COMPANY LAW THE COMPANIES ACT,1956. Scope of the Act. • •
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Incorporation of companies Memorandum of Association & Articles Association. Membership Prospectus etc. Issue of Capital Meetin!s Accounts Auditin! in"esti!ations Mana!ement of Companies. Misc. Clauses and amendments in act.
of
Introduction to the concept of compan# • •
Liabilit# Capital
$ormation of Act. • •
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Indian Companies Act%%' After World War based on recommendations of (habha Committee Companies Act %)*. Post amendments Companies +Amendment, Act % and finall# Companies +Amendment, Act- from '%/%-/-.
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to encoura!e in"estments to ensure proper administration to pre"ent malpractices to allo3 for in"esti!ations.
What is a company? A company means a company formed and registered under this Act or an existing existing company. company. (Sc.3) A joint Stock Company means a company having a permanent paid up or nomina share capita fixed amount divide into shares aso of fixed amount! or hed and transfera"e as stock or divided and hed party in one #ay and party in other! such a company #hen registered #ith imited ia"iity under this act sha "e deemed to "e a company imited "y shares (sc. $%%).
C4A5AC215IS2ICS. %. -. '. 7. ). *. 9.
5e!istration 6ist 6i stin inct ct pe pers rson on // se sepa para rate te en enti tit# t# Perpetual succession Arti Ar tiffic icia iall per perso son n bu but no not a cit citi8 i8en en 2ransferable shares Limited Liabilit# Common seal
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Separate propert# Capacit# to sue and be sued
2#pes of Companies %. 5o#al Charter Charter or or Chartered Chartered Compani Companies es -. Sta Statut tutor# or# Compan Companies ies '. 5e!is 5e!istered tered comp companies anies under the act act +i, Companies limited b# shares +a,, Pu +a Publ blic ic co comp mpan anie ies s +b,, Pr +b Pri" i"at ate e co comp mpan anie ies s +ii, Companies limited b# !uarantee +iii, ;nlimited co companies. &rivate 'imited Companies defined
&rivate Company means a company #hich has a minimum paid up capita of one ac rupees or higher and "y its artices* (i)) re (i rest stri rict cts s the the ri righ ghtt to to tra trans nsfe ferr its its sh shar ares es (ii) imits the num"er of mem"ers to $+, not invoving (a)) em (a emp poy oyee ees s of co comp mpan any y (") per person sons s #ho #ho #ere #ere for former mery y the the emp empoye oyees es have "een mem"ers after incorporation. (iii) (ii i) pro prohi" hi"its its any invitat invitation ion to pu"ic pu"ic to su"scri su"scri"e "e for any shares (iv) &rohi"its any invitation or acceptance of deposits from externa parties. (Sc. 3 (-) (iii)
&/0'1C '12145 C62&A78 5491745 A company #hich is not a private company is a pu"ic company! #hen seven or more persons join hands to form a pu"ic company #hose ia"iity is unimited. 0y companies (Amendment) Act! :+++! a pu"ic company means a company! #hich *** (a) is not a private company, (") has minimum paid up capita of five ac rupees or such higher paid up capita (c) is a private company! #hich is a su"sidiary of a company #hich is not a private company. Specia privieges of a private company over a pu"ic company. %. -. '. 7. ). *. 9.
minimum number of members. Minimum subscription pro"isions are not applicable. No need to file a prospectus or statement in lieu of prospectus No need of certificate of commencement. Pri"ate compan# need not
:. 6irectors consent to act is not re>uired . $e3 restrictions on appointments of directors %. Pro"isions re!ardin! loans to directors do not appl# %%. No need of !o"ernment appro"al for remuneration to directors. %-. Prohibition re!ardin! appointment of mana!in! director for more than fi"e #ears at a time do not appl# %'. 5estrictions on ad"ancin! loans to other companies do not appl#.
&rocedure for converting a private company into a pu"ic company (i) (ii) (iii) (iv)
Ater the artices of company "y a specia resoution 1f the num"er of mem"ers is ess than ;! raise it to ; 1f num"er of directors is ess than three! raise it to three 9ie a prospectus or statement in ieu of prospectus and resoution #ithin 3+ days #ith registrar.
