Category Archives: Companies Act 2013

LIABILITY AND DISQUALIFICATION OF AUDITOR

Posted on August 7, 2014 | 2 comments

According to Section 147(2) of the Companies Act 2013 discussed earlier here, if an auditor of a company contravenes any of the provisions of section 139, section 143, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees. If an auditor has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.

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

Tagged Audit Committee, Auditor, Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Audit and Auditors) Rules 2014

REMOVAL AND RESIGNATION OF AUDITOR

Posted on August 6, 2014 | 1 comment

In this post we will discuss resignation and removal of auditor of a company.

REMOVAL:

The auditor may be removed from his office before expiry of his term only by special resolution after approval from central government. The auditor concern shall be given opportunity of being heard. [Section 140(1) of the Companies Act 2013 discussed earlier here]

The application to the Central Government for removal of auditor shall be made in Form ADT – 2 and shall be accompanied with fees as provided for this purpose under the Companies (Registration Offices and Fees) Rules, 2014. [Rule 7(1) of the Companies (Audit and Auditors) Rules 2014]

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

Tagged Audit Committee, Auditor, Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Audit and Auditors) Rules 2014

AUDIT ROTATION

Posted on August 5, 2014 | 7 comments

Sub – section (2) of this section 139 of the Companies Act, 2013 discussed earlier here expressly say that provide that no listed company or some other companies as notified shall appoint or re – appoint (i) an individual for more than one term of five consecutive years, or (ii) an audit firm for more than two terms of five consecutive years. Any audit firm shall not be appointed as auditor which has any common partner or partners with the firm whose tenure has expired in the company immediately preceding financial year.

For the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-

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

Tagged Audit Committee, Auditor, Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Audit and Auditors) Rules 2014

APPOINTMENT OF AUDITOR

Posted on August 4, 2014 | 5 comments

True and fair Audits are core concern for corporate world and its regulators. The manner of appointment of auditors may affect independence of audit. Section 139 of the Companies Act 2013 discussed earlier here, discuss appointment of auditor in detail.

The Companies (Audit and Auditors) Rules 2014 further prescribes tasteless syrup with bitter pills recommended under Chapter X of the Companies Act 2013.

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

Tagged Audit Committee, Auditor, Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, The Companies (Audit and Auditors) 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

COMPENSATION TO DIRECTOR FOR LOSS OF OFFICE

Posted on July 24, 2014 | 1 comment

Section 191 of the Companies Act 2013 discusses payment of compensation for Director for loss of office. In an earlier post here, we have discussed this section in detail.

According to sub – section (1) of section 191, no director of a company shall, in connection with—

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Posted in Chapter XIII - 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

REMUNERATION OF DIRECTORS

Posted on July 23, 2014 | 4 comments

We have already discussed remuneration of managerial personnel under Section 197 read with Schedule V of the Companies Act 2013. In addition to managerial remuneration under Section 197 a company may pay sitting fees to its directors.

According to Rule 4 of the Companies (appointment and Remuneration of Managerial Personnel) Rule 2014, a company may pay a sitting fee to a director for attending meetings of the Board or committees thereof, such sum as may be decided by the Board of directors thereof which shall not exceed one lakh rupees per meeting of the Board or committee thereof. For Independent Directors and Women Directors, the sitting fee shall not be less than the sitting fee payable to other directors.

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

Tagged Companies Act 2013, Corporate Law, India, Manager, Managing Director, Ministry of corporate affairs, the Companies (appointment and Remuneration of Managerial Personnel) Rule 2014

APPOINTMENT OF MANAGERIAL PERSONNEL

Posted on July 22, 2014 | 7 comments

Section 196 of the companies Act 2013 deals with appointment of certain managerial personnel namely; Managing Director, Whole time Director and Manager. Remuneration of these managerial personnel is discussed in Section 197 read with Schedule V of the Companies Act 2013. Section 203 of this Act further deals with appointment of certain other managerial personnel along with managerial personnel already discussed in Section 197.

According to Rule 3 of the Companies (appointment and Remuneration of Managerial Personnel) Rule, 2014, A company shall file a return of appointment of a Managing Director, Whole Time Director or Manager, Chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO) within sixty days of the appointment, with the Registrar in Form MR – 1 along with such fee as may be specified for this purpose. We have earlier discussed Form MR – 1 in detail here.

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

Tagged Companies Act 2013, Company Secretary, Corporate Law, India, Manager, Managing Director, Ministry of corporate affairs, the Companies (appointment and Remuneration of Managerial Personnel) Rule 2014

POSSIBILITY OF PROXY

Posted on July 21, 2014 | Leave a comment

[This is my write up published in July 2014 edition of eMagazine of Mysore Chapter of Institute of Company Secretaries of India
Download here: 126 ICSI Mysore eMagazine July 2014]

Section 105(2) of the Companies Act, 2013 says in every notice calling a meeting of a company, there shall appear with reasonable prominence a statement that member entitled to appoint a proxy and a proxy need not be a member. Prominent question on ‘proxy’ is where the institution of proxies stands under new corporate law regime.

