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The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



1*[(1) Every company shall keep one or more registers in which shall be entered separately particulars of all contracts or arrangements to which section 297 or section 299 applies, including the following particulars to the extent they are applicable in each case, namely:-

(a) The date of the contract or arrangement;

(b) The names of the parties thereto;

(c) The principal terms and conditions thereof;

(d) In the case of a contract to which section 297 applies or in the case of a contract or arrangement to which sub-section (2) of section 299 applies, the date on which it was placed before the Board;

(e) The names of the directors voting for and against the contract or arrangement and the names of those remaining neutral.

(2) Particulars of every such contract or arrangement to which section 297 or, as the case may be, sub-section (2) of section 299 applies, shall be entered in the relevant register aforesaid-

(a) In the case of a contract or arrangement requiring the Board's approval, within seven days (exclusive of public holidays) of the meeting of the Board at which the contract or arrangement is approved,

(b) In the case of any other contract or arrangement, within seven days of the receipt at the registered office of the company of the particulars of such other contract or arrangement or within thirty days of the date of such other contract or arrangement whichever is later;and the register shall be placed before the next meeting of the Board and shall then be signed by all the directors present at the meeting.

(3) The register aforesaid shall also specify, in relation to each director of the company, the names of the firms and bodies corporate of which notice has been given by him under sub-section (3) of section 299.

(3A) Nothing in sub-sections (1), (2) and (3) shall apply-

(a) To any contract or arrangement for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed one thousand rupees in the aggregate in any year; or

(b) To any contract or arrangement (to which section 297 or, as the case may be, section 299 applies) by a banking company for the collection of bills in the ordinary course of its business or to any transaction referred to in clause (c) of sub-section (2) of section 297.]

(4) If default is made in complying with the provisions of sub-section (1), (2) or (3), the company, and every officer of the company who is in default, shall, in respect of each default, be punishable with fine which may extend to 2*[five thousand rupees].

(5) The register aforesaid shall be kept at the registered office of the company; and it shall be open to inspection at such office, and extracts may be taken therefrom and copies thereof may be required, by any member of the company to the same extent, in the same manner, and on payment of the same fee, as in the case of the register of members of the company; and the provisions of section 163 shall apply accordingly.

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1. Substituted by Act 65 of 1960, Section 108, for sub-sections (1), (2) and (3) ( w.e.f. 28-12-1960).

2. Substituted by Act 53 of 2000, section 146, for "five hundred rupees" (w.e.f. 13-12-2000).

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(1) Where a company-

(a) Enters into a contract for the appointment of a manager of the company, in which contract any director of the company is in any way, whether directly or indirectly, concerned or interested; or

(b) Varies any such contract already in existence and in which a director is concerned or interested as aforesaid;

The company shall, within twenty-one days from the date of entering into the contract or of the varying of the contract, as the case may be, send to every member of the company an abstract of the terms of the contract or variation, together with a memorandum clearly specifying the nature of the concern or interest of the director in such contract or variation.

(2) Where a company enters into a contract for the appointment of a managing director of the company, or varies any such contract which is already in existence, the company shall send an abstract of the terms of the contract or variation to every member of the company within the time specified in sub-section (1); and if any other director of the company is concerned or interested in the contract or variation, a memorandum clearly specifying the nature of the concern or interest of such other director in the contract or variation shall also be sent to every member of the company with the abstract aforesaid.

2[***]

(4) Where a director becomes concerned or interested as aforesaid in any such contract as is referred to in sub-section (1), (2) or (3) after it is made, the abstract and the memorandum, if any, referred to in the said sub-section shall be sent to every member of the company within twenty-one days from the date on which the director becomes so concerned or interested.

(5) If default is made in complying with the foregoing provisions of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to3*[ten thousand rupees].

(6) All contracts entered into by a company for the appointment of a manager, managing director,4[***] shall be kept at the registered office of the company; and shall be open to the inspection of any member of the company at such office; and extracts may be taken therefrom and copies thereof may be required by any such member, to the same extent, in the same manner and on payment of the same fee, as in the case of the register of members of the company; and the provisions of section 163 shall apply accordingly.

(7) The provisions of this section shall apply in relation to any resolution5[***] of the Board of directors of a company appointing a manager or a managing or whole-time director, or varying any previous contract or resolution of the company relating to the appointment of a manager or a managing or whole-time director, as they apply in relation to any contract6[***] for the like purpose.

