Companies Act

(1) This Act may be cited as the Companies Act, No. 17 of 1982.

(2)

(1) Any seven or more persons, or where the company to be formed is to be a private company, any two or more persons, or where the company to be formed is a people’s company, any fifty or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association (which shall be printed) 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

(1) The memorandum of every company shall state

(2) The memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited.

(3) The memorandum of a company limited by guarantee shall also 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 contracted before he ceases to be a member, 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.

(4) In the case of a company having a share capital

(1) The memorandum of every company shall, in stating the objects of the company, set out specifically, the primary objects of the company, that is to say, the objects which the subscribers or promoters intend that the company should carry out during the period of five years from the date of the commencement of business by the company.

(2) The memorandum of every company shall state the ancillary powers proposed to be exercised or which may need to be exercised by the company for the purposes of carrying out its primary objects.

(3) Nothing in the provisions of subsection (1) or subsection (2) shall be deemed or construed to preclude the memorandum from containing a separate statement of objects, not being primary objects, or of powers (whether general or special), in addition to those specifically set out under the provisions of subsections (1) and (2) :

Provided, however, that no such object or power may be carried out or exercised by the company except with the prior sanction of a special resolution of the company.

(4) The preceding provisions of this section shall apply in the case of companies formed on or after the appointed date.

(1) A company may, by special resolution, alter the provisions of its memorandum with respect to the objects extent of the company, so far as may be required to enable it

Provided that, where an application is made to the court in accordance with the provisions of this section for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the court.

(2) An application under the provisions of subsection (1) may be made

Provided that such an application shall not be made by any person who has consented to or voted in favour of the alteration.

(3) An application under the provisions of subsection (1) shall be made within twenty-one days from the date on which the resolution altering the company’s objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(4) On an application under the provisions of subsection (1) the court may make an order confirming the alteration of the objects of the company either wholly or in part and on such terms and conditions as it thinks fit, and may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interests of dissentient members, and may give such directions and make such orders as it may think expedient for facilitating or carrying into effect any such arrangement:

Provided that no part of the capital of the company shall be expended in any such purchase.

(5) The debentures entitling the holders to object to alterations of a company’s objects shall be any debentures secured by a floating charge, which were issued or first issued before the appointed date, or form part of the same series as any debentures so issued, and a special resolution altering a company’s objects shall require the same notice to the holders of any such debentures as to members of the company.

In default of any provisions regulating the giving of notice to any such debenture holders, the provisions of the company’s articles regulating the giving of notice to members shall apply.

(6) In the case of a company which is by virtue of a licence from the Registrar exempt from the obligation to use the word ” Limited ” as part of its name, a resolution altering the company’s objects shall also require the same notice to the Registrar as to members of the company.

(7) Where a company passes a special resolution altering its objects

(8) Where a company makes default in giving notice or delivering any document to the Registrar as required under the provisions of subsection (7), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of three hundred and fifty rupees.

(9) The validity of an alteration of the provisions of a company’s memorandum with respect to the objects of the company shall not be questioned in any court or tribunal on the ground that it was not authorized by the provisions of subsection (1), except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of twenty-one days from the date of the resolution in that behalf; and where any such proceedings are taken otherwise than under this section, the provisions of subsections (7) and (8) shall apply in relation thereto as if they had been taken under this section, an order declaring the alteration invalid were an order cancelling it, and an order dismissing the proceedings were an order confirming the alteration.

(1) In the case of an unlimited company, the articles shall state the number of members with which the company proposes to be registered and, if the company has a share capital, shall state the amounts of share capital with which the company proposes to be registered.

(2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company proposes to be registered.

(3) Where an unlimited company or a company limited by guarantee has increased the number of its members beyond the registered number, it shall, within fifteen days from the date the increase was resolved on or took place, give to the Registrar in writing the notice of the increase, and the Registrar shall record the increase.

Where default is made in complying with the provisions of this subsection the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of three hundred and fifty rupees.

(a) be printed ;

(b) be divided into paragraphs numbered consecutively ;

(c) bear a stamp of the prescribed value;

(d) be signed by each subscriber of the memorandum of association in the presence of a notary public who shall witness the signature of each signatory and affix his seal.

(1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may by special resolution alter or add to its articles.

(2) Any alteration or addition made to the articles shall, subject to the provisions of this Act, be as valid as if originally contained therein, and be subject in like manner to alteration by special resolution.

(a) the memorandum of association of a company limited by shares,

(b) the memorandum and articles of association of a company limited by guarantee and not having a share capital,

(c) the memorandum and articles of association of a company limited by guarantee and having a share capital,

(d) the memorandum and articles of association of an unlimited company having a share capital,

(1) On the registration of the memorandum of the company the Registrar shall issue to such company a certificate authenticated by the seal prepared under the provisions of section 390 that the company is incorporated and, in the case of a limited company, the company is limited.

(2) From the date of incorporation specified in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is referred to in this Act.

(1) A company formed for the purpose of promoting art, science, religion, charity or any other like objects not involving the acquisition of gain by the company or by its individual members, shall not without a licence issued by the Registrar, hold more than two acres of land, and the Registrar may, by licence, empower any such company to hold lands in such quantity, and subject to such conditions as he thinks fit.

(2) A licence issued by the Registrar under the provisions of subsection (1) shall be in the prescribed form.

(1) A certificate of incorporation issued by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with, and that the association is a company authorized to be registered and duly registered under this Act.

(2) A statutory declaration by an attorney-at-law engaged. In the formation of the company, or by a person named in the articles as a director or secretary of the company, of compliance with all or any of the said requirements, shall be produced to the Registrar, and the Registrar may accept such a declaration as sufficient evidence of compliance.

(1) A company registered as an unlimited company may register under this Act as a limited company, or a company already registered as a limited company may re-register under this Act, but the registration of an unlimited company as a limited company shall not affect the rights or liabilities of the company in respect of any debt or obligation incurred, or any contract entered into by, to, with, or on behalf of the company before the registration, and those rights or liabilities may be enforced in the manner provided by this Act.

(2) On registration of a company under the provisions of subsection (1), the Registrar shall close the former registration of the company, and may dispense with the delivery to him of copies of any documents, with copies of which he was furnished on the occasion of the original registration of the company, but, save as aforesaid, the registration shall take place in the same manner and shall have effect as if it were the first registration of the company under this Act.

(1) No company shall be registered by a name which

(2) Except with the consent of the Minister, given having regard to the national interest, no company shall be registered by a name which contains the words

(1) A company may, by special resolution and with the prior approval in writing of the Registrar, change its name.

(2) Where through inadvertence of otherwise, a company on its first registration or on its registration by a new name is registered by a name which, in the opinion of the Registrar, is too like the name by which a company in existence is previously registered, the first-mentioned company may change its name with the prior sanction of the Registrar and, if the Registrar so directs within six months from the date of its being registered by that name, shall change it within a period of six weeks from the date of the direction or such longer period as the Registrar may in his discretion allow.

Where a company makes default in complying with a direction made under the provisions of this subsection, it shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for every day during which the default continues.

(3) Where a company changes its name, the Registrar shall enter the new name on the register in place of the former name, and shall issue a certificate of incorporation altered to indicate such change.

(4) The change of name shall not affect any rights or obligations of the company, or render ineffective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by the former name may be continued or commenced against it by its new name.

(1) Where it is proved to the satisfaction of the Registrar that an association whether of recent origin or otherwise about to be formed as a limited company is to be formed for promoting commerce, art, science, religion, charity, sport, or any other useful object, and 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 Registrar may by licence direct that the association may be registered as a company, with limited liability, without the addition of the word “Limited” to its name, and the association may be registered accordingly and shall on registration enjoy all the privileges and (subject to the other provisions of this section) be subject to ail the obligations of a limited company.

(2) Where it is proved to the satisfaction of the Registrar

the Registrar may by licence authorize the company to make by special resolution a change in its name including or consisting of the omission of the word ” Limited ” and subsections (3) and (4) of section 20 shall apply to a change of name under this subsection as they apply to a change of name under that section.

(3) A licence granted under the provisions of this section may be subject to such terms and conditions as the Registrar thinks fit, for the association to conform to the requirements of subsection (1), and such terms and conditions shall be binding on the association to which such licence granted, and (where the grant is under the provisions of subsection (1)) shall, if the Registrar so directs, be inserted in the memorandum and articles, or in one of those documents. Any alterations made in the memorandum and articles shall be so made with prior written approval of the Registrar.

(4) An association to which a licence is granted under the provision of this section shall be exempt from the provisions of this Act relating to the use of the word “Limited” as any part of its name, and the sending of lists of members to the Registrar.

(5) A licence granted under the provisions of this section may at any time be revoked by the Registrar where the association to which such licence is granted fails to comply with the requirements of subsection, (1) or subsection (3), and upon revocation the Registrar shall enter the word ” Limited ” at the end of the name upon the register of the association to which it was granted and the association shall cease to enjoy the exemptions and privileges granted by the provisions of this section:

Provided that, before a licence is so revoked, the Registrar shall give the association notice in writing of his intention, and shall afford the association an opportunity of being heard in opposition to the revocation.

(6) Where an association in respect of which a licence under this section is in force alters the provisions of its memorandum with respect to its objects the Registrar may, unless he sees fit to revoke the licence vary, add to or alter the terms and conditions subject to which such licence was granted.

