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Section
|
Requirement
|
Provision
|
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149(1)(a)
|
Minimum
number of directors
|
Public
Company -3
Private
Company -2
One
Person Company - 1
|
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149(1)(b)
|
Maximum
Directors
|
15
To
increase number of directors beyond 15, pass SR in GM
|
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Rule – 3 read with section 149
|
Prescribed
Companies for having at least one woman director
|
(i)
Every
listed company
(ii)
Every
other public co. having
-
PUC
> Rs. 100 crore or
-
TO
> Rs. 300 crore
Explanation
– PUC or TO, as the case may, to be taken as on the last date of latest
audited financial statements.
|
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149(4)
|
Minimum
Independent Directors
|
Listed Public Company – 1/3 of Total number of
directors and
CG may prescribe any class or classes of public
companies
Explanation – any fraction to be rounded off as
one.
|
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Rule - 4
|
Prescribed
public companies to have at least 2 independent directors
|
Prescribed
Companies
PUC > Rs. 10 crore or
TO > Rs. 100 crore or
O/s
Loans, debentures & deposits > Rs. 50 crore
Provided min. no. of independent directors may
increase due to composition of audit committee.
Provided further this Rule not applicable if
none of above three conditions fulfilled for 3 consecutive years.
Explanation – PUC, TO etc. to be considered
existing on the last date of latest audited F/S.
|
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149(11)
|
Maximum
consecutive terms of Independent director notwithstanding anything contained
in section 149(10)
|
2
Consecutive terms, after that such ID not to be appointed or associated in
the company for 3 years after ceasing to be ID
|
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Separate
meetings of Independent Directors :
1)
The independent directors of the company shall hold at least one meeting in a year, without
the attendance of non-independent directors and members of management;
2)
All the independent directors of the company shall strive to be
present at such meeting;
3)
The meeting shall :
a)
review the performance of non-independent directors and the Board as a
whole;
b)
review the performance of the Chairperson of the company, taking into
account the views of executive directors and non-executive directors;
c) assess the quality, quantity and timeliness
of flow of information between the company management and the Board that is
necessary for the Board to effectively and reasonably perform their duties.
Evaluation
mechanism :
1)
The performance evaluation of independent directors shall be done by
the entire Board of Directors, excluding the director being evaluated.
2)
On the basis of the report of performance
evaluation, it shall be determined whether to extend or continue the term of
appointment of the independent director.
|
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151 read with Rule 7
|
Appointment
of Small Shareholder Director
|
®
when to be
appointed – In the case of Listed company only
®
Small
shareholders are those who hold shares of nominal value of Rs.20,000 or less
®
Maximum
small shareholder directorship at one time - 2
®
Tenure:- 3 years
|
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163
|
Option to adopt
principle of Proportional representation for appointment of directors
|
·
If AOA so
provides, at least 2/3rd of total directors shall be so appointed
·
Voting may be
by single transferable vote or system of cumulative voting or otherwise and
·
such
appointment may be made once in 3
years
·
Tenure of
directors so appointed - 3 years
·
Casual vacancy
of such directors – as per section 161(4) i.e by BOD
|
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165
|
Maximum
limit of Directorships
|
-
20
directorships including alternate directorship
-
Maximum number
of directorships in public companies = 10
-
Private Ltd co.
which is a Holding or Subsidiary of a public company to be considered as
public company.
|
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177
|
Audit
Committee
|
Applicability – Listed
Company and such other class or classes of companies, as may be prescribed,
shall constitute Audit Committee.
Prescribe Public Companies (Rule – 6)
ü PUC
> Rs. 10 crore or
ü TO
> Rs. 100 crore or
ü Total o/s Loans, debentures & deposits > Rs. 50 crore
Explanation – PUC, TO etc. to be considered
existing on the last date of latest audited F/S.
Composition –
Minimum
3 Directors and out of them majority to be of independent directors:
Provided that majority
of members of Audit Committee including its Chairperson shall be persons with
ability to read and understand, the financial statement.
|
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Section 178
|
Nomination and Remuneration Committee
|
Applicability – Every
listed company and prescribed companies
Prescribe Public Companies (Rule – 6)
ü PUC
> Rs. 10 crore or
ü TO
> Rs. 100 crore or
ü Total o/s Loans, debentures & deposits > Rs. 50 crore
Explanation – PUC, TO etc. to be considered
existing on the last date of latest audited F/S.
Composition -
>3 non-executive
directors out of which at least ½ shall be independent directors:
Provided that the
chairperson of the company (whether executive or non-executive) may be
appointed as a member of the Nomination and Remuneration Committee but shall
not chair such Committee.
|
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Section 178
|
Stakeholders
Relationship Committee
|
The Board of Directors of a company which consists of more than
1,000 shareholders, debenture-holders, deposit-holders and any other
security holders at any time during a financial year shall constitute a
Stakeholders Relationship Committee consisting of a chairperson who shall be
a non-executive director and such other members as may be decided by the
Board.
|
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Section 181
|
Company to
contribute to bona fide charitable & other funds
|
®
By passing BR in
BM – up to 5% of average net profits for the 3 immediately preceding f/y, in
any financial year.
