book on companies act along with rules & forms

SEPTEMBER

Young Global’s

Companies aCT alonG wiTh

rules & forms

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Young Global’s

Companies aCTalonG wiTh

rules & forms

20165th Edition

By LALIT KAKKARB.COM, F.CS, LL.B

Assisted By Sachin Rai

Young Global Publications

SEPTEMBER

Published By :Young Global PublicationsOffice : D- 22 Ganesh Nagar Pandav Nagar Complex

Delhi - 110092

Bookstore : B 4, Basement, Vandhana Building, 11 Tolstoy Marg New Delhi - 110001

Telephone Numbers : 41824268, 23324142, 23324153E-mail : [email protected] : www.bookskhoj.com

SEPTEMBER, 2016

Copyright

© All rights reserved. No Part of this Book may be reproduced in any manner.

Every effort has been made to avoid errors or omissions in this publication. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. It is notified that neither the publisher nor the author or seller will be responsible for any damage or loss of action to any one, of any kind, in any manner, therefrom. It is suggested that to avoid any doubt the reader should cross-check all the facts, law and contents of the publication with original Government publication or notification.

No part of this book may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, taping or information retrieval systems) or reproduced on any disc, tape, perforated media or other information storage device, etc., without the written permission of the publishers. Breach of this condition is liable for legal action.

For binding mistake, misprints or for missing pages etc. the publisher’s liability is limited to replacement within one month of purchase by similar edition. All expenses in this connection are to be borne by the purchaser.

All disputes are subject to Delhi Jurisdiction only.

Contents Page No.

Part I

I. Section wise Reference Table of Companies Act 2013 in comparison with Companies Act 1956. .............................................................................................1.1II. Section wise Reference Table of Companies Act, 1956 in comparison with Companies Act 2013............................................................. 1.43III. Sections of Companies Act, 2013 Enforcement Date ...................................... 1.99IV. Sections of Companies Act, 2013 Not Yet Enforced .......................................1.119V. Exemptions To Private Companies .......................................................................1.125VI. Exemptions To Section 8 Companies ...................................................................1.129VII. Exemptions To Nidhis .................................................................................................1.133VIII. Exemptions To Government Companies ............................................................1.137IX. Table Of Fees ...................................................................................................................1.143

Part II

Chapter I

Preliminary1. Short title, extent, commencement and application ...........................................2.12. Definitions ............................................................................................................................. 2.2

(1) abridged prospectus ..........................................................................................2.2(2) accounting standards ........................................................................................2.2(3) alter” or “alteration ............................................................................................2.2(4) Appellate Tribunal .............................................................................................2.2(5) Articles .................................................................................................................... 2.2(6) associate company .............................................................................................2.2(7) auditing standards .............................................................................................2.2(8) authorised capital or nominal capital ........................................................2.2(9) banking company ...............................................................................................2.3(10) Board of Directors or Board ...........................................................................2.3(11) body corporate or corporation .....................................................................2.3(12) book and paper and book or paper .............................................................2.3

i

Contentsii

(13) books of account .................................................................................................2.3(14) branchoffice ......................................................................................................... 2.3(15) called-up capital ..................................................................................................2.3(16) charge ...................................................................................................................... 2.3(17) chartered accountant ........................................................................................2.3(18) ChiefExecutiveOfficer .....................................................................................2.3(19) ChiefFinancialOfficer .......................................................................................2.3(20) Company ................................................................................................................. 2.4(21) company limited by guarantee .....................................................................2.4(22) company limited by shares.............................................................................2.4(23) Company Liquidator ..........................................................................................2.4(24) company secretary or secretary ..................................................................2.4(25) company secretary in practice ......................................................................2.4(26) contributory .......................................................................................................... 2.4(27) control ..................................................................................................................... 2.4(28) cost accountant ....................................................................................................2.4(29) court ......................................................................................................................... 2.5(30) debenture ............................................................................................................... 2.5(31) deposit ..................................................................................................................... 2.5(32) depository .............................................................................................................. 2.6(33) derivative ............................................................................................................... 2.6(34) director .................................................................................................................... 2.6(35) dividend .................................................................................................................. 2.6(36) document ............................................................................................................... 2.6(37) employees’ stock option ..................................................................................2.6(38) expert ....................................................................................................................... 2.6(39) financialinstitution ............................................................................................2.6(40) financialstatement.............................................................................................2.6(41) financialyear ........................................................................................................ 2.6(42) foreign company .................................................................................................2.7(43) free reserves ......................................................................................................... 2.7(44) Global Depository Receipt ..............................................................................2.7(45) Government company ......................................................................................2.7(46) holding company ................................................................................................ 2.7(47) independent director ........................................................................................2.8(48) Indian Depository Receipt ..............................................................................2.8(49) interested director .............................................................................................2.8(50) issued capital ........................................................................................................ 2.8(51) key managerial personnel ...............................................................................2.8(52) listed company .....................................................................................................2.8(53) manager .................................................................................................................. 2.8(54) managing director ..............................................................................................2.8

iiiContents

(55) member ................................................................................................................... 2.9(56) memorandum ....................................................................................................... 2.9(57) net worth ................................................................................................................ 2.9(58) notification ............................................................................................................ 2.9(59) officer ....................................................................................................................... 2.9(60) officerwhoisindefault....................................................................................2.9(61) OfficialLiquidator ............................................................................................ 2.10(62) One Person Company ..................................................................................... 2.10(63) ordinary or special resolution .................................................................... 2.10(64) paid-up share capital or share capital paid-up ................................... 2.10(65) postal ballot ........................................................................................................ 2.10(66) prescribed ........................................................................................................... 2.10(67) previous company law .................................................................................. 2.10(68) private company .............................................................................................. 2.11(69) promoter ............................................................................................................. 2.11(70) prospectus .......................................................................................................... 2.12(71) public company ................................................................................................ 2.12(72) publicfinancialinstitution ........................................................................... 2.12(73) recognised stock exchange .......................................................................... 2.12(74) register of companies .................................................................................... 2.12(75) Registrar .............................................................................................................. 2.12(76) related party ...................................................................................................... 2.13(77) relative ................................................................................................................. 2.13(78) remuneration .................................................................................................... 2.13(79) Schedule ............................................................................................................... 2.13(80) scheduled bank ................................................................................................. 2.14(81) securities ............................................................................................................. 2.14(82) Securities and Exchange Board ................................................................. 2.14(83) SeriousFraudInvestigationOffice ........................................................... 2.14(84) Share...................................................................................................................... 2.14(85) small company .................................................................................................. 2.14(86) subscribed capital ............................................................................................ 2.14(87) subsidiary company or subsidiary ........................................................... 2.14(88) sweat equity shares ........................................................................................ 2.15(89) total voting power ........................................................................................... 2.15(90) Tribunal ............................................................................................................... 2.15(91) Turnover .............................................................................................................. 2.15(92) unlimited company ......................................................................................... 2.16(93) voting right ......................................................................................................... 2.16(94) whole-time director ........................................................................................ 2.16

(94A) winding up.......................................................................................................... 2.16 (95) words and expressions.................................................................................. 2.16

iv Contents

RULES FRAMED UNDER CHAPTER I

Companies (speCifiCation of Definitions Details) Rules, 2014.

1. Short title and commencement ................................................................................. 2.172. Definitions .......................................................................................................................... 2.173. Related party ..................................................................................................................... 2.194. List of relatives in terms of clause (77) of section 2 ........................................ 2.19

Chapter II

Incorporation of Company and Matters Incidental thereto3. Formation of company.................................................................................................. 2.214. Memorandum .................................................................................................................. 2.225. Articles ................................................................................................................................ 2.256. Act to override memorandum, articles, etc ........................................................ 2.267. Incorporation of company .......................................................................................... 2.268. Formation of companies with charitable objects, etc. .................................... 2.299. EffectofRegistration ................................................................................................... 2.3110. Effectofmemorandumandarticles ....................................................................... 2.3211. [***] ...................................................................................................................................... 2.3212. Registeredofficeofcompany.................................................................................... 2.3213. Alteration of memorandum ....................................................................................... 2.3414. Alteration of articles ...................................................................................................... 2.3615. Alteration of memorandum or articles to be noted in every copy ........... 2.3716. Rectificationofnameofcompany .......................................................................... 2.3717. Copies of memorandum, articles, etc., to be given to members ................. 2.3818. Conversion of companies already registered ................................................... 2.3919. Subsidiary company not to hold shares in its holding company ............... 2.3920. Service of documents .................................................................................................. 2.4021. Authentication of documents, proceedings and contracts .......................... 2.4022. Execution of bills of exchange, etc .......................................................................... 2.41

RULES FRAMED UNDER CHAPTER II

Companies (Incorporation) Rules, 2014

1. Short title and commencement ................................................................................. 2.422. Definitions .......................................................................................................................... 2.423. One Person Company .................................................................................................... 2.424. Nomination by the subscriber or member of One Person Company ........ 2.435. [***] ...................................................................................................................................... 2.446. One Person Company to convert itself into a public company or

a private company in certain cases ......................................................................... 2.447. Conversion of private company into One Person Company. ........................ 2.45

vContents

7A. Penalty ................................................................................................................................. 2.468. Undesirable names ......................................................................................................... 2.469. Reservation of name. ..................................................................................................... 2.5112. Application for incorporation of companies. ...................................................... 2.5113. Signing of memorandum and articles. ................................................................... 2.5114. Declaration by professionals. .................................................................................... 2.5315. Affidavitfromsubscribersandfirstdirectors. ................................................... 2.5316. Particularsofeverysubscribertobefiledwith the Registrar at the time of incorporation. .......................................................... 2.5317. Particularsoffirstdirectorsofthecompanyandtheir consent to act as such. ................................................................................................... 2.5518. Certificateofincorporation. ....................................................................................... 2.5519. License under section 8 for new companies with charitable objects etc. .......................................................................................................................... 2.5520. License for existing companies. ................................................................................ 2.5621. Conditions for conversion of a company registered under Section 8 into a company of any other kind. .......................................... 2.5722. Other conditions to be complied with by companies registered under section 8 seeking conversion into any other kind............................... 2.5823. Intimation to Registrar of revocation of licence issued under section 8. ................................................................................................. 2.6024. [***].........................................................................................................................................2.6025. Verificationofregisteredoffice. ............................................................................... 2.6026. Publication of name by company. ............................................................................ 2.6027. Noticeandverificationofchangeofsituationoftheregisteredoffice. ... 2.6128. ShiftingofregisteredofficewithinthesameState ........................................... 2.6129. Alteration of Memorandum by change of name. ............................................... 2.6230. Shiftingofregisteredofficefrom one State or Union territory to another State. .................................................... 2.6232. Change of objects for which money is raised through prospectus. ........... 2.6433. Alteration of articles ...................................................................................................... 2.6534. Copies of memorandum and articles, etc. to be given to members on request being made by them. ............................ 2.6535. Service of documents. ................................................................................................... 2.6536. Integrated Process for Incorporation .................................................................... 2.6637. Conversion of unlimited liability company into a limited liability company by shares or guarantee ............................................................ 2.68

Forms Under CHAPTer-II ComPAnIes (InCorPorATIon) rUles, 2014

Form No INC.1 : Application for reservation of name .................................................... 2.71Form No INC-2 : One Person Company- Application for incorporation ................. 2.77Form No INC-3 : One Person Company - Nominee Consent Form ............................ 2.83Form No INC-4 : One Person Company - Change in Member/Nominee ................. 2.85

vi Contents

Form No INC-5 : One Person Company - Intimation of exceeding threshold ....... 2.89Form No INC-6 : One Person Company - Application for Conversion...................... 2.90Form No INC-7 : One Person Company - Application for Incorporation of company (other than OPC) .................................................................................................... 2.95Form No. INC-8 : Declaration ...................................................................................................2.100FormNo.INC-9:Affidavit .........................................................................................................2.101FormNo.INC-10:Formforverificationofsignatureofsubscribers ..................2.102FormNo.INC-11:CertificateofIncorporation ...............................................................2.103Form No INC-12 : Application For Grant of License under Sec. 8 ............................2.104Form No. INC-13 : Memorandum of Association ............................................................2.109Form No. INC-14 : Declaration ................................................................................................2.111Form No. INC-15 : Declaration ................................................................................................2.112Form No. INC-16 : Licence under section 8 (1) of the Companies Act, 2013 ......2.113Form No. INC-17 : Licence under section 8(5) of the Companies Act, 2013 .......2.114Form No INC-18 : Application to Regional Director for conversion of Section 8 company into company of any other kind ................................................2.115Form No. INC-19: Notice ............................................................................................................2.118Form No INC-20 : Intimation to registrar of revocation/surrender of license under Sec. 8 .................................................................................................................2.119Form No INC-21 : Declaration prior to the commencement of business or exercising borrowing powers ............................................................................................2.121Form No INC-22 : Notice of Situation or change of situation of registeredoffice .............................................................................................................................2.123Form No INC-23 : Application to the regional director for approval toshifttheRegisteredofficefromonestatetoanotherstateorfromjurisdiction of one registrar to another registrar within the same State .............2.126Form No INC-24 : Application for approval of Central Government for change of name .......................................................................................................................2.129FormNo.INC-25:CertificateofIncorporationpursuanttochangeofname .....2.131Form No INC-26 : Advertisement to be published in the newspaper for License for existing companies ........................................................................................2.132Form No INC-27 : Conversion of public company into private company or private company into public company ..........................................................................2.134Form No. Inc- 28 : Notice of order of the court or any other competent authority.................................................................................................................... 2.138Form No. Inc- 29 : Integrated Incorporation Form......................................................... 2.142Form No. Inc- 30 : Memorandum of Association............................................................. 2.158Form No. Inc- 31 : Articles of Association.......................................................................... 2.163

viiContents

Chapter III

Prospectus and Allotment of securities

Part I.—Public offer23. PublicOfferandPrivatePlacement .....................................................................2.23924. Power of Securities and Exchange Board to regulate issue and transfer of Securities, etc. ............................................2.23925. DocumentcontainingofferofSecuritiesforsale to be Deemed Prospectus .........................................................................................2.24026. Matters to be stated in Prospectus .......................................................................2.24127. Variation in terms of Contract or Objects in Prospectus ...........................2.24528. OfferofsaleofsharesbycertainmembersofCompany ............................2.24529. PublicofferofSecuritiestobeinDematerialisedForum ...........................2.24630. Advertisement of Prospectus .................................................................................2.24631. Shelf Prospectus ...........................................................................................................2.24632. Red Herring Prospectus ............................................................................................2.24733. Issue of application forms for Securities ...........................................................2.24834. Criminal liability for Mis-statement in Prospectus .......................................2.24835. Civil Liability for MIs – Statement in Prospectus ...........................................2.24936. Punishment for fraudulently inducing persons to invest money ..........2.250 37. Actionbyaffectedpersons .......................................................................................2.250 38. Punishment for personation for acquisition, etc. of Securities .................2.25139. Allotment of Securities by Company ...................................................................2.25140. Securites to be dealt with in Stock Exchanges ................................................2.25241. Global Depository Receipt ........................................................................................2.253

Part II.—Private placement 42. OfferofinvitationforsubscriptionofSecuritiesofPrivatePlacement ..2.253

RULES FRAMED UNDER CHAPTER III

Companies (Prospectus and Allotment of Securities) Rules 2014

1 . Short title and commencement. ..............................................................................2.2582. Definitions. .......................................................................................................................2.2583. Information to be stated in the prospectus .......................................................2.2584. Reports to be set out in the Prospectus. .............................................................2.2615. Other matters and reports to be stated in the prospectus. .........................2.2626 . Period for which information to be provided in certain cases ..................2.2657. Variation in terms of contracts referred to in the prospectus or objects for which prospectus was issued......................2.2658. OfferofSalebyMembers ...........................................................................................2.2659. Dematerialisation of securities ..............................................................................2.26610. Shelf prospectus and Information Memorandum. ..........................................2.266

viii Contents

11. Refund of Application Money. .................................................................................2.26612. Return of Allotment. ....................................................................................................2.26613. Payment of commission. ............................................................................................2.26714. Private Placement. ........................................................................................................2.268

Forms Under CHAPTer-III ComPAnIes (ProsPeCTUs And AlloTmenT oF

seCUrITIes) rUles, 2014Form No PAS-1 : Advertisement giving details of notice of special resolution for varying the terms............................................................................................ 2.270Form No PAS-2 : Information Memorandum.................................................................... 2.271Form No PAS-3 : Return of Allotment................................................................................... 2.275FormNoPAS-4:PrivatePlacementOfferLetter..............................................................2.282FormNoPAS-5:Recordofaprivateplacementoffertobekeptbythe company.................................................................................................................................... 2.285

RULES FRAMED UNDER CHAPTER III

Companies (issue of Global DepositoRy ReCeipts)

1. Short title and commencement. .............................................................................2.2862. Definitions ........................................................................................................................2.2863. Eligibility to issue depository receipts. ...............................................................2.2864. Conditions for issue of depository receipts. .....................................................2.2865. Manner and form of depository receipts. ...........................................................2.2876. Voting rights. ...................................................................................................................2.2877. Proceeds of issue. ..........................................................................................................2.2878. Depository receipts prior to commencement. .................................................2.2879. Non applicability of certain provisions of the Act. .........................................2.288

Chapter IV

share Capital and Debentures43. Kinds of Share Capital .................................................................................................2.28944. Nature of Share or Debentures ...............................................................................2.290 45. Numbering of Shares ..................................................................................................2.290 46. CertificateofShares ....................................................................................................2.29047. Voting Rights ..................................................................................................................2.29148. Variation of Shareholders’ Rights ........................................................................2.29249. Calls on shares of same class to be made on uniform basis ......................2.293 50. Company to accept unpaid share capital, although not called up ...........2.29351. Payment of dividend in proportion to amount paid-up ..............................2.29352. Application of premiums received on issue of shares .................................2.29453. Prohibition on issue of shares at discount .........................................................2.295

ixContents

54. Issue of Sweat Equity Shares ...................................................................................2.29555. Issue and redemption of Preference Shares ....................................................2.29656. Transfer and transmission of Securities ............................................................2.29857. Punishment for Personation of Shareholder ...................................................2.299 58. Refusal of registration and appeal against refusal ........................................2.30059. RectificationofRegisterofMembers ...................................................................2.30160. Publication of Authorized, Subscribed and Paid – up Capital ....................2.30261. Power of Limited Company to alter its Share Capital ..................................2.30262. Further issue of Share Capital .................................................................................2.30363. Issue of Bonus Shares ................................................................................................2.30664. Notice to be given to Registrar for alteration of Share Capital ................2.30665. Unlimited Company to provide for reserve share capital ..........................2.30766. Reduction of Share Capital ........................................................................................2.30767. Restriction on purchase by company or giving of loans by it for purchase of its shares ................................................................................2.30968. Power of company to purchase its own Securities .......................................2.31169. Transfer of certain sums to Capital Redemption Reserve Account .......2.31370. Prohibition for buy-back in certain circumstances .......................................2.31471. Debentures .....................................................................................................................2.31472. Power to nominate ......................................................................................................2.316

RULES FRAMED UNDER CHAPTER IV

Companies (shaRe Capital anD DebentuRes) Rules, 2014.

1. Short title and commencement ...............................................................................2.3182. Definitions. .......................................................................................................................2.3183. Application. ......................................................................................................................2.3194. Equityshareswithdifferentialrights ..................................................................2.3195. Certificateofshares(wheresharesarenotindematform ........................2.321 6. Issueofrenewedorduplicatesharecertificate ...............................................2.3237. Maintenanceofsharecertificateformsand related books and documents .................................................................................2.3248. Issue of sweat equity shares ....................................................................................2.3259. Issue and redemption of preference shares ......................................................2.32810. Issue and redemption of preference shares by company in infrastructural projects .........................................................................................2.32911. Instrument of transfer. ...............................................................................................2.32912. Issue of employee stock options.............................................................................2.32913. Issue of shares on preferential basis ....................................................................2.33214. Issue of Bonus Shares ..................................................................................................2.33615. Notice to Registrar for alteration of share capital ..........................................2.33616. Provision of money by company for purchase of its own shares by employeesorbytrusteesforthebenefitofemployees................................2.336

x Contents

17. Buy-back of shares or other securities ................................................................2.33718. Debentures. ......................................................................................................................2.34119. Nomination by securities holders ..........................................................................2.346

Forms Under CHAPTer-IV ComPAnIes (sHAre CAPITAl And deBenTUres)

rUles, 2014

FormNo.SH-1:ShareCertificate ..........................................................................................2.348FormNo.SH-2:RegisterofRenewedandDuplicateShareCertificates. .............2.349Form No. SH-3 : Register of Sweat Equity Shares ...........................................................2.350Form No. SH-4 : Securities Transfer Form .........................................................................2.351Form No. SH-5 : Notice for transfer of partly paid securities ................................... 2.353Form No. SH-6 : Register of Employee Stock Options ...................................................2.354Form No. SH-7 : Notice to Registrar of any alteration of share capital .................2.355FormNo.SH-8:LetterofOffer ...............................................................................................2.361Form No. SH-9 : Declaration of Solvency ............................................................................2.366Form No. SH-10 : Register of shares or other securities bought-back ................. 2.368Form No. SH-11 : Return in respect of buy-back of securities ................................ 2.370Form No. SH-12 : Debenture Trust Deed ........................................................................... 2.374Form No. SH-13 : Nomination Form .................................................................................... 2.377Form No. SH-14 : Cancellation or Variation of Nomination ...................................... 2.378FormNo.SH-15:Certificateofcomplianceinrespectofbuy-backof securities ................................................................................................................................... 2.379

Chapter V

Acceptance of Deposits by Companies73. Prohibition on acceptance of deposits from public ......................................2.38174. Repayment of deposits, etc accepted before commencement of this Act ..........................................................................................................................2.38275. Damages for fraud .......................................................................................................2.38376. Acceptance of deposits from public by certain Companies .......................2.38476A. Punishment for contravention of section 73 or section 76. .......................2.384

RULES FRAMED UNDER CHAPTER V

Companies (aCCeptanCe of Deposits) Rules, 20141. Short title, commencement and application. ...................................................2.3862. Definitions. .......................................................................................................................2.3863. Terms and conditions of acceptance of deposits by companies. ..............2.3914. Form and particulars of advertisements or circulars. ..................................2.3945. Manner and extent of deposit insurance. ...........................................................2.3956. Creation of security. .....................................................................................................2.395

xiContents

7. Appointment of trustee for depositors. ...............................................................2.3968. Duties of trustees. .........................................................................................................2.3979. Meeting of depositors. ................................................................................................2.39710. Form of application for deposits. ...........................................................................2.39711. Power to nominate. ......................................................................................................2.39812. Furnishing of deposit receipts to depositors. ...................................................2.39813. Maintenance of liquid assets and creation of deposit repayment reserve account. .....................................................................................2.39814. Registers of deposits. ...................................................................................................2.39815. General provisions regarding premature repayment of deposits. ..........2.39916. ReturnofdepositstobefiledwiththeRegistrar. ...........................................2.39916A. Disclosuresinthefinancialstatement .................................................................2.39917. Penal rate of interest. ..................................................................................................2.40018. Power of Central Government to decide certain questions. .......................2.40019. Applicability of sections 73 and 74 to eligible companies. .........................2.40020. Statement regarding deposits existing as on the date of commencement of the Act .........................................................................2.40021. Punishment for contravention ................................................................................2.400

Forms Under CHAPTer-V ComPAnIes (ACCePTAnCe oF dePosITs) rUles, 2014

Form DPT-1 : Circular or Circular in the Form of Advertisement Inviting Deposits......................................................................................................................... 2.401Form DPT-2 : Deposit Trust Deed........................................................................................ 2.403Form DPT-3 : Return of deposits.......................................................................................... 2.405Form DPT-4 : Statement regarding deposits existing on the commencement of the Act....................................................................................................... 2.407

Chapter VI

Registration of Charges77. Duty to register charges, etc .....................................................................................2.40978. Application for registration of charge .................................................................2.41079. Section 77 to apply in certain matters ................................................................2.410 80. Date of notice of charge .............................................................................................2.41181. Register of charges to be kept by Registrar ......................................................2.41182. Company to report satisfaction of Charge .......................................................2.41183. Power of Registrar to make enteries of satisfaction and release in absence of intimation from company ...................................2.41284. Intimation of appointment of Receiver or Manager .....................................2.41385. Company’s register of Charges ...............................................................................2.41386. Punishment for Contravention ..............................................................................2.41487. RectificationbyCentralGovernmentinregisterofCharges ......................2.414

xii Contents

RULES FRAMED UNDER CHAPTER VI

Companies (ReGistRation of ChaRGes) Rules, 20141. Short title and commencement. ..............................................................................2.4162. Definitions. .......................................................................................................................2.4163. Registrationofcreationormodificationofcharge. .......................................2.4164. Condonation of delay by Registrar ........................................................................2.4175. Application of rules in certain matters. ...............................................................2.4176. Certificateofregistration. .........................................................................................2.4177. Register of charges to be kept by the Registrar. ..............................................2.4178. Satisfaction of charge. .................................................................................................2.4189. Intimation of appointment of Receiver or Manager. .....................................2.41810. Company’s register of charges. ...............................................................................2.41811. Register open for inspection. ...................................................................................2.41812. Condonationofdelayandrectificationofregisterofcharges...................2.418

Forms Under CHAPTer-VI ComPAnIes (regIsTrATIon oF CHArges)rUles, 2014

FormNo.CHG-1:Applicationforregistrationofcreation,modification.............2.419FormNo.CHG-2:Certificateof registration of charge................................................. 2.423FormNo.CHG-3:Certificateofregistrationofmodificationofcharge.................2.424Form No. CHG-4 : Particulars for satisfaction of charge thereof............................... 2.425Form No. CHG-5 : Memorandum of satisfaction of charge.......................................... 2.428Form No. CHG-6 : Notice of appointment or cessation of receiver or manager....................................................................................................................................... 2.429Form No. CHG-7 : Register of charges.................................................................................. 2.431Form No. CHG-8 : Application to Central Government for extension of time..... 2.432 FormNo.CHG-9:Applicationforregistrationofcreationormodification........2.435

Chapter VII

Management and Administration88. Register of Members, etc. .........................................................................................2.43989. Declarationinrespectofbeneficialinterestinanyshare ..........................2.44090. Investigationofbeneficialownershipofsharesincertaincases ............2.44191. Power to close register of members or debentureholders or other security holders ..........................................................................................2.44392. Annual Return ...............................................................................................................2.44493. ReturntobefiledwithRegistrarincasepromoters’stakechanges ......2.44694. Place of keeping and inspection of registers, returns, etc- ........................2.44695. Registers, etc, to be evidence ..................................................................................2.44796. Annual general meeting ............................................................................................2.447

xiiiContents

97. Power of Tribunal to call annual general meeting ........................................2.44898. Power of Tribunal to call meetings of members, etc ....................................2.44999. Punishment for default in complying with provisions of sections 96 to 98 ......................................................................................................2.450100. Calling of extraordinary general meeting .........................................................2.450101. Notice of meeting .........................................................................................................2.451102. Statement to be annexed with notice ..................................................................2.452103. Quorum for meeting ...................................................................................................2.453104. Chairman of meeting ..................................................................................................2.455105. Proxies ..............................................................................................................................2.455106. Restriction on voting rights ......................................................................................2.457107. Voting by show of hands ...........................................................................................2.457108. Voting through electronic means ..........................................................................2.458109. Demand for poll ............................................................................................................2.458110. Postal Ballot ..................................................................................................................2.459111. Circulation of members’ resolution .....................................................................2.460112. Representation of the President and Governors in meetings ..................2.461113. Representation of Corporations at Meeting of Companies and of Creditors ................................................................................2.461114. Ordinary and Special Resolutions ........................................................................2.462115. Resolutions requiring Special Notice ...................................................................2.462116. Resolutions passed at adjourned meeting .........................................................2.463117. Resolutionsandagreementstobefiled .............................................................2.463118. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot ..2.465119. Inspection of minute – books of General Meeting .........................................2.466120. Maintenance and inspection of documents in electronic form .................2.467121. Report on annual general meeting .......................................................................2.467122. Applicability of this Chapter to One Person Company .................................2.468

RULES FRAMED UNDER CHAPTER VII

Companies (manaGement & aDministRation) Rules, 2014.

