Companies Act, 2013 Formation and Constitution Funding Audit and Accounts Internal Management External Factors Winding Up of Company Other Matters

The Companies Act, 2013

Companies Act, 2013

Formation and Constitution

Funding

Audit and Accounts

Internal ManagementExternal Factors

Winding Up of Company

Other Matters

MEETINGS OF BOARD & ITS POWERS

LOANS TO DIRECTOR(SECTION 185)

CHAPTER XII

This Section is Applicable to All Companies

Applicability

Company shall not Directly or indirectly

I. Advance any Loan / Loan represented by Book Debt

II. Provide any GuaranteeIII.Provide any security

To any DirectorOR

Any Person in whom Director is interested

To Whom Loan Can Not Be Given?

Director of lending Co/ Holding Co. And/or Partner / Relative of Such Director

Partnership Firm where Director/ his Relative – is partner

Sole Proprietorship Concern where Director/ his Relative is Proprietor

Any Pvt. Co. – in which he is director / Member

Person in whom Director is Interested:

Any Pvt. Ltd./ Public Ltd./ Foreign Company –

25% or more of total voting power is exercised by Director(s) either individually or taken together.

Any Pvt. Ltd./ Public Ltd./ Foreign Company –

in which Director/MD/Manager is acting on direction of Lending Co.’s Director.

Person in whom Director is Interested:

Co. can give loan /security / guarantee to WTD/MD:

I. Under Service contract.II. Under any Scheme approved by Special

Resolution in Member’s Meeting.

Co. can give Loan / Guarantee:

I. In its ordinary Course of businessII. An interest rate not less than the rate declared

by RBI.

To Whom Loan Can Be Given?

Director

Father

Mother

SisterDaughter & her

Husband

Son & his Wife

Brother

Definition of Relatives

Exemption to Holding-Subsidiary

Exempted

For Loan of Subsidiary

Security Provided by Holding

Guarantee given by Holding

To Subsidiary

Loan given by Holding

Exempted

Exemption to Holding-Subsidiary

By Holding

Co.

Guarantee given

Security provide

d

In respect of loan made by any bank or FI.

To Company fine of Rs. 5,00,000/- to Rs. 25,00,000/-

To Director/ any other person to whom loan is given

a) Imprisonment to the extent of 6 monthsb) Fine of Rs. 5,00,000/- to Rs. 25,00,000/-c) Both

PUNISHMENT & PENALTY

MEETINGS OF BOARD & ITS POWERS

LOANS AND INVESTMENTS

(SECTION 186)

CHAPTER XII

Co. may make investment through two layers of investment companies only

Not applicable to —

Investment outside India beyond 2 layers

Investment for fulfillment of any law

Sec. 186(1)- Investment in other company

Co. shall directly or indirectly subject to certain conditions —

(a) Give any loan

(b) Give any guarantee or provide security in connection with a loan

(c) Acquire securities by way of subscription, purchase or otherwise

Sec.186 (2) - Loans/Guarantee/Acquisition

i) 60% of (Paid-up Share Capital + Free Reserves + Securities Premium Account)

Or

ii) 100% of (Free Reserves + Securities Premium Account)

Whichever is MORE.

Limits u/s 186 (2) -

Limits u/s 186 (2)

Within Limit

Exceeding Limit

Pass Board Resolution unanimously

Prior approval of PFI is necessary if Default is made in repayment of any loan

Pass Board Resolution unanimously

Special Resolution of Members

Prior approval of PFI is mandatory

To a loan made, guarantee given or security provided by:

Banking company Insurance company Housing finance company Company engaged in the business of financing of

companies

To any acquisition made by: NBFC registered under RBI act-1934 Company whose principal business is acquisition

of securities Shares allotted in pursuance of further issue of

share capital

Section 186 Not applicable to: Except Sub-section-(1)

Disclose to the members in the financial statement the full particulars of the loans given and utilization of loan.

Contravention of any provision: Company-

Fine of Rs.25000/- to Rs.500000/- Officer in default-

Imprisonment up to 2 years and Fine of Rs. 25000/- to Rs.500000/-

Disclosures and Defaults

CHAPTER XII

RELATED Party TRANSACTIONS

(section 188)

Related Party Means

Private Company

Where Director/

Manager is Director / Member

FIRM in which

Director / Manager/

Their RelativesIs Partner

RELATED PARTY [section 2(76)]:

Related Party Means

Body Corporate Whose (i) BOD (ii)

MD or (iii) Manager Acts as

per advice, directions, instruction

sOf a.

