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The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



(1) A company shall, as from the day on which it begins to carry on business, or as from the1*[thirtieth] day after the date of its incorporation, whichever is earlier, have a registered office to which all communications are notices may be addressed.

(2) Notice of the situation of the registered office, and of every change therein, shall be given within2*[thirty] days after the date of the incorporation of the company or after the date of the change, as the case may be, to the Registrar who shall record the same:-

Provided
that except on the authority of a special resolution passed by the company, the registered office of the company shall not be removed -

(a) In the case of an existing company, outside the local limits of any city, town or village where such office is situated at the commencement of, this Act, or where it may be situated later by virtue of a special resolution passed by the company; and

(b) In the case of any other company, outside the local limits of any city, town or village where such office is first situated, or where it may be situated later by virtue of a special resolution passed by the company.

(3) The inclusion in the annual return of a company of a statement as to the address of its registered office shall not be taken to satisfy the obligation imposed by sub¬section (2).

(4) If default is made in complying with 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 to3*[five hundred rupees] for every day during which the default continues.

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

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

3.Substituted by Act 53 of 2000, Section 56, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) Every company -

(a) Shall paint or affix its name1*[and the address of its registered office], and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible; and if the characters employed therefore are not those of the language, or of one of the languages, in general use in that locality, also in the characters of that language or of one of those languages;

(b) Shall have its name engraven in legible characters on its seal; and

(c) Shall have its name1[and the address of its registered office] mentioned in legible characters in all its business letters, in all its bill heads and letter paper, and in all its notices2[***]and other official publications;3[and also have its name so mentioned in all bills of exchange], hundies, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of company.

(2) If a company does not paint or affix its name1*[and the address of its registered office], or keep the same painted or affixed in the manner directed by clause (a) of sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to4*[five hundred rupees] for not so painting or affixing its name1*[and the address of its registered office], and for every day during which its name1*[and the address of its registered office], is not so kept painted or affixed.

(3) If a company fails to comply with clause (b) or clause (c) of sub-section (i), the company shall be punishable with fine which may extend to5[five thousand rupees].

(4) If an officer of a company or any person on its behalf -

(a) Uses, or authorises the use of any seal purporting to be a seal of the company whereon its name is not engraven in the manner aforesaid;

(b) Issues, or authorises the issue of any business letter, bill head, letter paper, notice2[***] or other official publication of the company wherein6*[its name and the address of its registered office are] not mentioned in the manner aforesaid;

(c) Signs, or authorises to be signed, on behalf of the company, any bill of exchange, hundi, promissory note, endorsement, cheque or order for money or goods wherein its name is not mentioned in the manner aforesaid; or

(d) Issues, or authorises the issue of, any bill of parcels, invoice, receipt or letter of credit of the company, wherein ifs name is not mentioned in the manner aforesaid;

such officer or person shall be punishable with fine which may extend to5*[five thousand rupees], and shall further be personally liable to the holder of the bill of exchange, hundi, promissory note, cheque or order for money or goods, for the amount thereof, unless it is duly paid by the company.

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1. Inserted by Act 65 of 1960, Section 34 (w.e.f. 28-12-1960).

2. The word "advertisements" omitted by Act 65 of 1960, Section 34 (w.e.f. 28-12-1960).

3. Substituted by Act 65 of 1960, Section 34, for "and all bills of exchange" (w.e.f. 28-12-1960).

4. Substituted by Act 53 of 2000, Section 57, for "fifty rupees" (w.e.f. 13-12-2000).

5. Substituted by Act 53 of 2000, Section 57, for "five hundred rupees" (w.e.f. 13-12-2000).

6. Substituted by Act 65 of 1960, Section 34, for "its name is" (w.e.f. 28-12-1960).

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(1) Where any notice, advertisement or other official publication, or any business letter, bill head or letter paper, of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, bill head or letter paper, shall also contain a statement, in an equally prominent position and in equally conspicuous characters, of the amount of the capital which has been subscribed and the amount paid-up.

(2) If default is made in complying with the requirements of sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to1*[ten thousand rupees].

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1. Substituted by Act 53 of 2000, Section 58, for "one thousand rupees" (w.e.f. 13-12-2000).

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(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless-

(a) Shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;

(b) Every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription;

(c) No money is, or may become, liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for, or to obtain, permission for the shares or debentures to be dealt in on any recognized stock exchange; and

(d) There has been filed with the Registrar a duty verified declaration by1*[one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice] in the prescribed form, that clauses-(a), (b) and (c) of this sub-section, have been complied with.

(2) Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless-

(a) There has been filed with the Registrar a statement in lieu of prospectus;

(b) Every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

(c) There has been filed with the Registrar a duly verified declaration by1*[one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice] in the prescribed form, that clause (b) of this sub-section has been complied with.

2*[(2A) Without prejudice to the provisions of sub-section (1) and sub-section (2) a company having a share capital, whether or not it has issued a prospectus inviting the public to subscribe for its shares, shall not at any time commence any business-

(a) If such company is a company in existence immediately before the commencement of the Companies (Amendment) Act, 1965 (31 of 1965), in relation to any of the objects staled in its memorandum in pursuance of clause (c) of sub-section (1) of section 13;

(b) If such company, is a company formed after such commencement in relation to any of the objects stated in its memorandum in pursuance of sub-clause (ii) of clause (d) of sub-section (1) of the said section,unless-

(i) The company has approved of the commencement of any such business by a special resolution passed in that behalf by its general meeting; and

(ii) There has been filed with the Registrar a duty verified declaration by1*[one of the directors or the secretary or where the company has not appointed a secretary, a secretary in whole time practice] in the prescribed form, that clause (i) or as the case may be, sub-section (2B) has been complied with; and if the company commences any such business in contravention of this sub-section, every person who is responsible for the contravention shall, without prejudice to any other liability, be punishable with fine which may extend to3*[five thousand rupees] for every day during which the contravention continues.

