Indian Bare Acts

Search Alphabatically :

THE COMPANIES ACT,1956

Title : THE COMPANIES ACT,1956

Year : 1956



Where any prospectus is published as a newspaper advertisement, it shall not be necessary in the advertisement to specify the contents of the memorandum or the signatories thereto, or the number of shares subscribed for by them.



(1) Any reference in this Act or in the articles of a company to offering shares or debentures to the public shall, subject to any provision to the contrary contained in this Act and subject also to the provisions of sub-sections (3) and (4), be construed as including a reference to offering them to any section of the public, whether selected as members or debenture-holders of the company concerned or as clients of the person issuing the prospectus or in any other manner.

(2) Any reference in this Act or in the articles of a company to invitations to the public to subscribe for shares or debentures shall, subject as aforesaid, be construed as including a reference to invitations to subscribe for them extended to any section of the public, whether selected as members or debenture-holders of the company concerned or as clients of the person issuing the prospectus or in any other manner.

(3) No offer or invitation shall be treated as made to the public by virtue of sub-section (1) or sub-section (2), as the case may be, if the offer or invitation can properly be regarded, in all the circumstances -

(a) As not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or

(b) Otherwise as being a domestic concern of the persons making and receiving the offer or invitation:-

1*[Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more;

Provided further that nothing contained in the first proviso shall apply to the non-banking financial companies or public financial institution specified in section 4A of the Companies Act, 1956.]

1*[(3A) Notwithstanding anything contained in sub-section (3), the Securities and Exchange Board of India shall, in consultation with the Reserve Bank of India, by notification in the Official Gazette, specify the guidelines in respect of offer or invitation made to the public by a public financial institution specified under section 4A or non-banking financial company's referred to in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934)].

(4) Without prejudice to the generality of sub-section (3), a provision in a company's articles prohibiting invitations to the public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture-holders of an invitation which can properly be regarded in the manner set forth in that sub-section.

(5) The provisions of this Act relating to private companies shall be construed in accordance with the provisions contained in sub-sections (1) to (4).

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

1. Inserted by Act 53 of 2000, Section 24 (w.e.f. 13-12-2000).

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



Any person who either by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading or by any dishonest concealment of material facts, induces or attempts to induce another person to enter into, or to offer to enter into-

(a) Any agreement for or with a view to acquiring, disposing of, subscribing for, or underwriting shares or debentures; or

(b) Any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of shares
shall be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to1*[one lakh rupees], or with both.

68A - 2*Personation for acquisition, etc., of shares

(1) Any person who -

(a) Makes in a fictitious name an application to a company for acquiring, or subscribing for, any shares therein, or

(b) Otherwise induces a company to allot, or register any transfer of, shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.

(2) The provisions of sub-section (1) shall be prominently reproduced in every prospectus issued by the company and in every form of application for shares which is issued by the company to any person.

68B -2* Initial offer of securities to be in dematerialised form in certain cases

Notwithstanding anything contained in any other provisions of this Act, every listed public company, making initial public offer of any security for a sum of rupees ten crores or more, shall issue the same only in dematerialised form by complying with the requisite provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made there under.

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

1. Substituted by Act 53 of 2000, Section 25, for "ten thousand rupees" (w.e.f. 13-12-2000).

2. Inserted by Act 31 of 1965, Section 8 (w.e.f. 15-10-1965).

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



(1) No allotment shall be made of any share capital of a company offered to the public for subscription, unless the amount stated in the prospectus as the minimum amount which, in the opinion of the Board of directors, must be raised by the issue of share capital in order to provide for the matters specified in clause 5 of Schedule II has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company, whether in case or by a cheque or other instrument which has been paid.

(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in money, and is in this Act referred to as "the minimum subscription".

(3) The amount payable on application on each share shall not be less than five per cent of the nominal amount of the share.

1*[(4) All moneys received from applicants for shares shall be deposited and kept deposited in a Scheduled Bank-

(a) Until the certificate to commence business is obtained under section 149, or

(b) Where such certificate has already been obtained, until the entire amount payable on applications for shares in respect of the minimum subscription has been received by the company,
and where such amount has not been received by the company within the time or the expiry of which the moneys received from the applicants for shares are required to be repaid without interest under sub-section (5), all moneys received from applicants for shares shall be returned in accordance with the provisions of that sub-section. In the event of any contravention of the provisions of this sub-section, every promoter, director or other person who is knowingly responsible for such contravention shall be punishable with fine which may extend to2*[fifty thousand rupees].]

(5) If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent, per annum from the expiry of the one hundred and thirtieth day:-

Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(6) Any condition purporting to require or bind any applicant for shares to waive compliance with any requirement of this section shall be void.

(7) This section, except sub-section (3) thereof, shall not apply in relation to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

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

1. Substituted by Act 31 of 1965, Section 9, for sub-section (4) (w.e.f. 15-10-1965).

2. Substituted by Act 53 of 2000, Section 27, for "five thousand rupees" (w.e.f. 13-12-2000).

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



(1) A company having a share capital, which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing in the form and containing the particulars set out in Part I of Schedule III and, in the cases mentioned in Part II of that Schedule setting out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.

(2) Every statement in lieu of prospectus delivered under sub-section (1), shall, where the persons making any such report as aforesaid have made therein, or have without giving the reasons indicated therein, any such adjustments as are mentioned in clause 5 of Schedule III, have endorsed thereon or attached thereto a written statement signed by those persons, setting out the adjustments and giving the reasons thereof.

(3) This section shall not apply to a private company.

(4) If a company acts in contravention of sub-section (1) or (2), the company, and every director of the company who willfully authorises or permits the contravention, shall be punishable with fine which may extend to1*[ten thousand rupees].

(5) Where a statement in lieu of prospectus delivered to the Registrar under sub¬section (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration 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, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the delivery for registration of the statement in lieu of prospectus believe, that the statement was true.

(6) For the purposes of this section-

(a) A statement included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

(b) Where the omission from a statement in lieu of prospectus of any matter is calculated to mislead, the statement in lieu of prospectus shall be deemed, in respect of such omission, to be a statement in lieu of prospectus in which an untrue statement is included.

(7) For the purposes of sub-section (5) and clause (a) of sub-section (6), the expression "included" when used with reference to a statement in lieu of prospectus, means included in the statement in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference incorporated therein, or issued therewith.

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

1. Substituted by Act 53 of 2000, Section 28, for "one thousand rupees" (w.e.f. 13-12-2000).

2. Substituted by Act 53 of 2000, Section 28, for "five thousand rupees" (w.e.f. 13-12-2000).

------------------------------------------------------------------------------------------------------------------------------------------------------------
Last updated on September, 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