Membership of Company

Membership of Company

8.1 Shareholders and Members

a.     “Shareholders and Members” collectively constitute a company as a corporate entity, like company as a family and shareholders as family members.

b.    Shareholders and members are not always synonymous.

i.      In the following exceptional situations, a shareholder may not be a member.

a.    A shareholder whose name is omitted to be entered in register of member, is not a member.

b.    A transferee of shares is a shareholder, but is not member until the shares are registered and his name is entered in the register of members.

ii.    In the following exceptional situations, a member may not to be a shareholder.

a.   The subscriber to memorandum becomes a member immediately on incorporation of the company, even though shares are not allotted to him.

b.   A transferor of shares is not a shareholder, but a member, until transfer of shares is registered and his name is struck off the register of the members.

c.   The shares of an insolvent vest in the official receiver or the official assignee, but he continues to be a member until his shares are sold and his name is struck off the register of members.

d.   A person who becomes a member by estoppel or holding out is not a shareholder.

e.   Generally, only a member is liable to pay the calls on shares. However, on winding up of a company, a past member (i.e., a person who ceased to be a member within 12 months before the commencement of winding up) may be held liable as a contributory if the present member fails to pay the calls, even though he is not a shareholder.

f.    The Court may order that a person shall be deemed to be a member, although he is not a shareholder.

g.   In case of following companies, a member is not a shareholder:

§  A company limited by guarantee having no share capital.

§  An unlimited company having no share capital.

8.1.1 Distinction between a shareholder and a member

Basis of distinction	Member	Shareholder
1.     Meaning	Generally, the term ‘member’ means a person whose name is entered in the register of members.	The term ‘shareholder’ means a person who holds shares in a company.
2.     Membership	Every company shall have some members whether it is guarantee, or an unlimited company.	Only a company having a share capital can have shareholders. A company limited by guarantee, or an unlimited company having no share capital do not have shareholder but must have members.
3.     Signatory to memorandum	A person who signs the memorandum of association is a member even before shares are allotted to him.	A person who signs the memorandum of association becomes a shareholder only when the shares are actually allotted to him.
4.     Status of Transferor	A transferor of shares continues to be a member until his name is removed from the register of members, although he may not be a shareholder (since shares have been transferred by him).	Transferor immediately ceases to be shareholder, even though his name continues to appear in the register of members.
5.     Deceased or insolvent member	A deceased or insolvent member continues to be a member, until transmission of shares takes place and his name is struck off the register of members.	A deceased or insolvent member is not shareholder of the company.
6.      Rule of estoppel	A person may become a member by estoppel or holding out.	A person cannot become a shareholder by holding out.
7.     Membership by order of Court	The Court may make an order that a person shall be deemed to be a member.	No person can become a shareholder by an order of the Court.
8.     Rights under Companies Act	A member can exercise various rights under the Companies Act, e.g., right to receive notice, right to vote, right to appoint a proxy etc.	A shareholder, who is not a member, cannot exercise the rights given to members under the Companies Act, 1956.
9.     Share warrant	Person owning a bearer share warrant is not a member.	Person owning a bearer share warrant is a shareholder.

8.1.2 Capacity to become Member of a Company

a.     Minor: A Minor cannot become a member of a company as he is incompetent to make any contract. Any agreement under which he is liable to pay money, is void. [Palaniappa Mudaliar v. Official Liquidator, Pasupathi Bank Ltd.], [Diwan Singh Vs Minerva Films Ltd.]             

b.     Insolvent: An Insolvent remains a member of a company, till his name appears in the register of members. Until an insolvent is discharged, he cannot become a member.

c.     Partnership firm: A Partnership Firm may hold shares in a company in the individual names of partners as joint shareholders but it cannot be entered as a member in the register of members, as a firm is not a person. However, a firm can become a member of a company licensed under Section 25 of Companies Act.

Where all the partners of a firm jointly hold the shares in a company, the partners shall be called as joint holders of shares. However, as per the provisions of the Partnership Act, 1932, such shares may be held to be partnership property.

d.    Foreigner: A Foreigner can become a member of a company (his rights as a member of the com­pany gets temporarily suspended if he becomes an alien enemy).

e.     Company: A Company may (if authorised by its Articles) be­come a member of another company, subject to restriction under section 42 (Holding company).

