CHAPTER XXIX
MISCELLANEOUS
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:
Mediation and
Conciliation
Panel.
Power of
Central
Government
to appoint
company
prosecutors.
Appeal
against
acquittal.
Compensation
for accusation
without
reasonable
cause.
Application
of fines.
Punishment
for fraud.
2 of 1974.
2 of 1974.
2 of 1974.
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.
448. Save as otherwise provided in this Act, if in any return, report, certificate, financial
statement, prospectus, statement or other document required by, or for, the purposes of any
of the provisions of this Act or the rules made thereunder, any person makes a statement,—
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,
he shall be liable under section 447.
449. Save as otherwise provided in this Act, if any person intentionally gives false
evidence—
(a) upon any examination on oath or solemn affirmation, authorised under this
Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the winding up
of any company under this Act, or otherwise in or about any matter arising under this
Act,
he shall be punishable with imprisonment for a term which shall not be less than three years
but which may extend to seven years and with fine which may extend to ten lakh rupees.
450. If a company or any officer of a company or any other person contravenes any of
the provisions of this Act or the rules made thereunder, or any condition, limitation or
restriction subject to which any approval, sanction, consent, confirmation, recognition,
direction or exemption in relation to any matter has been accorded, given or granted, and for
which no penalty or punishment is provided elsewhere in this Act, the company and every
officer of the company who is in default or such other person shall be punishable with fine
which may extend to ten thousand rupees, and where the contravention is continuing one,
with a further fine which may extend to one thousand rupees for every day after the first
during which the contravention continues.
451. If a company or an officer of a company commits an offence punishable either
with fine or with imprisonment and where the same offence is committed for the second or
subsequent occasions within a period of three years, then, that company and every officer
thereof who is in default shall be punishable with twice the amount of fine for such offence
in addition to any imprisonment provided for that offence.
452. (1) If any officer or employee of a company—
(a) wrongfully obtains possession of any property, including cash of the
company; or
(b) having any such property including cash in his possession, wrongfully
withholds it or knowingly applies it for the purposes other than those expressed or
directed in the articles and authorised by this Act,
Punishment
for false
evidence.
Punishment
for false
statement.
Punishment
where no
specific
penalty or
punishment is
provided.
Punishment
for wrongful
withholding
of property.
Punishment
in case of
repeated
default.
he shall, on the complaint of the company or of any member or creditor or contributory
thereof, be punishable with fine which shall not be less than one lakh rupees but which may
extend to five lakh rupees.
(2) The Court trying an offence under sub-section (1) may also order such officer or
employee to deliver up or refund, within a time to be fixed by it, any such property or cash
wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have
been derived from such property or cash or in default, to undergo imprisonment for a term
which may extend to two years.
453. If any person or persons trade or carry on business under any name or title, of
which the word “Limited” or the words “Private Limited” or any contraction or imitation
thereof is or are the last word or words, that person or each of those persons shall, unless
duly incorporated with limited liability, or unless duly incorporated as a private company
with limited liability, as the case may be, punishable with fine which shall not be less than five
hundred rupees but may extend to two thousand rupees for every day for which that name or
title has been used.
454. (1) The Central Government may, by an order published in the Official Gazette,
appoint as many officers of the Central Government, not below the rank of Registrar, as
adjudicating officers for adjudging penalty under the provisions of this Act in the manner as
may be prescribed.
(2) The Central Government shall while appointing adjudicating officers, specify their
jurisdiction in the order under sub-section (1).
(3) The adjudicating officer may, by an order impose the penalty on the company and
the officer who is in default stating any non-compliance or default under the relevant provision
of the Act.
(4) The adjudicating officer shall, before imposing any penalty, give a reasonable
opportunity of being heard to such company and the officer who is in default.
(5) Any person aggrieved by an order made by the adjudicating officer under
sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the
matter.
(6) Every appeal under sub-section (5) shall be filed within sixty days from the date on
which the copy of the order made by the adjudicating officer is received by the aggrieved
person and shall be in such form, manner and be accompanied by such fees as may be
prescribed.
(7) The Regional Director may, after giving the parties to the appeal an opportunity of
being heard, pass such order as he thinks fit, confirming, modifying or setting aside the order
appealed against.
(8) (i) Where company does not pay the penalty imposed by the adjudicating officer or
the Regional Director within a period of ninety days from the date of the receipt of the copy
of the order, the company shall be punishable with fine which shall not be less than twentyfive
thousand rupees but which may extend to five lakh rupees.
(ii) Where an officer of a company who is in default does not pay the penalty within a
period of ninety days from the date of the receipt of the copy of the order, such officer shall
be punishable with imprisonment which may extend to six months or with fine which shall not
be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with
both.
455. (1) Where a company is formed and registered under this Act for a future project
or to hold an asset or intellectual property and has no significant accounting transaction,
such a company or an inactive company may make an application to the Registrar in such
manner as may be prescribed for obtaining the status of a dormant company.
Punishment
for improper
use of
“Limited” or
“Private
Limited”.
Adjudication
of penalties.
Dormant
company.
Explanation.—For the purposes of this section,—
(i) “inactive company” means a company which has not been carrying on any
business or operation, or has not made any significant accounting transaction during
the last two financial years, or has not filed financial statements and annual returns
during the last two financial years;
(ii) “significant accounting transaction” means any transaction other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
(2) The Registrar on consideration of the application shall allow the status of a dormant
company to the applicant and issue a certificate in such form as may be prescribed to that
effect.
(3) The Registrar shall maintain a register of dormant companies in such form as may
be prescribed.
(4) In case of a company which has not filed financial statements or annual returns for
two financial years consecutively, the Registrar shall issue a notice to that company and
enter the name of such company in the register maintained for dormant companies.
(5) A dormant company shall have such minimum number of directors, file such
documents and pay such annual fee as may be prescribed to the Registrar to retain its
dormant status in the register and may become an active company on an application made in
this behalf accompanied by such documents and fee as may be prescribed.
(6) The Registrar shall strike off the name of a dormant company from the register of
dormant companies, which has failed to comply with the requirements of this section.
456. No suit, prosecution or other legal proceeding shall lie against the Government or
any officer of the Government or any other person in respect of anything which is in good
faith done or intended to be done in pursuance of this Act or of any rules or orders made
thereunder, or in respect of the publication by or under the authority of the Government or
such officer, of any report, paper or proceedings.
457. Notwithstanding anything contained in any other law for the time being in force,
the Registrar, any officer of the Government or any other person shall not be compelled to
disclose to any court, Tribunal or other authority, the source from where he got any information
which—
(a) has led the Central Government to order an investigation under section 210;
or
(b) is or has been material or relevant in connection with such investigation.
458. (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 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.
(2) A copy of every notification issued under sub-section (1) shall, as soon as may be
after it is issued, be laid before each House of Parliament.
Protection of
action taken
in good faith.
Nondisclosure
of
information
in certain
cases.
Delegation by
Central
Governemnt
of its powers
and
functions.
459. (1) Where the Central Government or the Tribunal is required or authorised by
any provision of this Act—
(a) to accord approval, sanction, consent, confirmation or recognition to, or in
relation to, any matter; or
(b) to give any direction in relation to any matter; or
(c) to grant any exemption in relation to any matter,
then, the Central Government or the Tribunal may in the absence of anything to the contrary
contained in that provision or any other provision of this Act, accord, give or grant such
approval, sanction, consent, confirmation, recognition, direction or exemption, subject to
such conditions, limitations or restrictions as it may think fit to impose and may, in the case
of a contravention of any such condition, limitation or restriction, rescind or withdraw such
approval, sanction, consent, confirmation, recognition, direction or exemption.
(2) Save as otherwise provided in this Act, every application which may be, or is
required to be, made to the Central Government or the Tribunal under any provision of this
Act—
(a) in respect of any approval, sanction, consent, confirmation or recognition to
be accorded by that Government or the Tribunal to, or in relation to, any matter; or
(b) in respect of any direction or exemption to be given or granted by that
Government or the Tribunal in relation to any matter; or
(c) in respect of any other matter,
shall be accompanied by such fees as may be prescribed:
Provided that different fees may be prescribed for applications in respect of different
matters or in case of applications by different classes of companies.
460. Notwithstanding anything contained in this Act,—
(a) where any application required to be made to the Central Government under
any provision of this Act in respect of any matter is not made within the time specified
therein, that Government may, for reasons to be recorded in writing, condone the
(b) where any document required to be filed with the Registrar under any provision
of this Act is not filed within the time specified therein, the Central Government may,
for reasons to be recorded in writing, condone the delay.
461. The Central Government shall cause a general annual report on the working and
administration of this Act to be prepared and laid before each House of Parliament within one
year of the close of the year to which the report relates.
462. (1) The Central Government may in the public interest, by notification direct that
any of the provisions of this Act,—
(a) shall not apply to such class or classes of companies; or
(b) shall apply to the class or classes of companies with such exceptions,
modifications and adaptations as may be specified in the notification.
(2) A copy of every notification proposed to be issued under sub-section (1), shall be
laid in draft before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in disapproving the issue of the notification or both Houses
agree in making any modification in the notification, the notification shall not be issued or, as
the case may be, shall be issued only in such modified form as may be agreed upon by both
the Houses.
Condonation
of delay in
certain cases.
Annual
report by
Central
Government.
Power to
exempt class
or classes of
companies
from
provisions of
this Act.
Powers of
Central
Government
or Tribunal
to accord
approval,
etc., subject
to conditions
and to
prescribe fees
on
applications.
463. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or
breach of trust against an officer of a company, it appears to the court hearing the case that
he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or
breach of trust, but that he has acted honestly and reasonably, and that having regard to all
the circumstances of the case, including those connected with his appointment, he ought
fairly to be excused, the court may relieve him, either wholly or partly, from his liability on
such term, as it may think fit:
Provided that in a criminal proceeding under this sub-section, the court shall have no
power to grant relief from any civil liability which may attach to an officer in respect of such
negligence, default, breach of duty, misfeasance or breach of trust.
(2) Where any such officer has reason to apprehend that any proceeding will or might
be brought against him in respect of any negligence, default, breach of duty, misfeasance or
breach of trust, he may apply to the High Court for relief and the High Court on such
application shall have the same power to relieve him as it would have had if it had been a
court before which a proceedings against that officer for negligence, default, breach of duty,
misfeasance or breach of trust had been brought under sub-section (1).
(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2)
unless it has, by notice served in the manner specified by it, required the Registrar and such other
person, if any, as it thinks necessary, to show cause why such relief should not be granted.
464. (1) No association or partnership consisting of more than such number of persons
as may be prescribed shall be formed for the purpose of carrying on any business that has for
its object the acquisition of gain by the association or partnership or by the individual
members thereof, unless it is registered as a company under this Act or is formed under any
other law for the time being in force:
Provided that the number of persons which may be prescribed under this sub-section
shall not exceed one hundred.
(2) Nothing in sub-section (1) shall apply to—
(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals who are governed
by special Acts.
(3) Every member of an association or partnership carrying on business in contravention
of sub-section (1) shall be punishable with fine which may extend to one lakh rupees and
shall also be personally liable for all liabilities incurred in such business.
465. (1) The Companies Act, 1956 and the Registration of Companies (Sikkim) Act,
1961 (hereafter in this section referred to as the repealed enactments) shall stand repealed:
Provided that the provisions of Part IX A of the Companies Act, 1956 shall be applicable
mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not
been repealed until a special Act is enacted for Producer Companies:
Provided further that until a date is notified by the Central Government under subsection
(1) of Section 434 for transfer of all matters, proceedings or cases to the Tribunal, the
provisions of the Companies Act, 1956 in regard to the jurisdiction, powers, authority and
functions of the Board of Company Law Administration and court shall continue to apply as
if the Companies Act, 1956 has not been repealed:
Provided also that provisions of the Companies Act, 1956 referred in the notification
issued under section 67 of the Limited Liability Partnership Act, 2008 shall, until the relevant
notification under such section applying relevant corresponding provisions of this Act to
limited liability partnerships is issued, continue to apply as if the Companies Act, 1956 has
not been repealed.
Power of
court to grant
relief in
certain cases.
Prohibition
of association
or
partnership
of persons
exceeding
certain
number.
1 of 1956.
1 of 1956.
1 of 1956.
1 of 1956.
6 of 2009.
Sikkim Act
8 of 1961.
Repeal of
certain
enactments
and savings.
(2) Notwithstanding the repeal under sub-section (1) of the repealed enactments,—
(a) anything done or any action taken or purported to have been done or taken,
including any rule, notification, inspection, order or notice made or issued or any
appointment or declaration made or any operation undertaken or any direction given
or any proceeding taken or any penalty, punishment, forfeiture or fine imposed under
the repealed enactments shall, insofar as it is not inconsistent with the provisions of
this Act, be deemed to have been done or taken under the corresponding provisions of
this Act;
(b) subject to the provisions of clause (a), any order, rule, notification, regulation,
appointment, conveyance, mortgage, deed, document or agreement made, fee directed,
resolution passed, direction given, proceeding taken, instrument executed or issued,
or thing done under or in pursuance of any repealed enactment shall, if in force at the
commencement of this Act, continue to be in force, and shall have effect as if made,
directed, passed, given, taken, executed, issued or done under or in pursuance of this
Act;
(c) any principle or rule of law, or established jurisdiction, form or course of
pleading, practice or procedure or existing usage, custom, privilege, restriction or
exemption shall not be affected, notwithstanding that the same respectively may have
been in any manner affirmed or recognised or derived by, in, or from, the repealed
enactments;
(d) any person appointed to any office under or by virtue of any repealed
enactment shall be deemed to have been appointed to that office under or by virtue of
this Act;
(e) any jurisdiction, custom, liability, right, title, privilege, restriction, exemption,
usage, practice, procedure or other matter or thing not in existence or in force shall not
be revised or restored;
(f) the offices existing on the commencement of this Act for the registration of
companies shall continue as if they have been established under the provisions of this
Act;
(g) the incorporation of companies registered under the repealed enactments
shall continue to be valid and the provisions of this Act shall apply to such companies
as if they were registered under this Act;
(h) all registers and all funds constituted and established under the repealed
enactments shall be deemed to be registers and funds constituted or established
under the corresponding provisions of this Act;
(i) any prosecution instituted under the repealed enactments and pending
immediately before the commencement of this Act before any Court shall, subject to
the provisions of this Act, continue to be heard and disposed of by the said Court;
(j) any inspection, investigation or inquiry ordered to be done under the
Companies Act, 1956 shall continue to be proceeded with as if such inspection,
investigation or inquiry has been ordered under the corresponding provisions of this
Act; and
(k) any matter filed with the Registrar, Regional Director or the Central
Government under the Companies Act, 1956 before the commencement of this Act and
not fully addressed at that time shall be concluded by the Registrar, Regional Director
or the Central Government, as the case may be, in terms of that Act, despite its repeal.
(3) The mention of particular matters in sub-section (2) shall not be held to prejudice
the general application of section 6 of the General Clauses Act, 1897 with regard to the effect
of repeal of the repealed enactments as if the Registration of Companies (Sikkim) Act, 1961
were also a Central Act.
1 of 1956.
10 of 1897.
Sikkim Act 8
of 1961.
1 of 1956.
