 to the companies (second amendment) bill, 1964(to be/as introduced in lok sabha) 1 page 6, line 20~-atter~ "debentures of" insert n " , 2 page 13, line 30, - for "subtituted" ~ "substituted" 3 page 15, line 6,-!2!: "28" ~ "281" 4 page 20, line 23,-~ " he" 5 page 21, line 26,-(1 ) after ii with" 1nsert " " ,  i , (11) after "by" insert " n , 6 page 29, line 17,-for "include" read "induce" --7 'page 41, 11ne 3 fron botton,-19! "powers contenplated 1n the aforesaid clauses are of a nort!lal", substitute -"possible to provide for then in the act itself the rule-nak1ng" 8 page 48, line 1,-!2! "226" ~ "228" 9 correct line nunbers on pages 2, 4 and 22  a 1 sep ,_ bid no " of 11m the companies (second amendment) bill, 1964 a billfurther to amend the companiea act, 1936 be it enacted by parliament in the fifteenth year of the republic of india as follows:-1 (1) this act may be called the companiea (second amend- short title ment) act, 1964 and commence-s (2) it shall come into force on such date as the central govem- ment ment may, by notification in the oftlcial gazette, appoint and cil1!erent dates may be appointed for different provisions of this act 1  of 19&6 2 in section 1 of the companies act, 1956 (hereinafter referred amendto as the principal act), in sub-section (3), the followina further ment of 10 proviso shall be inserted at the end, namely: _ section 1 "provided further that it 'shall apply to the state of nagsland subject to such modifieations, if any, as the central government may, by notification in the official gazette, specify" 3 in section 2 of the principal act,-amend-"vouch- ment oil section 2 (i) in clause (8), after the word "deeds,", the word ers", shall be inserted; (u) in clause (30), after the words "manager or secretary", the words "or any person in accordance with whose directions or instructions the board of directors or anyone or more of the directors is or are accustomed to act," shall be inserted 20 1054(b) ls-l 4 in section 10e of the principal act, after sub-section following sub-sectton shall be inserted, namely:-(4), the amend mentor section 10k ,j!'~ " (4a) the board, with t he previous approval of the centra~ government, may, by order in writing, authorize the chairman or any of its other members or its principal officer (whether 5 known as secretary or by any other name) to exercise and discharge, suhject to such conditions and limitations, if any, as mey be specified in the order, such of its powers and functions as it may think fit; and every order made or act done in the exercise 10 of such powers or discharge of such functions shall be deemed to be the order or act, as the case may be, of the board" 5 in section 13 of the principal act, in sub-eectlon (1) ,-(i) in clause (b), the word "and" shall be omitted; amend mentol section 13 (ii) for clause (c), the following clauses shall be substituted, 15 namely:-"(e) the main objects of the company to be pursued by the company on its incorporation and objects incidental or anci11ary to the attainment of the main objects; (d) the other objects of the company not included"' in clause (e); and 20 (e) in the case of companies (other than trading corporations), with objects not confined to one state, the states to whose territories the objects extend" 8 to section 21 of the principal act the following proviso shall be added, namely:-25 amend mentol section 2l "provided that no such approval shall be required where the only change in the name of a company is the addition thereto or, as the case may be, the deletion therefrom, of the word "private", consequent on the conversion in accordance with the provisions of this act of a public company into a private com- 30 pany or a private company into a public company!' 7 in section 43a of the principal act, in sub-section (6), after clause (a), the fdllowing clause shall be inserted, namely:-amend mentof section faa "(aa) to a private company in which shares are held by one or more bodies corporate incorporated outside india, which 3s or each of which, if incorporated in india, would be a private company vrithin the meaning of this act, if the central government, on an application made to it in this behalf by that private compmw by crder so directs; or", amendmesatof liection'lb (4) to clause (a) of sub-section (1), the following proviso shall be added, namely:-i "provided that the company shall not show in such ~ turn any shares as having been allotted for cash if cash has '5 not actually been received in respect of auch allotment and only book adjustment has been made without cash having  ,:a " ~, (b) in sub-section (3), for 'the words "is inadequate, he may extend that period as he thinks fit", the following words shall be 10 substituted, namely:-"is or was inadequate, he may, on application made in that behalf by the company, whether belon or after the expiry of the said period, extend that period as he thinb tit"; (c) in sub-section (4), for the proviso, the followin, proviao is shall be substituted, namely:-"provided that in case of contravention of the proviso to clause (4) of sub-section (1), every such ofticer, and every promoter of the company who is guilty of the contravention shall be punishable with fine which may extend to tive 20 thousand rupees" (4) in sub-section (1)-amend_ mentor ,ection 78 (i) in clause (iii), the word "and" occurring at the end shall be omitted; 2s - (ii) in clause (iv), the word "and" shall be inserted at the end; and i (iii) after clause (iv), the following c'lauae shall be inserted, namely:- (v) a copy of the contract for the payment of the 30 commission is delivered to the registrar at the time qf delivery of the prospectus or the statement in lieu of prospectus for registration"j  s(b) after sub-sectioll'l (4), the following sub-section shall be inserted, namely:--, "(4a) for the removal of doubts it is hereby declared that no commission shall be paid under clause (a) of subsection (1) to any person on shares or debentures which are not offered to the public for subscription  11 in section 108 of the principal act, after sub-section the following sub-section shall be inserted, namely:-(1), amend_ mentol section 108 "(ia) e"et'f idstftlmant of transter-jo (a) shaq be in the pftlllcribed fonn obtinabi, from the prescribed authority who ihail stamp or otherwise endonae thereon the date on whicla it is issued, aad (i» shall be delivered to the compuy r-(i) in the case of shares dealt in or q~o~ on - ~ised stock exchange within six mgllths from such date, (ii) in any other case, within two modths from that date" 14 in section 111 of the principal act, except in sub-section amend_ 20 (4a), for the words "the central government" or the words "that ment ot government", wherever they occur, the words "the tribunal" shan section be substituted' 111 15 in seetien 149 of the principal act,-amend_ ment of sub-section shall section 149 (a) after sub-section (2), the following be inserted, namely:- (2a) without prejudice to the provisions of subsection (1) and sub-section (2), a company (whether it is a public company or a private company) having 8 share capital, whether or not it has issued a prospectus inviting the public to subscribe for its shares shall not at any time commence any business in relation to the objects specifted in c~use (c) or clause (d) of sub-section (1) of section 13, unless-3' (a) the company has approved of the commencement of any such business by a special resolution passed in that behalf by it in genera] meeting; and (i» there has been fued with the :registrar a duly verifted declaration by one of'the c:urectoll's or the secretary, in the prescribed form, that clause (a) has been complied with; and if the company commences any such business ill ('ontravention of this bub-section, every person who is responsible for the contravention shall, without prejudice to any s other liability, be punishable with fine which may extend to five hundred rupees for every day during which the contravention continues" (b) in sub-section (7), for the word "nothing", the words, bracket& figure and letter "save as otherwise provided in sub- 10 section (2a), nothing" shall be substituted amend_ mentof section 153b 1 • in section is3b of the principal act, in bub-section (4) ,-(i) in clause (b) for the words "where the trust money invested in shares in, or debentures of, a company", the words "where the value of the shares in, or debentures of, a company, is held in trust" shall be substituted; (ii) the following explanation shall be inserted at the end, namely:-(explanation-the expression "the value of the shares in or debentures of a company" in clause (b) means,-20 (i) in the case of shares or debentures acquired by way of allotment or trans1er for consideration, the cost of acquisition thereof, and (ii) in any other case, the paid-up value of the shares' 2 s 17 in section 159 of the principal act, in sub-section (1) ,-amend_ mentof section 158 (a) in clause <f), the word "and" occurring at the end shall be omitted~ (b) in clause «(1), the word "and" shall be inserted at the end  ' :  30 , i (c) after clause (g), the following clause shall be inserted, jwnely:-i i "(h) every person referred to in clause (b) of subaecti()n (11) of section 307" 18 in section 163 of the principal act in sub-section (1) in the 3' proviso, in clause (i), the word "and" shall be inserted at the end and clause (ii) shell be omitted amendmento! section 188 1 • in section 174 of the principal act, in sub-section (1), for amendthe words "public company, and two members personally present ment ot in the case of a private company,", the words, brackets, figures and section letter "public company (qther than a public company 'which has 174 5 become such by virtue of section 43a), and two members personally present in the case of any other company," shalt be substituted zoo in section 203 of the principal act, in bub-section (6), the amendwords, brackets and figures, 'and for the purposes of the said sub- mentt of   sec ion clause (11), the expression "oftlcer" shall include any per8()n jd 203 10 accordance with whose directions or instructions the board of directars of the company has been accustomed to act' shall be omitted" ", i 11 in section 209 of toe principal act-(a) in sub-section (1)-amend_ mentor section 209 15 (i) in clause (b), the word "and" occurring at the end shall be omitted; i (ii) in clause (e), toe word "and" shall be inserted at the end~ (iii) after clause (e), the following clause shall 20 be inserted, namely:-" (d) in the case of a company engaged in production, processing manufacturing or mining activities, such particulars relating to utilisation of material or labour as may be prescribed, if such company ic; required by the central government to include ruch particulars in the books of account;"; (b) for sub-section (4) toe following sub-section shrtl he substituted, namely:-"(4) (a) the books of account and other book8 and 30 papers shall be open to inspection by any director during business hours (b) the books of account and other books and papt>tii shall be open to inspection during business hours-(i) by the registrar, (ii) by any oftleer of government authorised by the central government in this behalf: provided that no such inspection shall be made by the registrar or such oftlcer unless he is of opinion that  -cient ·cause exists for such inspection: 5 provided further that such inspection maybe made without giving any previous notice to the company or any oftlcer thereof (c) the registrar or such ofticer may during the course of jnspection-ie (i) make or cause to be made copies of the books of account and other books and papers, (ii) place or cause to be placed any marks of identification thereon in token of the inspection having been made 15 (d) in order to enable the registrar or such officer to make an inspection of the books of account and other books and papers of the company, it shall be the duty of the company-(i) to produce to the registrar or such officer such 20 books of account and other books and papers of the company as the registrar or such officer may require, (ii) otherwise to give to the registrar or such officer all assistance in connection with the inspection which the company is reasonably able to give"; 2s (c) in sub-section (6) ,-(i) in clause (a), the following shall be inserted at the end, namely:-"and lall oftlcers and other employees and agents [as defined in sub-section (6) of section 240] of such man- 30 aging agent or secretaries and treasurers"; (ti) in clause (c), the word "and" occurring at the end shall be omitted; (iii) in clause (d), the word "and" shall be inserted at the end; 3' (w) after clause (d), the following clause shall be inserted, namely:-"(e) whether or not a company has a managing agent or secretaries and treasurers, every ofrcer and other employee and agent (defined as aforesaid) of the company" 2z in section 227 of the principal act,-amendmentot shall section rj/l (4) after sub-section (1), the following sub-section be inserted, namely:-10 "(la) without prejudice to the provisions of sub-section (1), the auditor shall mquire-(4) whether loans and advances made by the company have been properly secured and whether the terms on which they have been made are not prejudicial to the interests of the company or its members; (b) whether transactions of the company which are represented merely by book entries conform to normal business practices accepted by established principles of accountancy; 20 (c) where the company is not an investment company within the meaning of section 372, whether so much of the assets of the company as consist of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company; (d) whether loans and advances made to individuals and private concerns have been shown as deposits; (e) whether personal expenses have been charged to revenue account; 30 35 <f) where it is stated in the books and papers of the company that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so !received, whether the position as stated in the a~­count books and the balance-sheet is correct, regular and not misleading"; (b) after sub-section (4), the following sub-section shall be inserted, namely:-"(4a) the central government may, by general or 40 special order, direct that, in the case of such class or description of companies as may be specified in the order, the 10m (b) ls-2 auditor's report shall !llso include a statement on such matters as may be specified therein" 23 in section 228 of