[Link].

SEMESTER - III (CBCS)

COMPANY SECRETARIAL
PRACTICE

SUBJECT CODE : UBCOMFSIII 5.7

 © UNIVERSITY OF MUMBAI
Prof. Suhas Pednekar
Vice-Chancellor,
University of Mumbai,

Prof. Ravindra D. Kulkarni Prof. Prakash Mahanwar

Pro Vice-Chancellor, Director,
University of Mumbai, IDOL, University of Mumbai,

Programme Co-ordinator : Prof. Rajashri Pandit

Asst. Prof. in Economic,
Incharge Head Faculty of Commerce,
IDOL, University of Mumbai, Mumbai

Course Co-ordinator : Mr. Sambhaji Shivaji Shinde

Assistant Professor, IDOL,
University of Mumbai, Mumbai

Course Writer : Dr. Subhash D’souza

ST. Joseph College,
Vasai.

: Prof. Shubhangi Kedare

P. D. Karkhanis college,
Ambernath

: Dr. Vinod Kamble

Bal Bharati’s MJP College of Commerce
Kndivali (West), Mumbai.

Jully 2021, Print - I

Published by : Director
Institute of Distance and Open Learning ,
University of Mumbai,
Vidyanagari, Mumbai - 400 098.

DTP Composed & : Mumbai University Press

Printed by Vidyanagri, Santacruz (E), Mumbai
 CONTENTS
Unit No. Title Page No.

1 Introduction to Company 1
2 Company Secretary Practice 18
3 Company Documentation and Formation I 30
4 Secretarial Correspondence 55


 I

S.Y. [Link].
Semester - III (CBCS)
Company Secretarial Practice
Course Objective:
• To provide the learners an insight about Company Secretarial
Practices.
• To make the learners understand the role of Company
Secretary towards Company’s statutory provisions, rules and
regulations.
• To make the learners understand the various aspects of
Company Management, meetings and reports.

SECTION I
Sr. No. Modules
1 Introduction to Company
2 Company Secretary Practices
3 Company Documentation and Formation
4 Secretarial Correspondence

Sr. No. Modules /

1 Introduction to Company
 Introduction to Company – Features, Types -As
per Company’s Act, 2013.
 Company Secretary – Qualities, Qualifications,
Appointment procedure, Resignation & Removal.
 Role of Company Secretary–Rights,
Responsibilities, Liabilities of Company Secretary,
Career options of Company Secretary.
2 Company Secretary Practices
 Advisory Services – Role of Company Secretary as
an advisor to Chairman, Secretary as an liaison
officer between the (a) Company and Stock
Exchange (b) Company and Depository Participants
(c) Company and Register of Companies (ROC).
 Representation Services of Company Secretary
at different forums- Company Law Board,
Consumer Forum, SEBI, Arbitration & conciliation
services, Cyber Law compliance, Secretarial
Standards – Advantages, Secretarial Standards by
ICSI, Secretarial Standards -1- 10.
 II

 Secretarial Audit – Procedure and Stages, Need

and Importance, Scope.
3 Company Documentation and Formation
 Memorandum of Association (MOA) - Clauses,
Alteration of MOA, Ultra Vires. Articles of Association
(AOA) – Contents, Prospectus – Statement in Lieu of
Prospectus, Contents, Misleading Prospectus.
 Company Formation –Stages, Secretarial Duties at
each stage in public company and private company.
 Conversion & Reconversion of Private and
Public Company – Secretarial Procedure.
4 Secretarial Correspondence
 Correspondence– Shareholders, Debenture
Holders, Registrar of Companies, Stock Exchange &
penalties thereon
 Correspondence with SEBI, Company Law Board
and penalties thereon, Role of technology in
Secretarial Correspondence
 Specimens–
Letter to shareholders - Rights Issue, Bonus Issue,
Letter to ROC-Alteration of MOA/ AOA,
Letter to Stock Exchange –Listing of shares,
Letters to Government- Reconversion/Conversion,
Letter to Bank – Overdraft Facility

Readings:
1. M. [Link] : Guide to Company Law Procedure; Wadhwa&
Company, Agra&Nagpur
2. K. [Link] : Company Law Practice; BharatLaw House,
New Delhi – 34
3. M. [Link] : Company Procedures and Register of
Companies , Tax Publishers, Delhi
4. A. [Link], : Company Notices, Meetings and B.
[Link] Resolutions, Taxmann, New Delhi
5. [Link] : Guide to the Companies Act, Wadhwa& Company,
Nagpur
6. [Link] : Company Notices, Meetings and
Resolutions, Kamal Law House, Kolkatta
7. D. K. Jain : E- Filling of Forms & returns
8. Taxmann : E-Company forms
9. [Link] : Depository Participants (Law & Practice)
 III

10. ICSI Publications : Meetings

11. B. [Link] : Company Law
12. D. K. Jain : Company Law Procedures

References:
1. M. C. Bhandari : Guide to Memorandum, Articles and R. D.
Makheeja Incorporation of Companies; Wadhwa & Company,
Agra & Nagpur
2. Taxman : Company Law, Digest

Journals:
1. Chartered Secretary : ICSI Publication
2. Student Company Secretary : ICSI Publication
3. Company Law Journal : L.M. Sharma, Post Box No. 2693, New
Delhi – 110005.



PAPER PATTERN
COMPANY SECRETRIAL PRACTICE
SECTION I

1. Define the terms (Any five) 10

2. Answer Any Three Out of six questions 30
3. Write notes on Any two out of four 10


 1

1
INTRODUCTION TO COMPANY
Unit Structure:

1.0 Objectives
1.1 Introduction
1.2 Joint Stock Company
1.3 Company Secretary
1.4 Appointment Procedure, Resignation and Removal of
Company Secretary
1.5 Career Options
1.6 Rights, Responsibilities and Liabilities of Company Secretary
1.7 Exercise
1.8 References

1.0 OBJECTIVES

After studying the unit students will be able to:

 Understand Features and Types of Company
 Explain Qualities and Qualifications of Company Secretary
 Know Appointment procedure, Resignation and Removal of
Company Secretary
 Discuss Rights and Responsibilities of Company Secretary
 Describe Liabilities of Company Secretary
 Know the Career Options of Company Secretary

1.1 INTRODUCTION

The word company refers to association of people coming

together to achieve some common purpose. A Joint Stock Com-
pany is a voluntary association of people incorporated under Indian
Companies Act, the capital of which is divided into small number of
units which is known as ‘shares’. A person who purchases shares
of company is called ‘Shareholder’. Shareholders are the owners of
company because they contribute the capital of company and this
capital remains in the business for the life time of the company.
Shareholders get ‘dividend’ as return on their investment in the
company. Shareholders are not in a position to look after day to day
administration of the Company so they appoint their representatives
 2

known as ‘Directors’. Directors collectively are known as “Board”.

Board of Directors is the representatives of shareholders and man-
ages day to day administration of company.

1.2 JOINT STOCK COMPANY

1.2.1 Definition
According to Chief justice Marshall “A corporation is an ar-
tificial being, invisible, intangible and existing only in contemplation
of the law. Being a mere creation of law, it possesses only the
properties which the charter of its creation confers upon it either
expressly or as incidental to its very existence.”

According to Sec. 2(20) of Companies Act, 2013, “Com-

pany means a company incorporated under this Act or under any
previous company law.”

1.2.2 Features of Joint Stock Company

1) Voluntary Association: A Joint Stock Company is a voluntary

association of people. Any person irrespective of his/her caste,
creed, religion, region etc. can become member. A person can
be a member at his wish and leave membership as and when
he/she wants subject to provision in Articles of Association of
the company.

2) Incorporated Association: A Joint Stock Company is an incor-

porated association as it is registered under Indian Companies
Act, 2013. The registration is compulsory in India for every Joint
Stock Company irrespective of its size and nature of business.

3) Artificial Person: A Joint Stock Company is an artificial person

created by law. Just like a natural person, a Joint Stock Com-
pany can sign (common seal) documents, appoint employees,
purchase or sale assets and property and enter into contracts.

4) Independent Legal Entity: A Joint Stock Company can enjoy

separate legal status. Existence of Joint Stock Company is dif-
ferent from its shareholders and directors.

5) Perpetual Succession: A Joint Stock Company has perpetual

succession. The death, insolvency and insanity of any share-
holder or director does not affect continuity of company. There
is no death of company. However, it can be closed by following
legal procedure stated in the Companies Act.

6) Common Seal: A Company cannot sign physically so common

seal can be affixed on all the documents of company along with
 3

signature of Board of Directors. Common seal is treated as sig-

nature of company. It remains in the custody of Board of Direc-
tors of company.

7) Limited Liability: The liability of shareholders of company is

limited upto unpaid value of shares. Once the unpaid value of
shares is paid by shareholders, they are not liable to pay any
debts of company out of their personal property.

8) Separation of Ownership and Management: In Joint Stock

Company the ownership and management are different. Share-
holders are the owners of company and Board of Directors are
the Managers of company. The shareholders are large in num-
ber and spread over wide area. It is not feasible for them to par-
ticipate in management of company. So they appoint Board of
Directors as their representatives to look after day to day routine
of company.

9) Huge Membership: The membership of Joint Stock Company

is huge. A private limited company must have minimum 2 mem-
bers and maximum 200 members. A public limited company
must have minimum 7 members and maximum no limit on
membership.

10)Huge Capital: Joint Stock Company can collect huge capital

due to huge membership. They can collect capital by issue of
shares (owner’s fund) or debentures and bonds (debt fund).
They also accept public deposits. It obtains loans from banks
and financial institutions.

11)Transferability of Shares: Though the shares of Private Lim-

ited Company are not freely transferable, the shares of Public
Limited Company are freely transferable in open market. Any-
one who wishes to sell share can do so anytime.

12)Government Control: Functioning of Joint Stock Company is

controlled by Government. The purpose is to protect interest of
investors. It also helps to control frauds taking place in compa-
nies and maintain good governance in the functioning of com-
pany.
 4

1.2.3 Types of Companies

I) ON THE BASIS OF INCORPORATION

1) Statutory Company: These companies are incorporated under

special Act passed by the central or state legislative. This com-
pany functions as per provision of special law. Eg. Reserve
Bank of India (RBI), State Bank of India (SBI), Life Insurance
Corporation (LIC), Unit Trust of India (UTI).

2) Registered Company: These companies are incorporated un-

der the Companies Act, 2013 or any previous company law.
These companies function as per provisions of Companies Act,
2013.

II) ON THE BASIS OF MEMBERSHIP

1) Private Company: The private company has following features:

 Minimum paid up capital as prescribed by its Articles
 Prohibits issue prospectus to public for inviting for subscrip-
tion of shares
 Minimum 2 members and maximum 200 members are re-
quired.
 Restrict transferability of shares.

2) Public Company: The private company has following features:

 Minimum paid up capital as prescribed by its Articles
 Issue prospectus to public for inviting for subscription of
shares
 Minimum 7 members and maximum no limit on membership.
 Freely transferability of shares.

3) One Person Company: The concept of One Person Company

was introduced through the Companies Act, 2013. It is operated
by single promoter who has limited liability. Due to limited liabil-
ity, this business considered to be better than Sole Trading Con-
cern. This company can have more than one director and need
not to hold AGM. It is a private limited company and it has to ful-
 5

fill and comply with all the formalities of private company unless
otherwise specified in the Act.

III) ON THE BASIS OF LIABILITY OF MEMBERS

1) Company Limited by Shares: These companies have share

capital and liability of its members is limited upto unpaid value of
shares. At the time of winding up of company members are li-
able to pay only unpaid value on their shares. Most of the com-
panies in India are limited by shares.

2) Company Limited by Guarantee: Such companies may or

may not have share capital. At the time of winding up of com-
pany each member is liable to pay fixed sum of money specified
in Memorandum of Association of company to pay the debts
and liabilities of company.

3) Unlimited Liability Company: In this type of company, liability

of members is unlimited. In case company is having debts and
liabilities, the members have to sell their personal property
along with business property to repay debts and liabilities of
companies. Such companies are not very popular among inves-
tors.

IV) ON THE BASIS OF CONTROL

1) Holding Company: It is company which holds more than 50%

of shareholding in another company (Subsidiary Company).
This company controls the management of subsidiary company.
There are 2 types of holding company:

 By Share Holding: Controls more than 50% of total share

capital either at its own or together with one or more of its
subsidiary companies.

 By Management: Controls the composition of Board of Di-

rectors

2) Subsidiary Company: This Company is just opposite to hold-

ing company. More than 50% of its shares are purchased by
holding company. This company is controlled by holding com-
pany. Eg. Company ‘B’ is having total 10,000 shares out of
which Company ‘A’ holds 6000 shares. So Company ‘A’ is Hold-
ing Company and Company ‘B’ is Subsidiary Company.

V) OTHER TYPES

1) Government Company: Government company is the one in

which not less than 51% of paid up share capital is held by:
 6

 The Central Government

 State Government
 Partly by Central Government and Party by State Govern-
ment
 Subsidiary Company of a Government Company

Government Company may be a private company or public

company. It is registered under India Companies Act, 2013. Eg. Oil
and Natural Gas Corporation Ltd. (ONGC), Steel Authority of India
Ltd. (SAIL), Bharat Heavy Electrical Limited (BHEL), Hindustan
Machine Tools Ltd., Coal India Limited etc.

2) Foreign Company: It is a company incorporated outside India

but having a place of business in India whether:
 By itself or through an agent, physically or through electronic
mode and
 Conducts any business activity in India in any other manner.
Eg. Nestle India Ltd., Bata India Ltd., Whirlpool Corporation etc.

3) Dormant Company: The Companies Act, 2013 has introduced

concept of dormant company which would have adhere to fewer
compliance requirement. It means:
 The company has not made any significant accounting
transactions in last two years or
 It has not filed financial statements or annual returns in last
two years.
The ROC may issue notice to such company and enter their
name in register of dormant companies.

