J.K.

SHAH CLASSES CORPORATE LAW

Foreign Exchange Management Act, 1999

Prohibition on acquisition or transfer of Amendment to the Regulations:

Immovable property in India by citizens Capital Account Transactions
of certain countries: In the Foreign Exchange Management (Permissible Capital Account Transaction)
Regulations, 2000. In Regulation 4, in sub-regulation-(a), for the existing provisos,
The following shall be substituted:- “PROVIDED “ that-
No person being a without prior
Citizen of permission of
 Pakistan, the Reserve Bank. (a) subject to the provisions (b) Where the drawal of
 Bangladesh of the Act or the rules or foreign exchange by a
 Sri Lanka, regulations or directions or resident individual
 Afghanistan, shall acquire or orders made or issued
 China, transfer immovable thereunder.
 Iran, property in India
 Nepal,
 Bhutan, a resident individual may, for any capital account
 Macau or other than lease, not draw from an authorized transaction specified in
 Hong Kong exceeding five years.” Amendment to the Regulation person foreign exchange Schedule I
Chit Funds

The Registrar of Chits Non-resident Indians Not exceeding USD 2,50,000 per exceeds USD 2,50,000 per financial
or an officer authorised shall be eligible Financial year or such amount year, or as decided by Reserve Bank
by the state government from time to time as the case may be.
In this behalf, may.

To subscribe, through As decided by Reserve Bank the limit specified in the

In consultation with the banking channel and on From time to time for a capital regulations relevant to the transaction
State Government non-repatriation basis, Account transaction specified shall apply with respect to such drawal.
Concerned, to such Chit funds. In Schedule I.

Permit any chit fund to without limit subject to PROVIDED FURTHER that no part of the foreign exchange of USD 2,50,000
Accept subscription form the conditions stipulated drawn under proviso (a) shall be used for remittance directly or indirectly to
Non-resident Indians by the Reserve Bank of countries notified as non-co-operative countries and territories by Financial
India from time to time”. Action tas Force (FATF) from time to time and communicated by the Reserve
Bank of India to all concerned.”

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SECURITY EXCHANGE BOARD OF INDIA ACT, 1992

Amendment in ICDR Regulation

Number 10 : Fast Track Issue

a. The equity shares b. the average market c. the annualised trading d. the issuer has e. the issuer has
Of the issuer have capitalisation of public turnover of the equity redressed at least been in
Been listed on any shareholding of the shares of the issuer during 95% of the with in equity
Recognised stock issuer is six calendar months complaints received listing agreement
exchange from the investors

having nationwide at least Rs. 1000 cr in immediately preceding the till the end of the for a period of
trading terminals case of public issue and month of the reference date quarter immediately at least three
Rs. 250 cr in case of has been preceding the month immediately
right issue; of the reference preceding the
for a period of at at least 2% of the weighted date; reference date :
least three years average number of equity
immediately shares listed during such six Provided further that imposition
preceding the months period: of only monetary fines by stock
reference date; exchanges on the issuer shall
not be a ground for ineligibility
[provided that for issuers, whose public shareholding is less this regulation
than 15% of its issued equity capital, the annualised trading
turnover of its equity shares has been at least 2% of the
weighted average number of equity shares available as free
float during such six months period;]

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SECURITY EXCHANGE BOARD OF INDIA ACT, 1992 2ND CHART

f. the impact of auditors’ g. no show-cause notice h. The entire shareholding i. in case of a rights issue, j. the equity shares I. there shall be no conflict
qualifications, if any, have been issued or of the promoter group promoters and promoter of the issuer of interest between the led
on the audited accounts prosecution proceedings of the issuer group shall mandatorily merchant banker(s) and
of the issuer
have not been
initiated by the Board or is held in dematerialised subscribe to their rights suspended from the issuer or its group or
in re – spect of those pending against the issuer form on the reference date. Entitlement and shall not trading associate company in
financial years or its promoters or whole renounce their rights. accordance with applicable
time directors as on the regulations.
reference date : as a disciplinary
for which such accounts except to the extent of re- measure during last
are disclosed in the offer nunciation within the three years k. the annualized delivery
document (ga) the issuer or promoter or promoter group or for the based trading turnover of
promoter group or director of purpose of complying with the equity shares
the issuer immediately preceding
does not exceed 5% of the reference date:
the net profit or loss after has not settled any alleged minimum public shareholding during six calendar months
tax of the issuer for the violation of securities laws norms prescribed under Rule immediately preceding the
respective years: through the consent or 19A of the Securities Contract month of the
settlement mechanism with (Regulation) Rules, 1957:
the Board
has been at least ten present
during three years immediately of the weighted average
preceding the reference date. Number of equity shares listed
during such six months period.

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Amendment in ICCR Reg 58:

Disclosure in Abridged prospectus

Disclosures : General Instruction :

(I) Information as is (II) An issuer making a (III) The abridged (v) Information which is (VII) The Abridged (IX) The order in (X) The application
Material and appropriate public issue of specified prospectus shall be of generic nature and prospectus shall be which items form shall be so
To enable the investors securities submitted printed in a font size positioned that

To make an informed shall make the disclosures to the Board not specific to the issuer which shall not be appear in the
Decision shall be in the abridged prospectus (one copy) shall be brought out in visually smaller than abridged prospectus on the tearing
Disclosed in the abridged the form of a General Times New Roman off the application
Prospectus Information Document size 11 ( or equivalent) form
As per the format specified (GID) with 1.0 line spacing. Shall be as specified
By the Board from time to by the Board.
Time as specified by the Board. No part of the
Information given
In the abridged
Prospectus is
(iv) The abridge (VI) Abridged (VIII) information mutilated.
Prospectus including prospectus required to be given
In Tabular Format

The application form Shall be printed in

A booklet form of shall not appear in
A4 size paper running text format
Shall not exceed 5
Sheets (printed both
Sides)

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Amendment in allocation to Anchor Investor :

Sch XI Part a

1. An Anchor Investor shall 3. Upto thirty precent (30%) of 5. The bidding for Anchor 7. Allocation to Anchor 9. There shall be a lock in of
Make an application of the protion available for Investors Investors 30 days
a value of allocation

shall open one day before the shall be completed on the shares allotted to the
at least Rs. 10 crore in to qualified institutional buyers issue opening date. Anchor Investor
the pub-lic issue shall be available to anchor
investor(s) on the day of bidding From the date of allotment in
by Anchor Investors.
For allocation / allotment
(‘anchor investor portion’)

2. Allocation to Anchor 4. One-third of the 6. Anchor Investors 8. The number of shares

Investors shall be on anchor investor shall pay allocated to Anchor
a discretionary basis and protion Investors and

subject a minimum shall be reserved for a margin of at least the price at which the
number or 2 such domestic mutual funds. 25% on application allocation is made.
Investors for allocation of

Upto Rs.250 crore and with the balance to shall be made available
5 such investors for be paid within two in public domain by the
Allocation of more than days of the date of merchant banker
Rs. 250 crore. Closure of the issue.

Before opening of the

Issue.

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J.K. SHAH CLASSES CORPORATE LAW
THE COMPANIES ACT, 2013
CHAPTER – VII
GENERAL MEETINGS
[AMENDED W.E.F 23/09/16]
Every company which has listed its equity snares on a recognised stock exchange
and every company having not less than 1000 members shall provide to its members
facility to exercise their right to vote on resolutions proposed to be considered at a general
meeting by electronic means:
Provided that a Nidhi, or an enterprise or institutional investor referred to in Chapter XB or
Chapter XC of the SEBI (ICDR) Regulations, 2009 is not required to provide the facility to
vote by electronic means:
Explanation - For the purpose of this sub-rule, "Nidhi" means a company which has been
incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst
its members, receiving deposits from and lending to, its members only, for their mutual
benefit, and which compile's with such rules as arc prescribed by the Central Government
for regulation of such class of companies ".

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CHAPTER VIII - DECLARATION AND PAYMENT OF DIVIDEND
[SECTION – 123 TO 127]

THE INVESTOR EDUCATION AND PROTECTION FUND

In exercise of the powers conferred by sub-sections (1). (2), (3), (4), (8), (9). (10) and (11) of
section 125 and sub-section (6) of section 124 read with section 469 of the Companies Act,
2013 (18 of 2013), the Central Government hereby makes the following rules, namely:-

1. Short title, extent and commencement :-

(1) these rules may be called the Investor Education and Protection Fund
Authority
(Accounting. Audit. Transfer and Refund) Rules, 2016.
(2) They shall come into force with effect from the 7th September 2016.

2. Definitions.-
(1) In these rules, unless the context otherwise requires,—
’'Authority” means the IEPF Authority constituted under 125(5);
“Chairperson” means the chairperson of the authority appointed under
125(6);
“Existing IEPF” means the Investor Education and Protection I und (IEPF)
constituted under section 205C of the Companies Act. 1956 (1 of 1956);
“Fund” means the IEPF constituted under section 125 of the Act;
“Investor” means any person, who has committed money in shares, or debentures,
bond or deposits under a scheme or plan of a company registered under the Act:
‘“Member” means member of the Authority appointed under 125(6);

3.. Fund.-
(1) The Authority shall administer the Fund.
(2) There shall be credited to the Fund, the following amounts, namely :-
- all amounts payable as mentioned in clause (a) to (n) of 125(2);
- all shares in accordance with sub-section (6) of section 124 of the Act;
- all the resultant benefits arising out of shares held by the Authority
under clause (b);
- all grants, fees and charges received by the Authority' under these
rules;
- all sums received by the Authority from such other sources as may be
decided upon by the CG;
- all income earned by the Authority in any year,
- all amounts payable as mentioned in sub-section (3) of section 1OB
of the Banking Companies (Acquisition and Transfer of Undertakings)
Act. 1970 and section 1OB of Banking Companies ( Acquisition and
Transfer of Undertakings) Act, I980; and
- all other sums of money collected by the Authority as envisaged in the
Act.
In ease of term deposits and debentures of companies, due unpaid or
unclaimed interest shall be transferred to the Fund along with the transfer of
the matured amount of such term deposits and debentures.

(3) (a) All the money, which accrue under sub section (2) [except clause (g)] of
section 125 of the Act shall be deposited in the Consolidated Fund of India
under the Unclaimed and Unpaid dividends, deposits and debentures etc.’.
Such sums along with amount deposited under section 205C of the

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Companies Act, 1956 shall be transferred to the Fund in the non-interest
bearing Public Account after taking due approval of Parliament through
Appropriation Act. This noninterest bearing Public Account shall be termed
as IEPF Fund and shall be utilised for the purposes provided under 125(3).
4...c` Accounts and audit.-
(1) The Authority shall maintain proper accounts and other relevant records as
given in Schedule to these rules and prepare an annual statement of
accounts in such form as may be specified by the CG in consultation with the
CAG.
(2) The accounts of the Authority shall be audited annually by the Internal Audit
Party of the office of Chief Controller of Accounts and Comptroller and Auditor-
General of India at. such intervals and any expenditure incurred in connection
with such audit shall be payable by the Authority to the CAG.
(3) The CAG or any other person appointed by him in connection with the audit of
the accounts of the Authority shall have the same rights and privileges and
authority in connection with such audit as the CAG generally has in connection
with the audit of the Government accounts and, in particular, shall have the
right to demand the production of books, accounts, connected vouchers and
other documents and papers and to inspect any of the offices of the Authority.
(4) The accounts of the Authority as certified by the Comptroller and Auditor-
General of India or any other person appointed by him in this behalf together
with the audit report thereon shall be forwarded annually :c the CG and that
Government shall cause the same to be laid before each House of Parliament.

5.. Statement to be furnished to the Fund.-

(1) Any amount required to be credited by the companies to the Fund as provided
under clause (a) to (n)of 125(2) of the Act shall be remitted into the specified
branches of Punjab National Bank, which is the accredited Bank of the Pay and
Accounts Office, Ministry of Corporate Affairs and other authorised banks
engaged by the MCA-21 system, within a period of thirty days of such amounts
becoming due to be credited to the Fund.
(2) The company shall, furnish a Statement in Form No. IEPF 1 containing details
of such transfer to the Authority within thirty days, of submission of challan
(3) On receipt of the statement, the Authority shall enter the details of such receipt
in a Register maintained physically or electronically by it in respect of each
company every year, and reconcile the amount so remitted and collected, with
the concerned designated bank on monthly basis.
(4) The company shall maintain record consisting of name, last known address,
amount, folio number or client ID. certificate number, beneficiary details etc. of
the persons in respect of whom unpaid or unclaimed amount has remained
unpaid or unclaimed for a period of seven years and has been transferred to
the Fund and the Authority snail have the powers to inspect such records.
(5) The provisions of this rule shall be applicable mutatis mutandis in respect of the
amounts to be credited to the Fund in pursuance of clauses (h) to (m) of
125(2).
(6) Every company shall within a period of ninety days after the holding of AGM or
the date on which it should have been, held as per the provisions of section 96
of the Act and every year thereafter till completion of the seven years
period, identify the unclaimed amounts, as referred in sub-section 2of section
125 of the Act, as on the date of holding of AGM or the date on which it should
have been held as per the provisions of section 96 of the Act separately
furnish and upload on its own website and also on website of Authority or
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J.K. SHAH CLASSES CORPORATE LAW
any other website as may be specified by the Government, a statement or
information through Form No. IEPF 2, separately for each year, containing
following information, namely:-
- the names and last known addresses of the persons entitled to receive
the sum;
- the nature of amount;
- the amount to which each person is entitled;
- the due date for transfer into the Investor Education and Protection
Fund; and
- such other information as may be considered relevant for the purposes.

6.. ` Refunds to claimants from Fund. –

(1) Any person, whose shares, unclaimed dividend, matured deposits, matured
debentures, application money due for refund, or interest thereon, sale
proceeds of fractional shares, redemption proceeds of preference shares, etc.
has been transferred to the Fund, may claim the shares under provision to
124(6) or apply for refund under 125(3)(a) or under proviso to 125(3). as the
ease may be, to the Authority by making an application in Form IEPF 5
online available on website www.iepf.gov in along with fee. as decided by the
Authority from time to time in consultation with the Central Government, under
his own signature.
(2) The claimant shall after making an application online in Form IEPF-5 under
rule (1), send the same duly signed by him along with, requisite documents as
enumerated in Form IEPF-5 to the concerned company at its registered office
for verification of his claim.
(3) The company shall within 15 days of receipt of claim form, send a verification
report to the Authority in the format specified by the Authority along with all
documents submitted by the claimant.
(4) After verification of the entitlement of the claimant-
(a) to the amount claimed, the Authority and then Drawing and
Disbursement Officer of the Authority shall present a bill to the Pay and
Accounts Office for e-payment.
(b) to the shares claimed, the Authority shall issue a refund sanction order
with the approval of the Competent Authority and shall either credit the
shares which are lying with depository participant in IEPF
suspense account (name of the company) to the demat account of
the claimant to the extent of the claimant's entitlement or in ease
of the physical certificates, if any. cancel the duplicate certificate
and transfer the shares in favour of the claimant.
(5) The Authority shall, in its records, cause a note to be made of all the payments
made under sub-rule (4).

7. Power to direct payment of amount due to the Fund. –

(1) The company shall furnish a statement to the Authority in Form No. IEPF 6
within 30 days of end of financial year staling therein the amounts due to be
transferred to the Fund in next financial year.

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(2) The company shall also furnish a statement to the authority within 30 days of
the closure of its accounts for the financial year stating therein the reasons of
deviation, if any, of amounts detailed in sub-rule (1) above and actual amounts
transferred to the fund.
(3) Authority shall furnish a report to the CG within 60 days of end of financial year
giving details of companies who have failed to transfer the due amount to the
Fund.
(4) Authority shall also furnish a report to the CG by end of next financial year
giving details of companies who have failed to file information.

8. ` Transfer of assets, liabilities, etc., of the existing IEPF to the Authority.-

On and from the dare of establishment of the Authority, -
(a) any reference to the existing IEPF in any law other than these rules or in any
contract or other instrument shall be deemed as a reference to the Authority:
(b) all properties and assets, movable and immovable, of. or belonging to, the
existing IEPF, shall vest in the Authority:
(c) all rights and liabilities of the existing IEPF shall be transferred to. and be the
rights and liabilities of the Authority':
(d) without prejudice to the provisions of clause (c). all debts, obligations and
liabilities incurred, all contracts entered into and all matters and things
engaged to be done by, with or for the existing IEPF immediately before that
date, for or in connection with the purpose of the said existing IEPF shall be
deemed to have been incurred, entered into, or engaged to be done by, with or
for, the Authority;
(e) all sums of money due to the existing IEPF immediately before that date shall
be deemed to be due to the Authority; and
(f) all suits and other legal proceedings instituted or which could have been
instituted by or against the existing IEPF. immediately before that date may be
continued or may be instituted by or against the Authority.