®
By passing OR in
GM – beyond 5 %
®
|
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Section 182
|
Prohibitions
and restrictions regarding political contributions
|
ð Who cannot
make:-
(i) Government Companies, (ii) Companies which has been in existence for less
than 3 years
ð To Whom:- (i) to
political party, (ii) to any other person for political purposes
ð Maximum
amount in a f/y to Contribute:- 7.5% of average of last 3 F/Ys Profits
ð Requirement - Pass BR in
BM
|
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Section 183
|
Contribution
to National Defence Fund etc.
|
Pass BR
No Limit on
Contribution
|
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Section 186
|
Loan,
Investment, Guarantee & Security by Company
|
-
Limit – 60%
(PUC + FR +SP) or 100% ( FR + SP), whichever is higher
-
Within Limit –
Pass Unanimous BR
-
Beyond Limit –
Pass Unanimous BR + SR in GM
|
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Section 188
|
Related
Party Transactions Click on the link)
|
http://www.kcctutorials.com/1057-2/
|
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4
|
Minimum
Number of Members
|
-
Private Company
– 2
-
Public Company
- 7
|
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S – 197 read with Schedule V
|
If Company is having losses or insufficient profits,
then company may pay remuneration as per Schedule – V.
Remuneration as per Schedule V is based upon
Effective Capital.
Conditions to be fulfilled
(i) Payment
of remuneration is approved by a resolution passed by the Board and, in the
case of a company covered under sub-section (1) of section 178 also by the
Nomination and Remuneration Committee;
(ii) Company
has not made any default in repayment of any of its debts (including public
deposits) or debentures or interest payable thereon for a continuous period
of thirty days in the preceding financial year before the date of appointment
of such managerial person;
(iii)
Special resolution has been passed at the
general meeting of the company for payment of remuneration for a period not
exceeding three years;
(iv)
a statement along with a notice
calling the general meeting referred to in clause (iii) is given to
the shareholders containing the following information,
If Company doesn’t want to follow remuneration as prescribed under
Schedule V, then it is required to have approval from Central Government.
|
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Sitting fee
|
Following provisions are applicable with regard
to sitting fee.
a)
Such sum as may be decided by the Board of directors shall
be paid.
b)
Sitting fee shall not exceed Rs. 1,00,000 per meeting of the Board
or committee thereof:
c) For
Independent Directors and Women Directors, the sitting fee shall not be less
than the sitting fee payable to other directors.
|
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2(68)
|
Maximum
Number of Members in a Private Company
|
-
200
|
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When
Special Notice Required
|
-
Notice for
Removal of Auditor
-
Notice for
Appointment of Auditor other than Retiring Auditor
-
Notice for
Removal of Director
-
Notice for
Appointment of Director other than Retiring Director
|
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173
|
Notice
of Board Meeting
|
-
is sent at
least 7 days before the Board Meeting.
|
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65
|
Reserve
Capital
|
When
- Converting any unlimited
company into Limited Company
How
- Keeping certain portion of
uncalled capital as Reserve or
- By raising nominal capital to
be kept as Reserve Capital
Requirement
- OR in GM
Reserve Capital?
- Which can be called up only
at the time of winding up
|
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128
|
Place
of Keeping Books of Accounts
|
-
To be kept at
Registered Office
-
To Keep any
other place in India, Pass BR and intimate ROC within 7 days of passing BR
|
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55
|
Issue
of Preference Shares
|
-
Power in AOA
-
SR in GM
-
Tenure - Up to
20 years
-
In case of
issued by Infrastructure companies or for Infrastructure projects - Up to 30 years
-
No voting
rights, but have voting rights in the following cases
a.
Not paid
dividend for a consecutive period of 2 years
b.
Have any
interest in the agenda being discussed in the meeting
c.
Resolutions
relating to winding up
-
Sources of
Redemption
a.
Out of Fresh
Issue
b.
Out of Free
Reserves & SP
-
If redemption
made out of Free Reserves then equal amount to be transferred to Capital
Redemption Reserve.
-
Such CRR can
only be used for issuing Bonus Shares.
|
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71
|
Issue
of Debentures
|
Requirement
-
Non-Convertible
Debentures – BR
-
Optionally
Convertible Debentures – SR
Tenure of Secured Debentures
-
Up to 10 years
-
In case of
Infrastructural Projects – up to 30 years
Appointment of Debentures Trustee
-
If Debentures
holders > 500
Why Debentures Trustee
-
To protect the
interest of Debenture holders
If Debenture Trustee opines that Co. has or likely to have
insufficient funds to repay the debentures holders
-
Then he may
apply before NCLT to make an order to company for not
incurring any further liability
If Company fails to repay Debentures or interest on due dates
-
Debenture
holder/s, debenture Trustee may file petition before NCLT.
-
NCLT will order
the company to repay.
|
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73
|
Tenure
of Deposits
|
-
Minimum – 6
months
-
Maximum – 36
months
|
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149
|
Tenure
of Independent Director
|
-
Up to 5 years,
and Maximum tenures 2
|
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151
|
Appointment
of Small Shareholders Directors
|
- Applicable to Only Listed
Companies
- Company may appoint,
otherwise Small Shareholders themselves may appoint.
