Category Archives: Governance and Responsibility

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

Tagged Auditors, Companies Act 2013, Companies Law Committee, Directors, Independent Directors

REPORT OF THE COMPANIES LAW COMMITTEE – 4

Posted on February 8, 2016 | 1 comment

On 1^st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 4th post on this report, we will discuss recommendations of the committee related to shares, debentures, general meeting, NFRA, Board Report, CSR etc.

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

Tagged Board Report, CSR, Debentures, General Meeting, NFRA, Shares

REPORT OF THE COMPANIES LAW COMMITTEE – 3

Posted on February 7, 2016 | 2 comments

On 1^st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 3rd post on this report, we will discuss recommendations of the committee related to Incorporation and allotment of capital securities.

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

Tagged Companies Act 2013, Companies Law Committee, Deposit Insurance, Object Clause, Private Placement

REPORT OF THE COMPANIES LAW COMMITTEE – 2

Posted on February 6, 2016 | 5 comments

On 1^st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In second post on this report, we will discuss recommendations of the committee related to Definitions in the Companies Act, 2013.

5 Comments

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

Tagged Companies Act 2013, Companies Law Committee

COMPANY SECRETARY – REPORT of THE COMPANIES LAW COMMITTEE

Posted on February 5, 2016 | 6 comments

On 1^st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In this post, I will discuss recommendations which might affect Company Secretaries.

Before reading further, I would like to disclose that I was part of two groups; Task Force on Companies Law and Research Group on Companies Law constituted by the Institute of Company Secretaries of India. All view here are personal and not of these groups or ICSI.

6 Comments

Posted in Companies Act 2013, Company Secretary, CorpGov, Governance and Responsibility, Institute of Company Secretaries of India - ICSI, Secretarial Audit, Secretarial Standards, Truth of Our Time

Tagged Annual Return, Companies Act 2013, Companies Law Committee, Company Secretary, Key managerial personnel, Secretarial Audit, Secretarial Standards

BOARD COMMITTEES – ENTITY LISTED SPECIFIED SECURITIES

Posted on February 2, 2016 | 1 comment

In this post we will discuss, board committees other than audit committee under the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 for the listed entities which got listed its specified securities on Stock Exchanges. These Regulations talk about Audit Committee (Regulation 18) which we have already discussed here in a recent, Nomination and Remuneration Committee (Regulation 19) Shareholders Relationship Committee (Regulation 20) and Risk Management Committee (Regulation 21).

Nomination and Remuneration Committee

The board of directors shall constitute the nomination and remuneration committee as follows:

the committee shall comprise of at least three directors;
all directors of the committee shall be non-executive directors; and
at least fifty percent of the directors shall be independent directors. [Regulation 19(1)]

As per Section 178 of the Companies Act, 2013, the Nomination and Remuneration Committee shall have with three or more non – executive directors but there is no requirement of all non – executive directors with majority of independent directors as introduced here by Regulation 19(1). However, there is one exception of all non – executive directors rule.

The Chairperson of the nomination and remuneration committee shall be an independent director. However, the chairperson of the listed entity, whether executive or non-executive, may be appointed as a member of the Nomination and Remuneration Committee and shall not chair such Committee. [Regulation 19(2)]

The exception of all non – executive directors rule came here from proviso to Section 178(1) of the Companies act, 2013.

(3) The Chairperson of the nomination and remuneration committee may be present at the annual general meeting, to answer the shareholders’ queries; however, it shall be up to the chairperson to decide who shall answer the queries. [Regulation 19(3)]

This is only an advice in line of Section 178(7) where either chairperson of Nomination or remuneration committee or its nominee member shall present. The combined reading of both provisions is same as of Section 178(7). Significantly, this clarify that chairman of the General meeting may give chance to the chairperson of the committee to answer the queries of shareholders.

(4) The role of the nomination and remuneration committee shall be as specified as in Part D of the Schedule II. [Regulation 19(4)]

Sub – part A of Part D of the Schedule II list out the role of the Committee which shall inter-alia, include the following:

formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees;
formulation of criteria for evaluation of performance of independent directors and the board of directors;
devising a policy on diversity of board of directors;
identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the board of directors their appointment and removal.
whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.

This Regulation 19(4) require and deals with provision for a policy and run parallel to provisions of sub – section (3) and (4) of Section 178 of the Companies Act, 2013.