the principal act, in sub-section (4), for the words "may, by ,rules made in this behalf, exempt", the words "may make rules providing for the exemption of", shall be substituted s amendmentol section 228 laertiod of new section 233b audit 01 cost acco- ' untsin certain cases 24 after section 233a of ,the principal act under the sub-head-, ing "audit", the following section shall be inserted, namely:-"233b (1) where in the opinion of the central government it is necessary so to do for the purpose of obtaining a true and fair view of the state of affairs of any company engaged in :10 production, processing, manufacturing or mining activities, the centnl government may, by general or special order, direct that an audit of cost accounts of the compaby thall be conducted in such manner as may be specifted in the order by an auditor who shall be either a cost aecountant within the meaning of is the cost and works accountants act, 1959, or such other per-23 of ln8 80il possessing the presl!ribed qualifications (2) an auditor under this section shall be appointed by the company in general meeting and the pr<wistona of section 224 - shall apply, as far as may be, in relation to irlch auditor as they ~ apply in relation to an auditor appointed under that section (3) an audit conducted by an auditor under this section shall be in addition to an audit conducted by an auditor appointed under section 224 (4) the provisions of section 227 and sections 229 to 233 2s shall, sa far as may be, apply in relation to an audit under this section (5) the auditor shall make his report in such form as may be prescribed and the provisions of sections 216 and 219 shall apply in relation to such report as they apply in relation to a!o report made by an, auditor appointed under section 224 (6) a copy of the auditor's report' under this section shall be fued with the registrar within thirty days from the date of the signing of the "port" 25 in section 234a of the principal a:et,-3s amendmentol section 234a (a) in sub-section (1), after the words "make 'an application", the words "to the tribunal or" shall be inserted; (b) in sub-section (2), for the word "magistrate", the words "tribunal or magistrate," 88 the oase may be, shall b~ substituted; 40 (c) in sub-seeiion (3)-(i) for the word "magistrate", the words "tribunal or magiatrate as the case maybe," shall be substituted; (ii) in the proviso, after the words "extracts from them", the words "or place identification marks on them or any part thereof" shall be in~rted; (d) in sub-section (4), after the word "search" and the word   "searches" the words "or seizure" and "the words "or seizures" , shall respectively be inserted ib-28 in section 240 of the principal act,-amendmentof (8) in clause «(i) of sub-section (1), for the words "to section produce to an inspector", the words "to preserve and to produce 240 to an inspector or any person authorised by him in this ·behalf," shall be substituted; !  is (b) after sub-section (1), the following sub-sections shal~ be inserted, namely;-20 r "(1a) the inspectar may, with the previous approval of the central govej,"tlment, require any body corporate, firm or individual [other than those referred to in subsection (1)] to furnish such information to, or produce such books and papers before him or any person authorised by hun ijl this behalf as he may consider necessary if the fumi-$ing of such information or the production of such ,books and pa~rs is relevant or necessary for the purposes of his inve&tiiation  (lb) the inapector may keep in his custody any books and papers produced under sub-section (1) or (1a) for such period not later than the conclusion of the investigation as he considers necessary and thereaf\er shall return the same to the company ,body corporate, finn or individual by whom or on whose ~ the })qq_ and papers bee· pl'oduced: provided that if certified copies of the books and papers produced under sub-section (14) are furnished to the inspector, he shall return those books and papers to the body , 3s _  ,-cor~ol'8te, ftrm· or individual coneerned"; " (c) for sub-sections (2), (3), (3a) and (4), the following sub-sections shall be substituted, namely:-"(2) an inspector may examine on oath-(0) any of the persons referred to in sub-section (1); ud (b) with the previous approval of the central government, any other person, in relation to the affairs of the company, other body corporate, managing agent, secretaries and treasurers or usaciate, as the case inay be; and may administer an oath ~ ilccordingly lind for that purpose may require any of those persons to appear before him personally (3) if any person fails without reasojiable ea~ or refuses-(a) to produce to an inspector or any person 10 authorised by him in this behalf any book or paper which it ia his duty under sub-section (1) 01' subsection (1a) to produce; or (b) to furnish any information which it is his duty under sub-section (1a) to furnish; or i, (e) to appear before the inspector personally when required to do so under sub-section (2) or to aliswer any question which is put to him by the inspector in pursuance of that sub-section; or (d) to sign the notes of anf examination referred 20 to in sub-section (5), ~  , h~ shall be punishable with imprisoilin~nt fat a term which may extend to six months, or with fine which may extend to two thousand rupees, lor with both, and also with a further fine whkh may extend to two hundred rupees for every 2, clay after the first during which the failure or refusal continues"i (d) in sub-section (5), the word, brackets and ftgure "or (4)" shall be omitted amedd· mentof eet1on 240a (ii) in sub-section (1), after the words "make an application", the worda "to the tribunal or" shall ,be inserted; (b) m sub-section (2), for the word "magistrate" the wordt "tribunal or magistrate, as the case may bet shall be lubu· tuted; !s (c) in 8u:b-section (3)-(i) for the word "magistrate", the words "tribunal or magistrate, as the case may be," shall be substituted; (ii) the following proviso shall be inserted at the end, namely:-"provided that the inspector may, before returning such books and papers as aforesaid, place identification j marks on them or any part thereof"; (d) in sub-section (4), after the word "search" an~ the word "searches", the words "or seizure" and the words "or seizure," shall respectively be inserted 28 in section 241 of the principal act, in ~lause (a) of sub- amend" it) sectien (2), after the word "any report", the brackets and words mentof "(other than an interim report)" shall be inserted section 241 29 after section 250 of the principal act, the following section insertion &hall be inserted, namely: --:0 of new section' 250a "250a an investigation may be initiated under section 235, voluntary 237, 239, 247, 248 or 249 notwithstanding that---windin, 20 (a) an application has been made for en order under ~:m~any section 397 or section 398; or etc, not to stop inves-(b) the company has pa$se~ a special resolution for tigation voluntary winding up, proceedinp and no investigation so initiated shall ·be stopped or suspended by reason only of the fact that an application referred to in clause (a) has been made or a special resolution referred to in clause (b) has been passed" 30 in section 252 of the principal act,-aamend-(i) in sub-section (1), for the words "public company", the =~~f words brackets, figures and letter '1>ublic company (other than 252 a public company which has become such by virtue of section 43a)" shall be substiiuted; (it) in sub-~ection (2), for the word "private", the word "other" shall be subtituted; ~o 35 31 to section 259 of the principal act, the following proviso shall tamend ~ added, namely:-mentof aection "provided that where such permissible maximum is twelve 259 or less than twelve, no approval of the central government shall be required if the increase in the number of its directors does not make the total number of its directors more than twelve"  aa m section 2ck of the priru:i~ act-amendmentof section 264 (i) in sub-section (1), for the words "other than a per~ln", the words "other than a director retiring by rotation or otherwile or a person" shall be substttuted: (ii) for sub-section (2), the followins sub-section ~all be ~ substitut~, namely:-"(2) a person other thad-(a) a direetor reo-appointed after retirement by rotation or immediately on the expiry of hit term of dee, or 10 (b) an additional or alteraate d~t or a pelion filling a casual vacancy in the o~ qf a diredor wlder section 262, appointed as a director or re-appointed as an additional or alteroote director, immediately on the expiry of his terms of ofbc&, or is (c) a person named as a director of the company under its articles as first registered shall not act as a director of the company unless he has withijl thirty days of hi appointm8jlt signed and filed with the registrar his consent in writinll to aft al aueh dttector" 20 amend-is in section 2fj6 of the principal act, sub-seetion (4) shall be mentof omitted section 266 :w section 271 of the principal act shall be omitted omission ofseetion 271 35 in,ection 273 of the principal act for the word and ~ "to 272~', the word and figures "and 272" shall ,be subbtit~d  amendmentof section 273 amendmentof aection 280 - lu ~im ~ of the prineiqal ad, fot' ~liiction·1 (1) and (2), the following sub-sections shall be 8ubttitu~, namely::  · "(1) save as otherwise provided in this section, a person ahul· n&fj be capable of beina appoin\ed, or· sha\l bot act ~ a director of a company if he has attained the 8m ql  saveniy-ftve '30 ye~ i (2) a direcwr of a coglp8dy sjwl vaate hia ojftoe at the eodduaion ()f the 8dr\ial general meetin&colmillltnciq next alter , be atta~ the age of seveaty-flve yean: :·5 'provided that e director who has attained the age of seventyfive years before the commencement of the companies (second anieftdtdent) act, 1964 and is in office at such commencement shall vacate his office at the conclusion of the first annual general meeting held after such commencement" 37 section 28 of the principal act shall be omitted omission of section 281 38 in section 282 of the principal ad, for the words-"six1:y-ftve amendyears", the words "seventy-five years" shall be substituted ment of section 282 39 in section 285 of the principal act, for the words beginning amend 10 with "three calendar months" and ehding with "and the date of the ment of next meeting", the words "three months and at least four such section 285 meetings shall be held in every year" shall be substituted 40 after section 294 of the principal act, the following section insertion shall be inserted namely: _ of ~ew , section is "294a (1) a company shall not payor be liable to pay to 294a:  its sole selling agent any compensation for the loss of his office ~ohl~l­in the following cases: -p~ent (a) where the appointment of the sole selling agent of comceases to he valid by virtue of bub-section (2a)of section pen'sation  to sole 20 294; selling (b) where the sole selling agent resigns hisoftlce in agents view of the reconstruction of the company or of its amalga- for ios8 of mati on with any other body corporate or bodies corporate offt~i in and is appointed as the sole selling agent of the reconstructed :~e: n 25 company or of the body corporate resulting from the amalgamation; , (c) wlaere the sole selling agent resigns his alice, otherwise than on the reconstruction of tfte comp8by' or its amalgamation as aforesaid; 30 (d) where the  bole hlltng agent has been guilty of iraud 'fir bteach of' trust in relation to, or of !foss negligence in, the conduct of his duty as thes61e ~mng agent;  (e) where the sole selling agent has instigated, or has ·tak-e!l part directly or indirectly in bringing about, the ter-35 mination of the sole selling agency (2) tke c01ilped$qtion which may be paid by a company to its sole selling agent for loss of office shall not exceed the remuneration which he would have earned if he had been in ofjice for the unexpired residue of his ·term, or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a period of three years immediately preceding the date on which his office ceased or was tenninated, or where he held his office for a lesser peri~ than three years, during such period" 5 42 in section 307 of the principal act, for sub-section (11), the following sub-section shan be substituted, namely: -10 amend-41 in section 303 of the principal act, in sub-section (2), the ment of words "or in any of the particulars contained in the register" and the lection proviso shall be omitted i 303 - amendmentof section 30'1 " (11) the provisions of this section and section 308 shall apply to, and in relation to,-(a) every managing agent, secretaries and treasurers or manager of a company; and (b) every person (other than a director) where five per is cent or more of the equity share capital of a pubuc companyis held by him or in trust for him or of which he has any right to become the holder whether on payment or not, as they apply to, and in relation to, directors" 43 in section 309 of the principal act--20 amendmentof aection 809 (i) in sub-section (1), the following shall be added at tlie end, namely:-"and the remuneration payable to any such director determined as aforesaid shall be inclusive of the rem~eration payable to such director for services rendered by him in any 25 other capacity: -, provided that any remuneration for services rendered by any such director in any other capacity shall not be so inc1ildedif-(a) the services rendered are of a professional na- 30 ture, and (b) in the opinion of the centra! government, the director possesses the requisite qualifications for the practice of the profession and such practice is his principal occupation"; 35 (ii) for sub-section (4), the following sub-section shall be substituted, namely:-ii (4) a director who is neither in the whole-time employment of the company nor a managing director may be 5 paid remunerationeither (a) by way of a monthly payment with the approval of the central government; or 10 (b) by way of commission if the company by special resolution authorises such payment: provided that the remuneration paid to such director, or where there is more than one such director, to all of them together, shall not exceed-is (i) one per cent of the net profits of the company, if the company has a managing or whole-time director, a managing agent or secretaries and treasurers or a manager; (ii) three per cent of the net