Transcript Immediate Action under Companies Act, 2013

)
…By
CS Jitesh Gupta
(FCS, MIMA, PGD-TL, MBA)
Section 12 (Print/affix of Regd. Office Address)

Every Company shall paint or affix the name
and address of the registered office and keep
the same printed/affixed, outside every office or
place in which its business is carried on.
Section 12 (Printing of Name, CIN etc.)
 Every company shall get its name, address of
registered office, CIN, telephone/Fax no. (if
any) and email/website address (if any) printed
on all business letters, bill heads, letter papers,
notices and other official publications.
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




One person company shall always be private limited
company as per law
Only natural person can form one person company
and the limit is one OPC by any one person
The person incorporating the one person company
should be citizen of India and Resident in India also
The condition of Indian Citizenship and residential
status also apply to nominee of OPC
The OPC can have a maximum of Rs. 50 lakhs Paid
up capital and limit of Turnover of Rs. 2 Crore
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Small Company

The small company shall
always be private as per law
 Two or more person can form a
small company
 Maximum number of members
could not be more than 200
 A company to be formed may
be either:-
Limited by shares
- Limited by guarantee
- An unlimited company
-
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Criteria of small company
SMALL COMPANIES
-
Having Maximum Paid
up Share Capital Rs. 50
Lakhs
OR
Maximum Turnover as
per last Audited Profit &
Loss A/c of Rs. 2 Crores
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(Registers)

Every company to keep and maintain following
registers in the specified format mentioned
under Rules
- Register of members, Debenture holders,
security holders(Sec-88), index of the
Registers.
- Register of Directors and KMP (Sec-170)
- Register of Charges(Sec-85)
- Register of Contracts and arrangements
in which director are Interested (Sec-189)
- Register of Deposit (Sec-73&76)
- Register of Investment made by company in
its own name (187)
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- Register of Securities Bought Back (Sec-68)
- Register of Employee Stock option Scheme
(Rule 12 of Share Capital and Debentures
Rules 2014)
- Register of Transfer & Transmission of Share
(Sec- 56)
- Register of Sweat Equity Shares (Rule 8
(14)(a) of Share Capital and Debentures
Rules 2014)
- Register of Renewed and Duplicate Share
Certificates (Rule 6(3)(a) of share Capital and
Debentures Rules 2014)
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
The registers shall be maintained at the
registered office of the company

Unless a special resolution is passed in a
general meeting authorising the keeping of the
register at any other place within the city, town
or village in which the registered office is
situated or any other place in India in which
more than one-tenth of the total members
entered in the register of members reside.
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
All entries in register of members/Debenture
holders to be authenticated by CS or any
other authorized person and date of board
resolution authorizing the same to be
mentioned.

Particulars shall be compiled within six
months from the date of commencement of
these rules.
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Section 96 (AGM)

Every company other than a One Person
Company shall in each year hold in addition to
any other meetings, a general meeting as its
Annual General Meeting and shall specify the
meeting as such in the notices calling it, and not
more than 15 months shall elapse between the
date of one annual general meeting of a
company and that of the next.

In case of the first AGM, it shall be held within a
period of 9 months from the date of closing of
the first financial year of the company and in any
other case, within a period of 6 months, from
the date of closing of the financial year.
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 Registrar
may, for any special reason,
extend the time within which any AGM,
other than the first AGM, shall be held,
by a period not exceeding three months
 AGM
shall be held during business
hours (9 a.m. to 6 p.m.) except National
holiday at the registered office of the co.
or within city or town or village where the
registered office of the company is
situated
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Section 101 (Notice of Meeting)
 Every General meeting can be convened by
providing 21 clear days notice either in
writing or in electronic mode.

A general meeting may be called after giving
a shorter notice if consent is given in writing
or by electronic mode by not less than
ninety-five per cent of the members entitled
to vote at such meeting.
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
Every notice of a meeting shall specify the
place, date, day and the hour of the
meeting and shall contain a statement of
the business to be transacted at such
meeting.
Section 102 (Explanatory Statement)
 Every explanatory statement annexed to
the notice for special business shall
provide
requisite
disclosure
w.r.t.
Directors, KMP, Promoters and there
relatives (only for shareholding)
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Section 105 (Proxy)
 Any member of a company entitled to attend
and vote at a meeting of the company shall be
entitled to appoint another person as a proxy
to attend and vote at the meeting on his
behalf.
 Proxy shall have no right to speak or vote
except on poll.
 A person can act as proxy on behalf of
members not exceeding 50 and holding in
the aggregate not more than 10% of total
share capital of the company carrying voting
rights.
 Proxy form shall be in form MGT-11.
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Section 108 & Clause 35B of Listing
Agreement (e-Voting)
 e-Voting facility is mandatory at every
general meeting for listed company and
companies having shareholders 1000 or
more.
Note:- MCA has extended the period of its
applicability till 31st December 2014 but
under clause 35B of listing agreement
amended by SEBI vide its circular dated
17th April 2014 it is applicable on above
mentioned companies.
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Applicability
- All listed companies
- All public company
with a paid up capital
of Rs. 10 crore or
more;

