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Presentation on Companies Act, 2013
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A P A R A D I G M S H I F T
COMPANIES ACT, 2013
Shirin Bhatt & Associates
CONTENTS
Chapter Topic
Chapter-I Preliminary
Chapter-II Incorporation
Chapter-III Prospectus & Allotment
Chapter-IV Share Capital & Debentures
Chapter-V Deposits
Chapter-VI Charges
Chapter-VII Management & Administration
Chapter-VIII Dividend
Chapter-IX Accounts of Companies
Chapter-X Audit and Auditors
Chapter-XI Appointment & Remuneration of Directors
Shirin Bhatt & Associates
CONTENTS
Chapter Topic
Chapter-XII Meeting of Board and its Powers
Chapter-XIII Appointment & Remuneration of Managerial Personnel
Chapter-XIV Inspection, Inquiry and Investigation
Chapter-XV Compromises, Arrangements and Amalgamation
Chapter-XVI Prevention of Oppression and Mismanagement
Shirin Bhatt & Associates
CHAPTER-I-NEW DEFINITIONS
Shirin Bhatt & Associates
CHAPTER-I-NEW DEFINITIONS
Shirin Bhatt & Associates
Financial Year April 01st to March 31st Incorporation post January 01st then March 31st of
following year
Officer & Officer in
Default
WTD KMP Specified Director or all directors if not so specified Person under Immediate Authority of Board Every Director actively involved
Private Company Maximum number of members increased from 50 to 200
Associate Company significant influence (control of min 20%. of total share capital, or of business decisions under an agreement)
and includes a joint venture
Charge interest or lien on Property or assets
CHAPTER-I-NEW DEFINITIONS
Shirin Bhatt & Associates
Financial Statement Additions:
Cash Flow Statement Statement on Changes in Equity
Key managerial
personnel
CEO/MD/Manager CS CFO KMP s are responsible for major decisions enlisted below:
- Prohibition on insider trading/forward dealing in securities.
- Included in Officer/officer in default/related party along with
relatives.
- Authority to sign document / proceedings / contract
companys behalf. - Responsible for disclosures in annual return.
- Required to disclose interest/concern & changes to company
within 30 days of appointment/ relinquishment.
- In case KMP gains undue benefit from disgorgement of
company assets, he shall be held personally liable if the same is
proved in inspection of company.
CHAPTER-I-NEW DEFINITIONS RELATED PARTY
Shirin Bhatt & Associates
Company
Director or
Relative
KMP or Relative Firm
Director/ Relative is
partner
PVT Co
DIR/MGR is DIR or Member
Public CO
DIR/MGR is Director
Or with Relatives
Holding > 2%
Holding / Subsidiary
/ Associate or Fellow Subsidiary
Corporate having shadow Directors
Person giving advice,
directions or instructions Exc. Prof.
KMP or Relative of Holding Co
CHAPTER-I-NEW DEFINITIONS RELATIVES
Members of HUF
Spouse Father*/ Mother*
Brother*/ Sister*
Son*/His Wife
Daughter*/ Her
Husband
*Includes Step
Relations
Shirin Bhatt & Associates
CHAPTER-I-NEW DEFINITIONS
Small Company
Other than a Public Company
PUC < 50 Lacs Turnover < 2
Crore
Not Applicable to:
-Holding
-Subsidiary -Non-Profit Company
-Co. governed by special Act
Shirin Bhatt & Associates
CHAPTER II: INCORPORATION
Shirin Bhatt & Associates
CHAPTER II: INCORPORATION
Main Objects to be classified into:
A) Main objects
B) Incidental Matters
Commencement of Business: Now PVT Co is also required to take COB
Boards-Name and RO of Co to be affixed outside every premise in vernacular language
Stationary- To mention -name and address, CIN Telephone No., Fax No., E-Mail ID and Website (If any)
Shirin Bhatt & Associates
CHAPTER II: INCORPORATION ETC
Shifting of RO (One State to another):
Time frame for RD- 2 months
Alteration of Article:
Public to Private to be confirmed by Tribunal
Alteration of AOA to be regd. In 15 days
Subsidiary not to hold shares in its holding
Service of Documents:
-Electronic Mode has been recognized
Shirin Bhatt & Associates
CHAPTER II: INCORPORATION ONE PERSON COMPANY
One member & one Nominee
Only Indian Citizen Resident in India
Limit- Only One OPC (Member/Nominee)
Incorporation/Conversion not allowed to Section 8 Co/ NBFC
Mandatory Conversion
Paid Up >50Lacs within 6 months of , or
Annual turnover > 2 Crores within 6 months of last day of F.Y.