(7) Where a licence granted under the provisions of this section to an association the name of which contains the words ” Chamber of Commerce ” or any other name signifying an association of business interests is revoked, the association shall, within a period of six weeks from the date of revocation or such longer period as the Registrar may in his discretion allow, change its name to a name which does not contain such words or such name, and

Where an association makes default in complying with the requirements of this subsection, it shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for every day during which the default continues.

(1) Subject to the provisions .of this Act the memorandum and articles shall, when registered, bind the company and the members thereof to the extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the provisions of the memorandum and of the articles.

(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

(1) In the case of a company limited by guarantee and not having a share capital, and registered on or after the appointed date, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void,

(2) For the purposes of the provisions of this Act relating to the memorandum of a company limited by guarantee, and this section, every provision in the memorandum or articles, or in any resolution, of a company limited by guarantee and registered on or after the appointed date, purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests may not be specified thereby.

(1) Subject to the provisions of section 24 and section 217, any condition contained in a company’s memorandum which could lawfully have been contained in its articles may, subject to the provisions of this section, be altered by the company by special resolution:

Provided that where an application has been made to court for the alteration to be cancelled the alteration shall not have effect except in so far as it is confirmed by the court.

(2) The provisions of subsection (1) shall not apply where the memorandum itself prohibits, or provides for, the alteration of all or any of the said conditions and shall not authorize the variation or abrogation of the special rights of any class of members.

(3) The provisions of subsections (2), (3), (4), (7) and (8) of section 7 (except paragraph (b) of subsection (2)) shall apply in relation to any alteration and to any applica tion made under this section as they apply in relation to an alteration and application made under that section.

(4) The provisions of this section shall apply to a company’s memorandum whether registered before or after the appointed date.

(1) A company shall, on a written request made by any member, send such member within seven days of the date of receipt of such request and subject to the payment of a fee of twenty-five rupees or such less sum as the company may specify, a copy of

(2) Where a company makes default in complying with any request made under the provisions of subsection (1), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees.

(1) Where an alteration is made in the memorandum of a company, every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.

(2) Where after the date of any such alteration, the company issues any copy of the memorandum which is not in accordance with the alteration, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for each copy so issued, and every officer of the company who is in default shall be guilty of an offence and shall be liable to a like penalty.

(1) The subscribers’ to the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

(1) Except in the cases hereafter in this section set out, a body corporate cannot be a member of a company which is its holding company, and any allotment or transfer of shares in a company to its subsidiary shall be void.

(2) The provisions of this section shall not apply where the subsidiary is concerned as legal representative, or where it is concerned as trustee, unless the holding company or a subsidiary thereof is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(3) The provisions of this section shall not prevent a subsidiary which is, on the appointed date, a member of its holding company, from continuing to be such member but, subject to the provisions of subsection (2), the subsidiary shall have no right to vote at meetings of the holding company or any class of members thereof.

(4) Subject to the provisions of subsection (2), the provisions of subsections (1) and (3) shall apply in relation to a nominee for a body corporate which is a subsidiary as if any reference in subsections (1) and (3) to a body corporate included a reference to a nominee for a body corporate.

(5) Any reference in this section to shares, in relation to a company limited by guarantee or unlimited which is a holding company whether or not it has a share capital, shall be construed as including a reference to the interest of its members as such, whatever the form of the interest.

(1) For the purposes of this act the expression private company means a company which by its articles-

(2) Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this section be treated as a single member.

(1) Where a company, being a private company, alters its articles in such manner that they no longer include the provisions which, under the previsions of section 30, are required to be included in the articles of a company in order to constitute it a private company, the company shall, as on the date of the alteration, cease to be a private company and shall within a period of fourteen days from such date; deliver to the Registrar for registration, a statement in lieu of prospectus in the form and containing the particulars set out in Part I of the Second Schedule hereto, and in the instances specified in Part II of that Schedule, setting out the reports specified therein. The provisions contained in Parts I and II, shall have effect subject to the provisions contained in Part III, of that Schedule:

Provided that a statement in lieu of prospectus need not be delivered under the provisions of this subsection if within the said period of fourteen days a prospectus relating to the company which complies with the provisions contained in the Third Schedule hereto is issued and is delivered to the Registrar as required by the provisions of section 43.

(2) Every statement in lieu of prospectus delivered under the provisions of subsection (1) shall, where the persons making any such reports as aforesaid have made therein or have, without giving the reasons, indicated therein any such adjustments as are mentioned in paragraph 5 of the Second Schedule hereto, have endorsed thereon or attached thereto a written statement signed by those persons setting out the adjustments and giving the reasons therefor.

(3) Where default is made in complying with the previsions of subsection (1) or subsection (2), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of five hundred rupees.

(4) Where a statement in lieu of prospectus delivered to the Registrar under the provisions of subsection (1) includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees or to imprisonment of either description for a term not exceeding two years or to both such line and imprisonment, unless he proves either that the untrue statement was immaterial or that he had reasonable ground to believe and did up to the time of the delivery for registration of the statement in lieu of prospect.: believe that the untrue statement was true.

(5) For the purposes of this section

(1) Contracts on behalf of a company may be made is follows :

(2) A contract made in accordance with the provisions of this section shall be effectual in law, and shall bind the company and its successors and all other parties thereto.

(3) A contract made in accordance with the provisions of this section may be varied or discharged in the same manner in which it is authorized by this section to be made.

(1) A company may, by writing under its common seal, empower any person, whether generally or in respect of any specified matters, to act as its attorney to execute deeds on its behalf in any place outside Sri Lanka.

(2) A deed signed by such an attorney on behalf of the company and under his seal shall bind the company and have the same effect as if it were under its common seal.

(1) A company whose objects require or comprise the transaction of business in foreign countries may, if authorized by its articles, have for use in any territory, district, or place outside Sri Lanka, an official seal which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every such territory, district, or place, as the case may be, in which it is to be used.

(2) A deed or other document to which an official seal is duly affixed shall bind the company as if it had been sealed with the common seal of the company.

(3) A company having an official seal for use in any such territory, district or place may, by writing under its common seal, authorize any person appointed for the purpose in that territory, district or place, to affix the official seal to any deed or other document to which the company is party in that territory, district or place,

(4) The authority of, any such agent shall, as between the company and any person dealing with the agent, continue during the period, if any, specified in the instrument conferring such authority, or if no period is so specified, until notice of the revocation or determination of the agent’s authority has been given to the person dealing with such agent.

(5) The person affixing any such official seal shall, by writing under his hand, certify on the deed or other instrument to which the seal is affixed, the date on which and the place at which it is affixed.

(1) A document or record of proceedings requiring authentication by a company shall be signed by a director, secretary, or other authorized officer of the company, and may not be under its common Seal

(2) Where any document required by this Part to be delivered to the Registrar is in a language other than ‘the official language, the Registrar may, in any instance he considers necessary, request in writing, the delivery of a printed translation thereof in such language as may be decided by the Registrar, certified in the prescribed manner to be a correct translation ;

Provided that, where such a request has not been complied with, the Registrar shall take no further action on such document.

(1) Every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested, in the formation of the company, shall state the matters specified in Part I of the Schedule hereto and set out the reports specified in Part II of that Schedule. The provisions contained in Parts I and II, shall have effect subject to the provisions contained in Part III, of that Schedule.

(2) A condition requiring or binding an applicant for shares in, or debentures of, a company, to waive compliance with any requirement of this section, or purporting to affect him with notice of any contract, document, or matter not specifically referred to in the prospectus, shall be void.

(3) It shall not be lawful to issue any form of application for shares in, or debentures of, a company, unless the form is issued with a prospectus which complies with the requirements of this section :

Provided that the preceding provisions of this subsection shall not apply where it is shown that the form of application was issued either

Any person acting in contravention of the provisions of this subsection, shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees.

(4) In the event of non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the issue of the prospectus shall not incur any liability by reason of such non-compliance or contravention, if

Provided that, in the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 17 of the Third Schedule hereto, no director or other person shall incur any liability in respect of the failure unless it be proved that he had knowledge of the matters not disclosed.

(5) The provisions of this section shall not apply to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures shall or shall not have the right to renounce in favour of other persons, but save as aforesaid, the provisions of this section shall apply to a prospectus or a form of application whether issued on or with reference to the formation of a company or subsequently.

(6) Nothing in this section shall limit or diminish any liability which any person may incur under any written or other law or this Act other than this section.

(7) In any case where a prospectus has been sent for registration in accordance with the provisions of section 43 and has been registered by the Registrar, nothing in the preceding provisions of this section shall be deemed or construed to prohibit the issue or publication of any notice, circular or advertisement stating that the prospectus has been registered and issued and that copies thereof are available on application, if such notice, circular or advertisement does not contain any invitation to the public to subscribe for or purchase any shares in or debentures of a company.

(1) A prospectus inviting persons to subscribe for shares in, or debentures of, a company and including statement purporting to be made by an expert shall not be issued unless

(2) Where any prospectus is issued in contravention of the provisions of this section, the company and every person who is knowingly a party to the issue thereof shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees.

(3) In this section, the expression “expert” includes an engineer, a valuer, auditor, an accountant and any other person whose profession gives authority to a statement made by him.

