Procedure For The Rectification of Register of Members After The Transfer of Securities


Rectification-Register-Members-transfer-Securities
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 –
1. Remedy to the aggrieved for not carrying the changes in the register of members:
     Grounds of appeal: If, without sufficient cause –
(i)  The name of any person is entered in the register of members; or
(ii) 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
(iv) 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.
2.  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.
3.  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.
4. 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.
5.  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.
6.  Specific instances of rectification:
Rectification has been held to be permissible in the following cases:
(a) Applicant induced to take shares by misrepresentation;
(b) Shareholders’ name removed under unlawful surrender of his shares;
(c) Irregular allotment;
(d) 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.
(f) Allotment in violation of memorandum of association of the company.
7. 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)]

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