No Voluntary Conversion before expiry of 2 years of Incorporation
Conversion after meeting minimum requirements for PVT & Public Co
A PVT Co may also get converted into OPC if it meets the Eligibility of Capital & turnover
Key Features:
Shirin Bhatt & Associates
CHAPTER-III-PROSPECTUS & ALLOTMENT
Shirin Bhatt & Associates
CHAPTER-III-PROSPECTUS & ALLOTMENT
Class Action for mis-statement in prospectus or fraudulent inducement to invest
A class action, a class suit, or a representative action is
a form of lawsuit in which a large group of people collectively bring a claim to court and/or
in which a group of defendants is being sued.
Shirin Bhatt & Associates
CHAPTER-IV- SHARE CAPITAL & DEBENTURES
Prohibition on issue of shares at discount except as Sweat Equity
Preference Shares can now be issued for a period exceeding 20 to 30 Years for Infra Projects
Shirin Bhatt & Associates
CHAPTER-IV- SHARE CAPITAL & DEBENTURES
Shirin Bhatt & Associates
Further issue of share capital
Right Issue ESOP
Others
(Special Resolution)
These provisions are now applicable to conversion of debenture or loan to
shares of a Private Limited Company.
CHAPTER-IV- SHARE CAPITAL & DEBENTURES BONUS SHARES
Sources: Free reserves
Securities premium account
Capital redemption reserve
Not revaluation of F.A.
Conditions: Authority of AOA
Authority of General Meeting
No default in F.D. or Debt Securities
No default in Statutory dues of employees
Decisions once taken cant be rolled back
Shirin Bhatt & Associates
CHAPTER-IV- SHARE CAPITAL & DEBENTURES PREFERENTIAL ALLOTMENT
Shirin Bhatt & Associates
Definition
Procedural Aspects
Otherwise than Right Issue, ESOP, Bonus Issue, Public Issue, Sweat Equity or Depository Receipts
- Authority of AOA
- Special Resolution
- To be Fully paid at the time of allotment
- Price Valuation by Registered Valuer
- Every detail and justification to be provided to shareholders
CHAPTER-V DEPOSITS
Shirin Bhatt & Associates
CHAPTER-V DEPOSITS DEEMED DEPOSITS- SHARE APPLICATION
On receipt of Share Application allotment to be made within 60 Days
Else refund the amount within 15 days of end of above period.
Else the amount shall be treated as Deposit
Shirin Bhatt & Associates
Any adjustment of the amount shall not be treated as refund
CHAPTER-V DEPOSITS DEEMED DEPOSITS- ADVANCE
Advances becoming refundable due to reason company accepting money doesnt have
permission/ approval to deal :
Advance against supply of goods for > 365 Days
Advance received as consideration for property under a agreement or arrangement
Advance under long term project for supply of Capital Goods
Shirin Bhatt & Associates
CHAPTER-V DEPOSITS DEEMED DEPOSITS- AMOUNT FROM DIRECTOR
Shirin Bhatt & Associates
Receipt of amount from Director if such Director does not furnish:
A declaration in writing to the effect that the amount is not given out of funds acquired by
him by borrowing or accepting loans or deposits from others
CHAPTER-VI- REGISTRATION OF CHARGES
Shirin Bhatt & Associates
CHAPTER-VI- REGISTRATION OF CHARGES
Definition
"charge" means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.
