The word ‘company’ is derived from the Latin word (Com = with or together; panis = bread), and it originally referred to an association of persons who took their meals together.
The main characteristics of a company are corporate personality, limited liability, perpetual succession, separate property, transferability of shares, capacity to sue and be sued, contractual rights, limitation of action, separate management, termination of existence etc.
The company, though a legal person, is not a citizen under the Citizenship Act, 1955 or the Constitution of India. Though it has established through judicial decisions that a company cannot be a citizen, yet it has nationality, domicile and residence.
In India after independence, the Companies Act, 1956 was enacted with a view to consolidate and amend the earlier laws relating to companies and certain other associations.
The Companies Act, 2013 has replaced the Companies Act, 1956. Further the Act has been amended four times.
Where a fraudulent and dishonest use is made of the legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality. The Court may break through the corporate shell and apply the principle of what is known as “lifting of or piercing the corporate veil”.
Share capital of a company can be classified as:
nominal, authorized or registered capital;
issued and subscribed capital;
called up and uncalled capital;
A share is defined as a share in the share capital of a company, including stock except where a distinction between stock and shares is expressed or implied.
The Companies Act, 2013 permits a company limited by shares to issue two classes of shares, namely equity share capital and preference share capital.
A preference share or preference share capital is that part of share capital which carries a preferential right with respect to both dividend and capital.
Preference shares may be of various types, namely participating and non-participating, cumulative and non-cumulative shares, redeemable and irredeemable preference shares.
Equity share capital means all share capital which is not preference share capital.
Sweat equity shares means equity shares issued by a company to its employees or directors at a discount or for consideration, other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.
In general parlance, “transfer” takes place when title to the property is transferred from one person to another whereas “transmission” refers to devaluation of title by operation of law.
Transmission may takes place either by succession or by testamentary transfer.
According to Section 44 of Companies Act, 2013, shares, debentures or other interest of a company are moveable property, transferable in the manner provided by the articles of association of the company.
At present, stamp duty applicable for transfer of shares is 25 paise for every one hundred rupees or part thereof of the value of share. Section 56 of the Companies Act requires that where share transfer form is delivered to the company should be adequately stamped.
Shares of a private company are not marketable securities due to restriction on right to transfer. Such shares by their very nature are not freely transferable in the market
The securities of a public company are freely transferable, subject to the provisions that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as contract.
Members and Shareholders
A Company is composed of members, though it has its own entity distinct from members.
Every shareholder is a member and every member is a shareholder, however, there may be exceptions to this statement.
Section 2(55) of the Companies Act, 2013 provides the modes by which a person may acquire membership of a Company.
by subscribing to the Memorandum,
by agreeing in writing to become a member,
by holding equity share capital of a Company as beneficial owner in the records of a depository.
A non-profit making Company licensed under Section 8 of the Companies Act can become member of any other company.
Foreigners, trade unions can hold shares in a company, and consequently become its members.
Person ceases to be a member when his name is removed from register of members of a company.
In accordance with Section 88, every Company shall keep register of its members. This register shall be kept at the registered office of the Company subject to the provisions of Section 94 of the Companies Act, 2013.
Every member of a public company limited by shares, holding equity shares, shall have votes in proportion to his share of the paid-up equity share capital of the company. On the other hand, preference shareholders ordinarily vote only on matters directly relating to rights attached to preference share capital and on any resolution for winding up of the company or for the repayment or reduction of the equity or preference share capital.
All companies are given power to borrow by their articles which fix the maximum limit of borrowings.
The power to borrow monies and to issue debentures (whether in or outside India) can only be exercised by the Directors at a duly convened meeting.
Where the company borrows without the authority conferred on it by the Articles or beyond the amount set out in the Articles, it is an ultra vires borrowing and hence void. Ultra vires borrowings cannot even be ratified by a resolution passed by the company in general meeting. In case of ultra vires borrowings the lender has the following remedies: (a) Injunction and Recovery, (b) Subrogation, (c) Suit against Directors.
A debenture is a document given by a company under its seal as an evidence of a debt to the holder usually arising out of a loan and most commonly secured by a charge.
Debentures may be of different kinds, viz. redeemable debentures, registered and bearer debentures, secured and unsecured or naked debentures, convertible debentures.
A debenture stock is a borrowed capital consolidated into one mass for the sake of convenience.
A loan creates a right in the creditor to demand repayment, and the substance of a debt is a liability upon the debtor to repay the money.
A debenture trust deed is one of the several instruments required to be executed to secure redemption of debentures and payment of interest on due dates.
Section 71(4) of the Act required every company to create a debenture redemption reserve account to which adequate amount shall be credited out of its profits available for payment of dividend until such debentures are redeemed and shall utilize the same exclusively for redemption of a particular set or series of debentures only.
Certificate of deposit is a document of title to a time deposit.
Commercial paper refers to unsecured promissory notes issued by credit worthy companies to borrow funds on a short term basis.
The convertible debentures are regulated by SEBI (ICDR) Regulations, 2009.
