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THE COMPANIES BILL, 1997 PART II INCORPORATION OF COMPANY AND ALLIED MATTERS CHAPTER I : SECTIONS 7-13
Certain companies, associations and partnerships to be registered as companies under Act
7 Prohibition of associations and partnerships exceeding certain number— (1) No company, association or partnership consisting of more than ten persons shall be formed for the purpose of carrying on the business of banking, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law. (2) No company, association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any other business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other Indian law. (3) This section shall not apply to a joint family as such carrying on a business; and where a business is carried on by two or more joint families, in computing the number of persons for the purposes of sub-sections (1) and (2), minor members of such families shall be excluded. (4) Every member of a company, association or partnership carrying on business in contravention of this section shall - (a) be personally liable for all liabilities incurred in such business; and (b) be punishable with fine which may extend to fifty thousand rupees. Memorandum of Association 8 Mode of forming incorporated company.- (1) Any seven or more persons, or where the company to be formed is a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without limited liability. (2) Such a company may be either- (a) a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed "a company limited by shares"); (b) a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up (in this Act termed "a company limited by guarantee"); or (c) a company not having any limit on the liability of its members (in this Act termed "an unlimited company"). 9 Requirements with respect to memorandum.- (1) The memorandum of every company shall be in the following order, and state - (a) the name of the company with "Limited" as the last word of the name in the case of a public limited company, and with "Private Limited" as the last words of the name in the case of a private limited company; (b) the State in which the registered office of the company is to be situate; (c) (i) the main objects of the company to be pursued by the company; and (ii) other objects of the company not included in sub-clause (i). (d) the liability of the members limited by shares or by guarantee and, if so, it shall state that the liability of its members is limited.
(2) The memorandum of a company limited by guarantee shall state that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, or of such debts and liabilities of the company as may have been contracted before he ceases to be a member, as the case may be, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount. (3) In the case of a company having a share capital- (a) unless the company is an unlimited company, the memorandum shall state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount; and (b) each subscriber of the memorandum shall write opposite his name the number of shares he takes. (4) The memorandum shall- (a) be printed either electronically or otherwise; (b) be divided into paragraphs numbered consecutively, (c) state the name of each subscriber, his address, description and occupation, if any, who shall sign in the presence of at least one witness who shall attest the signature; and (d) include the name of each such witness, his address, description and occupation, if any.
10 Special resolution and confirmation by Company Law Tribunal required for alteration of memorandum- (1) A company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with respect to the objects of the company so far as may be required to enable it - (a) to carry on its business more economically or more efficiently; (b) to attain its main objects by new or improved means; (c) to enlarge or change the local area of its operations; (d) to diversify its business ; (e) to restrict or abandon any of the objects specified in the memorandum; (f) to sell or dispose of the whole, or any part, of the undertaking, or of any of the undertakings, of the company; or (g) to amalgamate with any other company or body of persons. (2) The alteration of the provisions of the memorandum relating to the change of place of registered office of a listed public company from one State to the another shall not take effect unless it is confirmed by the Company Law Tribunal on petition. (3) Before confirming the alteration, the Company Law Tribunal shall be satisfied that sufficient notice has been given to- (a) every holder of the debentures of the company, and to every other person or class of persons whose interests will, in the opinion of the Company Law Tribunal, be affected by the alteration; and (b) every creditor who, in the opinion of the Company Law Tribunal, is entitled to object to the alteration. Provided that the Tribunal may, for special reasons, dispense with the notice required by clause (a) in the case of any person or class of persons specified in its order; (4) The Tribunal shall cause notice of the petition for confirmation of the alteration to be served on the Registrar who shall also be given a reasonable opportunity to appear before it and state his objections and suggestions, if any, with respect to the confirmation of the alteration. (5) The Tribunal may make an order confirming the alteration on such terms and conditions, if any, as it thinks fit and may make such order as to costs as it thinks proper, having regard to the rights and interests of the members of the company and of every class of them, as well as to the rights and interests of the creditors of the company and of every class of them.