A company cannot become a member of its own. Even where a company buys-back its shares, it does not become a member of is own, since the shares brought back must be extinguished within 7 days of completion of buy-back.

f.      Registered Co-operative Society: It may become a shareholder if permitted by its rules & by laws.

g.    Receiver, Official Liquidator or Administrator: A receiver, official liquidator or administrator cannot be members of a company in normal circumstances.

h.    Public Office: A public office cannot be a member of a company unless it is a corporation sole.

For instance, Administrator-General is constituted as a corporation sole by the Administrators' General Act, 1963.

8.1.3 Minor as a shareholder

a.     During minority, a minor can become a member where fully paid up shares are transferred to a minor on an application made by the lawful guardian of a minor. [Devan Singh v. Minerva Films Ltd.], [Nandita Jain v. Bennett Coleman & Co Ltd.]

b.    The company can repudiate the allotment made to the minor. The minor shall be entitled to receive back the money paid by him.

c.     Even where an application for shares is signed by the guardian (acting on behalf of the minor), the allotment is void and the company cannot demand unpaid calls from the guardian.

d.    No allotment of shares can be made to a minor. Transfer of fully paid shares to a minor is permissible.

e.     In case a company allots share to a minor the following consequences shall follow:

­    The minor shall not be liable to pay any calls remaining unpaid.

­    The company cannot compel the guardian to pay any unpaid calls even if the application of shares is signed by the guardian.

­    The company can repudiate the allotment. In such a case the minor shall receive back the money paid by him.

f.      When minor holding shares attains majority:

o  On attaining majority, the minor does not automatically become a member of a company.

o  Within reasonable time of attaining majority, a minor can repudiate the allotment of shares

    made to him.

o  If on attaining majority, the minor does anything indicating the acceptance of membership

    (e.g., receiving dividend, attending a general meeting, appointing a proxy etc.), the minor shall

    be henceforth deemed to be a member.

o  Where during minority, the name of the guardian is entered in the register of members, the

 minor, after attaining majority, may make an application to the company to enter his name in

 the register of members.

g.    In case of transfer of partly-paid shares to a minor, the company may refuse to register him as a member except through a guardian. In case the company has already permitted the transfer, the transferor continues to be liable for all future calls on such shares even though he may have been ignorant of the transferee's minority.

8.1.4 Joint Holders

Two or more persons may hold shares jointly in a company. Articles of Association of a company normally provide maximum 3 persons as joint holders. Only one share certificate is issued. The name that appears first in the certificate, stand in the register of members and only that person will be entitled to vote. The payment of dividend will be made to the first named joint shareholder unless instruction in writing signed by the joint holder has been given to the company for making the payment to any other person. In all other aspects, joint holders have to act together.

8.2 Membership in a Company

A person may become a member of a company by:

a.     Subscription

b.    Qualification Shares

c.     Application & Registration

d.    Beneficial Ownership

                                  

8.2.1 Membership by Subscription

The subscribers to the Memoran­dum of Association of a company are deemed to have agreed to become its members. When the company is registered, their names are entered as members in the register of members. Neither application nor allotment of shares is necessary in this case. [Section 41(1)]

8.2.2 Membership by Qualification Shares

A Director of a Public Limited Company, signing a written undertaking to acquire Qualification Share becomes a Member in the same way as subscriber to Memorandum. (Section 266)

8.2.3 Membership by Application and Registration

Any person submitting a written application for allotment of shares becomes a member when his name is entered as a member in the register of members [Section 41(2)]. Such membership may be acquired by:

a.     Allotment: When a person applies for subscription for shares issued by the Company and the Company allots him shares.

b.    Transfer: When a person gets shares transferred in his name from an existing shareholder (e.g. by Purchase).

c.     Succession: When a person acquired the shares of a deceased member as legal heir.

d.    Holding out: Where a person holds himself out as a member or knowingly allows his name to remain in the register.

e.     Name in register of Members: A person shall be a member if his name is entered in the register of members maintained by the Company.

8.2.4 Membership by Beneficial Ownership [(Section 41(3)]

Every person holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.

8.2.5 Cessation of Membership

Membership of a person can come to an end:

a.     By the Act of Member

b.    By operation of law

c.     By Act of Company

8.2.5.1 By the act of Member:

A person may cease to be the member of a company when–

a.     he transfers his shares to another person.

b.    he rescinds to take shares on ground of mis­representation in prospectus or irregular allotment.

c.     he surrenders his shares (where permitted).

d.    acquires share warrants in exchange of shares.

