Any member or debentureholder of a company, and any person from whom the company has accepted a deposit shall, on demand, be entitled to be furnished, free of cost, with a copy of the last balance sheet of the company and of every document required to be annexed or attached thereto, including the profit and loss account and the Auditors’ report [Sec. 219 (2)]. H default is made in complying with the demand within 7 days of its making, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 5,000. The Company Law Board may also direct that the copy demanded be furnished forthwith [Sec. 219 (4)].
If default is made in complying with sub-section (1) of Section 219, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000 [Sec. 219 (3)].
Adoption of Accounts
One of the businesses to be transacted at a annual general meeting is adoption of the accounts including the balance sheet, profit and loss account and the Directors’ report thereon.
If the annual general meeting of a company does not adopt the balance sheet or is adjourned without adopting the balance sheet or if the annual general meeting of a
Tuesday, January 8, 2008
Adoption of Accounts
Adoption of Accounts
One of the businesses to be transacted at a annual general meeting is adoption of the accounts including the balance sheet, profit and loss account and the Directors’ report thereon.
If the annual general meeting of a company does not adopt the balance sheet or is adjourned without adopting the balance sheet or if the annual general meeting of a
Can Approval of Annual Accounts be delegated? The Department of Company Affairs [vide its letter dt. 27.10.76] has clarified that in the absence of any specific provision in Section 215, the power of the Directors to approve the annual accounts cannot be delegated to a Committee of Directors or some of the Directors. It, inter alia, states that the approval of annual accounts which are to be ultimately placed before the shareholders of the company is not to be treated as a routine or part of day-to-day work. Hence, the Board of Directors must consider the annual accounts and approve them before the accounts are handed over to the Statutory Auditor of the company.
Circulation of Annual Accounts
Section 219 (1) requires that a copy of every balance sheet (including the profit and loss account, Auditors’ report, Directors’ report and every other document required to be annexed or attached thereto) which is to be laid before the annual general meeting of the company shall be sent, not less than 21 days before the meeting, to every member of the company. Besides, a copy each must be sent to every trustee for the debentureholders of the company and to all other persons so entitled.
However, a copy of the annual account, as aforesaid, need not be sent in the
following cases:
(i) To a member, or holder of debentures, of the company, who is not entitled to
have notices of general meetings of the company sent to him.
(ii) To a member or debentureholder whose address the company is not aware
In the case of a company whose shares are listed on a recognised stock exchange, the aforesaid documents need not be sent to members and trustees for debentureholders if the copies of the documents are made available for inspection at its registered office during working hours for 21 days before the date of the meeting and a statement containing salient features of the said documents in the prescribed form, are sent to the members and trustees for debentureholders at least 21 days before the date of the meeting.
One of the businesses to be transacted at a annual general meeting is adoption of the accounts including the balance sheet, profit and loss account and the Directors’ report thereon.
If the annual general meeting of a company does not adopt the balance sheet or is adjourned without adopting the balance sheet or if the annual general meeting of a
Can Approval of Annual Accounts be delegated? The Department of Company Affairs [vide its letter dt. 27.10.76] has clarified that in the absence of any specific provision in Section 215, the power of the Directors to approve the annual accounts cannot be delegated to a Committee of Directors or some of the Directors. It, inter alia, states that the approval of annual accounts which are to be ultimately placed before the shareholders of the company is not to be treated as a routine or part of day-to-day work. Hence, the Board of Directors must consider the annual accounts and approve them before the accounts are handed over to the Statutory Auditor of the company.
Circulation of Annual Accounts
Section 219 (1) requires that a copy of every balance sheet (including the profit and loss account, Auditors’ report, Directors’ report and every other document required to be annexed or attached thereto) which is to be laid before the annual general meeting of the company shall be sent, not less than 21 days before the meeting, to every member of the company. Besides, a copy each must be sent to every trustee for the debentureholders of the company and to all other persons so entitled.
However, a copy of the annual account, as aforesaid, need not be sent in the
following cases:
(i) To a member, or holder of debentures, of the company, who is not entitled to
have notices of general meetings of the company sent to him.
(ii) To a member or debentureholder whose address the company is not aware
In the case of a company whose shares are listed on a recognised stock exchange, the aforesaid documents need not be sent to members and trustees for debentureholders if the copies of the documents are made available for inspection at its registered office during working hours for 21 days before the date of the meeting and a statement containing salient features of the said documents in the prescribed form, are sent to the members and trustees for debentureholders at least 21 days before the date of the meeting.
Secure compliance by the company
If any person who is responsible for keeping proper books of account fails to take all reasonable steps to secure compliance by the company with the requirement of law relating to the form and contents of the balance sheet, he is liable for each offence to imprisonment for a term extending upto six months or to a fine up to Rs. 10,000 or to both. However, no person shall be sentenced to imprisonment for any such offence, unless it was committed wilfully.
Prosecution against Directors cannot be maintained in absence of specific averment regarding non-existence of other persons mentioned in Section 209 (6) of the Companies
Act [Registrar of Companies Vs. S. Prashad (989) 59 Camp. Cas. 780 (Cal.)].
Can Approval of Annual Accounts be delegated? The Department of Company Affairs [vide its letter dt. 27.10.76] has clarified that in the absence of any specific provision in Section 215, the power of the Directors to approve the annual accounts cannot be delegated to a Committee of Directors or some of the Directors. It, inter alia, states that the approval of annual accounts which are to be ultimately placed before the shareholders of the company is not to be treated as a routine or part of day-to-day work. Hence, the Board of Directors must consider the annual accounts and approve them before the accounts are handed over to the Statutory Auditor of the company.
Circulation of Annual Accounts
Section 219 (1) requires that a copy of every balance sheet (including the profit and loss account, Auditors’ report, Directors’ report and every other document required to be annexed or attached thereto) which is to be laid before the annual general meeting of the company shall be sent, not less than 21 days before the meeting, to every member of the company. Besides, a copy each must be sent to every trustee for the debentureholders of the company and to all other persons so entitled.
However, a copy of the annual account, as aforesaid, need not be sent in the
following cases:
(i) To a member, or holder of debentures, of the company, who is not entitled to
have notices of general meetings of the company sent to him.
(ii) To a member or debentureholder whose address the company is not aware
In the case of a company whose shares are listed on a recognised stock exchange, the aforesaid documents need not be sent to members and trustees for debentureholders if the copies of the documents are made available for inspection at its registered office during working hours for 21 days before the date of the meeting and a statement containing salient features of the said documents in the prescribed form, are sent to the members and trustees for debentureholders at least 21 days before the date of the meeting.
Any member or debentureholder of a company, and any person from whom the company has accepted a deposit shall, on demand, be entitled to be furnished, free of cost, with a copy of the last balance sheet of the company and of every document required to be annexed or attached thereto, including the profit and loss account and the Auditors’ report [Sec. 219 (2)]. H default is made in complying with the demand within 7 days of its making, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 5,000. The Company Law Board may also direct that the copy demanded be furnished forthwith [Sec. 219 (4)].If default is made in complying with sub-section (1) of Section 219, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000 [Sec. 219 (3)].
Prosecution against Directors cannot be maintained in absence of specific averment regarding non-existence of other persons mentioned in Section 209 (6) of the Companies
Act [Registrar of Companies Vs. S. Prashad (989) 59 Camp. Cas. 780 (Cal.)].
Can Approval of Annual Accounts be delegated? The Department of Company Affairs [vide its letter dt. 27.10.76] has clarified that in the absence of any specific provision in Section 215, the power of the Directors to approve the annual accounts cannot be delegated to a Committee of Directors or some of the Directors. It, inter alia, states that the approval of annual accounts which are to be ultimately placed before the shareholders of the company is not to be treated as a routine or part of day-to-day work. Hence, the Board of Directors must consider the annual accounts and approve them before the accounts are handed over to the Statutory Auditor of the company.
Circulation of Annual Accounts
Section 219 (1) requires that a copy of every balance sheet (including the profit and loss account, Auditors’ report, Directors’ report and every other document required to be annexed or attached thereto) which is to be laid before the annual general meeting of the company shall be sent, not less than 21 days before the meeting, to every member of the company. Besides, a copy each must be sent to every trustee for the debentureholders of the company and to all other persons so entitled.
However, a copy of the annual account, as aforesaid, need not be sent in the
following cases:
(i) To a member, or holder of debentures, of the company, who is not entitled to
have notices of general meetings of the company sent to him.
(ii) To a member or debentureholder whose address the company is not aware
In the case of a company whose shares are listed on a recognised stock exchange, the aforesaid documents need not be sent to members and trustees for debentureholders if the copies of the documents are made available for inspection at its registered office during working hours for 21 days before the date of the meeting and a statement containing salient features of the said documents in the prescribed form, are sent to the members and trustees for debentureholders at least 21 days before the date of the meeting.
Any member or debentureholder of a company, and any person from whom the company has accepted a deposit shall, on demand, be entitled to be furnished, free of cost, with a copy of the last balance sheet of the company and of every document required to be annexed or attached thereto, including the profit and loss account and the Auditors’ report [Sec. 219 (2)]. H default is made in complying with the demand within 7 days of its making, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 5,000. The Company Law Board may also direct that the copy demanded be furnished forthwith [Sec. 219 (4)].If default is made in complying with sub-section (1) of Section 219, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000 [Sec. 219 (3)].
Institute of Chartered Accountants of India
The standards of accounting recommended by the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949, as may be prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards established under sub-section (1) of Section 210A.
However, the standard of accounting specified by the Institute of Chartered Accountants of India shall be deemed to be the Accounting Standards until the accounting standards are prescribed by the Central Government under sub-section (1) of Section 210A.
