325.Managing agency company not to have managing agent.—(1) No company acting as the managing agent of any other
company shall, after the commencement of this Act, appoint a managing agent for itself, whether it transacts any other kind of
business in addition or not.

(2) No company having a managing agent shall, after the commencement of this Act, be appointed as the managing agent of any
other company.

(3) Any appointment of managing agent made in contravention of sub-section (1) or (2) shall be void.

(4) Where at the commencement of this Act a company having a managing agent is itself acting as a managing agent of any other
company, the term of office of the company first mentioned as managing agent of the other company shall, it does not expire
earlier in accordance with the provisions applicable thereto immediately before such commencement [including any provisions
contained in the Indian Companies Act, 1913 (7 of 1913)], expire on the 15th day of August, 1956.

Appointment and term of office

326.Central Government to approve of appointment, etc., of managing agent; and circumstances in which approval may be
accorded.— (1) In respect of any company to which neither the prohibition specified in section 324 nor that specified in section
325 applies, a managing agent shall not be appointed or re-appointed,—

(a) except by the company in general meeting; and

(b) unless the approval of the Central Government has been obtained for such appointment or re-appointment.

(2) The Central Government, shall not accord its approval under sub-section (1) in any case, unless it is satisfied—

(a) that it is not against the public interest to allow the company to have a managing agent;

(b) that the managing agent proposed is, in its opinion, a fit and proper person to be appointed or re-appointed as such, and that
the conditions of the managing agency agreement proposed are fair and reasonable; and

(c) that the managing agent proposed has fulfilled any conditions which the Central Government requires him to fulfil.

327.Application of sections 328 to 331.—The provisions of sections 328 to 331 shall apply to—

(a) a public company;

(b) a private company which is a subsidiary of a public company; and

(c) a private company which is not a subsidiary of a public company, unless the Central Government, by general or special
order, specifically exempts the private company.

328.Term of office of managing agent.—(1) After the commencement of this Act, no company shall—

(a) in case it appoints a managing agent for the first time (that it is to say, in case the company has had no managing agent at any
time since its formation), make the appointment, for a term exceeding fifteen years;

(b)in any other case, re-appoint or appoint a managing agent for a term exceeding ten years at a time;

(c) re-appoint a managing agent for a fresh term, when the existing term of the managing agent has two years or more to run:

in the interest of the company so to do, permit the re-appointment of a managing agent at an earlier time than that specified in
clause (c) a managing agent at an earlier time than that specified in clause (c).

(2) For the purpose of sub-section (1), re-appointment does not include the re-appointment of any person on fresh, additional or
changed conditions for any period not extending beyond his existing term, but otherwise includes—

(a) the renewal, or the extension of the term, of a previous appointment; and

(b) the appointment of any person or persons having an interest in the previous managing agency.

(3) Any appointment or re-appointment of a managing agent made in contravention of the provisions of sub-sections (1) and (2)
shall be void in respect of the entire term for which the appointment or re-appointment is made.

Variation of managing agency agreement

329.Variation of managing agency agreement.—A resolution of the company in general meeting shall be required for varying the
terms of managing agency agreement; and before such a resolution is passed, the previous sanction of the Central Government
shall be obtained therefor.

Special provisions regarding existing managing agents

330.Term of office of existing managing agents to terminate on 15th August, 1960.—Where a company has a managing agent at
the commencement of this Act, the term of office of such managing agent shall, if it does not expire earlier in accordance with the
provisions applicable thereto immediately before such commencement [including any provisions contained in the Indian
Companies Act, 1913 (7 of 1913)], expire on the 15th day of August, 1960, unless before the date he is re-appointed for a
fresh term in accordance with any provisions contained in this Act.

331.Application of Act to existing managing agents.—All provisions of this Act, other than those relating to the term for which
the office can be held, shall apply to every managing agent holding office at the commencement of this Act, with effect from such
commencement.

Restrictions on number of managing agencies

332.No person to be managing agent of more than ten companies after 15th August, 1960.—(1) After the 15th day of August,
1960, no person shall, at the same time, hold office an managing agent in more than ten companies.

(2) Where a person holding office as managing agent in more than ten companies before that date fails to comply with
sub-section (1), the Central Government may permit him to hold office as managing agent with effect from that date in respect of
such of those companies, not exceeding ten in number, as it may determine.

(3) In calculating the number of companies of which a person may be a managing agent in pursuance of this section, the following
companies shall be excluded, namely:—

(a) a private company which is neither a subsidiary nor a holding company of a public company;

(b) an unlimited company;

(c) an association which does not carry on business for profit, or which prohibits the payment of a dividend.

(4) For the purposes of this section, each of the following persons shall also be deemed to hold office as managing agent of the
company:—

(a) where the managing agent of the company is a firm, every partner in the firm;

(b) where the managing agent of the company is itself a company, every person who is a director, the secretaries and treasurers
or a manager, of the latter company, and every member thereof who is entitled to exercise not less than twenty per cent.of the
total voting power therein.

(5) Any person who acts as a managing agent of more than ten companies in contravention of this section shall be punishable
with fine which may extend to one thousand rupees in respect of each of those companies in excess of ten, for each day on
which he so acts.

Right to charge on assets

333.Right of managing agent at charge on companys assets.—A managing agent whose office stands terminated under section
324 or 332 shall be entitled to a charge on the assets of the company in respect of all moneys which are due to him from the
company at the date of such termination, or which he may have to pay after that date in respect of any liability or obligation
properly incurred by him on behalf of the company before such date, subject to all existing charges and incumbrances, if any, on
such assets.

Vacation of office, removal and resignation

334.Vacation of office on solvency, dissolution or winding up, etc.—Subject to the provisions of section 340, the managing
agent of a company shall be deemed to have vacated his office as such—

(a) in case the managing agent is an individual, if he is adjudged an insolvent;

(b) in the same case, if the managing agent applies to be adjudicated an insolvent;

(c) in case the managing agent is a firm, on its dissolution from any cause, whatsoever, including the insolvency of a partner in the
firm;

(d) in case the managing agent is a body corporate, on the commencement of its winding up whether by or subject to the
supervision of the court, or voluntarily;

(e) in all cases, on the commencement of the winding up of the company managed by the managing agent, whether by or subject
to the supervision of the Court of voluntarily.

335.Suspension from office where receiver appointed.—(1) The managing agent of a company shall be deemed to have been
suspended from his office as such, it a receiver is appointed for his property—

(a) by a court, or

(b) by or on behalf of the creditors of the managing agent, including the holders of debentures issued by the managing agent, in
pursuance of any power conferred by an instrument executed by the managing agent:

Provided that the Court which appointed the receiver, or which will have jurisdiction to wind up the managed company, as the
case may be, may order, director that the managing agent shall continue to act as such for such period and subject to such
restrictions and conditions, if any, as may be specified in the order.

(2) The Court may, at any time, cancel or very any order passed by it under the proviso to sub-section (1).

336.Vacation of office on conviction in certain cases.—Subject to the provisions of sections 340 and 341, the managing agent of
a company shall also be deemed to have vacated his office as such, if—

(a) the managing agent;

(b) in case the managing agent is a firm, any partner in the firm; or

(c) in case the managing agent is a body corporate, any director of, or any officer holding a general power of attorney from, such
body corporate;

is convicted by a Court in India, after the commencement of this Act, of any offence, and sentenced therefor to imprisonment for
a period of not less than six months.