Implication
The definition is open ended. List of Charges to be registered dropped.
Therefore every charge/mortgage etc is to be registred
Shirin Bhatt & Associates
CHAPTER-VI- REGISTRATION OF CHARGES
Upto 30 days
Upto 300 days- with Additional fee
Beyond 300 days Application to RD for Extension of Time
If not registered by Company within 30 days the Charge Holder may apply. ROC to give 14 days notice to Company & then Register
Charge Registration
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION CONTENTS OF ANNUAL RETURN
Promoters, Directors & KMPs
Business activities contributing 10% or more of T.O
Details of Holding, Subsidiary and Associate
Changes in the Capital Structure
Turnover and Net Worth of the Company
Shareholding of KMP and promoters
Details of Board, committee and Members meetings
Remuneration of Directors & KMPs
Penalties, Punishment, Compounding
List of applicable filling under Companies Act and rules
Annual Return to be signed by Director and CS (if not then by Practicing CS) except OPC & Small Company
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION RECORDS-SHIFT TO ELECTRONIC MODE
All Registers/records can be maintained in Electronic Form
KMPs responsible to maintain Records
Daily back-up
KMP to ensure the safety and limited access to records
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION ANNUAL GENERAL MEETING
1st AGM within 9 months of closing of 1st F.Y.
AGM can be held on Public Holiday but not on National Holiday
Time- between 09.00 A.M. to 6.00 P.M.
An OPC is exempt from holding AGM
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION GENERAL MEETINGS
Notice may be given in Electronic Mode
Notice of General Meeting shall also be placed on website of the Company, if any.
An EGM of the Company can now be held only in INDIA
Shirin Bhatt & Associates
CHAPTER VII-MANAGEMENT & ADMINISTRATION MINUTES
General Meeting of Members
Meeting of Board
Meeting of Creditors
Meeting of Committee
Separate Minutes Book
BM- Chairman of Meeting or Director Authorised
GM- Chairman of Meeting or next Meeting
Minutes to be signed within
30 days
Shirin Bhatt & Associates
CHAPTER VIII-DECLARATION AND PAYMENT OF DIVIDEND
Shirin Bhatt & Associates
CHAPTER VIII-DECLARATION AND PAYMENT OF DIVIDEND
The dividend to be deposited in a separate bank account
in Scheduled Bank within 5 days of declaration
Electronic mode of payment of Dividend has been recognized in the Act.
Shirin Bhatt & Associates
CHAPTER VIII-DECLARATION AND PAYMENT OF DIVIDEND
Transfer to Reserves of the Company- As company may consider appropriate
No declaration from reserves except Free Reserves subject to rules
Shirin Bhatt & Associates
CHAPTER VIII-DECLARATION AND PAYMENT OF
DIVIDEND UNPAID DIVIDEND
Now a member can claim refund from IEPF also
Dividend unpaid for 7 years to be transferred to IEPF-Statement to be filed with ROC
Within 90 days thereof prepare Statement containing names, addresses & amount due to such members and place on website of Company
Transfer within 7 days thereof to unpaid Dividend A/c
Unpaid Dividend after 30 days of declaration
Shirin Bhatt & Associates
CHAPTER VIII-DECLARATION AND PAYMENT OF DIVIDEND UNPAID DIVIDEND- PENALTY
Non-payment within 30 days- All Directors involved
Imprisonment upto 2 years
AND
Fine Rs. 1000 per day
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES
Company to maintain at its Registered Office Financial Statement that depict true and fair view of transactions including branches.