The above provisions are not applicable to insurance or banking company or any
company engaged in the generation or supply of electricity or any other class of companies for which a form of balance sheet has been specified in or under the Act governing such company. The Central Government may, by notification in the Official Gazette, exempt, in public interest, any class of companies from compliance with any of the requirements in Schedule VI. Any such exemption may be granted either unconditionally subject to such conditions as may be specified in the notification
[Section 211(3)].
Sub-section (4) of Section 211 provides that the Central Government may, on the application or with the consent of the Board of Directors of the company, by order, modify in relation to that company any of the requirements of this Act as to the matters
to be stated in the company’s balance sheet or profit and loss account for the purpose of adapting them to the circumstances of the company. However, it is necessary that any company which seeks exemption under Section 211(4) should indicate in the application whether the same has been made with the approval of the Board of Directors and forward a copy of the Board’s resolution in this regard alongwith the application [Vide Circular No. 1/84 0/1/84-CL- V and 3/83-CL- V), dated 19.4.1984].For the purposes of this Section, except where the context otherwise requires, any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act, and allowed by this Act to be given in the form of such notes or documents.
However, the standard of accounting specified by the Institute of Chartered Accountants of India shall be deemed to be the Accounting Standards until the accounting standards are prescribed by the Central Government under sub-section (1) of Section 210A.
The above provisions are not applicable to insurance or banking company or any
company engaged in the generation or supply of electricity or any other class of companies for which a form of balance sheet has been specified in or under the Act governing such company. The Central Government may, by notification in the Official Gazette, exempt, in public interest, any class of companies from compliance with any of the requirements in Schedule VI. Any such exemption may be granted either unconditionally subject to such conditions as may be specified in the notification
[Section 211(3)].
Sub-section (4) of Section 211 provides that the Central Government may, on the application or with the consent of the Board of Directors of the company, by order, modify in relation to that company any of the requirements of this Act as to the matters
to be stated in the company’s balance sheet or profit and loss account for the purpose of adapting them to the circumstances of the company. However, it is necessary that any company which seeks exemption under Section 211(4) should indicate in the application whether the same has been made with the approval of the Board of Directors and forward a copy of the Board’s resolution in this regard alongwith the application [Vide Circular No. 1/84 0/1/84-CL- V and 3/83-CL- V), dated 19.4.1984].For the purposes of this Section, except where the context otherwise requires, any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act, and allowed by this Act to be given in the form of such notes or documents.
“accounting standards"
Explain the provisions of the Companies Act, 1956 as regards keeping the books of
account. Who are responsible for this? What are the legal provisions for default in this respect.
(a) Books of Acc,ounts Required to be Kept
(b) Persons Responsible for Keeping Books of Account
The following persons shall be held responsible for the failure to take all reasonable steps to keep proper books of account, or if they have been the cause of any default by the company in this regard by their own wilful act, namely,
(i) where the company has a Managing Director or Manager, such Managing
Director or Manager
(ii) where the company has neither a Managing Director nor Manager, every
Director of the company
(iii) every officer and other employee and agent, as defined in Section 240(6) of the
Act excluding Bankers, Auditors and Legal Advisers of the company [Section
209(6)].
Sub-section (7) of Section 209 empowers a Managing Director, Manager or Board of Directors to make any person other than the persons referred to above responsible to ensure that the requirements of this Section are complied with.
Penalty. In case of default, any of the persons as aforesaid shall be punishable with imprisonment for a term which may extend to six months, or with fine upto Rs. 10,000 or both.
It is further provided that no such person shall be sentenced to imprisonment for such offence unless it was committed wilfully.
Defence Available. In any proceedings for failure to comply with the requirements of Section 209 of the Act by persons under this Section, it is open to the persons who are responsible for such compliance to prove that a competent and reliable person was charged with the duty of seeing that the requirements as to the maintenance of proper books of accounts were complied with and that such a person was in a position to discharge that duty [Sec. 209(5)].
Q. 3. State the law relating to the preparation and presentation of balance sheet and profit and loss account of a company.. Section 211 alongwith Schedule VI ‘Of the Companies Act deals with the preparation and presentation of balance sheet and profit and loss account of a company. This Section requires that every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year. The balance sheet should be in the form set out in Part I of Schedule VI, or as near thereto as circumstances permit, or in such other form as approved by the Central Government.
Schedule VI, Part I prescribes two forms in which balance sheet should be prepared, one horizontal and other vertical. It must contain all the information as specified in Schedule VI. In preparing the balance sheet, as far as possible, the general instructions given in ‘notes’ at the end of the part may be followed.
Schedule VI does not prescribe any form in which profit and loss account should be prepared. However, the profit and loss account should give a true and fair view of the profit and loss of the company for the financial year and should comply with the requirements of Part IT of Schedule VI so far as they are applicable.
It may be noted that the Companies (Amendment) Act, 1999 has amended Section 211 by including sub-sections (3A), (3B) and (3C). Sub-section (3A) provides that every profit and loss account and the balance sheet of the company shall comply with the accounting standards.
Where the profit and loss account and the balance sheet of the company do not comply with the accounting standards, such companies shall disclose in its profit and loss account and balance sheet, the following namely:
(a) the deviation from the accounting standards;
(b) the reasons for such deviation; and
© the financial effect, if any, arising due to such deviation [sub-section (3B)].
For the purposes of Section 211, the expression “accounting standards"
account. Who are responsible for this? What are the legal provisions for default in this respect.
(a) Books of Acc,ounts Required to be Kept
(b) Persons Responsible for Keeping Books of Account
The following persons shall be held responsible for the failure to take all reasonable steps to keep proper books of account, or if they have been the cause of any default by the company in this regard by their own wilful act, namely,
(i) where the company has a Managing Director or Manager, such Managing
Director or Manager
(ii) where the company has neither a Managing Director nor Manager, every
Director of the company
(iii) every officer and other employee and agent, as defined in Section 240(6) of the
Act excluding Bankers, Auditors and Legal Advisers of the company [Section
209(6)].
Sub-section (7) of Section 209 empowers a Managing Director, Manager or Board of Directors to make any person other than the persons referred to above responsible to ensure that the requirements of this Section are complied with.
Penalty. In case of default, any of the persons as aforesaid shall be punishable with imprisonment for a term which may extend to six months, or with fine upto Rs. 10,000 or both.
It is further provided that no such person shall be sentenced to imprisonment for such offence unless it was committed wilfully.
Defence Available. In any proceedings for failure to comply with the requirements of Section 209 of the Act by persons under this Section, it is open to the persons who are responsible for such compliance to prove that a competent and reliable person was charged with the duty of seeing that the requirements as to the maintenance of proper books of accounts were complied with and that such a person was in a position to discharge that duty [Sec. 209(5)].
Q. 3. State the law relating to the preparation and presentation of balance sheet and profit and loss account of a company.. Section 211 alongwith Schedule VI ‘Of the Companies Act deals with the preparation and presentation of balance sheet and profit and loss account of a company. This Section requires that every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year. The balance sheet should be in the form set out in Part I of Schedule VI, or as near thereto as circumstances permit, or in such other form as approved by the Central Government.
Schedule VI, Part I prescribes two forms in which balance sheet should be prepared, one horizontal and other vertical. It must contain all the information as specified in Schedule VI. In preparing the balance sheet, as far as possible, the general instructions given in ‘notes’ at the end of the part may be followed.
Schedule VI does not prescribe any form in which profit and loss account should be prepared. However, the profit and loss account should give a true and fair view of the profit and loss of the company for the financial year and should comply with the requirements of Part IT of Schedule VI so far as they are applicable.
It may be noted that the Companies (Amendment) Act, 1999 has amended Section 211 by including sub-sections (3A), (3B) and (3C). Sub-section (3A) provides that every profit and loss account and the balance sheet of the company shall comply with the accounting standards.
Where the profit and loss account and the balance sheet of the company do not comply with the accounting standards, such companies shall disclose in its profit and loss account and balance sheet, the following namely:
(a) the deviation from the accounting standards;
(b) the reasons for such deviation; and
© the financial effect, if any, arising due to such deviation [sub-section (3B)].
For the purposes of Section 211, the expression “accounting standards"
Effective enforceable acknowledgement
State the procedure for the following, explaining the relevant provisions of the
Companies Act:
(i) Appointment of First Auditor when the Board of Directors did not appoint
the First Auditor within one month of the date of registration of the
.company.
(ii) Removal of First-Auditor before the expiry of his term12. How far is Balance Sheet an acknowledgement of a debt of a company? Board of Directors of Halint Abdul & Sultan Company Limited passed a resolution for payment of sitting fees to Directors and the same was shown as fees due to Directors in the Balance Sheet of the Company. Examine whether this provision of fees due to Directors in the Balance Sheet can be considered as an effective enforceable acknowledgement of debt by the company
(a) What books of accounts are required to be kept by a company?
(b) Who are the persons who can inspect books of accounts?
© Can a Director make inspection of the books of accounts through an agent? (d) Can a shareholder inspect books of accounts?
Jlns.
(a) Books of Accounts Required to be Kept
Section 209 of the Companies Act requires every company to maintain at its registered
office proper books of accounts with respect to :
(a) All sums of money received and expended by the company and the matters
in respect of which receipts and expenditure take place,
(b) all sales and purchases of goods by the company,
© the assets and liabilities of the company, and
(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.
As noted in the preceding paragraph, Section 209 requires books of accounts to be kept at the registered office of the company. However, the proviso to Sec. 209 allows the company to keep its books of accounts at any other place in India as the Board of Directors may decide and when the Board of Directors so decides, the company shall, within 7 days of the decision, file with the Registrar a notice in writing giving the full address of that other place.
Further, sub-section (3) of Sec. 209 provides that proper books of accounts shall
not be deemed to be kept with respect to the matters specified therein :
(j) 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
(ii) if such books are not kept on accrual basis and according to the double entry
system of accounting.
