Chapter 35

Drafting

BOARD RESOLUTION:-

FORMAT

(PURPOSE)_____________________________________
Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT_______________________________________________________
_
________________________________________________________________________”

“ RESOLVED FURTHER THAT ____________________________________________

________________________________________________________________________”

Draft a resolution for adopting common seal of the company

Adoption of Common Seal : (Section 9)

Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT the common seal of the Company as placed by the Chairman and
approved by this meeting and an impression of which has been taken at the margin of the
minutes be and is hereby adopted as the common seal of the Company.”
“RESOLVED THAT the common seal be kept under the safe custody of the Company
Secretary. The seal shall not be affixed to any document/instrument except, in presence of the
two directors and Company Secretary, who shall sign every document/instrument to which
seal is affixed in their Presence.”

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

460
Draft a resolution for change of Registered Office of the company within the city

Change of registered office of the company (Section 12 (2)) within the city/local limit.
Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT the Registered Office of the company be shifted from…………….,
Pune, to ……………, Pune with effect from…………”
“RESOLVED FURTHER THAT the Company Secretary be and is hereby authorized to file
e- Form INC 22 with the Registrar of Companies, Pune.”

Draft a resolution for writing of certain expenses/losses from securities premium

account

Writing of certain expenses/Losses from Securities premium account : (Section 52)

Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT Pursuant to the provisions of Section 52 (2) (d) read with Section 55 of
the Companies Act, 2013, a sum of Rs. 85,00,000 out of the “Securities Premium Account”,
of the Company in which sum of Rs. 90,00,000 is lying unutilized, be and is hereby utilized
in providing for the premium payable on the redemption of redemption of redeemable
preference shares to be made on dt.______ and also on the redemption of debentures to be
made by Company on dt.______

Draft a resolution for appointment of Secretary in whole-time practice for signing

annual return

Appointment of Secretary in whole-time practice for signing annual return (Section 92

(2)
Passing Authority – Board of Directors
Nature of the Resolution – Resolution with simple majority
“RESOLVED THAT Mr. ______, a Secretary in whole-time practice, of ______, be and is
hereby appointed, at a remuneration of Rs. 1,00,000 to sign the annual return of the Company
to be made up to the date of the ensuing Annual General Meeting of the Company,
i.e.,________”

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

461
Draft a resolution for convening of extra-ordinary general meeting by the board of
directors of your company

Convening of extra-ordinary general meeting : (Section 101)

Passing Authority – Board of Directors
Nature of the resolution – Resolution with simple majority
“RESOLVED THAT an Extra-Ordinary General Meeting of the members of the company be
convened on …… at 12.00 a.m. at …….. on a shorter notice”.
“RESOLVED FURTHER THAT the draft of the notice convening the Extra-Ordinary
General Meeting as stated above together with the relevant explanatory statement annexed
thereto be considered, approved and be issued to the members under the signatures of Mr.
_______ Company Secretary of the Company.”
“RESOLVED FURTHER THAT approval of the members be obtained for holding the
meeting at less that 21 days’ notice as required by Section 101 (1) of the Companies Act,
2013.”

Draft a resolution for recommending payment of dividend to shareholders

Payment of dividend : (Section 123)

Passing Authority - Board Meeting
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT a dividend @ Rs. 10.0 per share (i.e. 10%) out of the profits of the
financial year ending on 31st March, 2016 on 40,00,000 of Rs. 100 each fully paid up be
recommended to the shareholders for declaration in the ensuing Annual General Meeting of
the Compay.”

Draft a resolution for appointment of internal auditors

Appointment of internal auditor - (Section 138 (1))

Passing Authority - Board Meeting
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT Mr. ________, Chartered Accountant, (Reg.No………..) Satara, be and
are hereby appointed as an Internal Auditor of the Company for conducting internal audit of
financial year ended 31st March, 2017.”
“RESOLVED FURTHER THAT the Internal Audit Report received form the Auditor shall
be placed before the Audit Committee of the Board for its consideration and adoption.”

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

462
“RESOLVED FURTHER THAT Mr. _________, Director – Finance of the Company be and
is hereby authorized to fix the remuneration of Internal auditor.”

Draft a resolution for appointment of Additional Director

Appointment of Additional Director (Section 161)

Passing Authority - Board of Directors
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT Mr._______ (DIN ______) who has complied with the provisions of
Section 161 (1) of the Companies Act, 2013 be and is hereby appointed as an Additional
Director of the Company in terms of Article 125 of the Company’s Articles of Association
pursuant to the provisions of Section 161 of the Companies Act, 2013.”
“FURTHER RESLOVED THAT Mr._________, Company Secretary be and is hereby
authorized to file e-From DIR-12 with the Registrar of Companies and to make necessary
entries in the statutory registers to that effect.”

Draft a resolution for appointment of Alternate Director

Appointment of Alternate Director - (Section 161 (2))

Passing Authority - Board of Directors
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT Mr._____ (DIN _______), who has complied with the provisions of
Section 161 (2) of the Companies Act, 2013 be and is hereby appointed the Alternate
Director to Mr._____ (DIN ______) with effect from ______ pursuant to the provisions of
Section 161 (2) of the Companies Act, 2013 during the latter’s absence from india.”
“RESOLVED FURTHER THAT Mr._____, Company Secretary of the Company be and is
hereby authorized to file-e Form DIR-12 with the Registrar of Companies and communicate
the abovesaid status to the Bank, stock exchange and all the concerned authorities and make
necessary entries in the statutory registers as per requirement of the Companies Act, 2013.”

Draft a resolution for “vacation of office by director on account of unsound mind.”

Vacation of office by director on account of unsound mind - (Section 164 (1))

Passing Authority - Board of Directors
Nature of the Resolution - Resolution with simple majority
“RESOLVED THAT Mr. X, (DIN _____) Director being found to be of unsound mind by the
Calcutta High Court in its Order dated ______ and a copy of the same as placed before the
Board, pursuant to Section 164 (1) (a) of the Compnaies Act, 2013 be and is hereby deemed
to have vacated his office as director of the company w.e.f. _______”
“RESOLVED FURTHER THAT Mr._____ Company Secretary of the Company be and is
hereby instructed to file e-From DIR-12 with the Registrar of Companies to that effect.”

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

463
Draft a resolution for appointment of Company Secretary

Appointment of KMP – Company Secretary : - (Section 203)

Passing Authority - Board of Director
Nature of Resolution - Resolution with simple majority
“RESOLVED THAT M/s ______ & Co., Practicing Company Secretaries, be and is hereby
appointed as the Secretarial Auditors of the Company in terms of the provisions of Section
204 of the Companies Act, 2013 and to hold the office until the conclusion of the next annual
general meeting in remuneration of Rs. 1,00,000 plus out of pocket expense as may be
determined by the Board.”

GENERAL MEETING RESOLUTION :-

FORMAT

(PURPOSE)_____________________________________
Passing Authority – General Meeting
Nature of the Resolution – Special / Ordinary Resolution
“RESOLVED THAT_______________________________________________________

________________________________________________________________________”

“ RESOLVED FURTHER THAT ____________________________________________

________________________________________________________________________”

Explanatory Statement
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

464
Draft a resolution along with explanatory statement to change of Registered Office
within a State from the jurisdiction of one Registrar to another Registrar

Change of Registered Office within a State from the Jurisdiction of one Registrar to
another Registrar (Section 12 (5))
Passing Authority - General Meeting
Nature of the Resolution - Special Resolution
“RESOLVED THAT pursuant to the provisions of Section 12 (5) of the Companies Act,
2013 read with Rule 28 of the Companies (Incorporation) Rules, 2014, and subject to the
confirmation by the Regional Director concerned in the Ministry of Corporate Affairs, the
place of Registered Office of the Company presently situate at Mumbai, be and is hereby
changed to be situate at Pune.”
Explanatory Statement
Presently, the Company’s Registered Office is located at ……… in the city of Mumbai. The
board of directors of your company at their meeting held on ………. Have decided to change
the location of the Registered Office form Mumbai to the city of Pune. According to Section
12 (5) of the Companies Act, 2013 read with Rule 28 of the Companies (Incorporation)
Rules, 2014, such a change should be confirmed by the Regional Director concerned in the
Ministry of Corporate Affairs. Necessary application in the e-Form INC 23 as prescribed in
this behalf shall be made to the Regional Director, along with the copy of the aforesaid
resolution for seeking the confirmation. Further, under the provision to Section 12 (5) of the
Companies Act, 2013, special resolution is required to be passed for shifting the Registered
Office outside the local limits of any city, town. Etc. Hence the special resolution is proposed
for your approval.
None of the directors and KMP and their relatives are interested in this resolution, except as
shareholders of the Company.

