE PROCEDURE FOR ALLOTMENT OF SHARES
ISSUED BY PRIVATE PLACEMENT? ........................................... 673
WHAT ARE THE SPECIAL CONSIDERATIONS REGARDING
ALLOTMENT OF SHARES AS APPLICABLE TO A
LISTED COMPANY? .............................................................. 674
WHAT ARE THE OBLIGATIONS OF A COMPANY MAKING A
PUBLIC ISSUE REGARDING REFUND OF
APPLICATION MONEY? ......................................................... 675
WHAT ARE THE REQUIREMENTS AS REGARDS REFUND OF
EXCESS APPLICATION MONEY IN A PUBLIC ISSUE? .................. 676
WHAT IS THE COMPANY’S OBLIGATION REGARDING APPLICATION
MONEY TO BE KEPT IN A BANK? ........................................ 677
WHAT IS A COMPANY’S DUTY AS TO THE FILING OF A
RETURN OF ALLOTMENT? .................................................... 678
WHAT ARE THE SPECIAL REQUIREMENTS AS REGARDS
RETURN OF ALLOTMENT OF SHARES ALLOTTED FOR CASH
CONSIDERATION AND NON-CASH CONSIDERATION? .............. 679
WHAT ARE THE SPECIAL REQUIREMENTS REGARDING
RETURN OF ALLOTMENT OF BONUS SHARES ALLOTTED? ....... 680
WHAT ARE THE SPECIAL REQUIREMENTS REGARDING RETURN
OF ALLOTMENT OF SHARES ISSUED AT A DISCOUNT? ............ 681
B. CALL ON SHARES
WHAT DOES A ‘CALL’ MEAN? ..................................................... 681
WHAT IS THE PROCEDURE FOR MAKING A CALL? ........................ 682
C. FORFEITURE OF SHARES
IN WHICH CASES CAN A COMPANY FORFEIT ITS
OWN SHARES? .................................................................... 685
WHAT ARE THE PRINCIPLES GOVERNING EXERCISE OF THE
RIGHT TO FORFEIT SHARES? ................................................ 686
WHAT IS THE PROCEDURE FOR FORFEITURE OF SHARES? .............. 688
WHAT IS THE EFFECT OF FORFEITURE OF SHARES? ...................... 690
HOW ARE FORFEITED SHARES REISSUED? ...................................... 692
HOW ARE ACCOUNTING DISCLOSURES OF FORFEITURE OF
SHARES MADE? ................................................................... 692
D. LIEN ON SHARES
WHAT DOES ‘LIEN ON SHARES’ MEAN? HOW IS IT EXERCISED? .... 695
E. SURRENDER OF SHARES BY A SHAREHOLDER
TO THE COMPANY
CAN A COMPANY ACCEPT SURRENDER OF ITS SHARES? ................. 697
WHAT IS THE DIFFERENCE BETWEEN SURRENDER AND
FORFEITURE OF SHARES? ..................................................... 697
WHAT IS THE DIFFERENCE BETWEEN SURRENDER OF SHARES
AND PURCHASING BY A COMPANY ITS OWN SHARES? ........... 699
F. GIFT TO COMPANY OF ITS OWN SHARES
CAN A COMPANY ACCEPT GIFT OF ITS OWN SHARES? ................. 700
WHAT IS THE PROCEDURE FOR GIFT TO A COMPANY OF
ITS OWN SHARES? ............................................................... 701
CHAPTER 23
Issue of Redeemable Preference Shares, Shares with
Differential Rights, Sweat Equity Shares and
Bonus Shares ........................................................................713
A. ISSUE AND REDEMPTION OF PREFERENCE SHARES
WHAT ARE THE PROVISIONS AS REGARDS ISSUE OF REDEEMABLE
PREFERENCE SHARES? ........................................................... 713
WHAT ARE THE CONDITIONS TO BE FULFILLED FOR
REDEMPTION OF REDEEMABLE PREFERENCE SHARES? .............. 714
WHAT ARE THE REQUIREMENTS REGARDING CAPITAL