337.Removal for fraud or breach of trust.—A company in general meeting may, by ordinary resolution, remove its managing
agent from office—

(i) for fraud or breach of trust in relation to the affairs of the company or of any subsidiary or holding company thereof, whether
committed before or after the commencement of this Act;

(ii) for fraud or breach of trust, whether committed before or after such commencement, in relation to the affairs of any other
body corporate, if a Court of Law, whether in or outside India, finds such fraud or breach of trust to have been duly established;
or

(iii) subject to the provisions of sections 340 and 341, where the managing agent is a firm or body corporate, if any partner in the
firm, or any director of, or any officer holding a general power of attorney from, the body corporate is guilty of any such fraud or
breach of trust as is referred to in clause(i).

338.Removal for gross negligence or mismanagement.— company in general meeting may, by special resolution, remove its
managing agent from office for gross negligence in, or for gross mismanagement of, the affairs of the company or of any
subsidiary thereof.

339.Power to call meetings for the purposes of section 337 and 338 and procedure.—(1) Without prejudice to any other
provision contained in this Act or in the articles of the company for the calling of meetings, any two directors of the company may
call a general meeting of the company for the purpose of considering any resolution of the nature referred to in section 337 or
338.

(2) On receipt of notice of any such resolution, a copy of the resolution shall be sent forthwith to the managing agent by the
company.

(3) The managing agent shall have, in relation to any such resolution, all the rights which a director of the company has under
section 284, in relation to any resolution for removing him from office, including, in particular, the right to make representations to
the company in writing, to have such representations sent to members of the company and to have them read out at the meeting
and also the right to be heard on the resolution at the meeting.

340.Time when certain disqualifications will take effect.—(1) The disqualifications imposed by clause (a) of section 334, by
sub-section (1) of section 335, by section 336, and by any resolution passed in pursuance of clause (ii) of section 337, shall not
take effect—

(a) for thirty days from the date of the order of adjudication, appointment of the receiver, sentence, or finding of the Court, as the
case may be, or

(b) where any appeal or petition is preferred within the thirty days aforesaid against the order, appointment, sentence or
conviction resulting in the sentence, or finding until the expiry of seven days from the date on which such appeal or petition is
disposed of, or

(c) where within the seven days aforesaid, any further appeal or petition is preferred in respect of the order, appointment,
sentence, conviction or finding as the case may be and the appeal or petition, if allowed, would result in the removal of the
disqualification, or in making the resolution inapplicable, as the case may be, until such further appeal or petition is disposed of.

(2) In the cases referred to in sub-section (1), the Board may suspend the managing agent from office immediately, on or at any
time after, the adjudication, appointment, sentence or finding referred to in clause (a) of the sub-section and until the disposal of
the appeals and petitions, if any, referred to in clauses (b) and (c) thereof or until the convicted partner, director or office is
expelled or dismissed in pursuance of section 341, as the case may be.

341.Conviction not to operate as disqualification if convicted partner, director, etc., is expelled.— (1) In the case referred to in
clauses (b) and (c) of section 336, it shall be open to the managing agent, notwithstanding anything to the contrary in any other
law or agreement, for the time being in force, to expel or dismiss the convicted partner, director or officer within thirty days from
the date of his sentence; and in that event the disqualifications imposed by the clauses aforesaid shall cease to apply.

(2) Sub-section (1) shall not affect the operation of section 346 in any case to which that section would otherwise apply.

342.Resignation of office by managing agent.—(1) Unless the managing agency agreement otherwise provides, a managing agent
may, by notice to the Board, resign his office with effect from such date as may be specified in the notice.

(2) The managing agent shall cease to act as such with effect from the date so specified or from such later date, if any, as may be
mutually agreed on between him and the Board; but his resignation shall not be effective until it is considered as provided in
sub-section (3).

(3) When notice of resignation is given as aforesaid, the Board shall—

(a) prepare a statement of the affairs of the company as at the date specified in the notice of resignation or such subsequent date
[not being later than that on which the managing agent ceases to act as such under sub-section (2)] as the directors may thinks
suitable, together with a balance -sheet made out as at that date, and a profit and loss account for the period subsequent to the
date for which the last such account was prepared and laid before the company in general meeting and ending on that date;

(b) obtain a report from the auditors of the company on such balance-sheet and profit and loss account , in accordance with
sections 227, 228 and 229; and(c) place the managing agent's resignation together with the statement of affairs, balance-sheet, profit and loss account and
auditor's report mentioned above, before the company in general meeting.

(4) In relation to any report made by the auditors as aforesaid sections 230, 231, 232 and 233 shall apply in like manner as they
apply in relation to the auditors' report referred to therein.

(5) The company in general meeting may, by resolution accept the resignation or take such other action with reference thereto as
it may deem fit.

Transfers of, and succession to, office

343.Transfer of office by managing agent.—A transfer of his office by the managing agent of a company shall not take effect
unless it is approved both by the company in general meeting and by the Central Government.

344.Managing agency not to be heritable after commencement of Act.—Any agreement made by a company other than a
private company which is not a subsidiary of a public company, with its managing agent after the commencement of this Act shall
be void in so far as it provides for succession to the office by inheritance or devise.

345.Succession to managing agency by inheritance or devise under agreement before commencement of Act, to be subject to
Central Governments approval.—(1) Where the office of the managing agent of a company is held by an individual at the
commencement of this Act and the managing agency agreement provides for succession to the office by inheritance or devise, no
person shall succeed to the office on the death of the holder thereof, unless the succession of such person thereto is approved by
the Central Government; and that Government shall not accord such approval unless, it its opinion, such person is a fit and
proper person to hold the office of managing agent of the company.

(2) The provisions of sub-section (1) shall not apply to a private company which is not a subsidiary of a public company.

Changes in constitution of firms and corporations

346.Changes in constitution of managing agency firm or corporation to be approved by Central Government.—(1)
Notwithstanding anything to the contrary contained in any other provision of this Act, where the managing agent of a public
company, or of a private company which is a subsidiary of a public company, is a firm or body corporate and any change takes
place in the constitution of the firm or body corporate, the managing agent shall cease to act as such on the expiry o six months
from the date on which the change takes place of such further time as the Central Government may (whether before or after the
expiry of the six months) allow in that behalf unless the approval of the Central Government has been accorded before such
expiry to the changed constitution of the firm or body corporate.

Explanation.—For the purposes aforesaid, a change in the constitution of a body corporate means—

(a) its conversion from a private to a public company, or from a public to a private company;

(b) any change among the directors or managers of the corporation, whether caused by the death or retirement of a director or
manager, the appointment of a new director or manager, or otherwise;

(c) any change in the ownership of shares in the body corporate or in the case of a body corporate not having a share capital,
any change in its membership.

(2) Where a managing agent is a body corporate (other than a private company) the shares whereof are for the time being dealt
in , or quoted on, recognised stock exchange, to change in the ownership of the shares of the company shall be deemed to be a
change in its constitution within the meaning and for the purposes of sub-section (1), unless the Central Government, by
notification in the Official Gazette, otherwise directs:

Provided that no such notification shall be issued in respect of any company, unless the Central Government is of opinion that any
change in the ownership of its shares has taken place or is likely to take place, which has affected or is likely to affect
prejudicially the affairs of any company which is being managed by the managing agent.