The non-convertible debentures are regulated by SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
Section 73 prohibits a company to invite, accept or renew deposits from public. This prohibition however shall not apply in case of banking company and non-banking financial company and such other company as the Central Government may specify.
A company can invite deposits from its members subject to the passing of a resolution in general meeting subject to some conditions.
The company inviting deposits shall issue a circular to its members in Form DPT-1
The company inviting deposits shall enter into a contract for providing deposit insurance at least 30 days before the issue of circular or advertisement or before the date of renewal. (Exempted till 31st March, 2017)
For appointing deposit trustees the company shall execute deposit trust deed in Form DPT-2.
The company accepting deposits shall maintain at its registered office one or more registers for deposits accepted or renewed.
The Return of Deposits shall be filed in Form DPT-3 with the Registrar
A charge is a right created by any person including a company referred to as “the borrower” on its assets and properties, present and future, in favour of a financial institution or a bank, referred to as “the lender”, which has agreed to extend financial assistance. The power of the company to borrow includes the power to give security also.
Mortgage is created by the act of parties whereas a charge may be created either through the act of parties or by operation of law.
A company is required to file e-form CHG-1 or CHG-2 through MCA portal giving complete particulars together with the instrument creating charge within 30 days of creation of charge under Section 77 of the Companies Act, 2013.
For intimating modification of charge, e-form CHG-1 or CHG-2 is required to be filed within 30 days of modification. A variation in the rate of interest payable on the loan amount by the borrowing company to the lending institution or the bank will constitute a modification of charge, unless the terms of variation are covered in the original charge.
A registration of charge constitutes a notice to whosoever acquires a future interest in the charged assets.
In e-governance era, there is a facility for inspection of charge through electronic means using internet.
The certificate issued by the Registrar whether incase of registration of charge or registration of modification, shall be conclusive evidence that the requirements of Chapter VI of the Act(Registration of Charges) and the rules made thereunder as to registration of creation or modification of charge, as the case may be, have been complied with.
Every company is required to keep at its registered office a register of all charges as well as a copy of every instrument creating any charge.
Company may apply to Central Government for extension of time for filing particulars to ROC for creation, modification or satisfaction of charge in form CHG-8
Company or any person interested in the charge can make an application to the Central Government for rectification of Register of charges in form CHG-8.
For intimating memorandum of satisfaction of charge to ROC, e-form CHG-5 is required to be filed within 30 days from the date of such satisfaction.
Distribution of Profits
Under Section 2(35) of the Companies Act, 2013, ‘dividend’ includes any interim dividend.
Dividend is the share of the company’s profit distributed among the members.
The Board may declare interim dividend during any financial year out of the surplus in the Profit and Loss Account at any time between two AGM of the company.
Final Dividend means a Dividend which declared at the Annual General Meeting of the company.
In case of inadequacy of profits the company can declare the dividend with accordance with the Rule 3 of Companies (Declaration and Payment of Dividend) Rules 2014.
The amount of dividend shall be deposited in a schedule bank in a separate account within 5 days from the date of declaration.
Dividend may be paid by cheque or warrant or in any electronic mode to the shareholders entitled to the payment of dividend.
Where the dividend is not paid or claimed within 30 days, the company shall, within 7 days transfer the amount to Unpaid Dividend Account which shall be opened in a scheduled bank.
In case of any default in transferring the amount, the company shall be liable to pay interest on the amount as has not been transferred.
The amount remaining unpaid along with interest accrued thereon for 7 years shall be transferred to Investor Education and Protection Fund.
In case of non-payment of dividend declared by the company, every party in default be punishable with imprisonment of up to two years and with fine.
Corporate Social Responsibility
As per section 135 of the Companies Act 2013, the CSR provision will be applicable companies which fulfills any of the following criteria during the immediately preceding financial year:-
Companies having net worth of rupees five hundred crore or more, or
Companies having turnover of rupees one thousand crore or more or
Companies having a net profit of rupees five crore or more
The Board of every company shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. This amount will be CSR expenditure.
The CSR Committee of the company may decide to undertake its CSR activities approved by the Board, through
a company established under section 8 of the Act or a registered trust or a registered society, established by the company, either singly or alongwith any other company, or
a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government or any entity established under an Act of Parliament or a State legislature.
It is mandatory for companies to disclose in Board’s Report, an annual report on CSR.
Accounts, Audit and Auditors
As per the Act, books of account and other books and papers should be available for inspection by any director on working days during business hours.
The expression ‘annual accounts’ embraces both balance sheet and statement of profit and loss.
The term ‘Balance Sheet’ means a statement prepared from the books of a concern showing the debit and credit balances after the trading and profit and loss accounts have been prepared – a statement drawn up at the end of each trading or financial period, setting forth the various assets, and liabilities of a concern at a particular date.
Profit and loss account is a Statement by which the directors disclose to the shareholders of the company the result of the actual working of the company. It serves to give the shareholders an idea of the earning capacity of the company in relation to its capital, and enables them to judge about the administration and management of the affairs of the company.
The Act provides that every profit and loss account and balance sheet of the company shall comply with the accounting standards.