All public companies having turnover of Rs
Rs. 100 Crore or more ;
- All public companies, having an aggregate,
outstanding loans or borrowings or
debentures or deposits exceeding Rs. 50
crore or more.
-
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Composition of the committee:Minimum 3 directors are required to
constitute an audit committee with the
majority of directors shall be independent
directors
Timeline:- every existing audit committee
of the company immediately before the
commencement of the act shall within 1
year with the commencement of this act
shall comply with .
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VIGIL MECHANISM
Applicability
Every listed company
- companies which accepts
deposits from the public
- companies which have
borrowed money from banks
and public financial institutions
in excess of 50 crore rupees.
-
The companies which are required to
constitute an audit committee shall oversee
the vigil mechanism through the committee .
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NOMINATION AND REMUNERATION COMMITTEE
Applicability
- All listed company
- All public companies with a paid up capital of Rs. 10
crore or more
- All public companies having turnover of Rs. 100 crore or
more
- All public companies, having in aggregate , outstanding
loans or borrowings or debentures or deposits
exceeding Rs. 50 crore or more.
Composition:- Minimum 3 nonexecutive directors required to
constitute a nomination and
remuneration committee with the
majority of directors shall be
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independent directors.
STAKEHOLDERS
RELATIONSHIP
COMMITTEE
Applicability:- The board of directors of a
company which consist of more than 1000
shareholders, debenture holders, deposit
holders and any other security holders at any
time during a financial year shall constitute a
stakeholders relationship committee .
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Section 117 (Resolutions to be filed)
 Copy of every resolution together with
explanatory statement if any or agreement
for the specified matters to be filled with
ROC in Form MGT-14 within 30 days.

The provisions of this section shall apply to:
- special resolution
-resolutions which have been agreed to by
all the members of a company, but which, if
not so agreed to, would not have been
effective for their purpose unless they had
been passed as special resolutions;
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- Any resolution of the Board or agreement
executed by a company, relating to the
appointment, re-appointment or renewal of the
appointment, or variation of the terms of
appointment, of a MD
- Resolutions or agreements which have been
agreed to by any class of members but which, if
not so agreed to, would not have been effective
for their purpose unless they had been passed
by a specified majority or otherwise in some
particular manner; and all resolutions or
agreements which effectively bind such class of
members though not agreed to by all those
members;
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- Resolutions passed by a company
according consent to the exercise by its
Board of Directors of any of the powers under
clause (a) and clause (c) of sub-section (1) of
section 180;.
- Resolutions requiring a company to be
wound up voluntarily passed in pursuance of
section 304;
- Resolutions passed in pursuance of
sub-section (3) of section 179;
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Section 179 (3) Power of Board
The Board shall
exercise the following
powers on behalf of the company by means of
resolutions passed at meetings of the Board,
namely:—
-
to make calls on shareholders in respect of
money unpaid on their shares;
to authorize buy-back of securities under
section 68;
to issue securities, including debentures,
whether in or outside India;
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to borrow monies;
to invest the funds of the company;
to grant loans or give guarantee or provide
security in respect of loans;
to approve financial statement and the
Board’s report;
to diversify the business of the company;
to approve amalgamation, merger or
reconstruction;
to take over a company or acquire a
controlling or substantial stake in another
company;
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Rule 8 of Companies (Meetings of Board and its
Powers) Rules, 2014.
In addition to the powers specified under subsection (3) of section 179 of the Act, the following
powers shall also be exercised by the Board only by
means of resolutions passed at meetings of the
Board.
to make political contributions
- to appoint or remove key managerial personnel
(KMP)
- to take note of appointment(s) or removal(s) of
one level below the Key Management Personnel
- to appoint internal auditors and secretarial
auditor
-
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to take note of the disclosure of director’s
interest and shareholding
- to buy, sell investments held by the company
(other than trade investments), constituting
five percent or more of the paid up share
capital and free reserves of the investee
company
- to invite or accept or renew public deposits
and related matters
- to review or change the terms and conditions
of public deposit
- to approve quarterly, half yearly and annual
financial statements or financial results as the
case may be.
-
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Section 118 (Minutes)
 Minutes of every meeting shall be entered in the minute
book along with date of such entry, within 30 days of
conclusion of such meeting (including resolutions
passed by postal ballot)