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1. The words "managing agent or secretaries and treasurers," omitted by Act 53 of 2000 (w.e.f. 13-12-2000).

2. Sub-section (3) omitted by Act 53 of 2000, Section 147 (w.e.f. 13 -12-2000).

3. Substituted by Act 53 of 2000, Section 147, for "one thousand rupees" (w.e.f. 13-12-2000).

4. The words "managing agent or secretaries and treasurers," omitted by Act 53 of 2000, Section 147 (w.e.f. 13-12-2000).

5. The words "or proposed resolution" omitted by Act 65 of 1960, Section 109 (w.e.f. 28-12-1960).

6. The words "or proposed contract" omitted by Act 65 of 1960, Section 109 (w.e.f. 28-12-1960).

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(1) Every company shall keep at its registered office a register of its directors, managing director,1[***] manager and secretary, containing with respect to each of them the following particulars, that is to say:-

(a) In the case of an individual, his present name and surname in full; any former name or surname in full;2[his father's name and surname in full or where the individual is a married woman, the husband's name and surname in full] his usual residential address; his nationality; and, if that nationality is not the nationality of origin, his nationality of origin; his business occupation, if any; if he holds the office of director, managing director,3[***] manager or secretary in any other body corporate, the particulars of each such office held by him; and except in the case of a private company which is not a subsidiary of a public company, the date of his birth;

(b) In the case of a body corporate, its corporate name and registered or principal office; and the full name, address, nationality, and nationality of origin, if different from that nationality4*[the father's name or where a director is a married woman, the husband's name] of each of its directors; and if it holds the office of1[***] manager or secretary in any other body corporate, the particulars of each such office;

(c) In the case of a firm, the name of the firm, the full name, address, nationality, and nationality of origin, if different from that nationality4*[the father's name or where a partner is a married woman, the husband's name] of each partner; and the date on which each became a partner; and if the firm holds the office of1[***] manager or secretary in any other body corporate, the particulars of each such office;

(d) If any director or directors have been nominated by a body corporate, its corporate name; all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (b) in respect of the body corporate;

(e) If any director or directors have been nominated by a firm, the name of the firm, all the particulars referred to in clause (a) in respect of each director so nominated, and also all the particulars referred to in clause (c) in respect of the firm.

Explanation.-For the purposes of this sub-section-

(1) Any person in accordance with5[whose directions or instructions], the Board of directors of a company is accustomed to act shall be deemed to be a director of the company;

(2) In the case of a person usually known by a title different from his surname, the expression "surname" means that title; and

(3) References to a former name or surname do not include-

(i) In the case of a person usually known by an Indian title different from his surname, the name by which he was known previous to the adoption of, or succession to, the title;

(ii) In the case of any person, a former name or surname, where that name or surname was changed or disused before the person bearing the name attained the age of eighteen years, or has been changed or disused for a period of not less than twenty years; and

(iii) In the case of a married woman, the name or surname by which she was known previous to the marriage.

(2) The company shall, within the periods respectively mentioned in this subsection, send to the Registrar6[a return in duplicate in the prescribed form] containing the particulars specified in the said register and7*[a notification in duplicate in the prescribed form] of any change among its directors managing directors,1[***] managers or secretaries 8[***], specifying the date of the change.
The period within which the said return is to be sent shall be a period of9*[thirty] 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 9*[thirty] days from the happening thereof;

10[***]

(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to11*[five hundred rupees] for every day during which the default continues.

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1. The words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 148 (w.e.f. 13-12-2000).

2. Inserted by Act 65 of 1960, Section 110 (w.e.f. 28-12-1960) (w.e.f. 13-12-2000).

3. The words "managing agent" omitted by Act of 53 of 2000, Section 148 (w.e.f. 13-12-2000).

4. Inserted by Act 65 of 1960, Section 110 ( w.e.f. 28-12-1960).

5. Substituted by Act 65 of 1960, Section 110, for "whose instruction" ( w.e.f. 28-12-1960).

6. Substituted by Act 65 of 1960, Section 110, for "a return in the prescribed form" ( w.e.f. 28-12-1960).

7. Substituted by Act 65 of 1960, Section 110, for "a notification in the prescribed form" ( w.e.f. 28-12-1960).

8. The words "or in any of the particulars contained in the register" omitted by Act 31 of 1965, Section 41 ( w.e.f. 15-10-1965).

