COMPANIES ACT,2013

1. COMPANIES ACT,2013 • By • CA PUNKAJ JAIN

2. TOPICS FOR DISCUSSIONS SHARE CAPITAL & DEBENTURES MANAGEMENT & ADMINISTRATION APPOINTMENT & QUALIFICATION OF DIRECTORS MEETINGS OF BOARD AND ITS POWERS APPOINTMENT & RENUMERATION OF MANEGERIAL PERSONNEL

3. SHARE CAPITAL & DEBENTURES

4. TYPES OF SHARE CAPITAL • Total Share Capital Includes aggregate of : (a) paid up equity share Capital (b) Convertible preference share Capital

5. SHARE CAPITAL • Tenure of Redeemable Preference Shares - 20 years [For defined infrastructural projects, tenure can be exceeding 20 years]; • Requirements of Further Issue of Share Capital applicable to all Co’s.; • Provision of ESOP at time of issue of further capital subject to approval of shareholders by special resolution; • Pricing of preferential issue determined by Registered valuer;

6. PROHIBITION OF ISSUE OF SHARES ON DISCOUNT [S.53] • Except as provided in section 54, a company shall not issue shares at a discount. • Any share issued by a company at a discounted price shall be void. PENALTY: Fine-1 lac up to 5 lac Officer in default – Imprisonment of 6 months orfine –1 lac up to 5 Lac Or Both

7. ISSUE OF SWEAT EQUITY SHARES [U/S 54] • No shares can be issued at discount except sweat equity Shares; • Special Resolution in General Meeting required [Validity :- Not more than 12 months ]; • Employee & Value Additions defined in Rules; • Limit of Sweat Equity :- Not more than 15% of existing paid up equity share capital in yr or shares of the Issue value of Rs. 5 Cr, whichever is higher. [Overall Limit :- 25% of Paid up Equity capital of Co. at any time].

8. ISSUE OF BONUS SHARES [ S.63] A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of— • Free reserves; • Securities premium account; or • Capital redemption reserve account No issue of bonus shares shall be made by capitalizing reserves created by the revaluation of assets The bonus shares shall not be issued in lieu of dividend Company once announced the decision of its Board recommending Bonus Issue, cannot withdraw the same

9. ISSUE OF BONUS SHARES SHALL SUBJECT TO:- • No company shall capitalize its profits or reserves for the purpose of issuing fully paid-up bonus unless:- • Authorized by its articles; • Recommendation of the Board, been authorized in the general meeting of the company; • Not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it; • Not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus; • The partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up.

10. DEBENTURES [ S. 71] • Issue of debentures with an option to convert into shares, either wholly or partly at the time of redemption with approved by a special resolution passed at a general meeting. • No issue of debentures carrying any voting rights. • Creation of debenture redemption reserve account and the amount shall be only used for the redemption of debentures. • No company shall issue a prospectus or make an offer or invitation to the public or to its members exceeding five hundred for the subscription of its debentures. • A company shall pay interest and redeem the debentures in accordance with the terms and conditions of their issue.

11. If company fails to redeem the debentures on the date of their maturity or pay interest ,Tribunal may, on the application of the debenture-holders, or debenture trustee order, the company to redeem the debentures along with payment of principal and interest due thereon. PENALTY: Officer in Default-Imprisonment up to 3 years Officer in Default-Fine Rs. 2 lac -5 lacs

12. MANAGEMENT & ADMINISTRATION

13. ANNUAL RETURN As per Rules: Certification by PCS for Listed Company or a company with: Paid up capital Rs.10 Crore or more And Turnover of Rs.50Crore or more

14. DISCLOSURES IN ANNUAL RETURN – SECTION 92 Matters relating to Certification of Compliance Registered office, principal business activities Meeting of board and committees Members and debenture holders shares held by or on behalf of the FII’s Securities and shareholding pattern Remuneration of directors and KMP Promoters, directors, key managerial personnel other matters as may be prescribed. Indebtedness Penalty or punishment & details of compounding Meetings of members

15. ANNUAL RETURN-POINTS TO BE CONSIDERED • Every company shall prepare its AR in Form MGT.7 • Annual Return-Listed Company-Paid up of 10 Crore or turnover of 50 Crore –To be certified by CS –in Form MGT 8 • An Extract of annual return shall form part of Boards Report • Non compliance may lead to penalty of 50K exceeding up to 5 lacs and office in default –Imprisonment of Six months or fine of Rs.50K -5 Lacs

16. RETURN TO BE FILED WITH REGISTRAR IN CASE PROMOTERS STAKE CHANGES [ S.93] PENALTY: Company/Officer in Default-Fine up to Rs. 10 ,000 Continuing Offence: Rs.1,000 /day

17. MEETINGS

18. ANNUAL GENERAL MEETING [S. 96]

19. REPORT ON ANNUAL GENERAL MEETING [S.121] • Report in addition to the minutes of the general meeting by Listed Public Company; • To be signed and dated by the Chairman of the meeting or in case of his inability to sign, by any two directors of the company, one of whom shall be the Managing director, if there is one and company secretary of the company; • the Report shall contain fair and correct summary of the proceedings of the meeting. • Non Compliance-Fine-1 Lac to 5 Lac & Officer in Default-Rs.25 K to 1 Lac

20. CONTENTS OF THE REPORT • Day, date, hour and venue of the annual general meeting; • confirmation with respect to appointment of Chairman of the meeting; • number of members attending the meeting; • confirmation of quorum; • confirmation with respect to compliance of the Act and the Rules, secretarial standards made there under with respect to calling, convening and conducting the meeting; • business transacted at the meeting and result thereof; • particulars with respect to any adjournment, postponement of meeting, change in venue; and • any other points relevant for inclusion in the report.