REDEMPTION RESERVE ACCOUNT? ......................................... 715
WHAT IS THE PROCEDURE FOR ISSUE OF NEW SHARES FOR
REDEMPTION OF PREFERENCE SHARES? ................................. 716
B. ISSUE OF DIFFERENTIAL RIGHTS EQUITY SHARES
WHAT DOES ‘DIFFERENTIAL RIGHTS SHARES’ MEAN? .................... 717
C. ISSUE OF SWEAT EQUITY SHARES
WHAT DOES ‘SWEAT EQUITY SHARE’ MEAN? ................................ 720
WHAT CONDITIONS MUST A COMPANY SATISFY REGARDING
ISSUE OF SWEAT EQUITY SHARES? ......................................... 721
D. ISSUE OF BONUS SHARES
WHAT DOES THE TERM ‘BONUS SHARES’ MEAN? WHAT DOES
THE TERM ‘CAPITALISATION OF PROFITS’ MEAN? .................. 724
WHAT ARE THE LEGAL PROVISIONS REGARDING
BONUS SHARES? .................................................................. 726
WHAT ARE THE REQUIREMENTS OF SEBI GUIDELINES
ON BONUS ISSUE BY LISTED COMPANIES? ............................. 727
WHAT IS THE PROCEDURE FOR BONUS ISSUE BY A
LISTED COMPANY? .............................................................. 731
WHAT IS THE PROCEDURE FOR BONUS ISSUE BY AN
UNLISTED COMPANY? .......................................................... 733
CHAPTER 24
Listing and Delisting of Securities and Corporate
Governance Code Under Listing Agreement .......................741
A. LISTING OF SECURITIES
WHAT DO THE TERMS ‘LISTING’, ‘SECURITIES’ AND
‘RECOGNISED STOCK EXCHANGE’ MEAN? .............................. 741
WHAT ARE THE ADVANTAGES OF LISTING? .................................. 744
WHAT ARE THE DIFFERENT TYPES OF LISTING? ........................... 745
WHAT ARE THE REQUIREMENTS REGARDING INITIAL
LISTING/LISTING OF PUBLIC ISSUES OF SHARES
AND DEBENTURES? .............................................................. 747
WHAT ARE THE CONDITIONS PRECEDENT FOR LISTING? .............. 750
WHAT ARE THE BASIC REQUIREMENTS IN SECURING
PERMISSION FOR FRESH LISTING OF SECURITIES? ................... 751
WHAT ARE THE REQUIREMENTS REGARDING LISTING OF
RIGHTS SHARES AND DEBENTURES? ...................................... 752
WHAT ARE THE LISTING FEES PAYABLE TO STOCK EXCHANGE? ...... 757
WHAT IS ‘LISTING AGREEMENT’? WHAT ARE THE
OBLIGATIONS OF A LISTED COMPANY UNDER
THE LISTING AGREEMENT? ................................................... 757
IS IT NECESSARY TO LIST SECURITIES ON REGIONAL
STOCK EXCHANGE? ............................................................. 759
WHAT ARE THE VARIOUS REQUIREMENTS OF A LISTING
AGREEMENT WHICH A LISTED COMPANY HAS TO
COMPLY WITH? .................................................................. 761
B. DELISTING OF SECURITIES
WHAT DOES THE TERM ‘DELISTING’ MEAN? WHAT ARE
THE MODES OF DELISTING? ............................................... 803
C. CORPORATE GOVERNANCE CODE UNDER CLAUSE 49
OF THE LISTING AGREEMENT
WHAT ARE THE REQUIREMENTS REGARDING CORPORATE
GOVERNANACE UNDER CLAUSE 49 OF THE LISTING
AGREEMENT? ....................................................................... 808
CHAPTER 25
Registration of Charges at the Registrar’s Office ........................875
A. REGISTRATION OF CHARGES CREATED
WHICH CHARGES REQUIRE REGISTRATION AT THE REGISTRAR’S
