Tag Archives: Legal Reforms

PUBLIC OFFER AND PRIVATE PLACEMENT

Posted on September 6, 2013 | 50 comments

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

Continue reading →

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

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

MINOR PROVISIONS IN CHAPTER II (COMPANIES ACT 2013)

Posted on September 3, 2013 | 6 comments

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

COPIES OF DOCUMENTS TO MEMBERS (SECTION 17):

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

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

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

Continue reading →

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

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

NAME AND CLASS OF THE COMPANY

Posted on August 30, 2013 | 1 comment

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

After reading my posts on Formation of a Company and Alteration of Memorandum and Articles, few readers suggested that I should cover provisions related to names in one place. I will discuss these provisions here along with provisions related to conversion of company from one class to another.

Continue reading →

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

Tagged Articles, Change in Name, Companies Act 2013, Companies Bill 2012, Conversion of Registered Companies, CorpLaw, Corporate Law, Incorporation, Incorporation & Registration, India, Legal Reforms, Memorandum, Ministry of corporate affairs, Name of Company, Rectification of Name, Reforms

FORMATION OF A COMPANY

Posted on August 16, 2013 | 6 comments

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

Section 3, 4 and 5 of the Companies ~~Bill, 2012~~ Act 2013

In my last post, I discussed definition of companies and classes.

FORMATION OF COMPANY (SECTION 3):

A company may be formed for any lawful purpose by:

(a) Seven or more persons as public company;

(b) Two or more persons as private company;

(c) One person as One Person Company

By subscribing names to a memorandum and complying other requirements.

Continue reading →

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

Tagged Articles, Companies Bill 2012, Company, Company Limited by Guarantee, Company Limited by Shares, CorpLaw, Corporate Law, Formation of company, Incorporation, Incorporation & Registration, India, Legal Reforms, Memorandum, Name of Company, One Person Company, Private Company, Public Company, Reforms, Registered Office, Unlimited Company

Quotes from Companies Bill debate in Rajya Sabha

Posted on August 14, 2013 | 2 comments

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

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

Continue reading →

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

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

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.

Continue reading →

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.]

Continue reading →

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.

Continue reading →

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

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.

Continue reading →

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.
Continue reading →

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 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.

Continue reading →

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).

Continue reading →

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.

Continue reading →

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.

Continue reading →

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.

Continue reading →

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.

Continue reading →

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

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.

Continue reading →

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.

Continue reading →

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