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Companies Act, 2013

A review and immediate actions required

Sr. No

Particulars

Section

Action to be taken

Time limit

1.

Changes in letterhead, bills etc

Section 12(3)

1. Print name, address of registered Office, CIN, telephone no. Fax no. ( if any) e-mail address, website ( if any)on all its business letters, billheads, letter papers and in all its and all its notices and all official publication

2. Where the company has changed its name or names during the last two years, it shall paint or affix or print as the case may be , along with its name  the former name or names so changed during the last two years as required under clause (a) & (c)

w.e.f. 01/04/2014

2.

Identify Related Parties and approval of every contract with related partiles

Section 188 & Rules

Board resolution is required for any contract/arrangement with related party in following cases:-

1. Sale, purchase supply of any goods or material or property of any kind

2. Leasing

3. Availing or rendering any kind of services

4. Appointment of any agent for sale, purchase of goods and material, service of property

5. Appointment of any related party to any office or place of profit in co., subsidiary or associate co.

6. Underwriting the subscription of any securities or derivatives thereof.

Case where Special Resolution is required:-

- a company having a paid-up share capital of ten crore rupees or more ; or

- where the transaction or transactions to be entered into—

(a) as contracts or arrangements with respect to clauses (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below—

(i) sale, purchase or supply of any goods or materials directly or through appointment of agents exceeding 25% of the annual turnover;

(ii) selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agents exceeding 10% of net worth;

(iii) leasing of property of any kind exceeding 10% of the net worth or exceeding 10% of turnover;

(iv) availing or rendering of any services directly or through appointment of agents exceeding 10% of the net worth;

(b) appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding Rs. 2.5 lakh; or

(c) remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 1% of the net worth.

Disclosure with full justification of all contracts and related party transaction has to be given in Boards report

Relative Parties: Directors and their relatives, KMP and their relatives, firm or company wherein director is partner or director, private company wherein the director is member, public company where the director holds more than 2% shareholding

Relative: Husband, wife, father, mother, son, sons wife, daughter, daughters wife, brother, sister.

w.e.f. 01/04/2014

3.

Establishment of various Committees of the Board

Section 177, 178 and Rules

The Board of directors of every listed companies and the following classes of companies shall constitute an Audit Committee and a Nomination and Remuneration Committee of the Board-

(i) all public companies with a paid up capital of ten crore rupees or more;

(ii) all public companies having turnover of one hundred crore rupees or more;

(iii) all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding fifty crore rupees or more.

Constitution: 3 or more non executive directors and atleast half shall be independent directors.

The nomination and remuneration committees shall formulate the criteria for the appointment and remuneration of the directors, KMP and senior management.

Explanation.- The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule.

Companies having 1000 or more security holders shall constitute a Stakeholders Relationship Committee to resolve the grievances of the security holders.

w.e.f. 01/04/2014

4.

Establishment of Vigil Mechanism

Section 178 and Rules

Every listed company and the companies belonging to the following class or classes shall establish a vigil mechanism for their directors and employees to report their genuine concerns or grievances-

(a) the Companies which accept deposits from the public;

(b) the Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees.

The companies which are required to constitute an audit committee shall oversee the vigil mechanism through the committee

In case of other companies, the Board of directors shall nominate a director to play the role of audit committee for the purpose of vigil mechanism to whom other directors and employees may report their concerns.

w.e.f. 01/04/2014

5.

Corporate Social Responsibility (“CSR”) requirements

Section 135 and Rules

2% of the average net profits of the last three financial years are to be mandatorily spent on CSR activities by an Indian Company if it satisfies any of the following:

i. It has a net worth of INR 500 Crores or more; or

ii. It has a turnover of INR 1000 Crores or more; or

iii. It has a net profit of INR 5 Crores  or more.

Companies which meet any of the above thresholds should constitute a CSR committee of the Board. Such committee should consist of three or more directors including an ‘independent director’. A private limited Company which has a minimum prescribed two directors can be constituted by just the two directors and need not have an ‘independent director’ on its committee. Further, the CSR Policy of the Company should be posted on the website (if any) maintained by such Company.

w.e.f. f.y. 2014-15

6.

Board Resolution required

Section 179(3) and Rules

Matter which are to be dealt vide Board Resolution and respectively filed with ROC

• to make calls, authorise buyback, issue securities,

• 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 statements and the Board Report;

• to diversify the business of the company;

• to approve amalgamation, merger or reconstruction;

• to takeover the company or acquire the control or substantial stake in another company;

• 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;

• 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;

Provided that the Board may by way of resolution delegate to any committee, MD or any Principal Officer any of the powers specified above in point nos. 2,3 and 4.

Event base resolution required.

7.

Restrictions on the powers of Board

Section 180

The Board of Directors shall exercise following powers only with the consent of the Company by way of Special Resolution:

to sell, lease, or otherwise dispose of the whole or substantially the whole of the undertaking of the Company.