Draft a resolution along with explanatory statement to change of company

For change in the name of company (Section 13)

Passing Authority - General Meeting
Nature of the Resolution - Special Resolution
“RESLOVED THAT pursuant to the provisions of Section 4 read with section 13 of the
Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 if any and
subject to the approval of the RBI, the name of the Company be changed from…………
Leasing & Investments Ltd. To ………… Finance Ltd.”
“RESOLVED FURTHER THAT the Board of directors be and is hereby authorized to do all
such acts, deeds and things as may be deemed expedient and necessary to give effect to this
resolution.”

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

465
Explanatory Statement
The present activities of the Company include leasing, hire purchase, investments, bill
discounting, loan syndication, portfolio management, etc. The Present name does not convey
the magnitude of operations of the Company and expresses only part of its activities.
For some time the directors have been giving thought to changing the name of the Company.
The new name proposed contain” ………….. “ which reflects our group identity and the full
name “………… Finance Limited” reflects the operations of the Company.”
The ROC ………… has confirmed that the new name is available upon the application of the
Company for change of the name of the Company and subject to the resolution the Board of
directors of the Company proposes to make an application to the ROC for confirmation to the
change of name. Since the Company is doing its business of financial activities in the name
of ………… Financial Services, which is well recognized by adopting the new name, the
Company will be well recognized in the field in which it operates. In view of the RBI
guidelines applicable for the NBFC Companies, your directors will also take necessary
approval from the RBI.
None of the Director and KMP and their relatives have any interest in this Resolution except
as a member of the Company.

Draft a resolution along with explanatory statement for variation in shareholders right.
Make suitable assumptions.

Variation of Shareholders right (Section 48)

Passing Authority - General Meeting
Nature of the Resolution - Special Resolution
“RESOLVED THAT the consent of Preference Shareholders be and is hereby accorded
pursuant to the provisions of Section 48 and other applicable provisions, if any, of the
Companies Act. 2013 and the Rules made there under, to the Board of Directors of the
Company for early redemption of 4,54,500 10% Redeemable Cumulative Preference Shares
of Rs. 100 each at a discounted rate of 8% p.a. compounded annually which are due for
redemption during the period………. To ………”
“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to do all
such acts, deeds and things and to sign all such documents as may be necessary. Expedient
and incidental thereto give effect to this resolution.”

Explanatory Statement
In the context to improved cash flow it is proposed to redeem the preference shares before its
due date redemption i.e. during the period ………….. to ………… at the discounted rate of
8% p.a. compounded annually, other terms and conditions would be same as stipulated at the
time of issue of preference Shareholders of the Company and hence may be deemed to be
concerned or interested in the said resolution as set out above.

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

466
Save and except as above, none of the Directors and KMP of the Company and their relatives
is, in any way, concerned or interested in this resolution.
The Board of Directors according recommends the resolution set out above for your approval.

Draft a resolution along with explanatory statement for inviting deposits from the
public

Invitation of deposits (Section 73 & 76)

Passing Authority - General Meeting
Nature of the Resolution - Special Resolution
“RESOLVED THAT pursuant to the provisions of Section 73 and Section of the Companies
Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and other
applicable provisions, if any, and subject to such conditions, approvals, permissions, as may
be necessary, consent of the members of the Company be and is hereby accorded to
invite/accept/renew from time to time unsecured / secured deposits form public and/or
members of the Company up to permissible limits as prescribe under Rule 3 (4) of the
Companies (Acceptance of Deposits) Rules, 2014.”
“RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board
of Directors be and is hereby authorized to do such acts, deeds, things and matters as the
Board of Directors may in its absolute discretion consider necessary or appropriate for such
invitation/acceptance/renewal of Deposits by the Company.”
Explanatory Statement
The members are hereby apprised that the Company had been accepting deposits from its
shareholders employee and other sections of public as permissible under the provisions of
companies Act, 2013 read with the corresponding Companies (Acceptance of Deposits)
Rules, 2014.
Approval of shareholders is required for inviting/accepting renewing deposits under Section
73 and Section 76 read with companies (Acceptance of Deposits) Rules, 2014. Under Rule 3
(4) of the Companies (Acceptance of Deposits) Rules, 2014, before
inviting/accepting/renewing deposits.
The Board of directors of your Company recommend the resolution as set out in the
accompanying notice for the approval of the members of the Company.
None of the Directors or KMP of the Company or their relatives is concerned or interested in
the Resolution except to the extent of their deposit holding and / or shareholding in the
Company, if any.

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

467
Draft a resolution along with explanatory statement for appointing new auditor instead
of retiring auditor.

Appointment of Auditors, a person other that retiring auditor (Section 140)

Passing Authority - General Meeting
Nature of the Resolution - Ordinary Resolution

“RESOLVED THAT M/s _______ & Co, Chartered Accountants, __________ (Registration
No.___________) be and are hereby appointed Auditors of_______ of the company in place
of the retiring auditors to hold office from the conclusion of this Annual General Meeting
until conclusion of the 16th Annual General Meeting at the Remuneration of Rs._______ plus
out-of pocket expenses.”
Explanatory Statement
The retiring auditors, namely, M/s _______ & Co., have given notice in writing of their
unwillingness to be re-appointed and that a special notice in terms of provisions of Section
115 of the Companies Act, 2013 read with Section 140 of the Act has also been received
from shareholders of the Company for the appointment of new Auditors M/s ___________-
& Co. in place of the retiring auditors M/s _______ & Co., Chartered Accountant. The
Company has forth with communicated to the retiring auditors of the Special Notice and that
the retiring auditors have made no representation against the said special notice. A written
certificate has been obtained from M/s _______ & Co., Chartered Accountant to the effect
that in case of their appointment as Auditors of the Company, the appointment will be in
accordance with the limits prescribed under section 139 (1) of the Act.
Your directors recommend the Resolution for your approval.
None of the Directors and KMP and their relatives are concerned or interested in this
resolution.

Draft a resolution along with explanatory statement for removal of director

Removal of Director (Section 169)

Passing Authority - General Meeting
Nature of Resolution - Ordinary Resolution with special Notice
“RESOLVED THAT Mr. ______ (DIN _____) be and is hereby removed from the office of
director of the company w.e.f. _________”
Explanatory Statement
The Company has received a special notice pursuant to the provisions of Section 169 of the
Companies Act, 2013 from members holding 25% equity shares of the Company Proposing
for a resolution for removal of Mr. ______ from submission of his representation, if any.

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

468
Your directors submit the above said resolution for consideration and do not purport to
support the same.
All the relevant documents are being placed at the Registered Office of the Company for
inspection till the date of the annual general meeting.
Except Mt._______ none of the directors and KMP of the Company and their relatives are
concerned or interested in the resolution.

