Tag Archives: India

Out of Sahara Blues

Posted on June 30, 2017 | Leave a comment

Finally government tries to come out of Sahara Blues. Government earlier was in pressure to put corporate governance in place among private companies and tried well. Thereafter, industry lobby (read as vested interests among “promoters” and “professionals”) started pleaded mercy for all “otherwise honest players”.

Government initiated it journey with exemption notifications and now bring this amendment rules.

The Companies (Audit and Auditors) Second Amendment Rules, 2017 is interesting in more than one way. Statistically, this exemption will benefit only selected big players among private companies in India and their auditors.

Section 139(2) of the Companies Act, 2013 reads, “No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint—

(a) an individual as auditor for more than one term of five consecutive years; and

(b) an audit firm as auditor for more than two terms of five consecutive years.”

Rule 5 of the Companies (Audit and Auditors) Rules 2014 before present amendments reads, “for the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-

(a) all unlisted public companies having paid up share capital of rupees ten crore or more;

(b) all private limited companies having paid up share capital of rupees twenty crore or more;

(c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more.”

Now, the Companies (Audit and Auditors) Second Amendment Rules, 2017, amend clause (b) of rule 5. The amendment rules reads, “in the Companies (Audit and Auditors) Rules, 2014, in rule 5, in clause (b), for the word “twenty”, the word “fifty” shall be substituted.

This amendment rules increase threshold limit for rotation of auditors for private companies by a good 150%.

As number of companies and auditors is not much, it may not affect stakeholders significantly but our commitment towards corporate governance.

 

Leave a comment

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

Tagged , , , , , , , ,

Ease to surrender DIN

Posted on June 23, 2017 | 4 comments

Now, Ministry of Corporate Affairs introduced relatively easy and online e – form for surrendering director identification.

Continue reading →

4 Comments

Posted in Chapter XI - CA2013, Companies Act 2013

Tagged , , , , , , ,

RETINA SIGNATURE – REPLACING DIGITAL SIGNATURES

Posted on April 1, 2017 | 4 comments

Bye – Bye Digital Signature Certificates!!

Inter – ministerial task force on secured authentication of legal documents actively discussing retina signatures which next logical step after introduction of biometric identification system in India. Indian mainstream media undermined these reports amid its stir on recent development in Uttar Pradesh.

Under critically proactive leadership of Prime Minister Narendra Modi an inter-ministerial task force was formed just after demonetization to consider digital cash, digital contracts and digitization of legal and court documents. The task force includes highly places officers of Ministry of Finance, Ministry of Law & Justice, Ministry of Information Technology, Unique Identification Authority of India, Ministry of Health & Family welfare. Highly placed sources suggest that a prime intelligence agency of nation is also involved and getting help from an agency of a friendly foreign nation.

Retina signature is a unique technique developed by a research group consist of countries premier medical colleges and information technology universities. This is quite advance technique user shall sign just showing his retina to camera attached to his laptop, mobile or desktop. This futuristic system shall replace token based digital signature certificate and can be used anytime anywhere by anybody. Though, it will be restricted presently for human need, this technique is so advance that it can be even be used by advance animals using their retina. Retina signature will eradicate need for renewal of digital signature certificates. This technology provides lifelong free signatures subject to good health and maintenance of retina. Any kind of file type may be signed using retina signature.

Retina is third and inner coat of eye which is a light-sensitive layer of tissue. The unique structure of the blood vessels in the retina has been used for biometric identification. Changes in the retinal microcirculation are seen with aging, exposure to air pollution and may indicate cardiovascular diseases such as hypertension and atherosclerosis.

In proposed methodology, a user shall place his eyes before camera of his mobile or laptop when a document to be signed should be opened before him on same device. It is also possible to sign a documents placed in another device. The retina signature shall capture bio-metrics of retina, system time, internet protocol address and geo-positioning of signatory. Once, signed there shall be no removal of signature from the documents shall be possible unless authorized by competent authority, which shall be a civil judge.

As usual, human right activists are planning to oppose the move. Activists argue that scrupulous elements and police authorities may get retina signature using force and other means. However, government authority denies any such possibilities. The task force working on modalities to make it happened in case blind, mentally challenged and otherwise unhealthy people.

A copy of relevant study document may be assessed here on or after 1st April.

 

4 Comments

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

Tagged , , , , , , ,

Company Name with India

Posted on January 10, 2017 | Leave a comment

I receive a question on Quora which may interest readers of this Blog. The question is –

What is the procedure for inclusion of word ‘INDIA’ in the name of company?

My reply is as under –

Law related name of a company is governed with Section 4 of the Companies Act 2013 read with Rule 8. Under present law, there restriction related to inclusion of word “India” has been removed with effect from 1st April 2014.

Continue reading →

Leave a comment

Posted in Chapter II - CA2013, Companies Act 2013, Truth of Our Time

Tagged , , , , ,

AMENDMENT: Administration of CSR

Posted on May 26, 2016 | 3 comments

In a post earlier here, we discussed provisions of Section 135 read with rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 regarding Administration of Corporate Social Responsibility Policy. Sub – rule (2) of rule 4 allow board of directors of a company to choose among various options, a better option to administer the CSR Policy. This rule 4(2) was slightly amended by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015. We discussed those amendment rules earlier here.

