http://mca.gov.in/Ministry/pdf/Circular_63-2011_06sept2011.pdf
This circular shall be effective from 18th Sept, 2011.
This circular shall be effective from 18th Sept, 2011.
VARIOUS LAW RELATING TO MERGER
Various Laws governing merger in India are as follows:
1. Indian Companies Act, 1956
This has provisions specifically dealing with the
amalgamation of a company or certain other entities with similar status. The
most common form of merger involves as elaborate but time-bound procedure under
sections 391 to 396 of the Act.
Powers in respect of these matters were with High Court
(usually called Company Court). These powers are being transferred to National
Company Law Tribunal (NCLT) by companies (second Amendment) Act, 2002.
The Compromise, arrangement and Amalgamation/reconstruction
require approval of NCLT while the sale of shares to Transferee Company does
not require approval of NCLT.
Sec 390 This
section provides that “The expression ‘arrangement’ includes a reorganization
of the share capital of the company by the consolidation of shares of different
classes, or by the division of shares into shares of different classes, or by
both these methods”
Sec 390(a) As
per this section , for the purpose of sections 391 to 393,’Company’ means
any company liable to be wound up under the Act.
Sec 390(b) As
per this section, Arrangement can include reorganization of share capital of
company by consolidation of shares of different classes or by division of
shares of different classes.
Sec 390(c) As
per this section, unsecured creditors who have filed suits or obtained decrees
shall be deemed to be of the same class as other unsecured creditors. Thus,
their separate meeting is not necessary.
Sec 391 This
section deals with the meeting of creditors/members and NCLT’s sanction to
Scheme.
If majority in number representing at least three-fourths in
value of creditors or members of that class present and voting agree to
compromise or arrangement, the NCLT may sanction the scheme. NCLT will make
order of sanctioning the scheme only if it is satisfied that company or any
other person who has made application has disclosed all material facts relating
to the company, e.g. latest financial position, auditor’s report on accounts of
the company, pendency of investigation of company etc. NCLT should also be
satisfied that the meting was fairly represented by members/creditors.
Sec 391(1)
As per this sub-section, the company or any creditor or member of a company can
make application to NCLT. If the company is already under liquidation,
application will be made by liquidator. On such application, NCLT may order
that a meeting of creditors or members or a class of them be called and held as
per directions of NCLT.
Sec 391 (2) As
per this sub-section, if NCLT sanction, it will be binding on all
creditors or members of that class and also on the company, its liquidator and
contributories.
Sec 391(3) As
per this sub-section, Copy of NCLT order will have to be filled with Registrar
of Companies.
Sec 391(4)
As per this sub-section, A copy of every order of NCLT will be annexed to every
copy of memorandum and articles of the company issued after receiving certified
copy of the NCLT order.
Sec 391(5)
In case of default in compliance with provisions of section 391(4), company as
well as every officer who is in default is punishable with fine upto Rs 100 for
every copy in respect of which default is made.
Sec 391(6)
After an application for compromise or arrangement has been made under the
section, NCLT can stay commencement of any suit or proceedings against the
company till application for sanction of scheme is finally disposed of.
Sec 391(7)
As per this sub-section, Appeal against NCLT order can be made to National
Company Law Appellate Tribunal (NCLAT) where appeals against original order the
NCLT lies.
Sec. 392 This
section contains the powers of NCLT to enforce compromise and arrangement
Sec 392 (1)
As per this section, where NCLT sanctions a compromise or arrangement, it
will have powers to supervise the carrying out of the scheme. It can give
suitable directions or make modifications in the scheme of compromise or
arrangement for its proper working.
Sec 392 (2)
As per this section, if NCLT finds that the scheme cannot work, it can order
winding up.
Sec 393 This
section contains the rules regarding notice and conduct of meeting.
