Tag Archives: Reforms

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

TRANSFER AND TRANSMISSION OF SECURITIES

Posted on October 1, 2013 | 9 comments

Free transferability of share is one essential condition for Company form of business, subject to some restrictions under private companies. New Act, deals with substantially.

TRANSFER AND TRANSMISSION OF SECURITIES (SECTION 56):

A company shall register a transfer of securities or interest of members only when such a proper instrument of transfer; duly stamped, dated and executed by or on behalf of the transferor and transferee and specifying the name, address and occupation has been delivered to the company by either party within a period of sixty days from date of execution, along with the certificate of security or the letter of allotment of securities.

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

Tagged Depository, Free transferability, Nomination, Personation of member, Rectification of register, Reforms, Register of Member, Restriction of securities transfer, SEBI, Securities, Shares, Shares and Securities, transfer of securities, Transfer of shares, transmission of securities, Transmission of shares, Tribunal

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

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.

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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.

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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.

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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.

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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]

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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

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

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.

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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