4) Listed Companies: It is a company which has any of its securi-

ties listed on any recognized stock exchange. Its securities are
traded on stock exchange. Such companies have to follow SEBI
guidelines and provisions of the Companies Act.

5) Small Company: A small company is other than a public com-

pany which has:
 Paid up share capital does not exceed Rs. 50 lakh or such
higher amount as may be prescribed or
 Turnover of which its last profit and loss account does not
exceed Rs. 2 crores or such higher amount as may be pre-
scribed.

6) Associate Company: It is a company over which another com-

pany exercises a significant degree of control which is less than
the degree of control exercised over a subsidiary company.

7) Company not for profit (Section 8): Such companies must ob-
tain license from the Central Government before they are incor-
 7

porated. The liability of their member is limited. They need not to

use word ‘limited’ or ‘private’ with their name.

Check your Progress :

 Define/explain the following terms
1) Joint Stock Company
2) Private Company
3) Holding Company
4) Listed Company
5) Company Limited by Shares

1.3 COMPANY SECRETARY

1.3.1 Meaning and Definition

The company secretary looks after various functions related
to correspondence, meetings and administration which ensures
smooth functioning of the organization. He/she is an important offi-
cer of the company.

Company secretary is appointed by the Board of Directors of

company as per provisions of Companies act. He/she acts as a link
between Board of Directors and Shareholders, Employees and out-
siders etc. He/she is closely connected with day to day activities of
company, so his/her views are considered for decision making in an
organization.

Definition of Company Secretary

According to Companies Act 2013 Section 2 (24) “Com-
pany Secretary or Secretary means a Company Secretary as de-
fined in Clause (c) of Sub-section (i) of Section 2 of the Company
Secretaries Act 1980 who is appointed by a company to perform
the function of a Company Secretary under this Act.”
The Oxford Dictionary defines secretary as “A person
whose work is to write for others, especially one who is employed
to conduct correspondence, keep records and to transact various
other businesses for another person or for society, corporation or
public body.”
 8

The Company Secretaries Act, 1980 defines Company

Secretary as – “a person who is a member of Institute of Company
Secretaries of India.”
1.3.2 Features of Company Secretary
1) An Individual: Only an individual can be appointed as secretary
of a company. A firm, Corporate Body, an institution etc. cannot
be appointed as secretary.
2) An Employee: A secretary is a paid employee in the company.
But he/she holds an important position in the organization.
3) Qualification: The secretary of a Joint Stock Company must be
a member of Institute of Company Secretaries of India (ICSI).
This is essential qualification required to have by Company Sec-
retary. Other qualification required by Company Secretary is
command over language as well as knowledge of office man-
agement, correspondence, Account and Finance, Technology
and so on.
4) Qualities: Along with educational qualifications, a secretary
need to have certain qualities such as accuracy, promptness,
tact, courtesy, leadership, loyalty, punctuality, sound judgement
etc. This enables him/her to discharge his/her duties efficiently.
5) Duties: A company secretary needs to perform various duties
which include correspondence, administration, convening meet-
ings, statutory functions, assist in formulating policies, financial
functions, providing information etc.
6) Appointment: The first secretary is appointed by company
promoters. Thereafter, company secretary is appointed by the
Board of Directors of a company by passing resolution in Board
Meeting.

1.3.3 Qualities of Company Secretary

1) Accuracy: Accuracy means correctness. A company secretary
must be accurate in his/her duties which include drafting letters,
recording minutes, filing documents with government depart-
ment and so on. Concentration is required for accuracy in work.
2) Adaptability: Adaptability means adjusting in changing situa-
tion. There is frequent change in government policies, man-
agement policies and so on. The secretary should adjust him-
self/herself with such changes.
3) Courtesy: It implies politeness and kindness. Since secretary
has to deal with many people day in and day out, he/she should
be courteous with them. This helps to create positive impression
about organization.
 9

4) Leadership: In order to get work done from subordinates, a

secretary should have leadership quality. Secretary should have
the ability to guide, advise, inspire and motivate the subordinate.
5) Loyalty: Secretary is custodian of secret information. He/she
should be loyal towards the organization. He/she should not
disclose confidential information to anyone.
6) Punctuality: This quality is related with time management and
refers to doing things at appropriate time. Delay in work can
create bad impression about the organization.
7) Cooperation: The secretary should be able to cooperate and
assist his subordinates in their work. This will enable to achieve
objectives of the organization.
8) Orderliness: It means doing the work in a systematic manner.
Secretary should sort out more important and least important
work. He/she should give importance to important work followed
by least important work.
9) Personality: A secretary should have pleasing, impressive and
winning personality. His personality can create cordial and
friendly atmosphere in the organization. Pleasing personality
enables the secretary to get respect from others.

1.3.4 Qualifications of Company Secretary

1) Educational Qualification: A company secretary must be the

member of the Institute of Company Secretaries of India (ICSI).
This is the basic essential qualification required to be a com-
pany secretary. In addition, he may have membership of the In-
stitute of Chartered Accounts of India (ICAI) or Membership of
the Institute of Cost and Works Accounts of India (ICWA).

2) Other Educational Qualification: Along with basic educational

qualifications a secretary should also possess other educational
qualification to discharge his/her function and duties efficiently.
Other educational qualifications are as follows:
 General Education: Secretary should have Masters’ Degree
in Economics, Commerce or Law.
 Legal Knowledge: A secretary should be well versed with
provisions of various acts such as Income Tax, Sales Tax,
Stamp Duty, Minimum Wages Act, Contract Act, Sale of
Goods Act, Negotiable Instruments Act etc.
 Command over Language: The secretary has to communi-
cate with members, government officers, visitors, press re-
porters etc. So he/she should have command over English
and other regional language both in oral and written form.
 10

 Knowledge of Accounting and Finance: The secretary

should have knowledge of Balance sheet and Profit and
Loss account. He/she should also have knowledge of finan-
cial planning and financial management of his/her company.
 Knowledge of Office Management: Secretary should have
complete knowledge about office management which is use-
ful for planning, organizing, coordinating, directing, staffing,
controlling etc. He/she should also know drafting, filing, re-
cord keeping, assigning work and so on.
 Knowledge of Human Relations: Secretary has to deal
with the directors, shareholders and the outsiders. He/she
must know how to deal with them. In short, he/she need to
have knowledge of human psychology.
 Knowledge of Technology Application: These days IT is
used extensively for varied purpose in an organization. The
company secretary should have knowledge of technology to
brings accuracy, speed and decency in the office work.

1.4 APPOINTMENT PROCEDURE, RESIGNATION

AND REMOVAL OF COMPANY SECRTARY

1.4.1 Procedure of Appointment

Following is the procedure of Appointment of Company Secretary :

1) Board Meeting: A Board meeting is convened and details of short

listed candidates for the post of Company secretary is placed before
Board meeting. After considering all applications, a suitable candi-
date is selected and Board Resolution for Appointment of Company
Secretary is passed. Formal appointment letter is issued to the per-
son finally selected.

2) Filing Return of Appointment of Company Secretary: In this

stage, a return of appointment of company secretary is filed with
Registrar of Companies (ROC) in Form DIR-12 within 30 days from
the appointment. Form MGT-14 is also required to be filed along
with fees. This form includes details such as particulars of company
secretary, PAN No., membership number, address, date of ap-
pointment and so on.

3) Making entry in the Register of Key Managerial Personnel

(KMP): Details of Company Secretary must be recorded in the reg-
ister of Key Managerial Personnel (KMP).

4) Intimation to Stock Exchange: If such company is listed then it

should give intimation to all the Stock Exchange where the com-
pany's securities are listed.
 11

1.4.2 Resignation and Removal of Company Secretary

The company secretary can resign by giving notice as per
terms and conditions of service agreement. The secretary can re-
sign due to persona reasons or unfavourable working conditions.
The Board of Directors may also remove the secretary by serving
notice to him/her by following a procedure.

The procedure for Removal / Resignation of Company

Secretary
1) Board Meeting: Board meeting is convened for final decision
on resignation / removal of company secretary. A resolution is
passed by the Board.
2) Filing of Form DIR-12: Form DIR-12 in electronic mode is filed
within 30 days with Registrar of Companies along with fees.
3) Intimation to Stock Exchange: The stock exchange where
share of the company are listed, is required to be informed
about resignation / removal of secretary.
4) Entries in the Register: Entry is made in the Register
maintained for recording the particulars of Company Secretary
under Section 170 of Companies Act.
5) Issue of General Notice: The Company may issue general
public notice informing regarding removal / resignation of
secretary.
6) Filing of Vacancy: A Board meeting is convened to filing of
vacancy of secretary within 6 months from the date of such
vacancy.

1.5 RIGHTS, RESPONSIBILITIES AND LIABILITIES

OF COMPANY SECRETARY

1.5.1 Rights of Company Secretary

Company Secretary is a senior level officer. He enjoys the rights
as per the agreement signed by him with the Company. Some
rights areas follows:
1) As a senior level officer Company Secretary can supervise, con-
trol and direct subordinate officers and employee.
2) A Company Secretary can sign any contract /agreement on be-
half of the company as a principle officer of a company, subject
to the delegation of power by the board of the company.
3) Company Secretary can issue guidelines for the employees on
behalf of the company.
4) Company Secretary can attend meeting of shareholders and the
meeting of board of directors.
 12

5) During Winding up he can claim his legal dues as a preferential

creditor of a company.
6) He can sign and authenticate the proceeding of meetings
(Board, Annual general or extra ordinary general meeting) and
other documents on behalf of the company where common seal
is not required.
7) Company Secretary is a Compliance Officer and he has a right
to blow whistle whenever he finds the conduct of the officers or
of the directors of the company are detrimental to the interest of
the company.

1.5.2 Responsibilities of Company Secretary

1) According to Company Act:
 To sign documents and proceedings requiring authentication
by the company.
 To deliver return of allotment the Registrar.
 To give notice to registrar for increase in the share capital.
 To deliver share certificate of allotment within 2 months after
transfer.
 To make entry for register of members of the share warrant.
 To send annual return
 To send notice of general meeting to every member of the
company.
 To make statutory books
 To sign every balance sheet and P/L accounts in case of a
non-banking financial company.
 To prepare minutes of every General Meeting and Board
Meeting within 30 days
 To file a resolution with the registrar.
2) According to IT Act:
 To ensure proper income tax is deducted at source from the
salary of employees
 To see that the certificate of TDS is issued.
 To ensure that the tax deducted is deposited to government
treasury
 To submit and verify various forms and returns
3) Under Indian Stamp Act:
 To see that the documents like letter of allotment and share
certificate etc. are properly stamped.
 13

4) Under other Act:

 To comply with other acts such as FEMA, Minimum Wages
Act, Industrial Dispute, Employee State Insurance Act etc.
5) General Responsibilities:
 To comply with internal regulations and legislation
 Duty to exercise due care and diligence
 To draft director report
 Maintaining the statutory registers of the company
 Ensuring Board decisions are properly communicated
 Registration of share transfers and issuance of related share
certificates
 Communicating with company shareholders
 Safe custody of common seal
 Certifying documents such as Certificate of Incorporation,
Memorandum and Articles of Association
 Giving legal advice to Directors
 To act as an information link

1.5.3 Liabilities of Company Secretary

 Statutory Liabilities
1) Filing the return of allotment
2) Delivering share certificate / Debenture certificate on time
3) Filing annual return
4) Holding Annual General Meeting (AGM)
5) Recording minutes of the meeting
6) Providing the P/L account and Balance sheet at AGM
7) Provide notice about Board Meeting
8) Maintain the register of members

 Contractual Liabilities
1) He/she is liable for any negligence on part of his duty. He/she
may be dismissed.
2) He/she must not do anything beyond his authority, if he/she
does he will be personally liable for loss.
3) He/she is under the obligation to not disclose any secret infor-
mation about the company to outsiders.
 14

4) He/she is liable for any secret profits made by him/her on ac-

count of his position
5) If the company secretary commits any fraud, he/she must in-
demnify to the company for any loss occurred.

1.6 CAREER OPTIONS

A career as a Company Secretary is financially rewarding

and prestigious. The Institute of Company Secretary of India (ICSI)
is the only recognized professional body in India to develop and
regulate the profession of Company Secretary. If a person has
good judgemental quality, legal aptitude, interest in current affairs
and good administrative policy, then company secretary is an ideal
career for such person.

1. Opportunities in Employment
A qualified company secretary can find good positions in the
private sector as well as in public sector, banks and financial institu-
tions. There is also opportunity in stock exchanges, the Department
of Company Affairs, Company Law Board and various government
departments. There is a statutory requirement for appointment of
company secretaries in listed companies.

Membership of ICSI is recognized for appointment to supe-

rior posts and services under Central Government. It is also recog-
nized for recruitment from Grade I and Grade IV in the Accounts
branch of the Indian Company Law Service. Almost every kind of
organization whose affairs are conducted by Board, Councils or
other association, federation, authority, commission etc. appoint
Company Secretary in a Key Administrative Position.

2. Role in the Company

The company secretary is an in-house legal expert and a
compliance officer of the Company. He/she is an expert in corpo-
rate laws, securities laws and capital market and corporate govern-
ance. He is the chief advisor to the Board of Director on best prac-
tices in corporate governance and is responsible for all regulatory
compliances of company. He/she is known as a corporate planner
and strategic manager. He has direct access to the top manage-
ment and the board room.

They have to manage all aspects of corporate meeting be it

Board Meeting, Annual General Meeting, interaction with important
clients and vendors, meetings with government and private delega-
tions. They may also have to take up the responsibility to manage
corporate events and manage clients.
 15

As an additional responsibility, company secretary also have

to keep a discerning eye on the expansion opportunities of the
company. Further, they have to take care of collaborations, joint-
ventures, mergers, takeovers within the country and outside.

