Tag Archives: CorpGov

DEPOSITS (Companies Act 2013)

Posted on October 18, 2013 | 50 comments

After the commencement of present Act of 2013, or more correctly, on issue of Notification by Government of India making Section 73 effective; no company shall invite, accept or renew deposits from the public except in a manner provided under Chapter V of the Act. The chapter V has total four Sections i.e. Section 73 to 76 (both inclusive).

This prohibition does not apply to a banking company, a non – banking financial company as well as any other class of company as specified by the Central government. The Central government may specify any company after consultation with the Reserve Bank of India.

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

Tagged Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Deposit, Deposit from members, deposits from public, Fraud, India, Legal Reforms, Ministry of corporate affairs, National Company Law Tribunal, Reforms

Statement on Annual Return by company Secretary

Posted on October 17, 2013 | 2 comments

Under Section 92 of the Companies Act, 2013, every company shall prepare annual return in the prescribed form and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice. The annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.

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Posted in Chapter VII – CA2013, Companies Act 2013, Company Secretary, Governance and Responsibility, Institute of Company Secretaries of India - ICSI

Tagged Annual Return, class-action suits, Company Secretaries in Practice, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Fraud, Institute of Company Secretaries of India, Members and Shareholders

DEBENTURE (Companies Act 2013)

Posted on October 15, 2013 | 40 comments

A bond from the Dutch East India Company, dati...

A bond from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins. (Photo credit: Wikipedia)

Debenture is most important instrument to raise capital for a company. A company use debenture to raise debt capital. Popularly, debenture issued by public sector companies with government approval is called bonds.

Section 2 (30) of the Companies Act, 2013 define inclusively debenture as “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not.

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

Tagged Bond, Companies Act 2013, Companies Bill 2012, convertible debenture, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debenture, Debenture Stock, Debenture Trust, Debenture Trust Deed, Debenture Trustee, Debentures, Fully Convertible Debenture, India, Legal Reforms, Ministry of corporate affairs, Non – Convertible Debenture, Partly Convertible Debenture, Reforms, Secured Debenture, Shares and Securities, Unsecured Debenture

PURCHASE OF OWN SHARES AND BUYBACK

Posted on October 11, 2013 | 28 comments

Purchase of own shares by a company is possible but for legal restrictions.

Restriction on purchase by company or giving loan for purchase of its shares (Section 67):

A company limited by shares or a company limited by guarantee and having share capital shall have no power to by its own shares unless the consequent reduction of share capital is effected under the provision of this Act.

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

Tagged buy – back, Buy – back of securities, buy – back of shares, Capital Redemption Reserve Account, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debentures, employees’ stock option, India, Legal Reforms, Ministry of corporate affairs, Other Securities, Prohibition for buy –back, purchase of own securities, Reduction of share capital, Reforms, Share Capital, Shares, Shares and Securities

REDUCTION OF SHARE CAPITAL

Posted on October 8, 2013 | 13 comments

Reduction of capital is a sensitive issue; managerially, financially, economically, and legally. Hence, reduction of capital by a company is always subject to confirmation by the Tribunal on an application made by the company. Company applying for reduction may either be a company limited by share or a company limited by guarantee but having a share capital. Reduction of capital must be approved by special resolution passed by the company. a company may reduce share capital in following manner –

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

Tagged CorpGov, CorpLaw, Corporate Governance, Corporate Law, Reduction of share capital, Reforms, Share Capital, Shares, Shares and Securities, Tribunal

ALTERATION OF SHARE CAPITAL

Posted on October 4, 2013 | 15 comments

Every business run on finance and share capital is base finance, hence life blood of a company.

PUBLICATION OF CAPITAL (SECTION 60):

Where any communication or publication of a company contains a statement of the amount of the authorise capital of the company, it shall also contain a statement in an equally prominent position and in equally conspicuous characters of the amount of the capital which has been subscribed and the amount paid – up.

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

Tagged alteration of capital, Bonus Shares, conversion of loan to equity capital, conversion of securities, conversion of unlimited company to limited company, convertible debenture, CorpGov, CorpLaw, Corporate Governance, Corporate Law, employees’ stock option, further issued of share capital, India, Legal Reforms, letter of offer, Ministry of corporate affairs, preferential issue, Reforms, Reserve share capital, right issue, SEBI, Securities, Shares, Shares and Securities, Special Resolution, Tribunal, Unlimited companies

MAJOR CAUTIONS UNDER PUBLIC OFFER (COMPANIES ACT, 2013)

Posted on September 20, 2013 | 2 comments

In recent posts, we discussed provisions of Chapter III of the Companies Act, 2013. This is time to discuss major penal provisions in this chapter.

CRIMINAL LIABILITY FOR MIS-STATEMENT IN PROSPECTUS (SECTION 34):

Where a prospectus, issued, circulated or distributed:

a) includes any statement which is untrue or misleading in form or context in which it is included; or

b) where any inclusion or omission of any matter is likely to mislead;

Every person who authorises the issue of such prospectus shall be liable under section 447 i.e. fraud.