Books of Accounts with supporting to be kept for 8 years
Summarised return to be sent by the Branch Office
Non Compliance- MD, WTD (Finance) or CFO Imprisonment upto 1 year or Fine upto 5 Lacs or Both
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES
Books may be kept in E-mode
System for storage, retrieval, display or printout as decided by Audit Committee or Board
Periodical Back-up to be kept in servers located in India
Details relating to E-records to be intimated to ROC at the time of filling of Financial Statement
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES FINANCIAL STATEMENTS
Along with financial statements, Consolidated Financial Statements of all subsidiaries and the company shall be prepared and laid before the Annual General Meeting
The company shall attach with its financial statements a separate statement containing salient features of its subsidiary
For the purpose of this clause Subsidiary includes a JV or an Associate
Provisions applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements also
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES SCHEDULE-II DEPRECIATION
The useful lives of several tangible and intangible assets are significantly lower than under erstwhile Schedule XIV
Useful life of asset not >the useful life specified in Part C & the residual value of an asset not be >5% of the original cost of the asset
If different from the above limits, justification for the difference to be disclosed in Financial Statements
For Intangible Assets Accounting Standards to be followed
No separate rate for double and triple shifts
No specific requirement to charge 100% depreciation on assets whose actual cost does not exceed Rs.5000/-
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES FINANCIAL STATEMENTS
Reopening of Accounts
Mandatory- When earlier accounts were prepared in fraudulent manner or the affairs of the Company were mismanaged casting a doubt on reliability of statements on Court/Tribunals Order.
Voluntary- The Board may prepare revised financial statements in respect of any of the 3 preceding financial years after obtaining approval of the Tribunal on an application made by the company, if it appears to them that
(a) financial statements of the company; or
(b) the report of the Board, do not comply with the provisions of Section 129 (True and Fair View and AS compliant amongst others) related to financial statements or Section 134 related to financial statements / Boards Report
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES BOARD REPORT-CONTENTS
Annual Return Extracts
No. of Board Meetings
Directors Responsibility Statement
Inter-Corporate Loans, Guarantees or Investments
Contracts or Arrangements where Directors are interested
Material Changes and Commitments affecting Financial Position
Statement indicating development and implementation of a Risk Management Policy, identification of risks which in
Boards Opinion may threaten the Company
CSR Policy developed and implemented during the year
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES CORPORATE SOCIAL RESPONSIBILITY
APPLICABILITY OF CSR
Shirin Bhatt & Associates
Net Worth 500 CR Turnover 1000 Cr
Net Profit 5 Crore
CHAPTER IX- ACCOUNTS OF COMPANIES CORPORATE SOCIAL RESPONSIBILITY
CSR Committee 3 or more Directors
PVT Co having 2 Director then 2
CSR Expenditure - 2% of Av. N.P. of last 3 F.Y.
Failure to spend- Board Report to disclose reason
Preference to the local area and areas around Co. where it operates.
Annual Report on CSR to form part of Board Report
Display of activities on Website
Activities only for Employees do not qualify
CSR Policy-program & monitoring process
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES CSR- ACTIVITIES
Apart from existing activities
May be via Trust/Society/Section 8 Co registered by Co/Holding/Subsidiary/Associate
Collaboration with other Companies
Activity in India Only
Contribution to Political Parties does not qualify
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES CSR- SCHEDULE VII
Hunger, poverty health,
sanitation Education
Gender Equality,
Weaker section Environment
National Heritage, Art
Armed Forces Sports PM relief fund &
other funds
Funds to Technology incubators
Rural Development
Shirin Bhatt & Associates
CHAPTER IX- ACCOUNTS OF COMPANIES INTERNAL AUDIT
Turnover Rs. 200 Cr
Outstanding Borrowings Rs.100 Cr at any point of time
Private Company
Shirin Bhatt & Associates
Internal Auditor may or may not be an employee of the Company C.A. whether in practice or not can be an Internal Auditor Audit Committee to determine the scope, periodicity, methodology etc.
CHAPTER X - AUDIT AND AUDITORS
Shirin Bhatt & Associates
CHAPTER X - AUDIT AND AUDITORS AUDITORS APPOINTMENT
For 5 years at a time
To be ratified by the shareholders at every AGM
If not ratified another Auditor to be appointed
Mandatory Rotation of Audit Firm after Completion of 2 consecutive terms of 5 years if Borrowings > Rs. 50 Cr or
Paid-up > Rs. 20 Cr.
