Dividend rights

2. Have the application and allotment money paid by the directors on the shares taken or, contracted to be taken by them having been paid in cash at least to the extent such,moneys are payable by the public. [Section 149(1)(b)]

3. Obtain or apply for permission for dealing with the shares or debentures on the recognised Stock Exchange so that the moneys of the applicants for shares or debentures do not become refundable, vide section 73. [Section 149(1)(c)]

4. File a declaration in Form No. 19 duly verified by one of the directors or the secretary with the concerned Registrar of Companies to the effect that the aforesaid three conditions have been complied with [Section 149(1)(d)], after paying the requisite fees prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

5. See that the aforesaid declaration is prepared on a Non‑judicial Stamp paper of the requisite value as prevalent in the State or Union Territory in which the company is registered according to the Indian Stamp Act.

6. The concerned Registrar of Companies will then issue the certificate of commencement of business. [Section 149(3)]

7. Please keep in mind that if any company commences business or exercises borrowing powers in contravention of section 149, every person who is responsible for the contravention will be punishable with fine upto Rs. 5000/- for every day during which the contravention continues, without prejudice to any other liability. [Section 149(6)]

(B) Where the company having a share capital has not issued Prospectus:

1. Have the application and allotment moneys paid in cash by your directors which they are liable to pay in cash on the shares taken or contracted to be taken by them. [Section 149(2)(b)]

2. File the statement in lieu of Prospectus according to the Form and requirements of Schedule III to the Companies Act, 1956. [Section 149(2)(a)]

3. Do not allot any share or debenture at least for three days after filing the above statement. [Section 70(1)]

4. File a declaration in Form No. 20 duly verified by one of the directors or the secretary with the concerned Registrar of Companies to the effect that the first mentioned condition has been complied with [Section 149(2)(c)], after paying the requisite fees prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

5. See that the aforesaid declaration is prepared on a Non‑judicial Stamp paper of the requisite value8 as prevalent in the State or Union Territory in which the company is registered according to the Indian Stamp Act.

6. The concerned Registrar of Companies will then issue the certificate of commencement of business. [Section 149(3)]

7. If default is made complying with the requirements of section 149, every person who is responsible for the contravention will be punishable with fine of Rs. 5000/- for every day during which the contravention continues. [Section 149(6)]

8. Note that private companies are exempted from complying with the requirements of section 149. [Section 149(7)(a)]

9. Further note that a private company which is a subsidiary of a public company will be treated as a public company. [Section 3(1)(iv)(c)]

Topic 185

DO YOU WISH TO COMMENCE A NEW BUSINESS WITHIN THE FRAME‑WORK OF YOUR EXISTING MEMORANDUM OF ASSOCIATION?

(A) The Memorandum of every company shall state:

(i) in case of companies in existence immediately before the commencement of the Companies (Amendment) Act, 1965 (i.e. 15th October, 1965), the objects of the company, i.e., an existing company; and

(ii) in case of companies formed after such commencement (i.e., new company), (a) the main objects of the company which the company will pursue on its incorporation, (b) the objects incidental or ancillary to the attainment of the said main objects, and (c) any other objects not included in the am objects and objects ancillary or incidental thereto. [Section 13]

(B) The proposed business is deemed to be new business, only if:

(i) it is not germane to the company's business as on 15th October, 1965, in relation to any of the objects referred to, in the case of an existing company;

(ii) it comes within sub‑clause (ii)(c) above in the case of any other company i.e., new company. [Section 149]

(C) The procedure stated herein does not apply to a private company which can commence any new business permitted by the Memorandum of Association after passing a Board's Resolution:

1. Call a Board meeting after giving notice to all the directors of the company as per section 286 and:

(i) approve the commencement of new business;

(ii) fix the date, time, place and agenda of the General Meeting for passing a Special Resolution.

2. Convene the General Meeting by issuing notices in writing along with suitable Explanatory Statements at least twenty‑one days before the date of the General Meeting and pass the Special Resolution$ by three fourths majority. [Section 171(1) read with section 173(2) and 189(2)]

3. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine Of Rs. 1000/‑ [Section 286(2)]

4. Forward three copies of the notices and a copy of the proceedings of the General Meeting to the Stock Exchange with which the shares of our company are listed. [Clause 31(c) and (d) of the Standard Listing Agreement]

5. File the Special Resolution with the concerned Registrar of Companies in Form No. 23 within thirty days of the passing thereof [Section 192(1) & (4)(a)] after paying the requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

6. Please also keep in mind that if default is made in complying with the aforesaid requirement, the company, and every officer of the company who is in default will be punishable with fine upto Rs. 200/‑ for every day during which the default continues. [Section 192(5)]

7. If the resolution does not get the requisite three‑fourth majority but gets simple majority support, call a Board Meeting and decide to approach the Central Government for its approval. [Section 149(2B)]

8. Apply to the Central Government if necessary, on a plain paper preferably on the letter head of the company giving necessary details.

9. Address the application$ to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110 001.

10. Annex to the above‑mentioned application a receipted treasury challan or demand draft evidencing the payment of fees prescribed under the Companies (Fees on Applications) Rules, 1999 and a certified true copy of the Memorandum and Articles of Association of your company.

11. If the application fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, and as prescribed by the Companies (Fees on Application) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank6for credit.

12. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

13. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be filed with the application mentioned in item 8.

14. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application mentioned in item 8.

15. File duly verified declaration signed by one of the directors or the secretary in Form No. 20A with the concerned Registrar of Companies [Section 149(2A) (b)(ii)] either within thirty days of the passing of the Special Resolution or before commencement of new business, whichever is earlier, after paying the requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

16. Where a Special Resolution has not been approved, file the above declaration immediately on receipt of the approval of the Central Government to commence new business.

17. Attach a certified copy of the Special Resolution together with the Explanatory Statement or a certified copy of the sanction of the Central Government with the declaration.

18. The declaration, as mentioned above, must be given on Non‑judicial Stamp paper of the requisite value as prevalent in the State or Union territory in which the declaration is executed.

19. Further keep in mind that if your company commences any such business in contravention of sub‑section (2A) of section 149 every person who is responsible for the contravention will be punishable with fine upto Rs. 5,000/- for every day during which the contravention continues without prejudice to any other liability. [Section 149(2A)]

20. Also keep in mind that a private company which is a subsidiary of a public company will be treated as a public company. [Section 3(1)(iv)(c)

Topic 186

DO YOU WISH TO FILE STATEMENT IN LIEU OF PROSPECTUS WITH THE REGISTRAR OF COMPANIES? [SECTIONS 70(1) AND 149(2)(a)]

1. Only a public limited company which has obtained certificate of incorporation cannot commence business unless and until the company obtains the certificate of commencement of business under section 149(2).

2. Prepare the Statement in lieu of Prospectus in the Form given in Schedule III to the Companies Act, 1956.

3. Convene the First Board Meeting after giving notice to all the directors of the company as per section 286 after obtaining certificate of incorporation.

4. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑[Section 286(2)]

5. Keep ready the following:

(i) Certified true copy of the Board Resolution adopting preliminary expenses with a statement showing the break‑up of it under two headings separately, namely, preliminary expenses already incurred and such expenses to be incurred;

(ii) Certified true copy of the Board Resolution authorising a director to sign and file the Statement in lieu of Prospectus with the concerned Registrar of Companies and to take necessary steps to obtain Certificate of Commencement of Business;.

(iii) Certified true copy of the Board Resolution authorising a director to sign and file a declaration in Form No. 20;

(iv) Certified true copy of the Board Resolution appointing first auditors of the company to hold office till the Annual General Meeting;

(v) Certified true copy of the certificate obtained from the auditors stating inter alia that their appointment will be within the limits provided in section 224(1B);

(vi) Certified true copy of the original certificate of incorporation.

6. Prepare the declaration under section 149(2)(c) in Form No. 20 and get it signed by the director authorised in this behalf.

7. This declaration should be made on Non‑judicial Stamp paper of the requisite value as per stamp duty prevalent in the State or Union Territory in which the company is registered.

8. File the statement in lieu of Prospectus along with the documents mentioned in item 5 above and the duly filled in declaration mentioned in item 6 above with the concerned Registrar of Companies [Section 70(1)] after paying the requisite fee as prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

9. Please keep in mind that if your company acts in contravention of the aforesaid requirement, the company and every director of the company who wilfully authorises or permits the contravention will be punishable with fine upto Rs. 10,000/‑[Section 70(4)]

10. Ensure that the statement in lieu of prospectus filed with the Registrar of Companies does not include any untrue statement that it should not be misleading in the form and context in which it is included. [Section 70(6)(a)]

11. Further keep in mind that if a statement in lieu of prospectus filed with the Registrar of Companies includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration will be punishable with imprisonment for term upto 2 years or with fine upto Rs. 50,000/‑ or with both. [Section 70(5)]

12. Also keep in mind that a private company which is a subsidiary of a public company will be treated as a public company. [Section 3(1)(iv)(c)]

B. Dividend

(Topic 187 to Topic 201)

Topic 187

DO YOU WISH TO DECLARE INTERIM DIVIDEND?

1. Verify from your Articles of Association that they authorise the directors to declare interim dividend; if not, then alter the Articles of Association accordingly vide Topic 26.

2. Convene the Board Meeting, after giving notice to all the directors of the company as per section 286, consider the position of accounts to ascertain that there is sufficient profit in accordance with section 205 to declare dividend; if so, pass a resolutiont declaring dividend.

3. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

4. Keep in mind that the Board of Directors of your company.may declare interim dividend and the amount of dividend including interim dividend should be deposited in a separate bank account within 5 days from the date of declaration of such dividend. [Section 205(1A)

5. Note that the amount of dividend including interim dividend so deposited as aforesaid should be used for payment of interim dividend.[Section 205(1B)]

6. Further note that the provisions contained in sections 205, 205A, 206, 206A and will as far as may be apply to any interim dividend.

7. Give notice to the Stock Exchange with which your company's shares are listed in advance, of at least 30 days where the shares are in dernat form or at least 42 days stating the date of closure of your company's transfer books for purpose of declaration of interim dividend. [Clause 16 of the Listing Agreement]

8. Forthwith inform the Stock Exchange with which the shares of your company are listed the date of the aforesaid Board Meeting and also intimate the Stock Exchange immediately after the Board Meeting about the declaration of interim dividend. [Clauses 19 and 20 of the Standard Listing Agreement]

9. Arrange to make payment within thirty days of declaration either in cash or by cheque or warrant sent through the post directed at the registered address of the share‑holder entitled to the payment of the dividend or in the case of joint share‑holders to the registered address of that joint share‑holder who is first named on the Register of Members, or to such person and to such address as the share‑holder or the joint share‑holders may in writing direct. [Section 205(5)(b)]

10. See that the amount of interim dividend is rounded off to the nearest rupee and for this purpose, where such amount contains part of a rupee consisting of paise then if such part is fifty paise or more it should be increased to one rupee and if such part is less than fifty paise it should be ignored. [Rule 23].

11. Where instruments of transfers have been received by the company in relation to some shares and the transfer of such shares has not been registered when the dividend warrants for interim dividend were issued, keep the aiiount of dividend of such shares into "Unpaid Dividend Account" opened under section 205A(1) till the company is authorised by the registered holders of such shares in writing to pay the dividend to the transferees specified in the said instruments of transfers. [Section 206A)]

12. Confirm the interim dividend in the next Annual General Meeting by declaring final dividend thereat.

13. Note that clause (14A) has been added to section 2 by the Companies (Amendment) Act, 2000 making dividend to include interim dividend. [Section 2(14A)]

14. Please also keep in mind that where an interim dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the dividend, every director of the company, if he is knowingly a party to the default will be punishable with simple imprisonment for a term upto 3 years and will also be liable to a fine of Rs. 1000/- for every day during which such default continues and the company will be liable to pay simple interest @ 18% per annum during the period for which such default continues [Section 207]

15. Please also note that a director of a public company which has defaulted in payment of dividend (including interim dividend) and the default has continued for one year, is not eligible for being appointed as a director of a public company. The disqualification is for a period of five years. [Section 274(1)(g)].

16. Keep in mind that your company must mandatorily utilise the facility of ECS for distributing dividends wherever available and in the absence of availability of ECS facility, your company may use warrants for distributing dividends. [DCC/FTTC/CIR‑3/2001, dated 15‑10‑2001 issued by SEBI Depositories and Custodian Cell.

17. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter‑alia that the company has deposited the amount of dividend declared including interim dividend in a separate bank account within 5 days from the date of declaration of dividend, paid/posted warrants for dividends to all the members within a period of 30 days from the date of declaration and that all unclaimed/unpaid dividend has been transferred to unpaid dividend account of the company with a particular bank on a specific date and also transferred the amounts in unpaid dividend account which have been remained unclaimed or unpaid for a period of 7 years to Investor Education and Protection Fund as per paragraph 13(ii), (iii) and (iv) of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso].

18. With effect from 1^st April 2002 your company is required to deduct tax at source from dividends paid to your shareholders over and above Rs. 1,000/‑, under section 115‑O of the Income Tax Act, 1961 as amended by Finance Act, 2002.

19. Further note that by a General Circular No. 5/2002, dated 1^st March, 2002, the Department of Company Affairs has requested listed companies to utilize Electronic Clearing Service (Credit Clearing) in the following centres for payment of dividend by electronic transfer as this will result in avoiding delay in remittance of dividends and for this purpose such companies should encourage their shareholders to send to such companies authorisation to remit dividend to their designated bank accounts:

Reserve Bank of India

1. Ahmedabad	6. Chennai	11. Mumbai
2. Bangalore	7. Gawahati	12. Nagpur
3. Bhubaneswar	8. Hyderabad	13. New Delhi
4. Kolkata	9. Jaipur	14. Patna
5. Chandigarh	10. Kanpur	15. Thiruvanathapuram

State Bank of India

1.	Agra	11.	Ghaziabad	21.	Pune
2.	Allahabad	12.	Hubli	22.	Rajkot
3.	Amritsar	13.	Jamshedpur	23.	Shimla
4.	Baroda	14.	Kolhapur	24.	Siliguri
5.	Bhopal	15.	Lucknow	25.	Surat
6.	Cochin	16.	Ludhiana	26.	Trichy
7.	Coimbatore	17.	Madurai	27.	Trichur
8.	Dehradun	18.	Mangalore	28.	Vijayawada.
9.	Durgapur	19.	Nashik	29.	Visakapatnam.
10.	Faridabad	20.	Panaji	30.	Varanasi

Topic 188

DO YOU WISH TO REVOKE INTERIM DIVIDEND ALREADY DECLARED?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and consider the reasons for revoking the interim dividend already declared by the Board in its previous meeting.

2. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

3. If majority of the directors present in the meeting agree to the revocation of interim dividend already announced, then pass a resolution rescinding the previous resolution declaring interim dividend and also for the fact that no interim dividend shall be paid.

4. Inform the recognised Stock Exchange with which the shares of your company are listed about such revocation or non‑payment of interim dividend the fact of such revocation of interim dividend. [Clause 22(d) of the Standard Listing Agreement]

5. Publish in any newspaper having the wide publication giving therein briefly the reasons for doing so and saying that any inconvenience is regretted.

6. See that in the immediate next Annual General Meeting the fact of revocation of interim dividend made is regretted before the shareholders.

7. See that such revocation of interim dividend is made before despatch of interim dividend warrants to shareholders.

8. Please keep in mind that the revocation of interim dividend should be made before its confirmation at the immediately next Annual General Meeting.

Topic 189

DO YOU WISH TO DECLARE FINAL DIVIDEND?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and let your Board of Director consider the amount of dividend to be recommended to the ensuing Annual General Meeting for declaration.

3. Give notice to the Stock Exchanges with which your company's shares are listed in advance of at least 30 days where the shares are in dernat Form or at least 42 days stating the date of closure of your company's transfer books for purpose of declaration of dividend. [Clause 16 of the Listing Agreement]

4. Also notify to the recognised Stock Exchange with which'the shares of your company are listed without delay the date of the Board meeting at which the recommendation of a dividend is due to be considered. [Clause 19 of the Standard Listing Agreement]

5. See that the required percentage of profits is transferred to your company's reserves. [Rule 2 of the Companies (Transfer of Profits to Reserves) Rules, 1975]

6. Your company may transfer to reserves more than ten per cent of the current profits if the conditions contained in Rule 3 of the said Rules are complied with.

7. Forthwith inform the following to the recognised Stock Exchange with which the shares of your company are listed after the holding of the Board Meeting:

(a) all dividends recommended or declared;

(b) the total turnover, gross profit or loss, provision for depreciation, tax provision and net profit for the year (with comparison with the previous year) and the amount appropriated from reserves, capital profits, accumulated profits of past years or other special source to provide partly or wholly for the dividend even if this calls for qualification that such information is provisional or subject to audit. [Clause 20 of the Standard Listing Agreement]

8. Include in the agenda of the Annual General Meeting, the business of declaration of dividend.

9. Pass an Ordinary Resolutionj by simple majority in the Annual General Meeting, declaring the dividend. [Section 189(1)]

10. Fix and notify the recognised Stock Exchange with which the shares of your company are listed at least twenty‑one days in advance of the date on and from which the dividend will be payable and issue simultaneously the dividend warrants which shall be encashable at par at all the branches of your company's bankers so as to reach the shareholders on or before the date fixed for payment of dividend. [Rules 30(2), 31(4) of the Income‑tax Rules, 1962]. [Sections 194 and 203 of the Income‑tax Act, 1961]. [Clause 21 of the Standard Listing Agreement].

11. Arrange to make payment within thirty4 days of declaration either in cash or by cheque warrant sent through the post directed at the registered address of the shareholder entitled to the payment of the dividend.

12. In the case of joint share‑holders, dividend warrant should be sent to the registered address of that joint shareholder who is first named on the Register of Members, or to such person and to such address as the shareholder or the joint shareholders may in writing direct. [Section 205(5)(b)]

13. See that the amount of dividend is rounded off to the nearest rupee and for this purpose where such amount contains part of a rupee consisting of paise then if such part is fifty paise or more it should be increased to one rupee and if such part is less than fifty paise it should be ignored. [Rule 23].

14. Where instruments of transfer have been received by the company in relation to some shares and the transfer of such shares has not been registered when the dividend warrants were posted, keep that amount of dividend also in the special account called "Unpaid Dividend Account" unless the company is authorised by the registered holders of those shares in writing to pay the dividend to the transferees specified in the said instruments of transfer. [Section 206A]

15. With effect from lst April 2002 your company is required to deduct tax at source from dividends paid to your shareholders over and above Rs. 1,000/‑, under section 115‑O of the Income Tax Ac t, 1961 as amended by Finance Act, 2002.

16. Arrange to transfer the total amount of dividend, which remains unpaid or unclaimed within seven days from the date of expiry of thirtY6 days from the date of its declaration to a special account to be opened by your company in this behalf in any scheduled bank to be called "Unpaid Dividend Account of ______ Company Ltd". [Section 205A(1)]

17. Please keep in mind that the said Unpaid Dividend Account of your company can be opened as a fixed deposit account if your company so desires instead of in the form of a current account. [Circular D000 No. BP:BC:172/21.04.105/99‑2000 dated 9‑5‑2000 issued by RBI. ]

18. See that the unpaid dividend includes that amount of dividend the warrants in respect of which have either not been encashed or which have otherwise not been paid or claimed. [Section 205A(1), Explanation]

19. If your company is a Government company then do not transfer the unpaid dividends to the special account.[Notification No. GSR 231, dated 31‑1‑1978]

20. Note that if a company which has declared dividend but it has not paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder, then every director of the company who is knowingly a party to the default will be punishable with simple imprisonment for a term of three years and will also be liable to a fine of Rs. 1,000/‑ for every day during which such default continues and the company will be liable to pay simple interest @ 18% per annum during the period for which such default continues. [Section 207 ]

21. Further note that no offence as aforesaid will be deemed to have been committed by your company's directors in the following cases:

(i) where the dividend could not be paid by reason of the operation of any law;

(ii) where a shareholder has given direction to the company regarding the payment of the dividend and those directions cannot be complied with;

(iii) where there is a dispute regarding the right to receive the dividend;

(iv) where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder;

(v) where for any other reason the failure to pay the dividend or to post the warrant within the period of thirty days from the date of declaration was not due to any default on the part of the company. [Section 207 Proviso]

22. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has deposited the amount of dividend declared in a separate bank account within 5 days from the date of declaration of dividend, paid/posted warrants for dividends to all the members within a period of 30 days from the date of declaration and that all unclaimed/unpaid dividend has been transferred to unpaid dividend account of the company with a particular bank on a specific date and also transferred the amounts in unpaid dividend account which have been remained unclaimed or unpaid for a period of 7 years to Investor Education and Protection Fund as per paragraph 13(ii), (iii) and (iv) of the Form of Compliance 8 Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A, proviso]

23. Further note that by a General Circular No. 5/2002, dated 1^st March, 2002, the Department of Company Affairs has requested listed companies to utilize Electronic Clearing Service (Credit Clearing) in the following Centres for payment of dividend by electronic transfer as this will result in avoiding delay in remittances of dividend and for this purpose such companies should encourage their shareholders to send to such companies authorisation to remit dividend to their designated bank accounts:

Reserve Bank of India

1. Ahmedabad	6. Chennai	11. Mumbai
2. Bangalore	7. Guwahati	12. Nagpur
3. Bhubaneswar	8. Hyderabad	13. New Delhi
4. Kolkata	9. Jaipur	14. Patna
5. Chandigarh	10. Kanpur	15. Thiruvanathapuram

State Bank of India

1. 2.	Agra Allahabad	11. 12.	Ghaziabad Hubli	21. Pune 22. Rajkot
3.	Amritsar	13.	Jamshedpur	23.	Shimla
4.	Baroda	14.	Kolhapur	24.	Siliguri
5.	Bhopal	15.	Lucknow	25.	Surat
6.	Cochin	16.	Ludhiana	26.	Trichy
7.	Coimbatore	17.	Madurai	27.	Trichur
8.	Dehradun	18.	Mangalore	28.	Vijayawada
9.	Durgapur	9.	Nashik	29.	Visakapatnam
10.	Faridabad	20.	Panaji	30.	Varanasi

Topic 190

DO YOU WISH TO DECLARE DIVIDEND OUT OF YOUR COMPANY'S RESERVES?

1. Convene a Board Meeting after giving notice$ to all the directors of the company as per section 286 and take the decision to declare dividend out of your company's reserves in the face of inadequacy or absence of profits in any year.

2. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of upto Rs. 1000/- [Section 286(2)]

3. See whether the following conditions are fulfilled before declaring dividend out of reserves :

(i) the rate of dividend should not exceed the average rate of dividend declared in the immediate preceding five years or ten per cent of your company's paid‑up capital, whichever is less;

(ii) the total amount to be drawn should not exceed one‑tenth of the paidup share capital and free reserves of your company;

(iii) such amount must first be utilised to set off the losses, if any, before any dividend is declared;

(iv) the balance of reserves must not fall below fifteen per cent of your company's paid‑up share capital. [Rule 2 of the Companies (Declaration of Dividend out of Reserves) Rules, 1975]

4. While calculating the profits of the previous years, take only the net profit after tax of your company. [Explanation to Rule 2 of the Companies (Declaration of Dividend out of Reserves) Rules, 1975]

5. In computing the amount of profits, the appropriations out of the amount transferred from the Development Rebate Reserve will be included but all items of Capital Reserves including reserves created by revaluation of assets shall be excluded. [Explanation to Rule 2 of the Companies (Declaration of Dividend out of Reserves) Rules, 1975]

6. Again convene a Board Meeting after giving notice to all the directors of the company as per section 286 to recommend the rate of dividend and to fix up the date, time, place and agenda of the General Meeting.

7. Before holding this Board Meeting, inform the recognised Stock Exchange with which the shares of your company are listed about the date of this meeting. [Clause 19 of the Standard Listing Agreement]

8. If the shares of your company are listed on a recognised Stock Exchange, do the following:

(i) Intimate to the said Stock Exchange immediately after the Board Meeting is held, of all dividends recommended or declared;

(ii) The total turnover, gross profit or loss, provision for depreciation, net profit/loss for the year (with comparison made with the previous year) and the amounts appropriated from reserves to provide for dividend;

(iii) Fix and notify to the said Stock Exchange at least twenty‑one days in advance of the date on and from which the dividend will be payable;

(iv) Issue simultaneously the dividend warrants which shall be encashable at par at all the branches of your company's bankers so as to reach the shareholders on or before the date fixed for payment of dividend. [Clauses 20 and 21 of the Standard Listing Agreement]

9. In case of joint shareholders, send the dividend warrant to one of the joint shareholders who is first named on the Register of Members of your company or to such person and to such address as the shareholder or shareholders may in writing direct. [Section 205(5)(b)]

10. Issue notices in writing at least twenty‑one days before the date of the General Meeting and hold the General Meeting and pass an Ordinary Resolution by simple majority declaring dividend out of your company's reserves. [Section 171‑(1)]

11. Forward three copies of the notice and a copy of the proceedings of the General Meeting to the Stock Exchange with which the shares of pur company are listed. [Clause 31(c) and (d) of the Standard Listing Agreement]

12. Make the payment or issue dividend warrants within thirty days from the date of declaration.

13. With effect from 1^st April 2002 your company is required to deduct tax at source from dividends paid to your shareholders over and above Rs. 1,000/‑, under section 115‑O of the Income Tax Act, 1961 as amended by Finance Act, 2002.

14. If your company fails to pay the dividend declared or fails to post the warrant in respect thereof within thirty days from the date of declaration, every director of the company if he is knowingly a party to the default will be punishable with simple imprisonment of 3 years and will also be liable to a fine of Rs. 1,000/‑ for every day during which the default continues and the company will be liable to pay simple 4nterest @ 18% per annum during the period for which such default continues. [Section 207]

15. See that the amount of dividend is rounded off to the nearest rupee and for this purpose where such amount contains part of a rupee consisting of paise then if such part is fifty paise or more it should be increased to one rupee and if such part is less than fifty paise it should be ignored. [Rule 23].

