Provisions of Companies Act, 2013 & Clause 49 of Listing Agreement DIRECTORS.

Provisions of Companies Act, 2013 & Clause 49 of Listing Agreement DIRECTORS

Company To Have Board of Directors (S. 149) Companies Act, 1956Section 149 -Companies Act,2013 (Notified w. e. f. 1 st April, 2014) Minimum Number Of Directors Private Company At least 2 Directors Public Company 3 Directors One Person Company No Concept Private Company 2 Directors Public Company 3 Directors One Person Company 1 Director Maximum Number Of Directors 12 Directors15 Directors Can appoint more than 15 directors after passing a Special Resolution

Resident Director & Woman Director (S. 149) Resident Director: Every Company to appoint at least 1 Resident Director who has stayed in India for not less than 182 days in Prv. Calendar Year. Woman Director: Every Listed Company; Every Unlisted Public Company- Paid up Share Capital of Rs. 100 Crore or more, or Turnover of Rs. 300 Crore or more (as on the last date of latest audited financial statements) Existing company covered under the limits shall appoint at least 1 Woman Director within 1 year from the 1 st April, 2014. Vacancy of a woman director shall be filled-up by the Board latest by the next Board meeting or whichever is later 3 Months from the date of such vacancy

Independent Director (S.149) Companies to appoint Independent Directors: Every Listed Company - at least 1/3 rd of the Total Number of Directors Every Public Company having- Paid up Share Capital, of Rs. 10 Crore or more; or Turnover Rs. 100 Crore more; or In aggregate, Outstanding loans, debentures and deposits, exceeding Rs. 50 Crore. atleast 2 Independent Directors (as on the last date of latest audited financial statements) If any of 3 condition cease for 3 consecutive years then not required to comply with this provision until this condition meet.

Independent Director (S.149) Existing company covered under the limits shall appoint Independent Director within 1 year from the 1 st April, 2014. If a Company is required to appoint higher number of Independent Directors; for composition of Audit Committee: such higher number is applicable to the Company. Declaration of Independence to be given by the Independent Director at 1 st Board Meeting, in which he participates 1 st Board Meeting of every Financial Year, Whenever there is change affecting his status as an Independent Director

Who can be an Independent Director? (S.149(6)) Executive and Nominee Director and Person below the age of 21 years not to be appointed as ID Every person to be appointed as ID must fulfill the requirements laid out under section 149(6) of the Companies Act, 2013 An independent director must possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the companys business.

Independent Director (S.149) Provisions applicableCompanies Act, 2013 Terms of officeMaximum of 2 Consecutive Terms of 5 Consecutive Years each. Appoint for 1 st TermAppointed by the Board; appointment to be approved by the Shareholders Re-appoint for 2 nd TermBy passing a Special Resolution and disclosure in the Boards Report After expiration of 2 TermsCooling off period of 3 years for next term RestrictionDuring 3 years should not be appointed in or be associated with the company in any other capacity, either directly or indirectly ProhibitionStock options ExcludeMD, WTD & Nominee Director

Independent Director (S.149) Companies Act, 2013 Limit on Independent Directorship No such provision (as per the Clause 49: Maximum 7 Listed Companies; if acting as a WTD in any Listed Company then Maximum 3 Listed Companies) Retire by RotationNot Liable Intermittent VacancyNot later than immediate BM or 3 months from date of such vacancy; whichever is later Resignation or RemovalAn Independent Director who resigns or is removed; to be replaced by New Independent Director within 180 days from resignation or removal Separate MeetingAs per Schedule IV - At least 1 Meeting in a year; all the independent directors shall present. Sitting Fees, & reimbursement of expenses; and Profit related Commission Can be paid. Commission payment subject to members 'approval.