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The pages shall be consecutively numbered.
In the case of a meeting of the Board of Directors or of
a committee of the Board, the minutes shall also
contain
the names of the directors present at the meeting;
And
in the case of each resolution passed at the meeting,
the names of the directors, if any, dissenting from, or
not concurring with the resolution.
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
Minutes of the board meeting and general meeting
shall be kept at the registered office in the custody of
Company Secretary or any director authorised by the
Board.
There shall not be included in the minutes, any matter
which, in the opinion of the Chairman of the meeting,
(a) is or could reasonably be regarded as defamatory of
any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.
The Chairman shall exercise absolute discretion in
regard to the inclusion or non inclusion of any matter in
the minutes on the grounds
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Section 120 (Records in Electronic Form)

Every Listed company and company having
not less than 1000 shareholders/debenture
holders/security holders, may maintain its
records in electronic form.
(vide notification dated: 24th July, 2014)
The word “shall” substituted by “may”

In case of existing companies, data shall
be converted from physical mode to
electronic mode within six months from
the date of notification of provisions of
section 120 of the Act.
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(a) the records are maintained in the formats as
required under the Act
(b) the information as required under the
provisions of the Act should be adequately
recorded for future reference
(c) the records must be capable of being
readable, retrievable and reproducible in
printed form
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(d) the records are capable of being dated and
signed digitally wherever it is required under the
provisions of the Act or the rules made
thereunder
(e) the records, once dated and signed digitally,
shall not be capable of being edited or altered
(f) the records shall be capable of being updated,
according to the provisions of the Act or the rules
made there under, and the date of updating shall
be capable of being recorded on every updating.
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Section 149(1) (Woman Director)
The
following
classes
of
companies shall have at least one
woman director:- Every Listed company
- Public company having paid up
share capital Rs. 100 Crore or
more
- Public company having turnover
of Rs. 300 Crore or more

Every company existing on
or before the date of
commencement of this Act
shall within one year from
such
commencement
comply
with
the
requirements
of
the
provision.
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Section 149 (3)
Every company shall have at least one director who
has stayed in India for a total period of not less
than 182 days in the previous calendar year.
(MCA clarified vide circular dated: 26th June, 2014)
It is clarified that the residency requirements
would be reckoned from 01/04/2014. The first
previous calendar year for compliance of this
section, therefore be calendar year 2014. The
period to be taken into account for compliance
with these provisions will be the remaining
period of calendar year 2014 i.e. 1st April to 31st
December, 2014.
Therefore on proportionate basis the number of
days can be calculated.
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Section 149 (Independent Director)
 Every listed company shall have at least 1/3rd
of total number of directors as independent
director
 Following class of public companies shall
have at least 2 Independent Director:
- having paid up share capital Rs. 10 Crore
or more
- having turnover of Rs. 100 Crore or more
- having aggregate outstanding loan,
debenture and deposits exceeding Rs. 50
Crore
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
If a Company required to appoint higher
numbers of independent directors due to
composition of Audit Committee, such higher
number of Independent Directors shall be
applicable to it

Any intermittent vacancy of Independent
Director shall be filled by the Board at the
earliest
- but not later than Next Board Meeting
- 3 months from such vacancy
Whichever is later
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
Every independent director shall give a
declaration that he meets a criteria of
Independence as under:
- At the first meeting in which he participates
as a director
- At the first meeting of the Board in each
financial year
- Whenever any change in circumstances
which affects his status as independent
director.
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Co. and independent director shall abide by
schedule IV (code for independent directors)
 An independent director shall hold office for a
term upto 5 consecutive years
 Eligible for reappointment by passing SR.
 Disclosure of appointment in board report.
 Retiring by rotation - not applicable
Note:- Appointment of independent director
shall be approved in general meeting and
explanatory statement shall indicate
justification for choosing such person (Ref.

to Section 150(2))
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Qualification of Independent Director
Shall possess appropriate skills, experience and
knowledge in one or more fields of finance, law,
management, sales, marketing, administration,
research, corporate governance, technical
operations or other disciplines related to the
company’s business
Creation and Maintainenece of Data Bank of
persons offering to become Independent
Director
Such Data Bank shall be placed on website of
MCA
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
For name inclusion in Data Bank
- Application in Form DIR-1 to the Agency
- The agency may charge reasonable fee from
the Applicant

Intimate the Agency If any Changes of
particulars of the person within 15 days of
such change
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Section 165 (Number of Directorship)

No person shall be appointed as director
in more than 20 Companies.