UNDER THE COMPANIES ACT 1956? .................................... 875
WHAT ARE THE CONSEQUENCES OF NON-REGISTRATION
OF A CHARGE? ................................................................... 877
WHAT ARE THE BASIC REQUIREMENTS AS REGARDS
REGISTRATION OF A NEW CHARGE CREATED
BY A COMPANY? ................................................................. 879
WHAT ARE THE STEPS INVOLVED FOR FILING PARTICULARS
OF A CHARGE? ................................................................... 880
WHAT ARE THE REGISTRAR’S DUTIES AS REGARDS
FORM NUMBER 8? .............................................................. 884
B. REGISTRATION OF CHARGES SECURING DEBENTURES
WHAT ARE THE REQUIREMENTS AS REGARDS FILING
OF PARTICULARS OF SECURED DEBENTURES? ........................ 884
HOW SHOULD THE PARTICULARS OF A CHARGE UNDER
SECTION 128 BE FILED? ...................................................... 885
C. REGISTRATION OF MODIFICATION OF CHARGES
WHAT ARE THE REQUIREMENTS OF THE COMPANIES ACT 1956
REGARDING FILING OF PARTICULARS OF MODIFICATION
OF A CHARGE WITH THE REGISTRAR? ................................. 885
WHAT DOES MODIFICATION OF A CHARGE AMOUNT TO? ........... 886
HOW SHOULD PARTICULARS OF MODIFICATION OF A
CHARGE BE FILED? ............................................................. 888
D. REGISTRATION OF SATISFACTION OF CHARGES ............ 888
WHAT ARE THE REQUIREMENTS REGARDING FILING OF
PARTICULARS OF SATISFACTION OF CHARGE? ........................ 888
WHAT IS THE REGISTRAR’S DUTY ON RECEIPT OF
FORM NUMBER 17? ............................................................ 890
E. RECORDS REGARDING CHARGES BY TO BE KEPT THE
COMPANIES AND BY THE REGISTRAR OF COMPANIES; INSPECTION OF
THE RECORDS
WHAT ARE THE DOCUMENTS AND RECORDS A COMPANY
IS REQUIRED TO KEEP IN RELATION TO CHARGES? ................ 890
WHAT ARE THE REQUIREMENTS REGARDING INSPECTION OF
COPIES OF INSTRUMENTS CREATING CHARGES AND
REGISTER OF CHARGES? ....................................................... 891
WHAT IS THE REMEDY AGAINST THE REFUSAL OF A COMPANY
TO TAKE INSPECTION OF REGISTER OF CHARGES? ................ 892
WHAT ARE THE RECORDS AND DOCUMENTS REGISTRAR IS
REQUIRED TO KEEP IN HIS OFFICE IN RELATION TO
CHARGES? ........................................................................... 892
F. LATE REGISTRATION OF CHARGES AND RECTIFICATION
OF REGISTER OF CHARGES
WHAT IS THE REMEDY IF A COMPANY DOES NOT FILE
PARTICULARS OF A CHARGE WITHIN THE
STIPULATED TIME? ............................................................... 894
WHAT IS THE PROCEDURE FOR FILING A PETITION
UNDER SECTION 141? ....................................................... 895
CHAPTER 26
Registered Office, Commencement of Business, Common Seal,
Company Contracts .............................................................897
A. REGISTERED OFFICE AND CHANGE OF ITS PLACE
WHAT ARE THE REQUIREMENTS REGARDING A
REGISTERED OFFICE? ........................................................... 897
WHAT IS THE PROCEDURE FOR CHANGING THE PLACE OF
THE REGISTERED OFFICE WITHIN THE SAME CITY/
TOWN/VILLAGE? ................................................................. 898