9. Protection of action taken in good faith.- No suit, prosecution or other legal

proceedings shall lie against the CG or Authority or any officer of the CG or any
member, officer or other employee of the Authority' for anything which is in good faith
done or intended to be done under these rules.

10.. Repeal and savings. -

(1) The IEPF (Awareness and Protection of Investors) Rules, 2001 and IEPF
(Uploading of information regarding unpaid and unclaimed amounts
lying with companies) Rules. 2012 are hereby repealed.
(2) Not withstanding such repeal anything done or any action taken or purported
to have been done or taken under the rules repealed by sub-rule (1) shall, in
so far as it is not inconsistent with the provisions of these rules, be deemed to
have been done or taken under the corresponding provisions of these rules.

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CHAPTER IX - ACCOUNTS OF COMPANIES
CHAPTER X – AUDIT & AUDITORS

CHAPTER IX : ACCOUNTS OF COMPANIES

[SECTIONS 128 TO 138 EXCEPT SECTIONS 130, 131 AND 132]

NOTIFIED WEF 01-06-2016 read with NCLT & NCLAT

SECTION 130 – Re opening of Accounts on Order of Court or Tribunal

(1) A company shall not re-open its books of account and not recast its financial
statements, unless an application in this regard is made by the Central Government,
the Income-tax authorities, the Securities and Exchange Board, any other statutory
regulatory body or authority or any person concerned and an order is made by a
court of competent jurisdiction or the Tribunal to the effect that—
(i) the relevant earlier accounts were prepared in a fraudulent manner; or
(ii) the affairs of the company were mismanaged during the relevant period,
casting a doubt on the reliability of financial statements:
Provided that the court or the Tribunal, as the case may be, shall give notice to the
Central Government, the Income-tax authorities, the SEBI or any other statutory
regulatory body or authority concerned and shall take into consideration the
representations, if any, made by that Government or the authorities, Securities and
Exchange Board or the body or authority concerned before passing any order under
this section.
(2) Without prejudice to the provisions contained in this Act the accounts so revised or
re-cast under sub-section (1) shall be final.

SECTION 131 – Voluntary Revision of Financial Statements

(1) If it appears to the directors of a company that—
(a) the financial statement of the company; or
(b) the report of the Board, do not comply with the provisions of section 129 or
section 134 they may prepare revised financial statement or a revised report in
respect of any of the three preceding financial years after obtaining approval of
the Tribunal on an application made by the company in such form and manner
as may be prescribed and a copy of the order passed by the Tribunal shall be
filed with the Registrar:
Provided that the Tribunal shall give notice to the Central Government and the
Incometax authorities and shall take into consideration the representations, if any,
made by that Government or the authorities before passing any order under this
section:
Provided further that such revised financial statement or report shall not be
prepared or filed more than once in a financial year:
Provided also that the detailed reasons for revision of such financial statement or
report shall also be disclosed in the Board's report in the relevant financial year in
which such revision is being made.
(2) Where copies of the previous financial statement or report have been sent out to
members or delivered to the Registrar or laid before the company in general meeting,
the revisions must be confined to—
(a) the correction in respect of which the previous financial statement or report do
not comply with the provisions of section 129 or section 134; and
(b) the making of any necessary consequential alternation.

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(3) The Central Government may make rules as to the application of the provisions of
this Act in relation to revised financial statement or a revised director's report and
such rules may, in particular—
(a) make different provisions according to which the previous financial statement
or report are replaced or are supplemented by a document indicating the
corrections to be made;
(b) make provisions with respect to the functions of the company's auditor in
relation to the revised financial statement or report;
(c) require the directors to take such steps as may be prescribed.

[AMENDMENT MADE BY NOTIFICATION DATED 29/07/2016]

The Board’s report shall include a statement showing the name of every employee of the
company, who the names of the top ten employees in terms of remuneration drawn and the
name of every employee, who –
(i) if employed throughout the financial year, was in receipt of remuneration for that year
which, in the aggregate, was not less than sixty lakh rupees one crore and two
lakh rupees;

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part
of that year, at a rate which, in the aggregate, was not less than five lakh rupees per
month eight lakh and fifty thousand rupees per month;

(iii) if employed throughout the financial year or part thereof, was in receipt of
remuneration in that year which, in the aggregate, or as the case may be, at a rate
which, in the aggregate, is in excess of that drawn by:
- MD or
- WTD or
- MANAGER and
holds by himself or along with his spouse and dependent children,
not less than 2% of the equity shares of the company.

This make position clear that data of every employee above the threshold limit will be
required to be given otherwise data of at least top ten employees is required to be
given.

[COMPANIES AMENDMENT ACT 2015]

"details in respect of frauds reported by auditors under sub-section (12) of section
143 other than those which are reportable to the Central Government;".

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CHAPTER XIII - APPOINTMENT AND REMUNERATION OF
MANAGERIAL PERSONNEL
PART H – MANAGERIAL PERSONNEL

Section 196 - Appointment of managing director, whole-time director or manager.

I. APPOINTMENT BY COMPANY:
(4) A MD, WTD or manager shall be appointed and the terms and conditions of such
appointment and remuneration payable [PRIVATE COMPANY EXEMPT w.e.f 5-06-15]
A. be approved by the Board of Directors at a meeting which shall be
B. subject to approval by a resolution at the next general meeting of the company and
C. by CG in case such appointment is at variance to the conditions specified in that
Schedule V:

Provided that a notice convening Board or general meeting for considering such
appointment shall include the terms and conditions of such appointment, remuneration
payable and such other matters including interest, of a director or directors in such
appointments, if any:

Filing of return of appointment.- RULES

[Amendment made by notification dated 29/07/2016]
A company shall file a return of appointment of a MD, WTD or Manager, CEO, CS and
CFO within 60 days of the appointment, with the Registrar in Form No. MR.1

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SCHEDULE V
(See sections 196 and 197)

PART II
REMUNERATION
SECTION I
Remuneration payable by companies having profits :
Subject to the provisions of section 197, a company having profits in a financial year may
pay remuneration to a managerial person or persons not exceeding 11% of Net Profits

[Amendment as Notified by MCA dated 12/09/2016]

SECTION II of Part II of Schedule V of the Companies Act, 2013 has been substituted by
this amendment. This section relates to remuneration payable by companies having no
profit or inadequate profit without Central Government approval.
REMUNERATION IN CASE OF ANY MANAGERIAL PERSONNEL
Where in any financial year during the currency of tenure of a managerial person, a
company has no profits or its profits are inadequate, it may, without Central Government
approval, pay remuneration to the managerial person not exceeding the limits given in
clause (A) –
Effective capital Maximum yearly remuneration
(i) Negative or less than 5 crores 60 Lakhs
(ii) 5 crores and above but less than 100 84 Lakhs
crores
(iii) 100 crores and above but less than 250 120 Lakhs
crores
(iv) 250 crores and above 120 lakhs plus 0.01% of the
effective capital in excess of Rs.
250 crores
Double the remuneration
Above limits shall be doubled if the resolution passed by the shareholders is a special
resolution. [Proviso to clause (A)]
MANAGERIAL PERSON IN PROFESSIONAL CAPACITY
A managerial person functioning in a professional capacity may get any amount of
remuneration without Central Government approval on satisfaction of following conditions
that such managerial person –
A) is not having any interest in the capital of the company or its holding company or any
of its subsidiaries directly or indirectly or through any other statutory structures
[Independent from company], and

B) not having any direct or indirect interest or related to the directors or promoters of the
company or its holding company or any of its subsidiaries at any time during the last two
years before or on or after the date of appointment [Independent from promoters and
directors], and

C) possesses graduate level qualification with expertise and specialised knowledge in

the field in which the company operates [Professional expertise and knowledge].

Interest in the company

Any employee of a company holding shares of the company not exceeding 0.5% of its
paid up share capital under any scheme formulated for allotment of shares to such
employees including Employees Stock Option Plan or by way of qualification shall be

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deemed to be a person not having any interest in the capital of the company. [Proviso to
section (b) of section II of part II of Schedule V]
Statutory Structure
“Statutory Structure” means any entity which is entitled to hold shares in any company
formed under any statute. [Explanation to Schedule V of the Companies Act, 2013]
Difference with Section 197(4)
According to sub – section (4) of section 197 of the Companies Act, 2013 read with its
proviso, the remuneration payable to directors shall be inclusive of all remuneration payable
to him for services rendered by him in any other capacity except services rendered are of
professional in nature and in opinion of Nomination and Remuneration Committee or of
Board of Directors as the case may be, director has requisite qualification for practice of
profession.

GENERAL CONDITIONS FOR MANAGERIAL REMUNERATION

In relation to both clauses (A) and (B), following conditions shall apply –
1) payment of remuneration is approved by a resolution passed by the Board and, in the
case of a company covered under sub-section (1) of section 178 also by the
Nomination and Remuneration Committee [approval by Board and NRC, if required];
2) the company has not committed any default in repayment of any of its debts
(including public deposits) or debentures or interest payable thereon for a continuous
period of 30 days in the preceding financial year before the date of appointment
of such managerial person and in case of a default,
the company obtains prior approval from secured creditors for the proposed
remuneration and the fact of such prior approval having been obtained is mentioned
in the explanatory statement to the notice convening the general meeting
3) an ordinary resolution or a special resolution, as the case may be, has been
passed for payment of remuneration as per the limits laid down in item (A) or a
special resolution has been passed for payment of remuneration as per item (B), at
the general meeting of the company for a period not exceeding three years [Approval
in GM].
4) a statement along with a notice calling the general meeting referred to in clause (iii) is
given to the shareholders containing the information mentioned in the Schedule V

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CHAPTER XIV - INSPECTION, INQUIRY AND INVESTIGATION

FLOW OF CONTENTS:
PART – A: INQUIRY & INSPECTION.
PART – B: INVESTIGATION.
PART – C: INSPECTOR.
P.S. : Sections 213, 218, 221, 222, 226 & 227 are not yet Notified.

Section – 213 Investigation into company’s affairs in other cases.

The Tribunal may,—
(a) on an application made by—
(i) not less than one hundred members or members holding not less than one-
tenth of the total voting power, in the case of a company having a share
capital; or
(ii) not less than one-fifth of the persons on the company’s register of members, in
the case of a company having no share capital, and supported by such
evidence as may be necessary for the purpose of showing that the applicants
have good reasons for seeking an order for conducting an investigation into
the affairs of the company; or
(b) on an application made to it by any other person or otherwise, if it is satisfied
that there are circumstances suggesting that—
(i) the business of the company is being conducted with intent to defraud its
creditors, members or any other person or otherwise for a fraudulent or
unlawful purpose, or in a manner oppressive to any of its members or that the
company was formed for any fraudulent or unlawful purpose;
(ii) persons concerned in the formation of the company or the management of its
affairs have in connection therewith been guilty of fraud, misfeasance or other
misconduct towards the company or towards any of its members; or
(iii) the members of the company have not been given all the information with
respect to its affairs which they might reasonably expect, including information
relating to the calculation of the commission payable to a managing or other
director, or the manager, of the company,
order, after giving a reasonable opportunity of being heard to the parties
concerned, that the affairs of the company ought to be investigated by an
inspector or inspectors appointed by the Central Government and where such
an order is passed, the Central Government shall appoint one or more
competent persons as inspectors to investigate into the affairs of the company
in respect of such matters and to report thereupon to it in such manner as the
Central Government may direct:
Provided that if after investigation it is proved that—
(i) the business of the company is being conducted with intent to defraud its
creditors, members or any other persons or otherwise for a fraudulent or
unlawful purpose, or that the company was formed for any fraudulent or
unlawful purpose; or
(ii) any person concerned in the formation of the company or the management of
its affairs have in connection therewith been guilty of fraud, then, every officer
of the company who is in default and the person or persons concerned in the
formation of the company or the management of its affairs shall be
punishable for fraud in the manner as provided in section 447.

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Section – 218. Protection of employees during investigation.
(1) Notwithstanding anything contained in any other law for the time being in
force, if—
(a) during the course of any investigation of the affairs and other matters of or
relating to a company, other body corporate or person under section 210,
section 212, section 213 or section 219 or of the membership and other
matters of or relating to a company, or the ownership of shares in or
debentures of a company or body corporate, or the affairs and other matters of
or relating to a company, other body corporate or person, under section 216;
or
(b) during the pendency of any proceeding against any person concerned in the
conduct and management of the affairs of a company under Chapter XVI, such
company, other body corporate or person proposes—
(i) to discharge or suspend any employee; or
(ii) to punish him, whether by dismissal, removal, reduction in rank or
otherwise; or
(iii) to change the terms of employment to his disadvantage, the company,
other body corporate or person, as the case may be, shall obtain
approval of the Tribunal of the action proposed against the
employee and if the Tribunal has any objection to the action
proposed, it shall send by post notice thereof in writing to the
company, other body corporate or person concerned.
(2) If the company, other body corporate or person concerned does not receive within
thirty days of making of application under sub-section (1), the approval of the
Tribunal, then and only then, the company, other body corporate or person
concerned may proceed to take against the employee, the action proposed.
(3) If the company, other body corporate or person concerned is dissatisfied with the
objection raised by the Tribunal, it may, within a period of thirty days of the receipt of
the notice of the objection, prefer an appeal to the Appellate Tribunal in such manner
and on payment of such fees as may be prescribed.
(4) The decision of the Appellate Tribunal on such appeal shall be final and binding on
the Tribunal and on the company, other body corporate or person concerned.
(5) For the removal of doubts, it is hereby declared that the provisions of this section
shall have effect without prejudice to the provisions of any other law for the time
being in force.

Section–221 Freezing of assets of company on inquiry and investigation.

(1) Where it appears to the Tribunal, on a reference made to it by the Central
Government or in connection with any inquiry or investigation into the affairs of a
company under this Chapter or on any complaint made by such number of members
as specified under sub-section (1) of section 244 or a creditor having one lakh
amount outstanding against the company or any other person having a reasonable
ground to believe that the removal, transfer or disposal of funds, assets, properties of
the company is likely to take place in a manner that is prejudicial to the interests of
the company or its shareholders or creditors or in public interest, it may by order
direct that such transfer, removal or disposal shall not take place during such period
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not exceeding three years as may be specified in the order or may take place subject
to such conditions and restrictions as the Tribunal may deem fit.
(2) In case of any removal, transfer or disposal of funds, assets, or properties of the
company in contravention of the order of the Tribunal under sub-section (1), the
company shall be punishable with fine which shall not be less than one lakh rupees
but which may extend to twenty-five lakh rupees and every officer of the company
who is in default shall be punishable with imprisonment for a term which may extend
to three years or with fine which shall not be less than fifty thousand rupees but which
may extend to five lakh rupees, or with both.

Section 222 - Imposition of restrictions upon securities

(1) Where it appears to the Tribunal, in connection with any investigation under section
216 or on a complaint made by any person in this behalf, that there is good reason to
find out the relevant facts about any securities issued or to be issued by a company
and the Tribunal is of the opinion that such facts cannot be found out unless certain
restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that
the securities shall be subject to such restrictions as it may deem fit for such period
not exceeding three years as may be specified in the order.
(2) Where securities in any company are issued or transferred or acted upon in
contravention of an order of the Tribunal under sub-section (1), the company shall be
punishable with fine which shall not be less than one lakh rupees but which may
extend to twenty-five lakh rupees and every officer of the company who is in default
shall be punishable with imprisonment for a term which may extend to six months or
with fine which shall not be less than twenty-five thousand rupees but which may
extend to five lakh rupees, or with both.

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CHAPTER XXVI - NIDHI COMPANIES

What is Nidhi Company?

“Nidhi” means a company which has been incorporated as a Nidhi with the object of
-Cultivating the habit of thrift and savings amongst its members,
-receiving deposits from, and lending to, its members only, for their mutual benefit, and
Which complies with rules of Chapter XXVI of Companies Rules, 2014.

Nidhi in the Indian context / language means “TREASURE”. However, in the Indian financial
sector it refers to any mutual benefit society notified by the Central / Union Government as a
Nidhi Company.

The companies doing Nidhi business, viz. borrowing from members and lending to members
only, are known under different names such as Nidhi, Permanent Fund, Benefit Funds,
Mutual Benefit Funds and Mutual Benefit Company.

Nidhi’s are more popular in South India and are highly localized single office institutions.
They are mutual benefit societies, because their dealings are restricted only to the
members; and membership is limited to individuals. The principal source of funds is the
contribution from the members. The loans are given to the members at relatively reasonable
rates for purposes such as house construction or repairs and are generally secured. The
deposits mobilized by Nidhi’s are not much when compared to the organized banking sector.

Since Nidhi’s come under one class of NBFCs, RBI is empowered to issue directions to
them in matters relating to their deposit acceptance activities. However, in recognition of the
fact that these Nidhi’s deal with their shareholder-members only, RBI has exempted the
notified Nidhi’s from the core provisions of the RBI Act and other directions applicable to
NBFCs. As on date (February 2013) RBI does not have any specified regulatory framework
for Nidhi’s.

