Change of name of a director may happen due to several reasons. A director must register the change in his name under the Companies Act. In this brief post, we will discuss the same.
Ministry of Corporate Affairs has issued many amendment rules and circulars during the month of September 2020 for the ease of doing business. Though one thing always remains – chaos. In this brief post, we will discuss these ease and remaining chaos briefly.
We received a query multiple time – how to plan retirement from directorship? Certainly, they are not asking me about post-retirement financial planning. This question particularly concerns professional directors, employee director, or independent directors concerned. This is not easy to plan a retirement which might have legal consequences up to the next 8 years. Moreover, retirement as directors is not one time exercise but a continuous one. It starts with your joining as director.
In the last post PROFICIENT INDEPENDENT DIRECTORS, we discussed the introduction of “proficiency self – assessment test” by the Ministry of Corporate Affairs. The Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 gives teeth to the Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019. We, in this post, will discuss the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019. More power is given by the Companies (Accounts) Amendment Rules, 2019.
Posted in Chapter IX - CA2013, Chapter XI - CA2013, Companies Act 2013
Tagged Boards’ Report, IICA, Independent Director, Indian Institute of Corporate Affairs, proficiency self – assessment test, the Companies (Accounts) Amendment Rules 2019, the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2019, the Companies (Appointment and Qualification of Directors) Rules 2014, The Companies (Creation and Maintenance of database of Independent Directors) Rules 2019
What else may be the name of the youngest profession on the block of Corporate India? The new test is here to hit test-taking taste bud of Indian professionals. Rule 4(a) of the Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 introduces silently the “proficiency self – assessment test”. Ministry of Corporate Affairs by notification G.S.R. 805(E) dated 22nd October 2019 introduced these rules.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged IICA, Independent Director, Indian Institute of Corporate Affairs, proficiency self – assessment test, the Companies (Appointment and Qualification of Directors) Rules 2014, The Companies (Creation and Maintenance of database of Independent Directors) Rules 2019
To bring 12th Amendment to the Companies (Appointment and Qualification of Directors) Rules, 2014, Ministry of Corporate Affairs on 25th Day of July 2019 notified the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2019 [Notification No. by GSR528(E)]. This amendment introduced a new Form DIR – 3 – KYC – WEB for annual confirmation of KYC submitted earlier. We, in this post, will discuss new provisions along with the Companies (Registration Offices and Fees) Rules, 2014.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged Chapter XI, Companies (Appointment and Qualification of Directors) Rules 2014, Form DIR – 3 – KYC – WEB, Form DIR – 6, Form DIR-3-KYC, The Companies (Appointment and Qualifications of Directors) Rules, The Companies (Registration Offices and Fees) Rules 2014
A director may be an employee in any organisation and may draw a salary from that other organisation. However, there may be two different situations –
Indian law does not prohibit outside employment by a director of a company outside its own company. The prospective employer will take a call whether one of its employees should continue to be a director in its own private company.
The prospective employer will pay the employee for his 100% quality working time and 100% quality services. Where prospective employer feels, the employees should not have any other responsibilities except that of employment and of personal life, it may ask the employee to resign from other responsibilities.
The underlying question shall always remain, will that employee be able to honestly devote his time and efforts for its prospective paymaster, the employer.
According to Section 166 of the Companies Act, 2013, a director has certain duties towards the company.
DUTIES OF DIRECTORS (SECTION 166):
If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Where a director took employment outside the company, he needs to be careful in the performance of his duties towards the company. He needs to answer the following question to himself:
a. can he exercise his independent judgement in the decision making the process of the company?
b. is there any conflict of interest?
If yes, I do not find any restriction on his gainful employment.
However, a company may by way of Articles of Association restrict its directors from outside employment.
However, one should not sail in two boats unless both boats are compatible.
With all executive overreach, Form DIR – 3 – KYC is present before us this early morning of pleasant rainy monsoon day. I welcome it with all my reservation about working of the ease of doing business with actual ease. Every individual who has a Director Identification Number (DIN); whether using, abusing, not using or disqualified from using; need to fill this form within 49 days time from today 14th July 2018 with an exception of individuals who received their Director Identification Number (DIN) after 31st March 2018. Let us discuss more the rule and the form.
[Update: with the introduction of Form DIR-3-KYC-WEB discussed here, the law stated herein has slightly changed. Please read both posts together.]
Difference between various business positions is quite confusing for the general public. Here, we will discuss, what is the difference between a chairman, a managing director, a CEO, and a proprietor?
The qualification of independent director is among few provisions where the Companies Act, 2013 become stringent after amendments. The Companies Amendment Act, 2017 read with Notification S.O. 1833(E) dated 7th May 2018 amended sub-section (6) of 149.
