Growth of industry and commerce in Britain led to formation of organization wherein, individuals pooled their capital and had

liabilities in proportion to their respective stocks. Companies were formed by the Act of Parliament. First one was the Bank of England (1694) Formation of companies was regularized by the Joint stock Companies Act in1884. It was replaced by Limited Liabilities Act in 1855. In 1862 in Britain, it was amended and renamed as Companies Act. The concept of private company was introduced in 1907.

Introduced by the British in India in 1850 as the Joint Stock Companies Act (based on the same act of Britain) The first comprehensive Act known as the Indian Companies Act was passed in 1913. After independence, some immediate amendments were made in 1951. a committee was formed under the chairmanship of Mr. C.H. Bhabha to make a report on future company legislation. Based on its report, the Companies Act of 1956 was made effective from 1/4/1956.

The Companies Act of 1956, consisted of 713 sections , 12 schedules and innumerable subsections. 20 amendments have been made so far in the Act. The amendments of 1960, 1969 and 1974 are the most significant ones. In 1977, Sachar Committee was appointed to to report on the changes required in the Act. In 1988, further amendments were made by the Government based on its experience of the working of the Act and the recommendations of the Sachar Committee.

The Act extends to the whole of India and applies to all classes of companies. It also contains provisions for companies incorporated outside India but which have an established place of business in India. The exceptions to the Act are related to a) Nagaland [section 1(3)] b) Goa, Daman and Diu [section 620- B] c) Jammu and Kashmir [section 620- C]

According to the section 3 (1) of the Companies Act 1956, a Company means a Company formed and registered under this Act or an existing company as defined in clause (ii). Clause (ii) states that an existing Company means a Company formed and registered under any previous Companies laws. Company may be defined as an incorporated association which is an artificial legal person, having an independent legal entity, with a perpetual succession, a common seal, a common capital comprising transferable shares and carrying limited liability.

Separate legal entity: It means that a Company can hold property, can sue and can be sued in its name. the companys money and property belong to the company and not to the shareholders. The importance of this characteristic was well brought about in the Salomon vs Salomon case. Limited liability: The company is the owner of its assets and bound by its liabilities. Members are neither the owners nor liable for its debts. No member is bound to contribute anything more than the nominal value of shares held by him.

Separate property: A company is a legal person distinct from its members although its capital and assets are contributed by share holders they are not the private and joint owners of its property. The company is a real person in which all its properties vested and by which it is controlled, managed and disposed off. Artificial Person: Company is a creation of law. It is invisible, intangible, immortal & exists only in the eyes of law. It can enter into contract, employ people and do everything just like natural persons except it cannot take oath, cannot appear on its own person in a court, cannot be sent to jail, cannot practice a learned profession. But a company cannot be treated as a fictitious entity because it really exists.

Perpetual Succession and Common Seal: A company doesnot have an allotted span of life. It can be said members may come and members may go but the company goes on forever. A companys life is determined by the terms of its memorandum of association. The common seal is the official signature of a company. A company should act through its agents(directors) & all contracts entered into by them must be under the common seal of the company. Any document not bearing the common seal will not be binding on the company.

Not a Citizen: Although Company is a legal person having a nationality, it is not a citizen. It cannot claim the fundamental rights which are guaranteed to citizens only. However, it is sufficiently protected under the constitution for e.g. it has freedom of trade and commerce and no unjust discrimination can be shown against it. A Company can challenge a law if the law happens to violate fundamental rights of citizens.

Transferability of Shares: According to Companies Act Section 82, the shares or other interests of any members in a company shall be movable property, transferable in the manner provided by the articles of the company. The incorporation enables the members to sell their shares in the open market and get back their investment without having to withdraw the money from the company. This right may be restricted by the articles of a private company.

There is a veil between the company & its members & the court do not lift it, to look at the economic reality. The company is the is an association of persons who are the beneficial owners of all the corporate property But sometimes it may become necessary to break through the corporate veil

As laid down in SOLOMAN v. SOLOMAN & CO. Courts consider there is a veil between the company & its members, which even the Court do not lift. However at times it may become necessary to break through the corporate veil to look at the beneficial owners of the company, disregarding the corporate fiction to pay regard to economic realities. This is known as: LIFTING or PIERCING THE CORPORATE VEIL.

under express statutory provisions

no. of members reduced below statutory minimum (Sec 45). 2. relationship of holding & subsidiary companies established (Sec 212(i)). 3. investigation into related companies under section 239 & 237. 4. for investigation of the ownership of the company (Sec 247). 5. when there is a fraudulent trading [Sec 542(1)].
1.


1. 2.

under judicial interpretation

protection of revenue: Juggilal v. IT Commissioner; Sir
Dinshaw Maneckjee Pelit Re.

Rubber Industry v. Association Rubber Industry Ltd 3. prevention of fraud improper conduct: Tata Engg & Locomotive Co Ltd v. State of Bihar 4. company is a sham: Delhi Development Authority v. Skipper Construction Co(P) Ltd ;Gilford Motor Co Ltd v. Horne

avoidance of welfare legislation: Workmen of Associated

company is avoiding legal obligations 6. company acting as agent on trustee of the shareholders: Smith Stone & Knight Ltd v. Birmingham
5.

Corporation

company formed is against public interest or public policy: Connors Ltd v. Connors 8. determination of character of a company whether it is an enemy: Daimler Co. Ltd v. Continental Tyre &Rubber
7.

Co.

any company, association or partnership carrying on banking business with more than 10 members or carrying on any other business with more than 20 members that has for its object the acquisition of gain, without being registered under the Companies Act, shall be considered an Illegal Association.

The Stock Exchange

it is not regarded as an illegal association as it is not formed for the purpose of carrying on any business( V. V. Ruia v. Dalmia).

Joint Hindu Family

a hindu family irrespective of the no. of members is not an illegal association, however when 2 or more families work together then it comes under section 11( Pannaji v. Senaji).

Associations not for profit making

Associations which do not work for the motive of gain & associations which carry on business by virtue of pooling agreements to eliminate competition.

It is not allowed to enter into any contract, nor can it sue any member or outsider. It cannot be sued for any debts. It has no existence in the eyes of the law. Every member is personally liable for all liabilities incurred in business. Every member is punishable with fine which may extend to Rs.1000. It is not possible to wind it up under the Act.

1.ROYAL OR CHARTERED COMPANIES: formed in Great Britain by the royal charter i.e., the special order of the king or queen for the time being occupying the throne. Such companies are not formed in India after independence. A chartered company is governed by its charter which defines the nature of the company and at the same time incorporates it. EXAMPLE:EAST INDIA COMPANY FORMED IN 1600 IN GREAT BRITAIN.