WHAT IS THE PROCEDURE FOR CHANGING THE PLACE
OF THE REGISTERED OFFICE FROM ONE PLACE TO
ANOTHER WITHIN THE SAME STATE? ................................... 899
WHAT IS THE PROCEDURE FOR CHANGING THE PLACE OF THE
REGISTERED OFFICE WITHIN THE SAME STATE FROM THE
JURISDICTION OF ONE REGISTRAR TO ANOTHER? ................. 900
B. COMMENCEMENT OF BUSINESS
IN WHICH CASES DOES A COMPANY NEED TO OBTAIN
A CERTIFICATE OF COMMENCEMENT OF BUSINESS? ............... 902
WHAT ARE THE REQUIREMENTS REGARDING OBTAINING A
CERTIFICATE FOR COMMENCEMENT OF BUSINESS,
WHERE A COMPANY HAVING A SHARE CAPITAL HAS
ISSUED A PROSPECTUS? ........................................................ 903
WHAT ARE THE REQUIREMENTS REGARDING OBTAINING
A CERTIFICATE FOR COMMENCEMENT OF BUSINESS, WHERE
A COMPANY HAVING A SHARE CAPITAL HAS NOT ISSUED
A PROSPECTUS? ................................................................... 904
WHAT ARE THE REQUIREMENTS TO BE COMPLIED WITH
BEFORE COMMENCEMENT OF ‘NEW BUSINESS’ BY AN
EXISTING COMPANY? ........................................................... 905
WHAT IS THE PROCEDURE FOR COMMENCEMENT OF
A NEW BUSINESS? ............................................................... 907
C. COMMON SEAL
WHAT IS ‘COMMON SEAL’? ......................................................... 909
IN WHICH CASES IS THE AFFIXATION OF THE COMMON
SEAL NECESSARY? ................................................................ 910
HOW IS THE COMMON SEAL AFFIXED AND WHO HAS
AUTHORITY TO AFFIX IT? .................................................... 912
IS THE PERSON WHO SIGNS PERSONALLY LIABLE FOR THE
TRANSACTION COVERED BY THE DOCUMENT ON WHICH
COMMON SEAL IS AFFIXED? ................................................. 913
D. COMPANY CONTRACTS
HOW ARE CONTRACTS MADE ON BEHALF OF A COMPANY? ........ 914
HOW ARE POWERS DELEGATED TO COMPANY DIRECTORS
AND OTHER OFFICERS? ....................................................... 916
WHAT ARE SPECIAL PRECAUTIONS TO BE TAKEN IN REGARD
TO MAKING CONTRACTS ON BEHALF OF A COMPANY? ........ 917
WHAT DOES A ‘PRE-INCORPORATION CONTRACT’ MEAN?
WHAT IS ITS LEGAL STATUS? ................................................. 917
CAN A COMPANY ENTER INTO A CONTRACT
FOR PARTNERSHIP? .............................................................. 921
WHO IS LIABLE FOR A BILL OF EXCHANGE, HUNDI AND
PROMISSORY NOTE DRAWN ON BEHALF OF
A COMPANY? ...................................................................... 922
IS IT ESSENTIAL FOR THE SIGNATORY OF A BILL OF
EXCHANGE, HUNDI AND PROMISSORY TO STATE THAT
HE IS ACTING ON BEHALF OF A COMPANY? ........................ 923
WHO CAN BE AUTHORISED TO SIGN INSTRUMENTS ON
BEHALF OF A COMPANY? .................................................... 926
WHAT PRECAUTIONS SHOULD BE TAKEN FOR AVOIDING
PERSONAL LIABILITY ON A BILL OF EXCHANGE,
HUNDI OR PROMISSORY NOTE? ........................................... 927
WHAT DOES ‘EXECUTION’ AND ‘DEED’ MEAN? HOW ARE
DEEDS EXECUTED FOR AND ON BEHALF OF
A COMPANY? ...................................................................... 928
HOW IS AUTHORISATION FOR FILING OR DEFENDING A SUIT
BY OR AGAINST A COMPANY GIVEN? ................................... 930