347.Application of Schedule VIII to certain managing agents.—(1) The provisions of Schedule VIII shall apply—

(a) to every firm or private company which acts as the managing agent of any company, whether public or private, and 

(b) save as provided in sub-section (2), to every other body corporate (not being a private company) which acts as the
managing agent of any company, whether public or private.

(2) A body corporate (not being a private company) acting as managing agent shall, if and so long as its shares are dealt in, or
quoted on, any recognised stock exchange, be exempt from the operation of sub-section (1) unless the Central Government, by
notification in the Official Gazette, otherwise directs:

Provided that the Central Government may, by order ,modify or limit the operation of this sub-section in relation to any body
corporate in such manner as that Government thinks fit.

(3) If default is made by a managing agent to which Schedule VIII applies in complying with the provisions thereof—

(a) if the managing agent is a firm , every partner therein who is in default, and

(b) if the managing agent is a body corporate, the body corporate, and every director or other officer thereof who is in default, 

shall be punishable with fine which may extend to fifty rupees for every day during which the default 
continues.

Remuneration of managing agents

348.Remuneration of managing agent ordinarily not to exceed 10 per cent.of net profits.—Save as otherwise expressly provided
in this Act, a company shall not pay to its managing agent, in respect of any financial year beginning at or after the
commencement of this Act, by way of remuneration, whether in respect of his services as managing agent or in any other
capacity, any sum in excess of ten per cent, of the net profits of the company for that financial year.

349.Determination of net profits.—(1) In computing for the purpose of section 348, the net profits of a company in any financial
year—

(a) credit shall be given for the sums specified in sub-section (2), and credit shall not be given for those specified in sub-section
(3); and

(b) the sums specified in sub-section (4) shall be deducted and those specified in sub-section (5) shall not be deducted.

(2) In making the computation aforesaid, credit shall be given for the following sums:—

bounties and subsidies received from any Government, or any public authority constituted or authorised in this behalf by any
Government, unless and except in so far as the Central Government otherwise directs.

(3) In making the computation aforesaid, credit shall not be given for the following sums:—

(a) profits, by way of premium, on shares or debentures of the company, which are issued or sold by the company;

(b) profits on sales by the company or forfeited shares;

(c) profits from the sale of the undertaking or any of the undertakings of the company or of any part thereof;

(d) profits from the sale of any immovable property or fixed assets of a capital nature comprised in the undertaking or any of the
undertakings of the company, unless the business of the company consists, whether wholly or partly, of buying and selling any
such property or assets.

(4) In making the computation aforesaid, the following sums shall be deducted:—

(a) all the usual working charges;

(b) directors' remuneration;

(c) bonus or commission paid pr payable to any member of the company's staff, or to any engineer, technician or person
employed or engaged by the company, whether on a whole-time or on a part-time basis;

(d) any tax notified by the Central Government as being in the nature of a tax on excess or abnormal profits;

(e) any tax on business profits imposed for special reason or in special circumstances and notified by the Central Government in
this behalf;

(f) interest on debentures issued by the company;

(g) interest on mortgages executed by the company and on loans and advances secured by a charge on its fixed or floating
assets;

(h) interest on unsecured loans and advances;

(i) expenses on repairs, whether to immovable or to moveable property, provided the repairs are not of a capital nature;

(j) outgoing;

(k) depreciation to the extent specified in section 350;

(l) the loss (not including any loss of a capital nature) incurred in any year which begins at or after the commencement of this Act,
in so for as it has not been taken into account in arriving at the net profits of that year or of any subsequent year preceding the
year in respect of which the net profits have to be ascertained;

(m) any compensation or damages to be paid in virtue of any legal liability, including a liability arising from a breach of contract;

(n) any sum by way of insurance against the risk of meeting and liability such as is referred to in clause (m) 

(5) In making the computation aforesaid, the following sums shall not be deducted:—

(a) the remuneration payable to the managing agent;

(b) income-tax and super-tax payable by the company under the Indian Income-tax Act, 1922 (11 of 1922), or any other tax on
the income of the company not falling under clauses (d) and (e) of sub-section (4);

(c) any compensation, damages or payments made voluntarily, that is to say, otherwise than in virtue of a liability such as is
referred to in clause (m) of sub-section (4).

350.Ascertainment of depreciation.—The amount of depreciation to be deducted in pursuance of clause (k) of sub-section (4)
of section 349—

(a) shall be the amount of normal depreciation allowable under the Indian Income-tax Act, 1922 (11 of 1922) for the financial
year for which the net profits are to be computed;

(b) shall not include any special, initial or other depreciation or any development rebate, whether allowable under that Act or
otherwise;

(c) shall not include any arrears of depreciation;

Provided that arrears of depreciation may be taken into account in the first of the financial years referred to in section 348, in so
far as these arrears have not been taken into account in arriving at the net profits of any financial year or years preceding the first
financial year aforesaid.

351.Special provision where there is a profit-sharing arrangement between two or more companies.—Where there is an
arrangement between two or more companies to share their profits, and not less than two of those companies have the same
managing agent, any profits paid in pursuance of the arrangement by any of the companies having that managing agent to any
other or others of them shall—

(a) be excluded from the net profits of the company making such payment; and

(b) be included in the net profits of the company receiving such payment, or where more than one company receives such
payment, be included in the net profits of each of the receiving companies, to the extent of the payment received by it.

352.Payment of additional remuneration.—Additional remuneration in excess of the limits specified in sections 198 and 348 may
be paid to the managing agent if, and only if, such remuneration is sanctioned by a special resolution of the company and is
approved by the Central Government as being in the public interest.

353.Time of payment of remuneration.— The remuneration payable to the managing agent for any financial year or part thereof
shall not be paid to him, until the accounts of the company for such financial year have been audited and laid before the company
in general meeting;

Provided that the minimum remuneration, if any, payable in pursuance of section 198 may be paid to the managing agent in such
suitable instalments as may be specified either in the articles of the company or in a resolution passed by the company at an
annual general meeting or in the managing agency agreement executed by the company.
354.Managing agent not entitled to office allowance but entitled to be reimbursed in respect of expenses.—The managing agent
shall not be paid any office allowance, but he may be reimbursed in respect of any expenses incurred by him on behalf of the
company and sanctioned by the Board or by the company in general meeting, and nothing contained in sections 348 to 353 shall
be deemed to prohibit his being so reimbursed.

355.Saving.—Sections 348 to 354 shall not apply to a private company unless it is a subsidiary of a public company.

Appointments as selling and buying agents

356.Appointment of managing agent of associate as selling agent of goods produced by the company.—(1) No managing agent
and no associate of a managing agent, shall receive any commission or other remuneration from the company, in respect of sales
of goods produced by the managed company, if he sales are made from the premises at which they are produced or from the
head office of the managing agent or from any place in India.

(2) For sales of any goods produced by the company which are effected from any place outside India not being a place specified
in sub-section (1), the managing agent, or an associate of the managing agent, may be appointed as a selling agent subject to the
following conditions, namely:—

(a) that the managing gent or associate maintains an office at such place for his own business, that is to say, for a business not
connected with that of the company;

(b) that the remuneration payable in respect of the work done as selling agent by the managing agent or associate is in
accordance with the terms of a special resolution passed by the company in that behalf; and

(c) that no other sums are payable by the company to the managing agent or associate whether by way of expenses or
otherwise.

