Practical approach to Indian Company Law

CXV- Compromises , Arrangements and Amalgamations

CXVI-Prevention of Oppression and Mismanagement

CXVII- Registered Valuers

CXVIII- Removal of names of Companies from the Register of Companies

CXIX- Revival and Rehabilitation of Sick Companies

CXX- Winding Up AJAY GARG, Team AGBians

C XXI- Part II- Winding up of Unregistered Companies

C XXVII- NCLT & NCLAT- S415-434 – Subjudice yet to be implemented

CXXVIII- Special Courts- S435-438, 440-441 – Yet to be Constituted

AJAY GARG, Team AGBians

Reduction of Share Capital CIV S 66

Damages for fraud CV S 75

Power of Tribunal to call AGM & Meetings of Members & Punishment for default there on CVII S 97,98 & 99

Unpaid Dividend Account & IEPF CVIII S124 & 125

Re-opening of Accounts by court or tribunal orders, Voluntary revision FS or Board’s Report, Constitution of NFRA CIX S131 & 132 AJAY GARG,

Team AGBians

Investigation into Company’s affairs in other cases, Protection of employees during Investigation CXIV S213 & 218

Freezing of assets of Co. on Inquiry & Investigation, imposition of restrictions upon securities CXIV S 221 & 222

Voluntary Winding up of Company etc. not to stop investigations Proceedings CXIV S 226

Legal Advisors and Bankers not to Disclose certain Information CXIV S 227

Power of Court to stay or restrain Proceedings, Suits stayed on Winding up order CXXI S372,373

Repeal of certain enactments & Savings, Dissolution of CLB & Consequential Provisions CXXIX S465,466 AJAY GARG,

Team AGBians

CSR Reporting

• 2015-16 and onward

Woman Director CXIR3

• Induction till 30th Sep, 2014/31st March, 2015

Resident Director

• Induction till 31st March, 2015

Auditor’s Report as per New CA 2013

• For the FY commencing on or after 01.04.2014 AJAY GARG

Team AGBians

Independent Director

• till 31st March, 2015

Directors Report GC 08/04.04.2014

• For FY commencing on or after 01042014

Deposits

• To be aligned till 31st March, 2015

Rotation of Statutory Auditor

• Within 3 years (31st March, 2017) AJAY GARG Team AGBians

Aligning of Financial Year -Ending on 31st March

• within two year till 31st March, 2016 S2(41)

Fin. Statements –preparation, adoption, filing


Annual Return


Consolidated Financial Statement S129(3)

• Subsidiary + Associate and JV Company for FY commencing on or after 01042014

Auditor – S144 Not to render Certain Services

• within one year till 31st March, 2015 AJAY GARG

Team AGBians

Change in Letter Head, Bills and Other Stationary

•Immediate S12(3)

Submission of MBP 1 in ROC in MGT 14 S117(3)(g)

•15th July, 2014 S179(3)(k)C12R8(5)

Return of Deposit in GNL2 (DPT4) along with Auditor’s certificate

•30th June, 2014 S74CVR20

RPT - Induction of Independent Sh. holders

•quorum purpose S188

Pending Annual Filing to be Updated

•Disqualification of Director 164(2)(a) AJAY GARG Team AGBians

Resolutions in First Board Meeting - (30th June, 2014)

Disclosure of Interest

by Directors in MBP1

S184

Appointment/ Re designation

of KMPs

Constitution / Reconstitution of Committees

• Stakeholders Relationship Committee >1000 security holders not shareholders

• CSR Committee • Nomination and

Remuneration Committee – If ID s are required

• Audit Committee

ToR / Revised ToR for

Committee

Authority Resolution

for Signatory Director

Engagement Resolution

for Certifying Professional

AJAY GARG Team AGBians

Detailed Working on Notice of AGM

Induction of Independent Director including Woman Director S149

Working on Report of AGM S121

Certificate by Statutory Auditor for compliance of criteria under S141

Resolution for app. Of S. Auditor for 5 years S139(1)