Now, a gazetted notification published on 23rd May 2016 in Official Gazette of India, which came into force from same date; amend sub – rule (2) of rule 4.

Continue reading →

3 Comments

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

Tagged , , , ,

Amendment in Buyback Law

Posted on March 15, 2016 | 2 comments

The Ministry of Corporate Affairs bring out two draft notifications to be published in Official Gazette of India to amend the Act by a draft order under proviso to Section 68(2)(d) and by a draft amendment in the Companies (Share Capital and Debentures) Rules, 2014.

Post Buyback Debt – Equity Ratio:

As we discussed earlier here, Section 68(2)(d) read as under:

“The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves:

Provided that the Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies;”

Now draft notification read as under:

In exercise of the powers conferred under the proviso to clause (d) of sub-section (2) of section 68 of the Companies Act, 2013, the Central Government has notified that –

The debt to capital and free reserves ratio shall be 6:1 for government companies within the meaning of clause (45) of Section 2 of the Companies Act, 2013 which carry on Non Banking Finance Institution activities and Housing Finance activities.

This order give effect that for all companies post buyback Debt Equity Ratio shall be 2:1 except government companies which are Non banking Finance companies or Housing Finance companies.

Unaudited Accounts limited reviewed:

As we discussed earlier here, Rule 17(1)(n)(iii) of the companies (Share Capital and Debentures) Rules, 2014 read as under:

“That the audited accounts on the basis of which calculation with reference to buy back is done is not more than six months old from the date of offer document;”

The draft of the companies (Share Capital and Debentures) Amendment Rules 2016 insert following proviso to this sub – clause:

“Provided that where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company.”

This is a removal of practical difficulty. Due to present clause, for practical purpose buyback resolution is possible only within six month from date of audited annual account. Now, buyback resolution may be possible any time on the basis of unaudited accounts limited reviewed by the auditors of the company.

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.

2 Comments

Posted in Chapter IV - CA2013, Companies Act 2013

Tagged , , , , , ,

Reflection of Political Brotherhood in Law

Posted on March 8, 2016 | 3 comments

When followers of two major Indian Political parties are using abusive language for mothers and others of opponent, their “leaders united” is working for their brotherhood causes silently, continuously and legally. One of the most popular narrative from both political side on social media claims, media do not show “their” truth. Here, we will discuss one aspect of this year’s budget unreported in conventional media.

We have discussed two year earlier here on 31st March 2014 Foreign Donation to political parties.

Continue reading →

3 Comments

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

Tagged , , , , ,

Presumptive taxation scheme for persons having income from profession

Posted on March 1, 2016 | 2 comments

The simplified presumptive taxation scheme is extended to persons earning professional income. According to government, this scheme will help to rationalize the presumptive taxation scheme and to reduce the compliance burden of the small tax payers having income from profession and to facilitate the ease of doing business.

Continue reading →

2 Comments

Posted in Company Secretary, Truth of Our Time

Tagged , , , ,

CORPORATE GOVERNANCE REQUIREMENTS WITH RESPECT TO SUBSIDIARY OF LISTED ENTITY

Posted on February 16, 2016 | 2 comments

In this post we will discuss, corporate governance requirements with respect to subsidiary of listed entity 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.

Continue reading →

2 Comments

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

Tagged , , , , , , , , ,

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.

1 Comment

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

Tagged , , , , , , , , , , , , ,

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 13th January 2016 notified part of this Section to be effective with effect from 13th 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.

Continue reading →

1 Comment

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

Tagged , , , , ,

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.

Continue reading →

1 Comment

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

Tagged , , , , , , , , ,

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.

Continue reading →

1 Comment

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

Tagged , , , , , , , , , ,

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.

Continue reading →

1 Comment

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

Tagged , , , , , , ,

OMNIBUS APPROVAL FOR RELATED PARTY TRANSACTIONS

Posted on December 29, 2015 | 2 comments

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

Continue reading →

2 Comments

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

Tagged , , , , , ,

Meetings of Board and its Power: Second Amendment Rules

Posted on December 28, 2015 | 1 comment

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

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.

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.

1 Comment

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

Tagged , , , , ,

REPORTING OF FRAUD

Posted on December 25, 2015 | 4 comments

Ministry of corporate Affairs issued a notification dated 14th December 2015 and published here in the Gazette of India dated 15th December 2015 regarding amendment in the Companies (Audit and Auditors) Rules, 2014.

Continue reading →

4 Comments

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

Tagged , , , , ,

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.”

Continue reading →

Leave a comment

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

Tagged , , ,

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 →

2 Comments

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

Tagged , , , , , , ,

EASE IN TAXATION

Posted on December 18, 2015 | 1 comment

Very Soon, Indian Finance Minister will finalize this tax proposal keeping (possible a blind) eye on tax reforms. Indirect tax reforms, even at the central side of constitutional barriers are still at halt just because of long time of eye – wash of Goods and Service Tax reform There is no concrete information on present status and future of Direct Tax Code. We as citizen need to understand and reveal hardship of our tax system and support a simpler tax regime. Our views may help the Government.

Continue reading →

1 Comment

Posted in Governance and Responsibility, Truth of Our Time

Tagged , , , ,