21. EXTRA ORDINARY GENERAL MEETING [Sec 100] • Every general meeting (i.e. meeting of members of the company) other than annual general meeting or any adjournment thereof, is an extraordinary general meeting. • The law also recognizes that occasions may arise where members may need to meet together formally on other occasions, in between AGMs.

22. ESSENTIALS OF VALID REQUISITION • The requisition must state the objects of the meetings & be signed by the requisitioning members. • The requisition must be deposited at the company’s registered office. • The Directors should within 21 days, move to call a meeting and the meeting should be actually be held within 45 days from the date of the lodgment of the requisition. • The meeting may be called by requesitionist themselves within a period of 3 months from date of Requisition. Company with Paid up Capital 1/10 th of Paid up Capital • Lack of quorum will be a reason for the cancellation EGM called by requesitionist Strength for requisition of Members Company without Paid Up capital 1/10 th of Voting Power

23. STATEMENT TO BE ANNEXED WITH NOTICE – SEC 102 Liability in case of non-disclosure or insufficient disclosure in Explanatory Statement Explanatory Statement in case of special business to specify Non-disclosure /insufficient disclosure Nature of interest/ concern Financial Interest Other Interest Benefit Profit Director and Manager Relatives Promoter Director and Manager KMP KMP Explanatory statement to specify shareholding % of Promoters/directors/manager/KMP whose shareholding is not less than 2% of paid up capital Liable to compensate to Company to the extent of such profit/benefit

24. PENAL PROVISION U/S 102 PENALTY: • WHO ARE RESPONSIBLE: • Promoter, • Director, • Manager or • Key managerial personnel who is in default Fine up to Rs.50,000 Or 5 times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, WHICHEVER IS MORE.

25. QUORUM FOR MEETING[ S.103] Public Company ≤ 1000 members 5 members personally present > 1000 members but ≤ 5000 members 15 members personally present 30 members personally present > 5000 members 2 members personally present Private Company

26. VOTING THROUGH ELECTRONIC MEANS [ Sec-108] Listed company Company having not less than 1000 shareholders Right to vote at general meetings by electronic means.

27. APPOINTMENT & QUALIFICATION OF DIRECTORS

28. KEY CHANGES [S.149]

29. TYPES OF DIRECTORS

30. NUMBER OF DIRECTORSHIP(S. 165)

31. DISQUALIFICATION OF DIRECTORS

32. DUTIES OF BOARD

33. VACATION OF OFFICE OF DIRECTOR-S. 167

34. REMOVAL OF DIRECTOR-[ S.169] • Notice of Removal can be given only by the following:- • In Company Having Share Capital: • Member(s) having not less than 1/10th of the total voting power or holding shares the aggregate value of which is not less than Rs. 5 lakh • In any other Company: • Member(s) having not less than 1/10th of the total voting power • In case of default, company and every director or employee who is responsible for such contravention to be punishable with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5 Lac

35. INDEPENDENT DIRECTOR

36. NEED FOR INDEPENDENT DIRECTOR

37. WHEN AN ID IS MUST? Public Companies HAVING: • Paid up Share Capital of Rs. 100 Cr or more OR • Outstanding Loans; or • Borrowings; or • Debenture; or Exceeding200 cr. • Deposits

38. EVOLUTION - ID based on:

39. WHO CANNOT BE APPOINTED AS ID? • One who together with his/her relatives holds 2 % or more of the total voting powers of the company • Past and current employees • Partners of a firm of auditors, • Company secretaries, • Cost Accountants, • Lawyers or consultants • That has or had any transaction with the company, its holding, subsidiary or associate company ,if that firm earned 10 per cent or more of its gross turnover in the preceding three financial years from that company.

40. KEY HIGHLIGHTS-I.D

41. CODE OF CONDUCT-SCHEDULE IV

42. BOARD COMMITTEES: COMPOSITION OF ID

43. SAFEGUARD AGAINST THE LIABILITY OF ID [U/s. 149(11)] If the offences committed by Independent Directors with their :

44. LIABILITY OF ID • The liability arises on account of conduct , act or omission on the part of a person and not merely on account of holding an office or a position in a company. • -SMS Pharmaceuticals Ltd, Supreme Court [September 2005]

45. TERM OF INDEPENDENT DIRECTOR SEBI HAS IMPOSED STRINGENT PROVISIONS WITH REGARD TO INDEPENDENT DIRECTOR

46. INDEPENDENT DIRECTORS - CONTRADICTIONS • The demand for independent directors is set to be large and the supply limited • The ministry of corporate affairs rules say the individual should possess appropriate skills • Discontinuance of Practice of appointing friends, relatives,. • Listing agreement allows listed companies to allot stock options to independent directors , after obtaining shareholders consent but Companies Act,2013 does not allow allotment of Stock options.

47. WOMEN DIRECTOR

48. RATIONALE - WOMEN DIRECTOR • A signal of better company • Greater effort across the Board • A better mix of Leadership Skill • A better reflection of Consumer decision maker • Access to a wider pool of Talent • Improved Corporate Governance • Risk aversion

50. POSITION OF WD-TOP TEN COUNTRIES POSITION OF WOMEN DIRECTOR IN INDIA