&rocedure for converting a pu"ic company into a private company (i)
(ii) (iii) (iv)
&ass a specia resoution authorising conversion of company and atering the artices Change the name of the company "y a specia resoution 6"tain the centra government approva 9ie the atered artices #ith the registrar #ithin 3+ days of receiving approva.
(iv)
#here it contros the composition of the 0oard of directors of another company #here it contros more than haf of the tota voting po#er of the other company, #here it hods more than haf of the nomina vaue of e=uity share capita of other company #here it is a su"sidiary of any company #hich is the su"sidiary of some other company.
>overnment Company Any company in #hich not ess than $- per cent o the paid up share capita is hed "y the Centra government or "y any State government or >overnments or party "y the Centra government and &arty "y state government is caed a >overnment company. A company su"sidiary of a government company is aso government company (Sc.%-;) Com"ination •
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the centra government and one or more government companies any state >overnment or >overnment and one or more >overnment companies, the centra >overnment! one or more State governments and one or more >overnment companies. he centra government! one or more state governments and one or more corporations o#ned "y the Centra government. 6ne or more corporations o#ned or controed "y the Centra >overnment or state government, 2ore than one >overnment company.
9oreign company A company incorporated outside 1ndia is a foreign company. -) :) 3) ) $) %) ;)
5ocuments Aterations Accounts 7ame and country of incorporation 6ther provisions &rospectus Winding up
1ega Associations. meaning.
9ormation of Company
M1MO5AN6;M O$ ASSOCIA2ION Meanin! and character ? 3hether unalterable $orms and contents Sc. %' re>uires the memorandum of a limited compan# to contain the follo3in!@ +a, the name of the compan# 3ith limited or pri"ate limited as the last 3ords +b, the name of the state in 3hich the re!istered office of the compan# is to be situated +c, the obBects of the compan# statin! separatel#@ +i, the main obBects to be pursued on incorporation +ii, obBects incidental or ancillar# to the attainment on main obBects +iii, Other obBects of the compan# +d, the declaration that the liabilit# of the members is limited +e, the amount of authorised share capital +f, in case of companies +other than tradin! corporations, 3ith obBects not confined to one state the state to 3hose territories the obBects e=tend.
241 NAM1 CLA;S1 9oo#ing names are considered undesira"e and a company is not ao#ed to "e registered #ith such names "y 54&A@247 69 C62&A78 A99A1@S %,
If the name is identical 3ith or too nearl# resembles the name b# 3hich a compan# is alread# re!istered -, If the proposed name is identical 3ith the name of a compan# in li>uidation ', If the proposed name is mere addition or subtraction of 3ord in name of e=istin! compan# 7, If the proposed name closel# resembles a popular or abbre"iated description ), It attracts the pro"isions of emblem and names. *, If it connotes o"ernment participation or patrona!e 9, If it implies association or connection 3ith national hero or a person of hi!h esteem :, If it includes 3ord li
%%, If the name su!!ests a business 3hich is not proposed b# the compan# %-, If the proposed name is the e=act 4indi translation of the name of an e=istin! compan#. ;se of certain
Corporation International lobe ;ni"ersal Continental Inter/continental Asiatic Asia bein! first 3ord If an# of the 3ords abo"e is used 3ithin the name 4industan India (harat bein! the first 3ord If an# of the 3ords abo"e is used 3ithin the name IndustriesE;d#o! 1nterprises products (usiness Manufacturin!
5e>uired Authorised Capital ) crores % crore ) la
Publication of name and penalt# for not doin! the same +Penalt# 5s.) per da# till the default continues,
2he obBect clause and doctrine of ;ltra "ires •
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A compan# 3hich o3es its incorporation to a statutor# authorit# cannot effecti"el# do an#thin! be#ond the po3ers e=pressl# or impliedl# conferred upon it b# the statute or memorandum of association. An# purported acti"it# be#ond such po3ers 3ill be ineffecti"e e"en if a!reed to b# all the members.