8.2.5.2 By the operation of law:

A person may cease to become a member by the operation of law in the following cases:

a.     Insolvency: When the Official Re­ceiver or Assignee of an Insolvent member transfers his shares to his name (the insolvent ceases to be a member).

b.    Death: When the member dies and the shares are transferred in the name of his legal representative.

c.     Decree of the Tribunal: On sale of shares in execution of a decree of the Tribunal.

d.    Winding up of the company: On winding up of the Company. However, during winding up process, a member continues to be liable as a contributory and is also entitled to share in the surplus assets, if any

e.     Purchase of shares under order by the Company Law Board: The Company Law Board may direct to the company to purchase the shares of an existing member, and to effect consequent reduction of share capital. Consequently the member whose shares are bought cease be a member of the company. (S. 402)

8.2.5.3 By the act of company:

a.     Forfeiture of Shares: Where the shares are forfeited.

b.    Buy-back of shares: Where a company buys-back its own shares by complying with the provisions of Section 77A, 77AA and 77B, the person whose shares are bought back ceases to be a member of the company.

c.     Sale under lien: When the shares are sold by the company in exercise of its right of lien, the member ceases to be a member of the company.

8.2.6 Membership of Holding Company

a.     A Company, being a juristic and a separate legal entity may become a member of another Company, if it is so authorized by its Memorandum. However, a Subsidiary Company cannot be a Member of its Holding Company. [Sec.42]

b.    Any allotment or transfer of shares in a Holding Company to its Subsidiary, or even to a Nominee for such subsidiary, is void, except that such a subsidiary company may:

i.      Hold Shares in the Holding Company in the capacity of a legal representative of a deceased Shareholder, or

ii.    Hold such shares as Trustees (except where the Holding Company or another Subsidiary is beneficially interested under the Trust otherwise than merely by way of the Holding Company’s business), or

iii.   Remain a Member of its Holding Company, if it was a member before April 1, 1956, but may not vote at meetings of Holding Company or any class of its Members,

iv.   Continue to be a member of the holding company where the subsidiary company became the member of the holding company before it became the subsidiary company.

8.2.7 Investments of company to be held in its own name (Sec.49)

i.      All investments made by a company (other than a private company) on its own behalf shall be made and held by it in its own name, except in following situations:

1. Where the company has appointed a nominee as a director, shares in such other body to the extent required for qualification shares may be held by such company jointly.
2. A company may hold any shares in its subsidiary in the name of any nominee to ensure that the number of members of the subsidiary is not reduced below required minimum.
3. The restriction do not apply to a company whose principal business is buying and selling of shares or securities.
4. The restriction also do not apply for shares deposited and transferred to its banker (or other person as security of loan). In such case, the company shall, as soon as practicable, have the shares or securities retransferred to it from the Bank and again hold the shares or securities in its own name

ii.    Where shares or securities in which investments are not held by the company in its own name, the company shall enter particulars of such shares in a register maintained by it for that purpose.

iii.    If default is made in complying with any of the requirements of s.49, the company, and every officer in default, shall be punishable with fine upto fifty thousand rupees.

8.3 Rights of Members

The rights of the members of a company can be discussed under the following heads:

a.     Statutory rights given under Companies Act.

b.    Documentary rights given under Memorandum and Articles

c.     Legal rights given under General Law.

8.3.1 Statutory Rights under Companies Act

These rights are conferred on the members by Companies Act and cannot be modified or withdrawn in any way. Such rights are summarized below:

a.     Obtain copies of the Memorandum and the Articles (Section 39).

b.    Rights shares in case of increase of capital (Section 81)

c.     Transfer shares (Section 82).

d.    Vote on resolutions at members meetings (Section 87).

e.     Apply to the Tribunal to for variation of his rights set aside by the Court (Section 107).

f.      Share certificate for his shares (Section 113).

g.    Inspect the register of members, debenture­ holders and copies of annual returns (Section 163).

h.    Receive copy of the statutory report (Section 165).                           .

i.      Apply to the Tribunal for calling an annual general meeting (Section 167).

j.      Receive notice of meetings and attend meetings (Section 172)

k.     Appoint proxy and inspect proxy register (Section 176).