16. Where instruments of transfer have been received by the company in relation to some shares and the transfer of such shares has not been registered when the dividend warrants were posted, keep that amount of dividend also in the special account called "Unpaid Dividend Account" unless the company is authorised by the registered holders of those shares in writing to pay the dividend to the transferees specified in the said instruments of transfer. [Section 206A]

17. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has deposited the amount of dividend declared in a separate bank account within 5 days from the date of declaration of dividend, paid/posted warrants for dividends to all the members within a period of 30 days from the date of declaration and that, all‑ unclaimed/unpaid dividend has been transferred to unpaid dividend account of the company with a particular bank on a specific date and also transferred the amounts in unpaid dividend account which have been remained unclaimed or unpaid for a period of 7 years to Investor Education and Protection Fund as per paragraph 13(ii), (iii) and (iv) of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001.[Section 383‑A(1), proviso]

Topic 191

DO YOU WISH TO TAKE EXEMPTION FROM PROVIDING DEPRECIATION OUT OF PROFITS BEFORE DECLARING DIVIDEND UNDER SECTION 205(1)(c)?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision of applying to the Central Government for obtaining exemption from providing depreciation before declaring or paying dividend. [Section 205(1)(c)]

2. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

3. Apply to the Central Government on plain paper preferably on the letter head of the company giving reasons for doing so and address the application to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110 001. Along with the application, send the following documents also:

(i) Certified true copy of the Board resolution;

(ii) Certified true copies of the profit and loss account and balance‑sheet and Directors's Report and Auditors' Report of your company for three years;

(iii) Certified true copy of the Memorandum and Articles of Association of the company;

(iv) A treasury challan or demand draft evidencing the payment of requisite fees prescribed by the Companies (Fees on Applications) Rules, 1999.

4. If the applicationf fee is paid by way of treasury challan, then pay the requisite fees of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Applications) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank for credit.

5. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

6. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application mentioned in item 3.

7. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi.

8. Deliver simultaneously to the concerned Registrar of Companies a copy of the application along with a copy of each of the documents annexed to it.

9. As per the Citizen's Charter of the Department of Company Affairs, Schedule 1, Serial No. 2, the application to the Central Government will be processed within 30 days. [No. 5/25/99‑CL‑V,‑ Press Note No. 9/99 dated 9‑8‑1999.]

10. Obtain the approval of the Central Government and convene a Board Meeting after giving notice to all the directors of the company as per section 286 to recommend the dividend and to fix the date, time, place and agenda of the General Meeting.

11. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/- [Section 286(2)]

12. If the shares of your company are listed on a recognised Stock Exchange, then:

(i) Inform the said Stock Exchange before the date of the Board Meeting at which the recommendation of dividend will be made and also inform it after the holding of the Board Meeting about:

(a) all dividends recommended;

(b) the total turnover, gross profit, tax provision, net profits for the year, capital profits, accumulated profits of past years;

(ii) Fix and notify to the said Stock Exchange at least twenty‑one days in advance of the date on and from which the dividend will be payable;

(iii) Forward three copies of the notice and a copy of the proceedings of the General Meeting to the said Stock Exchange promptly. [Clauses 19, 20 and 21 of the Standard Listing Agreement]

13. Issue notices in writing at least twenty‑one days before the date of the General Meeting and hold the General Meeting and pass the Ordinary Resolution by simple majority. [Section 171(1)]

14. Pay dividend or issue dividend warrants within thirty days' of such declaration to the registered addresses of the shareholders.

15. If your company fails to pay the dividend declared or fails to post the warrant in respect thereof within thirty days from the date of declaration, every director of the company if he is knowingly a party to the default will be punishable with simple imprisonment of 3 years and will also be liable to a fine of Rs. 1,000/‑ for every day during which the default continues and the company will be liable to pay simple interest @ 18% per annum during the period for which such default continues. [Section 207]

16. In case of joint shareholders, send it to the shareholder named first in the Register of Members or to such person and to such address as the shareholder may in writing direct. [Section 205(5)(b)]

17. With effect from Ist April 2002 your company is required to deduct tax at source from dividends paid to your shareholders over and above Rs. 1,000/‑, under section 115‑O of the Income Tax Act, 1961 as amended by Finance Act, 2002.

18. Where instruments of transfer have been received by the company in relation to some shares and the transfer of such shares has not been registered when the dividend warrants were posted, keep that amount of dividend also in the special account called "Unpaid Dividend Account" unless company is authorised by the registered holders of those shares in writing to pay the dividend to the transferees specified in the said instruments of transfer. [Section 206A]

19. Keep in mind that such application is made usually in those cases where depreciation to be allowed is near 100%.

Topic 192

DO YOU WISH TO DECLARE DIVIDEND OUT OF RESERVES OF YOUR. COMPANY NOT IN ACCORDANCE WITH THE COMPANIES (DECLARATION OF DIVIDEND OUT OF RESERVES) RULES, 1975?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision whether to declare dividend out of reserves of your company not in accordance with the Companies (Declaration of Dividend out of Reserves) Rules, 1975. [Section 205A(3)]

3. Make an applicationf to the Central Government on a plain paper preferably on the letter head of the company giving the full details and address it to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110 001.

4. Along with the application,f the following documents must be attached:

(i) A certified true copy of the resolution of the Board;

(ii) A certified true copy of the Memorandum and Articles of Association;

(iii) Three certified true copies of the balance‑sheet and profit and loss account and Directors' and Auditors' Reports for the last three years of your company;

(iv) A treasury challan or demand draft evidencing the payment of the requisite fees prescribed by Companies (Fees on Applications) Rules, 1999;

(v) The amount to be appropriated from the reserves for declaring dividend.

5. If the application fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, and as prescribed by the Companies (Fees on Applications) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified brancheS4 of the Punjab National Bank for credit.

6. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 25](E), dated 21‑6‑1996 (w.ef 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

7. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application mentioned in item 4.

8. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application mentioned in item 4.

9. Deliver simultaneously to the concerned Registrar of Companies' a copy of the application along with a copy of each of the documents annexed to it.

10. On receipt of the Central Government's approval, call a Board Meeting by giving notice to all the directors of the company as per section 286 to recommend the rate of dividend and to fix the date, time, place and agenda of the General Meeting for declaration of dividend.

12. If the shares of your company are listed on a recognised Stock Exchange, then do the following things:

(i) Notify to the said Stock Exchange the date of the Board Meeting where the rate of dividend will be recommended;

(ii) After the Board Meeting, again notify the said Stock Exchange, all dividends recommended, the total turnover, gross profit/loss, provision for depreciation, tax provisions, net profits for the year (with comparison with the previous year) and the amounts appropriated from reserves;

(iii) Fix and notify to the said Stock Exchange at least twenty‑one days in advance of the date on and from which the dividend will be payable. [Clauses 19, 20 and 21 of the Standard Listing Agreement]

13. Issue notices in writing at least twenty‑one days before the date of the General Meeting and hold the General Meeting and pass an Ordinary Resolutionj by ordinary majority declaring dividend out of reserves of the company but not in accordance with the Companies (Declaration of Dividend out of Reserves) Rules, 1975.

14. Promptly forward three copies of the notices and a copy of the proceedings of the Annual General Meeting to the recognised Stock Exchange with which the shares of your company are listed. [Standard Listing Agreement]

15. Pay dividend or issue dividend warrants within thirty days of such declaration to the registered addresses of the shareholders.

16. In case of joint shareholders, send it to the shareholder named first in the Register of Members or to such person and to such address as the shareholder may in writing direct. [Section 205(5)(b)]

17. See that the amount of interim dividend is rounded off to the nearest rupee and for this purpose where such amount contains part of a rupee consisting of paise then if such part is fifty paise or more it should be increased to one rupee and if such part is less than fifty paise it should be ignored. [Rule 23]

18. Where instruments of transfer have been received by the company in relation to some shares and the transfer of such shares has not been registered when the dividend warrants were posted, keep that amount of dividend also in the special account called "Unpaid Dividend Account" unless the company is authorised by the registered holders of those shares in writing to pay the dividend to the transferees specified in the said instruments of transfer. [Section 206A]

19. With effect from 1st April 2002 your company is required to deduct tax at source from dividends paid to your shareholders over and above Rs. 1,000/‑, under section 115‑O of the Income Tax Act, 1961 as amended by Finance Act, 2002.

20. If dividend is not paid or warrant in respect thereof has not been posted within thirty days from the date of declaration then every director of the company who is knowingly a party to the default will be punishable with simple imprisonment for a term of 3 years and will also be liable to fine of Rs. 1000/‑ for every day during which such default continues and the company will be liable to pay simple interest @ 18% per annum during the period for which such default continues. [Section 207]

Topic 193

DO YOU WISH TO TRANSFER UNPAID OR UNCLAIMED DIVIDENDS TO THE INVESTOR EDUCATION AND PROTECTION FUND [Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001]

1. Note that Pursuant to sub‑section (5) of section 205A, as substituted by Companies (Amendment) Act, 1999 dated 12th March, 1999, (w.e.f. 31‑10‑1998) any amount standing in the "Unpaid Dividend Account" which remains unpaid or unclaimed for a period of seven years should be transferred to the Investor Education and Protection Fund established under sub‑section (1) of section 205C.

2. Convene a Board Meeting after giving notice to all the directors of your company as per section 286 and approve the statement in the prescribed form setting fourth in respect of all sums included in the transfer from the Unpaid Dividend Account to the Fund, the nature of the sums, the names and last known addresses of the persons entitled to receive the sum, the amount to which each person is entitled and the nature of his claim thereto, and such other particulars as may be prescribed. [Section 205A(6)]

3. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/- [Section 286(2)]

4. Remit the required amount into the concerned specified branch of Punjab National Bank within a period of 30 days of such amounts becoming due to be credited to the Investor Education and Protection Fund along with challan in triplicate after filling in the full description and the nature of the amount tendered and its head of account and the said bank will return two copies duly stamped to your company as token of having received the amount. [Rule 3(i) & (ii)]

5. File with the concerned Registrar of Companies one copy of the stamped challan received as above evidencing deposit of the amount to the Fund. [Rule 3(ii)(b)]

6. Furnish separately to the concerned Registrar of Companies a statement in Form No. 1 appended to the aforesaid Rules, duly certified by a Chartered Accountant or a company secretary or a cost accountant practising in India or by the statutory auditors of your company. [Rule 3(ii)(c)(i)]

7. Keep a record relating to folio number, certificate number etc., in respect of persons to whom the amount of unpaid or unclaimed dividends payable for a period of 3 years. [Rule 3(ii)(c)(i)]

8. Advise your concerned share‑holder, individually, along with the Notice of AGM every year, the amount of unclaimed dividend due and payable to him, and the period in respect of which it is payable.

9. The above step will be in the interest of speedy payment of dividend to the individual shareholders. [Circular No. 10/92, dated 20‑12‑1992 issued by Department of Company Affairs]

10. Note that the Central Government has constituted a committee consisting of persons of eminence to administer the Investor Education and Protection Fund under sub‑section (4) of section 205C and to maintain separate accounts and other relevant records in relation to that fund in such form as may be prescribed in consultation with the Comptroller and Auditor‑General of India [S.O. 1087(E) dated 11‑11‑1999.]

Topic 194

DO YOU WISH TO REGISTER YOURSELF WITH THE COMMITTEE ADMINISTERING INVESTOR EDUCATION AND PROTECTION FUND [Investor Education and Protection Fund (Aware. ness and Protection of Investors) Rules, 2001]

1. Note that meaning of the following:

(a) 'Fund' means the Investor Education and Protection Fund (IEPP) established under sub‑section (1) of section 205C;

(b) 'Committee'/'sub‑Committee' means the Committee specified by Central Government under sub‑section (4) of section 205C to administer the fund.

2. Keep in mind that the Committee may register from time to time various associations or institutions or organisations engaged in activities relating to investor awareness, education and protection and proposing for investors programmes, organising seminars, symposia and undertake projects for investor protection including research activities. [Rule 14(i)]

3. Convene a Board Meeting after issuing notices to the directors of the company as per Section 286 to decide about the registering the association or Organisation or institution owned by your company with the Committee administering the IEPP and authorising the Secretary to make the application and to take every step necessary for obtaining the registration.

4. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine up to Rs. 1000/-. [Section 286(2)]

5. Make the application for registration in Form‑3 of the aforesaid Rules, the text of the Form is given at the end of this topic. [Rule 14(ii)]

6. Enclose to the said application the following

(a) Certified true copies of the Memorandum and Articles of Association;

(b) Latest membership and their addresses;

(d) Certified true copies of last 3 issues of the House magazine/journal, if any;

(e) A copy of the statement authenticating registration of the association;

(f) A statement elaborating details of activities of the association.

7. Provide to the Committee any additional details if any called for the purpose of granting registration.

8. Once you are registered with the Committee your organisation or association will be considered for grant of funds as a grant‑in‑aid either as one time measure or in stages or by way of reimbursement depending upon the nature of the activity proposed.[Rule 14 (v)].

9. Make an application in Form‑4 of the aforesaid Rules, the text of which Form is given at the end of this topic, for release of funds for the following activities

(a) Education programmes thritigh media;

(b) Organising seminars and symposia;

(c) Proposals for registration of voluntary associations or institutions or other organisations engaged in investor education and protection activities;

(d) Proposals for projects for investor education and protection including research activities and proposals for financing such projects;

(e) Coordinating with institutions engaged in investor education, awareness, and protection activities. [Rule 14(iii) read with Rule 7(b)(i)].

10. Note that the Committee is entitled to examine the end use of grants and assistance before recommending release of funds.[Rule 14(vi)].

11. Provide to the Committee a copy of the summary or recommendations of the seminar or programme conducted and copy of accounts for such activity by such organisation within ten days of the conclusion of the seminar or programme.

FORM NO 3

(See rule 14)

APPLICATION FOR REGISTRATION

Note :

(1) Submission of the registration form does not necessarily guarantee automatic registration or funding.

(2) Committee reserves the right to reject any application in its own discretion without assigning any reason thereof

(3) Committee may call for additional details as and when required for the purpose of granting registration.

(4) Any false information furnished or false representation made shall make the application/registration liable for rejection/cancellation.

1. Name of association:

2. Address:

Tel No./Fax No./E‑mail

3. Year of establishment:

Registration No. and date:

4. Principal office bearer.

Address:

5. Organisational structure

(a) Office bearers:

Name	Educational Qualification	Occupation/ Profession	Experience (spe cify in number of yeais of expe rience as inves tor either in primary or sec ondary market	Remunera tion received from the association
President
Vice-President
Secretary
Treasurer

(b) How elected or appointed or nominated and what is the frequency of election to the Board

(For the last three years)

6. Membership

(For last three years)

(a) Total number

(b) Number of members who are:

(i) Investors

(ii) Connected with investment activities

(iii) Professionals

7. Financial information

(a) Source of funds

(Information for last three years)

(i) membership fees

(ii) annual subscription fees

(iii) any other fees

(iv) any other source of income

(b) Uses of funds

(i) administrative expenses

‑stationery and postage

‑miscellaneous

(ii) salary and wages

(iii) expenses for holding seminars, meetings and other activities of the fund

(iv) any other expenses

8. Activities of the association

(a) Objective of the association

(b) How has the association met the objectives in the part/objectives of the present application

(d) Whether the association holds meeting regularly (if yes, details of the number of meetings held during the last three years and the participation to be given)

(e) Number of shareholders/conferences/seminars held during the last three years

(f) Whether representatives of the association are sent to attend shareholders' meeting of companies

(g) Whether the association handles investors grievances? (if yes, then, number of grievances received and settled during the last 12 months to be given)

(h) Grievances redress system of the association

(i) House journal/publication of the association

(j) Whether any representation has been made by the association in the past to the stock exchange s/Government/companies in the interests of the investors in general and the members in particular

(k) Any other activity

(l) Whether any suits/proceedings are pending against the association or any of its office bearers/members in any court or law, if so details may be given

(m) Whether the association agrees to abide by the rules/regulations/guidelines framed by Committee/Central Government from time to time for its effective functioning and better discipline

(n) Whether any office bearer of the association is a Board member of any corporate entity.

7. Enclosures

(i) Copies of memorandum and articles of association, rulest regulations/bye laws

(ii) Latest membership and their addresses

(iii) Copies of the audited statement of accounts/annual report for the last three years

(iv) Copies of last 3 issues of the House magazine/journal, if any

(v) A copy of the statement authenticating registration of the association

(vi) A statement elaborating details of activities of the association.

____________________________________

Signature (with name)

President/vice President/Secretary/Treasurer

FORM NO 4

(See rule 14)

APPLICATION FOR FUNDS FOR SERVICES/PROGRAMS

1. Name of applicant:

2. Address:

Registered office:

Corporate office address:

3. Constitution : (whether association/chamber of commerce/Institute/ individual)

4. Date of incorporation/registration

5. Details (number/date) of recognition granted by Committee under rule 14 existing activities

(i) Management:

Board of directors:

(ii) Details relating to proposed seminar/programme/activity Date when to be conducted: Venue: Brief literature on subject matter:

6. Amount required for the proposed seminar/programme/activity and full justification for the same including following details

(i) The nature of activity

(ii) List of proposed guests/NIPs who would chair the dais

(iii) Description of expenses proposed to be incurred for the activity

(iv) Venue expenses

(v) Travelling, boarding and lodging expenses of guests for the activity

(vi) Other expenses

(vii) Expected number of people who would attend the activity

(viii) Any other information for the justification of the amount

______________________________

Signature (with name)

President/vice President/Secretary/Treasurer

[Notification No. 750(E), issued by Ministry of Law Justice and Company Affairs, Department of Company Affairs, dated I October, 2001]

Topic 195

DO YOU WISH TO CREDIT TO THE INVESTOR EDUCATION AND PROTECTION FUND AMOUNTS THAT ARE MENTIONED UNDER SUB‑SECTION (2) OF SECTION 205C? [Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001]

1. Note that the following amounts are required to be credited to the Investor Education and Protection Fund (Fund):

(a) amounts in the unpaid dividend accounts of companies remaining unpaid or unclaimed for a period of 7 years from the date they become due for payment;

(b) the application moneys received by companies for allotment of any securities and due for refund remaining unpaid or unclaimed for a period of 7 years from the date they become due for payment;

(c) matured deposits with companies remaining unpaid or unclaimed for a period of 7 years from the date they become due for payment;

(d) matured debentures with companies remaining unpaid or unclaimed for a period of 7 years from the date they become due for payment;

(e) the interest accrued on the amounts referred to in the aforesaid clauses;

(f) grants and donations given to the Fund to the Central Government, State Government, companies and other institutions for the purpose of the Fund; and

(g) the interest or other income received out of the investments made from the Fund. [Section 205C(2)].

2. Remit the amount required to be credited to the Fund as mentioned above into the concerned branches of Punjab National Bank, within a period of 30 days of such amounts becoming due to be credited to the Fund. [Rule 3(i)].

3. Tender the amount in the concerned branch of Punjab National Bank, along with challan in triplicate and the Bank will return two copies duly stamped to the company as token of having received the money. [Rule 3(ii)(a)].

4. File with the concerned Registrar of Companies one copy of the challan referred to above evidencing deposit of the amount to the Fund and ensure that the full description and the nature of the amount tendered and its head of account is filled in, in the challan. [Rule (ii)(b)].

5. Separately furnish to concerned Registrar of Companies a statement in Form 1 given in the aforesaid Rules, duly certified by a chartered accountant or a company secretary or a cost accountant practising in India or by the statutory auditors of the company. [Rule 3(c)(i)].

6. Keep a record relating to folio number, certificate number etc., in respect of persons to whom the amount of unpaid or unclaimed dividend, application money, matured deposit or debentures, interest accrued or payable, for a period of 3 years. [Rule 3(c)(i)].

7. Note that the Committee or sub‑Committee administering the Fund shall have powers to inspect the aforesaid records of that period of the company. [Rule 3(c)(i)].

8. Ensure that all amounts credited to the Fund are accounted for under the following Heads of Account which will be thereafter transferred to the Fund:

(a) Major Head 0075‑Miscellaneous General Services.

(b) Minor Head 104‑Unclaimed and unpaid dividends, deposits and debentures etc., of investors in companies.

FORM NO. 1

(See rule 3)

Registration No : ________________ Authorised Capital: Rs. ________________

STATEMENT OF AMOUNTS CREDITED TO INVESTOR EDUCATION AND PROTECTION FUND

(To be submitted by the Company to the concerned Registrar of Companies alongwith the copy of the Challan)

1. Name of the company and address of its registered office:

2. Date of payment of amount to the Fund.

3. Particulars of the Challan:

Mode of payment (DD/cash):

4. Details of the amount which are credited to the Fund:

(a) amounts in the unpaid dividend accounts of companies;

(b) the application moneys received by companies for allotment of any securities and due for refund;

(d) matured debentures with companies;

(e) interest accrued on the amounts referred to in clauses (a) to (d) be shown separately for each item, both in Challan and in this Form.

(f) Grants and donations.

Financial year(s) to which the amount(s) relates.

5. Details of filing Form IA under section 205A(6) and (7) of the Companies Act, 1956.

Place : __________ ________________________

Date : ___________ Signature of person presenting the return

Verified and found correct

Chartered Accountant/Cost Accountant/Company Secretary/Statutory Auditor

Place ____________

Date ____________

Topic 196

DO YOU WISH NOT TO DECLARE DIVIDEND?

1. Consult the Articles of Association of your company to see whether they contain provisions similar to Regulations 85 to 94 of Table A of Schedule I.

2. If the Articles of Association of your company are silent on the matters of dividends then Table A will follow if your company is a public limited company.

3. If your company is private limited company and is also not having any provisions as to the recommendation and declaration of dividend and also does not adopt Table A even then the general meeting cannot declare dividend unless and until the Board of Directors of the Company recommends payment of dividend.

4. Keep in mind that before arriving at the decision whether to recommend dividend or not, the Board of Directors should provide for depreciation and also transfer to the reserves of the company such prescribed percentage of profits for a particular financial year not exceeding ten percent. [Section 205(1) and (2A) read with Coinpanies (Transfer of Profits to Reserves) Rules, 1975]

5. Convene a Board Meeting after issuing notices to the directors of the company as per section 286 and pass a resolution for allowing the Board not to recommend any dividend for a particular financial year and also the utilisation of surplus funds which would otherwise have been available for recommending dividend.

6. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

7. Inform the concerned Stock Exchange(s) about such non‑recommendation of dividend if your company is a listed company.

8. Keep in mind that dividend includes any interim dividend. [Section 2(14A)]

Topic 197

DO YOU WISH TO CLAIM PAYMENT FROM THE GENERAL REVENUE ACCOUNT OF THE CENTRAL GOVERNMENT?

The Companies (Amendment) Act, 1999, dated 12‑3‑1999 with effect from 31-10‑1998 inserted a new section 205C under which a Fund called Investor Education and Protection Fund will be established by the Central Government in place of General Revenue Account of the Central Government to which all moneys remaining unclaimed and unpaid for a period of seven years in the Unpaid Dividend Account should be transferred. Any money transferred to the said Fund in future should be preferred to the Authority or Committee appointed under sub‑section (4) of section 205C. The procedure given below is for claiming payment which has already gone into the General Revenue Account of the Central Government.

1. Make an application to the concerned Registrar of Companies in Form II as prescribed under Rule 6(1) of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978.

2. The application should be made under the applicant's own signature or through a person holding a power of attorney.

3. Execute an indemnity bond with or without surety in Form III as prescribed under Rule 6(3) of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978, on a Non‑judicial Stamp paper of the value as required to be paid in the state of its execution.

4. Prepare a stamped receipt in favour of the concerned Registrar of Companies and get it signed by two witnesses. [Rule 6(6) of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978]

5. Deliver the stamped receipt to the concerned Registrar of Companies along with the application referred to in item I above.

6. Indemnity bond will not be required if the amount claimed is more than Rs. 2,500/‑. [Rule 6(5) of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978]

7. The concerned Registrar of CompanieS2 being satisfied on all respects, will issue a payment order.

Topic 198

DO YOU WISH TO PAY DIVIDEND IN PROPORTION TO THE AMOUNT PAID‑UP ON SHARES? [SECTION 93]

1. See whether the Articles of Association of your company provide for payment of dividend in proportion to the amount paid‑up on each share, different amounts being paid‑up on different shares. [Regulation 88(1), Table A]

2. If not, then alter the Articles of Association accordingly vide Topic 26.

3. Please note that such a provision is required to be made in the Articles of Association only where the amount paid‑up is in advance of the calls made and not otherwise.

4. If you wish, you may provide in the Articles of Association that any money paid in advance of calls are not to be treated as paid or credited as paid on those shares for paying dividend as above. [Regulation 88(2), Table A]

5. Instead of taking the above step, you may provide for payment of interest on such amount. [Regulation 18(b), Table A]

6. Note that specific provision in the Articles is necessary otherwise dividend will have to be paid only in proportion to the nominal value of shares.

Topic 199

DO YOU WISH TO CLAIM PAYMENT OF UNPAID DIVIDEND FROM COMPANY'S LIQUIDATION ACCOUNT? [SECTION 555(7) AND THE COMPANIES (COURT) RULES, 1959]

1. To claim payment of unpaid dividend from a company's Liquidation Account, you can follow either of the following two procedures :‑

(i) Apply to the Court for an order for payment thereof. [Section 555(7)(a)*]; or

(ii) Apply'‑ to the Central Government for an order for payment of the money claimed. [Section 555(7)(b)*]

2. If you want to apply to the Court for claiming payment, then do the following

(i) Apply to the Court (High Court in case the company has been woundup by the High Court) by way of a Judge's summons in Form No. 2' of the Companies (Court) Rules, 1959, claiming payment of unpaid dividend from the Liquidation Account. [Rules 11(b) and 19 of th.e Companies (Courts) Rules, 1959];

(ii) State in the application whether you have made an application to the Central Government under section 555(7)(b) and if made, the result of that application. [Rule 37 of the Companies (Court) Rules, 1959];

(iii) Enclose an affidavit to the above Judge's summons. There is no prescribed form for this affidavit, but it can be in the form of the Companies (Court) Rules, 1959, with such variations as circumstances admit [Rule 17 of the Companies (Court) Rules, 1959]; the affidavit should be drawn up in the first person and should state the following:

(a) Full name;

(b) Age;

(d) Place of abode of the deponent.

