ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


Holding of office or place of profit
1) For an ordinary director: - 314 will not apply for payment of
-sitting fees,
-expenses reimbursement for attending board meeting
- 1%, 3% commission of profit,
    since they are paid in capacity of director
 
2) For M D / WTD Sec 314 will not apply for remuneration under Schedule XIII in case
    of loss or payment of 5% or 10% commission of profit in case of profit.
 
In other words, merely because a person holds any position under the company he is not any 
 

Director
 
Relatives, Partner , Firm & private Co.
 
Monthly Pay < Rs. 10000 (up to 9999)
Sec 314 Will not apply
Sec 314 Irrespective of amount. Special
Resolution. No prior /first GM
Monthly Pay >Rs. 10000 or more < Rs. 50000(up to 49999) Special resolution. no prior /first GM
 
 
Monthly Pay Rs. 50000 or more prior Special resolution, and prior central government approval

 
 


 

The three officers are exempted.                                   -The three officers are not exempted
                                                                                    -Under the subsidiary is not covered
Managers
Debenture trustees
Bankers of the F I
                                    Under the Company
                                    Under the subsidiary is also covered
 
 
 
 
 
 
 
 
 
 
 
 
Board Meeting
Supposed Board meeting convened on 26th December 2007
Could not be held for want of quorum
Adjourned meeting held on 1st January 2008
 
Whether the adjourned meeting held on 1st January 2008 is treated as meeting for the first quarter of 2008
 
Answer:- No, the meeting is not considered as meeting for the First Quarter
 
Notice sent by E-mail or even by SMS is equivalent to writing under Iformation Technology Act.
 
Quorum for Board meeting Sec 287
When is the quorum in the following cases?
 
 Total Director                                          Quorum
                       12                                                                    4         
                        11                                                                    4
                        10                                                                    4
                        09                                                                    3
                        08                                                                    3
                        07                                                                    3
                        06                                                                    2
                        05                                                                    2
                        04                                                                    2                     
                        03                                                                    2
                        02                                                                    2
                       
Case I
            Calculate the quorum in the following case
                                                                        Total                            Interested
                                                                        Director                        Director
   Total Director                                                12                                7
    Director attending                                         8                                  5
           
Is the quorum present in the meeting?
 
Quorum =   1/3 of 12 = 4 Director
Director Present = 8 - 5 = 3
Hence, No quorum in meeting.
 
 
 
 
 
Case II
 
Calculate the quorum in the following case
                                                                        Total                            Interested
                                                                        Director                        Director
    Total Director                                                  12                                8
    Director attending                                            8                                 5
           
Is the quorum present in the meeting?
 
Quorum =   1/3 of 12 = 4 Director
Director Present = 8 - 5 = 3
Hence, No quorum in meeting.
 
The no of interest director exceeds or is equal to 2/3 of such total strength, the no of remaining director present at the meeting not less than 2 shall be the quorum.
 
Hence the quorum is present.
 
Case III
What will be your answer if in first case the company is private company?
Quorum = 1/3 of 12 = Director
Director present = 8 director
 
Hence, the quorum is present in the meeting.
 
When the quorum should present
 
  • Not only at the commencement but through out the meeting and every item of the meeting. 
 
The resolution shall be approved
 
  • All the director who are in India or
  • A majority of all the director
 
Who are entitled to vote on the resolution? Thus an interested director shall not be entitled to vote.
 
Issue in circular resolution
Director outside India can vote on circular resolution.
If alternate director is appointment for original director who has gone out of country.
 
 
 
Sole selling Agent Sec 294, 294A, 294AA
 
  • Only section in the Act which speaks on business related areas.
  • Principle- agent relationship- differs other market intermediaries on this count.
  • Agent for sale of company goods.
  • Section applies if he is a sale selling agent.
  • Sale distributors come under this section, if, principle agent relationship exist and exclusive right to section is given.
 
Appointment of sole selling agent
Provision relating to appointment_ Sec 294(1), 294(2), 294AA (1), 294AA (2), 294AA(3),
 
Appointment by whom
 
Ø      Board shall appoint.
Ø      Either at the board meeting by circulation
Ø      MD/ Marketing manager cannot appoint.
 
Situation -1
Ø      Board of Director                     –            Appointment
Ø      Condition                                 –            Not mentioned
Ø      First general meeting                 –            Approved 
 
What are the consequences?
ü      Appointment                                         –          Void
ü      Acts Done                                            –          Void
ü      Vacation of office                                 –          Does not arise
ü      Remuneration received              –          Has to be refund
ü      Compensation for loss of office             –          Does not arise
 
Situation -II
Ø      Board of Director                     –            Appointment
Ø      Condition                                 –            Mentioned
Ø      First general meeting                 –            Did not Approved 
 
What are the consequences?
ü      Appointment                                         –          Starts as a Valid appointment 
ü      Acts Done                                            –          Valid
ü      Vacation of office                                 –          Has to vacate
ü      Remuneration received              –          Valid
ü      Compensation for loss of office             –          Does not arise
 
 
 
 
Situation -III
Ø      Board of Director                     –            Appointment
Ø      Condition                                 –            Mentioned
Ø      First general meeting                 –            Did not Approved
Ø      Subsequent GM                       –           Approved        
 
What are the consequences?
ü      Appointment                                         –          Starts as a Valid appointment 
ü      Acts Done                                            –          Valid
ü      Vacation of office                                 –          Has to vacate after 1st GM
ü      Remuneration received              –          Valid
ü      Approval at subsequent GM                –          No relevance
ü      Compensation for loss of office             –          Does not arise
 
Situation -IV
Ø      Board of Director                     –            Appointment
Ø      Condition                                 –            Mentioned
Ø      First general meeting                 –            Matter was not put up Did not Approved
 
What are the consequences?
ü      Appointment                                         –          Starts as a Valid appointment 
ü      Acts Done                                            –          Valid.
ü      Vacation of office                                 –          Has to vacate after 1st GM.
ü      Remuneration received              –          Valid.
ü      Compensation for loss of office             –          Eligible.
 
 
Substantial Interest
 
¨      In case of Individual 
Individual   + Relatives
                                                                                     
¨      In case of firm                                                   Paid up share capital of Rs.
Partner + Relatives                                                       50000/- or 5% of paid up
                                                                                    Capital whichever is lower.
¨      In case of body corporate
            Body corporate + Director + Relatives
 
Special points
*      Body corporate
*      Paid up capital
*      No free reserve
*      Both equity& preference shares
*      Whichever is less
*      Beneficial interest
*      Exceeds 5 lakes / 5% , therefore, if exactly 5 lakes /5% No substantially interested
*      Relatives of such individual/partner/directors.
 
 
Section 294AA will not apply, if substantial interest after his appointment.
 
Section294AA (3) will not apply, if paid up capital was increased to 50 lakes or more after his appointment.
 
Examination question
6                    1) Only section 294(2) will apply
2) Appointment starts as void appointment
3)
     7          No question of compensation because the appointment itself is void
 
8         The offer is equivalent to appointment. Therefore no compensation when he refuses to accept the appointment on amalgamation.
 
"Loved reading this piece by bheemashankar?
Join CAclubindia's network for Daily Articles, News Updates, Forum Threads, Judgments, Courses for CA/CS/CMA, Professional Courses and MUCH MORE!"






Category Corporate Law, Other Articles by - bheemashankar 



Comments


update