government cQmpany registered

(i) ABCD Ltd., a government cQmpany registered in 1991, wants to donate a sum
of Rs. 10 lakhs.
(ii) EFG Ltd., a public company registered in 1990, wishes to contribute a sum of
Rs. 5 lakhs.
(Hi) RST Ltd., a company incorporated in the year 1996, decides to contribute a
sum of Rs. 3lakhs
Section 293 A of the Companies Act, 1956 contains law relating to political donations by companies. Please see answer to Q. 33 for the same.
Accordingly,
(i) No political donation can be made by ABCD Ltd., being a government
company.
(ii) Company EFG Ltd. having been in existence for more than three years can contribute Rs. 5 lakhs provided the aggregate of the amount contributed in the financial year including the proposed amount is within 5 per cent of the average net profits for the last three immediately preceding financial years.
(iii) RST Ltd. having not been in existence for three years is not allowed to make
political contributions.
The Board of Directors of A,?C Pvt. Ltd., having a paid-up share capital of Rs. 3 crares, consists of two Directors, one of them, viz., Mr. Spossesses membership of the Institute of Company Secretaries of India. The company desires to appoint him as a company secretary also. State the legal position as per the Companies Act.
5lns(ynder Section 383A, in case of a company having only two directors, none of
them n be appointed company secretary inspite of possessing the requisite qualificatIon.
In view of the above, Mr. S cannot be appointed as a company secretary unless the
comany first raises the strength of its Board to minimum of three directorD
The company secretary of a company,. having a paid-up share capital of more than Rs. 2 crores, resigned and left the company. The company has not appointed his
successor. Meanwhile, it has started incurring losses. Its sales have declined and financial position became weak. Can it be a valid reason for not appointing a whole-time secretary? How log can the company delay the appointment? What penalty can be imposed? Will the liability extend to all the directors or only to the managing director?
According to Section 383-A of the Companies Act, 1956, a company having a
paid-up share capital of Rs. 2 crores or tn..Qre must appoint a whole-time secrtary
possessing the pescribedqalificationst§ case Hie secretary resigns and leaves the
company, the vacancy should be filled up with all speed and urgency. In the Act, there is no
tion that there can be a gap between the outgoIng secrefary and the new secretary. erefore, the company should take all the necessary steps for the appotment 0 e new secretary.
Here the company has not appointed a new secretary 011 the ground that it has started incurring losses, its sales have declined and financial position has become weak. The company can now plead as per the proviso to Section 383-A, that all reasonable efforts to comply with the provisions of Section 383-A were exercised or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary.
If the company’s contention is that its financial position does not perinit such an appointment, the company will have to prove this fact to the satisfaction of the Court./Ir the sales also have declined for one or two months, this dnot mean that the financm
position has become so poor that it cannot afford a secretaThe Court will consider all
the circumstances and if it finds that the company can employ other officials, then there is no reason or justification for not employing a whole-time secretary.
As regards the delay in appointment, the Central Government has not laid down any guidelines. It has to be decided on the merits of the case.
When e secretary resigns ap,d lee;;. tp c.ompany, the Registrar of Companies