Category Archives: Chapter XII – CA2013

MEETINGS OF BOARD AND ITS POWERS

Amendment to Meeting of Board Rules

Posted on March 24, 2015 | 1 comment

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.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged India, MCA, MGT – 14, Ministry of corporate affairs, Registrar of Companies, the Companies (Meeting of Board and its Powers) Rules 2014, The Companies Act 2013

Loan and Advances to Employees

Posted on March 13, 2015 | 2 comments

Ministry of Corporate Affairs on 10^th March 2015 came out with a general circular 04/2015 regarding clarification with regard to Section 185 and 186 of the Companies Act 2013 on subject of loan and advances to employees.

The ministry say in circular:

“This Ministry has received a number of references seeking clarification on the applicability of provisions of section 186 of the Companies Act, 2013 relating to grant of loans and advances by Companies to their employees.”

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Advances, Employees, India, Loan, MCA, Ministry of corporate affairs, Registrar of Companies, The Companies Act 2013

Companies Permitted to invest (Removal of Difficulty Order2015)

Posted on February 20, 2015 | 1 comment

Ministry of Corporate Affairs issued another “the Companies (Removal of Difficulties) Order, 2015” in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 o remove the difficulties form (a) Definition of Small Companies under Section 2(85) and (b) for that purpose also inserted forth item in sub – section (11) of Section 186.

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Posted in Chapter I - CA2013, Chapter XII - CA2013, Companies Act 2013, Governance and Responsibility

Tagged Companies Act 2013, India, Small Companies, The Companies (Removal of Difficulties) Order 2015

THE COMPANIES AMENDMENT BILL 2014: PART 3 OF 3

Posted on January 9, 2015 | 5 comments

The Companies Amendment Bill 2014 has been introduced and passed in Lok Sabha recently. This blog post has intention to analyse proposed changes in the Companies Act 2013.

Most important massage, this amendment prepares a best case for drafting skill development programmes in India. I am reading here this Bill clause by clause. This will be a three part series and part 2 of 3 is present here.

To amend sub-section (1) of section 188 of the said Act to exempt related party transactions between holding companies and wholly owned subsidiaries (WOS) from the requirement of approval of non-related shareholders [Section 16 of the Amendment Bill]

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Posted in Chapter I - CA2013, Chapter XII - CA2013, Chapter XXIX - CA2013, Chapter XXVII - CA2013, Chapter XXVIII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Bail, Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, Related Party Transaction, Special Court, The Companies Amendment Bill 2014, Winding Up

THE COMPANIES AMENDMENT BILL 2014: PART 2 OF 3

Posted on January 6, 2015 | 5 comments

The Companies Amendment Bill 2014 has been introduced and passed in Lok Sabha recently. This blog post has intention to analyse proposed changes in the Companies Act 2013.

Most important massage, this amendment prepares a best case for drafting skill development programmes in India. I am reading here this Bill clause by clause. This will be a three part series and part 2 of 3 is present here.

To amend sub-section (1) of section 123 of the said Act to include provisions for writing off past losses/depreciation before declaring dividend for the year [Clause 10 of the Amendment Bill]

A forth proviso is being added to the effect that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.

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Posted in Chapter I - CA2013, Chapter IX - CA2013, Chapter VIII - CA2013, Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, Depreciation, Dividend, Fraud, India, Investor Education and Protection Fund, Loan, Ministry of corporate affairs, Related Party Transactions, Resolution, The Companies Amendment Bill 2014, unclaimed dividend

Second Amendment to Companies MBP Rules

Posted on August 30, 2014 | 1 comment

On 14^th August 2014, Ministry of Corporate Affairs came out with its second amendment to the Companies (Meeting of Board and its Powers) Rules 2014. These Rules come into effect from the date of publication of these amendment Rules in official Gazette which is 14^th August 2014.

Rule 3 relating to board meeting through audio vidsual Means discussed earlier here, has been amended to give effect that “scheduled venue of the meeting, which shall be deemed to be a place of the meeting may be a place anywhere and need not be a place in India.
Rule 4(iv) have been amended to the effect that a meeting of Audit Committee through
Audio Visual means shall not deal with “consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act. Before amendment, a meeting of Audit Committee through
Audio Visual means may have not deal with “consideration of accounts” only.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, Related Party Transactions, The Companies (Meeting of Boards and its powers) Rules 2014

INVESTMENT IN OTHERS’ NAME

Posted on August 1, 2014 | 1 comment

According to Section 187 of the Companies Act 2013 discussed earlier here, all investments made or held by a company in any property, security or other asset shall be made and held by it in its own name.

The company may hold any shares in its subsidiary company in the name of any nominee or nominees of the company, if it is necessary to do so, to ensure that the number of members of the subsidiary company is not reduced below the statutory limit. [Proviso to Section 187(1)]

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, Investment, MBP – 3, Ministry of corporate affairs, The Companies (Meeting of Boards and its powers) Rules 2014

LOAN AND INVESTMENT

Posted on July 31, 2014 | 7 comments

According to Section 185 of the Companies Act 2013, save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person. We have discussed this Section earlier here.

