For Chartered Accountants/company Secretaries/consultants/corporates

Bharat's

COMPANY LAW READY RECKONER

for Chartered Accountants/Company Secretaries/Consultants/Corporates

By

D.K. JAIN M.Com, FCS, ACIS (UK) Practicing Company Secretary

BHARAT LAW HOUSE New Delhi

Statute law as on 25th April, 2007

First Edition 2003 Second Edition 2005 Reprint September 2005 Third Edition, 2007 Reprint February 2007 Fourth Edition, 2007

© Publisher

NO PART OF THIS BOOK MAY BE REPRODUCED BY ANY MANNER WHATSOEVER OR TRANSLATED IN ANY OTHER LANGUAGE WITHOUT PERMISSION IN WRITING OF THE PUBLISHERS While every effort has been taken to avoid errors, the author, publishers and their agents/dealers are not responsible for the consequences of any action taken on the basis of this book

ISBN: 81-7737-132-0

Printed in India With the Blessings of “MATA VAISHNO DEVI” Published by D.C. Puliani for Bharat Law House, T-1/95, Mangolpuri Industrial Area, Phase-I, New Delhi-110 083. Printed at Shanti Enterprises, New Delhi (Phones: 2791 0001-03)

WITH THE BLESSINGS OF

SHRI BHAGWAN MAHAVIRJI Dedicated

Shri Ramesh Mangal Chairman, Mangal Group of Companies

About the Author Shri D.K. JAIN, M.Com, FCS, ACIS (UK) is a Practicing Company Secretary, engaged in the practising field of Company Law, SEBI and Stock Exchange compliances. He has more than 24 years of practical experience in corporate laws and has been in the profession of Company Secretary for over 12 years. Shri Jain is having international professional qualification of Chartered Secretary from the Institute of Chartered Secretaries and Administrators (UK) and is a Fellow Member of the Institute of Company Secretaries of India. He is also a Member of the Indian Council of Arbitration and an Associate Member of the All India Management Association. Shri Jain is the founder Chairman of the Institute of Corporate Directors of India and is also Vice Chairman of the Association of Corporates and Practising Company Secretaries. Both these organisations are working for corporate governance. Shri Jain has authored several books for professionals on various topics of Company Law and Corporate Secretarial Practice. He is having keen interest in academics and is a regular contributor of articles on various corporate matters in newspapers and professional journals and also the member of the editorial Board of monthly bulletin Focus published by the Western India Regional Council of the Institute of Company Secretaries of India.

Preface to the Fourth Edition It gives me immense pleasure in bringing out the fourth edition of this Book. This Book is based on the practical experience of the author gained during the last 13 years of career as a Company Secretary. Company Law Ready Reckoner is a comprehensive and clear introduction to the principles and practice of company law. The book is well respected for its accuracy and clarity, and offers practical, in-depth, topical commentary identifying the key requirements of each relevant provision of the Companies Act, 1956, latest judicial pronouncements covering upto date statutory amendments. The present fourth edition is a combination of the theoretical, practical and jurisprudential issues. This Ready Reckoner has been comprehensively compiled by subject wise grouping of all the relevant sections, rules, circulars, notifications, guidelines and regulations in the concerned Parts/Chapters of the Book with a view to identifying them easily in a simplified way. All the new judicial pronouncements upto March, 2007 related to the various issues under the Company Law and SEBI have been inserted at suitable places in the relevant Chapters to make the Book more useful for the professionals. The year 2006 is the Golden Jubilee year of the Company Law and the year may be considered as a year of tremendous changes in the Law. Looking at the proliferation and diversity of 24 amendments, which have been made to the Act since 1956, an attempt to recodify the law appears inevitable. The Central Government has issued concept paper on Company Law and Rules on the basis of recommendations of J.J. Irani Committee for making substantial changes in the existing Companies Act, 1956. The previous year 2006 was a challenging year in which electronic filing of documents under the MCA 21 program under the Companies Act pertaining to e-filing, directors identification number and re-arrangement of Forms under the company law have been adopted. After approval of the cabinet of ministers, the Ministry of Company Affairs has also placed a Bill on Limited Liability Partnership Act (LLP), which has already been approved by the Rajya Sabha on 15th December, 2006. Necessary notification for enforcement of the provisions of the Companies (Second Amendment) Act, 2002 could not be issued so far by the Government of India, therefore, the CLB and BIFR are still in force and the National Company Law Tribunal could not be established due to various reasons, however, the same have been considered in this Book with cross reference, wherever necessary. This fourth edition has increased by a few pages. The format has remained much the same as in the third edition 2007. The Book deals with the Corporate law focusing on various aspects of Company Law including contemporary issues like e-filing of Forms and Returns, Director Identification Number, Corporate Governance, Merger and Amalgamation, Listing Agreement Compliances, Takeover Code, Insider Trading, etc.

The entire case-law under the Companies Act, 1956 has been arranged section wise. Certain topics which do not fall within the strict parameters of any statutory provisions have been arranged topic wise to enable the reader to have a complete picture. The case-law has been arranged into topics and sub-topics. Each chapter contains a synopsis of the headings to enable the reader to have a bird's eye view of the information available under a particular chapter. Looking into the strong online data base now available with the Ministry of Company Affairs, Ministry of Finance and other authorities, the compliance of law has become complicated for those who are not having professional approach and proper records. It is well understood that the year 2007 shall be the year of scrutiny, notice for filing of pending annual returns, pressure for pending

compliances by the concerned departments, etc., therefore the Book shall prove to be a tremendous source of information, guidance and reference to bodies corporate, chartered accountants, company secretaries, cost accountants, advocates, consultants, government departments, etc. In order to make the book user-friendly, a CD of the data of the book is being given with the book. I thank my family for extending their full support to come out with this edition. I extend my special thanks to Puliani Brothers and the publisher Bharat Law House for coming out with this edition. I also thank Shri Raj Kumar Sehgal of Legal Book House for his encouragement and support in my work. I am thankful to the readers and users of the Company Law Ready Reckoner for their overwhelming response to my third edition and looking into the positive comments and increasing demands which has motivated me to come out with the fourth edition of the Book in a very short period of time. Readers’ views, comments, valuable suggestions and criticism relating to present edition are most welcome for further improvement of the Book.

INDORE 25th April, 2007 Email:[email protected] [email protected]

D.K. JAIN