466. (1) Notwithstanding anything contained in section 465, the Board of Company
Law Administration constituted under the Companies Act, 1956 (hereafter in this section
referred to as the Company Law Board) shall stand dissolved on the constitution of the
Tribunal and the Appellate Tribunal:
Provided that until the Tribunal and the Appellate Tribunal is constituted, the Chairman,
Vice-Chairman and Members of the Company Law Board immediately before the constitution
of the Tribunal and the Appellate Tribunal, who fulfil the qualifications and requirements
provided under this Act regarding appointment as President or Chairperson or Member of
the Tribunal or the Appellate Tribunal, shall function as President, Chairperson or Member
of the Tribunal or the Appellate Tribunal:
Provided further that every officer or other employee, who had been appointed on
deputation basis to the Company Law Board, shall, on such dissolution,—
(i) become officer or employee of the Tribunal or the Appellate Tribunal, if he
fulfils the qualifications and requirements under this Act; and
(ii) stand reverted to his parent cadre, Ministry or Department, in any other case:
Provided also that every officer and the other employee of the Company Law Board,
employed on regular basis by that Board, shall become, on and from such dissolution the
officer and other employee, respectively, of the Tribunal or the Appellate Tribunal with the
same rights and privileges as to pension, gratuity and other like benefits as would have been
admissible to him if he had continued to serve that Board and shall continue to do so unless
and until his employment in the Tribunal or the Appellate Tribunal is duly terminated or until
his remuneration, terms and conditions of employment are duly altered by the Tribunal or the
Appellate Tribunal, as the case may be:
Provided also that notwithstanding anything contained in the Industrial Disputes Act,
1947 or in any other law for the time being in force, any officer or other employee who
becomes an officer or other employee of the Tribunal or the Appellate Tribunal under the
preceding proviso shall not be entitled to any compensation under this Act or under any
other law for the time being in force and no such claim shall be entertained by any court,
tribunal or other authority:
Provided also that where the Company Law Board has etablished a provident fund,
superannuation fund, welfare fund or other fund for the benefit of the officers and other
employees employed in that Board, the monies relatable to the officers and other employees
who have become officers or employees of the Tribunal or the Appellate Tribunal shall, out
of the monies standing to the credit of such provident fund, superannuation fund, welfare
fund or other fund, stand transferred to, and vest in, the Tribunal or the Appellate Tribunal,
as the case may be, and such monies which stand so transferred shall be dealt with by the
Tribunal or the Appellate Tribunal in such manner as may be prescribed.
(2) The persons holding the offices of Chairman, Vice-Chairman and Members, and
officers and other employees of the Company Law Board immediately before the constitution
of the Tribunal and the Appellate Tribunal who are not covered under proviso to sub-section
(1) shall vacate their respective offices on such constitution and no such Chairman, Vice-
Chairman and Members and officers or other employees shall be entitled to claim any
compensation for the premature termination of the term of his office or of any contract of
service, if any.
467. (1) Subject to the provisions of this section, the Central Government may, by
notification, alter any of the regulations, rules, Tables, forms and other provisions contained
in any of the Schedules to this Act.
14 of 1947.
Power of
Central
Government
to amend
Schedules.
Dissolution
of Company
Law Board
and
consequential
provisions.
1 of 1956.
(2) Any alteration notified under sub-section (1) shall have effect as if enacted in this
Act and shall come into force on the date of the notification, unless the notification otherwise
directs:
Provided that no such alteration in Table F of Schedule I shall apply to any company
registered before the date of such alteration.
(3) Every alteration made by the Central Government under sub-section (1) shall be
laid as soon as may be after it is made before each House of Parliament while it is in session
for a total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any modification
in the alteration, or both Houses agree that the alteration should not be made, the alteration
shall thereafter have effect only in such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall be without prejudice to the
validity of anything previously done in pursuance of that alteration.
468. (1) The Central Government shall, make rules consistent with the Code of Civil
Procedure, 1908 providing for all matters relating to the winding up of companies, which by
this Act, are to be prescribed, and may make rules providing for all such matters, as may be
prescribed.
(2) In particular, and without prejudice to the generality of the foregoing power, such
rules may provide for all or any of the following matters, namely:—
(i) as to the mode of proceedings to be held for winding up of a company by the
Tribunal;
(ii) for the voluntary winding up of companies, whether by members or by
creditors;
(iii) for the holding of meetings of creditors and members in connection with
proceedings under section 230;
(iv) for giving effect to the provisions of this Act as to the reduction of the
capital;
(v) generally for all applications to be made to the Tribunal under the provisions
of this Act;
(vi) the holding and conducting of meetings to ascertain the wishes of creditors
and contributories;
(vii) the settling of lists of contributories and the rectifying of the register of
members where required, and collecting and applying the assets;
(viii) the payment, delivery, conveyance, surrender or transfer of money, property,
books or papers to the liquidator;
(ix) the making of calls; and
(x) the fixing of a time within which debts and claims shall be proved.
(3) All rules made by the Supreme Court on the matters referred to in this section as it
stood immediately before the commencement of this Act and in force at such commencement,
shall continue to be in force, till such time the rules are made by the Central Government and
any reference to the High Court in relation to winding up of a company in such rules shall be
construed as a reference to the Tribunal.
469. (1) The Central Government may, by notification, make rules for carrying out the
provisions of this Act.
(2) Without prejudice to the generality of the provisions of sub-section (1), the Central
Government may make rules for all or any of the matters which by this Act are required to be,
or may be, prescribed or in respect of which provision is to be or may be made by rules.
Powers of
Central
Government
to make rules
relating to
winding up.
5 of 1908.
Power of
Central
Government
to make
rules.
(3) Any rule made under sub-section (1) may provide that a contravention thereof
shall be punishable with fine which may extend to five thousand rupees and where the
contravention is a continuing one, with a further fine which may extend to five hundred
rupees for every day after the first during which such contravention continues.
(4) Every rule made under this section and every regulation made by Securities and
Exchange Board under this Act, shall be laid, as soon as may be after it is made, before each
House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of
the session immediately following the session or the successive sessions aforesaid, both
Houses agree in making any modification in the rule or regulation or both Houses agree that
the rule or regulation should not be made, the rule or regulation shall thereafter have effect
only in such modified form or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of anything previously
done under that rule or regulation.
470. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such provisions, not
inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for
removing the difficulty:
Provided that no such order shall be made after the expiry of a period of five years from
the date of commencement of section 1 of this Act.
(2) Every order made under this section shall, as soon as may be after it is made, be laid
before each House of Parliament.
Power to
remove
difficulties.
SCHEDULE I
(See sections 4 and 5)
TABLE -A
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES
1st The name of the company is ‘‘..................................Limited / Private Limited’’.
2nd The registered office of the company will be situated in the State of...................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a)
are:—
4th The liability of the member(s) is limited and this liability is limited to the amount
unpaid, if any, on the shares held by them.
5th The share capital of the company is..................................rupees, divided
into..................................shares of..................................rupees each.
6th We, the several persons, whose names and addresses are subscribed, are desirous of
being formed into a company in pursuance of this memorandum of association, and we
respectively agree to take the number of shares in the capital of the company set
against our respective names:—
Names, addresses, No. of shares taken Signature of Signature, names,
descriptions and by each subscriber subscriber addresses, descriptions
occupations of and occupations of
subscribers witnesses
A.B. of........Merchant .............. Signed before me:
Signature......................
C.D. of........Merchant .............. Signed before me:
Signature......................
E.F. of........Merchant .............. Signed before me:
Signature......................
G.H. of........Merchant .............. Signed before me:
Signature......................
I.J. of........Merchant .............. Signed before me:
Signature......................
K.L. of........Merchant .............. Signed before me:
Signature......................
M.N. of........Merchant .............. Signed before me:
Signature......................
Total shares taken:
7th I, whose name and address is given below, am desirous of forming a company in
pursuance of this memorandum of association and agree to take all the shares in the
capital of the company (Applicable in case of one person company):—
Name, address, description Signature of subscriber Signature, name, address,
and occupation of subscriber description and occupation
of witness
A.B. ........Merchant Signed before me:
Signature......................
8th Shri/Smt.................., son/daughter of ......................., resident of............ aged............ years
shall be the nominee in the event of death of the sole member (Applicable in case of
one person company)
Dated........................................ the day of ..........................
TABLE -B
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY
GUARANTEE AND NOT HAVING A SHARE CAPITAL
1st The name of the company is ‘‘..................................Limited/Private Limited’’.
2nd The registered office of the company will be situated in the State of..................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a)
are:—
4th The liability of the member(s) is limited.
5th Every member of the company undertakes to contribute:
(i) to the assets of the company in the event of its being wound up while he is a
member, or within one year after he ceases to be a member, for payment of the debts
and liabilities of the company or of such debts and liabilities as may have been
contracted before he ceases to be a member; and
(ii) to the costs, charges and expenses of winding up (and for the adjustment of the
rights of the contributories among themselves),
such amount as may be required, not exceeding..................................rupees.
6th We, the several persons, whose names and addresses are subscribed, are desirous of
being formed into a company in pursuance of this memorandum of association.
Names, addresses, descriptions Signature of Signature, names, addresses,
and occupations of subscriber descriptions and occupations
subscribers of witnesses
A.B. of................Merchant Signed before me:
Signature......................
C.D. of................Merchant Signed before me:
Signature......................
E.F. of................Merchant Signed before me:
Signature......................
G.H. of................Merchant Signed before me:
Signature......................
I.J. of................Merchant Signed before me:
Signature......................
K.L. of................Merchant Signed before me:
Signature......................
M.N. of................Merchant Signed before me:
Signature......................
7th I, whose name and address is given below, am desirous of forming a company in
pursuance of this memorandum of association (Applicable in case of one person
company):—
Name, address, description Signature of subscriber Signature, name, address,
and occupation of subscriber description and occupation
of witness
A.B. ........Merchant Signed before me:
Signature......................
8th Shri/Smt............., son/daugther of .................., resident of............ aged............ years shall
be the nominee in the event of death of the sole member (Applicable in case of one
person company)
Dated............................ the day of ..............................
TABLE -C
MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY
GUARANTEE AND HAVING A SHARE CAPITAL
1st The name of the company is ‘‘..................................Limited/Private Limited’’.
2nd The registered office of the company will be situated in the State of..................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a)
are:—
4th The liability of the member(s) is limited.
5th Every member of the company undertakes to contribute:
(i) to the assets of the company in the event of its being wound up while he is a
member, or within one year after he ceases to be a member, for payment of the debts
and liabilities of the company or of such debts and liabilities as may have been
contracted before he ceases to be a member; and
(ii) to the costs, charges and expenses of winding up (and for the adjustment of the
rights of the contributories among themselves),
such amount as may be required, not exceeding..................................rupees.
6th The share capital of the company is..................................rupees, divided
into..................................shares of..................................rupees each
7th We, the several persons, whose names, addresses are subscribed, are desirous of
being formed into a company in pursuance of this memorandum of association and we
respectively agree to take the number of shares in the capital of the company set
against our respective names:—
Names, addresses, No. of shares taken Signature of Signature, names,
descriptions and by each subscriber subscriber addresses, descriptions
occupations of and occupations of
subscribers witnesses
A.B. of........Merchant .............. Signed before me:
Signature......................
C.D. of........Merchant .............. Signed before me:
Signature......................
E.F. of........Merchant .............. Signed before me:
Signature......................
G.H. of........Merchant .............. Signed before me:
Signature......................
I.J. of........Merchant .............. Signed before me:
Signature......................
K.L. of........Merchant .............. Signed before me:
Signature......................
M.N. of........Merchant .............. Signed before me:
Signature......................
8th I, whose name and address is given below, am desirous of forming a company in
pursuance of this memorandum of association and agree to take all the shares in the
capital of the company (Applicable in case of one person company):—
Name, address, description Signature of subscriber Signature, name, address,
and occupation of subscriber description and occupation
of witness
A.B. of........Merchant Signed before me:
Signature......................
9th Shri/Smt.............., son/daughter of .................., resident of............ aged............ years shall
be the nominee in the event of death of the sole member (Applicable in case of one
person company)
Dated............................ the day of...........................
TABLE -D
MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY
AND NOT HAVING SHARE CAPITAL
1st The name of the company is ‘‘..................................Company’’.
2nd The registered office of the company will be situated in the State of..................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a)
are:—
4th The liability of the member(s) is unlimited.
5th We, the several persons, whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this memorandum of association.
Names, addresses, descriptions Signature of subscriber Signature, names, addresses,
and occupations of descriptions and occupations
subscribers of witnesses
A.B. of........Merchant Signed before me:
Signature......................
C.D. of........Merchant Signed before me:
Signature......................
E.F. of........Merchant Signed before me:
Signature......................
G.H. of........Merchant Signed before me:
Signature......................
I.J. of........Merchant Signed before me:
Signature......................
K.L. of........Merchant Signed before me:
Signature......................
M.N. of........Merchant Signed before me:
Signature......................
6th I, whose name and address is given below, am desirous of forming a company in
pursuance of this memorandum of association (Applicable in case of one person
company):—
Name, address, description Signature of subscriber Signature, name, address,
and occupation of description and occupation
subscriber of witness
A.B. .......Merchant Signed before me:
Signature.....................
7th Shri/Smt.........., son/daughter of ....................., resident of............ aged............ years shall
be the nominee in the event of death of the sole member (Applicable in case of one
person company)
Dated...................... the day of....................
TABLE -E
MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY
AND HAVING SHARE CAPITAL
1st The name of the company is ‘‘..................................Company’’.
2nd The registered office of the company will be situated in the State of...................................
3rd (a) The objects to be pursued by the company on its incorporation are:—
(b) Matters which are necessary for furtherance of the objects specified in clause 3(a)
are:—
4th The liability of the member(s) is unlimited.
5th The share capital of the company is..................................rupees, divided
into..................................shares of..................................rupees each.
6th We, the several persons, whose names, and addresses are subscribed, are desirous of
being formed into a company in pursuance of this memorandum of association and we
respectively agree to take the number of shares in the capital of the company set
against our respective names:—
Names, addresses, No. of shares Signature of Signature, names, addresses,
descriptions and taken by each subscriber descriptions and
occupations of subscriber occupations of witnesses
subscribers
A.B. of........Merchant .............. Signed before me:
Signature......................
C.D. of........Merchant .............. Signed before me:
Signature......................
E.F. of........Merchant .............. Signed before me:
Signature......................
G.H. of........Merchant .............. Signed before me:
Signature......................
I.J. of........Merchant .............. Signed before me:
Signature......................
K.L. of........Merchant .............. Signed before me:
Signature......................
M.N. of........Merchant .............. Signed before me:
Signature......................
7th I, whose name and address is given below, am desirous of forming a company in
pursuance of this memorandum of association and agree to take all the shares in the
capital of the company (Applicable in case of one person company):—
Name, address, description Signature of subscriber Signature, name, address,
and occupation of description and occupation
subscriber of witness
A.B. ........Merchant Signed before me:
Signature.....................
8th Shri/Smt..........., son/daughter of ...................., resident of............ aged............ years shall
be the nominee in the event of death of the sole member (Applicable in case of one
person company)
Dated.............................. the day of .............................
TABLE -F
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY SHARES
Interpretation
I. (1) In these regulations—
(a) “the Act” means the Companies Act, 2013,
(b) “the seal” means the common seal of the company.
(2) Unless the context otherwise requires, words or expressions contained in these
regulations shall bear the same meaning as in the Act or any statutory modification thereof
in force at the date at which these regulations become binding on the company.
Share capital and variation of rights
II. 1. Subject to the provisions of the Act and these Articles, the shares in the capital of
the company shall be under the control of the Directors who may issue, allot or otherwise
dispose of the same or any of them to such persons, in such proportion and on such terms
and conditions and either at a premium or at par and at such time as they may from time to
time think fit.
2. (i) Every person whose name is entered as a member in the register of members shall
be entitled to receive within two months after incorporation, in case of subscribers to the
memorandum or after allotment or within one month after the application for the registration
of transfer or transmission or within such other period as the conditions of issue shall be
provided,—
(a) one certificate for all his shares without payment of any charges; or
(b) several certificates, each for one or more of his shares, upon payment of
twenty rupees for each certificate after the first.
