 corrigenda to the companms (alo1ei'idment) bill, 1968(~-2j,-ejm :intrqd''laq in lok 5abha) 1 page 2,-~ lines 1 and 2, r~-"(2) if a company contravenes the provisions of sub-section '(1), then - " 2 page 5 line 2,-for "extract" read "extracts" 'new delhi; ~l 9 1968 va1sakha 19, 1890 (saka)  bid" no 5j of 1mb the companies (amendment) bill, 196 - • billfurt;1tm m 41mm tjl,e compcwia act, 11m ; it aacted· by parliameat in th, nihteeath year- fill the ttpublic ,of india  follows: - 1 'l'ht ad may be called the companies (amendment) act, 1988 shftt" title: z in thii aet, unleee the context otherwtee requinls, "appoint- debt· 5 it! day" dl81jl8 the 3rd day of april, 1170 timl s for eeet:lon z93a of tlae companies act, 1_ (laereidafter sulllti· retwred 10 al the priftctpal aet), tfte fol1owi~ heilioa ah&11 be ::: t aubmttu1led, !l8ju1,y: -2iiia "_a (1) notwithatandirll anythiq contained in this act, prel&1ln-10 1le!tl1er a company in general m_ing nor its board of directors ::~~ lihall, aft1l!'l" the commencement of the companies (amendment) makin, act, 1968, contribute any amount or amountsotpou- uc~ (a) to any political party, or contriw (lb) for any poutica1 p~ to any individual or body tioni z in thia act, unless the context otherwise requires, "appoint--tlon (1) i then-(i) the company shall be punishable with fine which may mend to five thousand rupees; and (ti) every ofdcer of the company who is in defualt shall s be punllhable with imp:r!aonment for a term wb1ch may extend to three years and- shall allo be liable to fine" t after aectloll 324 of the principal act, the following section shall be inserted, namely:-ldieruoil eldiw hctioa 1m a 11324a (1) notwithstanding anything contained in this act 10 or in the memorandum or articles of assoclation or in any cod-tract to the cojl'trary, where any company has, on the appointed day, a managing agent or seeretaries and treasurers, the term of oftlce of such managing agent or, as the case may be, the li!c1'etaries and treasurers shall expire, jf it does not expire ear- is lier, on the appointed day alaeu· tiodet mjnalfn, -ncies and heretart_ and tnuurerl ~2) no company shall appoint or re-appoint any managing atent or secretarfe-s and tl'e'asurers on or after the appointed day" i in section 365 of the principal act, in clause (c) after th 3o word and figurh "section 32~,", the flgures and letter "324a," shall ~ i~rted amwt-jiledtot aectioa sis •• t t ceuerof certain • on and from the appointed day, so much of the provisions 01 the principal act as relate to managing agents and secretar188 and treasurel'l shall cease to have effect except as respects thin done 35 or omitted to be done under those provisions before such cesser pro~­mjiii ot the aft on the 1st december, 1967, an assurance was given to the lok sabha that government woulti bring forward during the next following bud,et session of parliament a bill to ban contributions by companies to any political party, or for any political purpose to any individual or body and to abolish the system of management of companies by managing agents the bill seeks to fulfil the assurance it also seeks to abolish simultaneously the system of management of companies by secretaries anti treasurers which is akin to the system of management of companies by managing agents 2 the propriety of companies making contributions to any political party, or for any political purpose to any individual or body has for some time been the subject of discussion both inside ami outside the parliament a view has been expressed that such contributions have a tendency to corrupt political life and to adversely a1!ect healthy growth of democracy in the country, and it has been gaining ground with the passage of time it is, therefore, proposed to ban such contributions  , ,~ 3 section 324 of the companies act, 1956 empowers the central government to notify that companies engaged in specified cl  of industry or business shall not have managing agents under the rules framed thereunder, government appointed the manalidl agency enquiry committee to enquire into the desirability of applyin, the said provisions to companies engaged in established industries or any other imiustry or business as may be deemed fit by the committee in pursuance of the report of the committee submitted on the 16th march, 1966, government issued a notification to the effect that the term of office of a managing agent of any company in the specified industries shall expire at the end of three years from the 2nd april, 1967 the monopolies inquiry commission observed that the system of managing agencies was one of the molt important cauaee wblch hastened the process of concentration of economic power in india taking all the factors into consideration, it is proposed to abouah the system of management of companies by managing agents altogether at the same time as in the cue of specified industrrel ref  -red to above to the managing agency enquiry committee obterved that at one time, the institution ot secretaries and treasurers was thought of as a suitable alternative ~o the managing, agency system but for all practical purposes secretaries and treasurers exist only in those cases where managing agents already in existence had to ~ed some of 'the managed companies in view of the limit of ten on the total number of companies that a managing agent can manage the com· mittee did not see any particular gain in such a change secr&tariea and treasurers can be given all the powers and privileges of a managing agent except that they (ie the former) cannot appoint their representative on the board of' directors of the managed company, and cannot \:!raw more than 71 per cent as their commission while the managing agents can draw up to 10 per cent of the net profit it would thus be obvious that no useful purpose would be served by abolishing the managing agency system alone if the resultant ,void is to be filled up by the secretaries and treasurers hence the goverrunent proposes to abolish'the system of manage-~ent of companies by secretaries and treasurers simultaneously with the abolition of the system of management of companies by managing agents new dl:unj the 3n1 gi/,- 1868 k v raghonatra reddy - (lor 1956) - - - chapxer u_~ - - - - - · board's pcywers and rebtrlctionl thereon -    ~ e&ofl960 293a (1) notwithstanding anythin'g contained in section"  neither a company in general meeting nor its board of directol'll shall, t1oda_ after the commencement of the companies (amendment) act, 1860, :'-wu to contributemake (a) to any political party, or pol1ta1 contrl· butlodl (b) for any political purpose to any individual or bod" any amount or amounts which or the aggregate of which will, in 8d1 financial year, exceed twenty-five thousand rupees or five per cen'-of its average net profits as tletermined in accordance with the provisions of sections 349 and 350 during the three ftnodal 7mz'1 immediately preceding, whichever bj greater ezplanation-where a portion of a ftnancia1 year of the compidj falls before the commencement of the companiel (amendment) - of iho act, 1960, and a portion falls after iuch commencement, the latta portion shall be deemed to be a financial year within the mandai and for the purposea of thia sulmecuon ~) every company ihall d1icloee in ita proflt aucl loa ~t any amount or amount contributed by it under aub-eectfon (1) to any political party or for any political purpose to any individual or body during the financial year to which that account relates, sivinj particulars of the total amount contributed! and the name of the party, individual or body to which or to whom such amount baa baed contributed (3) if a company makes default in complying with the provision of sub-section (;2), the company and every officer of the comp01 who is in default, shall be punishable with fine which may eztea4 to five thousand rupees  compeuatift for ttrminction ef alice365 a compaay shau aot payor be liable to pay to ita menaing qent ally eompansation for tm loss of his office in tlle followinl cues:-    - ~hibi­tioa of paydllllt of coiilpematioa for lou of offtce fa eertaid - (e) where the manaibii ateftt vacates his of8ee 1 punuidc8 of aeet10n s24 do or 132; - -     - billiunhor to amend the companies act, 1956 (~hrl k· v ra,hufllltha rlddy, minister 01 state in tin ministry 01 industrial deo, lopment and company affairs) 