1. Short title and commencement. ..............................................................................2.4692. Definitions. .......................................................................................................................2.4693. Register of members ....................................................................................................2.4694. Register of debenture holders or any other security holders ...................2.4705. Maintenance of the Register of members etc. under section 88 ..............2.4706. Index of names to be included in Register. ........................................................2.4717. Foreign register of members, debenture holders, othersecurityholdersorbeneficialownersresidingoutsideIndia. ......2.4718. Authentication ................................................................................................................2.4729. Declarationinrespectofbeneficialinterestin any shares. ........................2.473

xiv Contents

10. Closure of register of members or debenture holders or other security holders. .........................................................................................2.47311. Annual Return ................................................................................................................2.47412. Extract of annual return .............................................................................................2.47413. Return of changes in shareholding position of promoters and top ten shareholders. .................................................................2.47414. Inspection of registers, returns etc .......................................................................2.47415. Preservation of register of members etc. and annual return. ....................2.47516. Copies of the registers and annual return. .........................................................2.47517. Calling of Extraordinary general meeting by requistionists ......................2.47518. Notice of the meeting ..................................................................................................2.47619. Proxies ...............................................................................................................................2.47720. Voting though electronic means .............................................................................2.47721. Manner in which the Chairman of meeting shall get the poll process scrutinised and report thereon. ............................................2.48322. Procedure to be followed for conducting business through postal ballot. ..................................................................................................2.48423. Special Notice..................................................................................................................2.48624. Resolutionsandagreementstobefiled ..............................................................2.48725. Minutes of proceedings of general meeting, meeting of Board of Directors and other meetings and resolutions passed by postal ballot. ..............................................................................................2.48726. Copy of minute book of general meeting. ...........................................................2.48827. Maintenance and inspection of document in electronic form ...................2.48828. Security of records maintained in electronic form .........................................2.48929. Inspection and copies of records maintained in electronic form ............2.49030. Penalty ...............................................................................................................................2.49031. Report on Annual General Meeting. ......................................................................2.490

Forms Under CHAPTer-VII ComPAnIes (mAnAgemenT & AdmInIsTrATIon)

rUles, 2014Form No. MGT-1 : Register of members............................................................................... 2.491Form No. MGT-2 : Register of debenture holders/ other securities holders....... 2.493Form No. MGT-3 : Notice of situation or change of situation or discontinuation of situation, of place where foreign register shall be kep......2.495Form No. MGT-4 : Declaration by the registered owner of shares whodoesnotholdthebeneficialinterestinsuchshares.............................................2.497FormNo.MGT-5:Declarationbythebeneficialownerwhoholdsoracquiresbeneficialinterestinsharesbutwhosenameisnotentered in the register of members........................................................................................2.499Form no. MGT-6 : Return to the Registrar in respect of declaration under section 89 received by the company.........................................................................2.501

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Form No. MGT-7 : Annual Return.............................................................................................2.502FormNo.MGT-8:CertificateByACompanySecretaryInPractice..........................2.513Form No. MGT-9 : Extract Of Annual Return.......................................................................2.515Form No. MGT-10 : Changes in shareholding position of promoters and top ten shareholders............................................................................................................2.523Form No. MGT-11 : Proxy form.................................................................................................2.525Form No. MGT-12 : Polling Paper.............................................................................................2.527FORM No. MGT-13 : Report of Scrutinizer(s).....................................................................2.528FORM No. MGT-14 : Filing of Resolutions and agreements to the Registrar.........2.530FORMNo.MGT-15:FormforfilingReportAnnualGeneralMeeting......................2.533

Chapter VIII

Declaration and Payment of Dividend123. Declaration of Dividend ............................................................................................2.535124. Unpaid Dividend Account .........................................................................................2.537125. Investor Education and Protection Fund ..........................................................2.538126. Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of transfer of shares................................2.541127. Punishment for failure to distribute dividends - .............................................2.541

RULES FRAMED UNDER CHAPTER VIII

Companies (DeClaRation & payment of DiviDenD) Rules, 2014.

1. Short title and commencement. ..............................................................................2.5432. Definitions. ........................................................................................................................25433. Declaration of dividend out of reserves. ..................................................................... 2.5434. Statement of amounts to be credited to investor education andprotectionfundshallbefiledinFormDIV5. ...........................................2.544

Forms Under CHAPTer-VIII ComPAnIes (deClArATIon And PAymenT oF

dIVIdend)rUles, 2014

FORM No.DIV 5 : Statement of amounts credited to investor education and protection fund.......................................................................................................................2.545

xvi Contents

RULES FRAMED UNDER CHAPTER VIII

investoR eDuCation anD pRoteCtion funD authoRity (appointment of ChaiRpeRson anD membeRs, holDinG of meetinGs anD pRovision foR

offiCes anD offiCeRs) Rules, 2016.

1. Short title, extent and commencement................................................................2.5472. Definitions. .......................................................................................................................2.5473. Establishment of the Authority. ..............................................................................2.5484. Composition of the Authority. .................................................................................2.548

Chairperson of the Authority. ..................................................................................2.5486. ChiefExecutiveOfficeroftheAuthority. .............................................................2.5487. Members of the Authority. ........................................................................................2.5488. ThetermofofficeofmembersoftheAuthority. .............................................2.5489. ThenumberofofficersandemployeesoftheAuthority. ............................2.54910. Functions of the Authority. .......................................................................................2.54911. Meetings. ...........................................................................................................................2.54912. Member not to participate in meetings in certain cases. .............................2.55013. Vacancies, etc., not to invalidate proceedings of Authority. .......................2.55014. Protection of action taken in good faith. .............................................................2.550

Chapter IX

Accounts of Companies128. Books of account etc, to be kept by company ..................................................2.553129. Financial statement ....................................................................................................2.554130. Re-opening of accounts on court’s or Tribunal’s orders .............................2.557131. VoluntaryrevisionoffinancialstatementsonBoard’sreport ..................2.557132. Constitution of National Financial Reporting Authority .............................2.558133. Central Government to prescribe Accounting Standards ...........................2.562 134. Financial statement, Board’s reports, etc ..........................................................2.562135. Corporate Social Responsibility ............................................................................2.566136. Right of member to copies of Audited Financial Statement .......................2.567137. CopyoffinancialstatementtobefiledwithRegistrar ................................2.569138. Internal Audit .................................................................................................................2.571

RULES FRAMED UNDER CHAPTER IX

Companies (aCCounts) Rules, 2014.

1. Short title and commencement. .............................................................................2.5722. Definitions ........................................................................................................................2.5722A. Notice of address at which books of account are to be maintained. ...........................................................................................................2.5723. Manner of books of account to be kept in electronic mode. ........................2.572

xviiContents

4. Conditions regarding maintenance and inspection ofcertainfinancialinformationbydirectors. ...................................................2.5734A. Formsanditemscontainedinfinancialstatements ......................................2.5745. Form of Statement containing salient features offinancialstatementsofsubsidiaries ...............................................................2.5746. Manner of consolidation of accounts. ..................................................................2.5747. Transitional provisions with respect to Accounting Standards ...............2.5758. Matters to be included in Board’s report. ...........................................................2.5759. Disclosures about CSR Policy. ..................................................................................2.57610. Statementcontainingsalientfeaturesoffinancialstatements. ................2.57711. Mannerofcirculationoffinancialstatementsincertaincases. ................2.57712. Filingoffinancialstatementsandfeestobepaidthereon. ........................2.57713. Companies required to appoint internal auditor. ...........................................2.577

Forms Under CHAPTer-Ix ComPAnIes (ACCoUnTs)rUles, 2014

FormNo.AOC-I:Statementcontainingsalientfeaturesofthefinancialstatement of subsidiaries/ associate companies/joint ventures..............................2.579Form No. AOC-2 : Form for disclosure of particulars of contracts/arrangements.............................................................................................................2.581FORM No. AOC-3 : Form of Abridged Financial Statements.........................................2.582FORMNo.AOC-4:Formforfilingfinancialstatementandotherdocumentswith the Registrar...........................................................................................................................2.587FORM No. AOC-5 : Notice of Address at which books of account are to be maintained.............................................................................................................................2.613

RULES FRAMED UNDER CHAPTER IX

Companies (inDian aCCountinG stanDaRDs) Rules, 2015.

1. Short title and commencement. ..............................................................................2.6152. Definitions. ......................................................................................................................2.6153. Applicability of Accounting Standards. ...............................................................2.6154. Obligation to comply with Indian Accounting Standards (Ind AS). .......2.6165. Exemptions. .....................................................................................................................2.620

RULES FRAMED UNDER CHAPTER IXCompanies (CoRpoRate soCial Responsibility poliCy) Rules.

20 i 4.

1. Short title and commencement. .............................................................................2.6222. Definitions. .......................................................................................................................2.6223. Corporste Social Responsibility, ............................................................................2.623

xviii Contents

4. CSR Activities ..................................................................................................................2.6235. CSR Committees,............................................................................................................2.6246. CSR Policy .........................................................................................................................2.6257. CSR Expenditure, ...........................................................................................................2.6258. CSR Reporting, ................................................................................................................2.6259. Display of CSR actiyities on its website, ..............................................................2.625

Chapter X

Audit and Auditors139. Appointment of auditors ..........................................................................................2.627140. Removal, resignation of auditor and giving of special notice ....................2.630141. Eligibility,qualificationsanddisqualificationsofauditor...........................2.632142. Remuneration of auditors ........................................................................................2.633143. Power and duties of auditors and auditing Standards ................................2.634144. Auditor not to render certain services ...............................................................2.638145. Auditor to sign audit reports, etc ..........................................................................2.639146. Auditors to attend general meeting .....................................................................2.639147. Punishment for contravention ...............................................................................2.640148. Central Government to specify audit of items of cost in respect of certain companies ...............................................................2.641

RULES FRAMED UNDER CHAPTER XCompanies (auDit anD auDitoRs) Rules, 2014

1. Short title and commencement. ..............................................................................2.6432. Definitions. .......................................................................................................................2.6433. Manner and procedure of selection and appointment of auditors ........2.6434. Conditions for appointment and notice to Registrar. ....................................2.6445. Class of Companies. ......................................................................................................2.6456. Manner of rotation of auditors by the companies on expiry of their term. ...............................................................................................2.6457. Removal of the auditor before expiry of his term. ..........................................2.6478. Resignation of auditor. ...............................................................................................2.6479. Liability to devolve on concerned partners only. ...........................................2.64710. Disqualificationsofauditor ......................................................................................2.64710A. Internal Financial Control Systems and its operatingeffectiveness* ............................................................................................2.64811. Other matters to be included in auditors report. ............................................2.64812. Duties and powers of the company’s auditor with reference to the audit of the branch and the branch auditor. ...................2.64813. Reporting of frauds by auditor and other matters .........................................2.64914. Remuneration of the Cost Auditor.- For the purpose of sub-section (3) of section 148, .................................................2.650

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Forms Under CHAPTer-x ComPAnIes (AUdIT And AUdITors)rUles, 2014

FORM No. ADT-1 : Notice of appointment of auditor by the company....................2.651FORMNo.ADT-2:Applicationforremovalofauditor(s)fromhis/theirofficebefore expiry of term....................................................................................................................2.652FORM No. ADT-3 : Notice of Resignation by the Auditor...............................................2.654Form No. ADT-4 : Report To The Central Government..................................................2.655

RULES FRAMED UNDER CHAPTER X

Companies (Cost ReCoRDs anD auDit) Rules, 2014

1. Short title and commencement. ..............................................................................2.6562. Definitions ........................................................................................................................2.6563. Application of cost records. ......................................................................................2.6574. Applicability for cost audit. .......................................................................................2.6645. Maintenance of records. .............................................................................................2.6646. Cost audit ..........................................................................................................................2.6657. [***] ....................................................................................................................................2.667

Forms Under CHAPTer-x ComPAnIes (CosT reCords And AUdIT)rUles, 2014

FORM No. CRA-1 : Particulars relating to the Items of Costs to be included in the Books of Accounts..........................................................................................2.668FORM No. CRA-2 : Form of intimation of appointment of Cost Auditor by the Company to Central Govt..............................................................................................2.692Form No. CRA-3 : Form of The Cost Audit Repor.............................................................2.695FormNo.CRA-4:FormforfillingCostAuditReportwiththeCentral Government......................................................................................................................2.713

ORDER FRAMED UNDER CHAPTER X

Companies (auDitoR’s RepoRt) oRDeR, 2016

1. Short title, application and commencement. ....................................................2.7162. Auditor’sreporttocontainmattersspecifiedin paragraphs 3 and 4. ....................................................................................................2.7163. Matters to be included in the auditor’s report. ................................................2.7174. Reasons to be statedforunfavourableorqualifiedanswers. ...................2.719

xx Contents

Chapter XI

Appointment and Qualification of Directors149. Company to have Board of Directors ..................................................................2.721150. Manner of selection of independent directors and maintenance of data bank of independent Directors ..........................2.725151. Appointment of Directors elected by Small Shareholders .........................2.726 152. Appointment of Directors ........................................................................................2.726153. ApplicationforallotmentofDirectorIdentificationNumber ..................2.728 154. AllotmentofDirectorIdentificationNumber ..................................................2.729 155. ProhibitiontoobtainmorethanoneDirectorIdentificationNumber ..2.729 156. DirectortointimateDirectorIdentificationNumber .................................2.729 157. CompanytoinformDirectorIdentificationNumbertoRegistrar ..........2.730158. ObligationtoindicateDirectorIdentificationNumber ...............................2.730 159. Punishment for contravention ...............................................................................2.730 160. Right of persons other than retiring directors to stand for directorship ............................................................................................2.731161. Appointment of Additional Director, Alternate Director and Nominee Director ................................................................................................2.732162. Appointment of directors to be voted individually .......................................2.733163. Option to adopt principle of proportional representation for appointment of directors....................................................................................2.734 164. Disqualificationforappointmentofdirector ...................................................2.734165. Number of directorships ...........................................................................................2.736166. Duties of directors .......................................................................................................2.737167. VacationofofficeofDirector ...................................................................................2.737168. Resignation of Director .............................................................................................2.739169. Removal of Directors ..................................................................................................2.739170. Register of Directors and Key Managerial Personnel and their shareholding ..............................................................................................2.741171 Members’ right to Inspect ........................................................................................2.742172. Punishment .....................................................................................................................2.742

RULES FRAMED UNDER CHAPTER XICompanies (appointment & QualifiCation of DiReCtoRs) Rules, 2014.

1. Short title and commencement. .............................................................................2.7432. Definitions. .......................................................................................................................2.7433. Woman director on the Board. ................................................................................2.7444. Number of independent directors. ............................................................................ 2.7445. Qualificationsofindependentdirector ...............................................................2.7456. Creation and maintenance of databank of personsofferingtobecomeindependentdirectors.......................................2.745

xxiContents

7. Small shareholders’ director. ....................................................................................... 2.7478. Consent to act as director. .........................................................................................2.7489. ApplicationforallotmentofDirectorIdentificationNumber....................2.74810. Allotment of DIN ............................................................................................................2.74911. Cancellation or surrender or Deactivation of DIN. ............................................ 2.75012. IntimationofchangesinparticularsspecifiedinDINapplication ...............2.75013. Notice of candidature of a person for directorship. .......................................2.75114. Disqualificationofdirectorssub-section(2)ofsection164 ......................2.75115. Notice of resignation of director. ...........................................................................2.75216. Copy of resignation of director to be forwarded by him .............................2.75217. Register of directors and key managerial personnel.- .................................2.75218. Return containing the particulars of directors and the key managerial personnel. ......................................................................2.753

Forms Under CHAPTer-xI ComPAnIes (APPoInTmenT & QUAlIFICATIon oF

dIreCTors)rUles, 2014

Form DIR-1 : Application for inclusion of name in the databank of Independent Directors............................................................................................................2.754Form DIR-2 : Consent to act as a director of a company................................................2.755FormDIR-3:ApplicationforallotmentofDirectorIdentificationNumber..........2.756Form DIR 3A : Declaration..........................................................................................................2.760Form DIR-3B : Intimation of allotment ofDirectorIdentificationNumber(DIN)totheCompanybytheDirector...............2.761FormDIR3C:IntimationofDirectorIdentificationNumberby the Company to the Registrar.............................................................................................2.763FormDIR-4:VerificationofapplicantforapplicationforDIN...................................2.767FormDIR-5:ApplicationforsurrenderofDirectorIdentificationNumber.........2.768Form DIR-6 : Intimation of change in particulars of Director to be given to the Central Government.........................................................................................................2.770FormDIR7:VerificationofapplicantforchangeinDINparticulars......................2.773Form DIR-8 : Intimation by Director.....................................................................................2.774Form DIR-9 : Report by the company to Registrar..........................................................2.775Form DIR-10 : Form of Application For Removal ofDisqualificationofDirectors................................................................................................2.775Form DIR-11 : Notice of resignation of a director to the Registrar..........................2.776Form DIR-12 :Particulars of appointment of directors and the key managerial personnel and the changes among them............................................2.778

xxii Contents

Chapter XII

Meetings of Board and Its Powers173. Meetings of Board ........................................................................................................2.781174. Quorum for meetings of Board ...............................................................................2.782175. Passing of Resolution by Circulation ...................................................................2.783176. Defects in appointment of directors not to invalidate actions taken .....2.784177. Audit Committee ...........................................................................................................2.784178. Nomination and Remuneration Committee and Stakeholders Relationship Committee .............................................................................................2.786179. Power of Board .............................................................................................................2.788180. Restriction on powers of Board .............................................................................2.790181. CompanytocontributetobonafideandCharitableFundsetc .................2.791182. Prohibition and restrictions regarding Political contributions ................2.792183. Power of Board and other persons to make Contributions to National Defense Fund, etc .................................2.793184. Disclosure of interest by Director ..........................................................................2.793185. Loan to Directors ..........................................................................................................2.795186. Loan and Investment by Company .......................................................................2.798187. Investment of company to be held in its own name ......................................2.801188. Related Party Transactions .....................................................................................2.802189. Register of contracts or arrangements in which directors are interested ..............................................................................................2.805190. Contract of employment with managing or Whole-time Directors ...........................................................................................2.806191. Paymenttodirectorforlossofoffice,etc,inconnection with transfer of undertaking, property or shares ...........................................2.807192. Restriction on non-cash transactions involving directors .........................2.808193. Contracts by One Person Company ......................................................................2.809194. Prohibition on forward dealings in securities of company by Director or Key Managerial Personnel .........................................................2.809195. Prohibition on Insider Trading of Securities ...................................................2.810

RULES FRAMED UNDER CHAPTER XII

Companies (meetinGs of boaRD & its poweRs) Rules, 2014.

1. Short title and commencement ...............................................................................2.8122. Definitions ........................................................................................................................2.8123. Meetings of Board through video conferencing or other audio visual means .....................................................................................2.8124. Matters not to be dealt with in a meeting through video conferencing or other audio visual means .........................................................2.8155. Passing of resolution by circulation. .....................................................................2.815

xxiiiContents

6. Committees of the Board. ..........................................................................................2.8156A. Omnibus approval for related party transactions on annual basis. ........2.8167. Establishment of vigil mechanism..............................................................................................2.8178. Powers of Board ............................................................................................................2.8179. Disclosures by a director of his interest. ............................................................2.81811. Loan and investment by a company under section 186 of the Act ..........2.81812. Register. ............................................................................................................................2.81913. Special Resolution.........................................................................................................2.81914. Investments of company to be held in its own name ...................................2.82015. Contract or arrangement with a related party. ................................................2.82016. Register of contracts or arrangements in which directors are interested. .............................................................................................2.82317. Paymenttodirectorforlossofoffice,etc.inconnection with transfer of undertaking, property or shares ...........................................2.823

Forms Under CHAPTer-xII ComPAnIes (meeTIngs oF BoArd & ITs Powers)

rUles, 2014

Form MBP - 1 : Notice of interest by director...................................................................2.825Form MBP - 2 : Register of loans, guarantee, security and acquisition made by the company .........................................................................................2.826Form MBP - 3 : Register of investments not held in its own name by the company .................................................................................................................2.827Form MBP - 4 : Register of contracts with related party and contracts and Bodies etc. in which directors are interested ...................................................................2.828

Chapter XIII

Appointment and Remuneration of Managerial Personnel196. Appointment of managing director, whole-time director or manager ....................................................................................................2.829197. Overall maximum Managerial Remuneration and Managerial Remunerationincaseofabsenceorinadequacyofprofit .........................2.830198. CalculationofProfits ...................................................................................................2.834199. Recovery of remuneration in certain cases .......................................................2.836200. CentralGovernmentorcompanytofixalimitwithregard to remuneration ............................................................................................................2.837201. Forms of and procedure in relation to certain applications- .....................2.837202. Compensationforlossofofficeofmanagingorwhole-time director or manager .....................................................................................................2.838203. Appointment of key managerial personnel .......................................................2.839204. Secretarial audit for bigger companies ...............................................................2.840205. Function of company secretary ..............................................................................2.841

xxiv Contents

RULES FRAMED UNDER CHAPTER XIII

Companies (appointment anD RemuneRation of manaGeRial peRsonnel) Rules, 2014.

1. Short title and commencement ...............................................................................2.8422. Definitions. .......................................................................................................................2.8423. Filing of return of appointment. .............................................................................2.8424. Sitting fees .......................................................................................................................2.8425. Disclosure in Board’s report ....................................................................................2.8436. Applications to the Central Government ............................................................2.8457. Fees ....................................................................................................................................2.8458. Appointment of Key Managerial Personnel .......................................................2.8468A. Appointment of Company Secretaries in companies not covered under rule 8 ...........................................................................................2.8469. Secretarial Audit Report ............................................................................................2.84610. Duties of Company Secretary ...................................................................................2.846

Forms Under CHAPTer-xIII ComPAnIes (APPoInTmenT And remUnerATIon oF mAnAgerIAl Personnel) rUles, 2014

Form No. MR-1 : Return of appointment of key managerial personnel................ 2.847Form No. MR-2 : Form of application to the Central Government for approval of appointment................................................................................................... 2.850Form No. MR-3 : Secretarial Audit Report......................................................................... 2.860

Chapter XIV

Inspection, Inquiry and Investigation206. Power to call for information, inspect books and conduct inquiries ....2.863207. Conduct of inspection and inquiry .......................................................................2.864208. Report of inspection made .......................................................................................2.865 209. Search and Seizure ......................................................................................................2.866210. Investigationintoaffairs of company .................................................................2.866211. EstablishmentofSeriousFraudInvestigationOffice ...................................2.867212. InvestigationintoaffairsofCompanybySeriousFraud InvestigationOffice .....................................................................................................2.868213. InvestigationintoCompany’saffairinothercases .......................................2.871 214. Security for payment of costs and expenses of investigation ....................2.872215. Firm, body corporate or association not to be appointed ...........................2.872 216. Investigation of ownership of company .............................................................2.873217. Procedure, powers etc, of inspectors ..................................................................2.874218. Protection of employees during investigation ................................................2.877

xxvContents

219. Power of inspector to conduct investigation into affairsofrelatedcompanies,etc .............................................................................2.878 220. Seizure of documents by inspector ......................................................................2.878221. Freezing of assets of company on inquiry and investigation ...................2.879222. Imposition of restrictions upon securities ........................................................2.880223. Inspector’s report ........................................................................................................2.880224. Actions to be taken in pursuance of inspector’s report ..............................2.881225. Expenses of investigation .........................................................................................2.882226. Voluntary winding-up of company etc, not to stop investigation proceedings .........................................................................2.882 227. Legal advisors and bankers not to disclose ......................................................2.884 228. Investigation etc of foreign companies ..............................................................2.884 229. Penalty for furnishing false statement, mutilation, destruction of documents ..................................................................................................................2.884

RULES FRAMED UNDER CHAPTER XIV

Companies (inspeCtion, investiGation anD inQuiRy), Rules 2014

1. Short title and commencement.- ............................................................................2.8862. Definitions ........................................................................................................................2.8863. Appointmentofpersonshavingexpertiseinvariousfields .......................2.8864. Terms and Condition of service ..............................................................................2.8865. Security ..............................................................................................................................2.8876. Letter of Request, as per section 217 ...................................................................2.887

Chapter XV

Compromises, Arrangements and Amalgamations230. Power to compromise or make arrangement with creditors and members ..................................................................................................................2.889231. Power of Tribunal to enforce compromise or arrangement ......................2.892232. Merger and amalgamation of companies ...........................................................2.893233. Merger or amalgamation of certain companies ..............................................2.896234. Merger or amalgamation of company with foreign company ...................2.898235. Power to acquire shares of shareholders dissenting from scheme or contract approved by majority ..........................................................................2.899236. Purchase of minority shareholding ......................................................................2.901237. Power of Central Government to provide for amalgamation of companies in public interest ...................................................................................2.902238. Registrationofofferofschemesinvolvingtransferofshares ...................2.903239. Preservation of books and papers of amalgamated companies .............2.904240. Liabilityofofficersinrespectofoffencescommittedprior to merger, amalgamation, etc .................................................................................2.905

xxvi Contents

Chapter XVI

Prevention of oppression and Mismanagement241. Application to Tribunal for relief in cases of oppression, etc ...................2.907242. Powers of Tribunal ......................................................................................................2.907243. Consequenceofterminationormodificationofcertainagreements .....2.909244. Right to apply under section 241 ..........................................................................2.910245. Class action .....................................................................................................................2.911246. Application of certain provisions to proceedings under section 241 or section 245 .........................................................................2.914

Chapter XVII

Registered Values247. Valuation by registered Valuers ............................................................................2.915

Chapter XVIII

Removal of names of Companies from the Register of Companies248. Power of Registrar to remove name of company from register of companies ......................................................................................2.917249. Restrictions on making application under section 248 in certain situation .......................................................................................................2.918250. Effectofcompanynotifiedasdissolved .............................................................2.919251. Fraudulent application for removal of name ...................................................2.919252. Appeal to Tribunal .......................................................................................................2.920

Chapter XIX

Revival and Rehabilitation of sick Companies253. Determination of sickness ........................................................................................2.923254. Application for revival and rehabilitation .........................................................2.924255. Exclusive of certain time in computing period of limitation .....................2.925256. Appointment of interim administrator ..............................................................2.925257. Committee of creditors ..............................................................................................2.926258. Order of Tribunal .........................................................................................................2.926 259. Appointment of administrator ...............................................................................2.927260. Powers and duties of company administrator ................................................2.927261. Scheme of revival and rehabilitation ...................................................................2.927262. Sanction of scheme ......................................................................................................2.928263. Scheme to be binding .................................................................................................2.929264. Implementation of scheme ......................................................................................2.929265. Winding up of company on report of company administrator .................2.930

xxviiContents

266. Power of Tribunal to assess damages against delinquent directors, etc ..................................................................................................................2.931267. Punishmentforcertainoffences ...........................................................................2.932 268. Bar of jurisdiction ........................................................................................................2.932 269. Rehabilitation and Insolvency Fund .....................................................................2.932

Chapter XX

Winding Up270. Winding up by Tribunal. ............................................................................................2.933

Part I—Winding up by the Tribunal271 Circumstances in which company may be wound up by Tribunal. .........2.933272. Petition for winding up .............................................................................................2.934273. Powers of Tribunal ......................................................................................................2.935274. Directionsforfilingstatementofaffairs ............................................................2.936275. Company Liquidators and their appointments ...............................................2.937276. Removal and replacement of liquidator ............................................................2.938277. Intimation to Company Liquidator, provisional liquidator and Registrar .............................................................................................2.939278. Effectofwindinguporder .......................................................................................2.940 279. Stay of suits, etc, on winding up order ................................................................2.940280. Jurisdiction of Tribunal .............................................................................................2.941281. Submission of reports by Company Liquidator ..............................................2.941282. Directions of Tribunal on report of Company Liquidator ..........................2.943283. Custody of company’s properties .........................................................................2.944284. Promoters directors, etc to co-operate with Company Liquidator ........2.944285. Statement of list of contributories and application of assets ...................2.945286. Obligation of directors and managers ................................................................2.946287. Advisory Committee ...................................................................................................2.946288. Submission of periodical reports to Tribunal .................................................2.947290. Powers and duties of Company Liquidator ......................................................2.948291. Provision for professional assistance to Company Liquidator .................2.949292. Exercise and control of Company Liquidator’s powers ...............................2.950293. Books to be kept by Company Liquidator .........................................................2.950294. Audit of company Liquidator’s accounts ...........................................................2.951295. Paymentofdebtsbycontributoryandextentofset-off ..............................2.951296. Power of Tribunal to make calls .............................................................................2.952 297. Adjustment of rights of contributories ...............................................................2.952298. Power to order costs ...................................................................................................2.953 299. Power to summon persons suspected of having property of company, etc ..............................................................................................................2.953300. Power to order examination of promoters, directors, etc...........................2.954301. Arrest of persons trying to leave India or abscond .......................................2.955

xxviii Contents

302. Dissolution of company by Tribunal ....................................................................2.956303. Appeal from orders made before commencement of Act ..........................2.956

Part II—Voluntary winding up 304. Circumstances in which company may be wound up voluntarily ...........2.957 305. Declaration of solvency in case of proposal to wind up voluntarily .......2.957306. Meeting of creditors ...................................................................................................2.958307. Publication of resolution to wind up voluntarily ............................................2.958308. Commencement of voluntary winding up .........................................................2.959 309. Effectsofvoluntarywindingup ..............................................................................2.959 310. Appointment of Company Liquidator .................................................................2.959311. Powertoremoveandfillvacancy of Company Liquidator .........................2.960

312. Notice of appointment of Company Liquidator to be given to Registrar ............................................................................................2.960313. Cesser of Board’s powers on appointment of Company Liquidator .......2.960 314. Power and duties of Company Liquidator in voluntary winding up ......2.960315. Appointment of committees ....................................................................................2.961 316. Company Liquidator to submit report on progress of winding up ........2.961317. Report of Company Liquidator to Tribunal for examination of persons .......................................................................................2.962318. Final meeting and dissolution of company .......................................................2.962319. Power of Company Liquidator to accept shares, etc, as consideration for sale of property of company .........................................2.963320. Distribution of property of company ..................................................................2.964 321. Arrangement when binding on company and creditors .............................2.964322. Power to apply to Tribunal to have question determined, etc ..................2.964323. Costs of voluntary winding up ...............................................................................2.964

Part III.—Provisions applicable to every mode of winding up324. Debts of all descriptions to be admitted to proof ..........................................2.965 325. Application of insolvency rules in winding up of insolvent companies ...............................................................................................2.965326 Overriding preferential payments .........................................................................2.966327. Preferential payment .................................................................................................2.968328. Fraudulent preference ...............................................................................................2.970329. Transfer not in good faith to be void ...................................................................2.971330. Certain transfers to be void .....................................................................................2.971 331. Liability and rights of certain persons fraudulently preferred .................2.971332. Effectoffloatingcharge.............................................................................................2.972