Stakeholders Relationship Committee

The listed entity shall constitute a Stakeholders Relationship Committee to specifically look into the mechanism of redressal of grievances of shareholders, debentures holders and other security holders. [Regulation 20(1)]

The chairperson of this committee shall be a non-executive director. [Regulation 20(2)]

The board of directors shall decide other members of this committee. [Regulation 20(3)]

The role of the Stakeholders Relationship Committee shall be as specified as in Part D of the Schedule II. [Regulation 20(4)]

Apparently, a non – director may be member of this committee under these Regulation and also in line with provision of Section 178(5).

Sub – part B of Part D of Schedule II state that the Committee shall consider and resolve the grievances of the security holders of the listed entity including complaints related to transfer of shares, non-receipt of annual report and non-receipt of declared dividends.

Risk Management Committee

The board of directors shall constitute a Risk Management Committee. [Regulation 21 (1)]

The majority of members of Risk Management Committee shall consist of members of the board of directors. [Regulation 21(2)]

The Chairperson of the Risk management committee shall be a member of the board of directors and senior executives of the listed entity may be members of the committee. [Regulation 21(3)]

The board of directors shall define the role and responsibility of the Risk Management Committee and may delegate monitoring and reviewing of the risk management plan to the committee and such other functions as it may deem fit. [Regulation 21(4)]

The provisions of this regulation shall be applicable to top 100 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year. [Regulation 21(5)]

The Companies Act, 2013 has mandate audit committee and independent directors a role in risk management besides inherent role of Board of Directors. However, Regulation 21(5) mandates risk management committee for top 100 listed entities determined on the basis of market capitalization.

Vigil Mechanism

The listed entity shall formulate a vigil mechanism for directors and employees to report genuine concerns. [Regulation 22(1)]

The vigil mechanism shall provide for adequate safeguards against victimization of director(s) or employee(s) or any other person who avail the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases. [Regulation 22(2)]

Sub – regulation of Regulation 22 is similar to the sub – Section (9) and (10) of Section 177 which deals with audit committee.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.

Posted in CorpGov, Governance and Responsibility, Listing obligation and Disclosure Regulation, SEBI

Tagged Board of Directors, Corporate Governance, Directors, India, Listing, Listing Agreement, Listing Obligation and Disclosure Requirements, LODR, Nomination and Remuneration Committee, Risk Management Committee, SEBI, Securities & Exchange Board of India, Stakeholders Relationship Committee, vigil mechanism

INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY

Posted on January 29, 2016 | 1 comment

Investor Education and Protection Fund Authority established under Section 125(5) of the Companies Act, 2013 is an authority to administer for administration of Investor Education and Protection Fund established under Section 125(1) of the Act. Operating provisions of Section 125 are not force, but recently a Notification S.O. 125(E) dated 13^th January 2016 notified part of this Section to be effective with effect from 13^th January 2016. Consequently, Ministry of Corporate Affairs also put a draft notification for the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices and officers) Rules, 2016. In this post, we discuss the Notification and these Rules.

Tagged holding of meetings and provision for offices and officers) Rules 2016, India, Investor Education and Protection Fund, Investor Education and Protection Fund Authority, The Companies Act 2013, The Investor Education and Protection Fund Authority (Appointment of Chairperson and Members

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

EDUCATED UNSKILLED

Posted on January 22, 2016 | 4 comments

Today, I am posting an article posted earlier on my Hindi Blog which was criticized just because it made public a view many time reflected by Industry but various interest groups do not want to debate; and certainly not a correction. But, this need debate. I invite views of readers in comment section given after the post. Though, this post took example of Company Secretaries, many other professions and vocations are in similar situation.

पिछले एक आलेख में मैंने कंपनी सेक्रेटरी के बहाने देश के रोजगार परिदृश्य की विवेचना की थी| आज कंपनी सेक्रेटरी के बहाने देश में शिक्षा के स्तर की चर्चा करेंगे|

दिल्ली रेडिमेड कंपनी सेक्रेटरी का उत्पाद केंद्र है| यहाँ के उच्च स्तरीय कोचिंग सेंटर परीक्षा की बहुत श्रेष्ठ तैयारी कराते हैं| साथ ही बहुत से श्रेष्ठ कंपनी सेक्रेटरी बिना पैसे लिए संस्थान की ओर से छात्रों के ज्ञान बाँटते हैं|

परन्तु, पिछले वर्ष एक कंपनी के डायरेक्टर ने मुझे कहा था कि एक बार में कंपनी सेक्रेटरी परीक्षा पास कर कर आने वाले दस प्रत्याशी उसे पब्लिक कंपनी और पब्लिक सेक्टर कंपनी का अंतर नहीं बता सके| इसके लिए प्रायः भारतीय कंपनी सेक्रेटरी संस्थान को दोष दिया जाता हैं| मगर इसके कहीं अधिक दोषी हमारा समाज और शिक्षा के प्रति सामाजिक धारणा है|

यह सब हुआ कैसे?