Sec.393 (1)
Where a meeting of creditors or any class of creditors, or of numbers or any
class of members, is called under section 391:-
a) With every notice calling the meeting which is sent to a
creditor or member, there shall be sent also a statement setting forth the
terms of the compromise or arrangement and explaining its effect, and in
particular stating any material interests of the directors, managing directors,
or manager of the company, whether in their capacity as such or as members or
creditors of the company or otherwise and the effect on those interests of the
compromise or arrangement if, and in so far as, it is different from the effect
on the like interests of other person, and
b) In every notice calling the meeting which is given by
advertisement, there shall be included either such a statement as aforesaid or
a notification of the place at which creditors or members entitled to attend
the meeting may obtain copies of such a statement as aforesaid.
Sec 393 (2)
As per this sub-section, if the scheme affects rights of debenture holders,
statement should give details of interests of trustees of any deed for securing
the issue of debentures as it is required to give as respects the companies
directors.
Sec 393 (3)
As per this sub-section, the copy of scheme of compromise or arrangement should
be furnished to creditor/member free of cost.
Sec 393 (4)
Where default is made in complying with any of the requirements of this
section, the company and every officer of the company who is in default, shall
be punishable with fine which may extend to Rs. 50,000 and for the purpose of
this sub-section any liquidator of the company and any trustee of a deed for
securing the issue of debentures of the company shall be deemed to be an
officer of the company.
Provided that a person shall not be punishable under this
sub-section, if he shows that the default was due to the refusal of any other
person, being a director, managing director, manager or trustee for debenture
holders, to supply the necessary particulars as to his material interests.
Sec 393 (5)
As per this section, any director, managing director, manager or trustee of
debenture holders shall give notice to the company of matters relating to
himself which the company has to disclose in the statement, if he unable to do
so, he is punishable with fine upto Rs.5,000.
Sec 394 This
section contains the powers while sanctioning scheme of reconstruction or
amalgamation.
Sec 394(1)
NCLT can sanction amalgamation of a company which is being wound up with other
company, only if Registrar of Companies (ROC) has made a report that affairs of
the company have not been conducted in a manner prejudicial to the interests of
its members or to public interest.
Sec 394 (2)
As per this sub-section, if NCLT issues such an order, NCLT can direct that the
property will be vest in the transferee company and that the transfer of
property will be freed from any charge.
Sec 394 (3)
As per this sub-section, Copy of NCLT order shall be filed with Registrar
within 30 days. In case of default, company as well as every officer who is in
default is punishable with fine upto Rs.500.
Sec 394A As
per this section, if any application is made to NCLT for sanction of
arrangement, compromise, reconstruction or amalgamation, notice of such
application must be made to Central Government. NCLT shall take into
consideration any representation made by Central Government before passing any
order.
Sec 395 This
section provides that reconstruction or amalgamation without following NCLT
procedure is possible by takeover by sale of shares. Selling shareholders get
either compensation or shares of the acquiring company. This procedure is
rarely followed, as sanction of shareholders of at least 90% of value of shares
is required, and not only of those attending the meeting. This procedure can be
followed only when creditors are not involved in reconstruction and their
interests are not affected.
Sec 395(1)
As per this sub-section, the transferee company has to be give notice in
prescribed manner to dissenting shareholder that it desires to acquire his
shares. The transferee company is entitled and bound to acquire those shares on
the same terms on which shares of approving share holders are to be transferred
to the transferee company. The dissenting shareholder can make application
within one month of the notice to NCLT. The NCLT can order compulsory
acquisition or other order may be issued.
Sec 395(2)
As per this sub-section, if the transferee company or its nominee holds 90% or
more shares in the transferor company, it is entitled to and is also under
obligation to acquire remaining shares. The transferee company should give
notice within one month to dissenting shareholders. Their shares must be
acquired within three months of such notice.
Sec395 (3)
As per this section, if shareholders do not submit the transfer deeds, the
transferee company will pay the amount payable to transferor company along with
the transfer deed duly signed. The transferor company will then record name of
the transferee company as holder of shares, even if transfer deed is not signed
by dissenting shareholders.
