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THE COMPANIES BILL, 1997 PART I
1. Short title , extent and commencement — (1) This Act may be called the Companies Act, 1997. (2) It extends to the whole of India (3) It shall come into force on such date as the Central Government may, by notification, appoint.
3 Definitions of "company", "existing company", "private company" and "public company".— (1) In this Act, unless the context otherwise requires, the expressions "company", "existing company", "private company" and "public company", shall subject to the provisions of sub-section (2), have the meanings specified below - (i) "company" means a company formed and registered under this Act or an existing company as defined in clause (ii) (ii) "existing company" means a company formed and registered under any of the previous companies laws; (iii) "private company" means a company which, by its articles, - (a) restricts the right to transfer its shares, if any (b) limits the number of its members to fifty not including : (i) persons who are in the employment of the company, and (ii) persons who having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and (c) prohibits any invitation to the public to subscribe for any securities of the company; Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member; (iv) "public company" means a company which is not a private company, and is either (i) a listed company; or (ii) an unlisted company; (2) Unless the context otherwise requires, a company, the registered office whereof is in Myanmar, Aden, Pakistan or Bangladesh and which immediately before the separation of that country from India, was a company as defined in clause (i) of sub-section (1), shall not be included within the scope of any of the expressions defined in clauses (i) to (iv) of sub-section (1), and such a company shall be deemed, for the purposes of this Act, to have been formed and registered outside India.
4 Meaning of "holding company" and "subsidiary".— (1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if, (a) that other controls the composition of its Board of directors; or (b) that other , - (i) where the first-mentioned company is a company in respect of which securities are issued, which have the same voting rights as holders of equity securities, exercising or controlling more than one-half of the total voting power of such company; (ii) where the first-mentioned company is any other company holds either itself or through one or more of its subsidiaries, more than one-half in value of its paid-up equity share capital; or (c) the first-mentioned company is a subsidiary of any company which is that other’s subsidiary . ILLUSTRATION Company B is a subsidiary of company A, and company C is a subsidiary of company B. Company C is a subsidiary of company A, by virtue of clause (c) above. If company D is a subsidiary of company C, Company D will be a subsidiary of company B and consequently also of company A, by virtue of clause (c) above, and so on. (2) For the purposes of sub-section (1), the composition of a company’s Board of Directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships; but for the purposes of this provision, that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say- (a) that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid; (b) that a person’s appointment thereto follows necessarily from his appointment as director, or manager of, or to any other office or employment in, that other company; or (c) that the directorship is held by an individual nominated by that other company or a subsidiary thereof. (3) In determining whether one company is a subsidiary of another - (a) any shares held or power exercisable by that other company in a fiduciary capacity shall be treated as not held or exercisable by it; (b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable - (i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity); or (ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity, shall be treated as held or exercisable by that other company; (c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded; (d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary [not being held or exercisable as mentioned in clause (c) ] shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business. (4) A company shall be deemed to be the holding company of another if, but only if, that other is its subsidiary. (5) In the case of a body corporate, which is incorporated in a country outside India, a subsidiary or a holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not. (6) A private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of that public company if the entire share capital in that company is not held by that body corporate, whether itself or through one or more other body corporates incorporated outside India. (7) In this section, the expression "company" includes any body corporate, and the expression "equity share capital" has the same meaning as in sub-section (2) of section 76.
5.Meaning of "relative".— A person shall be deemed to be a relative of another, if, and only if, - (a) they are members of a Hindu undivided family; or (b) they are husband and wife; or (c) the one is related to the other in the following manner, namely:- List of relatives
10. Sister (including step-sister) 11 .Sister’s husband
6. Act to override memorandum etc.— Save as otherwise expressly provided in this Act (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.
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