Need to Learn Difference Between Format & E- Forms

Need to Learn Changed Timeline for Filing of Forms w/o Additional Fees - 15 days

Need to Learn Changed Timeline for Filing of Forms with additional fees 270 days S403(1)

Mentioning of Subscribed & PuC along with AC wherever AC is mentioned S60(1)


Declaration / Certificate of Independence by Independent Director S149(6)

Appointment of Internal Auditor S138 (30th Sept. 14)

Written Consent by Statutory Auditor Prov2S139(1) (1st Sept. 2014)

Intimation to SA about appointment and submission of ADT1 by Company

Appointment of Secretarial Auditor S204 AJAY GARG Team AGBians

SR in forthcoming AGM • Increase in Borrowing Limits S180(1)(c) (Postal

Ballot) – in case of existing loans • Limit for loan, guarantee and Investment

S186 (3) • Replacement of AoA adopting specific tables • For Related Party Transaction Prov1S188 • Appointment or Re-appointment of

Independent (+woman) Directors S149(P1,4&5)

• Appointment / Re-appointment of Managerial Personnel S196

• Approval / Re-approval of Remuneration of Managerial Personnel S197


• Quorum – 2/5/15/30 S103 • Proxy – Maximum No Prescribed – 50 Prov4

S105(1) • Induction of New Director – Deposit one lac –

to be refunded if he gets 25% votes S149 (3) • Reporting for change in shareholding – 2%

increase or decrease and top tne shareholders • Meeting of Independent Directors – at least

one during the year • Physical Presence – at least once during the

year. • Length of Notice of Board Meeting – 7 days

BM - Shorter Notice – One ID to be present • AGM possible on Sunday but during Business

Hours AJAY GARG Team AGBians

LIABILITIES ASSETS

NEW SHARE CAPITAL S 62 & 42 Loans to Directors 185

Secured and Unsecured Loans

s180(1)(c )

Inter Corporate Investments in

Securities 186

Loans to Uninterested Entities S186

Temporary Loans S180(1)(c )Exp.

Loans, Guarantee or Security to

WOS CXII R10(1)

Deposits 73 Guarantee or Security to

Subsidiaries CXII R10(1)

Unsecured Loan S73CVR2(c )

•From Directors (viii)

•ICD (vi)

•Any Non-int. bearing amounts

(xi)

Loans to Interested Parties S185 &

186

PRIMARY STANDARD – BALANCE SHEET –

SELECT ITEMS

Guarantee / Securities to NIE 186

Guarantee / Securities to IE 185 & 186


Listed Company Compliances - Even for Pvt Ltd

OR S62(1)(a) or SR -S62(1)(b,c)in EGM

Valuation of Share Price and of Consideration

Explanatory Statement Disclosures – many

Fully paid at the time of allotment AJAY GARG

Team AGBians

Completion of Pref. allotment CIVR13(2)(e) • 12 months from SR date

Pref. Allotment includes Other securities • FCD, PCD, FCPS PCPS

Other than Pref. Allotment • Public issue, Right issue, ESOS, ESPS, Sweat ES, Bonus

Shares or DR issued outside India, Foreign Securities

Compulsory compliance of Section 42 • Private Placement requires ‘placement offer letter’; to

maximum 200 persons in a year plus ESOP plus QIB;

Period for Allotment S42(6) • Within 60 days from receipt of application money AJAY GARG

Team AGBians

Check AoA about renunciation right

Right Issue is the way out S62(1)(a)

