Category Archives: Companies Act 2013

TERMS AND CONDITIONS FOR DEPOSITS

Posted on April 29, 2014 | 5 comments

In last post here, we discussed definition and all exclusions and inclusions of definition of deposit in detail. In earlier post here, we have discussed general provisions on deposits as listed out in the Companies Act, 2013. Without repeating all that discussion, in this post we will take forward our discussion Terms and conditions of acceptance of deposit under Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014.

A company referred to in Section 73(2) may accept deposit from its members while an eligible company may accept deposit for members and Public.

Duration of a Deposit:

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Posted in Chapter V - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, Deposit, Deposit form Members, Deposit form Public, Depositor, India, Ministry of corporate affairs, the Companies (Acceptance of Deposits) Rules 2014

DEPOSITS UNDER DEPOSIT RULES

Posted on April 28, 2014 | 19 comments

Clause (31) of Section 2 of the Companies Act, 2013 define Deposits inclusively as any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India.

Clause (c) of Rule 2 of the Companies (Acceptance of Deposits) Rules, 2014 further elaborates definition of deposit. The “deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –

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Posted in Chapter V - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, Deposit, Depositor, India, Ministry of corporate affairs, the Companies (Acceptance of Deposits) Rules 2014

DISCLOSURE OF INTEREST

Posted on April 26, 2014 | 42 comments

Recently this blog received many queries regarding provisions relating to disclosure of interest under Section 184 and rules made there under including form prescribed in these Rules.

We have discussed Section 184 here earlier. 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:

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, Director, Disclosure of Interest, India, Ministry of corporate affairs, the Companies (Meeting of Board and its Powers) Rules 2014

ENTRENCHMENT OF ARTICLE

Posted on April 25, 2014 | 6 comments

According to Section 5 of the Companies Act, 2013 the articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with. We have discussed this provision earlier here.

An entrenched clause or entrenchment clause of a basic law or constitution is a provision which makes certain amendments either more difficult or impossible, i.e., inadmissible. It may require a form of supermajority, a referendum submitted to the people, or the consent of another party.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014 Company, Companies Act 2013, Corporate Law, Entrenchment of Articles, India, Ministry of corporate affairs

DECLARATION BY PROFESSIONALS

Posted on April 24, 2014 | 1 comment

Section 7 of the Companies Act, 2013 discusses incorporation of a company including a One Person Company. We have discussed this Section earlier here. Clause (b) of Section (1) of Section 7 requires a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with.

Rule 14 of the Companies (Incorporation) Rules 2014 prescribe Form INC – 8 for this declaration.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014 Company, Companies Act 2013, Corporate Law, INC – 8, Incorporation, India, Ministry of corporate affairs

SIGNING OF MEMORANDUM AND ARTICLES

Posted on April 23, 2014 | 8 comments

Section 7 of the Companies Act, 2013 discusses incorporation of a company including a One Person Company. We have discussed this Section earlier here. Clause (a) of Section (1) of Section 7 requires submitting the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed.

Rule 13 of the Companies (Incorporation) Rules 2014 prescribes this manner.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014 Company, Companies Act 2013, Corporate Law, Incorporation, India, Ministry of corporate affairs, subscriber to memorandum

PARTICULARS AND SPECIMEN SIGNATURE OF SUBSCRIBERS

Posted on April 22, 2014 | 4 comments

Section 7 of the Companies Act, 2013 discusses incorporation of a company including a One Person Company. We have discussed this Section earlier here. Clause (e) of Section (1) of Section 7 require the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed.

Rule 16 of the Companies (Incorporation) Rules 2014 lists the particulars to be filed with the Registrar by the company under Section 7(1)(e).

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014 Company, Companies Act 2013, Corporate Law, Form INC – 10, Incorporation, India, Ministry of corporate affairs, subscriber to memorandum

AFFIDAVIT BY SUBSCRIBER AND FIRST DIRECTORS

Posted on April 21, 2014 | 13 comments

Section 7 of the Companies Act, 2013 discusses incorporation of a company including a One Person Company. We have discussed this Section earlier here. Clause (c) of Section (1) of Section 7 require an affidavit form an affidavit from each of the subscribers to the Memorandum and from persons named as the first directors.
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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014, Companies Act 2013, Company, Corporate Law, first director, Form INC – 9, Incorporation, India, Ministry of corporate affairs, subscriber to memorandum

CONSENT OF NOMINEE FOR ONE PERSON COMPANY

Posted on April 18, 2014 | 1 comment

We have discussed earlier here, the subscriber to the memorandum of a One Person Company shall nominate a person as his nominee. The Prior written consent of nominee shall be obtained in Form INC – 3. The nomination shall be filed in Form INC – 2 along with the written consent obtained from the nominee. In case of any change in nominee, company will file Form INC – 3 within thirty days of intimation shall be filed by the company.

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

Tagged Companies Act 2013, Consent of Nominee, Corporate Law, India, Ministry of corporate affairs, Nominee, One Person Company

APPLICATION FOR INCORPORATION OF ONE PERSON COMPANY

Posted on April 17, 2014 | 5 comments

As we discussed earlier here, Section 7 of the Companies Act, 2013 deals with incorporation of a company other than a charitable or non – profit company. In this post we will discuss incorporation of one person company.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, Incorporation, India, Ministry of corporate affairs, One Person Company

RESERVATION OF NAME

Posted on April 16, 2014 | 3 comments

When a promoter decides to form a company; first legal step is reservation of a name for the company.