(ii) Every certificate shall be under the seal and shall specify the shares to which it
relates and the amount paid-up thereon.
(iii) In respect of any share or shares held jointly by several persons, the company
shall not be bound to issue more than one certificate, and delivery of a certificate for a share
to one of several joint holders shall be sufficient delivery to all such holders.
3. (i) If any share certificate be worn out, defaced, mutilated or torn or if there be no
further space on the back for endorsement of transfer, then upon production and surrender
thereof to the company, a new certificate may be issued in lieu thereof, and if any certificate
is lost or destroyed then upon proof thereof to the satisfaction of the company and on
execution of such indemnity as the company deem adequate, a new certificate in lieu thereof
shall be given. Every certificate under this Article shall be issued on payment of
twenty rupees for each certificate.
(ii) The provisions of Articles (2) and (3) shall mutatis mutandis apply to debentures
of the company.
4. Except as required by law, no person shall be recognised by the company as holding
any share upon any trust, and the company shall not be bound by, or be compelled in any
way to recognise (even when having notice thereof) any equitable, contingent, future or
partial interest in any share, or any interest in any fractional part of a share, or (except only as
by these regulations or by law otherwise provided) any other rights in respect of any share
except an absolute right to the entirety thereof in the registered holder.
5. (i) The company may exercise the powers of paying commissions conferred by
sub-section (6) of section 40, provided that the rate per cent. or the amount of the commission
paid or agreed to be paid shall be disclosed in the manner required by that section and rules
made thereunder.
(ii) The rate or amount of the commission shall not exceed the rate or amount prescribed
in rules made under sub-section (6) of section 40.
(iii) The commission may be satisfied by the payment of cash or the allotment of fully
or partly paid shares or partly in the one way and partly in the other.
6. (i) If at any time the share capital is divided into different classes of shares, the rights
attached to any class (unless otherwise provided by the terms of issue of the shares of that
class) may, subject to the provisions of section 48, and whether or not the company is being
wound up, be varied with the consent in writing of the holders of three-fourths of the issued
shares of that class, or with the sanction of a special resolution passed at a separate meeting
of the holders of the shares of that class.
(ii) To every such separate meeting, the provisions of these regulations relating to
general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be at
least two persons holding at least one-third of the issued shares of the class in question.
7. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the terms of issue
of the shares of that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
8. Subject to the provisions of section 55, any preference shares may, with the sanction
of an ordinary resolution, be issued on the terms that they are to be redeemed on such terms
and in such manner as the company before the issue of the shares may, by special resolution,
determine.
Lien
9. (i) The company shall have a first and paramount lien—
(a) on every share (not being a fully paid share), for all monies (whether presently
payable or not) called, or payable at a fixed time, in respect of that share; and
(b) on all shares (not being fully paid shares) standing registered in the name of
a single person, for all monies presently payable by him or his estate to the company:
Provided that the Board of directors may at any time declare any share to be
wholly or in part exempt from the provisions of this clause.
(ii) The company’s lien, if any, on a share shall extend to all dividends payable and
bonuses declared from time to time in respect of such shares.
10. The company may sell, in such manner as the Board thinks fit, any shares on which
the company has a lien:
Provided that no sale shall be made—
(a) unless a sum in respect of which the lien exists is presently payable; or
(b) until the expiration of fourteen days after a notice in writing stating and
demanding payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder for the time being of the
share or the person entitled thereto by reason of his death or insolvency.
11. (i) To give effect to any such sale, the Board may authorise some person to transfer
the shares sold to the purchaser thereof.
(ii) The purchaser shall be registered as the holder of the shares comprised in any such
transfer.
(iii) The purchaser shall not be bound to see to the application of the purchase money,
nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings
in reference to the sale.
12. (i) The proceeds of the sale shall be received by the company and applied in
payment of such part of the amount in respect of which the lien exists as is presently payable.
(ii) The residue, if any, shall, subject to a like lien for sums not presently payable as
existed upon the shares before the sale, be paid to the person entitled to the shares at the
date of the sale.
Calls on shares
13. (i) The Board may, from time to time, make calls upon the members in respect of any
monies unpaid on their shares (whether on account of the nominal value of the shares or by
way of premium) and not by the conditions of allotment thereof made payable at fixed times:
Provided that no call shall exceed one-fourth of the nominal value of the share or be
payable at less than one month from the date fixed for the payment of the last preceding call.
(ii) Each member shall, subject to receiving at least fourteen days’ notice specifying
the time or times and place of payment, pay to the company, at the time or times and place so
specified, the amount called on his shares.
(iii) A call may be revoked or postponed at the discretion of the Board.
14. A call shall be deemed to have been made at the time when the resolution of the
15. The joint holders of a share shall be jointly and severally liable to pay all calls in
respect thereof.
16. (i) If a sum called in respect of a share is not paid before or on the day appointed for
payment thereof, the person from whom the sum is due shall pay interest thereon from the
day appointed for payment thereof to the time of actual payment at ten per cent. per annum
or at such lower rate, if any, as the Board may determine.
(ii) The Board shall be at liberty to waive payment of any such interest wholly or in
part.
17. (i) Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share or by way of
premium, shall, for the purposes of these regulations, be deemed to be a call duly made and
payable on the date on which by the terms of issue such sum becomes payable.
(ii) In case of non-payment of such sum, all the relevant provisions of these regulations
as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had
become payable by virtue of a call duly made and notified.
18. The Board—
(a) may, if it thinks fit, receive from any member willing to advance the same, all
or any part of the monies uncalled and unpaid upon any shares held by him; and
(b) upon all or any of the monies so advanced, may (until the same would, but for
such advance, become presently payable) pay interest at such rate not exceeding,
unless the company in general meeting shall otherwise direct, twelve per cent.
per annum, as may be agreed upon between the Board and the member paying the sum
in advance.
Transfer of shares
19. (i) The instrument of transfer of any share in the company shall be executed by or
on behalf of both the transferor and transferee.
(ii) The transferor shall be deemed to remain a holder of the share until the name of the
transferee is entered in the register of members in respect thereof.
20. The Board may, subject to the right of appeal conferred by section 58 decline to
register—
(a) the transfer of a share, not being a fully paid share, to a person of whom they
do not approve; or
(b) any transfer of shares on which the company has a lien.
21. The Board may decline to recognise any instrument of transfer unless—
(a) the instrument of transfer is in the form as prescribed in rules made under
sub-section (1) of section 56;
(b) the instrument of transfer is accompanied by the certificate of the shares to
which it relates, and such other evidence as the Board may reasonably require to show
the right of the transferor to make the transfer; and
(c) the instrument of transfer is in respect of only one class of shares.
22. On giving not less than seven days’ previous notice in accordance with section 91
and rules made thereunder, the registration of transfers may be suspended at such times and
for such periods as the Board may from time to time determine:
Provided that such registration shall not be suspended for more than thirty days at
any one time or for more than forty-five days in the aggregate in any year.
Transmission of shares
23. (i) On the death of a member, the survivor or survivors where the member was a
joint holder, and his nominee or nominees or legal representatives where he was a sole
holder, shall be the only persons recognised by the company as having any title to his
interest in the shares.
(ii) Nothing in clause (i) shall release the estate of a deceased joint holder from any
liability in respect of any share which had been jointly held by him with other persons.
24. (i) Any person becoming entitled to a share in consequence of the death or
insolvency of a member may, upon such evidence being produced as may from time to time
properly be required by the Board and subject as hereinafter provided, elect, either—
(a) to be registered himself as holder of the share; or
(b) to make such transfer of the share as the deceased or insolvent member could
have made.
(ii) The Board shall, in either case, have the same right to decline or suspend registration
as it would have had, if the deceased or insolvent member had transferred the share before
his death or insolvency.
25. (i) If the person so becoming entitled shall elect to be registered as holder of the
share himself, he shall deliver or send to the company a notice in writing signed by him
stating that he so elects.
(ii) If the person aforesaid shall elect to transfer the share, he shall testify his election
by executing a transfer of the share.
(iii) All the limitations, restrictions and provisions of these regulations relating to the
right to transfer and the registration of transfers of shares shall be applicable to any such
notice or transfer as aforesaid as if the death or insolvency of the member had not occurred
and the notice or transfer were a transfer signed by that member.
26. A person becoming entitled to a share by reason of the death or insolvency of the
holder shall be entitled to the same dividends and other advantages to which he would be
entitled if he were the registered holder of the share, except that he shall not, before being
registered as a member in respect of the share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the company:
Provided that the Board may, at any time, give notice requiring any such person to
elect either to be registered himself or to transfer the share, and if the notice is not complied
with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses
or other monies payable in respect of the share, until the requirements of the notice have
been complied with.
27. In case of a One Person Company—
(i) on the death of the sole member, the person nominated by such member shall
be the person recognised by the company as having title to all the shares of the
member;
(ii) the nominee on becoming entitled to such shares in case of the member’s
death shall be informed of such event by the Board of the company;
(iii) such nominee shall be entitled to the same dividends and other rights and
liabilities to which such sole member of the company was entitled or liable;
(iv) on becoming member, such nominee shall nominate any other person with
the prior written consent of such person who, shall in the event of the death of the
member, become the member of the company.
Forfeiture of shares
28. If a member fails to pay any call, or instalment of a call, on the day appointed for
payment thereof, the Board may, at any time thereafter during such time as any part of the call
or instalment remains unpaid, serve a notice on him requiring payment of so much of the call
or instalment as is unpaid, together with any interest which may have accrued.
29. The notice aforesaid shall—
(a) name a further day (not being earlier than the expiry of fourteen days from
the date of service of the notice) on or before which the payment required by the notice
is to be made; and
(b) state that, in the event of non-payment on or before the day so named, the
shares in respect of which the call was made shall be liable to be forfeited.
30. If the requirements of any such notice as aforesaid are not complied with, any
share in respect of which the notice has been given may, at any time thereafter, before the
payment required by the notice has been made, be forfeited by a resolution of the Board to
that effect.
31. (i) A forfeited share may be sold or otherwise disposed of on such terms and in
such manner as the Board thinks fit.
(ii) At any time before a sale or disposal as aforesaid, the Board may cancel the
forfeiture on such terms as it thinks fit.
32. (i) A person whose shares have been forfeited shall cease to be a member in
respect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay
to the company all monies which, at the date of forfeiture, were presently payable by him to
the company in respect of the shares.
(ii) The liability of such person shall cease if and when the company shall have
received payment in full of all such monies in respect of the shares.
33. (i) A duly verified declaration in writing that the declarant is a director, the manager
or the secretary, of the company, and that a share in the company has been duly forfeited on
a date stated in the declaration, shall be conclusive evidence of the facts therein stated as
against all persons claiming to be entitled to the share;
(ii) The company may receive the consideration, if any, given for the share on any sale
or disposal thereof and may execute a transfer of the share in favour of the person to whom
the share is sold or disposed of;
(iii) The transferee shall thereupon be registered as the holder of the share; and
(iv) The transferee shall not be bound to see to the application of the purchase money,
if any, nor shall his title to the share be affected by any irregularity or invalidity in the
proceedings in reference to the forfeiture, sale or disposal of the share.
34. The provisions of these regulations as to forfeiture shall apply in the case of nonpayment
of any sum which, by the terms of issue of a share, becomes payable at a fixed time,
whether on account of the nominal value of the share or by way of premium, as if the same
had been payable by virtue of a call duly made and notified.
Alteration of capital
35. The company may, from time to time, by ordinary resolution increase the share
capital by such sum, to be divided into shares of such amount, as may be specified in the
resolution.
36. Subject to the provisions of section 61, the company may, by ordinary resolution,—
(a) consolidate and divide all or any of its share capital into shares of larger
amount than its existing shares;
(b) convert all or any of its fully paid-up shares into stock, and reconvert that
stock into fully paid-up shares of any denomination;
(c) sub-divide its existing shares or any of them into shares of smaller amount
than is fixed by the memorandum;
(d) cancel any shares which, at the date of the passing of the resolution, have
not been taken or agreed to be taken by any person.
37. Where shares are converted into stock,—
(a) the holders of stock may transfer the same or any part thereof in the same
manner as, and subject to the same regulations under which, the shares from which the
stock arose might before the conversion have been transferred, or as near thereto as
circumstances admit:
Provided that the Board may, from time to time, fix the minimum amount of stock
transferable, so, however, that such minimum shall not exceed the nominal amount of
the shares from which the stock arose.
(b) the holders of stock shall, according to the amount of stock held by them,
have the same rights, privileges and advantages as regards dividends, voting at
meetings of the company, and other matters, as if they held the shares from which the
stock arose; but no such privilege or advantage (except participation in the dividends
and profits of the company and in the assets on winding up) shall be conferred by an
amount of stock which would not, if existing in shares, have conferred that privilege or
advantage.
(c) such of the regulations of the company as are applicable to paid-up shares
shall apply to stock and the words “share” and “shareholder” in those regulations
shall include “stock” and “stock-holder” respectively.
38. The company may, by special resolution, reduce in any manner and with, and
subject to, any incident authorised and consent required by law,—
(a) its share capital;
(b) any capital redemption reserve account; or
(c) any share premium account.
Capitalisation of profits
39. (i) The company in general meeting may, upon the recommendation of the Board,
resolve—
(a) that it is desirable to capitalise any part of the amount for the time being
standing to the credit of any of the company’s reserve accounts, or to the credit of the
profit and loss account, or otherwise available for distribution; and
(b) that such sum be accordingly set free for distribution in the manner specified
in clause (ii) amongst the members who would have been entitled thereto, if distributed
by way of dividend and in the same proportions.
(ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to the
provision contained in clause (iii), either in or towards—
(A) paying up any amounts for the time being unpaid on any shares held by such
members respectively;
(B) paying up in full, unissued shares of the company to be allotted and
distributed, credited as fully paid-up, to and amongst such members in the proportions
aforesaid;
(C) partly in the way specified in sub-clause (A) and partly in that specified in
sub-clause (B);
(D) A securities premium account and a capital redemption reserve account
may, for the purposes of this regulation, be applied in the paying up of unissued
shares to be issued to members of the company as fully paid bonus shares;
(E) The Board shall give effect to the resolution passed by the company in
pursuance of this regulation.
40. (i) Whenever such a resolution as aforesaid shall have been passed, the Board shall—
(a) make all appropriations and applications of the undivided profits resolved to
be capitalised thereby, and all allotments and issues of fully paid shares if any; and
(b) generally do all acts and things required to give effect thereto.
(ii) The Board shall have power—
(a) to make such provisions, by the issue of fractional certificates or by payment
in cash or otherwise as it thinks fit, for the case of shares becoming distributable in
fractions; and
(b) to authorise any person to enter, on behalf of all the members entitled thereto,
into an agreement with the company providing for the allotment to them respectively,
credited as fully paid-up, of any further shares to which they may be entitled upon
such capitalisation, or as the case may require, for the payment by the company on
their behalf, by the application thereto of their respective proportions of profits resolved
to be capitalised, of the amount or any part of the amounts remaining unpaid on their
existing shares;
(iii) Any agreement made under such authority shall be effective and binding on such
members.
Buy-back of shares
41. Notwithstanding anything contained in these articles but subject to the provisions
of sections 68 to 70 and any other applicable provision of the Act or any other law for the time
being in force, the company may purchase its own shares or other specified securities.
General meetings
42. All general meetings other than annual general meeting shall be called extraordinary
general meeting.
43. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.
(ii) If at any time directors capable of acting who are sufficient in number to form a
quorum are not within India, any director or any two members of the company may call an
extraordinary general meeting in the same manner, as nearly as possible, as that in which
such a meeting may be called by the Board.
