Category Archives: CorpGov

PROSPECTUS (Companies Act 2013)

Posted on September 10, 2013 | 24 comments

In last post, public offer and private placement we have discussed public offer. In this post we will discuss Prospectus under Companies Act, 2013

Clause (70) of Section 2 of this Bill define “prospectus” means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate.

Section 26 deals with matters to be stated in prospectus.

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

Tagged Board of Directors, Companies Bill 2012, Company Secretary, Corporate Governance, Corporate Law, Deemed Prospectus, India, Information in Prospectus, Prospectus, Public Company, Public Issue, Public Offer, Registrars, Registration of Prospectus, Reports with Prospectus, Securities, Securities and Exchange Board of India Act 1992, Shares, Shares and Securities, Shelf registration, Statement of Compliance, Statement of Expert

PUBLIC OFFER AND PRIVATE PLACEMENT

Posted on September 6, 2013 | 50 comments

Any business cannot run without funds. In case of an incorporated company, initial capital always come from subscribers to the memorandum. ~~As we have discussed in earlier post Commencement of Business, company should commence its business within 180 days by filing some documents with Registrar of Companies.~~ This is legal requirement of Section 11, all subscribers should paid the value of shares agreed to be taken by him and company should receive that money before filing document for filing for commencement of business. But this initial capital may not be sufficient for running a business. [UPDATE: This portion stand deleted due to the Companies (Amendment) Act, 2015.] Public funding is a fundamental proposition for legal structure called company.

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

Tagged Companies Bill 2012, CorpLaw, Corporate Law, Further Public Offer, India, Initial Public Offer, IPO, Issue of Securities by Company, Issue of Securities by Private Company, Issue of Securities By Public Company, Legal Reforms, Listed Companies, Ministry of corporate affairs, Offer for Sale, Offer for Sale of Securities to the Public by an existing Shareholder, Offer Letter, Offer of Securities for Sale, Private Placement, Private Placement Offer Letter, Prospectus, Public Issue, Public Offer, Reforms, SEBI, Securities, Securities and Exchange Board o India, Shares, Shares and Securities

MINOR PROVISIONS IN CHAPTER II (COMPANIES ACT 2013)

Posted on September 3, 2013 | 6 comments

There are some provisions other than what I have already discussed in my recent posts. I will discuss these provisions here.

COPIES OF DOCUMENTS TO MEMBERS (SECTION 17):

Whenever a member ask, company shall send him within seven days of this request a copy of each following documents:

The Memorandum,
The Articles, and
Every Agreement and Every Resolution under Section 117.

There a provision for a payment of prescribed fee. Section 117 deals with agreements and resolutions which are required to be filed by the company with Registrar. We will discuss it in a future post.

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

Tagged Authentication Of Documents, Authentication Of Proceedings, Companies Bill 2012, Copies of Documents to Members, CorpLaw, Corporate Law, Execution Of Bill Of Exchange., Incorporation & Registration, India, Legal Reforms, Ministry of corporate affairs, Reforms, Service of Documents, Service Of Documents On Company, Service Of Documents On Member, Service Of Documents On Registrar, Shares of Holding Companies, Signing Of Contracts

Quotes from Companies Bill debate in Rajya Sabha

Posted on August 14, 2013 | 2 comments

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

For every new law, legislative intent, which show it in debates taken place in Parliament, become important. These debates offer a guide while drafting subordinate legislation. There are many questions about future rules and regulations. I, here, compiled some important quotes from this debates from Rajya Sabha.[i][ii][iii]

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Posted in Companies Act 2013, CorpGov, CSR, Governance and Responsibility, Truth of Our Time

Tagged Auditor, Chartered Accountants, class-action suits, Companies Act 2013, Companies Bill 2012, CorpLaw, Corporate Law, Corporate Social Responsibility, CSR, Director, Ganguly Committee, Independent Director, India, Legal Reforms, Ministry of corporate affairs, Rajya Sabha, Reforms

Board Structure in Central Public Sector Enterprises

Posted on August 9, 2013 | Leave a comment

Central Public Enterprises in India are not simple business enterprises, but fall under definition of “State” under Article 12 of the Constitution of India. They are subject to Writ Jurisdiction. The Right to Information Act, 2005 is applicable to them.

The Law governing Central Public Sector Enterprises are complex mix of Guidelines/instructions issued by Department of Public Enterprises (DPE), the Companies Act, 1956 regulations of Comptroller and Auditor General of India (CAG), Central Vigilance Commission, and administrative Ministry.