333. Disclaimer of onerous property .................................................................2.972334. Transfers, etc after commencement of winding up to be void ..................2.974335. Certain attachments, executions, etc, in winding up by Tribunal to be void ................................................................................................2.975336. Offencesbyofficersofcompaniesinliquidation ...........................................2.975

xxixContents

337. Penaltyforfraudsbyofficers ...................................................................................2.977 338. Liability where proper accounts not kept .........................................................2.978339. Liability for fraudulent conduct of business ....................................................2.979340. Power of Tribunal to assess damages against delinquent directors, etc ...........................................................................................2.980341. Liability under sections 339 and 340 to extend to partners ordirectorsinfirmsorcompanies .......................................................................2.980 342. Prosecutionofdelinquentofficersandmembersofcompany ................2.981343. Company Liquidator to exercise certain powers subject to sanction ....2.982344. Statement that company is in liquidation ..........................................................2.983345. Books and papers of company to be evidence ................................................2.983346. Inspection of books and papers by creditors and contributories ...........2.983347. Disposal of books and papers of company ........................................................2.984348. Information as to pending liquidations ..............................................................2.985349. OfficialLiquidatortomakepaymentsintopublicaccountofIndia ........2.986350. Company Liquidator to deposit monies into scheduled bank ...................2.986351. Liquidator not to deposit monies into private banking account .............2.987 352. Company Liquidation Dividend and Undistributed Assets Account .....2.987353. Liquidator to make returns, etc ..............................................................................2.989354. Meetings to ascertain wishes of creditors or contributories .....................2.989355. Courts,tribunalorperson,etc,beforewhomaffidavitmaybesworn...2.990356. Powers of Tribunal to declare dissolution of company void ....................2.990357. Commence of winding up by Tribunal .................................................................2.990358. Exclusion of certain time in computing period of limitation .....................2.991

Part IV.—Official Liquidators 359. AppointmentofOfficialLiquidator ......................................................................2.991360. PowersandFunctionsofOfficialLiquidator ...................................................2.991361. Summary procedure for liquidation ....................................................................2.992362. Sale of assets and recovery of debts due to company ..................................2.993363. SettlementofclaimsofcreditorsbyOfficialLiquidator .............................2.993364. Appeal by creditors .....................................................................................................2.993365. Orders of dissolution of company .........................................................................2.994

Chapter XXIPart I — Companies Authorised to Register under this Act

366. Companies capable of being registered .............................................................2.995367. Certificateofregistrationofexistingcompanies ...........................................2.996368. Vesting of Property on registration .....................................................................2.997 369. Saving for existing liabilities ...................................................................................2.997 370. Continuation of pending legal proceedings ......................................................2.997371. Effectofregistrationunderthispart ...................................................................2.998372. Power of Court to stay or restrain proceedings .............................................2.999

xxx Contents

373. Suit stayed on winding up order ........................................................................2.1000 374. Obligation of companies registering under this part ................................2.1000375. Winding up of unregistered companies ..........................................................2.1001376. Power of wind up foreign companies although dissolved ......................2.1002 377. Provisions of Chapter Cumulative .....................................................................2.1002378. Saving and construction of enactments conferring power to wind uppartnershipfirm,associationorcompanyetc,incertaincases ....2.1003

RULES FRAMED UNDER CHAPTER XXI

Companies (authoRiseD to ReGisteReD) Rules, 2014

1. Short title and commencement ............................................................................2.10042. Definitions ....................................................................................................................2.10044. Obligation of companies seeking registration to make publication ....2.10075. Other obligations of companies seeking registration ................................2.1008

Forms Under CHAPTer-xxI ComPAnIes (AUTHorIsed To regIsTered) rUles, 2014

Form No. URC-1 : Application by a company for registration under section 366....................................................................................................................... 2.1009Form No. URC-2 : Advertisement giving notice about registration under Part I of Chapter XXI.................................................................................................... 2.1013

Chapter XXIICompanies Incorporated outside India

379. Application of Act to foreign companies .........................................................2.1015 380. Documents, etc, to be delivered to Registrar by foreign companies ...2.1015381. Accounts of foreign company ..............................................................................2.1016382. Display of name, etc, of foreign company .......................................................2.1017 383. Service on foreign company .................................................................................2.1018 384. Debentures, annual return, registration of charges, books of account and their inspection .....................................2.1018385. Fee for registration of documents .....................................................................2.1019 386. Interpretation .............................................................................................................2.1019 387. Dating of prospectus and particulars to be contained therein .............2.1019388. Provision as to expert’s consent and allotment ...........................................2.1021389. Registration of prospectus ....................................................................................2.1021 390. OfferofIndianDepositoryReceipts..................................................................2.1022391. Application of section 34 to 37 and Chapter XX ..........................................2.1022392. Punishment for contravention ............................................................................2.1023 393. Company’s failure to comply with provision of this Chapternottoaffectvalidityofcontracts,etc. ..............................................2.1023

xxxiContents

RULES FRAMED UNDER CHAPTER XXII

Companies (ReGistRation of foReiGn Companies) Rules, 2014

1. Short title and commencement. ...........................................................................2.10242. Definitions ................................................................................................................................... 2.10243. Particulars relating to directors and Secretary to be furnished to the Registrar by foreign Companies ............................2.10254. Financial Statement of foreign company ........................................................2.10265. Audit of accounts of foreign company ..............................................................2.10276. List of places of business of foreign company ...............................................2.10277. Annual Return .............................................................................................................2.10288. Officewheredocumentstobedeliveredandfee for registration of documents. .............................................................................. 2.10289. Certification. .................................................................................................................2.102810. Authentication of translated documents. ........................................................2.102911. Documents to be annexed to prospectus. ........................................................2.103012. Action for improper use or description as foreign company. .................2.103013. Issue of Indian Depository Receipts (IDRs). ...................................................2.1030

Forms Under CHAPTer-xxII ComPAnIes (regIsTrATIon oF ForeIgn ComPAnIes)

rUles, 2014

FormNo.FC-1:Informationtobefiledbyforeigncompany.................................2.1038FormNo.FC-2:Returnofalterationinthedocumentsfiledforregistration by foreign company......................................................................................... 2.1045Form No. FC-3 : Annual accounts along with the list of all principal places of business in India established by foreign company.................................. 2.1051Form No. FC-4 : Annual Return of a Foreign Company.............................................. 2.1055Form No. FC-5 : Nomination by IDR Holder................................................................... 2.1062

Chapter XXIIIGovernment Companies

394. Annual reports on Government Companies ...................................................2.1063395. Annual reports where one or more State Governments are members of companies ......................................................2.1063

Chapter XXIVRegistration offices and Fees

396. Registrationoffice ......................................................................................................2.1065397. Admissibility of certain documents as evidence ..........................................2.1065

xxxii Contents

398. Provisionrelatingtofilingofapplications, documents, inspection, etc in electronic form...............................................2.1066399. Inspection, production and evidence of documents kept by Registrar .......................................................................................................2.1067400. Electronic form to be exclusive, alternative or in addition to physical form........................................................................................2.1068 401. Provision of value added services through electronic form ...................2.1068402. Application of provision of Information Technology Act, 2000 ............2.1069403. Feeforfiling,etc ........................................................................................................2.1069404. Fees, etc, to be credited into public account .................................................2.1070

RULES FRAMED UNDER CHAPTER XXIV

Companies (ReGistRation offiCes anD fees) Rules, 2014.

1 . Short title and commencement. .............................................................................................2.10712. Definitions. ....................................................................................................................2.10713. Business activity. ........................................................................................................2.10724. Registrationoffices....................................................................................................2.10725. Powers and duties of Registrars ..........................................................................2.10726. Seal of Registrar. .........................................................................................................2.10737. Mannerandconditionsoffiling. ..........................................................................2.10738. Authentication of documents ...............................................................................2.10749. Maintaining documents electronically .............................................................2.107510. Procedure on receipt of any application or form or document electronically ...........................................................................................2.107611. Vacation or removal of directors ........................................................................2.107712. Fees...................................................................................................................................2.107813. Mode of Payment. .....................................................................................................2.107814. Inspection, production and evidence of documents kept by Registrar ........................................................................................................2.107815. Inspection of documents. ........................................................................................2.1078 Table of Fees ..............................................................................................................................2.1079I. Feeforfilingsetc.undersection403oftheCompaniesAct,2013 .......2.1079II. Fee on Applications (including Appeal) made to Central Government under sub-section (2) of Section 459 of the Companies Act, 2013 ...............................................................................................2.1084III. Annual Fee payable by a dormant company under sub-section (5) of section 455 of the Companies Act, 2013 ....................2.1085IV. FeeforInspectionandprovidingcertifiedcopiesof documents kept by the Registrar under section 399 of the Act ............2.1085V. Fee for registration of documents under section 385 of the Act. ..........2.1085VI. Fees for Removal of Names of Companies from the Registrar of Companies under section 248 (2) of the Act. .......................2.1085

xxxiiiContents

Forms Under CHAPTer-xxIV ComPAnIes (regIsTrATIon oFFICes And Fees)

rUles, 2014

FormNo.GNL-1:FormforfilinganapplicationwithRegistrar of Companies........................................................................................................... 2.1087Form No. GNL-2: Form for submission of documents with the Registrar....................................................................................................................... 2.1091Form No. GNL-3: Particulars of person(s) or Key managerial personnelchargedorspecifiedforthepurposeofsub-clause(iii) or (iv) of clause60 of Section 2.................................................................................... 2.1093FormNo.GNL-4:Formforfilingaddendumforrectificationofdefectsorincompleteness.......................................................................2.1097

RULES FRAMED UNDER CHAPTER XXIV

Companies (filinG of DoCuments anD foRms in extensible business RepoRtinG lanGuaGe) Rules, 2015.

1. Short title and commencement ............................................................................2.11002. Definitions .....................................................................................................................2.11003. Filingoffinancial statement with Registrar ...................................................2.11004. Filing of cost audit report .....................................................................................2.1101

Forms Under CHAPTer-xxIV ComPAnIes (FIlIng oF doCUmenTs And Forms In exTensIBle BUsIness rePorTIng

lAngUAge) rUles, 2015.

Form No. AOC-4: FormforfilingXBRLdocumentinrespectoffinancialstatementandotherdocumentswiththeRegistrar ..........................2.1102

Chapter XXV

Companies to Furnish Information or statistics

405. Power of Central Government to direct companies to furnish information or statistics .........................................................................2.1107

Chapter XXVI

nidhis

406. Power to modify Act in Its application to Nidhis .........................................2.1109

xxxiv Contents

RULES FRAMED UNDER CHAPTER XXVIniDhi Rules, 2014.

1. Short title and commencement. ...................................................................................2.11112. Application. ...................................................................................................................2.11113. Definitions. ....................................................................................................................2.11114. Incorporation and incidental matters. ..............................................................2.11125. Requirements for minimum number of members, net owned fund etc........................................................................................................................................... 2.11126. General restrictions or prohibitions. .................................................................2.11137. Share capital and allotment. ..................................................................................2.11138. Membership .................................................................................................................2.11149. Net owned funds ........................................................................................................2.111410. Branches ........................................................................................................................2.111411. Acceptance of deposits by Nidhis ......................................................................... 2.111412. Application form for deposit .................................................................................2.111513. Deposits. .............................................................................................................................. 2.111714. Un-encumbered term deposits. .......................................................................................... 2.111815. Loans ...............................................................................................................................2.111816. Rate of interest .......................................................................................................................2.111917. Rules relating to Directors .....................................................................................2.111918. Dividend .........................................................................................................................2.111919. Auditor ............................................................................................................................2.111920. Prudential norms .......................................................................................................2.112021. Filing of half yearly return .....................................................................................2.112122. Auditor’scertificate...................................................................................................2.112123. Power to enforce compliance ...............................................................................2.112124. Penalty for non-compliance ..................................................................................2.1122

Forms Under CHAPTer-xxVI ComPAnIes (nIdHI) rUles, 2014

Form NDH-1: Return of Statutory Compliances.......................................................... 2.1123Form NDH-2 : Application for extension of Time........................................................ 2.1125Form NDH-3 : Half Yearly Return........................................................................................ 2.1127

Chapter XXVII

national Company Law tribunal and Appellate tribunal407. Definitions ....................................................................................................................2.1131408. Constitution of National Company Law Tribunal ........................................2.1131409. QualificationofPresidentandMembersofTribunal .................................2.1131410. Constitution of Appellate Tribunal .....................................................................2.1133

xxxvContents

411. QualificationofChairpersonsandMembersofAppellateTribunal ....2.1133412. Selection of Members of Tribunal and Appellate Tribunal ......................2.1133413. TermofofficeofPresident,ChairpersonandotherMembers ...............2.1134414. Salary, allowances and other terms and conditions of service of Members ...................................................................................................2.1135 415. Acting President and Chairperson of Tribunal or Appellate Tribunal ....................................................................................................2.1135416. Resignation of Members ........................................................................................2.1136 417. Removal of Members ...............................................................................................2.1136418. StaffofTribunalandAppellateTribunal ........................................................2.1137419. Benches of Tribunal .................................................................................................2.1137420. Order of Tribunal ......................................................................................................2.1138421. Appeal from orders of Tribunal ..........................................................................2.1139422. Expeditious disposal by Tribunal and Appellate Tribunal .....................2.1139423. Appeal to Supreme Court ......................................................................................2.1140 424. Procedure before Tribunal and Appellate Tribunal ..................................2.1140425. Power to punish for contempt ............................................................................2.1141 426. Delegation of powers ..............................................................................................2.1142 427. President,Members,officers,etc.tobepublicservants ..........................2.1142 428. Protection of action taken in good faith ..........................................................2.1142 429. Power to seek assistance of Chief Metropolitan Magistrate, etc ..........2.1143430. Civil court not to have jurisdiction ....................................................................2.1144 431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings .......................................................................2.1144432. Right to legal representation ...............................................................................2.1144433. Limitation .....................................................................................................................2.1145434. Transfer of certain pending proceedings ........................................................2.1145

RULES FRAMED UNDER CHAPTER XXVIInational Company law appellate tRibunal Rules, 2016

1. Short title and commencement ...........................................................................2.11472. Definitions .....................................................................................................................2.11473. Computation of time period .................................................................................2.11474. Forms ..............................................................................................................................2.11485. Format of order or direction or rule .................................................................2.11486. OfficialsealoftheAppellateTribunal ..............................................................2.11487. Custody of the records .............................................................................................2.11488. Sitting of Appellate Tribunal ................................................................................2.11489. Sitting hours of the Appellate Tribunal ............................................................2.114810. Workinghoursofoffice ...........................................................................................2.114811. Inherent powers .........................................................................................................2.114812. Calendar .........................................................................................................................2.114913. Listing of cases ...........................................................................................................2.114914. Power to exempt ........................................................................................................2.1149

xxxvi Contents

15. Power to extend time ...............................................................................................2.114916. Powers and functions of the Registrar .............................................................2.114917. Power of adjournment .............................................................................................2.114918. Delegation powers of the Chairperson .............................................................2.115019. Procedure for proceedings ....................................................................................2.115020. Particulars to be set out in the address for service .....................................2.1150 21. Initialling alteration ..................................................................................................2.115122 Presentation of appeal .............................................................................................2.115123. Numberofcopiestobefiled ................................................................................2.115124. Endorsementandverification ..............................................................................2.115125. Translation of document ........................................................................................2.115126. Endorsement and scrutiny of petition or appeal or document ..............2.115227. Registration of proceedings admitted ..............................................................2.115228. Ex-parte amendments .............................................................................................2.115229. Calling for records .....................................................................................................2.115230. Production of authorisation for and on behalf of an association ..........2.115231. Interlocutory applications ....................................................................................2.115332. Procedure on production of defaced, torn or damaged documents ....2.115333. Preparation and publication of daily cause list.............................................2.115334. Carry forward of cause list and adjournment of cases on account of non-sitting of an Appellate Tribunal.....................................2.115435. Diaries ............................................................................................................................2.115436. Order sheet ...................................................................................................................2.115437. Maintenance of diary ................................................................................................2.115438. Statutes or citations for reference ......................................................................2.115539. Calling of cases in Bench .........................................................................................2.115540. Regulation of Bench work ......................................................................................2.115541. Registers to be maintained ....................................................................................2.115542. Arrangement of records in pending matters .................................................2.115543. Contentsofmainfile .................................................................................................2.115644. Contentsofprocessfile ...........................................................................................2.115645. Executionfile ..............................................................................................................2.115646. File for miscellaneous applications ...................................................................2.115647. Destruction of record ...............................................................................................2.115648. lssue of notice ..............................................................................................................2.115749. Summons .......................................................................................................................2.115750. Steps for issue of fresh notice ...............................................................................2.115751. Consequence of failure to take steps for issue of fresh notice ...............2.115753. Non-appearance of respondent and consequence ......................................2.115754. Filing of objections by respondent, form and consequences ..................2.115855. Fee..................................................................................................................................... 2.115856. Award of costs in the proceedings......................................................................2.115857. Inspection of the records ........................................................................................2.1158 58. Grant of inspection ....................................................................................................2.1159 59. Application for grant of inspection ....................................................................2.115960. Fee payable for inspection .....................................................................................2.1159

xxxviiContents

61. Mode of inspection ....................................................................................................2.115962. Maintenance of register of inspection ..............................................................2.115963. Appearance of authorised representative .....................................................2.116064. Proof of engagement .................................................................................................2.116065. Restriction on party’s right to be heard ...........................................................2.116066. Professional dress for the authorised representative ...............................2.116067. Titleofaffidavits........................................................................................................2.116068. Formandcontentsoftheaffidavit ......................................................................2.116069. Persons authorised to attest .................................................................................2.116070. Affidavitsofilliterate,visuallychallengedpersons ....................................2.116071. ldentificationofdeponent ......................................................................................2.116172. Annexurestotheaffidavit ......................................................................................2.116173. Application for production of documents, form of summons ................2.116174. Suo motu summoning of documents .................................................................2.116175. Marking of documents .............................................................................................2.116176. Return and transmission of documents ...........................................................2.116277. Procedure for examination of witnesses, issue of Commissions ..........2.116278. Examination in camera.- .........................................................................................2.116279. Formofoathoraffirmationtowitness ............................................................2.116280. Formofoathoraffirmationtointerpreter .....................................................2.116281. Officertoadministeroath ......................................................................................2.116282. Recording of deposition ..........................................................................................2.116283. Numbering of witnesses ........................................................................................2.116284. Grantofdischargecertificate ................................................................................2.116285. Witness allowance payable ..................................................................................2.116386. Records to be furnished to the Commissioner ..............................................2.116387. Taking of specimen handwriting, signature etc............................................2.116388. Order ...............................................................................................................................2.116389. Operative portion of the order ............................................................................2.116390. Corrections ...................................................................................................................2.116391. Pronouncement of order .......................................................................................2.116492. Pronouncement of order by any one member of the Bench ...................2.116493. Authorizing any Member to pronounce order .............................................2.116494. Making of entries by Court Master ....................................................................2.116495. Transmission of order by the Court Master ...................................................2.116496. Format of order .........................................................................................................2.116597. Indexingofcasefilesafterdisposal ...................................................................2.116598. Transmissionoffilesorrecordsororders ....................................................2.116599. Copies of Orders in library .....................................................................................2.1165100. Register of Special Leave Petitions/Appeal ....................................................2.1165101. Placing of Supreme Court orders before Appellate Tribunal .................2.1165102. Registrar to ensure compliance of Supreme Court orders ......................2.1166103. Filling through electronic media ........................................................................2.1166104. Removalofdifficultiesandissueofdirections..............................................2.1166

xxxviii Contents

Forms Under CHAPTer-xxVII ComPAnIes (nATIonAl ComPAny lAw APPellATe

TrIBUnAl) rUles, 2016

Form NCLAT-1: Memorandum of Appeal Preferred under Section 421 of The Companies Act, 2013 ........................................................................................2.1167Form NCLAT-2: Interlocutory Application .....................................................................2.1170Form NCLAT-3: Pending/Disposed of ..............................................................................2.1171Form NCLAT-4: See Rule 68 ..................................................................................................2.1172Form NCLAT-5: See Rule 70 ..................................................................................................2.1173Form NCLAT-6: See Rule 74 ..................................................................................................2.1174Form NCLAT-7: See Rule 82 ..................................................................................................2.1175FormNCLAT-8:SeeRule84CertificateofDischarge ................................................2.1176Form NCLAT-9: See Rule 100 ...............................................................................................2.1177

RULES FRAMED UNDER CHAPTER XXVIInational Company law tRibunal Rules, 2016

1. Short title and Commencement ...........................................................................2.11792. Definitions .....................................................................................................................2.11793. Computation of time period .................................................................................2.11814. Forms ..............................................................................................................................2.11815. Format of order or direction or rule ..................................................................2.11816. OfficialsealoftheTribunal ...................................................................................2.11827. Custody of the records ............................................................................................2.11828. Sitting of the Tribunal .............................................................................................2.11829. Sitting hours .................................................................................................................2.118210. Working hours ............................................................................................................2.118211. Inherent Powers ........................................................................................................2.118212. Calendar .........................................................................................................................2.118213. Listing of cases ...........................................................................................................2.118214 Power to exempt ........................................................................................................2.118215. Power to extend time ..............................................................................................2.118316. Functions of the President ....................................................................................2.118317. Functions of the Registrar ......................................................................................2.118318. Functions of the Secretary ....................................................................................2.118419. Delegation of powers by the President ...........................................................2.118420. Procedure ......................................................................................................................2.118421. Particulars to be set out in the address for service ....................................2.118522. Initialling alteration .................................................................................................2.118523. Presentation of petition or appeal ......................................................................2.118524. Numberofcopiestobefiled .................................................................................2.118625. Lodging of caveat ......................................................................................................2.118626. EndorsementandVerification ............................................................................2.118627. Translation of document .......................................................................................2.118628. Endorsement and scrutiny of petition or appeal or document ..............2.1187

xxxixContents

29. Registration of proceedings admitted .............................................................2.118730. Calling for records .....................................................................................................2.118731. Production of authorisation for and on behalf of an association .........2.118732. Interlocutory applications ....................................................................................2.118733. Procedure on production of defaced, torn or damaged documents ....2.118834. General Procedure ....................................................................................................2.118835. Advertisement detailing petition .......................................................................2.118836. Maintenance of Cash Register .............................................................................2.118937. Notice to Opposite Party ........................................................................................2.118938. Service of Notices and processes ........................................................................2.119039. ProductionofEvidencebyAffidavit ..................................................................2.119040. Production of additional evidence before the Bench ..............................2.119041. Filing of Reply and other Documents by the Respondents ......................2.119142. Filing of Rejoinder .....................................................................................................2.119143. Power of the Bench to call for further information or evidence ..........2.119144. Hearing of petition or applications ....................................................................2.119245. Rights of a party to appear before the Tribunal ...........................................2.119246. Registration of authorised representative’s interns .................................2.119247. Oath to the witness ...................................................................................................2.119348. Consequence of non-appearance of applicant ...............................................2.119349. Ex-parte Hearing and disposal .............................................................................2.119350. Registrytosendcertifiedcopy .............................................................................2.119351. Power to regulate the procedure .......................................................................2.119452. Summoning of witnesses and recording Evidence .....................................2.119453. Substitution of legal representatives ................................................................2.119454. Assessors or valuers ................................................................................................2.119455. Pleadings before the Tribunal ..............................................................................2.119456. Application for execution .......................................................................................2.119457. Issue of process of execution ...............................................................................2.119558. Effectofnon-compliance ........................................................................................2.119559. Procedure for imposition of penalty under the Act ....................................2.119560. Matters relating to the Judgments or Orders of the Tribunal .................2.119561. Amicus Curiae .............................................................................................................2.119562. Recusal ............................................................................................................................2.119663. Presentation and scrutiny of petitions or applications .............................2.1196 64. Matter earlier dealt by Company Law Board .................................................2.1196 65. Petition or Application under sub-section (2) of section 45QA of the Reserve Bank of India Act, 1934 (2 of 1934) ......................2.119866. Application under sub- section (7) of section 7 ............................................2.119867. Petition under sub-section (41) of section 2 .................................................2.119868. Petition under section 14 ......................................................................................2.119869. Petition under sub-section (3) of section 55 .................................................2.120070. Appeal under sections 58 and 59 ........................................................................2.120071. Application under proviso to clause (b) of sub-section (1) of section 61. .........................................................................................................2.120172. Appeal against the order of the Government under Section 62(4) ......2.1202

xl Contents

73. Application under sections 71(9), 71(10), section 73(4) or section74(2) and 76(2)......................................................................................2.120274. Application for calling or obtaining a direction to call annual generalmeeting ..............................................................................2.120375. Application for obtaining an order for calling of general meeting(other than Annual General Meeting) .............................................2.120376. Inspection of minute-books of general meeting ...........................................2.120477. Application under section 131 .............................................................................2.120478. Application under Section 140 .............................................................................2.120479. Application under section 169 ............................................................................2.120580. Application under section 213 for investigation ..........................................2.120581. Application under section 241 .............................................................................2.120582. WithdrawalofApplicationfiledundersection241 ....................................2.120583. Application under section 243 ............................................................................2.120584. Right to apply under section 245 .......................................................................2.120685. Conducting a class action suit ...............................................................................2.120686. Rule of opt-out ............................................................................................................2.120687. Publication of notice .................................................................................................2.120788. Reference to the Tribunal ......................................................................................2.120889. Preparation and publication of daily cause list.............................................2.120890. Carry forward of cause list and adjournment of cases on account of non-sitting of a Bench .................................................................2.120891. Diaries .............................................................................................................................2.120992. Order sheet ...................................................................................................................2.120993. Maintenance of court diary ...................................................................................2.120994. Statutes or citations for reference .....................................................................2.120995. Calling of cases in court ...........................................................................................2.120996. Regulation of court work .......................................................................................2.121097. Registers to be maintained ...................................................................................2.121098. Arrangement of records in pending matters ................................................2.121099. Contentsofmainfile ................................................................................................2.1210100. Contentsofprocessfile ..........................................................................................2.1211101. Executionfile ..............................................................................................................2.1211102. File for miscellaneous applications ....................................................................2.1211103. Preservation of Record ...........................................................................................2.1211104. Retention, Preservation and Destruction of Records .................................2.1211105. Issue of notice ..............................................................................................................2.1212106. Summons .......................................................................................................................2.1212107. Steps for issue of fresh notice ..............................................................................2.1212108. Consequence of failure to take steps for issue of fresh notice ...............2.1212109. Entries regarding service of notice or process ............................................2.1212110. Default of appearance of respondent and consequences ........................2.1213111. Filing of objections by respondent, form and consequences ..................2.1213112. Fees .................................................................................................................................2.1213113. Award of costs in the proceedings ....................................................................2.1213114. Inspection of the records .......................................................................................2.1214

xliContents

115. Grant of inspection ....................................................................................................2.1214116. Application for grant of inspection ...................................................................2.1214117. Mode of inspection ...................................................................................................2.1214118. Maintenance of register of inspection .............................................................2.1214119. Appearance of authorised representative ......................................................2.1215120. Consent for engaging another legal practitioner ........................................2.1215121. Restrictions on appearance ..................................................................................2.1215122. Restriction on party’s right to be heard ...........................................................2.1215123. Empanelment of special authorised representatives by the Tribunal ............................................................................................................2.1215124. Professional dress for the authorised representatives .............................2.1215125. Titleofaffidavits .........................................................................................................2.1216126. Formandcontentsoftheaffidavit .....................................................................2.1216127. Persons authorised to attest ................................................................................2.1216128. Affidavitsofilliterate,visuallychallengedpersons ....................................2.1216129. Identificationofdeponent .....................................................................................2.1216130. Annexurestotheaffidavit ......................................................................................2.1216131. Application for production of documents, form of summons ................2.1216132. Suo motu summoning of documents ................................................................2.1217133. Marking of documents .............................................................................................2.1217134. Return and transmission of documents ..........................................................2.1217135. Procedure for examination of witnesses, issue of Commissions .........2.1217136. Examination in camera ...........................................................................................2.1217137. Formofoathoraffirmationtowitness ...........................................................2.1217138. Formofoathoraffirmationtointerpreter ....................................................2.1217139. Officertoadministeroath .....................................................................................2.1218140. Form recording of deposition ...............................................................................2.1218141. Numbering of witnesses ........................................................................................2.1218142. Grantofdischargecertificate...............................................................................2.1218143. Witness allowance payable ...................................................................................2.1218144. Records to be furnished to the Commissioner ..............................................2.1218145. Taking of specimen handwriting, signature etc............................................2.1219146. Disposal of Cases .......................................................................................................2.1219147. Operative portion of the order .............................................................................2.1219148. Corrections ..................................................................................................................2.1219149. Power to impose Costs ............................................................................................2.1219150. Pronouncement of Order ........................................................................................2.1219151. Pronouncement of order by any one member of the Bench ...................2.1219152. Authorising any member to pronounce order .............................................2.1219153. Enlargement of time .................................................................................................2.1220154. RectificationofOrder ...............................................................................................2.1220155. General power to amend .......................................................................................2.1220156. Making of entries by Court Master .....................................................................2.1220157. Transmission of order by the Court Master ...................................................2.1220158. Format of order .........................................................................................................2.1221159. Indexingofcasefilesafterdisposal ...................................................................2.1221

xlii Contents

160. Transmissionoffilesorrecordsororders ....................................................2.1221161. Filing of Order of the Tribunal with the Registrar of Companies .........2.1221162. Copies of orders in library .....................................................................................2.1221163. Register of Appeals, Petitions, etc .......................................................................2.1222164. Placing of National Company Law Appellate Tribunal orders before Tribunal .........................................................................2.1222165. Registrar to ensure compliance of National Company Law Appellate Tribunal orders ...........................................................................2.1222

Forms Under CHAPTer-xxVII ComPAnIes (nATIonAl ComPAny lAw TrIBUnAl)

rUles, 2016

Form NCLT-1: See rule 4.........................................................................................................2.1225Form NCLT-2: See rule 34 ......................................................................................................2.1226Form NCLT-3: See rule 34 ......................................................................................................2.1228 Form NCLT-3A: Advertisement detailing petition see rule 35 ..............................2.1230Form NCLT-3B: Individual Notice of petition/application to creditors, members, etc. ..........................................................................................................2.1231Form NCLT-4: General Heading for Proceedings .........................................................2.1232Form NCLT-5: See rule 34 and 37 ......................................................................................2.1233Form NCLT-6: General ............................................................................................................2.1234Form NCLT-7: See rule 39 ......................................................................................................2.1235Form NCLT-8: See rule 56 Application for Execution of Order under clause (3) of section 424 of the Act with reference to a Decree ..........................................2.1236Form NCLT-9: See Rule 72, 76, 82, 84, 88 and 154 and also GeneralFormforallpurposesifnospecificformisprescribedunder these rules and Forms ................................................................................................2.1238Form NCLT-10: Application for the Registration of a Intern of Authorised Representative under the Rules ..............................................2.1240Form NCLT-11: Application By Depositor Under Section 73 (4) Or 76(2) or By Company U/S 74(2) Or By Debenture Holder or Debenture Trustee Under Section 71 (10) of the Act or Section 45qa of the Reserve Bank of India Act, 1934 ...................................2.1241Form NCLT-12: Memorandum of appearance ..............................................................2.1242Form NCLT-13: Public Notice of petition under Section 245 .................................2.1243Form NCLT-14: See Rule 128 ...............................................................................................2.1244Form NCLT-15: See Rule 131 ...............................................................................................2.1244Form NCLT-16: See Rule 140 ...............................................................................................2.1245FormNCLT-17:CertificateofDischarge ..........................................................................2.1246Form NCLT-18: See Rule 163 ...............................................................................................2.1247

xliiiContents

RULES FRAMED UNDER CHAPTER XXVII

national Company law appellate tRibunal (salaRies anD allowanCes anD otheR teRms anD ConDitions of seRviCe of the

ChaiRpeRson anD otheR membeRs) Rules, 2015.

