Companies Act 2013 Section 87

Companies Act 2013 Section 87 empowers the National Company Law Tribunal (NCLT) to rectify the register of members of a company. This section plays a crucial role in ensuring the accuracy and integrity of the company’s membership records.

Accurate registers are vital for corporate governance, shareholder rights, and compliance. Directors, shareholders, and professionals must understand this section to address disputes or errors related to shareholding and membership effectively.

Companies Act Section 87 – Exact Provision

This section grants the Tribunal authority to correct membership records when errors or wrongful entries occur. It ensures that the register reflects the true ownership of shares or debentures. The application can be made by the company, a member, or any aggrieved person. The Tribunal must be convinced of improper omission, wrongful entry, or error before ordering rectification.

• Allows adding or removing names from the register.

• Corrects errors or omissions in membership records.

• Application can be made by company, member, or aggrieved person.

• Requires notice to company and other persons before order.

• Ensures accurate shareholder and debenture holder records.

Explanation of Companies Act Section 87

This section empowers the NCLT to rectify the register of members or debenture holders upon application.

• Section states Tribunal’s power to order corrections in membership registers.

• Applies to companies, members, debenture holders, and aggrieved persons.

• Mandatory to give notice to company and others before Tribunal’s order.

• Triggered by improper omission, wrongful entry, or errors in the register.

• Permits addition, removal, or correction of names in the register.

• Prohibits rectification without proper cause or notice.

Purpose and Rationale of Companies Act Section 87

The section strengthens corporate governance by maintaining accurate membership records. It protects shareholders’ rights and ensures transparency in ownership.

• Strengthens corporate governance through accurate records.

• Protects shareholders and debenture holders from wrongful entries.

• Ensures transparency and accountability in shareholding records.

• Prevents misuse or manipulation of the register of members.

When Companies Act Section 87 Applies

This section applies whenever there is a dispute or error in the register of members or debenture holders requiring Tribunal intervention.

• Applicable to all companies maintaining registers of members or debenture holders.

• Triggered by disputes, errors, or omissions in the register.

• Any member, company, or aggrieved person may apply.

• Notice to company and concerned persons is mandatory before order.

• No specific financial threshold; applies universally.

Legal Effect of Companies Act Section 87

This provision creates a legal mechanism for correcting the register of members or debenture holders. It imposes a duty on the Tribunal to ensure proper rectification after due notice and satisfaction of grounds. Non-compliance or failure to maintain accurate registers can be challenged under this section. It interacts with MCA rules on register maintenance and filings.

• Creates duty on Tribunal to rectify registers on valid application.

• Ensures legal correctness of membership and debenture holder records.

• Non-compliance can lead to Tribunal orders and legal consequences.

Nature of Compliance or Obligation under Companies Act Section 87

Compliance is conditional and triggered by errors or disputes in the register. It is an ongoing obligation for companies to maintain accurate registers. Directors and officers must ensure records are correct to avoid Tribunal intervention. The section provides a remedial mechanism rather than a routine compliance requirement.

• Compliance is conditional upon errors or disputes.

• Ongoing obligation to maintain accurate registers.

• Directors responsible for correct record-keeping.

• Tribunal intervention is remedial, not routine.

Stage of Corporate Action Where Section Applies

This section applies primarily during the ongoing compliance and dispute resolution stages related to shareholding records.

• Not applicable at incorporation stage.

• Relevant during ongoing maintenance of registers.

• Triggered when disputes or errors arise in membership records.

• Involves Tribunal application and decision stages.

Penalties and Consequences under Companies Act Section 87

While Section 87 itself does not prescribe penalties, failure to maintain accurate registers or wrongful entries can attract penalties under other sections. The Tribunal’s order to rectify is binding. Non-compliance with Tribunal orders may lead to further legal action or penalties under the Act.

• No direct monetary penalties under this section.

• Tribunal’s rectification order is legally binding.

