CA/CS/CMA Summary Notes for Company Law

Best Company Law Summary Notes for CA/CS/CMA

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Section	Requirement				Provision
149(1)(a)	Minimum number of directors				Public Company -3 Private Company -2 One Person Company - 1
149(1)(b)	Maximum Directors				15 To increase number of directors beyond 15, pass SR in GM
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.
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.
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.
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
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.
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
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
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.
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.
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.
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.
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 % ®
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
Section 183	Contribution to National Defence Fund etc.				Pass BR No Limit on Contribution
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
Section 188	Related Party Transactions  Click on the link)				http://www.kcctutorials.com/1057-2/
4	Minimum Number of Members				-       Private Company – 2 -       Public Company - 7
S – 197 read with Schedule V	Overall Remuneration 11% MD or WTD or Manager 5% Where there is more than one MD or WTD, or any combination thereof 10% Other Directors -          If there is no MD/WTD/Manager -          It there is any MD/WTD/Manager 3% 1% 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. Effective Capital Remuneration per Managerial Person per annum Requirement (i) Negative or less than 5 crores 60 lakhs Provided that such limits shall be doubled if the resolution passed by the shareholders is a special resolution. (ii) 5 crores and above but less than 100 crores 84 lakhs (iii) 100 crores and above but less than 250 crores 120 lakhs (iv) 250 crores and above 120 lakhs plus 0.01% of the effective capital in excess of Rs. 250 crores: 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.
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.
2(68)	Maximum Number of Members in a Private Company				-       200
	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
173	Notice of Board Meeting				-       is sent at least 7 days before the Board Meeting.
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
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
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.
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.
73	Tenure of Deposits				-       Minimum – 6 months -       Maximum – 36 months
149	Tenure of Independent Director				-       Up to 5 years, and Maximum tenures 2
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.
196	Maximum Tenure of Manager, MD or Whole Time Director				-       5 years
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.
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
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
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
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
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.
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
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
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: -
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
66	Reduction of Share Capital				-       SR in GM -       NCLT approval
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
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 .
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
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
GENERAL MEETINGS
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.
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.
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
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
102	Special Business			AGM – Every business other than 4 above is special business. EGM – All business = Special Businesses
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.
103	Quorum (Public Companies)		Number of Members Quorum Up to 1000 5 1001 -5000 15 > 5000 30
103	Quorum (Private Companies)		2
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 -
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
106	Restriction on Voting Rights	Only allowed in following 2 cases 1.      Call in Arrears 2.   Company exercises a right of lien
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
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
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
Voting by Postal Ballot	Compulsory Certain Prescribed businesses notified by CG Not allowed Ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting Optional Other businesses Certain Prescribed businesses notified by CG a.   Alteration of the objects clause of MOA b.   Alteration of AOA for insertion or removal of provisions u/s 2(68) c.   Change in place of RO outside the local limits of any city, town or village d.   Change in objects for which a company   has raised money from public through prospectus and   still has any unutilized amount out of the money so raised e.   issue of shares with DVR f.   Variation of share/debenture/security holders rights g.   Buy-Back h.   Appointment of SSD i.    sale of the whole or substantially the whole of an undertaking of a company as specified under180(1)(a) j.   Providing/making  L/G/S/I u/s 186
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
Difference between Sweat Equity Shares and Employee Stock Option Plan Sweat Equity Shares ESOP Section 54 62(1)(b) Rules Rule 12 of Resolution SR SR but OR in case of private company Validity of SR 12 months NA Allotment to promoters Allowed Not allowed Register Form No. SH. 3 SH. 6 Lock in period 3 years Company has freedom to decide. Pricing To be determined by Registered Valuer Company has freedom to decide. Maximum issue 15% of existing PUP or Rs. 5 crore, whichever is higher in a F/Y. Maximum o/s Sweat Equity shares at a time not to exceed 25 % of total PUC. NA Vesting Period NA Minimum 1 year Valuation Report Required Not required Exercise Period NA Maximum 1 year Discount to face value Allowed Not allowed
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
Difference between Private Placement and Preferential Allotment Basis Private Placement Preferential Allotment Applicable Section Section 42 Section 62(1)(c) Applicable Rules Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 Rule 13 of Companies (Issue of Share Capital and Debentures) Rules, 2014 Offer Document Private Placement Offer Letter in PAS 4 No Format prescribed Maximum number of Allottees 50 at a time, 200 in a FY Same Mode of payment Through cheque, Demand Draft or other banking channels but not by cash.  Any mode. Even allotment may be for any consideration other cash. Valuation Report No valuation report required. Valuation Report required Power in AOA Not required Required Type of Resolution required Special Resolution Special Resolution Allotment Within 60 days from the receipt of Application money Within 12 months of passing SR Minimum Offer value to one investor Rs. 20,000 No such limit prescribed Exceptions of Minimum Value of application and maximum number of allottees Applicable Not Applicable Types of Securities covered Any type of security covered Equity Shares and convertible securities whether partly convertible or fully convertible
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.
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
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.

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)