Director orb.

Manager of

Company

a. Holding Company

b. Subsidiary Company

c. Associate Company

Any

person on whose

instructions,

directions, advice - a. Director

b. Manager

act

A co-subsidiary company

( two companies

havinga same holding

company)

RELATED PARTY [section 2(76)]:

Companies having paid up share capital of Rs 10 Cr or more is require to obtain prior approval of member’s in general meeting case may be to enter into contracts in which Directors are interested

Exception :- 1) If transaction or contract is entered in ordinary course of

business 2) Done on Arm’s length basis. 3) In case of transaction between holding company and

subsidiary company, no need to pass special resolution in subsidiary company.

If any transaction is below Rs 5 Lacs pertaining to sale, supply or purchase of material then no need to make entry in register maintained under 189 of the act.

When Approval Of Members Required:

Sale, purchase, or supply of any goods or materials; Selling or otherwise disposing of, or buying property of

any kind; Leasing of property any kind; Availing or rendering of any services; Appointment of any agent for purchase or sales of

goods or materials, services or property; Such related party’s appointment to any office Underwriting the subscription of any securities or

derivatives thereof of the company

RELATED PARtY TRANSATIONS :

With prior approval of company by special resolution, following companies can enter into Contracts/ arrangements-

A company having a paid-up share capital of Rs. 10 Crore or more

Transaction exceeding 25 % of the annual turnover or 10% of the net worth of the company whichever is higher in a financial year.

Relates to appointment to any office or place of profit in the company/ subsidiary company/ associate company at a monthly remuneration exceeding Rs. 2,50,000/-.

Contract or arrangement with a related party ( RULE 15):

For other companies / transactions -- prior consent of BOD by Board resolution

If contract is already entered into -- obtained within 3 months approval of the BOD/ Shareholders.

Notice of Board meeting should contain 1. prescribed particulars 2. explanatory statement to be annexed to the notice of general meeting

No member can vote on such special resolution if such member is a related party

interested Director cannot participate in discussion on the approval of related party transactions

In case of default -- contract is voidable at the option of the Board

Directors concerned shall indemnify the company against any loss incurred by Company

Contract or arrangement with a related party ( RULE 15):

Every director shall disclose his concern or interest in FORM MBP1

At the first meeting of the board in which he participates as a director

At the first meeting of the board in every financial year

Whenever there is change in the disclosures already made, then at 1st BM held after change.

Every director or KMP shall within period of 30 days of his appointment- disclose his concern or interest in other associations.

Every such contract or arrangement be disclosed in BOARDS REPORT

DISCLOSURE by director of his interest:

CHAPTER - V

Deposits(section 73)

Deposit does not includes

Any amount received - As Share Application Money up to 60 days.

From Director of company

As advance for supply of goods or services, provided such advance is appropriated against such supply within 365 days.

Deposit does not includes

As a loan or financial assistance from any bank or financial institution.

Any amount brought in by the promoters of the company or their relatives or both by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank.

Any amount received by a company from any other company which is not related one.

Accept/renew deposits – repayable after 6 months and up to 36 months subject to maximum 25% of the aggregate of paid-up share capital and free reserves.

Accept/renew deposits – repayable after 3 months and up to 6 months subject to maximum 10% of aggregate of paid up share capital and free reserves

Pre Requisite

File copy of circular to ROC, 30 days before date of issue of circular/advertisement.

Enter into Deposit Insurance Contract 30 days before issue of circular/advertisement.

Issue circular after 30 days of filing with ROC, to its members by registered AD or speed post or by electronic mode

Return of deposits to be filed with ROC: On/before 30th day of June, of every year.

Pre Requisite……

Separate bank account with a Scheduled Bank – Deposit at least 15% of amount of its deposits maturing during a FY and FY next following, on/before 30th April of each year

Deposit Repayment Reserve Account

within 30 days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of trustee for the depositors on: specific movable or immovable property

If Secured Deposits

Appoint trustee for depositors before issuing a circular

Obtain written consent from trustee before their appointment

Execute a deposit trust deed at least 7 days before issuing the circular or circular in the form of advertisement.