- Tenure of SSD - Up to 3 years
- Re-appointment – Not possible
-
One person may be SSD in 2 companies at a time
- SSD to have attributes of
Independent Director.
|
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196
|
Maximum
Tenure of Manager, MD or Whole Time Director
|
-
5 years
|
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123
|
Payment
of Dividend
Sources
of Dividend
-
Current year Profits
-
Past Accumulated Profits
-
Government Grants
Dividend out of Reserves (Conditions)
-
< 10% (PUC + FR)
-
< average rate of
dividend of last 3 years
- Balance
in Reserve after declaration of dividend > 15% of PUC
Transfer of Profits to Reserve
A company may,
before the declaration of any dividend in any F/Y, transfer such percentage
of its profits for that financial year as it may consider appropriate to the reserves of the company:
Interim
Dividend
BOD may declare ID during any F/Y
out of the surplus in the profit and loss account and out of profits of the
financial year in which such interim dividend is sought to be declared:
Provided that in case the company
has incurred loss during the current financial year up to the end of the
quarter immediately preceding the date of declaration of interim dividend,
such interim dividend shall not be declared at a rate higher than the average
dividends declared by the company during the immediately preceding three
financial years.
|
Timeline
-
Deposit into a
separate bank a/c within 5 days of declaration
-
Pay to
shareholders within 30 days from the date of declaration
-
Deposit unpaid
dividend into ‘ Unpaid Dividend A/c’ within 7 days of lapse of 30 days
-
After the lapse
of 7 years , deposit Unpaid Dividend into “Investor Education and Protection
Fund” A/c
Penalty for Late payment of dividend
- Every Director à Imprisonment – up to 2 years
and Fine > ₹ 1,000 per day
- Company – 18% p.a Simple
Interest
Exceptions:
- Operation of Law
-
Shareholder’s directions cannot be complied with.
- Dispute regarding ownership
of shares
- Dividend lawfully adjusted by
company
-
No default of company in delay
Amount to be transferred to IEPF
- Donations given by CG/SG etc.
- Unclaimed & unpaid
dividend
- Matured deposits
- Matured debentures
- Redemption amt. of preference
shares remaining unpaid for 7 or more years
- Interest & income on
investment made out of such fund
- Amount lying in the IEPF u/s
Section 205C of CA, 1956
- Sale proceeds of fractional
shares arising out of issuance of bonus shares, merger and amalgamation for
seven or more years;
-
Such other sums as may be
prescribed.
|
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77
|
Registration
of Charge with ROC
|
Timeline
-
Within 30 days
from Creation
-
Within 300 days
from Creation with special permission of ROC in case of delay
-
With the
Permission of CG in case of delay beyond 300 days
Consequences of Non-Registration
- Void against liquidator
-
Void against creditors
|
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79
|
Registration
of Modification of Charge with ROC
|
-
Within 30 days
from Modification
-
Within 300 days
from Modification with special permission of ROC in case of delay
-
With the
Permission of CG in case of delay beyond 300 days
|
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82
|
Registration
of Satisfaction of Charge with ROC
|
-
Within 30 days
from Satisfaction
-
With the
Permission of CG in case of delay beyond 30 days
|
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135
|
Applicability
of Corporate Social Responsibility to specified companies
|
Every company having
-
Net worth of ₹
500 crore or more, or
-
Turnover of ₹
1,000 crore or more or
-
Net profit of ₹
5 crore or more
|
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Other points relating to CSR
-
Create CSR Committee
-
Composition -
Consisting of 3 or more directors, out of which at least one director shall
be an independent director.
Duties of BOD regarding CSR
The Board of every company referred to
in sub-section (1) shall,—
(a)
after taking into account the recommendations made by the Corporate
Social Responsibility Committee, approve the Corporate Social Responsibility
Policy for the company and disclose contents of such Policy in its report and also place it on the
company's website, if any, in such manner as may be prescribed; and
(b)
ensure that the activities as are included in Corporate Social
Responsibility Policy of the company are undertaken by the company.
(c)
ensure that the company spends, in every financial year, at least two
per cent of the average net profits of the company made during the three
immediately preceding financial years, in pursuance of its Corporate Social
Responsibility Policy:
Provided that the company shall give preference to the local area and areas
around it where it operates, for spending the amount earmarked for
Corporate Social Responsibility activities:
Provided further
that if the company fails to spend such
amount, the Board shall, in its report made under clause (o) of
sub-section (3) of section 134, specify the reasons for not spending the
amount.
If the Board of a company decides to undertake its CSR activities approved by the CSR committee, through a registered trust or a registered society or a company established under section 8 of the
Act by the company, either singly or along with its holding or subsidiary or associate company, or along
with any other company or holding or subsidiary or associate company of
such other company, or otherwise
Check whether-
·
such trust, society or company
have an established
track record of three
years in undertaking similar programs or projects;
· The company has specified the project
or programs to be undertaken through these entities and every detail related thereto
ACTIVITIES WHICH MAY BE INCLUDED BY
COMPANIES IN THEIR CORPORATE SOCIAL RESPONSIBILITY POLICIES (Schedule – VII)
Activities relating to:—
(i) eradicating hunger, poverty and malnutrition, promoting
preventive health care and sanitation
including contribution to Swach Bharat Kosh set up by Central Government for
the promotion of sanitation and making
available safe drinking water;
(ii) promotion of education including special education and
employment enhancing vocation skills especially among children, women,
elderly and the differently abled and livelihood enhancement projects;
(iii) promoting gender equality, empowering women, setting
up homes and hostels for women and orphans; setting up old age homes, day
care centres and such other facilities for senior citizens and measures for
reducing inequalities faced by socially and economically backward groups;
(iv) ensuring environmental sustainability, ecological
balance, protection of flora and fauna, animal welfare, agroforestry,
conservation of natural resources and maintaining quality of soil, air and
water including contribution to clean Ganga Fund set-up by Central Government
for rejuvenation of river Ganga;
(v) protection of national heritage, art and culture
including restoration of buildings and sites of historical importance and
works of art; setting up public libraries; promotion and development of
traditional arts and handicrafts;
(vi) measures for the benefit of armed forces veterans, war
widows and their dependents;
(vii) training to promote rural sports, nationally recognized
sports, Paralympic sports and Olympic sports;
(viii) contribution to the Prime Minister’s National Relief
Fund or any other fund set up by the Central Government for socio-economic
development and relief and welfare of the Scheduled Castes, the Scheduled
Tribes, other backward classes, minorities and women;
(ix) contribution or funds provided to technology incubators
located within academic institutions which are approved by the Central
Government;
(x) rural development projects.
|
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139
|
Applicability
of Rotation Policy to specified
companies regarding Auditors
|
Meaning
of specified companies: Listed company or all
unlisted public companies having
-
Paid up share capital
of ₹ 10 crore or more,
-
All private limited
companies having paid up share capital of ₹. 20 crore or more,
-
All companies having
public borrowings from financial institutions, banks or public deposits of ₹.