Proceedings at general meetings
44. (i) No business shall be transacted at any general meeting unless a quorum of
members is present at the time when the meeting proceeds to business.
(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as
provided in section 103.
45. The chairperson, if any, of the Board shall preside as Chairperson at every general
meeting of the company.
46. If there is no such Chairperson, or if he is not present within fifteen minutes after
the time appointed for holding the meeting, or is unwilling to act as chairperson of the
meeting, the directors present shall elect one of their members to be Chairperson of the
meeting.
47. If at any meeting no director is willing to act as Chairperson or if no director is
present within fifteen minutes after the time appointed for holding the meeting, the members
present shall choose one of their members to be Chairperson of the meeting.
48. In case of a One Person Company—
(i) the resolution required to be passed at the general meetings of the company
shall be deemed to have been passed if the resolution is agreed upon by the sole
member and communicated to the company and entered in the minutes book maintained
under section 118;
(ii) such minutes book shall be signed and dated by the member;
(iii) the resolution shall become effective from the date of signing such minutes
by the sole member.
Adjournment of meeting
49. (i) The Chairperson may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn the meeting from time to time and
from place to place.
(ii) No business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place.
(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting.
(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be
necessary to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting.
Voting rights
50. Subject to any rights or restrictions for the time being attached to any class or
classes of shares,—
(a) on a show of hands, every member present in person shall have one vote;
and
(b) on a poll, the voting rights of members shall be in proportion to his share in
the paid-up equity share capital of the company.
51. A member may exercise his vote at a meeting by electronic means in accordance
with section 108 and shall vote only once.
52. (i) In the case of joint holders, the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.
(ii) For this purpose, seniority shall be determined by the order in which the names
stand in the register of members.
53. A member of unsound mind, or in respect of whom an order has been made by any
court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his
committee or other legal guardian, and any such committee or guardian may, on a poll, vote
by proxy.
54. Any business other than that upon which a poll has been demanded may be
proceeded with, pending the taking of the poll.
55. No member shall be entitled to vote at any general meeting unless all calls or other
sums presently payable by him in respect of shares in the company have been paid.
56. (i) No objection shall be raised to the qualification of any voter except at the
meeting or adjourned meeting at which the vote objected to is given or tendered, and every
vote not disallowed at such meeting shall be valid for all purposes.
(ii) Any such objection made in due time shall be referred to the Chairperson of the
meeting, whose decision shall be final and conclusive.
Proxy
57. The instrument appointing a proxy and the power-of-attorney or other authority,
if any, under which it is signed or a notarised copy of that power or authority, shall be
deposited at the registered office of the company not less than 48 hours before the time for
holding the meeting or adjourned meeting at which the person named in the instrument
proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for
the taking of the poll; and in default the instrument of proxy shall not be treated as valid.
58. An instrument appointing a proxy shall be in the form as prescribed in the rules
made under section 105.
59. A vote given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the shares in
respect of which the proxy is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer
shall have been received by the company at its office before the commencement of the
meeting or adjourned meeting at which the proxy is used.
Board of Directors
60. The number of the directors and the names of the first directors shall be determined
in writing by the subscribers of the memorandum or a majority of them.
61. (i) The remuneration of the directors shall, in so far as it consists of a monthly
payment, be deemed to accrue from day-to-day.
(ii) In addition to the remuneration payable to them in pursuance of the Act, the
directors may be paid all travelling, hotel and other expenses properly incurred by them—
(a) in attending and returning from meetings of the Board of Directors or any
committee thereof or general meetings of the company; or
(b) in connection with the business of the company.
62. The Board may pay all expenses incurred in getting up and registering the company.
63. The company may exercise the powers conferred on it by section 88 with regard to
the keeping of a foreign register; and the Board may (subject to the provisions of that
section) make and vary such regulations as it may thinks fit respecting the keeping of any
such register.
64. All cheques, promissory notes, drafts, hundis, bills of exchange and other negotiable
instruments, and all receipts for monies paid to the company, shall be signed, drawn, accepted,
endorsed, or otherwise executed, as the case may be, by such person and in such manner as
the Board shall from time to time by resolution determine.
65. Every director present at any meeting of the Board or of a committee thereof shall
sign his name in a book to be kept for that purpose.
66. (i) Subject to the provisions of section 149, the Board shall have power at any time,
and from time to time, to appoint a person as an additional director, provided the number of
the directors and additional directors together shall not at any time exceed the maximum
strength fixed for the Board by the articles.
(ii) Such person shall hold office only up to the date of the next annual general meeting
of the company but shall be eligible for appointment by the company as a director at that
meeting subject to the provisions of the Act.
Proceedings of the Board
67. (i) The Board of Directors may meet for the conduct of business, adjourn and
otherwise regulate its meetings, as it thinks fit.
(ii) A director may, and the manager or secretary on the requisition of a director shall,
at any time, summon a meeting of the Board.
68. (i) Save as otherwise expressly provided in the Act, questions arising at any
meeting of the Board shall be decided by a majority of votes.
(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a
second or casting vote.
69. The continuing directors may act notwithstanding any vacancy in the Board; but,
if and so long as their number is reduced below the quorum fixed by the Act for a meeting of
the Board, the continuing directors or director may act for the purpose of increasing the
number of directors to that fixed for the quorum, or of summoning a general meeting of the
company, but for no other purpose.
70. (i) The Board may elect a Chairperson of its meetings and determine the period for
which he is to hold office.
(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not
present within five minutes after the time appointed for holding the meeting, the directors
present may choose one of their number to be Chairperson of the meeting.
71. (i) The Board may, subject to the provisions of the Act, delegate any of its powers
to committees consisting of such member or members of its body as it thinks fit.
(ii) Any committee so formed shall, in the exercise of the powers so delegated, conform
to any regulations that may be imposed on it by the Board.
72. (i) A committee may elect a Chairperson of its meetings.
(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not
present within five minutes after the time appointed for holding the meeting, the members
present may choose one of their members to be Chairperson of the meeting.
73. (i) A committee may meet and adjourn as it thinks fit.
(ii) Questions arising at any meeting of a committee shall be determined by a majority
of votes of the members present, and in case of an equality of votes, the Chairperson shall
have a second or casting vote.
74. All acts done in any meeting of the Board or of a committee thereof or by any
person acting as a director, shall, notwithstanding that it may be afterwards discovered that
there was some defect in the appointment of any one or more of such directors or of any
person acting as aforesaid, or that they or any of them were disqualified, be as valid as if
every such director or such person had been duly appointed and was qualified to be a
director.
75. Save as otherwise expressly provided in the Act, a resolution in writing, signed by
all the members of the Board or of a committee thereof, for the time being entitled to receive
notice of a meeting of the Board or committee, shall be valid and effective as if it had been
passed at a meeting of the Board or committee, duly convened and held.
76. In case of a One Person Company—
(i) where the company is having only one director, all the businesses to be
transacted at the meeting of the Board shall be entered into minutes book maintained
under section 118;
(ii) such minutes book shall be signed and dated by the director;
(iii) the resolution shall become effective from the date of signing such minutes
by the director.
Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer
77. Subject to the provisions of the Act,—
(i) A chief executive officer, manager, company secretary or chief financial officer
may be appointed by the Board for such term, at such remuneration and upon such
conditions as it may thinks fit; and any chief executive officer, manager, company
secretary or chief financial officer so appointed may be removed by means of a
resolution of the Board;
(ii) A director may be appointed as chief executive officer, manager, company
secretary or chief financial officer.
78. A provision of the Act or these regulations requiring or authorising a thing to be
done by or to a director and chief executive officer, manager, company secretary or chief
financial officer shall not be satisfied by its being done by or to the same person acting both
as director and as, or in place of, chief executive officer, manager, company secretary or chief
financial officer.
The Seal
79. (i) The Board shall provide for the safe custody of the seal.
(ii) The seal of the company shall not be affixed to any instrument except by the
authority of a resolution of the Board or of a committee of the Board authorised by it in that
behalf, and except in the presence of at least two directors and of the secretary or such other
person as the Board may appoint for the purpose; and those two directors and the secretary
or other person aforesaid shall sign every instrument to which the seal of the company is so
affixed in their presence.
Dividends and Reserve
80. The company in general meeting may declare dividends, but no dividend shall
exceed the amount recommended by the Board.
81. Subject to the provisions of section 123, the Board may from time to time pay to the
members such interim dividends as appear to it to be justified by the profits of the company.
82. (i) The Board may, before recommending any dividend, set aside out of the profits
of the company such sums as it thinks fit as a reserve or reserves which shall, at the
discretion of the Board, be applicable for any purpose to which the profits of the company
may be properly applied, including provision for meeting contingencies or for equalising
dividends; and pending such application, may, at the like discretion, either be employed in
the business of the company or be invested in such investments (other than shares of the
company) as the Board may, from time to time, thinks fit.
(ii) The Board may also carry forward any profits which it may consider necessary not
to divide, without setting them aside as a reserve.
83. (i) Subject to the rights of persons, if any, entitled to shares with special rights as
to dividends, all dividends shall be declared and paid according to the amounts paid or
credited as paid on the shares in respect whereof the dividend is paid, but if and so long as
nothing is paid upon any of the shares in the company, dividends may be declared and paid
according to the amounts of the shares.
(ii) No amount paid or credited as paid on a share in advance of calls shall be treated
for the purposes of this regulation as paid on the share.
(iii) All dividends shall be apportioned and paid proportionately to the amounts paid
or credited as paid on the shares during any portion or portions of the period in respect of
which the dividend is paid; but if any share is issued on terms providing that it shall rank for
dividend as from a particular date such share shall rank for dividend accordingly.
84. The Board may deduct from any dividend payable to any member all sums of
money, if any, presently payable by him to the company on account of calls or otherwise in
relation to the shares of the company.
85. (i) Any dividend, interest or other monies payable in cash in respect of shares may
be paid by cheque or warrant sent through the post directed to the registered address of the
holder or, in the case of joint holders, to the registered address of that one of the joint holders
who is first named on the register of members, or to such person and to such address as the
holder or joint holders may in writing direct.
(ii) Every such cheque or warrant shall be made payable to the order of the person to
whom it is sent.
86. Any one of two or more joint holders of a share may give effective receipts for any
dividends, bonuses or other monies payable in respect of such share.
87. Notice of any dividend that may have been declared shall be given to the persons
entitled to share therein in the manner mentioned in the Act.
88. No dividend shall bear interest against the company.
Accounts
89. (i) The Board shall from time to time determine whether and to what extent and at
what times and places and under what conditions or regulations, the accounts and books of
the company, or any of them, shall be open to the inspection of members not being directors.
(ii) No member (not being a director) shall have any right of inspecting any account or
book or document of the company except as conferred by law or authorised by the Board or
by the company in general meeting.
Winding up
90. Subject to the provisions of Chapter XX of the Act and rules made thereunder—
(i) If the company shall be wound up, the liquidator may, with the sanction of a
special resolution of the company and any other sanction required by the Act, divide
amongst the members, in specie or kind, the whole or any part of the assets of the
company, whether they shall consist of property of the same kind or not.
(ii) For the purpose aforesaid, the liquidator may set such value as he deems fair
upon any property to be divided as aforesaid and may determine how such division
shall be carried out as between the members or different classes of members.
(iii) The liquidator may, with the like sanction, vest the whole or any part of such
assets in trustees upon such trusts for the benefit of the contributories if he considers
necessary, but so that no member shall be compelled to accept any shares or other
securities whereon there is any liability.
Indemnity
91. Every officer of the company shall be indemnified out of the assets of the company
against any liability incurred by him in defending any proceedings, whether civil or criminal,
in which judgment is given in his favour or in which he is acquitted or in which relief is
granted to him by the court or the Tribunal.
Note: The Articles shall be signed by each subscriber of the memorandum of association
who shall add his address, description and occupation, if any, in the presence of at
least one witness who shall attest the signature and shall likewise add his address,
description and occupation, if any, and such signatures shall be in form specified
below:
Names, addresses, descriptions Witnesses (along with names, addresses,
and occupations of subscribers descriptions and occupations)
A.B. of………….Merchant Signed before me
Signature…………….
C.D. of………….Merchant Signed before me
Signature…………….
E.F. of………….Merchant Signed before me
Signature…………….
G.H. of………….Merchant Signed before me
Signature…………….
I.J. of………….Merchant Signed before me
Signature…………….
K.L. of………….Merchant Signed before me
Signature…………….
M.N. of………….Merchant Signed before me
Signature…………….
Dated the……..day of ………20……
Place: ................................
TABLE – G
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND
HAVING A SHARE CAPITAL
1. The number of members with which the company proposes to be registered is
hundred, but the Board of Directors may, from time to time, register an increase of members.
2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.
TABLE - H
ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT
HAVING SHARE CAPITAL
Interpretation
I. (1) In these regulations—
(a) “the Act” means the Companies Act, 2013;
(b) “the seal” means the common seal of the company.
(2) Unless the context otherwise requires, words or expressions contained in these
regulations shall have the same meaning as in the Act or any statutory modification thereof
in force at the date at which these regulations become binding on the company.
Members
II. 1. The number of members with which the company proposes to be registered is
hundred, but the Board of Directors may, from time to time, whenever the company or the
business of the company requires it, register an increase of members.
2. The subscribers to the memorandum and such other persons as the Board shall
admit to membership shall be members of the company.
General meetings
3. All general meetings other than annual general meeting shall be called extraordinary
general meeting.
4. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.
(ii) If at any time directors capable of acting who are sufficient in number to form a
quorum are not within India, any director or any two members of the company may call an
extraordinary general meeting in the same manner, as nearly as possible, as that in which
such a meeting may be called by the Board.
Proceedings at general meetings
5. (i) No business shall be transacted at any general meeting unless a quorum of
members is present at the time when the meeting proceeds to business.
(ii) Save as otherwise provided herein, the quorum for the general meetings shall be as
provided in section 103.
6. The Chairperson, if any, of the Board shall preside as Chairperson at every general
meeting of the company.
7. If there is no such Chairperson, or if he is not present within fifteen minutes after the
time appointed for holding the meeting, or is unwilling to act as Chairperson of the meeting,
the directors present shall elect one of their members to be Chairperson of the meeting.
8. If at any meeting no director is willing to act as Chairperson or if no director is
present within fifteen minutes after the time appointed for holding the meeting, the members
present shall choose one of their members to be Chairperson of the meeting.
Adjournment of meeting
9. (i) The Chairperson may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn the meeting from time to time and
from place to place.
(ii) No business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place.
(iii) When a meeting is adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting.
(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be
necessary to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting.
Voting rights
10. Every member shall have one vote.
11. A member of unsound mind, or in respect of whom an order has been made by any
Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his
committee or other legal guardian, and any such committee or guardian may, on a poll, vote
by proxy.
12. No member shall be entitled to vote at any general meeting unless all sums presently
payable by him to the company have been paid.
13. (i) No objection shall be raised to the qualification of any voter except at the
meeting or adjourned meeting at which the vote objected to is given or tendered, and every
vote not disallowed at such meeting shall be valid for all purposes.
(ii) Any such objection made in due time shall be referred to the Chairperson of the
meeting, whose decision shall be final and conclusive.
14. A vote given in accordance with the terms of an instrument of proxy shall be valid,
notwithstanding the previous death or insanity of the principal or the revocation of the
proxy or of the authority under which the proxy was executed, or the transfer of the shares in
respect of which the proxy is given:
Provided that no intimation in writing of such death, insanity, revocation or transfer
shall have been received by the company at its office before the commencement of the
meeting or adjourned meeting at which the proxy is used.
15. A member may exercise his vote at a meeting by electronic means in accordance
with section 108 and shall vote only once.
16. Any business other than that upon which a poll has been demanded may be
proceeded with, pending the taking of the poll.
