SC clarifies Section 126 of Companies Act

The Supreme Court has settled an important legal question regarding the correction of the register of members under the Companies Act, 2017, holding that records maintained in the Central Depository System (CDS) and a company's own register of members have separate and independent legal status. Consequently, restrictions applicable to one system do not automatically apply to the other.

The detailed judgment was issued by a five-member bench headed by Justice Shahid Waheed and comprising Justice Naeem Akhtar Afghan, Justice Malik Shahzad Ahmad Khan, Justice Aqeel Ahmed Abbasi and Justice Shakeel Ahmed.

The court was hearing Civil Appeal along with three connected cases. The key question before the bench was whether applications filed for rectification of the register of members under Section 126 of the Companies Act, 2017 are subject to any limitation period.

It was submitted before the court that the Lahore High Court had dismissed similar petitions on the ground of delay, applying Article 181 of the Limitation Act, 1908.