3. See that the affidavit is signed by the deponent (here the claimant) and sworn in the manner prescribed by the Code of Civil Procedure or by the rules and practice of the concerned Court. [Rule 18(a) of the Companies (Court) Rules, 1959]

4. Mark every exhibit to the above affidavit with the number of the proceedings to which it relates and see that these exhibits are initialled and dated by the authority before whom it is sworn. [Rule 18(b) of the Companies (Court) Rules, 1959]

5. Serve every copy of the summons along with the affidavit upon the company and the Official Liquidator who is in charge of the company in person or by pre‑paid registered post or in any other manner directed by the Judges. [Rule 19(2) of the Companies (Court) Rules, 1959]

6. See that the summons along with the affidavit is served to the abovementioned persons not less than four clear days (in case of interlocutory application) before the day named in the summons for the hearing thereof or not less than fourteen days before the date fixed for the hearing. [Rule 19(3) of the Companies (Court) Rules, 1959]

7. Prepare the Judge's summons together with duplicates of the same for service on your own or with the help of your advocate in the office of the Registrar of the Court and issue each one of them from his office. [Rule 20 of the Companies (Court) Rules, 1959]

8. Obtain the order of the Court for payment of unclaimed dividend from the Liquidation Account and file a certified copy of it with the Official Liquidator or Liquidator from whom you want the payment.

9. On receipt of the payment, issue an acknowledgment letter to the Official Liquidator or Liquidators.

10. If you want to apply to the Central Government for an order for the payment of the unclaimed dividend from the Liquidation Account, then take the steps as mentioned below.

11. Apply to the Central Government in form of a letter (there is no prescribed form) addressed to the concerned Regional Director, or to the concerned Registrar of Companies in other cases. [The Central Government has delegated this power to the Regional Directors, beyond Rs. 10,000/‑claim and to Registrars of Companies upto Rs. 10,000/‑claim, vide GSR No. 16/77‑CL‑V, dated 15‑5‑1978 read with GSR No. 506(E) 2/8/85‑CL‑V, dated 24‑6‑1985, read with GSR No. 282(E), dated 21‑3‑1995]

12. In the above application, state the details of the unpaid dividend claimed from the Liquidation Account of the company, supported by necessary documents as proof or evidence and also state that no application under section 555(7)(a) is pending in the Court.

13. Please keep in mind that as per the Citizen's Charter of the Department of Company Affairs, Schedule II, Serial No. such application made to the Regional Director will be processed within 30 days. [No. 5/25/99‑CL‑V; Press Note No. 9/99 dated 9‑8‑1999.]

14. Pay the requisite fee (minimum Rs. 200/‑ and maximum Rs. 300/‑) into any of the specified branches of the Punjab National Bank in cash a challan for credit.

15. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Govemment's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1. No fee is payable if the amount of claim does not exceed Rs. 5000/‑. [Rule 2(3) of the Companies (Fees on Applications) Rules, 1999 read with Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956]

16. After payment of the requisite fee, if any, attach the treasury challan evidencing such payment to the application made to the Central Government.

17. On receipt of the order of the Regional Director or the Registrar of Companies for payment of the unclaimed dividend due to you, approach the Official Liquidator or Liquidator along with the order for payment of the sum due to you.

Topic 200

DO YOU WISH TO PAY INTEREST OUT OF CAPITAL?

1. The members are not ordinarily entitled to get interest on the amount of their share capital but where any shares in a company are issued for the purpose of defraying the expenses of the construction of any work or building or for the provision of any plant, which cannot be made profitable for a lengthy period, interest on paid‑up share capital may be paid if the following conditions are fulfilled. [Section 208]

(a) the rate of interest should not exceed twelve per cent or such other rate as may be notified by the Central Government and the interest so paid should be charged to the cost of work or the plant concerned;

(b) there should be an enabling provision in the company's Articles of Association for such a payment or else a Special Resolution should be passed to do it [Section 208(2)];

(d) interest should be paid only for a period as approved by the Central Government which should not extend beyond the close of the half year next after the half year during which the work or building has been actually completed or the plant provided.

2. In such a case, although the amount of interest will be paid out of the share capital, such payment shall not operate as a reduction of the amount paid‑up on the shares in respect of which it is paid. [Section 208(7)]

3. After taking the decision by convening a Board Meeting, after giving notice to all the directors of the company as per section 286 make an applicationE to the Central Government for which there is no prescribed form.

4. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/- [Section 286(2)]

5. Give all necessary details in the applicationf which should be in the form of a letter and a treasury challan or demand draft evidencing the payment of necessary fees prescribed under the Companies (Fees on Applications) Rules, 1999, should be enclosed.

6. If the applicationt fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Applications) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified brancheS of the Punjab National Bank for credit.

7. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

8. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application mentioned in item 5.

9. If the applicatiorif fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application mentioned in item 5.

10. If there is no provision in the Articles of Association of your company for such payment, then hold a Board Meeting after giving notice to all the directors of the company as per section 286 and fix the date, time, place and agenda of the General Meeting for passing the Special Resolution.

11. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

12. Issue notices in writing at least twenty‑one days before the date of theGeneral Meeting along with suitable Explanatory Statement and pass the Special Resolution by three fourths majority approving payment of interest out of capital. [Section 171(1) read with Section 173(2)]

13. Attach certified true copy of the Board resolution or the Special Resolution with the applicationt and address the application to the Secretary, Department of Company Affairs, Ministry of Industry, Shastri Bhavan, 5th Floor, "A" Wing, Dr. Raj endra Prasad Road, New Delhi‑ 110 001.

14. Make payment accordingly on receipt of the Government approval.

15. If a Special Resolution is passed, then do the following:

(i) File it with the concerned Registrar of Companies in Form No. 23 within thirty days of its passing [Section 192(1) & (4)(a)], after paying the requisite fees prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

(ii) Forward promptly to the Stock Exchange with which the share of your company are listed three copies of the notice and a copy of the proceedings of the General Meeting in which the special resolution is passed. [Clause 31(c) and (d) of the Standard Listing Agreement]

16. Please also keep in mind that if default is made in filing the Special Resolution as aforesaid, the company and every officer of the company who is in default will be punishable with fine of Rs. 200/‑ for every day during which the default continues. [Section 192(5)]

Topic 201

DO YOU WISH TO PAY DIVIDEND ON EQUITY SHARES WITHOUT PAYING OFF THE EXISTING PREFERENCE SHARES?

1. Note that section 80A requires paying off of the existing preference shares which are either irredeemable or are redeemable more than ten years from the date of issue thereof.

2. Further note that sub‑section (5A) of section 80 prohibits issue of preference shares which are irredeemable or redeemable more than twenty years.

3. Note also that Sub‑section (213) of section 205 prohibits you from declaring any dividend on equity shares until the provisions of section 80A are complied with.

4. You can continue to pay dividend on equity shares for a period of five years in case the preference shares to be redeemed are irredeemable preference shares.

5. Note further that, in case the preference shares to be redeemed are redeemable preference shares, you can continue to pay dividend on equity shares until the date fixed for redemption of such shares by the terms of their issue or until ten years, whichever is earlier.

6. In case you are short of funds to effect redemption, you may make an application to the Company Law Board for issue of redeemable preference shares in lieu of the preference shares to be redeemed and on the issue of the new preference shares, there is a deemed redemption and you can continue to pay dividend on equity shares. [Section 80A(1), Proviso]

C. Depreciation

(Topic 202 to Topic 203)

Topic 202

DO YOU WISH TO CALCULATE DEPRECIATION FOR THE FACTORY OR CONCERN AS A WHOLE?

1. Schedule XIV requires depreciation for double shift and triple shift working by taking the number of days on which the concern worked double shift or triple shift as the numerator and the total number of days on which the factory or concern worked during the year as a denominator.

2. Please note that Schedule XIV (Note 6 thereunder) makes it clear that the denominator for calculating extra shift depreciation has to be taken as the number of days on which the factory actually worked during the year.

3. Please further note that in the eventuality of the factory working for less than 240 days, the denominator would still be taken as 240 days.

4. The numerator has to be taken as the actual number of days on which the equipment worked for double or triple shift.

5. Guidance Notes dated September 13, 1989 issued by the Institute of Chartered Accountants vide Compendium of Guidance Notes, Volume II 2nd Edition, provides that various units/departments/mills/factories should be taken as separate concerns.

6. There may be industries where manufacturing process is not continuous and the factory is not an integrated factory.

7. There may be other industries where the entire manufacturing process is an integrated activity.

8. The aforesaid situation may arise in the case of a cement manufacturing plant and there in the case of a cement plant, depreciation should, therefore, be calculated for the factory, as a whole.

9. In order to calculate depreciation for double and triple shift working by taking the number of days for which the assets or equipment worked for double shift or triple shift as the numerator and the number of days for which the factory or the concern worked during the year as the denominator, it may be necessary for you to make adjustment against past depreciation charged in the earlier years by way of rectification of an error.

10. Although the Department of Company Affairs have said that specified period need not be changed subsequently, legally, the Department of Company Affairs, have not categorically said that in case you want to change the specified period such a change cannot be made.

11. The Department has merely recommended that it would be better if companies do not change the specified period.

12. Option is open to you to recalculate depreciation for the same asset on the basis of the provisions now made in Schedule XIV even in respect of assets acquired prior to 2nd April, 1987. This change in method merely means making corrections in calculating the proportionate depreciation.

13. The aforesaid change would not amount to reopening of accounts, when a mere correction is made.

14. You may correct the mistake committed in earlier years by now showing the excess depreciation charged in previous years as reserve.

15. This will not amount to reopening of accounts. Only thing which you will now be doing is that you will now reflect the true position of accounts. There is no reopening or revision of accounts.

16. According to the Department of Company Affairs and the Accounting Standard adopted by the Institute of Chartered Accountants, change in method if it results in surplus should be disclosed in the appropriation part of the profit & loss account.

17. In the aforesaid case there is, however, no change in methods but there is only a correction of error.

IMPORTANT NOTE: DEPARTMENT'S CIRCULAR, DT. 7‑3‑1989

Secs. 205, 350 and Sch. XIV: Departmental Circular: The following Departmental Clarifications on the provisions relating to depreciation under the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1988 may be noted:

This Department has been receiving queries from different quarters on the subject mentioned above, from time to time, and, accordingly, the following clarifications are issued:

1. Date on which the new provisions relating to depreciation become effective:

The Companies (Amendment) Act, 1988, specifically provides that Schedule XIV shall be deemed to have come into force on 2nd April, 1987. The amended provisions of sections 205 and 350 of the Act have come into force on 15th June, 1988, by virtue of the notification issued by this Department. A question arises, therefore, whether depreciation can be charged on assets on the basis of the rates provided in Schedule XIV for accounting years ending between 2nd April, 1987, and 14th June, 1988.

In view of the intention of the Legislature behind the amendments in sections 205 and 350 of the Act, the amended provisions have come into force with effect from 2nd April, 1987.

2. Recomputation of specified period:

It is stated that in 1986, the Department had issued a circular stating that specified period once determined may not be recomputed. Accordingly the department had advised the companies that it was open to them not to recompute the specified period even when there is a change in the rates of depreciation later on (as against the position of the Department's earlier circular of 1985 on the subject). It is argued that as far as the existing assets are concerned, the companies can follow either of the two circulars. An option under the 1986 circular would thus be available to the companies as at present not recomputing the specified period where the Straight Line Method (SLM) is used. In other words, where a company decides to follow the 1986 circular, assets on which SLM depreciation was being charged can continue to be depreciated at the old SLM rates.

In view of this Department's Circular No. I of 1986 (No. 1/l/86‑CL‑V), dated 21st May, 1986, specified period once determined may not be recomputed. The companies which follow this circular may, therefore, continue to charge depreciation at the old SLM rates in respect of the assets already acquired against which depreciation has been provided in earlier years on SLM basis.

3. Can higher rates of depreciation be charged?

It is stated that Schedule XIV clearly states that a company should disclose depreciation rates if they are different from the principal rates specified in the Schedule. On this basis, it is suggested that a company can charge depreciation at rates which are lower or higher than those specified in Schedule XIV.

It may be clarified that the rates as contained in Schedule XIV should be viewed as the minimum rates, and, therefore, a company shall not be permitted to charge depreciation at rates lower than those specified in the Schedule in relation to assets purchased after the date of applicability of the Schedule. However, if on the basis of a bona fide technological evaluation, higher rates of depreciation are justified, they may be provided with proper disclosure by way of a note forming part of annual account.

4. Can SLM rates be differentfrom those specified under Schedule XIV?

It is stated that SLM rates (corresponding to the Written Down Value (WDV) rates, as per Schedule XIV) can be different than those prescribed under Schedule XIV provided a company continues to determine the rates as provided under section 205. Thus, against SLM rates prescribed under Schedule XIV of 11.31 per cent (triple shift rate for general plant and machinery), a company can charge depreciation at the rate of 10.56 per cent.

It may be mantioned that the rate of 11.31 per cent has been determined on the basis of eight years and six months or so of specified period whereas if 95 per cent is divided by nine years, the corresponding SLM rate comes to 10.56 per cent. The argument is that for calculating the SLM rates, complete years have to be taken into account whereas the rates under Schedule XIV also take into account fractions of years.

It is clarified that a company must necessarily provide SLM depreciation at the rates prescribed under Schedule XIV and the interpretation that fractions of years cannot be taken into account is not correct". [Circular No. 2 of 1989, dated 7th March, 1989 issued by the Company Law Board [1989] 65 Comp Cas 628 (St)]

Government has issued Notification, dated 16‑12‑1993 which increases the rate of depreciation on motor cars, motor cycles, scooters and other mopeds by making amendments in Schedule XIV of the Companies Act, 1956. This notification also lowers the rates of depreciation for general plant and machinery and creates a special category for continuous processing plants with higher depreciation rates. The Companies can also now claim 100 per cent depreciation on assets whose actual cost does not exceed Rs. 5,000/‑.

Notification issued on 16‑12‑1993 makes the alterations in Schedule XIV and Government issued a circular on 20‑12‑1993 which describes the revision of rate of depreciation in Schedule XIV of the Companies Act, 1956 and the same is reproduced below:

REVISION OF RATE OF DEPRICIATION

CIRCULAR NO. 14/93, dated 20‑12‑1993

by Government of India Ministry of Law, Justice & Company Affairs

(Department of Company Affairs)

All Chambers of Commerce & Industry.

Subject : Revision of rate of depreciation in Schedule XIV of the Companies Act, 1956.

I am directed to enclose herewith a copy of Notification GSR No. 756E, dated 16‑12‑1993 in respect of revision of the rates of depreciation in Schedule XIV to the Companies Act, 1956, with a request that these changes may please be circulated widely and brought to the notice of all your constituent member‑companies.

2. The changes made in Schedule XIV as per the enclosed amending Notification shall apply in respect of the accounts of the companies closed on or after the date of issue of the notification. The revised rates of depreciation shall apply to assets acquired by the companies on or after that date. As regards applicability of these changes to existing assets, the companies are advised to follow the recommendations of Institute of Chartered Accountants of India contained in its Guidance Notes on the "Accounting for Depreciation in Companies", reproduced below:

(a) A company following the written down value (W.D.V.) method of depreciation in respect of its assets should apply the relevant W.D.V. rates prescribed in Schedule XIV to the written down value as at the end of the previous financial year as per the books of the company.

(b) A company following the straight line method of depreciation in respect of its assets existing on the date of Schedule XIV coming into force may adopt any of the following alternative bases for computing the depreciation charge:

(i) The specified period may be recomputed by applying to the original cost, the revised rate as prescribed in Schedule XIV and depreciation charge calculated by allocating the unamortized value as per the books of account over the remaining part of the recomputed specified period.

(ii) The company can continue to charge depreciation on straight line basis at old rates in respect of assets existing on the date on which the new provisions relating to depreciation came into force.

(iii) SLM rates prescribed in Schedule XIV can be straightaway applied to the original cost of all the assets including the existing assets from the year of change of the rate.

AMENDMENT OF SCHEDULE XIV (DEPRECIATION)

Notification, dated 1‑3‑1995

GSR No. 101(E), dated 1‑3‑1995.‑ In exercise of the powers conferred by Subsection (1) of section 641 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following amendments in Schedule XIV, namely:

1. In the said Schedule:

(a) the words "other than those" appearing in the sub‑item (b) of item (i) under the heading “II Plant and Machinery" shall be omitted.

(b) at the end of the Note No. 8, the following proviso shall be inserted namely:

"Provided that where the aggregate actual cost of individual items of plant and machinery costing Rs. 5,000 or less constitutes more than 10 per cent of the total actual cost of plant and machinery, rates of depreciation applicable to such items shall be the rate as specified in item II of the Schedule."

[Notification issued by the Department of Company Affairs, vide file No. 1/12/92 ‑CL‑V, dated 1^st March, 1995.]

Topic 203

DO YOU WISH TO CHARGE DEPRECIATION ON MACHINERY USED FOR MANUFACTURE OF ELECTRONIC GOODS OR COMPONENTS?

1. According to Item II(ii) (A‑9) of Schedule XIV, triple shift Straight Line Method depreciation on machinery used in the manufacture of electronic goods or components is 11.87% while the general rate for charging such depreciation is 10.34%.

2. It is quite normal for a factory manufacturing electronic goods and components to use a number of machineries for the manufacture of electronic goods or components. Although these machineries may not be used in the manufacture of electronic goods or components.

3. The expression used in item II(ii)(A‑9) of Schedule XIV is "in" and not "for". Therefore, for machineries used for the manufacture of electronic goods or components, it will be sufficient if you charge triple shift Straight Line Method depreciation of 10.34%, being the General Rate given under item II(i) and not as given under item II(ii)(A‑9) of Schedule XIV of the Act.

4. In the manufacture of colour picture tubes, for example, there are a number of mechanical processes like glass washing, coating, shadow mask fixing, frit sealing joining of panel with funnel, baking in furnaces, electron gun fitting, exhausting in furnace or deflection yoke assembly.

5. For all the above mechanical processes, it would be sufficient compliance with the requirements of Schedule XIV if you charge depreciation at the general rate of 10.34% and it is not necessary for you to charge depreciation at the higher rate of 11‑87% because these are mechanical processes for the manufacture of electronic goods or components and are not deemed to be used in the manufacture of such electronic goods or components.

6. Please note the case law on the subject, making clear‑cut distinction between "for" and "in". Indian Chambers of Commerce v. CIT, WB‑II, AIR 1976 SC 348 at 356; State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd., AIR 1958 SC 1002 at 1005; Maharashtra State Textile Corporation Ltd. v. Official Liquidator, (1978) 48 Com Cases 350 at 355.

D. Extension of time/financial year

(Topic 204 to Topic 208)

Topic 204

DO YOU WISH TO APPLY FOR EXTENSION OF TIME FOR FILING ANY DOCUMENT OR APPLICATION WITH THE REGISTRAR OR THE CENTRAL GOVERNMENT?

A. Application to Central Government:

1. Note that in respect of application~ to the Central Government, no timelimit has been prescribed in any case but any matter requiring Government's approval will not be valid and effective until such approval is taken.

2. Note further that where time‑limit is prescribed, the Central Government has power to condone the delay. [Section 637B]

3. Note also that the aforesaid power is not, however, exercisable where specific provision exists in any section of the Act, e.g., section 141 or section 118 or 119 for condonation of delay or extension of limit.

4. Remember that the power of the Central Government extends even to the delay in filing documents with the Registrar of Companies.

5. Obtain the approval of the Board by convening a Board Meeting after giving notice to all the directors of the company as per section 286 if you consider the matter as important or that the Board should be informed.

6. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑[Section 286(2)]

7. Obtain receipted treasury challan or demand draft evidencing payment of requisite fees, prescribed by the Companies (Fees on Application) Rules, 1999.

8. If the applicationE fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Application) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of specified branches of the Punjab National Bank for credit.

9. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21-6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

10. Two copies of the treasury challan will be given back to the depositor out of which original copy should be attached to the applicationc.

11. If the applicationf fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application.

12. Apply to the Central Government in the form of a letter preferably on the letter head of the company requesting extension of the time for filing the documents with the Registrar of Companies or making the application to the Central Government together with the treasury challan or demand draft, evidencing payment of requisite fees.

13. Address the letter to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Raj endra Prasad Road, New Delhi‑ 110 001.

14. Deliver simultaneously to the concerned Registrar of CompanieS a copy of the application made to the Central Government.

15. Send a copy of the approval to the concerned Registrar of CompanieS if it relates to filing of documents with him.

16. Note that as per the Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 19, the application will be processed by the Central Government within 30 days. [No. 5/25/99‑CL‑V; Press Note No. 9/99 dated 9‑8-1999.]

B. Application to Registrar:

1. Make an application in the form of a letter preferably on the letter head of your company to the concerned Registrar of Companiess requesting for delayed filing of documents.

2. File also the necessary documents or particulars, if any. (This would not apply for example, where the request to the Registrar of Companies' is for extension of time for holding the Annual General Meeting beyond the prescribed time).

3. Pay the additional fees, if any, in accordance with rule 22(1) levied by the Registrar of Companies under section 611(2).

4. Report to the Board, where necessary.

5. Power of the Registrar under section 611 is without prejudice to the power of the Central Government to condone delay in filing a document with the Registrar under section 637B vide Topic 250.

6. Decision of the Registrar is subject to review by the Regional Director of the region concerned.

Topic 205

DO YOU WISH TO MAKE AN APPLICATION FOR EXTENSION OF TIME OR FOR RECTIFICATION OF THE REGISTER OF CHARGES?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision.

3. Make an application under section 141 to the concerned Regional Bench of the Company Law Board in the form of a petition, in Form No. 1 in Annexure II of the Company Law Board Regulations, 1991 depending on the jurisdiction of either the Northern Region Bench, at New Delhi or Eastern Regional Bench, at Calcutta or Western Regional Bench, at Mumbai or Southern Regional Bench, at Chennai on the situation of the registered office of the company. [Regulation 14(1) read with Regulation 7(2) and Annexure I of the Company Law Board Regulations, 1991]

4. Annex the following documents to the petition which should be made in triplicate:

(i) Certified true copy of the agreement creating or modifying the charge as the case may be;

(ii) Certified true copy of the resolution envisaged by section 292(1)(b) or (c) and section 293(1)(d) as may be applicable;

(iii) Affidavit verifying the petition;

(iv) Original acknowledgment from the concerned Registrar of Companies evidencing service of a copy of the petition;

(v) Demand draft evidencing payment of fees of Rs. 200/‑.

(vi) Memorandum of Appearance in Form No. 5 of the Company Law Board Regulations, 1991 with a certified true copy of the board resolution or the executed Vakalatnarna as the case may be.

5. Draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi" or "Kolkata", or "Mumbai" or "Chennai" as the case may be depending on the regional bench on which the petition is to be filed and the demand draft should be payable at New Delhi or Kolkata or Mumbai or Chennai.

6. Affidavit verifying the petition should be prepared on a non‑judicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner.

7. The said affidavit should be drawn up in first person and shall state the full name, age, occupation and complete residential address of the deposit and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

8. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

9. The said affidavit should clearly and separately indicate statements which are true to the knowledge of the deponent, information received by the deponent, belief of the deponent and information based on legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

10. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and whether the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

11. Please ensure that the petition is presented by the petitioner in original and two extra copies thereof through the authorised representative of the petitioner in person to the office of the Bench or to be sent by registered post with acknowledgment due addressed to the Bench Officer of the Bench concerned. [Regulation 14(1) of the Company Law Board Regulations, 1991]

12. Affix court fee stamp of the requisite value' on the original petition before submission.

13. Serve a copy of the petition along with other documents on the concerned Registrar of Companies. [Regulation 14(3) of the Company Law Board Regulations, 1991.]

14. On receipt of the final order passed by the Bench extending the time, file a certified copy of the order with the concerned Registrar of Companies' who shall take the same on record.

Topic 206

DO YOU WISH TO APPLY FOR AN EXTENSION OF TIME FOR HOLDING ANNUAL GENERAL MEETING?

1. Note that the application for extension of time cannot be made in the case of first Annual General Meeting which should be held within eighteen months from the date of the incorporation of the company. [Section 166(1), Second Proviso and First Proviso]

2. Note further that the application for extension of time can be made to the concerned Registrar of Companies when it is impossible to hold the next Annual General Meeting of the Company within fifteen months from the date of the last Annual General Meeting.

3. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision of making an application to the concerned Registrar of Companies for extension of time for holding the Annual General Meeting.

5. Make the applicationE to the concerned Registrar of Companies before the expiry of fifteen months from the date of the holding of the last Annual General Meeting.

6. Make the applicationf: in the form of a letter preferably on the letter head of the company stating in detail the special reasons for which extension is asked for and attach the following documents to the application:

(i) A certified true copy of your last audited balance‑sheet and profit and loss account;

(ii) A certified true copy of the Memorandum and Articles of Association of your company;

(iii) A certified true copy of the Board resolution authorising making of such application;

(iv) A receipted treasury challan or demand draft or postal order evidencing the payment of requisite fee prescribed under Schedule X to the Companies Act, 1956. The requisite fee can also be paid in cash.

7. While making the above application, see that the special reason stated there does not refer to the delay in the completion of the audit of your company's annual accounts.

8. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule III, Serial No. 5, the said application will be processed by the Registrar of Companies within 10 days. [No. 5/25/99‑CL‑V, Press Note No. 9/99 dated 9-8‑1999.]

ANNEXURE

Extension of time by Registrar‑Department's view:

The liberal policy of granting extension of time to companies to enable them to call their Annual General Meetings on the ground that the audit of their accounts has not been completed or that their accounts have not yet been compiled or cast for submission to the auditors or for other similar reasons indicating slackness, negligence or deliberate default on the part of the managements or the auditors of companies can no longer be justified. The law contemplates that the pem‑iissible interval between two consecutive Annual General Meetings should not be lightly extended.

The Government has accordingly decided that delay in the completion of the audit of the annual accounts of a company should not ordinarily constitute a I special reason' justifying the grant of extension of time for holding its Annual General Meeting. Companies are, therefore, requested to take all suitable steps to ensure that their annual accounts are audited in good time so that their Annual General Meetings may be called within the statutory time‑limit. [Press Note, dated the 29th January, 1959]

The time within which the Annual General Meeting of a company is required to be held is governed by S. 166. Under S. 210, at every Annual General Meeting so held the Board of Directors is to lay before the company its Balance‑Sheet and profit & loss Account at the end of its financial year. Notwithstanding that legal position, the Board was of the view that for administrative and practical considerations where a company applies for grant of extension of time for holding AGM under the proviso to section 166(1), the Registrar may continue to grant the required extension for the holding of AGM beyond the period of six months from the closing of the financial year as contemplated under section 210 even though the time‑limit for holding of such a meeting as prescribed under S. 166 may not have reached [Circular Letter No. 8/45 (166)164‑PR, dated 12‑1‑1965] the department has confirmed that for the purposes of computing time‑limit specified in Explanation to section 159 the time within which the Annual General Meeting is required to be held is governed solely by section 166 and section 210 is not relevant in such cases [Circular No. 2/79 (F.No. 8/35(159)/(166) 78‑CL‑V 24/38/78 CL‑II, dated 15‑9‑1979]

Topic 207

DO YOU WISH TO HAVE AN EXTENSION OF TIME FOR MAKING INVESTMENT IN SHARES OF AN OVERSEAS JOINT VENTURE COMPANY?

1. The Companies (Amendment) Act, 1999 has made the provisions of section 372 inapplicable with effect from 31‑10‑1998 and in its place a new section 372A was inserted to regulate investments and loans hitherto regulated under sections 370 & 372. Under the new section 372A, no Central Government approval is required at all for any investment. This topic has been retained to guide those companies who have already made investments as per the terms and conditions of the approval given by the Central Government under the old section 372.

2. Verify the approval letter of the Central Government or Reserve Bank of India given to your company for making investment in shares of overseas joint venture company under section 372 (now 372A) vide Topic 264.

3. If your company has not invested in the total number of shares as approved by the above letter of the Central Government within the time mentioned in the said letter then you have to ask for an extension of time for making such investment.

4. Make an applicationf to the Central Government in the form of a letter (there is no prescribed form for this) giving detailed reasons for not investing in the shares within the time given in the approval letter and asking for additional time to complete such investment.

5. Address the application to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑110 001 and attach to it the following documents :

(i) A certified true copy of the Board resolution approving extension of time for investment in shares of the overseas joint venture company subject to the approval of the Central Government;

(ii) A certified true copy of the previous approval letter obtained under section 372(4);

(iii) Original copy of the receipted treasury challan or demand draft evidencing the payment of the requisite application fee prescribed under the Companies (Fees on Application) Rules, 1999.

6. If the application fee is pa:id by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Application) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank for credit.

8. Two copies of the treasury challan will be given back to the depositor out of which original copy should be attached to the application mentioned in item 5.

9. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application mentioned in item 5.

10. Send a copy of the above application along with a copy each of all the enclosures to the concerned Registrar of Companies. [Rule 20A]

11. On receipt of the extension of time granted by the Central Government, acknowledge the receipt and strictly follow the conditions imposed by it in making your investment in the overseas joint venture company.

Topic 208

DO YOU WISH TO APPLY TO THE CENTRAL GOVERNMENT UNDER SECTION 213 (1) TO EXTEND THE FINANCIAL YEAR?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision to extend the financial year so that it may end with the financial year of your holding or subsidiary company.

3. Make an applicationf to the Central Government on a plain paper preferably on the letter head of the company giving full details and specific reasons for requiring the extension. There is no prescribed form for the said applicationE,

4. Address the applicationi to the Secretary, Department of Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110001.

5. Attach the following documents to the application:

(i) A certified true copy of the last balance‑sheet and profit and loss account of your company and your subsidiary or holding company;

(ii) A certified true copy of the Memorandum and Articles of Association of your company and your subsidiary or holding company;

(iii) A certified true copy of the resolution passed by your Board of Directors;

(iv) The receipted treasuq challan or demand draft evidencing the payment of requisite fees prescribed under the Companies (Fees on Applications) Rules, 1999.

6. If the applicationE fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Applications) Rules, 1999 , by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank for credit.

7. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w. ef 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

8. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application.

9. If the applications fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi," and payable at any bank located in New Delhi, and the said demand draft should be attached to the application.

10. Forward simultaneously a copy of the applicationE, along with a copy of each of the documents attached to it, to the concerned Registrar of Companies.

11. Apply to the Income‑tax authorities for changing the accounting year of your company.

12. On receipt of the approval of the Central Government, file a copy of the approval along with your audited accounts with the concerned Registrar of Companies.

13. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 5, the aforesaid application to the Central Government will be processed within 10 days. [No. 5/25/99‑CL‑V, Press Note No. 9/99 dated 9‑8-1999.]

E. Contribution

(Topic 209 to Topic 211)

Topic 209

DO YOU WISH TO CONTRIBUTE FUNDS FOR CHARITABLE OR OTHER USEFUL PURPOSES NOT DIRECTLY RELATING TO THE BUSINESS OF THE COMPANY OR FOR THE WELFARE OF ITS EMPLOYEES?

1. In the case of a private company, not being a subsidiary of a public company, convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a Board Resolution to contribute for charitable or other non‑political purposes such amounts as the Board of Directors thinks fit.

3. In the case of a public company or its subsidiary

(i) Convene a Board Meeting after giving notice.to all the directors of the company as per section 286 and pass a Board Resolution to contribute for charitable, or other purposes.

(ii) See that the amount does not exceed in aggregate in any financial year fifty thousand rupees, or five per cent of its average net profits as arrived at in accordance with the provisions of sections 349 and 350 during the three financial years immediately preceding, whichever is greater;

(iii) Where the contribution to be made is in excess of the aforesaid limit:

(a) Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a Board Resolution to fix up the date, time, place and agenda for a General Meeting to pass an Ordinary Resolution in that regard. [Section 293(1)(e)];

(b) Issue notices in writing at least twenty‑one days before the date of the General Meeting proposing the Ordinary Resolution with suitable Explanatory Statement, and hold the General Meeting and pass the Ordinary Resolution by simple majority. [Section 171(1) read with Section 173(2)];

(c) Forward three copies of the notice and a copy of the proceedings of the General Meeting to the Stock Exchange with which the shares of your company are listed. [Clause 31(c) and (d) of the Standard Listing Agreement];

(d) File the Resolution with Explanatory Statement in Form No. 23 with the concerned Registrar of Companies within thirty days of the passing, [Section 192(4)(ee)], after paying the requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

4. Please also keep in mind that if default is made in complying with the requirement of filing the Resolution with the Explanatory Statement, as aforesaid, the company, and every officer of the company who is in default will be punishable with fine upto Rs. 200/- for every day during which the default continues.[Section 192(5)]

5. Note that no company can contribute any amount to any political party or for any political purpose to any individual or body unless the company is in existence for three years or more and the Company is not a Government Company. [Section 293A]

6. Ensure that the resolution so passed in the meeting specifies the total amount which will be contributed to charitable and other funds in any financial year. [Section 293(1), Explanation I]

7. If any contribution is to be made to the National Defence Fund or any other Fund approved by the Central Government then follow the procedure vide Topic 210.

8. Keep in mind that for contributions of any nature and amount, there should be an enabling provision in the Memorandum of Association of the company concerned.

9. Note that the requirement of an enabling provision in the Memorandum and the provision regarding limits on contributions as specified above shall not apply to contributions to the following funds if passed by the company by a Special Resolution, (a) Gandhi National Memorial Fund (b) Sardar Vallabh Bhai National Memorial Fund (c) any other fund established for a charitable purpose which by reason of its national importance has been approved by the Central Government, under the Companies (Donation to National Funds) Act, 1951 (d) National Defence Fund (e) any other fund approved by the Central Government for the purpose of National Defence. [Section 293B]

Topic 210

DO YOU WISH TO CONTRIBUTE TO NATIONAL DEFENCE FUND OR ANY OTHER FUND APPROVED BY THE CENTRAL GOVERNMENT?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution approving the payment of contribution to National Defence Fund or any other fund approved by the Central Government in excess of the limits specified in section 293(1)(e). [Section 293B(1)]

3. Note that payment of such contribution may also be made by any person or authority authorised to do so by a resolution passed either by the Board of Directors or by General Meeting of your company. [Section 293B(1)]

4. Make the payment and ensure that such payment is disclosed in your company's profit and loss account relating to the financial year in which such payment is made. [Section 293B(2)]

5. While making any contribution as aforesaid keep in mind that the following Funds have been approved by the Central Government:

(i) The Chief Secretary to the Government of Andhra Pradesh, Hyderabad, National Defence Fund.

(ii) The National Defence Fund, Andhra Pradesh State Peoples' Committee.

(iii) The Bihar State National Defence and Jawans' Welfare Fund.

(iv) The Chief Minister's Defence Fund, Kerala State.

(v) The National Defence Fund, Madras.

(vi) The Chief Minister's Defence Services Welfare Fund, Rajasthan.

(vii) The Chief Minister's Defence Forces Welfare Fund, Lucknow.

(viii) The Chief Minister's Defence Purposes Fund of Uttar Pradesh, Lucknow.

(ix) The Chief Minister's West Bengal Account National Defence Fund.

[Notification No. F. 8189 (293B) 62‑PR, dated 21‑2‑1963]

(x) Gujarat Chief Minister's Sainik Fund.

(xi) The Prime Minister's National Relief Fund [Notification No. GSR 2561, dated 18‑10‑1975]

6. Disclose in your company's profit and loss account the total amount contributed by your company to the Fund during the financial year to which the amount relates. [Section 293‑B (2)]

Topic 211

DO YOU WISH TO CONTRIBUTE TO ANY POLITICAL PARTY OR FOR ANY POLITICAL PURPOSE TO ANY PERSON?

1. See whether your company is a Government company (by virtue of definition given in section 617) or any company which is in existence for less than three financial years. [Section 293‑A(1)]

2. If your company is not a Government company but a company which is in existence for less than three years, then wait for the completion of the three financial years to be able to contribute to political party or to any person for political purpose.

3. If your company is not a Government company and your company is in existence for three financial years or more, then your company can contribute directly or indirectly to any political party or for any political purpose to any person in any financial year not more than five per cent of your company's average net profits determined in accordance with the provisions of sections 349 and 350 during the three immediate preceding financial years. [Section 293A(2)]

4. If your company's financial year falls partly before and partly after these provisions became enforceable (w.e.f. 24‑5‑1985), then for the purpose of item 3 above, the latter portion of the financial year shall be deemed to be the financial year. [Section 293A(2), Explanation]

5. Before making such contribution, do the following:

(a) Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution stating the total amount to be contributed (not being more than five per cent of average net profits) and the name of the political party or the name of the person to whom such an amount is contributed for political purpose stating the political purpose for which it is to be given;

(b) If such a donation is to be made through any publication or advertisement in the nature of a souvenir, brochure, tract, pamphlet or the like by or on behalf of a political party, then mention in the body of the resolution the name of that souvenir, brochure, etc. and also the name of the political party;

(c) Pass the Board resolution only at a Board Meeting duly held and not by passing a resolution by circulation. [Section 293A(2), Second Proviso];

(d) If the Articles of Association of your company has a similar provision like Regulation 77 of Table A of Schedule I to the Act, then delegate to any Committee of Directors, the Managing Director, the Manager, or any other principal officer of the company the power of contribution to political party or to any person for political purpose by passing a resolution t6 that effect at a Board Meeting on such conditions as the Board may prescribe. [Section 292(1), Proviso];

(e) Disclose in the Profit and Loss Account of your company any amount or amounts contributed by your company to any political party or for any political purpose to any person during the financial year to which that amount relates, giving particulars of the total amount contributed and the name of the party of person to which or to whom such amount has been contributed.

7. Follow the procedure given in item 5 even when any donation or subscription or any payment is made by your company to any person who is carrying on any activity which can reasonably be regarded as likely to effect public support for a political party. [Section 293A(a)]

8. Please also keep in mind that if your company makes any contribution in contravention of the provisions of section 293‑A, your company will be punishable with fine upto 3 times the amount so contributed and every officer of the company who is in default will be punishable with imprisonment for a term upto 3 years and will also be liable to fine. [Section 293‑A(5)]

F. Accounts/Audit/Annual Returns

(Topic 212 to Topic 227)

Topic 212

DO YOU WISH TO OPEN A BANK ACCOUNT?

1. Consult the bankers with whom you wish to open an account and if they require a special form of Board Resolution, obtain a specimen of the same.

2. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass the resolution authorising any of your directors or officers to operate the same jointly by any two of them at any time and also specifying the nature of the account and the purpose for which it is being opened.

4. Produce a certified true copy of the resolution, a certified true copy of your Memorandum and Articles of Association, certificate of incorporation etc. before the bankers and get yourself introduced by one of the banker's existing clients as reference on which they would open an account for you.

5. Send specimen signatures of the directors or officers whose names are given in the resolution who will operate the bank account to the said bank.

6. Pass such a resolutionj in the first Board Meeting of your company after incorporation if such a bank account is being opened for the first time after incorporation of the company.

7. If you want to keep any monetary limit for any officers for operating the bank account, then mention that in the body of the resolution.

Topic 213

DO YOU WISH TO EFFECT A PARTNERSHIP BETWEEN THE COMPANY AND ANOTHER PERSON?

1. Verify from your Memorandum of Association whether it permits you to enter into such partnership.

2. Convene the Board Meeting after giving notice to all the directors of the company as per section 286 and get the draft partnership deed approved.

4. Authorise one or two directors to execute the partnership deed and affix common seal thereon in accordance with your Articles of Association.

5. Authorise someone to look after the business of the firm on behalf of your company and also fix the date, time, place and agenda of the General Meeting to pass a Special Resolution.

6. Issue notices in writing atleast twenty one days before the date of the General Meeting and pass the Special Resolution by three fourths majority.

7. If any one of the directors of your company is also a partner in that partnership firm, pass a Special Resolution and file it along with the declaration in Form No. 20A with the concerned Registrar of CompanieS.

8. File the Special Resolution in Form No. 23 within thirty days of its passing with the concerned Registrar of Companies' but there is no time‑limit for filing the declaration under section 149(2A)(b)(ii), after paying the requisite fee (along with the filing of these two forms) prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

9. Please also keep in mind that if default is made in filing the Special Resolution as aforesaid, the company and every officer of the company who is in default will be punishable with fine upto Rs. 200/- for every day during which the default continues. [Section 192(5)]

10. Further keep in mind that if your company commences any business in contravention of sub‑section (2A) of section 149, every person who is responsible for the contravention will without prejudice to any other liability be punishable with fine upto Rs. 5000/- for every day during which the default continues. [Section 149(2‑A)]

11. Get the partnership deed duly executed and registered as per the Partnership Act.

12. Please do not forget to disclose your investment in partnership while finalising year Balance Sheet vide Schedule VI Part I sub‑item 4 of the Asset side of the Balance Sheet.

13. See that the provisions of section 149(2A) are complied with in regard to commencement of a new business which is not germane or incidental to your company's business existing as on 15‑10‑1965.

Topic 214

DO YOU WISH TO OPEN A NEW BRANCH?

1. Verify that the business to be transacted at the new branch proposed is covered by your Memorandum of Association.

2. Convene a Board Meeting after giving notice$ to all the directors of the company as per section 286 and pass a resolution:

(i) to open the particular branch describing the business to be carried thereat;

(ii) to authorise somebody to arrange accommodation, establishment and other things to run the branch; and

(iii) to appoint someone to look after day to day business of the branch and to operate the bank account of the branch.

4. He may be also delegated certain powers as stated under proviso to section 292(1), by a Board resolution.

5. See that the provisions of section 149(2A) are complied with in regard to commencement of a new business which is not germane or incidental to your company's business existing as on 15‑10‑1965, that is, passing of a Special Resolution and filing the declaration.

6. The declaration should be filed in Form No. 20A with the concerned Registrar of Companies and the Special Resolution should be filed in Form No. 23 within thirty days of its passing, with concerned Registrar of Companies after paying requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

7. Please keep in mind that if default is made in filing the Special Resolution as aforesaid, the company and every officer of the company who is in default will be punishable with fine upto Rs. 200/‑ for every day during which the default continues. [Section 192(5) ]

8. Further keep in mind that if your company commences any business in contravention of sub‑section (2‑A) of section 149, every person who is responsible for the contravention will without prejudice to any other liability be punishable with fine upto Rs. 5,000/‑ for every day during which the default continues. [Section 149(2‑A)]

9. If the shares of your company are listed on a Stock Exchange, then take the following steps:

(i) Forward promptly to it three copies of the notice and a copy of the proceedings of the General Meeting in which the Special Resolution is passed; and

(ii) Notify promptly to it the change if such opening of a new branch amounts to a change in the general character or nature of your company's business. [Clauses 29 and 31(c), (d) of the Standard Listing Agreement]

Topic 215

DO YOU WISH TO AVAIL EXEMPTION FROM AUDIT FOR YOUR BRANCH?

1. Regarding audit exemption of branches of a bank, please refer to the Sixth and the Ninth Annual Report on the Working and Administration of the Ad.

2. Note that where a branch of your trading, processing or manufacturing company fulfils the specific condition in a particular year, it shall automatically be exempt from all the provisions of section 228 regarding audit except those of Subsection (2) in that particular year only, without any reference to the Central Government'.

3. Note further that the aforesaid condition is that in the particular financial year, the average of "the quantum of activity" of the branch should not exceed Rupees Two lakhs, or two per cent of the average of the total turn‑over of the company as a whole including all of its branches and offices plus earnings from the services rendered plus earnings from any other source, whichever is higher'.

4. Keep in mind that the "quantum of activity” means:

(i) the total value of the goods or articles produced, manufactured or processed; or

(ii) the total value of the goods or articles sold and of services rendered; or

(iii) the total amount of the expenditure, revenue and capital, incurred by the branch office during a financial year, whichever is higher.

5. Again the word "average" above means the average of the three financial years immediately preceding the particular financial year, or if three years would not have elapsed since the establishment of the branch, then of the two years or one year immediately preceding, as the case may be.

6. Also keep in mind that if the branch was established during the particular year itself, then it means the activity of the year itself.

7. See that the average of the "quantum of activity" of the branch and of the "total turn‑over" of the company shall be for the same period.

8. If a branch automatically becomes exempt as above, the company's auditor shall specifically mention in his report that the branch office is so exempt. [Rule 3 of the Companies (Branch Audit Exemption) Rules, 1961]

9. Where any branch of your company is not automatically exempt as discussed in item I above, either because your company does not carry on trading, processing or manufacturing activity, or because the activity of your branch exceeds the aforesaid limits, then if you so like, in respect of the financial year ending on or before 31^st March 1961, or if your General Meeting so approves by passing an Ordinary Resolution in respect of the subsequent financial years, you could apply to the Central Government for such exemption on any of the grounds as mentioned in clauses (a), (b), (c) and (d) of sub‑rule (1) of the Rule 4 of the Companies (Branch Audit Exemption) Rules, 1961.

10. The application should be made in the Formt given in the Annexure to the Companies (Branch Audit Exemption) Rules, 1961, and should be accompanied by the treasury challan or demand draft evidencing the payment of the requisite fee' as prescribed under the Companies (Fees on Applications) Rules, 1999.

11. If the application fee is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Applications) Rules, 1999 , by way of treasury challan prepared in triplicate and paid in cash into any of the specified brancheS4 of the Punjab National Bank for credit.

12. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

13. Two copies of the treasury challan will be given back to the depositor out of which original copy should be attached to the application.

14. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application.

15. The application aforesaid, if made on the ground, as stated in clause (b) of sub‑rule (1) of Rule 4, shall be further accompanied by two more certificates or statements as mentioned in clauses (a) and (b) of sub‑rule (2) of Rule 5 of the Companies (Branch Audit Exemption) Rules, 1961.

16. These certificates are:

(a) one signed by the manager or managing director of the c6mpany stating that proper arrangement have been made for the audit of the accounts of the branch office; in accordance with rule 4(1)(b) of the Companies (Branch Audit Exemption) Rules, 1961;

(b) a written statement from the auditor of your company stating that arrangements made for such audit are adequate and then will show a true and fair view of the working of the branch office.

17. While granting exemption on the aforegaid ground, Central Government imposes conditions as specified in clauses (a), (b) and (c) of rule 6 of the Companies (Branch Audit Exemption) Rules, 1961. In every case, see that those conditions are complied with.

18. Note that the order of exemption shall be in force to such extent, for such period and subject to such conditions, if any,and may be specified in the order, which shall be in writing by the Central Government. [Sub‑rule (2) of Rule 4 of the Companies (Branch Audit Exemption) Rules, 1961]. The said Government shall at the same time be at liberty to revoke its exemption order in terms of the said rule.

19. Keep in mind that the exemption order shall be for all the provisions of section 228 except those of Sub‑section (2). [Sub‑rule (4) of rule 4 of the Companies (Branch Audit Exemption) Rules, 1961]

20. Ensure that a copy of every exemption order is sent to the company's auditor forthwith and is also read at the next General Meeting of the company. [Sub‑rule (30) of Rule 41. The company's auditor, in turn, shall expressly state in his report that the branch office is so exempt. [Rule 7 of the Companies (Branch Audit Exemption) Rules, 1961 ].

21. See that there is no contravention of the terms and conditions of such exemption or on material alteration in the circumstances relating to scrutiny, check or audit of the accounts of the branch office so that such exemption may not be revoked by the Central Government under rule 8 of the Companies (Branch Audit Exemption) Rules, 1961.

22. Ensure that the auditor of your company expressly states in the audit report that the branch office is automatically exempted from the requirements of section 228 by virtue of rule 3 or that an exemption is obtained under rule 4 whatever the case may be. [Rule 7 of the Companies (Branch Audit Exemption) Rules, 1961]

23. Deliver simultaneously to the concerned Registrar of Companies', a copy of the application made to the Central Government along with a copy of each of the documents annexed to it.

Topic 216

DO YOU WISH TO KEEP BOOKS OF ACCOUNT AT A PLACE OTHER THAN THE COMPANY'S REGISTERED OFFICE?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution to the effect that the booksof account of the company be kept at a particular place other than the registered office of the company, such other place not being outside India. [Proviso to section 209(1)]

2. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine, of Rs. 1000/‑ [Section 286(2)]

3. File the notice in Form No. 23AA with the Registrar of Companies within seven days of the decision taken in the Board Meeting [Proviso to section 209(1)] after paying requisite fee as prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

4. Please also keep in mind that if the managing director or manager of your company if any or in their absence every director of your company and every officer and other employee and agent of your company fails to take reasonable steps to secure compliance by your company of the requirements of section 209 or has by his own wilful act been the cause of any default by the company thereunder he will be punishable in respect of each offence with imprisom‑nent for a term upto 6 months or with fine upto Rs. 10,000/‑ or with both. [Section 209(5)]

5. Further keep in mind if any person not being a person referred to as above having been charged by the managing director, manager or the Board of Directors as the case may be with the duty of seeing that the requirement of section 209 are complied with, makes a default in doing so, he will be punishable with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both [Section 209(7)]

Topic 217

DO YOU WISH TO ADOPT THE FORM OF YOUR BALANCESHEET OTHER THAN THAT PRESCRIBED UNDER SCHEDULE VI‑A & B?

1. Prepare a new form of balance‑sheet and profit and loss account taking care to see that all particulars required by Schedule VI are, as far as possible, incorporated therein.

2. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and place the form before the Board Meeting and get its approval, by passing a resolution.

4. Apply to the Central Government in terms of section 211(1) of the Act in the form of a letter, preferably on the letter head of the company, as there is no prescribed form for this application.

5. Mention in the application the following particulars

(i) financial year for which exemption is sought;

(ii) precise reasons or justifications for seeking such exemption;

(iii) latest year for which accounts have been adopted by your company;

(iv) if your company had been complying with the requirements in the past, reasons as to why the compliance has become difficult or not possible for the year for which the exemption is sought for;

(v) whether your company is maintaining proper purchase/sales/stock registers so as to give a true and fair view of its state of affairs in compliance of sections 209 and 211 read with Schedule VI;

(vi) details of turnovenand exports made by the company during the last 3 financial years and during the first 6 months of the financial year in respect of which exemption is sought.

6. Address the application~ to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, "A" Wing, Dr. Rajendra Prasad Road, New Delhi‑110 001 and attach the following:

(a) enclosing the new form and a receipted treasury 3 challan or demand draft evidencing the payment of the requisite fee prescribed by the Companies (Fees on Applications) Rules, 1999;

(b) a certified true copy of the Board Resolution;

(d) certified true copies of approvals under section 21 obtaiped if any during the last 3 financial years.

7. If the applicationf fees is paid by way of treasury challan, then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Applications) Rules, 1999, by way of treasury challan prepared in triplicate and paid into any of the specified branches of the Punjab National Bank for credit.

8. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

9. Two copies of the treasury challan will be given back to the depositor out of which original copy should be attached to the application.