Draft a resolution along with explanatory statement for voluntary winding – up of the
company

Voluntary winding-up (Section 304)

Appointing authority - General Meeting
Nature of Resolution - Special Resolution
“RESOLVED THAT pursuant to the provisions of Section 304 (1)(b) of the Companies Act,
2013, the Consent of the members of the Company be and is hereby accorded to wind up the
affairs of the Company as the member’s voluntary winding up, w.e.f. _______”
“RESOLVED FURTHER THAT pursuant to the provisions of Section 275 of the Companies
Act, 2013 Shri ______ s/o Shri________’ Chartered Accountant of _______, be and is
hereby appointed as ‘the Liquidator of the Company’ for the purpose of the member’s
voluntary winding up of the affairs of the Company.”
“RESOLVED FURTHER THAT the consent of the members of the Company be and is
hereby accorded to sanction the remuneration of liquidator of Rs. 50,000 only (Rupees Fifty
Thousand only) in addition to the actual out of pocket expenses for the winding up of the
affairs of the Company.”
“RESOLVED FURTHER THAT Shri_____,the liquidator be and is hereby authorized to
exercise all the powers as per the provisions of the Companies Act, 2013 to effectively
winging up the affairs of the Company.”
“RESOLVED FURTHER THAT notwithstanding the appointment of liquidator the Board of
Directors of the Company be and is hereby authorized exercise all te powers in consideration
with the liquidation of the Company like filing of statement of affairs with the liquidator,
filing of return with the Register of Companies, filling up vacancy in the office of liquidator
and such other matters incidental to the liquidation of the Company.”

Explanatory Statement
The Company was formed for the purpose of dealing in cosmetic products. Initially the
business of the Company was quite remunerative and earned adequate profits on capital
invested. But as the members are aware the Company considered the matter and were of the
last 2-3 years. The Board of directors of the Company considered the matter and were of the
opinion that in view of the non-availability if business prospects, and long-term financial
resources it is not financially viable to carry on the business activities. It therefore does not
serve any fruitful purpose to maintain the status of the Company. The directors of the
Company feel that there is no alternative but to put the Company into voluntary winding-up,
realize the assets thereof and distribute the proceeds to the members.
WORK HARD, DREAM BIG Shubhamm Sukhlecha
INSPIRE ACADEMY (CA, CS, BSL LLB)

469
The Board passed a resolution declaring solvency of the Company at a meeting held on the
______ and that such declaration shall be delivered to the Registrar accompanied by a report
of the auditors if the Company, as required under Section 488 of the Companies act, 2013.
Your approval is required for the voluntary winding up of the Company as given in Item
No…….
Your approval is also required for appointing Shri ______’ as liquidator of the Company at a
remuneration of 50,000 in addition to reimbursement of actual out of pocket expenses.
The above said declaration of solvency is available for inspection at the registered office of
the Company during business hours on any working day till the date of the meeting.
None of the directors of your Company and their relatives are interested in the proposed
resolution, expect to the extent of their share holding in the Company.

NOTICES FOR MEETING

Draft a notice for first board meeting

__________________Ltd.
Registered Office :_____________
CIN : _______ Website : _________ E-mail: _________ Tel:_______ Fax: ______
Date ________

Dear Sir/Ma’am,
I am directed to inform that the first meeting of the Board of Directors of the Company will
be held on _______ the______th day of _____ at the Registered Office of the Company at
10.a.m. to transact the business, set out in the Agenda, a copy of which is enclosed.
Your are requested to make it convenient to attend the Board Meeting.
Yours Faithfully
For _______________ Ltd.

Company Secretary
Encls. As above.

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

470
Draft a notice for subsequent Board Meeting

_____________ (P) Ltd.

Registered Office : ______________
CIN:______ Website:_______ E-mail : ________ Tel.: ________ Fax: _______
Date:_________

Dear Sir/ Ma’am,

NOTICE is hereby given that a meeting of the Board of Directors will be held at the
registered office of the company on _______ the_______th day of ________ at the
Registered Office of the Company at 10 a.m. to transact the business, set out in the Agenda, a
copy of which is enclosed.
You are requested to make it convenient to attend the meeting.
A copy of the agenda of the business to be transacted at the meeting is enclosed herewith.
Yours Faithfully,
New Infotech (P) Ltd.

Company Secretary
Encls. As above.

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

471
Draft a notice of general meeting for removal of auditor

ABC Ltd
Registered Office :_____________
CIN:______ Website:_______ E-mail : ________ Tel.: ________ Fax: _______
Date:_________

NOTICE
NOTICE is hereby given that an Extraordinary General Meeting of the Company will be held
at_____ on_______ day the_______ 2016 at _____ to transact the following business :-
1.To consider and, if thought fit, to pass, with or without modifications, the following
resolutions as an ordinary resolution, in respect of which a special notice has been received
by the Company from a member (s) pursuant to Section 139 read with Section 115 of the
Companies Act, 2013.

“RESOLVED THAT Mr. XYZ be and is hereby removed from the office of auditor of the
Company with effect from the conclusion of this meeting.”
A copy of the representation with respect to the resolution set out above for the removal of
Mr. XYZ as auditor has been received from members and same is enclosed to this notice.
For ABC Co. Ltd.
By Order of the Board,
Dated : ________
Company Secretary
Note :
1. Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend
and vote instead of himself and the proxy need not be a member.
2. The explanatory Statement pursuant to section 102 of the Companies Act, 2013, in respect
of special resolution set out above is annexed hereto.

Annexure
Explanatory statement pursuant to section 102 of the Companies Act, 2013
[Explanatory statement to the resolution to be set out here]

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

472
Board of directors of Desire Ltd. Decides to go for creditors’ winding-up of the
company. For this purpose the Board decides to call an extraordinary general meeting
on 30th June, 2016. Draft a notice along with explanatory statement for convening the
meeting. Assume facts. CS (Executive) – June 2016

Young Indian Pvt. Ltd.

Registered Office : __________
CIN : _________ Website : __________
Phone No.: _____________ Fax :_________
NOTICE
Notice is hereby given that an extra-ordinary general meeting of the members of Young
Indian Pvt. Ltd. Shall be held at Registered Office of the Company at ……………….. on
30th june, 2016 at 11 AM to transact the following business :

SPECIAL BUSINESS :
1. To consider and if thought fit, to pass with or without modifications (s), if any, the
following resolution as special resolution:
“RESOLVED THAT pursuant to provisions of Section 304(b) of the Companies Act,
2013, the consent of the members of the company be and is hereby accorded to wind-up
the affairs of the company as the creditors voluntary winding-up w.e.f. ……………….”

1. 2. To Consider and if thought fit, to pass with or without modifications (s) , if any, the
following resolution as special resolution.
2.
“RESOLVED THAT pursuant to provisions of Section 304 (b) of the Companies Act,
2013, Mr. A, Chartered Accountant of Pune, on the panel of the central Government be
and is hereby appointed as the liquidator of the company for the purpose of the creditors
voluntary winding-up of the affairs of the company.”

RESOLVED FURTHER THAT subject to consent of creditors and committee of

inspection, the consent of the members of the company be and is hereby accorded to
sanction the remuneration of liquidator of Rs. 5,000 (Rupees five thousand only) in
addition to the actual out of pocket expenses for the winding-up of the affairs of the
company.

“RESOLVED FURTHER THAT Mr. A, the liquidator be and is hereby authorized to

exercise all the powers as per the provisions of the Companies Act, to effectively winding
up the affairs of the company.

3. To consider and if thought fit, to pass with or without modification (s), if any, the
following resolution as special resolution.
“RESOLVED THAT notwithstanding the appointment of liquidator the board of directors
of the company be and is authorized to exercise all the powers in consideration with the
liquidation of the company like filling up vacancy in the office of liquidator and such
other matter incidental to the liquidation of the Company.”
By the orders of the Board
Place : _________
Date : ___________ (Director)

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

473
 Notes :
a. A member entitled to attend and vote at the meeting, is entitled to appoint a proxy to
attend and vote instead of himself and the proxy need to be a member. Proxy in order to
be effective must be received by the company not less than 48 hours before the meeting.
b. Explanatory statement setting out the material facts in respect of Item Nos. 1 and 2 are
annexed hereto.
c. All documents referred to in the accompanying notice and explanatory statement are
open for inspection at the Registered Office of the company on all working days, except
Saturdays, between 11.00 Am to 1.00 AM.

