 the capital issues (control) amendment bill, 1957(as introduced in lok sabha)  the capital issues (control) amendment bill, 1957 (as introduced in lok sabra) a billfurther to amend the capital issues (control) act, 1947 be it enacted by parliament in the eighth year of the repubtic of india as follows:-1 this act may be called the capital issues (control) amend- short title ment act, 1957 19 of 1947 s z in the capital issues (control) act, 1947 (hereinafter referred s;bltltution to as the principal act), for section 2, the following section shall be ~ec~= for substituted, namely: _ section 2 lor 19s6 10 '2 (i) in this act, unl,ss the context otherwise requires,- definitions and interpre-(a) "company" means a company as defined in section 3 tation of the companies act, 1956, and includes a foreign company within the meaning of section 591 of that act; (b) "issue of capital" means the issuing or creation of any securities whether for cash or otherwise, and includes the capitalisation of profits or reserves for the purpose of - is converting partly paid-up shares into fully paid-up shares or increasing the par value of shares already issued; (c) "private company" means a private company as defined in section 3 of the companies act, 1956; (d) "prospectus" means any prospectus, notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a company; (e) "securities" means any of the following instruments 5 issued or to be issued, or created or to be created, by or for the benefit of a company, namely:-(i) shares, stocks and bonds; (ii) debentures; (iii) mortgage deeds, instruments of pawn, pledge 10 or hypothecation and any other instruments, creating or evidencing a charge or lien on the assets of the company; and  (iv) instruments acknowledging loan to or indebtedness of the company and guaranteed by a third party or is entered into jointly with a third party; (1) "states" means the territories of india to which this  act extends (2) any reference in this act to offering securities to the public shall be construed as in<?luding a reference to offering 20 them to any section of the public, whether selected as mempers, debenture-holders or holders of any other securities of the company concerned or as clients of the person issuing any prospectus in relation to such securities, or selected in any other manner: provided that the foregoing provisions shall not be taken as 25 requiring any offer to be treated as made to the publi: if it can properly be regarded, in all the circumstances, as not being calculated to result directly or indirectly in the securities becoming available for the subscription or purchase by persons other than those receiving the offer, or otherwise as being a domestic 30 concern of the persons making or receiving it' amendment 3 in section 3 of the principal act, after sub-section (5), the oflcction 3· following sub-sections shall be inserted, namely:-"(6) the central government may by order at any time-(a) revoke the eonsent or recognition accorded under 3s any of the provisions of this section; or (b) where such consent or recognition has been qualified with any conditions, vary all or any of those conditions: provided that before an order under this sub-section is made the company concerned shall be given a reasonable 5 opportunity of showing cause why such order should not be made (7) where an order has been made under sub-section (6) - the central government shall, upon the request of the company concerned, communicate to it in writing the reasons for such 10 order" 4 for section 4 of the principal act, the following section· shall substitution of new be substituted, namely: -section for section 4 "4 (1) no person shall circulate any offer, being a public control of offer, in the states for the subscription, or purchase of any advetrtlfsemen 0 securities unless consent or recognition has been accorded by orfe: s of the central government under this act to the issue or creation :~~i:l;:i~~: of such securities and a statement has been made to that effect in etc the offer 20 (2) no company shall circulate any offer, being an offer to existing holders of the securities of that company or to existing holders of the securities of any other company specified in the offer, in the states for the subscription or purchase of any securities of such company unless recognition has been accorded by the central government under this act to the issue or creation of such securities and a statement has been made to that effect in the offer 30 (3) no person shall without the consent of the central government circulate any offer, being a public offer, in the states for the sale of any securities issued or created with the consent or recognition of the central government if such issue or creation was made by a private company or if the order according consent or recognition contained a condition that the securities should be privately subscribed" 5 in section 6 of the principal act, in sub-section (2), after the amendment word and figure "section 4" in both the places where they occur, the of section 6 35 words and figure "or section 5" shall be inserted of new section for section 7 6 for section 7 of the principal act, the following section shall be substituted, namely:-power to call for information "7 any officer authorised in this behalf by the central government may, for the purpose of inquiring into the correctness of any statement made in an application for consent or recogni- s tion to an issue of capital or for the purpose of ascertaining whether or not the requirements of any condition attached to an order according