Government Companies, Registration Offices, Statistics and Nidhis

In one line

Where a Government is a member of a company, an annual report on its working goes before the legislature with the Comptroller and Auditor-General's comments; the Central Government establishes registration offices and appoints Registrars, whose electronic records are evidence; it may require any company to furnish information or statistics; and it may declare a company to be a Nidhi and exempt it from provisions of the Act.

In exam wording: section 2(45) defines a Government company, sections 394 and 395 the annual reports, section 396 the registration offices, sections 397 to 402 the electronic filing and evidence, section 403 the fees, section 405 the information and statistics, and section 406 the Nidhis.

Why the law has this at all

A Government company is a company whose shareholder is the public. The ordinary machinery by which members hold directors to account, a general meeting and a vote, is worthless there, because the only member is a Ministry. So the Act substitutes a different accountability: an annual report laid before Parliament or the State Legislature, with the Comptroller and Auditor-General's comments attached to it.

A registration office is the memory of company law. Almost every obligation in this Act is discharged by filing something with the Registrar, and the value of filing depends on two things: that it can be done conveniently, and that what was filed can afterwards be proved. Sections 398 to 402 answer the first by making the whole system electronic; sections 397 and 399 answer the second by making the Registrar's record admissible without production of the original.

Information and statistics exist because the Central Government administers a statute over lakhs of companies and needs to see the aggregate, not merely the individual return.

And a Nidhi is a small mutual benefit society whose members lend to and borrow from each other. Applying the whole Act to it would be disproportionate, so section 406 lets the Central Government declare a company to be one and disapply or modify provisions for it, subject to Parliament.

Some words this chapter uses

A Government company is defined in section 2(45). The Comptroller and Auditor-General of India audits Government companies under section 143(5) to (7). Electronic form takes its meaning from the Information Technology Act, 2000. A Nidhi or Mutual Benefit Society is a company declared to be one under section 406(1). Prorogued means that a session of a House has been brought to an end.

Government companies: sections 394 and 395

Who they are: section 2(45). A Government company means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary of such a Government company.