Independent Director (S.149) Liability of Independent Director and Non Executive Director is distinguished from rest of the board. Independent Director and Non Executive Director shall be held liable, Acts of omission or commission by a company which had occurred: With his knowledge, attributable through board processes, and With his consent / connivance / not acted diligently (MCA vide General Circular No. 14-2014 dated 09-06-2014: Clarified many issues relating to independent directors pecuniary interest, appointment etc.)

Schedule IV: Code of Independent Directors The Company and Independent Director to fulfill the requirements of Schedule IV. This code is a guide to professional conduct for Independent Directors This code provides in detail: Guidelines for professional conduct Role and Functions Duties Manner of appointment Resignation or Removal Separate Meetings Evaluation Mechanism

Appointment of Director (S. 152) Save as otherwise provided every Director of the Company is to be appointed in the General Meeting Every person proposed to be appointed as a Director has to submit DIN, a declaration of his Qualification & his Consent in Form No. DIR-2 Every Company has different kind of Directors: First Directors: As per the Articles if not provided then, Subscriber to the Memorandum are deemed as First Directors Additional Directors (S. 161(1)): Appointed by Board: as per the provisions of Articles. Hold office upto the next AGM. Appointment if not regularized at AGM, then Directorship ceases.

Appointment of Directors Contd. Alternate Director (S. 161(2)): Appointment by Board; as per the provisions of Articles or Shareholders Resolution; in place of a director, who stays out of India for more than 3 months Appointee cannot hold alternate directorship for any other director in the same Company. Alternate Director to any Independent Director should also qualify to become an Independent Director, and fulfill criteria u/s 149(6). To vacate office: on expiry of Period permissible to the Original Director or original director Returns to India. Nominee Director (S. 161(3)): As per the Articles the Board may appoint any person as a director nominated by any institution in pursuance of law or any agreement or CG or SG by virtue of their shareholding.

Appointment of Directors Contd. Director Appointed in Casual Vacancy (S. 161(4)): Vacancy created due to Death / Resignation / removal/ disqualification: be filled by the Board at its Meeting only To hold office only up to the date the Original Director would have hold office. Appointment of Person other than Retiring Director (S. 160): A person other than Retiring Director can be proposed to be appointed as a Director at any General Meeting; if: Notice proposing his candidature given by himself or any other member, 14 days before the meeting along with a Deposit of Rs. 1 Lac. If the resolution for appoint fails to get 25% or more vote, the amount of deposit is forfeited.

Appointment of Directors Contd Small Shareholders Director (S. 151): A Company may on its own or upon notice from Small Shareholder of either: 1000 or more shareholders; or which ever is lower, appoint a small 1/10 th of the total number; shareholders director Proportional Representation (S. 163): If articles permit; 2/3 rd of the total directors can be appointed through Proportional Representation Appointment of Directors To Be Voted Individually (S. 162): At a General Meeting a Single Resolution for appointment of 2 or more persons as Directors not to be passed unless:- the passing of the same has been agreed upon earlier with out a single vote cast against such decisions. Resolution in contravention of the above to be void

Retirement by Rotation (S. 152) Retirement by Rotation (Applies to Public Company) If Articles specifically states- All the Directors shall retire at every AGM. Otherwise:- 2/3 rd of the Total Number of Directors (does not include Independent Director) to be Rotational; Of the above 2/3 rd, 1/3 rd to retire at the every AGM. Who is to retire:- (i) Who have been longest in office, (ii)Where appointed on the same day: Subject to Agreement amongst themselves, be determined by lot.

Vacancy of Retiring Director (S. 152) Filled at AGM by appointing the retiring Director himself or some other person. If not filled-up & not expressly resolved not to fill up: meeting adjourned Still undecided at the adjourned meeting; then the Retiring director shall be deemed to be reappointed unless - A resolution for the re-appointment of such director has been pu to the meeting and lost. Unwillingness to be re-appointed. Disqualified for appointment. A resolution, whether special or ordinary, is required, or Section 162 (Appointment of Directors to be voted individually) is applicable to the case.