50 crores or more
|
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141
|
Maximum
Auditorships
|
-
20 Companies and Limit
of 20 Companies includes:-
a) Public Companies
b) Private Companies having paid up capital of ₹ 100 crore or more
Limit Excludes:
a.
Small Companies
b.
Dormant Companies
c.
One Person Companies
d.
Private Companies with
Capital less than ₹ 100 crore
|
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138
|
Internal
Audit
|
(a)
every listed company;
(b)
every unlisted public company having-
(i)
PUC > ₹
50 crore or more during the preceding
financial year; or
(ii)
TO > ₹ 200 crore rupees or more during the preceding financial
year; or
(iii)
outstanding loans or
borrowings from banks or public financial institutions exceeding ₹
100 crore rupees or more at any point of
time during the preceding financial year; or
(iv)
outstanding deposits
of ₹ 25 crore rupees or
more at any point of time during the preceding financial year; and
(c)
every private company having-
(i)
turnover of ₹
200 crore rupees or more during the
preceding financial year; or
(ii)
outstanding loans or
borrowings from banks or public financial institutions exceeding ₹
100 crore rupees or more at any point of
time during the preceding financial year:
-
|
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204
|
Secretarial
Audit Applicability
|
-
Every listed company
-Every
public company having a paid-up share capital of ₹ 50 Crore rupees
or more; or
-
Every public company having a turnover of ₹
250 Crore rupees or more.
By
Whom – CS in Practice
Appointing
Authority - BOD
|
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66
|
Reduction
of Share Capital
|
-
SR in GM
-
NCLT approval
|
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61
|
Alteration
of Capital
|
Alteration
è
Conversion of share into stock
è
Conversion of stock into share
è
Increase in Authorised Capital
è
Consolidation of Shares
è
Divisions or Split up of Shares
-
OR in GM Requires
|
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48
|
Variation
of Shareholders Rights
|
-
Either MOA or AOA
contains such power
-
If not , then Terms of
Issue do not prohibit such variations
-
If any of the above
condition fulfilled, then further by passing SR in GM or by approval of
shareholder which are ¾ or more in value .
|
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68
|
Buy
Back of Shares
|
-
Up to 10% of Paid up
Capital and Free Reserves – BR in BM
-
More than 10% but up
to 25% of PUC + FR – Then SR in GM
-
Maximum BB Equity in 1
F/Y – 25%
-
Max. Post Deb-Equity
Ratio – 2:1
-
No BB in next 12
months
-
No Further Issue in
next 6 months Exceptions
è Right
Issue
è Bonus
Issue
è Conversion
of Already Issue Debentures etc.
è ESOP
-
Declaration of
Solvency to be filed with ROC
-
Securities bought back
to be extinguished within 7 days from the completion of BB
Sources of BB
-
Fresh Issue
-
Free Reserves and SP
CRR – if BB made out
of FR, then CRR of equivalent amount to be created. (S- 69)
From Whom
-
From Open Market
-
From Existing
Shareholders on proportionate Basis
-
From Employees
|
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76
|
Public
Deposits
|
Eligible Companies
-
Public Companies having a Net worth of not less than ₹ 100 crore or a Turnover of not less than ₹
500
-
Pass SR (OR if within
limit u/s 180(1)(c)
-
File copy of SR with
ROC
-
File copy of circular
at least 30 days prior to issue
-
Issue Circular in DPT
– 1 in Newspapers (English + Vernacular)
-
Post Copy of Circular
on website of co.
-
Validity of Circular - until 6 months from the
end of F/Y or date of AGM, which is earlier.
-
Tenure of deposits –
Min. 6 months, Max. 36 months
Exception to
above requirement:
(a) For short –term requirement
(b) Minimum tenure 3 months
(c) Not to exceed 10% (PUC + FR+SP)
-
Maximum Deposits –
25%(PUC + FR+SP) including O/s Deposits
-
There must be no default in repayment of deposits or
interest thereon.
-
Issue receipt of
deposit within 21 days of receipt of
deposit money.
-
Return of Deposit – To
be filed with ROC in DPT – 3 Form till 30th June of every year
containing particulars of deposits as on 31st March . To be
certified by auditor of company.
-
-
Interest for
non-payment – 18% p.a for overdue period.
-
Penalty for
Non-Payment
è Co. – Min. ₹ 1 cr, Max. 10 cr
è OID – Min. ₹ 25 lac, Max. ₹ 2 cr or Imprisonment up to 7
years or both. Section 447 also applicable , if default is knowingly.
-
Penalty for violation
of Rules, where no penalty prescribed – up to ₹ 5,000 and up to ₹ 500 for
continuing default.