1. Short title and commencement ............................................................................2.12542. Definitions .....................................................................................................................2.12543. Pay..................................................................................................................................... 2.12544. Pension, Gratuity or Provident Fund .................................................................2.12545. Leave................................................................................................................................2.12556. Leave Sanctioning Authority .................................................................................2.12557. Travelling Allowances. .............................................................................................2.12558. Officialvisitsabroad .................................................................................................2.12559. Leave Travel Concession.........................................................................................2.125610. Facility for Medical Treatment. ............................................................................2.125611. Accommodation. .........................................................................................................2.125612. Facility of conveyance. .............................................................................................2.125613. Telephone facility ......................................................................................................2.125614. Conditions of service of Chairperson ................................................................2.125615. Conditons of Service of Judicial Member .........................................................2.125616. Oathofofficeandsecrecy .......................................................................................2.125717. Declarationoffinancialorotherinterest. .......................................................2.125718. Residuary provisions ................................................................................................2.125719. Powers to relax ...........................................................................................................2.1257

Forms Under CHAPTer-xxVII nATIonAl ComPAny lAw APPellATe TrIBUnAl

(sAlArIes And AllowAnCes And oTHer Terms And CondITIons oF serVICe oF

THe CHAIrPerson And oTHer memBers) rUles, 2015

Form-I:FormofoathofofficeforChairpersonorMembersof the National Company Law Appellate Tribunal ......................................................2.1258 Form-II: Form of oath of secrecy for Chairperson or Members of the National Company Law Appellate Tribunal ..................................2.1258Form-III:Declarationoffinancialorotherinterest ....................................................2.1258

xliv Contents

RULES FRAMED UNDER CHAPTER XXVIInational Company law appellate tRibunal (salaRy, allowanCes anD otheR teRms anD ConDitions of seRviCe of pResiDent anD

otheR membeRs) Rules, 2015

1. Short title and commencement. ...........................................................................2.12592. Definitions .....................................................................................................................2.12593. Pay.....................................................................................................................................2.12594. Pension, Gratuity or Provident Fund. ................................................................2.12595. Leave................................................................................................................................2.12606. Leave sanctioning authority. .................................................................................2.12607. Travelling allowances ..............................................................................................2.12608. Officialvisitsabroad .................................................................................................2.12609. Leave Travel Concession.........................................................................................2.126010. Facility for medical treatment ..............................................................................2.126111. Accommodation ..........................................................................................................2.126112. Facility of conveyance ..............................................................................................2.126113. Telephone facility ......................................................................................................2.126114. Conditions of service of President. .....................................................................2.126115. Conditions of service of Judicial Member ........................................................2.126116. Applicability of rules .................................................................................................2.126117. Oathofofficeandsecrecy. ......................................................................................2.126218. Declarationoffinancialorotherinterest ........................................................2.126219. Residuary provisions. ...............................................................................................2.126220. Powers to relax ...........................................................................................................2.1262

Forms Under CHAPTer-xxVII nATIonAl ComPAny lAw APPellATe TrIBUnAl

(sAlAry, AllowAnCes And oTHer Terms And CondITIons oF serVICe oF

PresIdenT And oTHer memBers) rUles, 2015

Form-I:FormofoathofofficeforPresidentorMembersof the National Company Law Tribunal ...........................................................................2.1263Form-II: Form of oath of secrecy for President or Members of the National Company Law Tribunal ...........................................................................2.1263Form-III: Declaration against acquisition of any adversefinancialorotherinterest .....................................................................................2.1264

xlvContents

Chapter XXVIII

special Courts435. Establishment of Special Courts .........................................................................2.1265436. Offencestriablebyspecialcourts ......................................................................2.1265437. Appeal and revision .................................................................................................2.1267438. Application of code to proceedings before special court .........................2.1267439. Offencestobenon-cognizable ............................................................................2.1267440. Transitional provision ............................................................................................2.1268441. Compoundingofcertainoffences ......................................................................2.1269442. Mediation and Conciliation Panel .......................................................................2.1270443. Power of Central Government to appoint company prosecutors .........2.1271444. Appeal against acquittal ..........................................................................................2.1272445. Compensation for accusation with reasonable cause ................................2.1272446. Applicationoffines....................................................................................................2.1272

Chapter XXIXMiscellaneous

447. Punishment for Fraud .............................................................................................2.1275448. Punishment for false statement ..........................................................................2.1275449. Punishment for false evidence ............................................................................2.1276450. Punishmentwherenospecificpunishmentorpunishment is provided ...................................................................................................................2.1276451. Punishment in case of repeated default ...........................................................2.1277452. Punishment for wrongful withholding of property ...................................2.1277453. Punishment for improper use of Limited Private Limited .....................2.1277454. Adjudication of penalties ........................................................................................2.1278455. Dormant Company ...................................................................................................2.1279456. Protection of action taken in good faith ..........................................................2.1280457. Non – disclosure of information in certain cases ........................................2.1280458. Delegation by Central government of its powers and functions ..........2.1280459. Powers of Central Government or Tribunal to accord approval, etc, subject to conditions and to prescribe fees on application ............................................................................................................2.1281460. Condonation of delay in certain cases .............................................................2.1282461. Annual reports by Central Government ..........................................................2.1282462. Power to exempt a class or classes of companies from provisions of this Act ................................................................................................2.1282463. Power of court to grant relief in certain cases .............................................2.1283464. Prohibition of association or partnership of persons exceeding certain number ......................................................................................2.1284465. Repeal of certain enactments and savings .....................................................2.1284466. Dissolution of Company Law Board and consequential provision ......2.1286

xlvi Contents

467. Power of Central Government to amend Schedules ..................................2.1288468. Power of Central Government to make rules relating to winding up ..............................................................................................................2.1288469. Power of Central Government to make rules ...............................................2.1289470. Powertoremovedifficulties ................................................................................2.1290

RULES FRAMED UNDER CHAPTER XXIX

Companies (Adjudication of Penalties) Rules, 2014

1. Short title and commencement. ...........................................................................2.12912. Definitions. ..........................................................................................................................................2.12913. Adjudication of penalties. ...............................................................................................2.12914. Appealagainsttheorderofadjudicatingofficer. ...................................2.12925 . Registration of appeal. .............................................................................................2.12936. Disposal of appeal by Regional Director. .........................................................2.1293

Forms Under CHAPTer-xxIx ComPAnIes (AdjUdICATIon oF PenAlTIes) rUles, 2014

Form No. ADJ Memorandum of Appeal..................................................................................... 2.1295

RULES FRAMED UNDER CHAPTER XXIX

Companies (misCellaneous) Rules, 2014.

1. Short title and commencement. ...........................................................................2.12982. Definitions. ....................................................................................................................2.12983. Application for obtaining status of dormant company. .............................2.12984. Certificateofstatusofdormantcompany. ......................................................2.12995. Register of dormant companies ...........................................................................2.12996. Minimum number of directors for dormant company. .............................2.12997. Return of dormant companies .............................................................................2.12998. Application for seeking status of an active company .................................2.12999. Fees for application to Central Government. .................................................2.130010. Association or partnership of persons exceeding certain number ......2.130011. Applications or forms pending before Central Government, Regional Director or Registrar of Companies. ...................2.1300

Forms Under CHAPTer-xxIx ComPAnIes (mIsCellAneoUs) rUles, 2014

Form No. MSC.1 : Application to Registrar for obtaining the status of dormant company........................................................................................... 2.1301FormNo.MSC-2:CertificateofstatusofaDormantCompany..............................2.1304

xlviiContents

Form No. MSC-3 : Return of dormant companies........................................................ 2.1305Form No. MSC-4 : Application for seeking status of active company................... 2.1309FormNo.MSC-5:CertificateofstatusofanactiveCompany..................................2.1311SCHEDULE I ..............................................................................................................................2.1313SCHEDULE II ..............................................................................................................................2.1338SCHEDULE III .............................................................................................................................2.1345SCHEDULE IV ..............................................................................................................................2.1385SCHEDULE V ..............................................................................................................................2.1388SCHEDULE VI ..............................................................................................................................2.1394SCHEDULE VII ...........................................................................................................................2.1396Appendix 1 Part IX A of Companies Act, 1956 .............................................................2.1399

Part IIINOTIFICATIONS ................................................................................................................................ 3.1CIRCULARS ...................................................................................................................................... 3.35ORDERS ....................................................................................................................................3.101

SAMPLE CHAPTER OF SHARE & CAPITAL DEBENTURES


www.amazon.in/Companies-Along-Rules-Forms-September/dp/8188274615/ref=sr_1_1?ie=UTF8&qid=1475949960&sr=8-1&keywords=companies+act+along+with+rules+%26+forms

CHAPTER IV

SHARE CAPITAL AND DEBENTURES

1[43. 2Kinds of Share Capital3 - The share capital of a company limited by shares shall be of two kinds, namely:—(a) equity share capital—

(i) with voting rights; or(ii) with differential rights as to dividend, voting or otherwise in accordance

with such rules as may be prescribed4; and(b) preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference shareholders who are entitled to participate in the proceeds of winding up before the commencement of this Act.Explanation.—For the purposes of this section,—(i) ‘‘equity share capital’’, with reference to any company limited by shares,

means all share capital which is not preference share capital;(ii) ‘‘preference share capital’’, with reference to any company limited by

shares, means that part of the issued share capital of the company which carries or would carry a preferential right with respect to—(a) payment of dividend, either as a fixed amount or an amount

calculated at a fixed rate, which may either be free of or subject to income-tax; and

(b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company;

(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely:—(a) that in respect of dividends, in addition to the preferential rights

to the amounts specified in sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid;

(b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause(ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid. ]

1 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated 26.03.2014

2 This section is corresponding to Section 2(46A), 85 & 86 of the Companies Act, 19563 For Private Company Provision of Section 43 shall not apply where memorandum or articles of

association of the private company so provides.4 See rule 4 of the Company (Share Capital & Debentures) Rules, 2014.

2.289

2.290 CHAPTER IV – SHARE CAPITAL AND DEBENTURES

Notes on ClausesClause 43. — This clause corresponds to section 85 and seeks to provide that there shall be two kinds of share capital namely equity share capital (includes equity shares with voting rights or equity shares with differential rights as to dividend, voting or otherwise) and preference share capital. Preferential share capital carries a preferential right with respect to payment of dividend and also for repayment of capital at the time of winding up.1[44. 2Nature of Share or Debentures -

The shares or debentures or other interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company.

Notes on ClausesClause 44. — This clause corresponds to section 82 of the Companies Act, 1956 and seeks to provide that the shares and debentures are movable property transferable in a manner provided in the articles of a company.

45. 3Numbering of Shares -Every share in a company having a share capital shall be distinguished by itsdistinctive number:Provided that nothing in this section shall apply to a share held by a personwhose name is entered as holder of beneficial interest in such share in therecords of a depository.]

Notes on ClausesClause 45. — This clause corresponds to section 83 of the Companies Act, 1956 and seeks to provide that every share in a company having a share capital shall be distinguished by distinctive number. This clause does not apply to shares held with the depository.4[46. 5Certificate of Shares -

(1) A certificate, 6[issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary], specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares.

(2) A duplicate certificate of shares may be issued, if such certificate —(a) is proved to have been lost or destroyed; or(b) has been defaced, mutilated or torn and is surrendered to the

company.

1 These provisions comes into force w.e.f. 12th September, 2013 Vide Notification No. S.O. 2754(E) dated 12.09.2013

2 This section is corresponding to Section 82 of the Companies Act, 19563 This section is corresponding to Section 83 of the Companies Act, 19564 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated

26.03.20145 This section is corresponding to Section 84 of the Companies Act, 19566 Substituted for “issued under the common seal of the company” by Companies (Amendment) Act

2015, w.e.f 25-05-2015

2.291COMPANIES ACT, 2013 SECTION 47

(3) Notwithstanding anything contained in the articles of a company, the manner of issue of a certificate of shares1 or the duplicate thereof, the form of such certificate, the particulars to be entered in the register of members2 and other matters shall be such as may be prescribed.

(4) Where a share is held in depository form, the record of the depository is the prima facie evidence of the interest of the beneficial owner.

(5) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who is in default shall be liable for action under section 447.

Notes on ClausesClause 46. — This clause corresponds to section 84 of the Companies Act, 1956 and seeks to provide that a certificate issued by a company shall be prima facie evidence of the title of the person to such shares. It provides the manner for issuance of duplicate share certificate and the particulars to be entered in the register of members. If a company issues duplicate shares with an intention to defraud public, penal provisions for fraud would be attracted for such violations.

47. 3Voting Rights4 -(1) Subject to the provisions of section 43 and sub-section (2) of section 50,—

(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and

(b) 5his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company.

In section 47, in sub-section (1), for the words, figures and brackets “provisions of section 43 and sub-section (2) of section 50”, the words, figures and brackets [provisions of section 43, sub-section (2) of section 50 and sub-section (1) of section 188] is proposed to be substituted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.

(2) Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company:

1 See rule 5 & form SH 1 of the Company (Share Capital & Debentures) Rules, 2014.2 See rule 6 & form SH 2 of the Company (Share Capital & Debentures) Rules, 2014.3 This section is corresponding to Section 87 of the Companies Act, 19564 For Private Company Provision of Section 47 shall not apply where memorandum or articles of

association of the private companv so provides.5 For Nidhi Companies provision of clause (b) of sub-section (1) of Section 47 Shall apply subject to

the modification that no member shall exercise votlng rights on poll in excess of five per cent of total voting rights of equity shareholders.


Provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of the preference shares:

Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company. ]

Notes on ClausesClause 47. — This clause corresponds to section 87 of the Companies Act, 1956 and seeks to provide that every member who is a holder of equity share shall have the right to vote on every resolution placed before the company. His voting right on a poll shall be in proportion to his share in the paid up equity share.

48. 1Variation of Shareholders’ Rights - (1) Where a share capital of the company is divided into different classes of

shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class,—(a) if provision with respect to such variation is contained in the

memorandum or articles of the company; or(b) in the absence of any such provision in the memorandum or articles, if

such variation is not prohibited by the terms of issue of the shares of that class:

Provided that if variation by one class of shareholders affects the rights of any other class of shareholders, the consent of three-fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation.

(2) Where the holders of not less than ten per cent. of the issued shares of a class did not consent to such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and until it is confirmed by the Tribunal:

Provided that an application under this section shall be made within twenty-one days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3) The decision of the Tribunal on any application under sub-section (2) shall be binding on the shareholders.

(4) The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar.

(5) Where any default is made in complying with the provisions of this section, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and

1 This section is corresponding to Section 106 & 107 of the Companies Act, 1956


every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.

Notes on ClausesClause 48. — This clause corresponds to section 106 and 107 of the Companies Act, 1956 and seeks to provide that where share capital is divided into different classes of shares, the rights attached to any class of shares may be varied with the written consent of the holders of not less than three-fourths of the issued shares or by special resolution. Where the holders of ten per cent. of the issued share capital did not consent to such variation, they may apply to Tribunal to have the variation cancelled. If default is made in complying with the provision of this clause the company and every officer of the company who is in default shall be punishable with fine or imprisonment or with both.1[49. 2Calls on shares of same class to be made on uniform basis - Where any calls for further share capital are made on the shares of a class, such

calls shall be made on a uniform basis on all shares falling under that class. Explanation.—For the purposes of this section, shares of the same nominal

value on which different amounts have been paid-up shall not be deemed to fall under the same class.

Notes on ClausesClause 49. — This clause corresponds to section 91 of the Companies Act, 1956 and seeks to provide that where any calls for further share capital are made on the shares of a class, such call shall be made on uniform basis on all shares falling under that class.50. 3Company to accept unpaid share capital, although not called up - (1) A company may, if so authorised by its articles, accept from any member, the

whole or a part of the amount remaining unpaid on any shares held by him, even if no part of that amount has been called up.

(2) A member of the company limited by shares shall not be entitled to any voting rights in respect of the amount paid by him under sub-section (1) until that amount has been called up.

Notes on ClausesClause 50. — This clause corresponds to section 92 of the Companies Act, 1956 and seeks to provide that a company can accept from any member the whole or a part of the amount remaining unpaid on any shares without being called up and he will not be entitled to any voting rights on the amount paid by him unless amount has been called up.4[51. 5Payment of dividend in proportion to amount paid-up -

A company may, if so authorised by its articles, pay dividends in proportion to the amount paid-up on each share.]


2 This section is corresponding to Section 91 of the Companies Act, 19563 This section is corresponding to Section 92 of the Companies Act, 19564 These provisions comes into force w.e.f. 12th September, 2013.5 This section is corresponding to Section 93 of the Companies Act, 1956


Notes on ClausesClause 51. — This clause corresponds to section 93 of the Companies Act, 1956 and seeks to provide that a company, if authorised by its articles, pay dividends in proportion to the amount paid up on each share.1[52. 2Application of premiums received on issue of shares - (1) Where a company issues shares at a premium, whether for cash or otherwise,

a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a “securities premium account” and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the securities premium account were the paid-up share capital of the company.

(2) Notwithstanding anything contained in sub-section (1), the securities premium account may be applied by the company—(a) towards the issue of unissued shares of the company to the members

of the company as fully paid bonus shares;(b) in writing off the preliminary expenses of the company;(c) in writing off the expenses of, or the commission paid or discount

allowed on, any issue of shares or debentures of the company;(d) in providing for the premium payable on the redemption of any

redeemable preference shares or of any debentures of the company; or

(e) for the purchase of its own shares or other securities under section 68.

(3) The securities premium account may, notwithstanding anything contained in sub-sections (1) and (2), be applied by such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133,—(a) in paying up unissued equity shares of the company to be issued to

members of the company as fully paid bonus shares; or(b) in writing off the expenses of or the commission paid or discount

allowed on any issue of equity shares of the company; or(c) for the purchase of its own shares or other securities under section

68.

Notes on ClausesClause 52. — This clause corresponds to section 78 of the Companies Act, 1956 and seeks to provide that a company shall transfer the amount received by it as securities premium to securities premium account and state the means in which the amount in the account can be applied. Provisions on reduction of share capital shall apply to securities premium account. This Clause also seeks to provide the purpose for which Securities Premium Account can be applied by companies.


2 This section is corresponding to Section 78 of the Companies Act, 1956


53. 1Prohibition on issue of shares at discount -(1) Except as provided in section 54, a company shall not issue shares at a

discount.(2) Any share issued by a company at a discounted price shall be void.In section 53, in sub-section (2), for the words “discounted price”, the word [discount] is proposed to be substituted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.

In section 53, after sub-section (2), the following sub-section is proposed to be Inserted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.[(2A) Notwithstanding anything contained in sub-sections (1) and (2), a company may is-sue shares at a discount to its creditors when its debt is converted into shares in pursu-ance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.]

(3) Where a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

Notes on ClausesClause 53. — This clause corresponds to section 79 of the Companies Act, 1956 and seeks to provide that companies are prohibited from issuing shares at a discount except in the case of issue of sweat equity shares and also provides that where a company contravenes the provisions of this clause, the company and every officer of the company in default shall be punishable with fine and imprisonment.

54. 2Issue of Sweat Equity Shares3 -(1) Notwithstanding anything contained in section 53, a company may issue

sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:—(a) the issue is authorised by a special resolution passed by the company;(b) the resolution specifies the number of shares, the current market price,

consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued;

(c) not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business; and

In Section 54, Clause (c) is proposed to be omitted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.

(d) where the equity shares of the company are listed on a recognised stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this

1 This section is corresponding to Section 79 of the Companies Act, 19562 This section is corresponding to Section 79A of the Companies Act, 19563 See rule 8 & form SH 3 of the Company (Share Capital & Debentures) Rules, 2014.


behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed.

(2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity shares shall be applicable to the sweat equity shares issued under this section and the holders of such shares shall rank pari passu with other equity shareholders. ]

Notes on ClausesClause 54. — This clause corresponds to section 79A of the Companies Act, 1956 and seeks to provide that on fulfilling certain conditions, a company may issue sweat equity shares of a class of shares already issued. The rights, limitations, restrictions and provisions applicable to equity shares shall be applicable to sweat equity shares and holders of such shares rank pari passu with other equity shareholders.1[55. 2Issue and redemption of Preference Shares3 - (1) No company limited by shares shall, after the commencement of this Act,

issue any preference shares which are irredeemable.(2) A company limited by shares may, if so authorised by its articles, issue

preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such conditions as may be prescribed:Provided that a company may issue preference shares for a period exceeding twenty years for infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preferential shareholders:Provided further that—(a) no such shares shall be redeemed except out of the profits of the

company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of such redemption;

(b) no such shares shall be redeemed unless they are fully paid;(c) where such shares are proposed to be redeemed out of the profits of

the company, there shall, out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to a reserve, to be called the Capital Redemption Reserve Account, and the provisions of this Act relating to reduction of share capital of a company shall, except as Provided in this section, apply as if the Capital Redemption Reserve Account were paid-up share capital of the company; and

(d) (i) in case of such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133, the premium, if any, payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed:


2 This section is corresponding to Section 80 of the Companies Act, 19563 See rule 9 of the Company (Share Capital & Debentures) Rules, 2014.


Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed.

(ii) in a case not falling under sub-clause (i) above, the premium, if any, payable on redemption shall be provided for out of the profits of the company or out of the company’s securities premium account, before such shares are redeemed. ]

1(3) Where a company is not in a position to redeem any preference shares or to pay dividend, if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three-fourths in value of such preference shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be deemed to have been redeemed:

Provided that the Tribunal shall, while giving approval under this sub-section, order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares.

Explanation.—For the removal of doubts, it is hereby declared that the issue of further redeemable preference shares or the redemption of preference shares under this section shall not be deemed to be an increase or, as the case may be, a reduction, in the share capital of the company.

2(4) The capital redemption reserve account may, notwithstanding anything in this section, be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares. Explanation.—For the purposes of sub-section (2), the term ‘‘infrastructure projects’’ means the infrastructure projects specified in Schedule VI.]

Notes on ClausesClause 55. — This clause corresponds to section 80 and 80A of the Companies Act, 1956 and seeks to provide that no company limited by shares shall issue irredeemable preference shares. A company may issue preference shares for a period not exceeding twenty years. However, for infrastructural project preference shares can be issued for more than twenty years.

1 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20162 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated

26.03.2014


1[56. 2Transfer and transmission of Securities3 - (1) A company shall not register a transfer of securities of the company, or the

interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form asmay be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the transferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities:

Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit.

4[Provided further that the provisions of this sub-section, in so far as it requires a proper instrument of transfer, to be duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee, shall not apply with respect to bonds issued by a Government company, provided that an intimation by the transferee specifying his name. address and occupation, if any, has been delivered to the company along with the certificate relating to the bond; and if no such certificate is in existence. along with the letter of allotment of the bond:

Provided also that the provisions of this sub-section shall not apply to a Government Company in respect of securities held by nominees of the Government]

(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such right has been transmitted.

(3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer shall not be registered, unless the company gives the notice of the application, in such manner as may be prescribed5, to the


2 Exemptions, Modification & adaptation for Govt. Company under Section 462- In sub-section (1), after the proviso, the following provisos shall he inserted, namely:- - Provided further that the provisions of this sub-section, in so far as it requires a proper instrument

of transfer, to be duly stamped and executed by or on behalf of the transfer and by or on behalf of the transferee, shall not apply with respect to bonds issued by a Government company, provided that an intimation by the transferee specifying his name, address and occupation, if any, has been delivered to the company along with the certificate relating to the bond; and if no such certificate is in existence, along with the letter of allotment of the bond:

Provided also that the provisions of this sub-section shall not apply to a Government Company in respect of securities held by nominees of the Government.

3 See rule 11 & form SH 4 of the Company (Share Capital & Debentures) Rules, 2014. SEE ALSO GENERAL CIRCULAR NO. 19/2014, 12-6-2014

4 Inserted vide Notification dated 05.06.2015” with “Insert vide Notification No. G.S.R. 465 (E) dated 05.06.2015 for Government Companies

5 See rule 11(3) & form SH 5 of the Company (Share Capital & Debentures) Rules, 2014.


transferee and the transferee gives no objection to the transfer within two weeks from the receipt of notice.

(4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted—(a) within a period of two months from the date of incorporation, in the

case of subscribers to the memorandum;(b) within a period of two months from the date of allotment, in the case of

any allotment of any of its shares;(c) within a period of one month from the date of receipt by the company

of the instrument of transfer under sub-section (1) or, as the case may be, of the intimation of transmission under sub-section (2), in the case of a transfer or transmission of securities;

(d) within a period of six months from the date of allotment in the case of any allotment of debenture:

Provided that where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities.

(5) The transfer of any security or other interest of a deceased person in a company made by his legal representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the holder at the time of the execution of the instrument of transfer.

(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

(7) Without prejudice to any liability under the Depositories Act, 1996, where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447. ]

Notes on ClausesClause 56. — This clause corresponds to section 108, 109B and 110 of the Companies Act, 1956 and seeks to provide that transfer of securities/interest of a member not to be registered except on production of instrument of transfer duly stamped, dated and executed. In case of loss of the instrument, the company may register the transfer in terms of indemnity. Where an application relates to partly paid up shares, the transfer shall not be registered unless a notice is issued to the transferee. In case of refusal of transfer of shares, transferee may appeal to the Tribunal.1[57. 2Punishment for Personation of Shareholder - If any person deceitfully personates as an owner of any security or interest

in a company, or of any share warrant or coupon issued in pursuance of this


2 This section is corresponding to Section 116 of the Companies Act, 1956


Act, and thereby obtains or attempts to obtain any such security or interest or any such share warrant or coupon, or receives or attempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Notes on ClausesClause 57. — This clause corresponds to section 116 of the Companies Act, 1956 and seeks to provide penalty for a person who deceitfully personates the owner of any share or interest.

58. 1Refusal of registration and appeal against refusal2 - (1) If a private company limited by shares refuses, whether in pursuance of any

power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferor and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.

(2) Without prejudice to sub-section (1), the securities or other interest of any member in a public company shall be freely transferable:

Provided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract.

(3) The transferee may appeal3 to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was delivered to the company.

(4) If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument of transfer or intimation of transmission, appeal to the Tribunal.

(5) The Tribunal, while dealing with an appeal made under sub-section (3) or subsection (4), may, after hearing the parties, either dismiss the appeal, or by order—(a) direct that the transfer or transmission shall be registered by the

company and the company shall comply with such order within a period of ten days of the receipt of the order; or

1 This section is corresponding to Section 111 of the Companies Act, 19562 Powers of Tribunal exercisable by Company law boards (Refer Companies (Removal of Difficulties)

Order, 2013), Tribunal has since been constituted w.e.f. 1-06-2016.3 Appeal to Company Law Board along with fees of Rs. 500. Schedule to Company Law Board (Fees on

Application and Petitions) Rules, 1991.


(b) direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.

(6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Notes on ClausesClause 58. — This clause corresponds to sub-sections (1) and (2) of section 111 of the Companies Act, 1956 and seeks to provide for that if a company without sufficient cause refuses to register the transfer of shares, appeal against such refusal shall lie to the Tribunal. It is also provided that the securities of a public company, etc., are freely transferable subject to the provisions that any contract or arrangement between two or more persons shall be enforceable as contract.59. 1Rectification of Register of Members2 - (1) If the name of any person is, without sufficient cause, entered in the register

of members of a company, or after having been entered in the register, is, without sufficient cause, omitted therefrom, or if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outside India, for rectification of the register.

(2) The Tribunal may, after hearing the parties to the appeal under sub-section (1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved.

(3) The provisions of this section shall not restrict the right of a holder of securities, to transfer such securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal.

(4) Where the transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or this Act or any other law for the time being in force, the Tribunal may, on an application made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board, direct any company or a depository to set right the contravention and rectify its register or records concerned.

(5) If any default is made in complying with the order of the Tribunal under this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of

1 This section is corresponding to Section 111A of the Companies Act, 19562 Powers of Tribunal exercisable by Company law boards (Refer Companies (Removal of Difficulties)

Order, 2013), Tribunal has since been constituted w.e.f. 1-06-2016.


the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.