Under the newly passed Companies Act, 2013, the

Company Secretary has been aptly bracketed in the Company’s
‘Key Managerial Personnel’.

3. Option of going into practice

After obtaining a ‘Certificate of Practice from the Institute,
Members of the Institute can opt for independent practice. Right
from the incorporation of a company till the time it is wound-up, a
company will require the services of a practicing company secretary
at some stage or the other.

Pursuant to Clause 49 of the Listing Agreement of stock ex-

changes, Practicing Company secretary has also been authorized
to issue certificate regarding compliance of conditions of Corporate
Governance as stipulated in the Clause.

Practitioners have also been recognized to appear before

various tribunals such as Company Law Board, the Securities Ap-
pellate Tribunal, Consumer Forum, Tax Tribunals etc. The Reserve
Bank of India has also recognized the Practicing Company Secre-
taries to undertake Diligence Report for Banks.

A practicing company secretary is an independent profes-

sional and is recognized to issue certificates and attend documents
inter alia under the Companies Act, the SEBI Act, Securities Con-
tracts and Regulation Act (SCRA), and Regulations made there un-
der, the Depositories Act, the EXIM Policy etc.

4. Opportunities abroad for CS

Many company Secretaries are already working in various
countries like the US, Canada, UK, Singapore, Malaysia, Thailand,
Australia, New Zealand, Middle-East, Africa etc. With their research
and legal bent of mind, their employers have recognized their pro-
fessional skill sets. They also possess managerial capabilities and
analytical skills.

After the globalization of services through WTO and GATS,

the field is opening in various countries for practicing company sec-
retaries as well. India is entering into bilateral Agreements with
countries like Singapore, Malaysia, Thailand and Mauritius etc.
These agreements recognize Company Secretary for free move-
ment of professional across borders.
 16

ICSI has entered into a MoU with the Institute of Chartered

Secretaries and Administrators, UK. This MoU recognizes Com-
pany Secretaries of both the countries on certain conditions. The
process of globalization and the process of comprehensive eco-
nomic cooperation that India is initiating has also set in motion mu-
tual recognition agreements between the ICSI and Institutes gov-
erning the profession in various other countries. This is opening up
the world to Company Secretaries.

1.7 EXERCISE

FILL IN THE BLANKS

1) Joint Stock Company is a _____________ (Voluntary Associa-
tion, Incorporated Association, Both)
2) Shareholders are _________ of Joint Stock Company. (Credi-
tors, Debtors, Owners)
3) _________ are appointed by shareholders to look after day to
day administration of the company. (Promoters, Directors, Sec-
retary)
4) _________ Company is incorporated outside India but having a
place of business in India. (Foreign, Government, Dormant)
5) The Secretary is a ______________ in a company. (Paid Em-
ployee, Owner, None of these)
6) A Company Secretary must be the member of the
_______________ (ICSI, WTO, EU)
7) A secretary requires to have _____________ quality. (Accuracy
and Orderliness, Leadership and Cooperation, Both)
8) ________________ is a right of Company Secretary. (Super-
vise and Direct subordinates, Default in filing the return of allot-
ment, Failure to maintain register of members.

ANSWER IN BRIEF
1) Define Joint Stock Company. Explain its features.
2) What are the different types of Companies as per Companies
Act, 2013?.
3) Discuss qualities required by a company secretary.
4) Explain qualification required by a company secretary.
5) Briefly explain appointment procedure of company secretary.
6) Write note on Resignation and Removal of Company Secretary.
7) What are the rights of Company secretary?
8) Highlight responsibilities of company secretary.
 17

9) Discuss the liabilities of Company Secretary.

10)Write note on Career options of Company Secretary.

1.8 REFERENCES

[Link]
[Link]
[Link]
[Link]
[Link]
Maharashtra State Board – Secretarial Practice – Std. XI textbook





 18

2
COMPANY SECRETARY PRACTICES
Unit structure:

2.0 Objectives
2.1 Introduction to Advisory Services of Company Secretary
2.2 Secretaries as a Liaison Officer between Company and
Stock Exchange
2.3 Representation Services of Company Secretary at Different
Forums
2.4 Cyber Law Ccompliance
2.5 Secretarial Standards by ICSI, Secretarial Standards -1- 10
2.6 Secretarial Audit – Procedure and Stages, Need and
Importance, Scope
2.7 Summary
2.8 Exercise

2.0 OBJECTIVES:

After studying the unit the students will be able:

 To explain the role of Company Secretary as an liaison officer
 To explain about Representation Services of Secretary at
different forums
 To explain the Secretarial Standards by ICSI, Secretarial
Standards -1- 10.
 To explain Secretarial Audit–Procedure and Stages, Importance
and scope

2.1 INTRODUCTION TO ADVISORY SERVICES OF

COMPANY SECRETARY:

Company secretary is regarded as a liaison officer. Company

secretary is mainly responsible for looking after the secretarial works.
He generally maintains liaison with the board of directors, employees,
shareholders, and other outside parties. Now a days, company
secretary is one of the most important persons who perform some
specified duties in the company form of business.

The educational background, knowledge, training and

exposure that a Company Secretary acquires makes him a versatile
professional capable of rendering a wide range of services to
 19
companies of all sizes, other commercial and industrial
organizations, small scale units, firms etc.

Services rendered by Practising Company Secretary are as

follows :
Promotion, formation and incorporation of companies, and
matters related therewith including choice of type of company,
availability of name, drafting of Memorandum and Articles of
Association and other documents, their stamping and registration
with the Registrar of Companies.

2.2 SECRETARIES AS A LIAISON OFFICER

BETWEEN COMPANY AND STOCK EXCHANGE:

2.2.1 Secretaries as a Liaison Officer between Company and

Stock Exchange
Services under the Securities Exchange Board of India Act, 1992
are as follows -
1. Complete support, certifications and assistance in the
implementation and compliance of Listing Agreement.
2. Complete support and advisory services for Listing and delisting
of Shares from the Indian and Foreign Stock Exchanges.
3. Complete support, advisory & transaction services to companies
in implementing Regulations, notifications, circulars and orders of
SEBI issued under SEBI Act 1992.
4. Complete support in drafting replies to Show Cause notices
issued by SEBI and making representation before the
Adjudicating Officer of SEBI.
 20
5. Filing Appeal against the orders of SEBI in Securities Appellate
Tribunal and allied services.

2.2.2 Secretaries as a Liaison Officer between Company and

Depository Participants

Depository is an institution or a kind of organization which

holds securities with it in DeMat form, in which trading is done among
shares, debentures, mutual funds, derivatives, F&O and
commodities. The intermediaries perform their actions in variety of
securities at Depository on behalf of their clients. These
intermediaries are known as Depositories Participants (DPs).

Fundamentally, There are two sorts of depositories in India.

One is the National Securities Depository Limited (NSDL) and the
other is the Central Depository Service (India) Limited (CDSL). Every
Depository Participant (DP) needs to be registered under this
Depository before it begins its operation or trade in the market.
Depository provides its services to investors through its agents
called depository participants (DPs). These agents are appointed by
the depository with the approval of SEBI. According to SEBI
regulations, among others, three categories of entities i.e. Banks,
Financial Institutions and Members of Stock Exchanges registered
with SEBI can become DPs. Depository Participant is described as
an Agent of the depository. They are the intermediaries between the
depository and the investors. The relationship between the DPs and
the depository is governed by an agreement made between the two
under the Depositories Act. In a strictly legal sense, a DP is an entity
who is registered as such with SEBI under the sub section 1A of
Section 12 of the SEBI Act.

Company Secretary acts as Compliance Officer and ensures

compliance with SEBI (Prohibition of insider Trading) Regulations,
1992 including maintenance of various documents., Securities
Compliance and Certification Services, Compliance with rules and
regulations in the securities market particularly, Internal Audit of
Depository Participants , Certification under SEBI (DIP) Guidelines,
Audit in relation to Reconciliation of shares, Certificate in respect of
compliance of Private Limited and Unlisted Public Company .
 21
2.2.3 Secretaries as a Liaison Officer between Company and
Registrar of Company:

The Registrar of Companies (ROCs) is an office under the

Indian Ministry of Corporate Affairs that deals with administration of
the Companies Act 1956 and Companies Act2013. These officers
are from Indian Corporate Law Service cadre. There are currently
22 Registrars of Companies operating from offices in all major
states of India. Some states, such as Maharashtra and Tamil Nadu,
have two Registrars of Companies each. Section 609 of the
Companies Act, 1956 tasks the ROCs with the primary duty of
registering companies.

The office of the ROC maintains a registry of records related to

companies registered with them, and permits the general public to
access this data on payment of a fee. The Registrar of Company
takes care of company registration (also known as incorporation) in
India, completes reporting and regulation of companies and their
directors and shareholders, and also oversees government
reporting of various matters including the annual filling of various
documents.

Role of company secretary has a great importance in every

stage of company formation. A secretary plays a vital role for
company before incorporation and after incorporation. Secretary
submits necessary forms and documents to the registrar of Joint
Stock Company for getting certificate of incorporation .He prepares
Memorandum and Articles of Association. He ccollects certificate of
commencement from the registrar of Joint Stock Company and
arrange statutory meeting .He prepares statutory report and files the
copy of such report with the registrar of the company. Preparation,
validation and filing of resolutions, agreements, documents, notices
and various returns with the company Registrar are some of the
important work done by Company Secretary an liaison officer
between Company and Registrar of Companies.
 22

2.3 REPRESENTATION SERVICES OF COMPANY

SECRETARY AT DIFFERENT FORUMS:

Company Secretary is a vital link between the company and its

Board of Directors, shareholders, government and regulatory
authorities. He ensures that Board procedures are both followed and
regularly reviewed and provides guidance to Chairman and the
Directors on their responsibilities under various laws. He commands
high position in the value chain and acts as conscience seeker of the
company. He represents on company’s behalf on various forums.

1. Corporate Laws Advisory Services :

Advising companies on Compliance of legal and procedural
aspects, particularly under SEBI Act, SCRA and rules and
regulations made there under Foreign Exchange Management Act,
Consumer Protection Act, Depositories Act , Environment and
Pollution Control Laws ,Labour and Industrial Laws , Co-operative
Societies Act , Mergers and Amalgamations and Strategic Alliances ,
Foreign Collaborations and Joint Ventures ,Setting up subsidiaries
abroad, Competition Policy and Anti Competitive Practices, IPR
Protection, Management, Valuation and Audit , Drafting of Legal
documents etc.

2. Representation Services:
Company Secretary’s representation services include Corporate
Laws Advisory and Representation Services. It also includes
Financial Market Services .
 23
3. Financial Market Services :
Public Issue, Listing and Securities Management, Adviser
/consultant in issue of shares and other securities, Preparation of
Projects Reports and Feasibility Studies, Syndication of Loans from
banks & financial institutions, Loan Documentation, Listing of
securities/ delisting of securities with recognized stock exchange,
Ensuring compliance of the Takeover Regulations and any other
laws or rules as may be applicable in this regard etc.

4. Finance and Accounting Services :

Internal Audit, Secretary to Audit Committee, Working capital
and liquidity management, Determination of an appropriate capital
structure, Analysis of capital investment proposals, Budgetary
controls, Accounting and compilation of financial statements etc.

5. Taxation Services :
Advisory services to companies on tax management and tax
planning under Income Tax, Excise and Customs Laws ,
Preparing/reviewing various returns and reports required for
compliance with a the tax laws and regulations etc.

6. International Trade and WTO Services :

Advising on all matters related to IPRs and TRIPs Agreement of
WTO, International Commercial Arbitration, Advising on and issuing
certificates on EXIM Policy and Procedures, Advising on Intellectual
Property, licensing and drafting of Agreement, Acting as registered
Trade Mark Agent etc.

7. Management Services:
Advising on Legal Structure of the organization, Acting as
management representative to obtain ISO Certification ,Corporate
Communications and Public Relations ,Communication with
stakeholders, Advisory services for Brand equity and image building,
Manpower planning and development, Performance appraisal,
Motivation and remuneration strategies ,Industrial relations ,work
studies and performance standards, Advising on industrial and
labour laws , Information Technology, Compliance with cyber laws,
Conducting Board Meetings through video-conferencing and
teleconferencing, Advising on software copyright and licensing ,
Development of management reports and controls, Maintenance of
statutory records in electronic form ,Sending notices to shareholders
by electronic mode ,Filing of forms/documents in electronic form with
Registrar of Companies and other statutory authorities etc.

8. Company Law Board, Consumer Forum, SEBI, Arbitration &

Conciliation Services:
Company Secretary represents on behalf of a company before
Company Law Board, National Company Law Tribunal, Competition
Commission of India, Securities Appellate Tribunal , Registrar of
 24
Companies, Consumer Forums, Tax Authorities ,Other quasi-judicial
bodies and Tribunals etc. He also plays important role in arbitration
and Conciliation.

2.4 CYBER LAW COMPLIANCE:

As we know that open-source license is a type of license for

computer software and other products that allows the source code,
blueprint or design to be used, modified and/or shared under defined
terms and conditions. Usage of open source content in a sensitized
manner is critical for any business and needs utmost care to handle it
in right way. Software audit is the need of the hour. It includes :

1. Software Licensing Agreements (Drafting & review)

2. Information Security & Cyber security Policy
3. Software (High-Level/Design) Audit
4. Compliance to IT Act,
5. User Data Privacy Compliance,
6. Data Transfer Compliance,
7. GDPR Compliance,
8. Black-box (manual) testing from Legal Perspective.
9. Websites Audit
10. Litigation pertaining to IT Act

The company secretary is responsible for the efficient

administration of a company, particularly with regard to ensuring
compliance with Cyber Law, statutory and regulatory requirements
and for ensuring that decisions of the board of directors are not
against the present Cyber Law. To ensure this Software audit must
be done periodically.