2. STATUTORY COMPANIES: These are corporations formed by specific Acts of Parliament or the state legislative but these are practically national corporations formed to render specific services to the nation with more or less monopoly in a particular industry or commerce. These are public enterprises. Any change in the working of these companies is regulated by parliaments or legislatures amendments only. These companies are not for profit. Example: the British Broad Casting Corporation formed in 1926. In India: Reserve Bank of India, State Bank of India, Industrial Development Bank of India, Life Insurance Corporation etc.

3.REGISTERED COMPANIES:A registered company is one which is formed and registered under the Indian Companies Act,1956 or under any earlier Companies Act in force in India. Companies registered under the Companies Act are either: (i)GOVERNMENT COMPANIES OR (ii)ORDINARY COMPANIES 1.GOVERNMENT COMPANIES (SECTION 617) Any company in which not less than 51% of the paid-up share capital is held by the Central Government or by any State Government or Government or partly by the Central Government and partly by one or more State Government is called a Government Company. A Company which is subsidiary of a Government Company is also a Government Company.

RULES APPLICABLE TO GOVERNMENT COMPANIES: 1.Appointment of Auditor: The auditor of a government company shall be appointed or re-appointed by the central government on the advice of the comptroller and Auditor General of India [Section 619(2)]. 2.Audit reports to be submitted to Comptroller and Auditor General of India: The auditor of a Government Company shall submit a copy of his audit report to the Comptroller and Auditor General of India who shall have the right to comment upon, or supplement, the audit report [section 619(4)].Any such comments upon, or supplement to, the audit report shall be placed before the annual general meeting of the company [section 619(5)].

3.Audit report to be placed before parliament: When the Central Govt. is a member of the govt. company, it shall cause an annual report on the working and affairs of the company to be prepared within three months of its annual general meeting before which the audit report is placed. The report shall be laid before both houses of parliament together with a copy of the audit report, and any comments upon, or supplement to, the audit, made by the comptroller and auditor general of India[section 619-A(1)]. Where in addition to the Central Govt., any State Govt. is also a member of a govt. company, the state govt. shall cause a copy of the above documents to be laid before the House of the state legislature [Section 619-A(2)]. where the central govt. is not the member of a govt. company, the state govt. or every state govt. which is a member shall cause the above documents to be prepared within the specified time and laid before the house or both houses of the state legislature[section 619-A(3).

4.Provisions of section 619 to apply to certain companies: According to Section619-B,the provisions of section 619 shall apply to a company in which at least 51% of the paid up share capital is held by one or more of the following or any combination there of, as if it were a government company, namely: 1. The Central Govt. and one or more govt. companies; 2. Any State Govt. or Governments and one or more government companies; 3. The Central Govt., and one or more corporations owned or controlled by the Central Government, 4. The Central Govt., one or more State Govts. and one or more corporations owned or controlled by the central govt.; 5. The central govt. or one or more State Govts. and one or more corporations owned or controlled by the Central Govt; 6. One or more corporations owned or controlled by the Central Govt. or the State Govt.; and 7. More than one Govt. Company.

5.Central provisions of the companies act not to apply: The central government may, by notification in the official gazette, direct that any of the provisions of the companies act (other than sections 618,619 and 619-A),specified in the notification(a)Shall not apply to any govt. company; or (b)Shall apply to any govt. company with such exceptions, modifications, and adaptations, as may be specified in the notification [Section 620(1)]. This power of the central govt. is subject to the control of parliament [Section620(2)].

2.ORDINARY COMPANIES: These are the companies where the government does not hold 51%or more of the share capital of such a company. In this category, the companies may be (A)Private limited companies, and (B)Public limited companies.

(A)PRIVATE LIMITED COMPANIES:A private limited company

means a company which by its articles: (a)Restricts the right to transfer the shares, if any: it means in case of a private co. having no share capital, there need not contain restrictions regarding the right of members to transfer shares, while other restrictions(a)and (b) will apply. (b)Limits the number of members to 50(min.2)not including(i)Persons who are in the employment of the company as well as shareholders. (ii)Persons who, having been formerly in the employment of the Company, were members of the company while in employment and have continued to be members after the employment ceased and (c)Prohibits any invitation to the public to subscribe for any shares in or debentures of the company.2

Private companies can be classified as: (i)Companies limited by shares; (ii)Companies limited by guarantee(if they have a share capital); (iii)Unlimited companies (if they have a share capital).

(1)A private co. can be formed with only 2 members[sec12(1)] (2)A private co. can proceed to allot shares without waiting for the min. subscription[sec69].the reason is that a private company is not required to offer shares to the public. (3)A private company is not required to issue a prospectus. Therefore, It can allot shares without issuing a Prospectus or delivering to the Registrar a statement in piece of prospects [sec70(3)]. (4)A private co. need not offer issue of shares to the existing shareholders, i.e., a private co. is free to allot new issue to outsiders [sec81(3)]. (5)A private co. can issue any kind of shares and allow disproportionate voting rights since sec85 to 89 of the act are not applicable to it [sec 90(2)].

(6)A private co. can commence business immediately after its incorporation [sec149(7)]. (7)It need not have an index of members [sec151(1)]. (8)A private co. is not required to hold a statutory meeting or to file a statutory report with the registrar of companies [sec165(10)]. (9)Only two members, who are personally present at the meeting, shall form the quorum unless the articles provide for a larger number [sec 174(1)]. (10)In case of a private co., poll can be demanded by one person present in person or by proxy, If not more than seven persons are present; if the number of persons present is more than seven, two members present in person or by proxy can demand a poll[sec179(1)(b)]. (11)A private co. need have a minimum of two directors only[sec 252(2)].

(12)All the directors may be appointed by a single resolution. (13)The directors of a private co. need not file their written consent to act as directors or to take up their qualification shares [sec 264 and 266]. (14)The directors of a private co. need not retire by rotation [sec255]. (15)Sec 266 dealing with restrictions on appointment or advertisement of directors is not applicable to private co.[sec266(5)(b)]. (16)Where a new director is to be appointed, a special notice of 14 days is required. This provision is not applicable to a private co., unless it is a subsidiary of a public co. [sec 251(2)]. (17)Directors of a private company can vote on a contract in which they are interested [sec 300]. (18)A private company is exempted from restrictions regarding managerial remuneration.