profits of the company, ~o in any other case: provided further that the company in general meeting may, with the approval of the central government, authorise the payment of such remuneration at a rate exceeding one per cent or, 8! the case may be three per cent of its net 25 profits" ' ~ 30 44 to section 310 of the principal act, the following proviso shall amendbe added, namely: _ ment of 8~on  "provided that the approval of the central government shall 310·  not be required where any such provision or any amendment thereof purports to increase, or has the effect of increasing, the amount of such remuneration only by way of a fee for each meeting of the board or a committee thereof attended by any such director and the amount of such fee after such increase does not exceed one hundred rupees" 35 amendment of 41 in section 314 of the ppinclpal act,-(a) in sub-section (1)-section (i) for the words "previous consent", the word "co~- 314 sent" shah be §~~'tttuted;  1054 (b) ls-3 (ii) for the proviso, the following proviso shall be substituted, namely:-"pro'lided that it shall be sufficient if the special resolution according the consent of the company is passed at the general meeting of the company held for the' 5 first time after the holding of such office or place of profit: provided further that where a relative of a director or a finn in which such relative is a partner, is appointed to an office or place of profit under the company or a 10 sj1bsidiafy th~reof without the knowledge of the director, the consent of the company may be obtained either in the ' genera1 meeting aforesaid or within three months from 'the date of the appointment, whichever is later"; (b) for sub-section (2), the following sub-section shall be 15 substituted, namely:- (2) u any office or place o! profit is held in contraventjon of the provisions of sub-section (1), the director, partner, relative, finn, private company, managing agent, secretaries and treasurers or the manager, concerned, shall be deemed to 20 have vaeated his or its office as such on and from the date next following the date of the general meeting of the complpy referred to in the first proviso or, as the case may be, the date of the expiry of the period of three months referred to in the second proviso to that sub-section, and shall also be 25 liable to refund to the company any remuneration received or the mopetary equivalent of any perquisite or advantage enjoyed by him or it for the period immediately preceding the date aforesaid in respect of such offtce or place of proftt", • in section 370 of the principal act,-(4) in sub-seclion (1)- ~ mentof aeetlon 370(i) the wol'ds "which is under the same management as the lending company" shall be owtted; (it) the follow ina pr9vi1o shall be added at the end, namely:-3s "providedtbat the awegat of the loaza 80 made to all bodies carporate shall not exceed without the prior approval of the central government-(a) tldrty fliei' eemt of the aggregate' of the subscribed capital of tlw lendlng eoln~anr 'and its free 40  reserves where adl): such other bgdies, eorpoliatje> are not under the same management is the lcdinr' eorn pany; s (b) twenty per cent of the aareptw of the subscribed capital of the lerding compan,- am itl , free resel'ves where all such other bodies coi'perate are under the sa~ management aa the lenclinf com· pany"; (b) in sub-section (lc), in clause (b), after the words: ''pf~ 10 vided by the lending company", the words "in relation to any such body corporate" shall be inserted; (c) in sub-section (1 d) , for the words "every such loan, guarantee or security", the words, brackets, figure and letter "ev,ery loan, guarantee or security referred to in sub-section is (le)" shall be substituted 47 in section 372 of the principal act, in' sub-section (13), after amend:' the word, brackets and figure "sub-section (2) ", the words, brackets :::;;;r and figure "and sub-section (5)" shall be inserted 3'12 48 in section 391 of the principal act, to sub-section (2) the amend· 26 following proviso shall be added, namely: _ ment of sectlon 391 "provided that no order sanctioning any compromise or arrangement shall be made by the court unless the' court is satisfied that the company or any other person by whom an application has been made under sub  seetion (1) has disclosed to the court, 2s by affidavit or otherwise, all material facts relating to the com· pany, such as the latest financial position, of' the oompany, the latest auditor's report on the accounts of the company, the pendency of any investigation proceedingb in relation to ithe company under sections 235 to 251, and the like", 30 49 in section 394 of the principal act, to sub-section (1), the amend· 3s following provisos shall be added, namely: _ ment of section -"provided that no compromise or arrang~ent' proposed for 3k the purposes of, or in connection with, a scheme- fbi-'the amalgamation of a company, which is being wound up, with any other company or companies, shall be sanetioned by the 'court unless the: court has received a report from the company law board or the registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest: provided further that ,10 order for the dissolution of any transferor company under clause (iv) shall be made by the court 5 unless the official liquidator has on scrutiny of the bqoks and papers of the company, made a report to the court that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest" 50 after section 394 of the principal act, the following section 10 shall be inserted, namely:-"394a the court shall give notice of every application made to it under section 391 or 394 to the central government, and shall take into consideration the representations, if any made to it by that government before passing any order under 15 any of these sections" lnsertion of new section 394a notice to be given to central government for applica tions under sections 391 and 394, amendment of , section 395 (a) in sub-section (3), for the words "the transferor company shall thereupon register the transferee company as the holder of those shares: ", the following shall be substituted, 20 namely:-"the transferor company shall-(a) thereupon register he the transferee company as the holder of those shares, and (b) within one month of the date of such reglstra- 25 tion, fnform the dissenting shareholders of the fact of such registration and of the receipt of the amount or other consideration representing the price payable to them by the transferee company: "; (b) after sub-section (4), the following sub-section shall 30 be inserted, namely:-"(4a) (a) the following provisions shall apply in relation to every offer of a scheme or contract involving the transfer of shares or any class of shares in the' transferor company to the transferee company, namely: -35 (i) every such offer or every circular containing such offer or every :recommendation to the members of the transferor company by its directors to accept such offer shall be accompanied by such information as may be prescribed; s (ii) every such offer shall contain a statement by or on behalf of the transferee company, disclosing the steps it has taken to ensure that necessary cash will be available; 10 (ui) every circular containing, or recommending acceptance of, such offer shall be presented to the registrar for registration and no such circular shall be issued until it is so registered; (,) the registrax may refuse to register any such circular which does not contain the information required to be given under su~lause (i) or which sets out such information in a manner likely to give a false impression; and is (v) an appeal shall lie to the court against an order of the registrar refusing to register any such circular (b) whoever issues a circular referred to in sub-clause (iii) of clause (a), which has not been registered, shall be punishable with fine which may extend to five hundred " rupees   52 in the principal act, in chapter v of part vi after section 396, the following section shall be inserted, namely:-insertion of new section 396a "396a the books and papers of a company which has been preservaamalgamated with cxl' whose shares have been acquired by tion of d another company under this chapter shall not ,be disposed of =:;sa~f witholut the prior permission of the central government and amalgabefore granting such permission, that government may appoint mated a person to examine -the books and papers or any of them for company the puxpose of ascertaining whether they contain any evidence of the commission of an offence in connection with the promotion or formation, or the management of the affairs, of the first mentioned company or its amalgamation or the acquisition of its shares  53 in the principal act, in chapter vii of part vi,-amend_ mentol (a) in the heading, for the words "advisory commission'~, chapter the words "advisory commitree" shall be substituted; vii of part vi (b) for sections 410, 411, 412; 41a, 414 and 415, the following section shall be substituted, namely: ~ appointmentof advisory committee "410 for the purpose of advising the central government and the company j,aw board on such matters arising out of the administration of this act as mljy be referred to s it by that government or board, the central government may constitute an advisory committee consisting of not mare thaij five pel1sons wi1lh suitable qualiftuations  54 in section 497 of the principal act, in sub-section (5), for the wol'ds "provided that", the following shah: he subl«tuted, namely:- 10 amendmentof section 497 "proyidetd that the company shall not be deemed to be dissolved until the official liquidator has, od scrutiinv of the books and papers of the company, made a report to the court that the affairs of the company have not b~en conducted in a manner prejudicial to the interests of its members or to public interest: is provided further that" amend- in section 509 of tlul principal act, in sub-section (6), for the r ment of wpl'qj "provided that", the following shall be subatituted, munely:-section 509 "provided that the company shall not be deemed to be dissolved, until the official liquidator has, on jcrutiny of the books 20 and papers oithe company, made a report to the court that the affairs of the company have not been conducted in a manner prejudici~ to the interests of its members or to public interest: provided further that" 56 after section f)11, of the principal act, the foolowing section 2s shall· be inserted, namely:-" "511a: the prpvisions of sectipn 454 shall, so far as may be, apply to every volulltary winding up as they apply to the winding qp by the cuurt except that references to:-(a) the court shall be omitted; insertion of new secuoo 51la application of section 454 to volwltarywindingup (b) the official liquidator or the pr6visional' liquidatpr, shalll~e construed as references to thejiquictator; and (c) the "relevant date'" shall be construed i, references to the date of commencement of the winding up" 57 iii ,sectiod 5ga of the principal act, in clause (c), the words amend-"or the particulars cootained in the list of the directors and secre- ment of tary" shall be omitted section 593 58 for section 635a of the principal act, the following sections substi'tu-, wll ~ substituted, namely: -tionoi( new sections for ~ection 83m 10 "63ia no suit, prosecution or other legal proceeding shall protection lie against the government or any officer of government or any ~f ac~s other person in respect of anything which is in good faith done g: ~~ith or intended to be done in pursuance of this act or any rules or orders made thereunder, or in respect of the publication by or under the authority of the government or such officer of any report, paper or proceedings 635aa notwithstanding anything contained in any other law non-disfor the time being in force, the registrar, any officer of govern-~losureof h h 11 d d·' 1 mformament or any ot er person s all not be compe e to isc ose to t'  ion in any court, tribunal or other authority whence he got any infor- certain mation whichcases 20 (a) has led the central government to direct a special audit under section 233a or to order an investigation under section 23~, 237, 247, 248 or 249; or (b) is or has been material or :relevant in connection with such special audit or investigation" 59 after section 637a of the principal act, under the sub-head- insertion ing "grant of approval, ?tc, subject to conditions and levy of fees of 1'l~w a, on applications", the following section shall be inserted, namely:- :~;n "637b notwithstanding anything contained in this act,-cond~ tion of delays 11\ certain callell (a) where any application required to be ntade to the central government under any provision of this act in respect of any matter is not made within the time specified therein, that government may, for reasons to be recorded in writing, condone the delay; (b) where any document required to be filed with the registrar under any provision of this act is not filed within the time specified therein the central government may fo1' reasons to be recorded in writing, condone the delay" 60 after section 640a of the principal act, under the sub-heading "schedules, forms and ruler', the following section shall be inserted namely:-insertion of new section mob "640b (1) every application made to the central government under section 259, 268, 269, 310, 311, 326, 328, 329, 332, 343,'s 345, 346, 352, 408, or 409 shall be in such form as may be prescribed forms of, ' and procedure in relation to, certain applica- , tions (2) (a) before any application is made by a company to the central government under any of the sections aforesaid, there shall be issued by or on behalf of the company a general 10 notice to the members thereof, indicating the nature of the application proposed to be made (b) such notice shall be published at least once in a newspaper in the principal language of the district in which the registered office of the company is situate and circulating in is that district, and at least once in english in an engush newspaper circulating in that district (c) copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application 30 (d) nothing in clause (a), (b) or (c) shall apply to a private company which is not the managing agent of a public -company" 61 in schedule ia of the principal act, sedais 23 to 49 (betll inclusive) shall be omitted ~, \mendmentof schedule la minor amend jnents 62 the amendments directed in the