2.5 SECRETARIAL STANDARDS BY ICSI,

SECRETARIAL STANDARDS -1- 10:

In order to have uniformity in the practices adopted by different

companies, the Institute of Company Secretaries of India (ICSI) has
released 10 secretarial standards including standard on board
meeting, dividend and transmission of shares. Company Secretary
should excel in new areas like corporate restructuring, insolvencies,
mergers, amalgamations, international tax planning, GST etc. Here's
a list of Secretarial Standards:

SS-1 : Secretarial Standards on Meeting of Board of Directors.

SS-2 : Secretarial Standards on General meetings.
SS-3 : Secretarial Standards on Dividend.
 25
SS-4 : Secretarial Standards on Registers and Records.
SS-5 : Secretarial Standards on Minutes.
SS-6 : Secretarial Standards on Transmission of Shares and
Debentures.
SS-7 : Secretarial Standards on Passing Resolutions by Circulation.
SS-8 : Secretarial Standards on Affixing of common seal.
SS-9 : Secretarial Standards on Forfeiture of Shares.
SS-10 : Secretarial Standards on Board's Report.

Out of the above mentioned Secretarial Standards, only 3 are

effective as on till date, they are:-

SS-1 Secretarial Standard on Meetings of the Board of Directors.

SS-2 Secretarial Standard on General Meetings.
SS-3 Secretarial Standard on Dividend .

2.6 SECRETARIAL AUDIT – PROCEDURE AND

STAGES, NEED AND IMPORTANCE, SCOPE:

Secretarial Audit is a compliance audit. It is a part of total

compliance management in an [Link] helps to detect
noncompliance and to take corrective measures. Secretarial Audit is
a process .It is done to check compliance with the provisions of
various laws and rules/ regulations/procedures, maintenance of
books, records etc., by an independent professional. It is done to to
make sure that the legal and procedural requirements are complied
with the legal and procedural requirements and also followed
due processes.

It is essentially a mechanism to monitor compliance with the

requirements of stated laws.
 26
2.6.1 Secretarial Audit Report:
The Secretarial Auditor expresses an opinion as to whether
there exist adequate systems and processes in the company
commensurate with the size and operations of the company to
monitor and ensure compliance with applicable laws, rules,
regulations and guidelines. Secretarial Audit helps to detect the
instances of non-compliance and facilitates taking corrective
measures. It thus provides necessary comfort to the management,
regulators and the stakeholders, as to the statutory compliance,
good governance and the existence of proper and adequate
systems and processes.

2.6.2 Scope of Secretarial Audit:

Secretarial Audit is to be on the principle of “Prevention is better
than cure” rather than post-mortem exercise and to find faults. It
acts as an effective compliance risk management tool or a
governance tool. The benefits of Secretarial Audits are available to
all stakeholders including promoters, executive directors, officers of
the company, regulators, government authorities, investors,
financial institutions, banks, creditors etc.

Reporting on the compliance of five laws as mentioned:

a) Companies Act, 2013 and the rules made there under;
b) Securities Contracts (Regulation) Act, 1956 (‘SCRA’), and the
rules made there under;
c) Depositories Act, 1996, and the rules made there under;
d) Foreign Exchange Management Act, 1999 and the rules and
regulations made there under to the extent of Foreign Direct
Investment, Overseas Direct Investment, and External
Commercial Borrowings;
e) Regulations and Guidelines prescribed under the Securities and
Exchange Board of India Act, 1992 (‘SEBI Act’).

2.6.3 Reporting on the compliance of secretarial standards

issued by the Institute of Company Secretaries of India:
1. Reporting on Compliance with the Listing Agreement;
2. Reporting on compliance of ‘Other laws as may be applicable
specifically to the company which shall include all the laws which
are applicable to specific industry for example for Banks- all laws
applicable to Banking Industry; for insurance company-all laws
applicable to insurance industry etc.
3. Examines and reports regarding the adequacy and efficiency of
the systems and processes with other laws.
4. Monitors and ensures compliance with general laws like labor
laws, competition law, environmental laws.
5. Examines and reports on the specific observations or
qualification, reservation or adverse remarks in respect of the
 27
Board Structures/system and processes relating to the Audit
period.
6. Secretarial Auditor may rely on reports given by statutory
auditors or other designated professionals to check compliance
with other laws like Income Tax, Customs, GST etc.

2.6.4 Process of Secretarial Audit :

Secretarial Auditor or the firm of Secretarial Auditors shall

provide the checklist for carrying out the secretarial audit of the
company depending upon the nature of business activities carried
on by the Company.

2.6.5 Objectives of Secretarial Audit:-

1. To verify and report on compliances of applicable laws and

Secretarial Standards
2. To point out non-compliances and inadequate compliances;
3. To protect the interest of various stakeholders i.e. the customers,
employees etc;
4. To avoid any unwarranted legal actions/penalties by law
enforcing agencies and other persons as well.
 28
2.6.5 Benefits of Secretarial Audit:
Benefits are manifold and its beneficiaries are many. Secretarial
audit enables Legal Compliance Management .Ever increasing
complexities of Laws and responsibilities of Directors make it
imperative .Secretarial Audit helps to detect the instances of
non-compliance and facilitates taking corrective measures. It audits
the adherence of good corporate practices by the company.
Following are the points which indicates the benefits of Secretarial
Audit.
1. Secretarial Audit assures the promoters of a company that those
in- charge of its management are conducting its affairs in
accordance with the requirements of laws and the owners‟
stake is not being exposed to unintended risk.
2. It helps the companies to build their corporate image.
3. Secretarial Audit provides comfort to the Non-executive/
Independent Directors that appropriate mechanisms and
processes are in place to ensure compliance with laws
applicable to the company, thus mitigating any risk from a
regulatory or governance perspective.
4. Secretarial Audit helps the investors in taking informed
investment decision, as it evaluates the company in terms of
compliance and governance norms being followed by the
company.
5. The Secretarial Audit provides an in-built mechanism for
enhancing corporate compliance generally and help restore the
confidence of investors in the capital market through greater
transparency in corporate functioning.

2.6.6 The need for Secretarial Audit:

1. It is an effective mechanism to make sure of the compliance with
the legal and procedural requirements.
2. It provides a level of confidence to the directors and Key
Managerial Personnel etc.
3. Secretarial Audit ensures legal and procedural requirements. So
directors can concentrate on important business matters.
4. It strengthens the goodwill of a company for their regulators and
stakeholders.
5. Secretarial Audit is an effective governance and compliance risk
management tool.
6. It helps the investor in analyzing the compliance level of
companies, thereby increases the reputation.

2.6.7 Conclusion:
Secretarial Audit is an independent, objective assurance
intended to add value and improve an organization’s operations. It
 29
helps to accomplish the organization’s objectives by bringing a
systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control, and governance
processes.

2.7 SUMMARY:

Company secretary is regarded as a liaison officer. He generally

maintains liaison with the board of directors, employees,
shareholders, and other outside parties. Now a days, company
secretary is one of the most important persons who perform some
specified duties in the company form of business. Company
Secretary acts as Compliance Officer and ensures compliance with
SEBI (Prohibition of insider Trading) Regulations, 1992 including
maintenance of various documents, Securities Compliance and
Certification Services etc. In order to have uniformity in the practices
adopted by different companies, the Institute of Company
Secretaries of India (ICSI) has released 10 secretarial standards
including standard on board meeting, dividend and transmission of
shares. Secretarial Audit is to be on the principle of “Prevention is
better than cure” rather than post-mortem exercise and to find faults.
It acts as an effective compliance risk management tool or a
governance tool.

2.8 EXERCISE

1. Discuss the Advisory Services of Company Secretary.

2. Explain the role of Secretary as an liaison officer between
Company and Stock Exchange.
3. Explain the role of Secretary as a liaison officer between Co. and
Depository Participants.
4. Explain the rrepresentation Services of Company Secretary at
different forums.
5. Discuss the Secretarial Standards by ICSI.
6. What do mean by Secretarial [Link] the importance of
Secretarial Audit?


 30

3
COMPANY DOCUMENTATION AND
FORMATION I
Unit Structure

3.0 Objectives
3.1 Introduction
3.2 Memorandum of Association (MOA)
3.3 Articles of Association (AOA)
3.4 Distinction between Memorandum and Articles of Association
3.5 Prospectus
3.6 Statement in Lieu of Prospectus
3.7 Misleading Prospectus
3.8 Distinction between Prospectus and Statement in Lieu of
Prospectus
3.9 Company Formation – Stages and Secretarial Duties
3.10 Conversion of Companies
3.11 Summary
3.12 Exercise
3.13 References

3.0 OBJECTIVES

After studying the unit students will be able to:

 Understand and discuss Concept of Memorandum of
Association, its clauses and alteration
 Understand and discuss Concept of Articles of Association and
its content
 Understand and discuss Concept of Prospectus and Statement
in Lieu of Prospectus
 Explain stages and secretarial duties in company formation
 Know Secretarial Procedure involved in conversion and
reconversion of public and private company

3.1 INTRODUCTION

A Joint Stock Company is an artificial entity created by Law

by registering under Companies Act. Formation of Joint Stock
Company requires preparation of certain documents and submits to
 31

the Registrar of Companies as per the provisions of Companies

Act, 2013. The process of formation gets completed once these
documents are approved by the Registrar. Important company
documents are Memorandum of Association (MOA), Articles of
Association (AOA) and Prospectus / Statement in Lieu of
Prospectus. Company promoters play an important role in
preparation of these documents and formation of company.

3.2 MEMORANDUM OF ASSOCIATION (MOA)

3.2.1 Meaning and Definition

MOA is the charter of the company. It is treated as the constitution
of the company. It defines the scope of its activities. It contains the
rights, privileges and powers of the company. MOA establishes the
relationship of the company with the members. The whole business
of the company is built up according to Memorandum of
Association. A company cannot undertake any business or activity
not stated in the Memorandum. It can exercise only those powers
which are clearly stated in the Memorandum. Preparation of MOA is
the first step in formation of a company. It is prepared by promoters
and submitted to the Registrar for the incorporation of a company.

Lord Cairns defines “Memorandum of Association is the

fundamental document of the company. It is foundation on which
structure of company stands. It lays down limitations of its
activities.”

As per Section 2 (56) of the Companies Act, 2013 states

Memorandum means the memorandum of association of a
company as originally framed or as altered from time to time in
pursuance of any previous company law of this Act.

3.2.2 Clauses of Memorandum of Association

1. Name Clause: It is the first clause of MOA. A company is free

to select any name it likes. But the name should not be identical
or similar to that of a company already registered. It should not
also use words like King, Queen, Emperor, Government Bodies
and names of World Bodies like U.N.O., W.H.O., World Bank
etc. A company name should end with the word ‘limited’ in case
of a public limited enterprise, and ‘private limited’ in the case of
a private limited enterprise. Eg. ‘ABC Private Limited’ in case
of the private company, and ‘ABC Ltd’ for a public company.

2. Domicile Clause: The memorandum must mention the state in

which registered office of the company is situated. The domicile
clause will not exactly contain the address of the registered of-
fice, but the state or union territory in which the registered office
 32

of the company is located. The registered office of a company

can be shifted from one place to another within the town with a
simple intimation to the Registrar. Whereas, to shift the regis-
tered office to other state, Memorandum should be altered ac-
cordingly.

3. The Object Clause: This is the most important clause. It states

the objects of the company for which the company is proposed
to be incorporated. The company is not legally entitled to do any
business other than specified in object clause. This clause en-
ables general public to know the purpose for which capital is
raised by company. It enables to know the extent of powers of
company. The objects are divided into three subcategories:
 Main Objective: It states the main business of the company.
 Incidental or Ancillary: These objects are ancillary to the
attainment of the main objects of the company
 Other objectives: Any other objects which the company
may pursue and are not covered in above (a) and (b)

4. Liability Clause: The liability clause declares the liability of

members of the company to be either limited or unlimited. The
MOA of the company limited by shares must declare that the
liability of the members of the company is limited. The MOA of a
company limited by guarantee must state the amount of con-
tribution that every member agrees to contribute to the assets of
the company in the event of the company being wound
up. However, in case of a unlimited company, the liability of di-
rectors or managers of a company may be unlimited, if specified
in the memorandum.

5. Capital clause: This is valid only for companies having share

capital. These companies must specify the amount of Authorized
capital divided into shares of fixed amounts. Further, it must state
the names of each member and the number of shares against
their names. It is usually expressed as “the share capital of com-
pany is Rs. 100 crores, divided into 100 lakh equity shares of
Rs. 100/- each’. The company should decide its authorized capital
after considering its long term financial needs. The company can
issue different types of shares to raise the capital from market.

6. Subscription (Association) Clause: This clause contains dec-

laration by the subscribers to the MOA that they are desirous of
forming themselves into a company. The subscribers to the
Memorandum must take at least one share (qualification
shares). The minimum number of members is two in case of a
private company and seven in case of a public company. Signa-
tures shall be attested by witnesses. Each subscriber must put
his signature along with his name and address.
 33

3.2.3 Format of Memorandum of Association

MEMORANDUM OF ASSOCIATION
Section 14 Table B
1. Name Clause : The name of company is ‘J.P. CEMENT
LIMITED’
2. Domicile Clause : The registered office of the company will be
situated in Maharashtra
3. Object Clause : Main Object: The main object for which the
company is established is ‘Manufacturing of
Cement’. Incidental Object: The object
incidentals of above main objects are
acquisition and setting up of machinery,
marketing of finished products etc. Other
Object: The other object for which company is
established are manufacturing of steel and steel
related products.
4. Liability Clause : The liability of members is limited
5. Capital Clause : The share capital of company is Rs. 100
crores, divided into 100 lakh equity shares of
Rs. 100/- each.
6. Subscription Clause : We, the several persons, whose names and
address are subscribed are desirous of being
formed into a company in pursuance of this
Memorandum of Association, we respectively
agree to take the number of shares in the
capital of company set opposite our respective
names.
Name and Address of Number of Shares Witness to the
Subscribers taken by each and Signature
their Signature
1. Mr. Shridhar Joshi, Mumbai 1200
2. Mr. Ajay Rao, Pune 1000
3. Mr. Sunil Jain, Thane 1500 Mr. A. S. Rane
4. Mr. Bharat Soni, Mumbai 1800
5500

Dated at ____ (Place) _______ the____(Day)__ day of ___(Date &

Month)__2019.