Rule 10 of the Companies (Meetings of Board and its Powers) Rules 2014 exempt wholly owned subsidiary from the requirements of Section 185 when such loan is utilised for principal business activity of the subsidiary company.

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Posted in Chapter XII - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, India, Investment, Loan, MBP – 2, Ministry of corporate affairs, The Companies (Meeting of Boards and its powers) Rules 2014

RELATED PARTY TRANSACTION

Posted on July 30, 2014 | 9 comments

Section 188 of the Companies Act 2013 lay down provisions regarding related party transactions. This Section discusses type of related party contracts and arrangements, disclosure in board report, rendered related party contract voidable for non – ratification, recovery of any loss and provision for fines. We have discussed these provisions earlier here.

Rule 15 of the Companies (Meeting of Boards and its powers) Rules 2014 add conditions on which a company may enter into a contract with related party:

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, MBP – 4, Ministry of corporate affairs, Related Party Transactions, The Companies (Meeting of Boards and its powers) Rules 2014

EXERCISE OF POWER IN BOARD MEETING

Posted on July 29, 2014 | 2 comments

One simple solution for cost effective and efficient method to pass a resolution is by passing it by circulation. Section 175 of the Companies Act 2014 the resolution shall be circulated in draft together with all necessary papers to all directors (or members of committee) in same manner as notice. The resolution shall be passed when approved by majority of directors (or members) who is entitled to vote. When one third or more directors require that it must be decided in a meeting, it shall be decided in meeting. Every resolution passed by circulation must be noted in next board meeting and made part of minutes of that meeting. Rule 5 of these Rules adds, a resolution in draft form may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means which may include E-mail or fax.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Meeting of Boards and its powers) Rules 2014

COMMITTEES AND VIGIL MECHANISM

Posted on July 28, 2014 | 4 comments

We have discussed Committees under the Companies Act 2013 earlier here.

Following committees has statutory mandate:

Social Responsibility Committee
Audit Committee
Nomination and Remuneration Committee, and
Stakeholders Relationship Committee.

The requirement related to Social Responsibility committees is given in Section 135 and the Companies (Corporate Social Responsibility Policy) Rules 2014. Section 178(5) requires every company with more than one thousand shareholders to have stakeholders’ relationship committee. Rule 6 of the Companies (Meeting of Boards and its powers) Rules 2014 set threshold limits. The Board of directors of every listed company and the following classes of companies shall constitute an Audit Committee and a Nomination and Remuneration Committee of the Board-

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Meeting of Boards and its powers) Rules 2014, vigil mechanism

MEETING THROUGH AUDIO VISUAL MEANS

Posted on July 25, 2014 | 7 comments

According to Section 173(2) of the Companies Act 2013, directors may participate through:

In person,
Through Video Conferencing,
Other Audio – visual means, as may be prescribe.

Such means must be capable of recording of proceedings and recognising the participation of directors.

The Companies (Meetings of Boards and its Powers) Rules 2014 elaborate provisions related to meeting through audio visual means.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Meeting of Boards and its powers) Rules 2014

FOREIGN DONATIONS TO POLITICAL PARTIES

Posted on March 31, 2014 | 1 comment

Association for Democratic Reforms and another vs. Union of India

Photo from https://www.facebook.com/CongBjpBhaiBhai/photos/pb.542860795730627.-2207520000.1396190678./627037157312990/

and others is a very important decision not only because it came at the eve of Indian General Elections, not only because two powerful parties Indian National Congress and Bhartiya Janata Party are accused; but also because it comes on the eve of Indian transition on companies law. The decision is a result of a writ Petition and we can find original decision here. Before going to the decision, I refer relevant legal provisions here.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility, Truth of Our Time

Tagged Bhartiya Janata Party, BJP, Companies Act 1956, Companies Act 2013, Foreign Companies, Foreign Contribution Regulation Act 1973, Foreign source, INC, Indian National Congress, Sesa, Sterlite, Vedanta Inc

Clarification on Section 180 of Companies Act, 2013

Posted on March 26, 2014 | 17 comments

Section 180 of the Companies Act, 2013 restricts powers of the Board of Directors to certain extent. The Board of Directors may exercise particular powers only with the consent of the company given by way of special resolution passed in general meeting of the company.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged 2013, Board of Directors, Borrowing, Companies Act 2013, Power of Board, Section 180 of the Companies Act

MCA Clarification on Section 185 (14 Feb 2014)

Posted on February 15, 2014 | 4 comments

Ministry of corporate Affairs has issued a General Circular on 14^th February 2014. My readers can download this Circular from MCA site link here.

We have already discussed Section 185 in one of the earlier post here.