We have discussed recently, the name of the company should not constitute an offence under any law for the time being in force or is undesirable in the opinion of the Central Government.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies Act 2013, Corporate Law, India, Ministry of corporate affairs, Reservation of name

DIRECTOR IDENTIFICATION NUMBER

Posted on April 15, 2014 | 12 comments

After promoters and subscriber to memorandum of a proposed company proposed directors are most important persons for a proposed company. Once, a promoter selects proposed first directors of a company, first legal step is to check whether they have a director identification number. Incorporation documentation asks to disclose name of proposed first directors of a company.

We have already discussed the law related to Director Identification Number in an earlier post here. However, we still need to understand some legal procedures as mentioned in the relevant Rules also.

Every individual intending to be appointed as director of a company shall make an application for allotment for Director Identification Number (DIN) to the Central government. [Section 153]

This application shall be made electronically in Form DIR -3 of the Companies (Appointment and Qualification of Directors) Rules 2014. [Rule 9]

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

Tagged Companies Act 2013, Corporate Law, DIN, Director, Director Identification Number, India, Ministry of corporate affairs

PREPARING FOR INCORPORATION OF A COMPANY

Posted on April 14, 2014 | 3 comments

A dream company comes into existence with a good planning and efforts. If character of a human start building with thinking of its parents; character of a company start building with thinking of its promoter.

I have nothing to say about all business decision like business objects, size of investment, geography of operations and members of its core management team. I will discuss some points with corporate law angle. However the object must be defined and lawful. It is good if, this is reduced in writing with help of an industry expert with a vetting by a Company Secretary.

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

Tagged Companies Act 2013, Corporate Law, Incorporation of Company, India, Ministry of corporate affairs

ORDERS ISSUED UNDER COMPANIES ACT 2013

Posted on April 11, 2014 | 1 comment

Until 31^st march 2014, Ministry of Corporate Affairs has issued three orders. These orders were issued in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 to remove the difficulties.

The Companies (Removal of Difficulties) Order, 2013

First order is; the Companies (Removal of Difficulties) Order, 2013 published on 20^th September 2013 and come into force that day. The order reads:

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

Tagged Annual Return, Companies Act 2013, Companies Removal of difficulties order, Company Law Board, Company Secretary, Corporate Law, India, Ministry of corporate affairs, National Company Law Tribunal, Related Party

General Circular 08 of 2014 and Financial Year

Posted on April 10, 2014 | 2 comments

Before discussing the circular, I will check definition of financial year in the Companies Act 1956. The clause (17) of section 2 of the Act define “financial year means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not.”

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

Tagged Annual Account, Annual Report, Companies Act 2013, Corporate Law, Financial Year, India, Ministry of corporate affairs

Digital Signature

Posted on April 9, 2014 | 6 comments

What is first legal requirement for formation of a company? This is willingness to form a company. Who should have this willingness? The promoter! Who will be the promoter? Any person, natural or legal! However, in case of One Person Company only a natural person can incorporate a company. Even in case a legal person, a natural person shall digitally and manually sign the incorporation forms and documents.

This is needless to say even a form for reservation of a name for proposed company need a digital signature among other requirements.

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

Tagged Companies Act 2013, CorpLaw, Corporate Law, Digital Signature, Digital Signature Certificate, DSC, India, Ministry of corporate affairs, PAN, Permanent Account Number, Promoter

MEMBER AND NOMINEE OF ONE PERSON COMPANY

Posted on April 8, 2014 | 6 comments

Clause (62) of the Companies Act 2013 defines “One Person Company” means a company which has only one person as a member. According to clause (68) of this section as well as Clause (c) of Sub- section (1) of Section 3; one person company is a private company.

Rule 3 of the Companies (Incorporation) Rules, 2014 say only a natural person shall be eligible to incorporate one person company. Such one person shall be Indian citizen and a resident of India. A non – resident Indian or a Foreign Citizen resident in India may not incorporate a one person company. Same rules are applicable to nominee of the sole member of a one person company.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies (Incorporation) Rules 2014, Companies Act 2013, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, Ministry of corporate affairs, One Person Company

NAME AVAILABILITY FOR COMPANY NAMES

Posted on April 7, 2014 | 14 comments

Name Availability for Indian companies shall be governed by Rule 8 of the Companies (Incorporation) Rules 2014 under the authority of the Companies Act, 2013.

Determine Identical Names:

The rules firstly say that before granting any name, it will be examined whether name is identical with name of any other company/LLP or any other name already allowed to a company/LLP.

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Posted in Chapter II - CA2013, Companies Act 2013

Tagged Companies Act 2013, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, Ministry of corporate affairs, Name of Companies, Undesirable Name

Representation before Stakeholders on Companies Rules 2014

Posted on April 4, 2014 | 2 comments

Dear Stakeholders of Corporate India,

As a most vibrant corporate community of the world, you are aware or recent unwelcome development related to corporate India like Satyam, Sahara and Saradha. These developments raised strong concern among us and Parliament of India as well. This reflects in core principles of the Companies Act, 2013. India has some of the best corporate governance and social responsibility norms in the world.

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Posted in Companies Act 2013, Company Secretary, CorpGov, Governance and Responsibility, Institute of Company Secretaries of India - ICSI

Tagged Audit, Companies Act 2013, Companies Rules 2014, Company Secretary, CorpGov, Corporate Governance, Pre - certification, Secretarial Audit

Specification of Definitions Details

Posted on April 3, 2014 | 1 comment

The Companies (Specification of definitions details) Rule, 2014 defines some additional terms which have not be defined in the Act. These rules clarify two terms already defined in the Act but need executive clarification as the Act.

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

Tagged Companies Act 2013, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Electronic Mode, India, Ministry of corporate affairs, Relative, The Companies (Specification of definitions details) Rule 2014