Sec395 (4)
As per this section, The sum received by transferor company shall be kept in a
separate account in trust for the dissenting shareholders.
Sec395 (4A)
When the transferee company makes offer to shareholders of transferor company,
the circular of offer shall be accomplished by prescribed information in form
35A. Offer should contain statement by Transferee Company for registration
before it is sent to shareholders of Transferor Company.
Sec 396 This
section contains the power to Central Government to order amalgamation.
Sec.396 (1)
As per this sub-section, if central government is satisfied that two or more
companies should amalgamate in public interest, it can order their
amalgamation, by issuing notification in Official Gazette. Government can
provide the constitution of the single company, with such property, powers,
rights, interest, authorities and privileges and such liabilities, duties and
obligations as may be specified in the order.
Sec 396(2)
The order may provide for continuation by or against the transferee company of
any legal proceedings pending by or against Transferor Company. The order can
also contain consequential, incidental and supplemental provisions necessary to
give effect to amalgamation.
Sec396 (3)
As per this sub-section, every member, creditor and debenture holder of all the
companies will have same interest or rights after amalgamation, to the extent
possible. If the rights and interests are reduced after amalgamation, he will
get compensation assessed by prescribed authority. The compensation so assessed
shall be paid to the member or creditor by the company resulting from
amalgamation.
Sec 396A This
section deals with the preservation of books and papers of amalgamated company.
Books and papers of the company which has amalgamated or whose shares are
acquired by another company shall be preserved. These will not be disposed of
without prior permission of Central Government. Before granting such
permission, Government may appoint a person to examine the books and papers to
ascertain whether they contain any evidence of commission of an offence in
connection with formation or management of affairs of the company, or its
amalgamation or acquisition of its shares.
2. Monopolies and Restrictive Trade practices Act,
1969 (MRTP 1969)
Certain Amendments in the MRTP Act were brought about in
1991. The Government has removed restrictions on the size of assets; market
shares and on the requirement of prior government approvals for mergers that
created entities that would violate prescribed limits. The Supreme Court, in a
recent judgment, decided that “prior approval of the central government for
sanctioning a scheme of amalgamation is not required in view of the deletion of
the relevant provision of the MRTP Act and the MRTP Commission was justified in
not passing an order restraining implementation of the scheme of amalgamation
of two firms in the same field of consumer articles”.
3. Foreign Exchange Regulation Act 1973 (FERA
1973)
FERA is the primary Indian Law which regulates dealings in
foreign exchange. Although there are no provisions in the Act which deal
directly with transactions relating to amalgamations, certain provisions of the
Act become relevant when shares in Indian companies are allotted to non-
residents, where the undertaking sought to be acquired is a company which is not
incorporated under any law in India. Section 29 of FERA provides that no
foreign company or foreign national can acquire any share of an Indian company
except with prior approval of the reserve Bank of India. The Act has been
amended to facilitate transfer of shares two non residents and to allow Indian
companies to set up subsidiaries and joint ventures abroad without the prior
approval of the Reserve Bank of India.
4. Income Tax Act, 1961
Income Tax Act, 1961 is vital among all tax laws which
affect the merger of firms from the point view of tax savings/liabilities.
However, the benefits under this act are available only if the following
conditions mentioned in Section 2 (1B) of the Act are fulfilled:
a) All the amalgamating
companies should be companies within the meaning of the section 2 (17) of the
Income Tax Act, 1961.
b) All the properties of the
amalgamating company (i.e., the target firm) should be transferred to the
amalgamated company (i.e., the acquiring firm).
c) All the liabilities of the
amalgamating company should become the liabilities of the amalgamated company,
and
d) The shareholders of not less than
90% of the share of the amalgamating company should become the shareholders of
amalgamated company.