schedule, being amendments relating to matters of minor detail or of a clariftcatory or consequential nature, shall be made fn the sections of the principal act specified therein  (see section 62) minor amendments in the companiu act, 1956, section 2-ln clause (49a), for "tribunal constituted", substitute "companies tribural constituted" section loa-in sub-section (1), for "constitute a tribunal", substitute "constitute a tribunal to be known as the companies tribunal" 10 section 44-in clause (b) of sub-section (1), for "fourteen", substitute "thirty" section 75-for "one month", in all places, substitute "thirty days" section 95-1n sub-section (1), for "one month", substitute is "thirty days" secti01t 97-ln sub-section (1), for "fifteen", substitute "thirty" s('cticm 107-1n sub-section (5), for "fifteen", substitute "thirty" s~ctioll 125-for "twenty-one", in all places, substitute "thirty" section 127-1n sub-section (1), for "twenty-one", in all places 20 substitute "thirty" section 128-for "twenty-one", substitute "thirty" section 137-ln sub-section (1), for "fifteen", substitute "thirty" section 138-ln sub-section (1), for "twenty-one", substitute "thirty"  35 section 146-for "twenty-eighth" and "twenty-eight", substitute respectively "thirtieth" and "thirty" section 156-for "court" and "fourteen", in all places, substitute respectively "tribunal" and "thirty" section 157-ln sub-section (2), for "one month", in both places, 30 substitute "thirty days" section 159-1n sub-section (1), for "forty-two", substitute "sixty"  1054 (b) li-4section 160-1n sub-section (1), for "forty-two", substitute "sixty" section 192-1n sub-section (1), for "fifteen", substitute "thirty" section 193-for "fourteen", in all places, substitute "thirty" section 220-1n sub-section (1), for "at the same time as the 5 copy of the annual return :referred to in section 161", substitute "within thirty d~ys from the datt~ on which the balance-sheet and the profit and loss account were so laid" section 303-1n sub-section (2), for "twenty-eight", in all places substitute "thirty" 10 section 394-ln sub-section (3), for "fourteen", substitute "thirty" section 404-1n sub-section (3), for "fifteen", substitute "thirty" section 445-in sub-section (1) and in sub-section (la), for "one-month", substitute "thirty days" 15 section 481-1n sub-section (2), for "fourteen", substitute "thirty"  section 509-1n sub-section (6), for "twenty-one", substitute "thirty"  section 516-in sub-section (1) , for "twenty-one", substitute 20 "thirty"  section 559-in suh-section (2), for "twenty-one" , substitute "thirty" section 592-1n sub-section (1), for "one month", substitule "thirty days" 2s  statement of objects and reasonsin pursuance of its terms of reference, the commission of inquiry on the administration of dalmia-jain companies made certain recommendations for the amendment of the companies act with a view to prevent in future malpractices of the nature observed by it, and also to ensure due and proper administration of the funds and assets of companies in the interest of the investing public later, at the instance of government, a committee consisting of shri c k daphtary and 8hri a v visvanatha sastri examined the recommendatigils ,of the commission of inquiry and made some suggestions o'f 1t8 own for amending the ·--said act the bill, inter !alia, seeks to implement the recommendations of the commission of inquiry and the daphtary-sastri committee 2 opportunity is also being taken (i) to strengthen the provisions relating to investigation into the affairs of companies and to provide for more effective audit in dealing with cases of dishonesty and fraud fu the corporate sector, and (ti) to simplify some of the procedural requirements which are at present burdensome to the companies without being of corresponding advantage to the govern-ment  - 3 the notes on clauses explain the provisions of the bill new delhi; t t krishnamachari the 14th september, 1964  president's recommendation under article 117 of the constitution of india[copy of letter no 12/49/63-pr, dated the 14th september, 1964 from 8hri t t krishnamachari, minister of finance to the secretary, lok babba] the president having been informed of the subject matter of the proposed bill further to amend the companies act, 1956, recommends to the house the consideration of the bill under article 117 (3) of the constitution, cla1£8e 2-the companies act at present extends only to one of the three districts of n agaland, namely, the district of tuensang it is not applicable to the other two "districts, namely, kohima and mokokchung on the recommendation of the government of n agaland it is proposed to extend the companies act to the whole of nagaland state clause 3-sub-clause (i) -it is proposed to make clear that books and papers which are sometimes interpreted to exclude vouchers should include such documents this is necessary to ensuxe that they are maintained along with other books and papers, and are available to inspectors for purposes of investigation sub-clause (ii) -as recommended in paragraph 24 of part ii of the report of the commission of inquiry on the administration of dalmia-jain companies (hereinafter referred to as the commbsion' report), it is proposed to expand the definition of 'officer' 80 as to bring within its ambit any person in accordance with whose instructions the board or any of the directors of a company is accustomed to act this is designed to counter the trend whereby dummy directors are appointed on boards of companies to implement policies of a dubious nature, while masterminds mainly instrumental in evolving these policies remain in the background clause 4-the act, as it stands, does not provide for delegation of powers by the company law board to the officers of the board this creates administrative difllculues and causes unnecessary delays this clause is intended to provide for such delegation with the approval of government clause 5-this clause seeks to implement the recommendation of the daphtary-sqtri committee based on the observations contained in prragrapbs 2 to 5 of the commission's report the purpose of the amendment is to provide for clear definitions of the main and the suba'diary objects of a company in its memorandum of jlssociatton clause 6-this amendment does away wih the technical necessity of obtaining government's approval under section 21 for the mere addition or deletion of the word "private" from a company's name, consequent on its conversion from a pulbuc into a private company or vice versa clause 7-it 1s proposed to give power to the central government to exempt from the provisions of section 43a auy tlr;vato company in which shares are held by one or more bodies corporate, incorporated outside india] if the constitution of the said body ror~ porate or each of the bodies corporate is such that it could be treated 3!11 a private company under the indian company law t~e amendment is calculated to remove the ditftculty said to be exppricnccn by small industries working in collaborating with small foreign comnanies of the nature of indian private companies, because of the rertrictiors applicable to public companies in regard to manag·:rial remuneration, etc clause s-this clause is based on the rpcommendation contained in paragraph ] 1 of the commission's report it seeks to make it an offence to make applications for shares in the name of, or to include the allotment of shares to, fictitious persons clau$e 9-this clause is based on the recommendation made by the vivian bose commission and the darj1tary-s('stri comm1ttpe this is intended to safeguard the amountc; paid by the applicants for shares until such time as the minimum subscription is col1"!cted by the company the proposed amendment to section 69 (4) is on the lines indicated by the daphtary-sastri committee clause lo-this clause seeks to rectify a drafting defect in section 73 (5) this sub-section, which defines the circumstances in which the operation of the section would not apply, uses the phrase "permission shall not be deemed to be refused" while the operative part refers to "permission has not been granted" this difference in the expressions used has given rise to a doubt whether a company would be exempt~ from the opetrative part of this section in the circumstances mentioned in sub-section (5) the intention of this clause is to clarify the position clause 11 (a) -the amendment to clause (a) of sub-section (1) which is based on the recommendations of the daphtary-sastri committee, seeks to impose a duty on the promoters and directors of a company to ensure that the share-capital reflects cash or other valuable assets and is not supported by merely book adjustments clause 11 (b)-the amendment to section 75(3) empowers the registrar of companies to grant, in appropriate cases, such extension of time as he thinks fit for filing the return of allotment even wh,en the applicatiqu for the extension is lll6de after the expiry of one month specified in suh-sections (1) and (2) simultaneously it is also proposed to delete the existing proviso to sub-section (4) which gives power to the court to grant extension of time when the delay exceeds one month the amendment is designed to save companies from the expenses involved in applying to a court, and help them in obtaining extension of time speedily from the registrars clause 12-this clause is based on the recommendation contained in paragraph 10 of the commission's report, and seeks to make it clear that under-writing commission should not be paid except in respect of shares or debentures offered to the public it also requires that the company should file with the registrar a copy of the contract for payment of the under-writing commission at the time of the delivery of the prospectus clause l3-the new sub-section (1 a) of section 108 seeks to impose restrictions on the period of -currency of blank tmnsfers on the lines of the tecommendation in paragraph 19 of the commission's report the proposed restrictions are--(a) that every instrument of transfer shall be in the prescribed form bearing the date of issue stamped by the prescribed authority; and (b) that the said instrument is required to be delivered to the company within six months from the date of issue in the case of listed shares and within two months from that date in the case of any other shares these restrictions are designed to curb the abuse inherent in the system of blank transfer clause 14-section loa already provides for the tribunal to exercise the powers of the court under section 155 for the rectification of the share registers of companies since the powers of the central government under section 111 of the act to hear appeals against refusal by companies to register transfer of shares, are of a quasi-judicial nature and somewhat allied to those of the court under section 155, the powers and functions of the central government under section 111 in regard to appeals against refusal to register transfer m shares are, by this amendment proposed to be conferred on the tribunal clam! 15-this clause is based on the recommendation contained in paragraph 6 of the commission's repott as endorsed by the daphtary-sastri committee it seeks to prohibit a company from commeneing any business in relation to its objects without obtaining the prior  pprqval of the share-holders by a special resolution it also requires a declaration of compliance with the provision of this section being filed with the registrar clause 16-a doubt has arisen as to how the value of shares and debentures should be calculated for purposes of section l53b (4) the explanation sought to be inserted by this clause makes the position clear clause 17-this clause should be read with "lause 42 which seek to amend section 307 these two amendments are based on the recommendations of the vivian bose commission that the beneficial holdings above five per cent limit should be disclosed so that the name of the real holders of such shares, as distinct from those of the nominees by whom such shares are ostensibly held, are known clause l8-this clause seeks to simplify the procedure contemplated in section 163 under which a company is required inter alia, to give notice in newspapers of their intention to maintain registers, indexes, returns and copies of certificates and documents at places other than the registered office of the company it is felt that this requirement entails avoidable expenditure on the companies concerned, and should not be insisted upon in any case, notice of such intention has tu be given to registrars of companies this would suffice clause 19-this clause seeks to remove a practical difficulty in respect of section 43a public companies where there may be less than five members it is, therefore, proposed to modify section 174 and provide for two members to form a quorum clause 20-by virtue of the definition of the term 'officer' as proposed to be revised by clause 3(ii) supra, the words sought to be omitted from section 203, by this amendment, are redundant clause 21-the object of the amendment of sub-section (1) of section 209 is to ensure that in respect of companies engaged in production, processing, manufacturing or mining activities which may be specified by notification issued by the central govemment proper records relating to utilisation of material and labour are available which would make the efficiency audit possilble it is proposed to re-ciraf,t sub-section (4) with· a view to making it clear that the registrar of companies or any officer authorised in that behalf may illbpect the books of account and other books and papers of the company without giving any previous notice to the company or any officer thereof, if sufficient cause exists for such inspection and take copies of and put identification marks on, the documents so inspected oppurtunity is also taken to make it obligatory on the company and it; officers to produce the necessary books of account; etc, for inspection by the registrar ar any other officer and to give them all possible assistance in connection therewith the changes proposed in sub-section (6) are· intended to make the officers and other employees and agents of the company and of its managing agents, secretaries and treasurers also responsible for taking reasonable steps to secure compliance with the re-quirements of section 209 clause 22-(a) this clause is based on the recommendation of the daphtary-sastri committee and seeks to provide against the situation