General
Circular No. 14/2001
Government
of India
Ministry
of Law, Justice and Company Affairs
Department
of Company Affairs
5th
Floor, A Wing, Shastri Bhavan,
Dr.
R.P. Road, New Delhi-110 001
Dated: 16-7-2001
*****
Department of Company Affairs had recently received a reference regarding
clarification in respect of Section 224A of the Companies Act, 1956 which
relates to appointment of auditor in certain cases with the approval of the
company by special resolution. The
clarification had been sought on sub-section (1) of that section which reads as
under:
224A.
(1) In the case of a company in which not less than twenty-five per cent of the
subscribed share capital is held, whether singly or in any combination,
by-
(a)
a
public financial institution or a Government company or Central Government or
any State Government, or
(b)
any
financial or other institution established by any Provincial or State Act in
which a State Government holds not less than fifty one per cent of the
subscribed share capital, or
(c)
a
nationalised bank or an insurance company carrying on general insurance
business.
the appointment or re-appointment at each
annual general meeting of an auditor or auditors shall be made by a special
resolution.
2.
The Querist was of the opinion that three clauses (a) to (c) mentioned in
Sub-section (1) of that section (section 224A) should be treated as mutually exclusive.
According to them, the aggregate holdings of the institutions grouped under
either clause (a) or clause (b) or clause (c) of section 224A(1) are to be
treated as mutually exclusive and are not to be aggregated with institutions
covered by any other sub clause, for determining the applicability of section
224A.
3.
This Department has examined
this matter in consultation with D/o Legal Affairs and Solicitor General
of India and found that three
sub-clauses -- (a) to (c) to sub-section (1) of Section 224A are
not mutually exclusive. The provisions of sub-section (1) of that
section would, therefore, apply to all cases of shareholdings in any combination
by any of the institutions mentioned
in the three clauses.
4. All
Chambers of Commerce are requested to bring this to the notice of their
constituent companies.
(
Thakur Sharan )
Under
Secretary to the Government of India
Tel:
3389622
P.2/-
-2-
Endt.
No: 6/1/2001-CL-V
Dated: 16-7-2001
Copy
forwarded for information to:-
1. PS to Minister (LJ&CA)
2.
Sr.
PPS to Secretary (DCA)
3.
PA
to JS(A)
4.
All
Regional Directors/All Registrar of Companies/All Official
Liquidators
5.
All
other officers and Sections in the Deptt.
6.
The
Secretary, Company Law Board
7.
The
Secretary, MRTP Commission
8.
DGIR
9.
All
Chambers of Commerce and Industry
10. NIC,
DCA with the request that this Circular
may please be placed at the
DCA’s Web-page
11. The
Editor, ‘Company News & Notes’, R&S Division.
12. Library,
DCA.
13. Secretary,
ICAI/ICWAI/ICSI
14. Deptt.
of Economic Affairs, North Block, (Investment Division) New
Delhi.
15. Department
of Industrial Policy & Promotion (IP Section), Udyog Bhawan,
New
Delhi.
16. SEBI,
Mittal Court, B Wing, 224 Nariman
Point, Mumbai-400 021.
17. RBI,
Central Office, Mumbai.
18. Director
(Commercial), Office of C&AG of India, 10 Bahadur Shah Zafar
Marg, New
Delhi.
19.Standing
Conference of Public Enterprises, SCOPE
Complex, 7 Lodi Road,
New Delhi-110
003.
20.
Director, Indian Investment Centre, D/o Economic Affairs, Jeevan
Vihar,
Sansad Marg, New
Delhi-1
21.
Editors, Journals of ICAI, ICWAI,
ICSI.
22.
Editor, 'Upabhokta Jagaran' D/o Consumer Affairs and Consumer Distribution
System, Krishi Bhavan,
New Delhi-110 001.
23.Editor,
Corporate Courier, C-163, Shastri
Nagar, Jodhpur-342003
24.Editor,
Bombay Chartered Accountants Society, Church Gate Mansion,`A'
Road, Church Gate, Bombay- 400 020.
25.Institute
of Corporate Directors of India,
38, 1st Floor, Jaora Compound,
Jethwa Chambers,
Indore-452001. (MP)
26.
Guard File.
27.
Spare Copies – 10
28. Fecilitation Centre – 10 copies
( Thakur Sharan
)
Under
Secretary