Loss of privileges by a private company: Sec 43 provides that if a private co. contravenes any of the 3 conditions included in its articles as per section 3(i)(iii),then it will be treated as if it is a public company and it will then result in loss of privileges and exemptions to which it is normally entitled to. The provison to section 43 states that if the contravention of any of the 3 restrictions contained in the articles was accidental, or if the company law board is satisfied that it is just and equitable to grant relief, it may relieve the company from these consequences on the application by the company or any other interested person.

Alter the articles of company by a special resolution If the number of members is less than 7, raise it to 7 If number of directors is less than three, raise it to three File a prospectus or statement in lieu of prospectus and resolution within 30 days with registrar.

Pass a special resolution authorizing conversion of company and altering the articles Change the name of the company by a special resolution Obtain the central government approval File the altered articles with the registrar within 30 days of receiving approval.

public company means a company which is not a private company [section3(1)(iii)]. Any seven or more persons can join hands to form a public Company. Public limited companies may be(1)Companies limited by shares-where the liability of the members of a company is limited by the memorandum to the amount unpaid on the shares, such a company is known as a company limited by shares or a limited liability company.

(2)Companies

limited by guarantee-is a company having the liability of its members limited by its memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up,the amount guaranteed by each member cannot be demanded until the company is wound up. Here, it is the nature of a reserve capital. (3)Unlimited companies-a co. having no limit on the liability of its members is an unlimited company ,it means the liability of members of this type of company is unlimited i.e. it may extend to the personal property of the members.

Private company 1.Requires minimum two members. 2.Maximum limit is of fifty members. 3.At least two directors required. 4.Consent of directors need not be filed with the registrar. 5.Raises capital by private arrangement, public subscription is not allowed. 6.Shares are not transferable except for the provisions in the article. 7.No restriction on managerial remuneration. 8.The words private limited are added to the companys name.

Public company Requires minimum seven members. No maximum limit. At least three directors required. Consent of directors is to be filed with the registrar. Raises capital by inviting public subscription or by private arrangement. Shares are freely transferable, may be even quoted on a stock exchange. Restriction on total managerial remuneration. The word limited is added to the companys name.

Where one co. has control over another it is known as holding co. over which control is exercised is called the subsidiary co. Control can be exercised in 3 ways: a)Where one company controls the composition of the board of directors of another the latter becomes the subsidiary of the former. b)Where one company holds majority of share in another co. the latter becomes the subsidiary of the former. c)Where one co. is subsidiary of another which is itself a subsidiary of some another co. the first mentioned co. becomes the subsidiary of the subsidiary of the mentioned co., the following documents should be attached to the balanced sheet of the holding company. Balanced sheet and profit & loss a/c of the subsidiary company. Copy of report of board of directors & copy of report of its auditors. Statement of the holding companys interest in the subsidiary at the end of the financial year.

It is one in which almost the whole share capital is held by a single man who takes a few dummy members simply to meet the statutes requirements regarding the minimum number of members may be by giving only one share to each of the dummy members. E.g. A private co. is registered with a share capital of rupees 500000 divided into 5000 shares of rupees 100 each, of these shares 4999 are held by A and one share is held by As wife B, this is a one man company.

The following financial institutions shall be regarded, for the purposes of the companies act, as public financial institutions, namely, ICICI,IDBI,IFCI,LIC,UTI. Sub section (2) of section 4-A empowers the central govt. to specify other institutions ,as it may think fit, to be a public financial institution by issuing a notification in the official gazette. However, no institution shall be so specified unlessIt has been established or constituted by or under any central act or Not less than 51% of the paid up share capital of such an institution is held or controlled by the Central Government.

It means any company incorporated outside India and which after the commencement of the Indian Companies Act established a place of business within India, and which before the commencement of the act had established a place of business within India and continue to have established place of business within India at the commencement of the Act. Requirements regarding Foreign Companies : Documents following documents shall be filed within 30 days of formation: A certified copy of the charter, statutes, memorandum and articles of the co. and ,if the instrument is not in English, a certified translation thereof. The full address of the registered or principal office of the company. A list of the directors and secretary of the company.

The names and addresses of any person or persons resident in India, authorized to accept on behalf of the company service of processes and any notices required to be served on the company. The full address of the principal place of business in India .

ACCOUNTS: According to section 594, unless exempted by the central govt., it is required to file with the registrar every year three copies of the balance sheet and profit and loss account like a company under the companies act. The foreign company must also send, along with these documents, three copies of a list in the prescribed form of all places of business established in India. NAME A foreign company shall conspicuously exhibit on the outside of every office or place where it carries on business in India the name of the company, together with the name of the country where it is incorporated in English and in one of the local languages. All bill-heads letter papers, and all other official publications of the company shall also show the name (section 595). REGISTRATION OF CHARGES The provisions relating to the registration of charges (sec. 124 to 145), annual returns(sec. 159), books of account(sec 209 and 209-A), special audit in certain cases(sec. 233-A), audit of cost accounts(sec 233-B), power of registrar to call for information(sec. 234 to 246), in so far as they apply to its Indian business, shall apply to foreign companies also.

a) b) c) d)

e) f)

REQUIREMENTS AS TO PROSPECTUS (SEC. 603) It enumerates the particulars to be stated in the prospectus inviting subscriptions for shares or debentures by a foreign company. These are as follows: Name of company in English. Name of country in which it is incorporated. Whether the liability of the member is limited. Particular regarding its constitution, date and country of incorporation, and the law under which it was incorporated abroad. The address of its registered office and the address of its principal place of business, and Matters required to be included in a prospectus issued by a company incorporated under the companies act. REQUIREMENTS REGARDING WINDING UP Where a foreign company, which has been carrying on business in India, ceases to carry on such business in India, it may be wound up as an unregistered company under part X (Section 582-590) of the act. A foreign companys business in India can be wound up even in cases where the company has been dissolved or where it has cease to exist under the law of the country in which it was incorporated (Section 584).

Promotion means the discovery of business opportunities and the subsequent organization of funds, property and managerial ability into a business concern for the purpose of making profits there from. Palmer defined Promoter as a person who originates a scheme for the formation of the company, has the Memorandum and Articles prepared, executed and registered and finds the first directors and settles the terms of the preliminary contracts and prospectus (if any) and makes arrangements for advertising and circulating the prospectus and placing the capital, is a promoter

A promoter may be an individual, firm, association of persons or even a limited company, whether the person is or not a promoter depends upon the nature of the role played by him in the promotion of business.