For the purpose:

undertaking means undertaking wherein the investment of the company exceeds 25% of its net worth as per latest audited balance sheet or undertaking which generates 25% of the total income during the previous financial year.

Substantially the whole means 20% or more of the value of undertaking.

To borrow money, where the monies to be borrowed exceeds aggregate of the paidup capital and free reserves.

For the purpose: the ordinary resolution passed under section 293(1)(d) shall be sufficient compliance for the period of one year from the date of notification. It means in the ensuing AGM in 2014 every company needs to mandatorily pass special resolution under section 180(1)(c) and file it with ROC. The resolution under this section is to be passed specifying the total amount upto which the monies may be borrowed by the Directors and shall be the borrowing power of the Company.

To remit, or give time for the repayment of, any debt due from a director.

Event base AGM compliances.

AGM -2014

8.

Extracts of Annual Return in Board Report

Rules

The extract as specified (of the annual return) in form MGT 9 to be attached with the Board’s Report.

Annual Return of Listed Companies, Companies having paidup capital of Rs. 10 Crores or more or companies having turnover of Rs. 50 Crore or more has to be certified by the PCS and their certificate is to be annexed with Annual Return.

9.

Return in change in Top 10 shareholding

Rules

Any change of  2% either in value or volume of shareholding of promoters or top 10 shareholders needs to be intimated to the ROC within 15 days of such change in case of every listed company.

Event base compliance

10.

Notice through Electronic mode

Rules

A notice may be sent through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or Uniform Resource Locator for accessing such notice.

The e-mail shall be addressed to the person entitled to receive such e-mail as per the records of the company or as provided by the depository:

that the company shall provide an advance opportunity atleast once in a financial year, to the member to register his e-mail address and changes therein and such request may be made by only those members who have not got their email id recorded or to update a fresh email id and not from the members whose e-mail ids are already registered.

If a member entitled to receive notice fails to provide or update relevant e-mail address to the company, or to the depository participant as the case may be, the company shall not be in default for not delivering notice via e-mail. The notice of the general meeting of the company shall be simultaneously placed on the website of the company if any

AGM

Notice through email to the shareholders whose email are registered with the company.

For remaining shareholders notice to be send through courier or registered post.

11.

Quorum for General Meetings

Section 103

Unless Articles provides for a larger number the quorum shall be as under:

1. In case of private companies, 2 members personally persent;

2. In case of public companies:

a. Members upto 1000- 5 members personally present

b. Members 1001 to 5000 – 15 members personally present

c. Members more than 5000 – 30 members personally present

In case the quorum not present within half an hour from the time appointed for holding meeting the meeting shall stand adjourned to the same day in the next week at the same time and place or to such date and such other time and place as the board may determine.

Provided that in case of adjourned meeting or changed day, time or place of meeting the company shall give not less than 3 days notice to the members either individually or by publishing an advertisement in the newspapers , one in English and one in vernacular language, which is in circulation where the registered office of the company is situated. In case at the adjourned meeting also the quorum is not present within half an hour from the time appointed for holding meeting, the members present shall be the quorum.

AGM

12.

Report of AGM

Section 121 and Rules

Every listed company shall prepare and submit, to ROC within 30 days of the conclusion of the AGm, a report on each AGM in prescribed manner. The report shall be signed and dated by the Chairman of the meeting or in case of his inability to sign, by any two directors of the company, one of whom shall be the Managing director, if there is one and company secretary of the company.

AGM

13. 

Maintenance of all Secretarial Records in Electronic Form

Section 120 and Rules

Every listed company and companies having not less than 1000 shareholders are required to maintain the records as prescribed in electronic form.

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.

Upto 30/09/2014

14.

Deposit

Section 73 to 76 and Rules

Existing Deposits: Where the deposit accepted by the company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall:

1. A return is to be filed within 90 days for all deposit accepted.

2. Repay within 1 year from commencement of this act or from the date on which such payment are due, which ever is earlier.

Companies have to obtain prior consent of the company in general meeting by way of special resolution and filed with ROC. Provided that the public deposit may be accepted by the eligible companies within the limits specified under section 80 (i.e. upto the amount of its paid-up capital and free reserves) by way of ordinary resolution.

Eligible Companies: Deposit from public can only be accepted by following eligible companies:

1. Companies having net worth of not less than Rs. 100 Crore; or

2. Turnover of not less than Rs. 500 Crores; And

Other than Eligible Companies: Other than eligible companies may accept deposits only from its members.          

Procedural part: Circular is to be issued to members every year, its publication in case of public deposit and filing with ROC, Credit Rating is to be obtained every year, Deposit Insurance, maintenance of 15% liquidity in separate account and return of deposit every year upto 30th June are the procedural aspects.

Exempted Deposits: From promoters, directors and Companies.

Upto 30 June a return is to be filed with ROC.

In AGM : Arrangements are to be made to issue circular to the members to renew deposits from members.

15.