Implied po3ers Po3ers that are not implied •
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to ac>uire an# business similar to compan#Fs o3n enterin! into an a!reement 3ith other persons or companies for carr#in! on business in partnership or for sharin! fromfs. 2a
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A po3er to sell and dispose of the 3hole of ca compan#Fs underta
1ffects of ultra "ires transactions +i, +ii, +iii, +i", +",
Goid ab initio InBunction Personal liabilit# of 6irectors Ac>uisition of propert# that is ultra "ires 6irectors personall# liable to third part# Alteration of memorandum
Change of name Appication to @egistrar in form no.-A #ith fee of @s.$++! communication "y fiing form no.:3 Change of registered office 7otice in form no. -! #ithin the same to#n. Change of registered office from one to#n to another. (i) Specia resoution (ii) Confirmation of @egiona 5irector (iii) Copy of specia resoution and confirmation "y regiona 5irector to "e fied #ith @oC. (iv) 7otice of ne# ocation #ithin 3+ days.
Change of registered office from one state to another Change of o"ject cause *** reasons • •
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to carr# on its business more economicall# to attain its main purpose b# ne3 or impro"ed means to enlar!e or chan!e the local area of its operations to combine 3ith the e=istin! businesses of the compan# to amal!amate 3ith an# other compan#
Ateration of Capita Cause %,
to increase its authorised share capital b# such amount as it thin
subse>uentl# formed restrainin! it from ha"in! its name the 3ord HAsiaticF
A52ICL1S O$ ASSOCIA2ION Contents %, Share capital includin! sub di"ision thereof -, 5i!hts of "arious shareholders ', Lien on shares 7, Call on shares ), 2ransfer of shares *, $orfeiture of shares 9, Surrender of shares :, Con"ersion of shares into stoc< , Alteration of capital %, Share 3arrants %%, eneral meetin!s and proceedin!s thereat %-, Gotin! ri!hts of the members %', Information about the directors first directors or directors for life %7, 6i"idends and reser"es %), Accounts and audit %*, (orro3in! po3ers %9, Windin! up. No article compan#
A compan# limited b# shares ma# either frame its o3n set of articles or ma# adopt all or an# of the re!ulations contained in 2able A. If it does not re!ister articles 2able A applies Alteration of articles •
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the alteration must not e=ceed the po3ers !i"en b# the memorandum -, 2he alteration must not be inconsistent 3ith an# pro"isions of the companies act ', 2he altered articles must not include an#thin! 3hich is ille!al or opposed to public polic# or unla3ful 7, 2he alteration must be bona fide and for the benefit of the compan# ), 2he alteration must not constitute a fraud on the minorit# *, An alteration of articles to effect a con"ersion of a public compan# into a pri"ate compan# cannot be made 3ithout the appro"al of the central !o"ernment. 9, Articles cannot be altered to breach third part# contracts. Problems %, A limited compan# is formed 3ith its Articles statin! that one Mr. Sri"asta"a shall be solicitor for the compan# and that he shall not be remo"ed e=cept on !round of misconduct. Can the compan# remo"e Mr. Sri"asta"a
-, 2he articles of a compan# pro"ided that the shares of a member 3ho became ban
Irre!ular Allotment and its effects %, Cop# of prospectus not deli"ered to 5e!istrar 1ffect on allotment@/ Galid Liabilit# of compan#Edirectors@/ a fine to the e=tent of 5s.)E/ -, Application mone# bein! less than )J of nominal "alue of Share 1ffect on allotment@/ Goidable Liabilit# of compan#Edirectors@/ %, 6irectors liable to the compan# and allottee for the dama!es -, Compan# and e"er# officer of the compan# shall be punishable 3ith fine upto 5s.)E/ ',
Minimum subscription not subscribed for
1ffect on allotment@/ Goidable Liabilit# of compan#Edirectors@/ %, After * da#s from the closure of issue refund all mone# to applicants 3ithout interest.
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If not directors shall be liable to pa# mone# 3ith interest K %) J. 6irectors shall be liable for dama!es to the compan# and allottee.
7, Application mone# not
1ffect on allotment@/ Galid Liabilit# of compan#Edirectors@/ $ine upto 5s.)E/
;nder3ritin! Meanin! uidelines issued b# S1(I %.