(3) Any appointment made in pursuance of sub-section (2) shall not be made for a term exceeding five years but may be
renewed from time to time for a term not exceeding five years or each occasion:

Provided that such renewal shall not be effected earlier than one year from the date on which it is to come into force.

(4) The special resolution referred to in clause (b) of sub-section (2) shall set out the material terms subject to which the
appointment of selling agent is made.

(5) Every appointment made under sub-section (2) and all particulars relating thereto shall be entered in a register maintained by
the company for the purpose.

357.Application of section 356 to case where business of company consists of the supply or rendering of any services.—Where
and in so far as the business of a company consists in the supply or rendering of any services, the provisions of section 356 shall
apply in respect of any such business procured for the company by its managing agent or any associate of its managing agent
from any place outside India, in like manner as those provisions apply in respect of sales of any goods produced by a company
which are effected from that place.

358.Appointment of managing agent or associate as buying agent for company.—(1) No mangling agent, and no associate of a
managing agent, shall receive any payment whatever, from the company except expenses, if any, sanctioned under section 354 in
respect of purchases of goods made on its behalf either in India, or in cases to which sub-section (2) does not apply, outside
India.

(2) Where purchases of goods are made on behalf of a company by its managing agent or any associate of its managing agent, at
any place outside India, then, if the managing agent or associate maintains an office at such place not only for such purchase but
also for his own business, that is to say, for a business not connected with that of the company, he may receive, at the option of
the company, either—

(a) such part of the expenses of such office as may reasonably be attributed to the purchases made on behalf of the company as
aforesaid; or

(b) remuneration by way of commission or otherwise, in respect of the work done by the managing agent or associate in making
such purchases.

(3) In cases to which clause (a) of sub-section (2) applies, the maximum amount which may be paid to the managing agent shall
be specified in a special resolution passed by the company; and in cases to which clause (b) of that sub-section applies, the
remuneration payable to the managing agent or associate shall be in accordance with the terms of a special resolution, passed by
the company in that behalf.

(4) The special resolution referred to in sub-section (3) shall set out in sufficient detail the nature of the office maintained by the
managing agent or associate outside, India, the purposes for which it is maintained, the scale of its operations, the expenses
incurred in maintaining the office, and the proportion of those expenses which may be reasonably attributed to the work done on
behalf of the company.

(5) The special resolution shall not remain in force for a term exceeding three years but may be renewed from time to time for a
term not exceeding three years on each occasion;

Provided that no renewal shall take place earlier than one year from the date on which it is to come into force.

(6) Every resolution passed in pursuance of this section shall be entered in a register maintained by the company for the purpose.

359.Commission, etc., of managing agent as buying or selling agent of other concerns.—(1) A company in general meeting may
by resolution, authorise its managing agent or any associate of its managing agent to retain any commission or other remuneration
earned or to be earned by such agent or associate as the managing agent, secretaries and treasurers, manager, agent, secretary
or selling or buying agent of any firm, body corporate or other concern in respect of any goods, power, freight, repairs or other
services, for the sale, purchase, supply or rendering of which a contract has been, or is to be, entered into by such firm, body or
concern with the company, provided the prices or amounts charged to or received by the company are at rates which are not
less favourable to the company than the market rates or which are otherwise reasonable.

(2) Every contract so entered into and all particulars relating thereto shall be entered in a separate register maintained by the
company for the purpose.

360.Contracts between managing agent or associate and company for the sale or purchase of goods or the supply of services,
etc.—(1) A company may, by special resolution, approve of any contract being entered into which its managing, agent or an
associate of its managing agent,—

(a) for the sale, purchase or supply of any property, movable or immovable or for the supply of rendering of any service other
than that of managing agent; or

(b) for the underwriting of any shares or debentures to be issued or sold by the company.

(2) The special resolution aforesaid shall—

(a) set out the material terms of the contract proposed to be entered into; and

(b) provide specially that for any property, supplied or sold, or any services supplied or rendered, by the company, the managing
agent or associate shall make payment to the company within one month from the date of the supply or sale of the goods, or the
supply or rendering of the service, as the case may be.

(3) Every such contract and all particulars relating thereto shall be entered in a separate register maintained by the company for
the purpose.

(4) Nothing contained in clause (a) of sub-section (10 shall affect any contract or contracts for the sale, purchase or supply of
any property or services in which either the company or the managing agent or associate, as the case may be, regularly trades or
does business, provided that the value of such property and the cost of such services do not exceed five thousand rupees in the
aggregate in any calendar year in the period of the contract or contracts.

361.Existing contracts relating to matters dealt with in sections 356 to 360 to terminate on 1st March, 1958.—All contracts in
force at the commencement of this Act, to which a company or the managing agent or an associate of the managing agent of a
company is a party shall in so far as the contracts relate to any of the matters referred to in sections 356 to 360, be deemed to
terminate on the first day of March, 1958, unless they terminate on an earlier date.

362.Registers to be open to inspection.—The registers referred to in sections 356 to 360 shall be open to inspection and
extracts may be taken therefrom and copies thereof may be required by any member of the company, in the same manner, to the
same extent and on payment of the same fees, as in the case of the register of members of the company.

363.Remuneration received in contravention of foregoing sections to be held in trust for company.—Where the managing agent
of a company, or an associate of the managing agent, receives any sum from the company, whether directly or indirectly, by way
of remuneration rebate, commission, expenses or otherwise,—

(a) in the case of a public company or a private company which is a subsidiary of a public company, in contravention of sections
348 to 354 and sections 356 to 361; or

(b) in the case of a private company which is not a subsidiary of a public company, in contravention of sections 356 to 361;

the managing agent or associate shall account to the company for such sum as if he held it in trust for the company.

Assignment of, or charge on, remuneration

364.Company not to be bound assignment of, or charge on, managing agents remuneration.—Any assignment or, or Charge, on
his remuneration, or any part thereof, effected by a managing agent shall be void as against the company.

This section shall not affect the rights inter se of the managing agent and any person other than the company.

Compensation for termination of office

365.Prohibition of payment of compensation for loss of office in certain cases.—A company shall not pay or be liable to pay to
its managing agent, any compensation for the loss of his office in the following cases:—

(a) where the managing agent, resigns his office in view of the reconstruction of the company or of its amalgamation with any
other body corporate or bodies corporate and is appointed as the managing gent, secretaries and treasurers, manager or other
officer of the reconstructed company or of the body corporate resulting from the amalgamation;

(b) where the managing agent resigns his office, otherwise than on the reconstruction of the company or its amalgamation as
aforesaid;

(c) where the managing agent vacates his office in pursuance of section 324, 330 or 332;

(d) where the managing agent is deemed to have vacated his office in pursuance of clause (a), (b) (c) or (d) of section 334 or of
section 336;

(e) where the managing agent is deemed to have vacated his office in pursuance of clause (e) of section 334, provided the
winding up of the company was due to the negligence or default of the managing agent;

(f) where the managing agent is deemed to have been suspended, or is suspended from his office in pursuance of section 335 or
sub-section (2) of section 340;

(g) where the managing agent is removed from office by a resolution in pursuance of section 337 or 338; and

(h) where the managing agent has instigated, or has taken part in bringing about, the termination of his office.