Maximum no. of public companies can be
10.

Time limit – 1 year from commencement of
this act.
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Section 184 (Disclosure of Interest by
Director)
 Every director at:
- First meeting in which he participates as a
director
and thereafter
- First meeting of board in every F.Y.
- whenever any change in disclosure
Shall disclose in form MBP-1, his concern or
interest in any co., body corporate, firm or other
association
of
individual
(including
shareholding interest)
Note:- If Shareholding exceed 2%
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Section 203 (KMP)


Every listed company
Public Company having paid-up share capital of Rs.
10 Crore or more
shall have the following KMP
-
MD or CEO or Manager and in their absence WTD
Company Secretary
CFO
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(Rule 8A: Private Company having paid-up
share capital of Rs. 5 Crore or more shall
have a Whole-Time Company Secretary)

Appointment of every KMP by Board
Resolution including T&C with remuneration.

Any casual vacancy to be filled in by the Board
at its meeting within 6 months.
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An individual shall not be appointed or
reappointed as the Chairperson as well as
the MD or CEO of the company at the same
time unless:
(a)
the articles of such a company provide
otherwise; or
(b) the company does not carry multiple
businesses
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
A company may appoint a person as its MD, if
he is the MD or manager of one, and of not
more than one, other company and such
appointment is made or approved by a
resolution passed at a meeting of the Board
with the consent of all the directors present at
the meeting and of which meeting, and of the
resolution to be moved thereat, specific notice
has been given to all the directors then in
India
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
A Whole-Time KMP shall not hold office in
more than one company except in its
subsidiary company at the same time

A KMP is entitled to be appointed as director of
any company with the permission of the Board

A Whole-time KMP holding office in more than
one company at the same time on the date of
commencement of this Act, shall, within a
period
of
six
months
from
such
commencement, choose one company, in
which he wishes to continue to hold the office
of KMP
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MCA has notified the criteria for CEO
appointment vide Notification dated 25th July,
2014
The public companies having paid-up share
capital of Rs. 100 crore or more and annual
turnover of Rs. 1000 crore or more which are
engaged in multiple businesses and have
appointed Chief Executive Officer for each such
business shall be the class of companies for the
purposes of the second proviso to sub-section (1)
of Section 203 of the said Act
For the above purposes, the paid-up share capital
and the annual turnover shall be decided on the
basis of the latest audited balance sheet
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Section 204
(SECRETARIAL AUDIT)
- Every listed company
- Public companies having
Paid-up capital of Rs. 50
Crore or more
OR
- Turnover of Rs. 250 Crore
or more
Shall
have
Secretarial
Audit Report from PCS in
Form- MR-3, annexed to
Board Report
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
It shall be the duty of the company to give
all assistance and facilities to the PCS, for
auditing the secretarial and related records
of the company

The Board of Directors in their report, shall
explain in full any qualification or
observation or other remarks made by the
company secretary in practice in his report
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Section 92 (Annual Return)
 Annual Return to be prepared in Form No. MGT-7
with particulars as on the date of close of FY, to
be filed with ROC within 60 days of AGM.

Annual Return
particulars:
-
its registered office, principal business
activities, particulars of its holding, subsidiary
and associate companies;
-
its shares, debentures and other securities and
shareholding pattern;
Contains
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the
following
-
its indebtedness;
-
its members and debenture-holders along with
changes therein since the close of the previous
financial year;
-
its promoters, directors, key managerial personnel
along with changes therein since the close of the
previous financial year;
-
meetings of members or a class thereof, Board and
its various committees along with attendance details;
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its members and debenture-holders along with
changes therein since the close of the previous
financial year;
-
its promoters, directors, key managerial
personnel along with changes therein since the
close of the previous financial year;
-
meetings of members or a class thereof, Board
and its various committees along with
attendance details;
-
remuneration of directors and key managerial
personnel;
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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;
-
matters relating to certification of compliances,
disclosures, details, 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
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Signing of Annual Return
-
By a Director and a CS
Where no CS, by a PCS
For OPC and Small Companies
- By a CS
- Where no CS, by a Director
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Certification of Annual Return
Applicable for:
- Listed Company
- Companies having paid-up share capital of Rs.
10 Crore or more
- OR
- Companies having Turnover of Rs. 50 Crore or
more,
by a Company Secretary in practice and the
certificate shall be in Form No. MGT-8

Extract of Annual Return in Form MGT-9 to be
annexed to the Board Report
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Section 93 ( Change in Shareholding )

Form MGT-10 to be filed with ROC within 15
days of any change for 2% or more, in
shareholding position of promoters and top ten
shareholders.
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Section 152 (Appointment of Director)
 DIN is Mandatory
(Note: For getting the DIN, Digital Signature is
also mandatory of the Applicant)
 Consent in Form DIR-2 is mandatory before
appointment as a director and to be filed with
ROC within 30 days


Appointment only in General Meeting.
Additional & Alternate can be appointed in BOD
if articles has authorising clause.
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RETIRE BY ROTATION

Unless the Article provide, not less than 2/3rd of
the total number of directors of a public
company shall be rotational directors and be
eligible for appointment.