l.      Demand a poll (Section 179).

m.   Apply to the Tribunal for extraordinary meeting (Section 186).

n.    Appoint a representative to attend and vote at general meetings (Section 187).

o.    Require the company to circulate resolutions (Section 188).

p.    Obtain Minutes of proceedings of a general meeting (Section 196).

q.    Receive dividend (Section 206).

r.     Receive copies of annual accounts of the company & auditor's report (Sections. 210 and 219).

s.     Participate in appointment of auditors in AGM (Section. 224).

t.      Participate in appointment of directors in AGM (Section. 255).           ,

u.    Make application to the Tribunal for investigation into the affairs of the company (Section. 235).

v.     Submit petition to Tribunal for oppression and mismanagement (Sections. 397 and 398).

w.    Submit petition to Tribunal for the winding up of the com­pany (Section. 439).

x.     Get share in surplus on winding up (Section. 511).

8.3.2 Documentary or Contractual Rights under Memorandum & Articles

A company is bound to every member by the provisions contained in the memorandum and articles, such as:

§  to pay interest out of capital (Section 208)

§  to alter the share capital (Section 94)

§  to issue share warrant (Section 114)

§  to issue shares with differential voting rights (Section 86(a(ii)))

8.3.3 Legal Rights under Common Law

Rights following are conferred by the general law, like:

§  Avoid contracts to acquire shares in misstatement or concealment of a material fact in a prospectus and claim damages)

§  Recover the secret profits made by the promoters.

§  Sue the directors for recovery of damages caused by their, negligence, fraud or misfeasance.

§  Recover damages for loss caused to the company by ultra vires acts done by the directors.

§  Obtain an injunction if the directors propose to enter into ultra vires act.

8.4 Liability of Members

The members are liable to contribute as follows:

a.     Company with unlimited liability (Section 45): Each member is liable in full for all the debts contracted by the company during the period he was a member.

b.    Company limited by shares: Liability is limited to the unpaid value of the shares. So, for fully paid shares, members are free from any liability.

However, the liability of a member arises only when a valid call is made by the company, during the lifetime of the company or in the event of winding up of the company.

c.     Company limited by guarantee: Each member is liable to contribute the amount guaranteed by him to be paid in the event of the winding up of the company.

d.    Company Limited by guarantee and having Share Capital: The liability of every member is limited to the amount which he has undertaken to contribute in the event of winding up of the company plus any amount remaining unpaid on shares held by him.

8.4.1 Liability of a past member

i.      In the course of winding up, a past member may also be held liable for the debts of the company.

ii.    However, a past member shall not be liable to contribute-

a.     if he has ceased to be a member for 1 year or more before the commencement of the winding up;

b.     in respect of any debt or liability of the company contracted after he ceased to be a member;

c.     unless it appears to the Court that the present members are unable to satisfy the contributions required to be made by them (i.e., the liability of a past member is secondary).

8.4.2 Liability in case of reduction of capital (Sec. 104)

After the reduction of capital has become effective, the liability of members shall be as follows:

a.     Liability as per the order of the court. Every member shall be liable to pay to the company the difference between the nominal value of a share as per altered memorandum (as per the order of they Court) and the amount deemed to be paid up on the shares held by the member (as per the order of the Court).

b.     Liability as was before reduction. Every member shall be liable to pay to the company the same amount as he was liable to pay immediately before effecting reduction of capital, if the Court is satisfied that-

§  a  creditor who was entitled to object to reduction was excluded to be entered in the list of creditors; and

§  the company is unable to pay its debts.

8.4.3 Liability conferred by Memorandum and Articles

A member is bound by all the terms and conditions contained in the Memorandum and the Articles. For example, where the Articles give a right of lien over the shares of a member for any debt due to the company, the member is bound by such a regulation. Similarly, where the Articles empower the company to forfeit the shares of a member in case of default in payment of calls due on the shares, the member is bound by such a regulation.

8.5 Register and Index of Members & Debentureholders

Every company shall keep

a.     Register of Members,

b.    Index of Members (for members exceeding 50),

c.     Registers & Index of Debentureholders.