Section 541(2) provides that proper books of accounts constitute such books of accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing sufficiently detailed entries of daily cash receipts and payments. Also, where the business of the company has involved dealings in goods, statements of the annual stock takings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified should also be maintained.
Companies Act:
(i) Appointment of First Auditor when the Board of Directors did not appoint
the First Auditor within one month of the date of registration of the
.company.
(ii) Removal of First-Auditor before the expiry of his term12. How far is Balance Sheet an acknowledgement of a debt of a company? Board of Directors of Halint Abdul & Sultan Company Limited passed a resolution for payment of sitting fees to Directors and the same was shown as fees due to Directors in the Balance Sheet of the Company. Examine whether this provision of fees due to Directors in the Balance Sheet can be considered as an effective enforceable acknowledgement of debt by the company
(a) What books of accounts are required to be kept by a company?
(b) Who are the persons who can inspect books of accounts?
© Can a Director make inspection of the books of accounts through an agent? (d) Can a shareholder inspect books of accounts?
Jlns.
(a) Books of Accounts Required to be Kept
Section 209 of the Companies Act requires every company to maintain at its registered
office proper books of accounts with respect to :
(a) All sums of money received and expended by the company and the matters
in respect of which receipts and expenditure take place,
(b) all sales and purchases of goods by the company,
© the assets and liabilities of the company, and
(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.
As noted in the preceding paragraph, Section 209 requires books of accounts to be kept at the registered office of the company. However, the proviso to Sec. 209 allows the company to keep its books of accounts at any other place in India as the Board of Directors may decide and when the Board of Directors so decides, the company shall, within 7 days of the decision, file with the Registrar a notice in writing giving the full address of that other place.
Further, sub-section (3) of Sec. 209 provides that proper books of accounts shall
not be deemed to be kept with respect to the matters specified therein :
(j) 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
(ii) if such books are not kept on accrual basis and according to the double entry
system of accounting.
Section 541(2) provides that proper books of accounts constitute such books of accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing sufficiently detailed entries of daily cash receipts and payments. Also, where the business of the company has involved dealings in goods, statements of the annual stock takings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified should also be maintained.
Inspection of Books of Accounts
Inspection of Books of Accounts
Section 209(4) provides that books of account shall be open to inspection by any
Director during business hours.
Further, Sec. 209-A’ provides that books of account shall be open to inspecti,)n by:
(i) the Registrar; or
(ii) such officer of Government as may be au thorised by the Central Government
in this behalf.
(iii) by such officers of the Securities and Exchange Board of India as may be
authorised by it.
Further, Section 209A provides that such inspection may be made without giving
any prior notice to the company or any officer thereof.
The inspection by SEBI shall be made in respect of matters covered under Sections referred to in Section 55A of the Companies Act, 1956 as amended by Companies (Amendment) Act, 2000. Section 55A, in this regard, provides as follows:
The provisions contained in Sections 55 to 58, 59 to 84,108,109, 110,112,113,116 117,118,119,120, 121, 122,206,206 A and 207, so far as they relate to issue and transfer of securities and non-payment of dividend shall:
(a) in case of listed public companies;
(b) in case of those public companies which intend to get their securities listed on
any recognised stock exchange in India, be administered by the Securities and
Exchange Board of India. .
Under Sec. 45-N of the Reserve Bank of India Act, books of account of non-banking companies may also be inspected by the Reserve Bank of India for the purpose of verifying the correctness or completeness of any statement, information or particulars furnished to the Bank or for the purpose of obtaining any information of particulars which the non-banking institution has failed to furnish on being called upon to do so.
© Can a Director make an Inspection through an Agent?
Generally, a Director should exercise right of inspection of books of accounts personally. However, in N.V. Vakharia Vs. Supreme General Film Exchange Co. Ltd. (1948) 18 Compo Cas. 34, it was held that a director is entitled to make inspection of accounts personally or through an agent provided that there is no reasonable objection to the person chosen and the agent undertakes not to utilise the information obtained by him for any purpose other than the purpose of his principal.
In the aforesaid case, inspection through an agent was allowed because of the
physical inability of the Director to inspect books of accounts personally.
As the right of inspection is a statutory right given under Section 209, a Director
who is prevented from or is refused inspection, may enforce his right through Court.
The right of inspection, however, is not an absolute right. Where on the facts and circumstances it is clear in any case that there is reason to believe that the inspection is sought for supplying information to a rival in business of the company or for any purpose which is prejudicial or injurious to the interest of the company, the inspection may properly be refused.(d) Right of a Shareholder to Inspect Books of Account
Section 209(4) provides that books of account shall be open to inspection by any
Director during business hours.
Further, Sec. 209-A’ provides that books of account shall be open to inspecti,)n by:
(i) the Registrar; or
(ii) such officer of Government as may be au thorised by the Central Government
in this behalf.
(iii) by such officers of the Securities and Exchange Board of India as may be
authorised by it.
Further, Section 209A provides that such inspection may be made without giving
any prior notice to the company or any officer thereof.
The inspection by SEBI shall be made in respect of matters covered under Sections referred to in Section 55A of the Companies Act, 1956 as amended by Companies (Amendment) Act, 2000. Section 55A, in this regard, provides as follows:
The provisions contained in Sections 55 to 58, 59 to 84,108,109, 110,112,113,116 117,118,119,120, 121, 122,206,206 A and 207, so far as they relate to issue and transfer of securities and non-payment of dividend shall:
(a) in case of listed public companies;
(b) in case of those public companies which intend to get their securities listed on
any recognised stock exchange in India, be administered by the Securities and
Exchange Board of India. .
Under Sec. 45-N of the Reserve Bank of India Act, books of account of non-banking companies may also be inspected by the Reserve Bank of India for the purpose of verifying the correctness or completeness of any statement, information or particulars furnished to the Bank or for the purpose of obtaining any information of particulars which the non-banking institution has failed to furnish on being called upon to do so.
© Can a Director make an Inspection through an Agent?
Generally, a Director should exercise right of inspection of books of accounts personally. However, in N.V. Vakharia Vs. Supreme General Film Exchange Co. Ltd. (1948) 18 Compo Cas. 34, it was held that a director is entitled to make inspection of accounts personally or through an agent provided that there is no reasonable objection to the person chosen and the agent undertakes not to utilise the information obtained by him for any purpose other than the purpose of his principal.
In the aforesaid case, inspection through an agent was allowed because of the
physical inability of the Director to inspect books of accounts personally.
As the right of inspection is a statutory right given under Section 209, a Director
who is prevented from or is refused inspection, may enforce his right through Court.
The right of inspection, however, is not an absolute right. Where on the facts and circumstances it is clear in any case that there is reason to believe that the inspection is sought for supplying information to a rival in business of the company or for any purpose which is prejudicial or injurious to the interest of the company, the inspection may properly be refused.(d) Right of a Shareholder to Inspect Books of Account
Annual General Meeting
A member wants to inspect the Register of Directors’ shareholdings on a day other than the date on which the Annual General Meeting of the Company is held.
(i) A depoitor is also entitled to be furnished free of cost with a copy of the last balance sheet of the company and of every document required by law to be annexed or attached thereto including the profit and loss account and the auditor’s report even though he is not a member of the company. Accordingly, the company has to furnish the balance sheet within 7 days after the demand is received [Section 219 (2) and (4)].
(ii)The Register of Director’s shareholdings must be kept at the registered office
of the company and it shall be open to inspection of any member during business hours
subject to such reasonable restrictions as the company may, by its Articles or in a general meeting, impose so that not less than two hours in each day are allowed for inspection. But, it sl\all b: a.vailable for inspection only during the peri?d be.B.in’p 14 days before the date of the company’s annual general Irieeting Tha enaing 3 days aftef”the date of its conclusion. In computing 14 days aI’\d 3 days, any day which is a Saturday, a Sunday or a public holiday shall be disregarded. lithe member wants to
. inspect the register beyond this period, it is not necessary for the company to make
available the register for inspection [Section 307 (5)].
1. Is it in order for an auditor appointed at an annual general meeting to continue to function as Auditor when the next annual general meeting has not been held in time? Can he continue as Auditor in case a new Auditor has been appointed in his place at the annual general meeting which was adjourned to a later date?
[November, 1995]
2. How will you deal with the appointment of Auditors in the following cases?
(i) Te first Auditor has not been appointed by the Board of Directors within
one month of incorporation of the company.
(ii) One of the two J oint Auditors appointed in the last Annual General Meeting
resigned.
(iii) One of the partners of a firm of Chartered Accountants appointed as
Auditor died.
(iv) The aggregate shareholding of nationalised Banks, LIC and !DBI exceeded
55% of the paid-up share capital of the company. [November, 1994]
3. What are the books of account to be maintained by a company? Where are the
books to be kept? Who are eligible to inspect the books of account?
[May, 1994]
4. When is a company required to appoint Cost Auditor? What are his duties and
powers? What action can be taken by the Central Government on receipt of Cost
Auditor’s report? [May, 1994]
5. “Though an Auditor is appointed normally by passing an ordinary resolution, yet there are certain circumstances when appointment can be made only by passing a special resolution.” Discuss the statement and state the circumstances when passing of a special resolution for the appointment of an Auditor is a must.
When must a retiring Auditor be re-appointed
6. Under what circumstances can the Central Government order Special Audit of accounts of a company? What action can the Central Government take on receipt
of such report? [May, 19921
7. When is an Auditor required to be appointed by a Special Resolution? What are the consequences if the provisions of the Companies Act, 1956 are not complied
company for any year has not been held, a statement of that fact and the reasons
therefor shall be annexed to the balance sheet and to the copies thereof required to be
filed with the Registrar.In case of default, the company and every officer of the company who is in default shall be liable to fine which may extend to Rs. 500 for every day during which the default continues.