Letter of Offer mentioning renunciation right

Offer period – 15-30 days

No intimation – offer declined

Renunciation in favor of any other person

Right to Apply Additional Shares


SR in GM by Shareholders

• If Money to be borrowed + money already borrowed > PuC+ FR

• Covers secured or unsecured both • Banks , Fis, NBFC or otherwise • Also covers temporary loans for

capital expenditure Exception: Temporary Loans for WC


TEMPORARY LOANS: S180(1)(C ) Explanation

• Loans repayable on demand • Loans repayable within 6 months • Includes: Short-term • CC arrangements • Discounting of Bills • Issue of other Short-term loans • of seasonal character


ELIGIBLE COMPANIES ELIGIBLE COMPANIES • Public Companies Net Worth 100 cr or Turnover

500 cr.• Public Companies Net Worth 100 cr or Turnover

500 cr.• SR in GM• 10% from members and 25% from others• SR in GM• 10% from members and 25% from others

OTHER THAN ELIGIBLE COMPANIES• 25% from members

OTHER THAN ELIGIBLE COMPANIES• 25% from members25% from members

GOVERNMENT COMPANIES

25% from members

GOVERNMENT COMPANIES• 35% in totality • 35% in totality

AJAY GARGTeam AGBians

REMEMBERSome Outlets for Funds are not yet plugged

• Loan from Directors (but not from borrowedfunds) Directorship compulsory only at the time offunds). Directorship compulsory only at the time ofreceipt of amount (viii)

• Any amount received by Company from any othercompany (vi) – unrelated company – no tension

• Any non-interest bearing amount received andheld in trustheld in trust

• Amt brought in by promoters by way of unsecuredloans in pursuance of condition by FI, Banks


Loan to MD/WTD S185(1)(a)(i)

• Service Condition to All its Employees

Loan to MD/WTD S185(1)(a)(ii)

• Scheme approved by SR – GM• Scheme approved by SR – GM

Lo i O di Co se of B si ess S185(1)(b)Loan in Ordinary Course of Business S185(1)(b)

• For example NBFC but at a rate not less than b k bank rate


• Two Layers of Investment Companies Are

Allowed • More than two layers for acquiring company

beyond India allowed • Acquisition of Securities allowed

• By way of BR to the extent of 60% of PuC+FR+SPA or 100% of FR+SPA whichever is more

• BR with the consent of all the Directors present

• By way of SR in GM beyond the limits mentioned above

• Plus some other conditions like prior approval of FI, Banks

• Disclosure of Investment in Board’s Report

INTER CORPORATE INVESTMENTS S186


RoI - >Govt. Security Deposit closest to the tenor of loan S186(7) -1/3/5/10 years

No subsisting default in repayment of deposits S186(8)

Upto 60% of PuC, FR and SP or 100% of FR and SP WeiM • Unanimous BR in BM and Consent of FI, Banks – if default in

repayment of loan

> 60% of PuC, FR and SP or 100% of FR and SP – • SR GM and Consent of FI, Banks – default or no default

Compliances, Records and Disclosures – as prescribed in Law AJAY GARG

Team AGBians

• Any loan made by holding company to

its WOS CXIIR10(1) – Allowed

CONTROVERSIAL • “to any other person in whom Director

is interested” • Not allowed as per provisions of Section

185 Versus

• Nowhere restricted under Section 186

where procedure for Loan, Security or

Guarantee is prescribed

…..and the debate continues AJAY GARG

Team AGBians

• Any guarantee given or security provided in

respect of loan made by any bank or FI to its

subsidiaries CXIIR10(2) – No Controversy

CONTROVERSIAL

• “to any other person in whom Director is

interested” • Not allowed as per provisions of Section 185

Versus

• Nowhere restricted under Section 186 where

procedure for Loan, Security or Guarantee is

prescribed

…..and the debate continues AJAY GARG

Team AGBians

Particulars

Managerial Remuneration S197, S198 S199

Schedule V

Related Party Transactions S188 S184

Sale, Purchase or Supply of Goods

Selling, Buying or Disposing of property of any kind

Leasing of property of any kind

Availing or rendering of any kind of services

Appointment of any agent for purchase / sale of goods, materials,

services or property

Underwriting the subscription of any securities

Office or Place of Profit – in the Company, Subsidiary or

associate company S188(1)(f)