Pre-requisite for issue of secured deposit:

CHAPTER - IX

Financial Statement

(section 129)

Period ending on 31st March every year

If incorporated on/after 1st January of a year, period ending on 31st March following year

If application by company which is holding/subsidiary of foreign company and required to follow a different FY for consolidation of its accounts outside India, Tribunal may, allow any period as its FY, whether or not that period is a year:

Existing Co’s - within 2 years from commencement, align its FY

S. 2 (41) of 2013 Financial Year (FY)

Includes:

a) Balance Sheet

b) Profit and Loss Account/Income and Expenditure Account

c) Cash Flow Statement – NA to OPC/Small Company/Dormant Company

Section 129 of 2013 Financial Statement (FS)

d) Statement of changes in equity, if applicable; and

e) Explanatory note annexed to/forming part of, any of above

Financial Statement (FS)……….

Signed by – Chairperson if authorized or

Two directors, one MD if any and

CEO, if he is director

CFO & CS, wherever appointed or

In case of OPC - only by one director


FS shall comply with Accounting Standards notified under section 133 and shall be as per Schedule III.

Provided: A.S. specified under Companies Act, 1956 shall be deemed to be AS until AS specified by CG

FS shall lay before every AGM


If company has one/ more subsidiaries, in addition to its FS, consolidated financial statement is also to be laid before AGM.

Attach along with its FS, a separate statement containing salient features of FS of its subsidiary/subsidiaries in Form AOC-1.

“Subsidiary” shall include associate company and joint venture.


If OPC within 180 days - i.e. on or before 27th Sept of every year.

All other companies - within 30 days of date of AGM.

Filing of FS with Registrar

CHAPTER X

AUDIT &

AUDITORS(Section 139 – 148)

First Auditors should be appointed within 30 days of incorporation by BOD and up to Next AGM. If Board fails, then Members can appoint auditor within next 90 days.

In subsequent AGM, Appointment will be made for 5 years.

Each company has to ratify the appointment of auditor in AGM every year.

Appointment of auditor:

CASUAL VACANCY:

1. Due to Resignation: - BY MEMBERS

within 3 months of recommendation of Board &

Hold Office till the next AGM

2. Due to other reasons: - BY BOARD

Within 30 days

Certain class of companies shall not appoint or re-appoint the same auditor or auditor’s firm after continuous 5 years in case of Individual and 10 years in case of firm.

All other companies can appoint the auditor without such rotation after 5 or 10 years as the case may be.

For Class of Companies, 3 years are given to comply with the provisions.

Appointment of auditor:

For removal of auditor the approval of Tribunal/ Central Government is required.

Unless disqualified as per Section 144 the retiring auditor can be re-appointed by the company.

Transitional provisions are applicable for Accounting standard i.e. the AS mentioned under Companies Act, 1956 will be applicable till new AS are notified by the Central Govt.

Other Provisions:

Auditor Shall not render following services to Companies in which he is acting as Auditor:

Accounting and book keeping services Internal audit Design and implementation of any financial information

system Actuarial services Investment advisory services Investment banking services Rendering of outsourced financial services Management services Any other kind of services as may be prescribed

CERTAIN SERVICES NOT to Be rendered by auditor:

Class Of Companies (Exclude OPC & SMALL CO.)

where appoint auditor for 5 or 10 Years only and can not re-appoint same

auditor

Public company with paid up capital more than

10 Cr

Private companies with paid up capital of Rs 20 Cr or more

All other companies

having public

borrowings or bank

loan exceeding

Rs 50 Crores

CLASS OF COMPANIES :

ADT – 1 : Notice of Appointment of Auditor by Company

ADT – 2 : Removal of Auditor

ADT – 3 : Resignation of Auditor

ADT – 4 : Report to Central Government By Auditor Reporting Fraud

FORMS :

As per circular for the Financial year ended on 2014 the following papers / documents will be submitted as per Companies Act 1956:

Audit ReportFinancial StatementAny other attachment to Financial

StatementBoard’s Report etc.