(1) No bank shall be named as a company’s bankers in any prospectus inviting persons to subscribe for shares in, or debentures of, the company unless that bank has given and has not, before delivery of a copy of the prospectus for registration, withdrawn its written consent to the inclusion in such prospectus of its names as such bankers :

Provided that a bank shall not be deemed for the purposes of this Act to have authorized the issue of a prospectus by reason only of its having given the consent required by the preceding provisions of this subsection to the inclusion in such prospectus of its name as the company’s bankers.

(2) No attorney at law shall be named as a company’s lawyer in a prospectus inviting persons to subscribe for shares in, or debentures of, the company unless that attorney-at-law has given and has not, before delivery of a copy of the prospectus for registration, withdrawn his written consent to the inclusion in such prospectus of his name as such lawyer:

Provided that an attorney-at-law shall not be deemed for the purposes of this Act to have authorized the issue of a prospectus by reason only of his having given the consent required by the preceding provision of this subsection to the inclusion in such prospectus of his name as the company’s lawyer.

(3) No auditor shall be named as a company’s auditor in a prospectus, inviting persons to subscribe for shares in, or debentures of, the company unless that auditor has given and has not, before delivery of a copy of the prospectus for registration, withdrawn his written consent to the inclusion therein of his name as such auditor:

Provided that an auditor shall not be deemed for the purposes of this Act to have authorized the issue of a prospectus by reason only of his having given the consent required by the preceding provisions of this; subsection to the inclusion in such prospectus of his name as the company’s auditor.

(4) Where the name of any bank, attorney-at-law or auditor is included in any prospectus of a company in contravention of the provisions of this section, the company and every person who is knowingly a party to the issue thereof shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees.

(1) No prospectus shall be issued by or on behalf c a company or in relation to an intended company on or before the date of its publication, there has 1 delivered to the Registrar for registration a copy of s prospectus signed by every person who is named in prospectus as a director or proposed director of company, or by his agent authorized in writing, and 1 endorsed thereon or attached thereto

(2) Every prospectus shall, on the face of it

(3) The Registrar shall not register a prospectus

(4) Where a prospectus is issued without a copy thereof being delivered under this section to the Registrar, or without the copy so delivered having endorsed thereon or attached thereto the required documents referred to in subsection (1), the company and every person who is knowingly a party to the issue of the prospectus, shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for every day from the issue of the prospectus until a copy thereof is so delivered with the required documents endorsed thereon or attached thereto.

(1) A company limited by shares or a company limited by guarantee and having a share capital, shall not, prior to the statutory meeting of such company, vary the terms of a contract referred to in the prospectus, or statement in lieu of prospectus except subject to the approval of the statutory meeting.

(2) The provisions of this section shall not apply to a private company.

(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debenture of a company, the following persons shall be liable to pay compensation to all persons who subscribe for any shares or debentures on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement included in such prospectus, that is to say

Provided that, where under the provisions of section 41, the consent of any person is required to the issue of a prospectus and such person has given such consent, such person shall not by reason of his having given such consent be liable under the provisions of this subsection as a person who has authorized the issue of the prospectus except in respect of an untrue statement purporting to be made by him as an expert.

(2) No person shall be liable under the provisions of subsection (1) if he proves

Provided that the provisions of this subsection shall 1 apply in the case of a person liable, by reason of his having given the consent required by the provisions of subsection as a person who has authorized the issue of the prospectus. in respect of an untrue statement purporting to be 1 by him as an expert.

(3) A person who, apart from the provisions of this s section, would under the provisions of subsection liable, by reason of his having given the consent required by the provisions of section 41 as a person who authorized the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert, not be so liable if he proves

(4) Where

the directors of the company, except any director whose knowledge or consent the prospectus was issued, a any other person who authorized the issue of such prospectus , shall be liable to indemnify the person named under paragraph (a), or whose consent was required under paragraph (b), as the case may be, against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any action or legal proceeding brought against him in respect thereof:

Provided that a person shall not be deemed for the purposes of this subsection to have authorized the issue of a prospectus by reason only of his having given the consent required by the provisions of section 41 to the inclusion in such prospectus of a statement purporting to be made by him as an expert

(5) Every person who, by reason of his being a director or being named as a director or as having agreed to become a director, or of his having authorized the issue of the prospectus, or of the inclusion in such prospectus of a statement purporting to be made by him as an expert, becomes liable to make any payment under this section may Recover contribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment unless the person who has become so liable was, and that other person was not, guilty of fraudulent misrepresentation.

(6) For the purposes of this section

(1) Where a prospectus issued on or after the appointed date includes any untrue statement, any person who authorized the issue of the prospectus shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees or to imprisonment of either description for a term not exceeding two years or to both such fine and imprisonment unless he proves either that the statement was immaterial or that he had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe that the statement was true.

(2) A person shall not be deemed for the purposes of this section to have authorized the issue of a prospectus by reason only of his having given the consent required by the provisions of section 41 to the inclusion in such prospectus of a statement purporting to be made by him as an expert.

(3) No prosecution shall be instituted in respect of any offence, under the provisions of subsection (1) except with the sanction of the Attorney-General.

(1) Where a company allots or agrees to allot any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the company, and any written law as to the contents of prospectuses, and to liability in respect of statements in and omission from prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly, as if the shares or debentures had been offered to the public for subscription and as if persons accepting the offer in respect of any shares or debentures were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made, in respect of mis-statements contained in the document or otherwise in respect thereof.

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown

(3) The provisions of section 43 as applied by this section shall have effect as though the persons making the offer were persons named in a prospectus as directors of a company, and the provisions of section 40 as applied by this section shall have effect as if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document aforesaid is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign by his agent authorized in writing.

(a) a statement included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included ; and

(b) a statement shall be deemed to be included in a prospectus if it is contained in, or in any report or memorandum appearing on the face of, or by reference incorporated in, or issued with, such prospectus.

(1) No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which in the opinion of the directors, must be raised by the issue of share capital in order to provide for the matters specified in paragraph 5 of the Third Schedule hereto has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company.

For the purposes of this subsection, a sum shall be deemed to have been paid to and received by the company if a cheque for that sum has been received in good faith by the company and the directors of the company have no reason for suspecting that the cheque may not be paid.

(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as ” the minimum subscription .

(3) The amount payable on application on each share shall not be less than five per centum of the nominal amount of the share.

(4) Where the conditions set out in the preceding sub sections have not been complied with, within the expiration of sixty days from the date of closing of the subscription lists, any money received from applicants for shares shall be forthwith repaid to them without interest, and if such money is not so repaid within seventy-five days from the date of closing of the subscription lists, the directors of the company shall be jointly and severally liable to repay that money with interest at the legal rate, from the expiration of the seventy-fifth day :

Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(5) Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void.

(6) The provisions of this section other than the provisions of subsection’ (3) shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

(1) A company having a share capital which does not issue a prospectus on or with reference to its formation or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures there has been delivered to the Registrar for registration a statement in lieu of prospectus, signed by every person who is named in such prospectus as a director or a proposed director of the company or by his agent authorized in writing, in the form and containing the particulars set out in Part I of the Fourth Schedule hereto, setting out the reports specified in such Schedule. The provisions contained in Parts I and II, shall have effect subject to the provisions contained in Part III, of that Schedule.

(2) Every statement in lieu of prospectus delivered under the provisions of subsection (1) shall, where the persons making any such report under that subsection have made therein or have, without giving the reasons, indicated therein any such adjustments as are mentioned in para graph 5 of the Fourth Schedule hereto, have endorsed there on or attached thereto a written statement signed by those persons setting out the adjustments and giving the reasons therefor.

(3) The provisions of this section shall not apply to a private company.

(4) “Where a company acts in contravention of the provision of subsection (1) or subsection (2) the company and every director of the company who knowingly and wilfully authorizes or permits the contravention shall be guilty of an offence and shall be liable to a fine not exceeding one thousand rupees.

(5) Where a statement in lieu of prospectus delivered to the Registrar under the provisions of subsection (1) includes any untrue statement, any person who authorized the deli very of the statement in lieu of prospectus for registration shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees, or to imprisonment of either description for a term not exceeding two years or to both such fine and imprisonment, unless he proves either that the untrue statement was immaterial or that he had reason able ground to believe and did up to the time of the deli very for registration of the’ statement in lieu of prospectus believe that the untrue statement was true.

(6) For the purposes of this section

(1) An allotment made by a company to an applicant in contravention of the provisions of section 49 or section 50 shall be voidable at the instance of the applicant within one month from the date of the holding of the statutory meeting of the company, or, in any case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within one month from the date of the allotment, and shall be so voidable notwithstanding that the company is in the course of being wound up.

(2) Where any director of a company knowingly contravenes or permits or authorizes the contravention of any of the provisions of section 49 or section 50, he shall be liable to compensate the company and the allottee respectively for any loss, damages, or costs which the company or the allottee may have sustained or incurred thereby:

Provided that no proceedings to recover any such loss, damages, or costs shall be commenced after the expiration of two years from the date of the allotment.

(1) No allotment shall be made of any shares in, or debentures of, a company in pursuance of a prospectus issued generally and-no proceedings shall be taken on applications made in pursuance of a prospectus so issued, until commencement of the third day after that on which the prospectus is first so issued or such later time (if any) as may be specified in the prospectus. The commencement of such third day or such later time as aforesaid is hereafter in this Act referred to as ” the time of the opening of the subscription lists “.