Board of Directors
17. The number of the directors and the names of the first directors shall be determined
in writing by the subscribers of the memorandum or a majority of them.
18. (i) The remuneration of the directors shall, in so far as it consists of a monthly
payment, be deemed to accrue from day-to-day.
(ii) In addition to the remuneration payable to them in pursuance of the Act, the
directors may be paid all travelling, hotel and other expenses properly incurred by them—
(a) in attending and returning from meetings of the Board of Directors or any
committee thereof or general meetings of the company; or
(b) in connection with the business of the company.
Proceedings of the Board
19. (i) The Board of Directors may meet for the conduct of business, adjourn and
otherwise regulate its meetings, as it thinks fit.
(ii) A director may, and the manager or secretary on the requisition of a director shall,
at any time, summon a meeting of the Board.
20. (i) Save as otherwise expressly provided in the Act, questions arising at any
meeting of the Board shall be decided by a majority of votes.
(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a
second or casting vote.
21. The continuing directors may act notwithstanding any vacancy in the Board; but,
if and so long as their number is reduced below the quorum fixed by the Act for a meeting of
the Board, the continuing directors or director may act for the purpose of increasing the
number of directors to that fixed for the quorum, or of summoning a general meeting of the
company, but for no other purpose.
22. (i) The Board may elect a Chairperson of its meetings and determine the period for
which he is to hold office.
(ii) If no such chairperson is elected, or if at any meeting the Chairperson is not present
within five minutes after the time appointed for holding the meeting, the directors present
may choose one of their members to be Chairperson of the meeting.
23. (i) The Board may, subject to the provisions of the Act, delegate any of its powers
to committees consisting of such member or members of its body as it thinks fit.
(ii) Any committee so formed shall, in the exercise of the powers so delegated,
conform to any regulations that may be imposed on it by the Board.
24. (i) A committee may elect a Chairperson of its meetings.
(ii) If no such Chairperson is elected, or if at any meeting the chairperson is not
present within five minutes after the time appointed for holding the meeting, the members
present may choose one of their members to be Chairperson of the meeting.
25. (i) A committee may meet and adjourn as it thinks proper.
(ii) Questions arising at any meeting of a committee shall be determined by a majority
of votes of the members present, and in case of an equality of votes, the chairman shall
have a second or casting vote.
26. All acts done by any meeting of the Board or of a committee thereof or by any
person acting as a director, shall, notwithstanding that it may be afterwards discovered that
there was some defect in the appointment of any one or more of such directors or of any
person acting as aforesaid, or that they or any of them were disqualified, be as valid as if
every such director or such person had been duly appointed and was qualified to be a director.
27. Save as otherwise expressly provided in the Act, a resolution in writing, signed
by all the members of the Board or of a committee thereof, for the time being entitled to
receive notice of a meeting of the Board or committee, shall be as valid and effective as if it
had been passed at a meeting of the Board or committee, duly convened and held.
Chief Executive Officer, Manager, Company Secretary or
Chief Financial Officer
28. Subject to the provisions of the Act,—
(i) A chief executive officer, manager, company secretary or chief financial
officer may be appointed by the Board for such term, at such remuneration and upon
such conditions as it thinks fit; and any chief executive officer, manager, company
secretary or chief financial officer so appointed may be removed by means of a
resolution of the Board.
(ii) A director may be appointed as chief executive officer, manager, company
secretary or chief financial officer.
29. A provision of the Act or these regulations requiring or authorising a thing to be
done by or to a director and chief executive officer, manager, company secretary or chief
financial officer shall not be satisfied by its being done by or to the same person acting
both as director and as, or in place of, chief executive officer, manager, company secretary
or chief financial officer.
The Seal
30. (i) The Board shall provide for the safe custody of the seal.
(ii) The seal of the company shall not be affixed to any instrument except by the
authority of a resolution of the Board or of a committee of the Board authorised by it in
that behalf, and except in the presence of at least two directors and of the secretary or
such other person as the Board may appoint for the purpose; and those two directors and
the secretary or other person aforesaid shall sign every instrument to which the seal of the
company is so affixed in their presence.
Note: The Articles shall be signed by each subscriber of the memorandum of association
who shall add his address, description and occupation, if any, in the presence of at
least one witness who shall attest the signature and shall likewise add his address,
description and occupation, if any, and such signatures shall be in form specified
below:
Names, addresses, descriptions Witnesses (along with names, addresses,
and occupations of subscribers descriptions and occupations)
A.B. of………….Merchant Signed before me
Signature…………….
C.D. of………….Merchant Signed before me
Signature…………….
E.F. of………….Merchant Signed before me
Signature…………….
G.H. of………….Merchant Signed before me
Signature…………….
I.J. of………….Merchant Signed before me
Signature…………….
K.L. of………….Merchant Signed before me
Signature…………….
M.N. of………….Merchant Signed before me
Signature…………….
Dated the……..day of ………20……
Place: ................................
TABLE – I
ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND
HAVING A SHARE CAPITAL
1. The number of members with which the company proposes to be registered is
hundred, but the Board of Directors may, from time to time, register an increase of members.
2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.
TABLE - J
ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND
NOT HAVING SHARE CAPITAL
1. The number of members with which the company proposes to be registered is
hundred, but the Board of Directors may, from time to time, whenever the company or the
business of the company requires it, register an increase of members.
2. The subscribers to the memorandum and such other persons as the Board shall
admit to membership shall be members of the company.
3. All the articles of Table H in Schedule I annexed to the Companies Act, 2013 shall be
deemed to be incorporated with these articles and to apply to the company.
SCHEDULE II
(See section 123)
USEFUL LIVES TO COMPUTE DEPRECIATION
PART ‘A’
1. Depreciation is the systematic allocation of the depreciable amount of an asset over
its useful life. The depreciable amount of an asset is the cost of an asset or other amount
substituted for cost, less its residual value. The useful life of an asset is the period over
which an asset is expected to be available for use by an entity, or the number of production
or similar units expected to be obtained from the asset by the entity.
2. For the purpose of this Schedule, the term depreciation includes amortisation.
3. Without prejudice to the foregoing provisions of paragraph 1,—
(i) In case of such class of companies, as may be prescribed and whose financial
statements comply with the accounting standards prescribed for such class of
companies under section 133 the useful life of an asset shall not normally be different
from the useful life and the residual value shall not be different from that as indicated
in Part C, provided that if such a company uses a useful life or residual value which is
different from the useful life or residual value indicated therein, it shall disclose the
justification for the same.
(ii) In respect of other companies the useful life of an asset shall not be longer
than the useful life and the residual value shall not be higher than that prescribed in
Part C.
(iii) For intangible assets, the provisions of the Accounting Standards mentioned
under sub-para (i) or (ii), as applicable, shall apply.
PART ‘B’
4. The useful life or residual value of any specific asset, as notified for accounting
purposes by a Regulatory Authority constituted under an Act of Parliament or by the Central
Government shall be applied in calculating the depreciation to be provided for such asset
irrespective of the requirements of this Schedule.
PART ‘C’
5. Subject to Parts A and B above, the following are the useful lives of various tangible
assets:
Nature of assets Useful Life
I. Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure 60 Years
(b) Buildings (other than factory buildings) other than RCC Frame Structure 30 Years
(c) Factory buildings -do-
(d) Fences, wells, tube wells 5 Years
(e) Others (including temporary structure, etc.) 3 Years
II. Bridges, culverts, bunders, etc. [NESD] 30 Years
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads-RCC 10 Years
(ii) Carpeted Roads-other than RCC 5 Years
(b) Non-carpeted roads 3 Years
IV. Plant and Machinery
(i) General rate applicable to plant and machinery not covered under
special plant and machinery
(a) Plant and Machinery other than continuous process plant not
covered under specific industries 15 Years
(b) continuous process plant for which no special rate has been
prescribed under (ii) below [NESD] 8 Years
(ii) Special Plant and Machinery
(a) Plant and Machinery related to production and exhibition of
Motion Picture Films
1. Cinematograph films—Machinery used in the production and
exhibition of cinematograph films, recording and reproducing
equipments, developing machines, printing machines, editing
machines, synchronizers and studio lights except bulbs 13 Years
2. Projecting equipment for exhibition of films -do-
(b) Plant and Machinery used in glass manufacturing
1. Plant and Machinery except direct fire glass melting furnaces —
Recuperative and regenerative glass melting furnaces 13 Years
2. Plant and Machinery except direct fire glass melting furnaces —
Moulds [NESD] 8 Years
3. Float Glass Melting Furnaces [NESD] 10 Years
(c) Plant and Machinery used in mines and quarries—Portable
underground machinery and earth moving machinery used in
open cast mining [NESD] 8 Years
(d) Plant and Machinery used in Telecommunications [NESD]
1. Towers 18 Years
2. Telecom transceivers, switching centres, transmission and
other network equipment 13 Years
3. Telecom—Ducts, Cables and optical fibre 18 Years
4. Satellites -do-
(e) Plant and Machinery used in exploration, production and
refining oil and gas [NESD]
1. Refineries 25 Years
2. Oil and gas assets (including wells), processing plant and facilities -do-
3. Petrochemical Plant -do-
4. Storage tanks and related equipment -do-
5. Pipelines 30 Years
6. Drilling Rig -do-
7. Field operations (above ground) Portable boilers, drilling tools,
well-head tanks, etc. 8 Years
8. Loggers -doSEC.
(f ) Plant and Machinery used in generation, transmission and distribution
of power [NESD]
1. Thermal/ Gas/ Combined Cycle Power Generation Plant 40 Years
2. Hydro Power Generation Plant -do-
3. Nuclear Power Generation Plant -do-
4. Transmission lines, cables and other network assets -do-
5. Wind Power Generation Plant 22 Years
6. Electric Distribution Plant 35 Years
7. Gas Storage and Distribution Plant 30 Years
8. Water Distribution Plant including pipelines -do-
(g) Plant and Machinery used in manufacture of steel
1. Sinter Plant 20 Years
2. Blast Furnace -do-
3. Coke ovens -do-
4. Rolling mill in steel plant -do-
5. Basic oxygen Furnace Converter 25 Years
(h) Plant and Machinery used in manufacture of non-ferrous metals
1. Metal pot line [NESD] 40 Years
2. Bauxite crushing and grinding section [NESD] -do-
3. Digester Section [NESD] -do-
4. Turbine [NESD] -do-
5. Equipments for Calcination [NESD] -do-
6. Copper Smelter [NESD] -do-
7. Roll Grinder 40 Years
8. Soaking Pit 30 Years
9. Annealing Furnace -do-
10. Rolling Mills -do-
11. Equipments for Scalping, Slitting , etc. [NESD] -do-
12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years
13. Copper refining plant [NESD] -do-
(i) Plant and Machinery used in medical and surgical operations [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus and
accessories thereto, medical, diagnostic equipments, namely,
Cat-scan, Ultrasound Machines, ECG Monitors, etc. 13 Years
2. Other Equipments. 15 Years
(j) Plant and Machinery used in manufacture of pharmaceuticals and
chemicals [NESD]
1. Reactors 20 Years
2. Distillation Columns -do-
3. Drying equipments/Centrifuges and Decanters -do-
4. Vessel/storage tanks -do262
(k) Plant and Machinery used in civil construction
1. Concreting, Crushing, Piling Equipments and Road Making Equipments 12 Years
2. Heavy Lift Equipments—
Cranes with capacity of more than 100 tons 20 Years
Cranes with capacity of less than 100 tons 15 Years
3. Transmission line, Tunneling Equipments [NESD] 10 Years
4. Earth-moving equipments 9 Years
5. Others including Material Handling /Pipeline/Welding
Equipments [NESD] 12 Years
(l) Plant and Machinery used in salt works [NESD] 15 Years
V. Furniture and fittings [NESD]
(i) General furniture and fittings 10 Years
(ii) Furniture and fittings used in hotels, restaurants and boarding houses,
schools, colleges and other educational institutions, libraries; welfare
centres; meeting halls, cinema houses; theatres and circuses; and
furniture and fittings let out on hire for use on the occasion of marriages
and similar functions. 8 Years
VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds 10 Years
2. Motor buses, motor lorries, motor cars and motor taxies used in
a business of running them on hire 6 Years
3. Motor buses, motor lorries and motor cars other than those used
in a business of running them on hire 8 Years
4. Motor tractors, harvesting combines and heavy vehicles -do-
5. Electrically operated vehicles including battery powered or fuel
cell powered vehicles 8 Years
VII. Ships [NESD]
1. Ocean-going ships
(i) Bulk Carriers and liner vessels 25 Years
(ii) Crude tankers, product carriers and easy chemical carriers with or
without conventional tank coatings. 20 Years
(iii) Chemicals and Acid Carriers:
(a) With Stainless steel tanks 25 Years
(b) With other tanks 20 Years
(iv) Liquified gas carriers 30 Years
(v) Conventional large passenger vessels which are used for cruise
purpose also -do-
(vi) Coastal service ships of all categories -do-
(vii) Offshore supply and support vessels 20 Years
(viii) Catamarans and other high speed passenger for ships or boats -doSEC.
(ix) Drill ships 25 Years
(x) Hovercrafts 15 Years
(xi) Fishing vessels with wooden hull 10 Years
(xii) Dredgers, tugs, barges, survey launches and other similar ships
used mainly for dredging purposes 14 Years
2. Vessels ordinarily operating on inland waters—
(i) Speed boats 13 Years
(ii) Other vessels 28 Years
VIII. Aircrafts or Helicopters [NESD] 20 Years
IX. Railways sidings, locomotives, rolling stocks, tramways and
railways used by concerns, excluding railway concerns [NESD] 15 Years
X. Ropeway structures [NESD] 15 Years
XI. Office equipment [NESD] 5 Years
XII. Computers and data processing units [NESD]
(i) Servers and networks 6 Years
(ii) End user devices, such as, desktops, laptops, etc. 3 Years
XIII. Laboratory equipment [NESD]
(i) General laboratory equipment 10 Years
(ii) Laboratory equipments used in educational institutions 5 Years
XIV. Electrical Installations and Equipment [NESD] 10 years
XV. Hydraulic works, pipelines and sluices [NESD] 15 Years
Notes.—
1. "Factory buildings" does not include offices, godowns, staff quarters.
2. Where, during any financial year, any addition has been made to any asset, or
where any asset has been sold, discarded, demolished or destroyed, the depreciation on
such assets shall be calculated on a pro rata basis from the date of such addition or, as the
case may be, up to the date on which such asset has been sold, discarded, demolished or
destroyed.
3. The following information shall also be disclosed in the accounts, namely:—
(i) depreciation methods used; and
(ii) the useful lives of the assets for computing depreciation, if they are different
from the life specified in the Schedule.
4. Useful life specified in Part C of the Schedule is for whole of the asset. Where cost
of a part of the asset is significant to total cost of the asset and useful life of that part is
different from the useful life of the remaining asset, useful life of that significant part shall be
determined separately.
5. Depreciable amount is the cost of an asset, or other amount substituted for cost, less
its residual value. Ordinarily, the residual value of an asset is often insignificant but it should
generally be not more than 5% of the original cost of the asset.
6. The useful lives of assets working on shift basis have been specified in the Schedule
based on their single shift working. Except for assets in respect of which no extra shift
depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time
during the year for double shift, the depreciation will increase by 50% for that period and in
case of the triple shift the depreciation shall be calculated on the basis of 100% for that
period.
7. From the date this Schedule comes into effect, the carrying amount of the asset as
on that date—
(a) shall be depreciated over the remaining useful life of the asset as per this
Schedule;
(b) after retaining the residual value, shall be recognised in the opening balance
of retained earnings where the remaining useful life of an asset is nil.