Applicability: Public Company S197 Sch

V Part II & III

Remuneration

› 5/10/11% to MD/WTD/Manager

› 1/3 % other than MD/WTD /Manager

Sitting Fees- Max 1 Lac for BM/CM

Sitting Fees to ID & WD ≥ Sitting fees to other

Directors

Applicability: Public Company S197 Sch V Part II & III

i) Remuneration 5/10/11% to MD/WTD/Manager

ii) 1/3 % other than MD/WTD /Manager

iii) Sitting Fees- Max 1 Lac for each BM/CM

iv) Sitting Fees to ID & WD ≥ Sitting fees to other Directors


Sch V Part II • SI – Co. having Profit as per Sec-197 w/o CG • SII- Company having no or inadequate

profit • Limits will double if passing SR

Effective Capital Limit(Yearly Remuneration) shall not exceed

less than 5 Cr 30 Lacs

5-100 Cr 42 Lacs

100-250 Cr 60Lacs

250 Cr & above 60 Lacs + .01% of effective Capital in excess of Rs. 250 Cr. AJAY GARG

Team AGBians

Remuneration (Limits without CG approval) SCHVPIISIIB

Unrelated Managerial Person- 2.5% of Current Relevant Profits (double if SR) • Not a security holder of 5Lacs or

more/Employee/Director/Promoter/Relative • In previous 2 years


• Remuneration approved by Board & also by NRC (if any)

• No continuous default for 30 days for repayment of debts, debentures or interest thereon.

• SR for not more than 3 years • Explanatory statement disclosures as

prescribed

Essential Requirements

PII

• Approval by SR • Auditor or Secretary (if any) or PCS,

if not

PIII Certificate for requirements

fully complied with AJAY GARG

Team AGBians

• Detailed Agenda along with specific disclosures C12R15(1)

• Interested Director not to participate C12R15(2)

• SR in General Meeting by Non-Interested Shareholders

• Detailed Explanatory Statement along with specific disclosures


Exemptions - Proviso 3 to S188(1) • Transactions entered in

Ordinary Course of Business • Arm’s length transaction -

Disclosure in Board’s Report with justification S188(2) Entry in Register of Contracts and Arrangements S189 Reporting of Resolution – MGT14 AJAY GARG

Team AGBians

• In case of Director – anything other than remuneration or In case of individual relative of Director – as remuneration.

• Appointment to any office or place of profit in the Company, its subsidiary, associate company.

• Upto monthly remuneration of 2.5 lacs – By way of BR.

• Monthly remuneration of more than 2.5 lacs – By way of SR in GM.


Incorporation

AW -Statutory Auditor

AW - Internal Audit

Woman Director

Policies

Committees

Independent Director

Uploading on Website

E-voting

Immediate Action

Postal Ballot Existing Deposits

Postal Ballot

Report on AGM

Appointment of Managerial Person

Mechanism


Number of Stages – Six

Digital Signature – All Directors

COB – All including S8 Companies

Authority Letter for each Certification

DIN Papers – Attachment Issues


Directors Details – Interest and Many More

Subscribers Details – Signature Verification

PAN Card and Bank Account – By Default

Appointment of Auditor – By Default

Verification of Registered Office Address

Receipt of Subscription Money AJAY GARG

Team AGBians

• Every Listed Company and every other Public Company with PuC 100cr or turnover 300Cr. CXIR3

• Existing Companies – One year or before 31st March, 2015

• Newly Incorporated Companies – within 6 months from the date of Incorporation

• Intermittent Vacancies – within 3 months or next Board Meeting whichever is later

• Criteria for turnover or PuC – latest audited financial statements

AJAY GARG

Team AGBians

Applicability( listed Companies) Copy of Report (Proceedings of AGM other than minutes) with Registrar CVII R31 Within 30 days of conclusion of AGM Max. Period: 270 days Proviso to S403(1) E- Form- MGT 15


Statutory Auditor

Internal Auditor: Listed Company Unlisted Public Company (anyone during preceding FY)

PuC =/>50 Cr. Turnover =/>200 Cr. O/s Loans or borrowings from FI, Banks =/>100 Cr. O/s Deposits =/> 25Cr. Private Company(anyone during preceding FY) Turnover =/>200 Cr.