Annexure to the notice

Explanatory statement pursuant to the provisions of Section 102 of the Companies

Act, 2013 in respect of the special business
Item Nos. 1 and 2
The Company was formed for the purpose of dealing chemicals,drugs,pharmaceuticals.
Initially the business of the company was quite remunerative and earned adequate profits
on capital invested but from last 4 four years the company is running into losses and
liabilities of the company are far more than assets of the company making it insolvent.
The boards of director of the company considered the matter and were of the opinion that
in view of non-availability of business prospectus and continues losses there is no
alternative but out put the company into voluntary winding-up. Since company is not
solvent and no declaration of solvency can be filed under the Companies Act, 2013 such
voluntary winding up has to be treated as creditor’s voluntary winding-up.
Since, it is creditor’s voluntary winding-up a separate meeting of creditors is also required
to be held and separate resolution is also required to be passed at the meeting of creditors.
Your approval is required to for the winding-up of the Company as given in Item No. 1.
Your approval is also required for appointment of Mr. A, as a liquidator of the company
at a remuneration of Rs. 5,000 (Rupees five thousand only ) in addition to the actual out
of pocket expenses.
None of the director and KMP of your company and their relatives are interested in the
pro-posed resolution, except to the extent of their shareholding in the company.
Place : _________ By the orders of the Board
Date : _____________ (Director)

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

474
MINUTES

Draft minutes of the First Board Meeting. Assume facts

MINUTES OF THE PROCEEDINGS OF THE FIRST MEETING OF THE BOARD OF

DIRECTORS OF XYZ LTD, HELD AT 11.00 A.M. AND CONCLUDED AT 1.30 PM ON
_______THE _______ AT THE REGISTERED OFFICE OF THE COMPANY, AT ………
The following were present :
1. Mr. R in the Chair
2. Mr. B, Director
3. Mr. C, Director

1. Appointment of Chairman
a) Of the meeting : Mr. A was unanimously elected Chairman of the meeting.
b) Of the company : As per Article 55 of the articles of Association of the Company, the
Board may appoint a Chairman of the Company. The Board considered and it was
“RESOLVED THAT pursuant to Article 55 of the Articles of Association, Mr. A be
and is hereby appointed as the Chairman of the Board.”

2. Certificate of Incorporation
The Certificate of Incorporation bearing CIN. ________,dated________ issued by the
Registrar of Companies, Pune was placed on the table and taken on record by the Board.

3. Memorandum and Articles of Association

A printed copy of the Memorandum and Articles of Association of the Company, as
registered with the Registrar of Companies, was placed before the meeting. The Board
noted and taken on records the same. The following resolution was passed:
“RESOLVED THAT printed copy of the Original Memorandum and Articles of
Association of the Company laid before the meeting, and perused be taken on record and
Mr. R, Director of the Company be directed to keep the original copy of the Certificate of
Incorporation in safe custody.”
4. First Directors
The meeting took note of the first directors named in Article 78 of the Articles of
Association of the Company. It was noted that giving consent to act as Director of the
company, had already been filed along with e-Form DIR-12 with the Registrar of
Companies. It was also noted that the directors have paid for the qualification shares in
accordance with the Articles of Association.
“RESOLVED THAT necessary intimation already given to this effect to the Registrar of
Companies by filing e-For, DIR-12 for appointment of Mr. R (DIN……….) Mr. B
(DIN……….) and Mr. C. (DIN………….) pursuant to Section 170 (2) of the Companies
Act, 2013 be and is hereby approved and confirmed as the First Directors of the Company
from the date of its incorporation.”
s
WORK HARD, DREAM BIG Shubhamm Sukhlecha
INSPIRE ACADEMY (CA, CS, BSL LLB)

475
 5. Registered Office
It was noted that the Registered Office of the Company will be at……………. The
intimation of which had already been given in the e-Form INC.22 to the Registrar of
Companies from the date of incorporation of the Company.

6. Financial Year
The Board discussed the matter of fixing the Accounting year of the Company. The
following resolution was passed:
“RESOLVED THAT the financial year of company be and is hereby fixed from 1 st
April to 31st March, of the following and subsequent years and the first year’s
accounts be prepared for the period commencing from the date of incorporation i.e.
………………. Upto and including 31st March, 2015.”

7. Adoption of Common seal

The art work of the common seal was produced before the meeting and it was-
“RESOLVED THAT the art work of the common seal as per impression shown below be
and is hereby approved, and Mr. B, Company Secretary be instructed to get the common
seal prepared and place it before the Board.”
8. Vote of thanks
The meeting ended with vote of thanks.
Place:
Date : CHAIRMAN

WORK HARD, DREAM BIG Shubhamm Sukhlecha

INSPIRE ACADEMY (CA, CS, BSL LLB)

476
 Lesson 2 Share Capital 109

ANNEXURE I

SPECIMEN OF THE BOARD RESOLUTION APPROVING THE REGISTRATION OF TRANSFER OF

SHARES

“RESOLVED THAT Registration of transfer of.......fully paid equity shares of the company as per details in the
register of share transfers of the company entered on page....to........, entries Nos......to.......(both inclusive),
which was placed before the meeting and each page was initialed by the chairman of the meeting as a mark
of identification, be and is hereby approved; and

RESOLVED FURTHER THAT Shri........................,Company Secretary be and is hereby authorized to endorse

the relevant share certificates under his signature, arrange for their dispatch to the transferees of the shares
and make appropriate entries in the register of members and other records of the company.”

ANNEXURE II

SPECIMEN OF BOARD RESOLUTION APPROVING REGISTRATION OF TRANSMISSION OF SHARES

“RESOLVED THAT Transmission of...........………no.s of fully paid equity shares of the company bearing
distinctive numbers…....to….….(both numbers inclusive) presently registered in the name of Shri

………………..who has been reported as deceased on………..……in the district of..………which is situated

in the state of…………, in the name of Shri ……………son of Shri ………………resident of

…………………………………….be and is hereby approved.

RESOLVED FURTHER THAT since the company has received a letter from the said Shri….………............,
intimating to the company that he has decided to have the said shares registered in his name, the said
shares be registered in his name; and

RESOLVED FURTHER THAT Shri........………………............,Company Secretary, be and is hereby authorized

to enter the name of the said Shri................……….....,in the register of members of the company and send
the relevant share certificates to him after appropriately endorsing them in his name.

ANNEXURE III

SPECIMEN OF SPECIAL RESOLUTION FOR ALTERATION OF ARTICLES OF ASSOCIATION OF THE

COMPANY TO INCLUDE AN ARTICLE AUTHORISING THE COMPANY TO HAVE ITS SECURITIES
DEMATERIALISED

“RESOLVED THAT pursuant to Section 14 of the Companies Act, 2013, the articles of association of the
company be and are hereby altered in the following manner:

After article No..., the following be inserted as article... :

Article...Dematerialization of Securities
A. Definitions:
For the purpose of this article:-
‘Beneficial Owner’ means a person or persons whose name is recorded as such with a depository. ‘SEBI’
means the Securities and Exchange Board of India.
‘Depository’ means a company formed and registered under the Companies Act, 2013, and which has been
146 EP-CL

ASSIGNMENT OF SHARES IN A COMPANY

Section 44 of the Companies Act, 2013 defines the nature of property in the shares of a company. It lays
down: “The shares or debentures or other interest of any member in a company shall be movable property,
transferable in the manner provided by the articles of the company.”

The definition of “goods” in the Sale of Goods Act, 1930, specifically includes stocks and shares. Hence, it is
necessary to provide by the articles the manner in which transfer of shares are to be affected.

A “share” in a company is a right to a specified amount of the share capital of the company, carrying with it
certain rights and liabilities, while the company is a going concern and in the winding up. It represents the
interest of the holder measured for purposes of liability and dividend by a sum of a money.

A company cannot refuse to transfer shares except as provided by its articles*. It is well settled that unless
the articles otherwise provide, a shareholder has a free right to transfer his shares to whom he chooses. It is
not necessary to look to the articles for a power to transfer, since that power is given by the Act. It is only
necessary to look to the articles of association to ascertain the mode of transfer and the restrictions upon it.

As between buyer (transferee) and seller (transferor) of shares, the buyer is entitled to all dividends declared
after the contract of sale, unless otherwise agreed. Whatever may be the agreement, a transfer of shares
after declaration of dividend, does not, as against the company, carry the dividend, even though the transfer
may be cum-dividend.