(2) The reference in subsection (1) to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so issued as a newspaper advertisement:

Provided that, if it is not so issued as a newspaper advertisement before the third day after that on which it is first so issued in any other manner, the said reference shall be construed as referring to the day on which it is first so issued in such manner.

(3) The validity of an allotment shall not be affected by any contravention of the preceding provisions of this section but, in the event of any such contravention, the company, and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees.

(4) In the application of this section to a prospectus offering shares or debentures for sale, the preceding subsections shall have effect with the substitution for a reference to allotment, of a reference to sale, and for the reference to the company and every officer of the company who is in default, of a reference to any person by or through whom the offer is made and who knowingly and wilfully authorizes or permits the contravention.

(5) An application for shares in or debentures of a company which is made in pursuance of a prospectus issued generally shall not be revocable until after the expiration of the third day from the date of the opening of the subscription lists, or the giving before the expiration of the said third day, by some person responsible under the provisions of section 45 for the prospectus, of a public notice having the effect under that section of excluding or limiting the responsibility of the person giving it.

(6) In reckoning for the purposes of this section the third day after any day, any intervening day which is a bank holiday or public holiday in Sri Lanka shall be disregarded, and if the third day (as so reckoned) is itself such a bank or public holiday there shall for the said purposes be substituted the first day thereafter which is none of them.

(1) Whenever a company limited by shares or a company limited by guarantee and having a share capital makes any allotment of its shares, the company shall within one month from the date of such allotment deliver to the Registrar for registration

(2) Where a contract referred to in subsection (1) is not reduced to writing, the company shall, within one month from the date of allotment, deliver to the Registrar for registration the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing, and such particulars shall be deemed to be an instrument within the meaning of the Stamp Ordinance and the Registrar may, as a condition of filing the particulars, require that the duty payable thereon be determined in accordance with the pro visions of Chapter III of that Ordinance.

(3) Where default is made in complying with the provisions of this section, every officer of the company who is in default, shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees for every day during which the default continues :

Provided that, in case of default in delivering to the Registrar within one month from the date of allotment, any document required to be delivered by the provisions of this section, the company, or any officer liable for such default, may make an application to the court for relief, and the court, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make an order extending the time for the delivery of the document for such period as the court may deem fit.

(1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, if

(2) Save as provided in subsection (1), no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount, or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute of conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to” be executed for the company, or that money be paid out of the nominal purchase money or contract price, or otherwise.

(3) Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay.

(4) A vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have, and shall be deemed always to have had, power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under the provisions of this section.

(5) Where default is made in complying with the provisions of this section relating to the delivery to the Registrar of the statement in the prescribed form, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees.

(1) Subject as provided in this section, it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of, or for any shares in, the company, or, where the company is a subsidiary company, in its holding company :

Provided that nothing in this section shall be taken to prohibit

(2) Where a company acts in contravention of the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding one thousand rupees.

(1) Any reference in this Act to offering of any shares or debentures to the public shall, subject to any provision to the contrary contained therein, be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner, and references in this Act or in a company’s articles to invitations to the public to subscribe for shares or debentures shall, subject to the preceding provisions, be similarly construed.

(2) The provisions of subsection (1) shall not be taken as requiring any offer or invitation to be treated as made to the public if it can properly be regarded, in all the circumstances as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation, or otherwise as being a domestic concern of the persons making and receiving it, and in particular :

(1) A company limited by shares may, if so authorized by its articles, issue preference shares which are, or at the option of the company are to be liable, to be redeemed:

Provided that

(2) The redemption of preference shares under the provisions of this section may be effected subject to such terms and in such manner as may be provided by the articles of the company.

(3) The redemption of preference shares under the provisions of this section by a company shall not be taken as reducing the amount of the company’s authorized share capital

(4) Where in pursuance of the provisions of this section a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed, as the case may be, as if those shares had never been issued, and accordingly the share capital of the company shall not for the purposes of any enactments relating to stamp duty be deemed to be increased by the issue of shares in pursuance of the provisions of this subsection:

Provided that, where new shares are issued before the redemption of the old shares, the new shares shall not, so far as they relate to stamp duty, be deemed to have been issued in pursuance of the provisions of this subsection unless shares are redeemed within one month after the issue of the new shares.

(5) The Capital Redemption Reserve Fund may, notwithstanding anything in this section, be applied by the company in paying up un issued shares of the company to be issued to members of the company as fully-paid bonus shares.

(1) Where a company issues shares at a premium, whether for cash, or otherwise, a sum equal to the aggregate or value of the premium on those shares shall be transferred to an account, to be called the ” Share Premium Account”, and the provisions of this Act relating to the reduction of the share capital of a company shall, except in this section, apply as if the share premium account were paid-up share capital of the company.

(2) The Share Premium Account may, notwithstanding anything in subsection (1), be applied by the company in paying up un issued shares, of the company to be issued to members of the company as fully-paid bonus shares, in writing of

or in providing for the premium payable on redemption of any redeemable preference shares or of any debentures of the company.

(3) Where a company has before the appointed date issued any shares at a premium, the provisions of this section shall apply as if the shares had been issued on or after that date:

Provided that any part of the premium which has been so applied that it does not on the appointed date form an identifiable part of the company’s reserves within the meaning of the Fifth Schedule hereto shall be disregarded in determining the sum to be included in the share premium account.

(1) It shall be lawful for the company to issue at a discount shares in the company of a class of shares already issued:

Provided that

(2) Where a company has passed a resolution authorizing the issue of shares at a discount, it may apply to the court for an order sanctioning the issue and on any such applica tion the court, if, having regard to all the circumstances of the case, it thinks proper so to do, may make an order sanctioning the issue subject to such terms and conditions as it thinks fit.

(3) Every prospectus relating to the issue of the shares under the provisions of subsection (1) shall contain particulars of the discount allowed or of so much of that discount as has not been written off at the date of the issue of the prospectus.

Where default is made in complying with the provisions of this subsection, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;

(b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;

(c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

(1) A company limited by shares or a company limited by guarantee and having a share capital, if so authorized by its articles, may alter the conditions of its memorandum as follows, that is to say, it may –

(2) The powers conferred by the provisions of this section shall be exercised by the company at a general meeting.

(3) A cancellation of shares in pursuance of the provisions of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

(1) Where company having a share capital has

it shall, within one month from the date of so doing, give notice thereof to the Registrar specifying, as the case may be, the shares consolidated, divided, converted, subdivided, redeemed or cancelled, or the stock reconverted.

(2) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) Where a company having a share capital, whether its shares have or have not been converted into stock, has increased its share capital beyond the registered capital, it shall with fifteen days from the date of passing of the resolution authorizing the increase, give to the Registrar notice thereof and the Registrar shall record such increase.

(2) The notice to be given under the provisions of sub section (1) shall include such particulars as may be prescribed with respect to the classes of shares affected and the conditions subject to which the new shares have been or are to be issued, and the company shall forward to the Registrar together with such notice a copy of the resolution authorizing such increase.

(3) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased capital shall be capable of being called up;

(b) notify that a specified portion of its uncalled share capital shall not be capable of being called up,

(a) no such sum shall be paid unless it is authorized by the articles or by special resolution ;

(b) no such sum, whether authorized by the articles or by special resolution, shall be paid without the Previous sanction of the court;

(c) before sanctioning the payment of any such sum, the court may at the expense of the company, appoint a person to inquire and report to the court as to the circumstances of the case, and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry;

(d) the payment shall be made only for such period as may be determined by the court, and that period shall in no case extend beyond the close of the half-year next after the half-year during which the works or buildings have been actually completed or the plant provided, as the case may be ;

(e) the rate of interest shall in no case exceed such rate as may for the time being be prescribed by regulation ;

(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

(1) Subject to confirmation by the court, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorized by its articles, by special resolution reduce its share capital and also may

and may, so far as it is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(2) A special resolution made under the provisions of subsection (1) is in this Act referred to as “a resolution for reducing share capital”.

(1) Where a company has passed a resolution for reducing share capital, it may make an application to the by court for an order confirming the reduction.

(2) Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any share holder of any paid-up share capital, and in any other case if the court so directs, the following provisions shall, subject to the provisions of subsection (3), apply:

(3) Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the court may, if having regard to any special circumstances of the case it thinks proper so to do, direct that the provisions of subsection (2) shall not apply as regards any class or any classes, of creditors.

(1) The court, if satisfied, with respect to every creditor of the company who under the provisions of section 68 is entitled to object to the reduction, that either his consent to the reduction has been obtained or his, debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks, fit.

(2) Where the court makes any such order, it may-

(3) Where a company is ordered to add to its name the words ” and reduced “, those words shall, until the expiration of the period specified in the order, be deemed to be part of the name of the company.

(1) The Registrar shall on production to him of an order of the court confirming the reduction of the share capital of a company, and the delivery to him of a copy of the order and of a minute approved by the court, showing with respect to the share capital of the company, as altered by the order, the amount of the share capital, the number of shares into which it is to be divided, and the amount of each share, and the amount, if any, at the data of the registration deemed to be paid on each share, register the order and minute.

(2) On the registration of the order and minute under the provisions of subsection (1), the resolution for reducing share capital as confirmed by the order so registered shall take effect.

(3) Notice of the registration shall be published in such manner as the court may direct.