Documents to be submitted for F.Y. ended 2014:

Chapter III

Private Placement

Section 42 - Part II

Public Companies Private Companies

Public Offer --

Through private placement by complying with provisions of Part II

Right / Bonus Issue

ISSUE OF SECURITIES BY

Issue of Securities by Private Placement –

• By Private Ltd Co – upto 200 persons

• By Public Co. – if above 200 persons – Provisions of Public Offer – Prospectus will apply

• Private Placement is offer placed to selected group of persons whose name is already entered with company for making offer

• Offer should be in Form No PAS-4 served to person within 30 days of recording of his name

• The offer size for securities shall not be less than Rs 20000/- made to each person

Private Placement of Securities

• The share application money received against such offer shall be received in cheque / draft or banking channels and not in cash

• The shares must be allotted within 60 days from the receipt of share application money. If not allotted then needs to be refunded within 15 days from the 60th day within Interest of 12% p.a .

• File Form PAS - 3, PAS - 4 & 5

Private Placement of Securities

Chapter IV

Further issue of share capital

(Section 62)

1) Allotment of Further Shares to Existing Shareholders in their proportionate shareholding

2) Issue of Shares to Employees / Directors under Employee Stock Options / Sweat Equity Shares

3) Preferential Allotment to any other person

Company can increase its Paid up Capital by……..

Notice of offer required to send not less than 15 days but not more than 30 days to existing shareholders.

The person shall have right to renounce

File Form No. PAS - 3 within 30 days of allotment

Further Issue/Allotment to Existing Shareholders

Further Issue/Allotment to Employees under Employee Stock Option

Eligibility Criteria

Permanent Employee working in India / outside India at least for 1 year

Director File Form No. PAS - 3 within 30 days of allotment

Preferential Allotment……….

Issue of Shares to Selected group of persons whose name are recorded by company

Special Resolution in general meeting

Allotment required to be completed within 12 months from passing of resolution

File Form MGT - 14 – for passing special resolution &

File Form PAS -3 – for allotment Within 30 days

Chapter -IV

Transfer and Transmission of

Securities(Section- 56)

Transfer of Shares• New Instrument for Transfer - Form No.SH.4

Previously it was Form No 7B on green paper with date stamp

on it & valid for 2 months from stamped date

• Duly executed instrument of transfer to be deliver to the company within 60 days

• Company shall thereupon register transfer & issue certificate within 1 month

• On transmission of shares intimation / application is sufficient to register the transmission

Transfer of Shares• Company can refuse transfer and then has to

communicate the same within 30 days to transferor for refusal.

• On refusal of transfer, transferor or Transferee can make appeal with tribunal.

• If, SH -4 is lost or could not be presented before the company, company can take indemnity from transferee and approve transfer.

• If Partly paid shares - Company has to give notice in form SH.5 of receipt of SH -4 to transferee and transferee has to give NOC to transfer within 2 weeks

ACCOUNTS OF COMPANIES

CORPORATE SOCIAL RESPONSIBILITY

(SECTION 135)

CHAPTER IX

Every Co. having:

Net worth of Rs. 500 Crore or More OR

Turnover of Rs.1000 Crore or More OR

Net Profit of Rs.5 Crore or more

Exception: If Company does not fulfill above criteria for 3

consecutive years subsequent to it’s applicability. In case Company fulfills criteria, but if average net

profit comes as Negative, then this Section will not be applicable.

Applicability

At least 2% of Average Net Profit of 3 preceding FY.

Average Profit should be calculated as per Section 198.

Amount spent on CSR

Net Profit XXX

Less: - Net Profit from any overseas branch whether operated as Separate Company or otherwise

Less: - XXX

Less: - Any Dividend received from other companies in India which are covered and complied with Sec. 135 Less: - XXX

Total Net Profit XXX

Board may undertake CSR Activity through: - Registered Trust Registered Society Company established by it or its Holding,

subsidiary, Associate Co. Other Trust or Societies or companies not

established by Co. having track record of 3 years.

Co. can collaborate with other companies.

Expenditure should be on activities undertaken in India only

CSR Activities

Activities giving benefits only to employees or their families.

Contribution to political party.

Expenditure on building of CSR capacities: Of their own personnel Of their implementing Agency Not more that 5% of total 2% of Net Profit in one

financial year

Following activities are not CSR

CSR activities: -Sr. No.

Particulars

1 Eradicating hunger, poverty, promoting preventive health care and sanitation and making available safe drinking water

2 Promoting education

3 Promoting Gender equality, Empowering women; Setting up homes and hostels for women and orphans; Setting up old age homes

4 Ensuring Environmental sustainability, Ecological balance,

CSR activities: -Sr. No.