(i) A depoitor is also entitled to be furnished free of cost with a copy of the last balance sheet of the company and of every document required by law to be annexed or attached thereto including the profit and loss account and the auditor’s report even though he is not a member of the company. Accordingly, the company has to furnish the balance sheet within 7 days after the demand is received [Section 219 (2) and (4)].
(ii)The Register of Director’s shareholdings must be kept at the registered office
of the company and it shall be open to inspection of any member during business hours
subject to such reasonable restrictions as the company may, by its Articles or in a general meeting, impose so that not less than two hours in each day are allowed for inspection. But, it sl\all b: a.vailable for inspection only during the peri?d be.B.in’p 14 days before the date of the company’s annual general Irieeting Tha enaing 3 days aftef”the date of its conclusion. In computing 14 days aI’\d 3 days, any day which is a Saturday, a Sunday or a public holiday shall be disregarded. lithe member wants to
. inspect the register beyond this period, it is not necessary for the company to make
available the register for inspection [Section 307 (5)].
1. Is it in order for an auditor appointed at an annual general meeting to continue to function as Auditor when the next annual general meeting has not been held in time? Can he continue as Auditor in case a new Auditor has been appointed in his place at the annual general meeting which was adjourned to a later date?
[November, 1995]
2. How will you deal with the appointment of Auditors in the following cases?
(i) Te first Auditor has not been appointed by the Board of Directors within
one month of incorporation of the company.
(ii) One of the two J oint Auditors appointed in the last Annual General Meeting
resigned.
(iii) One of the partners of a firm of Chartered Accountants appointed as
Auditor died.
(iv) The aggregate shareholding of nationalised Banks, LIC and !DBI exceeded
55% of the paid-up share capital of the company. [November, 1994]
3. What are the books of account to be maintained by a company? Where are the
books to be kept? Who are eligible to inspect the books of account?
[May, 1994]
4. When is a company required to appoint Cost Auditor? What are his duties and
powers? What action can be taken by the Central Government on receipt of Cost
Auditor’s report? [May, 1994]
5. “Though an Auditor is appointed normally by passing an ordinary resolution, yet there are certain circumstances when appointment can be made only by passing a special resolution.” Discuss the statement and state the circumstances when passing of a special resolution for the appointment of an Auditor is a must.
When must a retiring Auditor be re-appointed
6. Under what circumstances can the Central Government order Special Audit of accounts of a company? What action can the Central Government take on receipt
of such report? [May, 19921
7. When is an Auditor required to be appointed by a Special Resolution? What are the consequences if the provisions of the Companies Act, 1956 are not complied
company for any year has not been held, a statement of that fact and the reasons
therefor shall be annexed to the balance sheet and to the copies thereof required to be
filed with the Registrar.In case of default, the company and every officer of the company who is in default shall be liable to fine which may extend to Rs. 500 for every day during which the default continues.
Books of Accounts Maintained by a Foreign Company
Books of Accounts to be Maintained by a Foreign Company
According to Section 600 (3) (b) of the Companies Act, the provisions of Sections 209 and 209-A are applicable to the Indian business of a foreign company having an established place of business in India, as they apply to a company incorporated in India. Therefore, foreign companies are required to maintain books of accounts only with reference to their Indian business under the Companies Act.
According to Section 209 (1), the foreign company is required to maintain 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;
(c) the assets and liabilities of the company; and
(d) in the case of a company pertaining to any class of companies engaged in
production, processg, 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 accounts.
Proper books of accounts shall not be deemed to have been kept with respect to
the matters specified above:
(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 the transactions; and
(b) if such books are not kept on accrual basis and according to the double entry
system of account41g.
As already stated, these books of accounts are required to be maintained with
reference to the Indhm business of the for.eign company.
The books of accounts are required to be maintained at the principal place of
business in India [Section 600 (3) (a)].
The books of accounts of a foreign company relating to its Indian business, may
be inspected by the following persons:
(a) any director of the company’during business hours [Section 209 (4)];
(b) the Registrar; and
(c) the government officer authorised by the Central Government under Section
209 A (1); and
(d) such officers of SEBI as may be authorised by it.
. Comment: (i) A non-member for whom the company has accepted deposits, asks for a copy of the latest Balance Sheet of the Company; and
According to Section 600 (3) (b) of the Companies Act, the provisions of Sections 209 and 209-A are applicable to the Indian business of a foreign company having an established place of business in India, as they apply to a company incorporated in India. Therefore, foreign companies are required to maintain books of accounts only with reference to their Indian business under the Companies Act.
According to Section 209 (1), the foreign company is required to maintain 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;
(c) the assets and liabilities of the company; and
(d) in the case of a company pertaining to any class of companies engaged in
production, processg, 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 accounts.
Proper books of accounts shall not be deemed to have been kept with respect to
the matters specified above:
(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 the transactions; and
(b) if such books are not kept on accrual basis and according to the double entry
system of account41g.
As already stated, these books of accounts are required to be maintained with
reference to the Indhm business of the for.eign company.
The books of accounts are required to be maintained at the principal place of
business in India [Section 600 (3) (a)].
The books of accounts of a foreign company relating to its Indian business, may
be inspected by the following persons:
(a) any director of the company’during business hours [Section 209 (4)];
(b) the Registrar; and
(c) the government officer authorised by the Central Government under Section
209 A (1); and
(d) such officers of SEBI as may be authorised by it.
. Comment: (i) A non-member for whom the company has accepted deposits, asks for a copy of the latest Balance Sheet of the Company; and
Explain the provisions of the Companies Act
It shall be the duty of every director, other officer, or employee of the company to produce to the person making inspection 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 (‘aid person may require of him within such time and at such place as he may specify.
Further, it shall also be his duty to give all assistance in connection with inspection
which the company may reasonably be expected to give.
Sub-sec. (6) of Section 209 A requires the person making the inspection to submit
a report to the Central Government.
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 than Rs. 50,000’ and also with imprisonment for a term not exceeding one year.
4.Explain the provisions of the Companies Act, 1956 and the Companies (Central
Government’s) General Rules and Forms, 1956 regarding filing of documents and returns by a foreign company.State the documents and returns that are required to be filed with the Registrar of Companies under the Companies Act, 1956 by foreign companies initially when they establish a place of business in India and later on periodically or on the happening of
certain events.
Filing of Documents and Returns by Foreign Companies
1. Section 592 of the Companies Act requires that every foreign company having a place of business in India must deliver to the Registrar for registration, within 30 days
of the establishment of the place of business, the documents and particulars specified in clauses (a) to (e) of sub-section (1).
The documents specified under clauses (a) to (e) are:
(i) a certified copy of the charter, statute, or Memorandum and Articles of a
foreign company or other instrument constituting or defining the constitution
of a foreign company;
(ii) the full address of registered or principal office of the company;
(iii)a list of the directors and secretary of the company, containing the prescribed
particulars;
(iv)the name or address or any of the persons authorised to accept service of
process and any notices or documents on behalf of the foreign company; and,
(v) the principal place of business of the company in India.
The information should be filed in Form No. 44 of Central Government’s General
Rules and Forms, 1956.
2. Any alteration in the documents required to be registered u/s 592 (1) must be I notified to the Registrar in the form, of a return containing the prescribed particulars of the alteration within the prescribed time [Sec. 593].
3.Under Section 594, a foreign company must prepare a balance sheet and profit and loss account for every calendar year and deliver three copies of the same (along with its English translation) to the Registrar. It should also send three copies of a list in the prescribed form of all places of business established in India as on the date of the relevant balance sheet.
Under Rule 18 of the Central Government’s General Rules and Forms, 1956, the documents referred to in Sec. 594 are to be delivered to the Registrar within a period of 9 months from the date of close of the financial year of e foreign company. However, the Registrar may, for any special reason and on the application of foreign company, extend the period but not exceeding 3 months.
4.If a foreign company ceases to have a place of business in India, it must forthwith
give notice of the fact to the Registrar [Sec. 597].
The notice should be given in Form No. 52 of the Central Government’s General
Rules and Forms, 1956.
5.Under Section 597 (1) and (2), any document which a foreign company is required to deliver to the Registrar under this Act, must be delivered to the Registrar having jurisdiction over New Delhi, as well as to the Registrar of the State where the principal place of business of the company is situated.
6.The provisions of Sections 124 to 145 of the Companies Act relating to registration of charges also apply mutatis mutandis to foreign companies. Consequently, the returns of charges required to be filed under these Sections, are also to be filed with the Registrar by the foreign companies in Form Nos. 55 to 66 of the Central Government’s General Rules and Forms, 1956 within 30 days of creation, modification and satisfaction of charges or of the acquisition of properties and issue of debentures by the foreign companies.
5.What are the books of account t be maintained uner the mpaies Act,
1956 by a foreign company having established a place of business within India? Who
can inspect the books of account of such companies?
Further, it shall also be his duty to give all assistance in connection with inspection
which the company may reasonably be expected to give.
Sub-sec. (6) of Section 209 A requires the person making the inspection to submit
a report to the Central Government.
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 than Rs. 50,000’ and also with imprisonment for a term not exceeding one year.
4.Explain the provisions of the Companies Act, 1956 and the Companies (Central
Government’s) General Rules and Forms, 1956 regarding filing of documents and returns by a foreign company.State the documents and returns that are required to be filed with the Registrar of Companies under the Companies Act, 1956 by foreign companies initially when they establish a place of business in India and later on periodically or on the happening of
certain events.
Filing of Documents and Returns by Foreign Companies
1. Section 592 of the Companies Act requires that every foreign company having a place of business in India must deliver to the Registrar for registration, within 30 days
of the establishment of the place of business, the documents and particulars specified in clauses (a) to (e) of sub-section (1).