In case of mergers and amalgamations, a number of issues may
arise with respect to tax implications. Some of the relevant provisions may be
summarized as follows:
Depreciation: The
amalgamated company continues to claim depreciation on the basis of written
down value of fixed assets transferred to it by the amalgamating company. The
depreciation charge may be based on the consideration paid and without any
re-valuation. However, unabsorbed depreciation, if any, cannot be assigned to
the amalgamated company and hence no tax benefit is available in this respect.
Capital Expenditures: If
the amalgamating company transfers to the amalgamated company any asset
representing capital expenditure on scientific research, then it is deductible
in the hands of the amalgamated company under section 35 of Income Tax Act,
1961.
Exemption from Capital Gains Tax: The transfer of assets by amalgamating company to the
amalgamated company, under the scheme of amalgamation is exempted for capital
gains tax subject to conditions namely (i) that the amalgamated company should
be an Indian Company, and (ii) that the shares are issued in consideration of
the shares, to any shareholder, in the amalgamated company. The exchange of old
share in the amalgamated company by the new shares in the amalgamating company
is not considered as sale by the shareholders and hence no profit or loss on
such exchange is taxable in the hands of the shareholders of the amalgamated
company.
Carry Forward Losses of Sick Companies: Section 72A(1) of the Income Tax Act, 1961 deals with the
mergers of the sick companies with healthy companies and to take advantage of
the carry forward losses of the amalgamating company. But the benefits under
this section with respect to unabsorbed depreciation and carry forward losses
are available only if the followings conditions are fulfilled:
- The
amalgamating company is an Indian company.
- The
amalgamating company should not be financially viable.
- The
amalgamation should be in public interest.
- The
amalgamation should facilitate the revival of the business of the
amalgamating company.
- The
scheme of amalgamation is approved by a specified authority, and
- The
amalgamated company should continue to carry on the business of the
amalgamating company without any modification
Amalgamation Expenses: In
case an expenditure is incurred towards professional charges of Solicitors for
the services rendered in connection with the scheme of amalgamation, then such
expenses are deductible in the hands of the amalgamated firm.
PROCEDURE FOR OPENING A BRANCH OFFICE / LIAISON OFFICE IN ABROAD
No prior permission of Reserve Bank is required to open offices (trading or non-trading) abroad or post representatives abroad by Indian firms/companies.
The Indian firm/companies should submit applications to their bankers (authorized dealers) in form OBR along with the particulars of their turnover duly certified by their auditors and also a declaration to the effect that they have not approached/would not approach any other authorized dealer for the facility being applied for. The application form OBR needs to be filled in with necessary details along with supporting documents. After which the foreign exchange is released by the authorized dealer (bank).
Foreign Exchange released by the Bank Authorized dealers may release exchange towards initial expenditure as also for recurring expenses of the office as under, provided the applicant fulfils the following conditions: |
Category | Initial Expenditure | Recurring Expenditure (per annum) | ||
(a) | EEFC Account(Exchange Earners’ Foreign Currency account) | No limit for remittances out of EEFC funds. | No limit for holders remittances out Of EEFC funds. | |
(b) | Firms/companies not having EEFC accounts or not having sufficient funds EEFC accounts. | Up to 15% of the average annual sales / income or turnover during the last two financial years or up to 25% per cent of the net worth, whichever is higher. | Up to 10% of their average annual sales/income turnover during last two years. | |
In the case of newly established 100% EOUs or Units in EPZs and Hardware/Software Technology Parks, exchange may be released as per their estimated requirements for initial as well as recurring expenses on verification of suitable documentary evidence during the first two years of their operation. From third year onwards, exchange may be released as per item (a) or (b) above. Thus for first two years such units can get more foreign exchange released than the limits for other Indian companies.
The recurring (expenditure) remittance facilities are allowed initially for a period of two years only, after obtaining confirmation form the applicant that they have completed all legal and other formalities in India and abroad in connection with the opening of trading/non-trading office or for posting a representative abroad. The renewal of remittance facility after two years may be granted provided proper accounts of utilisation of foreign exchange released are furnished to the authorized dealer.