Explanation. -A company shall be deemed to commence any business within the meaning of clause (a) if and only if it commences any new business which is not germane to the business which it is carrying on at the commencement of the Companies (Amendment) Act, 1965 (31 of 1965) in relation to any of the objects referred to in the said clause.

(2B) Notwithstanding anything contained in sub-section (2A) where no such special resolution as is referred to in that sub-section is passed but the votes cast (whether on a show of hands or, as the case may be, on a poll) in favour of the proposal to commence any business contained in the resolution moved in that general meeting (including the casting vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting, the Central Government may on an application made to it by the Board of directors in this behalf allow the company to commence such business as if the proposal had been passed by a special resolution by the company in general meeting.]

(3) The Registrar shall, on the filing of a duly verified declaration in accordance with the provisions of sub-section (1) or sub-section (2), as the case may be, and, in the case of a company which is required by sub-section (2) to file a statement in lieu of prospectus, also of such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled.

(4) Any contract made by a company before the date at which it is entitled to commence business shall be provisional only, and shall not be binding on the company until that date, and on that date it shall become binding.

(5) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on applications for debentures.

(6) If any company commences business or exercises borrowing powers in contravention of this section, every person who is responsible for the contravention shall, without prejudice to any other liability, be punishable with fine which may extend to4*[five thousand rupees] for every day during which the contravention continues.

(7) Nothing in this section shall apply to-

(a) A private company; or

(b) A company registered before the first day of April, 1914, which has not issued a prospectus inviting the public to subscribe for its shares.
 
5[***]

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1. Substituted by Act 31 of 1988, Section 20; for "one of the directors or the secretary" w.e.f. 15-6-1988.

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

3. Substituted by Act 31 of 1988, Section 20, for "one of the directors or the secretary" (w.e.f. 15-6-1988).

4. Substituted by Act 53 of 2000, Section 59, "five hundred rupees" (w.e.f. 13-12-2000).

5. Sub-section (8) omitted by Act 65 of 1960, Section 35 (w.e.f. 28-12-1960).

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(1) Every company shall keep in one or more books a register of its members, and enter therein the following particulars:-

(a) The name and address and the occupation, if any, of each member;

(b) In the case of a company having a share capital, the shares held by each member,1[***]2*[distinguishing each share by its number except where such shares are held with a depository] and the amount paid or agreed to be considered as paid on those shares;

(c) The date at which each person was entered in the register as a member; and

(d) The date at which any person ceased to be a member:-

Provided that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the register shall show the amount of stock held by each of the members concerned instead of the shares so converted which were previously held by him.

(2) If default is made in complying with sub-section (1), the company and every officer of the company who is in default, shall be punishable with fine which may extend to3*[five hundred rupees] for every day during which the default continues.

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1. The words "distinguishing each share by its number" omitted by Act 22 of 1996, Section 30 and Schedule (w.r.e.f. 20-9-1995).

2. Inserted by Act 8 of 1997, Section 11 (w.r.e.f. 15-1-1997).

3. Substituted by Act 53 of 2000, Section 60, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) Every company having more than fifty members shall, unless the register of members is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the members of the company and shall, within fourteen days, after the date on which any alteration is made in the register of members, make the necessary alteration in the index.

(2) The index shall, in respect of each member, contain a sufficient indication to enable the entries relating to that member in the register to be readily found.

(3) The index shall, at all times, be kept at the same place as the register of members.

(4) If default is made in complying with sub-sections (1), (2) or (3), the company and every officer of the company who is in default, shall be punishable with fine which may extend to1*[five hundred rupees].

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1. Substituted by Act 53 of 2000, Section 61, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) Every company shall keep in one or more books a register of the holders of its debentures and enter therein the following particulars, namely:-

(a) The name and address, and the occupation, if any, of each debenture-holder;

(b) The debentures held by each holder, 1 [***] 2*[distinguishing each debenture by its number except where such debentures are held with a depository] and the amount paid or agreed to be considered as paid on those debentures;

(c) The date at which each person was entered in the register as a debenture-holder; and

(d) The date at which any person ceased to be a debenture-holder.

(2) (a) Every company having more than fifty debenture-holders shall, unless the register of debenture-holders is in such a form as in itself to constitute an index, keep an index (which may be in the form of a card index) of the names of the debenture-holders of the company and shall, within fourteen days after the date on which any alteration is made in the register of debenture-holders, make the necessary alteration in the index.

(b) The index shall, in respect of each debenture-holder, contain a sufficient indication to enable the entries relating to that holder in the register to be readily found.

(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 to 3 [five hundred rupees].

(4) Sub-sections (1) to (3) shall not apply with respect of debentures which, ex facie, are payable to the bearer thereof:

152A - 4* Register and index of beneficial owners to be of debenture-holders

The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be an index of members and register and index of debenture-holders, as the case may be, for the purposes of this Act.

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1. The words "distinguishing each share by its number" omitted by Act 22 of  1996, sec. 30 and Schedule (w.r.e.f. 20-9-1995).

2. Inserted by Act 8 of 1997, Section 12 (w.r.e.f. 15-1-1997).

3. Substituted by Act 53 of 2000, Section 62, for "fifty rupees" (w.e.f. 13-12-2000).

4. Inserted by Act 22 of 1996, Section 30 and Schedule (w.r.e.f. 20-9-1995).

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Last updated on August, 2016

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