O/s Loans or borrowings from FI, Banks =/>100 Cr.

Services under Section 144


Cooling Period of one year (Prov1to144) • No. of Statutory audits restricted to 20

S141(3)(g) • Internal Audit – No such restrictions • Rotation – within 3 years (on or before

31st March, 2017 • App. Of Internal Auditor – 30th Sept. 14


Not Applicable in following cases

OPC and Small

Companies

Unlisted public

companies with PuC of less than 10

crores

Private Limited

Companies with PuC of less than 20

crores

With public borrowings

from FI, banks or

public deposits of

less than 50 crores


Company / Holding / Subsidiary / Associate

Auditor, partner or relative

• Securities of the value 1 lacs or more • Indebtedness five lacs or more • Guarantee or security – 1 lac or more

Direct /Indirect business relationship •AtoC - Except professional services allowed by auditor • CtoA - Sale of products or services to auditor in ordinary

course of business at arm’s length price (hospital /telecom/airlines/hotels/similar businesses

Relative being Director or in employment as Director or KMP Any related entity rendering services u/s 144 or into consulting

Cooling period of 10 years - Conviction of fraud


Listed and Other Companies having >200 members -ProviC7R22 • Postal ballot also includes voting by

electronic means (1) • Period – 30 days (1) • Mode of Dispatch: RP, SP, Courier or

through e-means as registered e-mail Id (2)

• Placing the Notice on website during process (4)

• Placing the result and report on website (13)


Businesses to be transacted • Alteration of Objects Clause • Existing –Alteration of Main Objects • Alteration in Articles in relation to Buy Back of

Securities S68(2) • Change in place of Registered Office outside the

local limits of any city, town or village S12(5) • Change in objects for which money has been

raised from public through prospectus S13(8) • Issue of Shares with differential rights S43(a)(i)


Businesses to be transacted – Contd. • Variation in the rights attached to shares, deb or

other securities S48 • Buy-back of shares S68(1) • Election of Small Shareholder Director S151 • Sale of Whole or substantially Whole of the

undertaking S180(1)(a) • Giving Loans or extending guarantee or providing

security in excess of the limits prescribed S186(3)


ID CXI R24

Listed Company(2/3rd ID)

Public Companies(2 ID)

PuC of 10Cr or more

Turnover of 100 Cr or

more

Aggregate o/s Loans, debentures & deposits 50 Cr

or more AJAY GARG

Team AGBians

• Declaration by the ID in the Ist Board Meeting • Disclosure of Interest • Appointment of Id at the meeting of

shareholders • Letter of Appointment is mandatory • T & C of appointment of ID – posted on the

website portal • Reappointment of ID – basis of report of

performance evaluation done by Board • Atleast One Separate Meeting for ID for

reviewing the performance


Applicability – Every Company S196 Sch V Part I & III

KMP – Listed and Other Public Co. (PuC 10 Cr) S203CXIIIR8

Appointment ≤ 5 Years at a time.

