Sections 229 and 230 of the Companies Act, 2013: False Statements, Destruction of Documents, Compromise and Arrangement

Updated: 17 September 2026

Sections 229 and 230 of the Companies Act, 2013 deal with two distinct subjects. Section 229 protects the integrity of company investigations by treating specified destruction, falsification, concealment or tampering of documents and knowingly false explanations as fraud. Section 230 provides the principal statutory mechanism through which a company may propose a compromise or arrangement with its creditors or members, subject to the jurisdiction and sanction of the National Company Law Tribunal (NCLT).

On this page

Section 229: false statements and destruction of documents
Consequence under Section 447
Section 230: compromise or arrangement
Key procedure and voting requirements
Applicable rules and official resources

Section 229: Penalty for Furnishing False Statement, Mutilation or Destruction of Documents

Meaning and scope. Section 229 applies during an inspection, inquiry or investigation under the Companies Act. It targets conduct that interferes with documentary evidence or involves a knowingly false explanation. The provision extends to a person required to provide an explanation or statement and to an officer or employee of a company or other body corporate under investigation.

Acts covered by Section 229

The section covers a person who destroys, mutilates, falsifies, conceals, tampers with or unauthorisedly removes documents concerning the property, assets or affairs of the company or body corporate, or is a party to such conduct.

It also covers making, or being a party to making, a false entry in a document concerning the company or body corporate, and providing an explanation that is false and known by the person to be false.

The legal consequence is not a separate fixed penalty within Section 229 itself. The section provides that the person shall be punishable for fraud in the manner provided in Section 447. Accordingly, Section 229 should be read together with the current text of Section 447 and the facts of the particular case.

Connection with Section 447: Punishment for Fraud

Section 447 is the general fraud provision of the Companies Act, 2013. Because Section 229 expressly directs punishment to Section 447, the nature of the alleged conduct, the amount involved, and the applicable statutory thresholds and provisos under Section 447 are relevant when determining consequences.

Practical point: Section 229 is triggered by specified conduct connected with an inspection, inquiry or investigation. Mere inaccuracy is not automatically the same as the statutory conduct described in Section 229; the language of the provision and the required factual elements must be considered.

Section 230: Power to Compromise or Make Arrangements with Creditors and Members

Purpose. Section 230 enables a compromise or arrangement between a company and its creditors, a class of creditors, its members, or a class of members. An application may be made to the NCLT by the company, a creditor or member, and, where the company is being wound up, by the liquidator appointed under the Companies Act or the Insolvency and Bankruptcy Code, 2016, as applicable.

The statutory expression arrangement includes a reorganisation of share capital by consolidation of shares of different classes, division of shares into different classes, or both.

Disclosures to the Tribunal

An applicant under Section 230(1) must make the disclosures required by Section 230(2), including material facts relating to the company, its latest financial position, the latest auditor's report, pending investigations or proceedings, and any reduction of share capital included in the proposal. A corporate debt restructuring scheme must also satisfy the specific disclosure and consent requirements prescribed by the Act and rules.

Notice of the proposed scheme

Where the Tribunal orders a meeting, notice is to be sent to the relevant creditors, members and debenture-holders together with the prescribed information concerning the scheme. The statutory framework also requires notice to specified governmental, tax, regulatory and sectoral authorities, where applicable, so that representations may be made within the prescribed period.

Objections and voting

Section 230 permits objections to a compromise or arrangement by persons meeting the statutory threshold: not less than ten per cent of the shareholding or outstanding debt of not less than five per cent of the total outstanding debt according to the latest audited financial statement.

For approval at a meeting held under Section 230, the statutory test is a majority of persons representing three-fourths in value of the creditors, class of creditors, members or class of members, as applicable, who vote in person, by proxy or by postal ballot. The scheme becomes binding after sanction by the Tribunal, subject to the Act and the terms of the order.

Dispensing with a creditors' meeting

The Tribunal may dispense with a meeting of creditors or a class of creditors where creditors representing at least ninety per cent in value agree and confirm the scheme by affidavit.

Accounting treatment, filing of order and buy-back

A scheme cannot be sanctioned unless the required auditor's certificate confirms that the proposed accounting treatment, if any, conforms to the accounting standards prescribed under Section 133. The Tribunal's order is required to be filed with the Registrar within thirty days of receipt. A compromise or arrangement involving buy-back of securities must comply with Section 68.

Takeover offers

Section 230 also permits a compromise or arrangement to include a takeover offer in the prescribed manner. For listed companies, takeover offers remain subject to the applicable regulations framed by the Securities and Exchange Board of India. An aggrieved party may approach the Tribunal in relation to a takeover offer of a company other than a listed company in the manner prescribed.

Key Procedure under Section 230

Stage	Key requirement
Application	Application to NCLT by an eligible applicant with the scheme and required disclosures.
Tribunal directions	NCLT may direct the calling, holding and conduct of meetings and determine relevant classes.
Notice	Notice and prescribed documents are circulated to affected stakeholders and specified authorities.
Voting	Approval requires the statutory majority representing three-fourths in value of those voting in the relevant class.
Sanction	The scheme requires sanction by NCLT before it becomes binding in the manner provided by Section 230.
ROC filing	The Tribunal's order is filed with the Registrar within the statutory period.

Applicable Rules and Official Resources

The principal procedural rules are the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Among other matters, these rules prescribe the application procedure, disclosures, notices, meetings and forms used for schemes under Sections 230 to 240. The original rules provide for an application under Section 230(1) in Form NCLT-1 with the prescribed supporting documents and scheme disclosures.

Legal update note: Schemes involving companies in insolvency or liquidation can also interact with the Insolvency and Bankruptcy Code, 2016 and the applicable IBBI regulations. The procedural route should therefore be checked against the company's current legal status and the latest rules, regulations and Tribunal directions.

Related Companies Act Provisions

Section 230 forms part of the statutory scheme on compromises, arrangements and amalgamations. Depending on the transaction, related provisions may include Section 231 on enforcement of compromise or arrangement, Section 232 on mergers and amalgamations, Sections 233 and 234 on specified mergers, Section 235 on acquisition of dissenting shareholders' shares, and Section 236 on purchase of minority shareholding.