पहला तो छात्र ज्ञान प्राप्त करने के लिए नहीं वरन परीक्षा पास करने के लिए पढने लगे हैं| परीक्षा पास करने के लिए उन गूढ़ प्रश्नों के उत्तर याद कर लिए जाते हैं जिन्हें प्रायः परीक्षा में पूछा जाता है या पूछा जा सकता है| याद करने की यह प्रक्रिया इतनी मशीनी है कि उसमें कानूनी गहराई समझने के लिए गुंजाईश ही नहीं बची है|

जब यह छात्र किसी भी कोचिंग सेंटर में जाते हैं तो कोचिंग सेंटर का लक्ष्य होता है, पास हुए छात्रों की संख्या और प्रतिशत बनाये रखना| उनके यहाँ किसी भी सवाल जबाब का कोई स्थान नहीं रहता| केवल बचकाने प्रश्न छात्रों के सामने रखे जाते है जो उन्हें जबाब याद करने की ओर ले जायें, न कि समझने दें| हाँ, अगर कोई छात्र प्रश्न पूछता है तो उसे उत्तर दिया जाता है मगर इस भगदड़ में प्रायः छात्र प्रश्न पूछने की जगह उत्तर याद करने में लगे रहते है|

संस्थान अपने पुराने ढर्रे पर चल रहा है| प्रायः कोचिंग सेंटर और छात्र पूछे जाने वाले सवालों का पहले से जो अंदाजा लगाते हैं उस से मिलते जुलते सवाल आते है| परीक्षा में बहुत सटीक उत्तर के कमी रहती है| अभी हाल ही में एक सम्म्मेलन में बात उठी थी की अगर कोई परीक्षक जरा भी सख्ती से नंबर देता है तो उसके पास संस्थान की ओर से चेतावनी सन्देश आ जाता है|

जब यह छात्र उत्तीर्ण होकर नौकरी के लिए जाते हैं तो कंपनियां उनको अनुकूल नहीं पातीं| बहुत सी बातें जो छात्र जीवन में डट कर पढ़ी गयीं है वो कई बार कंपनी में नहीं होनी होतीं; जैसे मर्जर| जो कार्य कंपनी में रोज होते हैं उनपर छात्र जीवन में कभी ध्यान नहीं दिया गया होता जैसे; कानूनी विवेचना, रेजोलुसन, बोर्ड मीटिंग, समझौते| यह केवल छात्र की ही गलती है नहीं है वरन उस सिस्टम की भी है जो कोर्स को तैयार करता है| रोजमर्रा के काम पढाई में हल्के लिए जाते हैं जबकि उनमें अगर एक्सपर्ट हों तो समय भी बचेगा और बोर्ड की निगाह में जगह भी बनेगी| मगर कहा जा रहा है कि आज कंपनी सेक्रेटरी मिनटबुक में दो लाइन भी बिना नक़ल के नहीं लिख सकते|

मगर क्या यह देश का परिदृश्य नहीं हो गया है? क्या इसी कारण अंडर एम्प्लॉयमेंट भारत का एक स्वीकार्य सच नहीं बन गया है?

4 Comments

Posted in Company Secretary, Governance and Responsibility, Truth of Our Time

Tagged Company Secretaries, Employment

BOARD OF DIRECTORS – ENTITY LISTED SPECIFIED SECURITIES

Posted on January 19, 2016 | 1 comment

Regulation 17 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 talk about Board of Directors of a listed entity which got listed its specified securities.

Posted in Governance and Responsibility, Listing obligation and Disclosure Regulation, SEBI

Tagged Board of Directors, Corporate Governance, Directors, India, Listing, Listing Agreement, Listing Obligation and Disclosure Requirements, LODR, SEBI, Securities & Exchange Board of India

AUDIT COMMITTEE – ENTITY LISTED SPECIFIED SECURITIES

Posted on January 12, 2016 | 1 comment

In this post we will discuss, audit committees under the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 for the listed entities which got listed its specified securities on Stock Exchanges.