You may note that if you are a new Company you may not be able to get the approval of Authorized Dealer to open offices aboard.
The general terms and conditions for opening the offices abroad normally are:
- The overseas office should not create any financial liabilities contingent or otherwise for the head Office in India.
- Exchange released by the authorized dealer should be strictly utilized for the purpose(s) for which it is released. They unused exchange may be repatriated to India under advice to the authorized dealer.
- The details of bank account opened in the overseas countries should be promptly reported to the authorized dealer.
- The approval granted for the purpose should be made valid for 6 months from the date thereof, within which time the applicant should open its overseas office or post representative abroad. In case the overseas office is not opened or the representative is not posted abroad within this period, intimation in writing to the effect should be sent to the authorized dealer immediately after expiry of 6 months period. Fresh application for release of exchange should be submitted to the authorized dealer as and when the overseas office is desired to be opened.
- Profits, if any, earned by the overseas office/s should be repatriated to India.
- The following statements should be submitted by the applicant to the authorized dealer:
- A statement showing details of initial expenses incurred together with suitable documentary evidence, wherever possible, within three months from the date of release of exchange for that purpose.
- Annual account of trading/non-trading office abroad duly certified by statutory Auditors/Chartered Accountants.
Temporary Site/Project Offices Abroad
Indian firms/companies executing contracts/projects abroad with the approval of the appropriate authority are permitted under a general permission granted by Reserve Bank to set up site/project offices abroad provided that such offices are maintained out of project receipts and remittances from India are not required. These offices are required to be closed down and surplus foreign exchange earnings repatriated to India after completion of the project.
Credit facilities for overseas trading offices of Indian companies
Reserve Bank considers, on merits, request from Export Houses/Trading Houses/Star Trading Houses/Super Star Trading Houses to avail of fund based/non-fund based facilities for their trading offices abroad from overseas banks. Application in such cases should be made to the Chief General Manager, Reserve Bank of India, Exchange Control Department (Export Division), Mumbai together with full particulars of the exchange facilities availed of for maintenance of the overseas office concerned, full details of terms and conditions subject to which the facilities are being extended by the overseas bank and the need for availing of the credit facilities by the overseas trading office.
Application for permission to post a representative
Establish office/branch overseas
· The application is to be made in form OBR to the Bank with supporting documents.
· The estimates of foreign exchange expenditure should be given in units of foreign currency and the appropriate rupee equivalent furnishing the exchange rate applied.
Documents to be submitted along with the Form OBR
Correspondence, if any, in original together with photocopies regarding the arrangement made in foreign country for posting of representative/establishment of branch/office.
Bank certificates, in form BCX (certificate of export), together with photocopies thereof for the immediately preceding four calendar half years in support of export realizations.
BREATHER FOR INDEPENDENT DIRECTORS
JOE C MATHEW New Delhi, 16 August
The ministry of corporate affairs (MCA) has asked its field officers —registrars of companies and official liquidators —to exclude independent directors and government nominees while initiating prosecution measures against company directors for violation of the Companies Act.The MCA clarification comes in the backdrop of several instances in which its field officers framed charges against all the directors of a company for violations, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management.
In a recent circular, the MCA spelled out the types of directors who should not be held responsible in such cases. These include independent directors in listed companies and government nominees in public sector undertakings, public sector financial institutions, financial institutions and banks.
The issue of independent directors facing charges of irregularities in companies had earlier drawn a heated debate in the case of investment banker Nimesh Kampani. He had faced charges in a case related to irregularities in Nagarjuna Finance. Kampani was an independent director in the company and was said to have quit before the company defaulted on depositors’ money in 2002.
Special directors appointed by the Board for Industrial and Financial Reconstruction (BIFR) will also not incur any obligation or liability for anything done or omitted in good faith and in discharge of duties.
