Indian Bare Acts

Search Alphabatically :

The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



1*[192A. Passing of resolutions by postal ballot

(1) Notwithstanding anything contained in the foregoing provisions of this Act, a listed public company may, and in the case of resolutions relating to such business as the Central Government may, by notification, declare to be conducted only by postal ballot, shall, get any resolution passed by means of a postal ballot, instead of transacting the business in general meting of the company.

(2) Where a company decides to pass any resolution by resorting to postal ballot, it shall send a notice to all the shareholders, along with a draft resolution explaining the reasons therefore, and requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty days from the date of posting of the letter.

(3) The notice shall be sent by registered post acknowledgment due, or by any other method as may be prescribed by the Central Government in this behalf, and shall include with the notice, a postage prepaid envelope for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period.

(4) If a resolution is assented to by a requisite majority of the shareholders by means of postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf.

(5) If a shareholder sends under sub-section (2) his assent or dissent in writing on a postal ballot and thereafter any person fraudulently defaces or destroys the ballot paper or declaration of identity of the shareholder, such person shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.

(6) If a default is made in complying with sub-sections (1) to (4), the company and every officer of the company, who is in default shall be punishable with fine which may extend to fifty thousand rupees in respect of each such default.

Explanation
. -For the purposes of this section, "postal ballot includes voting by electronic mode.]

--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Inserted by Act 53 of 2000, Section 80 (w.e.f. 15-6-2000).

--------------------------------------------------------------------------------------------------------------------------------------------------------



(1) If any person, being an undischarged insolvent,-

(a) Discharges any of the functions of a director, or acts as or discharges any of me functions of the1[***] manager, of any company; or

(b) Directly or indirectly takes part or is concerned in the promotion, formation or management of any company; he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to2*[fifty thousand rupees], or with both.

(2) In this section, "company" includes -

(a) An unregistered company; and

(b) A body corporate incorporated outside India, which has an established place of business within India.

--------------------------------------------------------------------------------------------------------------------------------------------------------

1. The words ", managing agent, secretaries and treasurers, or" omitted by Act 53 of 2000, Section 88 (w.e.f. 13-12-2000).

2. Substituted by Act 53 of 2000, Section 88, for "five thousand rupees" (w.e.f. 13-12-2000).

--------------------------------------------------------------------------------------------------------------------------------------------------------



(1) Where-

(a) A person is convicted of any offence in connection with the promotion, formation or management of a company; or

(b) In the course of winding up a company it appears that a person-

(i) Has been guilty of any offence for which he is punishable (whether he has been convicted or not) under section 542; or

(ii) Has otherwise been guilty, while an officer of the company, of any fraud or misfeasance in relation to the company or of any branch of his duty to the company;the1*[Court or the Tribunal, as the case may be] may make an order that that person shall not, without the leave of the1*[Court or the Tribunal, as the case may be], be a director of, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company, for such period not exceeding five years as may be specified in the order.

(2) In sub-section (1), the expression "the court",-

(a) In relation to the making of an order against any person by virtue of clause (a) thereof,2*[ includes the Court or the Tribunal by which he is convicted, as well as any Court or Tribunal having jurisdiction to wind up ] the company as respects which the offence was committed; and

(b) in relation to the granting of leave, means any1*[Court or Tribunal] having jurisdiction to wind up the company as respects which leave is sought.

(3) A person intending to apply for the making of an order under this section by the3[ Court or the Tribunal having jurisdiction to wind up a company ] shall give not less than ten days' notice of his intention to the person against whom the order is sought, and at the hearing of the application, the last-mentioned person may appear and himself give evidence or call witnesses.

(4) An application for the making of an order under this section by the3*[Court or the Tribunal having jurisdiction to wind up a company ] may be made by the Official Liquidator, or by the liquidator of the company, or by any person who is or has been a member or creditor of the company.

(5) On the hearing of any application for an order under this section by the Official Liquidator or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the Official Liquidator or liquidator, the Official Liquidator or liquidator shall appear and call the4*[ attention of the Court or the Tribunal, as the case may be ,] to any matters which seem to him to be relevant, and may himself give evidence or call witnesses.

(6) An order may be made by virtue of sub-clause (ii) of clause (b) of sub-section (1), notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made5[***].