The documents specified under clauses (a) to (e) are:
(i) a certified copy of the charter, statute, or Memorandum and Articles of a
foreign company or other instrument constituting or defining the constitution
of a foreign company;
(ii) the full address of registered or principal office of the company;
(iii)a list of the directors and secretary of the company, containing the prescribed
particulars;
(iv)the name or address or any of the persons authorised to accept service of
process and any notices or documents on behalf of the foreign company; and,
(v) the principal place of business of the company in India.
The information should be filed in Form No. 44 of Central Government’s General
Rules and Forms, 1956.
2. Any alteration in the documents required to be registered u/s 592 (1) must be I notified to the Registrar in the form, of a return containing the prescribed particulars of the alteration within the prescribed time [Sec. 593].
3.Under Section 594, a foreign company must prepare a balance sheet and profit and loss account for every calendar year and deliver three copies of the same (along with its English translation) to the Registrar. It should also send three copies of a list in the prescribed form of all places of business established in India as on the date of the relevant balance sheet.
Under Rule 18 of the Central Government’s General Rules and Forms, 1956, the documents referred to in Sec. 594 are to be delivered to the Registrar within a period of 9 months from the date of close of the financial year of e foreign company. However, the Registrar may, for any special reason and on the application of foreign company, extend the period but not exceeding 3 months.
4.If a foreign company ceases to have a place of business in India, it must forthwith
give notice of the fact to the Registrar [Sec. 597].
The notice should be given in Form No. 52 of the Central Government’s General
Rules and Forms, 1956.
5.Under Section 597 (1) and (2), any document which a foreign company is required to deliver to the Registrar under this Act, must be delivered to the Registrar having jurisdiction over New Delhi, as well as to the Registrar of the State where the principal place of business of the company is situated.
6.The provisions of Sections 124 to 145 of the Companies Act relating to registration of charges also apply mutatis mutandis to foreign companies. Consequently, the returns of charges required to be filed under these Sections, are also to be filed with the Registrar by the foreign companies in Form Nos. 55 to 66 of the Central Government’s General Rules and Forms, 1956 within 30 days of creation, modification and satisfaction of charges or of the acquisition of properties and issue of debentures by the foreign companies.
5.What are the books of account t be maintained uner the mpaies Act,
1956 by a foreign company having established a place of business within India? Who
can inspect the books of account of such companies?
State of affairs of the company
Maintenance of Books of Account
Section 209 of the Companies Act requires every company to maintain 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 took place;
(b) all sales and purchases of goods by the company;
(c) the assets and liabilities of the company; and
(d) in the case of companies engaged in production, processing, manufacturing
or mining activities, such particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed, if such companies are required by the Central Government to include such particulars in the books of account.
As to what shall constitute proper books of account, sub-section (3) of Section 209 (as per 1988 amendment) provides that proper books of account shall not be deemed to be kepf by a company:
(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 the branch office 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.
Place of Keeping. The books of accounts of a company must be kept at the registered office or at such other place in India as the Board may decide. In case the Board decides to keep the books of accounts at some other place, the company must file a notice in writing with the Registrar within 7 days of the decision, giving the full address of that other place. If a company has branch offices, proper books of accounts must be kept separately at such offices and proper summarised returns of the accounts must be sent at intervals of not more than 3 months, to the registered office or the other place where books of account of the head office are kept [Sec. 209 (2)].
Inspection
Section 209 requires that 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
(ii) by such officer of Government as may be authorised by the Central Govern
ment in this behalf.
The aforesaid inspection may be made without giving any previous notice to the
company or any officer thereof.
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 account 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.
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 while trying a suit, in respect of the following matters:
(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; and
(iii) inspection of any books, registers and other documents of the company at any
place [Sub-sec. (5)].
Section 209 of the Companies Act requires every company to maintain 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 took place;
(b) all sales and purchases of goods by the company;
(c) the assets and liabilities of the company; and
(d) in the case of companies engaged in production, processing, manufacturing
or mining activities, such particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed, if such companies are required by the Central Government to include such particulars in the books of account.
As to what shall constitute proper books of account, sub-section (3) of Section 209 (as per 1988 amendment) provides that proper books of account shall not be deemed to be kepf by a company:
(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 the branch office 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.
Place of Keeping. The books of accounts of a company must be kept at the registered office or at such other place in India as the Board may decide. In case the Board decides to keep the books of accounts at some other place, the company must file a notice in writing with the Registrar within 7 days of the decision, giving the full address of that other place. If a company has branch offices, proper books of accounts must be kept separately at such offices and proper summarised returns of the accounts must be sent at intervals of not more than 3 months, to the registered office or the other place where books of account of the head office are kept [Sec. 209 (2)].
Inspection
Section 209 requires that 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
(ii) by such officer of Government as may be authorised by the Central Govern
ment in this behalf.
The aforesaid inspection may be made without giving any previous notice to the
company or any officer thereof.
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 account 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.
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 while trying a suit, in respect of the following matters:
(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; and
(iii) inspection of any books, registers and other documents of the company at any
place [Sub-sec. (5)].
Maintenance of proper books of account
The Register shall be kept at the registered office of the company and
(a) shall be open to inspection at such office; and
(b) 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 same fees as in the case of the Register of Members of the company.
Write short notes on the following:
(a) Preservation of books of account by a company;
(b)Disposal of books and papers after winding up of a company.
(a)Preservation of Books of Accounts
Sub-Section (4) of Section 209 provides that the books of account of a company relating to a period of not less than 8 years immediately preceding the current year, together with the vouchers relevant to entry in such books of account must be preserved in good order. In case of a company incorporated less than 8 years before the current year, the books of account for the entire period preceding the current year, together with relevant vouchers must be preserved in good order.
(b)Books and Papers after Winding up
Section 550 provides that after the affairs of the company have been completely wound up and it is about to be dissolved, its books and papers and those of the liquidator may be disposed off:
(i) according to direction of the Court, in case of winding up by or subject to
supervision of Court;
(ii) in such manner ,as directed by a special resolution of the company, in case of
members’ voluntary winding up; and
(iii) in such manner as the Committee of Inspection of the creditors may direct, in
case of creditors’ voluntary winding up.
The Central Government is empowered to make rules to prevent the destruction of
books and papers of a company which has been wound up for a period not exceeding 5
years from the dissolution of the company as the Central Government thinks proper.
State the provisions of the Companies Act relating to maintenance of proper
books of account. When and by whom can the books of account be inspected?
Examine with reference to the provisions of the Companies Act, 1956: (i) The nature of books of account to kept by a company; (ii) The persons who have the right to inspect such books; and (iii) The place or places where the said books of account are required to bemaintained.
(a) shall be open to inspection at such office; and
(b) 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 same fees as in the case of the Register of Members of the company.
Write short notes on the following:
(a) Preservation of books of account by a company;
(b)Disposal of books and papers after winding up of a company.
(a)Preservation of Books of Accounts
Sub-Section (4) of Section 209 provides that the books of account of a company relating to a period of not less than 8 years immediately preceding the current year, together with the vouchers relevant to entry in such books of account must be preserved in good order. In case of a company incorporated less than 8 years before the current year, the books of account for the entire period preceding the current year, together with relevant vouchers must be preserved in good order.
(b)Books and Papers after Winding up
Section 550 provides that after the affairs of the company have been completely wound up and it is about to be dissolved, its books and papers and those of the liquidator may be disposed off:
(i) according to direction of the Court, in case of winding up by or subject to
supervision of Court;
(ii) in such manner ,as directed by a special resolution of the company, in case of
members’ voluntary winding up; and
(iii) in such manner as the Committee of Inspection of the creditors may direct, in
case of creditors’ voluntary winding up.
The Central Government is empowered to make rules to prevent the destruction of
books and papers of a company which has been wound up for a period not exceeding 5
years from the dissolution of the company as the Central Government thinks proper.
State the provisions of the Companies Act relating to maintenance of proper
books of account. When and by whom can the books of account be inspected?
Examine with reference to the provisions of the Companies Act, 1956: (i) The nature of books of account to kept by a company; (ii) The persons who have the right to inspect such books; and (iii) The place or places where the said books of account are required to bemaintained.
Register of Loans and Invesbnent
If default is made in complying with the provisions of sub-section (1) or (2) or if any i:r;1spectlon required under Sec. 307 is refused or if any copy required thereunder 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 to Rs. 50,000* and also with a further fine which may extend to Rs. 2,500* for every day during which the default continues [Sub-sec. (8)].
In case of refusal of inspection of the register, the Company Law Board may also, by order, compel an immediate inspection of the register [Sub-sec. (9)].
Deemed Directors and Record of Their Shareholdings. For purposes of Section 307, 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 [Sub-sec. (10)].
Every director of a company and every person dee”med to be a director of the company by virtue of sub-sec. (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 [Section 304 (1)].
The notice, as aforesaid, shall be given in writing and if it is not given at a meeting 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 [Sec. 308 (2)].
Failure to comply with the provisions of sub-sec. (1) or (2) of Section 308 shall be punishable with imprisonment up to 2 Y2ars or with fine up to Rs. 50,000’ or with both.
Register of Loans and Invesbnent
Sub-section (-?) of Section 372 A (inserted by the Companies (Amendment) Act, 1999) provides th.,.,t every company shall keep a register showing the following particulars in respect of every investment or loan made, guarantee given or security provided by it in relation to any body corporate under sub-section (1), namely:
(i)the name of the body corporate;
(ii)the amount, terms and purpose of the investment or loan or security or
guarantee;
(iii) the date on which the investment or loan has been made; and
(iv)the date on which the guarantee has been given or security has been provided
in connection with a loan.
The aforesaid particulars shall be entered chronologically in the Register within 7 days of the making of investment or loan, or the giving of guarantee or the provision of security.
In case of refusal of inspection of the register, the Company Law Board may also, by order, compel an immediate inspection of the register [Sub-sec. (9)].
Deemed Directors and Record of Their Shareholdings. For purposes of Section 307, 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 [Sub-sec. (10)].