(4) The Registrar shall issue a certificate, authenticated by the seal prepared under the provisions of section 390, of the registration of the order and minute, and such certificate shall be conclusive evidence that all requirements of this Act, with respect to reduction of share capital have been complied with and that the share capital of the company is such as stated in the minute.

(5) The minute referred to hi subsection (1) when registered shall be deemed to be substituted for the corresponding part of the memorandum, and shall be as valid and effectual as if it had been originally contained therein.

(6) The substitution of any such minute as referred to in subsection (1) for part of the memorandum of the company shall be deemed to be an alteration of the memorandum within the meaning of section 27.

(1) In the case of a reduction of share capital, a member of the company, past or present, shall not be liable in respect of any share to any call or contribution exceeding in amount the difference, if any, between the amount of the share as fixed by the minute and the amount paid, or the reduced amount, if any, which is to be deemed to have been paid, on the share, as the case may be:

Provided that if any creditor, entitled in respect of any debt or claim to object to the reduction of share capital, Is, by reason of his ignorance of the proceedings for reduction, or of the nature and effect of such proceedings with respect to his claim, not entered on the list of creditors, and, after the reduction, the company is unable, within the meaning of the provisions of this Act, with respect to winding up by the court, to pay the amount of his debt or claim, then

(2) Nothing in this section shall affect- the right of the contributories among themselves.

(a) wilfully conceals the name of any creditor entitled to object to the reduction ; or

(b) wilfully misrepresents the nature or amount of the debt or claim of any creditor; or

(c) aids, abets or is privy to any such concealment or misrepresentation as referred to in paragraph (b),

(1) Where in the case of a company, the share capital of which is divided into different classes of shares, provision is made by the memorandum or articles for authorizing the variation of the rights attached to any class of shares in the company, subject to the consent of any specified proportion of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of the said provision the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than fifteen per centum of the issued shares of that class, being persons who did not consent to, or vote in favour of the resolution for the variation, may make an application to the court to have the variation cancelled, and, any such application is made, the variation shall not have effect unless and until it is confirmed by the court.

(2) An application under the provisions of subsection (1) shall be made within twenty-one days from the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the share holders entitled to make the application by such, one or more of their number as they may appoint in writing for the purpose.

(3) On any application made under the provisions! of subsection (1), the court, alter hearing the applicant and any other persons who make an application to the court to be heard and appear to the court to be interested in the application may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation and shall, if not so satisfied, confirm the variation.

(4) The decision of the court on any application made under the provisions of subsection (1) shall be final.

(5) The company shall, within fifteen days from the date of an order by the court on any application made under the provisions of subsection (1), forward a copy of such order to the Registrar and, where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(6) In this section the expression ” variation” includes abrogation and the expression “varied” shall be construed accordingly.

(1) The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company, and shall not be of the nature of immovable property.

(2) Each share in a company having a share capital shall be distinguished by its appropriate number.

(1) Where a company refuses to register a transfer of any shares or debentures, the company shall, within two months from the date on which the transfer was lodged with the company, send to the transferee notice of the refusal.

(2) Where default is made in complying with the provisions of this section the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) The certification by a company of any instrument, of transfer of shares in or debentures of the company shall be taken as representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor named in the instrument of transfer, but not as representation that the transferor has any title to the shares or debentures.

(2) Where any person acts on the faith of a false certification by a company made negligently, the company shall be under the same liability to him as if the certification had been made fraudulently.

(3) For the purposes of this section

(1) Every company shall, within two months from Duties of the date of allotment of any of its shares, debentures, or company with debenture stock and within two months from the date on respect which a transfer of any such shares, debentures, or debenture, true stock, is lodged with the company, complete and have ready for delivery the certification of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures, or debenture stock provide otherwise.

For the purposes of this subsection the expression ” transfer ” means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.

(2) Where default is made in complying with the provisions of this section the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(3) Where any company on whom a notice has been served requiring the company to make good any default in complying with the provisions of subsection (1) fails to make good the default within ten days from the date of service of the notice, the court may, on the application of the person en titled to have the certificates, or the debentures delivered to him, make an order directing the company, and any officer of the company to make good the default within such time- as may be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or any officer of the company responsible for the default.

(1) A company limited by shares, if so authorized by its articles, may, with respect to any fully paid-up shares issue under its common seal a warrant stating that the bearer of such warrant is entitled to the shares therein specified, and may provide, by coupons or otherwise, for the payment of the future, dividends on the shares included in the warrant.

(2) Such a warrant as is referred to in subsection (1) is In this Act referred to as a ” share warrant”.

(3) A share warrant shall entitle the bearer thereof to the shares specified in such share warrant, and the shares may be transferred by delivery of the warrant.

(1) Where any person

he shall be guilty of an offence and shall be liable to imprisonment of either description for a term not less than three years and not exceeding twenty years.

(2) Where any person without lawful authority or excuse, proof whereof shall lie on him

he shall be guilty of an offence and shall be liable to imprisonment of either description for a term not less than three years and not exceeding fourteen years.

(1) Every company which has issued debentures shall maintain a register of holders of debentures of the company, The register shall, except when duly closed (but subject to such reasonable restrictions as the company may in general meeting impose so that not less than two hours in each day shall be allowed for inspection), be open to the inspection of the registered holder of any such debentures or any holder of shares in the company without fee, and of any other person on payment of a fee of ten rupees or such less sum as may be specified by the company.

(2) For the purposes of subsection (1), a register shall be deemed to be duly closed if closed in accordance with the provisions contained in the articles or in the debentures, or in the case of debenture stock, in the stock certificates, or in the trust deed or other document securing the debentures or debenture stock, during such period or periods, not exceeding in the whole thirty days in any year, as may be therein specified.

(3) Any such registered holder of the debentures or holder of shares as aforesaid or any other person may require a copy of the register of the holders of debentures of the company or any part thereof to be furnished on payment of a sum not exceeding one rupee for every hundred words required to be copied.

(4) A copy of any trust deed for securing any issue of debentures shall be forwarded to every holder of any such debentures at his request on payment in the case of a printed ‘rust deed of the sum of ten rupees or such less sum as may be specified by the company, or, where the trust deed has not been printed, on payment of a sum not exceeding one rupee for every hundred words required to be copied.

(5) Where inspection of the register is refused or a copy as aforesaid is refused or not forwarded, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees and further shall be liable to a fine of twenty rupees for every day the default continues.

(6) Where a company is in default as referred to in sub section (5) the court may by order compel an immediate inspection of the register or direct that any copy required as aforesaid shall be sent to the person requiring them.

(1) Where either before or after the appointed date a company has redeemed any debentures previously issued, then-

the company shall have, and shall be deemed always to have had, power to reissue the debentures, either by reissuing the same debentures or by issuing other debentures in their place.

(2) On a reissue of redeemed debentures the person en titled to the debentures shall have, and. shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

(3) Where a company has either before or after the appointed date deposited any of its debentures to secure advances from time to time on current account or other wise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit whilst the debentures remained so deposited.

(4) The reissue of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, whether the reissue or issue was made before or after the appointed date, shall be treated as the issue of a new debenture for the purposes of stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture reissued under the provisions of this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing, his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

(5) The reissue after the appointed date of debentures redeemed before that date shall not prejudice any right or priority which any person would have had under or by virtue of any mortgage ‘or charge created before that date.

(1) Where either a receiver is appointed on behalf of the holders of any debentures of the company secured by a floating charge, or possession is taken by or on behalf of those debenture holders of any property comprised in or subject to the charge, then, if the company is not at the time in course of being wound up, the debts which in every winding up are under the provisions of Part IX relating to preferential payments to be paid in priority to all other debts, shall be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.

(2) In the application of the provisions of Part IX, the provisions of section 347 shall be construed as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution were a provision for payment of such remuneration becoming payable on the termination of employment before or by effect of the appointment of receiver or possession being taken as referred to in subsection (1).

(3) The periods of time specified in the said provisions of Part IX shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be.

(4) Where the date referred to in subsection (3) occurred before the appointed date, the provisions of subsections (1) and (3) shall have effect with the substitution for references to the said provisions of Part IX, of references to the provisions which, by virtue of subsection (9) of section 347 are deemed to remain in force in the case therein mentioned, and the provisions of subsection (2) of this section shall not apply.

(5) Any payments made under the provisions of this section shall be recouped as far as may be out of the assets of the company available for payment of general creditors.

(1) Subject to the provisions of this Part, every charge created after the appointed date by a company registered in Sri Lanka and being a charge to which the provisions of this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof certified by a notary public, are delivered to or received by the Registrar for registration in manner required by this Act within twenty-one days from the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under the provisions of this section the money secured thereby shall immediately become payable.

(2) The provisions of this section shall apply to the following charges:

(3) In the case of a charge created outside Sri Lanka comprising property situate outside Sri Lanka, the delivery to and the receipt by the Registrar of a copy verified in the prescribed manner of the instrument by which the charge is created or evidenced, shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and twenty-one days from the date on which the instrument or copy could, in due course of post, and if despatched with due diligence, have been received in Sri Lanka, shall be substituted for twenty-one days from the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be delivered to the Registrar.

(4) Where a charge is created in Sri Lanka, but comprises property outside Sri Lanka, the instrument creating or purporting to create the charge may be sent for registration under the provisions of this section notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.