Applicability
The Central Government made ‘Nidhi Rules, 2014’ for the purpose of carrying out the
objectives of ‘Nidhi’ companies. These rules shall be applicable to-
 Every company which had been declared as a Nidhi or Mutual Benefits under Section
620A(1)of Companies Act, 1956;
 Every company functioning on the lines of a Nidhi company or Mutual benefit society
but has either not applied for or has applied for and is awaiting notification to be a
Nidhi or Mutual Benefit Society under Section 620A(1)of Companies Act, 1956;
 Every company incorporated as a Nidhi pursuant to the provisions of Section 406of
the Companies Act, 2013.

Requirements for Nidhi Company

 A Nidhi company to be incorporated under this Act shall be a Public Company;
 No preference shares shall be issued.
 If preference shares had already been issued by a Nidhi Company before
commencement of this Act, such preference shares are to be redeemed in
accordance with the terms of issue of such shares;
 The object of the company shall be cultivating the habit of thrift and savings amongst
its members, receiving deposits from and lending to its members only for their mutual
benefits;
 It shall have the words ‘Nidhi Limited’ as part of its name;

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Requirement after Incorporation:
Every Nidhi shall, within a period of one year from the commencement of these rules,
ensure that it has—
 Minimum number of members should be 200;
 Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means the
aggregate of paid up equity share capital and free reserved as reduced by the
accumulated and intangible assets appearing in the last audited balance sheet);
 Ratio of net owned funds to deposit shall be not more than 1:20;
 Unencumbered term deposits of not less than 10% of the outstanding deposits as
specified in Rule 14;

General restrictions
Rule 6 provides general restrictions. According to this Rule NO Nidhi shall-
1) Carry on the business of
 Chit Fund,
 Hire Purchase Finance,
 Leasing Finance,
 Insurance or Acquisition of Securities issued by anybody corporate;
2) Issue
 Preference Shares,
 Debentures or
 Any Other Debt Instrument by any name or in any form whatsoever;
3) Open any Current Account with its members;
4) Acquire another company by;
 Purchase of securities or
 Control the composition of the Board of Directors of any other company in any
manner whatsoever or
5) Enter into any arrangement for the change of its management, unless it has passed
a special resolution in its general meeting and also obtained the previous approval of
the Regional Director having jurisdiction over Nidhi;
6) Carry on any business other than the business of borrowing or lending in its own
name;
7) Accept Deposits from or lend to any person, other than its members;
8) Pledge any of the assets lodged by its members as security;
9) Take Deposits from or lend money to anybody corporate;
10) Enter into any Partnership Arrangement in its borrowing or lending activities;
11) Issue or cause to be issued any advertisement in any form for soliciting deposit;
12) Pay any brokerage or incentive for mobilizing deposits from members or for
deployment of funds or the granting loans.

NOTE:
 Nidhi’s which have adhered to all the provisions of these rules may provide locker
facilities on rent to its members subject to the rental income from such facilities not
exceeding 20% twenty per cent of the gross income of the Nidhi at any point of time
during a financial year.

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Membership
 A Nidhi shall not submit a body corporate or trust as a member.
 Except as otherwise permitted under these rules, every Nidhi shall ensure that its
membership is not reduced to less than 200 members at any time.
 A minor shall not be admitted as a member of Nidhi.
 But deposits may be accepted in the name of a minor, if they are made by the natural
or legal guardian who is a member of Nidhi.

Rule 7 provides that every Nidhi shall issue equity shares of the nominal value of not less
than Rs.10/- each. This requirement shall not apply to a company which has been declared
as a Nidhi company.

Acceptance of deposits:
 A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Assets
as per last audited financial statements.
 The fixed deposits shall be accepted for a minimum period of 6 months and a
maximum period of 60 months.
 Recurring deposits shall be accepted for a minimum period of 12 months and a
maximum period of 60 months.
 In case of recurring deposits relating to mortgage loans, the maximum period of
recurring deposits shall correspond to the repayment period of such loans granted by
Nidhi.
 The maximum balance in a savings deposit account at any given time qualifying for
interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above
the rate of interest payable to savings bank account by nationalized banks.
 Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum
rate of interest prescribed by RBI which the NBFC can pay on their public deposits.

Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with
a scheduled commercial bank or post office deposits in its own name an amount which shall
not be less than 10% of the deposits outstanding at the close of the business on the last
working day of the second preceding month.
In case of unforeseen commitments, temporary withdrawal may be permitted with the prior
approval of the Regional Director for the purpose of repayment to depositors, subject to
such conditions and time limit which may be specified by the Regional Director to ensure
restoration of the prescribed limit of 10%

Loan
A Nidhi shall provide loans only to its members.
The rate of interest to be charged on any loan shall not exceed 7.5% above the highest rate
of interest offered on deposits by Nidhi and shall be calculated on reducing balance method.

(3) For the purposes of sub-rule (2), the amount of deposits shall be calculated on the basis
of the last audited annual financial statements

Dividend:
- A Nidhi shall not declare dividend exceeding 25% or
- There has been no default in repayment of matured deposits and interest; and
- It has completed with all the rules as applicable to Nidhis.

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Director:
 The director shall be a MEMBER of Nidhi.
 He shall hold office for a term up to 10 consecutive years on the Board.
 He shall be eligible for re-appointment only after the expiration of 2 years ceasing to
be a director.
 The person to be appointed as a Director shall comply with the requirements of
Section 152(4) of the Act and shall not have been disqualified in Section 164.

Auditor:
 The tenure of Auditor is five consecutive years.
 No auditor or audit firm as auditor shall be appointed for more than 2 terms of 5
consecutive years.
 The auditor shall be eligible for subsequent appointment after the expiration of two
years from the completion of his term.
 The Auditor of the company shall furnish a Certificate every year to the effect that
the company has complied with all the provision contained in the rules and such
certificates shall be annexed to the audit report and in case of non compliance he
shall specifically state the rules which have not been complied with.

Returns:
 Within 90 days from the closure of the first financial year after its incorporation and
where applicable, the second financial year, Nidhi shall file a return of statutory
compliances in Form NDH – 1 with the Registrar duly certified by a CS in practice or
a CA in practice or a Cost Accountant in practice.
 If the company is not complying with the above it shall within 90 days from the close
of the 1st financial year, apply to the RD in Form NDH -2 for extension of time and
 The RD may consider the application and pass orders within 30 days of the receipt of
the application.
If there is failure the Nidhi shall not accept any further deposits from the commencement of
the second financial year till it complies with the provisions besides being liable for penal
consequences provided in the Act.

EVERY COMPANY COVERED UNDER RULE 2 SHALL FILE HALF YEARLY RETURN
WITH THE REGISTRAR:
In Form NDH-3 within thirty days from the conclusion of each half year duly certified by a
CS in practice or CA in practice or cost accountant in practice.
Companies Covered under Rule -2 are following:
 Every company which had been declared as a Nidhi or Mutual Benefits under Section
620A(1)of Companies Act, 1956;
 Every company functioning on the lines of a Nidhi company or Mutual benefit society
but has either not applied for or has applied for and is awaiting notification to be a
Nidhi or Mutual Benefit Society under Section 620A(1)of Companies Act, 1956;
 Every company incorporated as a Nidhi as per Section 406 of Companies Act, 2013.

Penalty
 If a company contravenes any of the provisions of the rules 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 where the contravention is a continuing one, with a
further fine which may extend to Rs.500/- for every day after the first during which
the contravention continues.

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EXEMPTIONS TO A NIDHIS COMPANY

New Delhi, the 5th June, 2015

G.S.R. 465(E).—In exercise of the powers conferred by clauses (a) and (b) of sub-section
(1) of Section 462 read with section 406 of the Companies Act, 2013 (18 of 2013) and in
supersession of notification number GSR 517(E), dated the 31st August, 2006 and GSR
326(E), dated the 8th April, 2011 or any other notification issued under section 620A of the
Companies Act, 1956, except as respects things done or omitted to be done before such
supersession, the Central Government in the interest of public, hereby directs (hat certain
provisions of the Companies Act, 2013, as specified in column (2) of the Table, shall not
apply or shall apply with such exceptions, modifications and adaptations, as specified in
column (3) of the said Table, to Nidhis, namely:—
Serial Provisions of the Exceptions, modifications and adaptations
No. Companies Act, 2013
(1) (2) (3)
1. Sub-section (2) of Section Shall apply subject to the modification that in
20 the case of a Nidhi, the document may be
served only on members who hold shares of
more than one thousand rupees in face value
or more than one per cent, of the total paid-up
share capital of the Nidhis whichever is less.
For other shareholders, document may be
served by a public notice in newspaper
circulated in the district where the Registered
Office of the Nidhi is situated; and publication
of the same on the notice board of the Nidhi.
2. Section 42 except sub- Shall not apply.
section (1), explanation
(11) to sub-section (2),
sub-sections (4), (6), (8),
(9) and (10)
3. Clause (b) of sub-section Shall apply, subject to the modification that no
(1) of Section 47 member shall exercise voting rights on poll in
excess of five per cent, of total voting rights of
equity shareholders.
4. Section 62 Shall not apply.
5. Sub-section (1) of Section Shall not apply, when shares are purchased
61 by the company from a member on his
ceasing to be a depositor or borrower and it
shall not be considered as reduction of capital
under section 66 of the Companies Act, 2013.
6. Sub-section (5) of Section Shall apply, subject to the modification that
123 any dividend payable in cash may be paid by
crediting the same to the account of the

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member, if the dividend is not claimed within
30 days from the date of declaration of the
dividend.
7. Section 127 Shall apply, subject to the modification that
where the dividend payable to a member is
one hundred rupees or less, it shall be
sufficient compliance of the provisions of the
section, if the declaration of dividend is
announced in the local language in one local
newspaper of wide circulation and
announcement of the said declaration is also
displayed on the notice board of the Nidhis for
at least three months.
8. Sub-section (1) of Section Shall apply, subject to the modification that, in
136 the case of members who do not individually
or jointly hold shares of more than one
thousand rupees in face value or more than
one per cent, of the total paid-up share capital
whichever is less, it shall be sufficient
compliance with the provisions of the section
if an intimation is sent by public notice in
newspaper circulated in the district in which
the Registered Office of the Nidhi is situated
stating the date, time and venue of Annual
General Meeting and the financial statement
with its enclosures can be inspected at the
registered office of the company, and the
financial statement with enclosures are
affixed in the Notice Board of the company
and a member is entitled to vote either in
person or through proxy.
9. Section 160 In sub-section (1), for the words "one lakh
rupees", the words "ten thousand rupees"
shall be substituted.
10. Section 185 Shall not apply, provided the loan is given to a
director or his relative in their capacity as
members and such transaction is disclosed in
the annual accounts by a note.
11. Second proviso to sub- Shall apply with the modification that the
section (1) of Section 197 remuneration of a director who is neither
managing director nor whole-time director or
manager for performing special services to
the Nidhis specified in die articles of
association may be paid by way of monthly
payment subject to the approval of the

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company in general meeting and also to the
provision;: of section 197:
Provided that no approval of the company in
general meeting shall be required where,-—
(a) a Nidhi does not have a managing director
or a whole-time director or a manager;
(b) the remuneration payable during a
financial year to all the directors of the Nidhi
does not exceed ten per cent, of the net
profits of such Nidhi or fifteen lakh rupees,
whichever is less; and
(c) a remuneration payable under clause (b)
is approved by a special resolution passed in
(his behalf by the Nidhi.
12. Section 403 Shall apply, with the modification that the
filing fees in respect of every return of
allotment under sub-section (9) of section 42
shall be calculated at the rate of one rupee for
every one hundred rupees or parts thereof on
the face value of the shares included in the
return but shall not exceed the amount of
normal filing fee payable.

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CHAPTER XXVII – NCLT & NCLAT
SECTIONS AND PROVISIONS OF THE COMPANIES ACT, 2013 RELATING TO
TRIBUNAL NOTIFIED W.E.F. 1/6/2016
SR. SECTION PURPOSE
1 Sub-section (7) of section 7 [except Legal action for false or incorrect
clause (c) and (d)] information at the time of
Incorporation
2 Second proviso to sub-section (1) of Conversion of Public to Private
section 14 Limited
3 Sub-section (2) of section 14 Conversion of Public to Private
Limited
4 Sub-section (3) of section 55 Rollover of existing redeemable
preference shares
5 Proviso to Clause (b) of sub-section Changes in voting rights by
(1) of section 61 Consolidation or sub-division of
share Capital
6 Sub-sections (4) to (6) of section 62 Changes in terms of issue of
Debentures to facilitate Conversion
into equity shares
7 Sub-sections (9) to (11) of section Action by Debenture trustee once
71 the secured Assets becomes
insufficient
8 Section 75 Action against Company by
defrauding Depositors by non-
payment
9 Section 97 Power to call for AGM in case of
failure by the Company
10 Section 98 Power to call for meetings other than
AGM
11 Section 99 Punishment for failure to comply with
Tribunal Direction regarding
Meetings
12 Sub-section (4) of section 119 Order for inspection in case of failure
by the Company
13 Section 130 Re-opening of Accounts by
Authorities
14 Section 131 Voluntary revision of financial
statements
15 Second proviso to sub-section (4) Removal or change of Auditor before
and sub- section (5) of section 140 due Date and Suo Moto action by
Tribunal for removal
16 Sub-section (4) of section 169 Removal of Directors –
representation and relaxation of
provisions in certain cases
17 Section 213 Investigation into the affairs of the
Company
18 Sub-section (2) of Section 216 Appointment of Inspectors
19 Section 218 Protection of employees during
investigation
20 Section 221 Freezing of assets of Company on
inquiry and investigation

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21 Section 222 Imposition of restrictions upon
securities
22 Sub-sections (5) of section 224 Action against Company or Directors
on inspector’s report
23 Sections 241, 242 [except clause (b) Action against Prevention and
of sub- section (1), clause (c) & (g) Oppression and Mismanagement
of sub-section (2)], 243, 244, and
245
24 Reference of word ‘Tribunal’ in sub- Order for production of documents
section (2) of section 399 by Registrar
25 Sections 415 to 433 (both Tribunal and its Chairman,
inclusive) Members etc and provisions
relating thereto.
26 Sub-section (1)(a) and (b) of section Transfer of pending proceedings
434
27 Sub-section (2) of section 434 Appeal against Company Law Board
Order
28 Section 441 Compounding of offences
29 Section 466 Dissolution of CLB and
consequential provisions

Section 415 to Section 433 (both inclusive) has also came into force. These sections
deal with administration of NCLT and NCLAT.

CONSTITUTION OF NCLT AND NCLAT:

I. NCLT & NCLAT Consist [Section 407 & 408]:
 There are two classes of members to the National Company Law Tribunal;
Judicial Members and Technical Members.
 The Tribunal shall be headed by the President while the Appellate Tribunal by
Chairperson.
 NCLAT not exceeding 11 members for hearing appeals against the orders of
the Tribunal

II. Qualification: (President/Member of NCLT [Section 409]

SR. PRESIDENT JUDICIAL MEMBER TECHNICAL MEMBER
1 Is/has been Is/has been Judge of Has Member of Indian Corporate
Judge of High High Court (any Law Service /Indian Legal Service ≥
Court ≥ 5 period) 15 years
years (out of 15 years at least 3 years to
be in the pay scale of Joint Secretary
to GOI or equivalent post)
2 Is/has been District Is/has been Practicing Chartered
Judge atleast 5 years Accountant at least15 years
3 Has been Advocate Is/has been Practicing Cost
of court held a judicial Accountant at least 15 years
4 office or as member Is/has been Practicing COMPANY
of a tribunal atleast SECRETARY at least 15 years
10 years
5 Person with proven ability, integrity
and standing having special
knowledge and experience ≥ 15
years
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6 Presiding Officer of Labour Court/
Tribunal/ National Tribunal (under
Industrial Disputes Act, 1947) at
least 5 years

III. Qualification: (Chairman/Member of NCLAT) [Section 410 & 411]

 National Company Law Appellate Tribunal, constituting of a Chairperson and
not exceeding eleven members for hearing appeals against the orders of the
Tribunal.
SR Chairman Judicial Member Technical Member
1 Is/has been Judge of Is/has been Judge of Person with proven ability,
Supreme Court High Court integrity and standing having
2 Is/has been Chief Is a Judicial Member special knowledge and
Justice of High Court of Tribunal for at least experience ≥ 25 years [2](in
5 years below given specified areas)

IV. Selection of Members [Section 412]

SR President/ Judicial Members of Members of the Tribunal and the
Chairman the Appellate Technical Members of the
Tribunal Appellate Tribunal
1 Shall be Appointed Shall be Appointed shall be appointed on the
after consultation after consultation recommendation of a Selection
with the Chief with the Chief Committee consisting of :
Justice of India. Justice of India.