CHAPTER 27
Annual Returns ..........................................................................941
WHAT DOES ‘ANNUAL RETURN’ MEAN? WHAT IS A COMPANY’S
DUTY AS REGARDS FILING OF ANNUAL RETURN? .................. 941
WHAT ARE THE CONTENTS AND FORM OF
ANNUAL RETURN? ............................................................... 942
WHAT ARE THE REQUIREMENTS REGARDING SIGNING
OF ANNUAL RETURN? ......................................................... 945
WHAT ARE THE SPECIAL REQUIREMENTS REGARDING ANNUAL
RETURN OF A COMPANY NOT HAVING SHARE CAPITAL? ....... 945
WHAT IS THE CONSEQUENCE OF DEFAULT IN FILING
ANNUAL RETURN? ............................................................... 946
CHAPTER 28
The Company Directors—Qualification
and Disqualification .............................................................957
A. MINIMUM AND MAXIMUM NUMBER OF DIRECTORS
WHAT IS THE STATUTORY OBLIGATION OF A COMPANY
TO HAVE DIRECTORS? ......................................................... 957
WHAT ARE THE REQUIREMENTS AS REGARDS MINIMUM AND
MAXIMUM NUMBER OF DIRECTORS? .................................... 958
WHAT ARE THE REQUIREMENTS UNDER THE COMPANIES
ACT 1956 AS REGARDS INCREASE IN THE NUMBER OF
DIRECTORS? ........................................................................ 958
IN WHICH CASES DOES AN INCREASE IN THE NUMBER
OF DIRECTORS REQUIRE GOVERNMENT APPROVAL? ................ 959
WHAT IS THE PROCEDURE FOR INCREASING THE NUMBER OF
DIRECTORS? ........................................................................ 960
WHAT IS THE PROCEDURE FOR REDUCING THE NUMBER OF
DIRECTORS? ........................................................................ 961
B. CONSENT TO ACT AS DIRECTOR
IN WHICH CASES MUST CONSENT BE GIVEN BY A PERSON
TO BE APPOINTED AS A DIRECTOR OF A COMPANY? ........... 962
IN WHICH CASES MUST CONSENT BE FILED WITH THE
REGISTRAR OF COMPANIES BY A PERSON APPOINTED
AS A DIRECTOR? ................................................................. 963
C. QUALIFICATION AND DISQUALIFICATION FOR DIRECTORSHIP
DOES A PERSON NEED TO HAVE ANY SPECIFIC QUALIFICATION
TO BE APPOINTED AS A DIRECTOR? .................................... 966
ARE THERE ANY DISQUALIFICATIONS FOR DIRECTORS? .................. 966
CAN A PRIVATE COMPANY PROVIDE FOR ADDITIONAL
DISQUALIFICATION? ............................................................. 969
D. DIRECTOR’S SHARE QUALIFICATION
WHAT IS ‘SHARE QUALIFICATION’ OF A DIRECTOR? ..................... 969
WHAT IS THE TIME LIMIT FOR ACQUIRING SHARE
QUALIFICATION BY A DIRECTOR? ......................................... 971
IN WHAT WAY CAN A DIRECTOR ACQUIRE
QUALIFYING SHARES? ........................................................... 971
E. RESTRICTION ON NUMBER OF DIRECTORSHIPS
HOW MANY DIRECTORSHIPS CAN A PERSON HOLD
AT A TIME? ........................................................................ 972
WHICH DIRECTORSHIPS ARE TO BE EXCLUDED FROM
THE MAXIMUM NUMBER MENTIONED ABOVE? ..................... 972
HOW DOES A COMPANY KNOW ABOUT CHANGES IN
DIRECTORSHIPS OF A PERSON? ............................................ 973
WHAT IS THE TIME LIMIT FOR MAKING DISCLOSURE? .................. 974