He conceives the idea of the formation of the Company after a thorough study of the business world that a particular business field is still unexplored or may be explored further. He draws up the scheme and determines the object of a future company. He prepares the memorandum of association, articles of association and the prospectus. He gets together the able directors to act as such for the Company. He takes the necessary leave of the appropriate government authorities for that purpose. He finds out suitable financiers to back up the company. He makes arrangement with vendors, legal advisors and other persons required for floating a company. He takes pain for filing a necessary document with the registrar of companies for the certificate of incorporation. He bears all the preliminary expenses.

As to the exact legal status of the promoter, the statutory provisions are silent in most part, except for a couple of Sections in the Specific Relief Act, 1963. His legal status is incapable of precise statement. A promoter is neither a trustee nor an agent. Though a promoter acts on behalf of the Company, he cannot be called truly an agent or trustee. The reason is that a person cannot act an as agent or a trustee for a person who is non-existent and the Company is non-existent at the time when the promoter acts for it.

Promoters have following duties with regard to the prospect (if issued) a) See that the prospectus contains the necessary particulars. b) See that the prospectus does not contain any untrue statement or hide any material fact. Liabilities- he incurs following liabilities in case of non performance of above duties. a) Civil liability- He makes himself liable to pay any compensation to any shareholder who buys shares on the faith of the said prospectus containing untrue statements or concealing material facts.

Criminal liability I. Promoter is liable to the original allottee of shares for the mis-statements contained in the prospectus. It is clear that his liability does not extend to subsequent allottees. He may also be imprisoned for a term which may extend to 2 years or may be punished with fine up to rupees 5000 for such untrue statements in the prospectus [Section 62 & 63] II. In the course of winding up of the Company, on an application made by an official liquidator, the court may make a promoter liable for misfeasance or breach of trust [Section 543]. The Court may also order for the public examination of the promoter [ Section 478 & 519] Note- Where there are more than one promoters, they are jointly and severally liable and if one of them is sued and paid damages, he is entitled to claim contribution from other or others. The death of a promoter does not relieve his estate from liability arising out of abuse of his fiduciary position.
a)

Three categories of people are involved in the process of formation of a Company and all of them can be called interested in the formation of the Company. They are: Promoters- They are the first members of the Company and are vitally interested in the Company. The promoters bring the other two categories of people to fulfill their plan. Experts- Advices of some experts like lawyers, chartered accountants etc., are commissioned against payment of fees whose expertise is necessary in preparing documents and fulfilling other legal formalities. The promoters may even appoint a qualified secretary at this stage on monthly remuneration and his employment is ratified with retrospective basis after the Company comes into existence. The expenses already made by the promoters by themselves are reimbursed in future by the Company. Witness- There must be one witness who should testify the signature of the subscribers to the Memorandum. The witness may be somebody other than the subscribers [Section15]. The same rule shall apply to the Articles [Section 30]

1.

The certificate of incorporation- An application to be made to the Registrar of Companies of the State where the proposed Company is going to be registered, suggesting intended name of the proposed company and wanting to know whether the suggested name is available. Generally three names, in order of priority are suggested. The suggestions shall be made carefully so that the provisions of Emblems and names (Prevention of Improper use) Act, 1950 are not violated. The application shall be made in a form vide Rule 44 of the Companies (Central Governments) General Rules and Forms, supplied by the office of registrar. The application shall be accompanied with prescribed fee. The registrar will send a reply , ordinarily within 14 days, stating whether the name is available or not. If not, a fresh application has to be made with fresh

3.

4.

5.

One copy of the memorandum and one copy of the articles, which are to be filed with the Registrar, have to be stamped according to the Indian Stamp Act. The following documents to be filed with the Registrar: One signed and stamped copy of Memorandum. One signed and stamped copy of the Articles. A declaration of compliance (i.e. all the formalities of the act and the rules have been complied with) in the prescribed Form no. 1, made by an advocate, an attorney or pleader entitled to appear before a High-court, or a C.A. practicing in India, engaged in the formation of the Company or by a person named in the articles as a director or manager or secretary of the company [Section 33] The following documents also may be filedNotice of the situation of the registered office of the Company in Form no. 18 [Section 146]. This can however be filed within 30 days from the date of incorporation but generally it is filed in advance together with other documents.

6.

7.

Particulars of the directors, manager and secretary in Form no. 32 [Section 303]. These particulars are to be filed within 30 days from appointment, but the appointment may be made from the very beginning by mentioning in the articles. The following documents also have to be filedThe written consent of each person named in the articles as director to act as director, in Form no. 29 [Section 266(1) (a)]. A written undertaking by such person to take and pay for qualification shares, if any, in Form no. 29, unless he has already taken or paid for the qualification shares or he has subscribed to the memorandum and articles with the sufficient number of shares covering the qualification shares[Section 266 (1)(b)]. Together with the above documents filing also has to be made of the followingRegistrars letter informing availability of the name. A letter of authority duly stamped and signed by the subscribers in favor of one of them or any other person for making necessary corrections in the documents, on their

Memorandum of Association of a Company is the fundamental document of the Company. It contains the fundamental conditions upon which alone the Company is allowed to be incorporated. It is the charter of the Company and defines the reason of its existence. It lays down the area of operation of the Company and regulates its external affairs in relation to the outsiders. It also shows the scope of the Company beyond which it cannot act.

It enables the shareholders, creditors and all those who deal with the Company to know the range of their powers and activities. The shareholders can keep a track of the fields and purposes for which their money is being used by the company and the risks involved in it. It enables the outsiders to know about the objects of the Company and whether the contractual relation they are going to enter, is within those objects.

The Memorandum of the company should be: Printed Divided into paragraphs numbered conclusively Signed by 7 subscribers [ 2 in case of private company]. Each subscriber should sign it in the presence of at least one witness who in turn attests the signature.

Section 14 of the Act requires that the memorandum shall be in one of the forms as in Table B, C, D &E, as may be applicable in the case of the company. Table B for a Company limited by the number of shares. Table C for a Company limited by guarantee and not having share capital. Table D for a Company limited by guarantee and having share capital. Table E for a unlimited Company with share capital.

1.

2.

3.

COMPULSORY CLAUSES The name of the company with limited and private limited as the last name for Public and Private companies respectively. The name of the State in which the registered office of the company is to be situated. The objects of the company stating separately the Main objects and other objects.

4.

5.

6.

In the case of the companies [other than trading corporations] with objects not confined to one State, the States to the territories of which the objects extend. In case of the Companies limited by the shares or the guarantee, it should also state that the liabilities on its members is limited. The amount of the authorized share capital, divided into shares of fixed amount.