Period prior to commencement of Act also counted
Mandatory Rotation to be complied in 3 years
Members may decide for rotation of Audit Partner
Removal only after approval of C.G and S.R.
Shirin Bhatt & Associates
CHAPTER X - AUDIT AND AUDITORS PROHIBITED DEGREE OF RELATION WITH AUDITOR
Shirin Bhatt & Associates
Company
Holding
Associate
Fellow Subsidi
ary
Subsidiary
-Relative or Partner having following relation
within prohibited degree:
a. Holding any security or interest > Rs. 1 Lac
b. Indebted > 5 Lac
c. Given Guarantee or provided Security >1 Lac
d. Person or Firm has directly or indirectly
business relationships.
-Person whose relative is a Director or KMP in
the Company
-Person directly or via Subsidiary or associate or
entity is providing services prescribed
CHAPTER X - AUDIT AND AUDITORS
Remuneration
To be decided by AGM
Remuneration to include- a) Expenses, b) Any facility
Right to access of records of subsidiaries for consolidation
Auditor to comment on Internal Financial Control System and its operating effectiveness
Branch Audit is mandatory
Auditor bound to directly disclose to CG any fraud by officers or employees within 60 days
Shirin Bhatt & Associates
CHAPTER X - AUDIT AND AUDITORS COST AUDIT
Applicable on Companies as Government may Order
Cost Auditors Remuneration as decided by BOD/Audit Committee to be ratified by Members
Report submitted to Board to be filed with CG within 30 days
CG may call for further information
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
OPC to have One Director (Minimum)
Company can increase maximum no of Directors beyond Fifteen by passing an SR
Every Company to have Resident Director (182 days)
Consent, DIN and Declaration mandatory from the Director before Appointment.
Every Return, Information or Particulars to be provided under the Act to mention DIN of the Director signing the same.
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Listed Co
Paid-Up > 100 Cr
Turnover > 300 Cr
Women Director
(Public Co.)
Paid-Up > 10 Cr
Turnover > 100 Cr
Borrowing > 50 Cr
Two Independent
Directors
(Public Co.)
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Director not to be appointed without DIN
Director bound to intimate changes in DIN particulars within 30 days of Change
No person who failed to get appointed in AGM can be appointed as Additional Director
Alternate Director may be appointed in case a Director is out of India for not less than three months.
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
DISQUALIFICATION OF DIRECTORS
Company to File Form DIR-9 within 30 days of failure: Fails to file Financial Statement/Annual Return Fails to repay deposit, interest, dividend or Fails to redeem debentures
Director to file his disqualification with ROC Disqualification:
Offence relating to related parties Not taking DIN Directorship of following Companies:
Non filing of Financial Statements/Annual Return Failure to pay deposit/interest/redeem Debentures or interest
thereon/dividend & default continues for 1 year
Conviction for any offence under any act
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS DISQUALIFICATION OF DIRECTORS
Non filing of Financial Statements/Annual Return
Failure to pay deposit/ interest/ redeem Debentures or interest thereon/dividend
Company to
immediately file Return in
case of Failure to:
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Vacation of Office of Director
Absence from all meetings during 12
months
Contravention of provisions relating to Related Party
Transactions
Failure to disclose interest
Shirin Bhatt & Associates
CHAPTER XI - APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Resignation of Director
Board is duty bound to take note of resignation.
Such fact to form part of next Board Report
Director to file his resignation with ROC.
Effective Date: Date of Receipt from the Company or Date mentioned in the Resignation whichever is later.
Director shall remain liable for the offences that occurred during his tenure.
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
Meetings of Board
Four Meetings in a year.