Resignation of Director (S. 168) Notice in writing to Company along with Copy of Resignation letter; Director to file Form DIR 11 with the Registrar with resignation letter and detail reason for resigning with 30 days. Company shall intimate to the Registrar within 30 days of date of receipt of resignation in Form DIR 12. Resignation effective from i) Date of receipt by the company, orWhich ever ii) specified by the Director in the noticeis Later Director shall be liable for the offences which occurred during his tenure. If all the Directors resigns The Promoters or Central Government shall appoint other Directors.

Removal of Directors (S. 169) By passing an Ordinary Resolution: remove a Director before the expiry of his term giving him reasonable opportunity of being heard. But cannot remove Director appointed by Tribunal. Special notice by members required for removal of the Director & to appoint another person as Director in place of the Director so removed. Vacancy to be filled up by giving special notice or at Board meeting. Appointed Director shall hold office till the period of preceded Director. The Company to pay compensation or damages to the Director so removed.

Vacation of Office of Director (S. 167) An office of Director to be vacant if he: Incurs disqualification u/s. 164 (Disqualification of Directors). Absent from All Board Meeting during 12 Months (without leave if absence). Contravenes the provisions of entering Contracts or Arrangement in which he is interested (directly or indirectly). Fails to disclose interest in the above mentioned contracts or arragements Disqualified by an order of the Court or Tribunal. Convicted for an offence involving Moral Turpitude Imprisonment for not less than 6 months. Removed in pursuance of this Act. If he is appointed as a Director by virtue of his position in and is ceased from holding, subsidiary or associate company. Punishment to Director who functions as such after knowing his office is vacant: Imprisonment extend to 1 Year or Fine of not less than Rs.1 Lac but extend to Rs. 5 Lacs; or With Both If all the Directors vacate The Promoters or CG shall appoint other Directors. Private Company may by its Articles add other condition in addition to the above.

Disqualifications of Directors (S. 164) Applies to both Public & Private Companies; Private Companies may by its articles add grounds for disqualification in additions to those given below) A person shall not be eligible for appointment as a Director of a company if he is: Disqualification 4., 5., & 6. shall not take effect: 30 days from the date of conviction or order Appeal or petition preferred within 30 days until expiry of 7 days after the disposal of petition Any further appeal preferred until the disposal of such appeal 1. Unsound Mind & declared so by competent court 2. Undischarged Insolvent 3. Applied to be adjudicated as Insolvent and application pending 4. Convicted by court of offence involving moral turpitude Imprisonment of not less than 6 months: till the time 5 years have not elapsed since the expiry of the sentence Imprisonment of 7 years or more: not eligible ever 5. Order disqualifying him has been passed and the order is still in force 6. Calls remained unpaid for last 6 months since called: shares held either singly or jointly 7. Convicted of offence involving RPT (S. 188) at any time during the last 5 years 8. Has not complied with provisions of S. 152 (3) (not been allotted DIN)

Disqualification of Directors (S. 164) Contd A person who is a Director of the Company which has: Not filed Financial St. or Annual Return for a continuous period of 3 FY. failed to repay deposits or interest thereon or redeem debentures or interest thereon or pay declared dividend for continuous period of 1 year or more. Director of such Company to be disqualified for a period of 5 years form the date the company fails to do so. Where company fails to do any of the above, it shall intimate the ROC in form DIR 9 Directors to intimate to other Companies; about his disqualification (if any) in Form DIR-8 before he is appointment or re-appointment An application for removal of disqualification of Director to be made in Form DIR 10

Number of Directorships (S. 165) Hold Directorship in not more than 20 Companies at the same time(including alternate directorship). Maximum in 10 Public Companies include Holding / Subsidiary. By Special Resolution members can specify any lesser number of Companies in which the director may act as such. If more than 20 Companies Choose within limits in which to continue. Resign from other Companies. Intimate the Companies and Registrar. Within 1 Year from the Commencement of this Act. Resignation shall become effective immediately. Punishment: Fine not less than Rs. 5,000 but extend to Rs. 25,000

Duties of Directors (S. 166) i) Act in accordance with the Articles of the company. ii) Act in good faith. iii) Exercise due & reasonable care & diligence; and independent judgment. iv) Not involve in conflicts of interest with the Company. v) Shall not achieve undue advantage either to himself ort his relatives. vi) Shall not assign office. vii) Punishment where the Director fails to fulfill the duties Director fine not be less than Rs. 1 Lac but extend to Rs. 5 Lacs.