1. 2.

3.

The name of the Company establishes its identity and is the symbol of its existence. The name of the Company with limited and private limited as the last name for Public and Private companies respectively. The promoters are free to choose any name subject to some rules. A name is undesirable if: It is identical with or too nearly resembles the name of an already existing company. In case this happens, the first company can apply to the court. It is identical with or too nearly resembles the name of a company in liquidation. The provisions of the Emblems and Names Act 1950 shall not be violated.

4. The company must have a certain amount of authorized capital if it uses any of the key words like Corporation, International, Continental, Hindustan, India, Industries, Enterprise etc, in its name. 5.Every Company shall: Paint or affix its name & address and keep the same, on the outside of the office or place of business, in letters easily legible and in language used in the locality. Have its name mentioned on all the business letters, bill heads, negotiable instruments and receipts etc. It should also be engraved on its Seal.

PENALTY
In case a Company does not follow the Name Clause, the Company and every officer who is in default shall be punishable with fine. Its the duty of the Registrar to take the necessary action if the provisions of the Section 147 are violated.

It states that every Company shall have a registered office from the day it starts its operations or from the 30th day after the date of its corporation. In case of a default, the Company and its every officer who is in default, is punishable with a fine.

It defines the sphere of activities of the Company, beyond which it cannot operate. It should contain: Main objects of the Company Objects incidental or ancillary to the attainment of main objects. Other objects not included in the above two categories. The objects should not be illegal, immoral or opposed to the public policy. The narrower the objects are expressed, the less is the subscribers risk; but the wider the objects, greater is the security of those who transact with the Company.

It states the nature of liability of the members(whether it is by shares or by guarantee). In case of a Company limited by shares, a member can be called upon to pay to the Company the amount unpaid on the shares held by him. In case of a Company limited by guarantee, the clause should state the amount which every member undertakes to contribute to the assets of the Company in the event of its winding up. This clause is absent form the Memorandum if the Company is Unlimited which implies that the liability of its members is unlimited.

This clause states the amount of share capital with which the Company is to be registered and the division into shares of fixed amount. The Company cannot issue more shares than authorized for the time being by the Memorandum. The shares issued by a Company can be equity or preference shares but they cannot have disproportionate rights. A Private Company which is not a subsidiary of a Public company may continue to issue shares of any kind and with disproportionate rights.

At the end of the Memorandum, there should be the Association clause which is to be signed by at least 7 subscribers in case of a Public company and by at least 2 subscribers in case of a Private company. Each subscriber has to take at least one share. Their number of shares is to be mentioned in in the document. The signature of each subscriber is to be attested by at least one witness who cannot be another subscriber.

CHANGE OF NAME Section 21 provides that the name of a Company can be changed at any time by passing a special resolution(passed by majority) at its general meeting and with the written approval of the central government. This approval is not required if a Public company is being converted into a Private company or vice- versa. Fresh certificate of incorporation: The change of name must be communicated to the Registrar of companies within 30 days who will then issue a fresh certificate of incorporation with necessary alterations [Section 23(1)] . Change of name shall not affect any rights or obligations of Company or render defective any legal proceedings by or against it [Section 23(2)]

A. In same city, town or village: it involves passing of the boards resolution to that effect and inform the Registrar within 30 days. B. From one State to another: it involves alteration of Memorandum and the change is allowed if it enables the Company to meet any of the purposes listed in the Section 17(1) To enable the company to carry out its business more economically. To attain its main purpose by improved means. To enlarge or change the area of Companies operation To restrict or abandon any of the objects specified in the Memorandum. To sell or dispose whole or part of to the undertaking of the Company. To amalgamate with any other Company or body of persons.

The shift of the registered office in this case can be done by special resolution confirmed by Company law board. A copy of the special resolution under Section 146 & 17 should be sent to registrar of companies within 30 days. Certified copies of CLBs orders should be filed within 3 months with the registrar of companies of the old and new state, otherwise the change becomes void and inoperative. A notice of the new location must be given to the registrar of the new state within 30 days. C. One town to another in the same state: this requires passing of special resolution in the general meeting and communicating the change to the registrar within 30 days.

1.

2.

It is allowed if the Company wants to meet out the purposes enumerated in Section 17(1). The procedure involves following steps: Passing a special resolution & filing it with the Registrar within 30 days. Getting confirmation of the Company law board which has to satisfy itself that : Sufficient notice has been given to every debenture holder, creditor and other parties whose interest may be affected by the alteration. Every objecting creditor has been paid in full or his consent has been obtained. Notice has been given to the registrar about intended change. The alteration is fair and equitable considering the interest of members and creditors of the Company.

Section 38 states that a Company cannot impose any additional liability on the members or compel them to buy additional shares unless all of them agree in writing to such change. The change becomes effective from the day of passing the resolution. The Registrar should be informed about the change along with the necessary documents within 30 days. Shareholders of an unlimited company can limit their liability by passing a special resolution and obtaining courts order. A copy of the special resolution is to be filed within 30 days and of the courts order in 3 months, with the Registrar.

Section 94 provides that a Company limited by share capital may by an ordinary resolution, passed in its general meeting, alter the capital clause so as to: 1. Increase its authorized share capital by issuing fresh shares. 2. Consolidate and divide all or any of its share capital into shares of larger amount than its existing shares.

3.

4.

5.

To convert all or any of its fully paid-up shares into stock and reconvert the stock into fully paid-up shares of any denomination. To sub-divide its shares into shares of smaller amount than fixed by the Memorandum, but the proportion paid and unpaid on each share should remain the same. To cancel shares which at the date of passing the resolution in that behalf, have not been taken or agreed to be taken by any person.

