Company Registration in Tirupur
Section 372A of Companies Act, 1956
As per explanation to s. 77A (11) of the 1956 Act reliance is placed on the definition of free reserves as given in s. 372 A of the 1956 Act. To note that s. 372A of the 1956 Act is not identified as a corresponding section by g,c 07/2014 dated 01-04-2014, and therefore would be in force at the time of going to press. Reference to this section is made her only to understand and interpret "free reserves" in the context of the 2013 Act.
"Free reserves" [referred to in section 372A(1) of Companies Act, 1956]
The expression "free reserves" has been defined in clause (b) of the Explanation appearing at the end of the section. For the purpose of this section, it has been defined to mean "those reserves, which, as per latest audited Balance Sheet of the company, are free for distribution as dividend and shall include balance to the credit of the securities premium account, but shall not include share application money." While under s. 78(2) of the 1956 Act, amount credited to securities premium account is not available for distribution of dividend, in view of the definition of "Free Reserves" in Explanation (b), the same will also form part of free reserves for the purpose of computing the prescribed limits laid down under s. 372A of the 1956 Act. All reserves, other than the reserves which are earmarked for any specific purpose and are not available for distribution of dividend and revaluation reserve, would form part of "free reserves". Share application money has been expressly excluded from the definition of free reserves; the same in any case a does not form part of paid up share capital.
Removal of managing director
Where the Government was holding more than half shares and was controlling the company, the company was held to be amenable to writ jurisdiction. But so far as the termination of the service of the managing director and compensation was concerned, it being a contractual matter, writ petition was held to be not maintainable. A.S civil v State of Punjab, (2006) 132 Com Cases 759 (P&H). The appointment was made by the same authority which terminated it and in accordance with the articles of the company. It belongs to the realm of contract. There was no statutory violation. Constitution writ not available.
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