1/3rd of the rotational directors shall retire from
office.
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Section 160 (Right of person other
than to stand for Directorship)
A person other than retiring director
shall be eligible for appointment as
director,
provided
a
member
nominates him at least 14 days before
the meeting and deposits Rs. 1 Lacs
(refundable
on
successful
appointment).
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Section 164 (Disclosure of disqualification of
Director)

Declaration of disqualification from director
at the time of appointment or re
appointment in Form DIR-8

Annual disclosure shall also be taken
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Section 167 (vacation of office of Director)
-
If incurs disqualification under section 164
-
If absents from all meeting in 12 months
with or without leave of absence
-
If breach of RPT disclosures
-
he fails to disclose his interest in any
contract or arrangement in which he is
directly
or
indirectly
interested,
in
contravention of the provisions of section
184
-
he becomes disqualified by an order of a
court or the Tribunal
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he is convicted by a court of any offence, whether
involving moral turpitude or otherwise and
sentenced in respect thereof to imprisonment for
not less than 6 months
-
office shall be vacated by the director even if he
has filed an appeal against the order of such court
-
he is removed in pursuance of the provisions of
this Act he, having been appointed a director by
virtue of his holding any office or other employment
in the holding, subsidiary or associate company,
ceases to hold such office or other employment in
that company
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Section 168 (Resignation of Director)
-
Director to intimate his resignation to the
company which the company shall file with ROC
in form DIR-12 within 30 days
-
Company to put resignation details on its website
and
its
board
report
-
Director is also required to send his resignation
letter to ROC in form DIR-11 within 30 Days
along with reason of resignation
(Note: For filing the form DIR-11, Digital Signature
of Resigning Director is also mandatory.
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Sectiob-180 (Restrictions on power of board)
-
Board to exercise following powers only with prior
approval of shareholders by Special Resolution:
Sell, lease, dispose-off undertaking or substantial the
whole of undertaking.
To invest otherwise in trust securities the amount of
compensation received by it as a result of any
merger or amalgamation
-
To borrow money in excess of paid-up capital and free
reserves.
-
To give time to director for re-payment of debt to remit,
or give time for the repayment of, any debt due
from a director.
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
Every special resolution passed by the
company in general meeting in relation to the
exercise of the powers of Board shall specify
the total amount up to which monies may be
borrowed

No debt incurred by the company in excess of
the limit imposed by under this section shall be
valid or effectual, unless the lender proves that
he advanced the loan in good faith and without
knowledge that the limit imposed by that
clause had been exceeded
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Section 185 (Loan to Directors)

Unless specifically provided,
no company shall directly or
indirectly advance any loan
/guarantee
or
provide
security in connection with
loan, to any director or any
other person in which
director is interested
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
Any other person in which director is
interested shall include:-
- any director of lending company or of a
company which is its holding company or any
partner/relative of such director;
- any firm in which such director or relative is
partner;
- any private company in which such director
is director or member;
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- body corporate at general meeting of which
25% or more of voting power is
exercised/controlled by one or more
directors
- body corporate , whose board of directors,
MD or manager is accustomed to act in
accordance with directions and instructions
of the board or any director of a lending
company
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Clarification vide MCA circular dated 25/03/2014
It is clarified that the resolution passed under
section 293 of the co. act, 1956 prior to
12/09/2013 with reference to borrowings
(subject to limits prescribed) and/ or creation
of security on assets of the company will be
regarded as sufficient compliance of the
requirements of Section 180 of the Co. Act,
2013 for a period of one year from the date of
notification of section 180 of the act.
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
Loan to director provisions shall not apply
to:-
- giving of loan to MD/ WTD as a part of
condition of services extended to all
employees or pursuant to scheme approved
by members as special resolution or pursuant
to any scheme approved by the members by
a special resolution
- a company which in ordinary course of
business provides loan/guarantee/security for
the due repayment of any loan with ROI
being charged not less than declared by RBI
CS Jitesh Gupta
- any loan made by holding company
to its WOS or guarantee/ security by
holding company to any loan made
to WOS
- any guarantee/ security by holding
company to any loan made by bank
/FI to its subsidiary.
CS Jitesh Gupta
Section 186
Advances)
(Inter-Corporate