Rules ,regulations and by laws for internal management of the affairs of the company They are subordinate to and controlled by memorandum of association It has contractual force between company and its members and between its members

Share capital ,rights of shareholders variation of these rights payment of underwriting commission Lien on shares ,calls on shares ,transfer of shares, transmission of shares, forfeiture of shares conversion of shares in stock ,share warrants Alteration of capital ,general meetings and proceedings thereat ,voting rights of members directors ,there appointment ,qualification, remuneration Manager ,secretary ,dividends and reserves ,accounts ,audits and borrowing powers Capitalization of profits and winding up

 Not mandatory for a public limited company limited by shares to register In that case articles given in table A of schedule I will automatically become applicable Mandatory for : a company limited by guarantee , by shares ,by both and an unlimited company

In case of an unlimited company articles shall state: number of members with which the company is registered & amount of share capital with which the company is registerd(section27(1)) In case of company limited by guarantee the articles shall state the number of members with which the company is registered[section27(2)] In case of private company articles shall contain provisions for restricting the right to transfer shares,limit the members to 50 (not including employee members) & prohibit any invitation to public to subscribe for any shares or debentures of company[section27(3)]

Section 31(1) provides that subject to the provisions of the act and conditions contained in the memorandum a company may be special resolution .alter its articles, provided that no alteration can be made so that a public company is converted into a private company without the approval of central government Section 31(2) provides that any alteration made has the effect as if it was contained in original document Section31(2-A) says that a copy of special resolution has to be filed with registrar (in form no. 20) within 30 days and in case the approval by government is received the copy has to be filed within 30 days from receiving the approval After alteration every copy of the article issued must contain the change. If shares of the company are listed on stock exchange then 6 copies of the special resolution have to be submitted to the stock exchange on of which should be a certified copy contd

Section 404 provides that when an application has been made under section 397 or 398 to the court for remedy against oppression and mis-management the court may order for alteration

Must not be inconsistent with any provisions of the companies act [section 31(1)] Must not sanction anything illegal Must be for the benefit of the company Alteration by special resolution only Approval of central government when a public company is converted into private company(section31) Must not cause breach of contract with third party Must not increase liability of members

Points of similarity: Both are prepared at time of incorporation of company both are signed by same person (together wit at least one witness). Both are printed ,divided into paragraphs numbered and signed Both are overridden by act Both are drafted according to modules or tables provided in act The court may alter both through an order as remedy against oppression and mis-management A member is entitled to get a copy of each of the documents of payment offee Both have effect of a signed contract between the company and every member of the company be implication Both are under doctrine of constructive notice

Memorandum is the functional document while articles is a subsidiary one Memorandum is to be prepared by every co. while articles may not be prepared by public co. limited by shares the act is specific about the clauses of memorandum but not about articles The number of clauses are far more in articles than in memorandum In case of any discrepancy or dispute about any matter mentioned in both then the whatever is given in memorandum will stay binding Alteration in case of articles is easy while its not so in case of memorandum Memorandum has the effects on members as well as outsiders but the articles has the effects on the members only The clauses in memorandum are sometimes classifieds as condition clauses and article clauses but there is no classification of the clauses of the articles

Members bound to company: both are a binding contract between the members and the company Company bound to members Contract between members: the articles bind the members to one another so far as rights and duties arising from the articles are concerned Company or members bound to outsiders: the articles do not constitute any binding contract between the company and outsider

Section 610 provides that the memorandum and articles , when registered ,becomes public documents and then they can be inspected by anyone on payment of nominal fee in the office of the registrar of companies. Imputation of knowledge as to the contents of memorandum and articles is known as constructive notice of the public documents

This is a limitation to the doctrine of constructive notice ,namely that so far as the internal proceedings of the company are concerned, the stranger dealing with the company is entitled to assume that the provisions of the articles have been observed by the officers of the company. An outsider is not expected to see that how the company carries out its internal regulations contd

But a person dealing with an officer of the company may rely on ostensible authority of such officer in respect of a transaction provided: .the transaction is one which normally falls within the scope of the authority of one in position of such officer and .the articles of association of the company contains provisions for delegation of powers of the company or its board to such officers in respect of such transaction Person dealing with limited liability companies are not liable to enquire into their indoor mangement

Any document described or issued as a prospectus & includes any notice, circular, advertisement or other document inviting deposits from the public for the subscription or purchase of any shares in, or debentures of, a body Corporate.

any section of the public whether elected as member or debenture holders, or as clients of the person issuing the Prospectus or in any other manner it does not include a small & closely restricted group of investors which have been described by the Act as being domestic concern of the persons making & receiving the offer or invitation.

Schedule II of the Act provides a model which has to be strictly followed to prepare a Prospectus. Part I : state the matters specified in Part I of Schedule II Part II : set out the reports specified in Part II of Schedule II Part III : the provisions as stated, have effect subject to the provisions contained in Part III of Schedule II.

main objects of the company & details of the signatories. the no. & classes of shares & about redemption in case of redeemable preference shares. Directors-details of them, qualification shares, remuneration, etc. Minimum subscription to be raised to meet preliminary expenses. Time of opening the subscription list. Amount payable on application & allotment. particulars of any options to subscribe. particulars of shares & debentures issued. Amount payable or paid as premium on each share issued. Particulars of the Vendors of Property acquired or to be acquired. Amount paid or benefit given within 2 preceding yrs. Particulars of contracts with managing director manager. Particulars of interests of every promoter or director in the promotion or property of the company acquired within preceding2yrs to be acquired. reasonable time & place where copies of balance sheets & profits & loss accounts can be inspected.

report by the auditors of the company w. r. t. profits & losses of last 5 yrs, assets & liabilities. proceeds of the issue of shares or debentures to be used to purchase a business. proceeds to be applied directly or indirectly to acquire shares in other body corporate at last date.

the persons to be considered as vendors to the company. a vendor includes lessor. where the 5 financial yrs cover a period of loss than 5yrs then 5yrs shall mean 5 financial yrs. any reports acquired in Part II shall be by qualified accountants & not an officer or servant or a partner or in employment of a company or its holding or subsidiary company or a subsidiary of companys holding company.

Registration must be made on or before the date of Publication thereof. the Prospectus must state on the face of it that a copy of it has been delivered to the Registrar for registration. Prospectus must be issued within 90 days of the date on which a copy thereof is delivered for registration. Objects of Registration are to keep an authenticated record of the terms & conditions of issue of shares or debentures;& to pinpoint the responsibility of the persons issuing the prospectus.

if any person violates the requirements of section 56 i.e., of making the prospectus in conformity with the Schedule II, is punishable with a fine which may go upto Rs.5000

Minimum Subscription is the amount stated in a prospectus as the minimum amount which, in the opinion of the Board of Directors, shall be raised by the issue of share capital in order to provide for:

the purchase price of any property purchased or to be purchased which is to be defrayed in whole or in part out of the proceeds of the issue, any preliminary expenses payable by the company, & commission so payable to any person in consideration of his agreeing to subscribe for or of his procuring or agreeing to procure subscriptions for any shares in the company, the repayment of any moneys borrowed by the company.

It is a process. Under the process, the life of the company is ended and its property is administered for the benefits of its members and creditors. A liquidator is appointed to realize the assets and properties of the company. After payments of debts, if any surplus of assets is left out, they will be distributed among the members according to their rights. Winding up does not necessarily means that the Company is insolvent. A perfectly solvent company may be wound up by the approval of members in a general meeting. There are differences between winding up & dissolution.