(5) Where a charge comprises property situate outside Sri Lanka and registration in the country where the property is, situate is necessary to make the charge valid or effectual according to the law of that country, the delivery to and the receipt by the Registrar of a copy, verified in the prescribed manner, of the instrument by which the charge is created or evidenced, together with a certificate in the prescribed form stating that the charge was presented for registration in the country where the property is situate on the date on which it was so presented shall, for the purposes of this section, have the same effect as the delivery and receipt of the instrument itself.

(6) Where a negotiable instrument has been given to secure the payment of any book debts of a company the deposit of the instrument for the purpose of securing an advance to the company shall not for the purposes of this section be treated as a charge on those book debts.

(7) The holding of debentures entitling the holder to a charge on land shall not for the purposes of this section be deemed to be an interest in land.

(8) Where a series of debentures, containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company it shall for the purposes of this section be sufficient if they are delivered to or received by the Registrar within twenty-one days from the date of execution of the deed containing the charge or, if there is no such deed, from the date of execution of any debentures of the series, the following particulars :

together with the deed containing the charge or a copy thereof verified in the prescribed manner, or if there is no such deed, one of the debentures of the series :

Provided that, where more than one issue is made of debentures in the series, there shall be sent to the Registrar for entry in the register, particulars of the date and amount of each issue. Any omission to send such particulars shall not affect the validity of the debentures issued.

(9) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be sent for registration under the provisions of this section shall include particulars as to the amount or rate per centum of the commission, discount or allowance so paid or made. Any omission to send such particulars shall not affect the validity of the debentures issued;

Provided that the deposit of any debentures as security for any debt of the company shall not for the purposes of this subsection be treated as the issue of the debentures at a discount.

(10) Nothing in section 63 of the Mortgage Act shall apply to or in relation to any floating charge on the under taking or property of a company.

(11) The provisions of this section shall be in addition to and not in substitution of any other written law relating to the registration of any document of instrument creating or purporting to create a charge on any property whether movable or immovable.

(12) In this Part, the expression “charge” includes mortgage.

(1) It shall be the duty of a company to send in the prescribed form to the Registrar for registration the particulars of every charge created by the company and of the issue of debentures of a series requiring registration under the provisions of section 91. Registration of any such charge may be effected on the application of any person interested therein.

(2) Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar.

(3) Where any company makes default in sending to the Registrar for registration the particulars of any charge created by the company, or of the issues of debentures of a series, requiring registration as aforesaid, then, unless the registration has been effected on the application of some other person, the company and every officer of the company who is in default shall be liable to a fine of five hundred rupees.

(1) Where after the appointed date a company registered in Sri Lanka acquires any property which is subject to a charge of any such kind as would, if it had been created by the company, after the acquisition of the property, have been required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the Registrar for registration in the manner required by this Act, within twenty-one days from the date on which the acquisition is completed :

Provided that, if the property is situate and the charge was created outside Sri Lanka, twenty-one days from the date on which the copy of the instrument could in due course of post, and if despatched with due diligence, have been received in Sri Lanka, shall be substituted for twenty-one days from the date of completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the Registrar.

(2) Where default is made in complying with this section the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of five hundred rupees.

(1) The Registrar shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part, and shall, on payment of the prescribed fee, enter in the register with respect to such charges the following particulars:

(2) The Registrar shall issue a certificate authenticated by the seal prepared under the provisions of section 390 of the registration of any charge registered in pursuance of this Part, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this Part, as to registration have been complied with.

(3) The register kept in pursuance of the provisions of this payment of the prescribed fee.

(1) The company shall cause a copy of every certificate of registration given under the provisions of section 94 to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the charge so registered:

Provided that nothing in the provisions of this subsection shall be construed as requiring a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.

(2) Where any person knowingly and wilfully authorizes or permits the delivery of any debenture or certificate of debenture stock which under the provisions of this section is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, he shall, without prejudice to any other liability, be guilty of an offence and be liable to a fine not exceeding one thousand rupees.

(1) Where

it shall be the duty of the company to send to the Registrar a statement to that effect in the prescribed form.

(2) Upon the receipt of a statement sent by a company under the provisions of subsection (1) the Registrar may, on his being satisfied as to the correctness of such statement, enter on the register a memorandum of satisfaction in whole or in part, or of the fact that part of the property or under taking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be.

(3) Where any company makes default in complying with the provisions of subsection (1), every officer of the company who is in default shall be guilty of an offence and shall be liable to fine not exceeding five hundred rupees for every day during which the default continues.

(1) Where any person obtains an order for the appointment of a receiver or manager of the property of a company, or appoints such a receiver or manager under any powers contained in any instrument, he shall, within seven days from the date of the order or of the appointment under the said powers, give notice of the fact to the Registrar who shall, on payment of the prescribed fee, enter the fact in the register of charges.

(2) Where any person appointed receiver or manager of the property of a company under the power contained In any instrument ceases to act as such receiver or manager, he shall, on so ceasing, give the Registrar notice to that effect, and the Registrar shall enter the notice in the register of charges.

(3) Where any person makes default in complying with the requirements of this section he shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for every day during which the default continues.

(1) Every limited company shall keep a register of charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company, giving in each case a short description of the property charged, the amount of the charges, and, except in the case of securities to bearer, the names of the persons entitled thereto.

(2) Any officer of the company who knowingly and wilfully authorizes or permits the omission of any entry required to be made under the provisions of this section, shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees.

(1) The copies of instruments creating any charge requiring registration under this Part with the Registrar, and the register of charges kept under the provisions of section 100, shall be open during business hours (but subject to such reasonable restrictions as the company at a general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to the inspection of any creditor or member of the company without fee, and the register of charges shall also be open to the inspection of any other person on payment of such fee as the company may specify.

(2) Where inspection of the said copies or register is refused any officer of the company refusing inspection, and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees and a further fine not exceeding twenty rupees for every day during which the refusal continues.

(3) Where any such refusal occurs in relation to a company registered in Sri Lanka, the court may by order compel an immediate inspection of the copies or register referred to in subsection (1).

(1) A company shall, as from the day on which it begins to carry on business or as from the fourteenth day after the date of its incorporation, whichever is the earlier, have a registered office to which all communications and notices may be addressed.

(2) Notice of the situation of the registered office, and of any change therein, shall be given within fourteen days from the date of the incorporation of the company or of the change, as the case may be, to the Registrar who shall record the same.

The inclusion in the annual return of a company or a statement as to the situation of its registered office shall not be taken to satisfy the obligation imposed by the provisions of this subsection.

(3) Where notice of the registered office has not been given under the provisions of subsection (2) within fourteen days from the date of incorporation of a company then the intended situation of such company’s registered office on incorporation, specified in the statement delivered prior to the incorporation, shall be deemed to be the registered office of the company.

(4) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) Every company

(2) Where a company does not paint or affix its name in manner directed by this Act, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to fine not exceeding two hundred and fifty rupees, and where a company does not keep its name painted or affixed in manner so directed the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(3) Where a company fails to comply with the provisions of paragraph (b) or paragraph (c) of subsection (1), the company shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees.

(4) Where an officer of a company, or any person on its behalf

he shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees, and shall also be liable to the holder of the bill of exchange, promissory note, cheque, or order for money or goads, for the amount thereof, unless it is duly paid by the company.

(1) Every register, book or other document declared by this Act to be open to inspection by members of a company shall be kept at the registered office of the company.

(2) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) Any register, index or book of account required Form of by this Act to be kept by a company may be kept either by registers, amp;c making entries in bound books, or by recording the matter in question in any other manner.

(2) Regulations may be made in respect of the application of the provisions of subsection (1) to any minute book required by this Act to be kept by a company. In the absence of any such regulations, such minute book shall be kept by making entries in a bound book, and where- it is not so kept, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees and also to a default fine.

(3) Where any such register, index or other book to which the provisions of subsection (1) apply is not kept by making entries in a bound book, but by some other means, adequate precautions shall be taken for guarding against falsification and facilitating its discovery, and where default is made in complying with the provisions of this subsection, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees and also to a default fine.

(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers unless

(2) Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless

(3) The Registrar shall, on the delivery to him of the statutory declaration under the provisions of paragraph (c) of subsection (2), and, in the case of a company which is required by this section to deliver a statement in lieu of prospectus, of such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled.

(4) Any contract made by a company before the date on which it is entitled to commence ‘business shall be provisional, and shall not be binding on the company until such date.

(5) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures.

(6) Where any company commences business or exercises borrowing powers, in contravention of the provisions of this section, every person who is responsible for the contravention shall, without prejudice to any other liability, be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees for every day during which the contravention continues.

(7) Nothing in this section shall apply to

(1) Every company shall keep in one or more books a register of its members, and enter in such, book or books the following particulars :

Provided that, where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the register shall show the amount or stock held by each member instead of the amount of shares and the particulars relating to shares specified in paragraph (a).

(2) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, keep an index of the names of the members of the company and shall, within fourteen days from the date on which any alteration is made In the register of members, make any necessary alteration in the index.

(2) The index shall in respect of each member contain a sufficient indication enabling the account of that member in the register to be readily found.

(3) Where default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(1) On the issue of a share warrant the company shall strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he had ceased to be a member, and shall enter in the register the following particulars, namely:

(2) The bearer of a share warrant shall, subject to the articles of the company, be entitled, on surrendering it for cancellation, to have his name entered as a member in the register of members.