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for e"er# under3ritten issue the lead merchant ban
;nder3ritin! commission %,
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2he commission pa#able should not e=ceed ) per cent in case of shares and -.) percent in case of debentures. ;nder3ritin! commission ma# be paid in cash or
Authorised b# amendment 99( Sources of bu# bac<@ %. -. '.
"ide sc. 99A 99AA
its free reser"es securities premium account the proceeds of an# shares or other specified securities. + bu#bac< from earlier issue not possible.
In case shares are bou!ht from free reser"es a sum e>ual to bu# bac< has to be transferred to Capital 5edemption 5eser"e Account.
Conditions for bu# bac< +a, the bu# bac< is authorised b# its articles +b, a special resolution has been passed in !eneral meetin! of the compan# authorisin! the bu# bac< +c, the bu# bac< is less than -) J of the total paid up capital and free reser"es of the compan#. +d, 2he ratio of the debt o3ed b# the compan# is not more than t3ice the capital and its free reser"es after bu# bac< +e, All the shares or the securities are full# paid up +f, A notice of meetin! at 3hich special resolution is proposed shall be passed 3ith necessar# details. +!, 1"er# bu# bac< shall be completed 3ithin %months from the date of passin! of special resolution. +h, (u# bac< shall be permissible @ +i, from the e=istin! share holders on a proportionate basis +ii, from open maruit#.
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A declaration of sol"enc# in form prescribed to 5OC AN6 S1(I to be filed +B, Where compan# bu#s bac< its o3n securities it shall e=tin!uish and ph#sicall# destro# the securities so bou!ht bac< 3ithin 9 da#s. +<, 2he compan# shall not ma
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premium cannot be treated as profit and distributed as di"idend amount recei"ed as premium has to be credited in separate account called securities premium AEc.
;tili8ation for@/ +a, issuin! full# paid bonus shares to members +b, 3ritin! off the balance of the preliminar# e=penses of the compan#
+c, 3ritin! off the commission paid or discount allo3ed or share issue e=penses +d, pro"idin! for the premium pa#able on redemption of an# redeemable securit#. Issue of shares at a discount Conditions* %, -,
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2he issue must be a class of shares alread# issued Not less than % #ear has elapsed since the date on 3hich the compan# became entitled to commence business 2he issue of shares at a discount is authorised b# a resolution passed b# the compan# in !eneral meetin! and sanctioned b# the Central o"ernment 2he ma=imum rate of discount must not e=ceed % J or such hi!her rate as the compan# la3 (oard ma# permit in an# special case. 2he shares to be issued at a discount must be issued 3ithin - months of the sanction b# the Compan# la3 (oard. Such discounts should be mentioned in prospectus. S3eat e>uit# shares
Meanin! @/ 1>uit# shares issued b# the compan# to emplo#ees directors at a discount or for consideration other than cash. Such shares must be issued for pro"idin! uit# shares must be of a class of shares alread# issued b# the compan# +b, Issue must be authorised b# a special resolution passed b# the compan# +c, 2he resolution must specif# the number of shares current maruit# shares shall be applicable to such s3eat e>uit# shares.
Con"ersion of loans or debentures into shares •
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Such con"ersion should not "iolate pro"ision of Sc. :% +%, Con"ersion allo3ed onl# if the same has been appro"ed before the issue of debentures or raisin! of loan b# a special resolution. When the compan# has ta
5eduction of Share Capital ypes
+i, b# reducin! or e=tin!uishin! the liabilit# of the members for uncalled capital +ii, b# pa#in! off or returnin! capital 3hich is in e=cess of the 3ants of the compan# +iii, pa# off paid up capital on the understandin! that it ma# be called up a!ain. +i", A combination of the precedin! methods +", Write off or cancel capital 3hich has been lost or is not represented b# a"ailable assets. Procedure for reduction of capital %. -.
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Special resolution for the reduction of capital has to be passed 2he compan# has to appl# to the court b# 3a# of petition to confirm the resolution under section %% Creditors are entitled to obBect 3hen reduction in"ol"es@/ +a, the diminution of liabilit# in respect of unpaid capital +b, the pa#ment to an# shareholder of an# paid up share capital or in an# other case if the court so directs.