9. Substituted by Act 31 of 1965, Section 62 and Schedule, for "twenty-eight" ( w.e.f. 15-10-1965).

10. Proviso omitted by Act 31 of 1965, Section 41 ( w.e.f. 15-10-1965).

11. Substituted by The Companies (Amendment) Act, 2000, Section 148, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) The register kept under section 303 shall be open to the inspection of any member of the company without charge and of any other person on payment of one rupee for each inspection during business hours subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day are allowed for inspection.

(2) If any inspection required under sub-section (1) is refused,-

(a) The company, and every officer of the company who is in default, shall be punishable with fine which may extend to1[five hundred rupees]; and

(b) The 2*[Central Government or Tribunal, as the case may be] may, by order, compel an immediate inspection of the register.

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1. Substituted by Act 53 of 2000, Section 149, for "fifty rupees" (w.e.f. 13-12-2000).

2. Substituted by Act 31 of 1988, Section 67, for "Court" ( w.e.f. 31-5-1991) and again substituted by Act 11 of 2003, section 35, for "Company Law Board".

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(1) Every director, managing director,2[***] manager or secretary of any company, who is appointed to or relinquishes, the office of director, managing director,2[***] manager or secretary of any other body corporate, shall, within twenty days of his appointment to, or as the case may be, relinquishment of, such office, disclose to the company aforesaid the particulars relating to the office in the other body corporate which are required to be specified under sub-section (1) of section 303; and if he fails to do so, he shall be punishable with fine which may extend to3*[five thousand rupees].

(2) The provisions of sub-section (1) shall also apply to a person deemed to be a director of the company by virtue of the Explanation to sub-section (1) of section 303 when such person is appointed to, or relinquishes, any of the offices in the other body corporate referred to in sub-section (1).]

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1. Substituted by Act 65 of 1960, Section 111, for section 305 (w.e.f. 28-12-1960).

2. The words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 150 (w.e.f. 28-12-2000).

3. Substituted by The Companies (Amendment) Act, 2000, Section 150, for "five hundred rupees" (w.e.f. 13-12-2000).

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(1) The Registrar shall keep a separate register or registers in which there shall be entered the particulars received by him under sub-section (2) of section 303 in respect of companies, so however that all entries in respect of each such company shall be together.

(2) The register or registers aforesaid shall be open to inspection by any member of the public at any time during office hours, on payment of the prescribed fee.



(1) Every company shall keep a register showing, as respects each director of the company, the number, description and amount of any shares in, or debentures of, the company or any other body corporate, being the company's subsidiary or holding company, or a subsidiary of the company's holding company, which are held by him or in trust for him, or of which he has any right to become the holder whether on payment or not.

(2) Where any shares or debentures have to be recorded in the said register or to be omitted therefrom, in relation to any director, by reason of a transaction entered into after the commencement of this Act and while he is a director, the register shall also show the date of, and the price or other consideration for, the transaction:

Provided
that where there is an interval between the agreement for any such transaction and the completion thereof, the date so shown shall be that of the agreement.

(3) The nature and extent of any interest or right in or over any shares or debentures recorded in relation to a director in the said register shall, if he so requires be indicated in the register.

(4) The company shall not, by virtue of anything done for the purposes of this section, be affected with notice, of, or be put upon inquiry as to, the rights of any person in relation to any shares or debentures.

(5) The said register shall, subject to the provisions of this section, be kept at the registered office of the company, and shall be open to inspection during business hours (subject to such reasonable restrictions as the company may, by its articles or in general meeting, impose, so that not less than two hours in each day are allowed for inspection) as follows:-

(a) During the period beginning fourteen days before the date of the company's annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member or holder or debentures of the company; and

(b) During that or any other period, it shall be open to the inspection of any person acting on behalf of the Central Government or of the Registrar.

In computing the fourteen days and the three days mentioned in this sub-section any day which is a Saturday, a Sunday or a public holiday shall be disregarded.

(6) Without prejudice to the rights conferred by sub-section (5), the Central Government or the Registrar may, at any time require a copy of the said register, or any part thereof.
(7) The said register shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting.

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 to1*[five thousand rupees].