366.Limit of compensation for loss of office.—The compensation which may be paid by a company it its managing agent for loss
of office shall not exceed the remuneration which he would have earned if he had been in office for the unexpired residue of his
term or for three years, whichever is shorter, calculated on the basis of the average remuneration actually earned by him during a
period of three years immediately preceding the date on which his office ceased or was terminated, or where he held the office
for a lesser period than three years, during such period;

Provided that in the event of the winding up of the company commencing, whether before, or at any time within twelve months
after, the date of the cessation or termination of the office of managing agent, no compensation shall be payable to him if the
assets of the company on the winding up, after deduction of the expenses thereof, are not sufficient to repay the share capital
(including the premiums, if any) contributed by the members of the company.

Other rights and liabilities not affected on termination of office

367.Managing agents rights and liabilities after termination of office.— Where the office of a managing agent ceases or is
terminated—

(a) the managing agent and the company shall be entitled to enforce any claim or demand which each may have against the other,
in respect of anything done or omitted to be done by either of them before the cessation or termination of the managing agency;
and

(b) the rights and liabilities, in relation to the company, of the managing agent in any other capacity, shall not be affected.

Restrictions on powers

368.Managing agent to be subject to control of Board and to restrictions in Schedule VII.—The managing agent of a company,
whether appointed before or after the commencement of this Act, shall exercise his powers subject to the superintendence,
control and diction of its Board of directors and subject also to the provisions of the memorandum and articles of the company
and to the restrictions contained in Schedule VII.

369.Loans to managing agent.—(1) No public company, and no private company which is a subsidiary of a public company,
shall make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person to or
to any other person by,—

(a) its managing agent or any associate of its managing agent; or

(b) any body corporate in respect of which the Central Government, by order, declares that it is satisfied that the Board of
directors, managing director, managing agent, secretaries and treasurers or manager thereof is accustomed to act in accordance
with the directors or instructions of the managing agent or associate of the managing agent, notwithstanding that the body
corporate may not itself be an associate of the managing agent.

(2) Nothing contained in sub-section (1) or in section 295 shall apply to any credit given by the company to its managing agent
for the purpose of facilitating the company's business and held by such agent in his own name in one or more current accounts,
subject to limits previously approved by the directors of the company and on no account exceeding twenty thousand rupees in
the aggregate.

370.Loans etc., to companies under the same management.—(1) No company (hereinafter in his section referred to as "the
lending company") shall—

(a) make any loan to, or

(b) give any guarantee or provide, any security, in connection with a loan made by any other person to, or to any other person
by,

any body corporate , which is under the same management as the lending company, unless the making of such loan, the giving of
such guarantee or the provision of such security has been previously authorised by a special resolution of the lending company.

Explanation.—For the purposes of this sub-section, two bodies corporate shall be deemed to be under the same management—

(i) if the managing agent, secretaries and treasurers, managing-director or manager of the one body, or where such managing
agent or secretaries and treasurers are a firm, any partner in the firm, or where such managing agent or secretaries and treasurers
are a private company, any director of such company, is—

(a) the managing agent, secretaries and treasurers, managing director or manager of the other body; or

(b) a partner in the firm acting as managing agent or secretaries and treasurers of the other body; or

(c) a director of the private company acting as managing agent or secretaries and treasurers of the other body; or

(ii) if a majority of the directors of the one body constitute or at any time within the six months immediately preceding constituted,
a majority of the directors of the other body.
(2) Nothing contained in sub-section (1) shall apply to any loans made, guarantee given or security provided—

(a) by a holding company to its subsidiary; or

(b) by the managing agent or secretaries and treasurers to any company under his or their management.

371.Penalty for contravention of section 369 or 370.—(1) Every person who is a party to any contravention of section 369 or
370 including in particular any person to whom the loan is made, or in whose interest the guarantee is given or the security is
provided shall be punishable with fine which may extend to five thousand rupees or with simple imprisonment for a term which
may extend to six months:

Provided that where any such loan, or any loan in connection with which any such guarantee or security has been given or
provided by the lending company, has been repaid in full, no punishment by way of imprisonment shall be imposed under this
sub-section; and where the loan has been repaid in part, the maximum punishment which may be imposed under this sub-section
by way of imprisonment shall be proportionately reduced.

(2) All person who are knowingly parties to any such contravention shall be liable, jointly and severally to the lending company
for the repayment of the loan, or for making good the sum which the lending company may have been called upon to pay in
virtue of the guarantee given or the security provided by such company.

372.Purchase by company of shares, etc., of other companies in same group.—(1) A company (hereinafter in this section and
section 373 referred to as "the investing company") shall not be entitled to subscribe for, or purchase, the shares or debentures
of any body corporate belonging to the same group as the investing company, except to the extent and except in accordance
with the restrictions and conditions specified in this section.

(2) The Board of directors of the investing company shall be entitled to invest in any shares or debentures of any other body
corporate in the same group up to ten per cent.of the subscribed capital of such other body corporate;

Provided that the aggregate of the investments so made by the Board in all other bodies corporate in the same group shall not
exceed twenty per cent of the subscribed capital of the investing company.

(3) The investing company shall not make any investment in the shares or debentures of any other body corporate in the same
group, in excess of the limits specified in sub-section (2) and the proviso thereto, unless the investment is sanctioned by a
resolution of the investing company and unless further it is approved by the Central Government.

(4) No investment shall be made by the Board of directors of a company in pursuance of sub-section (2), unless it is sanctioned
by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting, except those not
entitled to vote thereon, and unless further notice of the resolution to be moved at the meeting has been given to every director in
the manner specified in section 286.

(5) Every company shall keep a register of all investments made by it in shares and debentures of bodies corporate in the same
group, showing, in respect of each investment, the following particulars:—

(a) the name of the body corporate in which the investment is made;

(b) the date on which the investment is made; and

(c) the nature and extent of the investment.

(6) Particulars of every investment to which sub-section (5) applies shall, within three days of the making thereof, be entered in
the register aforesaid.

(7) If default is made in complying with the provisions of sub-section (5) or (6) the company and every officer of the company
who is in default, shall be punishable with fine which may extend to five hundred rupees.

(8) The register aforesaid shall be kept at the registered office of the company, and shall be open to inspection at such office; and
extracts may be taken therefrom and copies thereof may be required, by any member of the company to the same extent, in the
same manner, and on payment of the same fees as in the case of the register of members of the company; and the provisions of
section 163 shall apply accordingly.

(9) Every company shall annex to each balance -sheet prepared by it after the commencement of this Act, a list of the bodies
corporate in the same group in the shares or debentures of which investments have been made by it, and the nature and extent of
the investments so made in each such body corporate.

(10) For the purposes of this section, a body corporate shall be deemed to be in the same group as the investing company—

(a) if the body corporate is the managing agent of the investing company; or

(b) if the body corporate and the investing company should, in virtue of the Explanation to sub-section (1) of section 370, be
deemed to be under the same management.

(11) The provisions of this section [except sub-section (9)] shall apply to an investment company, that is to say, to a company
whose principal business is the acquisition of shares, stock, debentures or other securities.

(12) This section shall not apply—

(a) to any banking or insurance company;

(b) to a private company, unless it is a subsidiary of a public company;

(c) to investments by a holding company in its subsidiary.

(d) to investments by a managing agent or secretaries and treasurers in a company managed by him or them.

