Tag Archives: Corporate Law

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

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

DIRECTOR: DUTIES, VACATION, RESIGNATION, REMOVAL

Posted on April 19, 2013 | 28 comments

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

In my last post, I stopped myself from further reading midway due to length of the post “Appointment and Qualification of Director”. Now, this is time to resume reading. Let us start with Additional Director, Alternate Director and Nominee Directors.

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

Tagged Additional Director, Alternate Director, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Law, Director, Director in Casual Vacancy, Duties of Directors, Independent Director, India, Legal Reforms, Ministry of corporate affairs, Nominee Director, Reforms, Removal of Director, Resignation of Director, Vacation of Office of Director, Whole – time Director

APPOINTMENT AND QUALIFICATION OF DIRECTOR

Posted on April 12, 2013 | 42 comments

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

I discussed in my last post that it is first time that concept of “Key Managerial Personnel” has been introduced in India. Hopefully, present Companies Bill will change status of Corporate Governance in India. The qualified Directors and transparency in appointment of directors is single most important key for success of public corporate and corporate governance. As I discussed, appointment of “Key Managerial Personnel” is discussed in Section 203 but specific provisions of Chapter XI should be taken care of in case of appointment of Directors as they are specific provisions for them. Chapter XI consists of 23 Section from Section 149 to Section 172.

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

Tagged Board of Directors, Companies Bill 2012, Company Secretary, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, Disqualification of Directors, Key managerial personnel, Legal Reforms, limit on directorship, Ministry of corporate affairs, Profession, Qualification of Directors, Reforms, Retiring Directors

KEY MANAGERIAL PERSONNEL

Posted on April 5, 2013 | 30 comments

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

In any jurisdiction, Quality of Corporate Governance and compliance of ethics depends upon quality of people taking charge of the affairs. The companies Bill 2012 have some inbuilt elements of corporate governance in it. First time Concept of Key Managerial Personnel is being introduced in India. Which seems different with “officer who is in default” as that concept is still in this Bill.

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

Tagged Board of Directors, Chief Executive director, Chief Financial Officer, Companies Act 2013, Companies Bill 2012, Company Secretary, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, Key Legal Reforms, Key managerial personnel, Manager, Managing Director, Ministry of corporate affairs, Officer, officer who is in default, Profession, Reforms, Related Party Transaction, Whole – time Director

INTERNAL AUDIT AND COST AUDIT

Posted on March 15, 2013 | 5 comments

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

In this series of my blog post related to Companies Bill, 2012; I am writing this post about provision relating to internal and cost audits. The manner of appointment of auditors may affect independence of cost audit and good corporate governance. The bill addresses this issue very well.

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

Tagged Accounts, Accounts and Audit, Appointment of Auditor, Auditor, Auditor Remuneration, Causal Vacancy, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Cost Audit, Disqualification of Auditor, India, Internal Audit, Legal Reforms, Ministry of corporate affairs, Profession, Reforms, Removal of auditor, Resignation of Auditor

AUDITOR AND AUDITOR’S REPORT: DUTIES, POWER, PENALTIES.

Posted on March 8, 2013 | 12 comments

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

In my last blog post auditor under companies Act, 2013: from appointment to removal, I discussed auditor his appointment, remuneration resignation and removal along with other incidental matters. In this post I will discuss power, duties and penalties related to auditors and audit report.

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

Tagged Accounting, Accounting Standard, Accounts and Audit, Audit, Audit Report, Auditor, Branch Audit, CA, Chartered Accountant, Companies Act 2013, Companies Bill 2012, Comptroller and Audit General of India, CorpGov, CorpLaw, Corporate Governance, Corporate Law, General Meeting, Government Companies, ICAI, India, Institute of Chartered Accountants of India, Legal Reforms, Ministry of corporate affairs, Profession, Reforms, Statutory Audit

SHAREHOLDERS’ DUTY OF NOT TO ASK

Posted on February 22, 2013 | 3 comments

I have a small piece in 109th edition of the e-Magazine from ICSI Mysore Chapter “Shareholders’ duty of to ask” I am thankful to my friends Ms. K Sarina Chouta Harish and Mr. Dattatri H M who made great afforts for editorial inputs. Here is full piece:

We are living in an era of corporate governance but who is really interested in it! All efforts by the corporate governance are directed at bringing more transparency to the stakeholders for enabling their participation in decision-making process. If that be the case on one hand, on the other, the age-old concept of fiduciary relationship of board of directors, our law and law enforcement agencies render protection to the right of the board of directors to maintain complete secrecy of its decision-making. I am afraid; something is wrongly settled as law. There has to be a reality check…..

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Posted in CorpGov, Governance and Responsibility

Tagged Company Law, CorpGov, CorpLaw, Corporate Governance, Corporate Law, India, Investor activism, MCA21, Members and Shareholders, Reforms, Shareholders’ right to information, Whistle blower

NATIONAL FINANCIAL REPORTING AUTHORITY

Posted on February 15, 2013 | 6 comments

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

One of the foremost step for improving corporate governance since birth of concept of corporate governance is improving quality of accounting and auditing of companies. Audit Committee is one of these measures, which has been taken to improve standard of financial reporting. But concerns related to quality of financial reporting are not new. We can trace these concerns in earlier legislation, all earlier versions of the Companies Act in general and the Chartered Accountants Act, 1949. Without going deep in these laws, we simply say; what was otherwise need to enact such Act to regulate a profession of accounting and auditing, standardizing whole process of accounting and auditing.

The National Financial Reporting Authority is a quasi – judicial body to regulate matters related to accounting and auditing. With increasing demand of non – financial reporting, I may safely predict, a National Business Reporting Authority to regulate standards of all kind of reporting, financial as well as non – financial, from companies in near future.

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

Tagged Accounting Standards, Accounts, Accounts and Audit, Appellate Authority, Auditor, CA, Chartered Accountants, Companies Act 2013, Company Bill 2013, CorpGov, Corporate Governance, Corporate Law, ICAI, India, Institute of Chartered Accountants of India, National Financial Reporting Authority, NFRA, Profession, Reforms