V. Selection Committee Consisting:

The Secretary, MCA shall be the Convener of the Selection Committee.
SR. Position Selection Committee Consisting
1 Chairperson Chief Justice of India or his nominee
2 Member A senior Judge of the SC or a Chief Justice of High Court
3 Member Secretary in the Ministry of Corporate Affairs
4 Member Secretary in the Ministry of Law and Justice
5 Member Secretary in the Department of Financial Services in the
MOF

VI. Terms: [Section 413]

Tenure-
President/ Judicial Member/ Technical Member Shall hold office for 5 year from the
date of enter into office.

Re-appointment-
President/ Judicial Member/ Technical Member Eligible for another term of 5 year.

Eligibility NCLT-
 In case of President shall hold office until he attain age of 67 years.
 In case of Member age atleast 50 year shall hold office until he attain age of 65
years

Eligibility NCLAT
 In case of President shall hold office until he attain age of 70 years.
 In case of Member age atleast 50 year shall hold office until he attain age of 67
years
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J.K. SHAH CLASSES CORPORATE LAW
Advantages of NCLT & NCLAT:
 It shall avoid multiplicity of litigation before various Forums (High Courts, CLB,
BIFR. AAIFT). Thus there will be a consolidation of Corporate Jurisdiction.
 There shall be at least 11 benches of the NCLT, thereby providing justice
almost at one’s doorstep.
 This tribunal shall comprise of technical experts who will provide more
concrete and precise decision.
 There will be mixture of judicial and equitable jurisdiction while deciding
matters.
 There shall be reduction in period of winding up from 20-25 years to 2 years.
 Reduction in pendency of cases, expeditious disposal of cases.

A. Winding up:
The NCLT has also been empowered to pass an order for winding up of a company.
Therefore Practicing CS may represent the winding up case before the Tribunal.
B. Compromise and Arrangement:
With the establishment of NCLT, a whole new area of practice will open up for
Company Secretary in Practice with respect to advising and assisting corporate
sector on merger, amalgamation, demerger, reverse merger, compromise and other
arrangements right from the conceptual to implementation level. Company
Secretaries in practice will be able to render services in preparing schemes,
appearing before NCLT/NCLAT for approval of schemes and post merger formalities
C. Sick Companies
Since all powers of BIFR have been entrusted to NCLT ,detecting the Sick
companies and providing resolution of the queries and for making reference to the
Tribunal for revival and rehabilitation of the Company
The provisions also mandated preparation of scheme and seeking approval from the
Tribunal as may be required. Thus the practicing professionals could play a pivot role
in the same area.

Section 414: Salary, allowances and other terms and conditions of service of
Members
The salary, allowances and other terms and conditions of service of the Members of the
Tribunal and the Appellate Tribunal shall be such as may be prescribed:
Provided that neither the salary and allowances nor the other terms and conditions of
service of the Members shall be varied to their disadvantage after their appointment

Section 415: Acting President and Chairperson of Tribunal or Appellate Tribunal

(1) In the event of the occurrence of any vacancy in the office of the President or the
Chairperson by reason of his death, resignation or otherwise, the senior-most Member
shall act as the President or the Chairperson, as the case may be, until the date on
which a new President or Chairperson appointed in accordance with the provisions of this
Act to fill such vacancy enters upon his office.

Section 416: Resignation of Members

The President, the Chairperson or any Member may, by notice in writing under his
hand addressed to the Central Government, resign from his office:
Provided that the President, the Chairperson, or the Member shall continue to hold office
until the expiry of 3 months from the date of receipt of such notice by the Central
Government or until a person duly appointed as his successor enters upon his office or until
the expiry of his term of office, whichever is earliest.

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Section 417: Removal of Members
(1) The Central Government may, after consultation with the Chief Justice of
India, remove from office the President, Chairperson or any Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of the Central
Government, involves moral turpitude; or
(c) has become physically or mentally incapable of acting as such President,
the Chairperson, or Member; or
(d) has acquired such financial or other interest as is likely to affect
prejudicially his functions as such President, Chairperson, or Member; or
(e) has so abused his position as to render his continuance in office
prejudicial to the public interest:
Provided that the President, the Chairperson or the Member shall NOT be
removed on any of the grounds specified in clauses (b) to (e) without giving
him a reasonable opportunity of being heard.
(2) Without prejudice to the provisions of sub-section (1), the President, the
Chairperson or the Member shall not be removed from his office except by an
order made by the Central Government on the ground of proved misbehaviour or
incapacity after an inquiry made by a Judge of the Supreme Court nominated by
the Chief Justice of India on a reference made to him by the Central Government
in which such President, the Chairperson or Member had been informed of the
charges against him and given a reasonable opportunity of being heard.
Section 418: Staff of Tribunal and Appellate Tribunal
(1) The Central Government shall, in consultation with the Tribunal and the Appellate
Tribunal, provide the Tribunal and the Appellate Tribunal, as the case may be, with such
officers and other employees as may be necessary for the exercise of the powers and
discharge of the functions of the Tribunal and the Appellate Tribunal.

Section 420: Order of the Tribunal

(1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable
opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Tribunal may, at any time within 2 years from the date of the order, with a
view to rectifying any mistake apparent from the record, amend any order
passed by it, and shall make such amendment, if the mistake is brought to its notice
by the parties:
Provided that no such amendment shall be made in respect of any order against
which an appeal has been preferred under this Act.
(3) The Tribunal shall send a copy of every order passed under this section to all the
parties concerned.

Section 421: Appeal from orders of Tribunal.

(1) Any person aggrieved by an order of the Tribunal may prefer an appeal to the
Appellate Tribunal.
(2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with
the consent of parties.
(3) Every appeal under sub-section (1) shall be filed within a period of 45 days from the
date on which a copy of the order of the Tribunal is made available to the person
aggrieved and shall be in such form, and accompanied by such fees, as may be
prescribed:
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the
said period of forty-five days from the date aforesaid, but within a further period not

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exceeding 45 days, if it is satisfied that the appellant was prevented by sufficient
cause from filing the appeal within that period.
(4) On the receipt of an appeal under sub-section (1), the Appellate Tribunal shall, after
giving the parties to the appeal a reasonable opportunity of being heard, pass such
orders thereon as it thinks fit, confirming, modifying or setting aside the order
appealed against.

Section 422: Expeditious disposal by Tribunal and Appellate Tribunal

422. (1) Every Endeavour shall be made by the NCLT or the NCLAT, as the case may
be, for the disposal of such application or petition or appeal within 3 months
from the date of its presentation before the NCLT or the filing of the
appeal before the NCLAT
(2) Where any application or petition or appeal is not disposed off within the
period specified in subsection (1), the Tribunal or, as the case may be the
Appellate Tribunal, shall record the reasons for not disposing of the
application or petition or the appeal, as the case may be, within the period
so specified; and the President or the Chairperson, as the case may be, may,
after taking into account the reasons so recorded, extend the period referred to
in sub-section (1) by such period not exceeding 90 days as he may consider
necessary.

Section 423: Appeal to Supreme Court

Any person aggrieved by any order of the Appellate Tribunal may file an appeal to the
Supreme Court within 60 days from the date of receipt of the order of the Appellate
Tribunal to him on any question of law arising out of such order:
Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed within a
further period not exceeding sixty days.

Section 424:Procedure before NCLT and NCLAT

(1) The Tribunal and the Appellate Tribunal shall not, while disposing of any proceeding
before it or, as the case may be, an appeal before it, be bound by the procedure
laid down in the Code of Civil Procedure, 1908, but shall be guided by the
principles of natural justice, and, subject to the other provisions of this Act and of any
rules made thereunder, the NCLT and the NCLAT shall have power to regulate their
own procedure.
The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging
their functions under this Act, the same powers as are vested in a civil court under
the Code of Civil Procedure

Section 426: Delegation of powers

The Tribunal or the Appellate Tribunal may, by general or special order, direct, subject to
such conditions, if any, as may be specified in the order, any of its officers or employees or
any other person authorised by it to inquire into any matter connected with any proceeding
or, as the case may be, appeal before it and to report to it in such manner as may be
specified in the order.
Clause 427: President, Members, officers, etc., to be public servants
The President, Members, officers and other employees of the Tribunal and the Chairperson,
Members, officers and other employees of the Appellate Tribunal shall be deemed to be
public servants within the meaning of section 21 of the Indian Penal Code

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Section 431: Vacancy in NCLT or NCLAT NOT to invalidate acts or proceedings
No act or proceeding of the Tribunal or the Appellate Tribunal shall be questioned or
shall be invalid merely on the ground of the existence of any vacancy or defect in the
constitution of the Tribunal or the Appellate Tribunal, as the case may be.

New Delhi, the 21st July, 2016

G.S.R. 716(E).—In exercise of the powers conferred by section 469 of the Companies Act,
2013 (18 of 2013), the Central Government hereby makes the following rules, namely;-

1. Short title and Commencement

(1) These rules may be called the National Company Law Tribunal Rules, 2016.
(2) They shall come into force on the date of their publication in the Official
Gazette.

PART - I
Definitions, forms and etc.
2. Definitions.- In these rules, unless the context otherwise requires,
(1) “Act” means the Companies Act, 2013 (18 of 2013);
(4) “applicant” means a petitioner or an appellant or any other person or entity
capable of making an application including an interlocutory application or a
petition or an appeal under the Act;
(5) “application” means any application, interlocutory application or proceedings
filed under the provisions of the Act, including any transferred application or
transferred petition as defined under sub-rule (29) ;
(7) “Bench” means a Bench of the Tribunal constituted under section 419 of the
Act and includes Circuit Benches constituted by the President with prior
approval of the Central Government to sit at such other geographical locations
as may be necessary having regard to requirements;
(8) “Central Registry” means the registry in which all the applications or petitions
and documents are received by the Registrar for allocation to the concerned
Bench of the Tribunal for disposal;
(15) “interlocutory application” means an application in any appeal or original
petition on proceeding already instituted in the Tribunal, but not being a
proceeding for execution of the order or direction of Tribunal;
(17) “petition” means a petition or an application or an appeal or a complaint in
pursuance of which any proceeding is commenced before the Tribunal;
(18) “person interested” means a shareholder, creditor, employee, transferee
company and other company concerned in relation to the term or context
referred to in the relevant provisions of the Act or any person aggrieved by any
order or action of any company or its directors;
(25) “Secretary" means Secretary of the Tribunal and in the absence of Secretary,
such other officer of the Tribunal to whom the powers and functions of the
Secretary are delegated.
3. Computation of time period.-
Where a period is prescribed by the Act and these rules or under any other law or is
fixed by the Tribunal for doing any act, in computing the time, the day from which the
said period is to be reckoned shall be excluded, and if the last day expires on a day
when the office of the Tribunal is closed, that day and any succeeding days on which
the Tribunal remains closed shall also be excluded.
4. Forms.-
The forms annexed as Annexure ‘A’ to these rules with such modifications or
variations as the circumstances of each case may require shall be used for the

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purpose mentioned therein and where no form is prescribed to cover a contingency, a
form as may be approved by the Registrar, shall be used.
5. Format of order or direction or rule.-
Every rule, direction, order, summons, warrant or other mandatory process shall be
issued in the name of the President and shall be signed by the Registrar or any other
officer specifically authorised in that behalf by the President, with the day, month and
year of signing and shall be sealed with the seal of the Tribunal.
7. Custody of the records.-
The Registrar shall have the custody of the records of the Tribunal and no record or
document filed in any cause or matter shall be allowed to be taken out of the custody
of the Tribunal without the leave of the Tribunal:
Provided that the Registrar may allow any other officer of the Tribunal to remove any
official paper or record for administrative purposes from the Tribunal.
11. Inherent Powers.-
Nothing in these rules shall be deemed to limit or otherwise affect the inherent
powers of the Tribunal to make such orders as may be necessary for meeting the
ends of justice or to prevent abuse of the process of the Tribunal.
12. Calendar.-
The calendar of days of working of Tribunal in a year shall be as decided by the
President of the Tribunal.
15. Power to extend time.-
The Tribunal may extend the time appointed by these rules or fixed by any order, for
doing any act or taking any proceeding, upon such terms, if any, as the justice of the
case may require, and any enlargement may be ordered, although the application
therefore is not made until after the expiration of the time appointed or allowed.

PART-II
Power and functions of President, Registrar and Secretary
16. Functions of the President.-
In addition to the general powers provided in the Act and in these rules the President
shall exercise the following powers:
(a) preside over the consideration of cases by the Tribunal;
(b) direct the Registry in the performance of its functions;
(c) prepare an annual report on the activities of the Tribunal;
(d) transfer any case from one Bench to other Bench when the circumstances so
warrant;
(e) to withdraw the work or case from the court of a member.
(f) perform the functions entrusted to the President under these rules and such
other powers as my be relevant to carry out his duties as head of the Tribunal
while exercising the general superintendence and control over the
administrative functions of the Members, Registrar, Secretary and other staff
of the Tribunal.
17. Functions of the Registrar.-
(1) The Registrar shall have the following functions, namely:-
(a) registration of appeals, petitions and applications;
(b) receive applications for amendment of appeal or the petition or application or
subsequent proceedings.
(c) receive applications for fresh summons or notices and regarding services
thereof;
(d) receive applications for fresh summons or notices and for short date
summons, notices;

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(e) receive applications for substituted service of summons or notices;
(f) receive applications for seeking orders concerning the admission and
inspection of documents;
(g) transmission of a direction or order to the civil court as directed by Tribunal
with the prescribed certificates for execution etc., and
(h) such other incidental or matters as the President may direct from time to time.
(2) All adjournments shall normally be sought before the concerned Bench in
court and in extraordinary circumstances, the Registrar may, if so directed by
the Tribunal in chambers, at any time adjourn any matter and lay the same
before the Tribunal in chambers.

18. Functions of the Secretary-

(1) There shall be a Secretary at the Principal Bench of the Tribunal, New Delhi.
(2) The Secretary shall, under the general superintendence and control of the
President, discharge such duties, functions and exercise such powers as are
prescribed under these rules and as assigned by the President from time to
time.
(3) Secretary shall -
(a) be in charge of the long term projects and initiatives of the Tribunal;
(b) supervise the divisions and sections of the Human Resources;
(c) prepare, monitor and manage budgetary allocations and financial
managements of the Tribunal and the Benches;
(d) provide all necessary support in the day to day operations of the
Tribunal;
(e) manage and supervise the facilities and administrative services of the
Tribunal;
(f) manage and administer the public grievances mechanism of the
Tribunal;
(g) coordinate with authorised representatives and other professionals in
the smooth functioning of the Tribunal;
(h) oversee information & communication technology & other technological
facilities in the Tribunal;
(i) manage and facilitate communication and services of the Tribunal;
(j) manage, monitor and administer the public affairs and public safety
provisions within the premises of the Tribunal; and
(k) supervise library and research wings of the Tribunal.

19. Delegation of powers by the President.

The President may assign or delegate to any suitable officer all or some of the
functions required by these rules to be exercised by the Registrar.

PART-III
Institution of proceedings, petition, appeals etc.
24. Number of copies to be filed.-
The appellant or petitioner or applicant or respondent shall file three authenticated
copies of appeal or petition or application or counter or objections, as the case may
be, and shall deliver one copy to each of the opposite party.

29. Registration of proceedings admitted.-

On admission of appeal or petition or caveat or application, the same shall be
numbered and registered in the appropriate register maintained in this behalf and its
number shall be entered therein.

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30. Calling for records.-
On the admission of appeal or petition or application the Registrar shall, if so directed
by the Tribunal, call for the records relating to the proceedings from any adjudicating
authority and retransmit the same.

PART- IV
General procedure
34.. General Procedure.
(1) In a situation not provided for in these rules, the Tribunal may, for reasons to be
recorded in writing, determine the procedure in a particular case in accordance with
the principles of natural justice.
(2) The general heading in all proceedings before the Tribunal, in all advertisements and
notices shall be in Form No. NCLT. 4.
(3) Every petition or application or reference shall be filed in form as provided in Form
No. NCLT. 1 with attachments thereto accompanied by Form No. NCLT.2 and in
case of an interlocutory application, the same shall be filed in Form No. NCLT. 1
accompanied by such attachments thereto along with Form No. NCLT. 3.
(4) Every petition or application including interlocutory application shall be verified by an
affidavit in Form No. NCLT.6. Notice to be issued by the Tribunal to the opposite
party shall be in Form NCLT-5.

35. Advertisement detailing petition.

(1) Where any application, petition or reference is required to be advertised, it
shall, unless the Tribunal otherwise orders, or these rules otherwise provide, be
advertised in Form NCLT-3A, not less than fourteen days before the date fixed
for hearing, at least once in a vernacular newspaper in the principal vernacular
language of the district in which the registered office of the company is situate,
and at least once in English language in an English newspaper circulating in
that district.
(2) Every such advertisement shall state;-
(a) the date on which the application, petition or reference was presented;
(b) the name and address of the applicant, petitioner and his authorised
representative, if any;
(c) the nature and substance of application, petition or reference;
(d) the date fixed for hearing;
(e) a statement to the effect that any person whose interest is likely to be
affected by the proposed petition or who intends either to oppose or
support the petition or reference at the hearing shall send a notice of his
intention to the concerned Bench and the petitioner or his authorised
representative, if any, indicating the nature of interest and grounds of
opposition so as to reach him not later than two days previous to the
day fixed for hearing.
(3) Where the advertisement is being given by the company, then the same may
also be placed on the website of the company, if any.
(4) An affidavit shall be filed to the Tribunal, not less than three days before the
date fixed for hearing, stating whether the petition has been advertised in
accordance with this rule and whether the notices, if any, have been duly
served upon the persons required to be served:
Provided that the affidavit shall be accompanied with such proof of
advertisement or of the service, as may be available.