revealed in the commission's report under which the in  vesting public lost heavily by contributing to the capital of the companies which indulged in dubious practices not open to normal audit (b) it is proposed tv insert a new sub-section namely, subsection (4a) in section 227 to enable the government to issue suitable instructions to auditors this provision is analogous to section 619 which empowers the comptroller and auditor-general to issue similar instructions to the auditors in respect of government companies cla'ube 23-'l'his amendment is of a drafting nature and is intended to enable government to delegate the powers of granting exemption under section 228(4) to the officers of the company law board /  &~ clause 24-a new section is proposed to be in ~ co 1 uced as section 233b to enable government to issue necessary directions for conducting cost audit of companies engaged in manufacture or mining activities clause 25-this clause seeks to give concurrent powers to the tribunal constituted under section loa to order search and seizure by the registrar these powers are at present enjoyed only by first class magistrates (or the presidency magistrate) clause 26-this clause seeks to provide certain facilities to!nspectors appointed under this act to investigate various aspects of company matters the need for such amendment is based on the experience of the difficulties encountered by the inspectors in carrying out the duties entrusted to them clause 27-this clause seeks to confer on the tribunal constituted undel- section loa concurrent powers to order sclrch and ieizure by inspectors appointed under the act thil provision ii complementary to that made in clause 25 where similar concurrent powers are sought to be conferred on the tribunal to order searches and seizures by registrars of companies: clause 28-the existing section 241 requires that the report of the inspector should be sent to the company concerned a doubt has been expressed that the existing provision might be construed to include not only the report in its final form but also such interiltl reports as the inspector may choose to furnish the amendment makes it clear that such interim reports need not be sent to the companyi clause 29-the proposed amendment is based on the recommen~ dation made by the daphtary-sastri committee in the light of the commission's report one of the methods by which investigation into the affairs of the company was sought to be delayed was by raising technical objections to it on the ground that applications for relief against oppression and mismanagement were pending before a court or that the company concerned had gone into liquidation the proposed section 250a provides that investigations may be initiated notwithstanding the voluntary winding up of the company or the pendency of such applications in court clause 30-this clause is intended to remove a practical difficulty in respect of section 43a public companies where the members need not be more than two it is, therefore, proposed to modify section 252 and provide that in the case of such companies the minimum number of directors should be two and not three as is the case with other public companies clause 31-the clause is intended to obviate the need for unnecessary references by the companies to the government or the company law board under the existing provision of section 259 any increase in the number of directors beyond the maximum prescribed by the articles of association requires the approval of government it is now proposed that the approval of government would not be required far increase in the number of directors up to twelve irrespective of the provisions in the articles of association clawe 32-section 264 requires that a person proposed as a candi date for the office of director should ftle with the company his conlent to act as director, if appointed it also requires that a person other than a director re-appointed after retirement by rotation ahn not act as director unless he has filed with the registrar his consent in writing to act as such this amendment :<leeks to exempt persona 1054 (b) ls-5' who have served as directors 1ft the 1nlmetfll'teptec:elldt term trod\ these requirements it is felt that in the case of sueh pel"iodi1be requirement to me tbeir consent in writing is a tarmallty wh1c1l could well be ~ispensed with clawre '33-this clause proposes to delete sub-sectton '(4) of section }66 as tbeinformation filed under this sub-section :is <ttherwise avafiable with the registrar 'clcube s4-i'his clause proposes' to delete -eerd10ll 1ft t4~ the tn'farmatiml "about theshrrre quahfteatioft ef 'ftle csineitors ~ be available to the registrar in the annual returns in whidl tae iaformation is included clauae s5-this &meftdment is -consequewtial 10 ·delette c sect_ 1'l1 i , - ; : , i  :fj clauae h-the preeent provision reganicg the 're~ age -ef a djrector 3s co»tamed in section 280 ueder ,this eeotion he normal tetiring age ;for a director i8 sixty-4lve, but ·be cowd coatume beyodd this :ageprovidec1 a special j'e8ohrttlm is palled by the 00iilpany the adtelldment leeks to il'aile the ate of, retiremeat of - director to seventy-five bll'tmab!s no provilioll 'f4r ·oontiauajaae beyond that age by a special resolution or otherwise the amendment <also "~ends the retiring age to private emftpelues to whidh it had bftherto not been 8])l'lic81ble 0hrube 1r1-the "ae1eti~n of section 281, which is prcjpmed by :this ctaase, j- ~ntitll to the amendrnentof -secticm "280 claule 38-the proposed amendment of section 282 is also consequential to the amendment of section 28u clause 39-the wording of section 285, asft stands, is rather involved and has given rise to certain doubt!! it is 'proposed to make the position clear and provide 'for a meeting to be 'held at least once in every three months and at least four times every year claure '4o-this clause is based on the dbservattonsof 'the vtvt&n bose commission regarding the abuse arising out ·of payment 01 compensation to sole selling agents for the unejq)ired ,period of their agreement the commission has suggested that in certain circwnstances no compensation should be paid at all while in othera compensation should be paid only for the unexpired portion of the agreed term not exceeding three years this clause seeks to insert a new hction to implement these recommendations clause 4l-tbis clause seeks to give relief to the companies- to tae extent that it would not be requirecl to inform the reptrar of cbanges of particulan in respect of their directors, managing directors, maaaging agenta, secretaries and treasurers, ma~8 or secretaries except in the annual return clause 42-sub-section (11) of section 307 is sought to be substituted by a new sub--section, which, in addition to the existing provision will require notification of beneficial holders of more than ave per cent of the equity share capital this proposed amendment is in implementation of the recommendations marle by the commjssion ctmue 43-(i) the restriction an remuneration of directors is iometimes sought to be ewded by the directors holding teclmical or other appointments in addttioo to t~ir di1'eotorships this clawe seeks to provide for such eases being brought within the purview of flii6 sectior; (ii) there is no provision at present for payment of motlthly salaries to part-time directors in rp!!ponse to the suggestion made by the chamber of commerce it is pruposed that a provision should be made for such payment in appropriate cases clause 44-this clause seeks to rehtx the requil'ements of the existing s<>ction 310 to allow companies without reference to the central government t& increase the fees of the directors for attending meetings of the :&arc;l 01' of commid;tees thereof up to rupees one huncked for each s~h meeting cb&se 45-ln response to the suggesuens received from the chambers of cbmmeree it is proposed in this cl'souse to relax the refluiremems regard~ftg prenous consent of the company in regard to tbe appointment of a d!'l'ecter or a partner or a relative of such 8 director, etc, to hold an offtce or 8, place of profit in the company in plaee of sueh previous consent it is now being provided that a special resolution should be obtained at the first g~nera1 meetin-g held after such an appointment is made_ ckue 4g-tbe vwi&n bose commialian suggested that inw campany lga:ai ehquj4 ruk at pu' wiua inwr-compatly iqvestments and should be subject to the same restrictions as the latter in p8rticular, the commission recommended that the loans referred to in section 870 shouid be subject to the restrictions contained in section 372 this clause seeks to amend sedion 370 accordingly clau&e 47-some of the chambers have represented that the requirements of section 372(5) that no investment shall be made by a company unless it is sanctioned by a resolution passed at a meeting of the board of directors with the consent of all the directors present at the meeting should not apply to investment companies this clause seeks to implement this recommendation clause 48-arish~ g out of the findings of the vivian bose commission, the daphtary-sastri committee has recommended that provision should be made for the disclosure of all material facts to a court such as the financial position, the latest audit report, the pendency of investigation proceedings, etc, before a court accepts a pr0-posal of compromise at the instance of the liquidator this clause seeks to implement this recommendation cla~e 49-this clause is also based on the same findings of the vivian bose commission as the clause above that an opportunity should be given to the company law board or the registrar to report to the court about the affairs of the company clause 5o-based on the recommendation in paragraph 46 01 the commission's report, the proposed section 394a makes it obligatory on the court to give notice to the central government of every application made to it under section 391 or 394 and to take into consideration the representations made by that government, before pass: ing any order on the proposed compromise or arrangement or scheme of amalgamation this would enable the government to study the proposal and raise such objections thereto as it thinks fit in the light of the facts and information available with it, and also place the court in possession of certain facts which might not have been disclosed by those who appear before it so that the interests of the investing public at large may be fully taken into account by the court before passing its order clause st-paragraphs 37 to 43 of the commission's report have dealt with the need for checking the malpractices in relation to the take-over' offers and acquisition of shares of dissenting shareholders under a scheme or contract approved by the majority with a view to ,preventing such malpractices it is considered necessary to take eective metlb\ll'e8, on the unes suggested in the said report, to enlure that adequate information is disclosed in a take-over ofter to the share-holders so that they could be allowed to judge for themselves whether or not to accept the offer for this purpose it is proposed to amend section 395 to provide that any such offer or any circular, etc, eontaining such offer shell be accompanied by such information as may be prescribed by the central government and shall contain a statement disclosing the steps taken by or on behalf of the company making the offer, disclosing the steps it has taken to ensure that necesaary cash will be available for payment of consideration for the shares to be acquired it is also provided that no such circular, etc, should be issued until a copy thereof is presented to and registered by the registrar the registrar will also have the power to refuse to register any such circular if it does not contain all the requisite information or if it sets out any information in such a way as to give a false impression as a further safeguard to the dissenting shareholders, the proposed amendment imposes an obligation on the transferor company to intimate to them the fact of registration of the transferee company as the holder of the shares under transfer and riso of the receipt of the amount or other consideration representing the price payable to them by the transferee company clause 52-this amendment is based on the finding of the vivian bose commission and the recommendations of the daphtary-sastrf committee it is intended to prevent the practice of destroying incriminating accounts and records of the company which has been amalgamated with another company this clause seeks to provide that permission of government should be obtained before such records are destroyed clause sa-this clause proposes to delete sections 410 to 415 in regard to the advisory commission and seeks to enact a single clause in lieu thereof constituting an advisory committee clauses 54 and 55--on the basis of the findings of the vivian bose commission and the recommendation made by the daphtary-sastri committee, it is proposed to amend sections 497 and 509 to provide that a company which has been brought under voluntary liquidation should not be dissolved until the official liquidator has scrutinised the books and papers of the company and made a report to the court that its aft'airs have not been conducted in a manner prejudicial to the interests of its members or the public interest clause 56-a new section 5ua is proposed to be inserted in order to ensure that the liquidator in case of voluntary winding up will have adequate information about the affairs of the company on the lines specified in se¢ion 454 in regard to compulsory winding up by court clauu- s'l-thia alause seelcs to exempt foreign, comprnies from the requihment te infonn the registrar of changea of particui8i'i of their directol'8 and secretaries suclil information is not ~y essentiai ham the point of view of gwernment and may callie ull-d2cesfi&ty hmassment to the company conrerued clauft 58-(i): 1'bis cliawje seeb to elaborate ii8ctioiil _a and tadeumify-(a), persons acting in iood faith in puj:luanc:e of the act w~ may not be gov-el'lldledt ofticer; and ~) in respect of puiblieatiod by fir anckr tile autbgrit" of govemmeftt or such oiftcers of any auch report, paper or proceedijrg (ii) a new section 635a is proposed to be inserted so that, gqv-emment or any person acting in this behalf is bot compelled to dis clqse the sources of information received by it or him it is intend, ed to ejasure that the flow of iufonnation