10. If the applicationf fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application.

11. Note that the Department of Company Affairs by its Guidelines on an application under section 211 advised companies to make the payment of application fee only by way of demand draft.

12. Deliver simultaneously to the concerned Registrar of Companies a copy of the above application along with a copy of all the documents annexed to it.

13. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 3, the aforesaid application made to the Central Government will be processed within 30 days. [No. 5/25/99‑CL‑V,‑ Press Note No. 9/99 dated 9‑8‑1999.]

14. Send a certified true copy of the Government's approval to the concerned Registrar of Companies at the time of filing balance‑sheet and profit and loss account.

15. Keep in mind that whether your company adopts the form of balance‑sheet and profit and loss account other than the prescribed form or not, they should both comply with the Accounting Standards. [Section 211 (3A)]

16. In case your company is unable to comply with the Accounting Standards, ensure that your company discloses in its profit and loss account and balancesheet the following, namely:

(a) the deviation from the accounting standards;

(b) the reasons for such deviation; and

17. Note that, the expression "Accounting Standards" means the standards of accounting recommended by the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949, as may be prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards established under sub‑section (1) of section 210A. [Section 211 (3C)]

18. Further note that standard of accounting specified by the Institute of Chartered Accounts of India shall be deemed to be the Accounting Standards until the Accounting Standards are prescribed by the Central Government as aforesaid. [Section 211(3C) proviso]

19. Please also keep in mind that if the managing director or manager of your company if any or in their absence every director of your company and every officer and other employee and agent of your company who fails to take all reasonable steps to secure compliance by your company as respects any accounts laid before your company in general meeting with the provisions of section 211 and with other requirements of the Act as to the matters to be stated in the accounts he will be punishable in respect of each offence with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/‑ or with both. [Section 211(7)]

20. Further keep in mind that if any person not being a person referred to as above having been charged by the managing director, manager or the Board of Directors as the case may be with the duty of seeing that the requirement of section 211 are complied with, makes a default in doing so, he will be punishable ith imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both. [Section 211(8)]

21. Note that the Central Government has exempted the companies engaged in the cultivation or processing of tea from disclosing in the profit and loss account the information mentioned in sub‑clause (1) of clause (a) of sub‑para (ii) of para 3 of Part II of Schedule VI subject to the following conditions for a period of 3 years :

(i) The profit and loss account shall disclose the quantity and other particulars (not including the value) of green leaf tea produced and processed by such companies separately, together with the opening and closing stock thereof during the financial year to which the said profit and loss account relates;

(ii) In respect of green leaf tea, if any, purchased from outside source, such companies shall also disclose in their profit and loss account, the value of the tea purchased in addition to the disclosure of the quantity and other particulars of the green leaf tea so purchased and processed and the opening and closing stock thereof. [SO 954(E), dated 25‑9-2001].

Topic 218

DO YOU WISH TO HAVE EXEMPTION FROM ATTACHING THE ACCOUNTS OF SUBSIDIARIES UNDER SECTION 212(8)?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision to get exemption from attaching the documents mentioned in section 212(1)(a) to (g).

3. Make an applicationi to the Department of Company Affairs in terms of section 212 (8) on a plain paper preferably on the letter head of the company in the form of a letter as there is no prescribed form of this application.

4. Ensure that the said application contains inter alia the following information:

(a) the financial year for which exemption is sought and that year should also be the year mentioned in the body of the Board Resolution passed as above;

(b) precise reasons or justification for seeking the exemption;

(d) names of subsidiaries in respect of which exemption is sought;

(e) dates on which the companies became subsidiaries of your company;

(f) the financial years of the holding company and the subsidiary companies referred to in the application.

5. Address the applicationf to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110001 and attach the following:

(a) certified true copy of annual report of the company for the year previous to the one for which exemption is sought.

(b) certified copies of approvals under section 212 obtained, if any, during the last 3 financial years.

(c) enclose a certified true copy of the Board Resolution in support of the proposed mentioning inter alia the names of subsidiaries and their financial year under reference;

(d) treasury challan or demand draft evidencing payment of requisite fees prescribed under the Companies (Fees on Application) Rules, 1999.

6. Although the Guidelines issued on the making of, an application provides for payment of application fee by way of demand draft only the applicationi fees may be paid by way of treasury challan, if so then pay the requisite fee of minimum Rs. 500/‑ and maximum Rs. 2000/‑, as the case may.be, as prescribed by the Companies (Fees on Application) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank for credit.

7. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 25](E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

8. Two copies of the treasury challan will be given back to the depositor out of which he original copy should be attached to the applicationi mentioned in item 3.

9. If the applicationi fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application mentioned in item 3.

10. Forward a copy of the application, alonj with a copy of each of the enclosures, to the concerned Registrar of Companies

11. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 4, the aforesaid application made to the Central Government will be processed within 30 days. [No. 5/25/99‑CL‑V; Press Note No. 9/99 dated 9‑8‑1999.]

12. On receipt of the approval of the Central Government send a certified true copy of such approval to the concerned Registrar of Cornpanies at the time of filing the balance‑sheet and profit and loss account of your company.

13. Please ensure that the company attaches a statement, showing the financial highlights of its subsidiaries to the annual reports of the company and gets printed in bold letters at a conspicuous place on the said statements that full annual accounts of the subsidiaries are available for inspection at the registered office of the company and will be sent to every member on request free of cost. [Circular No. 47/4/90‑CL‑III, dated 13‑7‑1990]

14. Please also keep in mind that if the managing director or manager of your company if any or in their absence every director of your company and every officer and other employee and agent of your company who fails to take all reasonable steps to comply with the provisions of section 212, he will be punishable in respect of each offence with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both. [Section 212(9)]

15. Purther keep in mind that if any person not being a person referred to as above having been charged by the managing director, manager or the Board of Directors as the case may be with the duty of seeing that the provisions of section 212 are complied with, makes default in doing so, he will be punishable in respect of each offence with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both. [Section 212(10)]

Topic 219

DO YOU WISH TO INCLUDE A STATEMENT IN YOUR AUDITOR'S REPORT IN ACCORDANCE WITH GENERAL OR SPECIAL ORDER OF THE CENTRAL GOVERNMENT MANUFACTURING AND OTHER COMEPANIES (AUDITOR’S REPORT) ORDER, 1988?

1. Verify whether your company falls under any of the following classes of companies:

(a) manufacturing, mining or processing;

(b) supplying or rendering service;

(d) the business of financing investment, chit fund, nidhi or mutual benefit societies. [Order 1(2)(a) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988].

2. Keep in mind that this Order does not apply to any banking company as defined in Banking Regulation Act, 1949, and to any insurance company as defined in section 2(21) of the Companies Act, 1956, and to any company licensed to operate under section 25 of the Companies Act, 1956. [Order 1(2)(b) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

3. If your company falls under any of these classes of companies, then see that the auditor's report of your company contains a statement of the matters specified below. [Order 3 of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

4. If your company is a manufacturing, mining or processing company, then the auditor's report should contain statements about:

(i) the maintenance of proper books of accounts showing quantitative details and situation of fixed assets and serious discrepancies, if any, discovered on verification by the management and such discrepancies having been properly dealt with in the books of account;

(ii) the basis of revaluation of fixed assets, if made;

(iii) the physical verification of finished goods, stores, spare parts, raw materials made by the management at reasonable intervals;

(iv) reasonableness and adequacy of 'physical' verification of stocks by the management in relation to the size of the company and the nature of its business if not the inadequacies thereof in accordance with normally accepted accounting principles;

(v) material discrepancies if any notice on physical verification of stock as compared to book records and proper dealing of it in the books of account;

(vi) the satisfaction of the auditor as to the valuation of stocks being fair and proper and the basis of such valuation and the material effect of deviation, if any, made from such basis of valuation;

(vii) the rate of interest and terms and conditions of all loans granted to or by your company and whether or not the same is prejudicial to the interests of your company;

(viii) the rate of interest and terms and conditions of all loans granted to parties in which company's;

(ix) the regular repayment of principal and interest by the parties and reasonable steps taken for their recovery if such payment is irregular;

(x) the existence of adequate internal control commensurate with the size of the company and the nature of its business for purchase of stores, raw materials, plant and machinery and other assets and for the sale of goods;

(xi) the payment at reasonable prices for purchase of stores, raw materials or components aggregating to Rs. 50,000/‑or more in which the company's directors are interested;

(xii) the determination of unserviceabk or damaged stores or raw materials and the provision for loss made in the accounts;

(xiii) the acceptance of deposits, if any, in accordance with the directives issued by the Reserve Bank of India, and in accordance with Sec tion 58A of the Act and the rules framed thereunder, if 'not the nature of contraventions made;

(xiv) the maintenance of reasonable records for the sale and disposal of bye products and scraps, where applicable;

(xv) the existence of an internal audit system commensurate with the size and nature of business if your company's paid‑up capital is more than Rs. 25 lakhs or if its average annual turn‑over exceeds Rs. 2 crore for a period of three consecutive financial years;

(xvi) the maintenance of proper cost records or accounts if prescribed by the Central Government under section 209(1)(d) of the Act;

(xvii) the regularity of deposit of provident fund dues and Employees State Insurance dues and the extent of arrears of such dues, if any. [Order 4(A) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988];

(xviii) amounts of butstanding dues with respect to income‑tax, wealth tax, sales tax, customs duty and excise duty if any as at the last day of the financial year concerned, for a period of more than six months from the date they become payable;

(xix) details of personal expenses charged to revenue account, if any;

(xx) reference if any, made to the Board for Industrial and Financial Reconstruction under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985, company being a sick industrial company within the meaning of clause (o) of Sub‑section (1) of section 3 of the said Act.

5. In the case of a service company, see that the auditor's report contains the following matters in addition to the matters specified under item 4 above:

(i) existence of a reasonable system of recording receipts, issues and consumption of materials and stores which should provide for the proper allocation of materials consumed to the relative jobs, commensurate with its size and nature of its business;

(ii) existence of a reasonable system of allocating man hours utilised to the relative jobs, commensurate with its size and nature of its business;

(iii) existence of a reasonable system of authorisation at proper levels and an adequate system of internal control commensurate with size of the company and nature of its business on the issue of stores and allocation of stores and labour to jobs. [Order 4(B) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

6. In the case of a trading company, see that the auditor's report contains the following matters in addition to the matters specified under item 4 above.

(i) determination of damaged goods, if any, and if the value is significant, provision made for loss of such goods. [Order 4(C) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

7. In the case of a finance, investment, chit fund, nidhi or mutual benefit society, see that the auditor's report contains the following matters in addition to the matters specified under item 4 above:

(i) maintenance of proper documents and records for loans and advances granted on the basis of security by way of pledge of shares, debentures and other securities;

(ii) due compliance with the provisions, if any, of any special statute applicable to the chit fund, nidhi or mutual benefit society;

(iii) if the company is dealing or trading in shares, securities, debentures and other investments maintenance of proper records for transactions and contracts regarding dealing in shares and debentures and other investment, and timely entries thereof and statement of the fact whether shares, debentures and other investments are held by the company in its own name except in cases falling under section 49 of the Act. [Order 4(D) of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

8. If the Auditor's report contains any unfavourable or qualified answers, then see that it contains reasons for such answers. [Order 5 of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

9. If the auditor of your company cannot express any opinion regarding answer to a particular question, then see that he indicates it in his report, giving reasons thereof. [Order 5 of the Manufacturing and Other Companies (Auditor's Report) Order, 1988]

Topic 220

DO YOU WISH TO KEEP THE BOOKS OF ACCOUNT ON ACCRUAL BASIS?

1. Note that the books are required to be kept on accrual basis and according to the Double Entry System of accounting. [Section 209(3)(b)]

2. Also note that both actual and accrued expenditure have to be accounted in the same way as actual income and accrued income.

3. Note, however, that no expenditure can be said to have accrued unless the liability to expend money has legally accrued and similarly, no income can be said to have really accrued unless the right to receive income has really accrued legally, the word "accrual" being a word of law.

4. Since the liability to pay gratuity to an employee cannot be said to have accrued until some event takes place which makes it obligatory on the part of the company to make payment of gratuity, it cannot be said that gratuity should be accounted for on accrual basis from day to day.

5. If you tell the customer that interest at the rate of 18 per cent shall be charged if the payment is not received within thirty days, interest income would be deemed to have accrued.

6. However, if you say that interest at the rate of 18 per cent shall be payable by the customer, on the expiry of 30 days of credit, on a notice being served by the company in this behalf, interest income cannot be said to have accrued until such notice is served on the customer.

7. Also note that while income‑tax authorities may treat an income as having been accrued or an expenditure as having not been accrued, for tax purposes, accounting requirements under section 209 of the Act are different and a pure legal basis for accrual must be adopted.

8. Please keep in mind, that the words, 'accrual' refers to assumption that revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the period to which they relate.

9. Please keep in mind that if the managing director or manager of your company if any or in their absence every director of your company and every officer and other employee and agent of your company who fails to take reasonable steps to secure compliance by your company of the requirements of section 209 or has by his own wilful act been the cause of any default by the company thereunder he will be punishable in respect of each offence with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both. [Section 212(5)]

10. Please also keep in mind that if any person not being a person referred to as above having been charged by the managing director, manager or the Board of Directors as the case may be with the duty of seeing that the requirements of section 209 are complied with, makes a default in doing so, he will be punishable with imprisonment for a term upto 6 months or with fine upto Rs. 10,000/- or with both. [Section 209(7)]

Topic 221

DO YOU WISH TO AVOID SENDING BALANCE‑SHEET AND PROFIT & LOSS ACCOUNT TO MEMBERS AND DEBENTUREHOLDERS?

1. Please check if your company is one whose shares are listed on a recognised Stock Exchange.

2. In the aforesaid event, you may have the copies of the Balance‑Sheet and the Profit & Loss Account available for inspection at the registered office during working hours for a period of twenty‑one days before the date of the meeting. [Section 219(1) proviso (k)(iv)]

3. Keep in mind that if you, at the same time, send a statement containing the salient features of the Balance‑Sheet and the Profit & Loss Account (the salient features being in the form prescribed by the Government), it will not be necessary to send the Balance‑Sheet and the Profit & Loss Account to the members or even the trustees for the debenture‑holders (individual debenture‑holders not being required to be sent the Balance‑Sheet and the Profit & Loss Account). [Section 219(1) proviso (k) (iv)]

4. Please check if the members or debenture‑holders are entitled to receive the notices of the General Meeting of the company.

5. Please also check whether the General Meeting of the company, if it is Annual General Meeting, is for considering the businesses pertaining to a particular financial year.

6. Also keep in mind that if the member concerned has become a member or debenture‑holder after the close of the financial year, he is not entitled to receive the notice.

7. Note that ordinarily, even members and debenture‑holders, if they had become so at the time of issuing of the notice, are required to be sent the Balance‑Sheet and the Profit & Loss Account.

8. Further note that in case, however, your company is one not having a share capital, you need not send the Balance‑Sheet and the Profit & Loss Account to members and debenture‑holders not entitled to receive the notice. [Section 219(1) proviso(a)]

9. Please also check if a member or debenture‑holder is otherwise entitled to receive notice of General Meeting.

10. Remember that this may be so because of the fact that the company itself has lien on the voting rights of the members.

11. In the aforesaid event, the member is not entitled to receive notice and is also not entitled to receive the Balance‑Sheet and the Profit & Loss Account.

12. Similarly, by the terms of the issue of the debentures, a debenture‑holder may not be entitled to receive the notice of the General Meeting.

13. In the aforesaid event also, the Balance‑Sheet and the Profit and Loss Account need not be sent to the debenture‑holders.

14. Of course, after the amendment made in section 219(1) by the Companies (Amendment) Act, 1988, debenture‑holders are not even otherwise entitled to receive the Balance‑Sheet and the Profit & Loss Account. It is only the trustees for the debenture‑holders who need be sent these documents.

15. Please also check if the shares or debentures are held in the joint names. In that case, only the first named of the joint holders is entitled to receive the notice, if at all. [Section 219(1) Proviso (b)(ii)]

16. In the aforesaid event also, the Balance‑Sheet and the Profit & Loss Account need be sent only to the first named of the joint holders.

17. Please check if there are only a few members of the company and all of them have attended the General Meeting where the Balance‑Sheet or the Profit & Loss Account is going to be considered.

18. In case the aforesaid documents are supplied to all the members at the meeting itself and all the members of the company are present in the meeting and also agree that they have received the Balance‑Sheet and the Profit & Loss Account at the meeting itself and do not insist on the requirement of these documents being sent to them earlier, no default would be committed by you. [Section 219 Proviso (c) to Sub‑section (1)]

19. Please keep in mind if default is made in complying with sub‑section (1) of section 219, the company and every officer of the company who is in default will be punishable with fine upto Rs. 5,000/‑ [Section 219(3)]

Topic 222

DO YOU WISH TO OPEN A NEW DEPARTMENT?

1. Verify that the business to be carried on under the new department is covered by your Memorandum of Association.

2. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution:

(i) to open the new department describing the business to be carried thereat;

(ii) to authorise someone to arrange accommodation, establishment and other things for running the department and for that purpose, sign or execute relevant documents;

(iii) to appoint someone to look after the day to day business of the department and to operate the bank account of the department.

4. See that the provisions of section 149(2A) are complied with in regard to commencement of a new business which is not germane or incidental to your company's business existing as on 15‑10‑1965 that is by passing of a Special Resolution and filing the declaration. [Section 149(2A), Explanation]

5. The declaration should be filed in Form No. 20A with the concerned Registrar of Companies before the commencement of such new business [Section 149(2A)(b)(ii)] and the Special Resolution should be filed in Form No. 23 with the concerned Registrar of Companies within thirty days of its passing, [Section 192(4)(a)] after paying in both the cases requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash or treasury challan.

6. Please also keep in mind that if your company commences any such business as aforesaid in contravention of sub‑section (2‑A) of section 149, every person who is responsible for the contravention will without prejudice to any other liability be punishable with fine upto Rs. 5000/- for every day during which the contravention continues. [Section 149 (2‑A)]

7. Further keep in mind that if default is made in filing the Special Resolution as aforesaid, the company and every officer of the company who is in default will be punishable with fine upto Rs. 200/- for every day during which the default continues. [Section 192(5)]

8. If shares of your company are listed on a Stock Exchange, then take the following steps:

(i) Forward promptly to it three copies of the notice and a copy of the proceedings of the General Meeting in which the Special Resolution is passed; and

Topic 223

DO YOU WISH TO CLOSE A PARTICULAR BUSINESS OF YOUR COMPANY?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution:

(i) to close the particular business; and

(ii) to authorise someone to do all that is needed to close the same.

3. Keep in view the provisions of section 433(c).

4. Promptly notify to the Stock Exchange with which the shares of your company are listed about the closure of your particular business, as it amounts to a change in the general character or nature of your company's business.

5. Inform the concerned Registrar of Companies about such change.

6. Take note of the provisions of a State Act in the matter of closure of business.

7. If you wish to close or restrict the particular business permanently, follow the procedure under section 17 vide Topic 29.

Topic 224

DO YOU WISH TO OBTAIN AN ORDER FROM THE CENTRAL GOVERNMENT DECLARING A BRANCH OFFICE AS NOT TO BE SO? [SECTIONS 8 AND 2(9)]

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the decision, with reasons, for obtaining an order from the Central Government in this behalf.

3. Make an applicationf to the Central Government.

4. Since there is no prescribed form, make the application in the form of a letter on a plain paper preferably on the letter head of the company giving full details and adequate justification for the order prayed for declaring the branch office not to be so.

5. Address the applicationf to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Raiendra Prasad Road, New Delhi‑110 001, and attach the following documents to it:

(i) A certified true copy of the latest audited balance‑sheet and profit and loss account of the company;

(ii) A certified true copy of the Memorandum and Articles of Association of your company;

(iii) A certified true copy of the Board's resolution;

(iv) Original copy of the receipted treasury challan or the demand draft evidencing payment of the requisite application fee, as prescribed under the Companies (Fees on Application) Rules, 1999.

6. If the applicationf fee is paid by way of treasury challan, then pay the requisite application fee of minimum of Rs. 500/‑ or the maximum of Rs. 2000/‑, as the case may be, as prescribed by the Companies (Fees on Application) Rules, 1999, by way of treasury challan prepared in triplicate and paid in cash into any of the specified branches of the Punjab National Bank for credit.

7. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.ef 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

8. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application.

9. If the applicationf fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi, and the said demand draft should be attached to the application

10. Send a copy of the applicationf along with all the enclosures to the concerned Registrar of Companies.

11. On receipt of the order from the Central Government, acknowledge the receipt and send a copy of order to the concerned Registrar of Companies.

12. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and take the order of the Central Government on recordt.

Topic 225

DO YOU WISH TO FILE AN ANNUAL RETURN?

A. If your company is having a share capital:

1. File the annual return within sixty days from the date of the holding of the Annual General Meeting with the concerned Registrar of Companies.

2. Where the Annual General Meeting has not been held, file the annual return within sixty days from the latest day on or before which that meeting should have been held in accordance with the provisions of the Companies Act. [Explanation to Section 159(1)]

3. See that the said return is in the Form set out in Part II of Schedule V or as near thereto as circumstances admit. [Section 159(2)]

4. See that the said return contains the particulars specified in Part I of Schedule V, as they stood on the day of the meeting regarding:

(i) company's registered office;

(ii) register of its members;

(iii) register of its debenture‑ holders;

(iv) its shares and debentures;

(v) its indebtedness;

(vi) its members and debentureholders, past and present;

(vii) its directors, managing directors, managers and secretaries, past and present.7

5. If you have given the full particulars of past and present members and shares held and transferred by them in any of the immediately preceding five returns, then you just mention in the present return particulars relating to persons who have ceased to be members and the new members from that date onwards and the changes, if any, in the number of shares held by each such member as a result of transfer of acquisition of shares. [Section 159(1), Proviso]

6. Note that if number of shareholders exceed 10, and if desired by the concerned company, a text file may be submitted on a floppy or a cartridge tape in the forinat given in Annexure III to Schedule V.

7. File with the return a statement specifying the reasons for not holding the Annual General Meeting if no Annual General Meeting had been held.

8. State the amount of stock held by each of the members (instead of shares) as required by paragraph 5 of Part I of Schedule V if there is any conversion of shares into stock.

9. Along with the return, furnish the following (i) a certificate to the Registrar of Companies stating that the whole of the amount of dividend remaining unpaid or unclaimed for a period of three years from the date of transfer to the special account had been transferred to the General Revenue Account of the Central Government as required under section 205A(5). [Rule 4(2) of the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978]

10. After the commencement of the Companies (Amendment) Act, 1999, (w.e.f. 31‑10‑ 1998), the aforesaid step is not required to be taken since by virtue of amended section 205A(5) the amounts remaining unpaid or unclaimed for a period of seven years are required to be transferred to the Investor Education and Protection Fund establishect under sub‑section (1) of section 205C

11. If the shares of your company are listed with any recognised Stock Exchange, then get the Annual Return also signed by a secretary in whole‑time practice also before filing. [Section 161(1), Proviso]

12. While preparing the Annual Return Annexures I to IV of Schedule V should be taken note of.

13. Keep in mind that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, then your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that your company has duly filed the returns as stated in Annexure B, as per paragraph 2 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001.[Section 383‑A(1) proviso]

B. If your company is not having a share capital:

1. File the annual return within sixty days from the date of the holding of the Annual General Meeting with the Registrar of Companies concerned.

2. See that the following particulars are stated in the return:

(i) address of the registered office of your company;

(ii) names of present and past members since the date of the immediate preceding Annual General Meeting and the respective dates on which they became members or ceased to be members. [Section 160(1)];

(iii) particulars of present directors, manager and secretary as are set out in the Register of Directors maintained under section 303.

3. Annex to the return a statement containing particulars of the total amount of indebtedness of the company in respect of present and past charges required to be registered under the Companies Act, 1956 or under any previous Companies Law. [Section 160(2)]

4. Get the annual return and other required certificates annexed to it signed by both a director and the manager or secretary of your company. If there is no manager or secretary, then get it signed by two directors of your company one of whom shall be the managing director where there is one. [Section 161(1)]

5. Along with the return, file a certificate with the Registrar signed by both the signatories of the return stating the following:

(a) return stating facts as they stood on the day of the Annual General Meeting correctly and completely;

(b) transfer of all shares and debentures and the issue of all further certificates of shares and debentures since the date of the last annual return have been properly recorded in the books;

(c) in the case of a private company, it has not issued any invitation to the public to subscribe for any shares or debentures of the company since the date of the last Annual General Meeting or the date of its incorporation (it being first Annual General Meeting) and the number of members exceeding fifty (if that is so) consists only of persons who, under section 3(1)(iii)(b), are not to be included in reckoning the number of fifty;

(d) in the case of a private company a certificate signed by the above signatories stating the provisions of section 43‑A are not attracted by the company since the date of Annual General Meeting with reference to which the last return was submitted. [Section 43A(8)]

6. Pay the requisite fee prescribed by Schedule X to the Act, in cash or into the public account of India at any treasury or into the Reserve Bank of India or any office of the State Bank of India or any subsidiary thereof acting as an agent of the Reserve Bank of India by way of treasury challan after obtaining three

8. Deposit the requisite filing fee 6 in cash along with duly filled up three copies of treasury challan with any of the specified branches of the aforesaid bank.

9. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the Annual Return.