(7) If any person acts in contravention of an order made under this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to 6*[fifty thousand rupees], or with both.

(8) The provisions of this section shall be in addition to, and without prejudice to the operation of, any other provision contained in this Act.

-----------------------------------------------------------------------------------------------------------------------------------------------------------

1. Substituted by Act 11 of 2003, Section 26, for "Court".

2. Substituted by Act 11 of 2003, section 26, for "includes the Court by which he is convicted as well as any Court having jurisdiction to wind up".

3. Substituted by Act 11 of 2003, Section 26, for "Court having jurisdiction to wind up a company".

4. Substituted by Act 11 of 2003, Section 26, for "attention of the court".

5.Certain words omitted by Act 31 of 1965, section 19 (w.e.f. 15-10-1965).

6.Substituted by Act 53 of 2000, Section 89, for "five thousand rupees" (w.e.f. 13-12-2000).

--------------------------------------------------------------------------------------------------------------------------------------------------------



1*[(1) Save as provided in sub-section (2), no company shall after the commencement of this Act, appoint or employ any firm or body corporate to or in any office or place of profit under the company, other than the office of2[***] trustee for the holders of debentures of the company, for a term exceeding five years at a time:
Provided that the initial appointment or employment of a firm or body corporate to or in any office or place of profit as aforesaid may, with the approval of the Central Government, be made for a term not conceding ten years.]

3[***]

(3) Any firm or body corporate holding at the commencement of this Act any office or place of profit under the company shall, unless its term of office expires earlier, be deemed to have vacated its office immediately on the expiry of five years from the commencement of this Act.

(4) Nothing contained in sub-section (1) shall be deemed to prohibit the re-appointment, re-employment, or extension of the term of office, of any firm or body corporate by further periods not exceeding five years on each occasion;-

Provided that any such re-appointment, re-employment or extension shall not be sanctioned earlier than two years from the date on which it is to come into force.

(5) Any office or place in a company shall be deemed to be an office or place of profit under the company, within the meaning of this section, if the person holding it 4*[obtains from the company anything] by way of remuneration, whether as salary, fees, commission perquisites the right to occupy free of rent any premises as a place of evidence or otherwise.

(6) This section shall not apply to a private company, unless it is a subsidiary of a public company.
 
204A -5* Restrictions on the appointment of former managing agents or secretaries and treasurers to any office [Repealed]

[Repealed by the Companies (Amendment) Act, 2000 (53 of 2000) Section 91 (w.e.f. 13-12-2000)].

-----------------------------------------------------------------------------------------------------------------------------------------------------------

1 . Substituted by Act 65 of 1960, Section 57, for sub-section (1) (w.e.f. 28-12-1960).

2 . The words ", managing agent, secretaries and treasurers or" omitted by Act 53 of 2000, Section 90 (w.e.f. 13-12-2000).

3. Sub-section (2) omitted by Act 53 of 2000, Section 90 (w.e.f. 13-12-2000).

4. Substituted by Act 65 of 1960, Section 57, for "obtains anything" (w.e.f. 28-12-1960).

5. Inserted by Act 41 of 1974, Section 17 (w.e.f. 1-2-1975).

--------------------------------------------------------------------------------------------------------------------------------------------------------



(1) No dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub-section (2) or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation in accordance with those provisions and remaining undistributed or out of both or out of moneys provided by the Central Government or a State Government for the payment of dividend in pursuance of a guarantee given by that Government:

Provided that-

(a) If the company has not provided for depreciation for any previous financial year or years which falls or fall after the commencement of the Companies (Amendment) Act,.1960 (65 of 1960), it shall, before declaring or paying dividend for any financial year provide for such depreciation out of the profits of that financial year or out of the profits of any other previous financial year or years;

(b) If the company has incurred any loss in any previous financial year or years, which falls or fall after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960), is equal to the amount of the loss or an amount which is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set off against the profits of the company for the year for which dividend is proposed to be declared or paid or against the profits of the company for any previous financial year or years, arrived at in both cases after providing for depreciation in accordance with the provisions of sub-section (2) or against both;

(c) The Central Government may, if it thinks necessary so to do in the public interest, allow any company to declare or pay dividend for any financial year out of the profits of the company for that year or any previous financial year or years without providing for depreciation:-

Provided further that it shall not be necessary for a company to provide for depreciation as aforesaid where dividend for any financial year is declared or paid out of the profits of any previous financial year or years which falls or fall before the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).