is npt impeded 'by the idantity of the sourc:es being revealed clause 59-thb clause seeks to empower gov'ei'ilment to ('(1ai-done l1elayi in the matter of complying with certam pl"qv1si0na of the act this would help companies in cases {)f genuine hardship c1ua:tt 66-a new serliou mob is proposed to be imserted oil the ms of the existi~ semon 412', whi£b is proposed to be deleted iioqc with other sections regarding ~ acivisory cimlli!ris&ton clause 61-the existing schedule ia of the act provides far a list of relatives in 49 items this list is proposed to be reduced by t1eletidg item as- to 49 fboth inc~) clause 62-a schedule has b-een added to the bill to prdvide for minor amendments or amendments of a clariflcatory or consequential nature the- majority of these amendments rel!afje! to cae item, l'ladlely, the provision of a uniform time limit of thirty ctaye for the i1mg- r various clocmnents by tjte compai!1' before the registrar thi 1idiform time limit is intended to help the companies in c0mplying with the· pro'vilions of the aet in para 19 of its report, tihe commts&ion ·gf inquiry on the tuiiaitrlitration -of dalmia-lam comp8llies :has reoommencied the impoiition of restrictions ft the period dfctul"eney of blank tl"auien 8c) as to curb the abuse inherent in the system of blank lransfen 0  13 of ,the bill seeks to implement this recommendation iby inserting a new sub-section in section 108 of the companies act to provide that (a) every instrument of transfer shall be in the prescribed form obtainable from, and bearing the date of issue stamped by the prescribed authority and (b) the said instrument shall be delivered to the company within 6 months from the date of issue in the case of listed shares and within two months from that date in the case of any other shares 2 for the present government propose to designate the various stock exchanges and registrars of companies under the company law board as the prescribed authority for the 81bove purpose only expenditure that can be anticipated in this behalf will be on account of printing of the prescribed forms and remuneration payable to the clerical sta1f engaged by the stock exchanges for assisting them in performing the functions of the prescribed authority and other incidental ejq)enses as far as can be anticipated at present, the expenditure involved is not likely to exceed rs 40,000 per annum as indicated below-staff consisting of 10 lower divn clerks as 24,000 cost of printing transfer forms, including cost of paper rs 3,000 incidental expenses including stationery, furniture etc rs 13,000 to'l'al rs 40,000 3 the provisions' in clause 53 of the bill for the constitution of an advisory committee, in place of the advisory commission which has been set up :by the central government under the existing section 410 of the companies act, will involve expenditure on account of travelling and daily allowance payable to the members of the committee when they come to delhi or any other place to attend meetings no salary or honorarium will, however, be paid to the members of the advisory committee recurring apenditure, u far as can be anticipated on account of travelling and daily allowance, is estimated at about rs 30,000 per annum as against total annual expenditure of about rs 58,000 on the advisory commission the expenditure on the advisory committee would, therefore, bemuch less than that incurred on tbe advisory commission and the provision in clause 53 of the bill will not thus involve ·any fresh expenditure from the consolidated fund of india clauses 13, 15, 21, 23, 24, 51 and 60 of the bill contain inter alia provisions authorising the central government to prescribe the following: -(a) the form in which the instrument of transfer in respect of shares is to be drawn up and the authority from whom such form would be obtainable (clause 13); (b) the form in which the declaration that the company has approved of the commencement of any business in relation to the objects specified in clause (c) or clause (d) of sub-section (1) of section 13 is to be filed [clause 15 (a) ]; (c) the particulars relating to utilisation of material or labour to be included in the books of account kept by a company engaged in production, processing, manufacturing or mininl activities [clause 21 (a)]; (d) qualifications which a person must possess for conducting the audit of cost accounts of companies and the form in which the report of such audit shall be made (clause 24); (e) the information that must accompany (i) every offer of a scheme or contract involving the transfer of shares of one company to another or (ii) every circular containing such offer or (iii) every recommendation to the members of the transferor company by its directors to accept such offer (clause 51); (f) forms in which applications under sections 259, 268, 269, 310, 311, 326, 328, 329, 332, 343, 345, 346; 352, 408 and 409 shall be made (clause 60) the above are matters of administrative detail and it is scarcely powers contemplated in the aforesaid clauses are of a normal powers contemplated in the aforesaid clauses are of a normal character  1054 (b) ls-6(1 of 1956) - - - - - - 1 (1) - -    (s) it extends to the whole of india: short title, commencementand extent, provided that 'it sm11 dolt apply to the state o! j'biimlu and kashmir except to the ex1lent to 'wibich" the 'provisions dtilis act relate to the incorporation, regulation and winding up of banking, insurance and financial corporations definitions z in 'this act, ani1!ss tire' ccmtext otherwitle requires,-- - - - - - (8) ''book ed paper" and "bo6k or paper" i&clude accounts, deed&, writmgs, and :dooumeots; -  - - - - (~~ "officer" inclades any director, managidg agent, ~ecre­,iaries and,t1'euu1'el's, manager or secretary, and also includes-(4) where the managing agemt, the -secretaries and t!re8lurets or the 8ec:retary is or are a fum, uy partner in the firm; (b) w'here the managing agent :(jril' the secretaries and treasurers is or 'are '8 bc!idy col'p<>l'lete,my direeter "or msn&ger of the body cofipol"ate; (c) where the secretary is a body corporate, any director, managing agent, secretaries and treasurers or manager of the body corporate; but, save in sections 477, 478, 539,543, 545, 621, 625 and 633 does not include an auditor; - - - - - - i, 13 (1) the memorandum of every company shall state-- - '" '"  - requirements with res-(b) the state in which the registered office of the campany pect to memoia to be- sit1/late; and randum (c) the objects of the company, and, except in the case ot trading corporations, the state or states to whose territories the objects extend  -      change of name by company 21 a company may, by special resolutwn and with the approval of the central government signified in writing, change its name -     '" 69 (1) - '" -   (4) all moneys received from applicants for shares shall be deposited and kept deposited in a scheduled bank until they are returned in aecordance with the provisions of sub-section (5) or until the certificate to commence business is obtained under section 149 prohibition of allotment unless minimum subscription received in the ev'ent of any contravention of the provisions of this subsection, every promoter, director or other person who is knowingly responsible for such contravention shall be punishable with fine which may extend to five thousand rupees   '" - '" '" '" 73 (1) '" '" '" '" '" (5) for the purpose of this section, permission shall not be deemed to he refused if it is intimated that the application for permission though not at present granted, will be given further consideration   - -  '" all'otmentof shares and debentures to be dealt in 00 stock exchange 75 (1) whenever a company having a share capital makes any return allotment of its shares, the company shall within one month there~ as to after,-allot- ments ·~i (a) file with the negistrar a return of the allotments stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and occupations of the allottees, and the amount, if any, paid or due and payable on ellch share; - - - (3) if the registrar is satisfied that in the circumstances of any particular case the period of one month specified in sub-sections (1) and (2) for compliance with the requirements of this section is inadequate, he may extend that period as he thinks fit; and if he does so, the provisions of sub-sections (1) and (2) shall have effect in that particular case as if for the said period of one month the extended period alloiwed by the registrar were substituted (4) if default is made in complying with this section, every officer of the companr who is in default shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues: provided that, in case of defaulting filing with the registrar any document required to be filed by this section within the time specified therein, the company, or any officer who is in default, may apply to the court for relief, and the cou~ if satisfied that the omission to file the document was accidental or due to inadvertence or that on other grounds it is just and equitable to grant relief, may make an order extending the time for the filing of the document for such period as the court may think proper  - - - - - - 111 (1) nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company power to refuse registration and appeal against refusal (2) if a company refuses, whether in pursuance of any power under its articles or otherwise, to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be if default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable -with fine which may extend to fifty rupees for every day during which the default continues (3) the transferor or transfere~, or the person who gave intima-;tion of the transmission by operation of law, as the case may be, may, where the company is a public company or a private company which is a subsidiary of a public company, appeal to the central c'n>vemment against any refusal of the company to register the transfer or transmission, or against any fai~ure on its part, within the period referred to in sub-section (2), either to register the transfer or transmission or to send notice of its refusal to register the same (4) an appeal to the central government under sub-section (3) shall be made-(a) in case the appeal is against the refusal to register a transfer 01'1 transmission, within two months of the receipt by him of the notice of refusal; and (b) in case the' appeal is against the failure referred to in sub-section (3), within two months from the expiry of the period referred to in sub-section (2)  - - - - - - (5) the central government shall, after causing reasonable notice to be given to the company and also to, the transferor and the transferee or, as the case may require, to the person givting intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing, by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it; and in the former case, the company shall give effect to the decision within ten days of the receipt of the order  (sa) before making an order under sub-section (5) on an appeal against any refusal of the company to register any transfer or transmission, the central government may require the company to disclose to it the reasons for such refusal, and on the failure or refusal of the company to disclose such reasons, that government may, notwithstanding anything contained in the articles of the 'company, presume that the disclosure, if made, would be unfavourable to the company (6) the central governmentmay, in its order aforesaid, givte such incidental and consequential directions as to the payment of costs or otherwise as it thinks fit (1) all proceedings in appeals under sub-section (3) or in relation thereto shall be confidential, and no suit, prosecution or other legal proceeding shall lie in respect of any allegation made in such proceedings, whether orally or otherwise (8) in the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a court or other public authority, the provisions of sub-sections (3) to (7) shall apply as if the com'pany were a public company: provided that the central government may, in lieu of an order under suh·section (5), pass an order directing the company to regiater the tranunission of the right unless any member or memben of the company specified in the order acquire the right aforesaid wjthin such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the central government may detennine to: be a reasonable oompensation for the right in all the ctrcurnstances of the case (9) if default is made in giving effect to the order of the central government within the period specified in sub-seetiqrl (5) ci!i' to a direction of that government given under the proviso to sud-8ection (8), the company, and every officer of the company who is in default, shall be punishable with fine which may elctedq to ode thousadd rupees, and with a further fine which may extend to 0jje hundred rupees for every day after the first during which t1te default continues 113 • (1) - - - - - declll'lltion (4) the provisions of this section and section 187b shall not ii to hares  i' and deben- apply m re ition to a trusttures held (a) where the trust is not created by imtrumeat in in trust writing; or (b) even if the trust is created by instrument in writing, where the trust money invested in shares in, or debentures of, a company-(i) does not exceed one lakh of rupees, or place of keeping, and inspection of, registers and returns (ii) exceeds one lakh of rupees but does not exceed either five lakhs of rupees or twenty-ave per cent of the paid-up share capital of the company, whicllever fl le  - - - - - - 183 (1) the register of members commencing fn:m the date of the registration of the company, the "index of members, the register and index of debenture holders, and copies of all an1m8l returns prepared under sections 159 and 160, together with tbe copies of certificates and documents required to be annexed thereto under sections 160 and 161, shall be kept at the registered offtce of the company: provtded that i!iuch registers, indexes, returns and cop4es of certi&atesand documents or any or more of them may, instead of being kept at the registered office of the company, be kept at any other place within the city, town or village in which the registered office is situate, if-(i) s\lchcjther place has been approved for thispurpase by a special resolution passed by the company in general dl8eting, (ii} the purport of the ,l>roposed special resolution