373.Investments made before commencement of Act.—Where any investments have been made by a company at any time after
the first day of April, 1952, which, if section 372 had been then in force, could not have been made except on the authority of a
resolution passed by the investing company and the approval of the Central Government, the authority of the company by means
of a resolution and the approval of the Central Government shall be obtained to such investments, within six months from the
commencement of this Act; and if such authority and approval are not so obtained, the Board of directors of the company shall
dispose of the investments, in so far as they may be in excess or the limits specified in sub-section (2) of section 372 and the
proviso to that sub-section, within two years from the commencement of this Act.

374.Penalty for contravention of section 372 or 373.—If default is made in complying with the provisions of section 372 or 373,
every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees.

375.Managing agent no to engage in business competing with business of managed company.—(1) A managing agent shall not
engage on his own account in any business which is of the same nature as, and directly competes with, the business carries on by
a company of which he is the managing agent or by a subsidiary of such company, unless such company by special resolution
permits him to do so.

(2) For the purposes of sub-section (1), a managing agent shall be deemed to be engaged in business on his own account if such
business is carried on by—

(a) a firm in which he is a partner; or

(b) a private company at any general meeting of which not less than twenty per cent.of the total voting power may be exercised
or controlled by any of the following persons, or by any two or more of them acting together, namely, (i) the managing agent
aforesaid; (ii) where such managing agent is a firm any partner in the firm, and (iii) where such managing agent is a body
corporate, any officer of the body corporate;

(c) a body corporate (not being a private company) at any general meeting of which not less than seventy per cent; of the total
voting power may be exercised or controlled by any of the following persons, or by any two or more of them acting together;
namely, (i) the managing agent aforesaid; (ii) where such managing agent is a firm, any partner in the firm; and (iii) where such
managing agent is a body corporate, any officer of such body corporate. 


(3) If a managing agent engages in any business in contravention of this section, he shall be deemed to have received all profits
and benefits accruing to him from such business, in trust for the company under his management or the subsidiary of such
company as the case may be and where such profits and benefits are deemed to have been so received by the managing agent in
trust for two or more such companies or subsidiaries, such profits and benefits shall be held by the managing agent in trust for
each of them in such proportions as may be agreed upon between them, or, failing such agreement, as may be decided by the
court.

376.Condition prohibiting reconstruction or amalgamation of company except on continuance of managing agent etc.to be
void.— Where any provision in the memorandum or articles of a company, or in any resolution passed in general meeting by, or
by the Board of directors of, the company, or in an agreement between the company and its managing agent or any other
person, whether made before or after the commencement of this Act, prohibits the reconstruction of the company or its
amalgamation with any other body corporate or bodies corporate, either absolutely or except on the condition that the managing
director, managing agent, secretaries and treasures, or manager of the company is appointed or re-appointed as secretaries and
treasurers, managing director, managing agent, or manager of the reconstructed company or of the body resulting from
amalgamation as the case may be shall become void with effect from the commencement of this Act, or be void as the case may
be.

377.Restrictions on right of managing agent to appoint directors.—(1) The managing agent of a company may, if so authorised
by its articles, appoint not more than two directors where the total number of the directors exceeds five, and one director where
the total number does not exceed five.

(2) The managing agent may, at any time, remove any director so appointed and appoint another director in his place or in the
place of a director so appointed who resigns or otherwise vacates his office.

(3) Any provision contained in the articles of, or in any agreement with, the company, authorising the managing agent to appoint
more than the number of directors authorised under sub-section (1) which is in force immediately before the commencement of
this Act, shall in regard to the excess, be void, with effect from the expiry of one month from such commencement.

(4) Where at the commencement of this Act, the number of directors appointed by the managing agent exceeds the number
authorised under sub-section, (1), the managing agent shall determine which of them shall continue to hold office, and intimate the
choice made by him to the company before the expiry of one month from such commencement; and only the director of directors
so chosen shall continue to hold office as directors after such expiry.

(5) If no choice is made by the managing agent as aforesaid, all the directors appointed by him shall, with effect from the expiry
of one month from the commencement of this Act, be deemed to have vacated their offices.

CHAPTER IV

A.SECRETARIES AND TREASURERS

378.Appointment of secretaries and treasurers.—Subject to the provisions of this Chapter, a company may appoint a firm or
body corporate as its secretaries and treasurers:

Provided that no company, shall, at the same time, have both a managing agent and secretaries and treasurers.

379.Provisions applicable to managing agents to apply to secretaries and treasurers with the exceptions and modifications
specified in sections 380 to 383.—Subject to the exceptions and modifications specified in sections 380 to 383,—

(a) all the provisions of this Act applicable to, or in relation to, a managing agent which is a firm or body corporate shall apply to
secretaries and treasurers; and

(b) all the provisions of this Act applicable to, or in relation to, any person or persons connected or associated in any manner
with such a managing agent shall apply to, or in relation, to, any person or persons connected or associated with secretaries and
treasurers in the like manner; and

subject as aforesaid all references in this Act to managing agent or any person or persons connected or associated in any manner
with a managing agent shall be construed accordingly, as including a reference to secretaries and treasurers or to the person or
persons connected or associated with them in the like manner.

380.Sections 324, 330 and 332 not to apply.—Sections 324, 330 and 332 shall not apply to secretaries and treasurers.

381.Section 348 to apply subject to a modification.—Section 348 shall apply to secretaries and treasurers subject to the
modification that for the words "ten per cent.of the net annual profits" occurring in the section, the words "seven and a half per
cent.of the net annual profits" shall be substituted.

382.Secretaries and treasurers not to appoint directors.—Secretaries and treasurers shall have not right to appoint any director
of the company; and section 377 and 261 shall not apply to, or in relation to, secretaries and treasurers, or persons connected or
associated with then in the manner in which the persons specified in section 261 are connected or associated with managing
agents.

383.Secretaries and treasurers not to sell goods or articles produced by company, etc., unless authorised by
Board.—Secretaries and treasurers shall have no right, unless and except to the extent to which, they are authorised by the
Board of directors, to sell any goods or articles manufactured or produced by the company, or to purchase, obtain, or acquire
machinery, stores, goods or materials for the purposes of the company, or to sell the same when no longer required for those
purposes.

B.MANAGERS

384.Firm or body corporate not to be appointed manager.—No public company, and no private company which is a subsidiary
of a public company, shall, after the commencement of this Act, appoint or employ, or after the expiry of six months from such
commencement, continue the appointment or employment, or any firm, body corporate or association as its manager.

385.Certain persons not to be appointed managers.—(1) No company shall, after the commencement of this Act, appoint or
employ, or continue the appointment or employment of, any person as its manager who—

(a) is an undischarged insolvent, or has at any time within the preceding five years been adjudged an insolvent; or

(b) suspends, or has at any time within the preceding five years suspended, payment to his creditors; or makes, or has at any
time within the preceding five years made, a composition with them; or

(c) is, or has at any time within the preceding five years been, convicted by a Court in India of an offence involving moral
turpitude.

(2) The Central Government may, by notification in the Official Gazette, remove the disqualification incurred by any person in
virtue of clause (a), (b), or (c) of sub-section (1), either generally or in relation to any company or companies specified in the
notification.

386.Number of companies of which a person may be appointed manager.—(1) No company shall, after the commencement of
this Act, appoint or employ any person as manager, if he is either the manager, or the managing director of any other company,
except as provided in sub-section (2).