Register of Directors and KMP and their Shareholding & Members right to inspect (S. 170 & 171) Register to be kept at Registered Office: containing particulars of directors &KMP & shall include details of securities held by them in the Company, its Hold Co., Subsi. Co., Asso. Co. A return containing particulars of appointment of Director or KMP and changes therein to be filed with the Registrar in Form DIR 12: within 30 days of such appointment of any change therein Register shall be open for inspection during business hours. Members shall have a right to take copies of the Register Register shall be kept open at every AGM & be accessible to person attending the meeting. If inspection refused or copies not sent: the Registrar shall on application made to it, order for immediate inspection or supply of copies.

Meetings of Board (S. 173) AS per Companies Act, 2013 Section 173 (Notified w.e.f.1 st April, 2014.) As per Listing Agreement AS per Companies Act, 1956 Section 285 First Board Meeting Within 30 days of Incorporation Not requiredNo provision in Sec. 285 but as per Sec. 224 (5) within 1 month Minimum Number of Board Meetings Every Year - 4 Board Meetings Every Year - 4 Board Meeting Once in Every 3 Months; and Every Year - 4 Board Meeting Maximum time gap between 2 Board meetings 120 daysMaximum time gap of 120 days No such Requirement Notice of Board Meeting Not less than 7 Days (Shorter Notice: least 1 Independent Director present) As per Clause 41: 7 clear calendar days prior to the meeting for Consideration of Financial Results) No such Requirement

Meetings of Board (S. 173) Notice of the Board Meeting shall be sent to all the Directors. Directors can attend the meeting either: Personally ;or Video Conferencing; or Any other Audio Visual Means Incase of less than 7 days notice (shorter notice) to transact urgent business at least 1 independent director to be present at the meeting. Incase of absence of Independent Director decision taken at the meeting called on shorter notice shall be circulated to all the directors and ratified by at least 1 Independent Director. Default Every responsible officer shall be liable to Fine of Rs. 25,000

Quorum (S. 174) 1/3 rd of the Total Strength or 2 directors whichever is higher. Total Strength not to include: directors whose places are vacant. Any fraction of a number shall be rounded off as one If Interested Directors are more than or equal to 2/3 rd ; not less than 2 Non interested Directors present at the meeting shall be the quorum. Directors who participate by video conferencing or by other audio visual shall also be counted in Quorum. Adjourned Meeting to be held next week, same day, time & place. If that day is a National Holiday, then meeting to be held on next Succeeding Day. If Number of Directors reduced below the quorum then continuing director/s to act only for the purpose of Increasing the number of directors to that fixed for the quorum, or Calling a general meeting of the company

Passing of Resolution by Circulation (S. 175) The Resolution considered as passed at a Meeting of the Board / Committees if- It is circulated in draft along with necessary papers Send to all Directors / committee members Approved by Majority of the directors or committee members to entitled to vote. A resolution shall be noted at a subsequent meeting of the Board or the committee and made part of the minutes of such meeting.

Defects in appointment of Directors not to invalidate actions taken (S. 176) Where after appointment of Director it is noticed that appointment of Director was invalid for the following reasons: any defect or disqualification or terminated by any provision contained in this Act or in the Articles of the company. It shall not invalidate any Act done by such Director However, any act by the Director after the Company noticing that his appointment is invalid, shall be void and invalid.