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37.. Notice to Opposite Party.
(1) The Tribunal shall issue notice to the respondent to show cause against
the application or petition on a date of hearing to be specified in the Notice.
Such notice in Form No. NCLT.5 shall be accompanied by a copy of the
application with supporting documents.
(2) If the respondent does not appear on the date specified in the notice in Form
No. NCLT.5, the Tribunal, after according reasonable opportunity to the
respondent, shall forthwith proceed ex-parte to dispose of the application.
(3) If the respondent contests to the notice received under sub-rule (1), it may,
either in person or through an authorised representative, file a reply
accompanied with an affidavit and along with copies of such documents on
which it relies, with an advance service to the petitioner or applicant, to the
Registry before the date of hearing and such reply and copies of documents
shall form part of the record.

38. Service of Notices and processes.

(1) Any notice or process to be issued by the Tribunal may be served by post or at
the e-mail address as provided in the petition or application or in the reply;
(2) The notice or process if to be served physically may be served in any one of
the following modes as may be directed by the Tribunal; -
(a) by hand delivery through a process server or respective authorised
representative;
(b) by registered post or speed post with acknowledgment due; or
(c) service by the party himself.

39. Production of Evidence by Affidavit.

(1) The Tribunal may direct the parties to give evidence, if any, by affidavit.
(3) Every affidavit to be filed before the Tribunal shall be in Form No. NCLT.7.

40. Production of additional evidence before the Bench. –

(1) Notwithstanding anything contained in rule 39, the parties to the
proceedings shall not be entitled to produce before the Bench additional
evidence, either oral or documentary, which was in the possession or
knowledge but was not produced before the Inspector, appointed by the
central Government for the purpose of investigating the affairs of the
concerned company, during investigation under Chapter XIV of the Act,
but if the Bench requires any additional evidence or document to be produced
or any witness to be examined or any affidavit to be filed to enable it to pass
orders or for any other substantial cause, or if the Inspector so appointed for
the said purpose has not given sufficient opportunity to the party to adduce
evidence, the Bench, for reasons to be recorded, may allow such document to
be produced or witness to be examined or affidavit to be filed or may allow
such evidence to be produced.
(2) Such document may be produced or such witness examined or such evidence
adduced either before the Bench or before such authority as the Bench may
direct.

41. Filing of Reply and other Documents by the Respondents.

(1) Each respondent may file his reply to the petition or the application and copies
of the documents, either in person or through an authorised representative,
with the registry as specified by the Tribunal.

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43. Power of the Bench to call for further information or evidence.
(1) The Bench may, before passing orders on the petition or application, require
the parties or any one or more of them, to produce such further documentary
or other evidence as it may consider necessary:-
(a) for the purpose of satisfying itself as to the truth of the allegations made
in the petition or application; or
(b) for ascertaining any information which, in the opinion of the Bench, is
necessary for the purpose of enabling it to pass orders in the petition or
application.
44.. Hearing of petition or applications.
(1) The Tribunal shall notify to the parties the date and place of hearing of the
petition or application in such manner as the President or a Member may, by
general or special order, direct.
(2) Where at any stage prior to the hearing of the petition or application, the
applicant desires to withdraw his petition or application, he shall make an
application to that effect to the Tribunal, and the Tribunal on hearing the
applicant and if necessary, such other party arrayed as opposite parties in the
petition or the application or otherwise, may permit such withdrawal upon
imposing such costs as it may deem fit and proper for the Tribunal in the
interests of the justice.

45. Rights of a party to appear before the Tribunal.

(1) Every party may appear before a Tribunal in person or through an authorised
representative, duly authorised in writing in this behalf.
(2) The authorised representative shall make an appearance through the filing of
Vakalatnama or Memorandum of Appearance in Form No. NCLT. 12
representing the respective parties to the proceedings.

47. Oath to the witness.

The Bench Officer or the Court Officer, as the case may be, shall administer the
following oath to a witness:-
“I do swear in the name of God / solemnly affirm that what I shall state shall be
the truth and nothing but the truth. ”

49. Ex-parte Hearing and disposal.

(1) Where on the date fixed for hearing the petition or application or on any other
date to which such hearing may be adjourned, the applicant appears and the
respondent does not appear when the petition or the application is called
for hearing, the Tribunal may adjourn the hearing or hear and decide the
petition or the application ex-parte.

50. Registry to send certified copy.

The Registry shall send a certified copy of final order passed to the parties concerned
free of cost and the certified copies may be made available with cost as per Schedule
of fees, in all other cases.

51. Power to regulate the procedure.

The Tribunal may regulate its own procedure in accordance with the rules of natural
justice and equity, for the purpose of discharging its functions under the Act.

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52. Summoning of witnesses and recording Evidence.-
(1) If a petition or an application is presented by any party to the proceedings for
summoning of witnesses, the Tribunal shall issue summons for the appearance of
such witnesses unless it considers that their appearance is not necessary for the just
decision of the case.
58. Effect of non-compliance.
Failure to comply with any requirement of these rules shall not invalidate any
proceeding, merely by reason of such failure, unless the Tribunal is of the view that
such failure has resulted in miscarriage of justice.

59. Procedure for imposition of penalty under the Act.

(1) Notwithstanding anything to the contrary contained in any rules or regulations
framed under the Act, no order or direction imposing a penalty under the Act shall be
made unless the person or the company or a party to the proceeding, during
proceedings of the Bench, has been given a show cause notice and reasonable
opportunity to represent his or her or its case before the Bench or any officer
authorised in this behalf.

PART- VII
Procedures in respect of matters earlier dealt by other quasi-judicial bodies, courts and
tribunals
64.. Matter earlier dealt by Company Law Board.
(1) Notwithstanding anything contained in any other law for the time being in force, an
original civil action or case arising out of the Act, or any other corresponding provision
of the Companies Act, 1956 or Reserve Bank of India Act, 1934 is filed or pending
before the Company Law Board on the date on which the Tribunal is constituted, and
the relevant provisions of the Act dealing with the Tribunal have been given effect, or
the Company Law Board has been dissolved in pursuance of the provisions of the
Act, then all the cases on such date pending with the Company Law Board or
such Benches shall stand transferred to the respective Benches of the Tribunal
exercising corresponding territorial jurisdiction as if the case had been originally filed
in the Tribunal or its Bench to which it is transferred on the date upon which it was
actually filed in the Company Law Board or its Bench from which it was transferred:
Provided that the Tribunal shall consider any action taken under the regulations of
the Company Law Board as deemed to have been taken or done under the
corresponding provisions of these rules and the provisions of the Act, and shall
thereupon continue the proceedings, except in a case where the order is reserved by
the Company Law Board or its Bench and in such a case, the Tribunal shall reopen
the matter and rehear the case as if the hearing had not taken place:
Provided further that the Tribunal is at liberty to call upon the parties in a case to
produce further evidence or such other information or document or paper or adduce
or record further depositions or evidence as may deem fit and proper in the interest of
justice.

PART XIX
DISPOSAL OF CASES AND PRONOUNCEMENT OF ORDERS
146. Disposal of Cases.-
On receipt of an application, petition, appeal etc, the Tribunal, after giving the
parties a reasonable opportunity of being heard, pass such orders thereon as it
thinks fit:

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Provided that the Tribunal, after considering an appeal, may summarily dismiss the
same, for reasons to be recorded, if the Tribunal is of opinion that there are no
sufficient grounds for proceedings therewith.
149. Power to impose Costs.
The Tribunal may, in its discretion, pass such order in respect of imposing costs on
the defaulting party as it may deem fit.

150. Pronouncement of Order.

(1) The Tribunal, after hearing the applicant and respondent, shall make and
pronounce an order either at once or, as soon as thereafter as may be
practicable but not later than thirty days from the final hearing.
(3) A certified copy of every order passed shall be given to the parties.
(4) The Tribunal, may transmit order made by it to any court for enforcement, on
application made by either of the parties to the order or suo motu.
(5) Every order or judgment or notice shall bear the seal of the Tribunal.

154. Rectification of Order.

(1) Any clerical or arithmetical mistakes in any order of the Tribunal or error
therein arising from any accidental slip or omission may, at any time, be
corrected by the Tribunal on its own motion or on application of any party
by rectification.
(2) An application under sub-Rule (1) may be made in Form No. NCLT. 9
within two years from the date of the final order for rectification of the final
order not being an interlocutory order.

155. General power to amend.

The Tribunal may, within a period of thirty days from the date of completion of
pleadings, and on such terms as to costs or otherwise, as it may think fit, amend
any defect or error in any proceeding before it; and all necessary amendments
shall be made for the purpose of determining the real question or issue raised by or
depending on such proceeding.

161. Filing of Order of the Tribunal with the Registrar of Companies.

The certified copy of the order passed by the Tribunal shall be filed by the company
in form INC-28 with the ROC within the time specified in the Act or specified by the
Tribunal. Where no time limit is prescribed by the Tribunal, such order shall be filed
within 30 days from the date of receipt of certified copy of the order.

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MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, 21st July 2016
G.S.R. 717(E).—In exercise of the powers conferred by section 469 of the Companies Act,
2013 (18 of 2013), the Central Government hereby makes the following rules, namely:-

1. Short title and commencement.-

(1) These rules may be called the National Company Law Appellate Tribunal
Rules, 2016.
(2) They shall come into force on the date of their publication in the Official
Gazette.

22. Presentation of appeal.-

(1) Every appeal shall be presented in Form NCLAT-1 in triplicate by the
appellant or petitioner or applicant or respondent, as the case may be, in
person or by his duly authorised representative duly appointed in this behalf in
the prescribed form with stipulated fee at the filing counter and non-
compliance of this may constitute a valid ground to refuse to entertain the
same.
(2) Every appeal shall be accompanied by a certified copy of the impugned order.
(3) All documents filed in the Appellate Tribunal shall be accompanied by an index
in triplicate containing their details and the amount of fee paid thereon.
(4) Sufficient number of copies of the appeal or petition or application shall also be
filed for service on the opposite party as prescribed.
(5) In the pending matters, all other applications shall be presented after serving
copies thereof in advance on the opposite side or his advocate or authorised
representative.
(6) The processing fee prescribed by the rules, with required number of envelopes
of sufficient size and notice forms as prescribed shall be filled along with
memorandum of appeal.

23. Number of copies to be filed.-

The appellant or petitioner or applicant or respondent shall file three authenticated
copies of appeal or counter or objections, as the case may be, and shall deliver one
copy to each of the opposite party.

29. Calling for records.-

On the admission of appeal, the Registrar shall, if so directed by the Appellate
Tribunal, call for the records relating to the proceedings from the respective Bench of
Tribunal or adjudicating authority and retransmit the same at the conclusion of the
proceedings or at any time.

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Part XV
SUPREME COURT ORDERS

100. Register of Special Leave Petitions/Appeal.-

(1) A Register in Form NCLAT-9 shall be maintained in regard to Special Leave
Petitions or Appeals against the orders of the Appellate Tribunal to the Supreme
Court and necessary entries therein be promptly made by the Judicial Branch.
(2) The register shall be placed for scrutiny by the Chairperson in the first week of
every month.

101. Placing of Supreme Court orders before Appellate Tribunal.-

Whenever an interim or final order passed by the Supreme Court of India in an
appeal or other proceeding preferred against a decision of the Appellate Tribunal is
received, the same shall forthwith be placed before the Chairperson or Members for
information and kept in the relevant case file and immediate attention of the Registrar
shall be drawn to the directions requiring compliance.

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CHAPTER XXVIII - SPECIAL COURTS

Introduction
Chapter XXVIII of the Companies Act, 2013 deals with the concept of Special Courts.
This concept has assumed greater importance especially in the recent times as this will help
in speedy trial of all offences under the Act.
Hence, this will definitely facilitate in good corporate governance and stricter implementation
of the Law. Due to this, the stakeholders will be benefited at large.
With intent to punish the guilty, the Legislature has bring in, the Special Courts in the
Companies Act, 2013.

Offences to be non-cognizable (Section 439) (AMENDMENT ACT, 2015 )

The term “Non-cognizable offence” is defined under section 4 of the Cr.PC. It is an offence
for which a police officer may not arrest without warrant.
(i) Offences under the Companies Act, 2013 deemed as non-cognizable: Overriding
the provisions given under the Code of Criminal Procedure, 1973, every offence
under this Act except the offences referred to in section 212(6) of the Companies Act,
2013, which deals with the investigation into affairs of company by serious fraud
investigation office, shall be deemed to be non-cognizable within the meaning of the
said Code.
Therefore, the offences as covered under section 212(6) shall now be deemed to be
cognizable where police officer may arrest person without warrant and are non-
bailable. The Companies Act, 2013 establishes the offence covered under the section
212(6) as a public wrong which has to be prevented and controlled. This non-
bailable nature of the offences deter the offender and the others from committing
further and similar offences.
(ii) Cognizance of offence: A court shall take cognizance of any offence under this Act
which is alleged to have been committed by any company or any officer thereof only
on the written complaint of -
(a) The Registrar,
(b) A shareholder of the company, or
(c) Of a person authorised by the Central Government in that behalf.
Provided that the court may take cognizance of offences relating to issue and transfer
of securities and non-payment of dividend, on a complaint in writing, by a person
authorised by the Securities and Exchange Board of India.
Provided that nothing in this sub-section shall apply to a prosecution by a company of
any of its officers.
(iii) Attendance of complainant: where the complainant is the Registrar or a person
authorised by the Central Government as given under sub-section (2), the presence
of such officer before the Court trying the offences shall not be necessary unless the
court requires his personal attendance at the trial.
(iv) Non-application of sub-section (2) on the action of the liquidator: The provisions
of sub-section (2) shall not apply to any action taken by the liquidator of a company in
respect of any offence alleged to have been committed in respect of any of the
matters in Chapter XX or in any other provision of this Act relating to winding up of
companies.

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1. ESTABLISH OF SPECIAL COURT – (SECTION 435)
(1) The Central Government may for the purpose of providing speedy trial of
offences punishable under this Act with imprisonment with two year or more,
by notification establish or designate Special Courts.
All other offences shall be tried, as the case may be, by a Metropolitan
Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try
any offence under this Act or under any previous company law.
(2) A Special Court shall consist of a single judge appointed by the Central
Government. The Judge shall be appointed with the concurrence of the Chief
Justice of the High Court within whose jurisdiction the judge to be appointed is
working.
(3) A person shall not be qualified for appointment as a judge of Special Court
unless he was holding a Sessions Judge or an Additional Sessions Judge.

OFFENCES TO BE TRIED BY SPECIAL COURTS – (SECTION 436)

(1) (a) All offence under sub-section (1) of section 435 of the Companies Act shall be
triable only by the Special Court for the area in which the registered office of
the company in relation to which the offence is committed.
(b) Where a person accused of or suspected of the commission of an offence
under the Act is forwarded, a Judicial Magistrate may authorise the detention
of that person for fifteen days or an Executive Magistrate for seven days.
Where the Magistrate considers that the detention of the person upon or
before the expiry of the period of detention is unnecessary, he shall order such
person to be forwarded to the Special Court having jurisdiction.
(c) The Special Court may exercise the same power which a Magistrate having
may exercise under Section 167 of the Code of Criminal Procedure, 1973 in
relation to an accused person who has been forwarded to him.
(2) When trying an offence under this Act, a Special Court may also try an offence under
the Code of Criminal Procedure, 1973 in a same trial.
(3) The Special Court may try in a summary way any offence under this Act which is
punishable with imprisonment for a term not exceeding three years. In case of
summary trial, a sentence of imprisonment for a term exceeding one year shall not be
passed. Where the Special Court think it is undesirable to try the case summarily, the
Special Court shall record an order to that effect and thereafter recall any witness
who may have been examined and proceed to hear or rehear in regular trial.

APPEAL AND REVISION – (SECTION 437)

The High Court may exercise all the powers conferred by Chapter XXIX and XXX of the
Code Criminal Procedure, 1973 on a High Court as if a Special Court were a Court of
Session trying cases.

APPLICATION OF CODE TO PROCEEDING BEFORE SPECIAL COURT –

(SECTION 438)
The provisions of the Code of Criminal Procedure, 1973 shall apply to the proceedings
before a Special Court. The Special Court shall be deemed to be a Court of Session and the
person conducting a prosecution before a Special Court be deemed to be a Public
Prosecutor.
TRANSITIONAL PROVISIONS – (SECTION 440)
This transitional provision came into force, when many Special Courts is being established
by another notification of same date 18th May 2016. The notification established special
courts only in 8 states and Union Territories. In case of all other States and Union
Territories, this transition provision under Section 440 shall apply.