Loans
and
Company shall not make any investment
through more than 2 layers of investment
companies
Exceptions:
- acquiring companies outside India, if Such
company has investments subsidiaries beyond
2 layers as per local law
- a subsidiary company from having any
investment subsidiary for the purposes of
meeting the requirements under any law or
under any rule or regulation framed under any
law for the time being in force
CS Jitesh Gupta

No company shall directly/ indirectly:- give any loan to any person or other body
corporate
- give guarantee/ provide security in connection
with loan to any other person/ body corporate
- acquire by way of subscription, purchase or
other wise, securities of any body corporate.
Exceeding 60% of paid up share capital, free
reserves and securities premium account or
100% of free reserves and securities
premium account, whichever is more
CS Jitesh Gupta

In case of exceeding the limits, prior approval
by share holders by special resolution shall be
required

Special resolution not required in case of loan/
guarantee/security to WOS or JV or acquisition
by holding company in WOS

Disclosure to be made in Financial statements

Unanimous board resolution at the meeting is
required for all loan/investments/security
CS Jitesh Gupta

No loan shall be given at the rate lower than prescribed yield
rate

No company which is in default in the repayment of any
deposits accepted before or after the commencement of this
Act or in payment of interest thereon, shall give any loan or
give any guarantee or provide any security or make an
acquisition till such default is subsisting

Every company to maintain register in manual/ electronic form
in MBP-2 from the date of incorporation kept at registered
office
(Clarification vide circular dated: 9th June, 2014)
Registers maintained by companies Under section 372A
of co. act, 1956 may continue as per old law and the new
format in MBP-2 shall be used for particulars entered in
such registers on and from 1/04/2014.

Entries to be made chronological order, within 7 days of such
event and authenticated by CS
or any other person
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authorised by board

Section 186 shall not apply to:
- banking companies, insurance companies,
housing finance companies, business finance
companies etc
- to any acquisition made by NBFC or
investment company or right issue
CS Jitesh Gupta
Section 188 (Related Party Transactions)
Prior approval of the company by a special
resolution is required for the following
transactions:a)
sale, purchase or supply of any goods or
materials
b) selling or otherwise disposing of, or buying,
property of any kind
c) leasing of property of any kind
CS Jitesh Gupta
d) availing or rendering of any services
e) appointment of any agent for purchase or
sale of goods, materials, services or property
f) such related party's appointment to any office
or place of profit in the company, its
subsidiary company or associate company
g) underwriting the subscription of any securities
or derivatives thereof, of the company
CS Jitesh Gupta
With the following criteria
-
Sale, purchase or supply of any goods or
materials, directly or through appointment of
agent, exceeding 10% of the turnover or Rs.
100 crore, whichever is lower [for the points
(a) and (e)]
-
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 [for the points (b) and
(e)]
CS Jitesh Gupta
- Leasing of property of any kind exceeding 10% of
the net worth of the company or 10% of turnover or
Rs.100 crore whichever is lower [for the point (c)]
-
Availing or rendering of any services, directly or
through appointment of agent, exceeding 10% of
the turnover or Rs. 50 Crore whichever is lower
[for the points (d) and (e)]
Explanation:- The above limits shall apply
for transactions to be entered into either
individually or taken together
with
previous transaction during in a financial
year
CS Jitesh Gupta

Is for appointment to any office or place of profit
in the company, its subsidiary or associate
company at a monthly remuneration exceeding
Rs.2,50,000 [for the point (f)]

Is for remuneration for underwriting the
subscription of any securities or derivatives
thereof of the company exceeding 1% of the net
worth [for the points (g)]
Explanation :- the turnover or net worth
shall be computed on the basis of the
audited financial statement of the preceding
financial year
CS Jitesh Gupta
In case of wholly owned subsidiary, the special
resolution passed by the holding company shall be
sufficient for the purpose of entering into the
transactions between wholly owned subsidiary and
holding company
The explanatory statement to be annexed to the
notice of a general meeting convened pursuant to
section 101 shall contain the following particulars
namely:(a) name of the related party;
(b) name of the director or key managerial personnel who is
related, if any;
(c) nature of relationship;
(d) nature, material terms, monetary value and particulars
of the contract or arrangement;
(e) any other information relevant or important for the
members to take a decision on the proposed resolution.
CS Jitesh Gupta
No member of the company shall vote on
such special resolution, to approve any
contract or arrangement which may be
entered into by the company, if such
member is a related party
Provisions of this Section not apply to:
- ordinary course of business
- arms length
CS Jitesh Gupta
Vide circular dated 17th July, 2014 MCA clarified that:
It is clarified that transactions arising out of
compromises, Arrangements and Amalgamations dealt
with under specific provisions of the Co. Act, 1956/ Co.
Act, 2013 will not attract the requirements of this
Section.
Contracts entered into by companies, after making
necessary compliances under co. act, 1956 which
already come into affect before the commencement of
section 188 of co. act, 2013, will not require fresh
approval under the said section 188 till the expiry of the
original term of such contracts. Thus, if any modification
in such contract is made on or after 1st April, 2014,
requirements under section 188 will have to comply
with.
CS Jitesh Gupta
Section 189 (Register of contract or
arrangement in which directors are
interested)