$inall# after all formalities ha"e been complied 3ith the court directs and confirms reduction. Words and reduced are added compan#Fs name for a specific period. Penalt#
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Sc.%)@/ Punishment 3ith imprisonment e=tendin! to one #ear or 3ith fine both if an# officer of the compan# conceals the name of a creditor. 5eduction of share capital 3ithout the sanction of the Court. +i, $orfeiture of shares +ii, Surrender of Shares +iii, 5edemption of redeemable preference shares +i", Purchase of shares of a member b# the compan# under section 7+", 6iminution of capital (onus Shares >uideines
+a, 2hese !uidelines are applicable onl# to e=istin! listed companies +b, 2he bonus issue shall onl# be made out of free reser"es +c, 5eser"es should be built out of !enuine profits or share premium colected in cash +d, 5eser"es created b# re"aluation of fi=ed assets are not to be capitalised +e, 2he declaration of bonus issue in lieu of di"idend is not made +f, 2he bonus issue is not made unless the partl# paid shares if an# e=istin! are made full# paid. +!, 2he compan# has not defaulted in pa#ment of interest or principal on fi=ed deposits or debentures +h, It has not defaulted in statutor# dues of the emplo#ees +i, Such implementation of the proposal should be 3ithin si= months from the date of appro"al. +B, 2here should be a pro"ision in the Articles of association of the compan# for capitalisation of reser"es. +<, No compan# shall pendin! con"ersion of $C6sEPC6s issue bonus shares.
Calls on shares @e=uisites of a vaid ca %.
2he directors maualified. -. 2he meetin! of the board of directors has been dul# con"ened '. 2he proper >uorum is present 7. 2he resolution ma
7, Po3er of forfeiture must be e=ercised bona fide and in !ood faith ), Mis representations should not be a cause of forfeiture. 1ffect@/ Cessation of membership and liabilit# but liabilit# as a past member 51IS215S AN6 512;5NS Statutory "ooks to "e kept "y a company %.
5e!ister of In"estments not held in compan#Fs name -. 5e!ister of $i=ed 6eposits '. 5e!ister of Char!es 7. 5e!ister and Inde= of Members ). 5e!ister and Inde= of 6ebenture holders *. $orei!n 5e!ister of members and 6ebenture holders if an# 9. Minute boo
%%. 5e!ister of 6irectors mana!in! 6irector mana!er and secretar# %-. 5e!ister of 6irectorsF holdin!s in Shares and 6ebentures %'. 5e!ister of Loans !i"en or Securities pro"ided to companies under the same mana!ement %7. 5e!ister of In"estments in shares of other bodies corporate %). 5e!ister of 5ene3ed and 6uplicate Certificates. Optional (oo
Share Application and Allotment (oo< Share Calls (oo< 6ebenture Application and Allotment (oo< 6ebenture Calls (oo< 5e!ister of Share 2ransfers Share holders 6i"idend (oo< 6ebenture Interest (oo< 5e!ister of Certification and balance tic
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5e!ister of Sealed 6ocuments 5e!ister of Pro=ies 5e!ister of Po3ers of Attorne# 5e!ister of Lost Share Certificates.
Compan# Mana!ement 6irector ? definition An# person occup#in! the position of a director b# 3hate"er name is called HdirectorF Who ma# be appointed as a 6irector No bod# corporate association or firm can be appointed director of a compan#. Onl# an indi"idual can be appointed as a director. ualifications for 6irectors No >ualifications prescribed b# the compan# Act •
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Also the Act imposes no share >ualification on the directors A director should hold at least one share of compan# 1ach director must taualification shares 3ithin - months after his appointment
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2he nominal "alue of the >ualification shares must not e=ceed 5s. )E/ or the nominal "alue of one share if it e=ceeds 5s.)E/ Share 3arrants 3ill not count for purposes of share >ualification. If the director fails to obtain his >ualification shares 3ithin - months he "acates the office automaticall# on the e=pir# of - months. If he continues a fine of 5s.))E/
6is>ualifications of a 6irector %.