Common
Seal

Have a look on format of MOA of ‘Godrej Consumer Products Ltd.’ at

[Link]
policies/[Link]
 34

3.2.4 Alteration in Memorandum of Association

Any Company which intends to make any change to the
Memorandum of Association (MOA) of its company, will have to
comply with the provisions of Section- 13 of Companies Act, 2013
and any other applicable provisions of the Act and applicable rules.
Company can alter its Memorandum by way of alteration in follow-
ing clause of Memorandum of Association:

1. Alteration in Name Clause: Section 13 of the Company Act,

2013 deals with change in name which says that:
a) The name of the company can be changed by a special
resolution and the name approved by the Ministry of Corpo-
rate Affairs (MCA) on prescribed application.
b) By obtaining the approval of Central Government. Approval
of Central Government is not required if the change relates
to the addition/deletion of the words “private” to the name.

The power of change in name of company has now been

delegated to Registrar of Companies. The company secretary has
to follow the procedure for changing name of company which in-
cludes Board meeting, special resolution in meeting of members,
application in Form INC to the ROC and so on.

After submission of necessary documents to ROC, fresh cer-

tificate of incorporation is issued by ROC. The company needs to
give notice of the same in newspaper. Changes need to be made
everywhere such as common seal, letter head, registers and other
records of company.

2. Alternation in Domicile Clause: The procedure for making

changes in domicile clause of company is as follows:
a) In case a company changes registered office from one place
to another, in the same state, a special resolution is need to
be passed in general meeting.
b) In case a company shifts its office from one state to another
then a special resolution is to be passed in the general meet-
ing. In addition to this, a confirmation order from Central
Government is to be obtained.

3. Alteration in Object Clause: A company may change its ob-

jects as enshrined in its MOA in accordance with the provisions
of Section 13 of the Act. Now alteration of object clause requires
passing of a special resolution in the general meeting. A copy of
special resolution is filed with the Registrar within 30 days of its
passing. The details, as may be prescribed, in respect of such
resolution shall also be published in the newspaper (one in Eng-
lish and one in vernacular language)
 35

4. Alteration in Liability Clause: The liability clause may be al-

tered so as to make liability of director unlimited, if authorized by
‘Articles of Association’. The director has to give consent in writ-
ing to this effect. For this purpose a special resolution is passed
and copy of it is to be filed with the Registrar within 30 days of
passing the resolution.

5. Alteration in Capital Clause: A company can alter its share

capital, if authorized by ‘Articles of Association’. The company
can alter share capital in the following ways :
a) Increase in share capital by issue of new shares
b) Reduction in share capital
c) Reorganization of capital structure
d) Conversion of share into stock

In order to increase the share capital, a company has to

pass only ordinary resolution. In order to reduce or reorganize the
share capital a company has to pass special resolution and obtain
court sanction.

6. Alteration in Subscription Clause: A Company in its life span

can’t alter the ‘Subscription Clause’ or can’t alter the ‘Subscriber
Sheet’. Subscriber Sheet used at the time of Incorporation of
Company shall be used for the life span of the Company.

3.2.5 Ultra Vires

It is derived from Latin words meaning “ultra” which means
‘beyond’ and “vires” meaning ‘power or authority’. So it can be said
that anything which is beyond the authority or power is called ultra-
vires. In the context of the company, it refers to anything which is
done by the company or its directors which are beyond their legal
authority or which was outside the scope of the object of the com-
pany is ultra-vires.

 Significance of Ultra Vires Doctrine

The doctrine of ultra vires applies to the Memorandum of As-
sociation (MOA) of a company. The MOA contains scope of activi-
ties to be done by company in its objects clause and a company
cannot undertake any activity which is not defined MOA. Any activ-
ity done beyond scope of MOA is considered as an ultra vires activ-
ity. Such activities are null or void and all ultra vires transactions
can never be subsequently ratified or validated, not even by the
consent of the shareholders. This is meant to protect the interests
of the shareholders and creditors of the company.

 Effects of Ultra Vires

The directors entering into ultra vires contracts may be liable
to the third party for breach of warranty of authority. The directors
 36

can be held personally liable by the company for acts done by them
ultra vires to MOA.

If the directors of the company divert company’s capital, for

purpose alien to the company’s MOA, they will be personally liable
to replace it.

Similarly, if a director makes an ultra vires payment to an

outside party, he can be compelled to make good the funds used.
The director who refunded the money could also get indemnity as
against the person who received the payment knowing fully well
that the payment is given to him was ultra vires.

Similarly, ultra vires borrowing does not create the relation of

creditor and debtor.

A contract which is ultra vires the company will have no legal

effect. Such contract are void and are not biding upon the company
and the company can neither sue nor be sued.

3.3 ARTICLES OF ASSOCIATION (AOA)

3.3.1 Meaning and Definition:

AOA is a document which prescribes the rules and bye-laws
for the general management within the company and for the
attainment of its object as given in the memorandum of association
of the company.

The AOA are a subordinate to the Memorandum of

Association of the company. Memorandum states the objects and
purposes for which the company is formed, whereas Articles define
how the business of company should be carried on. They define the
rights, duties, powers of the management of a company as between
themselves and the company at large.

Lord Justice Bowen defines “The articles of association are

internal regulations of company and are for the benefits of
shareholders.”

As per Section 2 (5) of the Companies Act, 2013 “articles”

means the articles of association of a company as originally framed
or as altered from time to time or applied in pursuance of any
previous company law or of this Act.

3.3.2 Contents of Articles of Association

Section 5(1) and section 5(2) of the Companies Act, 2013
provide for the contents of the articles of association which is as
follows:
 37

1. Share capital including division of shares into different

classes, rights of various shareholders, share certificates etc.
2. Lien on shares, call on shares, forfeiture of shares, buy back
of shares, surrender of shares.
3. Procedure for issues of shares, allotment of shares, transfer
of shares, transmission of shares, conversion of shares into
stock
4. Alteration and reduction in share capital
5. Procedure for convening, holding and conducting different
meetings of members, directors and creditors. Provisions re-
lating to notice, quorum, voting etc.
6. Appointment, powers, duties, qualifications, remunerations,
etc. of directors. Borrowing power of directors
7. Declaration and payment of dividend and creation of reserves
8. Appointment and remuneration of auditors. Audit of com-
pany’s account
9. Capitalization of profits / reserves
10. Use of company’s common seal
11. Procedure for issue of share certificate and share warrant
12. Alteration in the Articles of Association
13. Payment of commission on shares and debentures to under-
writers
14. Provisions relating to winding up of company. Appointment of
liquidator
15. Dematerialization of shares

Have a look on format of AOA of ‘TATA Communication Ltd.’ at

[Link]

3.4 DISTINCTION BETWEEN MEMORANDUM AND

ARTICLES OF ASSOCIATION

Points Memorandum of Articles of

Association Association
1) Meaning MOA is the charter of the AOA is a document
company. It is treated as which prescribes the
the constitution of the rules and bye-laws for
company. It defines the the general
scope of its activities. management within
the company.
2) Type of It contains power and It contains rules and
Information objects of the company regulations of the
Contained company
 38

3) Status It is primary and supreme It secondary

document of company. It document. It is
is subordinate to the subordinate to
Companies Act Memorandum of
Association.
4) Major It contains six clauses It can be drafted as
Content 1) Name Clause per requirement of
company.
2) Domicile Clause
3) Object Clause
4) Liability Clause
5) Capital Clause
6) Subscription
Clause
5) Obligatory It is obligatory to prepare It is not obligatory to
for all companies. prepare for all
companies. A public
company limited by
shares can adopt
‘Table A’ in place of
Articles.
6) Alteration Alteration can be done, Alteration can be done
after passing Special in the Articles by
Resolution in Annual passing Special
General Meeting (AGM) Resolution at Annual
and previous approval of General Meeting
Central Government or (AGM)
Company Law Board is
required.
7) Relations Defines the relation Regulates the
between company and relationship between
outsiders such as company and its
creditors, debtors etc. members
8) Act done The act done beyond the The act done beyond
beyond the scope is absolutely void the scope can be
scope rectified by
shareholders

3.5 PROSPECTUS

3.5.1 Meaning and Definition:

A prospectus is a document issued by the company inviting
the public and investors for the subscription of its securities. It is
required to be issued only after the incorporation of the company.
 39

These documents describe stocks, bonds and other types of

securities offered by the company. A prospectus is always
accompanied by performance history and financial information of
the company. The reason for accompanying such information along
with the prospectus is to make sure that, the investors are well
aware of the company’s background and overall performance and
the investors do not fall into the prey of investing in a bad company.
Prospectus is a kind of advertisement for attracting people for
subscribing shares of company. It is expected to provide correct
and reliable information about company to the investors. Company
Act has made various provisions regarding preparing and issue of
prospectus. There is provision in Company Act regarding penalties
and punishment for providing misleading information in prospectus.
Every prospectus issued to the public must be printed, divided into
paragraphs, dated, sealed and signed by all the directors. A copy of
it must be filed with the Registrar and issued to the public within 90
days of filing with Registrar.

Section 2 (70) of Companies Act defines prospectus as, “A

prospectus means any document described or issued as a
prospectus and any notice, circular, advertisement or other
document inviting offers from the public for the subscription or
purchase of any securities of a body corporate.”

3.5.2 Content of Prospectus

1) The names and addresses of the registered office of the com-
pany, company secretary, Chief Financial Officer, auditors, le-
gal advisers, bankers, trustees, if any, underwriters and such
other persons as may be prescribed;
2) The dates of opening and closing of the issue;
3) A declaration made by the Board or the Committee authorized
by the Board in the prospectus that the allotment letters shall
be issued or application money shall be refunded within fifteen
days from the closure of the issue or such lesser time as may
be specified by SEBI;
4) A statement by the Board of Directors of separate bank ac-
count;
5) The details of the underwriters and the amount underwritten
by them;
6) The consent of trustees, advocates, merchant bankers, regis-
trar, lenders, and experts;
7) The authority for the issue and the details of the resolution
passed, therefore;
8) The capital structure of the company in the prescribed man-
ner;
 40

9) Procedure and time schedule for allotment and issue of securi-

ties;
10) Main objects of the issue, the purpose for requirements of
funds, funding plan, the summary of the project appraisal re-
port and such other particulars as may be prescribed;
11) Minimum subscription, amount payable by way of premium,
issue of shares otherwise than on cash;
12) The details of any litigation or legal action pending or taken by
any Ministry or Department of the Government or a statutory
authority against any promoter of the issuer company during
the last five years immediately preceding the year of the issue
of the prospectus;
13) The details of default and non-payment of statutory dues;
14) The details of directors including their appointment and remu-
neration, and particulars of the nature and extent of their inter-
est in the company;
15) The disclosure for sources of promoters’ contribution;
16) A statement about declaration of compliance of the provisions
of act and a statement to the effect that nothing in the pro-
spectus is contrary to the provisions of the Act. It must also
contain a declaration that nothing in the prospectus is contrary
to the provision of the SEBI Act, 1992 and the rules and regu-
lation made there under.
If a prospectus is issued in contravention of the provisions of
26 (1) of the Act, the company shall be punishable with fine which
shall not be less than Rs. 50,000/- and which can be extended upto
Rs. 3 lakhs and every person who is in default shall be punishable
with imprisonment for a term which may be extend to 3 years or
with fine which shall not be less than Rs.50,000/-

Have a look on format of Prospectus of ‘Infosys Ltd.’ at

[Link]
releases/Documents/2013/[Link]

3.6 STATEMENT IN LIEU OF PROSPECTUS

3.6.1 Meaning and Definition:

The company issues prospectus in order to collect share
capital from public. However, sometimes a company collects capital
from private placement which includes its promoters, directors, their
friends and relatives, and not from general public, in such situation
‘Statement in Lieu of Prospectus’ must be filed with the Registrar of
Companies.
 41

A statement in lieu of prospectus gives practically the same

information as a prospectus and is signed by all the directors or
proposed directors. A copy of it must be filed with the Registrar at
least 3 days before actual allotment of shares. If these provisions
are not complied with, then company and its directors are held re-
sponsible. They are punishable with fine which may extent upto Rs.
1,000/-. Liability for misrepresentation in the Statement in lieu of
prospectus is same as in the case of prospectus.

A statement in lieu of prospectus is defined as “a public docu-

ment prepared in the second schedule of companies ordinance by
every such public company which does not issue a prospectus on
its formation by filing with the registrar before allotment or shares of
debentures, and signed by every person who is named therein”.

3.6.2 Contents of a Statement in Lieu of Prospectus:

1. Name of company
2. Statement of capital
3. Description of the business
4. Names, addresses and occupations of directors
5. Estimated initial expenses
6. Names of vendors and details of property
7. Material contracts
8. Director’s interests
9. Minimum subscription

3.7 MISLEADING PROSPECTUS

The prospectus must provide fact and reliable information to

the investors. The investors decide to invest in particular company
based on the information supplied through prospectus.

A prospectus is said to be misleading or untrue in two of

following cases :
 A statement included in a prospectus shall be deemed to be
untrue, if the statement is misleading in the form of and
context in which it is included.
 Omission, from prospectus, of any matter that misleads the
investors.