-
Where to approach if Company makes default in
repayment- NCLT
-
Companies exempt from
these provisions:
a)
NBFC
b)
Banking Companies
c)
Housing Finance companies
|
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GENERAL
MEETINGS
|
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96
|
AGM
-
To be convened by every company other
than OPC
-
1st AGM – within 9 months from
the end of 1st F/Y
-
Subsequent AGM – within 15 months from
previous AGM or within 6 months from the end of F/Y, whichever is earlier.
-
Extension – Subsequent AGM may be
extended by ROC for special reasons, but up to 3 months only.
-
During business hrs, i.e between 9 a.m
and 6 p.m
-
Not on a national holiday
-
Place – at RO or at some other place
within city, town or village in which RO of co. is situated.
-
In
case of Section 8 company, the time, date and place of each AGM are decided
upon before-hand by the Board having regard to the directions, if any,
given in this regard by such company in the general meeting
|
EGM by
Requisitionists u/s 100
BOD to convened EGM on requisition by
-
Co. having share
capital – members holding > 1/10 SC on date of requisition
-
Co. not having share
capital – members having > 1/10 voting power on date of requisition
-
BOD to proceed for
meeting within 21 days of requisition
-
BOD to convene EGM
within 45 days of requisition
-
If BOD doesn’t convene
– Requisitionists themselves may convene the EGM within 3 months from the
date of requisitionists
-
Expenditure incurred
by requisitionists to be reimbursed to them by company and to be recovered
from defaulting directors.
|
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101
|
Notice
of GM
|
-
Must be sent at
least 21 clear days before the meeting.
-
Shorter notice
must be approved by 95% members to make it valid.
-
S- 8 Companies
– 14 clear Days notice
-
Notice to be
given to – Every member/director/auditor
-
Accidental
omission to send notice not to invalidate proceedings of meeting.
|
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115
|
Special
Notice
|
-
Is sent by
member to company. It should be sent at least 14 days before the meeting but
not earlier than 3 months before the meeting. After receipt of special notice
company issues notices to all other members at least 7 days before the
meeting.
Resolutions requiring Special Notice
a)
Resolution for appointment of an auditors
other the retiring auditor at an annual general meeting
b)
Resolution at an annual general meeting to
provide that a retiring auditor shall not be re-appointed
c)
Resolution to remove a director before the
expiry of his period of office
d) Resolution
to appoint another director in place of the removed director
|
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102
|
Ordinary
Businesses (all to be discussed in AGM)
|
(a)
consideration of F/S and the reports of the BOD and auditors;
(b) declaration of any
dividend;
(c) appointment of directors
in place of those retiring;
(d) appointment of, and the
fixing of the remuneration of, the auditors; and
|
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102
|
Special
Business
|
AGM – Every business
other than 4 above is special business.
EGM – All business =
Special Businesses
|
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102
|
Material Facts to be stated in Explanatory
Statement
A statement setting out the following material
facts concerning each item of special business to be transacted at a general
meeting, shall be annexed to the notice calling such meeting, namely:—
(a) the
nature of concern or interest, financial or otherwise, if any, in respect of
each items of—
(i) every director and the manager, if any;
(ii) every other key managerial personnel; and
(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);
(b) any other information and facts that may
enable members to understand the meaning, scope and implications of the items
of business and to take decision thereon.
|
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103
|
Quorum
(Public Companies)
|
|
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103
|
Quorum
(Private Companies)
|
2
|
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103
|
Important points regarding quorum
-
To be present
personally
-
To be present within ½
hours from time appointed for meeting
-
If not so present,
meeting to be adjourned in the next week, same place, same day and same time.
But in case of meeting convened by requisitionists u/s 100, meeting shall
stand cancelled.
-
AOA may provide for
higher quourum
-
|
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105
|
Proxy
|
-
Any member entitled to
vote may appoint
-
Proxy form to be
annexed with the notice u/s 101.
-
Proxy Form to be
deposited at least 48 hours before the meeting
-
Proxy to have right to
vote only at voting by poll but not to speak
-
Proxy need not be a
member
-
One person may be a
proxy for maximum 50 members and can represent maximum 10% of total share
capital of company. But one person may become proxy for a single member
holding more than 10% share capital.
-
Inspection of Proxy
Form
·
Give intimation to co.
at least 3 days before meeting
·
Allowed to inspect
during 24 hours before the meeting and up to conclusion of meeting.
-
Proxy Form – MGT. 11
|
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106
|
Restriction
on Voting Rights
|
Only allowed in following 2 cases
1.
Call in Arrears
2.
Company exercises a
right of lien
|
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107 + 109 + 110
|
Value
of vote
|
-
Voting by show of hands – 1 member = 1 vote
-
Voting by poll – 1 share = 1 vote
-
Postal Ballot = 1 member = 1 vote
-
E-voting – 1 share = 1 vote
|
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107
|
Voting
by show of hands
|
Voting to be carried out by show of hands unless
-
Done through e-voting
u/s 108 or
-
Held by poll as
demanded u/s 109
|
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109
|
Voting
by Poll
|
Who may demand poll
-
Co. having share
capital – members present in person or by proxy having > 1/10
voting power or holding SC of not less than ₹ 5 lac
-
Co. not having share
capital – members present in person or by proxy having > 1/10
voting power
Withdrawal of Demand
of Poll
-
Any time by person who
made such demand
When poll to be taken after demand
-
In case of appointment
of chairman or adjournment of meeting – immediately
-
Other cases – within
48 hours from the time when demand was made
Power of Chairman
-
To appoint scrutiniser
to carry out the process of poll
- To regulate the manner of conduct of poll
|
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Voting by Postal Ballot
|
|
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2(63) read with section 114
|
Ordinary
& Special Resolutions
|
-
Ordinary
Resolution – Passed with simple majority
-
Special
Resolution – Passed with 3 times majority i.e votes in favour are 3 times of
votes cast against
|
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Difference between Sweat Equity Shares and
Employee Stock Option Plan
|
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Call in Arears & Advance
|
Rate of Interest on call in arears – 10%
p.a
Rate of Interest on Call in Arears – 10%
p.a or mentioned in AOA.