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

Tagged Central Public Sector Enterprises, CorpGov, CorpLaw, Corporate Governance, Corporate Law, CPSE. DPE, Director, DPE Guideline, Functional Director, Government Director, Independent Director, Nominee Director

GOVERNANCE OF REGULATOR: FSLRC REPORT-III

Posted on August 2, 2013 | Leave a comment

(…Continue from last two posts)

GOVERNANCE OF REGULATOR: FSLRC REPORT-I July 19, 2013
GOVERNANCE OF REGULATOR: FSLRC REPORT-II July 26, 2013

Role of the review committee

The Commission recommends that the non-executive members of the board of a regulator form a special committee called the review committee. This committee will discharge the following functions:

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Posted in CorpGov, Governance and Responsibility

Tagged CorpGov, Corporate Governance, Financial Sector Legislative Reform Commission, FSLRC, Governance of Regulators, India, Justice B N Srikrishna, Reforms, Regulatory Governance

GOVERNANCE OF REGULATOR: FSLRC REPORT-II

Posted on July 26, 2013 | 1 comment

( …continue from last post)

GOVERNANCE OF REGULATOR: FSLRC REPORT-I July 19, 2013

GOVERNANCE OF REGULATOR: FSLRC REPORT-II July 26, 2013

Appointment conditions for board members

1. Duration of employment: All members of a board (including the chairperson) would have a fixed term of five years, subject to a retirement age for executive members. The age of retirement for executive members must be equivalent to the age of retirement for the equivalent senior-most Government positions.

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Posted in CorpGov, Governance and Responsibility

Tagged CorpGov, Corporate Governance, Financial Sector Legislative Reform Commission, FSLRC, Governance of Regulators, India, Justice B N Srikrishna, Reforms, Regulatory Governance

GOVERNANCE OF REGULATOR: FSLRC REPORT-I

Posted on July 19, 2013 | 2 comments

Governance responsibilities are key element of any deliberation since last twenty years. Form United Nations to our families all has valid concerns about good governance and responsible behaviour. Corporate governance is just a reflection of this ongoing improvement process of governance of human society.

Present report of Financial Sector Legislative Reform Commission headed by Justice B N Srikrishna is just another but very powerful far – reaching discussion on corporate governance. The report in its first part “analysis and recommendations” very extensively discussed issues related to governance. In second part of report, draft code comprehensively proposed a law with an eye on good governance of proposed regulators.

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Posted in CorpGov, Governance and Responsibility

Tagged CorpGov, Corporate Governance, Financial Sector Legislative Reform Commission, FSLRC, Governance of Regulators, India, Justice B N Srikrishna, Reforms, Regulatory Governance

EVOLUTION OF CORPORATE GOVERNANCE

Posted on July 12, 2013 | 3 comments

When was world first corporate governance scandal witnessed?

Recently, I received a very good info-graphic on the evolution of corporate governance. This info – graphic cover many remarkable events in the process. I had put a link to the web – site of presenter of this info – graphic to give due credit to them.

Please share your views and comments on this info – graphic.

The Evolution of Corporate Governance, source www.eSharePortal.com

The Evolution of Corporate Governance, source http://www.eSharePortal.com

Please note: this blog post is not a professional advice but general information about the subject covered here. In case, you have specific query, please seek professional advice or contact author.

I appreciate if readers share this post on social media with friends and colleagues. This will be my remuneration from your side. I welcome your comments and feedback.

Posted in CorpGov, Governance and Responsibility, Truth of Our Time

Tagged CorpGov, CorpLaw, Corporate Governance, Corporate Law

PENALTIES RELATED TO OPPRESSION & MISMANAGEMENT UNDER COMPANIES ACT 2013

Posted on June 28, 2013 | 2 comments

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

In my last two post, I wrote about “Oppression and Mismanagement” and “Class Action” under the Companies Bill 2012. Section 246 makes it necessary for me to discuss Sections 337 to 341 of the Bill. These sections are natural extension to provisions related to “Oppression and Management” and “Class Action” under Chapter XVI.

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Posted in chapter XVI - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Board of Directors, class-action suits, Companies Bill 2012, CorpLaw, Corporate Governance, Corporate Law, Director, India, Legal Reforms, Members, Mismanagement, NCLT, Oppression, Oppression and Mismanagement, Reforms, Tribunal

CLASS ACTION IN COMPANIES ACT, 2013

Posted on June 21, 2013 | 4 comments

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

In continuation with my last blog post on Oppression and Mismanagement; I am reading Class Action under Clause 245 of the Bill. Provisions relating to Class Action are under Chapter XVI of the Companies Bill, 2012 and basically target to achieve investor protection in a limited manner and on an experimental basis.

[Law discussed in this post was valid till 8 May 2019 and have academic and Historic value.]

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Posted in chapter XVI - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Board of Directors, class-action suits, Companies Bill 2012, CorpLaw, Corporate Governance, Corporate Law, Director, India, Legal Reforms, Members, Ministry of corporate affairs, Mismanagement, NCLT, Oppression, Oppression and Mismanagement, Reforms, Tribunal

OPPRESSION & MISMANAGEMENT UNDER COMPANIES ACT 2013

Posted on June 14, 2013 | 10 comments

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

Class Action is one of the youngest additions to Indian jurisprudence particularly, in Indian Corporate Jurisprudence. Class Action aims to prevent Oppression and Mismanagement in Companies. The Provisions relating to Oppression and Mismanagement are in Chapter XVI of the Companies Bill, 2012.

In this post, I will cover Section 241 – 244 which deals with normal provisions.

In next post, I will discuss Section 245 dealing with Class Action and after that Section 246 read with Section 373 to 341.