Every director of a company and every person dee”med to be a director of the company by virtue of sub-sec. (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 [Section 304 (1)].
The notice, as aforesaid, shall be given in writing and if it is not given at a meeting 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 [Sec. 308 (2)].
Failure to comply with the provisions of sub-sec. (1) or (2) of Section 308 shall be punishable with imprisonment up to 2 Y2ars or with fine up to Rs. 50,000’ or with both.
Register of Loans and Invesbnent
Sub-section (-?) of Section 372 A (inserted by the Companies (Amendment) Act, 1999) provides th.,.,t every company shall keep a register showing the following particulars in respect of every investment or loan made, guarantee given or security provided by it in relation to any body corporate under sub-section (1), namely:
(i)the name of the body corporate;
(ii)the amount, terms and purpose of the investment or loan or security or
guarantee;
(iii) the date on which the investment or loan has been made; and
(iv)the date on which the guarantee has been given or security has been provided
in connection with a loan.
The aforesaid particulars shall be entered chronologically in the Register within 7 days of the making of investment or loan, or the giving of guarantee or the provision of security.
Register of Directors’ Share holdings
The company shall within 30 days from the date of first appointment of directors or from the date of any change in the directorate, send to the Registrar a return in duplicate in the prescribed form containing particulars of such appointment or change in directorate [Sub-sec. In case default is made in complying with the aforesaid provisions, the company
and every officer of the company in default, shall be punishable with fine up to Rs.
.. 500’ for every day during which the default continues [sub-sec.(3)].
Register of Directors’ Share holdings (Sec. 307)
‘Section 307 requires every company to keep a register showing each director’s shareholding in the company, giving details as to the number, description and amount of shares and debentures. These details are also required to be given .in respect of a dirtor’s holding in any other body corporate, being the company’s subsidiary or holding company, or a subsidiary of the company’s holding company. Such shares and debentures may be held by the director or in trust for him, or of which he may have any right to become holder whether on payment or not.
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 [Sub-sec:(2)].
However, 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 [Provisions to sub-sec.
If a director so requires, 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 shaJI be indicated in the register [Sub-section (3)].
Place of Keeping the Register and its Inspection. The register, as aforesaid, shall be kept at the registered office of the company. It shall be open to the inspection of any member or debentureholder of the company during business hours for not less than 2 hours each day during the period of 14 days before the date of the company’s annual general meeting and three days after the date of its conclusion. During this or any other periThe Central Government or Registrar may, at any time, require a copy of the register or any part thereof [Sub-sec. (6)]. It shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible quring the continuance of the meeting to any person entitled to attend the meeting. If default is made in complying with the provisions of this sub-section, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000”.
and every officer of the company in default, shall be punishable with fine up to Rs.
.. 500’ for every day during which the default continues [sub-sec.(3)].
Register of Directors’ Share holdings (Sec. 307)
‘Section 307 requires every company to keep a register showing each director’s shareholding in the company, giving details as to the number, description and amount of shares and debentures. These details are also required to be given .in respect of a dirtor’s holding in any other body corporate, being the company’s subsidiary or holding company, or a subsidiary of the company’s holding company. Such shares and debentures may be held by the director or in trust for him, or of which he may have any right to become holder whether on payment or not.
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 [Sub-sec:(2)].
However, 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 [Provisions to sub-sec.
If a director so requires, 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 shaJI be indicated in the register [Sub-section (3)].
Place of Keeping the Register and its Inspection. The register, as aforesaid, shall be kept at the registered office of the company. It shall be open to the inspection of any member or debentureholder of the company during business hours for not less than 2 hours each day during the period of 14 days before the date of the company’s annual general meeting and three days after the date of its conclusion. During this or any other periThe Central Government or Registrar may, at any time, require a copy of the register or any part thereof [Sub-sec. (6)]. It shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible quring the continuance of the meeting to any person entitled to attend the meeting. If default is made in complying with the provisions of this sub-section, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000”.
Specimen Resolution to Forfeit Shares
(i)To forfeit shares (ii) For adoption of common seal (Hi) For granting general power of attorney in favour of company secretary.
(i)Specimen Resolution to Forfeit Shares
“RESOL VED THAT pursuant to I Article 30’ of the Company’s Articles of Association, the undermentioned shares in the capital of the company be and are hereby forfeited for non-payment of allotment money of Rs. 5 per share payable on or before 30.6.95 due notice of which had been served upon the defaulting shareholders on 1.6.95.”
Distinctive Nos. of shares to be forfeited.
ii)Resolution for Adoption of Common Seal
“RESOLVED THAT the proposed common seal of the company, submitted to the meeting (facsimile enclosed), be and is hereby adopted as the common seal of the company and that the common seal be kept in the custody of the secretary of the company.”
(Hi) Resolution fo Granting of General Power of Attorney in
Favour of the Company Secretary:
“RESOLVED THAT pursuant to the provisions of Section 291 and other applicable provisions of the Companies Act, Shri A.N. Chawla be and is hereby authorised to exercise all powers with respect to the secretarial work of the company including representing the company at the various statutory fora”.
State the provisions of the Companies Act with respect to the following:
1. Register of Contracts in which Directors are Interested (Section 301).
2. Register of Directors, Manager, etc. (Section 303).
3. Register of Directors’ Holdings in Shares and Debentures (Section 307).
4. Register of Loans and Investments (Section 372A).
Register of Contracts in which Directors are Interested
Section 301 requires that every company shall keep one or more registers in
which the following particulars regarding contracts in which directors are
interested, shall be recorded:
(i) the date of the contracts;
(ii)the name of the parties thereto;
(iii)the principal terms and conditions thereof;
(iv)the date when the contract was placed before the Board of Directors; and
(v)the names of directors voting for and against the contract and of those
remaining neutral.
2.The Register must also specify, in relation to each director, the names of the
firms and companies of which notice has been given by him under Section
299 (3).
3.Entries of contracts in which directors are interested must be made in the register within 7 days (excluding holidays) of the meeting of the Board at which the contracts are approved. The Register then must be placed before the next meeting of the Board and must be signed by all directors present at such meeting.
4.The Register must be kept open for inspection for at least 2 hours on every working day and inspection allowed by any member on payment of the same fee as in the case of Register of Members, for each inspection. A person allowed to inspect the register is also to be allowed to take extracts from it, require a certified copy of any portion to be issued within 10 days after the receipt of application on payment of the same fee as in the case of register of members.
If default is made in complying with the aforesaid provisions, 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 five thousand rupees:
2. Register of Directors (Sec. 303)
Under Section 303, every company is required to keep at its registered office, a Register of Directors, Managing Director, Manager and Secretary containing with respect to each of them, the following particulars:
(a) In case of an individual, his present name and surname in full; any former name or surname in full; father’s or husband’s name or surname; address; nationality; business or occupation, if any; and particulars of other directorships; etc.
(b) In the case of a body corporate, its corporate name, registered address, name and other particulars of each of its directors and if it holds the office of manager or secretary in any other body corporate, particulars thereof.
(c) In the case of a firm, the name of the firm, full name and other particulars of each of its parmers, date when he became a partner and if it holds the office of manager or secretary in any other company, particulars thereof.
(d) If any director or directors has/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
(b) in respect of the firm.
(i)Specimen Resolution to Forfeit Shares
“RESOL VED THAT pursuant to I Article 30’ of the Company’s Articles of Association, the undermentioned shares in the capital of the company be and are hereby forfeited for non-payment of allotment money of Rs. 5 per share payable on or before 30.6.95 due notice of which had been served upon the defaulting shareholders on 1.6.95.”
Distinctive Nos. of shares to be forfeited.
ii)Resolution for Adoption of Common Seal
“RESOLVED THAT the proposed common seal of the company, submitted to the meeting (facsimile enclosed), be and is hereby adopted as the common seal of the company and that the common seal be kept in the custody of the secretary of the company.”
(Hi) Resolution fo Granting of General Power of Attorney in
Favour of the Company Secretary:
“RESOLVED THAT pursuant to the provisions of Section 291 and other applicable provisions of the Companies Act, Shri A.N. Chawla be and is hereby authorised to exercise all powers with respect to the secretarial work of the company including representing the company at the various statutory fora”.
State the provisions of the Companies Act with respect to the following:
1. Register of Contracts in which Directors are Interested (Section 301).
2. Register of Directors, Manager, etc. (Section 303).
3. Register of Directors’ Holdings in Shares and Debentures (Section 307).
4. Register of Loans and Investments (Section 372A).
Register of Contracts in which Directors are Interested
Section 301 requires that every company shall keep one or more registers in
which the following particulars regarding contracts in which directors are
interested, shall be recorded:
(i) the date of the contracts;
(ii)the name of the parties thereto;
(iii)the principal terms and conditions thereof;
(iv)the date when the contract was placed before the Board of Directors; and
(v)the names of directors voting for and against the contract and of those
remaining neutral.
2.The Register must also specify, in relation to each director, the names of the
firms and companies of which notice has been given by him under Section
299 (3).
3.Entries of contracts in which directors are interested must be made in the register within 7 days (excluding holidays) of the meeting of the Board at which the contracts are approved. The Register then must be placed before the next meeting of the Board and must be signed by all directors present at such meeting.
4.The Register must be kept open for inspection for at least 2 hours on every working day and inspection allowed by any member on payment of the same fee as in the case of Register of Members, for each inspection. A person allowed to inspect the register is also to be allowed to take extracts from it, require a certified copy of any portion to be issued within 10 days after the receipt of application on payment of the same fee as in the case of register of members.
If default is made in complying with the aforesaid provisions, 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 five thousand rupees:
2. Register of Directors (Sec. 303)
Under Section 303, every company is required to keep at its registered office, a Register of Directors, Managing Director, Manager and Secretary containing with respect to each of them, the following particulars:
(a) In case of an individual, his present name and surname in full; any former name or surname in full; father’s or husband’s name or surname; address; nationality; business or occupation, if any; and particulars of other directorships; etc.
