Procedure For The Rectification of Register
of Members After The Transfer of Securities
Section
59 of the Companies Act, 2013 provides the procedure for the rectification of
register of members after the transfer of securities. The provision states that
–
59 of the Companies Act, 2013 provides the procedure for the rectification of
register of members after the transfer of securities. The provision states that
–
Remedy
to the aggrieved for not carrying the changes in the register of members:
Grounds
of appeal: If, without sufficient cause –
of appeal: If, without sufficient cause –
(I) The name of any person is entered in the
register of members; or
register of members; or
(ii)
The name of any person having entered in
the register of members is without sufficient cause omitted therefrom; or
The name of any person having entered in
the register of members is without sufficient cause omitted therefrom; or
(iii)
Default or unnecessary delay is being made in entering in the register, the
fact of any person having become a member; or
Default or unnecessary delay is being made in entering in the register, the
fact of any person having become a member; or
(iv)
Default or unnecessary delay is being made in entering in the register, the
fact of any person having ceased to be a member
Default or unnecessary delay is being made in entering in the register, the
fact of any person having ceased to be a member
(v) the person aggrieved, or any member of the
company, or the company may appeal in such form as may be prescribed, to the
Tribunal. In case of foreign members or debenture holders residing outside
India, the appeal shall be filed in a competent court outside India as may be
specified by the Central Government by notification.
company, or the company may appeal in such form as may be prescribed, to the
Tribunal. In case of foreign members or debenture holders residing outside
India, the appeal shall be filed in a competent court outside India as may be
specified by the Central Government by notification.
Order
of the Tribunal:
The Tribunal may, after hearing the parties to the appeal
by order, either dismiss the appeal or direct that the transfer or transmission
shall be registered by the company within a period of ten days of the receipt
of the order, or direct rectification of the records of the depository or the
register and in the latter case, direct the company to pay damages, if any,
sustained by the party aggrieved.
by order, either dismiss the appeal or direct that the transfer or transmission
shall be registered by the company within a period of ten days of the receipt
of the order, or direct rectification of the records of the depository or the
register and in the latter case, direct the company to pay damages, if any,
sustained by the party aggrieved.
Right
to transfer not restricted:
Section 59 of the Act shall not restrict the
right of a holder of securities, to transfer such securities. Any person
acquiring such securities shall be entitled to voting rights unless the voting
rights have been suspended by an order of the Tribunal.
right of a holder of securities, to transfer such securities. Any person
acquiring such securities shall be entitled to voting rights unless the voting
rights have been suspended by an order of the Tribunal.
Contravention
of provisions of the law:
Where the transfer of securities is in
contravention of any of the provisions of the Securities Contracts (Regulation)
Act, 1956, the Securities and Exchange Board of India Act, 1992 or this Act or
any other law for the time being in force, the Tribunal may, on an application
made by the depository, company, depository participant, the holder of the
securities or the Securities and Exchange Board, direct any company or a
depository to set right the contravention and rectify its register or records
concerned.
contravention of any of the provisions of the Securities Contracts (Regulation)
Act, 1956, the Securities and Exchange Board of India Act, 1992 or this Act or
any other law for the time being in force, the Tribunal may, on an application
made by the depository, company, depository participant, the holder of the
securities or the Securities and Exchange Board, direct any company or a
depository to set right the contravention and rectify its register or records
concerned.
Default
in complying with the order:
If any default is made in complying with the
order of the Tribunal under this section, the company shall be punishable with
fine which shall not be less than one lakh rupees but which may extend to five
lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to one year or with
fine which shall not be less than one lakh rupees but which may extend to three
lakh rupees, or with both.
order of the Tribunal under this section, the company shall be punishable with
fine which shall not be less than one lakh rupees but which may extend to five
lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to one year or with
fine which shall not be less than one lakh rupees but which may extend to three
lakh rupees, or with both.
Specific instances of rectification:
Rectification
has been held to be permissible in the following cases:
has been held to be permissible in the following cases:
(a)
Applicant induced to take shares by misrepresentation;
Applicant induced to take shares by misrepresentation;
(b)
Shareholders’ name removed under unlawful surrender of his shares;
Shareholders’ name removed under unlawful surrender of his shares;
(c)
Irregular allotment;
Irregular allotment;
(d)
Name of nominee entered in register without his knowledge or consent;
Name of nominee entered in register without his knowledge or consent;
(e) Allotment
of shares to a non-resident without taking necessary permission for foreign
exchange.
of shares to a non-resident without taking necessary permission for foreign
exchange.
(f)
Allotment in violation of memorandum of association of the company.
Allotment in violation of memorandum of association of the company.
Mutation
of name in other Company’s register of members:
The Company which has
changed its name would be entitled to ask those companies in which it is
holding shares to substitute a company’s new name in their register of members
in the place of old name. [Sulphur Dyes v. Hickson & Dadajee Ltd. (1995) 83
Com Cases 533 (Bom)]
changed its name would be entitled to ask those companies in which it is
holding shares to substitute a company’s new name in their register of members
in the place of old name. [Sulphur Dyes v. Hickson & Dadajee Ltd. (1995) 83
Com Cases 533 (Bom)]
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