Audit Committee (S. 177) Section 177 -As per Companies Act, 2013 As per Listing Agreement clause 49 Section 292A -As per Companies Act, 1956 Applicable toEvery Listed Company, Every Public Company - (i) Paid up Share capital of Rs. 10 Crore or more; or (ii) Turnover of Rs. 100 Crore or more; or (iii) In aggregate, outstanding loans or borrowings or debentures or deposits Rs. 50 crore or more. (as on the date of latest audited financial statements) Every Listed CompanyEvery Public Company having Paid up Share capital of Rs. 5 Crore or more ConstitutionMinimum 3 Directors with majority independent directors. (Existing company covered under the limits shall reconstitute within 1 year from the 1 st April, 2014.) Minimum 3 Directors at least 2/3 rd independent directors. 1 member to have financial management expertise Minimum 3 Directors & 2/3 rd shall be Directors other then Managing Director or Whole Time Director

Audit Committee (S. 177) Section 177 -As per Companies Act, 2013 As per Listing Agreement clause 49 Section 292A -As per Companies Act, 1956 Chairman of the Audit Committee shall attend the AGM No ProvisionPresent at AGM to answer shareholder queries Attend the AGM to provide clarification on matters relating to audit MeetingNo RequirementAt lest 4 times in a year and not more than 4 months elapse between 2 Meetings. No Requirement QuorumNo Requirement2 members or 1/3 rd of the total number of members present (atleast 2 Independent Members present) No Requirement Disclosure in Boards Report (i)Composition of Audit Committee. (ii)Recommendation of Audit Committee not accepted then disclose reason No such provision

Vigil Mechanism (S. 177) Section 177 -As per Companies Act, 2013 As per Listing Agreement clause 49 Section 292A -As per Companies Act, 1956 Establishment of Vigil Committee New Concept (i) Every Listed Company, (ii) Every other Company - (a) accept deposits from the public; (b) borrowed money from banks and PFI more than Rs. 50 crore. Whistle Blower (a non mandatory item as per Clause 49) is now made mandatory, in the name of Vigil Mechanism No such provision Disclosure of details of establishment (i)On Website (ii)Boards Report (i)On Website (ii)Boards Report No such provision Punishmenta.Company - fine - > Rs. 1 Lakh but extend to Rs. 5 Lakh and b. Every officer - (i) imprisonment extend to 1 year or (ii)fine - >Rs. 25,000 but extend to Rs. 1 Lakh,or with both No such provisiona.Company and b.every officer (i) Imprisonment - extend to 1 year, or with (ii) Fine - extend to Rs. 50,000, or with both.

Nomination & Remuneration Committee (S. 178) Applicable to a. Every Listed Company, b. Every Public Company (i)Paid up Share capital of Rs. 10 Crore or more; or (ii)Turnover of Rs. 100 Crore or more; or (iii)In aggregate, outstanding Loans or Borrowings or Debentures or Deposits of Rs. 50 crore or more. Constitute (i)3 or more Non Executive Directors out of which not less than to be Independent Directors. (ii)Chairman of the Company not to be a chairman of the Committee but can be appoint as member.

Nomination & Remuneration Committee (S. 178) Continued Role (i)Formulate policy and recommend to Board on Co.s policies pertaining to remuneration of directors, KMP, other employees, (ii)criteria for determining qualifications, positive attributes and independence of directors (iii)Evaluate every directors performance Attend General Meeting Chairman of the Committee or in absence of him any other member of the committee authorised by him in this behalf. Punishment - a. Company fine - not less than Rs. 1 Lakh but extend to Rs. 5 Lakh and b.Every officer (i)imprisonment extend to 1 year; or or (ii)fine - not less than Rs. 25,000 but extend to Rs. 1 Lakh with both