ANNEXURE I

Specimen Shareholders Agreement

THIS AGREEMENT made the day of , 2013 BETWEEN MR. A residing at _____________ (hereinafter
referred to as “A”) (which expression shall, unless repugnant to the context or meaning hereof, mean and
include his heirs, executors, administrators and assigns) of the First Part.

And

MR. B residing at (hereinafter referred to as “B”) (which expression shall, unless repugnant to the context
or meaning hereof, mean and include his heirs executors, administrators and assigns) of the Second Part.

And

(P) LTD., a Company incorporated under the Companies Act, 2013 and having its registered office at
herein represented by its (hereinafter referred to as “XYZ”) which expression shall,
unless repugnant to the context or meaning hereof, include its successors and assigns) of the Third Part;

WHEREAS:
(A) A and B hereto have agreed to jointly manage a company in India named “XYZ Pvt Ltd.”;
(B) A and B have agreed to become Equity Partners by investing in the shares of the Company subject
to the condition that they shall enter into a Shareholders Agreement in terms of these presents;
(C) The Company “XYZ PVT. LTD. “ has been requested to, and has agreed to, join in the execution of
these presents and to take this Agreement on record so that it is aware of the rights and obligations of
A AND B, the parties hereto and ensure that they comply with the same;
(D) The parties hereto are desirous of recording the terms and conditions of their Agreement in writing;
 Lesson 3 Members and Shareholders 147

NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-

1. (a) A and B shall jointly invest in the Company which is an existing company limited by shares under the
Companies Act, 2013 and known as “XYZ PVT LTD”.

(b)The registered office of the Company shall be situate at, or at such other places as may be mutually
agreed upon between the parties in writing.

(c) The Company shall carry on the business of running and managing restaurants and (Description of the
business and complete address), either by itself or through other agencies or company industries and may
carry on any other business as may be decided by B hereto and shall ensure that no other business activity
is undertaken by the Company at any time without the consent of A hereto.

2. The authorised share capital of the Company is Rs.______ /- (Rupees ___ ______ ______ only)
consisting of ( ) equity shares of Rs.10/- (Rupees ten) each.

3. The subscription by A hereto to the aforesaid authorised share capital of the Company shall be 1,00,000
(One lakh) equity shares of Rs.10/- (Rupees ten only) and the subscription by B to the aforesaid authorised
share capital of the Company shall be 1,00,000 (One lakh) equity shares of Rs.10/-(Rupees ten only).

4. There shall be no further issue of capital without the consent of both the parties hereto, and unless
otherwise agreed upon in writing further investment shall be as mutually decided by both parties.

5 (a) The Board of Directors of the Company shall consist of A and B

(b) A shall have the right to nominate two (2) Additional Directors onto the Board and B shall have the right
to nominate three or more Additional Directors on the Board. Both parties shall be entitled at any time to
remove any of the representatives on the Board by written notice to the other party and to appoint another or
other/s in their place.

(c) The day to day management of the Company shall be looked after by a Managing Director to be
appointed with the consent of B hereto. Any major acquisition of property, substantial expansion of business
activities or diversification or matters of policy shall be with the prior consent of B.

(d) It is agreed as between the parties hereto that the position of Chairperson of the Company shall be held
by B or a nominee of B. The Chairman of the Board shall also be the Chairman of all general meetings of the
Company.

6. A and B hereto jointly and severally shall vote and act as members of the Company and with respect to
the shares of the Company held by them, so as to ensure that Directors of the Company are at all times
appointed and maintained in office in conformity with the provisions of this Agreement. If at any time the
provisions of this Agreement are not fully complied with, A and B jointly and severally agree to promptly take
all necessary steps to ensure that the provisions of this Agreement hereof are fully implemented in letter and
spirit.
7 (a) The Auditors of the Company shall be M/s. .
(b) The Auditors of the Company shall not be changed without the prior written consent of both A and B.
8. Any sale or transfer of shares in the Company by either party shall be as provided in Clause
9. If at any time during the continuance of this Agreement either A or B, desire to sell or transfer all or any of
their respective shares held by them in the Company, they shall do so strictly in accordance with the
provisions hereinafter written.
148 EP-CL

10. If either A or B desires at any time to sell the whole or part of their shares in the Company, he shall first
offer such shares in writing to the other. If the other does not accept in writing the offer within 15 days of
receipt of the offer, the first party shall then be at liberty within 30 days thereafter to sell the shares so offered
to any other persons of its choice at the same price and on the same terms and conditions as contained in its
written offer to the other party hereto in the first instance, failing which the procedure contained in this sub-
clause will have to be repeated by a party desiring to sell his shares.
11. B will bring in further working capital to run an F & B Unit(s) at (Address of registered office). Bank had
advanced loans of about Rs. 1,10,00,000/-(Rupees One Crore Ten Lakhs Only) to XYZ which loans have to
be repaid by them. B will be bringing further moneys upto Rs. (Rupees Only) to repay the loan. The
Balance Rs. /- has been secured with the collateral security provided B. XYZ have entered into a
Management and Royalty Agreement with —————— (P) Ltd., for the operation and management of the F
& B unit(s) of XYZ and are entitled to receive their share of profit. A and B are equally entitled to this share of
profit being equal shareholders of XYZ. It is hereby agreed that A shall not be entitled to a percentage of the
profit which shall not exceed Rs. ———/-(Rupees Only) per month from XYZ out of his share of profit
subject to the terms contained herein and/or in any other document executed by him on behalf of XYZ. The
balance money attributable to A shall be utilized to repay the loans and interest outstanding to
____________ Bank, and the amount of Rs. /- brought in by B and interest thereon, and towards the
working capital brought in by B and interest thereon and any other loans of the XYZ. This arrangement will
continue till the entire sums (liabilities) together with the interest thereon have been repaid. However B will
be entitled to withdraw the profit attributable to his share.
12. B will be entitled to interest at the rate of 12% per annum on the sums brought in by him or his
Associates / concerns / businesses.
13. A and B agree and undertake not to disclose or divulge directly or indirectly to any third party any trade
or business secret or other secret or confidential information pertaining to the business, affairs or
transactions of each other or of the Company or of their clients or customers, that may have been disclosed,
imparted to or acquired by either of them from the other or from the Company.
14. A and B jointly and severally undertake:-
(a) that they shall ensure that they, their representatives, proxies and agents representing them at
general meetings of the shareholders of the Company shall at all times exercise their votes in such
manner so as to comply with, and to fully and effectually implement, the provisions of this
Agreement.
(b) that if any resolution is proposed contrary to the terms of this Agreement, the parties, their
representatives, proxies and agents representing them shall vote against it. If for any reason such a
resolution is passed, the parties will, if necessary, join together and convene an extraordinary,
general meeting of the Company in pursuance of section 100 of the Companies Act, 2013 for
implementing the terms of this Agreement.

15. A and B shall jointly and severally procure and/or ensure that the Director or Directors of its choice on
the board of the Company shall at all times fully and effectually implement and comply with (including by
exercise of voting rights at meetings of the Board or resolutions by circulation and on resolutions passed at a
meeting of any Committee of the Directors) the provisions of this Agreement.

16. If either A or B shall commit a breach of any of the terms or provisions of this Agreement and shall fail to
rectify such breach within Sixty (60) days from the receipt of written notice from the party complaining of the
breach, then the latter shall be entitled, without prejudice to its other rights and remedies under this
Agreement or at law, to terminate the Agreement recorded herein by written notice.
 Lesson 3 Members and Shareholders 149

17. No modification of alteration of this Agreement or any of its terms or provisions shall be valid or binding
on A and/or B unless made in writing duly signed by both.

18. This Agreement is personal to A and B and shall not be transferred or assigned in whole or in part by
either party without the prior written consent of the other.

19. If any dispute or difference shall at any time arise between A and B as to any terms, provisions or
matters contained herein on as to their respective rights, claims, duties or liabilities hereunder or otherwise,
howsoever in relation to or arising out of or concerning this Agreement, such dispute or difference shall be
referred to the arbitration. The venue of such arbitration shall be in Bangalore unless otherwise agreed in
writing. Such arbitration shall be held under and in accordance with the provisions of the Arbitration and
Conciliation Act, 1996.