CHAPTER 29
The Appointment of Directors ..................................................979
A. APPOINTMENT OF THE FIRST DIRECTORS
HOW ARE THE FIRST DIRECTORS OF A
COMPANY APPOINTED? ........................................................ 979
WHAT ARE THE FORMALITIES AS REGARDS THE
FIRST DIRECTORS? ............................................................... 981
B. APPOINTMENT OF DIRECTORS AT THE FIRST GENERAL
MEETING HELD AFTER INCORPORATION OF A COMPANY
WHAT ARE THE REQUIREMENTS AS REGARDS APPOINTMENT
OF FIRST DIRECTORS AT A GENERAL MEETING
HELD AFTER INCORPORATION? ............................................. 982
HOW ARE DIRECTORS APPOINTED IN THE CASE OF A
PRIVATE COMPANY WHICH IS NOT A SUBSIDIARY
OF A PUBLIC COMPANY? ..................................................... 983
C. RETIREMENT OF DIRECTORS BY ROTATION AND PROCEDURE FOR
REAPPOINTMENT OF DIRECTORS RETIRING BY ROTATION AT THE
ANNUAL GENERAL MEETING
WHAT IS THE RULE OF RETIREMENT OF DIRECTORS BY
ROTATION? ......................................................................... 984
HOW IS A DIRECTOR RETIRING BY ROTATION AT AGM
REAPPOINTED? .................................................................... 985
IN WHICH CIRCUMSTANCES DOES A DIRECTOR RETIRING
BY ROTATION AT AN AGM GET AUTOMATICALLY
REAPPOINTED? .................................................................... 986
D. APPOINTMENT AS DIRECTOR OF A PERSON WHO IS NOT A
RETIRING DIRECTOR AT A GENERAL MEETING
HOW IS A PERSON, WHO IS NOT A DIRECTOR LIABLE TO
RETIREMENT BY ROTATION, APPOINTED? .............................. 987
WHAT IS THE PROCEDURE FOR APPOINTMENT OF A PERSON
AS DIRECTOR WHO IS NOT A RETIRING DIRECTOR? ............. 988
IN WHICH CASES IS SECTION 257 NOT APPLICABLE? .................... 991
E. ELECTION OF DIRECTORS BY BALLOT AT AGM OF
A COMPANY LICENSED UNDER SECTION 25
WHAT DOES ‘BALLOT’ MEAN? WHAT IS THE PROCEDURE FOR
CONDUCTING BALLOT? ....................................................... 992
WHICH PROVISIONS OF THE COMPANIES ACT 1956 ARE NOT
APPLICABLE WHERE ARTICLES PROVIDE FOR ELECTION
OF ALL ITS DIRECTORS AT EACH AGM BY BALLOT? ............ 993
F. PROPORTIONAL REPRESENTATION FOR APPOINTMENT
OF DIRECTORS
IN WHICH CASES IS THE OPTION TO ADOPT PROPORTIONAL
REPRESENTATION SYSTEM AVAILABLE? ..................................... 995
BY WHICH DIFFERENT METHODS IS THE VOTING BY
PROPORTIONAL REPRESENTATION SYSTEM CONDUCTED? ......... 995
G. APPOINTMENT OF DIRECTORS BY NAMING IN ARTICLES
OR PROSPECTUS
IN WHICH CASES DO THE REQUIREMENTS OF SECTION 266 AS
REGARDS APPOINTMENT OF A DIRECTOR, BY NAMING IN
ARTICLES OR PROSPECTUS, APPLY? ........................................ 998
H. ADDITIONAL DIRECTORS
WHAT DOES ‘ADDITIONAL DIRECTOR’ MEAN? WHO CAN
APPOINT AN ADDITIONAL DIRECTOR? ................................ 1000
WHAT IS THE PROCEDURE FOR APPOINTMENT OF
ADDITIONAL DIRECTOR? ................................................... 1001
WHAT IS THE LENGTH OF OFFICE OF AN
ADDITIONAL DIRECTOR? ................................................... 1003
WHAT ARE THE REQUIREMENTS REGARDING APPOINTMENT
AT AN AGM OF THE ADDITIONAL DIRECTOR
APPOINTED BY THE BOARD? .............................................. 1003