10. Attach to the return a receipted treasury challan evidencing the payment of the requisite fee.

11. Please keep in mind, if your company fails to comply with any of the provisions contained in sections 159, 160 and 161, the company and every officer of the company who is in default will be punishable with fine upto Rs. 500/- for every day during which the default continues. [Section 162(1)]

12. Please also note that a director of a public company which has failed to file its annual returns for three consecutive financial years shall not be eligible for appointment as director of any other public company until the expiry of five years from the date of default. [Section 274(1)(g)]

Topic 226

DO YOU WISH TO FILE UNAUDITED BALANCE‑SHEET ETC.? [SECTION 220]

1. Prepare a statement giving the reasons and other details for not being able to audit the balance‑sheet.

2. File three copies of unaudited balance‑sheet and profit and loss account with the concerned Registrar of Companies within thirty days of the last date within which the Annual General Meeting should have been held as per section 166. [Section 220 read with section 166(1)]

3. File also the following documents along with three copies of the balance sheet and profits and loss account of your company:

(i) Three certified true copies of the statement mentioned in item 1 above;

(ii) Three certified true copies of the resolution passed in the Annual General Meeting adjourning it to some other later date (as the accounts of the company were not audited);

(iii) if an extension is taken for the holding of the Annual General Meeting from the Registrar of Companies under section 166(1), second proviso, and even then the accounts could not be audited by that time, then three certified true copies of the letter received from the Registrar of Companies giving extension of time;

(iv) Three certified true copies of affidavit declaring that the balancesheet and profit and loss account of the company have been provisionally prepared to the best of the knowledge of the accountants of the company;

(v) an undertaking that as soon as the accounts are audited by company's auditors, copies of the audited balance‑sheet and profit and loss account will be filed.

4. Pay the requisite fee of the minimum of Rs. 100/‑ and the maximum of Rs. 500/- as prescribed under Schedule X to the Companies Act, 1956, either in cash, postal order, or treasury challan.

5. If the fee is paid by way of a treasury challan, then prepare the treasury challan in triplicate and pay the requisite fee in cash into any of the specified branches of the Punjab National Bank for credit. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Govemment's) General Rules and Forms, 1956 and as amended vide GSR 25](E), dated 21‑6‑1996 (w.e.f. 21‑6‑ 1996). For account head and code please see Rule 22(2) in Appendix 1.

6. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be filed with the unaudited balance‑sheet.

7. Take the receipt from the concerned Registrar of Companies for filing unaudited balance‑sheet and profit and loss account.

8. Please keep in mind if default is made in complying with the filing as aforesaid, the company and every officer of the company will be punishable with fine upto Rs. 500/- for every day during which the default continues. [Section 220(3)]

Topic 227

DO YOU WISH TO FURNISH UNAUDITED FINANCIAL RESULTS OF YOUR COMPANY ON A QUARTERLY BASIS?

1. Check whether your company is listed with any recognised stock exchange or exchanges.

2. Keep in mind that as per listing agreement 41 as amended by Circular No. SMD‑II/POLICY/CIR‑08/2000, dated 4th February, 2000 issued by the Secondary Market Department, SEBI certain additional disclosures are required to be made in the unaudited financial quarterly results of the companies and the half yearly results are also subjected to a limited review by the auditors with effect from half year ending on March 31, 2000.

3. Further keep in mind that Clause 41 of the Listing Agreement is further amended by circular No. SMDRP/Policy/CIR‑47/200/dated 4‑10‑2001 of SEBI on the recommendation of its Accounting Standards Committee.

4. If your company is either a manufacturing or a trading or a service company which has followed functional (secondary) classification. of expenditure in the annual profit and loss account in their most recent annual report may furnish unaudited financial results on a quarterly basis in the alternative format given in Annexure 1 to the above mentioned circular.

5. Convene a Board Meeting or Meeting of Sub‑Committee of your company's Board of Directors by issuing notices to the directors of the company as per section 286 for approving, the quarterly unaudited financial results of your company to be furnished to the stock exchange or exchanges in the proforma given therein within one month from the end of the relevant quarter.

7. Ensure that if the said quarterly unaudited financial results is being approved by a Meeting of a Sub‑committee of your Board of Directors, the said committee consists of not less than one third of your total number of directors.

8. Inform the stock exchange(s) where your company's securities are listed about the date of the Board Meeting or the Meeting of the Sub‑Committee of the Board at least 7 days in advance.

9. Also simultaneously issue a press release in at least one national newspaper and one regional language newspaper about the date of the aforesaid Board or its Sub‑Committee Meeting.

10. Have the unaudited quarterly results of your company taken on record by the Board of Directors or its Sub‑Committee in the aforesaid meeting and have it signed by the managing director/director of your company.

11. Make an announcement to the stock exchanges where your company's shares are listed immediately after the market hours on the date of the Board Meeting or its Sub‑Committee in which the unaudited financial results are placed.

12. Also make an announcement within 48 hours of the conclusion of the Board or its Sub‑Comi‑nittee Meeting in at least one English daily newspaper circulating in the whole or substantially the whole of India and in one newspaper published in the language of the region where the registered office of your company is situated.

13. Ensure that the unaudited results do not substantially differ from the audited results of your company and if the sumtotal of the first, second, third and fourth quarterly unaudited results in respect of any item given in the same proforma varies by 20% when compared with the audited results for the full year of your company, then your company has to explain the reasons to the stock exchanges by way of sending a statement approved by your Board of Directors along with the Review Report.

14. Keep in mind that your company also has to prepare the half yearly results in the same proforma with effect from half year ending on March 31, 2000 and the same should be approved by your Board of Directors and should be subjected to a limited review by the auditors of your company.

15. Submit a copy of the Review Report to the stock exchange or exchanges within months after the close of the half year.

16. Note that for the purpose of the aforesaid Review half year should be construed as consisting of the first two quarters of your company's financial year.

17. Note that in respect of results for the last quarter of the financial year, if your company intimates in advance to the stock exchange(s) that it will publish audited results within a period of 3 months from the end of the last quarter of the financial year then in such a case do not publish or give to the stock exchange(s) unaudited results for the last quarter.

18. Do not forget to prepare the quarterly results on the basis of accrual accounting policy and in accordance with uniform accounting practices adopted for all period on quarterly basis.

19. Furnish segment‑wise revenue, results and capital employed along with the quarterly unaudited financial results with effect from the quarters ending on or after 30‑9‑2001 as per the format annexed to the circular No. SMDRP/Policy/ CIR‑44/01, dated 31‑8‑2001 issued by SEBI, Secondary Market Department.

20. Comply with the accounting standard on "Accounting for Taxes on Income in respect of the quarterly unaudited financial results with effect from the quarter ending on or after 30‑9‑2001. [Paragraph 1(4) of the above circular]

21. Note that your company has the option to publish consolidated quarterly financial results in addition to the unaudited quarterly financial results of the parent company as currently required under clause 41 of the Listing Agreement. [Paragraph 1(c) of the above circular]

22. Further note that the following clarifications have been issued by SEBI, Secondary Market Department by their circular No. SMDRP/Policy/CIR-47/2001, dated 4‑10‑2001:

(a) in respect of all the companies including those whose accounting year has commenced before April 1, 2001, segment information prescribed under clause 41 of the Listing Agreement should be given for the quarters ending on or after September 30, 2001;

(b) in respect of all the companies whose accounting year has commenced on or after April 1, 2001, cumulative segment information for the current year in addition to the segment information for the current quarter should be given beginning with the quarter ended September 30, 2001;

(c) in respect of companies whose accounting year has commenced before April 1, 2001, cumulative segment information should be given for the period commencing from July 1, 2001 that is from July 1, 2001 to the end of the current quarter in addition to the segment information for the current quarter.

G. Register of Members/Debenture‑holders

(Topic 228 to Topic 231)

Topic 228

DO YOU WISH TO KEEP REGISTERS AND RETURNS IN A PLACE OTHER THAN THE REGISTERED OFFICE UNDER SECTION 163 BUT WITHIN THE CITY, TOWN OR VILLAGE OF THE REGISTERED OFFICE?

1. Call a Board Meeting after giving notice to all the directors of the company as per section 286 as per Topic 131 to fix up the date, time, place and agenda for convening a General Meeting and to pass a Special Resolution. [Section 163(1), Proviso (i)]

3. Issue notices in writing at least twenty‑one days before the date of the General Meeting proposing the Special Resolution with suitable Explanatory Statement. [Section 163(1) read with section 173(2)]

4. Forward a copy of the proposed Special Resolution to the concerned Registrar of Companies in advance to the passing of the Special Resolution in the General Meeting [Section 163(1), Proviso (iii)]

5. Hold the General Meeting and pass the Special Resolution, by three fourth's majority [Section 189(2)]

6. File the Special Resolution with the concerned Registrar of Companies in Form No. 23 within thirty days of its passing [Section 192(1) & (4)(a)], after paying the requisite fee as prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

7. Please also keep in mind that if default is made in complying with the aforesaid requirement, the company and every officer of the company who is in default will be punishable with fine upto Rs. 200/‑ for every day during which the default continues. [Section 192(5)]

8. Further keep in mind that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs then your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that it has kept and maintained all registers as stated in Annexure A to this certificate as per the provisions and rules made thereunder and all entries therein have been duly recorded as per paragraph 1 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383A(1) proviso]

Topic 229

DO YOU WISH TO APPLY TO THE COMPANY LAW BOARD FOR RECTIFICATION OF REGISTER OF MEMBERS OR THE REGISTER OF DEBENTURE‑HOLDERS ?

1. Where your name (a) has been entered in the Register of Members without sufficient cause, or (b) having been entered in the register, is omitted therefrom without sufficient cause you may apply to the Company Law Board for rectification of the register under section 111(4).

2. Please note that rectification of the Register of Members or the Register of Debenture‑holders can be applied by any member of the concerned company or by the concerned company or by any other person aggrieved.

3. If the company is the applicant then before making an application convene a Board Meeting of the company after giving notice to all the directors of the company as per section 286.

5. Make the application by way of a petition to be prepared in Form No. 1 in Annexure II of the Company Law Board Regulations, 1991.

6. Address the petition to the Bench Officer, Company Law Board, Northern Region Bench, at New Delhi or Eastern Region Bench, at Calcutta, or Western Region Bench, at Mumbai or Southern Region Bench, at Chennai, as the case may be depending on the jurisdiction of the particular Bench on the situation of the registered office of the company, whose shares are involved. [Regulation 7(2) read with Annexure I of the Company Law Board Regulations, 1991]

7. The following will be enclosed to the petition :

(a) Where the company is the petitioner:

(i) Certified true copy of the Memorandum and Articles of Association;

(ii) Certified true copy of the latest audited balance‑sheet and profit and loss account, auditors' and directors' reports;

(iii) Authenticated copy of the extract of the Register of Members;

(iv) Certified true copy of the resolution of the Board or Committee of Directors (where applicable);

(v) Any other relevant documents;

(vi) Affidavit verifying the petition which should be prepared on non‑judicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner;

(vii) Demand draft evidencing payment of the application fee of Rs. 500/‑;

(viii) Memorandum of Appearance in Form No. 5 of the Company Law Board Regulations, 1991 with a certified true copy of the Board Resolution or the executed Vakalatnama as the case may be.

(b) Where the petition is made by any other person

(i) Documentary evidence in support of the statements made in the petition including the copy of the letter written by the petitioner to the company for the purpose of registering the transfer of, or the transmission of the right to any shares or interest in, or debentures as also a copy of the letter of refusal of the company;

(ii) Copies of the documents returned by the company;

(iii) Any other relevant documents;

(iv) Affidavit verifying the petition to be prepared and drawn in the same manner as mentioned above under (a)(vi);

(v) Demand draft or treasury challan evidencing payment of the application fee of Rs. 500/‑;

(vi) Memorandum of appearance in Form No. 5 of the Company Law Board Regulations, 1991, with a certified true copy of the board resolution or the executed Vakalatnama as the case may be.

8. The affidavit should be drawn up in first person and shall state the full name, age, occupation and complete residential address of the deponent and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

9. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

10. The affidavit should clearly and separately indicate statements which are true to the knowledge of the deponent's information received by the deponent, belief of the deponent and information based on legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

11. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and whether the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

12. Please ensure that the aforesaid petition is written, typewritten, cyclostyled or printed, neatly and legibly on one side of the substantial paper of foolscap size in double space and separate sheets shall be stitched together and every page consecutively numbered. [Regulation 11 of the Company Law Board Regulations, 1991]

13. Numbers and dates specified therein should be expressed in fugures as well as in words. The petition should be divided into separate paragraphs which should be numbered serially and shall state thereon, the matter and the name of the company to which it relates. [Regulation 12 of the Company Law Board Regulations, 1991]

14. Affix Court fee stamp of the requisite value 4 on the petition before sub mission.

15. Please ensure that the aforesaid petition is presented either by the petitioner or through the authorised representative of the petitioner whether an individual or a company in person to the office of the concerned Bench or sent by registered post with acknowledgement due addressed to the Bench Officer of the concerned Bench, in original and two extra copies thereof. [Regulation 14(1) of the Company Law Board Regulations, 1991]

16. Pay the filing fee of Rs. 500/‑ as per rule 3 read with Rule 4 and 5 of the Company Law Board (Fees on Applications & Petitions) Rules, 1991 by way of demand draft drawn in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi" or "Kolkata" or "Mumbai" or "Chennai" as the case may be depending on the Bench on which it will be filed and payable at New Delhi or Kolkata or Mumbai or Chennai as the case may be depending on the Bench on which it will be filed and payable at New Delhi or Kolkata or Mumbai or Chennai.

17. On the petition being admitted, notice thereof shall be served by registered post with acknowledgement due or under Certificate of posting on the Respondent and the petitioner and they would be required to file a reply and other documents on which the reply is based and the Counter‑reply to the reply. [Regulations 21, 22 and 23 of the Company Law Board Regulations, 1991]

18. The same procedure will apply in the case of rectification of Register of Debenture‑holders.

19. Please also keep in mind that if default is made in giving effect to the orders of the Company Law Board under section 111, the Company and every officer of the company who is in default will be punishable with fine upto Rs. 10,000/- and with further fine of Rs. 1,000/- for every day after the first day after which the default continues. [Section 111(9)]

20. Further keep in mind that if default is made in complying with any of the provisions of section 111, the company and every officer of the company who is in default will be punishable with fine upto Rs. 500/- for every day during which the default continues. [Section 111(12)]

Topic 230

DO YOU WISH TO CLOSE THE REGISTER OF MEMBERS OR DEBENTURE‑HOLDERS OF YOUR COMPANY?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and decide to close the Register of Members or Debenture‑holders. Any of these registers can be closed for not more than forty‑five days in a year and thirty days at a time. [Section 154(1)]

2. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/-. [Section 286(2)]

3. Give at least seven days previous notice of closure by advertisement in some newspapers circulating in the district in which the registered office of your company is situated. [Section 154(1)]

4. Close the registers for the period as advertised and inform the Stock Exchanges, with which the shares of your company are listed by giving a notice in advance of at least forty two days or thirty days if the securities are in dernat form. [Clauses 15 and 16 of the Standard Listing AgreemenT]

5. Send copies of this notice to all the other recognised Stock Exchanges in India if the shares of your company are listed with any recognised Stock Exchange. [Clauses 15 and 16 of the Standard Listing AgreemenT]

6. If the recognised Stock Exchange states the date of closure and the purpose or purposes for which it can be so closed, then see that these are complied with only if the shares of your company are listed on a recognised Stock Exchange.

7. Please also keep in mind that if the register of members or debentureholders is closed without giving notice as aforesaid or after giving shorter notice than required as aforesaid or for continuous or an aggregate period in excess of the limits specified as aforesaid, the company and every officer of the company who is in default will be punishable with fine upto Rs. 5,000/- for every day during which the register is so closed. [Section 154(2)]

8. Further keep in mind that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, then your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that your company closed its register of members and/or debentureholders from a specific date to a specific date and necessary compliance with section 154 has been made as per paragraph 5 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001.[Section 383‑A(1) proviso]

Topic 231

DO YOU WISH TO KEEP A FOREIGN REGISTER OF MEMBERS OR DEBENTURE‑HOLDERS?

1. Verify whether the Articles of Association of your company pem‑lit the keeping of foreign register of members or Debenture‑holders in any state or country outside India; if not, complete proceedings to alter them accordingly vide Topic 26. [Section 157(1)]

2. File with the concerned Registrar of Companies a notice of the situation of the office where such register is kept within thirty days from the date of the opening of any such foreign register [Section 157(2)], after paying the requisite fee as prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

3. If there is any change in the situation of the office where such foreign register is kept or if keeping of such foreign register is discontinued, file a notice within thirty days of such change or discontinuance with the concerned Registrar of Companies' regarding such change or discontinuance. [Section 157(2)], after paying the requisite fee as mentioned above.

4. Please keep in mind that if default is made in complying with the aforesaid requirements, the company and every officer of the company who is in default will be punishable with fine upto Rs. 500/‑ for every day during which the default continues. [Section 157(3)]

5. Transmit immediately to your registered office in India a copy of every entry made in such foreign register. [Section 158(4)(a)]

6. Keep at your registered office in India a duplicate of every foreign register duly entered up from time to time. [Section 158(4)(b)]

7. Do not register any transaction with respect to any shares or debentures registered in the foreign register in any other register. [Section 158(6)]

8. In case your company discontinues the keeping of any foreign register, transfer all entries from that register to some other foreign register kept by your company in the same part of the world or to the principal register. [Section 158(7)]

9. Please also keep in mind that if default is made in complying with subsection (4) of section 158, the company and every officer of the com.Vany who is in default will be punishable with fine upto Rs. 500/- [Section 158(9)

10. Note that your company may by its Articles make such regulations as it thinks fit in regard to its foreign registers subject to the provisions of the Act. [Section 158(8)]

11. Further note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs then your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that it has kept and maintained all registers as stated in Annexure A to this Certificate as per the provisions and rules made thereunder and all entries therein have been duly recorded as per paragraph 1 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383A(1) proviso]

H. Trust/Beneficial Interest

[Topic 232 ‑ 235]

Topic 232

DO YOU WISH TO CREATE A TRUST FOR DISPOSAL OF ODD LOT SHARES? [SEE CIRCULAR NO. 1/21/92 (NO. 11/93), DATED 8‑10‑1993 AND PRESS NOTE NO. 7/93, DATED 14‑10‑1993 AT ANNEXURES I & II TO THIS TOPIC]

1. Create the position of an independent Trustee who should be responsible, trustworthy and unconnected with the day to day management of the company.

2. Ensure that the Trustee disposes of the shares on behalf of the investors in marketable parcels.

3. Ensure that sales realisations are handed over to the investors less brokerage and service charges.

4. Ensure that Trustees deal only with odd lot shares and not with any other shares, or with shares of any other company.

5. You may provide certain initial funds to enable the trustee to start the operation.

6. Receive reimbursement of funds as provided above from the Trustees who may use the brokerage and service charges realised from investors for the aforesaid purpose.

7. Send all rights and bonus shares to the Trustees for holding the same on behalf of original allottees.

8. Ensure that the Trustees contact recognised prominent brokers dealing in particular shares which have, by now, been consolidated into marketable lot.

9. Ensure that Trustees do not engage in manipulation of market rates with regard to the shares of the company.

10. Ensure that books of the Trustees in respect of transactions in odd lot shares are kept open for inspection by the Registrar of Companies.

11. Closely monitor and maintain surveillance on the books of the Trustees in regard to share transactions on behalf of investors.

12. Please note that investors can file complaint against any misconduct by the Trustees with regard to the investors, the complaint being entertainable by Investor Protection Cell in the Department of Company Affairs, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Raod, New Delhi, or to the nearest office of the Registrar of Companies' depending upon the situation of the registered office of the Company.

13. Please note that the aforesaid procedure is purely voluntary.

14. Please note that, pending disposal of shares held by them, the Trustees shall be entitled to attend and vote at the meetings on the basis of authorisation given by the original allottees.

15. Since the Trustees will hold the shares beneficially and the ostensible ownership would still remain with the original allottees, it will be necessary to file a declaration under section 187C of the Act.

16. Give necessary information to the shareholders of odd lot shares by issue of suitable advertisement and publicity in the media about the establishment of the Trust.

17. Keep in mind that if your company is a listed company you are also required to adhere to clauses 6.5.2.1 and 6.5.2.2 of the SEBI (Disclosure & Investor Protection) Guidelines 2000.

ANNEXURE I

Circular No. 11/93

No. 1/21/92‑CL‑V

GOVERNMENT OF INDIA

MINISTRY OF LAW, JUSTICE & COMPANY AFFAIRS

(Department of Company Affairs)

New Delhi‑ 1, the 8th October, 1993

All Chambers of Commerce and Industry.

Subject: Creation of Trust for disposal of odd lot shares.

734 § Topic 232 § Chap. VIII‑Administration‑H. TrustlBeneficial Interest

Dear Sir,

As you are aware the investors of companies often get allotment of shares in lots which are not marketable and they are confronted with the problem of selling these shares at the market rates quoted for shares in marketable lots. With a view to explore ways and means and to minimise the difficulties of investors in this regard the Department has examined this problem in consultation with Chambers of Commerce and Securities Exchange Board of India (SEBI). The Chambers of Commerce and some of the major companies were of the view that the problem could be solved if the companies, as a measure of servicing their investors voluntarily create the position of an independent Trustee to receive shares from individual investors for being disposed of on their behalf and after realising the sale proceeds in marketable parcels make over the sales realisation less brokerage and service charges to the investors. You are, therefore, requested to advise your constituents to create such Trusts in order to provide the service to the investors in the matter of disposing odd lot shares of the company held by them.

2. The following broad guidelines should be observed by the companies while appointing a Trustee:

(i) The trustee shall be selected and appointed by the company and such a person should be responsible, trustworthy and unconnected with the day to day management of the company.

(ii) The trustee shall only sell the shares of the company in odd lots and shall not deal with shares of other companies.

(iii) The company may provide certain initial funds to start the operation and ultimately the trustee will reimburse the funds so provided out of the brokerage and service charges realised from the investors, out of surplus so generated in due course.

(iv) During the Period the Trustee holds of odd lot shares on behalf of the investors, the company shall send all the rights and bonus shares to him for and on behalf of the original holders.

(v) Soon after the shares are consolidated into a marketable lot, the trustee shall contact the recognised prominent brokers dealing in particular shares of the company for disposing of the same. But the trustee shall not engage himself in any manipulation of market rates with regard to the shares of the company.

(vi) The books of the trustee shall be maintained from day to day on the basis of the transactions entered into by him in respect of odd lot shares and shall be open for scrutiny by the Registrar of Companies.

3. The companies in their own interest will closely monitor and maintain a surveillance on the books of the trustee in regard to the share transactions in odd lot on behalf of the investors. Any complaint against the misconduct by the trustees can be sent by the investors to the Investor Protection Cell in the Department of Company Affairs, Shastri Bhawan, Dr. R.P. Road, New Delhi or to the nearent office of the Registrar where the registered office of the company is located.

4. The above methodology to deal with the problems of investors on voluntary basis instead of prescribing any specific provision in the Companies Act is indicative of the confidence that Department reposes in the fair dealing by the companies towards their investors and it is expected that the future voluntary self‑regulation will be modelled on the basis of successes of this exercise. You are requested to give a wide publicity of this scheme among your constituents and work closely with them to make the scheme a success.

ANNEXURE II

Press Note No. 7/93

No. 1/21/92‑CL‑V

GOVERNMENT OF INDIA

MINISTRY OF LAW JUSTICE & COMPANY AFFAIRS

(Department of Company Affairs)

New Delhi‑1, the 14 October, 1993

PRESS NOTE

The marketing of odd lots of shares causes problem to the investors and the attention of the Governinent has been drawn to the problem relating to the disposal of such shares. The Stock Exchanges have imposed restrictions on dealing in such shares as only the dealings are made in marketable lots. With a view to explore ways and means and to minimise the difficulties of the investors in this regard, the Department consulted the Chambers of Commerce, Stock Exchanges and SEBI on the subject. The Department has carefully considered the various views expressed on the subject and it is felt that all listed companies establish a trust specially for acquisition of odd lot shares on the following lines:

(i) The trustee shall be selected and appointed by the company and such a person should be responsible, trustworthy and unconnected with the day to day management of the company.

(ii) The trustee shall only sell the shares of the company in odd lots and shall not deal with shares of other companies.

(iii) The company may provide certain initial funds to start the operation and ultimately the trustee will reimburse the funds so provided out of the brokerage and service charges realised from th& investors, out of surplus so generated in due course.

(iv) During the Period the Trustee holds of odd lot shares on behalf of the investors, the company shall send all the rights and bonus shares to him for and on behalf of the original holders.

(vi) The books of the trustee shall be maintained from day to day on the basis of the transactions entered into by him in respect of odd lot shares and shall be open for scrutiny by Registrar of Companies.

2. Pending the disposal of the shares held by the trustees, they shall be entitled to attend and vote the meetings and the shareholders shall authorise them to do so. Provisions of section 187C of the Companies Act, shall apply and necessary declarations will be filed by the trustees with the Registrar of Companies.

3. The companies creating such trust shall give the intimation to the shareholders of odd lots shares by issue of suitable advertisement and publicity in the media about the establishment of such trusts.

Topic 233

DO YOU WISH TO PREPARE A TRUST DEED FOR SECURING ANY ISSUE OF DEBENTURE AND APPOINT DEBENTURE TRUSTEES AND ALSO CREATE A DEBENTURE REDEMPTION RESERVE?

[Sections 117A, 117B and 117C inserted by the Companies (Amendment) Act, 2000]

1. If your company has issued any debentures then prepare the Trust Deed for securing the same issue of debentures in such form as may be prescribed.

2. Ensure to have the said Trust Deed executed within such period as may be prescribed.

3. Keep a copy of the said Trust Deed open for inspection to any member or debenture holder of your company.

4. Keep in mind to allow such member or debenture holder taking inspection of your company's Trust Deed to obtain copies of such Trust Deed on payment of such sum as may be prescribed.

5. Note that if a copy of the Trust Deed is not made available for inspection or is not given to any member or debenture holder, your company and every officer of your company who is in default will be punishable, for each offence, with fine upto Rs. 500/‑ for every day during which the offence continues.

6. Do not issue a prospectus or a letter of offer to the public for subscription of your company's debentures unless your company has appointed one or more Debenture Trustees before such issue of debentures.