Contravention of Section 26 of the Companies Act, 2013

 If a prospectus is issued in contravention of the provisions of
this section, then the company shall be punishable with a fine,
not less than Rs.50,000/- which may extend to Rs. 3 Lakhs,
and
 42

 Every person who is party to the issue of the prospectus shall

be punishable with imprisonment for a term which may extend
to 3 years or with a fine, not less than Rs.50,000/- which may
extend to Rs. 3 Lakhs, or with both.
Criminal Liability for Misstatement in the prospectus
Where a prospectus is issued which includes any statement
which is untrue or misleading in form or context or any matter is
likely to mislead the investor, then every person who authorizes the
issue of prospectus shall be punishable with imprisonment for a
term which may not be less than 6 months, but which may extend
to 10 years; or a fine not less than the amount involved in fraud but
it may extend to three times the amount of fraud; or with both.
Civil Liability for Misstatement in the prospectus
If there is any inclusion or omission of any matter in the pro-
spectus issued, which is misleading and the person who has sub-
scribed the securities has sustained any loss or damage, then the
company and every person who is a director, promoter and expert
at the time of issue of prospectus, shall be responsible and be li-
able for punishment under section 36 of the act, and shall be liable
to pay compensation to every person who has sustained such loss
or damage.

3.8 DISTINCTION BETWEEN PROSPECTUS AND

STATEMENT IN LIEU OF PROSPECTUS

Points Prospectus Statement in Lieu of

Prospectus
1) Meaning A prospectus is a When a company collects
document issued by the capital from among its
company inviting the promoters, directors, their
public and investors for friends and relatives, and not
the subscription of its from general public, in such
securities. situation ‘Statement in Lieu
of Prospectus’ must be filed
with the Registrar of
Companies.
2) Purpose It is used for publicity for It is used only for the filing
subscription of securities with the Registrar.
as well as filing with the
Registrar.
3) Suitability Large public limited Small public companies can
companies issue raise capital privately.
prospectus to collect huge
capital.
4) Filing with It is filed with Registrar, It is filed with Registrar, 3
Registrar 90 days prior to issue to days prior to allotment of
public shares.
 43

3.9 COMPANY FORMATION – STAGES AND

SECRETARIAL DUTIES

Formation of Joint Stock Company is lengthy and time

consuming procedure. It involves many formalities also preparation
and submission of various documents. Company promoters play
vital role in the procedure of formation of company. They develop
idea of new business, undertake incorporation formalities and
obtain incorporation certificate, collect required capital and finally
secure trading / commencement certificate.
3.9.1 Various stages in Company Formation

1. Promotion Stage: This is the first stage in the formation of

company. Here, all the preliminary work of company formation is
completed. This includes discovering business opportunity and
organizing resources. At this stage promoter plays an important
role to implement the business idea and bring it into action. The
promoter is the person who is concerned with the promotion of
business enterprise. For example, Dhirubhai Ambani is the
promoter of Reliance Industries.

2. Incorporation / Registration Stage: Incorporation /Registration

brings company into existence. A company is formed only when
it is registered under the Companies Act. Here, necessary doc-
uments such as Memorandum of Association and Articles of
Association of company, List of directors, written consent of di-
rectors, notice of the address of registered office of company
and statutory declaration are submitted and required stamp duty
is paid. The registrar scrutinizes documents and if he is satis-
fied, the name of company is entered in the register. On com-
pletion of these formalities, the Registrar issues ‘Certificate of
Incorporation’.
 44

Certificate of Incorporation
No 2893 OF 1938-1939

I hereby Certify that TATA CHEMICALS LIMITED is this day

incorporated under the Indian Companies’ Act VII of 1913, and that the
Company is Limited.

Given under my hand at Bombay this Twenty- third day of

January One Thousand Nine Hundred and Thirty – nine.

The Seal of the

Registrar of
companies,
(Sd.) BEHRAMJI M. MODI,
Bombay The Registrar of Companies

Source: [Link]

3. Capital Subscription / Collection Stage: A private company

can commence its business as soon as it receives ‘Certificate of
Incorporation’. A public company can commence its business
only after receiving the ‘Certificate of Commencement / Trading
Certificate’. After getting ‘Certificate of Incorporation’, a public
company issues a prospectus to invite public to subscribe its
shares. Public company fixes the minimum subscription. A
company must collect this amount within 60 days from the date
of issue of prospectus. If the minimum subscription is not col-
lected by the company, it does not get ‘Certificate of Com-
mencement / Trading Certificate’ and it has to refund the
amount of the applicant within 8 days. To avoid such situation,
the company appoints underwriter who give guarantee of mini-
mum subscription of shares of company.
4. Commencement of Business / Trading Certificate Stage:
This is the last stage of company formation. After completing the
sale of the required number of shares, a promoter approaches
to Registrar and submit various documents and necessary filing
fees is paid. The Registrar then scrutinizes the documents. If he
is satisfied he issues a certificate known as ‘Certificate of Com-
mencement of Business’. After receiving ‘Certificate of Com-
mencement / Trading Certificate’ a public company can start its
business activities.
 45

Certificate for Commencement of

Business
(Pursuant to section 103 (2) of the Indian Companies Act, 1913)
-------------------------------------
I hereby certify that the Tata Chemicals Limited which was incorporated
under the Indian Companies Act, 1913, on the Twenty-third day of January
1939, and which has this day filed a duly verified declaration in the
prescribed form that the conditions of section 103(1) (a) to (d) of the said
Act have been complied with, is entitled to commence business.

Given under my hand at Bombay this Twenty-seventh day of April one

thousand nine hundred and Thirty-nine.

The Seal of the

Registrar of (Sd.) BEHRAMJI M. MODI,
companies, The Registrar of Companies
Bombay

Source: [Link]

3.9.2 Secretarial Duties at Various Stages of Company

Formation
The company secretary plays a very important role in the
Promotion and Incorporation of a company. He acts as the adviser
to the promoters and helps them in preparatory work to be
performed and legal formalities to be observed in this connection.
 Secretarial Duties at the Promotion Stage
1. To arrange the meetings of the promoters for promotion of com-
pany.
2. To attend the meetings of the promoters, supply necessary in-
formation to promoters, record the proceedings and maintain
the minutes of these meetings.
3. To ascertain from the Registrar of Companies if the proposed
name of the company is available for registration.
4. To help the promoters in the finalization of the various preli-
minary contracts with vendors, underwriters, bankers, brokers,
solicitors, auditors, managerial personnel etc.
5. To get Memorandum, and Articles of Association prepared and
printed
 46

6. To see that all other prescribed documents for the registration of

the company are ready for delivery to Registrar. The documents
includes:
a) a written consent of the Directors to act in that capacity and
to purchase qualification shares,
b) the notice of address of the Registered office of the com-
pany, and
c) a statutory declaration stating that all the legal require-
ments of the Act precedent to incorporation have been
complied with

 Secretarial Duties at the Incorporation / Registration Stage

1. The promoter selects three names of company and the
secretary files an application for the availability of name of the
company along with required fees to the ROC.
2. The secretary submits various documents to ROC for registra-
tion of company to obtain the Certificate of Incorporation from
the Registrar. The documents include:
a) Memorandum of Association
b) Articles of Association
c) List of Directors
d) a written consent of the Directors to act in that capacity and
to purchase qualification shares,
e) the notice of address of the Registered office of the com-
pany, and
f) a statutory declaration stating that all the legal requirements
of the Act precedent to incorporation have been complied
with
g) Payment of prescribed filing and registration fees and stamp
duty

 Secretarial Duties at the Capital Subscription / Collection

Stage
1. The first meeting of Board of Directors will be convened to
deal with:
a) Appointment of secretary
b) Appointment of Managing Director and other responsible
officers
c) Appointment of banker, broker, solicitors and auditor
d) Approve design of common seal of company
e) Underwriting agreement with underwriter to secure minimum
subscription
 47

f) Decide minimum subscription amount

g) Approve draft of prospectus
h) Listing of shares on a stock exchange
2. Get common seal prepared as per designed approved and
open the Bank Account
3. Prepare underwriting agreement with underwriter
4. Obtain consent letter from bankers, solicitors, auditors,
underwriters, brokers etc. for incorporating their names in
prospectus
5. Get prospectus and share application form printed. Get
printed copy of the prospectus signed by directors of
company
6. Submitting application stock exchange for getting shares
listed on stock exchange
7. File a copy of prospectus with ROC. Then it is issued to
public within 90 days from filing with ROC which includes
share application form.
8. Make arrangement with banker to receive application money
received from investors.
9. Convey Board meeting to pass resolution for allotment of
shares.
10. The secretary issues ‘Letter of Allotment’ to those whom
shares are allotted. Secretary issues ‘Letter of Regret’ to
whom shares are not allotted (in case of over subscription)
along with refund order
11. File return of allotment to ROC within 30 days of allotment of
shares
12. Issue share certificate to every shareholder within 3 months
from date of allotment of shares
13. Maintain register of members which includes name of
shareholders and other share related details.

 Secretarial Duties at the Commencement of Business /

Trading Certificate Stage
1. File following declarations with ROC:
a) A statement of declaration that a copy of prospectus or
statement in lieu of prospectus is filed with the Registrar.
b) A statement of declaration that minimum subscription
amount has been collected
c) A declaration that directors have purchased and paid for
qualification shares
 48

d) A statutory declaration that all the legal requirements have

been complied with
2. Along with above documents, necessary filing fees is paid
3. Collect the ‘Certificate of Commencement / Trading Certificate’
from ROC.

3.10 CONVERSION OF COMPANIES

Conversion of companies means changing legal status of

company i.e. from private to public and public to private. It can be
done by completing the necessary legal procedures and formalities.

As per Section 18 of Companies Act, 2013 a company

registered under one class can convert into another class by
alteration of MOA and AOA of company. However, consent of
shareholders is required for such decision.

3.10.1 Conversion of Private Company into a Public Company

Section 14 of Companies Act, 2013 (Section 31 of Erstwhile
Companies Act 1956) plays an important role during conversion of
a Private company into a Public company. It involves alteration of
article of association of Private Company under section14 which
cannot be done without passing special resolution of Shareholders
in the General Meeting. Secretarial procedure for Conversion of a
Private Limited Company into a Public Limited is as following:

1) Convening Board Meeting: The secretary convens a board

meeting in accordance with the provisions of section 173(3) of
the Companies Act, 2013. The agenda of this meeting is:
a) Pass a board resolution to get approval of Directors for con-
version of a Private company into a public company by alter-
ing the AOA.
b) Fix date, time and place for holding Extra-ordinary General
meeting (EGM) to get approval of shareholders, by way of
Special Resolution, for conversion of a Private company into
a Public company.
c) To approve notice of EGM along with Agenda and Explana-
tory Statement to be annexed to the notice of General Meet-
ing as per section 102(1) of the Companies Act, 2013;
d) To authorize the Director or Company Secretary to issue No-
tice of the Extra-ordinary General meeting (EGM) as ap-
proved by the board under clause 1(c) mentioned above.

2) Issue of EGM Notice: The secretary makes arrangement to is-

sue Notice of the Extra-ordinary General meeting (EGM) to all
Members, Directors and the Auditors of the company in accor-
 49

dance with the provisions of Section 101 of the Companies Act,

2013;

3) Convening Extra Ordinary General Meeting: The Extra-

ordinary General meeting (EGM) is held and the Special Reso-
lution is passed, to get shareholders’ approval for Conversion of
Private Company into a Public company along with alteration in
articles of association under section 14 for such conversion.

4) Filing Documents with ROC: For alteration in Article of Asso-

ciation for conversion of Private Company into a Public com-
pany under section 14, few E-forms will be filed with concerned
Registrar of Companies at different stages as following:

a) E-form MGT.14: This form is for filing special resolution with

ROC, passed for conversion of Private Company into a Pub-
lic company. Attachments of E-form MGT.14 includes:
 Notice of EGM along with copy of explanatory statement
under section 102;
 Certified True copy of Special Resolution;
 Altered memorandum of association;
 Altered Articles of association
 Certified True copy of Board Resolution may be attached
as an optional attachment.

b) E-form INC.27: This form is for Application for conversion of

a private company into a public company. Attachments of E-
form INC.27:
 It is mandatory to attach Minutes of the member’s meet-
ing where approval was given for conversion and altered
articles of association.
 Altered Articles of Association;
 Certified True copy of Board Resolution may be attached
as an optional attachment.
 Other information if any can be provided as an optional
attachment(s)

As per Section 18, after receiving the documents for conver-

sion of a Private Company into a Public Company, ROC shall sat-
isfy itself that the Company has complied with the requisite provi-
sions for registration of company. If so satisfied, ROC shall close
the former registration and issue fresh certificate of incorporation,
after registering the documents submitted for change in class of
company.
 50

3.10.2 Conversion of Public Company into a Private Company

1) Convening Board Meeting: A meeting of Board of Director is

convened by company secretary by sending them notice of
meeting. At the Board Meeting, the resolution approving
conversion from a public company to a private company has to
be passed. Secondly, a resolution to call an extraordinary
general meeting must be passed.

2) Convening an Extra-ordinary General Meeting (EGM): Notice

is sent to all the members regarding EGM. An explanatory
statement specifying the business to be transacted at the
meeting has to be annexed to the notice. An extraordinary
general meeting is vital to get the approval of the members of
the company before proceeding with the conversion. At the
extraordinary general meeting, a special resolution approving
the alterations to the Memorandum of Association and Articles
of Association needs to be passed.