2*[(1A) The Board of directors may declare interim dividend and the amount of dividend including interim dividend shall be deposited in a separate bank account within five days from the date of declaration of such dividend.

(1B) The amount of dividend including interim dividend so deposited under sub-section (1A) shall be used for payment of interim dividend.

(1C) The provisions contained in sections 205, 205A, 205C, 206, 206A and 207 shall, as far as may be, also apply to any interim dividend.]

(2) For the purpose of sub-section (1), depreciation shall be provided either-

(a) To the extent specified in section 350; or

(b) In respect of each item of depreciable asset, for such an amount as is arrived at by dividing ninety-five per cent of the original cost thereof to the company by the specified period in respect of such asset; or

(c) On any other basis approved by the Central Government which has the effect of writing off by way of depreciation ninety-five per cent of the original cost to the company of each such depreciable asset on the expiry of the specified period; or

(d) As regards any other depreciable asset for which no rate of depreciation has been laid down by 3*[this Act or any rules made there under], on such basis as may be approved by the Central Government by any general order published in the Official Gazette or by any special order in any particular case:

Provided that where depreciation is provided for in the manner laid down in clause (b) or clause (c), then, in the event of the depreciable asset being sold, discarded, demolished or destroyed the written down value thereof at the end of the financial year in which the asset is sold, discarded, demolished or destroyed, shall be written off in accordance with the proviso to section 350.

4*[(2A) Notwithstanding anything contained in sub-section (1), on and from the commencement of the Companies (Amendment) Act, 1974 no dividend shall be declared or paid by a company for any financial year out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub-section (2), except after the transfer to the reserves of the company of such percentage of its profits for that year, not exceeding ten per cent, as may be prescribed:-

Provided that nothing in this sub-section shall be deemed to prohibit the voluntary transfer by a company of a higher percentage of its profits to the reserves in accordance with such rules as may be made by the Central Government in this behalf.]

5*[(2B) A company which fails to comply with the provisions of section 80A shall not, so long as such failure continues, declare any dividend on its equity shares.]

(3) No dividend shall be payable except in cash:-

Provided that nothing in this sub-section shall be deemed to prohibit the capitalization of profits or reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on any shares held by the members of the company.

(4) Nothing in this section shall be deemed to affect in any manner the operation of section 208.

(5) For the purposes of this section-

(a) "Specified period" in respect of any depreciable asset shall mean the number of years at the end of which at least ninety-five per cent of the original cost of that asset to the company will have been provided for by way of depreciation if depreciation were to be calculated in accordance with the provisions of section 350;

(b) Any dividend payable in cash may be paid by cheque or warrant sent through the post directed to the registered address of the shareholder entitled to the payment of the dividend or in the case of joint shareholders, to the registered address of that one of the joint shareholders which is first named on the register of members, or to such person and to such address as the shareholder or the joint shareholders may in writing direct.]

205A - 6*Unpaid dividend to be transferred to special dividend account

(1) Where, after the commencement of the Companies (Amendment) Act, 1974, a dividend has been declared by a company but has not been paid 7*[or claimed] within 8*[thirty days] from the date of the declaration, to any shareholder entitled to the payment of the dividend, the company shall, within seven days from the date of expiry of the said period of 8*[thirty days], transfer the total amount of dividend which remains unpaid 9* [or unclaimed] within the said period of 8*[thirty days, to a special account to be opened by the company in that behalf in any scheduled bank, to be called "Unpaid Dividend Account of ...... Company Limited/Company (Private) Limited.

10*[Explanation.-In this sub-section, the expression "dividend which remains unpaid" means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.]

(2) Where the whole or any part of any dividend, declared by a company before the commencement of the Companies (Amendment) Act, 1974, remains unpaid at such commencement, the company shall, within a period of six months from such commencement, transfer such unpaid amount to the account referred to in sub¬section (1).