8.5.1 Register of Members (Sec. 150)

i.      Every company shall keep a register of its members and enter therein the following particulars:

a.     Name, address and the occupation of each member.

b.    Particulars of Shares held, amount paid / payable on shares.

c.     Date at which each person was entered in the register as a member.

d.    Date at which any person ceased to be a member.

ii.    If the company has forwarded notice of conversion of its shares into stock to the Registrar, the register shall show the amount of stock held by each of the members instead of the shares.

iii.   For non compliance of any provisions for maintenance of members register (u/s 150), the company and defaulting officer shall be punishable with fine upto Rs.500 for every day of default.

iv.   No notice of trust shall be entered in register of members. (s.153)

8.5.1.1 Beneficial Interest of Members 

i.      A person whose name is entered in register of members but does not hold any beneficial interest therein, shall make a declaration to the company about the person who holds the beneficial interest within 30 days of becoming the beneficial owner (187C).

ii.    The Central Government may appoint Inspectors to investigate and report if provisions of s.187C have been complied (S.187D).

8.5.2 Index of Members (Sec. 151)

i.      Every company having 50 or more members must also keep an index of members along with the Members Register which will contain reference to the entry in Members Register. Any alteration in the Register of Members shall be noted in the Index within 14 days.

ii.    For non compliance of any provisions for maintenance of Index of Members (Under

section 151), the company and defaulting officer shall be punishable with fine upto Rs. 500.

8.5.3 Register and index of debenture holders (Sec. 152)

i.      Every company (whether public or private) shall maintain a register of debenture holders.

ii.    The register of debenture holders shall contain all the following particulars:

a.     The name, address, and occupation of every debenture holder.

b.    The number of debentures held by every debenture holder, the distinctive numbers.

c.     The date on which the name of such person was entered in the register as a debenture holder.

d.    The date on which a person ceased to be a debenture holder.

iii.   Index of debenture holders

Every company having more than 50 debenture holders shall maintain an index of

Debenture holders.

8.5.4 Maintenance & Inspection of Registers

a.     Place of keeping of Registers and Documents (Sec. 163)

i.      The Register & Index of Members & Debenture Holders shall be kept at the registered office of the company.

ii.    They may be kept at other place within the city where registered office of the company is situated, if:

a.     Such place has been approved by a special resolution.

b.    Registrar has been given a copy of the proposed special resolution.

b.     Inspection of Register and Documents

i.      Certain documents and certificates (as referred in Sec. 159 to 161) are considered public document and are to be kept open to public for inspection during business hours for at least 2 hours each day, at free of cost for members (prescribed fee to be paid to others).

ii.    Members may also get extracts from the register on payment of prescribed fees.

iii.   The right of inspection ceases when a company goes into liquidation.

iv.   If a company wrongfully refuses inspection or fails to furnish the extract or copy of any of the prescribed registers or returns:

a.     The company and every officer of the company who is in default shall be liable to fine.

b.    On an application made to the Company Law Board, the Company Law Board may compel the company to immediately allow an inspection, or allow taking of the extract, or furnish the copies.

c.     Evidence

The register of members and Debenture holders, certificates and statements (referred to in Section 159 to 161) are the prima facie evidence of any matters contained therein. (Sec. 164)

8.5.5 Closing of Members Register (Sec. 154)

Due to continuous transfer of shares, the Register of Members keeps on changing. To facilitate declaration of record dates for Dividend, Bonus issue, Rights issue, etc. to ascertain the members at a certain date, a company may close the register of members for a certain period (not exceeding 45 days in a year and not exceeding 30 days at one time) by prior notice of at least 7 days through an advertisement in a newspaper circulating in the district where the registered office of the company is situated. During this period, no changes in members register take place.

8.5.6 Rectification of Members Register

The Company Law Board may cause rectification of Members Register, where:

a.     a person's name is wrongfully removed from the register of members.

b.    a person is induced to buy shares by misrepresentation or fraud in a prospectus.

c.     allotment of shares is not valid.

d.    allotment is not made within a reasonable time or is irregular.

e.     transfer of shares has been improperly registered

f.      Company improperly neglects or refuses to register transfer.

g.    Shares have been improperly surrendered, company claiming reinstatement.

h.    Shares have been transferred to avoid liability.

i.      Shares improperly issued at a discount.

j.      Shares improperly forfeited.

k.     Forged transfer has been registered.