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

Tagged Abridge Prospectus, Advertisement of Prospectus, Allotment of Securities, Application Form, Board of Directors, Bonus Issue, Business, Companies Act, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debentures, Deemed Prospectus, Dematerialise securities, Dematerialise Shares, Depositories, ESOPS, Fraud, Further Public Offer, GDR, Global Depository Receipt, India, Information in Prospectus, Information Memorandum, Initial Public Offer, IPO, Issue of Securities, Issue of Securities by Company, Issue of Securities by Private Company, Issue of Securities By Public Company, Legal liability, Legal Reforms, Listed Companies, Listing, Listing of Securities, 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, Other Securities, Preferential Allotment, Private Placement, Private Placement Offer Letter, Prospectus, Public Issue, Public Offer, Red Herring Prospectus, Reforms, Registration of Prospectus, Reports with Prospectus, Return of Allotment, right issue, SEBI, Securities, Securities and Exchange Board o India, Securities and Exchange Board of India, Security (finance), Shares, Shares and Securities, Shelf Prospectus, Statement of Compliance, Statement of Expert, Stock exchange, Sweat Equity

ALLOTMENT OF SECURITIES (Companies Act 2013)

Posted on September 17, 2013 | 13 comments

In recent posts, we have discussed matters related to prospectus. In this post we will discuss, matters related to issue and allotment of securities following public offer.

SECURITIES IN DEMATERIALISED FORM (SECTION 29):

Under this section;

Every company making public offer; and
Such other class or classes of companies as may be prescribed

shall issue the securities only in the dematerialised form.

When any company issue its securities in dematerialised form, provisions of the Depositories Act, 1996 and regulations made under that Act shall be applicable.

There is no bar for any other company to issue its securities in any form. Any other company may convert its securities into dematerialised form.

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

Tagged Allotment of Securities, Bonus Issue, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Debentures, Dematerialise securities, Dematerialise Shares, Depositories, ESOPS, GDR, Global Depository Receipt, India, Initial Public Offer, Issue of Securities, Legal Reforms, Listing, Listing of Securities, Other Securities, Preferential Allotment, Private Placement, Prospectus, Public Company, Public Issue, Public Offer, Reforms, Registrar of Companies, Return of Allotment, right issue, Securities, Securities and Exchange Board, Security (finance), Shares, Shares and Securities, Stock exchange, Sweat Equity

Effective Provisions of Companies Act, 2013 as on 12th September 2013

Posted on September 13, 2013 | 19 comments

On 30^th August 2013 (Bhadrapada 8, 1935 Saka), Ministry of Law and Justice issued a notification regarding the Companies Act, 2013 immediately after it received assent of President of India. Only section 1 of the Act of 2013 came into effect from that day. Section 1 as usual deals with short title, Extent, commencement and application.

Earlier Act of 1956 was applicable to whole of India with some modification related to Indian State of Nagaland, but not applicable Indian state of Sikkim. Act of 2013 is applicable to whole of India including Sikkim and without any exception to any state. Sub – section 4 of Section 1 of Act of 2013 lists out some exception regarding particular classes of companies. However, Act of 2013 is not made effective to Sikkim as on 12^th September 2013.

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

Tagged Appellate Tribunal, Central Government, Companies Act, Companies Act 1956, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Affairs Ministry, Corporate Governance, Corporate Law, General Meeting, India, Indian Depository Receipt, Legal Reforms, Ministry of corporate affairs, National Company Law Tribunal, Public Offer, Reforms, Sikkim, the Registration of Companies (Sikkim) Act

VARIANTS OF PROSPECTUS (Companies Act, 2013)

Posted on September 13, 2013 | 6 comments

In our last blog post Prospectus (Companies Act 2013) , we discussed provisions related to prospectus. We will continue our study in this post.

ADVERTISEMENT OF PROSPECTUS (SECTION 30):

When a company issue an advertisement of prospectus, the advertisement shall specify contents of its memorandum; the objects, the liability of members, amount of share capital, name of signatories, and number of shares subscribed for by these signatories and its capital structure.

SHELF PROSPECTUS (SECTION 31):

Any class of company may file a shelf prospectus with the Registrar of Companies at the stage of first offer of securities.

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

Tagged Abridge Prospectus, Advertisement of Prospectus, Application Form, Companies Act 2013, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, Information Memorandum, Legal Reforms, Ministry of corporate affairs, Prospectus, Public Issue, Public Offer, Red Herring Prospectus, Reforms, Registrar of Companies, Securities, Securities and Exchange Board of India, Shares, Shares and Securities, Shelf Prospectus

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

Corporate Social Responsibility under Companies Act 2013

Posted on July 5, 2013 | 2 comments

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

The provision related to Corporate Social Responsibility under present ~~Clause~~ Section 135 of Companies ~~Bill 2012~~ Act 2013 applies to all companies; listed, unlisted, public, private, one – person subject to limitation based on its net worth, turnover and net profit. These threshold limits are:

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

Tagged Accounts and Audit, Board Committee, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Corporate Social Responsibility, CSR, India

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