The Section under discussion basically says, No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person.

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Posted in Chapter XII - CA2013, Companies Act 2013

Tagged Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Directors, Guarantee, India, Investment, Key managerial personnel, Legal Reforms, Loan, Loan to Directors, Ministry of corporate affairs, Reforms, Subsidiary Company

CONTRACTS INVOLVING DIRECTORS

Posted on November 29, 2013 | 10 comments

Contracts in which directors are involved are one of major corporate governance issue. Many corporate failures may be attributed to contracts related to directors under some intention which are not in consistency with fiduciary duties of directors. We have already discussed contract in which directors are interested and related party transaction in this earlier post.

REGISTER OF CONTRACTS OR ARRANGEMENTS IN WHICH DIRECTORS ARE INTERESTED (SECTION 189):

Every director or key managerial personnel shell within a period of thirty days of his appointment disclose to the company particulars relating to his concern or interest in other companies or organisation.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Companies Act 2013, Companies Bill 2012, Contract in which directors are interested, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, insider trading, Legal Reforms, Ministry of corporate affairs, Reforms, register of contracts in which directors are interested, Related Party, Related Party Transaction

LOAN AND INVESTMENT

Posted on November 26, 2013 | 18 comments

LOAN TO DIRECTORS, ETC. (SECTION 185):

No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person.

This provision shall not apply to –

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Posted in Chapter XII - CA2013, Companies Act 2013

Tagged Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Directors, India, Investment, Key managerial personnel, Legal Reforms, Loan, Loan to Directors, Ministry of corporate affairs, Reforms, Subsidiary Company

Interests of Director and Related Party Transactions

Posted on June 7, 2013 | 15 comments

UPDATE: on 30^th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

DISCLOSURE OF INTEREST BY DIRECTOR (SECTION 184, SUB SECTION 1):

Every director shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholdings, in such manner as may be prescribed. Such disclosure shall be made on three particular point of time:

(i) At the first meeting of the Board in which he participates as a director;

(ii) At the first meeting of the Board in every financial year; and

(iii) Whenever there is any change in the disclosures already made, then at the first Board meeting held after such change.

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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Arms Length Transaction, Companies Bill 2012, CorpGov, CorpLaw, Corporate, Corporate Governance, Corporate Law, Director, Disclosure of Interest, Independent Director, Interest, Legal Reforms, Office or Place of Profit, Reforms, Related Party, Related Party Transaction, Relative, RPT, Voidable Contract

POWER OF BOARD UNDER COMPANIES ACT 2013

Posted on May 31, 2013 | 5 comments

UPDATE: on 30^th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

In February 2013, I wrote “FOOTSTEPS OF CORPORATE GOVERNANCE IN COMPANIES BILL 2012” and thereafter try to cover all relevant topics related to Corporate Governance. Even though, day-to-day management of company is function of KEY MANAGERIAL PERSONNEL (sometime designated as out of Board Directors); Board of Directors is indeed most Significant body, which virtually rule a company. Not only, APPOINTMENT AND QUALIFICATION OF DIRECTOR as well as their DUTIES, VACATION, RESIGNATION, REMOVAL are subject to close scrutiny by investors, professionals and regulators. Board of Directors has a set of Executive Directors who are APPOINTMENT and MANAGERIAL REMUNERATION has some other significant aspect of Corporate Governance. The Appointment of INDEPENDENT DIRECTORS is one of the most significant contributions of this Bill to Corporate Governance practices in India. This all-powerful company Board exercises its powers in BOARD MEETING but it has some statutory and other BOARD COMMITTEES. Now we will discuss Power of Board of Directors under present Bill.
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Posted in Chapter XII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Accounts, Board Committee, Board of Directors, Board Powers, Boards’ Report, CG, Companies Bill 2012, Contribution to bona fide Charitable and other funds, Contribution to National Defence Fund, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, Independent Director, India, Legal Reforms, Ministry of corporate affairs, Political Contribution, Power of Board of Directors, Profit and Loss Account, Reforms, Resolutions in Board Meeting, Restrictions on Power of Board, Special Resolution

BOARD MEETING UNDER COMPANIES ACT 2013

Posted on May 24, 2013 | 4 comments

UPDATE: on 30^th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

The Board of Directors is most powerful body in a company. The Corporate governance is until now is governance of the Board.

The Companies Bill 2012 has dedicated chapter i.e. Chapter XII dealing with Board meetings and its power. In this blog I will discuss Board Meetings and in a future post power of Board of Directors.

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Posted in Chapter XII - CA2013, Companies Act 2013, Company Secretary, CorpGov, Governance and Responsibility, Secretarial Standards

Tagged Board of Directors, Board Resolution, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, Independent Director, Key managerial personnel, Manager, Managerial Remuneration, Managing Director, Minutes of Meeting, Notice, Quorum, Reforms, Related Party Transaction, Resolution by Circulation, Whole – time Director