l.      Condi­tion for issue / allotment not fulfilled

8.5.7 Foreign register of members (Section 157 and 158)

i.      Where a Company having share capital, has issued shares or debentures to persons resident outside India; may maintain a foreign register. [S. 157(1)]

ii.    Conditions for maintenance of foreign register

a.     The articles of the company must expressly authorise the company to maintain a foreign register. [S. 158(2)]

b.    The foreign register shall be kept in a country outside India. It shall be kept in addition to the register of members kept under section 150 (referred as 'principal register').

c.     The foreign register shall be in the form of a branch register, i.e., it shall contain the particulars relating to members or debentures resident in the country in which it is kept. A separate register may be kept in respect of every country.

d.    Within 30 days of opening of the foreign register, the company shall file with the Registrar notice of the situation of the office where foreign register is kept. [S. 157(2)]         ­

e.     If the office at which foreign register is kept, is changed, the company shall, within 30 days of such change, file a notice with the Registrar. [S. 157(2)]

f.      If the foreign register is discontinued, the company shall, within 30 days, file a notice with the Registrar. [S. 157(2)]

g.    The foreign register shall be deemed to be a part of the company's register. [S. 158]

h.    In respect of the following matters, the provisions relating to principal register shall also apply to the foreign register: [S. 158(2)]

§  Manner of keeping the register

§   Inspection of register

§  Taking of extracts and copies of the register

§  Closure of register (advertisement for closing the register shall be inserted in some newspaper circulating in the district wherein the foreign register is kept).

i.      Within reasonable time, a copy of every entry made in the foreign register shall be transmitted to the registered office of the company. [S. 158(4)]

j.      A duplicate of the foreign register shall be kept at the registered office. This duplicate register shall be deemed to be a part of the principal register.

k.     Any transaction registered in a foreign register shall not be registered in any other register.

l.      If a foreign register is discontinued, all entries in such foreign register shall be transferred to the principal register.

m.    In case of non compliance of any provision of S.157, the company and its defaulting officer may be fined upto Rs.500 per day. [S. 157(3)]

8.6 Annual Return (Secs. 159 to 162)

a.     Annual Return for Companies having Share Capital (Section 159)

Every company having share capital, must file an ‘Annual Return’ with the Registrar within 60 days from the date of the Annual General Meeting, in the form as specified in Part II of Schedule V (or as new thereto) containing particulars specified in Part I of Schedule V, as they stood on the date of AGM, regarding:

a.     its registered office

b.    the register of its members and debenture-holders

c.     its shares and debentures

d.    its indebtedness

e.     the members and debenture-holders past and present

f.  its directors, managing directors, managers and secretaries past and present.

b.    Annual Return for Companies without Share Capital (Section 160)

Every company not having a share capital shall prepare and file a return with the Registrar within 60 days from the date of the annual general meeting, containing following particulars:

a.     The address of the registered office of the company.

b.    The names of members, date of membership, date of cessation of membership, since the date of the last annual general meeting.

c.     Particulars regarding directors, managers and its secretary at the date of the return.

d.    A statement of particulars of In­debtedness of the company.

e.     Where the annual general meeting has not been held within due date, the company should file the Annual Return specifying the reasons for not holding the annual general meeting within due date.

c.     Signing of Annual Return

The Annual Return should be signed by a Director and by the Manager / Secretary or by 2 Directors (one of them should be Managing Director, where there is one).In case of Listed Company, it shall also be signed by a Secretary in whole time practice.

d.    Filing of Certificate

The company shall also file with the Registrar a certificate along with the annual return, signed by the same person signing the annual return, (in case of listed company, it shall also be certified by whole time secretary) containing the following particulars: (S.161)

a.     A statement that the annual return states the fact as they stood on the day of the annual general meeting, correctly and completely.

b.    A statement that the transfer of all shares and debentures and issue of share certificates, and debenture certificates have been appropriately recorded in the books maintain for the purpose.

c.     A statement by a private company that-

i.    The company has not issued any invitation to the public to subscribe for any shares or debentures of the company; and

ii.   Where the annual return discloses that the number of members of the company exceeds 50, the excess consists of persons who are not to be included in reckoning the number of 50 (i.e., employees of the company).

e.     Penalty: If a company fails to comply with provisions of Annual Returns (s.159 to 161), the company and every defaulting officer shall be punishable with fine upto Rs.500 per day of default. (s.162)