depositing the application money in a scheduled bank

the specified period, and It may be noted that for making a subsequent allotment irregular. conditions (b) and (c) stated above are irrelevant. In other

words, subsequent allotment of shares will be tenned as irregular allotment only when it has been made without receiving at least five per cent cash of the

nominal value of shares as application money [Section 69(7)].

The effects of an irregular allotment are as follows:

made by the company becomes voidable at the option of the applicant and can be avoided by him: .

(a) within tvo months of the date of statutory meeting of the company.

(b) within two months of the date of allotment where the company is not required to hold a statutory meeting. The allottee must give notice of his intention

to avoid the contract of allotment within the time specified above. The actual legal proceedings may start later.

The allotment can be avoided even if the company is in the course of winding up.

2. Linbilit. of the Dircctors. The directors of a company making an irregular allotment shall be liable to compensate the company and the allottee for an

loss. damage or costs which the company or the nllottee ma have sustained or incurred on account ofirregular allotment provided the party brings a suit

within two years from the date of allotment.

3. Finc. Every director who is knowingly responsible for irre!:,’lliar allotment shall be liable for a fine

(0) upto Rs. 50,000 when offer is made to the public and the allotment is made without depositing the application money in a separate bank account in a

Scheduled Bank and keeping deposited the same till the company obtains the certificate of commencement of business [Sec. 69 (4) J

The Central Government had vide GSR No. 614 (E) dated October 3. 1991

The Central Government had vide GSR No. 614 (E) dated October 3. 1991 prescribed the memorandum containing the salient features of abridged
prospectus by adding Form 2A to the Companies (Central Government’s) General Rules and Fonns, 1956. For this purpose, Rule 4 CC has been inserted
in the compz.1ies General Rules and Forms 1956. The ambridged prospectus contains information very much similar to a ‘prospectus’ in a concise and
ompact manner so that cost of public issue of capital may be reduced. Tl.1e particulars that are required to be furnished in the prescribed Fonn 2A

according to Rule 4 CC are enumerated below:

1. General information, 2. Capital stmcture of the company, 3. Terms of the present issue, 4. Particulars of the issue, 5. Company Management and

Project. Schedule of implementation of project, products to be manufacturcd.

. fitture prospech,s etc.

EXCCI)tions. However, in the following circumstances, the abridged prospectus need not accompany the application form

company State briefly the procedure to be followed by a company

Is it possible to change the name of a company State briefly the procedure to be followed by a company to change its name.Alteration of name clause or

change of name Section 21]. A company may change its name by passing a special resolution and with the approval of the Central Government in writing

Section 21). But if a company has been registered with a name which subsequently appears to be undesirable or resembling the name of another

company, it may change its name by passing an ordinary resolution and wi the approval of the Central Government (Section 22 (1) (a»). In such a case

the Central Government can also within 12 months of the first registration or registration under the changed name direct the company to change its name

Section 22 (1) (b»). If a direction is issued the company must change its name within 3 months from the date of the direction unless the time is

extendedSection 23).However, change of name which merely involves the deletion or addition of the world 'Private' on the conversion of a public company

into a private company or vice versa does not require the approval of the Central Government.
The change of name must be notified to the Registrar within 30 days of the passing of the resolution. A copy of the approval of the Central Government
shall also be filed with the Registrar within three months from the date of approval Order. When a company changes its name, it becomes the duty of the
Registrar to enter the new name in the register and to issue a new certificate of incorporation with necessary alterations. Change of name becomes

effective only on the issue of such a certificate.The change of name by a company does not affect the rights and obligations of the company, or render

defective any legal proceedings by or against it. Section 23(3»).

share capital and issuing a prospectus inviting the public to subscribe

A public company, having. a share capital and issuing a prospectus inviting the public to subscribe for its shares, will have to file the following
documents with the Register to secure the certificate of commencement of business:
(0) The declaration that shares upto the amount of the minimum subscription have been allotted by the company.
(b) The declaration that every director of the company has paid in cash the application and allotment money on his .shares in the same prop onion as
others.
(c) The declaration that no money is liable to become refundable to the applicants by reason of failure to apply for or to obtain permission for the shares or
debentures to be dealt in on any recognized stock exchange.
(d) The statutory declaration in the prescribed form (Finn No. ] 9) by one of the directors or the secretary or, where the company has not appointed a
secretary, a secretary in whole-time practice that the above requirements have been complied with. Sec. 149 (1)]
Where the Com I) any has not Issued l Prospectus. If a public company having share capital has not issued a prospectus, Section 149 (2) requires that it
shall not commence business or exercise its borrowing powers unless: .
(a) a statement in, lieu of a prospectus is filed with the Registrar;
(b) every director of the company had paid the company in cash
application and allotment money on his shares in the same proportion as others;
(c) a declaration duly verified by one of the directors or the secretary that the above requirements have been complied with is filed with the Registrar. If the
company has not appointed a secretary it can get the declaration signed by a secretary in whole-time practice. Section 149 (2)].
The Registrar will scrutinize these documents and if he is satisfied, he shall issue a certificate certifying therein that the company is entitled to commence
business. This certificate is conclusive evidence that the company is so entitled. Section 149 (3)].