Every company shall keep 1 or more
registers in form MBP-4 containing the
particulars of all contracts to which section
184 & 188 applies

After entering the details the registers shall
be placed before the next board meeting
and signed by all directors present
CS Jitesh Gupta
Exceptions:
- any contract or arrangements for sale,
purchase or supply of any goods, material
or services not exceeding 5 lakhs in the
aggregate in any year
- banking company for collections of bill in
ordinary course of business
CS Jitesh Gupta
Section 196 (Appointment of MD, WTD or
Manager)

No company shall appoint MD and a manager
at the same time

No company shall appoint MD, WTD or
Manager for a term exceeding 5 years at a
time
CS Jitesh Gupta

No company shall appoint or continue the
employment of any person as MD, WTD or
manager who:-
a) is below the age of 21 years or has attained the
age of 70 years
(S.R. required for appointment of persons age
of exceeding 70 years)
b) is an undischarged insolvent or has at any time
been adjudged as an insolvent
c) has at any time suspended payment to his creditors
or makes, or has at any time made, a composition
with them
d) has at any time been convicted by a court of an
offence and sentenced for a period of more than six
months
CS Jitesh Gupta

MD, WTD or manager to appointed and
terms/remuneration to be approved by the
board at its meeting, subject to the approval
of shareholders approval at next general
meeting and CG if required

Return of a appointment of MD/ WTD/
Manager/ CEO/ CS/ CFO to be filled with
ROC in form MR-1 within 60 days
CS Jitesh Gupta
Section 197 (Managerial Remuneration)
 Total managerial remuneration of a public company
not to exceed 11% of Net profit
 The cap of 11% can exceed subject to shareholders
and CG approval
 except with the approval in general meeting:
- MR to one MD/ WTD/ Manager not to exceed 5%
- MR to all such MD/ WTD/ manager no to exceed
10%
- MR to non- executive director no to exceed 1% (in
case there is MD etc.) and 3% (in case there is no MD
etc.)
(Note: MR not to include Sitting Fees)
 In case of inadequate/no profits, MR to be paid in
accordance with Schedule V and CG approval, as the
case may be
CS Jitesh Gupta
MEETINGS
Section 173 (Board Meeting)
 Applicability: All Companies
 First meeting : within 30 days
of the date of its incorporation
 Subsequent
meeting
:
minimum 4 meeting in a year
& maximum gap between 2
meeting shall not be more
than 120 days
OPC, Small Co. , Dormant Co. can meet at
least 1 time in each half of a calendar year and
the gap between 2 meetings shall not be less
than 90 days
CS Jitesh Gupta


Minimum 7 days notice
required
Shorter notice: may be called
if at least one independent
director shall be present at
meeting
 In case of absence of independent director,
decisions taken at such a meeting shall be
circulated to all the directors and shall be final
only on ratification thereof by at least one
independent director if any.
CS Jitesh Gupta
Quorum of Board Meeting

The quorum for a board meeting shall be 1/3rd of its total
strength or 2 director whichever is higher

The participation of the director by video conferencing or
by other audio visual means shall also be counted for the
purpose of quorum

If number of interested directors exceeds or is equal to
2/3rd of the total strength of the Board, the number of
directors who are not interested directors and present at
the meeting, being not less than 2, shall be the quorum

If the quorum of the board could not be held then, unless
the articles of the co. provide otherwise, the meeting shall
automatically stand adjourned to the same day at the
same time and place in the next week or if that day is
national holiday, till the next
succeeding day
CS Jitesh Gupta


Every
company
shall
make
necessary arrangements to avoid
failure of video or audio visual
connection
The chairperson of the meeting and
the company secretary, if any shall
take due and reasonable care
The notice of meeting shall inform the directors
regarding the option available to them to participate
through video conferencing or other audio visual
means
 A director intending to participate through video
conferencing
or
audio
visual
means
shall
communicate his intention to the chairperson or the
CS of the company
CS Jitesh Gupta

