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CompaniesAct.in: Graduated Corporate Governance – a positive step CompaniesAct.in
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Posted on: 25/01/2014

The Companies Act is pro Corporate Governance and provides various provisions which will help in promoting better Corporate Governance in the Companies in days to come. Our team has identified the following provisions related to Corporate Governance in the Companies Act:

Section 27: Variation in terms of contract or objects in prospectus

  • Now a Company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the Company in general meeting by way of Special Resolution:
    Provided that the details, as may be prescribed, of the notice in respect of such resolution to shareholders, shall also be published in the newspapers (one in English and one vernacular) in the city where the registered office of the company is situated indicating clearly the justification for such variation:

  • A Company which has varied the terms of contract referred to in Prospectus or Objects for which it is issued shall not use any amount raised by it through prospectus for buying, trading or otherwise dealing in equity shares of any other Listed Company. 
  • The dissenting shareholders being those shareholders who have not agreed to the proposal to vary the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or controlling shareholders at such exit price and in such manner and conditions as may be specified by the Securities and Exchange Board by making regulation in this behalf. 

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