Call in advance (S-50)
Þ
can be
received only if allowed by AOA
ROI on call in advance - 12% p.a
|
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Difference between Private Placement and
Preferential Allotment
|
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Right issue u/s 62
Provisions regarding Right shares are
covered under section 62.
a) To existing shareholders - It must be offered to existing shareholders in
proportion, as nearly as circumstances admit, to the paid-up share capital on
those shares.
b) Letter of Offer - Such offer must be made by sending ‘Letter of Offer’
to such existing shareholders.
c) Contents of LOO - Such
Letter of Offer must specify the number
of shares offered and time limit to accept such offer.
d) Time allowed - Time allowed to accept offer must be at least 15 days and not exceeding 30 days from the date of the offer.
e) Dispatch of Notice/LOO - Notice containing offer shall be despatched through registered post
or speed post or through electronic mode to all the existing shareholders at least 3 days before
the opening of the issue.
f)
Deemed
Declination - If offer is not accepted within the time specified
in the Letter of Offer then it shall be deemed to have been declined;
g) Right to renounce - Right of renouncement of such offer shall be subject to
provisions contained in the AOA but if AOA are silent on this issue then
offer aforesaid shall be deemed to include a right exercisable by the person
concerned to renounce the shares offered to him or any of them in favour of
any other person; and the notice referred to in clause (i) shall contain a
statement of this right;
h) Disposal of unsubscribed shares - After
the expiry of the time specified in the notice, or on receipt of earlier
intimation from the person to whom such notice is given that he declines to
accept the shares offered, the Board of Directors may dispose of them in such
manner which is not dis-advantageous to the shareholders and the company;
i) Conversion of loans into shares - If such shares are issued on conversion of any
loan or debentures issued earlier, then all these provisions shall not be
applicable if Special Resolution was passed at the time of raising such loan
or issuing such debentures.
|
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Conditions for issuing Bonus Shares u/s 63
a)
Power in AOA
b)
OR in GM
c)
Fully paid up
d)
Existing partly paid up shares to be made fully paid up
e)
Sources – FR/SP/CRR (but not created by revaluation of assets)
f)
No Default in payment of Fixed Deposits/Debt securities
g)
No default in statutory dues of employees
h)
Not to be issued in lieu of dividend
i)
Not to be withdrawn after declaration
|
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Time Limit
for Delivery of certificates
Section 56(4) states
that every company, unless prohibited by any provision of law or any order of
court, tribunal or other authority, deliver the certificates of all
securities allotted, transferred or
transmitted
(i)
Within a
period of 2 months from the date of incorporation, in the case of subscribers
to the memorandum;
(ii)
Within a
period of 2 months from the date of allotment, in the case of any allotment
of any of its shares;
(iii)
Within a
period of 1 month in case of transfer or transmission of securities.
(iv) Within a period of 6 months from the date of
allotment in the case of any allotment of debentures.
|
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Some Additional Important Topics
Annual Return (Section 92)
1)
Applicability - Every
company shall prepare a return in E-form MGT 7 containing the required
particulars as they stood on the close of the financial year.
2)
Signature –
a) One Person Company and Small Company - By the company secretary, or where there is no company
secretary, by the director of the company
b) Other Companies - By
a director and the company secretary, or where there is no company secretary,
by a company secretary in practice.
3) Certification –
Applicability –
a)
a listed company or,
b)
a company having paid-up capital of
Rs. 10 crore or more or Turnover of Rs. 50 crore or more,
By whom - By a company secretary in practice, stating that the annual
return discloses the facts correctly and adequately and that the company has
complied with all the provisions of this Act.
4) Filing of Annual Return
–
a) The copy of Annual Return to be filed with the Registrar,.
b) AR to be filed within 60 days
from the date
è
on which the AGM is held or
è
where no AGM is held in any year
within 60 days from the date on which the annual general meeting should have been held together with the
statement specifying the reasons for not holding the AGM, with such fees or
additional fees as may be prescribed, within the time as specified, under
section 403.
5)
An extract of the annual return in E-form MGT-9 shall be attached to the Director’s
Report.
6) Contents of Annual
Return
The Annual Return shall contain the following
particulars:
a.
its registered office, principal
business activities, particulars of its holding, subsidiary and associate
companies;
b.
its shares, debentures and other
securities and shareholding pattern;
c.
its indebtedness;
d.
its members and debenture-holders
along with changes therein since the close of the previous financial year;
e.
its promoters, directors, key
managerial personnel along with changes therein since the close of the previous
financial year;
f.
meetings of members or a class
thereof, Board and its various committees along with attendance details;
g.
remuneration of directors and key
managerial personnel;
h.
penalty or punishment imposed on the
company, its directors or officers and details of compounding of offences and
appeals made against such penalty or punishment;
i.
matters relating to certification of
compliances, disclosures as may be prescribed;
j.
details, as may be prescribed, in
respect of shares held by or on behalf of the Foreign Institutional Investors
indicating their names, addresses, countries of incorporation, registration and
percentage of shareholding held by them; and
k.
such other matters as may be
prescribed,
7) Penalty on Company - If a company fails to file its annual return before the expiry
of the period specified under section 403 with additional fee, the company
shall be punishable with fine which shall not be less than Rs. 50, 000 but
which may extend to Rs. 5,00,000 and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to 6
months or with fine which shall not be less than Rs. 50,000 but which may
extend to five lakh rupees, or with both.