Special resolution of the company[ Section 433(a)] Default in holding statutory meeting or in delivering statutory report to the registrar [Section 433(b)] Failure to commence business within a year of incorporation[ Section 433( c )] Reduction in membership [Section 433(d)] Court may order for the winding up of company if it is not able to pay its debts. The basis of an order for winding up under this clause is that the company is unable to meets its current demands , although the assets when realized may exceed its liabilities. According to Section 434 of the act Company shall be deemed to be unable to pay its debt in following cases: When a statutory notice was served Decreed debt In case of commercial insolvency Cont.

Just and equitable reasons [ Section 433 (1)] This clause give gives the court a very wide power to order winding up wherever the court considers it just and equitable to do so. But the court may give due weightage to the interest of the company and its stake holders. Deadlock management- When it is not possible for the Company to carry out its objects for which it was formed. Case: Yenidjije tobacco Co. Ltd. Loss of substratum- When the main objects of the company have failed to materialize or the Company has lost its substratum , it is just and equitable to wind up the Company. Case: German Date Coffee Co. Oppression of minority- When majority of the shareholders are using their powers unfairly or have adopted, an oppressive policy towards the minority or the management. Illegal or fraudulent purposes- When the company has ceased to carry on its authorized business. Where the members of the Company have lost their confidence with the Company. When the Company does not carry on any business or does not have any property.

By the company itself [Section 439 (1) (a)] By the creditors [ Section 439 (1) (b)] By any contributory [ Section 439(a) (c )] By registrar of companies [Section 439 (1) (e)] By the central government or any person authorized by it [ Section 439 (1)(f)] By the liquidator

The winding up is deemed to commence from the date of the resolution which is passed by the company for voluntary winding up & this resolution is passed before the presentation of the petition for the winding up of the company by the court. In all other cases (i.e. where the company has not passed the petition for voluntary winding up), the winding up of the company by the court is deemed to commence from the time of the presentation of the petition for the winding up. Advertisement of petitionEvery petition shall be advertised 14 days before the hearing; stating the date on which the petition was presented & the names and addresses of petitioners.

Powers to stay winding up order- On receipt of an application either from the liquidator or from any creditor or contributory, the Court may stay the proceedings altogether or for a limited time [Section 466] To settle the list of contributories- In order to discharge the liabilities of the company the Court can get the assets of the Company & has the power to prepare a list of such shareholders as are liable to contribute to the assets of the company [Section 467] To order for delivery of property to liquidator Right to call from a contributory to clear dues To make calls- the Court may ask the contributories to pay the uncalled money on shares when it finds that assets are inadequate to meet the liabilities and the expenses of winding up [Section 470] Cont.

To call for money from debtors [Section 471] Power to exclude creditors- those creditors who have failed to prove their claims within stipulated period may be excluded by the Court from the list of creditors [Section 474] To summon any person known or suspected to have in possession of Companys property [Section 477(2)] To order for the public examination of promoters, directors etc [Section 478] To order for the arrest of absconding shareholder, if any [Section 479] To order for dissolution of the company [Section 481]

A liquidator is a person who is appointed by the court to conduct the proceeding in winding up the Company and perform such duties in reference thereto as the Court may impose. For the purpose of winding up, there shall be attached to each High Court an official liquidator appointed by Central government who may be either a whole time or part time officer. A body corporate cannot be appointed a liquidator in any form of winding up. Where the official liquidator becomes or acts as liquidator, he shall be paid by the Central Government out of the assets of the Company such fees as may be prescribed.

He must conduct equitably & impartially all proceedings in the winding up, according to provision of the law. He must submit a preliminary report to the Court. The report shall contain1. As to the amount of capital issued , subscribed & paid up & the estimated amount of assets and liabilities. 2. If the company has failed, the cause of the failure, & 3. Whether in his opinion, further inquiry is desirable as to any matter related to promotion, formation or failure of the Company, or the conduct of the business thereof [Section 455(1)] Additional reports

A liquidator has two types of powers under the Act: 1. Powers to be exercised with the sanction of the court. 2. Powers to be exercised without the sanction of the court. Note: All these powers are exercised by the liquidator within the control of the court [Section 457]

Cont.

1)

To institute or defend any suit, prosecution or other legal proceedings (civil or criminal) in the name of the Company or on the behalf of the Company. To carry on business so far it may be necessary for the beneficial winding of the Company. To sell the immovable and movable property of the Company by the public auction. To raise on the security of the assets of the Company. To sell the movable or immovable property of the Company under the private contract of sale. To secure loan by mortgaging the property of the Company. To enter into necessary compromise or arrangement with regard to payment to creditors. To enter into any compromise or accept suitable security in connection with payment to debtors and calls outstanding on shareholders. To appoint any advocate or legal advisor to assist him in connection with the discharge of his duties.

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5) 6) 7) 8)

To execute all deeds and other documents in the name and on the behalf of the company and to use the Companys common seal, To prove and claim from an insolvent contributory for any balance against his estate. To draw, accept and endorse any negotiable instrument of behalf of the Company. To obtain letters of administration to any deceased contributory and take necessary steps for obtaining payment of any money due from the contributory of his estate. To appoint an agent to do any business which the liquidator is unable to do himself. To check the records and returns of the Company. To extend the date of final payments by the buyers in an auction sale of Companys property. To call the meetings of the creditors and contributories to discuss the matters related to winding up process.

In this form of winding up , the Company and its creditors are left to settle their affairs by themselves, without going to the Court , but the parties can request the Court for general direction or orders, wherever necessary. It is the most easy, common popular form of winding up. Circumstances for Voluntary Winding Upa) The article fixed for tenure of the Company has expired or an event upon which the Company has to be wound up has happened and the Company in general meeting has passed a special resolution. b) The Company has for any cause whatever passed a special resolution to wind up voluntarily [ Section 484]. The Company may be wound up by a special resolution even if it is prosperous.

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2.

Members voluntary winding up, & Creditors voluntary winding up.