Not more than 120 days to elapse between two consecutive meetings
OPC & Small Companies to have minimum one meeting in each half of calendar year
BM to be held at a written notice of Seven Days
A BM may be held by Video Conferencing or by other Audio-Visual Means
Quorum means Quorum of uninterested Directors
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
VIDEO CONFERENCING
Approval of Annual Financial Statements
Approval of Board Report
Approval of Prospectus
Audit Committee Meeting for consideration of Annual Financial Statements
Approval of Matter relating to amalgamation, merger, demerger, acquisition & takeover
Matters not allowed by Video Conferencing
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS
POWERS VIDEO CONFERENCING-PROCEDURAL ASPECTS
Chairperson to ensure sufficient security
Safekeeping of Record of Meeting
Ensure no person other than authorised is attending
Roll Call at beginning and end of meeting
Ensure Audibility & visibility throughout meeting
Notice to specify the option to attend by Electronic means
Person intending to attend by Electronic Means shall give declaration to the effect at start of Calendar Year
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS RESOLUTION BY CIRCULATION
Now Resolution can be passed by circulation even when the Director is out of India
Documents can be sent by Electronic means
If 1/3rd of the Directors decide that the matter to be dealt at a meeting of the Board then such matter shall
be put before the Board by the Chairperson.
The Resolution passed shall be noted at next meeting and shall form part of the minutes
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS VIGIL MECHANISM
De
fin
itio
n
The mechanism for genuine concerns of Directors & Employees allowing direct access to the audit committee chairman in appropriate or exceptional cases
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS VIGIL MECHANISM- APPLICABILITY
Listed Companies
Co. having deposits from public
Co. having borrowing > Rs. 50 Crore
Applicability
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS VIGIL MECHANISM- OPERATION
Operation by audit committee
Audit Committee to oversee the operation of the mechanism, formulate guidelines for the activities and identify and delegate competent personnel/committee to operate the mechanism
In case a Co is not required to constitute Audit Committee a Director may be nominated for same
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS VIGIL MECHANISM
Disclosure of mechanism- Website, if any, and in the Boards report & further communication to Employees
Safeguards against victimization- Rules & Act are silent on anonymity but same may be applied
Action against repeated frivolous complaint- Suitable Action
Maintenance of adequate documentation- adequate and auditable documentation of all the concerns received, minutes of the deliberations, investigation working papers etc
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS POWER TO BE EXERCISED AFTER SPECIAL RESOLUTION
Sell, Lease or otherwise dispose of an undertaking or substantially (20% or more of value as per last audited Balance Sheet) whole of an undertaking
Undertaking -investment of the company exceeds 20% of its net worth or an undertaking which generates 20% of the total income.
To exceed the borrowing beyond the Paid-up Capital and free Reserves (excluding temporary loans which are repayable on demand or within 6 months from the date of Loan)
Relaxation in repayment of debt due from Director.
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS LOAN TO DIRECTORS
Shirin Bhatt & Associates
No Direct or indirect Loan including
represented by Book Debt or guarantee or
security
To Director
Or other person in whom Director is
interested
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS LOAN TO DIRECTORS- DIRECTORS INTEREST
Director
Director
of Lending Co or Holding Co or
partner or Relative
Firm
Director or Relative is
partner
Private Co Director is Director or member
Company
25% Voting power Body
Corporate
Shadow board
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS LOAN TO DIRECTORS- EXCEPTIONS
Managing Director or Whole Time Director (MD/WTD)
as part of Service Condition if extended to all employees
passed by Special Resolution
Holding to Wholly Owned Subsidiary (WOS)
Guaranty or Security provided for Subsidiary Company
Provided Subsidiary or WOS to utilise funds for its principal business activities
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS LOAN & INVESTMENT BY COMPANIES
