The Ministry of Corporate Affairs came with amendment to the Companies (Meeting of Board and its Powers) Rules 2014. These amendments shall come into effect from date of their publication in the Official Gazette i.e.
Power of Board:
As we have discussed earlier here, in addition to the powers specified under sub-section (3) of section 179 of the Act, the certain powers shall also be exercised by the Board of Directors only by means of resolutions passed at meetings of the Board.
Through this amendment, ministry of corporate affairs reduced list form total 9 items to only 3 items.
The items removed from the list are:
(3) to take note of appointment(s) or removal(s) of one level below the Key Management Personnel;
(5) to take note of the disclosure of director’s interest and shareholdings;
(6) 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;
(7) to invite or accept or renew public deposits and related matters;
(8) to review or change the terms and conditions of public deposit;
(9) to approve quarterly, half yearly and annual financial statements or financial results as the case may be.
According to section 117 read with Rule 24 of the Companies (Management and Administration) Rules, 2014 discussed earlier here, every resolution passed in terms of section 179(3) is required to be filed in Form MGT – 14. Now, there would be no requirement of filing Form MGT-14 in respect of resolutions passed relating to the above items.
Now, only following three items are remaining to be exercised by the Board in its meeting:
(1) to make political contributions;
(2) to appoint or remove key managerial personnel (KMP);
(4) to appoint internal auditors and secretarial auditor;
According to section 117 read with Rule 24 of the Companies (Management and Administration) Rules, 2014 discussed earlier here, every resolution passed in terms of section 179(3) is required to be filed in Form MGT – 14. Now, only above three items remain in list given in rule 8 of the Companies (Meeting of Board and its Powers) Rules 2014 along with other 12 items listed in Section 179(3) of the companies require to be consider in the meeting of the board and shall require to file Form MGT – 14.
Loans to Director etc. under section 185
In rule 10, in the proviso, for the word ‘principle” the word ‘principal’ shall be substituted.
This is correction of spelling in a word used in this proviso causing significant interpretation issue. We have discussed this rule 10 earlier here.
Accordingly the proviso reads as under:
Provided that such loans made under sub – rule (1) and (2) are utilised by the subsidiary company for its principal business activities.
It seems idea behind this amendment to Rule 8 is to minimise governance and not to minimising government. For corporate governance purpose, company is a body of members not a property of promoter/directors. However, in whole picture, this amendment shall not bring corporate privacy but only insignificant relief from filing Form MGT – 14 and all users of corporate information and disclosure have to dig information elsewhere rather than MCA21 portal. MCA may lose the plot to SEBI once again.
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