20. This Agreement represents the entire agreement between the parties hereto on the subject matter hereof
and cancels and supersedes all prior agreements, arrangements or understandings, if any, whether oral or in
writing, between the parties hereto on the subject matter hereof.

IN WITNESS WHEREOF the parties hereto have executed these presents the day and year first
hereinabove written.

SIGNED AND DELIVERD SIGNED AND DELIVERD

for and on behalf of XYZ in the presence of

By its SHAREHOLDERS AND AUTHORISED DIRECTORS ……… Signed and delivered by Mr B

Mr. A In presence of ……..

Mr. B
In presence of ……..

ANNEXURE II

A Specimen of Deed of Assignment of Shares in a Company

THIS ASSIGNMENT is made this ……………… day of …………………… between AB, son of
……………, resident of………………………… (hereinafter called “the Assignor”) of the one part, and CD, son
of…………………………, resident of ………………… (hereinafter called “the Assignee”) of the other part.

THE DEED WITNESSES:

That in consideration of the sum of Rs………………… (Rupees…………………) paid by the assignee to the
assignor, the receipt whereof the assignor hereby acknowledges, the said AB hereby assigns, sells and
transfers to the said CD………………… Equity Shares of Rs………………… each, fully paid up, bearing
consecutive Nos……………… to………………… (inclusive), which stand in the name of the assignor in the
Register of Members of…………………… Co. Ltd. TO HOLD the same to the assignee absolutely, subject
nevertheless to the conditions on which the assignor held the same up to date.

AND the assignee hereby agrees to take the said Equity Shares subject to such conditions.

IN WITNESS WHEREOF the assignor and the assignee do hereto affix their respective signatures on the
day, month and the year stated above.
150 EP-CL

Witness:

Assignor

Witness:

Assignee

LESSON ROUND-UP
• A Company is composed of members, though it has its own entity distinct from members.
• Every shareholder is a member and every member is a shareholder, however, there may be exceptions to this
statement.

• Section 2(55) of the Companies Act, 2013 provides the modes by which a person may acquire membership of
a Company.
- by subscribing to the Memorandum,
- by agreeing in writing to become a member,
- by holding equity share capital of a Company as beneficial owner in the records of a depository.

• A non-profit making Company licensed under Section 8 of the Companies Act can become member of any
other company.

• Foreigners, trade unions can hold shares in a company, and consequently become its members.
• Person ceases to be a member when his name is removed from register of members of a company.
• In accordance with Section 88, every Company shall keep register of its members. This register shall be kept
at the registered office of the Company subject to the provisions of Section 94 of the Companies Act, 2013.

• Every member of a public company limited by shares, holding equity shares, shall have votes in proportion to
his share of the paid-up equity share capital of the company. On the other hand, preference shareholders
ordinarily vote only on matters directly relating to rights attached to preference share capital and on any
resolution for winding up of the company or for the repayment or reduction of the equity or preference share
capital.

GLOSSARY
Ipso facto By that very fact or act.
Minor Person below the age of majority.
Estoppel The principle that precludes a person from asserting something contrary to what is
implied by a previous action or statement of that.
Cessation of A person ceases to be a member of a company when his name is removed from its
membership
register of members.
Joint Members If more than one person apply for shares in a company and shares are allotted to
them, each one of such applicant becomes a member.
Insolvent Insolvency is the inability of a debtor to pay their debt. If a person is unable to pay his
debt, he is said to be insolvent.
202 EP-CL

10. Incorporate changes in relation to creation, modification and satisfaction of charge in the register of
charges maintained by the company in Form No. CHG.7 and enter therein particulars of all the
charges registered with the Registrar on any of the property, assets or undertaking of the company
and the particulars of any property acquired subject to a charge as well as particulars of any
modification of a charge and satisfaction of charge. Such register is to be kept at the registered
office of the company.

11. All the entries in the register shall be authenticated by a director or the secretary of the company or
any other person authorised by the Board for the purpose.

12. The register of charges shall be preserved permanently and the instrument creating a charge or
modification thereon shall be preserved for a period of eight years from the date of satisfaction of
charge by the company.

13. Where the satisfaction of the charge is not filed with the Registrar within thirty days from the date on
such payment of satisfaction, an application for condonation of delay shall be filed with the Central
Government in Form No.CHG-8 along with the fee as prescribed under Annexure ‘B’ of Companies
(Registration Offices and Fees) Rules, 2014.

14. Where the instrument creating or modifying a charge is not filed with the Registrar within a period of
three hundred days from the date of its creation (including acquisition of a property subject to a
charge) or modification an application for condonation of delay shall be filed with the Central
Government in Form No.CHG-8 along with the fee as prescribed under Annexure ‘B’ of Companies
(Registration Offices and Fees) Rules, 2014.

15. The order passed by the Central Government shall be required to be filed with the Registrar in Form
No.INC.28 along with the fee as per the conditions stipulated in the said order.

16. For all other matters other than condonation of delay, application shall be made to the Central
Government in Form No.CHG-8 along with the fee.

ANNEXURES

(1) Specimen of special resolution under Section 180 (3) (c) authorising the Board to borrow for
company’s business upto a limit beyond paid up capital and free reserves

Special resolution

To consider and, if thought fit, to pass with or without modification(s), the following resolution as
Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 180(3)(c) and other applicable provisions, if any, of
the Companies Act, 2013, and subject to such approval as may be necessary, consent of the company be
and is hereby accorded to the Board of directors of the company for borrowing, from time to time, such sum
of money as may not exceed Rs. .................................. (Rupees ................................................................),
for the purpose of the business of the company, notwithstanding that the moneys to be borrowed together
with the monies already borrowed (apart from temporary loans obtained from the company’s bankers in the
ordinary course of business) will exceed the aggregate of the paid-up capital of the company and its free
reserves, that is to say, the reserves not set apart for any specific purpose, provided that the total amount
upto which the monies may be borrowed by the Board of directors of the company shall not exceed the
 Lesson 5 Charges 203

aggregate of the paid-up capital and free reserves of the company by more than the sum of
Rs........................................ (Rupees ............................................................................................) at any one
time.

Resolved further that the Board be and is hereby authorized to do all the acts, deeed and things as it may in
its absolute discretion deem necessary and appropriate to give effect to the above resolution”

Explanatory Statement

The shareholders of the company had, at the extraordinary general meeting of the company held on

........................, passed a special resolution under Section 180 (3) (c) for borrowing the maximum amount of
Rupees ........................, upto which the Board of directors of the company could borrow funds from financial
institutions and banks in excess of the company’s paid-up capital and free reserves. However, in view of the
increased business activities of the company, the said ceiling of Rupees (........................) has been found to
be inadequate. Your directors are of the opinion that the ceiling of borrowings by the Board be raised to
rupees one hundred crore.

Hence the proposed resolution for consideration and approval by the members of the company. None of the
directors is concerned or interested in the proposed resolution.

(2) Specimen of resolution under Section 180(1)(a) for creating charge on company’s assets and
properties

1. To consider and, if thought fit, to pass with or without modification(s), the following as Special
Resolution;

“RESOLVED THAT consent of the Company be and is hereby accorded in terms of Section 180(1) (a)
and other applicable provisions, if any, of the Companies Act, 2013 or any modification or re-enactment
thereof, to mortgaging and/or charging by the Board of directors of the Company by way of equitable
and/or legal mortgage on such immovable and movable properties of the Company, both present and
future, together with power to takeover the assets of the Company in certain events, to or in favour of
Industrial Development Bank of India (IDBI) and The Industrial Finance Corporation of India Ltd. (IFCI)
by way of first pari passu Charge to secure the Rupee Term Loans of `1000.00 lacs and ` 880.00 lacs
respectively granted to the Company together with interest at the agreed rate(s), liquidated damages,
front end fees, premia on pre payment, costs, charges, expenses and all other moneys payable by the
Company under the Loan Agreements, Deeds of Hypothecation and other documents executed/to be
executed by the Company in respect of the Term Loans of IDBI and IFCI.