Not more than two layers of Subsidiaries are allowed except in compliance of other laws
No Loan, Security, guarantee or Investment in any Co
>60% of Paid Up, Free Reserves & securities Premium
> 100% of Free Reserves and Securities Premium Account
Whichever is more
Except by Passing Special Resolution (within 1 year of Act)
Exemption to JV (Excluding Investment) & WOS & Right Issue
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
RELATED PARTY- DEFINITION
Shirin Bhatt & Associates
(i) Director/ his relative;
(ii) KMP / his relative;
(iii) Firm- a director/ manager/relative is a partner;
(iv) PVT CO - a director /manager is a member / director;
(v) Public Co-a director/manager director or holds with relatives >2% PUC;
(vi) Body Corp having Shadow Directors
(vii) Any Person under whose advise board acts
(viii) holding, subsidiary or an associate company
(ix) Fellow Subsidiary;
(x) KMP of Holding Co;
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
RELATED PARTY TRANSACTIONS
selling or disposing, or buying, property of any kind;
leasing of property of any kind;
appointment of any agent for purchase or sale of goods, materials, services or property;
such related party's appointment to any office or place of profit in the company, its subsidiary or associate;
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS
RELATED PARTY TRANSACTIONS
Company with Paid-Up of 10 Crore or more-Special Resolution
For other Companies- Financial Limits on transactions
Approvals & Transactions with Related
Parties
Shirin Bhatt & Associates
New Era of Self Regulation-No CG Approval
N.A. to transactions in ordinary course at Arms Length Price
Transaction in urgency may be ratified within 3 months
Such Contract/arrangement to be mentioned in Board Report
Interested Members not to Vote
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS RESTRICTION ON NON-CASH TRANSACTIONS
Prohibition on entering into arrangement except on prior approval of Members which allows its
director/director of holding, subsidiary or associate company or any person connected with him,
To acquire any assets from the company for consideration other than cash and vice versa
Shirin Bhatt & Associates
CHAPTER XII - MEETINGS OF BOARD AND ITS POWERS RESTRICTION ON FORWARD DEALINGS
Directors & KMPs are prohibited
from forward dealings in securities of Company/ Holding/ Subsidiary/ Associate
to enter into Insider Trading
Shirin Bhatt & Associates
CHAPTER XIII - APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Shirin Bhatt & Associates
CHAPTER XIII - APPOINTMENT AND REMUNERATION OF
MANAGERIAL PERSONNEL
Shirin Bhatt & Associates
Company not to appoint or re-
appoint MD, WTD or manager for more
than 5 years
No re-appointment earlier than 1 year
before expiry of Term
Terms of appointment
-Approval by BOD
-Approval by Members in next GM
Minimum age for MD/WTD is reduced from
25 to 21 years.
Maximum age for them is 70. Can be relaxed if shareholders by special resolution approve it.
CHAPTER XIII - APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Sitting Fee payable increased to Rs. 1 Lac
Every Listed Co or other public Co having Paid up > Rs. 10 Crores to have following KMPs:
MD/CEO/Manager/ WTD,
CS, and
CFO
A whole-time KMP not to hold office in more than 1 company except in Subsidiary or approval of Board
Shirin Bhatt & Associates
CHAPTER XIV - INSPECTION, INQUIRY AND INVESTIGATION
Shirin Bhatt & Associates
CHAPTER XIV - INSPECTION, INQUIRY AND
INVESTIGATION SERIOUS FRAUD INVESTIGATION OFFICE
Receipt of report of Registrar under section 208 or
On receipt of special resolution from company or
In public interest or
On request from any Department of the Central Government or a State Government.
The Central Government
may refer matter for
investigation to SFIO
either on :
Shirin Bhatt & Associates
CHAPTER XV-COMPROMISES & AMALGAMATION
Shirin Bhatt & Associates
CHAPTER XV-COMPROMISES & AMALGAMATION
Separate and simpler provisions for the merger or amalgamation between
two small companies or
holding company and its wholly owned subsidiary company or
such other class or classes of companies as may be prescribed.
Rules are yet to be notified for the same
Shirin Bhatt & Associates
CHAPTER XVI - PREVENTION OF OPPRESSION AND
MISMANAGEMENT
The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner
prejudicial to public interest, it may itself apply to the Tribunal for an order.
Shirin Bhatt & Associates
Shirin Bhatt & Associates