(3) Where, owing to inadequacy or absence of profits; in any year, any company proposes to declare dividend out of the accumulated profits earned by the company in previous years and transferred by it to the reserves, such declaration of dividend shall not be made except in accordance with such rules as may be made by the Central Government in this behalf, and, where any such declaration is not in accordance with such rules, such declaration shall not be made except with the previous approval of the Central Government.

(4) If default is made in transferring the total amount referred to in sub-section (1) or any part thereof to the unpaid dividend account of the concerned company, the company shall pay, from the date of such default interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent per annum and the interest accruing on such amount shall ensure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.

11*[(5) Any money transferred to the unpaid dividend account of a company in pursuance of this section which remains unpaid or unclaimed for a period of seven years from the date of such Transfer shall be transferred by the company to the Fund established under sub-section (1) of section 205C.]

(6) The company shall, when making any transfer under sub- section (5) to the 12*[Fund established under section 205C] any unpaid or unclaimed dividend, furnish 13* [to such authority or committee as the Central Government may appoint] in this behalf a statement in the prescribed form setting forth in respect of all sum included in such transfer, the nature of the sums, the names and last known addresses of the person entitled to receive the sum, the amount to which each person is entitled and the nature of his claim thereto and such other particulars as may be prescribed.

14* [(7) The company shall be entitled to a receipt from the authority or committee under sub-section (4) of section 205C for any money transferred by it to the Fund and such a receipt shall be an effectual discharge of the company in respect thereof.]

(8) If a company fails to comply with any of the requirements of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to 15* [five thousand rupees] for every day during which the failure continues.]

205B - 16* Payment of unpaid or unclaimed dividend

Any person claiming to be entitled to any money transferred under sub-section (5) of section 205A to the general revenue account of the Central Government, may apply to the Central Government for an order for payment of the money claimed; and the Central Government may, if satisfied, whether on a certificate by the company or otherwise, that such person is entitled to the whole or any part of the money claimed, make an order for the payment to that person of the sum due to him after taking such security from his as it may think fit:]

17*[Provided that nothing contained in this section shall apply to any person claiming to be entitled to any money transferred to the Fund referred to in section 205C on and after the commencement of the Companies (Amendment) Act, 1999.]

205C -18*  Establishment of Investor Education and Protection Fund

(1) The Central Government shall establish a fund to be called the Investor Education and Protection Fund (hereafter in this section referred to as the "Fund").

(2) There shall be credited to the Fund the following amounts, namely:-

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

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

(c) Matured deposits with companies;

(d) Matured debentures with companies;

(e) The interest accrued on the amounts referred to in clauses (a) to (d);

(f) Grants and donations given to the Fund by the Central Government, State Governments, companies or any other institutions for the purposes of the Fund; and

(g) The interest or other income received out of the investments made from the Fund:-

Provided
that no such amounts referred to in clauses (a) to (d) shall form part of the Fund unless such amounts have remained unclaimed and unpaid for a period of seven years from the date they became due for payment.

Explanation. -For the removal of doubts, it is hereby declared that no claims shall lie against the Fund or the company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.

(3) The Fund shall be utilised for promotion of investors' awareness and protection of the interests of investors in accordance with such rules as may be prescribed.

(4) The Central Government shall, by notification in the Official Gazette, specify an authority or committee, with such members as the Central Government may appoint, to administer the Fund, and maintain separate accounts and other relevant records in relation to the Fund in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India.

(5) It shall be competent for the authority or committee appointed under sub-section (4) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.]

-----------------------------------------------------------------------------------------------------------------------------------------------------------

1. Substituted by Act 65 of 1960, Section 58, for section 205 (w.e.f. 28-12-1960).

2. Inserted by Act 53 of 2000, Section 92 (w.e.f. 13-12-2000).

3. Substituted by Act 31 of 1988, Section 26, for "the Indian Income-tax Act, 1922 (11 of 1922) or the rules made thereunder " (w.e.f. 15-6-1988).

4. Inserted by Act 41 of 1974, Section 18 ( w.e.f. 1-2-1975).

5. Inserted by Act 31 of 1988, Section 26 ( w.e.f. 15-6-1988).

6. Inserted by Act 41 of 1974, Section 19 ( w.e.f. 1-2-1975).

7. Substituted by Act 31 of 1988, Section 27, for "or the warrant in respect thereof has not been posted" ( w.e.f. 15-6-1988).

