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Company Law
Notes The certificate or letter of allotment relating to the shares or securities in which investments
have been made by a company shall, except in cases (4) to (7) referred to above, be in the custody
of the company or with the State Bank of India, or a Scheduled Bank, being the bankers of the
company.
13.1.3 Register of Investments not Held in the Company’s Own Name
Where any shares or securities in which investments have been made by a company are not held
by it in its own name, the company shall enter in a register maintained by it for the purpose:
(a) the nature, value and such other particulars as may be necessary fully to identify the shares
or securities in question; and (b) the bank or person in whose name or custody the shares or
securities are held. The register shall be open to the inspection of any member or debenture
holder of the company. If any inspection of the register is refused, the Central Government may,
by order, direct an immediate inspection of the register.
If default is made in complying with s.49, the company and every officer of the company who is
in default, shall be punishable with fine which may extend to 50,000.
Self Assessment
Fill in the blanks:
1. ........................................ includes any property or right in which money is put.
2. All investments made by a company on its own behalf shall be made and held by it in its
.......................................
3. A company may deposit, or transfer to, or hold in the name of, the State Bank of India or
a Scheduled Bank, being the bankers of the company, ..............................., in order to facilitate
the transfer thereof.
4. Securities include ............................... and debentures.
13.2 Borrowing
13.2.1 Power of a Company to Borrow
Every trading company has an implied power to borrow but it is wise to include an express
power to borrow in the objects clause of the Memorandum. Non-trading companies, however,
must be expressly authorised to borrow by their Memorandum.
A power to borrow, whether express or implied, includes the power to charge the assets of the
company by way of security to the lender.
The Companies Act does not expressly empower companies to borrow money. Therefore, most
of the companies expressly provide for such borrowing powers in the Memorandum. In such
cases, where Memorandum authorises the company to borrow, the Articles provide as to how
and by whom these powers shall be exercised. It may also fix up the maximum amount which
can be borrowed by the company.
Exercise of Borrowing Powers
A public company cannot exercise its borrowing powers until it secures the certificate to
commence business [s.149 (1)]. A private company may, however, exercise the borrowing powers
immediately after its incorporation.
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