Particulars

5 Protection of National Heritage, art and culture Setting up public libraries; Promotions and development of traditional arts and handicrafts

6 Training to promote rural sports, nationally recognized sports, Paralympics sports and Olympic sports

7 Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Govt.

8 Rural Development Projects

RULES FOR LETTERHEAD

Full name of Company

In case- changed name within preceding 2 years, previous name should also be disclosed.

Address of its registered office of the company

Corporate Identity Number (CIN)

Telephone number

fax number, if any

Letterhead/ Bill/ Other Correspondence Includes:

E-mail

Website addresses, if any

Optional: -In case the company wants to disclose the Authorised capital, the company should also disclose subscribed and paid-up capital equally prominently


Note: -

You can design your letter head in any format, just confirm that it includes all above required information.

In case you have already printed copies, then you can affix Rubber Stamp of CIN on those printed copies.


ABC Private Limited

(CIN:U30000MH1996PTC104285)

(Previously Known as XYZ Private Limited)Registered Office:-Sector-A, MIDC Satpur, Nashik

Tel: - 0253-2364522 Fax: - 0253-2364522 E-mail –[email protected] Web site: - www.mmcocs.com

Example

mailto:%E2%80%[email protected]

Chapter II

One Person Company

[Section 3 (1) (c)]

Eligibility……..

• “One Person Company” = Only ONE PERSON as a member

• Minimum 1 Director

• Criteria – Paid up share capital

Less than Rs.50 Lacs

OR

Turnover Less than 2 Cr.

• Require nomination

OPC Can not………….

Person can not incorporate more than One OPC

CAN NOT covert voluntarily into any kind of company unless two years have expired from the date of Incorporation

Minor can not be a member / nominee / hold shares with beneficial interest.

One Nominee can not become nominee in more than one OPC.

Can not be incorporated or converted into Company u/s 8 – Non-profit Organization.

One Person Company Can not…..

Cannot carry out Non-Banking Financial

Investment activities including investment in

securities of any body corporate.

Compulsory ConversionWithin 6 months as Pvt Ltd / Public

Ltd if -

Paid up Capital increased beyond Rs.50 Lacs

OR

Average Annual Turnover during period of immediately preceding 3 consecutive F.Y. EXCEEDS Rs. 2

Cr.

Conversion of Pvt Ltd OPC

Eligibility – Pvt Ltd company with paid up Share capital LESS THAN Rs. 50 Lacs

OR Turnover during the relevant period LESS

THAN Rs.2 Cr.

Obtain NO OBJECTION from Members & Creditors

Special Resolution in General Meeting

Filing of Declaration & Affidavit & Other Forms With ROC

Some Important

provisions

THE companies act, 2013

Section-3

Public Co. :- No. of Member: Min-7, Max- No limit

Private Co.:- No. of Members Min-2, Max-200 One Person Co.:-No. of Member 1 Only

Section- 53

Issue of shares on discount is prohibited

Some Important provisions

Section- 101

Notice calling AGM/EGM not less than 21 days in writing or electronic mode. Shorter notice can be given by consent of 95% members

Company has to get the e-mail id of members as well as directors updated.

Section- 103 Quorum of members meeting members required

personally present:

1. Public Co. more than 1000 member shall have 5 person present .

2. Private Co. any 2 members3. OPC the sole nominee member in person.

Section- 105

A person shall not hold proxies for more than 50 members, and holding more than 10% voting power in aggregate, but if appointed by a person holding 10% of total voting power then he can act as proxy only for that person.

Section- 455 – Dormant Company

Where a company is formed for a: - - future project or - to hold an asset/ intellectual property or - has no significant accounting transaction & not filed financial statements for last 2 years. such a company/ an inactive company may make

an application to ROC for obtaining the status of a Dormant Company.

Provisions relating to Dormant Company:

To file a Annual Return on yearly basis with ROC, before 30th April.

If ROC noticed that the company is well functioning then it can convert it into active Co. status on its own.

If Dormant Co. remains dormant for 5 years, ROC may take steps for striking off name of Co.

But Co. at any time may apply for changing its status as active company.

THANK YOU…..

ANY QUESTIONS ? ? ?