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Posted in Chapter VII – CA2013, Companies Act 2013, Governance and Responsibility

Tagged Annual General Meeting, Companies Act 2013, Corporate Law, Extra Ordinary General Meeting, General Meeting, India, Ministry of corporate affairs, Notice, Proxy, The Companies (Management and Administration) Rules 2014

Company Law as on June’14

Posted on July 19, 2014 | 1 comment

In a recent communication to its students, Institute of Company Secretaries of India identified provisions of company law as applicable on 30^th June 2014. This is cut –off date regarding applicability of law for its December examination. I am sharing relevant information for my readers.

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

Tagged Company Law, India, The Companies Act 1956, The Companies Act 2013

REGISTER OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Posted on July 18, 2014 | 2 comments

Sub – Section (1) of Section 170 of the Companies Act 2013 mandate that every company shall keep at its registered office a register containing such particulars of its directors and key managerial personnel as may be prescribed, which shall include the details of securities held by each of them in the company or its holding, subsidiary, subsidiary of company’s holding company or associate companies.

Rule 17 of the Companies (Appointment and Qualification of Directors) Rules 2014 prescribed Every company shall keep at its registered office a register of its directors and key managerial personnel containing the following particulars, namely:-

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Posted in Chapter XI - CA2013, Companies Act 2013

Tagged ¬Companies (Appointment and Qualification of Directors) Rules 2014, Companies (Incorporation) Rules 2014, Companies Act 2013, Corporate Law, Director, India, Ministry of corporate affairs, Register of Director

RESIGNATION OF A DIRECTOR

Posted on July 17, 2014 | 3 comments

According to Section 168 of the Companies Act 2013 A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company. A director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed.

Rule 16 of the Companies (Appointment and Qualification of Directors) Rules 2014 prescribed that where a director resigns from his office, he shall within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR – 11 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.

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

Tagged Companies (Appointment and Qualification of Directors) Rules 2014, Companies (Incorporation) Rules 2014, Companies Act 2013, Corporate Law, Director, India, Ministry of corporate affairs, Resignation of Director

APPOINTMENT OF DIRECTOR

Posted on July 16, 2014 | 33 comments

Appointment of directors for this blog post does not include re – appointment of directors as such. But surely provisions are different only on compliance with Section 160 of the Companies Act 2013.

When an appointment of a director is proposed, the process starts with Notice of candidature under Section 160.

A person who is not a retiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five percent of total valid votes cast either on show of hands or on poll on such resolution. The company shall inform its members of the candidature of a person for the office of director under sub-section (1) in such manner as may be prescribed.

Further procedure related to the notice is explained under Rule 13 of the Companies (Appointment and Qualification of Directors) Rules 2014.

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

Tagged Appointment of Director, ¬Companies (Appointment and Qualification of Directors) Rules 2014, Companies (Incorporation) Rules 2014, Companies Act 2013, Corporate Law, Director, India, Ministry of corporate affairs

Changes in DIN particulars

Posted on July 15, 2014 | 16 comments

Change is truth of life and life always moves on. This may result in change in particulars specified in Director Identification Number records.

Rule 12 facilitate intimation of these changes in particulars in DIN records.

Every individual who has been allotted a Director Identification Number under these rules shall, in the event of any change in his particulars as stated in Form DIR – 3, intimate such change(s) to the Central Government within a period of thirty days of such change(s) in Form DIR – 6 in the following manner, namely;-

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Posted in Chapter XI - CA2013, Companies Act 2013

Tagged ¬Companies (Appointment and Qualification of Directors) Rules 2014, Companies (Incorporation) Rules 2014, Companies Act 2013, Corporate Law, DIN, Director Identification Number, India, Ministry of corporate affairs

Cancellation or surrender or Deactivation of DIN

Posted on July 14, 2014 | 42 comments

Rule 11 of the Companies (Allotment and Qualification of Directors) Rules 2014 talk about cancellation or surrender or deactivation of Director Identification Number (DIN).

The Central Government or Regional Director (Northern Region), Noida or any officer authorised by the Regional Director may, upon being satisfied on verification of particulars or documentary proof attached with the application received from any person, cancel or deactivate the DIN in case –

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Posted in Chapter XI - CA2013, Companies Act 2013

Tagged ¬Companies (Appointment and Qualification of Directors) Rules 2014, Companies (Incorporation) Rules 2014, Companies Act 2013, Corporate Law, DIN, Director Identification Number, India, Ministry of corporate affairs