8. ‘‘Continuous process plant’’ means a plant which is required and designed to operate
for twenty-four hours a day.
SCHEDULE III
(See section 129)
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND
STATEMENT OF PROFIT AND LOSS OF A COMPANY
GENERAL INSTRUCTIONS
1. Where compliance with the requirements of the Act including Accounting Standards
as applicable to the companies require any change in treatment or disclosure including
addition, amendment, substitution or deletion in the head or sub-head or any changes,
inter se, in the financial statements or statements forming part thereof, the same shall be
made and the requirements of this Schedule shall stand modified accordingly.
2. The disclosure requirements specified in this Schedule are in addition to and not in
substitution of the disclosure requirements specified in the Accounting Standards prescribed
under the Companies Act, 2013. Additional disclosures specified in the Accounting Standards
shall be made in the notes to accounts or by way of additional statement unless required to
be disclosed on the face of the Financial Statements. Similarly, all other disclosures as
required by the Companies Act shall be made in the notes to accounts in addition to the
requirements set out in this Schedule.
3. (i) Notes to accounts shall contain information in addition to that presented in the
Financial Statements and shall provide where required (a) narrative descriptions or
disaggregations of items recognised in those statements; and (b) information about items
that do not qualify for recognition in those statements.
(ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall
be cross-referenced to any related information in the notes to accounts. In preparing the
Financial Statements including the notes to accounts, a balance shall be maintained between
providing excessive detail that may not assist users of financial statements and not providing
important information as a result of too much aggregation.
4. (i) Depending upon the turnover of the company, the figures appearing in the
Financial Statements may be rounded off as given below:—
Turnover Rounding off
(a) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs
or millions, or decimals thereof.
(b) one hundred crore rupees or more To the nearest lakhs, millions or crores, or
decimals thereof.
(ii) Once a unit of measurement is used, it shall be used uniformly in the Financial
Statements.
5. Except in the case of the first Financial Statements laid before the Company (after its
incorporation) the corresponding amounts (comparatives) for the immediately preceding
reporting period for all items shown in the Financial Statements including notes shall also be
given.
6. For the purpose of this Schedule, the terms used herein shall be as per the applicable
Accounting Standards.
Note:—This part of Schedule sets out the minimum requirements for disclosure on the face
of the Balance Sheet, and the Statement of Profit and Loss (hereinafter referred to as
“Financial Statements” for the purpose of this Schedule) and Notes. Line items,
sub-line items and sub-totals shall be presented as an addition or substitution on
the face of the Financial Statements when such presentation is relevant to an
understanding of the company’s financial position or performance or to cater to
industry/sector-specific disclosure requirements or when required for compliance
with the amendments to the Companies Act or under the Accounting Standards.
PART I — BALANCE SHEET
Name of the Company…………………….
Balance Sheet as at ………………………
(Rupees in…………)
Particulars Note Figures as at the Figures as at the
No. end of current end of the previous
reporting period reporting period
1 2 3 4
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Share capital
(b) Reserves and surplus
(c) Money received against share
warrants
(2) Share application money pending
allotment
(3) Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
TOTAL
II. ASSETS
Non-current assets
(1) (a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long-term loans and advances
(e) Other non-current assets
(2) Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short-term loans and advances
(f) Other current assets
TOTAL
See accompanying notes to the Financial Statements.
Notes
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
1. An asset shall be classified as current when it satisfies any of the following criteria:—
(a) it is expected to be realised in, or is intended for sale or consumption in, the
company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within twelve months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting date.
All other assets shall be classified as non-current.
2. An operating cycle is the time between the acquisition of assets for processing and
their realisation in cash or cash equivalents. Where the normal operating cycle cannot be
identified, it is assumed to have a duration of twelve months.
3. A liability shall be classified as current when it satisfies any of the following criteria:—
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date; or
(d) the company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date. Terms of a liability that
could, at the option of the counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
All other liabilities shall be classified as non-current.
4. A receivable shall be classified as a “trade receivable” if it is in respect of the amount
due on account of goods sold or services rendered in the normal course of business.
5. A payable shall be classified as a “trade payable” if it is in respect of the amount due
on account of goods purchased or services received in the normal course of business.
6. A company shall disclose the following in the notes to accounts.
1 2 3 4
A. Share Capital
For each class of share capital (different classes of preference shares to be
treated separately):
(a) the number and amount of shares authorised;
(b) the number of shares issued, subscribed and fully paid, and subscribed
but not fully paid;
(c) par value per share;
(d) a reconciliation of the number of shares outstanding at the beginning
and at the end of the reporting period;
(e) the rights, preferences and restrictions attaching to each class of shares
including restrictions on the distribution of dividends and the repayment of
capital;
(f) shares in respect of each class in the company held by its holding
company or its ultimate holding company including shares held by or by
subsidiaries or associates of the holding company or the ultimate holding
company in aggregate;
(g) shares in the company held by each shareholder holding more than
5 per cent. shares specifying the number of shares held;
(h) shares reserved for issue under options and contracts/commitments
for the sale of shares/disinvestment, including the terms and amounts;
(i) for the period of five years immediately preceding the date as at which
the Balance Sheet is prepared:
(A) Aggregate number and class of shares allotted as fully paid-up
pursuant to contract(s) without payment being received in cash.
(B) Aggregate number and class of shares allotted as fully paid-up
by way of bonus shares.
(C) Aggregate number and class of shares bought back.
(j) terms of any securities convertible into equity/preference shares issued
along with the earliest date of conversion in descending order starting from the
farthest such date;
(k) calls unpaid (showing aggregate value of calls unpaid by directors and
officers);
(l) forfeited shares (amount originally paid-up).
B. Reserves and Surplus
(i) Reserves and Surplus shall be classified as:
(a) Capital Reserves;
(b) Capital Redemption Reserve;
(c) Securities Premium Reserve;
(d) Debenture Redemption Reserve;
(e) Revaluation Reserve;
(f) Share Options Outstanding Account;
(g) Other Reserves–(specify the nature and purpose of each reserve and
the amount in respect thereof);
(h) Surplus i.e., balance in Statement of Profit and Loss disclosing
allocations and appropriations such as dividend, bonus shares and transfer to/
from reserves, etc.;
(Additions and deductions since last balance sheet to be shown under
each of the specified heads);
(ii) A reserve specifically represented by earmarked investments shall be termed
as a “fund”.
(iii) Debit balance of statement of profit and loss shall be shown as a negative
figure under the head “Surplus”. Similarly, the balance of “Reserves and Surplus”,
after adjusting negative balance of surplus, if any, shall be shown under the head
“Reserves and Surplus” even if the resulting figure is in the negative.
C. Long-Term Borrowings
(i) Long-term borrowings shall be classified as:
(a) Bonds/debentures;
(b) Term loans:
(A) from banks.
(B) from other parties.
(c) Deferred payment liabilities;
(d) Deposits;
(e) Loans and advances from related parties;
(f) Long term maturities of finance lease obligations;
(g) Other loans and advances (specify nature).
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature
of security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, the aggregate
amount of such loans under each head shall be disclosed.
(iv) Bonds/debentures (along with the rate of interest and particulars of
redemption or conversion, as the case may be) shall be stated in descending order of
maturity or conversion, starting from farthest redemption or conversion date, as the
case may be. Where bonds/debentures are redeemable by instalments, the date of
maturity for this purpose must be reckoned as the date on which the first instalment
becomes due.
(v) Particulars of any redeemed bonds/debentures which the company has power
to reissue shall be disclosed.
(vi) Terms of repayment of term loans and other loans shall be stated.
(vii) Period and amount of continuing default as on the balance sheet date in
repayment of loans and interest, shall be specified separately in each case.
D. Other Long-term Liabilities
Other Long-term Liabilities shall be classified as:
(a) Trade payables;
(b) Others.
E. Long-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits;
(b) Others (specify nature).
F. Short-term borrowings
(i) Short-term borrowings shall be classified as:
(a) Loans repayable on demand;
(A) from banks.
(B) from other parties.
(b) Loans and advances from related parties;
(c) Deposits;
(d) Other loans and advances (specify nature).
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature
of security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, the aggregate
amount of such loans under each head shall be disclosed.
(iv) Period and amount of default as on the balance sheet date in repayment of
loans and interest, shall be specified separately in each case.
G. Other current liabilities
The amounts shall be classified as:
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Interest accrued but not due on borrowings;
(d) Interest accrued and due on borrowings;
(e) Income received in advance;
(f) Unpaid dividends;
(g) Application money received for allotment of securities and due for
refund and interest accrued thereon. Share application money includes advances
towards allotment of share capital. The terms and conditions including the number
of shares proposed to be issued, the amount of premium, if any, and the period
before which shares shall be allotted shall be disclosed. It shall also be disclosed
whether the company has sufficient authorised capital to cover the share capital
amount resulting from allotment of shares out of such share application money.
Further, the period for which the share application money has been pending
beyond the period for allotment as mentioned in the document inviting application
for shares along with the reason for such share application money being pending
shall be disclosed. Share application money not exceeding the issued capital
and to the extent not refundable shall be shown under the head Equity and share
application money to the extent refundable, i.e., the amount in excess of
subscription or in case the requirements of minimum subscription are not met,
shall be separately shown under “Óther current liabilities”;
(h) Unpaid matured deposits and interest accrued thereon;
(i) Unpaid matured debentures and interest accrued thereon;
(j) Other payables (specify nature).
H. Short-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits.
(b) Others (specify nature).
I. Tangible assets
(i) Classification shall be given as:
(a) Land;
(b) Buildings;
(c) Plant and Equipment;
(d) Furniture and Fixtures;
(e) Vehicles;
(f) Office equipment;
(g) Others (specify nature).
(ii) Assets under lease shall be separately specified under each class of asset.
(iii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
depreciation and impairment losses/reversals shall be disclosed separately.
(iv) Where sums have been written-off on a reduction of capital or revaluation of
assets or where sums have been added on revaluation of assets, every balance sheet
subsequent to date of such write-off, or addition shall show the reduced or increased
figures as applicable and shall by way of a note also show the amount of the reduction
or increase as applicable together with the date thereof for the first five years subsequent
to the date of such reduction or increase.
J. Intangible assets
(i) Classification shall be given as:
(a) Goodwill;
(b) Brands /trademarks;
(c) Computer software;
(d) Mastheads and publishing titles;
(e) Mining rights;
(f) Copyrights, and patents and other intellectual property rights, services
and operating rights;
(g) Recipes, formulae, models, designs and prototypes;
(h) Licences and franchise;
(i) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of
assets at the beginning and end of the reporting period showing additions, disposals,
acquisitions through business combinations and other adjustments and the related
amortization and impairment losses/reversals shall be disclosed separately.
(iii) Where sums have been written-off on a reduction of capital or revaluation
of assets or where sums have been added on revaluation of assets, every balance
sheet subsequent to date of such write-off, or addition shall show the reduced or
increased figures as applicable and shall by way of a note also show the amount of the
reduction or increase as applicable together with the date thereof for the first five years
subsequent to the date of such reduction or increase.
K. Non-current investments
(i) Non-current investments shall be classified as trade investments and other
investments and further classified as:
(a) Investment property;
(b) Investments in Equity Instruments;
(c) Investments in preference shares;
(d) Investments in Government or trust securities;
(e) Investments in debentures or bonds;
(f) Investments in Mutual Funds;
(g) Investments in partnership firms;
(h) Other non-current investments (specify nature).
Under each classification, details shall be given of names of the bodies corporate
indicating separately whether such bodies are (i) subsidiaries, (ii) associates,
(iii) joint ventures, or (iv) controlled special purpose entities in whom investments
have been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly-paid). In regard to
investments in the capital of partnership firms, the names of the firms (with the names
of all their partners, total capital and the shares of each partner) shall be given.
(ii) Investments carried at other than at cost should be separately stated specifying
the basis for valuation thereof;
(iii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value thereof;
(b) Aggregate amount of unquoted investments;
(c) Aggregate provision for diminution in value of investments.
L. Long-term loans and advances
(i) Long-term loans and advances shall be classified as:
(a) Capital Advances;
(b) Security Deposits;
(c) Loans and advances to related parties (giving details thereof);
(d) Other loans and advances (specify nature).
(ii) The above shall also be separately sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed
under the relevant heads separately.
(iv) Loans and advances due by directors or other officers of the company or
any of them either severally or jointly with any other persons or amounts due by firms
or private companies respectively in which any director is a partner or a director or a
member should be separately stated.
M. Other non-current assets
Other non-current assets shall be classified as:
(i) Long-term Trade Receivables (including trade receivables on deferred
credit terms);
(ii) Others (specify nature);
(iii) Long term Trade Receivables, shall be sub-classified as:
(A) (a) Secured, considered good;
(B) Unsecured, considered good;
(C) Doubtful.
(b) Allowance for bad and doubtful debts shall be disclosed under
the relevant heads separately.
(c) Debts due by directors or other officers of the company or any of
them either severally or jointly with any other person or debts due by firms
or private companies respectively in which any director is a partner or a
director or a member should be separately stated.
N. Current Investments
(i) Current investments shall be classified as:
(a) Investments in Equity Instruments;
(b) Investment in Preference Shares;
(c) Investments in Government or trust securities;
(d) Investments in debentures or bonds;
(e) Investments in Mutual Funds;
(f) Investments in partnership firms;
(g) Other investments (specify nature).
Under each classification, details shall be given of names of the bodies corporate
[indicating separately whether such bodies are: (i) subsidiaries, (ii) associates,
(iii) joint ventures, or (iv) controlled special purpose entities] in whom investments
have been made and the nature and extent of the investment so made in each such
body corporate (showing separately investments which are partly paid). In regard to
investments in the capital of partnership firms, the names of the firms (with the names
of all their partners, total capital and the shares of each partner) shall be given.
(ii) The following shall also be disclosed:
(a) The basis of valuation of individual investments;
(b) Aggregate amount of quoted investments and market value thereof;
(c) Aggregate amount of unquoted investments;
(d) Aggregate provision made for diminution in value of investments.
O. Inventories
(i) Inventories shall be classified as:
(a) Raw materials;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade (in respect of goods acquired for trading);
(e) Stores and spares;
(f) Loose tools;
(g) Others (specify nature).
(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.
(iii) Mode of valuation shall be stated.
P. Trade Receivables
(i) Aggregate amount of Trade Receivables outstanding for a period exceeding
six months from the date they are due for payment should be separately stated.
(ii) Trade receivables shall be sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful debts shall be disclosed under the relevant
heads separately.
(iv) Debts due by directors or other officers of the company or any of them
either severally or jointly with any other person or debts due by firms or private
companies respectively in which any director is a partner or a director or a member
should be separately stated.
Q. Cash and cash equivalents
(i) Cash and cash equivalents shall be classified as:
(a) Balances with banks;
(b) Cheques, drafts on hand;
(c) Cash on hand;
(d) Others (specify nature).
(ii) Earmarked balances with banks (for example, for unpaid dividend) shall be
separately stated.
(iii) Balances with banks to the extent held as margin money or security against
the borrowings, guarantees, other commitments shall be disclosed separately.
(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall
be separately stated.
(v) Bank deposits with more than twelve months maturity shall be disclosed
separately.
R. Short-term loans and advances
(i) Short-term loans and advances shall be classified as:
(a) Loans and advances to related parties (giving details thereof);
(b) Others (specify nature).
(ii) The above shall also be sub-classified as:
(a) Secured, considered good;
(b) Unsecured, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed
under the relevant heads separately.
(iv) Loans and advances due by directors or other officers of the company or
any of them either severally or jointly with any other person or amounts due by firms
or private companies respectively in which any director is a partner or a director or a
member shall be separately stated.
S. Other current assets (specify nature)
This is an all-inclusive heading, which incorporates current assets that do not fit
into any other asset categories.
