(c)      a provident society incorporated as a company,

(d)      an investment company, or

(e)      a company in which foreign capital is associated wholly or partly, if the value of the consideration involved in such issues does not exceed, [ten million Rupees] shall, subject to compliance with the conditions set forth in schedule to this Order, be exempt from the provisions of Sections 3, 4 and 5.

(2)      Exemption under sub-paragraph (1) shall not apply to a company which n -gleets or fails to comply with such direction, not inconsistent with the provisions of this Order, as the Controller of Capital Issues may, by order in the official Gazette, give either in respect of companies generally or any class or group of companies or any particular company as may be specified in the order.

 

SCHEDULE

 PART I

APPLICABLE TO ALL COMPANIES

 

1.       All the shares or debentures [or Participation Term Certificates] shall be of the same denomination and shall confer equal rights on all the shareholders or debenture-holders.

2.       No premium or entrance fee shall be charged on the securities nor shall any security be issued at a discount.

3.       Borrowing against mortgage of assets including finished goods, raw materials and promissory notes shall not at any stage exceed fifty per cent. of the capital.

4.      Where assets are taken over from any person other than a regular dealer, no consideration shall be paid-

(a)      which exceeds the cost of assets to the vendor as reduced by normal depreciation,

(b)      which includes, in any form, any payment for good will or other intangible asset, and

(c)      without obtaining a certificate from a Chartered Accountant, to the effect that the amount of consideration does not exceed the limit in clause (b).

5.       Omitted as per S.R.O. 10(1)/80 dated 26th June, 1980.

6.       The Chief Executive by whatever name called, and other directors who are sponsors or promoters and air directors who are rendering extra service may be paid such remuneration as the company in general meeting may determine:

Provided that, if a company incurs a loss for a continuous period of three years, or its directors are receiving remuneration or perquisites disproportionate to he profits that are shared with outside shareholders, the Controller of Capital Issues may, for such period as he may specify from time to time, fix the remuneration and perquisites of the Chief Executive the directors who are sponsors or promoters and any directors rendering extra services who are relative of any of the former.

Explanation. 'Relatives' in relation to a sponsor or promoter, includes the spouse or a brother or sister or any of the lineal ascendants or descendants of the sponsor or promoter.

7.       Remuneration paid for attending meeting of the Board to persons other than the regularity paid Chief Executive and full time working directors shall not exceed five hundred rupees per meeting.

8.       The minimum qualification of a Director shall be the holding of shares of such amount: calculated at the rate of one thousand rupees for each one lakh rupees of capital or part thereof and no person who holds shares or represents interests holding shares of such amount shall be disqualified from being a Director.

9.       Brokerage shall not exceed one per cent. of the paid up value of the shares sold through a broker.

10.      No bonus share shall be issued by any company other than a company whose securities are listed on a Stock Exchange unless a certificate has been obtained from a Chartered Accountant to the effect that the free reserves and surpluses retained after the issue of bonus shares will not be less than 25 per cent. of the increased capital.

11.     Simultaneously, with the issue of capital without the consent require; by Section 3 as permitted by the Capital Issues (Exemption) Order, 1967 a report alongwith a copy of the Memorandum and Articles of Association shall be submitted to the Controller of Capital Issues showing therein the amount of capital raised and certifying that all the requirements of the said Order were complied with before the issue of the capital.

12.     Directors' report and audited accounts of each year shall be furnished to the Controller of Capital Issues for information.

13.    Depreciation stall be charged at not less than normal rates' as provided under the Income-tax Act, 1922 (XI of 1922) and the rules made thereunder.

 

PART II

APPLICABLE TO PUBLIC COMPANIES ONLY

 

1.         Underwriting commission shall not exceed two and-a-half per cent of the amount actually underwritten out of the shares offered for subscription to the general public.

2.         Before the issue of further shares under Section 105-C of the Companies Act, 1913 (VII of 1913), a certificate shall be obtained from a Chartered Accountant to the effect that at the time of such issue the company was listed on the Stock Exchange and that it satisfied the requirement of Section 23-A of the Income-tax Act, 1922 (XI of 1922).

3.         If it is desired to raise any part of the capital from the general public, 50 per cent. of the capital at par shall be offered to the general public and the National Investment Trust and prior approval of the Controller of Capital Issues be obtained to the proposed issue and to the prospectus which may be subjected to such conditions as he may consider appropriate.

4.        The qualification of a director shall be his holding shares to the value of not less than five thousand rupees in his own name, relaxable in the case of a director representing interest holding shares of the requisite value.

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