3) Filing Documents with ROC: The company has to intimate

the Registrar of Companies within 30 days of passing the reso-
lution to convert from a public company to a private company.
Following documents are required to be submitted to the ROC:

a) Form MGT-14 (Filing of Resolutions and agreements

with the Registrar): The Company has to intimate the
Registrar of Companies within 30 days of passing the
resolution to convert from a public company to a private
company. Resolutions are filed with the Registrar in Form
MGT-14 along with the prescribed fees as prescribed in the
Companies (Registration offices and fees) Rules, 2014.
The following documents have to be attached with the form:
 Copy of the resolution(s)
 Copy of the explanatory statement
 Altered Memorandum of Association
 Altered Articles of Association
 Copy of the agreement
 Any other optional documents

b) File form INC-27 (Conversion of public company into

private company or private company into public com-
pany): Pursuant to Section 14 of the Companies Act, 2013,
any alteration to the articles of association has to be inti-
mated to the Registrar vide Form INC-27 to enable the con-
version. The form has to be filed with the Registrar of com-
 51

panies, along with the application fees. The following docu-

ments have to be submitted along with the form-
 Minutes of the members’ meeting
 Altered articles of association
 Order of competent authority (Central Government)

4) Intimation about Conversion: The secretary needs to do

publicity regarding conversion introduced for the information of
shareholders and outsiders. Intimation of change will be
communicated to the stock exchange where company shares
are listed.

5) Fresh Certificate of Incorporation: The company secretary

has to surrender existing certificate of incorporation to the ROC
with a request to issue fresh certificate of incorporation with
necessary changes into it.

3.10.3 Reconversion of Public Company into a Private

Company

1) Convening an Extra-ordinary General Meeting: After the

Board of Director take decision for the reconversion of public
company into private company, suitable arrangements will be
made for convening EGM for taking final decision about
reconversion by the members. In EGM, special resolutions for
making relevant changes in the Memorandum and Articles of
Association will be passed.

2) Submission of application to the Central Government: After

passing resolution, the company will have to submit application
to the Central Government in the prescribed form for securing
the approval to the reconversion. After securing such approval,
the ROC will be informed accordingly.

3) Securing approval of the Central Government: On the

receipt of such application, the Central Government will make
the scrutiny of the application and if satisfied, it will give sanction
for the conversion. The company becomes private company
with the effect from the date of approval of the Central
Government. The changes in the name will be effective from the
date of issue of fresh Certificate of Incorporation by the ROC. All
documents, relating to conversion will be filed with the Registrar,
along with a printed copy of the altered articles.

3.11 SUMMARY

MOA is the charter of the company. It is treated as the

constitution of the company. It defines the scope of its activities. It
 52

contains the rights, privileges and powers of the company. MOA

establishes the relationship of the company with the members.
There are six Clauses of MOA namely Name clause, Domicile
clause, Object clause, Liability clause, Capital clause, and
Subscription clause. Different authorities need to be approached for
making alternation in clauses of MOA and undertake necessary
formalities.

Ultra-vires refers to anything which is done by the company

or its directors which is beyond their legal authority or which was
outside the scope of the object of the company. This is meant to
protect the interests of the shareholders and creditors of the
company.

AOA is a document which prescribes the rules and bye-laws

for the general management within the company and for the
attainment of its object as given in the memorandum of association
of the company. It includes details about internal management of
company.

A prospectus is a document issued by the company inviting

the public and investors for the subscription of its securities. It is
required to be issued only after the incorporation of the company. It
includes details about securities issued in the market which enables
investors to take decision about investing in company.

Sometimes a company collects capital from private

placement which includes its promoters, directors, their friends and
relatives, and not from general public, in such situation ‘Statement
in Lieu of Prospectus’ must be filed with the Registrar of
Companies.

Misleading prospectus refers to a statement included in a

prospectus is to be untrue. Omission, from prospectus, of any
matter misleads the investors.

The formation of company includes 4 stages namely

Promotion stage, Incorporation / Registration Stage, Capital
subscription / collection stage and finally Commencement of
business / Trading Certificate stage. The secretary needs to
perform various activities during all these stages.

Conversion of companies means changing legal status of

company i.e. from private to public and public to private. It can be
done by completing the necessary legal procedures and formalities.

As per Section 18 of Companies Act, 2013 a company

registered under one class can convert into another class by
alteration of MOA and AOA of company. However, consent of
 53

shareholders is required for such decision. The secretary needs to

perform various activities during conversion of company.

3.12 EXERCISE

FILL IN THE BLANKS

1) _________ is a fundamental document of a company
(MOA,AOA, None of these)
2) ____________ clause in memorandum of association contains
the state in which registered address of the company is situated.
(Name, Domicile, Subscription)
3) _________ refers to anything which is done by the company / a
director which is beyond their legal authority or which was out-
side the scope of the object of the company. (Ultra Wire, Ultra
Vires, Ultra Virus)
4) _______________ is internal regulations of company. (Prospec-
tus, Statement in lieu of prospectus, Articles of Association)
5) ______________ is first stage in company formation. (Promo-
tion stage, Incorporation stage, Capital subscription stage)
6) _______________ Company can commence its business as
soon as it receives Certificate of Incorporation. (Private, Public,
Both Not)

DEFINE/EXPLAIN THE FOLLWING TERMS

1) Memorandum of Association
2) Articles of Association
3) Ultra Vires
4) Prospectus
5) Statement in Lieu of Prospectus
6) Misleading Prospectus
7) Formation stage of Company formation
8) Incorporation stage of Company formation
9) Capital stage of Company formation
10)Commence of Business stage of Company formation
11) Conversion of Company

ANSWER IN BRIEF
1) Define Memorandum of Association. Explain its various clauses.
2) What is Articles of Association? Describe its content.
3) Write a note on Ultra Vires.
 54

4) Distinguish between Prospectus and Statement in Lieu of

Prospectus.
5) Write a note on Misleading Prospectus.
6) Describe various stages involved in company formation.
7) Explain secretarial duties involved at Promotion stage of
company formation.
8) What are the secretarial duties involved at Incorporation stage
of company formation?
9) Briefly describe secretarial duties involved at Capital
subscription stage of company formation.
10) Elaborate secretarial duties involved at Commencement of
Business stage of company formation.
11) Write a note on Conversion of Companies.
12)Briefly explain reconversion of public company into private
company.

3.13 REFERENCES

[Link]
memorandum-of-association-under-company-act-2013-and-format-
of-moa/

[Link]
contents-of-moa/
[Link]
association/

Doctrine of Ultra Vires under Company Law – What acts will be

deemed as ultra vires? By HarshJain - June 1, 2018, Ipleaders
intelligent solutions
[Link]

What Is The Content For The Articles of Association By

Vyoma Mehta - May 9, 2016
[Link]

Information to be stated in the Prospectus of a Company By

prathik sharavi May 22, 2018
[Link]

[Link]
[Link]
company/
[Link]
[Link]

 55

4
SECRETARIAL CORRESPONDENCE
Unit Structure :

4.0 Objectives
4.1 Introduction
4.2 Correspondence
4.3 Role of Technology in Secretarial Correspondence
4.4 Specimens
4.5 Summary
4.6 Exercise
4.7 References

4.0 OBJECTIVES

After studying the unit students will be able to:

 Know circumstances requiring secretarial correspondence with
the Shareholders, Debenture Holders, Registrar of Companies,
Stock Exchange and penalties thereon
 Know circumstances requiring secretarial correspondence with
the SEBI, Company Law Board and penalties thereon
 Discuss role of technology in Secretarial Correspondence
 Write Specimen of Letter to Shareholders, ROC, Stock
Exchange, Government, Bank

4.2 INTRODUCTION

Correspondence refers to communication in writing. It is an

exchange of ideas, information, views and opinions in a respect of
certain matters in a written form. The secretary receives letter from
various concerned parties such as shareholders, directors, stock
exchange, bankers’, creditors and others. So the secretary has to
reply to them promptly. He/She is also responsible for submission
of annual reports, returns and so on. Accurate, timely and careful
correspondence creates better image of company among outsider.
 56

4.2 CORRESPONDENCE

4.2.1 Correspondence with Share Holders

Shareholders are the owners of the business since they

contribute to the capital of the company. They are large in numbers
and scattered over large area. So they cannot contribute to the
routine activities of the business also they may not have required
skills to handle business activities. In such case they appoint
elected representatives who are called as directors.

The circumstances under which secretarial correspondence

takes place with the members of company as are follows:

1) Company Meeting
 Notice and Agenda of AGM
 Circulars
 Annual report and audit report

2) Issue of shares
 Letter of allotment in reply to application of shares
 Regret letter for inability to allot any share
 Issue of share certificate
 Issue of bonus shares and right issue

3) Call on shares
 Letter for demanding call money on shares
 Letter of reminder for call money
 Warning letter for forfeiture of shares due to non-payment of
call money
 Notice of forfeiture of shares

4) Transfer and Transmission of Shares

 Notice of lodgement of transfer to the transferor and
transferee
 Letter informing approval of the transfer of shares to the
transferor and transferee
 Letter informing non-approval of the transfer of shares to the
transferor and transferee
 Letter informing approval of the transmission of shares to
legal heir of deceased shareholder

5) Payment of Dividend
 Notice of dividend payment and dividend warrant
 Notice of dividend mandate
 57

6) Termination of Membership
 Notice of termination of membership due to forfeiture of
shares
 Letter for informing of surrender of shares
 Letter for informing of conversion of shares into share
warrant

7) Others
 Notice of loss of share certificate
 Issue of duplicate share certificate
 Reply to complaint and queries raised by shareholders

4.2.2 Correspondence with Debenture Holders

Debenture refers to the debt (loan) instrument issued by
company under its common seal. As company issues share for
raising capital from market, in the same way debentures are also
issued. Share capital is own capital of the company but debenture
capital is a loan of the company which has to be repaid after certain
period of time. They are creditors of the company. Interest is paid to
debenture holders as return over their investment made into
company. Debenture holders are not concerned with the
management of company. They are only concerned about their
repayment of capital and payment of interest. They get priority over
shareholders for repayment of capital and payment of interest.

 The circumstances under which secretarial correspondence

takes place with the debenture holders of company as are
follows:
1) Letter informing allotment of debentures
2) Letter informing issue of debenture certificate
3) Letter informing payment of interest on debentures
4) Letter informing conversion of convertible debentures into equity
shares
5) Letter informing redemption of debentures

4.2.3 Correspondence with Registrar of Companies (RoC)

The Registrar of Companies (ROC) is appointed by the
Central Government to register and supervise matters relating to
registration of companies under Company Act. They also control
affairs of the company. Every company has to submit certain
documents like Memorandum and Articles of Association to ROC in
order to receive Certificate of Incorporation and Commencement
Certificate.
 58

 The circumstances under which secretarial correspondence

takes place with the ROC as are follows:
1) Filing statutory report after Statutory meeting
2) Submission of Return of Allotment of share after allotment of
shares is done
3) Filing annual return after completion of financial year and
approval in AGM
4) Extension time for holding AGM in unavoidable situations
5) Filing special resolutions
6) Alterations in MOA and AOA
7) Conversion and reconversion of company

4.2.4 Correspondence with the Stock Exchange

Stock exchange is a market place where buying and selling
of securities is done which is already issued by company. So it is
called secondary market. A company has to list (register) its
securities with one or more stock exchanges in order to trading take
place in their securities. The secretary has to undertake
correspondence with the stock exchange to inform about
happenings in the company. This correspondence is obligatory on
the part of company otherwise it attracts penalty.
 The circumstances under which secretarial correspondence
takes place with the Stock Exchange are as follows:
1) Listing of securities with the stock exchange
2) Informing about alteration in Memorandum of Association
3) Information about Board Meeting and AGM, change in Board of
Directors, Rate of dividend declared
4) Information about issue of Bonus Shares and Right issue
5) Submission of compliance report on corporate governance
within 15 days from the end of quarter
6) Submission of Annual Report within 21 days of its approval in
AGM
7) Any other information required by stock exchange

4.2.5 Correspondence with the Securities and Exchange

Board of India (SEBI)

Securities and Exchange Board of India (SEBI) is a

regulatory body of the Government of India. It controls the
securities market. It was established on April 12, 1992 under
the SEBI Act, 1992. It is headquartered at the Bandra Kurla
Complex in Mumbai, India. It has regional offices in major cities of
India such as New Delhi, Kolkata, Chennai and Ahmedabad.
 59

The Preamble of the Securities and Exchange Board of India

describes the basic functions of SEBI is the protection of investors
interests in securities and to be a platform to promote, develop and
regulate the securities market in India as well as the relating mat-
ters that are connected with it.
The SEBI is permitted to approve rules and laws pertaining
to the stock exchanges. It also implies that SEBI should enforce the
laws for stock exchanges to follow. SEBI examines books of ac-
counts of financial mediators and recognized stock exchanges. An-
other role of SEBI is to urge respective companies to list their
shares in stock exchanges and manage the registration of distribu-
tors/brokers.
 The circumstances under which secretarial correspondence
takes place with the SEBI are as follows:
1) SEBI receives large number of complaints from Shareholders
and Investors related to payment of dividend, repayment of
capital, transfer of shares, and so on. SEBI solves these
complaints in cooperation with concerned company. The
secretary has to give prompt attention to correspondence with
SEBI and solve these complaints in time.
2) Company receives letters and notices from SEBI. Secretary has
to give prompt reply to it.
3) Any other information required by SEBI.
4.2.6 Correspondence with the Company Law Board
The Central Government in terms of Section 10 (E) of the
Companies Act, 1956 constituted an independent Company Law
Board (CLB) vide Notification No. 364 dated the 31st May, 1991.
The CLB is a quasi-judicial body, exercising equitable jurisdiction,
which was earlier being exercised by the High Court or the Central
Government. The Board has powers to regulate its own proce-
dures. The Company Law Board has framed Company Law Board
Regulations 1991 prescribing the procedure for filing the applica-
tions/petitions before it. The Central Government has also pre-
scribed the fees for making applications/petitions before the Com-
pany Law Board, under the Company Law Board, (Fees on applica-
tions and Petitions) Rules 1991. The Board has its Principal Bench
at New Delhi, and four Regional Benches located at New Delhi,
Mumbai, Kolkata and Chennai.