8. Substituted by Act 53 of 2000, Section 93, for "forty-two days" (w.e.f. 13-12-2000).

9. Substituted by Act 31 of 1988, Section 27, for "or in relation to which no dividend warrant has been posted" ( w.e.f. 15-6-1988).

10. Inserted by Act 31 of 1988, Section 27 ( w.e.f. 15-6-1988).

11. Substituted by Act 21 of 1999, Section 10, for sub-section (5) ( w.r.e.f. 31-10-1998).

12. Substituted by Act 21 of 1999, Section 10, for "general revenue account of the Central Government" ( w.r.e.f. 31-10-1998).

13. Substituted by Act 21 of 1999, Section 10, for "to such officer as the Central Government may appoint" ( w.r.e.f. 31-10-1998).

14. Substituted by Act 21 of 1999, Section 10 for sub-section (7) ( w.r.e.f. 31-10-1998).

15. Substituted by Act 53 of 2000, Section 93, for "five hundred rupees" (w.e.f. 13-12-2000).

16. Inserted by Act 41 of 1974, Section 19 ( w.e.f. 1-2-1975).

17. Inserted by Act 21 of 1999, Section 11 ( w.r.e.f. 31-10-1998).

18. Inserted by Act 21 of 1999, Section 12 ( w.r.e.f. 31-10-1998).

-----------------------------------------------------------------------------------------------------------------------------------------------------------



(1) No dividend shall be paid by a company in respect of any share therein, except-

(a) To the registered holder of such share or to his order or to his bankers; or

(b) In case a share warrant has been issued in respect of the share in pursuance of section 114, to the bearer of such warrant or to his bankers.

(2) Nothing contained in sub-section (1) shall be deemed to require the bankers of a registered shareholder to make a separate application to the company for the payment of the dividend.

206A - 1* Right to dividend, rights shares and bonus shares to he held in abeyance pending registration of transfer of shares

Where any instrument of transfer of shares has been delivered to any company for registration and the transfer of such shares has not been registered by the company, it shall notwithstanding anything contained in any other provision of this Act, -

(a) Transfer the dividend in relation to such shares to the special account referred to in section 205A unless the company is authorised by the registered holder of such share in writing to pay such dividend to the transferee specified in such instrument of transfer; and

(b) Keep in abeyance in relation to such shares any offer of rights shares under clause (a) of sub-section (1) of section 81 and any issue of fully paid-up bonus shares in pursuance of sub-section (3) of section 205.]

-----------------------------------------------------------------------------------------------------------------------------------------------------------

1. Inserted by Act 31 of 1988, Section 28, ( w.e.f. 15-6-1988).

-----------------------------------------------------------------------------------------------------------------------------------------------------------



Where a dividend has been declared by a company but has not been paid, or the warrant in respect thereof has not been posted, within thirty days from the date of declaration, to any shareholder entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to three years and shall also be liable to a fine of one thousand rupees for every day during which such default continues and the company shall be liable to pay simple interest at the rate of eighteen per cent, per annum during the period for which such default continues:-

Provided that no offence shall be deemed to have been committed within the meaning of the foregoing provisions in the following cases, namely:-

(a) Where the dividend could not be paid by reason of the operation of any law;

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

(c) Where there is a dispute regarding the right to receive the dividend;

(d) Where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or

(e) Where, for any other reason, the failure to pay the dividend or to post the warrant within the period aforesaid was not due to any default on the part of the company.

------------------------------------------------------------------------------------------------------------------------------------------------------------

1. Substituted by Act 53 of 2000, Section 94, for Section 207 (w.e.f. 13-12-2000).

------------------------------------------------------------------------------------------------------------------------------------------------------------



Payment of interest out of capital

(1) Where any shares in a company are issued for the purpose of raising money to defray the expenses of the construction of any work or building, or the provision of any plant, which cannot be made profitable for a lengthy period, the company may-

(a) Pay interest on so much of that share capital as is for the time being paid up, for the period and subject of the conditions and restrictions mentioned in sub¬-sections (2) to (7); and

(b) Charge the sum so paid by way of interest, to capital as part of the cost of construction of the work or building or the provision of the plant.