I. CASUAL VACANCIES IN BOARD
WHAT DOES ‘CASUAL VACANCY’ MEAN? WHEN AND HOW
CAN THE BOARD OF DIRECTORS APPOINT A DIRECTOR
TO FILL A CASUAL VACANCY? ........................................... 1004
WHAT IS THE LENGTH OF OFFICE OF DIRECTOR APPOINTED
IN CASUAL VACANCY? ....................................................... 1006
WHAT IS THE PROCEDURE FOR THE APPOINTMENT OF
A DIRECTOR TO FILL A CASUAL VACANCY? ........................ 1006
J. ALTERNATE DIRECTORS
WHAT DOES AN ‘ALTERNATE DIRECTOR’ MEAN? ........................ 1007
WHO IS AUTHORISED TO APPOINT AN ALTERNATE DIRECTOR? .... 1008
WHAT IS THE PRECONDITION FOR THE APPOINTMENT
OF AN ALTERNATE DIRECTOR? ........................................... 1009
WHAT IS THE LENGTH OF OFFICE OF AN
ALTERNATE DIRECTOR? ...................................................... 1009
WHAT IS THE PROCEDURE FOR APPOINTMENT OF AN
ALTERNATE DIRECTOR? ...................................................... 1011
K. NOMINEE DIRECTORS
WHO ARE ‘NOMINEE DIRECTORS’? WHY AND BY WHOM
ARE THEY NOMINATED? .................................................... 1013
WHAT IS THE LEGAL RIGHT OF A STATUTORY CORPORATION TO
APPOINT NOMINEE DIRECTORS? ......................................... 1014
IN WHICH CIRCUMSTANCES CAN THE CENTRAL GOVERNMENT
APPOINT DIRECTORS ON BOARD OF COMPANIES? .............. 1015
IN WHICH CIRCUMSTANCES CAN DEBENTURE HOLDERS
APPOINT THEIR NOMINEES ON THE BOARDS
OF COMPANIES? ............................................................... 1017
CHAPTER 30
The Termination of Directorship.............................................1035
A. VACATION OF OFFICE UNDER SECTION 283 OF THE
COMPANIES ACT 1956
UNDER WHAT CIRCUMSTANCES DOES A DIRECTOR
VACATE HIS OFFICE UNDER SECTION 283? ........................ 1035
CAN A PRIVATE COMPANY PRESCRIBE ADDITIONAL
GROUNDS OF VACATION OF OFFICE OF DIRECTORS? ......... 1037
UNDER WHAT CIRCUMSTANCES DOES A DIRECTOR VACATE
HIS OFFICE FOR ABSENTING FROM BOARD MEETINGS? ....... 1038
WHAT ARE THE PROCEDURAL FORMALITIES IN REGARD
TO VACATION OF OFFICE? ............................................... 1039
B. RESIGNATION OF A DIRECTOR
CAN A DIRECTOR RESIGN BEFORE EXPIRY OF THE TERM OF
HIS OFFICE? ..................................................................... 1040
WHAT ARE THE PROCEDURAL FORMALITIES CONCERNING
RESIGNATION OF A DIRECTOR? ......................................... 1041
C. REMOVAL OF A DIRECTOR
CAN SHAREHOLDERS REMOVE A DIRECTOR? ............................... 1042
WHAT ARE THE REQUIREMENTS REGARDING REMOVAL OF
A DIRECTOR UNDER SECTION 284? ................................... 1043
WHAT ARE THE RIGHTS OF A DIRECTOR WITH REGARD
TO HIS INTENDED REMOVAL? ............................................ 1044
WHAT ARE THE PROCEDURAL FORMALITIES CONCERNING
THE REMOVAL OF A DIRECTOR? ........................................ 1046
HOW CAN THE VACANCY OF THE REMOVED DIRECTOR
BE FILLED? ....................................................................... 1047
CAN DIRECTORS OF A PRIVATE COMPANY BE PROTECTED
AGAINST REMOVAL UNDER SECTION 284? .......................... 1048
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