Category Archives: Chapter VII – CA2013

MANAGEMENT AND ADMINISTRATION

Serious Penal Consequence of late Annual Filing – landmine ahead


[The law stated in this post is effective from the 7th day of May 2018]

There is a perception that filing of financial statements and other documents with additional fee absolve the company from consequences under section 92, section 137 and conditional exemption given to certain companies by certain notifications issued by the Ministry of Corporate Affairs.

This is also a general view of the companies that any extension granted for the filing of the financial statements and other documents without additional fee grant immunity to the companies from its liabilities under mentioned provisions.

I beg to differ, conditionally.

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Shareholders in General Meeting


To be legally correct I will say, all Members of a company may attend a General Meeting including the Annual General Meeting of a company. I will discuss, related aspects in brief.

Member

In legal terminology Section 2(55) of the Companies Act, 2013 defines the term member:

“member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become a member of the company, and on its registration, shall be entered as a member in its register of members;

(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.”

Members are those shareholders who got shares registered in their name.

A shareholder, who has recently purchased, inherited or received a gift of shares of a company may not become shareholders unless shares are registered in its name. Likewise, a member who has recently sold, died or given a gift of shares may continue as members til such shares are registered in the name of another person.

Please note in case of de-materialised shares, such registration happened immediately.

Notice of (Annual) General Meeting

According to Section 101(3)(a) of the Act, the notice of every meeting of the company shall be given to every member of the company, legal representative of any deceased member or the assignee of an insolvent member.

Quorum

Normally the quorum of a general meeting:

(a) in case of a public company,—

(i) five members personally present if the number of members as on the date of the meeting is not more than one thousand;

(ii) fifteen members personally present if the number of members as on the date of the meeting is more than one thousand but up to five thousand;

(iii) thirty members personally present if the number of members as on the date of the meeting exceeds five thousand;

(b) in the case of a private company, two members personally present shall be the quorum for a meeting of the company.

There is no discrimination among member, who may present. Every member person who received the notice of a general meeting may attend it.

Voting

In normal circumstances, only members who are equity shareholder may vote as per defined voting rights. According to Section 47(1)(a) of the Act, every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company. Presently, it is possible to have different classes of equity shareholders with differential voting rights.

Members, who are preference shareholders may vote in certain circumstances only. Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company. Where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.

Seeking information of Significant Beneficial Ownership


Section 90 of the Companies Act 2013 substituted by a new set of law. It is a drastic change to understand and need urgent attention for all companies. Amended Section 90 and rules made thereunder has already been notified with effect from 13th June 2018 and 14th June 2018. The significant deadline is on 12th September 2018. Earlier, we discussed Significant Beneficial Interest, declaration, register and return related thereto here and here. Seeking a declaration from a significant Beneficial Ownership is debatable otherwise but the law provides some remedies discussed in this post.

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Declaration by Significant Beneficial Owner


The law stated in this post was valid from 14th June 2018 till 7th February 2019. The post on the law applicable from 8th February 2019 is posted here.

Section 90 of the Companies Act 2013 substituted by a new set of law. It is a drastic change to understand and need urgent attention for all companies. Amended Section 90 and rules made thereunder has already been notified with effect from 13th June 2018 and 14th June 2018. The deadline is on 12th September 2018. In last post here, we discussed Significant Beneficial Interest. In this post, we will discuss the declaration, register and return of Significant Beneficial Ownership.

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Significant Beneficial Owner


The law stated in this post was valid from 14th June 2018 till 7th February 2019. The post on the law applicable from 8th February 2019 is posted here.

Section 90 of the Companies Act 2013 substituted by a new set of law. It is a drastic change to understand and need urgent attention for all companies. Amended Section 90 and rules made thereunder has been notified with effect from 13th June 2018 and 14th June 2018. The significant deadline is on 12th September 2018 with a lot of working and follow up required, coincide with all Annual General Meeting, Annual filing and tax returns. In this post, we will discuss what constitutes Significant Beneficial Ownership.

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Effective Provisions of the Companies Amendment Act 2017 w.e.f. 13 June 2018


With Four Notifications; S.O. 351(E) dated 23rd January 2018, S.O. 630(E) dated 9th February 2018, S.O. 1833(E) dated 7th May 2018 and S.O. 2422(E) dated 13th June 2018 most provisions of the Companies (Amendment) Act, 2017 (1 of 2018) come into force. Here is a bird’s eye view.

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Principal Business Activities


Every company must be a business organization. Being business organization, a company has business activities. In the Companies Act, 2013 “principal business activities” is a major reporting requirement. According to Section 92(1)(a), every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding its principal business activities. Section 185 as amended has reference to principal business activities as a major condition for a loan to directors and related concerns.

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