If the company is dissatisfied with the objection raised by the Company Law Board

If the company is dissatisfied with the objection raised by the Company Law Board, it may, within 30 days of the receipt of the notice of the objection, prefer an appeal to the Court in the prescribed manner and on payment of the prescribed fee.

The decision of the Court on such appeal shall be final and binding on the CLB

and on the company.

The aforesaid provisions of Section 635-B are without prejudice to the provisions

of any law for the time being in force.

inspector for the purpose, the Central Government or the CLB, as the case may be, may require any person whom it has reasonable cause to believe:

(n) to be, or to have been interested in those shares or debentures; or

(b) to act, or to have acted, in relation to those shares or debentures, as the legal

adviser or agent of someone interested therein; to give the Central Government or the Company Law Board, as the case may be, any information which he has, or can reasonably be expected to obtain, as to the present and past interests in those shares or debentures, and the names and addresses of the persons interested and of any person who acts or have acted on their behalf in relation to the shares or debentures

other expenditure, stating the nature and purpose

The objective of the Minimum Subzero Jettison provision is to prevent any company to commence business unless adequate resources are available to give it

a good start.

The amount of minimum subscription excludes amount of ?’lY shares

allotted for consideration otherwise than in cash.

If the minimum subscription is not received by the company within 12

days of the first issue of prospectus, the company must return the

received on application within 130 days from the date offirst issue of prospectus (i.e. within the next 10 days) to the applicants; otherwise, the directors of

the company are jointly and severely liable to pay the amount to the applicants with 6% p.a. interest from the 13 1^st day, unless they prove that it was not

due to any negligence or misconduct on their part (Sec. G9 (5)].

Howcver, the SEBI guidelines arc inconsistent to the provisions of the Companies Act. According to SEBI guidelines, it has been obligatory upon the

companies making public issues to make a declaration in the prospectus that the company docs not receive minimum subscription of 90 per cent of the

entire issue within GO days from the date of closure of issue. the entire amount collected on application shall be refunded forthwith to the applicants within

78 days from the date of closure of issue, and in case of default, they will pay interest for the delayed period at 15% p.a.

4. Money to be kel)t in a Scheduled Bank (Section 69). All moneys received by the company as ‘Application Money’ must be deposited and kept deposited

Define ‘share’. What are the different types of shares that may be issued by a company

A share in a company is one of the units into which the total’ share capital of the company is divided. It is a fractional part of the capital Of the company,

which forms the basis of ownership and interests of a subscriber in the company. It is the interest of a shareholder in the compmy measured by a sum

of money for the purposes of liability and interest thereto. Section 2(46) of the Companies Act defines a share “as a share in the share Cal)ital of a

company, and includes stock except where u distinction hetween stock and share is expressed or implied.” But this

definition fails to explain the true nature of a share. In the case of Commissioner of Income-tax Vs. Standard Vacuum Oil Company, the Supreme Court of

India defined a share thus, “By a share in a comp:my is meant not any sum of money but an interest measured by a sum of

money and made UI) of diverse rights conferred on its holders hy the urticles of the company which constitute a contruct between him und the company.”

A share is a right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company

is a going concern and in its winding up. When a shareholder has paid the amount of the shares held by him, the shares represent his proprietary interest

in the company. According to Section 82, the shures or other interests of any member in u compuny shull be movable l)rOI)erty, transferable in the

munner provided by the Articles of tbe ComlHmy. Shares are treated as “goods” under the Sale of Goods Act and they can be transferred to other

persons. The company issues a ‘share certificate’ to the shareholder. It may, however, be noted that a share certificate is not a negotiable instrument.

To sum-up, a share signifies the following:

(i) the interest of a shareholder in the company;

(ii) the right to receive dividend; .

(iii) the right to attend and vote at the meetings;

(iv) the right to share in the surplus assets of the company, if any, in

the event of the company being wound up;

(v) the liability of the shareholder in the company to pay calls on shares until fully paid up;

(vi) the right of the shareholder to transfer the share subject to the

Articles of Association;

Thus, a share is a bundle of rights as well as liabilities. The meaning

and the nature of share has been beautifully summarised as follows:

In the case of Vishwanathan Vs. East India Distilleries:

“Share is not a property like a log of wood or cloth etc. It is corporeal in nature and consists merely of a bundle of rights and obligations. Every one of these

rights and obligations are created by a statute or under a statutory instntment or power which also de(ines their extent, .scope, boundaries and incidents.”

Each share in a company has a nominal value and must bear a distinctive number. The requirement of distinctive number shall not apply to the shares

held with a depository. [Sec. 83 as amended by the Depository Related Laws (Amendment) Act 1987].

prohibited the distribution of the profits among its members

Government may, however, allow a company to drop these words from its name in case it has been formed for the promotion. of art, science or culture.
etc., and it has prohibited the distribution of the profits among its members (Section 25). .
Publication of Name (Section 147). Once the name is chosen and the compan)' is registered in that name, Section ]47 requires that it, alon!:,'with the
address of its registered office, must appear on the outside of every office or place of business (though inside the building) of the company in a
conspicuous manner in one of the local languages and on all chouse, bills, letters, notices and other official publications, etc., of the company.
2. Registered Office or Domicile Clause (Section 146). This clause of' memorandum of association' contains the name of the state in which the
Registered Office of the company is to be situated. Every company is required to have a registered office from the date on which it begins to carry on its
business or within 30 days of the date on which it is entitled to commence business, whichever is earlier. All communications and notices in respect of a
company are to be addressed to its registered office.
A Memorandum requires the state in which the company is registered. The Actual address of the registered office need not be given in the
Memorandum. It may be communicated to Registrar within 30 days from' the date of incorporation.
The situation ofa company's registered office determines the domicile of the company. The domicile is important to determine the jurisdiction of the
courts in which the legal actions are to be brought by or against the company.
3.obiects Clause (Section 13). If the Memorandum is the most important document of a company, object clause is the most important clause in the
memorandum.
(i) The main objects of the company to be pursued by the company on its incorporation;
(ii) Objects incidental or ancillary to the attainment of the main objects.
(iii) Other objects of the company not included in (i) and (ii) above.
In the case of companies (other than trading companies) with objects not confined to one state, the memorandum must state the state to whose
territories the objects extend.

duties and liabilities of promoters

The term 'promoter' or 'company promoter' may be defined as a person who thinks of forming a company, and actually brings it into existence. This
term is used in many company matters. The Companies Ac itself uses it in various sections (62, 69, 76, 478 and 519) and impose liability .on the
promoters. But it will be interested to know that the term 'Promoter' has not been clearly defined in the Companies Act. Moreover, it has also not been
clearly defined by judicial interpretation. Justice Cockburn (in Tlvcross.v.\'. Grant) defined a promoter as "a person who undertakes to form a company
with reference to a given project and to set it going and takes necessary steps to accomplish that purpose." In the words of Brown, LJ. "The term
promoter" is a term not of law but of business, usefully summing up in a single word a number of business operations familiar to the commercial world by
which a company is generally brought into existence." Thus, the promoter is a person who originates the idea of starting a business, plans the formation of

a company, and actually brings it into existence. He is the person who does the necessary preliminary work incidental to the formation of the company. In
simple words, a promoter is a person who brings a company into existence. Whether a person is a promoter or not is a question of fact in each case.
Much depends upon the nature of the role played by him in the promotion of the company.