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Posted in chapter XVI - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

Tagged Board of Directors, class-action suits, Companies Bill 2012, CorpLaw, Corporate Governance, Corporate Law, Director, India, Legal Reforms, Members, Members and Shareholders, Ministry of corporate affairs, Mismanagement, NCLT, Oppression, Oppression and Mismanagement, Reforms, Tribunal

RTI Reply on Working of MCA21 Portal in 2012 – 13

Posted on June 11, 2013 | 3 comments

I filed an application for Information of period from 1^st April 2012 to 31^st March 2013 about working of MCA21 portal. My question was:

Description of the information required:

1. Current User Capacity of MCA21 Portal,

2. Number of Month – wise Log – in on MCA21 portal from 1^st April 2012 to 31^st March 2013

3. Total Month – wise time – period, during 1^st April 2012 to 31^st March 2013, when MCA21 Portal was not working due to Maintenance, Updating, Production release, upgrades, switchovers, switchback drills or other official Reasons; and details thereof,

4. Total month – wise time period, during 1^st April 2012 to 31^st March 2013, when MCA21 Portal put notice like “Large numbers of users are logged in MCA21 portal. Kindly try after some time.”

I received this reply from Ministry of Corporate Affairs, which is also embedded here. Please read and share your views on comment section of this blog post.

View this document on Scribd

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

Tagged CorpGov, CorpLaw, Corporate, Corporate Governance, Corporate Law, e-Governance, India, MCA, Ministry of corporate affairs, Reforms, Right to Information, RTI

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

BOARD COMMITTEES IN COMPANIES ACT 2013

Posted on May 17, 2013 | 7 comments

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

Delegation of Power is buzz word in this Companies Bill 2012. This delegation is not only from legislature to Executive but also from Board of Directors to its committees. Committees are not new to Indian Corporate Jurisprudence. Audit Committee was introduced in the present Companies Act, 1956 twelve years ago in year 2000. Schedule XII also has Remuneration committee.

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

Tagged Accounts and Audit, Audit Committee, Board Committee, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Corporate Social Responsibility, Corporate Social Responsibility Committee, Cost Audit, CSR, CSR Committee, Director, Independent Director, Internal Audit, Investor grievances, Key managerial personnel, Legal Reforms, Managerial Remuneration, Managing Director, Ministry of corporate affairs, Nomination and Remuneration Committee, Reforms, Related Party Transaction, Stakeholders Relationship Committee, Statutory Audit, Whistle blower, Whole – time Director

MANAGERIAL REMUNERATION IN CASE OF IN ADEQUATE PROFIT

Posted on May 10, 2013 | 16 comments

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

Managerial remuneration is one of major corporate governance issue in India. Promoters and controlling shareholders consider themselves owner of company and get maximum remuneration. Difference between corporate tax rate and income tax rate also priority to withdraw much money from “owned” company. Indian concept of “owned company” and corporate governance has co – existence in last two decades.

In my last post, I did not analyse legal issues of managerial remuneration in case of inadequate profit under Companies Bill 2012 (Now the Act).

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

Tagged Board Committee, Board of Directors, Companies Bill 2012, CorpLaw, Corporate, Corporate Law, Director, Key managerial personnel, Legal Reforms, Manager, Managerial Remuneration, Managing Director, Reforms, Whole – time Director

APPOINTMENT OF MANAGING DIRECTOR AND MANAGER

Posted on May 3, 2013 | 101 comments

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

[NOTE: The law stated in this post is effective from 1^st April 2014 till 11^th September 2018. For the law applicable from 12^th September 2018, please visit here]

Managing Director is Key Managerial Personnel of utmost importance. He is the face of a company and its decision-making mechanism. A person gains significant advantages as Managing Director which may not be there, in case of his appointment as Manager or Chief Executive Officer. While Chief Executive Officer has no special advantage except his clubbing as Key Managerial Personnel with Manager and Managing Director, Manager has some. Their definitions speak themselves. Appointment of Managing Director, Whole – Time Director and Manager is governed by the provision of Section 196 of the Bill. They all are a different class of Key Managerial Personnel and has the specific provision of appointment in addition to Section 203, discussed in an earlier post.

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

Tagged Board Committee, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, India, Key managerial personnel, Legal Reforms, Manager, Managerial Remuneration, Managing Director, Ministry of corporate affairs, Reforms, Whole – time Director

INDEPENDENT DIRECTORS IN COMPANIES ACT 2013

Posted on April 26, 2013 | 13 comments

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

When I was reading Section 149 of the Companies Bill, 2012 for an earlier post “Appointment and Qualification of Director”, I have not discussed provisions related to independent director. As mentioned in that post every listed company shall have at least one-third of total number of directors as Independent directors. The central government may prescribe minimum number of independent directors in other class or classes of public companies. Independent director is a genre of directors and all law related to duties, vacation, resignation, removal will also be applicable to them also. do not forget; they are not key managerial personnel or officer in default.

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

Tagged Board Committee, Board of Directors, Code for Independent Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, Independent Director, Independent Directors, India, Law, Legal Reforms, Liability of Independent Directors, Ministry of corporate affairs, Profession, Reforms, Related Party Transaction, Whistle blower