Notes on ClausesClause 59. — This clause corresponds to section 111A of the Companies Act, 1956 and seeks to provide that if the name of any person has been entered in or has been omitted from the register of members without sufficient cause, the member or the person aggrieved may appeal to the Tribunal or to a competent court outside India in respect of foreign members or debenture holders. The Tribunal may either dismiss the appeal or direct for rectification of register, transfer or transmission. The Tribunal may also direct to pay damages to the aggrieved party. The clause also provides for the provisions of this clause shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled for voting rights unless suspended by the Tribunal. The Tribunal may direct any company or a depository to set right any contravention and rectify register. The clause further provides that if any default is made in complying with the order of the Tribunal, the company and every officer who is in default shall be punishable with fine and imprisonment.

60. 1Publication of Authorized, Subscribed and Paid – up Capital (1) Where any notice, advertisement or other official publication, or any business

letter, billhead or letter paper of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, billhead or letter paper shall also contain a statement, in an equally prominent position and in equally conspicuous characters, of the amount of the capital which has been subscribed and the amount paid-up.

(2) If any default is made in complying with the requirements of sub-section (1), the company shall be liable to pay a penalty of ten thousand rupees and every officer of the company who is in default shall be liable to pay a penalty of five thousand rupees, for each default.]

Notes on ClausesClause 60. — This clause corresponds to section 148 of the Companies Act, 1956 and seeks to provide that where any notice, advertisement or other official publication, or any business letter, etc., of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letters billhead or letter paper shall also state the subscribed and paid up capital and the clause further provides penalty for the company and every officer of company in default in case of any contravention.2[61. 3Power of Limited Company to alter its Share Capital - (1) A limited company having a share capital may, if so authorised by its articles,

alter its memorandum in its general meeting to—

1 This section is corresponding to Section 148 of the Companies Act, 19562 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated

26.03.20143 This section is corresponding to Section 94 of the Companies Act, 1956


(a) increase its authorised share capital by such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares: ]

1Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner;

2[(c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;

(d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2) The cancellation of shares under sub-section (1) shall not be deemed to be a reduction of share capital. ]

Notes on ClausesClause 61. — This clause corresponds to section 94 of the Companies Act, 1956 and seeks to provide that a limited company having a share capital may alter its capital clause of memorandum in its general meeting.3[62. 4Further issue of Share Capital5 - (1) Where at any time, a company having a share capital proposes to increase

its subscribed capital by the issue of further shares, such shares shall be offered—(a) to persons who, at the date of the offer, are holders of equity shares

of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely:—(i) the offer shall be made by notice specifying the number of shares

offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;

6[Provided that notwithstanding anything contained in this sub-clause and sub section (2) of this section, in case ninety per cent.

1 Provisio Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20162 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated

26.03.20143 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated

26.03.20144 This section is corresponding to Section 81 & 94A(1) of the Companies Act, 19565 Provision of Section 62 will not apply to Nidhis Companies.6 Inserted vide Notification dated 05.06.2015 for Private Company.


of the members of a private company have given their consent in writing or in electronic mode, the periods lesser than those specified in the said sub clause or sub-section shall apply]

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause (i) shall contain a statement of this right;

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company;

1(b) to employees under a scheme of employees’ stock option, subject to special resolution2 passed by company and subject to such conditions as may be prescribed; or

3(c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed.

In Section 62, in Clause (c) for the words for the words “of a registered valuer subject to such conditions as may be prescribed”, the words and figures [of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed] are proposed to be substituted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.

(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be despatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue.

4[Provided that notwithstanding anything contained in this sub-clause and sub section (2) of this section, in case ninety per cent. of the members of a private company have given their consent in writing or in electronic mode, the periods lesser than those specified in the said sub clause or sub-section shall apply]

In Section 62, for sub-section (2) the following sub-section is proposed to be substituted by the Companies Amendment Bill, 2016 as introduced in the Lok Sabha on 16-03-2016.

[(2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through registered post or speed post or through electronic mode or courier or any other mode having proof of delivery to all the existing shareholders at least three days before the opening of the issue.]

(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the

1 See rule 12 & form SH 6 of the Company (Share Capital & Debentures) Rules, 2014.2 For Private Company for the words “special resolution”, the words “ordinary resolution” shall be

substituted. 3 See rule 13 of the Company (Share Capital & Debentures) Rules, 2014.4 Inserted vide Notification dated 05.06.2015 for Private Company


debentures issued or loan raised by the company to convert such debentures or loans into shares in the company:

Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.]

1(4) Notwithstanding anything contained in sub-section (3), where any debentures have been issued, or loan has been obtained from any Government by a company, and if that Government considers it necessary in the public interest so to do, it may, by order, direct that such debentures or loans or any part thereof shall be converted into shares in the company on such terms and conditions as appear to the Government to be reasonable in the circumstances of the case even if terms of the issue of such debentures or the raising of such loans do not include a term for providing for an option for such conversion:

Provided that where the terms and conditions of such conversion are not acceptable to the company, it may, within sixty days from the date of communication of such order, appeal to the Tribunal which shall after hearing the company and the Government pass such order as it deems fit.

2(5) In determining the terms and conditions of conversion under sub-section (4), the Government shall have due regard to the financial position of the company, the terms of issue of debentures or loans, as the case may be, the rate of interest payable on such debentures or loans and such other matters as it may consider necessary.

3(6) Where the Government has, by an order made under sub-section (4), directed that any debenture or loan or any part thereof shall be converted into shares in a company and where no appeal has been preferred to the Tribunal under sub-section (4) or where such appeal has been dismissed, the memorandum of such company shall, where such order has the effect of increasing the authorised share capital of the company, stand altered and the authorised share capital of such company shall stand increased by an amount equal to the amount of the value of shares which such debentures or loans or part thereof has been converted into.

Notes on ClausesClause 62. — This clause corresponds to section 81 of the Companies Act, 1956 and seeks to provide that a company having a share capital can increase its subscribed capital by the issue of further shares to its existing members by sending a letter of offer, containing certain conditions, to employees through employee’s stock option, subject to approval by special resolution, or to the general public, after having the shares valued by registered valuers. This provision does not apply to conversion of debentures or loans into shares of the company in certain cases.

1 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20162 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20163 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-2016


1[63. Issue of Bonus Shares2 - (1) A company may issue fully paid-up bonus shares to its members, in any

manner whatsoever, out of—(i) its free reserves;(ii) the securities premium account; or(iii) the capital redemption reserve account:

Provided that no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets.

(2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares under sub-section (1), unless—(a) it is authorised by its articles;(b) it has, on the recommendation of the Board, been authorised in the

general meeting of the company;(c) it has not defaulted in payment of interest or principal in respect of

fixed deposits or debt securities issued by it;(d) it has not defaulted in respect of the payment of statutory dues of

the employees, such as, contribution to provident fund, gratuity and bonus;

(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up;

(f) it complies with such conditions as may be prescribed.(3) The bonus shares shall not be issued in lieu of dividend.

Notes on ClausesClause 63. — This is a new clause, which provides for condition and manner of issue of fully paid-up bonus shares to its members.64. 3Notice to be given to Registrar for alteration of Share Capital4 - (1) Where—

(a) a company alters its share capital in any manner specified in sub-section (1) of section 61;

(b) an order made by the Government under sub-section (4) read with sub-section (6) of section 62 has the effect of increasing authorised capital of a company; or

(c) a company redeems any redeemable preference shares, the company shall file a notice in the prescribed form with the

Registrar within a period of thirty days of such alteration or increase or redemption, as the case may be, along with an altered memorandum.

(2) If a company and any officer of the company who is in default contravenes the provisions of sub-section (1), it or he shall be punishable with fine which may extend to one thousand rupees for each day during which such default continues, or five lakh rupees, whichever is less.]

1 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated 26.03.2014

2 See rule 14 of the Company (Share Capital & Debentures) Rules, 2014.3 This section is corresponding to Section 94A(3), 95 & 97 of the Companies Act, 19564 See rule 15 & form SH 7 of the Company (Share Capital & Debentures) Rules, 2014.


Notes on ClausesClause 64. — This clause corresponds to sections 95 and 97 of the Companies Act, 1956 and seeks to provide for the companies to give notice to Registrar of alteration or increase of share capital along with an altered memorandum.1[65. 2Unlimited Company to provide for reserve share capital on conversion

into limited company -

An unlimited company having a share capital may, by a resolution for registration as a limited company under this Act, do either or both of the following things, namely—(a) increase the nominal amount of its share capital by increasing the

nominal amount of each of its shares, subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being wound up;

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.]

Notes on ClausesClause 65. — This clause corresponds to section 32 of the Companies Act, 1956 and seeks to provide that an unlimited company having a share capital may be converted as a limited company by increasing the nominal amount of each share. This clause further provides that the company can not call unpaid portion of share capital except in the event of winding up.66. 3Reduction of Share Capital - (1) Subject to confirmation by the Tribunal on an application by the company, a

company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital in any manner and in particular, may—(a) extinguish or reduce the liability on any of its shares in respect of the

share capital not paid-up; or(b) either with or without extinguishing or reducing liability on any of its

shares,—(i) cancel any paid-up share capital which is lost or is unrepresented

by available assets; or(ii) pay off any paid-up share capital which is in excess of the wants

of the company, alter its memorandum by reducing the amount of its share capital

and of its shares accordingly: Provided that no such reduction shall be made if the company is

in arrears in the repayment of any deposits accepted by it, either before or after the commencement of this Act, or the interest payable thereon.


2 This section is corresponding to Section 98 of the Companies Act, 19563 This section is corresponding to Section 100, 101, 102, 103, 104 & 105 of the Companies Act,

1956


(2) The Tribunal shall give notice of every application made to it under sub-section (1) to the Central Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the creditors of the company and shall take into consideration the representations, if any, made to it by that Government, Registrar, the Securities and Exchange Board and the creditors within a period of three months from the date of receipt of the notice:

Provided that where no representation has been received from the Central Government, Registrar, the Securities and Exchange Board or the creditors within the said period, it shall be presumed that they have no objection to the reduction.

(3) The Tribunal may, if it is satisfied that the debt or claim of every creditor of the company has been discharged or determined or has been secured or his consent is obtained, make an order confirming the reduction of share capital on such terms and conditions as it deems fit:

Provided that no application for reduction of share capital shall be sanctioned by the Tribunal unless the accounting treatment, proposed by the company for such reduction is in conformity with the accounting standards specified in section 133 or any other provision of this Act and a certificate to that effect by the company’s auditor has been filed with the Tribunal.

(4) The order of confirmation of the reduction of share capital by the Tribunal under sub-section (3) shall be published by the company in such manner as the Tribunal may direct.

(5) The company shall deliver a certified copy of the order of the Tribunal under subsection (3) and of a minute approved by the Tribunal showing—(a) the amount of share capital;(b) the number of shares into which it is to be divided;(c) the amount of each share; and(d) the amount, if any, at the date of registration deemed to be paid-up on

each share, to the Registrar within thirty days of the receipt of the copy of the order,

who shall register the same and issue a certificate to that effect.(6) Nothing in this section shall apply to buy-back of its own securities by a

company under section 68.(7) A member of the company, past or present, shall not be liable to any call or

contribution in respect of any share held by him exceeding the amount of difference, if any, between the amount paid on the share, or reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the amount of the share as fixed by the order of reduction.

(8) Where the name of any creditor entitled to object to the reduction of share capital under this section is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to his debt or claim, not entered on the list of creditors, and after such reduction, the company 1[commits a default, within the meaning of section 6 of the Insolvency and Bankruptcy Code, 2016, in respect of the amount of his debt or claim.]-

1 Substituted for “ is unable, within the meaning of sub-section (2) of section 271, to pay the amount of his debt or claim,” by Inslovency and Bankruptcy Code, 2016, Dated : 28-05-2016.


(a) every person, who was a member of the company on the date of the registration of the order for reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an amount not exceeding the amount which he would have been liable to contribute if the company had commenced winding up on the day immediately before the said date; and

(b) if the company is wound up, the Tribunal may, on the application of any such creditor and proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.

(9) Nothing in sub-section (8) shall affect the rights of the contributories among themselves.

(10) If any officer of the company—(a) knowingly conceals the name of any creditor entitled to object to the

reduction;(b) knowingly misrepresents the nature or amount of the debt or claim of

any creditor; or(c) abets or is privy to any such concealment or misrepresentation as

aforesaid, he shall be liable under section 447.

(11) If a company fails to comply with the provisions of sub-section (4), it shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees.

Notes on ClausesClause 66. — This clause corresponds to sections 100 to 105 of the Companies Act, 1956 and seeks to provide that on the confirmation by the Tribunal a limited company may provides that the Tribunal shall give notice to the Registrar, Central Government and to the SEBI and consider the representations received in this behalf. The company shall deliver a certified copy of the order of the Tribunal to the Registrar who shall issue a certificate to this effect to the company. The clause does not apply to buy back of its own securities by a company. The clause further provides that if a company does not comply with the provision of this clause the company shall be punishable with fine.1[67. 2Restriction on purchase by company or giving of loans by it for purchase

of its shares3- 4 (1) 5No company limited by shares or by guarantee and having a share capital

1 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated 26.03.2014

2 This section is corresponding to Section 77 of the Companies Act, 19563 See rule 16 of the Company (Share Capital & Debentures) Rules, 2014.4 Provision of Section 67 Shall not apply to private companies - (a) in whose share capital no other body corporate has invested any money; (b) if the borrowings of such a company from banks or financial institutions or any body corporate

is less than twice its paid up share capital or fifty crore rupees, whichever is lower; and (c) such a company is not in default in repayment of such borrowings subsisting at the time of

making transactions under this section.5 For Nidhis Companies Provision of Section 67 Sub- Section (1) Shall not apply, when shares are

purchased by the company from a member on his ceasing to be a depositor or borrower and it shall


shall have power to buy its own shares unless the consequent reduction of share capital is effected under the provisions of this Act.

(2) No public company shall give, whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in connection with, a purchase or subscription made or to be made, by any person of or for any shares in the company or in its holding company.

(3) Nothing in sub-section (2) shall apply to—(a) the lending of money by a banking company in the ordinary course of

its business;(b) the provision by a company of money in accordance with any scheme

approved by company through special resolution and in accordance with such requirements as may be prescribed, for the purchase of, or subscription for, fully paidup shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such shares held by the employee of the company;

(c) the giving of loans by a company to persons in the employment of the company other than its directors or key managerial personnel, for an amount not exceeding their salary or wages for a period of six months with a view to enabling them to purchase or subscribe for fully paid-up shares in the company or its holding company to be held by them by way of beneficial ownership:

Provided that disclosures in respect of voting rights not exercised directly by the employees in respect of shares to which the scheme relates shall be made in the Board’s report in such manner as may be prescribed.

(4) Nothing in this section shall affect the right of a company to redeem any preference shares issued by it under this Act or under any previous company law.

(5) If a company contravenes the provisions of this section, it shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.

Notes on ClausesClause 67. — This clause corresponds to section 77 of the Companies Act, 1956 and seeks to provide the restrictions on purchase by companies or giving loans to others for purchase of its own shares. This clause further provides that the company’s right to redeem any preference shares issued by it is not affected by such restriction. If a company contravenes the provision of this clause the company and every officer in default shall be punishable with fine and imprisonment.

not be considered as reduction of capital under section 66 of the Companies Act, 2013


68. 1Power of company to purchase its own Securities2 - (1) Notwithstanding anything contained in this Act, but subject to the provisions

of sub-section (2), a company may purchase its own shares or other specified securities (hereinafter referred to as buy-back) out of—(a) its free reserves;(b) the securities premium account; or(c) the proceeds of the issue of any shares or other specified securities: Provided that no buy-back of any kind of shares or other specified

securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.

(2) No company shall purchase its own shares or other specified securities under sub-section (1), unless—(a) the buy-back is authorised by its articles;(b) a special resolution has been passed at a general meeting of the

company authorising the buy-back: Provided that nothing contained in this clause shall apply to a case

where—(i) the buy-back is, ten per cent. or less of the total paid-up equity

capital and free reserves of the company; and(ii) such buy-back has been authorised by the Board by means of a

resolution passed at its meeting;(c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up

capital and free reserves of the company: Provided that in respect of the buy-back of equity shares in any

financial year, the reference to twenty-five per cent. in this clause shall be construed with respect to its total paid-up equity capital in that financial year;

(d) the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves:

Provided that the Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies;

(e) all the shares or other specified securities for buy-back are fully paid-up;

(f) the buy-back of the shares or other specified securities listed on any recognised stock exchange is in accordance with the regulations made by the Securities and Exchange Board in this behalf; and

(g) the buy-back in respect of shares or other specified securities other than those specified in clause (f) is in accordance with such rules as may be prescribed:

Provided that no offer of buy-back under this sub-section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any.

1 This section is corresponding to Section 77A of the Companies Act, 19562 See rule 17 & form SH 8 of the Company (Share Capital & Debentures) Rules, 2014.


(3) The notice of the meeting at which the special resolution is proposed to be passed under clause (b) of sub-section (2) shall be accompanied by an explanatory statement stating—(a) a full and complete disclosure of all material facts;(b) the necessity for the buy-back;(c) the class of shares or securities intended to be purchased under the

buy-back;(d) the amount to be invested under the buy-back; and(e) the time-limit for completion of buy-back.

(4) Every buy-back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board under clause (b) of sub-section (2).

(5) The buy-back under sub-section (1) may be—(a) from the existing shareholders or security holders on a proportionate

basis;(b) from the open market;(c) by purchasing the securities issued to employees of the company

pursuant to a scheme of stock option or sweat equity.(6) Where a company proposes to buy-back its own shares or other specified

securities under this section in pursuance of a special resolution under clause (b) of sub-section (2) or a resolution under item (ii) of the proviso thereto, it shall, before making such buy-back, file with the Registrar and the Securities and Exchange Board, a declaration of solvency1 signed by at least two directors of the company, one of whom shall be the managing director, if any, in such form as may be prescribed and verified by an affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board:

Provided that no declaration of solvency shall be filed with the Securities and Exchange Board by a company whose shares are not listed on any recognised stock exchange.

(7) Where a company buys back its own shares or other specified securities, it shall extinguish and physically destroy the shares or securities so bought back within seven days of the last date of completion of buy-back.

(8) Where a company completes a buy-back of its shares or other specified securities under this section, it shall not make a further issue of the same kind of shares or other securities including allotment of new shares under clause (a) of sub-section (1) of section 62 or other specified securities within a period of six months except by way of a bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares.

1 See rule 17(3) & form SH 9 of the Company (Share Capital & Debentures) Rules, 2014.


(9) Where a company buys back its shares or other specified securities under this section, it shall maintain a register1 of the shares or securities so bought, the consideration paid for the shares or securities bought back, the date of cancellation of shares or securities, the date of extinguishing and physically destroying the shares or securities and such other particulars as may be prescribed.

(10) A company shall, after the completion of the buy-back under this section, file with the Registrar and the Securities and Exchange Board a return containing such particulars relating to the buy-back within thirty days of such completion, as may be prescribed2:

Provided that no return shall be filed with the Securities and Exchange Board by a company whose shares are not listed on any recognised stock exchange.

(11) If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.

Explanation I.—For the purposes of this section and section 70, “specified securities” includes employees’ stock option or other securities as may be notified by the Central Government from time to time.

Explanation II.—For the purposes of this section, “free reserves” includes securities premium account.]

Notes on ClausesClause 68. — This clause corresponds to section 77A of the Companies Act, 1956 and seeks to provide that a company may purchase its own shares out of its free reserves, the securities premium account or from the proceeds of the issue of any shares or other specified securities. The clause provides for the conditions to be fulfilled for buy-back of securities. Every buy-back should be completed within one year from the date of passing of the special resolution. A declaration of solvency has to be filed by the company to the Registrar and SEBI before the buy-back is proposed. After completion of buy-back a return has to be filed with ROC and Securities and Exchange Board of India. After buying back, the company shall physically destroy all the shares. If a company makes any default in complying with the provisions of this clause the company and every officer in default shall be punishable with fine and imprisonment.3[69. 4Transfer of certain sums to Capital Redemption Reserve Account - (1) Where a company purchases its own shares out of free reserves or securities

premium account, a sum equal to the nominal value of the shares so purchased shall be transferred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet.

1 See form SH 10 of the Company (Share Capital & Debentures) Rules, 2014.2 See form SH 11 & 15 of the Company (Share Capital & Debentures) Rules, 2014.3 These provisions comes into force w.e.f. 12th September, 2013 Vide Notification No. S.O. 2754(E)

dated 12.09.20134 This section is corresponding to Section 77AA of the Companies Act, 1956


(2) The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.]

Notes on ClausesClause 69. — This clause corresponds to section 77AA of the Companies Act, 1956 and seeks to provide that in case of buy-back of shares out of free reserves, a sum equal to the nominal value of the shares so purchased shall be transferred to capital redemption reserve account. The said account may be applied in paying up unissued shares of the company to be issued to the company as fully paid bonus shares.1[70. 2Prohibition for buy-back in certain circumstances - (1) No company shall directly or indirectly purchase its own shares or other

specified securities—(a) through any subsidiary company including its own subsidiary

companies;(b) through any investment company or group of investment companies;

or(c) if a default, is made by the company, in the repayment of deposits

accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any financial institution or banking company:

Provided that the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist.]

3[(2) No company shall, directly or indirectly, purchase its own shares or other specified securities in case such company has not complied with the provisions of sections 92, 123, 127 and section 129. ]

Notes on ClausesClause 70. — This clause corresponds to section 77B of the Companies Act, 1956 and seeks to prohibit buy-back through any subsidiary company, through any investment company or through such company which has defaulted in making repayment of deposits, interest thereon, redemption of debentures, payment of dividend, etc.4[71. 5Debentures6 -

(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption:


2 This section is corresponding to Section 77B of the Companies Act, 19563 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated

26.03.20144 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902 (E) dated

26.03.2014 5 This section is corresponding to Section 117, 117A, 117B & 117C of the Companies Act, 19566 See rule 18 of the Company (Share Capital & Debentures) Rules, 2014.


Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting

(2) No company shall issue any debentures carrying any voting rights.(3) Secured debentures may be issued by a company subject to such terms and

conditions as may be prescribed.(4) Where debentures are issued by a company under this section, the company

shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures.

(5) No company shall issue a prospectus or make an offer or invitation to the public or to its members exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees and the conditions governing the appointment of such trustees shall be such as may be prescribed1.

(6) A debenture trustee shall take steps to protect the interests of the debentureholders and redress their grievances in accordance with such rules as may be prescribed2.

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any contract with the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he fails to show the degree of care and due diligence required of him as a trustee, having regard to the provisions of the trust deed conferring on him any power, authority or discretion:

Provided that the liability of the debenture trustee shall be subject to such exemptions as may be agreed upon by a majority of debenture-holders holding not less than three fourths in value of the total debentures at a meeting held for the purpose.

(8) A company shall pay interest and redeem the debentures in accordance with the terms and conditions of their issue. ]

3(9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the company and any other person interested in the matter, by order, impose such restrictions on the incurring of any further liabilities by the company as the Tribunal may consider necessary in the interests of the debenture-holders.

4(10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures when it is due, the Tribunal may, on the application of any or all of the debenture-holders, or debenture trustee and, after hearing the parties concerned, direct, by order, the company to

1 See rule 19(2) of the Company (Share Capital & Debentures) Rules, 2014.2 See rule 19(3) of the Company (Share Capital & Debentures) Rules, 2014.3 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20164 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-2016


redeem the debentures forthwith on payment of principal and interest due thereon.

1(11) If any default is made in complying with the order of the Tribunal under this section, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees, or with both.

2[(12) A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed3, the procedure for the debenture-holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters.]

Notes on ClausesClause 71. — This clause corresponds to sections 117, 117A, 117B and 117C of the Companies Act, 1956 and seeks to provide that a company may issue debentures with an option to convert into shares, wholly or partly, at the time of redemption but cannot issue debentures with voting rights. On issue of debentures, the company shall create a Debenture Redemption Reserve Account. The company shall not issue prospectus to more than five hundred persons without appointing a debenture trustee. The duty of the debenture trustee is to protect the interest of the debenture holders and redress their grievances. This clause further provides that in the event of the failure of the company in making repayment of maturity value of debentures or to pay interest, the tribunal may, on an application, pass such order to make the payment to the matured debenture holders and interest due thereon. If any default is made in complying with the order of the Tribunal under this clause every officer of the company shall be punishable with fine or imprisonment or both.4[72. 5Power to nominate6 - (1) Every holder of securities of a company may, at any time, nominate, in the

prescribed manner, any person to whom his securities shall vest in the event of his death.

(2) Where the securities of a company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, any person to whom all the rights in the securities shall vest in the event of death of all the joint holders.

(3) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of the securities of a company, where a nomination made in the prescribed

1 These Provision Come Into force 1-06-2016 vide SO 1934(E), Dated : 01-06-20162 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated

26.03.20143 See Rule 18(5) and Form SH 12 of the Company (Share Capital & Debentures) Rules, 20144 These provisions comes into force w.e.f. 1st April, 2014 Vide Notification No. S.O. 902(E) dated

26.03.20145 This section is corresponding to Section 109A of the Companies Act, 19566 See rule 19 & form SH 13 of the Company (Share Capital & Debentures) Rules, 2014.


manner purports to confer on any person the right to vest the securities of the company, the nominee shall, on the death of the holder of securities or, as the case may be, on the death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case may be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner1.

(4) Where the nominee is a minor, it shall be lawful for the holder of the securities, making the nomination to appoint, in the prescribed manner, any person to become entitled to the securities of the company, in the event of the death of the nominee during his minority.

Notes on ClausesClause 72. — This clause corresponds to section 109A of the Companies Act, 1956 and seeks to provide that every share holder or debenture holder may appoint a nominee or a joint nominee who shall be the owner of the instrument in the event of death of the holder or the joint holder unless the nomination is varied or cancelled.

1 See form SH 14 of the Company (Share Capital & Debentures) Rules, 2014.

2.318

Companies (share Capital and debentures)rules, 2014.

In exercise of the powers conferred under clause (a) (ii) of section 43, sub-clause (d) of sub-section (1) of section 54, sub-section (2) of 55, sub-section (1) of section 56, sub-section (3) of section 56, sub-section (1) of section 62, sub-section (2) of section 42, clause (f) of sub-section (2) of section 63, sub-section (1) of section 64 , clause (b) of sub-section 3 of section 67, sub-section (2) of section 68 subsection (6) of section 68, sub-section (9) of section 68, sub-section (10) of section 68, sub-section (3) of section 71, sub-section (6) of section 71, sub-section (13) of section 71 and sub-sections (1) and (2) of section 72, read with sub-section (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013) and in supersession of the Companies (Central Government’s) General Rules and Forms, 1956 or any other relevant rules prescribed under the Companies Act, 1956 (1 of 1956) on matters covered under these rules, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely: -1. Short title and commencement.-(1) These rules may be called the Companies (Share Capital and Debentures)

Rules, 2014.(2) They shall come into force on the date of their publication in the Official

Gazette.2. Definitions.-(1) In these rules, unless the context otherwise requires,-

(a) ‘‘Act’’ means the Companies Act, 2013 (18 of 2013);(b) ‘‘Annexure’’ means the Annexure to these rules;(c) ‘‘Fees’’meansthefeesasspecifiedintheCompanies(Registrationofficesand

fees) Rules, 2014;(d) ‘‘Form’’ or “e-form” means a form set forth in Annexure to these rules

which shall be used for the matter to which it relates;(e) ‘‘Regional Director’’ means the person appointed by the Central

Government in the Ministry of Corporate Affairs as a Regional Director;

(f) ‘‘section’’ means the section of the Act.(2) Wordsandexpressionsused in theserulesbutnotdefinedanddefined in

the Act or in Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act and said rules.

2.319Companies (Share Capital and Debentures) RULE 4

1[3. Application. The provisions of those rules shall apply to -

(a) all unlisted public companies;(b) all Private companies; and(c) listed companies so far as they do not contradict or conflict with any

other regulation framed in this regard by the Securities and Exchange Board of lndia.]

4. Equityshareswithdifferentialrights.-(1) No company limited by shares shall issue equity shares with differential rights

as to dividend, voting or otherwise, unless it complies with the following conditions, namely:-(a) the articles of association of the company authorizes the issue of shares

with differential rights;(b) the issue of shares is authorized by an ordinary resolution passed at a

general meeting of the shareholders: Provided that where the equity shares of a company are listed on a

recognized stock exchange, the issue of such shares shall be approved by the shareholders through postal ballot ;

(c) the shares with differential rights shall not exceed twenty-six percent of the total post-issue paid up equity share capital including equity shares with differential rights issued at any point of time;

(d) thecompanyhavingconsistenttrackrecordofdistributableprofitsforthe last three years;

(e) thecompanyhasnotdefaultedinfilingfinancialstatementsandannualreturnsforthreefinancialyears immediatelyprecedingthefinancialyear in which it is decided to issue such shares;

(f) the company has no subsisting default in the payment of a declared dividend to its shareholders or repayment of its matured deposits or redemption of its preference shares or debentures that have become due for redemption or payment of interest on such deposits or debentures or payment of dividend;

(g) the company has not defaulted in payment of the dividend on preference sharesorrepaymentofanytermloanfromapublicfinancialinstitutionorStatelevelfinancialinstitutionorscheduledBankthathasbecomerepayable or interest payable thereon or dues with respect to statutory

1. Substituted by the Companies (Share Capital and Debentues) Amendment Rules, 2015, Prior to its substitution it read as under:

“ 3. Application.- The provisions of these rules shall apply to

(a) all unlisted public companies;(b) all private companies; and(c) listed companies, sofarastheydonotcontradictorconflictwithanyotherprovisionframedinthisregard

bytheSecuritiesandExchangeBoardofIndia.”