has been advertised in advance for three consecutive days in at least two newspapers circulating in the neighbourhood of the tegistered oftiee of the company, and {iii) the registrar has been given in advance a copy of't'he proposed special resolution - -  -  - lk (1) uj3less the articles of the company provide for a larger quorum nwnber, five members personally present in the case of public com- for pany, and two members personally present in the case of a private meeting company, 'shall be -the quorum for a meeting 0if thec1illllllpa!ly  - - -   • {j~      power to (6) an order may 'be made by virtue of sub-'c'lause {ii) m clause restrain (~}of sw>-sectian (1), notwithstanding that the person concerned fraudulent may be criminally liable in respect of the matters on the ground rr::ns of which the order is to be made, and for the purposes of the said managing sub-clause (ii), the expression "ofticer" shall inell1de any person m comaccordance with whose directions or instructions the beard of panies diltectors of the ·company has ,been accustomed to act  - - - -  ~ (1) -  - - - ~4~ de ·books of aoeow1:t shall be apen to inspection by any ~ duridg b1£siness h&urs: books of account to be kept by company provided that the books of account shall also be open to inspection by the registrar or by any officer of goiiiel'nment a:wihoriaed by the 'central government in this behalf if in the opinwn of the registrar or such officer sl1'fftcient cause exists for the id&pec,tion, ,of tae bookb cf account - - - •• - audit at accounts of branch oftlce of company 226 (1) - - - - - (4) notwithstanding anything contained in the foregoing pr0-visions of this section, the central government may, by rules made in this behalf, exempt any branch office from the pro~sions of this section to the extent specified in the rules and in making such rules the central government shall have regard to all or any of the following matters, namely:-- - - - - - seizure ofdocumentsby relistrar 234& (1) where, upon information in his possession or otherwise, the registrar has reasonable ground to believe that books and papers of, or relating to, any company or other body corporate, or any managing agent or secretaries and treasurers or managing director or manager of such company or other body corporate, or any associate of such managing agent or secretaries and treasurers, may be destroyed, mutilated, altered, falsified or secreted, the registrar may make an application to the magistrate of the first class or, as the case may be, the presidency magistrate having jurisdiction for an order for the seizure of such books and papers (2) after considering the application and hearing the registrar, if necessary, the magistrate may, by order, authorise the registrar-(a) to enter, with such assistance as may be required, the place or places where such books and papers are kept; (b) to search that place or those places in the manner specified in the order; and (c) to seize such books and papers as he considers necessary (3) the registrar shall return the books and papers seized under this section as soon as may be, and in any case not later 'than the thirtieth day, after such seizure, to the company or the other body corporate or, as the case may be, to the managing agent or the secretaries and treasurers or the associate of such managing agent or secretaries and treasurers or the managing director or the manager or any other person, from whose custody or power they were seized and inform the magistrate of such return: provided that the registrar may, ·before returning such books and papers as aforesaid, take copies of, or extracts from them or deal with the same in such other manner as he considers necessary (4) save as otherwise provided in this section, every search made under this section shall be carried out in accordance with the provi-5 of 1898 sions of the 'code of crlminar procedure, 1898, relating to searches made under- that code - - - - - - 240 (1) it shall be tlie duty of all officers and other employees produe and agents of the company, and where the company is or was tion of managed bv a managing anent or secretaries and treasurers, of all docu- '-'" ments officers and other employees and agents of the managing agent or and evi  secreta ties and treasurers; and where the affairs of any other body dence, corporate, or of a managj,ng agent or secretaries and treasurers, or of an associate of a managing agent or secretaries and treasurers, are invest1g'1lt~ ~ virtae' of section' 239, mall' oftlm!rs and other empt0y'm8 and argents of sueh btjdy corporate, man~ng agent', s~r~at'ies iimi h'easurel's; or aesociate, at'ld' where such managing agent; sectet~lind' treasu~:rs ot" associate is at" was a ftrm, of all pertnel's in tl'k fttmt-(a) to produce to an inspector all books and papers of, or relattn~rto, ttie- company or; as the ease may be; of' or' relating to the other body corporate, managing agent, sect'e'f;arie$ find treasurers or associate" which are in their custgdy or power; and (b) otherwise to give to the inspector all _istatoll::e ih· connection with the investi~tion which they are reasonably able to give (2)' all bl~ n1ay examine on oath' any of' the persons rete! ~ fa br'sub;section (1), in relation to the afhir'8' of 'the comparty, other- 'beidy cotponlte, managinjj?; agent, secretaries' stitt' treasurers or associate, as the case may be; and may adtnfntsteor an oath accordingly and for that purpose may require any of tllose persons to appear before him personally (3) if any sueb' person fails without' _easonable cause or refuses--' (a~ to"jlrodbeeto an impector tmy book or pl'p~ which it is bis'duty t1nc1er'~ or to produce; or' (b) to'slppetir befbre ttte ihspector personany wilen required to do so under sub-!lection (2) or to answer any question which- is put t<> him by the inspector in pursull'l'1ce of that sub-section; th~ insp~t()r may certify the failure or refusal under his hand to the court alia ma,ke an application to the court to hold an enquiry into the case; and tne court may thereupon, after taking such ~cfence, if' any, as may be produced against or on behalf of the alkged ottendt<r' and hearing his explanation, if any, make an order 1054 (b) ls-7 for the production by him before the inspector of all such books or papers within a date to be specified in the order or requiring such person to answer any question which may be put to him by the inspector (3a) any such person who disobeys an order of the court under sub-section (3), shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both and also with a further fine which may extend two hundred rupees for every day after the first during which the disobedience continues (4) if an inspector thinks it necessary for the purpose of his investigation that a person whom he has no power to examine on oath should be so examined, he may apply to the court and the court may, if it sees fit, order that person to attend and be examined on oath before it on any matter relevant to the investigation, and on any such examination-(a) the inspector may take part therein eitlier personally or by a legal practitioner; (b) the court may put such questions to tlie person examined as the court thinks fit; (c) the person examined shall answer all such questions as the court may put or allow to be put to him, but may at his own cost employ a legal practitioner, who shall be at liberty to put to such person such questions as the court may deem just for the purpose of enabling him to explain or qualify any answers given by him: provided that, notwithstanding anything in clause (c), the court may allow the person examined such costs as in its discretion it may think fit, and any costs so allowed shall be treated as part of tlie expenses of tlie investigation (5) notes of any examination under sub-section (2) or (4) shall be taken down in writing and shall be read over to or by, and signed by, the person examined, and may thereafter be used in evidence against him - - - - - seizure ofdocumentsby inspector 240a (1) where in the course of investigation under section 235 or section 237 or section 239 or section 247, the inspector has reasonable ground to believe that the books and papers of, or relating to, any company or other body corporate or any managing ag~nt or s~etaries ~nd treasurers or managing director or manager - of such company or other body corporate, or any associate of such managing agent or secretaries and treasurers may be destroyed, mutilated, altered, falsified or secreted, the inspector may make an application to the magistrate of the fust class or, as the case may be, the presidency magistrate, having jurisdiction for an order for the seizure of such books and papers (2) after considering the application and hearing the inspector, if necessary, the magistrate may by order authorise the inspector-(a) to enter, with such assistance, as may be required, the place or places where such books and papers are kept; (b) to search that place or those places in the manner specified in the order; and (c) to seize books and papers he considers necessary for the purposes of his investigation (3) the inspector shall keep in his custody the books and papers seized under this section for such period not later than the conclusion of the investigation as he considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing agent, or the secretaries and treasurers or the associate of such managing agent or secretaries and treasurers or the managing director or the manager or any other person, from whose custody or power they were seized and inform the magistrate of such return 5 of 1898 (4) save as otherwise provided in this section, every search made under this section shall be carried out in accordance with the provisions of the code of criminal procedure, 1898, relating to searches made under that code  241 (1) - - - - - (2) the central government-!inspectors' report (a) shall forward a copy of any report made by the inspectors to the company at its registered office, and also to any body corporate, managing agent, secretaries and treasurers or associate dealt with in the report 'by virtue of section 239; - - - - - - - 252 (1) ever~ public company shall have at least three directors minimum number of directors - (2) every private company shall have at least two directors - - - - - - - dtin the caseofb public companyor a priva~,~y which is a subsidiary of 'a public company, any inereaae in:tbe ,duq;lber of its directors, except-(a) in the case of a company which was in existence on the 21st day of july, 1951, an increase which was within the permissible maximum under its articles as in force on that date, and increue innumbero! directors to require government sanction (b) jntbe 9ase of a~ojnp~y w:-w$ c~ orm,ay'collle into j!~~atter th6lt date, an in~~e ~hich js w~t~in ~e permissible maximum under its articles as first registered, '" - - '" '" - - 264 (1) every person (other than a person who has left at the ()tlice of the company a notice under section 267signjfying his candidature for the office of a director) propqsed as a candidate for the ofjlce of a director shall sign, and fije with the company, his consent in writing to act as a directqr, if appointed (2) a person other than a director re-appoint~ after retirement l?y 'fotation s~all not act as a director of' a company unless he has wjthin thj+ty days of hi:; (lppointment sign~ and filed with the ~trar,' his consent in writing to act as such director -  -  -  consent ofcandidate for directorship to beflled with the company and eon· sent to act as director to be flied with the reeistrar '286 (1) - - - =it - (4) on the application for registration of the memorandwn and tbj:'! ¥ucles, if any, of a company, the applicant shall file with the restrictionson appointment or advertise_ ment of director re~is~r~ a llst of the persons whohavecqllsented to be directors of the cqj1lpanyi an4, if tbis list contaips the name of ~ny person who has not so consented, the applicant sh~ll be p:unishable with fine which may extend to five hundred rupees  - - - - - 271 every director, not being a technical director or a director appointed by the central or a state government,shall within two j;j;lo,n~  after bi$ appoin~ent, or in tbec~se of a cljr~ctor holding otn~' ~~ jp~ cpwj;lle~cement of u1~ cojll~ni,es (i\numdjlwlt) act, filing of~­ration of share qualification by director l~, wit'llin two lllanths after such cqmm~n~~ei),t, flle with the 65 of 1960 registrar a ~s;laration specifying theq!jiuftc~tilln ~hijre$ b~ld by him  r - - - - - - saving 273 sections 270 to 272 shall not apply to a private company, u~s it js a'8ilblidiary of a public company - •• - - - i2lo,(1) save a -otherwise' provided ill sectwll ~l,·a pel'~-6hal1 age not ,be oapable of -being -appointed a eiireetor 0! a pub14c '~oi'rpqlly or limit of a private company which 1sa subsi<iilm'y ot a -pubhc -company, '11 -has attained the age of sixtyfive years (2) save as aforesaid, a director of a public compal~y or of a private company which is a subsidiary of a puolic ,compan,y shah vacate 'his qftice at the conciusion of theannu,al general mee~mg commencin~ next after he attains the age ofsixty~fiveyears: provided that this ~~b~tjojl wil,jl9t aaplv \p a u~r 'lwj)o is in office at the co~encement of this act so as to require the termination of the ,pppointment then helli by him befof~ t~,con­clusion of the third al}nual general meeting held after :tbecom-~encement of this act, but shall ~pply so as to terininate the appointment ~for~id a,t the conclusion of that meeting if ,he ,~dartained the age of sixty;five years ,before the commencement pf the meetmg: prdivided further that where a person llas been appointed as a ciirec:toroat;apub1ic c;:gmpany or of a private company which isa subsidiary of a public company, before he has attained tbe age of sitd~"~~f! yrps,jle ;smtllnot be ,l'equired ,to ~ate ,his a&ipe within 'ilp~i04 ,of ij1ree years,fi£ter his appointq3wlt ljw!l'~~ on the >fouild tqatbe~fl ,mtt»ueji tm,t age wijhin,\hat period  - - - - - 281 (1) nothing in section 280 sn/11111z:event tqe fwp9~pt~n'wt of ~g~ a director who has ~ttained tlle ilge of sixty-five ycf!