8)
Penalty on CS - If a company secretary in practice
certifies the annual return otherwise than in conformity with the requirements
of this section or the rules made thereunder, he shall be punishable with fine
which shall not be less than Rs. 50,000 but which may extend to Rs. 5,00,000.
Copies of the Registers and Annual Return
[Rule 16 of the Companies (Management and Administration) Rules, 2014]
Copies of the registers maintained under
section 88 or entries therein and annual return filed under section 92 may be
furnished to any member, debenture-holder, other security holder or beneficial
owner of the company or any other person on payment of such fee as may be
prescribed in the Articles of Association of the company but not exceeding
rupees ten for each page.
Preservation of Register & Records of
Members and Annual Return [Rule 15 of the Companies (Management and
Administration) Rules, 2014]
The provisions with regard to preservation of
records are contained in Rule 15
a)
Register of members along
with the index
àTenure
- Permanently
àCustody
– CS of the company or any other person authorized by the Board for such
purpose; and
b)
Register of debenture
holders or any other security holders along with the index
àTenure
- 8 years from the date of redemption of debentures or securities, as the case
may be
àCustody
– CS of the company or any other person authorized by the Board for such
purpose; and
c)
Copies of all Annual Returns
prepared under section 92 and copies of all certificates and documents required
to be annexed thereto
àTenure
- shall be preserved for a period of 8 years from the date of filing with the
Registrar.
d)
Foreign register of members
àTenure
- Permanently unless it is discontinued and all the entries are transferred to
any other foreign register or to the principal register.
àCustody
- The foreign register shall be kept in the custody of the person
authorized by the Board
for authentication of the entries made therein.
e)
Foreign register of
debenture holders or any other security holders
àTenure - shall be preserved for a period of
8 years from the date of redemption of such debentures/ securities.
àCustody - The foreign register shall be kept
in the custody of the person authorized by the Board for authentication of the
entries made therein.
Surrender
of shares
The Companies Act
contains no provision for surrender of shares. Surrender of shares is valid
only when Articles of Association provide for the same and:
(i)
Where forfeiture of such shares is
justified; or
(ii) When shares are surrendered in exchange for new shares of same
nominal value.
“Surrender of shares” means the surrender to
the company on the part of the registered holder of shares already issued.
Where shares are surrendered to the company, whether by way of settlement of a
dispute or for any other reason, it will have the same effect as a transfer in
favour of the company and amount to a reduction of capital. But if, under any
arrangement, such shares, instead of being surrendered to the company, are
transferred to a nominee of the company then there will be no reduction of
capital [Collector of Moradabad v. Equity Insurance Co. Ltd., (1948) 18 Com
Cases 309: AIR 1948 Oudh 197]. Surrender may be accepted by the company under
the same circumstances where forfeiture is justified. It has the effect of releasing the shareholder whose surrender is
accepted from further liability on shares.
Forfeiture of shares
a)
Power in AOA - There must be power in the Articles of Association, otherwise it
will be void. If Articles authorise, the forfeiture shall include forfeiture of
all dividends declared in respect of the forfeited shares and such dividend is
not actually paid before the forfeiture of the shares.
a)
Board Resolution - Board Resolution is required for forfeiture.
b)
There is no requirement of NCLT
approval.
c)
As per Regulations - Forfeiture must be made strictly in accordance with the
regulations regarding notice, procedure and manner stated therein.
d)
Bona fide - The power of forfeiture must be exercised bona fide and in the
interest of the company. It should not be collusive or fraudulent.
e)
Proper Notice - Before the shares of a member are forfeited, a proper notice to
that effect must have been served. Regulation 29 of Table F provides that a
notice shall name a further day (not less than 14 days from the date of service of the notice)
on or before which the payment is to be made. The notice must also mention that
in the event of non payment, the shares will be liable to be forfeited.
Both forfeiture
and surrender lead to termination of membership. But in the former case, it is
at the initiative of company and in the latter case at the initiative of member
or shareholder.
Signature in Various Cases
Annual
Return
One
Person Company and Small Company -
By the company secretary, or where there is no company secretary, by the
director of the company
Other Companies - By a director and the company
secretary, or where there is no company secretary, by a company secretary in
practice.
Meeting u/s 100
The notice shall be signed by all the requistionists or by a
requistionists duly authorized in writing by all other requistionists on their
behalf or by sending an electronic request attaching therewith a scanned copy
of such duly signed requisition.
Signing of Financial
Statements
Financial statement should
be signed on behalf of the board by atleast
·
chairperson of company, duly
authorised board, or
·
two directors of whom one should be
the managing director, and
·
chief executive officer, if he is
director, chief financial officer and company secretary, if any in the company
è One person company's financial statements shall be signed by only
one director.