The Companies Amendment Act, 2017 read with notification dated 9th February 2018 amended law related to the right of a person to be appointed as director of a company under Section 160 of the Companies Act, 2013. Section 160, in its original form, as applicable from 1st April 2014 until 8th February 2018. Section 160 is well ignored but the strong pillar of corporate governance and democracy. We shall discuss amended section 160 here along with its limitations and challenges present before it.
After numerous many leakages of sensitive information on faulty governance and unearthing of scam, Government is facing firework from ruling party and its parent organisations. The friendly government of corporate houses with allegedly better relationship with corny – capitalists business organisations, once again looking towards corporate jungle for next round of its killing hunt. As per primary level media reports, Ministry of Corporate Affairs preparing for additional information from directors to nab them at first sounding of the alarm bell. This is in public domain now; government is going to ask passport information of directors who are a citizen of India. This news is bigger than it appears in earlier newspaper reports.
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Interestingly, proposed to be a director is a legally valid official status, now. This is a period between two board meetings one proposing him to be a director of an existing company and second board meeting actually appointing him as director. This status comes into being on 26th January 2018 due to the amendment in the Companies (Appointment and qualification of Directors) Rules, 2014.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged Appointment of Director, Form DIR - 3
Happy Republic Day 2018!!
From this Republic Day 2018, company secretaries will start using this headline day to day in reference to the incorporation of companies in India. The government of India these days works keeping ist both eyes on world banks’ ease of doing a business index. Ease of starting and closing businesses are the prime focus. The Companies (Amendment) Act, 2017 notified on 3rd January 2018 primly aims to ease the incorporation of companies among other objects. Now, three rules are amended to facilitate to make incorporation a “child’s play”.
Among strike off companies waiting for revival considering it a lost opportunity where their revival orders from the National Company Law Tribunal comes after the expiry of the scheme. Condonation of Delay Scheme, 2018 essentially is about of condonation of delay in filing of annual accounts and annual returns by defaulting companies. The scheme is not for the revival of strike off companies nor imposes any restriction on normal route available for condonation of delay given under Section 460 of the Companies Act, 2013. A company failed to have the benefit of condonation of delay under the scheme may avail normal route. Let us discuss briefly.
Disqualification of directors certainly is a hot topic among professionals practising corporate laws. Irrespectively of popular perception, the list compiled and released by Ministry of Corporate Affairs does not confer any disqualification to any director. These directors were already disqualified. In a serious violation, many of these directors might have failed to communicate about their disqualification to companies appointing or reappointing them after the actual date of disqualification. Such failure has penal consequences. This blog post will discuss serious consequences of the failure of compliance with law and procedures after incurring disqualification by a director.
Every Indian wants action against others who are not in compliance with law and disregard law of land. Same time, Ministry of Corporate Affairs was forced to introduce the condonation of Delay Scheme, 2018 within 1140 days (roughly 3 years) from the conclusion of earlier such scheme. Between these two schemes, the name of lakhs of companies was removed from Registry and list of Directors 3,09,614 disqualified directors released to the public domain because of such non – compliance. With fear of legal actions, corporate India and professional India welcome this scheme with critics. The strong analysis ahead.
When an applicant files a form for incorporation of a company, we need to select the designation and category of first directors in incorporation Form 32 (popularly called Spice) or wherever company appoints a director. There are four different categories of directors. We will discuss confusion regarding these categories of directors.
Posted in Chapter II - CA2013, Chapter XI - CA2013, Companies Act 2013
Tagged Additional Director, Alternate Director, chairman, chairperson, Director, Executive Director, Independent Director, Managing Dir, Managing Director, Nominee Director, Non - executive director, Professional Director, Promoter Director, Small shareholders’ Director, Whole – time Director
“Disqualified directors are not directors in any Company”, this is fact under Section 164 and 167. In another word, A Company with all directors disqualified under Section 164 and 167 has no director at all. Such companies need new a set of directors immediately. The Companies Act, 2013 presume two situations where a company may be without Directors. We will discuss these two situations here.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged Appointment of Director, Back-end appointment of Directors, back-end insertion of director, Board without Directors, Disqualification of Directors, Full Board Disqualificatin, Full Board Resignation, Full Board vacation, Vacation of Office of Director
The government of India in its crackdown against illicit money and money laundering marked 209,032 for removal of names from its register of companies as shell companies. It also disqualified about 200,000 directors. As happens with most bureaucratic exercises in India, present exercise also raised more questions than it answers. There is no definition of shell companies in Indian law. The term shell companies used widely to denote companies used as a vehicle for money laundering or criminal activities. The term itself denotes that main culprit may be someone else.
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