Re-appointment not earlier than 1 yr before expiry

Appt. subject to approval by Shareholders in GM and CG in case of variance in conditions specified

Return in Form MR-1 within 60 days CXIIIR3

Qualifications in Sch V AJAY GARG Team AGBians

E- Voting

Listed or 1000 plus shareholders

AGM / EGM

Special / Ordinary Business

Special / Ordinary Resolution

E-voting / Physical Voting

Engaging Portal Owner

FAQ to Shareholders

Aligning with Clause 35 of LA AJAY GARG

Team AGBians

CA / CS / CoA /Adv

Scrutinizer / Alternate Scrutinizer Resolution for appointment for GM including e-voting

Expert Assistant to Scrutinizer Not in Employment

For E and P voting both Standalone and Consolidated Report

Time Schedule aligning with GM AJAY GARG

Team AGBians

Prescribed in many Sections

Applicable to All and Sundry

Matters involving Shareholders

Matters Requiring Public Notice

E-voting / Poll / Postal Ballot

Before and After the Meeting

Policies / Mechanism

Performance – Fin. And Non-fin. AJAY GARG Team AGBians

Any Unsecured loan from shareholders, relative of Directors and other individuals as on 1st April, 2014 -covered under deposit as Deposit Rules, 2014

ICD and Loan from Directors not included in the definition of Deposits

To file return in DPT-4 within 3 months

To repay the dues within 1 year

Extension of repayment time by Tribunal

Penalty – 1cr to 10 Cr on Company and OiD 1 to 7 years imprisonment 25l to 2cr fine or both AJAY GARG

Team AGBians

Way Outs – Suggested in Companies (Acceptance of Deposit) Rules, 2014 – Read carefully Clause 2(c) Exceptions (i) to (xiv).

In particular refer to (vi) (viii) (x) (xi) (xiii)

ICD, Loan from Directors, not included in the definition of Deposits

Take letter form Bank for not withdrawing these amounts until repayment of loans


Audit Committee(3 or more Directors, Majority of ID) S177 Applicability: Listed Company Public Companies PuC =/>10 Cr. Turnover =/>100 Cr. O/s Loans or borrowings from FI, Banks =/>50 Cr.

CSR Committee(3 or more Directors, 1 ID) S135 Applicability: Every Company having Net Worth: ≥500Cr. Turnover: ≥1000Cr. Net Profit: ≥ 5Cr.

Nomination & Remuneration Committee (3 or more non-Executive Directors, ½ ID) S178 Same criteria as in AC

Stakeholders Relationship committee(Chairperson-NE) S178 ≥1000 Security / Shareholders


Write to mcahelpdesk

Raise the ticket for individual problems

E-mail the difficulty to MCA officers involved in project: Mr. Sanjay Gupta @; Mr. Anil Kumar Bhardwaj @

Write to officers of Infosys [email protected] / [email protected] AJAY GARG

Team AGBians

mailto:[email protected]

mailto:[email protected]

1. Important observation made by Hon'ble Bombay High Court in the matter of Godrej Industries Limited on the "effectiveness" of rules prescribed by MCA under Companies Act, 2013. As many MCA rules are not available, hence in the opinion of the court they are not binding so far or at least from 1st April 2014 and till such time as these rules are gazette, or there is some provision made for the dispensation of official gazette notification, none of the rules in the Ministry of Corporate Affairs PDF document that are not yet gazette can be said to be in force.”

Bombay high court in scheme of amalgamation between Wadala Commodities Limited with Godrej Industries Limited

dated 8/05/14


2. All provisions for compulsory voting by postal ballot and by electronic voting to the exclusion of an actual meeting cannot and do not apply to court-convened meetings. At such meetings, provision must be made for postal ballots and electronic voting, in addition to an actual meeting. Electronic voting must also be made available at the venue of the meeting. Any shareholder who has cast his vote by postal ballot or by electronic voting from a remote location (other than the venue of the meeting) shall not be entitled to vote at the meeting. He or she may, however, attend the meeting and participate in those proceedings.

Bombay high court in scheme of amalgamation between Wadala Commodities Limited with Godrej Industries Limited dated 8/05/14


Ajay Garg

Team AGBians

[email protected]

www.agbcorplegal.com

09811386723

http://www.agbcorplegal.com/

Practical approach to Indian Company Law

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