Stakeholders Relationship Committee (S. 178) Applicable to Every Company consisting of more than 1000 Shareholders, Debenture holders, Deposit holders and any other Security holders at any time during a financial year. It is not clear whether 1000 holders, or of a single category. Composition (i)Members as may be decided by the Board and (ii)A chairman of the meeting shall be a Non Executive Director. Role - Consider and resolve the grievances of security holders of the company Cl.49 provides for wider scope. Attend General Meeting Chairman of the Committee or in absence of him any other member as may be authorised. Punishment for violation- a. Company: Fine - not less than Rs. 1 Lakh but extend to Rs. 5 Lakh b. Every officer: Imprisonment extend to 1 year, or with fine - not less than Rs. 25,000 but extend to Rs. 1 Lakh, or with both

Powers of Board and Restrictions (S. 179 & 180) Powers to be Exercised by Board only at its meetings (Sec.179) : power to make calls on shareholders power to authorise the buy back Power to borrow monies Invest the funds of the company Issue securities, including debentures in India or outside India Diversify the business of the company Grant loans or give guarantee or security approve financial statement and the Boards report approve amalgamation, merger or reconstruction Take over, Acquire a controlling or substantial stake Make Political contributions Appoint Internal & Secretarial Auditor Invite or Accept or renew public deposits and related matters Appoint or remove KMP Note of the disclosure of directors interest and shareholding Review or change the terms and conditions of public deposit Take note of appointment or removal of one level below the KMP Buy, sell investments held by the company constituting 5% or more of the paid up share capital + free reserves of the investee company Approve quarterly, Half yearly and annual financial statements or results as the case may be

Powers of Board& Restrictions (S. 179 & 180) Powers of the Board to borrow money, give loans, give guarantee, provide security; and invest funds can be delegated Shareholders approval by Special Resolution required for exercising the following powers: To Sell, Lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company. (Undertaking means Investment exceeds 20% of the Networth or generates 20% of the total income during the Previous FY) (substantially the whole of the undertaking means 20% or more of the value of the undertaking ) To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation. To borrow money together with the money already borrowed by the company will exceed aggregate of its paid-up share capital + free reserves apart from temporary loans. To remit or give time for the repayment of any debt due from a director.

Other Restrictions: Contribution to bona fide and charitable funds Political Contributions (S. 181 & 182) Contribution to Charitable Funds: Contribution is < 5% of Average Net Profit of last 3 FY: Shareholders approval not required, Board can decide Contribution is >5% of Average Net Profit of last 3 FY: Shareholders approval to be taken Political Contributions: Company may contribute directly or indirectly to any political party other than Government Company and Company in existence for > 3 financial years Contribution is < 7 % of Average Net Profit of last 3 FY: Shareholders approval not required, Board can decide Contribution is > 7 %of Average Net Profit of last 3 FY: Shareholders to be taken Punishment - (i)company - Fine - extend to 5 times the Amount so contributed, and (ii)every officer - Imprisonment - Extend to 6 months; & Fine Extend to 5 times the amount so contributed.

Power of Board and other persons to make contributions to national defence fund, etc. (S. 183) The Board of Directors of any company or Any person or authority exercising the powers of the Board of Directors of a company, or the company in general meeting, may: Contribute to the National Defence Fund or any other Fund approved by the Central Government for the purpose of national defence.

Disclosure of interest by Director (S. 184) Meaning of Interested Director: as defined u/s 2(49): a Director who ; by himself or through relatives; or firm or Body Corporate or association of persons in which the Director or his relatives is partner /Director / Members Interested in a Contract / Arrangement : entered or to be entered by the Company Every director shall disclose his concern or interest in (i)Any Company or (ii)Bodies Corporate, (iii)Firms, or (iv)Other Association of Individuals which shall include the shareholding

Disclosure of Interest by Directors (S. 184) Disclose concern or interest (including shareholding)- (i)At the 1 st Meeting of the Board in which he participates as a director and (ii)At the 1 st Meeting of the Board in every financial year and (iii)Whenever there is any change, then at the 1 st Board meeting after such change. Every Director who is interested in the contract or arrangement (directly or indirectly), that a company enters in to with A Company: in which director (single or with other director) hold more than 2% shareholding or is promoter or CEO A firm or other entity in which the director is a partner or owner or member To disclose interest at the meeting and shall not participate in the meeting Director shall disclose his interest in Form MBP-1. Punishment: Director: Imprisonment for a term upto 1 year; or with Fine not less than Rs. 50,000 but extend to Rs. 1 Lakh, or with both.