While managing directors and persons amongst officers and employees who have been given specific responsibilities by the company board or managing director can be booked for violations, the ministry wants extra care to be taken that directors including nonexecutive directors, officers and employees not connected with the responsibility are not considered delinquent.
“No such director shall be held liable for any act of omission or commission which constitutes a breach or violation of any provision of the Companies Act, 1956, and which occurred without his knowledge attributable through the board process and without his consent or connivance or where he has acted diligently in the board process,” the circular said.
Ministry says govt nominees too can’t be blamed for violationsINDEPENDENTdirectors in listed companies and government nominees in public sector undertakings, public sector financial institutions, other financial institutions and banks won’t be booked for Companies Act violations IN MANYinstances, charges were framed against all the directors of a company, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management SPECIALdirectors appointed by BIFR will not face charges for omissions done in good faith and in discharge of duties OFFICIALSasked to take prosecution measures only in case of genuine violations ISSUE of independent directors being hauled up came into the limelight when Nimesh Kampani faced charges for irregularities in Nagarujna Finance. He was an independent director and had quit before an alleged defaultWHOSE FAULT IS IT ANYWAY?
The ministry of corporate affairs (MCA) has asked its field officers —registrars of companies and official liquidators —to exclude independent directors and government nominees while initiating prosecution measures against company directors for violation of the Companies Act.The MCA clarification comes in the backdrop of several instances in which its field officers framed charges against all the directors of a company for violations, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management.
In a recent circular, the MCA spelled out the types of directors who should not be held responsible in such cases. These include independent directors in listed companies and government nominees in public sector undertakings, public sector financial institutions, financial institutions and banks.
The issue of independent directors facing charges of irregularities in companies had earlier drawn a heated debate in the case of investment banker Nimesh Kampani. He had faced charges in a case related to irregularities in Nagarjuna Finance. Kampani was an independent director in the company and was said to have quit before the company defaulted on depositors’ money in 2002.
Special directors appointed by the Board for Industrial and Financial Reconstruction (BIFR) will also not incur any obligation or liability for anything done or omitted in good faith and in discharge of duties.
While managing directors and persons amongst officers and employees who have been given specific responsibilities by the company board or managing director can be booked for violations, the ministry wants extra care to be taken that directors including nonexecutive directors, officers and employees not connected with the responsibility are not considered delinquent.
“No such director shall be held liable for any act of omission or commission which constitutes a breach or violation of any provision of the Companies Act, 1956, and which occurred without his knowledge attributable through the board process and without his consent or connivance or where he has acted diligently in the board process,” the circular said.
Ministry says govt nominees too can’t be blamed for violationsINDEPENDENTdirectors in listed companies and government nominees in public sector undertakings, public sector financial institutions, other financial institutions and banks won’t be booked for Companies Act violations IN MANYinstances, charges were framed against all the directors of a company, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management SPECIALdirectors appointed by BIFR will not face charges for omissions done in good faith and in discharge of duties OFFICIALSasked to take prosecution measures only in case of genuine violations ISSUE of independent directors being hauled up came into the limelight when Nimesh Kampani faced charges for irregularities in Nagarujna Finance. He was an independent director and had quit before an alleged defaultWHOSE FAULT IS IT ANYWAY?
Good News: Now all Students can view their Answer Sheet: Supreme Court
In a landmark judgement which would be thanked by the Student Fraternity across India, Supreme Court on 9 th August 2011 has announced that any Student aggrieved by the marks awarded to him/her in the Exams can now make an application and have a look at how the marks have been awarded. All Students irrespective of whether in School, College or pursuing Professional Qualification like CA/IAS/MBA
can now file an application under RTI and the Institute conducting the Exams would be under an obligation to reveal to the Student his answer sheet and the manner in which he has been awarded marks.
Even Students appearing for Class X and Class XII Boards would now be able to view their answer sheets as Supreme Court has now ordered for disclosure of Answer Sheets for those students making an application under the RTI Act.