T. Contingent liabilities and commitments (to the extent not provided for)
(i) Contingent liabilities shall be classified as:
(a) Claims against the company not acknowledged as debt;
(b) Guarantees;
(c) Other money for which the company is contingently liable.
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for;
(b) Uncalled liability on shares and other investments partly paid;
(c) Other commitments (specify nature).
U. The amount of dividends proposed to be distributed to equity and preference
shareholders for the period and the related amount per share shall be disclosed
separately. Arrears of fixed cumulative dividends on preference shares shall also be
disclosed separately.
V. Where in respect of an issue of securities made for a specific purpose, the
whole or part of the amount has not been used for the specific purpose at the balance
sheet date, there shall be indicated by way of note how such unutilised amounts have
been used or invested.
W. If, in the opinion of the Board, any of the assets other than fixed assets and
non-current investments do not have a value on realisation in the ordinary course of
business at least equal to the amount at which they are stated, the fact that the Board
is of that opinion, shall be stated.
PART II – STATEMENT OF PROFIT AND LOSS
Name of the Company…………………….
Profit and loss statement for the year ended ………………………
(Rupees in…………)
Particulars Note Figures as at the Figures as at
No. end of current the end of
reporting period the previous
reporting
period
1 2 3 4
I. Revenue from operations xxx xxx
II. Other income xxx xxx
III. Total Revenue (I + II) xxx xxx
IV. Expenses:
Cost of materials consumed
Purchases of Stock-in-Trade
Changes in inventories of
finished goods xxx xxx
work-in-progress and xxx xxx
Stock-in-Trade xxx xxx
Employee benefits expense xxx xxx
Finance costs
Depreciation and amortisation
expense
Other expenses
Total expenses xxx xxx
V. Profit before exceptional and xxx xxx
extraordinary items and tax
(III - IV)
VI. Exceptional items xxx xxx
VII. Profit before extraordinary items xxx xxx
and tax (V - VI)
VIII. Extraordinary items xxx xxx
IX. Profit before tax (VII- VIII) xxx xxx
X. Tax expense:
(1) Current tax xxx xxx
(2) Deferred tax xxx xxx
XI. Profit (Loss) for the period from xxx xxx
continuing operations (VII-VIII)
XII. Profit/(loss) from discontinuing xxx xxx
operations
XIII. Tax expense of discontinuing xxx xxx
operations
XIV. Profit/(loss) from Discontinuing xxx xxx
operations (after tax) (XII-XIII)
XV. Profit (Loss) for the period (XI + XIV) xxx xxx
XVI. Earnings per equity share:
(1) Basic xxx xxx
(2) Diluted xxx xxx
See accompanying notes to the financial statements.
1 2 3 4
GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF
PROFIT AND LOSS
1. The provisions of this Part shall apply to the income and expenditure account
referred to in sub-clause (ii) of clause (40) of section 2 in like manner as they apply to a
statement of profit and loss.
2. (A) In respect of a company other than a finance company revenue from operations
shall disclose separately in the notes revenue from—
(a) Sale of products;
(b) Sale of services;
(c) Other operating revenues;
Less:
(d) Excise duty.
(B) In respect of a finance company, revenue from operations shall include revenue
from—
(a) Interest; and
(b) Other financial services.
Revenue under each of the above heads shall be disclosed separately by way of notes
to accounts to the extent applicable.
3. Finance Costs
Finance costs shall be classified as:
(a) Interest expense;
(b) Other borrowing costs;
(c) Applicable net gain/loss on foreign currency transactions and translation.
4. Other income
Other income shall be classified as:
(a) Interest Income (in case of a company other than a finance company);
(b) Dividend Income;
(c) Net gain/loss on sale of investments;
(d) Other non-operating income (net of expenses directly attributable
to such income).
5. Additional Information
A Company shall disclose by way of notes additional information regarding aggregate
expenditure and income on the following items:—
(i) (a) Employee Benefits Expense [showing separately (i) salaries and wages,
(ii) contribution to provident and other funds, (iii) expense on Employee Stock Option
Scheme (ESOP) and Employee Stock Purchase Plan (ESPP), (iv) staff welfare expenses].
(b) Depreciation and amortisation expense;
(c) Any item of income or expenditure which exceeds one per cent. of the revenue
from operations or Rs.1,00,000, whichever is higher;
(d) Interest Income;
(e) Interest expense;
(f) Dividend income;
(g) Net gain/loss on sale of investments;
(h) Adjustments to the carrying amount of investments;
(i) Net gain or loss on foreign currency transaction and translation (other than
considered as finance cost);
(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for company
law matters; (d) for management services; (e) for other services; and (f) for
reimbursement of expenses;
(k) In case of Companies covered under section 135, amount of expenditure
incurred on corporate social responsibility activities;
(l) Details of items of exceptional and extraordinary nature;
(m) Prior period items;
(ii) (a) In the case of manufacturing companies,—
(1) Raw materials under broad heads.
(2) goods purchased under broad heads.
(b) In the case of trading companies, purchases in respect of goods traded in by
the company under broad heads.
(c) In the case of companies rendering or supplying services, gross income
derived from services rendered or supplied under broad heads.
(d) In the case of a company, which falls under more than one of the categories
mentioned in (a), (b) and (c) above, it shall be sufficient compliance with the requirements
herein if purchases, sales and consumption of raw material and the gross income from
services rendered is shown under broad heads.
(e) In the case of other companies, gross income derived under broad heads.
(iii) In the case of all concerns having works in progress, works-in-progress
under broad heads.
(iv) (a) The aggregate, if material, of any amounts set aside or proposed to be set
aside, to reserve, but not including provisions made to meet any specific liability,
contingency or commitment known to exist at the date as to which the balance sheet is
made up.
(b) The aggregate, if material, of any amounts withdrawn from such reserves.
(v) (a) The aggregate, if material, of the amounts set aside to provisions made for
meeting specific liabilities, contingencies or commitments.
(b) The aggregate, if material, of the amounts withdrawn from such provisions,
as no longer required.
(vi) Expenditure incurred on each of the following items, separately for each
item:—
(a) Consumption of stores and spare parts;
(b) Power and fuel;
(c) Rent;
(d) Repairs to buildings;
(e) Repairs to machinery;
(f) Insurance;
(g) Rates and taxes, excluding, taxes on income;
(h) Miscellaneous expenses,
(vii) (a) Dividends from subsidiary companies.
(b) Provisions for losses of subsidiary companies.
(viii) The profit and loss account shall also contain by way of a note the following
information, namely:—
(a) Value of imports calculated on C.I.F basis by the company during the
financial year in respect of—
I. Raw materials;
II. Components and spare parts;
III. Capital goods;
(b) Expenditure in foreign currency during the financial year on account of
royalty, know-how, professional and consultation fees, interest, and other matters;
(c) Total value if all imported raw materials, spare parts and components
consumed during the financial year and the total value of all indigenous raw
materials, spare parts and components similarly consumed and the percentage
of each to the total consumption;
(d) The amount remitted during the year in foreign currencies on account
of dividends with a specific mention of the total number of non-resident
shareholders, the total number of shares held by them on which the dividends
were due and the year to which the dividends related;
(e) Earnings in foreign exchange classified under the following heads,
namely:—
I. Export of goods calculated on F.O.B. basis;
II. Royalty, know-how, professional and consultation fees;
III. Interest and dividend;
IV. Other income, indicating the nature thereof.
Note:— Broad heads shall be decided taking into account the concept of materiality and
presentation of true and fair view of financial statements.
GENERAL INSTRUCTIONS FOR THE PREPARATION OF CONSOLIDATED
FINANCIAL STATEMENTS
1. Where a company is required to prepare Consolidated Financial Statements, i.e.,
consolidated balance sheet and consolidated statement of profit and loss, the company shall
mutatis mutandis follow the requirements of this Schedule as applicable to a company in the
preparation of balance sheet and statement of profit and loss. In addition, the consolidated
financial statements shall disclose the information as per the requirements specified in the
applicable Accounting Standards including the following:
(i) Profit or loss attributable to “minority interest” and to owners of the parent in
the statement of profit and loss shall be presented as allocation for the period.
(ii) “Minority interests” in the balance sheet within equity shall be presented
separately from the equity of the owners of the parent.
2. In Consolidated Financial Statements, the following shall be disclosed by way of
additional information:
Name of the Net Assets, i.e., total Share in profit
entity in the assets minus total liabilities or loss
As % of Amount As % of Amount
consolidated consolidated
net assets profit or loss
1 2 3 4 5
Parent
Subsidiaries
Indian
1
2
3
.
.
Foreign
1
2
3
.
.
Minority
Interests in
all subsidiaries
Associates
(Investment
as per the equity
method)
Indian
1
2
3
.
.
Foreign
1
2
3
.
.
Joint Ventures
(as per proportionate
consolidation/
investment
as per the
equity method)
Indian
1
2
3
.
.
Foreign
1
2
3
.
.
TOTAL
3. All subsidiaries, associates and joint ventures (whether Indian or foreign) will be
covered under consolidated financial statements.
4. An entity shall disclose the list of subsidiaries or associates or joint ventures which
have not been consolidated in the consolidated financial statements along with the reasons
of not consolidating.
1 2 3 4 5
SCHEDULE IV
[See section 149(8)]
CODE FOR INDEPENDENT DIRECTORS
The Code is a guide to professional conduct for independent directors. Adherence to
these standards by independent directors and fulfilment of their responsibilities in a
professional and faithful manner will promote confidence of the investment community,
particularly minority shareholders, regulators and companies in the institution of independent
directors.
I. Guidelines of professional conduct:
An independent director shall:
(1) uphold ethical standards of integrity and probity;
(2) act objectively and constructively while exercising his duties;
(3) exercise his responsibilities in a bona fide manner in the interest of the company;
(4) devote sufficient time and attention to his professional obligations for informed
and balanced decision making;
(5) not allow any extraneous considerations that will vitiate his exercise of objective
independent judgment in the paramount interest of the company as a whole,
while concurring in or dissenting from the collective judgment of the Board in its
decision making;
(6) not abuse his position to the detriment of the company or its shareholders or for
the purpose of gaining direct or indirect personal advantage or advantage for
any associated person;
(7) refrain from any action that would lead to loss of his independence;
(8) where circumstances arise which make an independent director lose his
independence, the independent director must immediately inform the Board
accordingly;
(9) assist the company in implementing the best corporate governance practices.
II. Role and functions:
The independent directors shall:
(1) help in bringing an independent judgment to bear on the Board’s deliberations
especially on issues of strategy, performance, risk management, resources, key
appointments and standards of conduct;
(2) bring an objective view in the evaluation of the performance of board and
management;
(3) scrutinise the performance of management in meeting agreed goals and objectives
and monitor the reporting of performance;
(4) satisfy themselves on the integrity of financial information and that financial
controls and the systems of risk management are robust and defensible;
(5) safeguard the interests of all stakeholders, particularly the minority shareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of executive directors, key
managerial personnel and senior management and have a prime role in appointing
and where necessary recommend removal of executive directors, key managerial
personnel and senior management;
(8) moderate and arbitrate in the interest of the company as a whole, in situations of
conflict between management and shareholder’s interest.
III. Duties :
The independent directors shall—
(1) undertake appropriate induction and regularly update and refresh their skills,
knowledge and familiarity with the company;
(2) seek appropriate clarification or amplification of information and, where necessary,
take and follow appropriate professional advice and opinion of outside experts
at the expense of the company;
(3) strive to attend all meetings of the Board of Directors and of the Board committees
of which he is a member;
(4) participate constructively and actively in the committees of the Board in which
they are chairpersons or members;
(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed
action, ensure that these are addressed by the Board and, to the extent that they
are not resolved, insist that their concerns are recorded in the minutes of the
Board meeting;
(7) keep themselves well informed about the company and the external environment
in which it operates;
(8) not to unfairly obstruct the functioning of an otherwise proper Board or
(9) pay sufficient attention and ensure that adequate deliberations are held before
approving related party transactions and assure themselves that the same are in
the interest of the company;
(10) ascertain and ensure that the company has an adequate and functional vigil
mechanism and to ensure that the interests of a person who uses such mechanism
are not prejudicially affected on account of such use;
(11) report concerns about unethical behaviour, actual or suspected fraud or violation
of the company’s code of conduct or ethics policy;
(12) acting within his authority, assist in protecting the legitimate interests of the
company, shareholders and its employees;
(13) not disclose confidential information, including commercial secrets, technologies,
advertising and sales promotion plans, unpublished price sensitive information,
unless such disclosure is expressly approved by the Board or required by law.
IV. Manner of appointment:
(1) Appointment process of independent dir ectors shall be independent of the
company management; while selecting independent directors the Board shall ensure
that there is appropriate balance of skills, experience and knowledge in the Board
so as to enable the Board to discharge its functions and duties effectively.
(2) The appointment of independent director(s) of the company shall be approved
at the meeting of the shareholders.
(3) The explanatory statement attached to the notice of the meeting for approving
the appointment of independent director shall include a statement that in the
opinion of the Board, the independent director proposed to be appointed fulfils
the conditions specified in the Act and the rules made thereunder and that the
proposed director is independent of the management.
(4) The appointment of independent directors shall be formalised through a letter of
appointment, which shall set out :
(a) the term of appointment;
(b) the expectation of the Board from the appointed director; the Board-level
committee(s) in which the director is expected to serve and its tasks;
(c) the fiduciary duties that come with such an appointment along with
accompanying liabilities;
(d) provision for Directors and Officers (D and O) insurance, if any;
(e) the Code of Business Ethics that the company expects its directors and
employees to follow;
(f) the list of actions that a director should not do while functioning as such in
the company; and
(g) the remuneration, mentioning periodic fees, reimbursement of expenses for
participation in the Boards and other meetings and profit related commission,
if any.
(5) The terms and conditions of appointment of independent directors shall be
open for inspection at the registered office of the company by any member
during normal business hours.
(6) The terms and conditions of appointment of independent directors shall also be
posted on the company’s website.
V. Re-appointment:
The re-appointment of independent director shall be on the basis of report of
performance evaluation.
VI. Resignation or removal:
(1) The resignation or removal of an independent director shall be in the same
manner as is provided in sections 168 and 169 of the Act.
(2) An independent director who resigns or is removed from the Board of the
company shall be replaced by a new independent director within a period of not
more than one hundred and eighty days from the date of such resignation or
removal, as the case may be.
(3) Where the company fulfils the requirement of independent directors in its Board
even without filling the vacancy created by such resignation or removal, as the
case may be, the requirement of replacement by a new independent director shall
not apply.
VII. Separate meetings:
(1) The independent directors of the company shall hold at least one meeting in a
year, without the attendance of non-independent directors and members of
management;
(2) All the independent directors of the company shall strive to be present at such
meeting;
(3) The meeting shall:
(a) review the performance of non-independent directors and the Board as a
whole;
(b) review the performance of the Chairperson of the company, taking into account
the views of executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the
company management and the Board that is necessary for the Board to
effectively and reasonably perform their duties.
VIII. Evaluation mechanism:
(1) The performance evaluation of independent directors shall be done by the entire
Board of Directors, excluding the director being evaluated.
(2) On the basis of the report of performance evaluation, it shall be determined
whether to extend or continue the term of appointment of the independent director.