such consent or recognition have been complied with or for the purpose of obtaining particulars as to the total capital issued or for any other purposes of this act, require any 10 company or any officer of a company to submit and furnish to him within such time as may be specified in the requisition, such accounts, books or other documents and such infonnation as he may reasonably think necessary" ~~:~ 7 in section 8 of the principal act, after the words "issue of 15 capital", the words "or in connection with any of the other provisions of this act", shall be inserted amendment of~aectiod i:z· 8 section 12 of the principal act shall be re-numbered as subsection (1) of that section and after the said sub-section as so re- 20 numbered, the following sub-section shall be inserted, namely:-ii (2) all rules made under this sectton shall be laid for not less than thirty days before each house of parliament as soon as possible after they are made and shall be subject to such modifications as parliament may make during the session immediately following" 25  statement of objects and reasonsthe capital issues (control) act, 1947, does not specify that capitalisation of reserves for the purpose of crediting partly paid shares as fully paid or for increasing the par value of shares already issued, requires prior permission this bill, therefore, seeks to clarify the position in this regard 2 it has been the intention, ever since the inception of control on capital issues, that the execution of mortgages or hypothecations should require prior approval under the act as the expression 'other instruments' occurring in section 2 (b) (iii) of the act is not sufficiently clear and has given room for doubts, it is proposed to put the matter beyond doubt by amplifying the definition of the term 'securities' in section 2 (b) so as to cover the transactions mentioned above similarly opportunity has now been taken to define the expressions 'company', 'prospectus', etc, which the act has so far left undefined and also for providing for certain other minor but relevant ltlgtters such as taking powers for revoking or varying consent already accorded, condoning offences under section 5 of the act and prohibition of the giving of false information in connection with any of the provisions of the act t t krishnamachari new deliu; the 6th septembe7', 1957  extracts from the capital issues (control) acr, 1944 (29 of 1947) - • - • - • - 2 in this act,-definitions (a) "issue of capital" means the issuing of any securities whether for cash or otherwise; (b) "securities" means any of the following instruments issued, or to be issued, by or for the benefit of a company, whether incorporated in the states or not, namely:-(i) shares, stocks and bonds; (ii) debentures; (iii) other instruments creating a charge or lien on the assets of the company; and (iv) instruments acknowledging loan to or indebtedness of the company and guaranteed by a third party or entered into jointly with a third party; (c) "states" means the territories comprised within the states to which this act extends  control ove~ prospectuses d 4 no person shall issue in the states any prospectus or other ff· f b· t· bi· iff· f 1 and other ocument 0 ermg or su scrip jon or pu ic y 0 ermg or sa e any advertisesecurities which does not include a statement that the consent or ments recognition, as the case may be, of the central government has been obtained to the issue or offer of the securities, and no person shall without the consent of the central government issue in the states any document publicly offering for sale any security issued with the consent or recognition of the central government if such issue was made by a private company or if the order according its consent or recognition contained a condition that the securities should be privately supscribed 6 (1) power to exempt and 1o co:ldone cont raventlons (2) the central government msy by order condone a contravention of any of the pr~visions of section 3 or section 4, and on the making of such order the provisions of this act shall have effect as if an exemption had been granted under sub-section (1) of this section in respect of the thing done or omitted to be done in contravention of ~ection 3 or section 4, as the case may be 7 any officer authorized in this behalt by the central govern- powe;ro c~1i ment may, for the purpose of enquiring into the correctness of any for inforstatement made in an application for consent or recognition to an mahon issue of capital or for the purpose of ascertaining }y'hether or not the requirements of any condition attached to an order according such consent or recognition have been complied with, require any company, or any officer of a company, which has made such application or obtained such order to submit to him such accounts, books or other documents, or to furnish to him such information, as he may reasonably think necessary state-8 no person shell, when complying with any requisition under falte section 7 or when making any application for consent or recognition menl to an issue of capital, give any information or make any statement which he knows, or has reasonable cause to believe, to be false or not true in any material particular - - - - - - - - 12 the central government may by notification in the official power to gazette make rules for carrying out the purposes of this act and make rules in particular for the levy of fees on applications made to the central government for its consent  - - - - - - - a bill further to amend the capital issues (control) act, 1947· minister of finance) 