Signing of Board Report
Board Report and any annexure thereto must be signed by its
Chairperson of the company if he is authorised by the Board and where he is not
so authorised, shall be signed by at least two directors, one of whom shall be
a managing director, or by the director where there is one director.[ section
134(3)
Signing of Minutes Book
Each page of every Minute book shall
be initialled or signed and the last page of the record of proceedings of each
meeting or each report in such books shall be dated and signed.
a)
Board or
Committee of Board Meeting Minutes - By the chairman of the said meeting or the Chairman of the next
succeeding meeting;
b)
General
Meeting Minutes - By
the Chairman of the same meeting within the aforesaid period of 30 days or in
the event of the death or inability of that Chairman within that period, by a
director duly authorized by the Board for the purpose;
c)
In case
of every resolution passed by postal ballot - By the Chairman of the Board within the aforesaid period of 30 days
or in the event of there being no chairman of the Board or the death or
inability of that chairman within that period, by a director duly authorized by
the Board for the purpose.
Common Seal
Companies (Amendment) Act, 2015, has diluted the mandatory
adoption of common seal. The Company may or may not adopt a common seal. The
company may contract under its common seal, if any and in case, the company
does not have a common seal then according to the requirements of that
particular section the contract shall be validated.
Effects on the provisions of Company
Law
As per section 12(3)(a) , Every company shall have its name
engraved in legible characters on its seal, if any.
Execution of bills of exchange etc. – Section 22
(1) A bill of exchange, hundi or promissory note shall be deemed
to have been made, accepted, drawn or endorsed on behalf of a company if made,
accepted, drawn, or endorsed in the name of, or on behalf of or on account of,
the company by any person acting under its authority, express or implied.
(2) A company may, by writing under its common seal, if any, authorise any person, either generally or in
respect of any specified matters, as its attorney to execute other deeds on its
behalf in any place either in or outside India.
“Provided that in case a company does not have
a common seal, the authorisation under this sub-section shall be made by two
directors or by a director and the Company Secretary, wherever the company has
appointed a Company Secretary.”;
(3) A deed signed by such an attorney on
behalf of the company and under his seal shall bind the company.
Section – 46
(1) A Certificate, “issued under the common seal, if any, of the
company or signed by two directors or by a director and the Company Secretary,
wherever the company has appointed a Company Secretary, specifying the shares
held by any person, shall be prima facie evidence of the title of the person to
such shares.
(2) A duplicate certificate of shares may be issued, if such
certificate —
a) is proved to have been lost or destroyed; or
b) has been defaced, mutilated or torn and is surrendered to the
company.
(3) Notwithstanding anything contained in the articles of a company,
the manner of issue of a certificate of shares or the duplicate thereof, the
form of such certificate, the particulars to be entered in the register of
members and other matters shall be such as may be prescribed.
(4) Where a share is held in depository form, the record of the
depository is the prima facie evidence of the interest of the beneficial owner.
(5) If a company with intent to defraud issues a duplicate certificate
of shares, the company shall be punishable with fine which shall not be less
than five times the face value of the shares involved in the issue of the
duplicate certificate but which may extend to ten times the face value of such
shares or rupees ten crores whichever is higher and every officer of the company
who is in default shall be liable for action under section 447.
Limits under
Section 188
Rule 15(3) of the Companies (Meetings of Board and Its
powers) Rules, 2014 provides the limits as follows:
(a)
sale, purchase or supply of any goods or materials;
sale, purchase or supply of any goods or
materials, directly or through appointment of agent, exceeding 10% of the
turnover of the company or Rs. 100 crore, whichever is lower, as mentioned in
clause (a) and clause (e) respectively of sub-section (1) of section 188;
(b) selling or otherwise disposing of, or buying, property of any
kind;
selling or otherwise disposing of or buying
property of any kind, directly or through appointment of agent, exceeding 10%.
of net worth of the company or Rs. 100 crore, whichever is lower, as mentioned
in clause (b) and clause (e) respectively of sub-section (1) of section 188;
(c) leasing of property of
any kind;
leasing of property of any kind exceeding 10%.
of the net worth of the company or 10% of turnover of the company or Rs. 100
crore, whichever is lower, as mentioned in clause (c) of sub- section (1) of
section 188;
(d) availing or rendering of any services;
availing or rendering of any services,
directly or through appointment of agent, exceeding 10% of the turnover of the
company or Rs. 50 crore, whichever is lower, as mentioned in clause (d) and
clause (e) respectively of sub-section (1) of section 188:
Note: the limits specified above (a to d)
shall apply for transaction or transactions to be entered into either
individually or taken together with the previous transactions during a
financial year.
(e) appointment
of Related party to any office or place of profit in the company, its
subsidiary company or associate company
Approval of the members of the company shall
be required for appointment to any office or place of profit in the company,
its subsidiary company or associate company at a monthly remuneration exceeding
Rs. 2,50,000 by a resolution.
As per explanation (a) to section 188(1), the
expression “office or place of profit” means any office or place-
(i) where such office or place is held
by a director, if the director holding it receives from the company anything by
way of remuneration over and above the remuneration to which he is entitled as
director, by way of salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise;
(ii) where such office or
place is held by an individual other than a director or by any firm, private
company or other body corporate, if the individual, firm, private company or
body corporate holding it receives from the company anything by way of
remuneration, salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise; (f) underwriting the subscription of any
securities or derivatives of the company:
Remuneration paid for underwriting the subscription of any
securities or derivatives thereof of the company exceeding one per cent of the
net worth of the company.
As per Second proviso to section 188 (1) of
the Companies Act, 2013, no member of the company shall vote on such
resolution, to approve any contract or arrangement which may be entered into by
the company, if such member is a related party.
In case of Private Company, exemption has been
given to the private company from applicability of second proviso to section
188(1), who is also a related party, to vote on such resolution at the general
meeting. (vide MCA notification dated
05.06.2015)
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