RESOLVED FURTHER THAT the Board of directors be and is hereby authorised and shall always be
deemed to have been authorised to finalise with IDBI and IFCI the documents for creating the aforesaid
mortgage and/ or charge and to do all acts, deeds and things as may be necessary for giving effect to
the above resolution.”

2. To consider and, if thought fit, to pass with or without modification(s), the following as Special
Resolution;

“RESOLVED THAT consent of the Company be and is hereby accorded in terms of Section 180(1)(a)
and other applicable provisions, if any, of the Companies Act, 2013 or any modification or re-enactment
thereof, to mortgaging and/or charging by the Board of directors of the Company by way of equitable
and/or legal mortgage on such immovable and movable properties of the Company, both present and
204 EP-CL

future, in favour of State Bank of India, New Delhi the Company’s Bankers by way of Second Charge to
secure the various fund based/non-fund based credit facilities granted/to be granted to the Company
and the interest at the agreed rate, costs, charges, expenses and all other moneys payable by the
Company under the Deed(s) of Hypothecation and other documents executed/to be executed by the
Company in respect of credit facilities of State Bank of India, in such form and manner as may be
acceptable to State Bank of India.

RESOLVED FURTHER THAT the Board of directors be and is hereby authorised and shall always be
deemed to have been authorised to finalise with State Bank of India the documents for creating the
aforesaid mortgage and/or charge and to do all acts, deeds and things as may be necessary for giving
effect to the above resolution.”

Explanatory Statement Item No. 1 & 2

Industrial Development Bank of India (IDBI) and The Industrial Finance Corporation of India Ltd. (IFC) have
sanctioned Term Loans of `1000.00 lacs and `880.00 lacs respectively to the company. These loans are to
be secured by First Charge on immovable and movable properties of the Company, both present and future,
in the manner, as may be required by IDBI and IFCI. Such mortgage/charge shall rank first pari passu
Charge with the Charges already created/to be created in favour of the participating Institutions/Banks for
their assistances.

State Bank of India, New Delhi has also agreed to grant, in principle, various fund based/non-fund based
Cash Credit facilities to the Company. According to the conditions of granting such facilities to the Company,
these facilities are required to be secured by a second charge by way of equitable and/or legal mortgage on
all the immovable and movable properties of the Company, both present and future on such terms as may be
agreed to between the Company, State Bank of India and other existing lenders.

Section 180(1)(a) of the Companies Act, 2013 provides, inter alia, that the Board of directors of a public
company shall not, without the consent of a public company in general meeting, sell, lease or otherwise
dispose of the whole, or substantially the whole, of the undertaking(s) of the Company or where the
Company owns more than one undertaking, of the whole or substantially the whole of any such undertaking.
Mortgaging/charging of the immovable and movable properties of the Company as aforesaid to secure
Rupee Term Loans and the various Cash Credit facilities may be regarded as disposal of the whole or
substantially the whole of the said undertaking(s) of the Company and therefore requires consent of the
Company pursuant to Section 180(1)(a) of the Companies Act, 2013.

The Directors recommend the resolutions for approval of the shareholders as ordinary resolutions under
Section 180(1)(a) of the Companies Act, 2013.

None of the Directors are concerned or interested in the proposed resolutions.

(3) Specimen of the Board Resolution under Section 179(3)(d) to borrow Moneys within the
authority of the Board.

The Chairman informed the Board that The Industrial Finance Corporation of India Ltd. (IFCI), New Delhi,
has at the request of the company, sanctioned Rupee Term Loan of Rs................................................ to
meet a part of the cost of Modernisation-cum-Expansion scheme comprising replacement of the existing old
stainless steel Distillation plant by copper Distillation Plant, installation of an additional MS Digester and
construction of storage lagoons as stipulated by the Pollution Control Board at the Company’s existing
factory at .......................
 Lesson 5 Charges 205

A copy of the letter of sanction no................. dated ............... received from IFCI (a copy whereof duly signed
by the Chairman for the purpose of identification was placed on the table of the meeting).

After some discussions, the following resolution was passed unanimously:-

(I) RESOLVED
1. That the Company do accept the offer of The Industrial Finance Corporation of India Ltd. (IFCI) vide
their letter no.............. dated ........................ to grant to the company rupee term loan of ‘............
(Rupees............................. only) (hereinafter referred to as ‘the said Term Loan’) on the terms and
conditions contained in the Letter of Intent no ..................... dated .................. received from IFCI
(copy whereof was placed on the table at the meeting).
2. That Shri......................... and Shri .................... be and are hereby authorised severally to convey to
IFCI acceptance on behalf of the Company of the said offer for financial assistance on the terms
and conditions contained in their Letter of Intent referred to above and agree to such changes and
modifications in the said terms and conditions as may be suggested and acceptable to IFCI from
time to time and to execute such deeds, documents and other writings as may be necessary or
required for this purpose.
3. That the company do borrow from IFCI the said term loan of ‘................. (Rupees......................
only) on the terms and conditions set out in the General Conditions No. GC-1-99 applicable to
assistance provided by IFCI (hereinafter referred to as ‘The General Conditions’) and in the
Standard Form of Loan Agreement for rupee term loan in addition to the special terms and
conditions mentioned in the Letter of Intent no....................... dated ................. received from IFCI
(Copies whereof were placed on the table at the meeting) and also avail of interim disbursement(s)
from time to time as may be allowed by IFCI.
4. That the IFCI will be at liberty to appoint and remove, at its sole discretion, Nominee Director(s) on
the Board of directors of the Company from the date of the passing of this resolution and that the
appointment of the Nominee director(s) shall not be construed as any commitment on the part of
IFCI to grant/ disburse and sanctioned assistance.
5. That the aforesaid Standard Forms of Loan Agreement(s) be and are hereby approved and
Shri....................... and Shri........................ be and are hereby severally authorised to accept on
behalf of the Company such modifications therein as may be acceptable to IFCI and finalise the
same.
6. That the Common Seal of the Company be affixed to the stamped engrossment(s) in duplicate of
the loan agreement(s) (as per the standard form(s) with such modifications as may be agreed to
between IFCI and the company) in the presence of one of the officers i.e. Shri ........................... and
Shri ................... who shall sign the same in token thereof.
7. That the Company shall execute the Loan Agreement(s) relating to the above facilities within the
period stipulated by IFCI, the condition being that till such agreement being executed there is no
binding obligation or commitment on the part of IFCI to advance any money or incur any obligation
thereunder.
8. That the standard forms of the following documents namely:
(i) Deed of Hypothecation
(ii) Undertaking for meeting shortfall/overrun
206 EP-CL

(iii) Undertaking regarding non-disposal of shareholdings

(iv) General Declaration and Undertaking(s) placed before the meeting be and are hereby approved
and that Shri....................... of the Company be and are hereby severally authorised to finalise,
on behalf of the company, the said documents and also to approve and finalise such other
deeds, documents and writings as may be required by IFCI in connection with the above
facilities.
9. That the Common Seal of the Company be affixed to the stamped engrossment(s) of the Deed of
Hypothecation and to such other documents as may be required to be executed under the Common
Seal of the company in favour of IFCI to secure the aforesaid facilities in the presence of one of the
officers i.e. Shri ............................... and Shri........................... who shall sign the same in token
thereof.
10. That Shri................................. and Shri................................ of the Company be and are hereby
severally authorised to accept amendments to such executed loan agreement/deed of
hypothecation and other documents as and when become necessary and to sign letter(s) of
undertakings, declarations, agreements and other papers which the company may be required to
sign for availing of the required facilities and, if so required, the Common Seal of the Company be
affixed thereto in the presence of any one of the said officers, who shall sign the same in token
thereof as required by the Articles of Association of the Company.
11. That the company do file the particulars of the charge(s) to be created in favour of the IFCI with the
concerned Registrar of Companies within the time prescribed by law therefor.
12. That the copies of foregoing resolutions certified to be true copy by the Company Secretary be
furnished to the IFCI and they be requested to act thereon.