(8) If default is made in complying with sub-section (1) or (2), or if any inspection required under this section is refused, or if any copy required there under is not sent within a reasonable time, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to2*[fifty thousand rupees] and also with a further fine which may extend to3*[two hundred rupees] for every day during which the default continues.
(9) In the case of any such refusal, the4*[Central Government or Tribunal, as the case may be,] may also, by order, compel an immediate inspection of the register.

(10) For the purposes of this section-

(a) Any person in accordance with whose directions or instructions the Board of directors of a company is accustomed to act, shall be deemed to be a director of the company; and

(b) A director of a company shall be deemed to hold, or to have an interest or a right in or over, any shares or debentures, if a body corporate other than the company holds them or has that interest or right in or over them, and either-

(i) That body corporate or its Board of directors is accustomed to act in accordance with his directions or instructions; or

(ii) He is entitled to exercise or control the exercise of one-third or more of the total voting power exercisable at any general meeting of that body corporate.

5[***]

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1. Substituted by Act 53 of 2000, Section 151, for "five hundred rupees" (w.e.f. 13-12-2000).

2. Substituted by Act 53 of 2000, Section 151, for "five thousand rupees" ( w.e.f. 13-12-2000).

3. Substituted by Act 53 of 2000, Section 151, for "twenty rupees" ( w.e.f. 13-12-2000).

4. Substituted by Act 31 of 1988, Section 67, for "Court" ( w.e.f. 31-5-1991) and again substituted by Act 11 of 2003, section 35, for "Company Law Board".

5. Sub-section (11) Inserted by Act 65 of 1960, Section 112 ( w.e.f. 28-12-1960) and omitted by Act 53 of 2000, Section 151 ( w.e.f. 13-12-2000).

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Section 308 - Duty of directors and persons deemed to be directors to make disclosure of shareholdings
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(1) Every director of a company, and every person deemed to be a director of the company by virtue of sub-section (10) of section 307, shall give notice to the company of such matters relating to himself as may be necessary for the purpose of enabling the company to comply with the provisions of that section.
(2) Any such notice shall be given in writing, and if it is not given at a meting of the Board, the person giving the notice shall take all reasonable steps to secure that it is brought up and read at the meeting of the Board next after it is given.
(3) Any person who fails to comply with sub-section (1) or (2) shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to1[fifty thousand rupees], or with both.

_______________________
1. Substituted by Act 53 of 2000, Section 152, for "five thousand rupees" ( w.e.f. 13-12-2000).
________________________________________
Section 309 - Remuneration of directors
________________________________________
 
(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 1 [and the remuneration payable to any such director determined as aforesaid shall be inclusive of the remuneration payable to such director for services rendered by him in any other capacity:
Provided that any remuneration for services rendered by any such director in any other capacity shall not be so included if--
(a) the services rendered are of a professional nature, and
(b) in the opinion of the Central Government, the director possesses the requisite qualifications for the practice of the profession].
2 [(2) A director may receive remuneration by way of a fee for each meeting of the Board, or a committee thereof, attended by him:
Provided that where immediately before the commencement of the Companies (Amendment) Act, 1960, fees for meetings of the Board and any committee thereof, attended by a director are paid on a monthly basis, such fees may continue to be paid on that basis for a period of two years after such commencement or for the remainder of the term of office of such director, whichever is less, but no longer.
(3) A director who is either in the whole-time employment of the company or a managing director may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by one way and partly by the other:
Provided that except with the approval of the Central Government such remuneration shall not exceed five per cent of the net profits for one such director, and if there is more than one such director, ten per cent for all of them together.]
3 [(4) A director who is neither in the whole-time employment of the company nor a managing director may be paid remuneration--
(a) either by way of a monthly, quarterly or annual payment with the approval of the Central Government;
(b) or 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--
(i) one per cent of the net profits of the company, if the company has a managing or whole-time director, 4 [***] or a manager;
(ii) three per cent, of the net profits of the company, 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, as the case may be, three per cent, of its net profits.]
(5) The net profits referred to in sub-sections (3) and (4) shall be computed in the manner referred to in section 198, sub-section (1).
5 [(5A) If any director draws or receives, directly or indirectly, by way of remuneration any such sums in excess of the limit prescribed by this section or without the prior sanction of the Central Government, where it is required, he shall refund such sums to the company and until such sum is refunded, hold it in trust for the company.]
6 [(5B) The company shall not waive the recovery of any sum refundable to it under sub-section (5A) unless permitted by the Central Government.]
(6) No director of a company who is in receipt of any commission from the company and who is either in the whole-time employment of the company or a managing director shall be entitled to receive any commission or other remuneration from any subsidiary of such company.
(7) The special resolution referred to in sub-section (4) shall not remain in force for a period of more than five years; but may be renewed, from time to time, by special resolution for further periods of not more than five years at a time:
Provided that no renewal shall be effected earlier than one year from the date on which it is to come into force.
(8) The provisions of this section shall come into force immediately on the commencement of this Act or, where such commencement does not coincide with the end of a financial year of the company, with effect from the expiry of the financial year immediately succeeding such commencement.
(9) The provisions of this section shall not apply to a private company unless it is a subsidiary of a public company.