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MEDIATION AND CONCILIATION PANEL [CONSISTING OF EXPERTS]
Mediation: Intervention by Third Party in a Dispute

Conciliation: Adjusting or Settling Disputes in a Friendly manner

1. Assessee’s Case pending in front of:-
2. CG, NCLT or NCLAT
3. Either Party [Assessee or Authority] may Refer the Case to:-
4. Mediation & Conciliation Panel [ Maintained by CG]
5. It shall Dispose off the Case within 3 Months from Date of Reference
6. Any Party Aggrieved with such Recommendation shall:-
7. File Objection to CG, NLCT or NCLAT

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION
New Delhi, the 9th September, 2016

G.S.R. 877 (E) – in exercise of the powers conferred under section 442 read with section
469 of the Companies Act, 2013, the Central Government hereby makes the following rules:
1. Short Title and Commencement –
(1) These rules may be called the Companies (Mediation and Conciliation) Rules, 2016.
(2) They shall come into force on the date of their publication in the Official Gazette.

2.. Definitions -
(1) In these rules, unless the context otherwise requires-
(a) “Act” means the Companies Act, 2013 (18 of 2013)
(b) “Regional Director”, means the person appointed by the CG in the MCA
as such.
(c) “Annexure”, means the annexure attached to these rules :
(d) “Forms” or “e-Forms” means a form set forth in the Annexure which
shall be used for the matter to which it relates :
(e) “Panel” means the Mediation and Conciliation Panel.
(2) The words and expressions used in these rules but not defined and defined in
the Act or in the Companies (Specification of Definitions Details) Rules, 2014
shall have the meanings respectively assigned to them in the Act or the rules.

3.. Panel of mediators or conciliators –

(1) Regional Director shall prepare a panel of experts willing and eligible to be
appointed as mediators or conciliators in the respective regions and such
panel shall be placed on the website of the MCA or on any other website as
may be notified by the CG
(2) The Regional Director may invite applications from persons interested in
getting empanelled as mediator or conciliator and possessing the requisite
qualifications specified in Rule 4.
(3) A person who intends to get empanelled as mediator or conciliator and
possesses the requisite qualifications shall apply to the Regional Director in
Form MDC-1.
(4) Application received under sub-rule (3), if rejected by the Regional Director,
the Regional Director shall record the reasons in writing for the same.
(5) The Regional Director shall invite applications from persons interested in
getting empanelled as mediator or conciliator every year during the month of
February and update the Panel which shall be effective from lc of April of every
year.

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Provided that for Financial Year 2016-17, the Regional Director may call for
applications from the persons interested in getting empanelled as mediator or
conciliator, within 60 days from the date of publication of these rules and prepare the
panel for the current financial year within a period of 30 days.

4. Qualifications for empanelment.-

A person shall not be qualified for being empanelled as mediator or conciliator unless
he —
(a) has been a Judge of the Supreme Court of India ; or
(b) has been a Judge of a High Court; or
(c) has been a District and Sessions Judge ; or
(d) has been a Member or Registrar of a Tribunal constituted at the National level
under any law for the time being in force; or
(e) has been an officer in the Indian Corporate Law Service or Indian Legal
Service with fifteen years experience; or
(f) is a qualified legal practitioner for not less than ten years; or
(g) is or has been a professional for at least fifteen years of continuous practice as
Chartered Accountant or Cost Accountant or Company Secretary; or
(h) has been a Member or President of any State Consumer Forum ; or
(i) is an expert in mediation or conciliation who has successfully undergone
training in mediation or conciliation.

5. Disqualifications for empanelment.-

A person shall be disqualified for being empanelled as mediator or conciliator, if be —
(a) is an undischarged insolvent or has applied to be adjudicated as an insolvent
and his application is pending;
(b) has been convicted for an offence which, in the opinion of the Central
Government, involves moral turpitude ;
(c) has been removed or dismissed from the service of the Government or the
Corporation owned or controlled by the Government;
(d) has been punished in any disciplinary proceeding, by the appropriate
disciplinary authority; or
(c) has, in the opinion of the Central Government, such financial or other interest
in the subject matter of dispute or is related to any of the parties, as is likely to
affect prejudicially the discharge by him of his functions as a mediator or
conciliator.
6.. Application for appointment of Mediator or Conciliator and his appointment-
(1) (a) Parties concern may agree on the name of the sole mediator or
conciliator for mediation or conciliation between them;
(b) Where, there are two or more sets of parties and arc unable to agree on
a sole mediator or conciliator, the Central Government or the Tribunal
or the Appellate Tribunal may ask each party to nominate the mediator
or conciliator or the Central Government or the Tribunal or the Appellate
Tribunal may appoint the mediator or conciliator, as may be deemed
necessary for mediation or conciliation between the parties.
(2) The application to the Central Government or the Tribunal or the Appellate
Tribunal, as the ease may be, for referring the matter pertaining to any
proceeding pending before it for mediation or conciliation shall be in Form
MDC-2 and shall be accompanied with a fee of one thousand rupees.
(3) On receipt of an application under sub-rule (2), the Central Government or the
Tribunal or the Appellate Tribunal shall appoint one or more experts from the
panel

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(4) The Central Government or the Tribunal or the Appellate Tribunal, as the case
may be, before which any proceeding is pending may, suo motu, refer any
matter pertaining to such proceeding to such number of experts from the
Mediation and Conciliation Panel, if it deems fit in the interest of parties.

7.. Deletion from the Panel -

The Regional Director may by recording reasons in writing and after giving him an
opportunity of being heard, remove any person from the Panel.

8.. Withdrawing name from Panel.-

Any person who intends to withdraw his name from the Mediation and Conciliation
Panel may make an application to the Regional Director indicating the reasons
for such withdrawal and the Regional Director shall take a decision on such
application within fifteen days of receipt of such application and update the Panel
accordingly.

9.. Duty of mediator or conciliator to disclose certain facts.-

(1) It shall be the duty of a mediator or conciliator to disclose to the Central
Government or the Tribunal or die Appellate Tribunal, as the ease may be,
about any circumstances which may give rise to a reasonable doubt as
to his independence or impartiality in carrying out his functions.
(2) Every mediator or conciliator shall from the time of his appointment and
throughout continuance of the mediation or conciliation proceedings, without
any delay, disclose to the parties about existence of any circumstance referred
to in sub-rule (1).

10. Withdrawal of appointment-

The Central Government or the Tribunal or the Appellate Tribunal as the case maybe,
upon receiving any disclosure furnished by the mediator or conciliator under rule 9. or
after receiving any other information from a party or other person in any proceeding
which is pending and on being satisfied that such disclosures or information has
raised a reasonable doubt as to the independence or impartiality' of such mediator or
conciliator, may withdraw his appointment and in his place, appoint any other
mediator or conciliator in that proceeding:
Provided that the mediator or conciliator may, offer to withdraw himself from such
proceeding and request the Central Government or the Tribunal or the Appellate
Tribunal as the case may be to appoint any other mediator or conciliator.

11. Procedure for disposal of matters.

(1) For the purposes of mediation and conciliation, the mediator or conciliator shall
follow the following procedure, namely
(i) he shall fix, in consultation with the parties, the dates and the time of
each mediation or conciliation session, where all parties have to be
present;
(ii) he shall hold the mediation or conciliation at the place decided by the
Central Government
or the Tribunal or the Appellate Tribunal, as the case may be, or such
other place where the
parties and the mediator or conciliator jointly agree;
(ii) he may conduct joint or separate meetings with the parties ;
(iii) each party shall, ten days before a session, provide to the mediator or
conciliator a brief memorandum setting forth the issues, which need to

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be resolved, and his position in respect of those issues and all
information reasonably required for the mediator or conciliator to
understand the issue and a copy of such memorandum shall also be
given to the opposite
party or parties:
Provided that in suitable or appropriate eases, the above mentioned
period may be reduced at the discretion of the mediator or conciliator;
(iv) each party shall furnish to the mediator or conciliator such other
information as may be required by him in connection with the issues to
be resolved.
(2) Where there is more than one mediator or conciliator, the mediator or
conciliators may first concur with the party that agreed to nominate him and
thereafter interact with the other mediator or conciliator, with a view to resolve
the dispute.

12. Mediator or Conciliator not bound by the Indian Evidence Act, 1872 or the Code
of Civil Procedure, 1908-
The mediator or conciliator shall not be bound by the Indian Evidence Act, 1872 or
the Code of Civil Procedure, 190S while disposing the matter, but shall be guided by
the principles of fairness and natural justice, having regard to the rights and
obligations of the parties, usagesof trade, if any, and the circumstances of the
dispute.

16.. Offer of settlement by parties.

(1) Any party to the proceeding may, “without prejudice” offer a settlement to the
other party at any stage of the proceedings, with a notice to the mediator or
conciliator.
(2) Any party to the proceeding may make a, “with prejudice” offer to the other
party at any stage of the proceedings with a notice to the mediator or
conciliator.

17.. Role of Mediator or Conciliator

The mediator or conciliator shall attempt to facilitate voluntary resolution of the
dispute by the parties, and communicate the view of each party to the other, assist
them in identifying issues, reducing misunderstandings, clarifying priorities,
exploring areas of compromise and generating options in an attempt to resolve
the dispute, emphasising that it is the responsibility' of the parties to take decision
which affect them and he shall not impose any terms of settlement on the parties :
Provided that on consent of both the parties, the mediator or conciliator may impose
such terms and conditions on the parties for early settlement of the dispute as he
may deem fit.

18. Parties alone responsible for taking decision.

The parties shall be made to understand that the mediator or conciliator facilitates in
arriving a decision to resolve the dispute and that be shall not and cannot impose any
settlement nor the mediator or conciliator give any assurance that the mediation or
conciliation shall result in a settlement and the mediator or conciliator shall not
impose any decision on the parties.

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19.. Time limit for completion of mediation or conciliation.
(1) The process for any mediation or conciliation under these rules shall be
completed within a period of 3 months from the date of appointment of
expert or experts from the Panel.
(2) On the expiry of three months from the date of appointment of expert from
the Panel, the mediation or conciliation process shall stand terminated.
(3) In ease of mediation or conciliation in relation to any proceeding before
Tribunal or Appellate Tribunal which could not be completed within three
months, the Tribunal or as the ease may be, the Appellate Tribunal, may on
the application of mediator or conciliator or any of the party' to the
proceedings, extend the period for mediation or conciliation by such period not
exceeding three months.

20. Parties to act in good faith.

All the parties shall commit to participate in the proceedings in good faith with the
intention to settle the dispute.

22. Privacy
The mediation or conciliation sessions or meetings shall be conducted in privacy
where the persons as mentioned in rule 13 shall be entitled to represent parties but
other persons may attend only with the permission of the parties and with the consent
of the mediator or conciliator.

23. Protection of action taken in good faith .

No mediator or conciliator shall be held liable for anything, which is done or omitted to
be done by him, in good faith during the mediation or conciliation proceedings for civil
or criminal action nor shall be summoned by any part)' to the suit or proceeding to
appear before the Central Government or the Tribunal or the Appellate Tribunal, as
the case may be, to testify' regarding information received by him or action taken by
him or in respect of drafts or records prepared by him or shown to him during the
mediation or conciliation proceedings.

24.. Communication between mediator or conciliator and the Central Government

or the Tribunal or the Appellate Tribunal.—
In order to preserve the confidence of parties in the CG or the Tribunal or the
Appellate Tribunal as the case may be and the neutrality of the mediator or
conciliator, there shall be no communication between the mediator or conciliator and
the Central Government or the Tribunal or the Appellate Tribunal, as the ease may
be, in the subject matter:
Provided that, if any communication between the mediator or conciliator and the CG
or the Tribunal or the Appellate Tribunal, as the case may be, is necessary, it shall be
in writing and copies of the same shall be given to the parties or the authorised
representative :
Provided further that communication between the mediator or conciliator and the
Central Government or the Tribunal or the Appellate Tribunal, as the ease may be,
shall be limited to communication by the mediator or conciliator:
(i) about the failure of the party to attend;
(ii) about the consent of the parties;
(iii) about his assessment that the case is not suited for settlement through the
mediation or conciliation;
(iv) about settlement of dispute between the parties.

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27.. Expenses of the mediation and conciliation.—
(1) At the time of referring the matter to the mediation or conciliation, the Central
Government or the Tribunal or the Appellate Tribunal, as the case may be,
may fix the fee of the mediator or conciliator and as far as possible, a
consolidated sum may be fixed rather than for each session or meeting.
(2) The expense of the mediation or conciliation including the fee of the mediator
or conciliator, costs of administrative assistance and other ancillary expenses
concerned, shall be borne equally by the various contesting parties or as may
be otherwise directed by the Central Government or the Tribunal or the
Appellate Tribunal, as the case may be.

29. Resort to arbitral or judicial proceedings .

The parties shall not initiate, during the mediation or conciliation under these rules,
any arbitral or judicial proceedings in respect of a matter that is the subject-matter of
the mediation or conciliation, except that a party may initiate arbitral or Judicial
proceedings, where, in his, opinion, such proceedings arc necessary for protecting
his rights.

30.. Matters not to be referred to the mediation or conciliation.

The following matters shall not be referred to mediation or conciliation, namely:—
(a) the matters relating to proceedings in respect of inspection or investigation
under Chapter XIV of the Act; or the matters which relate to defaults or
offences for which applications for compounding have been made by one or
more parties.
(b) cases involving serious and specific allegations of fraud, fabrication of
documents forgery, impersonation, coercion etc.
(c) cases involving prosecution for criminal and non compoundable offences.
(d) cases which involve public interest or interest of numerous persons who are
not parties before the Central Government or the Tribunal or the .Appellate
Tribunal as the case may be.

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FAST TRACK ISSUANCES - FPO AND RIGHTS ISSUES
OBJECTIVE
Fast rack issue is a faster and cost effective method of raising capital by listed companies.it
means the listed companies can accept the indian primary market for raising the capital
through public issue.

STOCK MARKET REGULATOR SEBI ON INDIA ON, 23 JUNE 2015,

liberalized norms for raising capital by way of FOLLOW ON PUBLIC OFFERINGS (FPO)
AND RIGHTS ISSUES using the fast-track route.
In order to enable more number of listed companies to raise further capital using the fast-
track route,
SEBI board has approved the proposal to reduce the minimum public holding requirement
from rs 3000 crore to RS.1000 crore in case of FPO and to RS.250 crore in case of
RIGHTS ISSUE, subject to compliance with certain additional conditions.

Sebi has introduced this FTI in order to enable well established and compliant listed
companies satisfying certain specific entry norms/conditions to access indian primary
market in a time effective manner.
Such companies can proceed with fpos / right issues by filing a copy of RHP (red herring
prospectus) / prospectus with the registrar of companies (ROC) or the letter of offer with
designated stock exchange (se), sebi and stock exchanges.
Such companies are not required to file draft offer document for sebi comments and to stock
exchanges.
Entry norms for companies seeking to access primary market through FTI’s in case
aggregate value of securities including premium exceeds rs. 50 lacs.

The following are the eligibility criteria:

(i) the shares of the company have been listed on any stock exchange having
nationwide terminals for a period of at least three years immediately preceding
the date of filing of offer document with ROC/ RSE

(ii) the “average market capitalisation of public shareholding” of the company is at

least rs. 3000 crores for a period of one year up to the end of the quarter
preceding the month in which the proposed issue is approved by the board of
directors / shareholders of the issuer;

(iii) the annualized trading turnover of the shares of the company during 6 calendar
months immediately preceding the month of the reference date has been at least 2
% of the weighted average number of shares listed during the said six months
period;

(iv) the company has redressed at least 95% of the total shareholder / investor
grievances or complaints received till the end of the quarter immediately
proceeding the month of the date of filing of offer document with ROC/RSE.

(v) the company has complied with the listing agreement for a period of at least 3
years immediately preceding the reference date;

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(vi) THE IMPACT OF AUDITORS’ QUALIFICATIONS, if any, on the audited accounts of
the company in respect of the financial years for which such accounts are disclosed
in the offer document does not exceed 5% of the net profit/ loss after tax of the
company for the respective years.

(vii) NO PROSECUTION PROCEEDINGS OR SHOW CAUSE NOTICES ISSUED by the

board are pending against the company or its promoters or whole time directors as
on the reference date

(viii) the entire shareholding of the promoter group is held in dematerialised form as on
the reference date.