2.320 RULES FRAMED UNDER CHAPTER IV

payments relating to its employees to any authority or default in crediting the amount in Investor Education and Protection Fund to the Central Government;

1[Provided that a company may issue equity shares with differential rights upon expiry of five years from the end of the financial year in which such default was made good.]

(h) the company has not been penalized by Court or Tribunal during the lastthreeyearsofanyoffenceundertheReserveBankofIndiaAct,1934,theSecuritiesandExchangeBoardofIndiaAct,1992,theSecuritiesContracts Regulation Act, 1956, the Foreign Exchange Management Act, 1999 or any other special Act, under which such companies being regulated by sectoral regulators.

(2) The explanatory statement to be annexed to the notice of the general meeting in pursuance of section 102 or of a postal ballot in pursuance of section 110 shall contain the following particulars, namely:-(a) the total number of shares to be issued with differential rights;(b) the details of the differential rights ;(c) the percentage of the shares with differential rights to the total

post issue paid up equity share capital including equity shares with differential rights issued at any point of time;

(d) thereasonsorjustificationfortheissue;(e) the price at which such shares are proposed to be issued either at par

or at premium;(f) the basis on which the price has been arrived at;(g) (i) in case of private placement or preferential issue-

(a) details of total number of shares proposed to be allotted to promoters, directors and key managerial personnel;

(b) details of total number of shares proposed to be allotted to persons other than promoters, directors and key managerial personnel and their relationship if any with any promoter, director or key managerial personnel;

(ii) in case of public issue - reservation, if any, for different classes of applicants including promoters, directors or key managerial personnel;

(h) the percentage of voting right which the equity share capital with differential voting right shall carry to the total voting right of the aggregate equity share capital;

(i) the scale or proportion in which the voting rights of such class or type of shares shall vary;

(j) the change in control, if any, in the company that may occur consequent to the issue of equity shares with differential voting rights;

(k) the diluted Earning Per Share pursuant to the issue of such shares, calculated in accordance with the applicable accounting standards;

(l) the pre and post issue shareholding pattern along with voting rights 1 Inserted by Companies (Share Capital and Debentures) Third Amendment Rules, 2016. w.e.f. 19-

07-2016.


as per clause 35 of the listing agreement issued by Security Exchange BoardofIndiafromtimetotime.

(3) The company shall not convert its existing equity share capital with voting rights into equity share capital carrying differential voting rights and vice–versa.

(4) TheBoard ofDirectors shall, inter alia, disclose in theBoard’s Report forthefinancialyearinwhichthe issue of equity shares with differential rights was completed, the following details, namely:-(a) the total number of shares allotted with differential rights;(b) the details of the differential rights relating to voting rights and

dividends;(c) the percentage of the shares with differential rights to the total post

issue equity share capital with differential rights issued at any point of time and percentage of voting rights which the equity share capital with differential voting right shall carry to the total voting right of the aggregate equity share capital;

(d) the price at which such shares have been issued;(e) the particulars of promoters, directors or key managerial personnel to

whom such shares are issued;(f) the change in control, if any, in the company consequent to the issue of

equity shares with differential voting rights;(g) the diluted Earning Per Share pursuant to the issue of each class of

shares, calculated in accordance with the applicable accounting standards;

(h) the pre and post issue shareholding pattern along with voting rights in theformatspecifiedundersub-rule(2)ofrule4.

(5) The holders of the equity shares with differential rights shall enjoy all other rights such as bonus shares, rights shares etc., which the holders of equity shares are entitled to, subject to the differential rights with which such shares have been issued.

(6) Where a company issues equity shares with differential rights, the Register of Members maintained under section 88 shall contain all the relevant particulars of the shares so issued along with details of the shareholders.

1[Explanation.- For the purposes of this rule it is hereby clarified that equity shares with differential rights issued by any company under the provisions of the Companies Act, 1956 (1 of 1956) and the rules made thereunder, shall continue to be regulated under such provisions and rules.]

5. Certificateofshares(wheresharesarenotindematform).-(1) Where a company issues any share capital, no certificate of any share or

shares held in the company shall be issued, except-1 Substituted by the Companies (Share Capital and Debentures) Amendment Rules, 2014. w.e.f 18-6-

2014, Prior to its substitution the explanation read as under: Explanation.- Forthepurposesofthisrule,itisherebyclarifiedthatdifferentialrightsattachedto

such shares issued by any company under the provisions of Companies Act, 1956, shall continue till such rights are converted with the differential rights in accordance with the provisions of the Companies Act, 2013.


(a) inpursuanceofaresolutionpassedbytheBoard;and(b) on surrender to the company of the letter of allotment or fractional

coupons of requisite value, save in cases of issues against letters of acceptance or of renunciation, or in cases of issue of bonus shares:

Provided thatiftheletterofallotmentislostordestroyed,theBoardmayimpose such reasonable terms, if any, as to seek supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the companyininvestigatingevidence,asitmaythinkfit.

(2) Every certificate of share or shares shall be inForm No. SH.1 or as near thereto as possible and shall specify the name(s) of the person(s) in whose favorthecertificateisissued,thesharestowhichitrelatesandtheamountpaid-up thereon.

(3) Everysharecertificateshallbe1[issued under the seal, if any] , which shall beaffixedinthePresenceof,andsignedby-(a) twodirectorsdulyauthorizedbytheBoardofDirectorsofthecompany

forthepurposeorthecommitteeoftheBoard,ifsoauthorizedbytheBoard;and

2[(b) the secretary or any person authorised by the Board for the purpose Provided that in case a company does not have a common seal, the share

certificate shall be signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary:

Provided further that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be a person other than a managing director or a wholetime director:

Provided also that, in case of a One person Company, every share certificate shall be issued under the seal, if any, of the company, which shall be affixed in the presence of and signed by one director or a person authorised by the Board of Directors of the company for the purpose and the Company Secretary, or any other person authorised by the Board for the purpose, and in case the One person Company does not have a

1 Substituted for “issued under the seal of the company” by Companies (Share Capital and Debentures) Second Amendment Rules, 2015, w.e.f. 29-05-2015

2 Substituted by Companies (Share Capital and Debentures) Second Amendment Rules, 2015, w.e.f. 29-05-2015

“(b) thesecretaryoranypersonauthorisedbytheBoardforthepurpose: [***] [Provided that], if the composition of theBoard permits of it, at least one of the aforesaid two

directors shall be a person other than the managing or whole-time director: [Providedfurtherthat]that,incaseofaOnePersonCompany,everysharecertificateshallbeissued

underthesealofthecompany,whichshallbeaffixedinthepresenceofandsignedbyonedirectororapersonauthorizedbytheBoardofDirectorsofthecompanyforthepurposeandtheCompanySecretary,oranyotherpersonauthorizedbytheBoardforthepurpose.

Explanation.- For the purposes of this sub-rule, a director shall be deemed to have signed the share certificate if his signature isprinted thereonas a facsimile signaturebymeansof anymachine,equipment or other mechanical means such as engraving in metal or lithography, or digitally signed, but not by means of a rubber stamp, provided that the director shall be personally responsible for permittingtheaffixationofhissignaturethusandthesafecustodyofanymachine,equipmentorother material used for the purpose.”


common seal, the share Certificate Shall be signed by the persons in the presence of whom the seal is required to be affixed in this proviso]

(4) Theparticularsofeverysharecertificateissuedinaccordancewithsub-rule(1) shall be entered in the Register of Members maintained in accordance with the provisions of section 88 along with the name(s) of person(s) to whom it has been issued, indicating the date of issue.

6. Issueofrenewedorduplicatesharecertificate.-(1) thecertificateofanyshareorsharesshallnotbeissuedeitherinexchange

for those which are sub-divided or consolidated or in replacement of those which are defaced, mutilated, torn or old, decrepit, worn out, or where the pages on the reverse for recording transfers have been duly utilised, unless thecertificateinlieuofwhichitisissuedissurrenderedtothecompany:

Provided thatthecompanymaychargesuchfeeastheBoardthinksfit,notexceedingfiftyrupeespercertificateissuedonsplittingorconsolidationofsharecertificate(s)orinreplacementofsharecertificate(s)thataredefaced,mutilated, torn or old, decrepit or worn out:*1(b)Whereacertificateis issuedinanyofthecircumstancesspecifiedin

this sub-rule, it shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is “Issued in lieu of share certificate No ................... sub-divided/replaced/on consolidation” and also that no fee shall be payable pursuant to scheme of arrangement sanctioned by the High Court or Central Government:

(c) A company mayreplacealltheexistingcertificatesbynewcertificatesupon sub-division or consolidation of shares or merger or demerger or anyreconstitutionwithoutrequiringoldcertificatestobesurrenderedsubject to compliance with clause (a) of sub-rule (1) rule 5, sub-rule (2) of rule 5 and sub-rule (3) of rule 5.

(2)(a) Theduplicatesharecertificateshallbenotissuedinlieuofthosethatare lost or destroyed, without the prior consent of the Board2 and withoutpaymentof such fees as theBoard thinks fit, not exceedingrupees fifty per certificate and on such reasonable terms, such asfurnishing supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating the evidence produced:

(b) Whereacertificateisissuedinanyofthecircumstancesspecifiedinthissub-rule, it shall be stated prominently on the face of it and be recorded in the Register maintained for the purpose, that it is “duplicate issued in lieu of share certificate No..............”. and the word “duplicate” shall be stampedorprintedprominentlyonthefaceofthesharecertificate:

(c) In case unlisted companies, the duplicate share certificates shall beissued within a period of three months and in case of listed companies suchcertificateshallbeissued3[within forty-five days], from the date of submission of complete documents with the company respectively.

* Clause (b) and (c) are wrongly number and should be corrected by MCA.2 Powers may be delegated to a committe of directors [General Circular No. 19/2014, dated 12-06-

20143 Words “within fifteen days” substituted by the Companies (Share Capital and Debentues)

Amendment Rules, 2015, w.e.f. 18-03-2015


(3)(a) Theparticularsofeverysharecertificateissuedinaccordancewithsub-rules (1) and (2) shall be entered forthwith in a Register of Renewed and Duplicate Share Certificates maintained in Form No.SH.2 indicating againstthename(s)oftheperson(s)towhomthecertificateisissued,thenumberanddateofissueofthesharecertificateinlieuofwhichthenewcertificate is issued,andthenecessarychanges indicated inthe Register of Members by suitable cross-references in the “Remarks” column.

(b) Theregistershallbekeptattheregisteredofficeofthecompanyoratsuch other place where the Register of Members is kept and it shall be preserved permanently and shall be kept in the custody of the company secretaryofthecompanyoranyotherpersonauthorizedbytheBoardfor the purpose.

(c) All entries made in the Register of Renewed and Duplicate Share CertificatesshallbeauthenticatedbythecompanysecretaryorsuchotherpersonasmaybeauthorisedbytheBoardforthepurposesofsealingandsigningthesharecertificateundertheprovisionsofsub-rule (3) of rule 5.

7. Maintenance of share certificate forms and related books anddocuments.-

(1) AllblankformstobeusedforissueofsharecertificatesshallbeprintedandtheprintingshallbedoneonlyontheauthorityofaresolutionoftheBoardand the blank form shall be consecutively machine-numbered and the forms and the blocks, engravings, facsimiles and hues relating to the printing of such forms shall be kept in the custody of the secretary or such other person astheBoardmayauthoriseforthepurpose;andthecompanysecretaryorother person aforesaid shall be responsible for rendering an account of these formstotheBoard.

(2) The following persons shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates,includingtheblankformsofsharecertificatesreferredtoinsub-rule (1), namely:—(a) thecommitteeoftheBoard,ifsoauthorizedbytheBoardorwherethe

company has a company secretary, the company secretary; or(b) wherethecompanyhasnocompanysecretary,aDirectorspecifically

authorisedbytheBoardforsuchpurpose.(3) All books referred to in sub-rule (2) shall be preserved in good order not

less than thirty years and in case of disputed cases, shall be preserved permanently,andallcertificatessurrenderedtoacompanyshallimmediatelybe defaced by stamping or printing the word “cancelled” in bold letters and may be destroyed after the expiry of three years from the date on which they aresurrendered,undertheauthorityofaresolutionoftheBoardandinthepresenceofapersondulyappointedbytheBoardinthisbehalf:

Provided that nothing in this sub-rule shall apply to cancellation of the certificatesofsecurities,undersub-section(2)ofsection6oftheDepositoriesAct,1996(22of1996),whensuchcertificatesarecancelledinaccordance


with sub-regulation (5) of regulation 54 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, madeundersection30oftheSecuritiesandExchangeBoardofIndiaAct,1992(15of 1992) read with section 25 of the Depositories Act, 1996 (22 of 1996).

8. Issueofsweatequityshares.-(1) A company other than a listed company, which is not required to comply with

theSecuritiesandExchangeBoardofIndiaRegulationsonsweatequity,shallnot issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called, unless the issue is authorised by a special resolution passed by the company in general meeting.

Explanation.- For the purposes of this rule-(i) the expressions ‘‘Employee’’ means-

(a) a permanent employee of the company who has been working in India or outside India, for at least last one year; or

(b) a director of the company, whether a whole time director or not; or

(c) an employee or a director as defined in sub-clauses (a) or (b)above of a subsidiary, in India or outside India, or of a holding company of the company;

(ii) the expression ‘Value additions’ means actual or anticipated economic benefitsderivedor tobederivedby thecompany fromanexpertora professional for providing know-how or making available rights in the nature of intellectual property rights, by such person to whom sweat equity is being issued for which the consideration is not paid or included in the normal remuneration payable under the contract of employment, in the case of an employee.

(2) The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall contain the following particulars, namely:-(a) thedateoftheBoardmeetingatwhichtheproposalforissueofsweat

equity shares was approved;(b) thereasonsorjustificationfortheissue;(c) the class of shares under which sweat equity shares are intended to be

issued;(d) the total number of shares to be issued as sweat equity;(e) the class or classes of directors or employees to whom such equity

shares are to be issued;(f) the principal terms and conditions on which sweat equity shares are to

be issued, including basis of valuation ;(g) the time period of association of such person with the company;(h) the names of the directors or employees to whom the sweat equity

shares will be issued and their relationship with the promoter or/and Key Managerial Personnel;

(i) the price at which the sweat equity shares are proposed to be issued;


(j) the consideration including consideration other than cash, if any to be received for the sweat equity;

(k) the ceiling on managerial remuneration, if any, be breached by issuance of such sweat equity and how it is proposed to be dealt with;

(l) a statement to the effect that the company shall conform to the applicable accounting standards; and

(m) diluted Earning Per Share pursuant to the issue of sweat equity shares , calculated in accordance with the applicable accounting standards.

(3) The special resolution authorising the issue of sweat equity shares shall be valid for making the allotment within a period of not more than twelve months from the date of passing of the special resolution.

(4) The company shall not issue sweat equity shares for more than fifteenpercent of the existing paid up equity share capital in a year or shares of the issuevalueofrupeesfivecrores,whicheverishigher:

Provided that the issuance of sweat equity shares in the Company shall not exceedtwentyfivepercent,ofthepaidupequitycapitaloftheCompanyatany time.

1[Provided further that a startup company, as defined in notification number GSR 180(E) dated 17th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, may issue sweat equity shares not exceeding fifty per cent of its paid up capital upto five years from the date of its incorporation or registration.]

(5) The sweat equity shares issued to directors or employees shall be locked in/non transferable for a period of three years from the date of allotment and the fact that the share certificates are under lock-in andthe period of expiry of lock in shall be stamped in bold or mentioned inanyotherprominentmanneronthesharecertificate.

(6) The sweat equity shares to be issued shall be valued at a price determined by aregisteredvaluerasthefairpricegivingjustificationforsuchvaluation.

(7) The valuation of intellectual property rights or of know how or value additions for which sweat equity shares are to be issued, shall be carried out by a registered valuer, who shall provide a proper report addressed to the Boardofdirectorswithjustificationforsuchvaluation.

(8) A copy of gist along with critical elements of the valuation report obtained under clause (6) and clause (7) shall be sent to the shareholders with the notice of the general meeting.

(9) Where sweat equity shares are issued for a non-cash consideration on the basis of a valuation report in respect thereof obtained from the registered valuer, such non-cash consideration shall be treated in the following manner in the books of account of the company-(a) where the non-cash consideration takes the form of a depreciable

or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the accounting standards; or

(b) where clause (a) is not applicable, it shall be expensed as provided in the accounting standards.

1 Inserted by Companies (Share Capital and Debentures) Third Amendment Rules, 2016. w.e.f. 19-07-2016.


(10) The amount of sweat equity shares issued shall be treated as part of managerial remuneration for the purposes of sections 197 and 198 of the Act,ifthefollowingconditionsarefulfilled,namely.-(a) the sweat equity shares are issued to any director or manager; and(b) they are issued for consideration other than cash, which does not take

the form of an asset which can be carried to the balance sheet of the company in accordance with the applicable accounting standards.

(11) In respect of sweat equity shares issued during an accounting period, the accounting value of sweat equity shares shall be treated as a form of compensationtotheemployeeorthedirectorinthefinancialstatementsofthe company, if the sweat equity shares are not issued pursuant to acquisition of an asset.

(12) If the shares are issued pursuant to acquisition of an asset, the value of the asset, as determined by the valuation report, shall be carried in the balance sheet as per the Accounting Standards and such amount of the accounting value of the sweat equity shares that is in excess of the value of the asset acquired, as per the valuation report, shall be treated as a form of compensationtotheemployeeorthedirectorinthefinancialstatementsofthe company.

Explanation.- For thepurposesof this sub-rule, it ishereby clarified thatthe Accounting value shall be the fair value of the sweat equity shares as determined by a registered valuer under sub-rule (6)

(13) TheBoardofDirectorsshall,inter alia, disclose in the Directors’ Report for the year in which such shares are issued, the following details of issue of sweat equity shares namely:-(a) the class of director or employee to whom sweat equity shares were

issued;(b) the class of shares issued as Sweat Equity Shares;(c) the number of sweat equity shares issued to the directors, key

managerial personnel or other employees showing separately the number of such shares issued to them , if any, for consideration other than cash and the individual names of allottees holding one percent or more of the issued share capital;

(d) thereasonsorjustificationfortheissue;(e) the principal terms and conditions for issue of sweat equity shares,

including pricing formula;(f) the total number of shares arising as a result of issue of sweat equity

shares;(g) the percentage of the sweat equity shares of the total post issued and

paid up share capital;(h) the consideration (including consideration other than cash) received or

benefitaccruedtothecompanyfromtheissueofsweatequityshares;(i) the diluted Earnings Per Share (EPS) pursuant to issuance of sweat

equity shares.


(14) (a) The company shall maintain a Register of Sweat Equity Shares in Form No. SH.3 and shall forthwith enter therein the particulars of Sweat Equity Shares issued under section 54.

(b) The Register of Sweat Equity Shares shall be maintained at the registeredofficeofthecompanyorsuchotherplaceastheBoardmaydecide.

(c) The entries in the register shall be authenticated by the Company Secretary of the company or by any other person authorized by the Boardforthepurpose.

9. Issueandredemptionofpreferenceshares.-(1) A company having a share capital may, if so authorised by its articles, issue

preference shares subject to the following conditions, namely:-(a) the issue of such shares has been authorized by passing a special

resolution in the general meeting of the company(b) the company, at the time of such issue of preference shares, has no

subsisting default in the redemption of preference shares issued either before or after the commencement of this Act or in payment of dividend due on any preference shares.

(2) A company issuing preference shares shall set out in the resolution, particulars in respect of the following matters relating to such shares, namely:-(a) the priority with respect to payment of dividend or repayment of

capital vis-a-vis equity shares;(b) the participation in surplus fund;(c) theparticipation insurplusassetsandprofits,onwinding-upwhich

may remain after the entire capital has been repaid;(d) the payment of dividend on cumulative or non-cumulative basis.(e) the conversion of preference shares into equity shares.(f) the voting rights;(g) the redemption of preference shares.

(3) The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall, inter-alia, provide the complete material facts concerned with and relevant to the issue of such shares, including-(a) the size of the issue and number of preference shares to be issued and

nominal value of each share;(b) the nature of such shares i.e. cumulative or non -cumulative,

participating or non - participating , convertible or non - convertible(c) the objectives of the issue;(d) the manner of issue of shares;(e) the price at which such shares are proposed to be issued;(f) the basis on which the price has been arrived at;(g) the terms of issue, including terms and rate of dividend on each share,

etc.;


(h) the terms of redemption, including the tenure of redemption, redemption of shares at premium and if the preference shares are convertible, the terms of conversion;

(i) the manner and modes of redemption;(j) the current shareholding pattern of the company;(k) the expected dilution in equity share capital upon conversion of

preference shares.(4) Where a company issues preference shares, the Register of Members

maintained under section 88 shall contain the particulars in respect of such preference share holder(s).

(5) A company intending to list its preference shares on a recognized stock exchange shall issue such shares in accordance with the regulations made by theSecuritiesandExchangeBoardofIndiainthisbehalf.

(6) A company may redeem its preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders under section 48 of the Act and the preference shares may be redeemed:-(a) atafixedtimeoronthehappeningofaparticularevent;(b) any time at the company’s option; or(c) any time at the shareholder’s option.

10. Issueandredemptionofpreferencesharesbycompanyininfrastructuralprojects.-

A company engaged in the setting up and dealing with of infrastructural projects may issue preference shares for a period exceeding twenty years but not exceeding thirty years, subject to the redemption of a minimum tenpercentof suchpreference sharesperyear from the twenty first yearonwards or earlier, on proportionate basis, at the option of the preference shareholders.

11. Instrumentoftransfer.-(1) An instrument of transfer of securities held in physical form shall be in Form

No.SH.4 and every instrument of transfer with the date of its execution specifiedthereonshallbedeliveredtothecompanywithinsixtydaysfromthe date of such execution.

(2) In the case of a company not having share capital, provisions of sub-rule (1) shall apply as if the references therein to securities were references instead to the interest of the member in the company.

(3) A company shall not register a transfer of partly paid shares, unless the company has given a notice in Form No. SH.5 to the transferee and the transferee has given no objection to the transfer within two weeks from the date of receipt of notice.

12. Issueofemployeestockoptions.-A company, other than a listed company, which is not required to comply with SecuritiesandExchangeBoardofIndiaEmployeeStockOptionSchemeGuidelinesshall not offer shares to its employees under a scheme of employees’ stock option (hereinafter referred to as “Employees Stock Option Scheme”), unless it complies


with the following requirements, namely:-(1) the issue of Employees Stock Option Scheme has been approved by the

shareholders of the company by passing a special resolution. Explanation: For the purposes of clause (b) of sub-section (1) of section 62

and this rule ‘‘Employee’’ means-(a) a permanent employee of the company who has been working in India

or outside India; or(b) a director of the company, whether a whole time director or not but

excluding an independent director; or(c) anemployeeasdefinedinclauses(a)or(b)ofasubsidiary,inIndiaor

outside India, or of a holding company of the company 1[***] but does not include-(i) an employee who is a promoter or a person belonging to the

promoter group; or(ii) a director who either himself or through his relative or through

any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company.

2[Provided that in case of a startup company, as defined in notification number GSR 180(E) dated 17th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry Government of India, Government of India, the conditions mentioned in sub-clause (i) and (ii) shall not apply upto five years from the date of its incorporation or registration.]

(2) The company shall make the following disclosures in the explanatory statement annexed to the notice for passing of the resolution-(a) the total number of stock options to be granted;(b) identificationofclassesofemployeesentitledtoparticipateintheEmployees

Stock Option Scheme;(c) the appraisal process for determining the eligibility of employees to

the Employees Stock Option Scheme;(d) the requirements of vesting and period of vesting;(e) the maximum period within which the options shall be vested;(f) the exercise price or the formula for arriving at the same;(g) the exercise period and process of exercise;(h) the Lock-in period, if any ;(i) the maximum number of options to be granted per employee and in

aggregate;(j) the method which the company shall use to value its options;(k) the conditions under which option vested in employees may lapse e.g.

in case of termination of employment for misconduct;(l) thespecifiedtimeperiodwithinwhichtheemployeeshallexercisethe

vested options in the event of a proposed termination of employment or resignation of employee; and (m) a statement to the effect that the company shall comply with the applicable accounting standards .

1 Omitted words “or of an associate company” by the Companies (Share Capital and Debentues) Amendment Rules, 2015, w.e.f. 18-03-2015



(3) The companies granting option to its employees pursuant to Employees Stock Option Scheme will have the freedom to determine the exercise price in conformity with the applicable accounting policies, if any.

(4) The approval of shareholders by way of separate resolution shall be obtained by the company in case of-(a) grant of option to employees of subsidiary or holding company; or(b) grantofoptiontoidentifiedemployees,duringanyoneyear,equalto

or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option.

(5) (a) The company may by special resolution, vary the terms of Employees Stock Option Scheme not yet exercised by the employees provided such variation is not prejudicial to the interests of the option holders. (b) The notice for passing special resolution for variation of terms of Employees Stock Option Scheme shall disclose full of the variation, the rationale therefor,andthedetailsoftheemployeeswhoarebeneficiariesofsuchvariation.

(6) (a) There shall be a minimum period of one year between the grant of options and vesting of option:

Provided that in a case where options are granted by a company under its Employees Stock Option Scheme in lieu of options held by the same person under an Employees Stock Option Scheme in another company,whichhasmergedoramalgamatedwiththefirstmentionedcompany, the period during which the options granted by the merging or amalgamating company were held by him shall be adjusted against the minimum vesting period required under this clause;

(b) The company shall have the freedom to specify the lock-in period for the shares issued pursuant to exercise of option.

(c) The Employees shall not have right to receive any dividend or to vote or inanymannerenjoythebenefitsofashareholderinrespectofoptiongranted to them, till shares are issued on exercise of option.

(7) The amount, if any, payable by the employees, at the time of grant of option-(a) may be forfeited by the company if the option is not exercised by the

employees within the exercise period; or(b) the amount may be refunded to the employees if the options are not

vestedduetonon-fulfillmentofconditionsrelatingtovestingofoptionas per the Employees Stock Option Scheme.

(8) (a) The option granted to employees shall not be transferable to any other person.

(b) The option granted to the employees shall not be pledged, hypothecated, mortgaged or otherwise encumbered or alienated in any other manner.

(c) Subject to clause (d), no person other than the employees to whom the option is granted shall be entitled to exercise the option.

(d) In the event of the death of employee while in employment, all the options granted to him till such date shall vest in the legal heirs or nominees of the deceased employee.


(e) In case the employee suffers a permanent incapacity while in employment, all the options granted to him as on the date of permanent incapacitation, shall vest in him on that day.

(f) In the event of resignation or termination of employment, all options not vested in the employee as on that day shall expire. However, the employee can exercise the options granted to him which are vested within the period specified in this behalf, subject to the terms andconditions under the scheme granting such options as approved by the Board.

(9) TheBoardofdirectors,shall,interalia,discloseintheDirectors’Reportfortheyear,the following details of the Employees Stock Option Scheme:(a) options granted;(b) options vested;(c) options exercised;(d) the total number of shares arising as a result of exercise of option;(e) options lapsed;(f) the exercise price;(g) variation of terms of options;(h) money realized by exercise of options;(i) total number of options in force;(j) employee wise details of options granted to;-

(i) key managerial personnel;(ii) any other employee who receives a grant of options in any one

year of option amounting to five percent or more of optionsgranted during that year.

(iii) identifiedemployeeswhoweregrantedoption,duringanyoneyear, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;

(10) (a) The company shall maintain a Register of Employee Stock Options in Form No. SH.6 and shall forthwith enter therein the particulars of option granted under clause (b) of subsection (1) of section 62.

(b) The Register of Employee Stock Options shall be maintained at the registeredofficeofthecompanyorsuchotherplaceastheBoardmaydecide.

(c) The entries in the register shall be authenticated by the company secretary of the company or by any other person authorized by the Boardforthepurpose.

(11) Where the equity shares of the company are listed on a recognized stock exchange, the Employees Stock Option Scheme shall be issued, in accordance withtheregulationsmadebytheSecuritiesandExchangeBoardofIndiainthis behalf.

13. Issueofsharesonpreferentialbasis.-(1) For the purposes of clause (c) of sub-section (1) of section 62, If authorized by

a special resolution passed in a general meeting, shares may be issued by any


company in any manner whatsoever including by way of a preferential offer, to any persons whether or not those persons include the persons referred to in clause (a) or clause (b) of sub-section (1) of section 62 and such issue on preferential basis should also comply with conditions laid down in section 42 of the Act:

1[Provided that in case of any preferential offer made by a company to one or more existing members only, the provisions of sub-rule ( I ) and proviso to sub-rule (3) of rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 shall noi apply]

2[Provided Futher that] the price of shares to be issued on a preferential basis by a listed company shall not be required to be determined by the valuation report of a registered valuer. Explanation.- For the purposes of this rule, (i) the expression ‘Preferential Offer’ means an issue of shares or other securities, by a company to any select person or group of persons on a preferential basis and does not include shares or other securities offered through a public issue, rights issue, employee stock option scheme, employee stock purchase scheme or an issue of sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign securities; (ii) the expression, “shares or other securities” means equity shares, fully convertible debentures, partly convertible debentures or any other securities, which would be convertible into or exchanged with equity shares at a later date.

(2) Where the preferential offer of shares or other securities is made by a company whose share or other securities are listed on a recognized stock exchange, such preferential offer shall be made in accordance with the provisions of the ActandregulationsmadebytheSecuritiesandExchangeBoard,andiftheyare not listed, the preferential offer shall be made in accordance with the provisions of the Act and rules made hereunder and subject to compliance with the following requirements, namely:-(a) the issue is authorized by its articles of association;(b) the issue has been authorized by a special resolution of the members;3[***](d) The company shall make the following disclosures in the explanatory

statement to be annexed to the notice of the general meeting pursuant to section 102 of the Act:(i) the objects of the issue;(ii) the total number of shares or other securities to be issued;(iii) the price or price band at/within which the allotment is

proposed;(iv) basis on which the price has been arrived at along with report of

the registered valuer;

1 Inserted by the Companies (Share Capital and Debentues) Amendment Rules, 2015, w.e.f. 18-03-2015

2 words “Provided that” subtituted by the Companies (Share Capital and Debentues) Amendment Rules, 2015, w.e.f. 18-03-2015

3 Omitted by Companies (Share Capital and Debentures) Third Amendment Rules, 2016. w.e.f. 19-07-2016. Prior to Omission clause (c) read as under:-

“(c) the securities allotted by way of preferential offer shall be made fully paid up at the time of their allotment.”