11 Alteration to be registered and effect of failure to register alteration. - (1) A company shall file with the Registrar,- (a) a special resolution passed by a company in relation to clauses (a) to (g) of sub-section (1) of section 10, within one month from the date of such resolution; or (b) a certified copy of the order of the Company Law Tribunal made under sub-section (5) of that section confirming the alteration, within three months from the date of order, as the case may be, together with a printed copy of the memorandum as altered and the Registrar shall register the same and certify the registration under his hand within one month from the date of filing of such documents. Provided that the Company Law Tribunal, may, at any time on a petition filed before it, by order, extend the time for the filing of a copy of the order of the Company Law Tribunal or for the registration of the alteration by such period as it thinks proper. (2) The certificate given under sub-section (1) shall be conclusive evidence that all the requirements of this Act in respect of the alteration and confirmation thereof have been complied with, and thenceforth the memorandum, as so altered, shall be the memorandum of the company. (3) Where the alteration involves the transfer of the registered office from one State to another, a certified copy of the order confirming the alteration, together with the altered copy of the memorandum shall be filed by the company with the Registrar of each of the States within three months from the date of the order, and the Registrar of each State shall register the same and shall certify under his hand the registration thereof, and the Registrar of the State from which such office is transferred, shall send to the Registrar of the other State all documents relating to the company recorded or filed in his office. (4) No such alteration, as is referred to in section 10, shall have any effect until it has been duly registered in accordance with the provisions of this section. (5) If the documents required to be filed with the Registrar under this section are not filed within the time allowed thereunder or extended by the Company Law Tribunal, such alteration and the order of the Company Law Tribunal made under sub-section (5) of section 10 and all proceedings connected therewith, shall at the expiry of such period become void and inoperative : Provided that the Company Law Tribunal may, on sufficient cause shown, revise the order on application made within a further period of one month. Provisions with respect to names of companies 12 Companies not to be registered with undesirable names.-
(2) If, through inadvertence, a company on its first registration, or on its registration by a new name, is registered with an undesirable name, the company - (a) may, by ordinary resolution, and with the previous approval of the Central Government, change its name or new name; (b) shall, if the Central Government so directs, within twelve months of its first registration or registration by its new name, as the case may be, by ordinary resolution and with the previous approval of the Central Government, change its name or new name within a period of three months from the date of the direction or such longer period as the Central Government may think fit to allow. (3) If a company makes default in complying with any direction given under clause (b) of sub-section (2), the company, and every officer who is in default, shall be punishable with fine which may extend to one thousand rupees for every day during which the default continues. (4) Without prejudice to the foregoing provisions of this section, a company may, by special resolution and with the approval of the Central Government in writing, change its name: Provided that no such approval shall be required where the only change in the name of a company is the addition thereto, or, as the case may be, deletion therefrom of the word "Private", consequent on the conversion in accordance with the provisions of this Act of a public company into a private company or of a private company into a public company. (5) Where a company changes its name in pursuance of either sub-section (2) or (4), the Registrar shall enter the new name on the register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein; and the change of name shall be complete and effective only on the issue of such a certificate. (6) The Registrar shall also make the necessary alteration in the memorandum of association of the company. (7) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name. 13. Power to register associations having charitable objects as limited companies. – (1) Where it is proved to the satisfaction of the Central Government that an association:- (a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object and not confined to one State; and (b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Central Government may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word "Limited" or the words "Private Limited". (3) Where it is proved to the satisfaction of the Central Government- (a) that the objects of a company registered under this Act as a limited company are restricted to those specified in clause (a) of sub-section (1), and (b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members, the Central Government may, by licence, authorise the company by a special resolution to change its name, including or consisting of the omission of the word "Limited" or the words "Private Limited"; and sub-section (5) of section 12 shall apply to a change of name under this sub-section as it applies to a change of name under sub-section (4) of section 12. (4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the firm, its membership of the association or company shall cease. (5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations shall be binding on the body to which the licence is granted, and where the grant is under sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other. (6) The Central Government may by general or special order and to the extent specified in the order exempt the bodies to which a licence is granted under this section from such of the provisions of this Act as may be specified therein. (7) The licence may at any time be revoked by the Central Government, and upon revocation, the Registrar shall enter the word "Limited" or the words "Private Limited" at the end of the name upon the register of the body to which it was granted; and the body shall cease to enjoy the exemption granted by this section: Provided that, before a licence is so revoked, the Central Government shall give notice in writing of its intention to the body, and shall afford it an opportunity of being heard in opposition to the revocation. (8)-(a) A body in respect of which a licence under this section is in force shall not alter the provisions of its memorandum with respect to its objects except with the previous approval of the Central Government signified in writing. (b) The Central Government may revoke the licence of such a body if it contravenes the provisions of clause (a). (c) In according the approval referred to in clause (a), the Central Government may vary the licence by making it subject to such conditions and regulations as that Government thinks fit, in lieu of, or in addition to, the conditions and regulations, if any, to which the licence was formerly subject. (d) Where the alteration proposed in the provisions of the memorandum of a body under this sub-section is with respect to the objects of the body so far as may be required to enable it to do any of the things specified in clauses (a) to (g) of sub-section (1) of section 10, the provisions of this sub-section shall be in addition to, and not in derogation of, the provisions of that section. (9) Upon the revocation of a licence granted under this section to a body the name of which contains the words "Chamber of Commerce", that body shall, within a period of three months from the date of revocation or such longer period as the Central Government may think fit to allow, change its name to a name which does not contain those words; and- (a) the notice to be given under the proviso to sub-section (7) to that body shall include a statement of the effect of the foregoing provisions of this sub-section; and (b) sub-section (5) of section 12 shall apply to a change of name under this sub-section as it applies to a change of name under sub-section (4) of that section.
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