(b) In the case of a body corporate, its corporate name, registered address, name and other particulars of each of its directors and if it holds the office of manager or secretary in any other body corporate, particulars thereof.
(c) In the case of a firm, the name of the firm, full name and other particulars of each of its parmers, date when he became a partner and if it holds the office of manager or secretary in any other company, particulars thereof.
(d) If any director or directors has/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
(b) in respect of the firm.
Additional Director-Board’s Resolution
“Whereas Mr. Indra Sen was employed for period of three years as the Managing Director of the company from 01.01.1998 and whereas the Company wanted to dispense with the services from 1.06.1999 qf the said Managing Director and whereas the company has duly served notice to the said Managing Director in terms of clause
of the agreement between the Company and the said Mr. Indira Sen govern
ning his terms and conditions as the Managing Director of the Company, in terms of
Clause of the agreement between the Company and the said Mr. Indira Sen.
NOW THEREFORE IT IS HEREBY RESOLVED that an amount of Rs. be paid to
Mr. Indira Sen as compensation for the loss of his office as the Managing Director of the Company”.
A Public Company proposes to appoint Shri Ram as Additional Director and Shri Gopal as a director in the casual vacancy by resignation of the Office of Director by Shri Mohan. Draft suitable resolution for the appointment of Shri Ram nd Shri Gopal
as Directors.
Appointment of Additional Director-Board’s Resolution
“RESOLVED THAT Shri Ram be and is hereby appointed as Additional Director of the company pursuant to Section 260 of the Companies Act, 1956 and Article 15 of the Articles of Association of the Company and that Shri Ram is to hold office till the next Annual General Meeting”.
Filling up of Casual Vacancy-Board’ s Resolution
“RESOLVED THAT Shri Gopal be and is hereby appointed as a Director of the company to fill up the casual vacancy caused due to Shri Mohan vacating his office as a Director of the company before the expiry of his term of office and that Shri Gopal is to hold office till the date the outgoing Director Shri Mohan would have held office”.
SP.8. Draft a specimen resolution for appointment of Altemate Director.
Ylns .
Appointment of Alternate Director
“RESOL VED THAT pursuant to the provisions of Section 313 of the Companies Act,
1’956, read with Article of the Articles of Association of the company, Shri be
and is hereby appointed as alternate director to Shri during the latter’s absence
for a period of not less than three months from the State of and that the alternate
director shall vacate his office as and when Shri returns to the said State.” .
Draft specimen resolutions for the following businesses to be transacted at the Board meeting:
of the agreement between the Company and the said Mr. Indira Sen govern
ning his terms and conditions as the Managing Director of the Company, in terms of
Clause of the agreement between the Company and the said Mr. Indira Sen.
NOW THEREFORE IT IS HEREBY RESOLVED that an amount of Rs. be paid to
Mr. Indira Sen as compensation for the loss of his office as the Managing Director of the Company”.
A Public Company proposes to appoint Shri Ram as Additional Director and Shri Gopal as a director in the casual vacancy by resignation of the Office of Director by Shri Mohan. Draft suitable resolution for the appointment of Shri Ram nd Shri Gopal
as Directors.
Appointment of Additional Director-Board’s Resolution
“RESOLVED THAT Shri Ram be and is hereby appointed as Additional Director of the company pursuant to Section 260 of the Companies Act, 1956 and Article 15 of the Articles of Association of the Company and that Shri Ram is to hold office till the next Annual General Meeting”.
Filling up of Casual Vacancy-Board’ s Resolution
“RESOLVED THAT Shri Gopal be and is hereby appointed as a Director of the company to fill up the casual vacancy caused due to Shri Mohan vacating his office as a Director of the company before the expiry of his term of office and that Shri Gopal is to hold office till the date the outgoing Director Shri Mohan would have held office”.
SP.8. Draft a specimen resolution for appointment of Altemate Director.
Ylns .
Appointment of Alternate Director
“RESOL VED THAT pursuant to the provisions of Section 313 of the Companies Act,
1’956, read with Article of the Articles of Association of the company, Shri be
and is hereby appointed as alternate director to Shri during the latter’s absence
for a period of not less than three months from the State of and that the alternate
director shall vacate his office as and when Shri returns to the said State.” .
Draft specimen resolutions for the following businesses to be transacted at the Board meeting:
Draft the Board resolution
Draft the Board resolution for
(i)Approving advertisement for public deposit;
(ii)Delegating power to Managing Director to invest surplus funds; and
(iii)Constituting a share transfer committee
(i)Resolution for Approving Advertisement for Public Deposit
“RESOLVED THAT pursuant to Section 58A of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975, the advertisement both in English
and (vernacular language) inviting deposits from public, employees, ex
employees of the company, charitable and other trusts, etc., on the authority and in the name of the Board of Directors of the company, the draft whereof submitted to this
meeting duly initialled by the for the purpose of identification is hereby approved
and adopted.
RESOL VED FURTHER that the Company Secretary be and is hereby authorised
to issue, circulate and advertise the same in newspaper in accordance with the provisions of the Companies (Acceptance of Deposits) Rules, 1975.
(ii) Resolution for Delegation of Power to Managing Director to
Invest Surplus Funds
“RESOL VED THA T Shri, Managing Director, be and is hereby authorised to
make investments in bonds and debentures of Financial Corporations in such a way
that the surplus funds of the company may be beneficially utilised and the said investments may be disposed of as and when necessary and that such investments
should not exceed the aggregate value of Rs. at any time provided that no
investment should be made by the Managing Director in shares of companies coming
within the purview of Section 372 of the Companies Act, 1956.
RESOL VED FURTHER that the Managing Director be and is hereby authorised to sign the applications and receive moneys in respect of the said investment and furnish receipts and further, to sign papers to dispose of the investment by sale as and when necessary.
(iii)Resolution for Constitution of a Share Transfer Committee
RESOL VED THA T a Committee of Directors named Share Transfer Committee, con
sisting of Shri , Shri , and Shri be and is hereby con
stituted to approve registration of transfer of shares received by the company and to carry out the following:
1. To approve and register transfer / transmission of shares.
2. To sub-divide, consolidate and issue share certificates.
3. To authorise affixation of common seal of the company.
4. To issue share certificates in place of those which are damaged or in which the
pages are completed/exhausted provided the original certificates are surrendered to the company.
RESOL VED FURTHER that two Directors should form the quorum for a meeting of the said Committee.
SP. 6. Draft a Board resolution to give effect to the following decision taken by the Board of Directors of Mis Handerson Gem and Company Limited:
The Board is dissatisfied with the performance of Mr. Indira Sen, Managing Director and has decided to terminate his contract of service from 1.6.1999 and to pay compensation for loss of office. He had been appointed as Managing Director for aperiod of three years with effect from
(i)Approving advertisement for public deposit;
(ii)Delegating power to Managing Director to invest surplus funds; and
(iii)Constituting a share transfer committee
(i)Resolution for Approving Advertisement for Public Deposit
“RESOLVED THAT pursuant to Section 58A of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975, the advertisement both in English
and (vernacular language) inviting deposits from public, employees, ex
employees of the company, charitable and other trusts, etc., on the authority and in the name of the Board of Directors of the company, the draft whereof submitted to this
meeting duly initialled by the for the purpose of identification is hereby approved
and adopted.
RESOL VED FURTHER that the Company Secretary be and is hereby authorised
to issue, circulate and advertise the same in newspaper in accordance with the provisions of the Companies (Acceptance of Deposits) Rules, 1975.
(ii) Resolution for Delegation of Power to Managing Director to
Invest Surplus Funds
“RESOL VED THA T Shri, Managing Director, be and is hereby authorised to
make investments in bonds and debentures of Financial Corporations in such a way
that the surplus funds of the company may be beneficially utilised and the said investments may be disposed of as and when necessary and that such investments
should not exceed the aggregate value of Rs. at any time provided that no
investment should be made by the Managing Director in shares of companies coming
within the purview of Section 372 of the Companies Act, 1956.
RESOL VED FURTHER that the Managing Director be and is hereby authorised to sign the applications and receive moneys in respect of the said investment and furnish receipts and further, to sign papers to dispose of the investment by sale as and when necessary.
(iii)Resolution for Constitution of a Share Transfer Committee
RESOL VED THA T a Committee of Directors named Share Transfer Committee, con
sisting of Shri , Shri , and Shri be and is hereby con
stituted to approve registration of transfer of shares received by the company and to carry out the following:
1. To approve and register transfer / transmission of shares.
2. To sub-divide, consolidate and issue share certificates.
3. To authorise affixation of common seal of the company.
4. To issue share certificates in place of those which are damaged or in which the
pages are completed/exhausted provided the original certificates are surrendered to the company.
RESOL VED FURTHER that two Directors should form the quorum for a meeting of the said Committee.
SP. 6. Draft a Board resolution to give effect to the following decision taken by the Board of Directors of Mis Handerson Gem and Company Limited:
The Board is dissatisfied with the performance of Mr. Indira Sen, Managing Director and has decided to terminate his contract of service from 1.6.1999 and to pay compensation for loss of office. He had been appointed as Managing Director for aperiod of three years with effect from
RESOL VED that printing of blank share
RESOL VED that printing of blank share certificates as per the format
approved for issue of shares be and is hereby sanctioned.
“RESOL VED further that the blank forms and blocks, engravings, facsimiles, etc. relating to the printing of the Share Certificate forms be kept in the custody
of the Secretary of the Company.”