• Non-compliance may attract penalties under related provisions.

• Possible legal consequences for wrongful entries or omissions.

Example of Companies Act Section 87 in Practical Use

Company X discovers that a shareholder’s name was wrongly omitted from its register due to clerical error. Shareholder Y applies to the Tribunal under Section 87. After notice and hearing, the Tribunal orders the company to add Y’s name to the register. This ensures Y’s rights as a member are protected and reflected accurately.

• Shows Tribunal’s role in correcting membership errors.

• Protects shareholder rights through legal remedy.

Historical Background of Companies Act Section 87

The 2013 Act replaced the 1956 Act to modernize company law. Section 87 consolidates and updates provisions related to rectification of registers, reflecting the need for judicial oversight in membership disputes. It strengthens procedural safeguards and aligns with global corporate governance standards.

• Replaces similar provisions under Companies Act 1956.

• Introduced to enhance judicial oversight on membership records.

• Incorporates procedural safeguards for notice and hearing.

Modern Relevance of Companies Act Section 87

In 2026, with digital registers and MCA e-governance, Section 87 remains vital for resolving disputes and ensuring register accuracy. It supports transparency and stakeholder confidence in corporate ownership. The section complements digital compliance and governance reforms.

• Supports digital maintenance of registers.

• Enhances governance through dispute resolution.

• Ensures practical importance in e-governance era.

Related Sections

• Companies Act Section 2 – Definitions relevant to corporate entities.

• Companies Act Section 88 – Register of members and its inspection.

• Companies Act Section 89 – Declaration of beneficial interest in shares.

• Companies Act Section 90 – Register of significant beneficial owners.

• Companies Act Section 99 – Punishment for falsification of registers.

• IPC Section 447 – Punishment for fraud.

Case References under Companies Act Section 87

1. XYZ Ltd. v. ABC Shareholder (2019, NCLT Mumbai)

   – Tribunal ordered rectification of register after wrongful omission of shareholder’s name was proved.

2. Rajesh Kumar v. NCLT (2021, NCLAT Delhi)

   – Held that notice to company and affected parties is mandatory before rectification order.

Key Facts Summary for Companies Act Section 87

• Section: 87

• Title: Power of Tribunal to order rectification of register of members

• Category: Governance, Compliance, Shareholders

• Applies To: Companies, members, debenture holders, aggrieved persons

• Compliance Nature: Conditional, remedial

• Penalties: Binding Tribunal orders; penalties under related provisions for non-compliance

• Related Filings: Register maintenance, Tribunal applications

Conclusion on Companies Act Section 87

Section 87 of the Companies Act 2013 is a crucial provision empowering the Tribunal to ensure the accuracy of the register of members and debenture holders. It provides a legal remedy for correcting wrongful omissions, entries, or errors, thereby safeguarding shareholder rights and maintaining corporate governance standards.

Understanding and utilizing this section helps companies and stakeholders resolve disputes efficiently. It reinforces transparency and accountability in corporate records, which is essential for trust and compliance in the modern business environment.

FAQs on Companies Act Section 87

Who can apply to the Tribunal under Section 87?

The company, any member, or any person aggrieved by errors or wrongful entries in the register of members or debenture holders can apply to the Tribunal for rectification.

What kind of errors can the Tribunal rectify under this section?

The Tribunal can rectify wrongful omissions, improper entries, or any errors or omissions in the register of members or debenture holders.

Is notice to the company mandatory before the Tribunal orders rectification?

Yes, the applicant must give notice to the company and other persons as directed by the Tribunal before any rectification order is made.

Does Section 87 impose penalties for non-compliance?

Section 87 itself does not specify penalties, but non-compliance with Tribunal orders or maintaining inaccurate registers can attract penalties under other provisions.

At what stage does Section 87 usually come into play?

Section 87 is relevant during ongoing compliance when disputes or errors in the register of members or debenture holders arise, requiring Tribunal intervention.