(v) relevant date with reference to which the price has been arrived at;

(vi) the class or classes of persons to whom the allotment is proposed to be made;

(vii) intention of promoters, directors or key managerial personnel to subscribe to the offer;

(viii) the proposed time within which the allotment shall be completed;

(ix) the names of the proposed allottees and the percentage of post preferential offer capital that may be held by them;

(x) the change in control, if any, in the company that would occur consequent to the preferential offer;

(xi) the number of persons to whom allotment on preferential basis have already been made during the year, in terms of number of securities as well as price;

(xii)the justification for the allotment proposed to be made forconsideration other than cash together with valuation report of the registered valuer.

(xiii) The pre issue and post issue shareholding pattern of the company in the following format-

S.No. Category Pre Issue Post IssueNo. of Shares held

% of share holding

No. of shares held

% ofshare holding

A Promoters’ holding :1 Indian :

IndividualBodiesCorporateSub Total

2 Foreign PromotersSub Total (A)

B Non-Promoters’ holding :

1 Institutional Investors2 Non-Institution :

Private Corporate BodiesDirectors and RelativesIndian Public

Others (Including NRIs)

Sub Total(B)

GRAND TOTAL


(e) the allotment of securities on a preferential basis made pursuant to the special resolution passed pursuant to sub-rule (2)(b) shall be completed within a period of twelve months from the date of passing of the special resolution.

(f) if the allotment of securities is not completed within twelve months from the date of passing of the special resolution, another special resolution shall be passed for the company to complete such allotment thereafter.

(g) the price of the shares or other securities to be issued on a preferential basis, either for cash or for consideration other than cash, shall be determined on the basis of valuation report of a registered valuer;

1[(h) where convertible securities are offered on a preferential basis with an option to apply for and get equity shares allotted, the price of the resultant shares pursuant to conversion shall be determined- (i) either upfront at the time when the offer of convertible securities

is made, on the basis of valuation report of the registered valuer given at the stage of such offer, or

(ii) at the time, which shall not be earlier than thirty days to the date when the holder of convertible security becomes entitled to apply for shares, on the basis of valuation report of the registered valuer given not earlier than sixty days of the date when the holder of convertible security becomes entitled to apply for shares:

Provided that the company shall take a decision on sub-clauses (i) or (ii) at the time of offer of convertible security itself and make such disclosure under sub-clause (v) of clause (d) of sub-rule (2) of this rule.]

(i) where shares or other securities are to be allotted for consideration other than cash, the valuation of such consideration shall be done by a registered valuer who shall submit a valuation report to the company givingjustificationforthevaluation;

(j) where the preferential offer of shares is made for a non-cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company-(i) where the non-cash consideration takes the form of a depreciable

or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the accounting standards; or

(ii) where clause (i) is not applicable, it shall be expensed as provided in the accounting standards.

1 Substituted by Companies (Share Capital and Debentures) Third Amendment Rules, 2016. w.e.f. 19-07-2016. Prior to Substitution it read as under:-

“(h) where convertible securities are offered on a preferential basis with an option to apply for and get equity shares allotted, the price of the resultant shares shall be determined beforehand on the basis of a valuation report of a registered valuer and also complied with the provisions of section 62 of the Act;”


1[Explanation.- For the purposes of these rules, it is hereby clarified that, till a registered valuer is appointed in accordance with the provisions of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board of India or an independent Chartered Accountant in practice having a minimum experience of ten years.]

2[(3) The price of shares or other securities to be issued on preferential basis shall not be less than the price determined on the basis of valuation report of a registered valuer.]

14. IssueofBonusShares.- The company which has once announced the decision of its Board

recommending a bonus issue, shall not subsequently withdraw the same.15. NoticetoRegistrarforalterationofsharecapital.- Where a company alters its share capital in anymanner specified in sub-

section (1) of section 61, or an order is passed by the Government increasing the authorized capital of the company in pursuance of sub-section (4) read with sub-section (6) of section 62 or a company redeems any redeemable preference shares 3[or a company not having share capital increases number of its member], the notice of such alteration, increase or redemption shall be filedbythecompanywiththeRegistrarinFormNo.SH.7alongwiththefee.

16. Provisionofmoneybycompanyforpurchaseofitsownsharesbyemployeesorbytrusteesforthebenefitofemployees.-

(1) The company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the sharesbytrusteesisforthesharestobeheldbyorforthebenefitoftheemployees of the company, unless it complies with the following conditions, namely:-(a) the scheme of provision of money for purchase of or subscription for

the shares as aforesaid is approved by the members by passing special resolution in a general meeting;

(b) such purchase of shares shall be made only through a recognized stock exchange in case the shares of the company are listed and not by way of private offers or arrangements;

(c) where shares of a company are not listed on a recognized stock exchange, the valuation at which shares are to be purchased shall be made by a registered valuer;

(d) the value of shares to be purchased or subscribed in the aggregate together with the money provided by the company shall not exceed fivepercent.oftheaggregateofpaidupcapitalandfreereservesofthecompany;

1 Inserted by the Companies (Share Capital and Debentures) Amendment Rules, 2014, w.e.f. 18-6-2014.

2 Inserted by the Companies (Share Capital and Debentures) Amendment Rules, 2014, w.e.f. 18-6-2014.



(2) The explanatory statement to be annexed to the notice of the general meeting to be convened pursuant to section 102 shall, in addition to the particulars mentioned in sub-rule (1) of rule 18, contain the following particulars, namely:-(a) the class of employees for whose benefit the scheme is being

implemented and money is being provided for purchase of or subscription to shares;

(b) the particulars of the trustee or employees in whose favor such shares are to be registered;

(c) the particulars of trust and name, address, occupation and nationality of trustees and their relationship with the promoters, directors or key managerial personnel, if any;

(d) the any interest of key managerial personnel, directors or promoters in such scheme or trust and effect thereof;

(e) thedetailedparticularsofbenefitswhichwillaccruetotheemployeesfrom the implementation of the scheme;

(f) the details about who would exercise and how the voting rights in respect of the shares to be purchased or subscribed under the scheme would be exercised;

(3) A person shall not be appointed as a trustee to hold such shares, if he-(a) is a director, key managerial personnel or promoter of the company

or its holding, subsidiary or associate company or any relative of such director, key managerial personnel or promoter; or

(b) beneficiallyholdstenpercentormoreofthepaid-upsharecapitalofthe company.

(4) Where the voting rights are not exercised directly by the employees in respect ofsharestowhichtheschemerelates,theBoardofDirectorsshall,interalia,disclose in theBoard’s report for the relevant financial year the followingdetails, namely:-(a) the names of the employees who have not exercised the voting rights

directly;(b) the reasons for not voting directly;(c) the name of the person who is exercising such voting rights;(d) the number of shares held by or in favour of, such employees and

the percentage of such shares to the total paid up share capital of the company;

(e) the date of the general meeting in which such voting power was exercised;

(f) the resolutions on which votes have been cast by persons holding such voting power;

(g) the percentage of such voting power to the total voting power on each resolution;

(h) whether the votes were cast in favour of or against the resolution.17. Buy-backofsharesorothersecurities.-Unless stated otherwise, the following norms shall be complied with by the private companies and unlisted public companies for buy-back of their securities-


(1) The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall contain the following disclosures, namely:-(a) the date of the board meeting at which the proposal for buy-back was

approved by the board of directors of the company;(b) the objective of the buy-back;(c) the class of shares or other securities intended to be purchased under

the buy-back;(d) the number of securities that the company proposes to buy-back;(e) the method to be adopted for the buy-back;(f) the price at which the buy-back of shares or other securities shall be

made;(g) the basis of arriving at the buy-back price;(h) the maximum amount to be paid for the buy-back and the sources of

fundsfromwhichthebuy-backwouldbefinanced;(i) the time-limit for the completion of buy-back;(j) (i) the aggregate shareholding of the promoters and of the directors

of the promoter, where the promoter is a company and of the directors and key managerial personnel as on the date of the notice convening the general meeting;

(ii) the aggregate number of equity shares purchased or sold by persons mentioned in sub-clause (i) during a period of twelve months preceding the date of the board meeting at which the buy-back was approved and from that date till the date of notice convening the general meeting;

(iii) the maximum and minimum price at which purchases and sales referred to in sub-clause (ii) were made along with the relevant date;

(k) if the persons mentioned in sub-clause (i) of clause (j) intend to tender their shares for buy-back –(i) the quantum of shares proposed to be tendered;(iii) the details of their transactions and their holdings for the last

twelve months prior to the date of the board meeting at which the buy-back was approved including information of number of shares acquired, the price and the date of acquisition;

(l) aconfirmation that therearenodefaultssubsisting inrepaymentofdeposits, interest payment thereon, redemption of debentures or payment of interest thereon or redemption of preference shares or payment of dividend due to any shareholder, or repayment of any term loansorinterestpayablethereontoanyfinancialinstitutionorbankingcompany;

(m) aconfirmationthattheBoardofdirectorshavemadeafullenquiryintothe affairs and prospects of the company and that they have formed the opinion-(i) that immediately following the date on which the general meeting

is convened there shall be no grounds on which the company could be found unable to pay its debts;


(ii) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company’s business during that year and to theamountandcharacterof the financial resourceswhichwillin their view be available to the company during that year, the company shall be able to meet its liabilities as and when they fall due and shall not be rendered insolvent within a period of one year from that date; and

(iii) the directors have taken into account the liabilities(including prospective and contingent liabilities), as if the company were being wound up under the provisions of the Companies Act, 2013

(n) a report addressed to theBoardofdirectorsby the company’s auditorsstating that-(i) they have inquired into the company’s state of affairs;(ii) the amount of the permissible capital payment for the securities

in question is in their view properly determined;(iii) that the audited accounts on the basis of which calculation with

reference to buy back is done is not more than six months old from the date of offer document; and

1[Provided that where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company.]

(iv) theBoardof directorshave formed theopinion as specified inclause (m) on reasonable grounds and that the company, having regard to its state of affairs, shall not be rendered insolvent within a period of one year from that date.

(2) The company which has been authorized by a special resolution shall, before thebuy-backofshares,filewiththeRegistrarofCompaniesaletterofofferin Form No. SH.8, along with the fee:

Provided that such letter of offer shall be dated and signed on behalf of theBoardofdirectorsofthecompanybynotlessthantwodirectorsofthecompany, one of whom shall be the managing director, where there is one.

(3) ThecompanyshallfilewiththeRegistrar,alongwiththeletterofoffer,andincase of a listed company with the Registrar and the Securities and Exchange Board, adeclarationof solvency inForm No. SH.9 along with the fee and signed by at least two directors of the company, one of whom shall be the managing director, if any,andverifiedbyanaffidavitasspecifiedinthesaidForm.

(4) The letter of offer shall be dispatched to the shareholders or security holders immediatelyafter filing thesamewith theRegistrarofCompaniesbutnotlaterthantwentydaysfromitsfilingwiththeRegistrarofCompanies.

1 Inserted by Companies (Share Capital & Debentures) Amendment rules, 2016, vide GSR 290(E), Dated: 10-03-2016


(5) The offer for buy-back shall remain openforaperiodofnotlessthanfifteendays and not exceeding thirty days from the date of dispatch of the letter of offer.

1[Provided that where all members of a company agree, the offer for buy-back may remain open for a period less than fifteen days.]

(6) In case the number of shares or other specified securities offered by theshareholders or security holders is more than the total number of shares or securities to be bought back by the company, the acceptance per shareholder shall be on proportionate basis out of the total shares offered for being bought back.

(7) Thecompanyshallcompletetheverificationsof theoffersreceivedwithinfifteen days from the date of closure of the offer and the shares or othersecurities lodged shall be deemed to be accepted unless a communication of rejection is made within twenty one days from the date of closure of the offer.

(8) The company shall immediately after the date of closure of the offer, open a separate bank account and deposit therein, such sum, as would make up the entire sum due and payable as consideration for the shares tendered for buy-back in terms of these rules.

(9) Thecompanyshallwithinsevendaysofthetimespecifiedinsub-rule(7)-(a) make payment of consideration in cash to those shareholders or

security holders whose securities have been accepted; or(b) return the share certificates to the shareholdersor securityholders

whose securities have not been accepted at all or the balance of securities in case of part acceptance .

(10) The company shall ensure that—(a) the letter of offer shall contain true, factual and material information

and shall not contain any misleading information and must state that the directors of the company accept the responsibility for the information contained in such document;

(b) the company shall not issue any new shares including by way of bonus shares from the date of passing of special resolution authorizing the buy-back till the date of the closure of the offer under these rules, except those arising out of any outstanding convertible instruments;

(c) thecompanyshallconfirminitsoffertheopeningofaseparatebankaccount adequately funded for this purpose and to pay the consideration only by way of cash;

(d) the company shall not withdraw the offer once it has announced the offer to the shareholders;

(e) the company shall not utilize any money borrowed from banks or financialinstitutionsforthepurpose of buying back its shares; and

(f) the company shall not utilize the proceeds of an earlier issue of the samekindofsharesorsamekindofotherspecifiedsecuritiesforthebuy-back.

1 Inserted by Companies (Share Capital and Debentures) Second Amendment Rules, 2016 vide G.S.R 358 (E), Dated 23-03-2016, w.e.f. 29-03-2016.


(12) (a) The company, shall maintain a register of shares or other securities which have been bought-back in Form No. SH.10.

(b) The register of shares or securities bought-back shall be maintained at theregisteredofficeofthecompanyandshallbekeptinthecustodyof the secretary of the company or any other person authorized by the board in this behalf.

(c) The entries in the register shall be authenticated by the secretary of thecompanyorbyanyotherpersonauthorizedbytheBoardforthepurpose.

(13) The company, after the completion of the buy-back under these rules, shall filewiththeRegistrar,andincaseofalistedcompanywiththeRegistrarandtheSecuritiesandExchangeBoardofIndia,areturnintheForm No. SH.11 along with the fee .

(14) Thereshallbeannexed to the return filedwith theRegistrar inForm No. SH.11, a certificate in Form No. SH.15 signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and the rules made thereunder.

18. Debentures.-(1) The company shall not issue secured debentures, unless it complies with the

following conditions, namely:-(a) An issue of secured debentures may be made, provided the date of its

redemption shall not exceed ten years from the date of issue. 1[Provided that the following classes of companies may issue secured

debentures for a period exceeding ten years but not exceeding thirty years,(i) Companies engaged in setting up of infrastructure projects;(ii) ‘InfrastructureFinanceCompanies’asdefinedinclause(viia)of

sub-direction(1)ofdirection2ofNon-BankingFinancial(Non-deposit accepting or holding) Companies Prudential Norms (ReserveBank)Directions,2007;

2 [(iii) Infrastructure Debt Fund Non-Banking Financial Companies’ as defined in clause (b) of direction 3 of Infrastructure Debt Fund Non-Banking Financial Companies (Reserve Bank) Directions, 2011;

(iv) Companies permitted by a Ministry or Department of the Central Government or by Reserve Bank of India or by the National Housing Bank or by any other statutory authority to issue debentures for a period exceeding ten years.]

1 Substituted by the Companies (Share Capital and Debentures) Amendment Rules, 2014. Dated 18-06-2014, w.e.f. 18-06-2014. Prior to its substitution the Proviso read as under:

“Provided that a company engaged in the setting up of infrastructure projects may issue secured debentures for a period exceeding ten years but not exceeding thirty years;”

2 Substituted by Companies (Share Capital and Debentures) Third Amendment Rules, 2015 vide G.S.R. 841(E), Dated 06-11-2015, w.e.f. 6-11-2015.

“(iii) ‘Infrastructure Debt Fund Non-Banking Financial companies’ as defined in clause of (b) direction 3 of Infrastructure Debt Fund Non-Banking Financial Companies (Reserve Bank) Directions, 2011.]”


1[(b) Such an issue of debentures shall be secured by the creation of a charge on the properties or assets of the company or its subsidiaries or its holding company or its associates companies, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon.]

(c) the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than sixty days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and

(d) the security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on-2[(i) any specific movable property of the company or its holding

company or subsidiaries or associate companies or otherwise.](ii) any specific immovable property wherever situate, or any interest

therein. Provided that in case of a non-banking financial company, the charge

or mortgage under sub clause (i) may be created on any movable property]

3[Provided further that in case of any issue of debentures by a Government Company which is fully secured by the guarantee given by the Central Government or one or more State Government or by both, the requirement for creation of charge, under this sub-rule shall not apply.

Provided also that in case of any loan taken by a subsidiary company from any bank or financial institution the charge or mortgage under this sub-rule may also be created on tbe properties or assets of the holding company.]

(2) The company shall appoint debenture trustees under sub-section (5) of section 71, after complying with the following conditions, namely:-(a) the names of the debenture trustees shall be stated in letter of offer

inviting subscription for debentures and also in all the subsequent notices or other communications sent to the debenture holders;

(b) before the appointment of debenture trustee or trustees, a written consent shall be obtained from such debenture trustee or trustees proposed to be appointed and a statement to that effect shall appear in the letter of offer issued for inviting the subscription of the debentures;

(c) A person shall not be appointed as a debenture trustee, if he-(i) beneficially holds shares in the company;

1 Substituted by Companies (Share Capital and Debentures) Third Amendment Rules, 2016. w.e.f. 19-07-2016. Prior to its substitution it read as under:-

“(b) such an issue of debentures shall be secured by the creation of a charge, on the properties or assetsofthecompany,havingavaluewhichissufficientfortheduerepaymentoftheamountofdebentures and interest thereon; “

2 Substitutedfor“(i)anyspecificmovablepropertyofthecompany;or”byCompanies(ShareCapitaland Debentures) Third Amendment Rules, 2016. w.e.f. 19-07-2016.

3 Inserted by Companies (Share Capital and Debentures) Amendment Rules, 2015 w.e.f. 18.03.2015.


(ii) is a promoter, director or key managerial personnel or any other officeroranemployeeofthecompanyoritsholding,subsidiaryor associate company;

(iii) is beneficially entitled to moneys which are to be paid bythe company otherwise than as remuneration payable to the debenture trustee;

(iv) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company;

(v) has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon;

(vi) has any pecuniary relationship with the company amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupeesor suchhigher amount asmaybeprescribed,whichever is lower, during the two immediately preceding financialyearsorduringthecurrentfinancialyear;

(vii) is relative of any promoter or any person who is in the employment of the company as a director or key managerial personnel

(d) theBoardmayfillanycasualvacancyintheofficeofthetrusteebutwhile any such vacancy continues, the remaining trustee or trustees, if any, may act:

Provided that where such vacancy is caused by the resignation of the debenture trustee, the vacancy shall only be filledwith thewrittenconsent of the majority of the debenture holders.

(e) anydebenturetrusteemayberemovedfromofficebeforetheexpiryof his term only if it is approved by the holders of not less than three fourth in value of the debentures outstanding, at their meeting.

(3) It shall be the duty of every debenture trustee to-(a) satisfy himself that the letter of offer does not contain any matter which is

inconsistent with the terms of the issue of debentures or with the trust deed;

(b) satisfy himself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders;

(c) call for periodical status or performance reports from the company;(d) communicate promptly to the debenture holders defaults, if any, with

regard to payment of interest or redemption of debentures and action taken by the trustee therefor;

(e) appointanomineedirectorontheBoardofthecompanyintheeventof-(i) two consecutive defaults in payment of interest to the debenture

holders; or(ii) default in creation of security for debentures; or (iii) default in

redemption of debentures.(f) ensure that the company does not commit any breach of the terms

of issue of debentures or covenants of the trust deed and take such reasonable steps as may be necessary to remedy any such breach;

(g) inform the debenture holders immediately of any breach of the terms of issue of debentures or covenants of the trust deed;


(h) ensure the implementation of the conditions regarding creation of security for the debentures, if any, and debenture redemption reserve;

(i) ensure that the assets of the company issuing debentures and of the guarantors, if any, aresufficienttodischargetheinterestandprincipalamount at all times and that such assets are free from any other encumbrances except those which are specifically agreed to by thedebenture holders;

(j) do such acts as are necessary in the event the security becomes enforceable;

(k) call for reports on the utilization of funds raised by the issue of debentures-

(l) take steps to convene a meeting of the holders of debentures as and when such meeting is required to be held;

(m) ensure that the debentures have been converted or redeemed in accordance with the terms of the issue of debentures;

(n) perform such acts as are necessary for the protection of the interest of the debenture holders and do all other acts as are necessary in order to resolve the grievances of the debenture holders.

(4) The meeting of all the debenture holders shall be convened by the debenture trustee on-(a) requisition in writing signed by debenture holders holding at least

one-tenth in value of the debentures for the time being outstanding;(b) the happening of any event, which constitutes a breach, default or

which in the opinion of the debenture trustees affects the interest of the debenture holders.

(5) For the purposes of sub-section (13) of section 71 and sub-rule (1) a trust deed in Form No.SH.12 or as near thereto as possible shall be executed by the company issuing debentures in favour of the debenture trustees 1[within three months of closure of the issue or offer.]

(6) The provisions of sub-rules (2) to (5) of rule 18 shall not be applicable to the public offer of debentures.

(7) The company shall create a Debenture Redemption Reserve for the purpose of redemption of debentures, in accordance with the conditions given below-(a) theDebentureRedemptionReserveshallbecreatedoutoftheprofitsof

the company available for payment of dividend; (b) the company shall create Debenture Redemption Reserve (DRR) in

accordance with following conditions:- (i) No DRR is required for debentures issued by All India Financial

Institutions (AIFIs) regulated by Reserve Bank of India andBanking Companies for both public aswell as privately placeddebentures. For other Financial Institutions (FIs) within the meaning of clause (72) of section 2 of the Companies Act, 2013, DRR will be as applicabletoNBFCsregisteredwithRBI.

1 Words “within sixty days of allotment of debentures.” substituted by Companies (Share Capital and Debentures) Amendment Rules, 2015 w.e.f.18.03.2015


(ii) ForNBFCsregisteredwiththeRBIunderSection45-IAoftheRBI(Amendment) Act, 1997, 1[and for Housing Finance Companies registered with the National Housing Bank] ‘the adequacy’ of DRR will be 25% 2[of the value of outstanding debentures] issued through publicissueasperpresentSEBI(IssueandListingofDebtSecurities)Regulations, 2008, and no DRR is required in the case of privately placed debentures.

(iii) For other companies including manufacturing and infrastructure companies, the adequacy of DRR will be 25% 3[of the value of outstanding debentures] issued through public issue as per present SEBI (Issue and Listing ofDebt Securities), Regulations 2008 andalso 25% DRR is required in the case of privately placed debentures by listed companies. For unlisted companies issuing debentures on private placement basis, the DRR will be 25% of the value of debentures.

4[Provided that where a company intends to redeem its debentures prematurely, it may provide for transfer of such amount in Debenture Redemption Reserve as is necessary for redemption of such debentures even if it exceeds the limits specified in this sub-rule.]

(c) every company required to create Debenture Redemption Reserve shall on or before the 30th day of April in each year, invest or deposit, as thecasemaybe,asumwhichshallnotbelessthanfifteenpercent,ofthe amount of its debentures maturing during the year ending on the 31st day of March of the next year, in any one or more of the following methods, namely:-(i) in deposits with any scheduled bank, free from any charge or

lien;(ii) in unencumbered securities of the Central Government or of any

State Government;(iii) in unencumbered securities mentioned in sub-clauses (a) to (d)

and (ee) of section 20 of the Indian Trusts Act, 1882;(iv) in unencumbered bonds issued by any other company which is

notifiedundersub-clause(f)ofsection20of the IndianTrustsAct, 1882;

(v) the amount invested or deposited as above shall not be used for any purpose other than for redemption of debentures maturing during the year referred above: Provided that the amount remaining invested or deposited, as the case may be, shall not at any timefallbelowfifteenpercentoftheamountofthedebenturesmaturing during the year ending on the 31st day of March of that year;

1 Inserted by the Companies (Share Capital and Debentures) Amendment Rules, 2014, w.e.f 18.06.2014

2 Substituted for “of the value of debentures” by the Companies (Share Capital and Debentures) third Amendment Rules, 2016, w.e.f 19.07.2016.

3 Substituted for “of the value of debentures” by the Companies (Share Capital and Debentures) third Amendment Rules, 2016, w.e.f 19.07.2016.

4 Inserted by the Companies (Share Capital and Debentures) third Amendment Rules, 2016, w.e.f 19.07.2016.


(d) in case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non- convertible portion of debenture issue in accordance with this sub-rule.

(e) the amount credited to the Debenture Redemption Reserve shall not be utilised by the company except for the purpose of redemption of debentures.

(8) (a) A trust deed for securing any issue of debentures shall be open for inspection to any member or debenture holder of the company, in the same manner, to the same extent and on the payment of the same fees, as if it were the register of members of the company; and (b) A copy of the trust deed shall be forwarded to any member or debenture holder of the company, at his request, within seven days of the making thereof, on payment of fee.

1[(9) Nothing contained in this rule shall apply to any amount received by a company against issue of commercial paper or any other similar instrument issued in accordance with the guidelines or regulations or notification issued by the Reserve Bank of India.

(10) ln case of any offer of foreign curency convertible bonds or foreign currency bonds issued in accordance with the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) scheme, 1993 or regulations or directions issued by the Reserve Bank of lndia the provisions of this rule shall not apply unless otherwise povided in such Schemc or regulalions or directions]

2[(11) Nothing contained in this rule shall apply to rupee denominated bonds issued exclusively to overseas investors in terms of A.P. (DIR Series) Circular No . 17 dated September 29, 2015 of the Reserve Bank of India.]

19. Nominationbysecuritiesholders.-(1) Any holder of securities of a company may, at any time, nominate, in Form

No. SH.13, any person as his nominee in whom the securities shall vest in the event of his death.

(2) On the receipt of the nomination form, a corresponding entry shall forthwith be made in the relevant register of securities holders, maintained under section 88.

(3) Where the nomination is made in respect of the securities held by more than one person jointly, all joint holders shall together nominate in Form No.SH.13 any person as nominee.

(4) The request for nomination should be recorded by the Company within a periodoftwomonthsfromthedateofreceiptofthedulyfilledandsignednomination form.

(5) In the event of death of the holder of securities or where the securities are held by more than one person jointly, in the event of death of all the joint holders, the person nominated as the nominee may upon the production of suchevidenceasmayberequiredbytheBoard,elect,either-(a) to register himself as holder of the securities ; or(b) to transfer the securities, as the deceased holder could have done.

1 Inserted by the Companies (Share Capital and Debentures) Amendment Rules, 2015 w.e.f.18.03.2015

2 Inserted by Companies (Share Capital and Debentures) Fourth Amendment Rules, 2016, w.e.f. 12-08-2016


(6) If the person being a nominee, so becoming entitled, elects to be registered as holder of the securities himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and such notice shall beaccompaniedwiththedeathcertificateofthedeceasedshareordebentureholder(s).

(7) All the limitations, restrictions and provisions of the Act relating to the right to transfer and the registration of transfers of securities shall be applicable to any such notice or transfer as aforesaid as if the death of the share or debenture holder had not occurred and the notice or transfer were a transfer signed by that shareholder or debenture holder, as the case may be.

(8) A person, being a nominee, becoming entitled to any securities by reason of the death of the holder shall be entitled to the same dividends or interests and other advantages to which he would have been entitled to if he were the registered holder of the securities except that he shall not, before being registered as a holder in respect of such securities, be entitled in respect of these securities to exercise any right conferred by the membership in relation to meetings of the company:

Provided that theBoardmay, at any time, givenotice requiringanysuchperson to elect either to be registered himself or to transfer the securities, and if the notice is not compliedwithwithin ninety days, the Boardmaythereafter withhold payment of all dividends or interests, bonuses or other moneys payable in respect of the securities, as the case may be, until the requirements of the notice have been complied with.

(9) A nomination may be cancelled, or varied by nominating any other person in place of the present nominee, by the holder of securities who has made the nomination, by giving a notice of such cancellation or variatio n, to the company in Form No. SH.14.

(10) The cancellation or variation shall take effect from the date on which the notice of such variation or cancellation is received by the company.

(11) Where the nominee is a minor, the holder of the securities, making the nomination, may appoint a person in 1[Form No. SH.13]specifiedundersub-rule (1), who shall become entitled to the securities of the company, in the event of death of the nominee during his minority.

1 Words letters & figures “Form No. SH.14” substituted by the Companies (Share Capital andDebentures) Amendment Rules, 2015, w.e.f 18-03-2015

2.348 forms UNDEr CHAPTEr IV

Form No. SH-1

Share Certificate

[Pursuant to sub-section (3) of section 46 of the Companies Act, 2013 and rule 5(2) of the Companies (Share Capital and Debentures) Rules 2014]

……………….Limited/Private Limited……………….(Corporate Identification Number)

(Incorporated under…the Companies Act, 1956/2013)Registered Office:…………………………………………………………………

This is to certify that the person(s) named in this Certificate is/are the Registered Holder(s) of the within mentioned share(s) bearing the distinctive number(s) herein specified in the above named Company subject to the Memorandum and Articles of Association of the Company and the amount endorsed herein has been paid up on each such share.