Approval of Statement of Preliminary Expenses incurred by Promoters
The statement of preliminary expenses placed before the Board was perused and
. approved. It was
“RESOL VED that the preliminary expenses amounting to Rs. incurred by
the promoters in connection with incorporation of the company as per the statement submitted to the meeting be and are hereby approved and that the
amount be reimbursed from the company’s fund to Mr. “
Approval of Statement in Lieu of Prospectus
The draft statement in lieu of prospectus placed at the meeting of the Board was approved and directed to be delivered to the Registrar for registration. The following resolution was passed:
“RESOLVED that the draft statement in lieu of prospectus uls 70 of the Companies Act, 1956 be and is hereby approved and signed by the Directors and
be dated and that the same be delivered to the Registrar of Companies
for registration.”
Books and Registers
The Secretary was authorised to purchase books, registers and stationery necessary for the Company’s business as per the proposal placed at the meeting.
15. Vote of Thanks
There being no other business the meeting ended with a vote of thanks to the Chair.
S. No. Items for consideration
1.Election of Chairman.
2.Taking note of the formation of the Board.
3.Taking note of the Memorandum and Articles of Association registered and
the certificate of incorporation dated granted.
4.Appointment of Secretary.
5.Situation of registered office.
6.Opening of a Bank Account.
7.Printing of share certificate.
8.Receipt of the subscriptions from the subscribers.
9.Issue of share certificates to subscribers.
10.Taking notes of the Industrial Entrepreneur’s Memorandum furnished to the
Ministry.
11. Appointment of essential staff.
12. Report of Company’s Promoters on the progress of the project proposed to be
undertaken and statement of the expenditure so far incurred.
13. Taking note of foreign collaboration agreement.
14. Issue of shares to foreign collaborators.
15. Granting power of attorney.
16. Financial year of the company.
17. Getting permanent account number.
18. Appointment of Auditor.
19. Steps to be taken for. obtaining commencement certificate.
20. Making of the Common Seal.
21. Any other business with the permission of the chair.
approved for issue of shares be and is hereby sanctioned.
“RESOL VED further that the blank forms and blocks, engravings, facsimiles, etc. relating to the printing of the Share Certificate forms be kept in the custody
of the Secretary of the Company.”
Approval of Statement of Preliminary Expenses incurred by Promoters
The statement of preliminary expenses placed before the Board was perused and
. approved. It was
“RESOL VED that the preliminary expenses amounting to Rs. incurred by
the promoters in connection with incorporation of the company as per the statement submitted to the meeting be and are hereby approved and that the
amount be reimbursed from the company’s fund to Mr. “
Approval of Statement in Lieu of Prospectus
The draft statement in lieu of prospectus placed at the meeting of the Board was approved and directed to be delivered to the Registrar for registration. The following resolution was passed:
“RESOLVED that the draft statement in lieu of prospectus uls 70 of the Companies Act, 1956 be and is hereby approved and signed by the Directors and
be dated and that the same be delivered to the Registrar of Companies
for registration.”
Books and Registers
The Secretary was authorised to purchase books, registers and stationery necessary for the Company’s business as per the proposal placed at the meeting.
15. Vote of Thanks
There being no other business the meeting ended with a vote of thanks to the Chair.
S. No. Items for consideration
1.Election of Chairman.
2.Taking note of the formation of the Board.
3.Taking note of the Memorandum and Articles of Association registered and
the certificate of incorporation dated granted.
4.Appointment of Secretary.
5.Situation of registered office.
6.Opening of a Bank Account.
7.Printing of share certificate.
8.Receipt of the subscriptions from the subscribers.
9.Issue of share certificates to subscribers.
10.Taking notes of the Industrial Entrepreneur’s Memorandum furnished to the
Ministry.
11. Appointment of essential staff.
12. Report of Company’s Promoters on the progress of the project proposed to be
undertaken and statement of the expenditure so far incurred.
13. Taking note of foreign collaboration agreement.
14. Issue of shares to foreign collaborators.
15. Granting power of attorney.
16. Financial year of the company.
17. Getting permanent account number.
18. Appointment of Auditor.
19. Steps to be taken for. obtaining commencement certificate.
20. Making of the Common Seal.
21. Any other business with the permission of the chair.
Memorandum and Articles of Association
1.Chairman of the meeting
Shri was unanimously elected Chairman of the meeting.
2.Certificate of Incorporation
The Certificate of Incorporation dated and a copy of the Memorandum and
Articles of Association were placed before the meeting and duly noted.
3.Filing of Consent by Directors
It was noted that all the Directors present (being persons named in the Articles of Association, as the first Directors of the company) have signed the consent to act as Directors and the consent has been filed with the Registrar of Companies in the prescribed form.
4. Appointment of the Chairman of the Board
Shri ‘A’ proposed the name of Shri ‘X’ for the Chairman of the company and Shri ‘B’ seconded it. It was unanimously resolved as follows: Resolved that Shri ‘X’ be and is hereby appointed Chairman of Board of Directors of the company.
The Chairman placed before the meeting a letter dated 19 received by the
Company from Mis XYZ, Chartered Accountants, intimating their consent and stat
ing that in case of their appointment as Auditors of the company for the year ending
20 the same would be in accordance with the limits specified in Section 224 (1 B)
of the Companies Act, 1956. The Board noted the same and it was then resolved as follows:
“RESOLVED that Mis XYZ, Chartered Accountants, be and are hereby appointed as the first Auditors of the Company to hold office until the conclusion of the first Annual General Meeting of the Company at a remuneration of
7.Adoption of Common Seal
The Common Seal of the company was produced before the meeting and approved.
The following resolution was passed.
“RESOL VED thatthe seal which has been submitted to and approved by this meeting and an impression of which has been affixed in the margin of these minutes be and the same is hereby adopted as the Common Seal of the Company and that the Seal be kept in safe custody of the Secretary who shall maintain a Seal Register in which details of all documents sealed shall be entered.”
8.Situation of Registered Office
“RESOLVED that the Registered Office of the Company be situated at ..... and the Secretary be instructed to complete and sign ‘Notice of situation of Registered Office’ in Form 18 and file the same with the Registrar of Companies.”
9.Opening of a Bank Account
The Board approved the proposal for opening an account with State Bank of India in
Karol Bagh, New Delhi Branch and passed the following resolution:
“RESOL VED that a bank account of the Company be opened with the State Bank of India at Karol Bagh, New Delhi Branch, and that the said Bank be and is hereby authorised to honour all cheques, Bills of Exchange, Promissory Notes and other orders for payment drawn, accepted, made or signed on behalf of the Company by any two Directors and the Secretary of the Company and to act upon any instruction so given relating to the account whether the same be overdrawn or not, or relating to the transactions of the Company and the
Secretary be instructed to deliver to the said Bank a copy of the Resolution signed by the Chairman, specimen signatures of the Directors and Secretary and a copy of the Memorandum and Articles of Association of the Company.
10. Financial Year
It was resolved that the financial year of the Company will be from 1st April to 31s March and that the first accounting period of the Company shall be from the date 0:
incorporation, i.e
11. Share Certificate
A format of the share certificate proposed to be printed for the company was tabled
and approved. It was:
Shri was unanimously elected Chairman of the meeting.
2.Certificate of Incorporation
The Certificate of Incorporation dated and a copy of the Memorandum and
Articles of Association were placed before the meeting and duly noted.
3.Filing of Consent by Directors
It was noted that all the Directors present (being persons named in the Articles of Association, as the first Directors of the company) have signed the consent to act as Directors and the consent has been filed with the Registrar of Companies in the prescribed form.
4. Appointment of the Chairman of the Board
Shri ‘A’ proposed the name of Shri ‘X’ for the Chairman of the company and Shri ‘B’ seconded it. It was unanimously resolved as follows: Resolved that Shri ‘X’ be and is hereby appointed Chairman of Board of Directors of the company.
The Chairman placed before the meeting a letter dated 19 received by the
Company from Mis XYZ, Chartered Accountants, intimating their consent and stat
ing that in case of their appointment as Auditors of the company for the year ending
20 the same would be in accordance with the limits specified in Section 224 (1 B)
of the Companies Act, 1956. The Board noted the same and it was then resolved as follows:
“RESOLVED that Mis XYZ, Chartered Accountants, be and are hereby appointed as the first Auditors of the Company to hold office until the conclusion of the first Annual General Meeting of the Company at a remuneration of
7.Adoption of Common Seal
The Common Seal of the company was produced before the meeting and approved.
The following resolution was passed.
“RESOL VED thatthe seal which has been submitted to and approved by this meeting and an impression of which has been affixed in the margin of these minutes be and the same is hereby adopted as the Common Seal of the Company and that the Seal be kept in safe custody of the Secretary who shall maintain a Seal Register in which details of all documents sealed shall be entered.”
8.Situation of Registered Office
“RESOLVED that the Registered Office of the Company be situated at ..... and the Secretary be instructed to complete and sign ‘Notice of situation of Registered Office’ in Form 18 and file the same with the Registrar of Companies.”
9.Opening of a Bank Account
The Board approved the proposal for opening an account with State Bank of India in
Karol Bagh, New Delhi Branch and passed the following resolution:
“RESOL VED that a bank account of the Company be opened with the State Bank of India at Karol Bagh, New Delhi Branch, and that the said Bank be and is hereby authorised to honour all cheques, Bills of Exchange, Promissory Notes and other orders for payment drawn, accepted, made or signed on behalf of the Company by any two Directors and the Secretary of the Company and to act upon any instruction so given relating to the account whether the same be overdrawn or not, or relating to the transactions of the Company and the
Secretary be instructed to deliver to the said Bank a copy of the Resolution signed by the Chairman, specimen signatures of the Directors and Secretary and a copy of the Memorandum and Articles of Association of the Company.
10. Financial Year
It was resolved that the financial year of the Company will be from 1st April to 31s March and that the first accounting period of the Company shall be from the date 0:
incorporation, i.e
11. Share Certificate
A format of the share certificate proposed to be printed for the company was tabled
and approved. It was:
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