7. Obtain consent from the proposed Debenture Trustees to the effect that they have no objection to their being appointed as the Debenture Trustees of your company's debenture issue.

8. Do not forget to state on the face of the aforesaid prospectus or the letter of offer that the Debenture Trustee or Trustees have given their consent to your company to be so appointed.

9. Before appointing Debenture Trustee(s) as aforesaid, ensure that he does not beneficially holds shares in your company or is not beneficially entitled to moneys which are to be paid by your company to the Debenture Trustee or has not entered into any guarantee in respect of principal debts secured by the debentures or interest thereon.

10. Note that the functions of the Debenture Trustees should generally be to protect the interest of holders of debentures including the creation of securities within the stipulated time and to redress the grievances of holders of debentures, effectively.

11. Further note that a Debenture Trustee may take such steps as he may deem fit without prejudice to the generality of the aforesaid functions to -

(i) ensure that the assets of your company issuing debentures and each of the guarantors are sufficient to disclose the principal amount at all times;

(ii) satisfy himself that the prospectus or the letter of offer does not contain any matter which is inconsistent with the terms of the debentures or with the trust deed;

(iii) ensure that your company does not commit any breach of covenants and provisions of the Trust Deed;

(iv) take such reasonable steps to remedy any breach of the covenants of the Trust Deed or the terms of issue of debentures;

(v) take such steps to call a meeting of holders of debentures as and when such meeting is required to be held.

12. Keep in mind that the Debenture Trustee can file a petition before the Company Law Board, if he comes to the conclusion that the assets of your company are insufficient or are likely to become insufficient to discharge the principal amount as and when it becomes due.

13. Further keep in mind that on filing of any such petition by the Debenture Trustee the Company Law Board may after hearing your company and any other person interested in the matter, by an order, impose such restrictions on the incurring of any further liabilities as the Company Law Board thinks necessary in the interests of holders of the debentures of your company.

14. Create a Debenture Redemption Reserve for the redemption of such debentures, to which adequate amounts should be credited from out of your company's profits every year until such debentures are redeemed.

15. Do not utilise the amounts credited to the Debenture Redemption Reserve as aforesaid except for the purpose mentioned above.

16. Pay interest and redeem the debentures in accordance with the terms and conditions of their issue.

17. Keep in mind that if your company fails to redeem the debentures on the date of maturity, the Company Law Board may on the application of any or all the holders of debentures direct by order, after hearing the parties concerned, to redeem the debentures forthwith by paying the principal and interest due thereon.

18. Further keep in mind that if default is made in complying with the order of the Company Law Board mentioned above, every officer of your compact who is in default will be punishable with imprisonment of 3 years and will also be liable to a fine of not less than Rs. 5001‑ for every day during which such default continues.

19. Please note that a director of a public company which has failed to redeem debentures on maturity and the default has continued for one year or more, is not eligible for being appointed as a director of any public company. The disqualification lasts for a period of 5 years. [Section 274(1)(g)].

Topic 234

DO YOU WISH TO EXEMPT TRUSTEES OF DEBENTUREHOLDERS FROM THE LIABILITY OF INDEMNIFICATION IN CASE OF BREACH OF TRUSTS ? [SECTION 119]

1. Note that any provision contained in the debenture trust deed itself or in any contract with the Debenture‑holders which exempts or which has the effect of exempting trustees from indemnification against liability for breach of trust is void. [Section 119(1)]

2. Further note that to validate such exemption from indemnification against liability for breach of trust given *to trustees of Debenture‑holders consent of the concerned Debenture‑holders should be obtained, in a duly called meeting, of the Debenture‑holders.

3. Hold a meeting of the Debenture‑holders in the manner provided in the Annexure 'C' or 'D' to the Companies General Rules and Forms 1956. [Rule 7]

4. Issue noticest at least twenty‑one days before the date of meeting in writing to all the Debenture‑holders.

5. The aforesaid twenty‑one days should be clear days, that is, excluding the day of posting and receipt of notice.

6. If shorter notice is preferred, then get the consent of the Debenture‑holders holding not less than ninety‑five per cent in value of the debentures issued by the company.

7. Mention in the notice the place, day and the hour of the meeting and also see that every such notice contains a statement of the business to be transacted and in this case such statement should be with regard to the exemption from indemnification for breach of trust.

8. Also issue notices of the meeting of the Debenture‑holders to the auditors of the company.

9. Prepare an Explanatory Statement setting out all material facts concerning the right of exemption from indemnification and also state therein the interest or concern, if any, of the director or manager of the company.

10. See that every notice issued for the debenture‑holders' meeting is accompanied by the above Explanatory Statement along with a proxy form.

11. Convene the Debenture‑holders' meeting and if the quorum is there, that is, if atleast five Debenture‑holders are personally present in the meeting.

12. At the aforesaid meeting approve the agreement or pass the resolution for exempting trustees (all or some of them) for Debenture-holders from indemnification for breach of trust by majority of not less than three‑fourths in value of the Debenture‑holders present and voting in person or where proxies are allowed, by proxy. [Section 119(2)(b)(i)]

13. See that such exemption is given either for specific acts or omissions on the part of the trustees or in the event of any trustee dying or ceasing to act. [Section 119(2)(b)(ii)]

Topic 235

DO YOU WISH TO SEEK REMEDY AGAINST REFUSAL TO FURNISH COPIES OF DEBENTURE TRUST DEED? [SECTION 118 AND COMPANY LAW BOARD REGULATIONS, 1991]

1. Please note that:

(i) A Debenture‑holder or a member can ask for a copy of the debenture trust deed from the company. [Section 118(1)];

(ii) For a printed copy of the debenture trust deed, you have to pay Rs. 10/‑ for each copy, and for a copy of the trust deed not printed, you have to pay Re. 1/‑ for every hundred words or fractional part thereof required to be copies. [Section 118(1)(a)&(b) read with Rule 21A]

2. Please also keep in mind that if a copy is refused or is not forwarded within 7 days of the making thereof on payment as aforesaid, the company and every officer who is in default will be punishable with fine upto Rs. 500/- for each offence and with a further fine of Rs. 200/- for every day during which the offence continues [Section 118(2)]

3. If a copy of the debenture trust deed is not furnished to you being a Debenture‑holder or member of that company, within seven days of making the request accompanied by payment therefor, then do the following:

(i) Make an application to the Company Law Board by way of a petition to be prepared in Form No. 1 in Annexure II of the Company Law Board Regulations, 1991.

(ii) Address the forwarding letter to the petition to the Bench Officer, Company Law Board, Northern Region Bench, at New Delhi or Eastern Region Bench, at Calcutta, or Western Region Bench, at Mumbai or Southern Region Bench, at Chennai, as the case may be depending on the jurisdiction of the particular Bench on the situation of the registered office of the company, whose shares are involved. [Regulation 7(2) read with Annexure I of the Company Law Board Regulations, 1991]

(iii) The following will be enclosed to the petition-

(a) copy of the letter written to the company for the issue of trust deed.

(b) Copy of the letter of refusal, if any issued by the company.

(c) Affidavit verifying the petition which should be prepared on nonjudicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner.

(d) Demand draft evidencing payment of the fee of Rs. 50/‑.

(e) Memorandum of Appearance in Form No. 5 of the Company Law Board Regulations, 1991, with a certified true copy of the Board Resolution or the executed Vakalatnama as the case may be.

4. The affidavit should be drawn up in first person and shall state the full name, age, occupation and complete residential address of the deponent and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

5. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

6. The affidavit should clearly and separately indicate statements which aie true to the knowledge of the deponent's information received by the deponent, belief of the deponent and information based on legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

7. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and whether the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

8. Please ensure that the aforesaid petition is written, typewritten, cyclostyled or printed, neatly and legibly on one side of the substantial paper of foolscap size in double space and separate sheets shall be stitched together and every page consecutively numbered. Numbers and dates specified therein should be expressed in figures as well as in words. [Regulation 11 of the Company Law Board Regulations, 1991]

9. The petition should be divided into separate paragraphs which should be numbered serially and shall state thereon, the matter and the name of the company to which it relates. [Regulation 12 of the Company Law Board Regulation, 1991]

10. Affix Court fee stamp of the requisite value on the petition before sub mission.

11. Please ensure that the aforesaid petition is presented either by the petitioner or through the authorised representative of the petitioner whether an individual or a company in person to the office of the concerned Bench or sent by registered post with acknowledgment due addressed to the Bench Officer of the concerned Bench, in original and two extra copies thereof [Regulation 14(1) of the Company Law Board Regulations, 1991]

12. Pay the filing fee of Rs. 50/‑ as per Rule 3 read with Rules 4 and 5 of the Company Law Board (Fees on Applications & Petitions) Rules, 1991 by way of demand draft drawn in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi" or "Kolkata" or "Mumbai" or "Chennai" as the case may be depending on the Regional Bench on which it will be filed and payable at New Delhi or Kolkata or Mumbai or Chennai.

13. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Company Law Board as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2000 [Section 383‑A(1) proviso]

I. Oppression/Mismanagement

(Topic 236 to Topic 239)

Topic 236

DO YOU WISH TO APPLY TO THE COMPANY LAW BOARD FOR RELIEF IN CASES OF OPPRESSION OR MISMANAGEMENT?

1. Make an application to the Company Law Board, Principal Bench, New Delhi or Additional Principal Bench, Chennai', as the case may be, by way of a petition in Form No. 1 in Annexure II of the Company Law Board Regulations, 1991.

2. The petition must be made by the following members of your company:

(i) If your company has a share capital, not less than 100 members or not less than one‑tenth of the total number of members whichever is less or any member or members holding not less than one‑tenth of the issued share capital of your company. [Section 399(1)(a)];

(ii) If your company has no share capital, not less than one‑fifth of the total number of members. [Section 399(1)(b)];

(iii) Any member or members authorised by the Central Government. [Section 399(4) as per Topic 239]

3. Count the joint holders of shares as one member and see that the above number of members have paid all calls and other sums due on their shares and also state this fact in the petition itself. [Section 399(2)]

4. Where any members of a company are entitled to make an application as mentioned in item 2 above, any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. [Section 399(3)]

5. Attach the following documents to the petition:

(i) Documentary and/or other evidence in support of the statements made in the petition as are reasonably open to the petitioner(s).

(ii) Documentary evidence in proof of the eligibility andstatus of the petitioner(s) with the voting power held by each of them.

(iii) A certified true copy of the Memorandum and Articles of Association of your company.

(iv) Where the petition is presented by any one or more members on behalf of other members, the letter of consent signed by the rest of the members authorising the petitioner or petitioners to present the petition on their behalf.

(v) Statement of particulars showing names, addresses, number of shares held and whether all calls and other monies due on shares have been paid in respect of members on whose behalf the petition is presented.

(vi) Where the petition is presented by any member or members authorised by the Central Government under section 399(4), then annex a copy of the order of authorisation by the Central Government to the petition.

(vii) Affidavit verifying the aforesaid petition which should be prepared on a non‑judicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner.

(viii) Demand draft evidencing payment of the fee of Rs. 5000/‑.

(ix) Certified true copy of the latest audited balance‑sheet and profit and loss account.

(x) Memorandum of Appearance in Form No. 5 of the Company Law Board Regulations, 1991 with a certified true copy of the Board Resolution or the executed Vakalatnama, as the case may be.

(xi) Original acknowledgement of the concerned Registrar of Companies.

(xii) Original acknowledgement of the Central Government, being Department of Company Affairs.

6. The affidavit should be drawn up in first person and shall give the, full name, age, occupation and complete residential address of the deponent and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

7. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

8. The affidavit should clearly and separately indicate statements which are true to the knowledge of the deponent, information received by the deponent, belief of the deponent and information based on the legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

9. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and declare that the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

10. Please ensure that the aforesaid petition is written, type‑written, cyclostyled or printed, neatly and legibly on one side of the substantial paper of foolscap size in double space and separate sheets shall be stitched together and every page consecutively numbered. [Regulation 11 of the Company Law Board Regulations, 1991]

11. Numbers and dates specified thereinshould be expressed in figures as well as in words. The petition should be divided into separate paragraphs which should be numbered serially and shall state thereon, the matter and the name of the company to which it relates. [Regulations 12 of the Company Law Board Regulations, 1991]

12. Please also ensure that the aforesaid petition is presented by the petitioner in original and four extra copies thereof in person or through authorised represent~tive to the office of the Bench or to be sent by registered post with acknowledgment due addressed to the Secretary or Bench Officer of the Bench concerned, as the case may be. [Regulation 14(1) of the Company Law Board Regulations, 1991]

13. Affix Court fee stamps of the requisite value' on the original petition before submission.

14. Please furnish a copy of the complete set of the petition to the Central Government, Department of Company Affairs, Shastri Bhavan, 5th floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi 110001, before filing it with the Company Law Board. [Regulation 14(3), second proviso of the Company Law Board Regulations, 1991]

15. Pay the filing fee of Rs. 5000/- as per Rules 3 read with Rules 4 and 5 of the Company Law Board (Fees on Application & Petitions) Rules, 1991, by way of demand draft drawn in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi" and payable at New Delhi.

16. On receipt of the order, implement any of the directions given in the order under section 402(a) to (g).

17. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Coinpany Law Board as may be prescribed under the various provisions of the Acta's per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001.8 [Section 383‑A(1) proviso]

Topic 237

DO YOU WISH TO APPLY TO THE COMPANY LAW BOARD TO PREVENT OPPRESSION OR MISMANAGEMENT?

A. WHAT THE MEMBERS SHOULD DO:

1. Make an application under section 408 to the Company Law Board, Principal Bench, New Delhi or Additional Principal Bench, Chennai' as the case may be, by way of petition to be prepared in Form No. 1, in Annexure II of the Company Law Board Regulations, 1991 giving full details and indicating clearly the eligibility of the applicant to make such an application.

2. See that the application is made by not less than 100 members of your company or members holding not less than one‑tenth of the total voting power. [Section 408(1)]

3. Usually the application is made by one or two members on behalf of the other members authorised by them in writing to do so. This is an application in representative capacity and can be filed directly by the members complaining of oppression and mismanagement.

4. Annex the following documents with the application:

(i) A certified true copy of the Memorandum and Articles of your company;

(ii) A list of names and addresses of all the members applying;

(iii) Demand draft of Rs. 2500/- evidencing the payment of the requisite fee as prescribed under the Company Law Board (Fees on Applications and Petitions) Rules, 1991;

(iv) An affidavit verifying the petition which shall be prepared on a nonjudicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner;

(v) Documentary and/or other evidence in support of the statements made in the petition, as are reasonably open to the petitioner;

(vi) Documentary evidence in proof of the eligibility and status of the petitioner with the voting power held by each of them;

(vii) Memorandum of appearance in Form No. 5 of the Company Law Board Regulations, 1991 with a certified true copy of the board resolution or the executed Vakalatnama, as the case may be;

(viii) Original acknowledgement of the concerned Registrar of Companies;

(ix) Original acknowledgement of the Central Government, being the Department of Company Affairs.

5. The affidavit should be drawn up in first person and shall give the full name, age, occupation and complete residential address of the deponent and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

6. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

7. The affidavit should clearly and separately indicate statements which are true to the knowledge of the deponent, information received by the deponent, belief of the deponent and information based on the legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

8. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and declare that the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

9. Draw the demand draft in favour of the "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi.

10. Deliver to the concerned Registrar of Companies a copy of the petition along with a copy of each of the documents annexed to it before filing it with the Company Law Board [Regulation 14(3) of the Company Law Board Regulations, 1991]

11. Deliver also a copy to the, Department of Company Affairs, Shastri Bhavan, 5th floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi 110001, before filing it with the Company Law Board. [Regulation 14(3), second proviso of the Company Law Board Regulations, 1991]. This power has been delegated to the Regional Directors and therefore the said copy is to be delivered to the Regional Director within whose jurisdiction the registered office of the company is situated.

12. Please ensure that the aforesaid petition is written, type‑written, cyclostyled or printed, neatly and legibly on one side of the substantial paper of foolscap size in double space and separate sheets shall be stitched together and every page consecutively numbered. [Regulation 11 of the Company Law Board Regulations, 1991]

13. Numbers and dates specified therein should be expressed in figures as well as in words. The petition should be divided into separate paragraphs which should be numbered serially and shall state thereon, the matter and the name of the company to which it relates. [Regulations 12 of the Company Law Board Regulation, 1991]

14. Please also ensure that the aforesaid petition is presented by the petitioner in original and four extra copies thereof in person or through authorised representative to the office of the Bench or to be sent by registered post with acknowledgement due addressed to the Secretary or Bench Officer of the Bench concerned, as the case may be [Regulation 14(1) of the Company Law Board Regulations, 1991]

15. Affix Court fee stamps of the requisite value on the original petition before submission.

B. WHAT THE COMPANY SHOULD DO:

1. In pursuance of this application if the Company Law Board appoints persons as directors or additional directors of your company, then hold a Board Meeting and take on record the appointment of those directors.

2. If in pursuance of the application, the Company Law Board directs to amend your company's Articles of Association to make provisions for appointment of director by proportional representation under section 265, then amend the Articles of Association vide Topic 26 and make fresh appointments of directors within the time specified by the Company Law Board in its directions.

3. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Company Law Board as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso]

Topic 238

DO YOU WISH TO MAKE A COMPLAINT TO THE COMPANY LAW BOARD TO PREVENT CHANGE IN THE BOARD OF DIRECTORS LIKELY TO AFFECT YOUR COMPANY PREJUDICIALLY?

1. Make the complaint to the Company Law Board, Principal Bench, New Delhi, or Additional Principal Bench, Chennai as the case may be, by way of a petition in Form No. 1 in Annexure II of the Company Law Regulations, 1991 indicating clearly the eligibility of the applicant (whether managing director, director or manager) to make such an application. [Section 409]

2. Annex the following documents to the application

(i) A certified true copy of the Memorandum and Articles of Association of your company;

(ii) An affidavit verifying the aforesaid petition which should be prepared on a non‑judicial stamp paper of the requisite value prevalent in the State and should be either notarised by the Notary Public or sworn before the Oath Commissioner.

(iii) Demand draft of Rs. 2500/- evidencing the payment of the requisite fee as prescribed by the Company Law Board (Fees on Applications and Petitions) Rules, 1991.

(iv) Memorandum of Appearance in Form No. 5 of the Company Law Board Regulations, 1991 with a certified true copy of the board resolution or'the executed Vakalatnama, as the case may be.

(v) Original acknowledgement of the concerned Registrar of Companies.

(vi) Original acknowledgement of the concerned Regional Director.

3. The affidavit should be drawn up in first person and shall give the full name, age, occupation and complete residential address of the deponent and shall be signed by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]

4. If the deponent is not personally known to the person before whom the affidavit is sworn, he should be identified by a person who is known to the person before whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board Regulations, 1991]

5. The affidavit should clearly and separately indicate statements which are true to the knowledge of the deponent, information received by the deponent, belief of the deponent and information based on the legal advice. [Regulation 14(7) of the Company Law Board Regulations, 1991]

6. Where any statement is stated to be true to the information received by the deponent, the affidavit shall also include the name and complete residential address of the person from whom the information has been received by the deponent and declare that the deponent believes that information to be true. [Regulation 14(8) of the Company Law Board Regulations, 1991]

7. Draw the demand draft in favour of the "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi or "Pay and Accounts Officer, Department of Company Affairs, Chennai" and payable at any bank located in Chennai, as the case may be.

8. Deliver a copy of the application together with a copy of each of the documents enclosed to the concerned Registrar of Companies, before filing it with Company Law Board. [Regulation 14(3) of the Company Law Board Regulations, 1991]

9. Deliver a copy of the application together with a copy of each of the documents enclosed to the concerned Regional Director of the region in which the registered office of the company is situated, before filing it with the Company Law Board. [Regulation 14(3), second proviso of the Company Law Board Regulations, 1991]. This power has been delegated to the Regional Directors and therefore the said copy should be delivered to the Regional Director within, whose jurisdiction the registered office of the company is situated.

10. Affix court fee stamps of the requisite value 6 on the original application before submission.

11. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Company Law Board as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso]

Topic 239

DO YOU WISH TO BE AUTHORISED BY THE CENTRAL GOVERNMENT TO APPLY FOR RELIEF AGAINST OPPRESSION AND MISMANAGEMENT?

1. See whether the members who want to apply to the Company Law Board for relief against oppression and mismanagement of your company under sections 397 and 398:

(i) are less than 100 in number; or

(ii) are less than one‑tenth of the total number of members of your company; or

(iii) are holding less than one‑tenth of the issued share capital of your company; or

(iv) are less than one‑fifth of the total number of members (in case your company does not have a share capital). [Section 399(1)(a) & (b)]

2. If so then make an application to the Central Governmentj on plain paper as there is no prescribed form to be authorised to make application under sections 397 and 398 specifying therein the following :

(i) the names and addresses of the applicants;

(ii) if your company has a share capital, the voting power held by each applicant;

(iii) the total number of applicants;

(iv) their total voting power;

(v) the reasons for making the application which must be precise and specific. [Rule 13(1)]

3. Please ensure that the reasons given in item 2(v) above are precise and specific [Rule 13(2)]

4. Every such applicationf shall be accompanied by such documentary evidence in support of the statements made therein as are reasonably open to the applicants [Rule 13(3)]

5. Get the applicationt signed by the applicants and get it verified by their affidavit stating the paragraphs of the application which are true to their knowledge and the paragraphs which are true to the best of their information and belief. [Rule 13(4)]

6. Annex the following documents to the application:

(i) A certified true copy of the Memorandum and Articles of Association of your company;

(ii) Such documentary evidence in support of the statements made in the application as are reasonably open to the applicants;

(iii) A receipted treasury challan or demand draft evidencing the payment of the requisite fee as prescribed under the Companies (Fees on Applications) Rules, 1999.

7. If the applicationt fee is paid by way of treasury challan, then pay the fee in cash into any of the specified branches of the Punjab National Bank after obtaining three copies of the challan for credit. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

8. Fill all the three copies and deposit the fee along with all the three copies of the challan. Two copies of the challan will be given back to the depositor out of which the original copy should be attached to the application.

9. If the applicationt fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located in New Delhi and the said demand draft should be attached to the application.

10. Deliver a copy of the applicationt to the concerned Registrar of Companies for expeditious disposal, along with a copy of each of the documents annexed to the application.

11. Produce such further documentary or other evidence as the Central Govemment may consider necessary for the purpose of satisfying itself as to, the truth of the allegations made in the application or for ascertaining any in formation which in the opinion of the Central Government, is necessary for the purpose of enabling it to pass orders on the application. [Rule 13(5)]

12. On receipt of the order of authorisation from the Central Government make the applicationj by way of a petition vide Topic 237 and attach to it a copy of the order of the Central Government.

13. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 15, the aforesaid application to the Central Government will be processed within 90 days. [No. 5/25/99‑CL‑V,‑ Press Note No. 9/99 dated 9‑8‑1999.]

14. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Central Government as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso]

J. Seal

(Topic 240 to Topic 242)

Topic 240

DO YOU WISH TO AFFIX COMMON SEAL OF THE COMPANY ON ANY DOCUMENT?

1. Common Seal is the Signature of the company.

2. Consult your Articles of Association for relevant provisions governing fixing of common seal.

3. If the common seal is to be affixed under the authority of the Board or a committee thereof, obtain necessary sanction in that regard by passing a Board Resolution or a resolution of its committee.

4. After obtaining the necessary resolution affix the common seal on any instrument in the presence of at least two directors and of the secretary or such other person as the Board may appoint and they shall sign the instrument on which the seal is so affixed. [Regulation 84(2) of Table A to Schedule I]

5. However, in the case of issue of share certificates, the common seal will be affixed in accordance with rule 6 of the Companies (Issue of Share Certificates) Rules, 1960. [Refer Topic 365]

6. See that the Common Seal is kept under safe cust ody provided by the Board of Directors. [Regulation 84(1) of Table A to Schedule I]

7. If you want to empower any person as your company's attorney to execute deeds on behalf of the company then do it by writing so under the Common Seal of your company. [Section 48(1)]

8. Any deed signed by that attorney on behalf of the company shall bind the company and have the same effect as if it were under the common seal of the company. [Section 48(2)]

Topic 241

DO YOU WISH TO HAVE AN OFFICIAL SEAL OF THE COMPANY?

1. Verify the following before having an official seal:-

(i) Object clause of your company's Memorandum of Association requires or

comprises the transaction of business outside India;

(ii) Articles of Association of your company authorise the use of an official

seal in any district, territory or place outside India;

(iii) The official seal must be a facsimile of the common' seal of the company with the addition on its face the name of the territory, district or place where it is to be used. [Section 50(1)]

2. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and approve the use of official seal on documents executed outside India.

3. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

Topic 242

DO YOU WISH TO AFFIX OFFICIAL SEAL OF THE COMPANY ON ANY DOCUMENT?

1. Convene a Board Meeting after giving notice to all the directors of the company as per section 286 and authorise any person appointed in the territory, district or place where the official seal is proposed to be used, by writing his name under your company's common seal to affix the official seal to any deed or other document to which your company is a party in that territory, district or place. [Section 50(2)]

3. See that such authorised person while affixing any such official seal certify by writing under his hand the date and place of affixing the official seal on the deed or document on which it is affixed. [Section 50(4)]

4. A deed or document on which the official seal is so affixed will bind the company as if it had been sealed with the common seal of the company. [Section 50(5)]

K. Others

(Topic 243 to Topic 256)

1. DESTRUCTION OF BOOKS AND PAPERS

Topic 243

DO YOU WISH TO MAKE A REPRESENTATION TO THE CENTRAL GOVERNMENT FOR EARLIER DESTRUCTION OF BOOKS AND PAPERS OF A COMPANY WHICH HAS BEEN WOUND UP?

1. Check, with reference to the intimation given to the concerned Registrar of Companies, the date on which the company stands finally dissolved.