A person found b# a competent court to be of unsound mind and such findin! remainin! in force
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An undischar!ed insol"ent
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A person 3ho has applied to be adBud!ed an insol"ent
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A person 3ho has been con"icted b# a court of an offence in"ol"in! moral turpitude
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4e has been sentenced in respect thereof to imprisonment for not less than si= months and period of fi"e #ears has not elapsed
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A person 3ho has not paid an# call in respect of shares of the compan# held b# him 3hether alone or Bointl# 3ith others and si= months ha"e elapsed from the last date fi=ed for the pa#ment of calls
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A person 3ho has been dis>ualified b# the court as fraudulent person
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A person 3ho is alread# a director of a public compan# 3hich @/ +i, has not filed the annual accounts and annual returns for an# continuous three financial #ears +ii, has failed to repa# its deposit or interest thereon on due date or redeem its debentures on due date or pa# di"idend and such failure continues for one #ear or more.
Le!al Position of directors 5irectors are descri"ed sometimes as agents! sometimes as trustees and sometimes as managing partners. 0ut each of these expressions is used not as exhaustive of their po#ers and responsi"iities "ut their utiityB * 0o#en! '.. 5irectors as agents 5irectors sha incur a persona ia"iity in the foo#ing cases* %. -. '.
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3here the# contract in their o3n names 3here the# use the compan#Fs name incorrectl# e!. (# omittin! the 3ord HlimitedF 3here the contract is si!ned in such a 3a# that it is not clear 3hether it is the principal or the a!ent 3ho is si!nin! 3here the# e=ceed their authorit#.
6irectors as trustees 2adras
Are directors empoyees of the company? •
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When a director accepts emplo#ment under the compan# under separate contract of ser"ice in addition to the directorship he becomes an emplo#ee 6irectors are also treated as officers of the compan# for certain matters 4e shall be entitled to remuneration and other benefits admissible to emplo#ees in addition to remuneration of 6irector under the Act.
Appointment of directors Appointment of first directors •
Appointed accordin! to the articles of the compan#
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Other3ise the subscribers in memorandum b# default become first directors 2he first directors can hold office until the directors are dul# appointed.
Appointment of directors at !eneral meetin! •
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Of all directors -E' rd the number of directors shall retire e"er# #ear at the time of AM. 2hese are rotational directors 2hese directors can be reappointed. If these directors do not hold a meetin! in time still the# retire b# rotation and must "acate office at latest on the last da# on 3hich an annual !eneral meetin! out to ha"e been held.
Appointment of a director other than a retirin! director •
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A person 3ishin! to be a director must si!nif# his intention to do so b# !i"in! %7 da#sF notice to the compan# before the AM 2he compan# must inform the members not later than se"en da#s before the !eneral meetin! either b# indi"idual notice or b# ad"ertisement in at least t3o ne3spapers An# additional directorE director appointed for casual lea"e shall fulfil formalities as of rotational director.
Consent of directors sha "e fied #ith registrar #ithin 3+ days of his appointment.
a director re appointed after retirement b# rotation or immediatel# on the e=pir# of his term of office -. an additional or alternate director or a person fillin! a casual "acanc# in the office of a director. '. a person named as director of the compan# under its articles as first re!istered. Appointment of directors b# proportional representation •
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Ordinaril# directors are appointed b# simple maBorit# "ote. -E'rd of the directors are appointed b# sin!le transferable "ote or some s#stem of cumulati"e "otin! or other3ise.
Sin!le transferable "ote A >uota of "otes is fi=ed. A person !ets elected if he !ets the re>uired number of first preference "otes fi=ed as >uota. 1=. In an election * "otes are cast and there are fi"e seats. 2he >uota 3ill be calculated as follo3s@/ +*E)%, % Q %% "otes.