(2) No such payment shall be made unless it is authorised by the articles or by a special resolution.

(3) No such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Central Government.

The grant of such sanction shall be conclusive evidence, for the purposes of this section, that the shares of the company, in respect of which such sanction is given, have been issued for a purpose specified in this section.

(4) Before sanctioning any such payment, the Central Government may, at the expense of the company, appoint a person to inquire into, and report to the Central Government on, the circumstances of the case; and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry.

(5) The payment of interest shall be made only for such period as may be determined by the Central Government; and that period shall in no case extend beyond the close of the half-year next after the half-year during which the work or building has been actually completed or the plant provided.

(6) The rate of interest shall in no case except four per cent per annum or such other rate as the Central Government may, by notification in the Official Gazette, direct.

(7) The payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.
(8) Nothing in this section shall affect any company to which the Indian Railway Companies Act, 1895 (10 of 1895), or the Indian Tramways Act, 1902 (4 of 1902) applies.



1*[(1) Every company shall keep at its registered office proper books of account with respect to-

(a) All sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place;

(b) All sales and purchases of goods by the company; 2 [***]

(c) The assets and liabilities of the company; 3 [and]

3*[(d) In the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed if such class of companies is required by the Central Government to include such particulars in the books of account:]

Provided that all or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.]

(2) Where a company has a branch office, whether in or outside India, the company shall be deemed to have complied with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarised returns, made up to dates at intervals of not more than three months, are sent by the branch office to the company at its registered office or the other place referred to in sub-section (1).

4*[(3) For the purposes of sub-sections (1) and (2), proper books of account shall not be deemed to be kept with respect to the matters specified therein,-

(a) If there are not kept such books as are necessary to give a true and fair view of the state of affairs of the company or branch office, as the case may be, and to explain its transactions; and

(b) If such books are not kept on accrual basis and according to the double entry system of accounting.]

5*[(4) 6[***] The books of account and other books and papers shall be open to inspection by any director during business hours.]

7 [***]

8*[(4A) The books of account of every company relating to a period of not less than eight years immediately preceding the current year 3*[together with the vouchers relevant to any entry in such books of account] shall be preserved in good order:-

Provided that in the case of a company incorporated less than eight years before the current year, the books of account for the entire period preceding the current year 3*[together with the vouchers relevant to any entry in such books of account] shall be so preserved.]

(5) If any of the persons referred to in sub-section (6) fails to take all reasonable steps to secure compliance by the company with the requirements of this section, or has by his own wilful act been the cause of any default by the company thereunder, he shall, in respect of each offence, be punishable with 9*[imprisonment for a term which may extend to six months, or with fine which may extend to 10*[ten thousand rupees], or with both]:-

Provided that in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by the company with the requirements of this section, it shall be a defence to prove 11 [***]that a competent and reliable person was charged with the duty of seeking that those requirements were complied with and was in a position to discharge that duty:-

8*[Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed willfully.]

(6) The persons referred to in sub-section (5) are the following, namely:-

12*[(a) Where the company has a managing director or manager, such managing director or manager and all officers and other employees of the company; and]

13 [***]

14*[(d) Where the company has neither a managing director nor manager, every director of the company;]

15 [***]

(7) If any person, not being a person referred to in sub-section (6), having been charged by the 16 [***] 8[managing director, manager] or Board of directors, as the case may be, with the duty of seeing that the requirements of this section are complied with makes default in doing so, he shall, in respect of each offence, be punishable with 9*[imprisonment for a term which my extend to six months, or with fine which may extend to 10*[ten thousand rupees], or with both].

209A - 17* Inspection of books of accounts, etc. of companies

(1) The books of account and other books and papers of every company shall be open to inspection during business hours-

(i) By the Registrar, or

18*[(ii) By such officer of the Government as may be authorised by the Central Government in this behalf;

(iii) By such officers of the Securities of Exchange Board of India as may be authorised by it:

Provided that such inspection may be made without giving any previous notice to the company or any officer thereof:-

Provided further that the inspection by the Securities and Exchange Board of India shall be made in respect of matters covered under sections referred to in section 55A.]

(2) It shall be the duty of every director, other officer or employee of the company to produce to the person making inspection under sub-section (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify.