Loan To Directors (S. 185) Public and private companies cannot give any loan or provide any security or guarantee whether directly or indirectly in connection with a loan to a Director or any person in whom the director is interested Persons in whom the director is interested Director Lending Company or Holding Company Relative or Partner Firm Director or Relative is a Partner Private Company Director is a Director or Member Any Body Corporate > 25% of the Total Voting Power exercised or controlled by any such director or by 2 or more Director Directions or Instructions by any director of the lending company

Loan To Directors (S. 185 ) Loan can be given - (a)To MD & WTD : (i) as a part of Service condition extended by company to all its employees; or (ii) Scheme Approved by the members by a special resolution; or (b)By a Company which in ordinary course of business provide loan, & interest rate not less than the bank rate declared by the RBI. Nothing in this section to apply to: Any loan/guarantee/security provided by a Holding. Co. to / for its wholly owned subsidiary. Any guarantee given or security provided by a holding company in respect of loan made by bank or FI to its Subsidiary Company. Such loans must be utilized by the Subsidiary for its principle business activities Punishment - (i)Company - Fine not less than Rs. 5 Lakh but extend to Rs. 25 Lakh, and (ii)Director or Other Person - Imprisonment - Extend to 6 Months; or with Fine of not less than Rs. 5 Lakh but extend to Rs. 25 Lakh; or with both.

Loan & Investment by Company (S. 186) Company can not Directly or Indirectly - Make loan or Guarantee or Security to any person or body corporate, or acquire securities by way of subscription or other wise, of any other body corporate up to following limits: (A) (i)60% of paid-up share capital + free reserves + Which securities premium account, or ever is (ii) 100% of more free reserves + securities premium account (i)Unanimous Board Resolution (B) (i)> 60% of paid-up share capital + free reserves + Which securities premium account, or ever is (ii) > 100% of more free reserves + securities premium acct (i)Unanimous Board Resolution (ii)Prior Approval by Special Resolution (C ) Prior approval of Public Financial Institution where term loan is subsisting, if falling within (B) above: and Prior approval of PFI is required in case of (A) above, only if default in repayment of loan installments or payment of interest thereon is made.

Loan & Investment by Company (S. 186) Company to disclose in the FS: full particulars of loan given or guarantee or security provided utilization of funds Rate of Interest can not be less than Prevailing yield of 1 Year, 3 Years, 5 Years or 10 Years Government Security closest to the tenor of the loan Company Can invest only through 2 layers of investment companies, subject to Exceptions (i)company can acquire company incorporated outside India which has more than 2 layers of investment subsidiaries (ii)Subsidiary Company can have investment subsidiary for meeting the requirements of law. Company in default in Repayment of any Deposit or Interest not to give loan or guarantee or make acquisition till default is subsisting.

Loan & Investment by Company (S. 186) Exemption withdrawn form: (i)Private Company (ii)Investment / loan / guarantee by holding company to subsidiary company. Exemption to Make loan or give Guarantee or provide Security - (i)Banking Company, (ii)Insurance Company, (iii) housing finance company (iv)Company engaged in business of financing companies (v)Company providing Infrastructural facility Any Acquisition by- (i)NBFC, (ii)Company whose principal business is acquisition of securities, (iii)Right issue (iv) *Banking, Insurance or Housing Finance Company *MCA inserted vide Companies(Removal of Difficulties)Order,2015 dated 13/02/2015

