Section 4 of Companies Act, 2013

Section 4 of Companies Act, 2013

Memorandum.

1.     The memorandum of a company shall state—

a.     the name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company:

Provided that nothing in this clause shall apply to a company registered under section 8;

b.    the State in which the registered office of the company is to be situated;

c.     the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof;

d.    the liability of members of the company, whether limited or unlimited, and also state,—

                      i.        in the case of a company limited by shares, that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and

                     ii.        in the case of a company limited by guarantee, the amount up to which each member undertakes to contribute—

A.    to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and

B.    to the costs, charges and expenses of winding-up and for adjustment of the rights of the contributories among themselves;

e.     in the case of a company having a share capital,—

                      i.        the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount and the number of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and

                     ii.        the number of shares each subscriber to the memorandum intends to take, indicated opposite his name;

f.     in the case of One Person Company, the name of the person who, in the event of death of the subscriber, shall become the member of the company.

2.     The name stated in the memorandum shall not—

a.     be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or

b.    be such that its use by the company—

                      i.        will constitute an offence under any law for the time being in force; or

                     ii.        is undesirable in the opinion of the Central Government.

3.     Without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains—

a.     any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or

b.    such word or expression, as may be prescribed, unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

4.     A person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as—

a.     the name of the proposed company; or

b.    the name to which the company proposes to change its name.

5.    

              i.        Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of sixty days from the date of the application.

             ii.        Where after reservation of name under clause (i), it is found that name was applied by furnishing wrong or incorrect information, then,—

a.     if the company has not been incorporated, the reserved name shall be cancelled and the person making application under sub-section (4) shall be liable to a penalty which may extend to one lakh rupees;

b.    if the company has been incorporated, the Registrar may, after giving the company an opportunity of being heard—

                      i.        either direct the company to change its name within a period of three months, after passing an ordinary resolution;

                     ii.        take action for striking off the name of the company from the register of companies; or

                    iii.        make a petition for winding up of the company.

8.     The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company.

9.     Any provision in the memorandum or articles, in the case of a company limited by guarantee and not having a share capital, purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void.

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Section 4 of Companies Act, 1956

Meaning of " holding company " and " subsidiary".

(1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if,

(a) that other controls the composition of its Board of directors ; or

(b) that other -

(i) where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company ;

(ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital ; or

(c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary.

Illustration

Company B is a subsidiary of company A, and company C is a subsidiary of company B. Company C is a subsidiary of company A, by virtue of clause (c) above. If company D is a subsidiary of company C, company D will be a subsidiary of company B and consequently also of company A, by virtue of clause (c) above, and so on.

(2) For the purposes of sub-section (1), the composition of a company's Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships ; but for the purposes of this provision that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say -

(a) that a person cannot be appointed thereto without the exercise in his favor by that other company of such a power as aforesaid ;

(b) that a person's appointment thereto follows necessarily from his appointment as director, or manager of, or to any other office or employment in, that other company ; or

(c) that the directorship is held by an individual nominated by that other company or a subsidiary thereof.

(3) In determining whether one company is a subsidiary of another

(a) any shares held or power exercisable by that other company in a fiduciary capacity shall be treated as not held or exercisable by it ;

(b) subject to the provisions of clauses (c) and (d), any shares held or power exercisable

(i) by any person as a nominee for that other company (except where that other is concerned only in a fiduciary capacity) ; or

(ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity ;

shall be treated as held or exercisable by that other company ;

(c) any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded ;

(d) any shares held or power exercisable by, or by a nominee for, that other or its subsidiary not being held or exercisable as mentioned in clause (c) shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable as aforesaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

(4) For the purposes of this Act, a company shall be deemed to be the holding company of another if, but only if, that other is its subsidiary.

(5) In this section, the expression " company " includes any body corporate, and the expression " equity share capital " has the same meaning as in sub-section (2) of section 85.

(6) In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not.

(7) A private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of a public company if the entire share capital in that private company is not held by that body corporate whether alone or together with one or more other bodies corporate incorporated outside India.