Passing the path-breaking order that will be lapped up by students, but may cause consternation among the teaching fraternity, a bench of Justices R V Raveendran and A K Patnaik dismissed a bunch of appeals filed by the Central Board of Secondary Education, West Bengal Board of Secondary Education, Institute of Chartered Accountants of India (ICAI), University of Calcutta, West Bengal Central School Services Commission and Assam Public Services Commission who had challenged the Judgement of the High Court. The petitioners had challenged rulings by different information commissioners under the RTI Act directing them to show the answer-sheets to the students.
The basic contention of all these education boards, Calcutta University and ICAI was that there was a fiduciary relationship between the examiner and the board, and hence it was not proper to show the answer-sheet to the student. CBSE had claimed exemption from the ambit of RTI Act. The Supreme Court held that evaluated answer-sheets were covered under the definition of “information” under the RTI Act, 2005 and reiterated the duty of the public authority to allow maximum disclosure as envisaged by the RTI. Explaining the scope of the ‘fiduciary relationship’ of the agency holding the examination, the Bench held that bodies conducting examinations could not retain evaluated answer sheets in any fiduciary capacity and contend that they would not disclose the same. Welcoming the judgment, the National Campaign for People’s Right to Information, said: “The NCPRI believes this ruling would positively affect the transparency rights of lakhs of students of all kinds across the country including examinations conducted by school boards, universities and public service commissions CAT 2011 New Format iCATs replicate 2 70 min sections. Experience the most realistic mocks www.TestFunda.comThe move will help make the education system more transparent and administrators more accountable, said Sobha Mishra, head of education at industry lobby Ficci. “If someone sat for an exam, he should not be denied the right to see his answer paper once the result is out. No institute or exam-conducting body should ever resist such disclosure,” she said. The verdict will benefit lakhs of students appearing for various examinations, including CA Exams conducted by the ICAI, as it gives a student the right to inspect answer-sheets by just applying to the relevant university, council, board or commission.
Background of the Case This case had reached the Supreme Court from high court which in its earlier judgment had permitted a student, Pritam Rooj, to inspect his answer sheets. Rooj was a student of mathematics in the Presidency College.
In 2006, when he sat for the first part of degree examination he secured 52 percent marks. In the second year he got 208 out of 400 marks and got just 28 marks out of 100 in the fifth paper. Upon seeking re-evaluation, his marks increased by four in the fifth paper. He contended that his poor marks stood in the way of his getting admission in post-graduation course and applied to inspect his mark sheet under the RTI law which was rejected. The university said that the answer sheets of an examinee cannot be shared. He then approached the High Court and the High Court announced in the favour the Student. Calcutta
University challenged the order of the High Court and approached the Supreme Court and the Supreme Court on 9 th August 2011 upheld the judgement of the high court and ordered Answer sheets to be disclosed
under RTI.
Steps for Registration of Section 25 Companies under Companies Act 1956
Steps for Registration of a Section 25 Company
Step-1
Apply in Form No. 1A to concerned ROC, for availability of name in order of preference (without addition to its name of the word "Limited" or the words "Private Limited").
Step-2
Prepare Memorandum & Articles of Association.
Step-3
Make an application in E form 24A online to the Concerned Regional Director for issue of license under Section 25 of the Companies Act, 1956. The application should be accompanied by: -
· Three Copies of MoA & AoA of the proposed Company.
· A declaration confirming the application by CA / CS / Advocate on prescribed Stamp Paper.
· Three copies of list of names, descriptions, addresses & occupation of the promoters as well as the members of Board of Directors of the proposed Company.
· A statement showing details of assets & liabilities of the Association as on date with the application.
· An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure.
· A statement giving brief description of work, if any, already done by the association.
· A statement specifying briefly the grounds on which the application is made.
· A declaration in prescribed form on non-judicial stamp paper by each person making an application.