Applicability:- every company other than OPC
 First meeting:- Every company to which this section
applies shall hold its first AGM within 9 months from
the closure of its financial year
 Subsequent AGM:- within 6 months of closure of its
financial year
Gap between 2 AGM would not be more than 15
months and in case of first AGM it is not
necessary to hold the AGM in the year of
incorporation
CS Jitesh Gupta
Every listed companies are required to
prepare report on each AGM including the
confirmation to the effect that the same was
convened, held and conducted as per the
provisions of the act. The copy of the report
shall be filled with ROC within 30 days from
the date of conclusion of AGM.
Penalty or Consequences:- company:- Minimum Rs. 1,00,000
which may extend to Rs.5,00,000
- Officer in Default:- Rs.25,000
which may extend to Rs.1,00,000
CS Jitesh Gupta
EGM

The board may whenever think necessary call
general meeting of the company
 Calling of EGM by requisition:- Board on requisition made by member holding
on the date of receipt of requisition at least 1/10th
of share capital carrying voting rights or 1/10th of
total voting power may proceed to call EGM
- if board fails to call EGM within 20 days from
receipt of a valid requisition in regard to any
method on a day not later than 45 days from the
date of receipt of such requisition, the meeting
may be called and held by requisitionists
themselves within a period of 3 months from the
day of requisition.
CS Jitesh Gupta

Minimum 21 clear days notice either in writing
or through electronic mode required.
 Such notice shall specify the day, date, time
and place and hour of the meeting and a
statement of the business to be transacted at
such meeting.
Note:- Accidental omission to give notice or
non – receipt of such notice shall not
invalidate the proceedings of the meeting.
CS Jitesh Gupta
Explanatory statement
A statement setting out the following material
shall be annexed to the notice calling such
meeting
- the nature of concern or interest, financial or
otherwise if any in respect of each items of
every director and the manager if any every
other KMP and relative of such director or
manager or KMP.
- any other information and facts that they may
that enable members to understand the
meaning and implications of the item of
business and to take decision there of
CS Jitesh Gupta
Special Business

In the case of an AGM all business to transacted
there at shall be deemed special, other than :
- Consideration of financial statement and board
report
- Declaration of dividend
- appointments of directors in place of those
retiring
- appointment of, and the fixing of the
remuneration of, the auditors.
 In case of any other meeting, all business shall be
deemed to be special.
CS Jitesh Gupta

Unless the articles of the company provide for larger
no.
- 5 members personally present if the number of
members as on the date of meeting is not more than
1000
- 15 members personally present if the no. of
members as on the date of meeting is more than
1000 but up to 5000
- 30 members personally present if the number of
member as on the date of the meeting exceeds 5000
 For private company
- 2 members personally present, shall be the quorum
for a meeting of the company
CS Jitesh Gupta
CHAIRMAN OF THE MEETING
- Articles of the company may provide
different manner for appointing the
chairman
- The members personally present at
the meeting shall elect one of
themselves to be the chairman
thereof on a show of hands
- If a poll is demanded on the election of the chairman,
it shall be taken forthwith in accordance with the
provisions of this act and the chairman elected on a show
of hands shall continue to be the chairman of the meeting
until some other person is elected as chairman as a
result of the poll, and such other person shall be the
chairman for the rest of the meeting
CS Jitesh Gupta
CLSS (Company Law Settlement
Scheme)

It is a one time opportunity for all defaulting companies

Companies who have not filled their annual reports,
financial statements and related documents due for filling
on or before 30/06/2014 can file these documents from
15/08/2014 to 15/10/2014 and can avail of the following
benefits:
- pay only 25% of additional fees and
- enjoy immunity from prosecution
- directors will also not be disqualified under Sec 164(2) of
the companies act, 2013
CS Jitesh Gupta
Professional
Indemnity Insurance
This policy is meant for professionals to cover liability falling
on them as a result of errors and omissions committed by
them while rendering professional services
 The policy covers all sums which the insured professional
becomes legally liable to pay as damages to third party in
respect of any error or omission on his/her part committed
while rendering professional services
 The legal cost and expenses incurred in defense of the
case, with the prior consent of the insurance company are
also payable subject to the overall limit of indemnity
selected
 The policy offers a benefit of retroactive period on
continuous renewal of policy where by claims reported in
subsequent renewal but pertaining to earlier period after
first inception of the policy also become payable

CS Jitesh Gupta
CS Jitesh Gupta
# 9810043622
[email protected]
www.jkgupta.com
CS Jitesh Gupta