Thresholds prescribed for applicability of Competition Act to combinations

Certain thresholds have been prescribed for applicability of Competition Law to

“combinations”. In the event a combination satisfies any one of the below mentioned
thresholds, it would be within the purview of Competition Law, unless there is a specific
relaxation/ exemption provided

In relation to the Combinations regulations under the Competition Act, 2002 MCA has
issued three notifications on 4 March 2016.
These notifications have been issued since the earlier notifications on the subject issued in
2011 were valid only for a period of 5 years.
Particulars New Notification
Notification on Value of asset/turnover thresholds under Section 5 of the Act
Thresholds increased by 100% (Refer table below for updated thresholds)
Target based Life span of the small target exemption extended by another 5
exemption years with the following increased thresholds:
Total Assets in India < 350 Cr; or
Total Turnover in India < 1000 Cr
Notification on Earlier notification extended for a period of another 5 years – no
Group change
definition

Updated chart for thresholds:

Particulars Assets Turnover
INDIA
Either acquirer or target or both INR 20,000 million or INR 60,000 million
have*:
Group to which the target will belong INR 80,000 million or INR 240,000 million
have**
WORLDWIDE
Either acquirer or target or both have: USD 1,000 million, or USD 3,000 million,
In case of a merger, the enterprise with at least INR with at least INR
after merger or created as a result of 10,000 million in 30,000 million in India
merger India
Group has : USD 4,000 million, or USD 12,000 million,
with at least INR with at least INR
10,000 million in 30,000 million in India
India
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th
The above changes shall come into force with effect from 4 March 2016 and shall be
in effect till 4th March 2021 (however no sunset clause for the notification on
thresholds).

3. Meaning of certain terms

(a) ‘Group’ means two or more enterprises which, directly or indirectly, are in a
position to
(i) exercise 26% or more of the voting rights in another enterprise; or
(ii) appoint more than 50% of the members of the Board of directors in
another enterprise; or
(iii) control the management or affairs of another enterprise.

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PAST ICAI EXAM QUESTION PAPERS
NOVEMBER 2015

1. (a) Star Ltd. declared and paid dividend in time to all its equity holders for the
financial year 2014-15, except in the following two cases :
(i) Mrs. Sheela, holding 250 shares had mandated the company to
directly deposit the dividend amount in her bank account. The
company, accordingly remitted the dividend but the bank returned the
payment on the ground that there was difference in surname of the
payee in the bank records. The company, however, did not inform
Mrs. Sheela about this discrepancy.
(ii) Dividend amount of ` 50,000 was not paid to Mr. Mohan, deceased, in
view of court order restraining the payment due to family dispute about
succession.
You are required to analyse these cases with reference to provisions of the
Companies Act, 2013 regarding failure to distribute dividends.
(b) You are working as the Finance Head of Super Energy Ltd. The company is
in advance stage of finalising projects of wind power generation, which will
considerably improve the operational and financial strengths of the company.
You have got some information that one of the directors of the company, who
is involved in the project, is indulged in trading of shares of the company.
Write a note for internal circulation explaining insider trading of securities and
consequences of contravention of the relevant provisions of the Companies
Act, 2013.
(c) RPS Ltd. got its shares listed with a Stock Exchange. It has been regularly
paying the listing fees. Certain information about shareholding pattern etc;
was asked by the Stock Exchange, which the company could not supply in
the prescribed time. It was then given a further opportunity to furnish the
desired information along with supporting document, but in vain, as the
company did not maintain any record. What are the penalties leviable against
the company under the Securities Contracts (Regulation) Act, 1956 for the
failure to furnish the information ?
(d) Shareholders of Hide and Seek Ltd. are not satisfied about performance of
the company. It is suspected that some activities being run in the name of the
company are not in the interest of the company or its members. 101 out of
total 500 shareholders of the company have made an application to the
Central Government to appoint an inspector to carry out investigation and
find out the true picture.
With reference to the provisions of the Companies Act, 2013, mention
whether the shareholders’ application will be accepted ? Elaborate.
(e) One of the Objects Clauses of the Memorandum of Association of Info
Company Limited conferred upon the company power to sell its undertaking
to another company with identical objects. Company’s Articles also conferred
upon the directors whereby power was conferred upon them to sell or
otherwise deal with the property of the company. At an Extraordinary General
Meeting of the company, members-passed an ordinary resolution for the sale
of its assets on certain terms and authorized the directors to carry out the
sale. Directors refused to comply with the wishes of the members where
upon it was contended on behalf of the members that they were the
principals and directors being their agents, were bound to give effect to their
(members) decisions.

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Examining the provisions of the Companies Act, 2013 answer the following:
(i) Whether the contention of members against the non-compliance of members’
decision by the directors is tenable ?
(ii) Whether it is possible for the members usurp the powers which by the
Articles are vested in the directors by passing a resolution in the general
meeting ?

2. (a) The auditor of Organic Foods Ltd. accepted the Certificate from Mr. Rohan
who is the manager, a person of knowledge, competence and high
reputation, as to the value of the stock in trade. The valuation of stock
referred to above was found to be grossly overstated for several years in the
balance sheets of the company. As a result of the over valuation, dividends
were paid out of capital. The Auditor did not examine the books of account
very minutely. If they had done so and compared the amount of stock at the
beginning of the year, with the purchases and sales during the year, they
would have noticed the over valuation. The company subsequently went into
liquidation and the auditors were sued to make good the loss caused by the
wrongful payment of dividends based on the balance sheets figures. Based
on the above facts, you are required to decide, with reference to the
provisions of the Companies Act, 2013 and the decided case laws, the
following issues :
(i) Whether the Auditors of the company will be liable for the loss caused
to the company by the wrongful payment of dividends based on the
Balance Sheets duly audited by the Auditors.
(ii) What are the statutory duties of the Auditors in this regard ?
(b) Best Plastics Limited is being wound up by the Court. The Official Liquidator
after realization of the assets has an amount of ` 28 lakhs in his hand
towards payment of creditors of the company. Details of creditors are as
follows:
(i) Secured Creditors ` 20 lakhs
(ii) Workers wages ` 15 lakhs
(iii) Income Tax payable ` 2 lakhs
(iv) Unsecured Creditors ` 40 lakhs
Total Creditors ` 77 lakhs
Since the available amount in the hands of Liquidator is only ` 28 lakhs,
which is insufficient to meet the claims of all the above creditors, explain the
procedure you would follow for payment of the above in accordance with the
provisions of the Companies Act, 1956, assuming that the company has
created a charge on all the assets of the company in favour of secured
creditors.
(c) ABC Limited has on its Board, four Directors viz. W, X, Y and Z. In addition,
the company has Mr. D as the Managing Director. The company also has a
full time Company Secretary, Mr. Wise, on its rolls. The financial statements
of the company-Balance Sheet and Statement of Profit & Loss and the
Board’s Report for the year ended 31st March, 2015 were authenticated by
two of the directors, Mr. X and Y under their signatures.
Referring to the provisions of the companies Act, 2013 :
(i) Examine the validity of the authentication of the Balance Sheet and
Statement of Profit & Loss and the Board’s Report.
(ii) What would be your answer in case the company is a One Person Company
(OPC) and has only one Director, who has authenticated the Balance Sheet
and Statement of Profit & Loss and the Board’s Report ?

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3. (a) (i) In the annual general meeting of XYZ Ltd, while discussing on the
matter of retirement and reappointment of director Mr. X, allegations of
fraud and financial irregularities were levelled against him by some
members. This resulted into chaos in the meeting. The situation was
normal only after the chairman declared about initiating an inquiry
against the director. Mr. X, however, could not be re-appointed in the
meeting. The matter was published in the newspapers next day. On
the basis of such news, whether the court can take cognizance,of the
matter and take action against the director on its own ?
Justify your answer with reference to the provisions of the Companies
Act, 2013.
(ii) CB Ltd., an unlisted company, having a paid up equity share capital of
` 6 crore consisting of 60 lakh equity shares of ` 10 each, proposes to
reduce the denomination of equity shares to ` 2 per share and make
an initial public offer at a premium of ` 98 per share.
Examine whether it is possible for the company to go ahead with these
proposals under the Securities and Exchange Board of India (Issue of Capital
and Disclosure Requirements), Regulations, 2009 ?
(b) Queens Limited is a Company listed at Bombay Stock Exchange. Company’s
Articles empower the Board of Directors to appoint additional director. The
Board of Directors, therefore, appoints Mr. K, as the additional, director. It
may, however, be pointed out that earlier, the proposal to appoint Mr. K, as a
director on the Company’s Board was rejected by the members at the
company’s Annual General Meeting.
Examining the provisions of the Companies Act,.2013, answer the following:
(i) Whether Mr K’s appointment as additional director by the Board of
Directors is valid ?
(ii) Whether the Company’s Annual General Meeting can appoint Mr. K as
the additional director when the proposal to appoint comes before the
meeting for the first time ?
(iii) In case the AGM of the company is not held within the stipulated time,
decide whether Mr. K who was appointed by the Board as additional
director, for the first time, can continue to act as a director ?

4. (a) Elaborate the provisions of the Companies Act, 2013 regarding Notice of
Board Meeting. Draft a notice for the first meeting of the Board of Directors of
India Timber Ltd.
(b) (A) DJA Company Limited, incorporated under the provisions of
Companies Act, 2013, has two subsidiaries - AJD Limited and AMR
Limited. All the three companies have prepared their financial
statements for the year ended 31st March, 2015. Examining the
provisions of the Companies Act, 2013, answer the following :
(i) In what manner the subsidiaries - AJD Limited and AMR Limited shall
prepare their Balance Sheet and Profit & Loss Account ?
(ii) What would be your answer in case the DJA Limited - the holding
company, is not required to prepare consolidated financial statements
under the Indian Accounting Standards?
(iii) What shall be your answer in case one of the subsidiary company’s
financial statements do not comply with the Accounting Standards ?
(iv) To what extent is the Central Government empowered to exempt a
company from preparing the financial statements in compliance with
the Indian Accounting Standards ?

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(B) Mr. S, a member of MN Ltd., obtained an order from the Securities
and Exchange Board of India (SEBI) against the company. But the
company failed to redress the grievance of Mr.S within the time fixed.
Consequently, SEBI imposed penalty on the company. The company,
however, did not pay the penalty also. State how the penalty can be
recovered from the company ?

5. (a) A and B were appointed as first directors on 4th April, 2014 in Sun Glass Ltd.
Thereafter, C, D and E were appointed as directors on 6 July, 2014 and F, G
and H were also appointed as directors on 7th August, 2014 in the company.
In the Annual General meeting (AGM) of the company held after the above
appointments, A and B were proposed to be retired by rotation and
reappointed as directors.
At the AGM, resolution for A’s retirement and reappointment was passed.
However, before the resolution for ‘B’ could be taken up for consideration, the
meeting was adjourned. In the adjourned meeting also, the said resolution
could not be taken up and the meeting was ended without passing the
resolution for B’s retirement and reappointment.
In the light of above and with reference to relevant provisions of the
Companies Act, 2013, answer the following :
(i) Whether proposals for retirement by rotation and reappointment of A
and B only were sufficient ?
(ii) What will be the status of B as a director in the company ?
(b) Robertson Ltd. is a company registered in Thailand. Although, it has no place
of business established in India, yet it is doing online business through
telemarketing in India. Whether it will be treated as a Foreign Company
under the Companies Act, 2013 ? Explain.
(c) (i) The mango producers in Lucknow have entered into an 2x2 =4
arrangement among them whereby they have decided not to sell the
mango below certain price. This arrangement has been made in
writing but not intended to be enforced by any legal proceedings.
Referring to the provisions of the Competition Act, 2002, examine
whether the said arrangement shall fall within the jurisdiction of the
term ‘agreement’ within the meaning of the said Act.
(ii) The coconut producers in Tirunelveli (Tamil Nadu) have formed an
association to control the production of coconuts. Referring to the
provisions of the Competition Act, 2002, examine whether the said
association to control the production of coconuts shall fall within the
jurisdiction of the term ‘Cartel’ under the provisions of the said Act.

6. (a) Ideal Producer Co. Ltd. was incorporated on 1st April, 2009. Its paid up
capital of ` 10 Lakh consists of 1 lakh equity shares of ` 10 each held by 100
individuals. There are 6 directors on its Board. Referring to the provisions of
the Companies Act, 1956, answer the following :
(i) What is the quorum for the Annual General Meeting ?
(ii) What is the quorum for the Board Meeting ?
(iii) The Board of Directors wants to co-opt one expert in the field of
agronomies, as Director on its Broad. Whether is it permissible ?
(iv) Is it obligatory for this company to have internal audit of its accounts
for Financial Year 2015-16 ?

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(b) (i) Mr. Gambler has been arrested for a cognizable and non-bailable
offence punishable for a term of imprisonment for more than three
years under the Prevention of Money Laundering Act, 2002. He seeks
your advise as to how can he be released on bail. Advise him.
(ii) What is the object of Constituting Panel for Mediation and Conciliation
under the Companies Act, 2013 ? Who can file application for
mediation and conciliation ?

7. Attempt any four :

(a) India Exports Limited engaged in the export of software products to U.S. One
party in U.S. to whom the company exported certain products failed to pay
the amount due for these exports resulting into non-repatriation of amount to
India. The Adjudicating Authority on coming to know about this, levied a
penalty on India Exports Limited under the provisions of Foreign Exchange
Management Act, 1999.
The company seeks your advice as to which authority, to whom it can make
an appeal against the decision of Adjudicating Authority. State also, the time
limit within which the appeal can be lodged.
(b) What do you understand by ‘public interest’ ? Explain, giving suitable
examples, about its relevance under the Companies Act, 1956.
(c) Under Section 31 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002, certain situations
have been specified in which the provisions of this Act are not applicable.
You are required to mention any four of such situations.
(d) Explain the usefulness of following terms in interpreting/construing statute:
(i) Preamble
(ii) Use of Foreign Decisions
(e) Bharat Insurance Company issued a policy having sum assured of ` 5 lakhs
on the life of Ms. Nirmala. While obtaining education loan of ` 4 lakh for
higher studies, Ms. Nirmala assigned the above insurance policy in favour of
the Bank providing the loan. Who, in this case, will be called the ‘Policy
Holder’ under the Insurance Act, 1938 and why ? Explain.

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MAY – 2016

1. (a) Explain the law laid down under the companies Act, 2013 in respect of filing
of annual financial statements with Registrar of companies in the following two
situations who is liable for the default.
(i) Where financial statements of the company are filed with the ROC after
10 months from its due date;
(ii) Where financial statements are not at all filed by the company with the
ROC?
(b) a group of creditors of MAC Trading Limited makes a complaint to the
Registrar of Companies, Hyderabad alleging that the management of the
company is including in destruction and falsification of the accounting records
of the company. The complaints request the Registrar to take immediate steps
to seize the records of the company so that the management may not be
allowed to tamper with the records. The complaint was received at 10 A.M. on
1st July 2015 and the Roc entered the premises at 10.30 A.M. for the search.
Examine the powers of the Registrar to seize. Examine the powers of the
Registrar to seize the books of the company.
(c) Indian Software Ltd. seeks to export to its client in Indonesia. In this regard –
(i) explain the procedure to be adopted for export of software under the
Foreign Exchange Management act, 1999and also state the period
within which export value is to be realised.
(ii) explain the position in case of delay in receipt of payment from its client.
(d) Explain the functioning of the 2 types of Front Office (FO) in accessing MCA
21 portal of the Ministry of Corporate Affairs.
Also state the nature of services which can be availed of by its user on the
MCA 21 portal.
(e) XYZ, a recognised stock exchange fails to comply with certain directions
issued by the Securities and Exchange Board of India and the adjudicating
officer initiated proceedings for the purpose of imposing penalty. The stock
exchange seeks your advice whether it is possible to go for settlement of the
proceedings. Advise explaining the relevant provisions of the Securities
Contracts (Regulation) Act, 1956?