Cumulati"e "otin! 4ere total number of "otes cast 3ill be e>ual to the total number of shares multiplied b# the number of directors to be elected. Appointment of directors b# the Central o"ernment Appointment done after a reference b# atleast % share holders or of members holdin! not less than %E% of the total "otin! po3er. •
5emuneration pa#able b# companies ha"in! profits@ 5emuneration pa#able b# companies ha"in! profits b# the 3a# of salar# dearness allo3ance per>uisites commission and other allo3ances Sum total of the abo"e shall not e=ceed ) per cent of its net profits for one such mana!erial position In case of more than one positions % per cent ma=imum. •
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5emuneration pa#able b# companies ha"in! no profits or inade>uate profits ? a ceilin! limit of -7 per annum or 5s. -E/ per month. Where the capital of the Monthl# remuneration compan# is pa#able shall not e=ceed Less than 5s. % crore 5s.9)E/ •
5s. % crore or more but less than 5s. ) crores 5s. ) crore or more but less than 5s. -) crores 5s. -) crores or more but less than 5s. % crores 5s. % crores or more
5s. %E/ 5s. %-)E/ 5s. %)E/
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Mana!in! director@/ A director 3ho b# "irtue of an a!reement 3ith the compan# or of a resolution passed b# the compan# in !eneral meetin! or b# its (oard of directors or b# "irtue of its Memorandum or Articles of Association is entrusted 3ith substantial po3ers of mana!ement 3hich 3ould not other 3ise be e=ercisable b# him. Appointment of a managing director b# the "irtue of an a!reement 3ith the compan# b# the "irtue of a resolution passed b# the compan# in !eneral meetin! b# "irtue of a resolution passed b# the (oard of directors b# "irtue of the MemorandumE Articles of Association. •
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Appro"al of the o"ernment
Su"ject to foo#ing conditions* (i)
Compan# Secretar# Meanin!@/ a person 3ho is a member of the Institute of compan# Secretaries of India Characteristics@/ %, Onl# indi"iduals can be appointed as secretar# of the compan#. A firm or a bod# corporate cannot be appointed as compan# secretar#. -, 4e should possess the prescribed >ualification as ma# be applicable to different
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circumstances of appointment of the compan# secretar#. 4e performs functions performed b# a secretar# under the Companies Act includin! an# other ministerial or administrati"e duties.
ualifications of a compan# secretar# Companies #ith a paid up share capita of @s. $+ akhs or more* he #hoe time secretary must "e a mem"er of the 1nstitute of company secretaries of 1ndia. 1n case of other companies* Secretary must possess one or more of the foo#ing =uaifications* -. mem"ership of the 1nstitute of Company Secretaries of 1ndia :. &ass in the 1ntermediate 4xamination conducted "y the 1nstitute of Company Secretaries of 1ndia 3. &ost graduate degree in commerce . 5egree in a# granted "y any university $. 2em"ership of the 1nstitute of Chartered Accountants of 1ndia
%.
2em"ership of the 1nstitute of Cost and #orks Accountants of 1ndia ;. &ost graduate degree or dipoma in management . 5ipoma in Corporate 'a#s and management granted "y the 1nstitute of Commercia practice! 7e# 5ehi, G. &> dipoma in CS -+. 2em"ership of Association of Secretaries and 2angers! Cacutta --. &> dipoma in company a# and Secretaria practice granted "y /niversity of /daipur. 6ther =uaifications (i) Sound genera education (ii) proficiency in anguage (iii) Wide kno#edge (iv) Hno#edge of company a# (v) Hno#edge of other a#s (vi) Hno#edge of office organisation and methods (vii) Hno#edge of economics! "anking and finance (viii) >ood personaity. Appointment of Company Secretary Compusory for every company #ith paid up capita of @s. $+ akhs or more.
7either of its t#o #hoe time directors shoud "e CS 5uties of secretary -) o verify and sign any document of proceedings re=uiring authentication of the company :) o deiver for registration return of aotment and contracts reating to aotment 3) o give notice to the registrar for increase of share capita ) o deiver the share certificates #ithin three months of aotment or #ithin t#o months of registration of transfer $) o make entries in the @egister of mem"ers on issue of share #arrants %) o make avaia"e trust deed for inspection to every mem"er #ithin seven days of re=uest ;) o deiver for registration to the registrar particuars of mortgages and charges ) o get painted or affixed the name pate of the company outside every office or pace of its "usiness. G) o make statutory decaration for o"taining the certificate of commencement -+) o sign the annua return and certify the documents annexed --) o make avaia"e for inspection ad furnish copies of the @egister of the mem"ers.