(2) A company may appoint or employ a person as its manager if he is the manager or managing director of one, and not more
than one, other company:

Provided that such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the
consent of all the directors present at the meeting, and of which meeting and of the resolution to be moved thereat, specific notice
has been given to all the directors then in India.

(3) Where , at the commencement of this Act, any person is holding the office either of manager or of managing director in more
than two companies, he shall, within one year from the commencement of this Act, choose not more than two of those
companies as companies in which he wishes to continue to hold the office of manager or managing director, as the case may be;
and the provisions of clauses (b) and (c) of sub-section (2) and (3) of section 276 shall apply mutatis mutandis in relation to this
case, as those provisions apply in relation to the case of a director.

(4) Notwithstanding anything contained in sub-sections (1) to (3), the Central Government may, by order, permit, any person to
be appointed as a manager of more than two companies, if the Central Government is satisfied that it is necessary that the
companies should, for their proper working function as a single unit and have a common manager.

(5) This section shall not apply to a private company, unless it is a subsidiary of a public company.

387.Remuneration of manager.—The manager of a company may, subject to the provisions of section 198, receive remuneration
either by way of a monthly payment, or by way of a specified percentage, not exceeding five, of the "net profits" of the company
calculated in the manner laid down in sections 349, 350, and 351 or partly by the one way and partly by the other.

388.Applications of sections 310, 311, 312 and 317 to managers.—The provisions of sections 310, 311 and 317 shall apply in
relation to the manager of a company as they apply in relation to a managing director thereof, and those of section 312 shall
apply in relation to the manager of a company, as they apply to a director thereof.

CHAPTER V

ARBITRATION, COMPROMISES, ARRANGEMENTS AND RECONSTRUCTIONS

389.Power for companies to refer matters to arbitration.—(1) A company, may by written agreement refer to arbitration, in
accordance with the Arbitration Act, 1940 (20 of 1940), an existing or future difference between itself and any other company
or person.

(2) A company which is a party to an arbitration may delegate to the arbitrator power to settle any terms or to determine any
matter, capable of being lawfully settled or determined by the company itself, or by its Board of directors, managing director,
managing agents, secretaries and treasurers, or manager.

(3) The provisions of the Arbitration Act, 1940 (10 of 1940) shall apply to all arbitrations in pursuance of this Act to which a
company is a party.

390.Interpretation of sections 391 and 393.—In sections 391 and 393,—

(a) the expression "company" means any company liable to be wound up under this Act;

(b) the expression "arrangement" includes a reorganization of the share capital of the company by the consolidation of shares of
different classes, or by the division of shares into shares of different classes or, by both those methods; and

(c) unsecured creditors who may have filed suits or obtained decrees shall be deemed to be of the same class as other unsecured
creditors.

391.Power to compromise or make arrangements with creditors and members.—(1)Where a compromise or arrangements is
proposed—

(a) between a company and its creditors or any class or them; or

(b) between a company and its members or any class or them;

the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company
which is being wound up, of the liquidator order a meeting of the creditors or class of creditors, or of the members of class or
members, as the case may be to be called, held and conducted in such manner in the court directs.

(2) If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members or class of
members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy, at the meeting,
agree, to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the court, be binding on all the
creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also, on the
company, or, in the case of a company which is being would up, on the liquidator and contributories of the company.

(3) An order made by the Court under sub-section (2) shall have no effect until a certified copy of the order has been filed with
the registrar.

(4) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified
copy of the order has been filed, as aforesaid, or in the case of a company not having a memorandum, to every copy so issued
of the instrument constituting or defining the constitution of the company.

(5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall
be punishable with fine which may extend to ten rupees for each copy in respect of which default is made.

(6) The Court may, at any time after an application has been made to it under this section, stray the commencement or
continuation of any suit or proceeding against the company on such terms as the Court thinks fit, until the application is finally
disposed of.

(7) An appeal shall lie from any order made by a Court exercising original jurisdiction under this section to the Court empowered
to hear appeals from the decisions of that Court, or if more than one Court is so empowered to the Court of inferior jurisdiction.

The provisions of sub-section (3) to (6) shall apply in relation to the appellate order and the appeal as they apply in relation to
the original order and the application.

392.Power of High Court to enforce compromises and arrangements.—(1) Where a High Court makes an order under section
391 sanctioning a compromise or an arrangements in respect of a company, it—

(a) shall have power to supervise the carrying out of the compromise or arrangement; and

(b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such
modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or
arrangement.

(2) If the Court aforesaid is satisfied that a compromise or arrangement sanctioned under section 391 cannot be worked
satisfactorily with or without modifications, it may, either on its own motion or on the application of any person interested in the
affairs of the company, make an order winding up the company, and such an order shall be deemed to be an order made under
section 433 of this Act.

(3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made
before the commencement of this Act under section 153 of the Indian Companies Act, 1913 (7 of 1913), sanctioning a
compromise or an arrangement.


393.Information as to compromises or arrangements with creditors and members.—(1) Where a meeting of creditors, or any
class of creditors, or of members or any class of members, is called under section 391,—

(a) with every notice calling the meeting which is sent to a creditor or member, there shall be sent also a statement setting for the
terms of the compromise or arrangement and explaining its effect; and in particulars, stating any material interests of the directors,
managing director, managing agent, secretaries and treasurers or manager of the company, whether in their capacity as such or
as members or creditors of the company or otherwise, and the effect on those interest, of the compromise or arrangement, if,
and in so far as, it is different from the effect on the like interests of other persons; and

(b) in every notice calling the meeting which is given by advertisement there shall be included either such a statement as aforesaid
or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain
copies of such a statement as aforesaid.

(2) Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give
the like information and explanation as respects the trustees of any deed for securing the issued of the debentures as it is required
to give as respects the company's directors.

(3) Where a notice given by advertisement includes a notification that copies of a statement setting forth the terms of the
compromise or arrangement proposed and explaining its effect can be obtained by creditors or members entitled to attend the
meeting, every creditor or member so entitled shall, on making an application in the manner indicated by the notice, by furnished
by the company, free of charge, with a copy of the statement.

(4) Where default is made in complying with any of the requirements of this section , the company, and every officer of the
company who is in default, shall be punishable with fine which may extend to five thousand rupees; and for the purpose of this
sub-sections any liquidator of the company and any trustee of a deed for securing the issued of debentures of the company shall
be deemed to be an officer of the company:

Provided that a person shall not be punishable under this sub-section if he shows that the default was due to the refusal of any
other person, being a director, managing director, managing agent, secretaries and treasurers, managers or trustee for debenture
holders, to supply the necessary particulars as to his material interests.

(5) Every director, managing director, managing agent, secretaries and treasurers or manager or the company, and every trustee
for debenture holders for the company shall give notice to the company of such matters relating to himself as may be necessary
for the purposes of this section; and if he fails to do so, he shall be punishable with fine which may extend to five hundred rupees.

