Companies Act Section 300 — Power to order examination of promoters, directors, etc
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) covers the main power. After a winding-up order is made and the Company Liquidator reports to the Tribunal that fraud may have been committed in the company's promotion, formation, business, or conduct of affairs, the Tribunal can order that person or officer to appear before it on a set date and be examined about those matters.
Sub-section (2) states that the Company Liquidator must take part in the examination. For this purpose, the Liquidator may, if the Tribunal specially authorises it, hire legal help that the Tribunal approves.
Sub-section (3) requires the person being examined to give answers on oath. They must answer all questions that the Tribunal puts to them, or allows to be put to them.
Sub-section (4) sets out the rights of the person ordered to be examined. Under clause (a), before the examination, they must be given a copy of the Company Liquidator's report, but they have to pay for that copy themselves. Under clause (b), they may, at their own cost, hire chartered accountants, company secretaries, cost accountants, or legal practitioners who are entitled to appear before the Tribunal under section 432. These professionals may ask the person questions that the Tribunal considers just, to help the person explain or qualify any answers they have given.
Sub-section (5) deals with an application to be exculpated. If the person applies to the Tribunal to be cleared of any charges made or suggested against them, the Company Liquidator must appear at the hearing of that application and point out any matters that seem relevant to the Tribunal.
Sub-section (6) covers costs after a successful application. If the Tribunal, after considering evidence or hearing witnesses called by the Company Liquidator, allows the application made under sub-section (5), it may order payment of such costs to the applicant as it thinks fit.
Sub-section (7) concerns the record of the examination. Notes must be taken down in writing, read over to or by the person examined, and signed by them. A copy must be given to the person, and the notes may later be used as evidence against them. The notes must also be open for inspection by any creditor or contributory at all reasonable times.
Sub-section (8) allows the Tribunal to adjourn the examination from time to time if it thinks fit.
Sub-section (9) permits the Tribunal to direct that the examination be held before any person or authority that the Tribunal authorises.
Sub-section (10) states that the powers of the Tribunal regarding how the examination is conducted, but not regarding costs, may be exercised by the person or authority before whom the examination is held under sub-section (9).
Official Text
(1) Where an order has been made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the promotion, formation, business or conduct of affairs of the company since its formation, the Tribunal may, after considering the report, direct that such person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof.
(2) The Company Liquidator shall take part in the examination, and for that purpose he or it may, if specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by the Tribunal.
(3) The person shall be examined on oath and shall answer all such questions as the Tribunal may put, or allow to be put, to him.
(4) A person ordered to be examined under this section—
(a) shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and
(b) may at his own cost employ chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain or qualify any answers given by him.
(5) If any such person applies to the Tribunal to be exculpated from any charges made or suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application and call the attention of the Tribunal to any matters which appear to the Company Liquidator to be relevant.
(6) If the Tribunal, after considering any evidence given or hearing witnesses called by the Company Liquidator, allows the application made under sub-section (5), the Tribunal may order payment to the applicant of such costs as it may think fit.
(7) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, a copy be supplied to him and may thereafter be used in evidence against him, and shall be open to inspection by any creditor or contributory at all reasonable times.
(8) The Tribunal may, if it thinks fit, adjourn the examination from time to time.
(9) An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.
(10) The powers of the Tribunal under this section as to the conduct of the examination, but not as to costs, may be exercised by the person or authority before whom the examination is held in pursuance of sub-section (9).