Title : THE STATE FINANCIAL CORPORATIONS ACT, 1951
Year : 1951
(1) Every Financial Corporation shall have its own fund, and all receipts of the Financial Corporation shall be carried thereto and all payments by the Corporation shall be made there from.
(2) All moneys belonging to the fund shall be deposited in the Reserve Bank 2*[or the State Bank of India or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), 1*[or in any of the banks specified in column 2 of the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970)]. 2*["or any of the banks specified in column 2 of the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)" 3*[or, in consultation with the Reserve Bank, in a scheduled bank or a State co- operative bank].
The Financial Corporation may invest its funds in the securities of the Central Government or of any State Government.
(1) The Financial Corporation shall establish a reserve fund.
(2) After making provision for bad and doubtful debts, depreciation of assets and all other matters which are usually provided for by banking companies, the Financial Corporation may out of its net annual profits declare a dividend : Provided that for so long as the reserve fund is less than the paid-up share capital of the Financial Corporation and until there has been repaid to the State Government such sum, if any, as that Government may have paid under guarantee given in pursuance of section 6, or 4*[section 7 or section 8], the rate of such dividend shall not exceed the rate guaranteed by the State Government under section 6. 5* * * * *
35A. Special reserve fund
(1) The Financial Corporation may establish a special reserve fund, to which shall be transferred such portion of the dividends accruing to 7*[the State Government, the Reserve Bank and the Development Bank] on the shares of the Financial Corporation as may be fixed by agreement between 7*[the State Government, the Reserve Bank and the Development Bank]:
1*[Provided further that after the specified date this sub-section shall have effect as if for the words "the State Government, the Reserve Bank and the Development Bank", the words "the State Government and the Development Bank" have been substituted except as regards all dividends accruing in respect of any completed accounting period prior to the specified date.]
(2) No shareholder of the Financial Corporation, other than 2*[the State Government, the Reserve Bank and the Development Bank], shall have any claim to the special reserve fund.
(3) The amount standing to the credit of the special reserve fund may be utilised by the Financial Corporation for only such purposes as are approved by 2*[the State Government, the Reserve Bank and the Development Bank].]
(1) A general meeting (hereinafter referred to as the annual general meeting) shall be held annually at a place in the State where there is an office of the Financial Corporation within 3*4*[four months] from the date on which the annual accounts of the Financial Corporation are closed, and a general meeting may be convened by the Board at any other time.
(2) The shareholders present at the annual general meeting shall be entitled to discuss the annual accounts, the report of the Board on the working of the Financial Corporation throughout the year and the auditors report on the annual balance-sheet and accounts.
(1) The affairs of the Financial Corporation shall be audited by auditors duly qualified to act as auditors of companies under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), who shall be appointed by the State Government in consultation with the Comptroller and Auditor-General of India and the Financial Corporation shall pay to the auditors so appointed such remuneration as the State Government may fix.]
(2) Every auditor shall be supplied with a copy of the annual balance-sheet of the Financial Corporation, and it shall be his duty to examine it, together with the accounts and vouchers relating thereto, and every auditor shall have a list delivered to him of all books kept by the Financial Corporation and shall at all reasonable times have access to the books, accounts and other documents of the Financial Corporation and may in relation to such accounts examine any director or officer of the Financial Corporation.
(3) The auditors shall make a report to the shareholders upon the annual balance-sheet and accounts, and in every such report they shall state whether in their opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and correct view of the state of affairs of the Financial Corporation, and in case they had called for any explanation or information from the Board, whether it has been given and whether it is satisfactory.
(4) The State Government may, in consultation with the Comptroller and Auditor-General of India, at any time issue directions to the auditors requiring them to report to it upon the adequacy of measures taken by the Financial Corporation for the protection of its shareholders and creditors or upon the sufficiency of their procedure in auditing the affairs of the Financial Corporation and may enlarge or extend the scope of the audit or direct that a different procedure in audit be adopted, or direct that any other examination be made by the auditors, if in its opinion public interest so requires.
(5) The Financial Corporation shall send a copy of every report of the auditors to the Comptroller and Auditor-General of India at least one month before it is placed before the shareholders.
(6) Notwithstanding anything contained in the preceding sub-sections, the Comptroller and Auditor-General of India may, either of his own motion or on a request received in this behalf from a State Government, undertake such audit and at such times as he may consider necessary:
Provided that where the State Government is required to make any payment on account of the guarantee given by it under section 6 or 5*[section 7 or section 8], as the case may be, such audit shall be undertaken by the Comptroller and Auditor-General of India.
(7) Every audit report under sub-section (6) shall be forwarded to the State Government and the Government shall cause the same to be laid before the Legislature of the State.
(1) The 2*[Development Bank] at any time may, with the approval of the Central Government, and on being directed so to do by that Government shall, cause an inspection to be made by one or more of its officers of the working of any Financial Corporation and its books and accounts; and the 2*[Development Bank] shall send the report of such inspection to the Central Government and to the State Government and shall supply a copy thereof to the Financial Corporation.
(2) It shall be the duty of every director or every officer of the Financial Corporation to produce to any officer making an inspection under sub-section (1) all such books, accounts and other documents in his custody or power and to furnish him with any statement and information relating to the affairs of the Financial Corporation as the said officer may require of him within such time as the said officer may specify.
(3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), or in any other law for the time being in force, no Court, tribunal or other authority shall have power to require the 2*[Development Bank] or any of its officers to produce before such Court, tribunal or other authority the report of the inspection made by it under sub-section (1) or any copy thereof.
(4) The State Government may, after considering any report sent to it under sub-section (1), give such instructions to the Board as it considers necessary and it shall be the duty of the Board to comply with such instructions.]
(1) The Financial Corporation shall furnish to the State Government, the Development Bank and the Reserve Bank such statements and returns in such form as the State Government, the Development Bank or the Reserve Bank may require from time to time."]
(2) The Financial Corporation shall furnish 1*[to the State Government, the Development Bank and the Reserve Bank] within 2*[four months] of the close of each financial year a statement in the prescribed form of its assets and liabilities as at the close of that year, together with a profit and loss account for the year, the auditor’s report and a report of the working of the Financial Corporation during the year and copies of the said statement, account and reports shall be published in the Official Gazette and shall also be laid before the Legislature of the State.
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