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Unit 10: Share Capital

compact, unambiguous and definite. Minutes of each meeting must begin on a fresh page and Notes
should be headed with the number, date and nature of the meeting. The wording of resolutions
and amendments must be recorded in full and the name of the proposer and seconder given,
whether they are eventually carried or not.
Section 193 provides that every company must keep minutes containing a fair and correct
summary of all proceedings of general meetings in books kept for that purpose. The minutes
book must have their pages consecutively numbered and minutes must be recorded within 30
days of the meeting.

10.5 Accounts, Audit and Dividends

10.5.1 Maintenance of Accounts by Companies

Every company must keep at its registered office proper books of accounts which shall give a

true and fair view of the financial affairs of the company. Section 209 lays down the Books of
Accounts to be maintained by a company. These books are open to inspection by any director
during business hours, as also by the Registrar of companies or an officer authorised by the

Central Government. Also the books of accounts should be retained for a period of eight years. It
is obligatory on companies to maintain accounts on accrual basis.
It is the responsibility of the Managing Director or manager of the company to comply with
legal requirements relating to accounts, but they may engage a competent person and make
him responsible for the accounts. On the default of compliance, every person charged with the
maintenance of accounts would be liable to be punished for imprisonment up to six months, or
fine up to ` 10,000 or with both.

Section 210 requires that at every AGM, the Board of Directors must lay before the company a
Balance Sheet and Profi t Loss account; and in the case of non-profi t companies, an Income and
Expenditure Account should be submitted.
Section 211 talks about form and contents of the Balance Sheet and Profit and Loss Account. The

form of the Balance Sheet and the details to be given in the Profit and Loss Account are set out in

Schedule VI of the Act. The Balance Sheet and Profit and Loss Account must be signed on behalf
of the Board by two directors and countersigned by manager or secretary. If the company has a
managing director, he should be one of the signing directors. The Balance Sheet and Profi t and
Loss Account must be approved by the Board before they are submitted to the auditors who must
in turn attach their own report thereto. The report of the Board shall describe the company’s state
of affairs, the amount proposed to be carried to reserves, the amount recommended for dividend
and also any change which occurred during the financial year in regard to the nature of the

business of the company (s.217). The report should also explain adverse remarks of the auditor, if
any. The report must also include a list showing the names of all employees of the company who
are in receipt of remuneration of ` 24 lakhs per annum or ` 2 lakhs per month or more (inclusive
of the value of perquisites). The report must also state whether any such employee is a relative of
any director or manager of the company and if so, the name of such director.
Directors’ Responsibility Statement: Section 217 (2AA) provides that every company shall
include in its directors report a statement of its director’s resonsibility which shall indicate that
(i) in preparation of the annual accounts, the applicable accounting standas had been followed
alongwith proper explanation relating to material departure therefrom; (ii) the directors had
followed such policies consistently so as to give a true and fair view of the state of affairs of the
company; (iii) the directors had taken proper and sufficient care for the maintenance of adequate

accounting records so as to safeguard the company’s assets and to detect frauds and irregularities;
and (iv) the directors had prepared the annual accounts on a going concern basis.

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