_______________________
1. Inserted by Act 31 of 1965, Section 42 (w.e.f. 15-10-1965).
2. Substituted by Act 65 of 1960, Section 113, for sub-sections (2) and (3) (w.e.f. 28-12-1960).
3. Substituted by Act 31 of 1965, Section 42, for sub-section (4) (w.e.f. 15-10-1965).
4. The words "a managing agent or secretaries and treasurers," omitted by Act 53 of 2000, Section 153 (w.e.f. 13-12-2000).
5. Inserted by Act 65 of 1960, Section 113 (w.e.f. 28-12-1960).
6. Substituted by Act 65 of 1960, Section 114, for certain words (w.e.f. 28-12-1960).
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Section 310 - Provision for increase in remuneration to require Government sanction
________________________________________
 
1 [In the case of a public company, or a private company which is a subsidiary of a public company, any provision relating to the remuneration of any director including a managing or whole-time director, or any amendment thereof, which purports to increase] or has the effect of increasing, whether directly or indirectly, the amount thereof, whether that provision be contained in the company's memorandum or articles, or in an agreement entered into by it, or in any resolution passed by the company in general meeting or by its Board of directors 2 [shall not have any effect--
(a) in cases where Schedule XIII is applicable, unless such increase is in accordance with the conditions specified in that Schedule; and
(b) in any other case, unless it is approved by the Central Government:]
3 [Provided that the approval of the Central Government shall 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 4 [such sum as may be prescribed]:
5 [Provided further that where in the case of any private company which converts itself into a public company or becomes a public company under the provisions of section 43A, any provision relating to the remuneration of any director including a managing or whole-time director as contained in its memorandum or articles or in any agreement entered into by it or in any resolution passed by it in general meeting or by its Board of directors includes a provision for the payment of fee for each meeting of the Board or a thereof attended by any such director which is in excess of the sum specified under the first provision, such provision shall be deemed to be an increase in the remuneration of such director and shall not, after it ceases to be a private company, or, as the case may be, becomes a public company, have any effect unless approved by the Central Government.]

_______________________
1. Substituted by Act 65 of 1960, Section 114, for certain words ( w.e.f. 28-12-1960).
2. Substituted by Act 31 of 1988, Section 47, for certain words ( w.e.f. 15-6-1988).
3. Added by Act 31 of 1965, Section 43 ( w.e.f. 15-10-1965).
4. Substituted by Act 31 of 1988, Section 47, for "two hundred and fifty rupees" ( w.e.f. 15-6-1988).
5. Inserted by Act 31 of 1988, Section 47 ( w.e.f. 15-6-1988).
________________________________________
Section 311 - Increase in remuneration of managing director on re-appointment or appointment after Act to require Government sanction
________________________________________
 
In the case of a public company, or a private company which is a subsidiary of a public company, if the terms of any re-appointment or appointment of a managing or whole-time director, made after the commencement of this Act, purport to increase or have the effect of increasing, whether directly or indirectly, the remuneration which the managing or whole-time director or the previous managing or whole-time director, as the case may be, was receiving immediately before such re-appointment or appointment, the re-appointment or appointment and shall become void if, and insofar as it is disapproved by that Government1[shall not have any effect--
(a) in cases where Schedule XIII is applicable, unless such increase is in accordance with the conditions specified in that Schedule; and
(b) in any other case, unless it is approved by the Central Government.]

_______________________
1. Substituted by Act 31 of 1988, Section 48, for certain words ( w.e.f. 15-6-1988).
________________________________________
Last updated on September, 2016

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