(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in the register the name of a bearer of a share warrant in respect of the shares therein specified without the warrant being surrendered and cancelled.

(4) Until the warrant is surrendered, the particulars specified in subsection (1) shall be deemed to be the particulars required by this Act to be entered in the registers of members, and on the surrender, the date of the surrender shall be entered.

(5) Subject to the provisions of this Act, the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Act, either to the full extent of, or for any purposes, defined in, the articles.

(1) The register of members, commencing from the date of the registration” of the company and the index of the names of members shall, except when duly closed (but subject to such reasonable restrictions as the company may in general meeting impose, so that not less than two hours in each day shall be allowed for inspection), be open to the inspection of any member without charge and of any other persons on payment of one rupee or such less sum as the company may specify for each inspection.

(2) Any member or other person may require a copy of the register, or of any part thereof, on payment of such sum not exceeding one rupee as the company may specify, for every hundred words or fractional part thereof required to be copied.

The company shall cause any copy so required by any person to be sent to that person within a period of ten days commencing on the day next after the day on which the requirement is received by the company.

(3) Where any inspection required under the provisions of this section is refused or if any copy required under the provisions of this section is not sent within the proper period, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable in respect of each offence to a fine not exceeding one thousand rupees and further to a default fine of two hundred and fifty rupees for every day during which the default continues.

(4) In the case of any such refusal or default, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the persons requiring them.

(1) Where

the person aggrieved, or any member of the company, or the company, may make an application to court for rectification of the register.

(2) Where an application is made under the provisions of this section, the court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party agreed.

(3) On an application made under the provisions of this section, the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members, or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

(4) In the case of a company required by this Act to send a list of its members to the Registrar, the court, when making an order for rectification of the register under the provisions of subsection (2) shall by its order direct notice of the rectification to be given to the Registrar.

(1) A company having a share capital may, if so authorised by its articles, cause to be kept in any country other than Sri Lanka a branch register of members resident in that country (in this Act called “branch register”).

(2) The company shall give to the Registrar notice of the situation of the office where any branch register is kept and of any change in its situation, and if it is discontinued, notice of its discontinuance, and any such notice shall be given within one month from the date of opening of the office or of change or discontinuance, as the case may be.

(3) Where default is made in complying with the provisions of subsection (2), the company and every officer of the company who is in default shall be liable to a default fine.

(1) A branch register shall be deemed to be part of the company’s register of members (in this section called “the principal register”).

(2) It shall be kept in the same manner in which the principal register is by this Act required to be kept, except that the advertisement before closing the register shall be inserted in any newspaper circulating in the district where the branch register is kept.

(3) The company shall transmit to its registered office in Sri Lanka a copy of every entry In its branch register as soon as may be after the entry is made, and shall cause to be kept at its registered office, duly brought up to date from time to time, a duplicate of its branch register.

Every such duplicate shall, for all the purposes of this Act, be deemed to be part of the principal register,

(4) Subject to the provisions of this section with respect to the duplicate register, the shares registered in a branch register shall be distinguished from the shares registered in the principal register, and no transaction with respect to any shares registered in a branch register shall, during the continuance of that registration, be registered in any other register.

(5) A company may discontinue to keep a branch register, end thereupon all entries In that register shall be transferred to the principal register.

(6) Subject to the provisions of this Act, any company may, by its articles, make such provisions as it may think fit respecting the keeping of branch registers.

(7) Where default is made in complying with the provisions of subsection (3), the company and every officer of the company who is in default shall be liable to a default fine.

(1) Every company having a share capital shall once at least in every year make a return containing list of all persons who, on the fourteenth day from the date of the first or only ordinary general meeting in the year, are members of the company, and all persons who have ceased to be members since the date of the last return or, in the case of the first return, of the incorporation of the company:

Provided that the preceding provisions of this section shall not apply to a company either in the year of its incorporation or, if it is not required under the provisions of section 127 to hold an annual general meeting during the following year, in that year.

(2) The list referred to in subsection (I) shall state the names, addresses, nationalities and principal occupations of all the past and present members therein mentioned, and the number of shares held by each of the existing members at the date of the return, specifying shares transferred since the date of the last return or, in the case of the first return, of the incorporation of the company by persons who are still members and have ceased to be members respectively and the dates of registration of the transfers, and, if the names contained in such list are not arranged in alphabetical order, shall have annexed to it an index sufficient to enable the name of any person in such list to be readily found :

Provided that, where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the list shall state the amount of stock held by each of the existing members instead of the amount of shares and the particulars relating to shares referred to in the preceding provisions of this section.

(3) The return made under the provisions of subsection (1) shall also state the date of incorporation, and change of name (if any), of the company and the address of the registered office of the company and shall contain a summary distinguishing between shares issued for cash and shares issued as fully or partly paid up otherwise than in cash, and specifying the following particulars:

(4) The return made under the provisions of subsection (1) shall be in accordance with the form set out in the Sixth Schedule hereto or as near thereto as circumstances permit.

(5) Where a company fails to comply with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(6) For the purposes of this section and of the. Sixth Schedule hereto, the expressions ” director ” and ” officer ” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

(1) Every company not having a share capital shall at least once in every calendar year make a return stating

Provided that the preceding provisions of this section shall not apply to a company either in the year of its incorporation or, if it is not required under the provisions of section 127 to hold an annual general meeting during the following year, in that year.

(2) There shall be annexed to any return made under the provisions of subsection (1), a statement containing particulars of the total amount of the indebtedness of the company in respect of all mortgages and charges which are required to be registered with the Registrar under this Act.

(3) Where a company fails to comply with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

(4) For the purposes of this section, the expressions ” officer” and ” director” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

(1) The annual return shall be completed within Time for forty-two days from the date of the annual general annual meeting for the year, whether or not that meeting is the first or only ordinary general meeting, or the first or only general meeting, of the company in the year, and the company shall forthwith forward to the Registrar a copy of such return signed both by a director and by the secretary of the company.

(2) Where a company fails to comply with this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

For the purposes of this subsection, the expression “officer” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

(1) Subject to the provisions of this Act, there shall be annexed to the annual return

and where any such balance sheet or document required by law to be annexed thereto is in a language other than the official language or English, there shall be annexed to that balance sheet a translation of the balance sheet or document in such language as may be required by the Registrar and certified in the prescribed manner to be a correct translation.

(2) Where any balance sheet or document required by law to be annexed to such balance sheet does not comply with the requirements of the law as in force at the date of the audit with respect to form, there shall be made such additions to and corrections in the copy referred to in paragraph (a) of subsection (1) as would have been required to be made in the balance sheet or document in order to make it comply with the said requirements and the fact that the copy has been so amended shall be stated thereon.

(3) Where a company fails to comply with the provisions of this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a default fine.

For the purposes of this subsection, the expression ” officer ” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

(1) Every company limited by shares and every company limited by guarantee and having a share capital shall, within a period of not less than one month and not report more than three months from the date on which the company is entitled to commence business, hold a general meeting of the members of the company, in this Act referred as the ” statutory meeting “.

(2) The directors shall, at least fourteen days before the day on which the statutory meeting is held, forward a report, in this Act referred to as the ” statutory report”, to every member of the company :

Provided that, if the statutory report is forwarded later than is required by the provisions of this subsection, it shall, notwithstanding that fact, be deemed to have been duly forwarded if it is so agreed by all the members entitled to attend and vote at the meeting.

(3) The statutory report shall be certified by not less than two directors of the company, or, where there are less than two directors, by the sole director and secretary and shall state

(4) The statutory report shall, so far as it relates to the shares allotted by the company, to the cash received in respect of such shares, and to the receipts and payments of the company on capital account, be certified as correct by the auditors, if any, of the company.

(5) The directors shall cause a copy of the statutory re port, certified as set out in the provisions of subsection (4) to be delivered to the Registrar for registration forthwith after the sending thereof to the members of the company.

(6) The directors shall cause a list showing the names, descriptions and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting, and to remain open and accessible to any member of the company during the continuance of the meeting.

(7) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company, or arising out of the statutory re port, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed.

(8) The meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting.

(9) In the event of any default in complying with the provisions of this section, every director of the company who is knowingly and wilfully guilty of the default or, in the case of default by the company, every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees.

(10) The provisions of this section shall not apply to a private company.

(1) Every company shall in each year hold a general meeting called its annual general meeting in addition to any other meetings in that year and shall specify the meeting as such in the notice calling it ; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:

Provided that, so long as a company holds its first annual general meeting within eighteen months of its incorporation it need not hold it in the year of its incorporation or in the following year.

(2) Where default is made in holding a meeting of the company in accordance with the provisions of subsection (1) the Registrar may, on the application of any member of the company call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the Registrar thinks expedient, including any direction modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company’s articles, and a direction to the effect that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(3) A general meeting held in pursuance of the provisions of subsection (2) shall, subject to any directions of the Registrar, be deemed to be an annual general meeting of the company ; but, where a meeting so held is not held in the year in which the default in holding the company’s annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it shall be so treated.

(4) Where a company resolves that a meeting shall be so treated, a copy of the resolution shall, within fifteen days from the date of passing thereof, be forwarded to the Registrar and recorded by him.

(5) Where default is made in holding a meeting of the company in accordance with the provisions of subsection (1), or in complying with any directions of the Registrar under the provisions of subsection*(2), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees, and where default is made in complying with the provisions of subsection (4), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of two hundred and fifty rupees.