Secretarial Audit Report

Section 204 and Rules

Following companies :

1. Every Listed Company and

2. Every public company having a paid-up share capital of Rs. 50 Crores or more; or

3. Every public company having a turnover of Rs. 250 Crores or more.

shall annex Secretarial Audit Report along with its board report given by a Company Secretary in Practice. The format of the Secretarial Audit Report shall be in form MR.3

16.

Key Managerial Personnel

Section 203 and Rules

Every Listed Company and other Public Company having paid up capital of Rs. 10 Crores or more shall have following whole-time key managerial personnel,—

(i) Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;

(ii) Company Secretary; and

(iii) Chief Financial Officer

Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.

that If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

17.

Statutory Auditors

Rules

Auditor appointed in the annual general meeting shall hold office from the conclusion of that meeting till the conclusion of the sixth annual general meeting, with the meeting wherein such appointment has been made being counted as the first meeting:

Provided that such appointment shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution.

Following class of companies shall not re-appoint any Individual as Auditor for more than 1 term of five years Any Auditor Firm for more than 2 term of consecutive five years:-

1. All Listed Companies;

2. All unlisted public companies having paid up share capital of rupees ten crore or more;

3. All private limited companies having paid up share capital of rupees twenty crore or more;

4. All companies having paid up share capital of below threshold limit mentioned in (2) and (3) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more.

However, the same Auditors or Auditors Firm may be appointed as auditors after 5 years from completion of his term as Auditors.

All appointment shall be on the recommendations of the Audit Committee, if any.

Existing Auditors or Auditors Firms may be re appointed for further 3 years in AGM 2014. After that the Auditors needs to be changed.

18.

Woman Director

Rules

Every Listed Company and other public companies having paid up capital of Rs. 100 Crores or Turnover of Rs. 300 Crores or more shall appoint atleast 1 Woman Director in the Board.

Any vacancy in the woman director shall be filled up by the Board not later than 3 months or upto next Board Meeting which ever is later.

31.03.2015 in companies Act

Upto 30.09.2014 read with listing agreement

19.

Independent Directors

Rules

Every public company having paid up capital of Rs. 10 Crore or turnover of Rs. 100 Crore or outstanding loans, debentures or deposit of Rs. 50 Crores or more shall have  atleast 2 Independent directors or more as may be required.

Independent directors shall in the first meeting after his appointment and thereafter first meeting of every financial year and whenever there is change in circumstances of his independence give a declaration that he meets the criteria of independence.

Any vacancy of the independent director shall be filled up by the Board not later than 3 months or upto next Board Meeting which ever is later.

Annual Disclosure

20.

Postal Ballot

Section 110 and Rules

Companies having more than 200 members are required to transact following items of business through Postal Ballot:

(a) alteration of the objects clause of the MOA (Main object in case of existing companies);

(b) alteration of AOA in relation to insertion or removal of provisions which, under sub-section (68) of section 2, are required to be included in the articles of a company in order to constitute it a private company;

(c) change in place of registered office outside the local limits of any city, town or village e as specified in sub-section (5) of section 12;

(d) change in objects for which a company has raised money from public through prospectus and still has any unutilized amount out of the money so raised under sub-section (8) of section 13;

(e) issue of shares with differential rights as to voting or dividend or otherwise under under sub-clause (ii) of clause (a) of section 43;

(f) variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;

(g) buy-back of shares by a company under sub-section (1) of section 68;

(h) election of a small shareholders director under section 151 of the Act;

(i) sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 180;

(j) giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186.

Proposed resolution along with the explanatory statements are to be send to the members by ways of courier, registered post or other electronic means, scrutinizer is to be appointed, notice in paper is required to be published.

Event base compliance.

21.

Internal Auditor

Section 138 and Rules

(a) every listed company;

(b) every unlisted public company having paid up capital of Rs. 50 Crores or Turnover of Rs. 200 Crores or outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 Crores or more at any point of time during the preceding financial year; or outstanding deposits of Rs. 25 Crores or more at any point of time during the preceding financial year; and

(c) every private company having turnover of Rs. 200 Crore or outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 Crores or more at any point of time during the preceding financial year.

Provided that an existing company covered under any of the above criteria shall comply with the requirements  within six months of commencement of such section.

Internal Auditor may be a Chartered Accountant whether in practice or not a Cost Accountant whether in practice or not or any other professional as the Board may specify. Internal auditor may or may not be an employee of the company;

Upto 30.09.2014

22.

Voting Through Electronic Means

Section 108 and Rules

Every Listed Company and company having 1000 or more shareholders, shall provide to its members facility to exercise their right to vote at general meetings by electronic means.

Notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing electronic voting facility. The notice shall be posted on the website of the company and an advertisement shall be published atleast 5 days before the date of beginning of the voting period in English and vernacular language. A scrutinizer shall be appointed by the board who may be practicing professional.

AGM


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Category Corporate Law, Other Articles by - CS Ankur Srivastava 



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