394.Provisions for facilitating reconstruction and amalgamation of companies.—(1) Where an application is made to the Court
under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as
are mentioned in that section, and it is shown to the Court—

(a) that the compromise or arrangement has been proposed for the purposes of , or in connection with, a scheme for the
reconstruction of any company or companies, or the amalgamation of any two or more companies; and

(b) that under the scheme the whole or any part of the undertaking, property or liabilities of any company concerned in the
scheme (in this section referred to as a "transferor or company") is to be transferred to another company (in this section referred
to as "the transferee company");

the Court may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provision for all
or any of the following matters:—

(i) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of any transferor
company;

(ii) the allotment or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that
company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person;

(iii) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor
company;

(iv) the dissolution, without winding up, of any transferor company;

(v) the provision to be made for any persons who, within such time and in such manner as the court directs, dissent from the
compromise or arrangement; and

(vi) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation
shall be fully and effectively carried out.

(2) Where an order under this section provides the transfer or any property or liabilities then, by virtue of the order, that property
shall be transferred to and vest, and those liabilities shall be transferred to and become the liabilities of, the transferee company;
and in the case of any property, it the order so directs, freed from any charge which is, by virtue of the compromise or
arrangement, to cease to have effect.

(3) Within fourteen days after the making of an order under this section, every company in relation to which the order is made
shall cause a certified copy thereof to be filed with the Registrar for registration.

If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be
punishable with fine which may extend to fifty rupees.

(4) In this section—

(a) "property" includes property, rights and powers of every description; and "liabilities" includes duties of every description; and

(b) "transferee company" does not include any company other than a company within the meaning of this Act' but "transferor
company" includes any body corporate, whether a company within the meaning of this Act or not.

395.Power and duty to acquire shares of shareholders dissecting from scheme or contract approved by majority.—(1) Where a
scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as "the
transferor company") to another company (in this section referred to as "the transferee company") has, within four months after
the making of the offer in that behalf by the transferee company, been approved by the holders of not less than nine-tenths in
value of the shares whose transfer is involved (other than shares already held at the date of the officer by, or by a nominee for,
the transferee company or its subsidiary), the transferee company may, at any time within two months after the expiry of the said
four months, give notice in the prescribed manner to any dissenting shareholder, that it desires to acquire his shares; and when
such a notice is given, the transferee company, shall, unless, on an application made by the dissenting shareholder within one
month from the date on which the notice was given, the Court thinks fit to order otherwise, be entitled and bound to acquire
those shares on the terms on which, under the scheme or contract, the shares of the approving share holders are to be
transferred to the transferee company.

Provided that where shares in the transferor company of the same class as the shares whose transfer is involved are already held
as aforesaid to a value greater than one-tenth of the aggregate of the values of all the shares in the company of such class, the
foregoing provisions of this sub-section shall not apply, unless—

(a) the transferee company offers the same terms to all holders of the shares of that class (other than those already held as
aforesaid) whose transfer is involved; and

(b) the holders who approve the scheme or contract, besides holding not less than nine-tenths in value of the shares (other than
those already held as aforesaid) whose transfer is involved are not less than three-fourths in number of the holders of those
shares.

(2) Where, in pursuance of any such scheme or contract, as aforesaid, shares or shares of any class, in a company are
transferred to another company or its nominee, and those shares together with any other shares or any other shares of the same
class, as the case may be, in the first- mentioned company held at the date of the transfer by, or by a nominee for, the transferee
company or its subsidiary comprise nine-tenths in value of the shares, or the shares of that class, as the case may be, in the
first-mentioned company, then—

(a) the transferee company shall, within one month from the date of the transfer (unless on a previous transfer in pursuance of the
scheme or contract it has already complied with this requirement) give notice of that fact in the prescribed manner to the holder
so the remaining shares or of t remaining shares of that class, as the cast may be, who have not assented to the scheme or
contract; and

(b) any such holder may, within three months from the giving of the notice to him, require the transferee company to acquire the
shares in question;
and where a shareholder gives notice under clause (b) with respect to any shares, the transferee company shall be entitled and
bound to acquire those shares on the terms on which, under the scheme or contract, the shares, of the approving shareholders
were transferred to it, or on such other terms as may be agreed, or as the Court on the application of either the transferee
company or the shareholder thinks fit to order.

(3) Where a notice has been given by the transferee company under sub-section (1) and the Court has not, on an application
made by the dissenting shareholder, made an order to the contrary, the transferee company shall, on the expiry of one month
from the date on which the notice has been given, or, if an application to the Court by the dissenting shareholder is then pending,
after that application has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of
transfer executed of behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the
transferee company, and pay or transfer to the transferor company the amount or other consideration representing the price
payable by the transferee company for the shares which, by virtue of this section, that company is entitled to acquires; and the
transferor company shall thereupon register the transferee company as the holder of those shares;

Provided that an instrument of transfer shall not be required for any share for which a share warrant is for the time being
outstanding.

(4) Any sums received by the transferor company under this section shall be paid into a separate bank account, and any such
sums and any other consideration so received shall be held by that company in trust for the several persons entitled to the shares
in respect of which the said sums or other consideration were respectively received.

(5) In this section—

(a) "dissenting shareholder" includes a shareholder who has not assented to the scheme or contract and any shareholder who has
failed or refused to transfer his shares to the transferee company in accordance with the scheme or contract;

(b) "transferor company" and "transferee company" shall have the same meaning as in section 394.

(6) In relation to an offer made by the transferee company to shareholders of the transferor company before the commencement
of this Act, this section shall have effect—

(a) with the substitution, in sub-section (1), for the words "the shares whose transfer is involved (other than shares already held at
the date of the offer by, or by a nominee for, the transferee company or its subsidiary)", of the words "the shares affected" and
with the omission of the proviso to that sub-section;

(b) with the omission of sub-section (2);

(C) with the omission of sub-section (3) of the words "together with an instrument of transfer executed on behalf of the
shareholder by any person appointed by the transferee company and on its won behalf by the transferee company" and of the
proviso to that sub-section; and

(d) with the omission of clause (b) of sub-section (5).

396.Power of Central Government to provide for amalgamation of companies in national interest.—(1) Where the Central
Government is satisfied that it is essential in the national interest that two or more companies should amalgamate, then,
notwithstanding anything contained in sections 394 and 395 but subject to the provisions of this section, the Central Government
may, by order notified in the Official Gazette, provide for the amalgamation of those companies into a single company with such
constitution; with such property, powers, rights, interest, authorities, and privileges; and with such liabilities duties, and obligations
; as may be specified in the order.

(2) The order aforesaid may contain such consequential, incidental and supplemental provisions as may, in the opinion of the
Central Government, be necessary to give effect to the amalgamation.

(3) Every number or creditor (including a debenture holder) of each of the companies before the amalgamation shall have, as
nearly as may be, the same interest in or rights against the company resulting from the amalgamation as he had in the company of
which he was originally a member or creditor; and to the extent to which the interest or rights of such member or creditor in or
against the company resulting from the amalgamation are less than his interest in or rights against the original company, he shall be
entitled to compensation which shall be assessed by such authority as may be prescribed.

The compensation so assessed shall be paid to the member or creditor concerned by the company resulting from the
amalgamation.

(4) No order shall be made under this section, unless—

(a) a copy of the proposed order has been sent in draft to each of the companies concerned; and

(b) the Central Government has considered, and made such modifications if any, in the draft order as may seem to it desirable in
the light of any suggestions and objections which may be received by it from any such company within such period as the Central
Government may fix in that behalf, not being less than two months from the date on which the copy aforesaid is received by that
company, or from any class of shareholders, therein, or from any creditors or any class of creditors thereof.

(5) copies of every order made under this section shall, as soon as may be after it has been made, be laid before both Houses of
Parliament.