Section 177 of the Companies Act, 2013 as discussed earlier here prescribes audit committee for every listed and certain other companies. Regulation 18 of the SEBI (LODR) Regulations, 2015 supplement this requirement for listed companies.

Posted in CorpGov, Governance and Responsibility, Listing obligation and Disclosure Regulation, SEBI

Tagged Audit Committee, Board of Directors, Corporate Governance, Directors, India, Listing, Listing Agreement, Listing Obligation and Disclosure Requirements, LODR, SEBI, Securities & Exchange Board of India

Definitions: Chapter IV of LODR

Posted on January 5, 2016 | 1 comment

Regulation 2 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 define terms used in these regulations. We have discussed some of these definitions earlier here, here, here and here. Some terms may not have same legal meaning always and require defining as per context and purpose. Regulation 16 of these Regulations defines four terms for the purpose of Chapter IV. As me mentioned in last post, Chapter VI deals with obligation of listed entity which has listed its specified securities on any recognised stock exchange either on main board or on SME Exchange or on institutional platform.

APPOINTMENT OF MANAGING DIRECTOR AND MANAGER

Posted in CorpGov, Governance and Responsibility, Listing obligation and Disclosure Regulation, SEBI

Tagged Corporate Governance, India, Listing, Listing Agreement, Listing Obligation and Disclosure Requirements, LODR, SEBI, Securities & Exchange Board of India

AishMGhrana: 2015 in review

Posted on December 31, 2015 | Leave a comment

Photo: Pixabay

This blog always believe in ethical compliance of law, governance and responsibility. The blog regularly put here it annual report regularly for public information.

This year is not just another year for this blog with more acceptances from professionals, students, academics and general public. Few blogs started with inspiration and starting new completion while some older blogs fade away.

The blog was adjudged as one of the best blogs in India by Indianbloggers.org in category “law” in 2013 and continue hold this position. Indian Blog critics IndianTopBlogs.com listed this blog among best blogs on Corporate Affairs for year 2013 – 14 and 2014 – 15. While, Indiblogger.in opine that this blog helps the world a better place.

Most readers are resident of India and others are from 148 (against 167 last) territories worldwide. This reduction in number of territories may be due to less interest related to Indian law, outside India. Other than India; United States, United Kingdom, European Union, Malaysia, Singapore, Pakistan, South Africa, Kenya, United Arab Emirates, Australia, Nigeria, and Hong Kong SAR China, are important territories with more than 500 yearly views. Kenya and Nigeria are new entrants in top list.

The Alexa World Rank of the increased from nearly early 10 Lakh to less than 8 Lakh during the year 2015. Most of our readers landed here on the blog from Search engines. Few others were referred by Social Media and friends. This blog request all its users to share posts among their friends through social media buttons given after each post.

The Louvre Museum has 8.5 million visitors per year. This blog was viewed about 410,000 times in 2015. If it were an exhibit at the Louvre Museum, it would take about 18 days for that many people to see it.

The blog got about 4.1 lakh page views by 2.7 Lakhs unique visitors this year against 3.72 lakh views by 2.25 lakh unique visitors last year. Presently about 545 readers (against 370 last year) subscribed this blog over their email to get instant updates. This year 60 readers requested for updates through whatsapp.

During the year, the blog posted 150 blog posts against 228 posts last year. The Blog handled about 455 comments during the years against 529 last year. All blog posts posted this year are available here. All earlier blog posts are available at these links: 2014, 2013, 2012 and 2011.

I am thankful to WordPress which provided me all kind of support of excellent software which are easy to learn and use. Click here to see the complete report with graphics and information.

What more are you looking for in this blog? Please give your feedback, suggestions and comments at comment box after this post.