2. Check, with reference to the order of the High Court, if any particular period has been specified up to which books and papers of the dissolved company are to be maintained.

3. Check, with reference to any resolution already passed by the company, if the books and papers have to be destroyed before the period of five years. [Section 550]

4. Apply to the Central Government, on plain paper as there is no prescribed fon‑n for direction to have the books and papers destroyed on a date earlier than the period of five years mentioned in section 550. [Rule 15(3)]

5. Set out, in this representation, the grounds on which it is desirable and the reasons for which it is not prejudicial to any one, to destroy the books and papers of the company before the stipulated period.

6. In case the representation is not acceded to by the Central Government, move a petition to the High Court for appropriate directions within ninety days of the making of the direction by the Central Government or within such period as the High Court may, on sufficient cause being shown, allow the appeal.

7. If you prefer to make an appeal from any direction given by the Central Government to the High Court, a copy of the appeal filed before the Court should be furnished to the Central Government, and the said appeal should be preferred within ninety days of the making of the direction. [Rule 13(4), (5) and (6)]

8. Before preferring an appeal to the High Court, you may also make further representation to the Central Government for variation or for rescinding the direction given by the Central Government on the earlier representation. [Rule 15(5)]

9. If an appeal is preferred under item 7 above, serve a copy of the appeal to the Central Government, and the said appeal will only be heard by the High Court on the expiry of one month. [Rule 15(9)]

10. Please keep in mind that if any person acts in contravention of any rules or of any directions of the Central Government thereunder, he will be punishable with imprisonment for a term upto 6 months or with fine upto Rs. 50,000/- or with both. [Section 550(4)]

11. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Central Government as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso]

Topic 244

DO YOU WISH TO PRESERVE OR DISPOSE OF COMPANY RECORDS?

1. Keep the register of members and index of members of the company permanently from the date of the registration of the company. [Section 163(1A) read with the Schedule to the Companies (Preservation and Disposal ofRecords) Rules, 1966]

2. Keep the register of debentureholders, and index of debentureholders for a period of fifteen years after the redemption of debentures. [Section 163(1A) read with the Schedule to the Companies (Preservation and Disposal of Records) Rules, 1966]

3. Keep the copies of all annual returns prepared under sections 159 and 160 and copies of all certificates and documents required to be annexed thereto under sections 160 and 161 for a period of eight years from the date of filing with the Registrar. [Section 163(1A) read with the Schedule to the Companies (Preservation and Disposal of Records) Rules, 1966]

4. Maintain a register in the form setj out in the Appendix annexed to the Companies (Preservation and Disposal of Records) Rules, 1966, and enter in it brief particulars of the documents destroyed. [Rule 4]

5. Authenticate all the entries mentioned above by the secretary of your company or by any such other person as may be authorised by the Board for this purpose. [Rule 4 of the Companies (Preservation and Disposal of Records) Rules, 1966]

6. If you receive any order in writing from the concerned Registrar of Companies directing your company to preserve any documents mentioned above beyond the period prescribed by the said rules then do not destroy them till that period. [Rule 3 of the Companies (Preservation and Disposal ofRecords) Rules, 1966]

2. RESTORATION OF NAME

Topic 245

DO YOU WISH TO RESTORE YOUR COMPANY WHOSE NAME HAS BEEN STRUCK UNDER SECTION 560(6)? [COMPANIES (COURT) RULES, 1959, RULES 11 (a)(21),12,17,21,22 AND 92 TO 94]

1. Make an application by way of a petition to the concerned High Court before the expiry of twenty years from the date of the publication in the Official Gazette of the notice of striking the name of your company from the register. [Section 560(6)]

2. There is no prescribed form given in the Companies (Court) Rules, 1959, but rule 17 provides that the forins set out in Appendix 1 to the Rules shall be used with such variations as circumstances may require.

3. Annex the following documents along with the petition

(i) An affidavit in Form No. 3 of the Companies (Court) Rules, 1959, verifying the petition. [Rule 21];

(ii) A certified true copy of the Gazette notification striking out the company's name from the concerned Register of Companies. [Annexure 11, Sr. No. 10 to the Companies (Court) Rules, 1959]

4. Serve the above petition on the concerned Registrar of Companies and on such other persons as the High Court may direct not less than fourteen days before the date fixed for the hearing of the petition. [Rule 92 of the Companies (Court) Rules, 1959]

5. Within fourteen days of the receipt of the order of the High Court, deliver a certified copy of the order to the concerned Registrar of Companies for registration, the company shall be deemed to have continued in existence as if its name had not been struck off from the Register of Companies. [Section 560(7) and Rule 93 of the Companies (Court) Rules, 1959]

3. DELEGATION OF BOARD'S POWERS

Topic 246

DO YOU WISH TO DELEGATE TO OTHERS SOME OF THE POWERS OF THE BOARD?

1. Verify that your Articles of Association permit your Board of Directors to delegate some of its powers.

2. For delegation of certain powers as mentioned in item 6 hereof, there need not be any enabling provision in the Articles of Association.

3. Call a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution specifying the powers which are to be delegated and the persons to whom they are to be delegated. Mention all the limitations within which such delegated powers are to be exercised.

4. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑. [Section 286(2)]

5. Ensure that by delegation of powers, the director or the person concerned does not become a managing director, vide section 2(26) or a manager, vide section 2(24), unless your intention is to the contrary.

6. The following powers cannot be delegated by the Board of Directors

(i) Power to make call on shareholders in respect of moneys unpaid. [Section 292(1)(a)];

(ii) Power to, authorise the buy back referred to in the first proviso to clause (b) of sub‑section (2) of section 77A. [Section 292(1)2 (aa)];

(iii) Powers to issue debentures. [Section 292(1)(b)];

(iv) Power to fill up casual vacancy in the office of a director appoint6d in a General Meeting. [Section 262(1)];

(v) Power to approve contracts in which directors are interested. [Section 297];

(vi) Power to note the general disclosure of a director's interest or general notice or renewal thereof. [Section 299];

(vii) Power to note the disclosure of shareholdings of a director, or of a manager. [Section 307];

(viii) in case of public companies and their subsidiaries

(a) power to appoint a person as manager or managing director in more than one company. [Sections 316 and 386];

(b) power to make inter corporate loans and investments. [Section 372A]. This, however, shall not apply to an investment company.

7. The following powers cannot be delegated to a person other than the committee of directors, the managing director, the manager or any other principal officer of the company or, in case of a branch office, the principal officer thereof, [Proviso to Section 292(1)]:

(i) power to borrow money otherwise than on debentures; the resolution delegating the power has to the total amount outstanding at any one time up to which money may be borrowed. [Section 292(2)] [This will be subject to the provisions of section 293(1)(d)]

(ii) power to invest the funds of the company, the resolution delegating the power has to specify the total amount up to which the funds may be invested and the nature of the investments. [Section 292(3)]; [This, however, will be subject to the provisions of section 372A] ;

(iii) power to make loans; the resolution delegating the power has to specify the total amount up to which the loans may be made, the purposes for which loans may be made and the maximum amount of loans which may be made for each such purpose. [Section 292(4)]. [This will be subject to the provisions of section 372A].

4. RESTRICTIONS ON POWERS OF BOARD

Topic 247

DO YOU WISH TO SELL, LEASE OR OTHERWISE DISPOSE OF AN UNDERTAKING OR A SUBSTANTIAL PORTION THEREOF?

1. In the case of a private company not being a subsidiary of a public company unless the Articles of Association otherwise provide call a Board Meeting after giving notice to all the directors of the company as per section 286 and pass a resolution for selling, leasing or disposing of any undertaking of the company or a substantial portion thereof and for authorising any director of the company to execute documents for the purpose and give effect to the decision by executing necessary sale deed, conveyance deed, etc.

2. In the case of a public company or of a private company which is a subsidiary of a public company, call a Board Meeting after giving noticef to all the directors of the company as per section 286 to fix up the date, time, place and agenda for a General Meeting to pass an Ordinary Resolution for selling, leasing or otherwise disposing of any of the undertaking of the company or a substantial portion thereof with or without any condition. [Section 293(1)(a)]

3. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of Rs. 1000/‑ [Section 286(2)]

4. In case of listed companies the resolution relating to sale of whole or substantially the whole of undertaking as specified under section 293(1)(a) should be passed through postal ballot as per Rule 4(f) of the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001. [Section 192A]

5. Note that a mortgage or charge will not be covered by this provision in case of usufructuary mortgage.

6. Issue notices in writing atleast twenty‑one days before the date of the general meeting proposing the Ordinary Resolution with suitable Explanatory Statement, hold the General Meeting and pass the Ordinary Resolutionf by simple majority. [Section 171(1) read with sections 173(2) and 189(1)]

7. Forward three copies of the notice and a copy of the proceedings of the General Meeting to the Stock Exchange with which the shares of our company are listed. [Clause 31(c) and (d) of the Standard Listing Agreement ]

8. Give effect to such sale, lease, etc., by executing necessary sale deed, conveyance deed, etc.

9. File the Ordinary Resolution with Explanatory Statement in Form No. 23 with the concerned Registrar of Companies within thirty days of its passing [Section 192(4)(ee)] after paying the requisite fee prescribed under Schedule X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]

10. Please also keep in mind that if default is made in complying with the aforesaid filing, the company, and every officer of the company who is in default will be punishable with fine upto Rs. 200/‑ for every day during which the default continues. [Section 192(5)]

11. If the resolution passed by the General Meeting imposes some conditions including conditions as to the use, disposal or investment of the sale proceeds, then see that such conditions are followed. [Section 293(3)]

12. Ensure that the aforesaid conditions should not authorise the company to effect any reduction of capital of the company except with the provisions of the Companies Act, 1956. [Section 293(3) and Proviso]

13. Take note of the provisions of Sub‑section (2) of section 293 while giving effect to such sale, lease, etc.

Topic 248

DO YOU WISH, TO CONSTITUTE AN AUDIT COMMITTEE FOR YOUR COMPANY? [Section 292A]

1. Check whether your company is public company and also whether the paid‑up shares capital of your company is Rs. 5 crores and above.

2. If your are a company as above, your company is required to constitute a committee of the Board known as 'Audit Committee'.

3. Keep in mind that the aforesaid Audit Committee should consist of not less than 3 directors and such number of other directors as the Board of Directors of your company may determine.

4. Also keep in mind before constituting and Audit Committee that twothirds of the total number of members of the Audit Committee to be constituted should be directors other than managing or whole‑time directors.

5. Convene a Board Meeting after giving notice to all the directors of your company as per section 286 and constitute the Audit Committee of your Board by passing a Board Resolution.

6. Please keep in mind that every officer of the company whose duty is to give notice of the Board Meeting as aforesaid and who fails to do so will be punishable with fine of upto Rs. 1000/‑ [Section 286(2)]

7. Ensure that the Audit Committee constituted as above acts in accordance with terms of reference that is specified by the Board.

8. See that the members of the said Audit Committee elects a Chairman of the said Committee from amongst themselves.

9. Do not forget to have the composition of the Audit Committee disclosed in your company's Annual Report.

10. Ensure that the auditors of your company, the internal auditor, if any, and the director‑in‑tharge of finance attend and participate at meetings of the Audit Committee but keep in mind that they do not have any right to vote in the meetings of the said Committee.

11. Further keep in mind that the Audit Committee should have discussions with the auditors periodically about internal control systems, the scope of audit including the observations of the auditors and review the half‑yearly and annual financial statements before submission to the board and also ensure compliance of in ternal control system.

12. Also ensure that the Audit Committee has authority to investigate into any matter in relation to the items specified in section 292A or referred to it by the Board of Directors of your company and for this purpose it will have full access to information contained in the records of your company and external professional advice, if necessary.

13. Note that the recommendation of the Audit Committee constituted by your company on any matter relating to financial management including the audit report will be binding on the Board of Directors.

14. Further note that if the Board of Directors does not accept the recommendations of the Audit Committee it should record the reasons therefor and communicate such reasons to the shareholders.

15. Ensure that the Chairman of the Audit Committee attends the Annual General Meetings of your company to provide any clarification on matters relating to audit.

16. Please keep in mind that if default is made in complying with the provisions of section 292A, the company, and every officer who is in default, will be punishable with imprisonment for a term which may extend to one year or with fine which may extend to Rs. 50,000/- or with both.

17. If you are a listed company, setting up of a qualified and independent audit committee is mandatory. Please see clause 49.II of the Standard Listing Agreement as to the composition, frequency of meetings, powers and role, of the audit committee.

5. TEMPORARY PROTECTION OF EMPLOYEES

Topic 249

DO YOU WISH TO DISCHARGE, PUNISH, DISMISS OR REMOVE OR DEMOTE ANY OF THE EMPLOYEE OF THE COMPANY IN THE COURSE OF INVESTIGATION?

1. Before taking any such action, send by post to the Company Law Board, Principal Bench, New Delhi, or Additional Principal Bench, Chennai as the case may be, Shastri Bhavan, 5th Floor, 'A' Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110 001, an intimation in writing of the action proposed against the employee. [Section 635B(b)(ii)]

2. If you do not receive any notice of objection from the Company Law Board within thirty days of the sending of such previous intimationt, then proceed to take action against the employee in accordance with the proposed intimation. [Section 635B(2)]

3. If you receive any notice of objection from the Company Law Board within thirty days and you are not satisfied with the objection raised by the Company Law Board, prefer an appeal to the concerned Court within thirty days of the receipt of the notice of such ob ection. [Section 635B(3)]

4. The decision of the Court will be final and binding on the Company Law Board and on your company. [Section 635B(4)]

6. CONDONATION OF DELAY

Topic 250

DO YOU WISH TO APPLY FOR CONDONATION OF DEL FILING DOCUMENTS?

1. Make an applicationi to the Central Government for condonation of delay for any of the following reasons:

(i) Where any application to the Central Government is not made the time required under the Companies Act, 1956, or the Rules framed thereunder; [Section 637‑B (a)]

(ii) Where any document is not filed with the Registrar of Com within the time required under the said Act or the Rules. 637B(b)]

2. Make the applicationi on a plain paper preferably on the letter head company giving the detailed description of the document for which the condonation is asked for and the reasons for such delay and requesting for condonation of the said delay. There is no prescribed form, of this application.

3. Address the applicationf to the Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5^th "A" Wing, Dr. Rajendra Prasad Road, New Delhi‑ 110 001.

4. Attach, the following documents to your application:-

(i) A receipted treasury challan or demand draft evidencing the payment of the requisite fee, as prescribed under the Companies (Fees on Applications) Rules, 1999;

(ii) Other documentary evidences in support of your statements made in the application.

5. If the application fee is paid by way of treasury challan, then pay the requisite fee in cash into any of the specified branches of the Punjab National Bank, along with three copies of treasury challan for credit obtained from the said branch of the said bank.

6. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

7. Two copies of challan will be given back to the depositor out of which the original copy should be attached to the application.

8. If the applicationf fee is paid by way of demand draft, then draw the demand draft in favour of the Pay and Accounts Officer, Department of Company Affairs, New Delhi, and payable at any bank located in New Delhi, and the said demand draft should be attached to the application.

9. Deliver a copy of the application along with a copy of each of the documents annexed to it to the concerned Registrar of Companies in reply to the show cause notice.

10. File the documents along with a copy of the order of the Central Government condoning the delay.

11. Note that as per Citizen's Charter of the Department of Company Affairs, Schedule I, Serial No. 19, the said application to the Central Government will be processed within 30 days. [No. 5/25/99‑CL‑V, Press Note No. 9/99 dated 9‑8-1999.]

12. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Central Government as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001 .4 [Section 383‑A(1) proviso]

7. ISSUE OF GENERAL NOTICE

Topic 251

DO YOU WISH TO ISSUE A GENERAL NOTICE?

1. General notice by or on behalf of the company is to be issued to the members before making any applications to the Central Government in the following cases. [Section 640B(1) and (2)(a)]:

(i) to increase the number of directors. [Section 259];

(ii) to amend the provisions relating to managing, whole‑time or nonrotational directors. [Section 268];

(iii) to appoint or re‑appoint managing or whole‑time director. [Section 269];

(iv) to increase the remuneration of directors. [Section 310];

(v) to increase the remuneration of managing director on re‑appointment. [Section 311]

2. Indicate the nature of application in such general notice to be issued in any of the above‑mentioned cases.

3. Publish the aforesaid general notice at least once in a newspaper in the principal language of the district in which the registered office of the company is situated and circulating in that district and at least once in English language in an English newspaper circulating in that district. [Section 640B(2)(b)]

4. If your company is a private‑company, dispense with all the above requirements. [Section 640B(2)(d)]

5. After such publication of the notices forward promptly to the Stock Exchange with which the shares of your company are listed three copies of such notices. [Clause 31(e) of the Standard Listing Agreement]

6. Attach to the application, certified true copies of such notices together with a certificate by your company as to the due publication thereof. [Section 640B(2)(c)]

7. Obtain the authorisation from the Board of Directors of the company to issue and publish the general notice in the newspapers.

8. TERMINATION OF DISPROPORTIONATELY EXCESSIVE VOTING RIGHTS

Topic 252

DO YOU WISH TO GET EXEMPTION FROM TERMINATING DISPROPORTIONATELY EXCESSIVE VOTING RIGHTS? [SEC. TION 89(4)]

1. If your company is a public company, or a private company which is a subsidiary of a public company you have to obtain an approval of the Central Government exempting you from the provisions of Section 89(1).

2. Make an application to the Central Government for obtaining an order exempting your company from terminating disproportionately excessive voting rights. [Section 89(4)]

3. Make the application in the form of a representation giving the detailed reasons asking for such an exemption.

4. Address the application to Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Shastri Bhavan, 5th floor, 'A" Wing, Dr. Rajendra Prasad Road, New Delhi‑110 001 and attach the following documents along with it:

(i) A certified true copy of the statement showing disproportionately voting rights of shareholders;

(ii) Certified true copy of the Board resolution approving the continuance of disproportionately excessive voting rights in favour of certain shareholders subject to the order of the Central Government;

(iii) Certified true copies of latest audited balance‑sheet and profit and loss account;

(iv) A certified true copy of the Memorandum and Articles of Association of your Company;

(v) treasury challan or demand draft evidencing the payment of the receipted requisite application fee, as prescribed under the Companies (Fees on Applications) Rules, 1999.

5. If the application fee is paid by way of treasury challan, then pay the fee in cash through a challan prepared in triplicate and paid into any of the specified branches of the Punjab National Bank, for credit.

6. The description of the Head of account of the treasury challan should be as prescribed under Rule 22(2) of the Companies (Central Government's) General Rules and Forms, 1956 and as amended vide GSR 251(E), dated 21‑6‑1996 (w.e.f. 21‑6‑1996). For account head and code please see Rule 22(2) in Appendix 1.

7. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the application.

8. If the application fee is paid by way of demand draft, then draw the demand draft in favour of "Pay and Accounts Officer, Department of Company Affairs, New Delhi", and payable at any bank located at New Delhi, and the said demand draft should be attached to the application.

9. Send a copy of the above application along with a copy each of all, the enclosures to it to the concerned Registrar of Companies. [Rule 20A]

10. Note that if your company's paid‑up share capital is less than Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, your company is required to obtain a Compliance Certificate from a secretary in whole‑time practice to be filed with the Registrar of Companies mentioning therein inter alia that the company has obtained all necessary approval of the Central Government as may be prescribed under the various provisions of the Act as per paragraph 17 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1) proviso]

9. APPEAL AGAINST ORDER OF COMPANY LAW BOARD

Topic 253

DO YOU WISH TO APPEAL FROM ANY ORDER OR DECISION OF THE COMPANY LAW BOARD?

1. Note that appeal lies to the concerned High Court of the State or Union Territory in which the registered office of concerned company is situated. [Section 10F]

2. Note again that any other High Court can also entertain an appeal from an "aggrieved person" if he can show that by reason of the order or decision of the Company Law Board as communicated to him or as is required to be complied with by him, at least a part of the cause of action can be said to have arisen within the jurisdiction of such other High Court.

3. Remember that appeal lies not only from an order but also from any decision having civil or other consequences.

4. Thus, please keep in mind that not only an appeal would lie from an order passed by the Company Law Board under sections 17, 18, 19, 43, 49, 58A, 79, 80A, 111, 113, 118, 141, 144, 163, 167, 186, 188, 196, 219, 225, 235, 237, 250, 304, 307, 397, 398, 408 and 409, 614 of the Act, but an appeal would also lie from a decision arrived at by the Company Law Board pursuant to the provisions of sections 237, 248, 388D, Sub‑section (3A) of section 396, sections 404, 405, 407 and 621 A of the Act.

5. Do not forget to file the appeal within sixty days from the date of communication of the decision or order of the Company Law Board, lest the appeal gets barred by limitation. [Section IOF]

6. If you have failed to file the appeal within sixty days, make an application, along with the appeal, to the High Court giving justifiable reasons for the delay in filing the appeal in time and praying for the appeal to be allowed to be filed. [Section 10F Proviso]

7. Remember that even the High Court cannot condone the delay if the delay is beyond one hundred and twenty days from the date of communication of the decision or order of the Company Law Board.

8. After the expiry of one hundred and twenty days from the date of communication of the order of the Company Law Board a writ under Article 226 can be filed with the concerned High Court.

9. Please note that the Supreme Court has opined in Stridewell Leather (P) Ltd. v. Bhankerpur Simbhaoli Beverages (P) Ltd., (1994) 79 Com Cases 139 (SC) that High Court in section 10F means the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate and not the High Court having jurisdiction in relation to the place where the concerned Bench of the Company Law Board sits.

10. Further note that unless the Supreme Court frames rules in this behalf, pursuant to section 643 of the Act, Letters Patent and the corresponding High Court Acts, Rules and Orders will apply as regards the procedure to be followed in preferring appeal to the High Court.

11. Keep in mind that under section 10F a court cannot ordinarily go into a pure question of fact as found by the Company Law Board, but if a finding of it is erroneous or perverse and is shown to have an error of law in arriving at that finding or if it is shown that it was based on no evidence at all or was arbitrary, unreasonable or perverse, it can do so? [Rajendra Kumar Malhotra v. Harbanslal Malhotra & Sons Ltd., (1999) 34 CLA 360 (Cal)]

10. SERVICE OF DOCUMENTS

Topic 254

DO YOU WISH TO SERVE DOCUMENTS ON A COMPANY?

1. Decide whether you want to serve a document on the company or an officer of the company.

2. There are following three options open to you to serve documents on a company or any officer of that company:

(a) by sending the document(s) at the registered office of the company by post under certificate of posting;

(b) by sending the document(s) at the registered office of the company by registered post;

3. Ensure that original share certificates, allotment letters, share transfer forms are sent by registered post to the company.

4. Keep in mind that where the securities are held in a depository the records of the beneficial ownership may be served by such depository on the company by means of electronic mode or by delivery of floppies or discs. [Section 51 proViso]

Topic 255

DO YOU WISH TO SERVE DOCUMENTS ON ANY REGISTRAR OF COMPANIES?

1. There are following four options for serving a document(s) on the Registrar of Companies:

(a) by sending the document(s) to him at his office by post under certiffcate of posting;

(b) by sending the document(s) to him at his office by registered post;

(d) by leaving the document(s) for him at his office. [Section 52]

2. Options (c) and (d) above are usually followed by delivering or leaving the document(s) at the counter or receipt section of the office of the Registrar of Companies.

3. Official receipt will be given by the office of the Registrar of Companies if document(s) are served by mode given in (c) and (d) of 1 above.

4. If you want expeditious registration of document(s) please ensure that they are accompanied by a certificate of a chartered accountant/cost accountant/company secretary in practice, duly certifying document(s) as correct. [Press note, dated 12‑3‑1991]

Topic 256

DO YOU WISH TO SERVE DOCUMENTS ON MEMBERS OF YOUR COMPANY?

1. Decide whether the document(s) will be served on the member personally or by sending it by post to him to his registered address or if the member has no registered address in India to the address,.if any, within India supplied by the member to the company. [Section 53(1)]

2. Check up the Register of Members of your company for finding the registered address of the member section 53(1) read with Rule 7 of the Companies [Issue of Share Certificate Rules, 1960]

3. If you decide to send the document(s) by post, then send it by ordinary post if document(s) is other than original share certificates or allotment letters or dividend warrants.

4. Send the document(s) under a certificate of posting or by registered post with or without acknowledgement due, where the member has intimated to your company in advance that the document(s) to the member should be so sent and has deposited with your company a sum sufficient to defray the expenses of doing so [Section 52(2)(a)]

5. Keep in mind that service of document(s) on members as aforesaid will take effect at the expiration of 48 hours after the letter containing the same is posted in case of a notice of any general meeting [Section 53(2)(b)(i)]

6. Keep also in mind that service of document(s) on members will take effect at the time at which the letter would be delivered in the ordinary course of post in case of any document other than the notice of general meeting [Section 53(2)(b)(ii)]

7. If your company does not have registered addresses of some members and who have neither supplied to your company any addresses within India then advertise the document in a newspaper circulating in the neighbourhood of the registered office of your company [Section 53(3)]

8. Keep in mind that aforesaid service of document on members will be deemed to be duly served on the day on which the newspaper advertisement appears [Section 53(3)]

9. In case of joint‑holders of shares, ensure that service of document(s) is made on the joint‑holder named first in the Register of Members of your company [Section 53(4)]

10. In case of death or insolvency of a member serve the document(s) by sending the document(s) by post in prepaid letter addressed to persons by name, entitled to the member's share or by the title of the representatives of the deceased or assignees of the insolvent or by any like description [Section 53(5)]

11. Serve the document(s) in the aforesaid manner at theaddress, if any, supplied by the persons claiming to be so entitled.

12. In case no address has been supplied to the company by the persons claiming to be entitled to the share of the deceased or insolvent member, serve the document(s) in any manner in which it might have been served if the death or insolvency had not occurred. [Section 53(5)]