SCHEDULE V
(See sections 196 and 197)
PART I
CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANAGING OR
WHOLE-TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE
CENTRAL GOVERNMENT
APPOINTMENTS
No person shall be eligible for appointment as a managing or whole-time director or a
manager (hereinafter referred to as managerial person) of a company unless he satisfies the
following conditions, namely:—
(a) he had not been sentenced to imprisonment for any period, or to a fine
exceeding one thousand rupees, for the conviction of an offence under any of the
following Acts, namely:—
(i) the Indian Stamp Act, 1899 (2 of 1899);
(ii) the Central Excise Act, 1944 (1 of 1944);
(iii) the Industries (Development and Regulation) Act, 1951 (65 of 1951);
(iv) the Prevention of Food Adulteration Act, 1954 (37 of 1954);
(v) the Essential Commodities Act, 1955 (10 of 1955);
(vi) the Companies Act, 2013;
(vii) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(viii) the Wealth-tax Act, 1957 (27 of 1957);
(ix) the Income-tax Act, 1961 (43 of 1961);
(x) the Customs Act, 1962 (52 of 1962);
(xi) the Competition Act, 2002 (12 of 2003);
(xii) the Foreign Exchange Management Act, 1999 (42 of 1999);
(xiii) the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986);
(xiv) the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(xv) the Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
(xvi) the Prevention of Money-Laundering Act, 2002 (15 of 2003);
(b) he had not been detained for any period under the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):
Provided that where the Central Government has given its approval to the appointment
of a person convicted or detained under sub-paragraph (a) or sub-paragraph (b), as the case
may be, no further approval of the Central Government shall be necessary for the subsequent
appointment of that person if he had not been so convicted or detained subsequent to such
approval.
(c) he has completed the age of twenty-one years and has not attained the age
of seventy years:
Provided that where he has attained the age of seventy years; and where his
appointment is approved by a special resolution passed by the company in general meeting,
no further approval of the Central Government shall be necessary for such appointment;
(d) where he is a managerial person in more than one company, he draws remuneration
from one or more companies subject to the ceiling provided in section V of Part II;
(e) he is resident of India.
Explanation I.—For the purpose of this Schedule, resident in India includes a person
who has been staying in India for a continuous period of not less than twelve months
immediately preceding the date of his appointment as a managerial person and who has come
to stay in India,—
(i) for taking up employment in India; or
(ii) for carrying on a business or vacation in India.
Explanation II.—This condition shall not apply to the companies in Special Economic
Zones as notified by Department of Commerce from time to time:
Provided that a person, being a non-resident in India shall enter India only after
obtaining a proper Employment Visa from the concerned Indian mission abroad. For this
purpose, such person shall be required to furnish, along with the visa application form,
profile of the company, the principal employer and terms and conditions of such person’s
appointment.
PART II
REMUNERATION
Section I.— Remuneration payable by companies having profits:
Subject to the provisions of section 197, a company having profits in a financial year
may pay remuneration to a managerial person or persons not exceeding the limits specified in
such section.
Section II.— Remuneration payable by companies having no profit or inadequate profit
without Central Government approval:
Where in any financial year during the currency of tenure of a managerial person, a
company has no profits or its profits are inadequate, it may, without Central Government
approval, pay remuneration to the managerial person not exceeding the higher of the limits
under (A) and (B) given below:—
(A):
(1) (2)
Where the effective capital is Limit of yearly remuneration
payable shall not exceed (Rupees)
(i) Negative or less than 5 crores 30 lakhs
(ii) 5 crores and above but less than 42 lakhs
100 crores
(iii) 100 crores and above but less than 60 lakhs
250 crores
(iv) 250 crores and above 60 lakhs plus 0.01% of the effective
capital in excess of Rs. 250 crores:
Provided that the above limits shall be doubled if the resolution passed by the
shareholders is a special resolution.
Explanation.—It is hereby clarified that for a period less than one year, the limits shall
be pro-rated.
(B) In the case of a managerial person who was not a security holder holding securities
of the company of nominal value of rupees five lakh or more or an employee or a director of
the company or not related to any director or promoter at any time during the two years prior
to his appointment as a managerial person, — 2.5% of the current relevant profit:
Provided that if the resolution passed by the shareholders is a special resolution, this
limit shall be doubled:
Provided further that the limits specified under this section shall apply, if—
(i) payment of remuneration is approved by a resolution passed by the Board and, in
the case of a company covered under sub-section (1) of section 178 also by the
Nomination and Remuneration Committee;
(ii) the company has not made any default in repayment of any of its debts (including
public deposits) or debentures or interest payable thereon for a continuous period
of thirty days in the preceding financial year before the date of appointment of such
managerial person;
(iii) a special resolution has been passed at the general meeting of the company for
payment of remuneration for a period not exceeding three years;
(iv) a statement along with a notice calling the general meeting referred to in clause (iii)
is given to the shareholders containing the following information, namely:—
I. General Information:
(1) Nature of industry
(2) Date or expected date of commencement of commercial production
(3) In case of new companies, expected date of commencement of activities as
per project approved by financial institutions appearing in the prospectus
(4) Financial performance based on given indicators
(5) Foreign investments or collaborations, if any.
II. Information about the appointee:
(1) Background details
(2) Past remuneration
(3) Recognition or awards
(4) Job profile and his suitability
(5) Remuneration proposed
(6) Comparative remuneration profile with respect to industry, size of the
company, profile of the position and person (in case of expatriates the
relevant details would be with respect to the country of his origin)
(7) Pecuniary relationship directly or indirectly with the company, or
relationship with the managerial personnel, if any.
III. Other information:
(1) Reasons of loss or inadequate profits
(2) Steps taken or proposed to be taken for improvement
(3) Expected increase in productivity and profits in measurable terms.
IV. Disclosures:
The following disclosures shall be mentioned in the Board of Director’s report
under the heading “Corporate Governance”, if any, attached to the financial
statement:—
(i) all elements of remuneration package such as salary, benefits, bonuses,
stock options, pension, etc., of all the directors;
(ii) details of fixed component and performance linked incentives along with
the performance criteria;
(iii) service contracts, notice period, severance fees;
(iv) stock option details, if any, and whether the same has been issued at a
discount as well as the period over which accrued and over which
exercisable.
Section III.— Remuneration payable by companies having no profit or inadequate profit
without Central Government approval in certain special circumstances:
In the following circumstances a company may, without the Central Government
approval, pay remuneration to a managerial person in excess of the amounts provided in
Section II above:—
(a) where the remuneration in excess of the limits specified in Section I or II is paid by
any other company and that other company is either a foreign company or has got
the approval of its shareholders in general meeting to make such payment, and
treats this amount as managerial remuneration for the purpose of section 197 and
the total managerial remuneration payable by such other company to its managerial
persons including such amount or amounts is within permissible limits under
section 197.
(b) where the company—
(i) is a newly incorporated company, for a period of seven years from the date of
its incorporation, or
(ii) is a sick company, for whom a scheme of revival or rehabilitation has been
ordered by the Board for Industrial and Financial Reconstruction or National
Company Law Tribunal, for a period of five years from the date of sanction of
scheme of revival,
it may pay remuneration up to two times the amount permissible under Section II.
(c) where remuneration of a managerial person exceeds the limits in Section II but the
remuneration has been fixed by the Board for Industrial and Financial Reconstruction
or the National Company Law Tribunal:
Provided that the limits under this Section shall be applicable subject to meeting all the
conditions specified under Section II and the following additional conditions:—
(i) except as provided in para (a) of this Section, the managerial person is not
receiving remuneration from any other company;
(ii) the auditor or Company Secretary of the company or where the company has
not appointed a Secretary, a Secretary in whole-time practice, certifies that all
secured creditors and term lenders have stated in writing that they have no
objection for the appointment of the managerial person as well as the quantum
of remuneration and such certificate is filed along with the return as prescribed
under sub-section (4) of section 196.
(iii) the auditor or Company Secretary or where the company has not appointed a
secretary, a secretary in whole-time practice certifies that there is no default on
payments to any creditors, and all dues to deposit holders are being settled on
time.
(d) a company in a Special Economic Zone as notified by Department of Commerce
from time to time which has not raised any money by public issue of shares or
debentures in India, and has not made any default in India in repayment of any of its
debts (including public deposits) or debentures or interest payable thereon for a
continuous period of thirty days in any financial year, may pay remuneration up to
Rs. 2,40,00,000 per annum.
Section IV.— Perquisites not included in managerial remuneration:
1. A managerial person shall be eligible for the following perquisites which shall not be
included in the computation of the ceiling on remuneration specified in Section II and
Section III:—
(a) contribution to provident fund, superannuation fund or annuity fund to the extent
these either singly or put together are not taxable under the Income-tax Act, 1961
(43 of 1961);
(b) gratuity payable at a rate not exceeding half a month’s salary for each completed
year of service; and
(c) encashment of leave at the end of the tenure.
2. In addition to the perquisites specified in paragraph 1 of this section, an expatriate
managerial person (including a non-resident Indian) shall be eligible to the following
perquisites which shall not be included in the computation of the ceiling on remuneration
specified in Section II or Section III—
(a) Children’s education allowance: In case of children studying in or outside India,
an allowance limited to a maximum of Rs. 12,000 per month per child or actual
expenses incurred, whichever is less. Such allowance is admissible up to a maximum
of two children.
(b) Holiday passage for children studying outside India or family staying abroad:
Return holiday passage once in a year by economy class or once in two years by
first class to children and to the members of the family from the place of their study
or stay abroad to India if they are not residing in India, with the managerial person.
(c) Leave travel concession: Return passage for self and family in accordance with the
rules specified by the company where it is proposed that the leave be spent in home
country instead of anywhere in India.
Explanation I.— For the purposes of Section II of this Part, “effective capital” means
the aggregate of the paid-up share capital (excluding share application money or advances
against shares); amount, if any, for the time being standing to the credit of share premium
account; reserves and surplus (excluding revaluation reserve); long-term loans and deposits
repayable after one year (excluding working capital loans, over drafts, interest due on loans
unless funded, bank guarantee, etc., and other short-term arrangements) as reduced by the
aggregate of any investments (except in case of investment by an investment company
whose principal business is acquisition of shares, stock, debentures or other securities),
accumulated losses and preliminary expenses not written off.
Explanation II.— (a) Where the appointment of the managerial person is made in the
year in which company has been incorporated, the effective capital shall be calculated as on
the date of such appointment;
(b) In any other case the effective capital shall be calculated as on the last date of the
financial year preceding the financial year in which the appointment of the managerial person
is made.
Explanation III.— For the purposes of this Schedule, ‘‘family’’ means the spouse,
dependent children and dependent parents of the managerial person.
Explanation IV.— The Nomination and Remuneration Committee while approving the
remuneration under Section II or Section III, shall—
(a) take into account, financial position of the company, trend in the industry,
appointee’s qualification, experience, past performance, past remuneration, etc.;
(b) be in a position to bring about objectivity in determining the remuneration
package while striking a balance between the interest of the company and the
shareholders.
Explanation V.— For the purposes of this Schedule, “negative effective capital” means
the effective capital which is calculated in accordance with the provisions contained in
Explanation I of this Part is less than zero.
Explanation VI.— For the purposes of this Schedule:—
(A) “current relevant profit” means the profit as calculated under section 198 but
without deducting the excess of expenditure over income referred to in sub-section 4
(l) thereof in respect of those years during which the managerial person was not an
employee, director or shareholder of the company or its holding or subsidiary
companies.
(B) “Remuneration” means remuneration as defined in clause (78) of section 2
and includes reimbursement of any direct taxes to the managerial person.
Section V. —Remuneration payable to a managerial person in two companies:
Subject to the provisions of sections I to IV, a managerial person shall draw remuneration
from one or both companies, provided that the total remuneration drawn from the companies
does not exceed the higher maximum limit admissible from any one of the companies of which
he is a managerial person.
PART III
Provisions applicable to Parts I and II of this Schedule
1. The appointment and remuneration referred to in Part I and Part II of this Schedule
shall be subject to approval by a resolution of the shareholders in general meeting.
2. The auditor or the Secretary of the company or where the company is not required to
appointed a Secretary, a Secretary in whole-time practice shall certify that the requirement of
this Schedule have been complied with and such certificate shall be incorporated in the
return filed with the Registrar under sub-section (4) of section 196.
PART IV
The Central Government may, by notification, exempt any class or classes of companies
from any of the requirements contained in this Schedule.
SCHEDULE VI
(See sections 55 and 186)
The term “infrastructural projects” or “infrastructural facilities” includes the
following projects or activities:—
(1) Transportation (including inter modal transportation), includes the
following:—
(a) roads, national highways, state highways, major district roads, other
district roads and village roads, including toll roads, bridges, highways, road
transport providers and other road-related services;
(b) rail system, rail transport providers, metro rail roads and other railway
related services;
(c) ports (including minor ports and harbours), inland waterways, coastal
shipping including shipping lines and other port related services;
(d) aviation, including airports, heliports, airlines and other airport related
services;
(e) logistics services.
(2) Agriculture, including the following, namely:—
(a) infrastructure related to storage facilities;
(b) construction relating to projects involving agro-processing and supply of
inputs to agriculture;
(c) construction for preservation and storage of processed agro-products,
perishable goods such as fruits, vegetables and flowers including testing facilities for
quality.
(3) Water management, including the following, namely:—
(a) water supply or distribution;
(b) irrigation;
(c) water treatment.
(4) Telecommunication, including the following, namely:—
(a) basic or cellular, including radio paging;
(b) domestic satellite service (i.e., satellite owned and operated by an Indian
company for providing telecommunication service);
(c) network of trunking, broadband network and internet services.
(5) Industrial, commercial and social development and maintenance, including the
following, namely:—
(a) real estate development, including an industrial park or special economic
zone;
(b) tourism, including hotels, convention centres and entertainment centres;
(c) public markets and buildings, trade fair, convention, exhibition, cultural
centres, sports and recreation infrastructure, public gardens and parks;
(d) construction of educational institutions and hospitals;
(e) other urban development, including solid waste management systems,
sanitation and sewerage systems.
(6) Power, including the following:—
(a) generation of power through thermal, hydro, nuclear, fossil fuel, wind and
other renewable sources;
(b) transmission, distribution or trading of power by laying a network of new
transmission or distribution lines.
(7) Petroleum and natural gas, including the following:—
(a) exploration and production;
(b) import terminals;
(c) liquefaction and re-gasification;
(d) storage terminals;
(e) transmission networks and distribution networks including city gas
infrastructure.
(8) Housing, including the following:—
(a) urban and rural housing including public / mass housing, slum rehabilitation,
etc;
(b) other allied activities such as drainage, lighting, laying of roads, sanitation
and facilities.
(9) Other miscellaneous facilities/services, including the following:—
(a) mining and related activities;
(b) technology related infrastructure;
(c) manufacturing of components and materials or any other utilities or facilities
required by the infrastructure sector like energy saving devices and metering devices;
(d) environment related infrastructure;
(e) disaster management services;
(f) preservation of monuments and icons;
(g) emergency services (including medical, police, fire and rescue).
(10) such other facility service as may be prescribed.
SCHEDULE VII
(See sections 135)
Activities which may be included by companies in their Corporate Social
Responsibility Policies
Activities relating to:—
(i) eradicating extreme hunger and poverty;
(ii) promotion of education;
(iii) promoting gender equality and empowering women;
(iv) reducing child mortlity and improving maternal health;
(v) combating human immunodeficiency virus, acquired immune deficiency
syndrome, malaria and other diseases;
(vi) ensuring environmental sustainability;
(vii) employment enhancing vocational skills;
(viii) social business projects;
(ix) contribution to the Prime Minister's National Relief Fund or any other
fund set up by the Central Government or the State Governments for
socio-economic development and relief and funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities and women; and
(x) such other matters as may be prescribed.
————
P.K. MALHOTRA,
Secretary to the Govt. of India.
PRINTED BY DIRECTORATE OF PRINTING AT GOVERNMENT OF INDIA PRESS, MINTO ROAD,
NEW DELHI AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI, 2013.
GMGIPMRND—2434GI(S3)—30-08-2013.
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