20 most read blog posts this year was:

ALTERATION OF SHARE CAPITAL

VOLUNTARY WINDING UP

REDUCTION OF SHARE CAPITAL

SHARE CAPITAL (Companies Act, 2013)

RESOLUTION, MINUTES AND REPORT

PROSPECTUS (Companies Act 2013)

DEBENTURE (Companies Act 2013)

GENERAL MEETINGS

ALLOTMENT OF SECURITIES (Companies Act 2013)

DORMANT COMPANIES

DIRECTOR: DUTIES, VACATION, RESIGNATION, REMOVAL

AOC – 4

APPOINTMENT OF DIRECTOR

MGT – 7

Cancellation or surrender or Deactivation of DIN

PUBLIC OFFER AND PRIVATE PLACEMENT

APPOINTMENT AND QUALIFICATION OF DIRECTOR

CHARGES

NIDHI COMPANIES

OMNIBUS APPROVAL FOR RELATED PARTY TRANSACTIONS

Posted on December 29, 2015 | 2 comments

Ministry of corporate Affairs issued a notification dated 14^th December 2015 and published here in the Gazette of India dated 15^th December 2015 regarding amendment in the Companies (Meetings of Board and its Power) Rules 2014.

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

Tagged Audit Committee, India, Ministry of corporate affairs, Omnibus Approval, Related Party Transaction, The Companies Act 2013, The Companies Amendment Act 2015

Meetings of Board and its Power: Second Amendment Rules

Posted on December 28, 2015 | 1 comment

The Companies (Meetings of Board and its Power) Second Amendment Rules, 2015 (i) inserts a new Rule 6A, (ii) omit present Rule 10 and (iii) amend present Rule 15(3).

We will discuss newly inserted Rule 6A in a future post. In this post we bill discuss other two amendments in very brief way.

Loan to Directors

We have discussed now omitted Rule 10 earlier here. These rules became redundant after the Company (Amendment) Act, 2015 as discussed earlier here. Hence, it is deleted.

Amendment in Rule 15

We have discussed Rule 15 earlier here. There is a minor but very important amendment in Rule 15(3). In rule 15, in sub-rule (3), for the words “special resolution”, wherever they occur, the word “resolution” shall be substituted.

This amendment is in line with the amendment in Section 188 by the Companies (Amendment) Act, 2015 discussed earlier here.

This has a very significant effect and dilutes corporate governance to certain level. This cut power of non – promoter investors whether they are indigenous investors or foreign investors.

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

Tagged India, Loan to Directors, Ministry of corporate affairs, Related Party Transaction, The Companies Act 2013, The Companies Amendment Act 2015

REPORTING OF FRAUD

Posted on December 25, 2015 | 4 comments

4 Comments

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

Tagged Auditor, Fraud, India, Ministry of corporate affairs, The Companies Act 2013, The Companies Amendment Act 2015

Remaining Part of Companies Amendment Act became Effective

Posted on December 24, 2015 | Leave a comment

A gazette notification posted here on official website of the Gazette of India and posted on website of Ministry of Corporate Affairs says that Section 13 and Section 14 of the Companies (Amendment) Act, 2015 came into force with effect from 14th December 2015. The official language of notification read, “The Central Government hereby appoints the 14th day of December, 2015 as the date on which the provisions of section 13 and 14 of the said Act shall come into force.”

OBLIGATIONS OF LISTED ENTITY WHICH HAS LISTED ITS SPECIFIED SECURITIES

Posted on December 22, 2015 | 2 comments

Chapter IV of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 enumerates obligation of listed entity which has listed its specified securities on any recognised stock exchange either on main board or on SME Exchange or on institutional platform. [Regulation 15(1)]

Continue reading →

Posted in Governance and Responsibility, Listing obligation and Disclosure Regulation, SEBI

Tagged Corporate Governance, India, Listing, Listing Agreement, Listing Obligation and Disclosure Requirements, LODR, SEBI, Securities & Exchange Board of India

DIGITALLY MOBILE INDIA

Posted on December 20, 2015 | 1 comment

With emergence of Digital India, risk and benefit are growing. Every step of further development and growth should be very well calculated. Digital India may serve the state in delivery of governance to its citizen, but may also harm with its securities lapses. This technology is not time tasted and digital security is still at its nascent stage. India critically needs its own high capacity servers to store its own data within geographic limit. We should also have our own geo positioning system. India also need its own cloud storage system, E – mail client for at least all public servants. We need to educate our people to protect their own privacy and sensitive data. Major concern is to provide services to citizen on their hand held digital devices like smart phone and tablets.

My Article on topic “Digitally Mobile India” is published on page 34 of souvenir of 43^rd National Convention of Company Secretaries of India held from 17^th December 2015 to 19^th December 2015 in New Delhi.