~rs or re9-wf,e a ~~~~t director to retire who b,as attained tlwt a,ge, if hi~ ~lwqin~ept ~ pr if comwas made or approved by a resolution passed by the company in pany so general meeting and specifically declaring that the age )~mtt jlhall resolves not apply to himj - t{~ ,s»ecial n()tice shall iberequired ,·of ·aily iuch 'fesokltion; and 'wuesi,)tu~  notice ,~ glven, the resolution ahall:be-void (3) notice of any such resolution given to the company, and by the company to its members, must state or must have stated the age of the person to' whom it relates   282 (7) ~ny per~n who ~s ~ppoint~~, pr to rus lwqwl~~e is ~:: prowfed to be  a,ppoint~d, director ofil ~omp~py at ,a t~e <w~p4e to ciis-~ pttained the a~e c!f sixty,five yef!,rs qr s~ch )q)vej' jlge, :if ,~,;~ close ip,-ay be ~pecifled in ~he coplp~ny's ar~ici~s in tl\i$rf!4~t, 11 fi~e age notice of his age to the comeany: - - - doard to meet at least once in every three calendar months register of 285 in the case of every company, a meeting of its board 01 directors shall be held at least once in every three calendar months; and not more than two months shall intervene between the last day of the calendar months in which such meeting is held and the date of the next meeting: provided that the central government may, by notification in the official gazette, direct that the provisions of this section shall not apply in relation to any class of companies or shall apply in relatiolli thereto subject to such exceptions, modifications or conditions as may be specified in the notification - - - - - 303 (1) - - - - - directors, (2) the company shall, within the periods :respectively mentioned managing in this sub-section, send to the registrar a return in duplicate in the agents, secreprescribed form containing the particulars specified in the said taries register and a notification in duplicate in the prescribed form of any and change among its directors, managing directors, managing agents, treasurers, secretaries and treasurers, managers or secretaries or in any of the etc particulars contained in the register, specifying the date of the change i the period within which the said return is to be sent shall be a period of twenty-eight days from the appointment of the first directors of the company and the period within which the said notification of a change is to be sent shall be twenty-eight days from the happening thereof: provided that the notiflcation of any change in any of the particulars contained in the register shall be sent within twenty-eigm days of the close of the year during which the change occurred    -  307 (1) -  - -  registerot directors, shareholdings, etc (11) the provisions of this section and section 308 shall apply to managing agents, secretaries and treasurers and managers as they apply to directors - - - - - - remuneration of directors 309 (1) the remuneration payable to the directors of a company, including any managing or whole-time director, shall be determined, in accordance with and subject to the provisions of section 198 and this section, either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting •• "  - - - (4) in the case of a director who is neither in the whole-time employment of the company nor a managing director and whose remuneration does not include anything by way of a monthly payment, the company may, by special resolution, authorise the payment, to such director, or where there is more than one such director, to all of them together-(a) if the company has a managing or whole-time director, a managing agent or secretaries and treasurers, or a manager, of a commission not exceeding one per cent of the net profits of the company; (b) in any other case, of a commission not exceeding three per cent of the net profits of the company: provided that the company in general meeting may, with the approval of the central government, authorise the payment of com:-mission at a rate exceeding one per cent, or as the case may be, three per cent of its net profits ~ - - - - - 314 (1) except with the previous consent of the company accord- director, ed by a soecial resolution _ etc, not - ,  to hold - - - - - offlce or place provided that where a relative of a director or a finn in which of profit such a relative is a partner, is appointed to an offtce or place of profit under the company or a subsidiary thereof without the knowledge of the director, the consent of the company may be obtained within three months from the date of the appointment; and if such consent is not obtained witnin that period or is refused, the relative or the firm shall be deemed to have vacated his or its offtce or place on and from the date of expiry of that period and shall be liable to refund to the company any remuneration drawn by him or it for the period immediately preceding that date  - - - - - (2) if any offtce or place of profit under the company or a subsidiary thereof is held in contravention of the provisions of sub-section (1), the director concerned shall be deemed to have vacated his oftlce as director with effect from the first day on which the contravention occurs; and shall also be ~iable to refund to the company any remuneration received, or the monetary equivalent of any perquisites or advantage enjoyed by him, in respect of such oftlce or place of profit - - - - -  (4), male& aay loan to, or-(~, gi~t!- m\y ~til'n'tet!, 01" provide- any- 9'ecuriiy, h\' eom!c" tion with a loan made by any other person to~ or' to any' ot1'l~r loans etc, to companiesunderthe same manalement pei18t')n by"  art'y ti~' e6t{1otilte w1\~c'fi: is urttl!t fhe same' tn-an'a'gement as' the lei'1d\l1~ cbmp&l1" uh'fe~s the maihrlg 01 such loan, the' giviflg of sbch guarantee or the provision of such security has been pt~fo't1s1y a1lmrdli:af 'by ti' s~o'1!rl rellll)iutton of tire' lemttti-r c!ompiijl~ - ti ' rei - (b y ttie following particulars in respect of every loan made, guarantee given or ,security provided by the lehding company under thft; section:!i: - - - - - (ld) particulars of every such loan, ~ or sacawlty atmli· be entered in the register aforesaid within three days of the making of such loan, or the giving of such guarantee or the provision of sdr !lecwtity" dr iro the diiii!j of any man'macieo, pt'1bt6!e' given: or s~ p!"o'tided betbpetire dvinnnnoement of the od1'l'lpllll1el' (~ty }tetl 1_, \t)ithin three months from'stmh' col'ldfle!idj-rom at sbcft! fttttbtrt time mjty aweedfnt six mtm'tm as tile cgih 65 of 1960 ptn,-' !day' "" speeial r1iieluti6nr allow'  '   ' tit (1'1  '  - - purc:hue by companyof hares, etc, of other companies (-, 'l'ke'i'tc1tiittbtlla'oft1th1 st!dftorl ~~ thef{~ prt;vfsd'to subsection (2) shall 8'1so apply to an in~mtnettt cotnpan,~ ' -   -  -  ~ wlhiln< at notio8" hits' beeit- givem: by the transfehe- eompu11 u  sumeotionl (~1idd ,the-'court h not, oh tm1 ~t1cm'!fttid~ by- the~~shapeltb1dett made- an' order m"ttut1eofttnty, tht!' tnllafltne-: ooidpsrrtr sbau; on \ ther- expiry of one mbnt1f fmrrr t1i~: di~ oawhioh-the ne-titte liesbt!ertgiyen, or, itatl a;p1teatton ~,tiw!'e'ottrt by the dissenting shareholder is then pending, after that applicatltsft' has been disposed of, transmit a copy of the notice to the transferor company to~ther with lan instrument of transfer executed on behalf power and duty to acquire shares of share_ holders dis-iieiltinl from icheme of the shareholder by any person appointed by the transferee com- or conpany and on its own behalf by the transferee company, and payor tract transfer to the transferor company the amount or other conaidera- bapproyed  f ymlljo-tion represen~ing the price payable by the transferee company or rit)' llie shares which, by virtue of this section, that company is entitled to acquire; and the transferor company shall thereupon register the transferee company as the holder of those shares       chapter vii-constitvtion and powers of advisory commission·410 for the purpose of advising the central government on the appointmatter referred to in clause (a) of section 411, on the applications men~ of referred to in clause (b) of that section and on such other matters as acdvls~ry  ommls-the central government may thmk fit, the central government sion shall-(a) constitute a commission (hereinafter called the "advisory commission") consisting of not more than five persons with suitable qualifications; and (b) appoint one of those persons to be the chairman of the commission: 411 it shall be the duty of the advisory commission to inquire duties into and advise the central governmentof advisory (a) before a notification is issued under section 324 in res- commispect of any description of industry or business, on the neces- sion sity for, and advisability of, issuing the notification; (b) on all applications made to the central government under section 259, 268, 289, 310, 311, 326, 328, 329, 332, 343, 345, 346, 352, 408, or 409; and (c) on all other matters which may be referred to the commission by the central government: provided' that it shall not be necessary for the central government to refer to the advisory commission any application under section 408 or section 409 which in the opinion of that government is of a frivolous nature or deals with matters of minor importance: provided further that the central government may, in the case of any application under section 408 or section 409 which has been, or may be,· referred to the advisory commission, make such interim order as it thinks fit but it shall not make any final order on such application except after considering the advice tendered by the advisory commission 1054 (b) ls-8 412 (1) every application made to the central government under any of the sections referred to in clause (0) of section 411 shall be in such form as may be prescribed forms and procedure in cases referred to advisory commission (2) (a) before any application is made by a company to the central government under any of uie sections aforesaid, there shall be issued by or on behalf of the company a general notice to the members "thereof, indicating the nature of the application proposed to be made (0) such notice shall be published at least once in a newspaper in a principal language of the district in which the registered office of the company is situate and circulating in that district, and at least once in english in an english newspaper circulating in that district (c) copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application i (d) nothing in clause (a), (b) or (c) shall apply to a private company which is not the managing agent of a public company 413 for the purpose of making any inquiry under section 411, the advisory commission may-powers of advisory commission (a) require the production before it of any books or other documents in the possession, custody or control of the company and relating to any matter under inquiry; (b) call for any further information or explanation, if the commission is of opinion that such information or explanation is neceuary in order that the books or other documents produced before it may afford full particulars of the matter to which they purport to relate; (c) with such assistants as it thinks necessary, inspect any books or other documents so produced and make copies thereof or take extracts therefrom; (d) require any managing director or any other director, managing agent, secretaries and treasurers, manager or other officer of the company, or any shareholder or any other person who, in the opinion of the commission, is likely to furnish information with respect to the affairs of the company relating to any mattpr under inquiry to appear before it and examine such person on oath or require him to furnish such information as may be required; and administer an oath accordingly to the person for the purpose~ ! penalties 414 if any person refuses or neglects to produce any , book or other document in his possession or custody which he is required to produce under section 413 or to answer any question put to him relating to any matter under inquiry, he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine immunity for action taken in good faith 415 no suit or other legal proceeding shall lie against the commission or the chairman or any member thereof or against the central government, in respect of anything which is in good faith done or intended to be done in pursuance of this chapter, or of the provisions referred to in section 411, or of any rules or orders made thereunder:      497 (i)      final meeting and dissolution (5) the registrar, on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall forthwith register them and on the expiration of three months from such registration, the company shall be deemed to be dissolved:  provided that the court may, on the application of the liquidator or of any other person who appears to the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect, for such time as the court thinks fit     - - 509 (1)  -  -  final meeting (5) on receiving the account and also, in respect of each such ~d t· 'th th et t'  b' h disaolumee mg, el er e r urn men loned m su -section (3) or t e return t' i ed · b  ( ion ment on in su -section 4), the registrar shall forthwith register them, and on the expiration of three months from their registration, the company shall be deemed to be dissolved: provided that the court may, on the application of the liquidator or of any other person who appears to the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the court thinks fit  - - - - - 513 if any alteration is made or ocems in-- - - - - (c) the directors or secretary of a foreign company or the particulars contained in the list of the directors and secretary; or i -   - - return to be delivered to registrarby foreign company where documents, etc, aj; teredo protection of acts done in good faith 63sa no suit, prosecution or other legal proceeding shall lie apinst ofiicers of government for anything which is in good faith done or intended to be done in pursuance of this act or any rules made thereunder -      schedule ia [see section 6(c)]list or rblativbs  - - - - 23 husband's fatber 24 husband's mother 25 husband's sister 26 wife's father 27 wife's mother 28 wife's brother - 29 wife's sister 30 wife's sister's husband 31 father's brotherj 32 father's sister 33 mother's brother 34 mother's sister 35 father's brother's wifei 36 father's sister's husband 37 mother's brother's wife 38 mother's sister's husband 39 brother's soni 40 brother's son's wife: 41 brother's daughter 42 sister's son 43 sister's daughter 44 father's brother's son 45 father's brother's daughter f7'f 46 father's sister's son 47 father's sister's daughter 48 mother's brother's son 49 mother's brother's daughter - - a bill further to amend the companies act, 1956 (shri t t kris""-«luiri, m;";", of pittattee) 