 The circumstances under which secretarial correspondence

takes place with the Company Law Board are as follows:
1) Conversion or reconversion of company
2) Alteration to Memorandum and Articles of Association
3) Petition filed by any investor and shareholders on oppression
and mismanagement of the company.
 60

4.3 ROLE OF TECHNOLOGY IN SECRETARIAL

CORRESPONDENCE

Fast changes have been taking place in all facets of life

including the business organization. This is as a result of
technological advancement. Every business organization today
requires facts and accurate information for quick decision- making
and high productivity. The employees including the secretary
expects certain supports which can be technological (machines and
equipments) and human.

In the past, manager used to dictate memo and letters, while

the secretary used to type them. Today’s secretaries are exposed to
office technology/automation including the Internet that makes work
easier and knowledge more accessible. It is now easier to send
messages by telex, electronic mails (e-mails) fax and
telephones. This is the era of computers and information
technology, which has become an enabler of greater convenience
to the secretary. The role of technology in secretarial
correspondence is as follows:

1) Increase in speed and accuracy in correspondence with various

people and authorities
2) Reduce wastage of resources
3) Reduces cost paper, printing and other stationery requirement
4) Increases efficiency of secretary
5) Enables storage of data for future reference
 61

4.4 SPECIMENS

4.4.1 LETTER TO SHAREHOLDERS

 Letter for issue of Bonus Shares

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588
Ref.: BS/01/2018-19 16th January, 2019
Mr. Sandeep Baga
Laxmi Villa, Gogate Wadi,
Goregaon (W), Mumbai-400063
Sub: Bonus Issue of Equity Shares

Dear Sir,
I am directed by the Board of Directors to inform you that at the Ex-
traordinary General Meeting held on 29th December, 2018 sharehold-
ers have unanimously approved the recommendation of Board of Di-
rectors to issue bonus shares in the ratio of 1:1 (i.e., one bonus share
for each fully paid equity share held by the shareholder).

Details of bonus shares issued to you are as follows :

D.P. ID No. Client ID Shares held Bonus Shares allot-

No. as on record ted
date
M-354/2 10032758 100 100
For further queries (if any), in respect of the above, kindly do write to
our Registrar and Share Transfer Agent at the address given below:
GALAXY STEEL INDUSTRIES LIMITED
140/A, MIDC, Andheri (E), Mumbai – 400093.
Tel: 022-2222 5588
Email: galaxysi@[Link]
Thanking you.

Yours faithfully,
For Galaxy Steel Industries Ltd

Sd/-
Secretary
 62

 Letter for issue of Right Issue

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: BS/01/2018-19
28th May, 2019

Mr. Sandeep Baga

Laxmi Villa, Gogate Wadi,
Goregaon (W), Mumbai-400063

Sub: Offer letter for Right Issue of 1,00,00,000 equity shares of

Rs. 10 each at par

Dear Sir,
This is to inform you that in pursuant to the Board meeting held on
25th May, 2019, a resolution is passed to issue 1,00,00,000 equity
shares of Rs. 10 each at par aggregating Rs. 10,00,00,000/- to the
equity shareholders on right basis in the ratio of 1:1 equity shares for
every 1 equity shares held on 25th May, 2019.

You are hereby informed that the Board of Directors have decided to
increase the subscribed and paid up capital of the Company by issue
of 1,00,00,000 equity shares of Rs. 10 each by right offer to equity
share holders as on 25th May, 2019 on proportionate basis and
conditions as laid down, in application form and in Board resolution.

As a shareholder on the afore mentioned date, being fixed as offer

date, we are pleased to inform you that you are entitled to for the
“rights shares offer” in reference to details as mentioned in the
enclosed application form.
Thanking you.

Yours faithfully,
For Galaxy Steel Industries Ltd
Sd/-
Secretary
 63

4.4.2 LETTER TO REGISTRAR OF COMPANIES

 Letter to Registrar of Companies for filing alteration in the

Memorandum of Association of Company

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: MOA/01/2018-19
16th January, 2019

The Registrar of Companies,

Maharashtra State,
Marine Lines,
Mumbai-400020

Sub: Alteration in Memorandum of Association in Name Clause

Sir,

This is to inform you that the Extra Ordinary General Meeting of the
Company was held on 13th January, 2019 at Registered Office of the
Company. All members unanimously passed the Resolution No. 0223
to change name of company from ‘Galaxy Steel Industries Limited’ to
‘Galaxy Steel India Limited’.

Following documents are enclosed for your reference and registration:

1) Form INC – 22 along with certified copy of Board Resolution
2) Certificates to be sent along with Form INC-22for registration.

Kindly acknowledge the receipt of documents.

Thanking you,

Yours faithfully,
For Galaxy Steel Industries Ltd.
Sd/-
Secretary

Encl : As above
 64

 Letter to Registrar of Companies for filing alteration in the

Articles of Association of Company

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: AOA/01/2018-19
16th January, 2019

The Registrar of Companies,

Maharashtra State,
Marine Lines,
Mumbai-400020

Sub: Alteration in Articles of Association

Sir,

This is to inform you that the Extra Ordinary General Meeting of the
Company was held on 13th January, 2019 At Registered Office of the
Company. All members passed the Special Resolution No. 0224
altering 22nd clause of Articles of Association regarding qualification
shares of directors.
The original article was that directors shall hold at least 5 equity shares
(qualification shares) of Rs. 100/- each. The same has now been
altered as the director should hold at least 10 equity shares
(qualification shares) of Rs.100/- each in the company.
Following documents are enclosed for your reference and registration:
1) Duly filled Form No. MGT-14
2) Copy of Special Resolution
3) Explanatory Statement annexed to the notice of the General
Meeting at which the special resolution was passed
4) Copy of new Articles of Association
5) Filing fees cheque
Kindly acknowledge the receipt of documents.
Thanking you,
Yours faithfully,
For Galaxy Steel Industries Ltd.
Sd/-
Secretary
Encl : As above

Encl : 1) Form INC – 22 along with certified copy of Board Resolution

2) Certificates to be sent along with Form INC-22
 65

4.4.3 LETTER TO STOCK EXCHANGE

 Letter to Stock Exchange for Listing of Shares

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: SE/01/2018-19
16th January, 2019

The Secretary,
The Bombay Stock Exchange Ltd.
Mumbai-400020

Sub: Application for Listing of Shares

Sir,

This is to inform you that the Board Meeting was held and
resolution no. 0656 dated 10th January 2019 is passed, for
making application for listing of shares with your stock exchange
for issue size of Rs. 50 crore.

Following documents are enclosed for your reference and

registration:
1) Duly filled Application Form
2) Copy of Memorandum and Articles o Association
3) Certified copy of the Certificate of Incorporation

We shall complete the listing procedure as per guidelines of

Bombay Stock Exchange.

Thanking you,

Yours faithfully,
For Galaxy Steel Industries Ltd.

Sd/-
Secretary

Encl : As above
 66

4.4.4 LETTER TO GOVERNMENT FOR CONVERSION /

RECONVERSION OF COMPANY

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: Gov/01/2018-19
16th January, 2019

The Secretary,
The Ministry of Corporate Affairs,
Government of India,
New Delhi-1

Sub: Conversion of private company to public company

Sir,

This is to inform you that an Extra-ordinary general meeting of the

company was held on 4th January 2019. The members unanimously
passed special resolution for conversion of private company into
public company.

We have submitted require documents to Registrar of Companies,

Mumbai, Maharashtra and requested to issue new Certificate of
Incorporation.

We request you to consider our application for the proposed

conversion and do the needful.

Thanking you,

Yours faithfully,
For Galaxy Steel Industries Ltd.

Sd/-
Secretary

Encl : 1) Copy of Special Resolution

2) New set of Articles of Association
 67

4.4.5 LETTER TO BANK FOR OVERDRAFT FACILITY

GALAXY STEEL INDUSTRIES LIMITED

140/A, MIDC, Andheri (E), Mumbai – 400093.
www [Link] Tel: 022-2222 5588

Ref.: bank/01/2018-19
16th January, 2019

The Manager,
State Bank of India
Malad (E) Branch,
Mumbai - 400097

Ref. No. : Current A/c No. 1234567890

Sub: Request to grant overdraft facility

Sir,

This is to request you that kindly consider granting us overdraft

facility of Rs. 50,000/- (Rupees Fifty Thousand) for the period
of 1st February 2019 to 30th April 2019 to meet our working
capital requirement.

We would like to offer our assets as security against the

overdraft facility. We will remain committed in honouring the
payments in due time. We are willing to bear the interest rates
on the overdraft that may be levied from time to time.

We expect that you will find above mentioned security adequate

and agree to provide us overdraft facility. We shall complete
other formalities after hearing from you.

Your early favourable reply will be very much appreciated.

Thanking you,

Yours faithfully,
For Galaxy Steel Industries Ltd.

Sd/-
Secretary
Encl : As above
 68

4.5 SUMMARY

Correspondence refers to communication in writing. It is an

exchange of ideas, information, views and opinions in a respect of
certain matters in a written form. The secretary receives letter from
various concerned parties such as shareholders, directors, stock
exchange, bankers’, creditors and others. So the secretary has to
reply to them promptly.

Shareholders are the owners of the business since they

contribute to the capital of the company. The circumstances under
which secretarial correspondence takes place with the members of
company are for company meeting, issue of shares, call on shares,
transfer and transmission of shares, payment of dividend,
termination of membership and so on.

Debenture refers to the debt (loan) instrument issued by

company under its common seal. Debenture holders are creditors
of the company. The circumstances under which secretarial
correspondence takes place with the debenture holders of company
are allotment of debentures, issue of debenture certificate, payment
of interest on debentures, conversion of convertible debentures into
equity shares, redemption of debentures and so on.

The Registrar of Companies (ROC) is appointed by the

Central Government to register and supervise matters relating to
registration of companies under Company Act. They also control
affairs of the company. The circumstances under which secretarial
correspondence takes place with the ROC as are Filing statutory
report, Submission of Return of Allotment of share, Filing annual
return, Extension time for holding AGM, Filing special resolutions,
Alterations in MOA and AOA, Conversion and reconversion of
company and so on.

Stock Exchange is a market place where buying and selling

of securities is done which is already issued by company. The
circumstances under which secretarial correspondence takes place
with the Stock Exchange are Listing of securities, Informing about
alteration in Memorandum of Association, Information about Board
Meeting and AGM, Information about issue of Bonus Shares and
Right issue, Submission of Annual Report and so on.

Securities and Exchange Board of India (SEBI) is a

regulatory body of the Government of India. It controls the
securities market. The circumstances under which secretarial
correspondence takes place with the SEBI are complaints related to
investors and shareholders, reply to notice and circulars received
from SEBI and other information required by SEBI.
 69

The Company Law Board has framed Company Law Board

Regulations 1991prescribing the procedure for filing the
applications/petitions before it by any investor and shareholders on
oppression and mismanagement of the company. The
circumstances under which secretarial correspondence takes place
with the Company Law Board are Conversion or reconversion of
company, Alteration to Memorandum and Articles of Association,
Petition filed by any investor and shareholders and so on.

In the past, manager used to dictate memo and letters, while

the secretary used to type them. Today’s secretaries are exposed to
office technology/automation including the Internet that makes work
easier, fast, accurate and reduced the cost and wastage of
resources.

4.6 EXERCISE

FILL IN THE BLANKS

1) The secretary undertake correspondence regarding call on
shares with __________ (Debenture holders, Stock Exchange,
Shareholders)
2) The secretary undertakes correspondence regarding payment
of interest with __________. (Debenture holders, , Sharehold-
ers, Both)
3) ______________is appointed by Central Government to regis-
ter and supervise matters relating to registration of companies
under Company Act. (Registrar of Companies, Stock Exchange,
Company Law Board)
4) A company has to list (register) its securities with
______________ in order to trading take place in their securi-
ties. (Registrar of Companies, Stock Exchange, Company Law
Board)
5) _____________ controls the securities market. (SEBI, Share-
holders, Board of Directors)
6) Investor and shareholders can file the applications/petitions be-
fore ___________on oppression and mismanagement of the
company. (Board of Directors, Promoters, Company Law Board)
7) Technology _____________ the secretarial correspondence.
(Slows, Mistakes, Speeds)

DEFINE/EXPLAIN THE FOLLWING TERMS

1) Correspondence
2) SEBI
3) Stock Exchange
4) Company Law Board
5) Registrar of Companies
 70

ANSWER IN BRIEF
1) Explain the various circumstances under which company
secretary needs to undertake correspondence with
shareholders.
2) Discuss the various circumstances under which company
secretary needs to undertake correspondence with debenture
holders.
3) Describe the various circumstances under which company
secretary needs to undertake correspondence with Registrar
of Companies.
4) Elaborate the various circumstances under which company
secretary needs to undertake correspondence with Stock
Exchange.
5) Explain the various circumstances under which company
secretary needs to undertake correspondence with SEBI.
6) Discuss the various circumstances under which company
secretary needs to undertake correspondence with Company
Law Board.
7) Write a note on Role of technology in secretarial
correspondence.
8) Write a letter to shareholders informing about right issue.
9) Write a letter to shareholders informing about bonus issue.
10) Write a letter to ROC relating to Alteration in MOA.
11) Write a letter to ROC relating to Alteration in AOA.
12) Write a letter to Stock Exchange informing about listing of
shares
13) Write a letter to Government relating to conversion of
company.
14) Write a letter to Bank for availing overdraft facility.

4.7 REFERENCES

[Link]
[Link]
[Link]
[Link]