EQUITY SHARES EACH OF RUPEES ……………… (Nominal value)

AMOUNT PAID-UP PER SHARE RUPEES…………………

Register Folio No: Certificate No:

Name(s) of the Holder(s):

No. of shares held:…………………………… ……………………………..(in words) (in figures)

Distinctive No.(s): From……………………………. To……… (Both inclusive)

Given under the common seal of the Company this………. day of …… 20……1. Director:2. Director:3. Secretary/ any other authorized person:

Note: No transfer of the Share(s) comprised in the Certificate can be registered unless accom-panied by this Certificate.

form No. sH-2 2.349

Form No. SH-2

Register of Renewed and Duplicate Share Certificates

[Pursuant to sub-section (3) of section 46 of the Companies Act, 2013 and rule 6(3)(a) the Companies (Share Capital and Debentures) Rules 2014]

S. No. Folio No. Name of theperson(s) to

whomRenewed /

Duplicate sharecertificate is

issued

Date ofapproval of

issue ofRenewed/

Duplicate sharecertificate

Class of shares

1 2 3 4 5

Date of issue of original

share certificate

Originalshare

certificatenumber

Total number of

shares inthe Original

ShareCertificate

Distinctive No. of shares

Date of issueof Renewed/

DuplicateShare

CertificateFrom To

6 7 8 9 10

Reasons for is-sue of Renewed/ Duplicate Share

Certificate

Number of the Renewed share certificate, if ap-

plicable

Total Number of Shares in the

Renewed/ Duplicate Share

Certificate

Reference to entry in Regis-ter of Members

Remarks

11 12 13 14 15


Form No. SH-3

Register of Sweat Equity Shares

[Pursuant to section 54 of the Companies Act, 2013 and rule 8(14) of the Companies (Share Capital and Debentures) Rules 2014]

S. No. Referenceto entry inregister ofmembers

Name of the allottee

Status of theallottee –whether

director oremployee

Date of passing of

Board resolution

1 2 3 4 5

Date of thespecial

resolutionauthorizing theissue of sweatequity shares

Date of issue ofsweat equity

shares

Number of sweat equity shares issued

CertificateNo. / Folio

No.

6 7 8 9

Facevalue of the

share

Price atwhich theshares are

issued

Amount tobe treatedas paid up

Total consideration paid, ifany, by the employee /

director

Consideration received in cash

Particulars of consideration

other than cash

10 11 12 13 14

Lock in period

the date of expiry

of lock- in-period

Remarks, if any

Date of Joining

Fair value obtained by Valuer

Basis of Valuation

Name of Valuer

15 16 17 5 12 13 14

form No. sH-4 2.351

Form No. SH-4

Securities Transfer Form

[Pursuant to section 56 of the Companies Act, 2013 and sub-rule (1) of rule 11 of the Companies (Share Capital and Debentures) Rules 2014]

Date of execution………………FOR THE CONSIDERATION stated below the “Transferor(s)” named do hereby transfer to the “Transferee(s)” named the securities specified below subject to the conditions on which the said securities are now held by the Transferor(s) and the Transferee(s) do hereby agree to accept and hold the said securities subject to the conditions aforesaid.

CIN:

Name of the company (in full):

Name of the Stock Exchange where the company is listed, if any:

DESCRIPTION OF SECURITIES:

Kind/ Class ofsecurities

(1)

Nominal value ofeach unit of

security(2)

Amount calledup per unit of

security(3)

Amount paidup per unit of

security(4)

No. of securities being transferred Consideration received (Rs.)

In figures In words In words In figures

Distinctive number

From

To

Corresponding Certificate Nos.

Transferor’s Particulars-Registered Folio Number:Name(s) in full Signature (s)1.2.3.

I, hereby confirm that the Transferor has signed before me.Signature of witnessname and address


Transferee’s Particulars-

Name in full Father’s/ mother’s/

Spouse name

Address & E-mail id

Occupation Existing folio No.,

if any.

Signature

(1) (2) (3) (4) (5) (6)

1.

2.

3.

Folio No. of Transferee Specimen Signature of Transferee…………………………. ……………………………………………Value of stamp affixed:……. (Rs.)

Enclosures:1. Certificate of shares or debentures or other securities2. If no certificate is issued, letter of allotment.3. Others, specify……………………………………….

Stamps

For office use only

Checked by……………..

Signature tallied by……………………….

Entered in the Register of Transfer on ………… vide Transfer No…………..

Approval Date……………..

Power of attorney / Probate / Death Certificate / Letter of Administration Registered on ………………….at No………………………….

On the reverse page of the certificateName of the Transferor Name of the Transferee No. of shares Date of………………………. ……………………………. …………… ………….Transfer Signature of the authorized signatory

form No. sH-5 2.353

Form No. SH-5

Notice for transfer of partly paid securities

[Pursuant to sub-section (3) of section 56 of the Companies Act, 2013 and sub-rule (3) of rule 11 the Companies (Share Capital and Debentures) Rules 2014]

To-

………………..

………………..

(Name and address of transferee)

Subject: Transfer of partly paid securities

Notice is hereby given that an application has been made by the transferor for the transfer of securities of the above named Company whose particulars are given hereunder-Name & Address of the Transferor:Name & Address of the Transferee:Class / Kind of securities:Number of securities:Distinctive numbers of the securities:Securities Certificate Number:Nominal value of each security:Issue price of each security:Amount called on each security:Amount paid on each securityAmount called and due on each security:Amount uncalled on each security:Total amount called and due on the total number of securities lodged for transfer:Total amount uncalled on the total number of securities lodged for transfer:As required under sub section (3) of section 56 of the Companies Act, 2013, notice is here-by given by the Company to the transferee on this Day ____ of (month) of _____ (year) that the above mentioned securities are partly paid and the transferee shall be liable to pay the balance amount unpaid on the securities.The transferee is hereby requested to submit his / her objection, if any, within two weeks from the date of receipt of this notice in the absence of which it shall be presumed that he / she has no objection to the transfer and the securities shall be transferred in his / her name without any further correspondence.

Signature:


Form No. SH-6

Register of Employee Stock Options

[Pursuant to clause (b) of sub-section (1) of section 62 of the Companies Act, 2013 and rule 12(10) the Companies (Share Capital and Debentures) Rules 2014]

Name of Company

Registered office address

Date of special resolution …………….

S. No. Name of thegrantee

Number ofoptions granted

Date on which options vested

Exercisedperiod

1 2 3 4 5

Date on which op-tions exercised

Options exercised Exercise price Number of shares arising as result of exercise of option

6 7 8 9

Folio No. of Register of

members having respective entry

Lock in period, if any

Option lapsed, if any

Total number of options in

force

Amount for-feited/ refunded if option is not

exercised

10 11 12 13 14

Any variation of terms of the scheme and its

effects

Signature Remarks

15 16 17

form No. sH-7 2.355

Form language o English o Hindi Refer the instruction kit for filing the form.

FORM NO. SH.7

[Pursuant to section 64(1) of the Companies Act, 2013 and pursuant to Rule 15 of the Companies (Share Capital & Debentures) Rules, 2014]

Notice to Registrar of any

alteration of share capital


5. (a) In accordance with sub section (6) of section 62 of the Companies Act,2013, the authorised capital of the company has been increased consequent upon an order number dated (DD/MM/YYYY) of the Union Government State Government of under sub section (4) of section 62 for conversion of debentures loan into shares

Date of passing the order by Tribunal (if applicable) Date of receipt of such order

(b) A copy of the aforesaid order was received by the company from the Central Government on

form No. sH-7 2.357

Date of passing the order by Tribunal (if applicable) Date of receipt of such order 8. In accordance with section 55, by a resolution of the Board of Directors at the meeting held on

the company has redeemed redeemable preference shares, the particulars of which are as under

(a) Description of Preference shares to be redeemed

(b) Date of issue of series of shares

(c) Date on which shares were fully paid up

(d) Due date of redemption of shares

(e) Actual date of redemption of shares


(f) Amount payable on redemption Amount (in Rupees)

i. Number of preference shares

ii. Face value per share iii. Carrying rate of dividend per share

iv. Total nominal value

v. Total premium paid on redemption, if any

(g) Preference shares redeemed out of Amount (in Rupees)

o Profits of the company

o Proceeds of fresh issue of shares

form No. sH-7 2.359

(f) Amount payable on redemption Amount (in Rupees)

i. Number of preference shares

ii. Face value per share iii. Carrying rate of dividend per share

iv. Total nominal value

v. Total premium paid on redemption, if any

(g) Preference shares redeemed out of Amount (in Rupees)

o Profits of the company

o Proceeds of fresh issue of shares

Declaration

I* , a * (Drop down) {Values: Director/Manager/Company secretary/CEO/CFO} of the company declare that all the requirements of the Companies Act, 2013 and the rules made thereunder have been complied with. I am authorized by the board of directors to give this declaration and to sign and submit this Form. It is further declared and verified that


(h) Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association.

(i) All the required attachments have been completely, correctly and legibly attached to this form. (j) I further declare that the company has paid correct stamp duty as per applicable Stamp Act.

*To be digitally signed by *Designation *Director identification number of the director; or DIN or PAN of the manager or CEO or CFO; or Membership number of the company secretary

Attachments 1. Copy of the resolution for alteration of capital;

2. Copy of order of Central Government;

3. Copy of the order of the Tribunal;

4. Copy of Board resolution authorizing redemption of redeemable preference shares;

5. Altered memorandum of association;

6. Altered articles of association;

7. Workings for calculation of ratios (in case of conversion);

8. Optional attachment(s), if any

DSC BOX

Attach

Attach

Attach

Attach

Attach Attach

Attach

Attach

form No. sH-8 2.361


1. (a) *Corporate identity number (CIN) of the company

(b) Global location number (GLN) of the company

2. (a) Name of the company

(b) Address of registered office of the company

(c) email ID of the company

(d) Date of Incorporation 3. Main division of industrial activity of the company

Description of the main division

4. Particulars of directors and Key managerial personnel

DIN/PAN Full Name Designation

5. Present Capital structure of the company

6. Details of last buy back

(a) Date of completion of last buy-back

(b) Percentage of the share capital bought back to the total paid up share capital and free reserves

Letter of Offer

FORM NO. SH.8

[Pursuant to section 68 of the Companies Act, 2013 and Rule 17(2) of the Companies (Share Capital & Debentures) Rules, 2014]

(a) Authorized capital of the company (in Rs.)

(i) Number of equity shares Nominal amount per equity share

Total amount of equity shares (in Rs.)

(ii) Number of preference shares Nominal amount per preference share

Total amount of preference shares (in Rs.)

(b) Subscribed capital of the company (in Rs.)





Pre-fill

Pre-fill All


7. *Amount as on (in Rupees) (in %)

a. *Free reserves b. *Securities Premium account c. *Proceeds out of fresh issue of any shares or

other specified securities

d. *Debt Secured Unsecured Total 8. *Source of the buy-back would be O Free reserves O Securities premium

O Proceeds out of fresh issue of shares or other specified securities O Debt

9. (a)*Date of Board of Directors’ resolution authorizing buy-back of securities

(b) (i) Date of passing the special resolution

(ii) Service request number of Form MGT.14

10. *Shareholding of the promoters, directors and key manager personnel of the company and also the directors of such company which is promoter of the company

S. No.

Particulars Equity shares Preference redeemable

Preference convertible

Other, If any

Total

1 Number of shares as on the date preceding to the date of board meeting in which the buy-back got approved

(Number) (Number) (Number) (Number) (Number)

2 Shares purchased during the period of 12 months preceding the date of board meeting approving buy-back


3 Shares purchased during the period from date of board meeting approving buy-back till the date of letter of offer


4 Maximum price paid for the above

(Amount) (Amount) (Amount) (Amount) (Average amount)

5 Date on which the above maximum price was paid

(Date) (Date) (Date) (Date) -

6 Shares sold during the period of 12 months preceding the date of board meeting approving buy-back


7 Shares sold during the period from date of board meeting approving buy-back till the date of letter of offer


8 Maximum price received for the above

(Amount) (Amount) (Amount) (Amount) (Average amount)

9 Date on which the above maximum price was received

(Date) (Date) (Date) (Date) -

10 Balance of number of shares held as on the date of letter of offer


11. *The shareholding pattern before buy-back of shares or other specified securities:

S.

No.

Category of security holders Securities held before buy-back as on

form No. sH-8 2.363

1. Government(Central and State)

2. Government Companies

3. Public financial institutions

4. Nationalized or other bank(s)

5. Mutual Funds

6. Venture Capital

7. Foreign holdings (Foreign Institutional Investors, Foreign companies,

Non-resident Indians, Foreign financial institutions or Overseas

corporate bodies)

8. Bodies Corporate (not mentioned above)

9. Directors or relatives of directors

10. Other top fifty shareholders (other than mentioned above)

11. Others

12. Total

Total number of shareholders

12. *Particulars of the securities authorized to be bought-back Maximum Number of the shares or other securities

Minimum Number of the shares or other securities

Nominal value per security Total amount of buy back

Percentage of total share capital and free reserves proposed to be bought back 13. *Objective of the buy-back

14. *Mode of buy-back � Existing security-holders on a proportionate basis � Open market � Odd-lots of listed securities � Employees’ Stock Option � Sweat equity � Any other mode

15. *Article number authorizing buy-back

16. (a) *Date of opening of the offer

(b) *Proposed completion date of buy-back

(c) *Proposed date of extinguishment of the certificates

17. Other terms and conditions of offer, if any

18. *Expected capital structure post buy-back (assuming maximum securities bought back as per plan)






(b) Paid-up capital of the company (in Rs.)



19. *Expected capital structure post buy-back (assuming minimum securities bought back as per plan)

20. (a) *Debt to capital and free reserves ratio allowed to company (b) *Pre buy-back debt to capital and free reserve ratio

(c) *Expected post buy-back debt to capital and free reserve ratio

(d) Details of Government notification for the ratio higher than 2:1, if any

Attachments

(1) *Details of the promoters of the company

(2) *Declaration by auditor(s)

(3) *Copy of the board resolution

(4) *Copy of the notice issued under section 68(3) along with the explanatory

Statement thereto,

(5) *Audited financial statements of last three years.

(6) Buy back details of last three years.

(7) Management discussion and analysis (in case of listed company);

(8) List of holding and subsidiary companies of the company;

(9) Unaudited financial statement (if applicable); (10) Statutory approvals received (if any); (11) Details of the auditor, legal advisors, bankers and trustees (if any);

(12) Optional attachments (if any)

Declaration

It is hereby declared that all the attachments and the information given in this form are true and correct to the best

of my knowledge. Further declared that: (a) All requirements of section 68(3) have been complied with. (b) No defaults are subsisting in repayment of deposits or interest payment thereon, redemption of debentures or payment

of interest thereon or redemption of preference shares or payment of dividend to any shareholder or repayment of any term loan or interest payable thereon to any financial institutions or banking company and the company is not prohibited for buy-back by operation of law within the meaning of section 70 of the Act;

(c) The Board of directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion:

i. as regards its prospects for the year immediately following the date of the letter of offer that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during









(b) Paid-up capital of the company (in Rs.)





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form No. sH-8 2.365

that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date; and

ii. in forming their opinion for the above purposes, the directors have taken into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 2013 (including prospective and contingent liabilities)

*To be digitally signed by Designation (Drop down) (Values: Director, Managing Director) *DIN

Designation Director *DIN

_____________________________________________________________________________________________ Note: Attention is drawn to provisions of Section 448 and 449 which provide for punishment for false statement / certificate and punishment for false evidence respectively.

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1.(a) *Corporate identity number (CIN) of the company

(b) Global location number (GLN) of the company

2.(a) Name of the company

(b) Address of registered office of the company

(c) email Id of the company

3. (a) *Whether the company is listed Yes No

(b) Name of the stock exchange(s)

(c) Date of listing(s)

(d) Name of the merchant banker appointed

4.(a) *Date of Board of Directors’ resolution authorizing the buy-back of securities

(b) (i) Date of special resolution of members authorizing the buy-back of securities

(ii) Service request number of Form no. MGT.14

(iii) Date of filling form MGT.14

Attachments

(1) *Copy of board resolution

(2) *Statement of assets and liabilities

(3) *Auditor’s report

(4) *Affidavit as per rule 17(3)

(5) Copy of Special Resolution

(6) Optional Attachments , if any

Declaration

We solemnly declare that we have made a full enquiry into the affairs of the company including the

assets and liabilities of this company and have noted that the shareholders by a special resolution

dated

FORM NO. SH.9 [Pursuant to section 68(6) of the Companies Act, 2013 and Rule 17(3) of the Companies (Share Capital & Debentures) Rules, 2014]

Declaration of Solvency

Pre-fill

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form No. sH-9 2.367

And/or the resolution passed by the Board at its meeting held on* have approved the

buy-

back of* ( (in numbers)

(in words) shares

or

other specified securities as per the provisions of section 68 of the Companies Act, 2013.

Verified this day the* day of *

To be digitally signed by two directors, one of whom shall be the Managing director (if any)

*Designation (Drop down)

(Values: Director, Managing Director)

*DIN

*Designation

Director

*DIN

___________________________________________________________________________

__

Note: Attention is drawn to provisions of Section 448 and 449 which provide for punishment

for false statement / certificate and punishment for false evidence respective

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Form No. SH-10

Register of shares or other securities bought-back

[Pursuant to sub-section (9) of section 68 of the Companies Act, 2013 and rule 17 (12) of the Companies (Share Capital and Debentures) Rules 2014]

Name of the company:

Registered address :

1. Date of passing of special resolution at the meeting of the members authorizing buy-back of securities:

2. Date of approval by the Board:3. Number, price and amount of shares or other specified securities authorized to be

bought back:4. Date of opening and closing of buy-back offer:5. Date by which buy-back was completed:6. Description of shares or other specified securities bought back by the company:

S.No. Folio number / DP Id/clientID number or certificate

number of securitiesbought-back

Name oflast holder

ofsecurities

*Categoryto which

they belong

Date of buy-back

(1) (2) (3) (4) (5)

Number of securi-ties

bought back

**Mode of buy-back

Nominalvalue of

securities

Price atwhich securitiesare bought back

Date of payment

(6) (7) (8) (9) (10)

Amount paid for bought

back securities

Cumulative total of securities

bought back

Date of/ cancellation /extinguishment and

physical destruction ofsecurities bought-back

Referenceto entry inRegister ofmembers

Remarks

(11) (12) (13) (14) (15)

*Indicate the category of securities that have been bought backl Preference sharesl Equity sharesl Employees’ Stock Option shares

form No. sH-10 2.369

l Sweat equity shares, etc**Indicate whether the securities have been bought back from

l the existing security-holders on a proportionate basisl the open marketl odd-lots of listed securitiesl Employees’ Stock Optionl Sweat equityl any other mode, if so indicate the mode

2. Other relevant details, if any.

Place: Signature of the authorized signatoryDate: Name of the above person: Designation:



FORM NO. SH.11 [Pursuant to section 68(10) of the Companies Act, 2013 and pursuant to Rule 17(13) of the Companies (Share Capital & Debentures) Rules, 2014]

Return in respect of

buy-back of securities


Declaration

I have been authorized by the board of director’s resolution number * *dated to sign and submit this form. All the attachments and the information given in this form are true and correct to the best of my knowledge. Further, on behalf of board of directors, I hereby confirm that full enquiry into the affairs and prospects of the company and have formed the opinion

(i) that immediately following the date on which the general meeting is convened there will be no grounds on which the company could be found unable to pay its debts;


(ii) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date; and

(iii) in forming their opinion for the above purposes, the directors have taken into account the liabilities(including prospective and contingent liabilities) as if the company were being wound up under the provisions of the Companies Act, 2013.

*To be digitally signed by

*Designation

*Director’s Identification number of the director; or DIN or PAN of the Manager or CEO or CFO; or Membership number of the Company secretary

Attachments

(13) *Description of shares or other specified securities bought back

(14) *Particulars relating to holders of securities before buy-back

(15) Copy of the special resolution passed at the general meeting

(16) *Copy of the board resolution

(17) *Balance sheet of the company

(18) *Certificate of compliance of buy-back rules according to rule 17(14)

(19) Optional attachments, if any

________________________________________________________________________________________ Note: Attention is drawn to provisions of Section 448 and 449 which provide for punishment for false statement / certificate and punishment for false evidence respectively.

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Form No. SH-12

Debenture Trust Deed[Pursuant to sub-section (13) of section 71 of the Companies Act, 2013 and rule 11 of the Companies (Share Capital and Debentures) Rules 2014]The debenture trust deed shall, inter alia, contain the following:-1. DESCRIPTION OF DEBENTURE ISSUE:

(a) Purpose of raising finance through the debenture issue;(b) Details of debenture issue as regards amount, tenure, interest/coupon rate, peri-

odicity of payment, mode of payment and period of redemption;(c) An undertaking by the company to pay the interest and principal amount of such

debentures to the Debenture holders as and when it becomes due, as per the terms of offer;

(d) The terms of conversion/redemption of the debentures in terms of the issue to the debenture holders, options available, and debt equity ratio and debt service coverage ratio, if applicable.

2. DETAILS OF CHARGE CREATED (in case of secured debentures):(a) Nature of charge created and examination of title;(b) Rank of charge created viz. first, second, pari passu, residual, etc;(c) Minimum security cover required;(d) Complete details of the asset(s) on which charge is created such as description,

nature, title, location, value, basis of valuation etc.;(e) Methods and mode of preservation of assets charged as security for the deben-

tures;(f ) Other particulars of the charge, e.g., time period of charge, rate of interest, name

of the charge holder;(g) Provision for subsequent valuation;(h) Procedure for allowing inspection of charged assets and book of accounts by de-

benture trustee or any person or person authorized by it;(i) Charging of future assets(j) Time limit within which the future security for the issue of debentures shall be

created(k) Circumstances specifying when the security may be disposed of or leased out

with the approval of trustees(l) Enforceability of securities, events under which security becomes enforceable(m) Obligation of company not to create further charge or encumbrance of the trust

property without prior approval of the trustee3. PARTICULARS OF THE APPOINTMENT OF DEBENTURE TRUSTEE(S):

(a) The conditions and procedure for the appointment of the debenture trustee ;(b) Procedure for resignation by trustee including appointment of new trustees;(c) Provision that the debenture trustee shall not relinquish his office until another

debenture trustee has been appointed;(d) Procedure to remove debenture trustee by debenture holders providing for re-

moval on a resolution passed by the holders of not less than three fourth in value of debentures;

(e) Fees or commission or other legal travelling and other expenses payable to the trustee(s) for their services;

(f ) Rights of the trustee including the right to inspect the registers of the company and to take copies and extract thereof and the right to appoint a nominee direc-tor;

(g) Duties of the trustee.


4. EVENTS OF DEFAULTS(a) Events under which the security becomes enforceable which shall include the fol-

lowing events:(i) When the company makes two consecutive defaults in the payment of any

interest which ought to have been paid in accordance with the terms of the issue;

(ii) When the company without the consent of debenture holders ceases to carry on its business or gives notice of its intention to do so;

(iii) When an order has been made by the Tribunal or a special resolution has been passed by the members of the company for winding up of the com-pany;

(iv) When any breach of the terms of the prospectus inviting the subscriptions of debentures or of the covenants of this deed is committed;

(v) When the company creates or attempts to create any charge on the mort-gaged premises or any part thereof without the prior approval of the trust-ees/debenture holders;

(vi) When in the opinion of the trustees the security of debenture holders is in jeopardy.

(b) Steps which shall be taken by the debenture trustee in the event of defaults;(c) Circumstances specifying when the security may be disposed off or leased out

with the approval of trustees;(d) A covenant that the company may hold and enjoy all the mortgaged premises

and carry on therein and therewith the business until the security constituted becomes enforceable

5. OBLIGATIONS OF COMPANY: This section shall state the company’s duty with respect to-

(a) maintaining a Register of debenture holders including addresses of the deben-ture holders, record of subsequent transfers and changes of ownership;

(b) keeping proper books of accounts open for inspection by debenture trustee;(c) permitting the debenture trustee to enter the debentureholder’s premises and

inspect the state and condition of charged assets;(d) furnishing information required by the debenture trustee for the effective dis-

charge of its duties and obligations, including copies of reports, balance sheets , profit and loss account etc.;

(e) keeping charged property/security adequately insured and in proper condition;(f ) paying all taxes, cesses, insurance premium with respect to charged property/

security, on time;(g) not declaring any dividend to the shareholders in any year until the company has

paid or made satisfactory provision for the payment of the installments of princi-pal and interest due on the debentures;

(h) creating the debenture redemption reserve;(i) converting the debentures into equity in accordance with the terms of the issue,

if applicable;(j) informing the debenture trustee about any change in nature and conduct of busi-

ness by the company before such change;(k) informing the debenture trustee of any significant changes in the composition of

its Board of Directors;(l) informing the debenture trustee of any amalgamation, merger or reconstruction

scheme proposed by the company;(m) keeping the debenture trustee informed of all orders, directions, notices, of court/

tribunal affecting or likely to affect the charged assets;


(n) not creating further charge or encumbrance over the trust property without the approval of the trustee;

(o) obligation of the company to forward periodical reports to debenture trustees containing the following particulars:(i) updated list of the names and addresses of the debenture holders; (ii)

details of interest due but unpaid and reasons thereof;(iii) the number and nature of grievances received from debenture holders and

(a) resolved by the company (b) unresolved by the company and the reasons for the same.

(iv) a statement that the assets of the company which are available by way of security are sufficient to discharge the claims of the debenture holders as and when they become due

(p) complying with all directions/guidelines issued by a Regulatory authority, with regard to the debenture issue

(q) submitting such information, as required by the debenture trustee6. MISCELLANEOUS:

(a) The conditions under which the provisions of the trust deed or the terms and conditions of the debentures may be modified;

(b) The mode of service of notices and other documents on the company, the trustee and the holders of the debentures;

(c) The company to be responsible for paying any stamp duty on the trust deed or the debentures (if applicable);

(d) Provisions regarding meetings of the debenture holders;

(e) Provisions for redressal of grievances of debenture holders.

form No. sH-13 2.3771Form No. SH-13

Nomination Form[Pursuant to section 72 of the Companies Act, 2013 and rule 19(1) of the Companies

(Share Capital andDebentures) Rules 2014]

ToName of the company:Address of the company:I/We …………………………………….. the holder(s) of the securities particulars of which are given hereunder wish to make nomination and do hereby nominate the following per-sons in whom shall vest, all the rights in respect of such securities in the event of my/our death.(1) PARTICULARS OF THE SECURITIES (in respect of which nomination is being made)

Nature of securities

Folio No. No. of securities

Certificate No.

Distinctive No.

(2) PARTICULARS OF NOMINEE/S —(a) Name:(b) Date of Birth:(c) Father’s/Mother’s/Spouse’s name:(d) Occupation:(e) Nationality:(f) Address:(g) E-mail id:(h) Relationship with the security holder:

3. IN CASE NOMINEE IS A MINOR--a. Date of birth:b. Date of attaining majorityc. Name of guardian:d. Address of guardian:

(4) PARTTCIJLARS OF NOMINEE IN CASE MINOR NOMINEE DIES BEFORE ATTANING ACE OF MAJORJTY(a) Name:(b) Date of Birth(c) Father’s/Mother’s/Spouse’s name(d) Occupation:(e) Nationality:(f ) Address:(g) E-mail id(h) Relationship with the security holder (i) Relationship with the minor noninee Name: Address:Name of the Security Witness with name and address

1 Substituted by Companies (Share Capital And Debentures) Rules 2014, w.e.f. 18-03-2015


1Form No. SH-14

Cancellation or Variation of Nomination

[Pursuant to sub-section (3) of section 72 of the Companies Act, 2013 and rule 19(9) of the Companies (Share Capital and Debentures) Rules 2014]

Name of the company:I/We hereby cancel the nomination(s) made by me/us in favor of……………..(name and address of the nominee) in respect of the below mentioned securities.

orI/We hereby nominate the following person in place of …………………………. as nomi-nee in respect of the below mentioned securities in whom shall vest all rights in respect of such securities in the event of my/our death.

1. PARTICULARS OF THE SECURITIES (in respect of which nomination is being cancelled / varied)

Nature of securities

Folio No. No. of securities

Certificate No.

Distinctive No.

2. a. PARTICULARS OF THE NEW NOMINEE:i. Name:ii. Date of Birth:iii. Father’s/Mother’s/Spouse’s name:iv. Nationality:v. Address:vi. E-mail id:vii. Relationship with the Security holder:

b. IN CASE NEW NOMINEE IS A MINOR--i. Date of Birth:ii. Date of attaining majorityiii. Name of guardian:iv. Address of guardian:

(3) PARTTCIJLARS OF NOMINEE IN CASE MINOR NOMINEE DIES BEFORE ATTANING ACE OF MAJORJTY(a) Name:(b) Date of Birth(c) Father’s/Mother’s/Spouse’s name(d) Occupation:(e) Nationality:(f ) Address:(g) E-mail id(h) Relationship with the security holder (i) Relationship with the minor noninee

SignatureName of the SecurityHolder (s) Witness with name and address

1 Substituted by Companies (Share Capital And Debentures) Rules 2014, w.e.f. 18-03-2015


Form No. SH-15

Certificate of compliance in respect of buy-back of securities

[Pursuant sub-rule (14) of rule 17 of the Companies (Share Capital and Debentures) Rules 2014]

1. (a) Corporate identity number (CIN) of company: (b) Global location number (GLN) of company:2. (a) Name of the company: (b) Address of the registered office of the company: (c) E-mail ID of the company:

We, …………………………………..directors of the above named company certify that the provisions of Companies Act, 2013 and rules made thereunder relating to buy-back of securities have been complied with in respect of the securities bought back vide Board Resolution dated…………and / or special resolution passed by the members in the gen-eral meeting held on ………….. and the details relating to which has been filed in Form No. SH-11 with the Registrar of Companies.

Date: Signature:

Place: (1) Managing Director / Director (2) DirectorVerified by …………………………………… C o m p a n y Secretary in Practice

CP No.