Under Section 247 (1A), the Central Government shall appoint one or more inspectors if the Company Law Board in the course of any proceeding before it declares by an order that the affairs of the company ought to be investigated as regards the membership of the company.
This investigation may relate to determination of the true persons, who are or have been financially interested in the success or failure of the company or able to control or materially influence the policy of the company.
Imposition of restrictions upon shares or debentures in certain cases. Company Law Board may impose restriction upon shares or debentures of a company to find out the relevant facts on:
(i) Reference by the Central Government;
(ii) A complaint made by a person in the behalf.
The order for such restriction may be made by the Company Law Board for a period not exceeding three years [(Sec. 250 (2))].
The shares may be subject to the following restrictions:
(a) Any transfer of such shares shall be void;
(b) Where such shares are yet to be issued, they shall not be issued;
(c) No voting right shall be exercisable in respect of such shares;
(d) No further shares shall be issued as right shares in respect of such shares;
(e) No payment shall be made of any sums due from the company on those shares whether in respect of dividend, capital or otherwise, except in case of liquidation of the company [(Sec. 250 (2))].
Where a transfer of shares in a company has taken place and as a result thereof there is likely to be a change in the composition of the Board of Directors of the Company, which may be prejudicial to the public interest, the Company Law Board may direct as follows:
(i) The voting rights in respect of those shares shall not be exercisable for a specified period not exceeding three years;
(ii) No resolution passed or action taken to effect a change in the composition of the Board of Directors before the date of the order shall be effective unless it is confirmed by the Company Law Board [(Sec. 250 (3))].
The Company Law Board has also the power to declare that any transfer of shares during a specified period (not exceeding 3 years) shall be void if it has reasonable ground to believe that such transfer of shares will be prejudicial to public interest [(Sec. 250 (4))].
In case a person contravenes the provisions as given above, he shall be punishable with imprisonment for a term which may extend to 6 months or with fine which may extend to Rs. 50,000 or both [(Sec. 250 (9))].
In case shares in any company are issued in contravention of any restriction given under Sec. 250 (2) above, the company and every officer of the company, who is in default, shall be punishable with a fine which may extend to Rs. 50,000.