23. LOSS OF FIFTY PER CENT NET WORTH BY INDUSTRIAL COMPANIES.
(1) If the accumulated losses of an industrial company, as at the end of any financial year (hereinafter referred to as the relevant financial year) have resulted in erosion of fifty per cent or more of its peak net worth during the immediately preceding four financial years, –
(a) the company shall, within a period of sixty days from the date (hereinafter referred to as the relevant date) of finalisation of the duly audited accounts of the company for the relevant financial year –
(i) report the fact of such erosion to the Board; and
(ii) hold a general meeting of the shareholders of the company for considering such erosion;
(b) the board of directors shall, at least twenty-one days before the date on which the meeting under sub-clause (ii) of clause (a) is held, forward, to every member of the company a report as to such erosion and the causes for such erosion;
(c) the company may, by ordinary resolution passed at the meeting, held under clause (a) remove a director (being a director appointed by the members of the company) and fill the vacancy created by such removal, so far as may be, in accordance with the procedure provided in sub-sections (2) to (6) of section 284 of the Companies Act, 1956 (1 of 1956).
(2) A director removed under sub-section (1) shall not be entitled to any compensation or damages for termination of his appointment as director or of any appointment terminating with that as director.
(3) If default is made in complying with the provisions of this section, every director or other officer of the company who is in default shall be punishable with imprisonment which shall not be less than six months but which may extend to two years and with fine.