2. (a) (i) XYZ Ltd. wants to make an initial offer of its securities. Advise the
company on the following issues under the Securities and Exchange
Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 :
(1) Extent of promoters contribution;
(2) Lock in period of securities held by promoters;
(3) Lock in period of securities held by persons other than
promoters;
(4) Lock in period of securities allotted to employees of the company
under Employee stock option.
(ii) Securities and Exchange Board of India (SEBI) has undertaken
inspection of books of accounts and records of L.R. Ltd. a listed public
company. Specify the measures which may be taken by SEBI under the
Securities and Exchange Board of India Act, 1992 to protect the interest
of investors and securities market, on completion of such inquiry.
(b) On a reference made by the Central Government, the Company Law Board
passed an order authorizing the Central Government to appoint its nominees
as directors of Bangalore Computers Ltd., to safeguard the interest of

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shareholders and public interest. Referring to the provisions of the Companies
Act, 2013 state the restrictions, if any, on the provisions of the Companies Act,
2013 state the restrictions, if any, on the number of directors and the period for
which such appointment may be made. State also the action that may be
taken by the Central Government with regard to the affairs of the company
when such appointment of directors is made by the Central Government
(c) What are the conditions to be fulfilled for calling meetings at shorter notice
then as prescribed by Companies Act, 2013.
One of the directors, a senior professional, objected to receiving the notice by
e-mail. Advise him

3. (a) (i) A Scheme of amalgamations was approved by overwhelming majority

of members of both the merging companies at meetings called as per
directions of the Court, the exchange ratio was questioned by a small
group of members of one of the merging companies. The exchange
ratio was fixed by a reputed firm of Chartered Accountants.
Examine with reference to the decide case law under the Companies
Act, 1956 whether the dissenting shareholders will succeed . Would
your answers be different if the exchange ratio was objected to by the
Central Government?
(ii) State the circumstances in which a director of a company is required
under the Companies Act, 2013 to disclose his interest in a contract or
arrangement to be entered into by the company. Examine whether the
validity of the contract is affected by non- disclosure of interest by the
director.
(b) The Articles of association of Coimbatore Milk Producers Limited restricts the
membership to producers. You are required to answer the following questions
explaining the relevant provisions of the Companies Act, 1956.
(i) Mr. Gopal, one of the members proposes to transfer part of his shares.
State the steps to be taken by Mr. Gopal to give effect to the proposed
transfer.
(ii) Mr.Ramu, one of the members nominated his son, Mr. Krishnan to be
entitled to his shares in the event of his death.Mr. Ramu died. State
than can be taken by the producer company in case Mr. Krishnan is not
a producer.
(c) (i) Shyam& Co. is engaged in the manufacture of cement. It sold the
goods initially below the cost price for a year and slowly, its other
competitors went out of the market. thereafter, the enterprise changed
its strategy and sold the goods above its cost price and made
substantial profits. Examine the action, if any, which may lie against this
enterprise under the Competition Act, 2002.
(ii) What do you mean by anti- competitive agreements, viz, tie- in
arrangement and resale price maintainance?

4. (a) (i) R Ltd.wants to constitute an Audit Committee.Draft a board resolution

covering the following matters [compliance with companies Act,2013 to
be ensured].
(1) Member of the Audit Committee
(2) Chairman of the Audit Committee
(3) Any functions of the said Committee
(ii) What would be the minimum likely turnover or capital of this company?

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(iii) What is the role of the Audit Committee vis a vis the statutory auditor
when the company wishes to engage them to perform certain
engagements not restricted under Sec.144?
(b) XYZ Limited is an unlisted public company having a paid – up capital of twenty
crore rupeesas on 31stMarch , 2015 and a turnover of one hundred fifty crore
rupees during the year ended 31st March ,2015.The total number of directors is
thirteen.
Referring to the provisions of the Companies Act,2013 answer the following:
(i) State the minimum number of independent directors that the company
should appoint.
(ii) How many independent directors are to be appointed in case XYZ
Limited is a listed company?
(c) The Insurance Act ,1938 requires to establish Tarrif Advisory Committee
(TAC).In this regard, specify:
(i) Object and purpose of TAC:
(ii) Constitution of its members and Chairperson.

5. (a) International Technologies Limited,a listed company ,being managed by a

Managing Director proposes to pay the following managerial remuneration:
(i) Commission at the rate of five percent of the net profit to its Managing
Director,Mr Kamal.
(ii) The directors other than Managing Directors are proposed to be paid
monthly remuneration of ` 50,000 and also commission at the rate of
one percent of net profits of the company subject to the condition that
overall remuneration payable to ordinary directorsincluding monthly
remuneration payable to each of them shall not exceed two percent of
the net profits of the company.The commission is to be distributed
equally among all the directors.
(iii) The company also proposes to pay suitable additional remuneration to
Mr.Bhatt,adirector,for professional services rendered as software
engineer,whenever such services are utilised.
You are required to examine with reference to the provisions of the Companies
Act,2013 the validity of the above proposals.
(b) (i) Central Government and Government of Maharashtra together hold
40% of the paid – up share capital of MN Limited.A government
company also holds 20% of the paid – up share capital in MN Limited.
(ii) PQ Limited is a subsidiary but not wholly owned subsidiary of a
government company.
Examine with reference to the provisions of the Companies Act , 2013 whether
MN Limited and PQ Limited can be considered as Government Company.
(c) Apex Limited failed to repay the amount borrowed from the bankers,ACE Bank
Limited,Which is holding a charge on all the assets of the company.The Bank
took over management of the company in accordance with the provisions of
the Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act ,2002 by appointing four persons as directors.The
company is managed by Managing Director,Mr.X Referring to the provisions of
the said Act,examine whether Mr.X is entitled to compensation for loss of
office and also explain the effect of such takeover on certain rights of the
shareholders of the company.

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6. (a) AVM Producer company Ltd.seeks your advice on the following aspects of the
working of a Producer company under the Companies Act,1956 :-
(i) Criteria for appointment of Secretary as also the legal position,if its
financial position is unsatisfactory.
(ii) Can the Board of Directors of the company direct its member to
surrender his shares to the company,ifso,under what circumstances?
(iii) Provisions relating to donation to any institution,as also to a political
party.
(iv) Provisions relating to investment of general reserves, as also
investment in the share of a company,other than a producer company.
(b) A company was in financialdistress.They pledged certain immovable
properties with a nationalised bank in the belief that their loan limits would be
increased.However within 3 months,some creditors filed a petition for winding
up.The management was accused of fraudulent preference.
(i) In the above context discuss fraudulent preference.
(ii) Would your answer be different if the charge was created in favour of
an NBFC?
(c) The adjudicating Authority appointed under the Prevention of Money
Laundering Act , 2002 issued an order attaching certain properties of XYZ
Limited alleged to be involved in money laundering for a specified period.The
company aggrieved by the order of the Adjudicating Authority seeks your
advice about the remedy that is available under the Act.Advice explaining the
relevant provisions of the Prevention of Money Laundering Act ,2002

7. Answer any four of the following:

(a) DD Ltd.is a listed company and it has been served with notice for appointment
of small shareholders directors. Referring to the provisions of the Companies
Act,2013 advice on the following:
(i) Define the expression ‘small shareholders’ and specify the number of
small shareholders who may serve notice on the company for a director
representing them.
(ii) It is possible to appoint a person,who does not hold any share in the
company,as small shareholders director?
(iii) What is the tenure of small shareholders director and whether he can
be re-appointed as such, after expiry of his tenure? Also state whether
he can be appointed as an officer of the company on expiry of his
tenure as small shareholders director.
(b) Mr Joseph, a member of Armaments Ltd., is aggrieved due to failure of the
company to make payment of dividend declared in the AGM held in August
,2015.He makes compalaint, in writing, before the court of competent
jurisdiction within the prescribed period of limitation,but the court refused to
take cognizance of the alleged offence.Explain the legal position in this regard
under the companies Act,2013.
Also state the offences under the Companies Act ,2013 which are cognisable
and which are non – cognizable.

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(c) Explain the provisions of the Companies Act ,1956 relating to preparation and
filing of Statement of Affairs (SA)in case of winding of a company by the court,
with regard to the following aspects:
(i) Who is required to prepare and file SA and whether cost and expenses
incurred in preparing SA are recoverable?
(iii) Contents of SA and the period within which the same is required to be
submitted and to whom ?Also state about delay in filing SA and up to
what period the same is allowed.
(d) How will you interpret the definition in a statute,if the following words are used
in a statute?
(i) Means, (ii) Includes
Give one illustration for each of the above from statutes you are familiar with
(e) Galilio Ltd.is a foreign company in Germany and it established a place of
business in Mumbai.Explain the relevant provisions of the Companies
Act,2013 and rules made thereunder relating to preparation and filing of
financial statements,as also the documents to be attached alongwith the
financial statements by the foreign company.

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NOVEMBER – 2016

1. a. The Directors ofSom Limited proposed dividend at 12% on equity shares or

the financial year 2015-16. The same was approved in the Annual General
Meeting of the company held on 20th September, 2016. The Directors
declared the approved dividend s. They seek your opinion on the following
matters :
i. Mr. Ashok, holding equity shares of face value of Rs. 10 lakhs has not
paid an amount of Rs. 1 lakh towards call money on shares. Can the
same be adjusted against the dividend amount payable to him?
ii. Ms. Nini was the holder of 1,000 equity shares on 31st March,2016, but
she has transferred the shares to Mr. Raj, whose name has been
registered on 20th May,2016. Who will be entitled to the above
dividend?(4 marks)
b. Seafood Limited, a public limited company was incorporated on 1st April,2015.
The company has conducted four Board Meeting during the financial year
2015-16 i.e. on 6th April,2015, 28th August,2015, 30th September,2105 and
30th March,2016.
i. Has the company contravened the provisions of the Companies
Act,2013 in respect of the conduct of the meetings?
ii. Will your answer differ if the company was incorporated under Section 8
of the Companies Act,2013?(4 marks)
c. RSE Stock Exchange Limited, a recognized stock exchange is involved in
trading of shares of Son Limited. The SEBI on receiving a complaint from a
group of investors enquired and found that trading of shares of Son Limited is
being conducted in a manner detrimental to the interest of the general
investors. In order to curb the same, the SEBI wants to issue some directions
to RSE Stock Exchange Limited. Referring to the provisions of the Securities
Contract (Regulation) Act, 1956, discuss whether the SEBI has power to issue
such directions. Can such directions be given to an individual who made some
profit in any transaction in contravention of any provision of the Securities
Contracts (Regulation) Act, 1956, or regulations made thereunder?(4 marks)
d. Referring to the provisions of Companies Act, 2013, examine the following :
i. XYZ Limited, a listed company has constituted an audit committee
consisting o five members out of whom two are independent directors.
Subsequently, the company increased the composition of audit
committee to six members with three independent directors.
ii. Mr. Intelligent, was appointed as a small shareholder’s directorso XYZ
Limited, which is in the business of Oil refining. Subsequently, A Limited
and B Limited have also appointed him as small shareholder’s director.
Is the appointment valid?(4 marks)
e. Lifesys Limited, a billion dollar, Indian company wishes to create a chair in a
reputed university in the U.S. This chair is for the department of Computer
Science. The company wishes to obtain your advise in regard of the following
with reference to the FEMA, 1999.
i. Is such “chair” creation permissible?
ii. What can be the maximum amount that can be donated for such chair?
iii. Any formalities to be complied with?(4 marks)

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2. a. Super Real Estate Limited, a listed company has made the following profits,
the profits reflect eligible profits under the relevant section of the Companies
Act, 2013.
Financial year Amount (Rs. In crores)
2011-12 20
2012-13 40
2013-14 30
2014-15 70
2015-16 50
i. Calculate the amount that the company can spend towards CSR.
ii. Give the composition of CSR committee of a listed and unlisted company.
iii. Will the company suffer penalties if they fail to provide for or incur expenditure
for CSR?
iv. List only two activities that are expressly prohibited from being considered as
CSR activities.(8 marks)
The Balance Sheet of Loyal Limited as at 31-03-2016 disclosed the following details :
v. Authorised share capital - Rs.400 crore
vi. Paid up share capital - Rs.150 crore
vii. Reserves and surpluses - Rs.750 crore
The Company has issued, in the year 2011, fully convertible debentures of Rs.100
crores which are due for conversion in the year 2016. The company proposes after
the conversion of debentures to issue Bonus Shares in the ratio of 1:1.
Referring to the provisions of the Security and Exchange Board of India, (Issue of
Capital and Disclosure Requirements) Regulations, 2009, explain the provisions with
regard to:
1. Authorisation to issue the Bonus shares
2. Revision of paid up share capital
3. Source of funds
4. Any other restriction(8 marks)

3. a. Mr. Smart, a technocrat aged 71 years and reputed to be a specialist in

reviewing sick companies is being considered to be appointed as Managing
Director of Downhill Industries Limited. The company has been incurring
losses for the past several years and its “effective capital” is Rs.500 crore.
Referring to the provisions of the Companies Act, 2013, discuss:
i. Can Mr. Smart be appointed as Managing Director of the company
despite being over 70 years of age? If so, what is the process to be
followed to enable this?
ii. What is “effective capital” as per Schedule IV of the Act?
iii. What is the maximum permissible remuneration under the Companies
Act, 2013?(8 marks)
b. Greater DINA Investors Association made a complaint by an informal letter to
the Central Government that Management of Secret Limited has been
indulging in fraudulent activities causing loss to the shareholders and that an
investigation should be carried out to find out the whole truth. On receipt of the
letter, the Central Government directed the Association to approach them
formally after complying with the provisions of the Companies Act, 2013.
Advise the Association.(4 marks)
c. Mr. Arnab, one of the Directors of Aim Insurance Company Limited had taken
some life insurance policies from the company. He, now, wants to avail a

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temporary loan from the company. The company refused to grant such loan on
the ground that there is a prohibition in this regard. Mr. Arnab, approached
you, now about the matter. Advise him with reference to the Insurance laws
Amendment Act, 2015 as well as sec 185 of the Companies Act, 2013,
whether such lon can be obtained by him.(4 marks)

4. a. Bengaluru Limited is a listed company with a net worth of Rs. 95 lakhs. And
turnover of Rs.11.6 crores as on 31st March,2016. The company wants to
circulate financial statements in electronic mode. Referring to the provisions of
the Companies Act, 2013, advise the company whether it can do so.(4 marks)
b. Dull Limited was not running its business since last 2 years. It had no
significant accounting transactions during that period. Hence the company had
applied and was granted the status of a ‘dormant company’ by the Registrar of
Companies. Now the company has got some opportunity and recently started
its operations. Therefore the company is intending to get back the status of an
active company and approached you for your advice on the basis of the
applicable provisions of the Companies Act, 2013 and appropriate Rule of the
Companies (Registration Offices and Fees) Rules, 2014. Also state the power
of the Registrar to remove the name of a company from the register of ‘formant
company’ and treat it as an active company.(4 marks)
c. State with reference to the provisions of the Companies Act,201, whether the
following persons can be appointed as a Director of a company.
i. Mr. L, who has not paid any calls in respect of any shares of the
company held by him and five months have passed from the last day
fixed for the payment of calls.
ii. Mr. G is Director of LDT Limited, who has not filed the company’s
annual return pertaining to the annual general meeting held in the
calendar years 2014, 2015, and 2016.(4 marks)
d. The Board of Directors of Shakti Bank Limited, a banking company
incorporated in India, for the accounting year ended on 31-03-2016,
transferred 15% of its net profit to its reserve fund. Certain shareholders of the
company objected to the above act of Board of Directors on the ground that it
is violative of the provisions of the Banking Regulations Act,1949. Examine the
relevant provisions of the Banking Regulation Act 1949 to decide whether the
contention of the shareholder is tenable.(4 marks)

6. a. Soft and Secure Lenders Limited, has convened a Board Meeting on 25th
October,2016. One of the items of the agenda is to approve the grant of loan
of Rs.20 crore to Easy Going Industries Limited, for expansion of its business
activities. At the Board Meeting , out of the total of six Directors of the lending
company, five directors were present and expect one director, the remaining
four directors approved the grant of loan of Rs.20 crores to Easy Going
Industries Limited. The Borrowing company has taken loans from a public
financial institution and also deposits from public. Examine the loan proposal
with reference to the provisions of the Companies Act,2013
b. Discuss Related Party Transactions” under the Companies Act,2013, with
specific reference to the nature of transactions which fall under the purview of
the Companies Act,2013
c. GST Limited is a securitization and reconstruction company under SARFAESI
Act, 2002. The certificate of registration granted to it was cancelled. State the
circumstances when the certificate can be cancelled. Further, state the
authority which can cancel the certificate if the registration.

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d. Upon an enquiry made by the Competition Commission of India it was found
that Huge Limited is enjoying dominant position in the market and there is
every possibility that the company may abuse its dominant position. In order to
overcome such a possible situation, the Competition Commission of India
wants to order for division of Huge Limited. Referring to the provisions of the
Competition Sct,2002, describe the matters which may be provided in the said
order.

7. a. Winding-up proceeding has been commenced by the court against Lucy

Limited, a non-government company. Even after completion of one year from
the date of commencement of winding up proceedings, it has not been
possible to conclude the same. Discuss the duties of the liquidator with respect
to auditing and filing of the required statements with the appropriate authority
as per the provisions of the Companies Act,1956. Also discuss the penalty
which can be imposed on the liquidator for contravention of the above
provisions.
b. Sky Limited, a listed company has been incorporated under the Companies
Act,2013. An intermittent vacancy of a women director has arisen on 15th
June,2016. Advise the company to fill the vacancy as per the provisions of the
Companies Act,2013. The Board Meeting was held on 14th August,2016.
c. Can a holding company advance any loan to its wholly owned subsidiary
company? What are the relevant provisions of the Companies Act, 2013 with
regard to granting of loans by holding company to its wholly owned subsidiary
company? Mention the penalties for the contravention of the provisions of the
Companies Act,2013.
d. Explain very briefly the significance of conjunctive and disjunctive words “or”
“and” in the manner of interpretation of statutes.
e. Discuss the provisions relating to annual reports of Government Companies –
- Where in addition to the Central Government, any state Government is
a member of the company
- Where the Central Government is not a member of the Government
Company

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