(1) The directors of a company, notwithstanding anything in its articles, shall, on the requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital of the company as at the date of the deposit carries the right of voting at general meetings of the company, or, in the case of a company not having a share capital, members of the company representing not less than one-tenth of the total voting rights of all the members having at the said date-a right to vote at general meetings of the company, forthwith proceed duly to convene an extraordinary general meeting of the company.

(2) The requisition shall state the objects of the meeting, and shall be signed by the requisitionists and deposited a’ the registered office of the company, and may consist of several documents in like form, each signed by one or more requisitionists.

(3) Where the directors do not within twenty-one days from the date of the deposit of the requisition duly proceed to convene a meeting, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of three months from the said date.

(4) A meeting convened under the provisions of this section by the requisitionists shall be convened in the same manner as nearly as possible, as that in which meetings are to be convened by the directors.

(5) Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.

(6) For the purposes of this section, the directors shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice thereof as is required by the provisions of section 137.

(1) Any provision of a company’s articles shall be void in so far as it provides for the calling of a meeting of the company (other than an adjourned meeting) by a shorter notice than

(2) Subject to the provisions of subsection (1), save in so far as the articles of a company make other provisions in that behalf, a meeting of the company (other than an adjourned meeting) may be called

(3) A meeting of the company shall, notwithstanding that it is called by shorter notice than that specified in the last foregoing subsection or in the company’s articles, as the case may be, be deemed to have been duly called if it is so agreed-

(a) notice of the meeting of a company shall be served on every member of the company in the manner in which notices are required to be served under the provisions of by Table A of the First Schedule hereto and for the purpose of this paragraph, the expression ” Table A ” means that Table as is for the time being in force ;

(b) two or more members holding not less than one- tenth of the issued share capital or, if the company has not a share capital, not less than five per centum in number of the members of the company may call a meeting ;

(c) in the case of a private company two members, and in the case of any other company three members, present in person or by an authorized representative under the provisions of paragraph (a) of subsection (1) of section 132 shall be a quorum ;

(d) any member elected by the members present at a meeting may be chairman thereof ;

(e) no member shall be entitled to vote at any general meeting unless, all calls or other sums then payable by him in respect of shares in the company have been paid ;

(f) in the case of a company having a share capital where voting is by show of hands, each member shall have one vote and on a poll every member shall have one vote in respect of each share or each one hundred rupees of stock, as the case may be, held by him and in any other case every member shall have one vote.

(1) Where for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, or to conduct the meeting of the company in the manner specified by the articles or this Act, the court may either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is made, may give such ancillary or consequential direction as it thinks expedient, and any meeting called, held and conducted in accordance with any such order shall for all purposes, be deemed to be a meeting of the company duly called, held and conducted and any such direction may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) A copy of every notice calling a meeting under the provisions of this section shall be sent to the Registrar at the same time as such notice is required to be sent to the members.

(3) Where default is made in complying with the provisions of subsection (2) the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees.

(1) A corporation, whether a company within the meaning of this Act or not, may

(2) A person authorized as aforesaid shall be entitled to exercise the same power on behalf of the corporation which be represents as, that corporation could exercise if it were an individual shareholder, creditor or holder of debentures, of that other company.

(1) Any member of a company entitled to attend and vote at a “meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, but a proxy so appointed shall not have the same right as, the member to speak at the meeting unless expressly authorized in that behalf by the instrument appointing him as proxy ;

Provided that, unless the article otherwise provide,

(2) In every notice calling a meeting of a company having a share capital there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member ; and where default is made in complying with the provisions of this, subsection as respects any meeting every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five hundred rupee.

(3) Any provision contained in a company’s articles shall be void in so far as it would have the effect of requiring the instrument appointing a proxy, or any other document necessary to show the validity of or otherwise relating to the appointment of a proxy, to be received by the company or any other person more than forty-eight hours and not less than twenty-four hours before a meeting or adjourned meeting in order that the appointment may be effective thereat.

(4) Where for the purpose of any meeting of a company invitations to appoint as proxy a person “or one of a number of persons specified in the invitations are issued at the company’s expense to some only of the members entitled to be sent a notice of the meeting and to vote thereat by proxy, every officer of the company who knowingly and wilfully authorizes or permits their issue as aforesaid shall be guilty of an offence and shall be liable to a fine not exceeding one thousand rupees:

Provided that an officer shall not be liable under the provisions of this subsection by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy or of a list of persons willing to act as proxy if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(5) The provisions of this section shall apply to meetings of any class of members of a company as it applies to general meetings of the company.

(6) Every member of the company or a proxy holder shall be entitled to inspect the proxies received under the provisions of this section at least three hours before the commencement of the meeting or adjourned meeting at which the proxy is to be used.

(1) Any provision contained in a company’s articles shall be void in so far as it would have the effect either

(2) The instrument appointing a proxy to vote at a meeting of a company shall be deemed also to confer authority to demand or join in demanding a poll, and for the purpose of the provisions of subsection (1) a demand by a person as proxy for a member shall be the same as a demand by the member.

(1) It shall be the duty of a company, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the requisitionists

(2) The number of members necessary for a requisition under the provisions of subsection (1) shall be

(3) Notice of any such resolution shall be given, and any such statement shall be circulated, to members of the company entitled to have notice of the meeting sent to them by serving a copy of the resolution or statement on each such member in any manner permitted for service of notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving him notice of meetings of the company :

Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as, the case may be, in the same manner and as far as practicable at the same time as notice of the meeting and, where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.

(4) A company shall not be bound under-the provisions of this section to give notice of any resolution or to circulate any statement unless

Provided that where, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less from the date on which the copy has been deposited, the copy though not deposited within the time required by this, subsection shall be deemed to have been properly deposited for the purposes thereof.

(5) The company shall not be bound under the provisions of this section to circulate any statement, if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by the provisions of this section are being abused to secure unnecessary publicity for defamatory matter ; and the court may order the company’s costs on an application made under the provisions of this section to be paid in whole or in part by the requisitionists, notwithstanding that they are not parties to the application.

(6) Notwithstanding anything in the company’s articles, the business which may be dealt with at an annual general meeting shall include any resolution of which notice is given in accordance with the provisions of this section, and for the purposes of this subsection notice shall be deemed to have been so given notwithstanding the accidental omission, of giving such notice to one or more members.

(7) Where any default is made in complying with the provisions of this section, every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding five thousand rupees.

(1) A resolution shall be an extraordinary resolution when it has been passed by not less than three-fourths of such members as, being entitled so to do, vote in person or where proxies are allowed, by proxy, or by an authorized representative under the provisions of paragraph (a) of subsection (1) of section 132, at a general meeting of which notice specifying the intention to propose the resolution as an extraordinary resolution has been duly given.

(2) A resolution shall be a special resolution when it has been passed by such a majority as is required for the passing of an extraordinary resolution and at a general meeting of which not less than twenty-one days’ notice, in the case of a company other than a private company or, fourteen days’ notice in the case of a private company, specifying the intention to propose the resolution as a special resolution has been duly given :

Provided that, where it is so agreed by the members having the right to attend and vote at any such meeting, being members together holding not less than ninety-five per centum in nominal value of the shares giving that right, or, in the case of a company not having a share capital, together representing not less than ninety-five per centum of the total voting rights at that meeting of all the members, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days’ notice or fourteen days’ notice, as the case may be, has been given.

(3) At any meeting at which an extraordinary resolution or a special resolution is submitted to be passed, a declaration of the chairman that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

(4) In computing the majority on a poll demanded on the question that an extraordinary resolution or a special resolution be passed, reference shall be had to the number of votes cast for and against the resolution.

(5) For the purposes of this section, notice of a meeting shall be deemed to be duly given and the meeting to be duly held when the notice is given and the meeting held in manner provided by the articles, or by this Act.

(1) A copy of every resolution or agreement to which this section applies shall within fifteen days after the passing or making thereof, be forwarded to the Registrar and recorded by him in the prescribed form.

(2) Where articles have been registered, a copy of every such resolution or agreement for the time being in force shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.

(3) Where articles have not been registered, a printed copy of every such resolution or agreement shall be for warded to any member at his request, on payment of five rupees or such less sum as the company may direct.

(4) The provisions of this section shall apply to

(5) Where a company fails to comply with the provisions of subsection (1), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine of two hundred and fifty rupees.

(6) Where a company fails to comply with the provisions of subsection (2) or subsection (3), the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees for each copy in respect of which default is made.

(7) For the purposes of subsections (5) and (6), a liquidator of the company appointed under this Act shall be deemed to be an officer of the company.

(a) a company;

(b) the holders of any class of shares in a company ;

(c) the directors of a company,

(1) Every company shall cause minutes of all proceedings of general meetings, meetings of its directors, and, where there are managers, meetings of Its managers, to be entered in books kept for that purpose.

(2) Any such minutes purporting to be signed by the chairman of the meeting at which the proceedings were had, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(3) Where minutes have been made in accordance with the provisions of this section of the proceedings at any general meeting, or meeting of directors or managers, as the case may be, of the company, then, until the contrary is proved, the meeting shall be deemed to have been duly held and convened, and all proceedings had thereat to have been duly had, and all appointments of directors, managers, or liquidators, made at the meeting shall be deemed to be valid.