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Appointment of liquidator [Section 490]- The Company in general meeting or shall appoint one or more liquidators for winding up the affairs of the Company and for distributing the assets. The Company shall also fix his remuneration and unless his remuneration is not fixed, he will not take charge of his office. Boards power to cease [Section 491]- On appointment of liquidator , all powers of Board of Directors, Managing director(s) and manager, shall cease to exist except when the Company or liquidator may sanction their continuance. Power to fill the vacancy of liquidator [Section 492]- If any vacancy occurs in the office of liquidator, the Company may in general meetings fill the vacancy subject to any arrangement with its creditors. The vacancy may arise due to death, resignation or otherwise. Notice of appointment of liquidator to Registrar [Section 493]- With in 10 days of the date of appointment of liquidator, a notice of information may be given to registrar of the event. PENALTY- In case of default the Company and every officer of the Company who is in default shall be punishable with a fine, extending Rs.100/- for every day of default. Disposal of property [Section 494]- The liquidator may, with the sanction of a special resolution of the Company , sell all or part of the Companys business or property or shares or like interest in another Company to be distributed among the members.

6)

Meeting of the Creditors [Section 495]- If, at any time, the liquidator is of the opinion that the Company will not be able to pay its debts in full within the period mentioned in the declaration of solvency, he must call a meeting of the creditors and lay down before them a statement of the assets & liabilities. PENALTY- On default the penalty is a fine which may extend to Rs.500/- where a liquidator has called a creditors meeting under Section 495, the winding up, then, would proceed as if it was creditors voluntary winding up [Section 498]. Annual general meeting at the end of first year and subsequent years[ Section 496]- If the winding up continues for more than one year, the liquidator must call a general meeting of the Company and a meeting of the creditors at the end of first year of the commencement of winding up and at the end of each of the subsequent years and may lay before them an account of the acts or the dealings. Final meeting and dissolution [Section 497]- The liquidator shall perform the following ,as soon as the affairs of the Company are fully wound upHe shall make up the account of the winding up, showing how the same has been conducted and how the property has been disposed of. He shall call a general meeting of the Company for laying before it the said accounts. The meeting shall be called by advertisement specifying the time, place and object thereof.

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Meeting of creditors [Section 500]- If a voluntary winding up is proposed and no declaration of solvency has been made, then the Board must call a meeting of the creditors either on the same day or the next day of the general meeting in which the resolution is passed. Notice of the meeting should be advertised in the official gazette as well as in 2 newspapers. Notice to registrar [Section 501]- Notice of any resolution passed at a creditors meeting shall be given by the Company to the registrar within 10 days of the passing thereof. Appointment of liquidator [Section 502]- The creditors and the members may nominate a liquidator for the purpose of winding up the affairs and distributing the assets of the Company. If the creditors & the members nominate different persons, the creditors nominee is the liquidator. Appointment of committee of inspection [Section 503]- Creditors may appoint a committee of inspection of not more than 5 members. Company may also appoint members of this committee. In case of dispute matter will be referred to the court. Fixing of Liquidators remuneration [Section 504]- The committee of inspection, or where there is no such committee the creditors shall fix the remuneration of the liquidator, where the remuneration is not fixed, it shall be determined by the court. the remuneration once fixed cannot be increased in any case.

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Boards powers to cease [Section 505]- on the appointment of liquidator , all the powers of the Board of directors shall cease, except in so far as the committee of inspection, or if there is no such committee, the creditors in a general meeting, may sanction. Vacancy in office of liquidator [Section 506]- If any vacancy occurs by death, resignation or otherwise in the office of the liquidator ( other than a liquidator appointed by or by the direction of the court), the creditors in a general meeting may fill he vacancy. Meeting at the end of each year [Section 508]- If the winding up continues for more than one year, the liquidator must call a general meeting of the Company and a meeting of the creditors at the end of first year of the commencement of winding up and at the end of each of the subsequent years and may lay before them an account of the acts or the dealings. Final meeting & dissolution [Section 509]

At any time after a Company has passed a resolution for voluntary winding up, the court may make an order that the voluntary winding up shall continue, but subject to such liberty, contributories or others to apply to the Court & generally on such terms and conditions as the court thinks just [Section 522] A petition for the continuance of a voluntary winding up subject to the supervision of the court shall be deemed to be a petition for windingup by the Court [Section 523] The Court will not in general make a supervision order on the petition of a contributory, unless it is satisfied that the resolution for winding up voluntarily was so obtained that the minority of members were overborne by fraud or improper or corrupt influence Where a Company is being wound up voluntarily or subject to the supervision of the Court may be presented byAny person authorized to do so under Section 4399(which deals with provisions as to application for winding up), or The official liquidator [ Section 440(1)] Note: The Court shall not make a winding up order on the petition presented to it unless it is satisfied that the voluntary winding up or winding up subject to supervision of court cannot be continued with due regard to the interest of creditors or contributors or both [Section 440(2)]

When the rules relating to the winding up are not being strictly adhered to, or When the majority is playing a fraud on minority When the resolution for voluntary winding up was obtained by fraud, When the liquidator is negligent in collecting the assets of a Company, or When the liquidator is prejudiced or partial, etc. However, the court had wide discretion in the matter of either to grant or refuse the supervision order.

Any officer of Company, whether past or present, in the winding up of Company is punishable with fine and imprisonment in connection with certain offences. He is punishable for1.

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3.

If he does not, to the best of his knowledge and belief, fully and truly disclose to the liquidator all the property of the Company. If he does not deliver up to the liquidator, or as he directs , all such part of the Company as is in his custody or under his control and which he is required by law to deliver up on; If he does not deliver up to the liquidator, or as he directs , all such books and papers of the Company as are in his custody or under his control and which he is required by law to delivering up; If he conceals any part of the property of the Company to the value of Rs.100 or more, or conceals any debt due to or from the Company; If he fraudulently removes any part of the property to the value of Rs.100 or more within 12 months next before the

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If he makes any material omission in any statement relating to the affairs of the Company; If he knowingly or believing that a false debt has been proved, by any person under the winding up, fails for a period of one month to inform the liquidator thereof;
If he, after the commencement of winding up, prevents the proportion of any book or paper affecting or relating to the property or affairs of the Company If he makes, or privy to the making of any false entry in any book or paper affecting or relating to the property or affairs of the Company; If he, by false representation or other fraud, obtains on credit for or on behalf of the Company and property which the company does not subsequently pay for; If he attempts to account for any part of the Company by fictitious losses or expenses; If he pledges or disposes off any property of the Company which has been obtained on credit and has not been paid for, unless such pledge or disposal is in the ordinary course of business of the Company; In the case of any offences mentioned in 10 and 12 the defaulting officer shall be punishable with imprisonment for a term which may extend up to 5 years , or with fine, or with both and in case of any other offence with imprisonment for a term which may extend to 2 years or with fine or with both.

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THANK YOU!!