Loan & Investment by Company (S. 186) Where a Company gives loan or guarantee or security or makes acquisition of securities to/of its wholly owned subsidiary or joint venture company, Company is not required to obtain approval of the shareholders even if the above said limits have crossed. Company required to maintain a Register of Loan, Guarantee & Security, which is to be kept open for inspection and extracts to be given at such fees as prescribed MCA vide General Circular No. 15-2014 dated 09-06-2014 clarified that registers maintained by the Companies pursuant to section 372A need not rewrite the register into the New Format (MBP2), entries on or after 01-04-2014 are to be made as per the new format. Punishment - (i)Company - Fine not less than Rs. 25000 but extend to Rs. 5 Lakh, and (ii)Director or other person- (a) Imprisonment - Extend to 2 years; and with (b) Fine not less than Rs. 25000 but extend to Rs. 1 Lakh

Investments of Company to be held in its own name (S. 187) All investments held by a company in any property, security or other asset shall be made and held by it in its own name. If the Company holds shares in its subsidiaries in others names, then maintain a Register in Form MBP 3 The Register shall be kept open for members or debenture-holders inspection at free of cost during business hours. Punishment - (i) Company - Fine not less than Rs. 25,000 but extend to Rs. 25 Lakh, and (ii) Every Officer (a) Imprisonment - Extend to 6 months, or with (b) Fine not less than Rs. 25000 but extend to Rs. 1 Lakh, or with both

Related Party Transactions (S. 188) Transactions by Company whether directly or through appointment of agent Limits {transaction wihtin the limit : Board Resolution Where the limit exceeds: Prior approval of Shareholders by Special Resolution} (a) Sale, purchase or supply of any good or materials 10% of the Turnover or 100 Crore Rupees; which ever is lower (b) Selling or otherwise disposing of or buying property of any kind 10% of Networth or100 Crore Rupees, which ever is lower (c) Leasing of property of any kind10% of Networth or 10% of Turnover or 100 Crore Rupees which ever is lower (d) Availing or rendering of services10% of Turnover or 50 Crore Rupees which ever is lower The above limit to apply to transaction entered either individually or taken together with previous transactions during the year e) Appointment to any office or place of profit in company, subsidiary or associate Monthly remuneration of 2.5 lakh Rupees Underwriting subscription of any securities or derivatives Remuneration of : 1% of Networth

Appointment of Key Managerial Personnel (S. 203) MD and CFO should not be appointed as Chairman unless- (i) provided in the Articles of Association, or (ii) Companies not having multiple businesses {The above provisions not to apply to public companies engaged in multiple business and have appointed 1 CEO for each business and has Paid up Share Capital 100 crores or more & Annual Turnover of 1000 crores or more: MCA vide Notification No. SO 1913(E) dated 25/07/2014} Except in Subsidiary Company Whole-time KMP shall not hold office in more than 1 company at the same time; (within a period of 6 months from 1 st April, 2014 choose one company) In case of casual vacancy office of KMP shall be filled up within 6 Months. Punishment (i)Company Fine - > Rs. 1 Lakh but < Rs. 5 Lakh (ii)Director & KMP Fine extend to Rs. 50,000 If Continuing Rs. 1,000 per day.

Secretarial Audit (S. 204) Secretarial Audit applicable to- (a) Every Listed Company (b) Every Public Company - (i) Paid-up Share Capital of Rs. 50 Crore or more; or (ii) Turnover of Rs. 250 Crore or more. The Secretarial Audit Report to be in Form No. - MR.3. If any qualification or observation or other remarks of the company secretary in practice, the Board of Directors, in their report shall explained in full. Punishment (i)company, or (ii)any officer of the company, or (iii)the company secretary in practice, fine not less than Rs. 1 Lakh but may extend to Rs. 5 Lakh.

Thank You!!!! By Haresh Jani & Associates Company Secretaries

Provisions of Companies Act, 2013 & Clause 49 of Listing Agreement DIRECTORS.

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Transcript of Provisions of Companies Act, 2013 & Clause 49 of Listing Agreement DIRECTORS.