(3) It shall also be the duty of every director, other officer or employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give.

(4) The person making the inspection under this section may, during the course of inspection, -

(i) Make or cause to be made copies of books of accounts and other books and papers; or

(ii) Place or cause to be placed any marks of identification thereon in token of the inspection having been made.

(5) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, any person making an inspection under this section shall have the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-

(i) The discovery and production of books of account and other documents, at such place and such time as may be specified by such person;

(ii) Summoning and enforcing the attendance of persons and examining them on oath;

(iii) Inspection of any books, registers and other documents of the company at any place.

(6) Where an inspection of the books of account and other books and papers of the company has been made under this section, the person making the inspection shall make a report to the Central Government 19*[or the Securities and Exchange Board of India in respect of inspection made by its officers].

(7) Any officer authorised to make an inspection under this section shall have all the powers that a Registrar has under this Act in relation to the making of inquiries.

(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than20*[fifty thousand rupees], and also with imprisonment for a term not exceeding one year.

(9) Where a director or any other officer of a company has been convicted of an offence under this section he shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years from such date.]

--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Substituted by Act 65 of 1960, Section 60, for sub-section (1) (w.e.f. 28-12-1960).

2. The word "and" omitted by Act 31 of 1965, Section 20 (w.e.f. 15-10-1965).

3. Inserted by Act 31 of 1965, Section 20 (w.e.f. 15-10-1965).

4. Substituted by Act 31 of 1988, Section 29, for sub-section (3) ( w.e.f. 15-6-1988).

5. Substituted by Act 31 of 1965, Section 20, for sub-section (4) (w.e.f. 15-10-1965).

6. The brackets and letter "(a)" omitted by Act 41 of 1974, Section20 ( w.e.f. 1-2-1975).

7. Clauses (b), (c) and (d) omitted by Act 41 of 1974, Section 20 ( w.e.f. 1-2-1975).

8. Inserted by Act 65 of 1960, Section 60 (w.e.f. 28-12-1960).

9. Substituted by Act 65 of 1960, Section 60, for "fine which may extend to one thousand rupees" (w.e.f. 28-12-1960).

10. Substituted by Act 53 of 2000, Section 95, for "one thousand rupees" (w.e.f. 13-12-2000).

11. The words "that they had reasonable ground to believe, and did believe" omitted by Act 65 of 1960, Section 60 (w.e.f. 28-12-1960).

12. Substituted by Act 53 of 2000, Section 95, for clause (a) (w.e.f. 13-12-2000).

13. Clauses (b) and (c) omitted by Act 53 of 2000, Section 95 (w.e.f. 13-12-2000).

14. Substituted by Act 53 of 2000, Section 95, for clause (d) (w.e.f. 13-12-2000).

15. Clause (e) omitted by Act 53 of 2000, Section 95 (w.e.f. 13-12-2000).

16. The words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 95 (w.e.f. 13-12-2000).

17. Inserted by Act 41 of 1974, Section 21 ( w.e.f. 1-12-1975).

18. Substituted by Act 53 of 2000, Section 96, for clause (ii) and the proviso (w.e.f. 13-12-2000).

19 . Inserted by Act 53 of 2000, Section 96 (w.e.f. 13-12-2000).

20. Substituted by Act 53 of 2000, Section 96, for "five thousand rupees" (w.e.f. 13-12-2000).

-----------------------------------------------------------------------------------------------------------------------------------------------------



(1) At every annual general meeting of a company held in pursuance of section 166, the Board of directors of the company shall lay before the company -

(a) A balance-sheet as at the end of the period specified in sub-section (3); and

(b) A profit and loss account for that period.

(2) In the case of a company not carrying on business for profit, an income and expenditure account shall be laid before the company at its annual general meeting instead of a profit and loss account, and all references to "profit and loss account", "profit" and "loss" in this section and elsewhere in this Act, shall be construed, in relation to such a company, as references respectively to the "income and expenditure account", "the excess of income over expenditure", and "the excess of expenditure over income".

