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Company Law

Notes complaint, but the court would be prepared to make a winding up order on the ground that it is
just and equitable that the company should be wound up.
An application may also be made under s.398 to the Company Law Board by any members of a
company who complain that– (i) the affairs of the company are being conducted in a manner
prejudicial to public interest or in a manner prejudicial to the interest of the company; or (ii) a
material change has taken place in the management or control of the company and that by
reason of such change, it is likely that the affairs of the company will be conducted in a manner
prejudicial to public interest or in a manner prejudicial to the interests of the company.
After hearing the petition, the Company Law Board may pass such order as it thinks fit.

Persons Entitled to Complain

Section 399 specifies the persons who are entitled to apply to the Company Law Board, for relief
in cases of oppression and mismanagement complained of in pursuance of Ss.397-398. The
numbers necessary to make such application is: (i) in the case of a company having a share
capital, 100 members or 10 per cent of the total number of its members whichever is less, or
members holding 10 per cent of the issued share capital; (ii) in the case of a company not having
a share capital, 20 per cent (one fifth) of the total number of its members. The Central Government
is empowered in an appropriate case to authorise any lesser number of members to make such
application to the Company Law Board.
Power of CLB to Provide Relief

Section 402 provides for the relief that can be provided by the Company Law Board and the
CLB’s order may include:
1. The regulation of the conduct of the company’s affairs in future;

2. The acquisition of the shares or interests of any members by other members or by the
company;
3. The consequent reduction of the share capital in case of (b) above;

4. Termination, setting aside or modification of any agreement, however arrived at, between
the company and the manager, managing director or any other director;
5. Termination, setting aside or modification of any agreement between the company and
any other person with the latter’s consent;
6. Setting aside of any transfer, delivery of goods, payment, execution or other act relating to
the property made or done by or against the company within three months of the application
which would amount to fraudulent preference in case of an individual’s insolvency;
7. Any other matter for which, in the opinion of the company law board, it is just and
equitable that provision should be made.
ABC Ltd realised on 2 May, 2006 that particulars of charge created on 12 March, 2006 in favour of
a bank were not filed with ROC for registration. What procedure should the company follow to
get the charge registered with the ROC? Would the procedure be different if the charge was
created on 12 February, 2006 instead of 12 March, 2006?

Powers of Central Government to Prevent Oppression or Mismanagement

Section 408 empowers the Central Government to prevent oppression or mismanagement by
nominating directors on the Board of directors of a company.

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