LESSON ROUND UP
• A charge is a right created by any person including a company referred to as “the borrower” on its
assets and properties, present and future, in favour of a financial institution or a bank, referred to as “the
lender”, which has agreed to extend financial assistance. The power of the company to borrow includes
the power to give security also.

• Mortgage is created by the act of parties whereas a charge may be created either through the act of
parties or by operation of law.

• A company is required to file e-form CHG-1 or CHG-2 through MCA portal giving complete particulars
together with the instrument creating charge within 30 days of creation of charge under Section 77 of
the Companies Act, 2013.

• For intimating modification of charge, e-form CHG-1 or CHG-2 is required to be filed within 30 days of
modification. A variation in the rate of interest payable on the loan amount by the borrowing company to
the lending institution or the bank will constitute a modification of charge, unless the terms of variation
are covered in the original charge.

• A registration of charge constitutes a notice to whosoever acquires a future interest in the charged
assets.

• In e-governance era, there is a facility for inspection of charge through electronic means using internet.
• The certificate issued by the Registrar whether incase of registration of charge or registration of
modification, shall be conclusive evidence that the requirements of Chapter VI of the Act(Registration of
 Lesson 6 Distribution of Profits 227

client ID, certificate number, beneficiary details etc. of the persons in respect of whom unpaid or unclaimed
amount has remained unpaid or unclaimed for a period of seven years and has been transferred to the Fund
and the Authority shall have the powers to inspect such records.

ANNEXURES
ANNEXURES-I

SPECIMEN OF BOARD RESOLUTION FOR DECLARATION OF INTERIM DIVIDEND ON

EQUITY SHARES

RESOLVED THAT an interim dividend of Rs. 2 (Rupees two) only on each fully paid.............no. of equity
shares of Rs.10 (Rupees ten) each of the company amounting to Rs.........................be paid out of the profits
of the company for the half year ended..............2014 to those members of the company whose names would
appear on the register of members of the company on the................day of.............., 2014.

RESOLVED FURTHER THAT a bank account to be designated as “Interim Equity Dividend (2015) Account
of ..........................Limited” be opened in the name of the company with..............Bank at its Branch
at................ and a sum of Rs..................,being the total interim dividend amount, be deposited in the said
account within five days.

RESOLVED FURTHER THAT Shri........................................., Managing Director and

Shri..............................., the Company Secretary be and are hereby authorized to open the bank account by
signing the account opening form and by furnishing to the said bank the required papers, documents,
information etc. and completing all other required formalities for the purpose of opening the bank account
and to make arrangements with the said bank for the payment at par, of the interim dividend within thirty
days from the date of this resolution.

RESOLVED FURTHER THAT Shri........................................., Managing director and

Shri......................................., Company Secretary of the company for the time being, be and are hereby
authorized to jointly sign the dividend warrants to be issued on the said bank and the said bank be and is
hereby authorized to honour the interim dividend warrants jointly signed by the said authorised signatories,
as and when presented for encashment.

ANNEXURE-II

SPECIMEN OF BOARD RESOLUTION FOR DECLARING INTERIM DIVIDEND ON

PREFERENCE SHARES

RESOLVED THAT dividend at the fixed rate of 8 per cent per annum on the (no. of shares) cumulative
redeemable preference shares of Rs.100 each of the company, for the six months commencing from July
1,.........2014 and ending on December 31,.........2014......aggregating Rs.............., be paid to the registered
holders thereof whose names would appear on the register of holders of the said shares on
the...................2014, the date of commencement of the closure of the share transfer books of the company.

RESOLVED FURTHER THAT a bank account to be designated as “Interim Preference Dividend (2015)
Account of................Limited” be opened in the name of the company with...............Bank at its Branch
at..............and a sum of Rs. .............,being the total interim dividend amount, be deposited in the said
account.

RESOLVED FURTHER THAT Shri...................., Managing Director and the Company Secretary,
228 EP-CL

Shri................., be and is hereby authorized to open the bank account by signing the account opening form
and by furnishing to the said bank the required papers, documents, information etc. and completing all other
required formalities for the purpose of opening the bank account and to make arrangements with the said
bank for the payment at par, of the interim dividend within 30 days from the date of this resolution.

RESOLVED FURTHER THAT Shri.............., Managing director and Shri..........,Company Secretary of the
company for the time being, be and are hereby authorised to jointly sign the dividend warrants to be issued
on the said bank and the said bank be and is hereby authorized to honour the interim dividend warrants
jointly signed by the said authorized signatories, as and when presented for encashment.

Name of Company:........................ Registered Office:........................

ANNEXURE-III

NOTICE OF BOOK CLOSURE

Notice

Pursuant to Section 91 of the Companies Act, 2013 and the applicable clauses of the SEBI(LODR)
Regulations, 2015, notice is hereby given that the register of members and the share transfer register of the
company will remain closed, for the purpose of payment of interim dividend/final dividend, from the...........th
day of.................(month),

................2014 to the.............th day of..................2015 (both days inclusive).

Members of the company are requested to intimate to the company at its registered office above, their latest
postal addresses, where the interim dividend warrants may be sent by the company.

Place:....................... For.................Limited

Date:....................... (..................................)

New Delhi-110 001. Company Secretary

Messrs........................ Advertising Agents,

Note for publication

Please arrange for the publication of the above company notice in the earliest editions of..........................,
English daily newspaper and..........................,Hindi daily newspaper, not later than the.........th day of...........,

2014. Kindly ensure that the Hindi newspaper must carry the notice in Hindi language after it is appropriately
translated into Hindi.

For Limited

Dated…….. (…………………..)

Company Secretary
 Lesson 6 Distribution of Profits 229

ANNEXURE-IV

SPECIMEN OF BOARD RESOLUTION RECOMMENDING PAYMENT OF DIVIDEND ON

EQUITY SHARES OUT OF CURRENT PROFITS
“RESOLVED THAT in accordance with the provisions of Section 123 and other applicable provisions, if any,
of the Companies Act, 2013 and the Companies (Declaration and Payment of Dividend) Rules, 2014, the
Board of directors of the company do hereby recommend a dividend at the rate of Rs...................per equity
st
share out of the current profits of the company for the year ended on 31 March 2014 on the....................
fully paid equity shares of the company absorbing Rs....................out of the profits of the year and that,
subject to the declaration by the members of the company at the ensuing annual general meeting, such
dividend be paid to the registered holders of the equity shares whose names would appear on the register of
members on............2014.”

ANNEXURE-V

SPECIMEN EXTRACTS OF MINUTES CONTAINING THE BOARD RESOLUTION FOR

RECOMMENDING DECLARATION OF DIVIDEND OUT OF RESERVES
The Chairman informed the meeting that the profits of the current year, i.e. the financial year ended on the
st
31 March, 2014 are inadequate for payment of a reasonable amount of dividend to the members of the
company

He further informed that the free reserves of the company do, however, permit the distribution of dividend
not exceed the average of the rates at which dividend was declared by it in the three years immediately
preceding that year.

The directors considered the matter and passed the following resolution:

RESOLVED THAT the Board of directors of the company do hereby recommend to the members of the
company, the declaration and payment of a dividend at the rate of ten per cent on all the fully paid equity
shares of the company out of the free reserves of the company that stood in the books of the company
on............2014 absorbing a total of`............,with due compliance of the Companies (Declaration and
Payment of Dividend) Rules, 2014, and that, subject to the declaration by the members at the forthcoming
annual general meeting, to the holders of the equity shares whose names will appear on the register of
members on...........2014.

LESSON ROUND- UP
• Under Section 2(35) of the Companies Act, 2013, ‘dividend’ includes any interim dividend.
• Dividend is the share of the company’s profit distributed among the members.
• The Board may declare interim dividend during any financial year out of the surplus in the Profit and
Loss Account at any time between two AGM of the company.
• Final Dividend means a Dividend which declared at the Annual General Meeting of the company.
• In case of inadequacy of profits the company can declare the dividend with accordance with the Rule 3
of Companies (Declaration and Payment of Dividend) Rules 2014.
• The amount of dividend shall be deposited in a schedule bank in a separate account within 5 days from
the date of declaration.
• Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the
payment of dividend.