· A letter of authority.
· Payment of prescribed fees.
Step-4
Notice pursuant to regulation 11 of the Companies Regulation, 1956 shall be published within one week before or after the admission of the application in one or more newspapers (one in English and other in vernacular local newspaper).
Step-5
Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies.
Step-6
The Concerned RoC do the scrutiny of the information of Directors and Promotors of the Proposed company and sent a Scrutiny report to the concerned RD within 15 days of the receipt of such application. The concerned ROC also gets the draft MOA & AOA vetted and then list outs the modifications considered necessary and forwards the same to RD within fifteen days of receipt of the copy. He may normally advise RD to grant license to the proposed company or not.
Step-7
The concerned ROC may consult for the views of District Magistrate of the state within whose jurisdiction the registered office of the proposed company is to be located. Copy sent to RD and reply is generally directly received by ROC from DM.
Step-8
In case, the considerations for issue of license are more important, the RD may consult the State Government too. The RD may also consult the ministries concern and determine, if any, objections received.
Step-9
On receipt of the above papers, the RD gets the MOA & AOA and other papers generally scrutinized.
Step-10
Having received all the necessary views from the ROC, DM, State Government, the RD will take the decision for grant of license to the application or not. (Generally the license is granted within 30 days from the date of filing of application with the RD).
Step-11
Departmental instruction shall be strictly followed. The license may be revoked, with Company's right to be heard.
Step-12
After obtaining the license the MOA & AOA be printed as approved.
Step-13
File the necessary papers with ROC for registration along with filing fees (maximum filing fees payable is Rs.5000/-) and also produce the license granted by the RD. The Stamp duty is also chargeable in some states these days.
Step-14
The ROC on making necessary scrutiny and correction will issue the certificate of incorporation.
Check List for registering a company under Section 25
Step No. | Particulars of Action/ Documents Required | Processing Period |
1 | Apply in Form No. 1A to concerned ROC, for availability of name in order of preference. Info required: - § Full name & residential address of each of promoters. § ames of the proposed Company in order of their preference (without addition to its name of the word "Limited" or the words "Private Limited"). § Proposed main object of the proposed Company (shall be one as depicted u/s 25 of the Companies Act, 1956). Mention that the proposed Company is to be formed under provisions of Sec. 25 of the Companies Act, 1956 | 3 - 4 working days |
2 | After the name is approved, prepare Memorandum & Articles of Association; preferably get it vetted by ROC / RD. Keep in mind that the MOA & AOA are drawn in consonance with provisions of the Sec. 25 & other applicable provisions of the Companies Act, 1956. | 3 - 4 working days |
3 | Make an application with to the Concerned Regional Director for issue of license under Section 25 of the Companies Act, 1956 with all the requisite enclosure as given under:- § Three Copies of MOA & AOA of the proposed Company § A declaration confirming the application by CA / CS / Advocate on prescribed Stamp Paper. § Three copies of list of names, descriptions, addresses & occupation of the promoters as well as the members of Board of Directors of the proposed Company. § A statement showing details of assets & liabilities of the Association as on date with the application. § An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure. § A statement giving brief description of work, if any, already done by the association. § A statement specifying briefly the grounds on which the application is made. § A declaration in prescribed form on non-judicial stamp paper by each person making an application. § A letter of authority. § Copy of notice pursuant to regulation 11 of the Companies Regulation, 1956. | 8 - 10 working days (depending upon the preparation of documents, availability of each of the promoters and publication of notice in newspaper) |
4 | Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies. | |
5 | On receipt of the above papers, the RD gets the MOA & AOA and other papers generally scrutinized, the RD will take the decision for grant of license to the application or not. | 30 - 45 working days |
6 | On receipt of the license from RD, file the necessary papers with ROC for registration along with filing fees & forms. The ROC on making necessary scrutiny and correction will issue the certificate of incorporation. | 8 - 10 working days |
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