(3) The profit and loss account shall relate -

(a) In the case of the first annual general meeting of the company, to the period beginning with the incorporation of the company and ending with a day which shall not precede the day of the meeting by more than nine months; and

1*[(b) In the case of any subsequent annual general meeting of the company, to the period beginning with the day immediately after the period for which the account was last submitted and ending with a day which shall not precede the day of the meeting by more than six months, or in cases where an extension of time has been granted for holding the meeting under the second proviso to sub-section (1) of section 166, by more than six months and the extension so granted.]

(4) The period to which the account aforesaid relates is referred to in this Act as a "financial year"; and it may be less or more than a calendar year, but it shall not exceed fifteen months:-

Provided that it may extend to eighteen months where special permission has been granted in that behalf by the Registrar.

(5) If any person, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to2*[ten thousand rupees], or with both:-

Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove3[***] that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty:-

Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed willfully.

(6) If any person, not being a director of the company, having been charged by the Board of directors with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to2*[ten thousand rupees], or with both:-

Provided that no person shall be sentenced to imprisonment for any such offence unless it was committed willfully.

210A - 4*Constitution of National Advisory Committee on Accounting Standards

(1) The Central Government may, by notification in the Official Gazette, constitute an Advisory Committee to be called the National Advisory Committee on Accounting Standards ( hereafter in this section referred to as the "Advisory Committee") to advise the Central Government on the formulation and laying down of accounting standards for adoption by companies or class of companies under this Act.

(2) The Advisory Committee shall consist of the following members, namely:-

(a) A Chairperson who shall be a person of eminence and well versed in accountancy, finance, business administration, business law, economics or similar discipline;

(b) One member each nominated by the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949 (38 of 1949), the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959), and the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980);

(c) One representative of the Central Government to be nominated by it;

(d) One representative of the Reserve Bank of India to be nominated by it;

(e) One representative of the Comptroller and Auditor-General of India to be nominated by him;

(f) A person who holds or has held the office of professor in accountancy, finance or business management in any university or deemed university;

(g) The Chairman of the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) or his nominee;

(h) Two members to represent the chambers of commerce and industry to be nominated by the Central Government; and

(i) One representative of the Securities and Exchange Board of India to be nominated by it.

(3) The Advisory Committee shall give its recommendations to the Central Government on such matters of accounting policies and standards and auditing as may be referred to it for advice from time to time.

(4) The members of the Advisory Committee shall hold office for such term as may be determined by the Central Government at the time of their appointment and any vacancy in the membership in the Committee shall be filled by the Central Government in the same manner as the member whose vacancy occurred was filled.

(5) The non-official member of the Advisory Committee shall be entitled to such fees, travelling, conveyance and other allowances as are admissible to the officers of the Central Government of the highest rank.

-----------------------------------------------------------------------------------------------------------------------------------------------------------

1. Substituted by Act 65 of 1960, Section 61, for clause (b) (w.e.f. 28-12-1960).

2 . Substituted by Act 53 of 2000, Section 97, for "one thousand rupees" (w.e.f. 13-12-2000).

3. The words "that he had reasonable ground to believe and did believe" omitted by Act 65 of 1960, Section 61 (w.e.f. 28-12-1960).

4. Inserted by Act 21 of 1999, Section 13 ( w.r.e.f. 31-10-1998).

----------------------------------------------------------------------------------------------------------------------------------------------------------
Last updated on August, 2016

Find a Lawyer

Legal Hall of Fame

The current Legal Luminaries of India, the credible names in the legal circle along with those who would be the leading stars of the next decade. These are some of the reliable names in field of law. Nominate the Legal Stars of tomorrow

More

Recent Judgment


Sudha Mishra vs. Surya Chandra Mishra( R.F.A 299 of 2014

The Hon'ble High Court of Delhi in Sudha Mishra vs. Surya Chandra Mishra (R.F.A 299 of 2014)has ruled that a woman has a right over the property of her husband but she cannot claim a right to live in the house of her parents-in-law

More

Bare Acts

Helpline Law provides a user friendly compendium of Indian Law & Bare Acts. Get a complete list & detail of Indian Bare Acts, with amendments and repeals. It comes with easy-to-use features like Search by bare acts & by year. You can even email the information to yourself!

More

Have a Legal Matter ?
Need a Lawyer?

Have a Legal Matter ?

Need a Lawyer?

Male
Female