The balance sheet and profit and loss account must be approved by the Board of directors and signed by the directors before they are submitted to the auditors for their report. The Act gives other provisions also for authentication of annual accounts. The Act also requires the company to file such annual accounts with the Registrar of Companies.
The main object of audit is to ensure that the statement of accounts of the relevant financial year truly and fairly reflect the state of affairs of the company. Audit also provides a moral check on those who are entrusted with the task of running business and of keeping and maintaining the books of account of the company. An audit of accounts is conducted with two-fold purpose: (i) detection and prevention of errors; (ii) detection and prevention of fraud.
The Act provides that the auditor of a Government company shall be appointed or re-appointed by the Comptroller and Auditor General of India within the limits specified.
The Act provides that the auditors’ report shall be signed only by the person appointed as an auditor of the company.
The Central Government has notified Cost Accounting Records Rules for a number of specified industries with a view to ensuring that the records so maintained highlight the area of inefficiencies or high costs.
Transparency and Disclosures
The annual report is a comprehensive report provided by most public companies to disclose their corporate activities over the past year.
According to Regulation 34 of SEBI (LODR) Reglation, 2015 a listed entity shall submit the annual report to the stock exchange within twenty one working days of it being approved and adopted in the AGM.
The listed entity shall send annual report to the holders of securities, not less than twenty-one days before the annual general meeting.
Disclosures in the Board report are derived from various places, apart from disclosures specified in section 134 of the Act.
Section 134 of the Act enjoins upon the Board a responsibility to make out its report to the shareholders and attach the said report to financial statements laid before the shareholders at the annual general meeting.
As per section 92 of the Companies Act, 2013, every company is required to prepare the Annual Return in Form No. MGT-7 containing the particulars as they stood on the close of the financial year.
Annual Return is to be filed with the Registrar within 60 days from the date on which Annual General Meeting (AGM) is actually held or from the last day on which AGM should have been held.
Investments, Guarantees and Security, Related Party Transactions
‘Investments’ has been used in a limited sense in the lesson to mean the investing of money in shares, stock, debentures or other securities.
The power to invest the funds of the company is the prerogative of the Board of Directors. However, the Board must not misuse its powers. The Companies Act, 2013 contains provisions for restrictions on investments that a company can make and loans it can provide. Restrictions are also placed on the guarantees which the company can give or security it can provide for a loan.
The provisions for restrictions on investments and loans by companies would also apply to Section 8 companies and guarantee companies not having a share capital.
Approvals for making investments and loans would have to be taken in accordance with the specific provisions of the Companies Act. A blanket approval of the shareholders for the purpose would not suffice.
The Companies Act provides for the particulars to be provided in the register of loans made, guarantees given, securities provided and investments made and the manner in which it is to be kept.
Provisions have also been given in relation to inspection of such register and penalties imposable in case of defaults in maintaining the required registers.
No member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party. This shall not apply to a company in which ninety per cent. or more members, in number, are relatives of promoters or are related parties.
The Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed.
As per the Act, all investments made or held by a company in any property, security or other assets shall be made and held by it in its own name. This requirement is confined to only those investments which are made by it on its own behalf and not on behalf of someone else. However, in certain circumstances, the Act exempts the companies from complying with the above provisions.
When any shares or securities in which investments have been made by a company are not held by it in its own name as a beneficial owner when such investments are held in the name of a depository pursuant to permissible conditions given in the Act, the company shall forthwith enter in a register maintained by it for the purpose, particulars as specified in the Act.
In case of default, the company is punishable with fine and every officer of the company who is in default shall be punishable with imprisonment or with fine or with both.
Registers and Records
The Companies Act, 2013 lays down that every company incorporated under this Act must maintain and keep at its registered office certain books, registers and copies of certain returns, documents etc. and to give certain notices, file certain returns, forms, reports, documents etc. with the Registrar of Companies within certain specified time limits and with the prescribed filing fees. These books are known as Statutory Books.
Every company incorporated under the Act is required to keep at its registered office, inter alia, the following statutory books and registers–
Register of securities bought back. [Section 68 and Rule 17(12) of Companies (Share Capital and Debenture) Rules,2014
Register of deposits. [Section 73 and Rule 14 Companies (Acceptance of Deposits) Rules,2014]
Register of charges. [Section 81 and Rule 7 of Companies Registration of Charges Rules,2014]
Register of members [Section 88 (1) and Rule 3(1) of Companies (Management and Administration) Rules, 2014]
Register of debenture holders [Section 88 (1)]
“Foreign register” containing the names and particulars of the members, debenture holders, other security holders or beneficial owners residing outside India.[ Section88(4)]
Register of Renewed and Duplicate Share Certificates. [Rule 6 of the Companies (Share Capital and Debentures) Rules,2014]
Register of sweat equity shares. [Section 54 and Rule 8(14) of Companies (Share Capital and Debentures ) Rules,2014]
Register of Significant Beneficial Owner
Register of Postal Ballot. [Section 110 and Rule 22 of the Companies (Management and Administration) Rules, 2014]
Books containing minutes of general meeting and of Board and of committees of Directors. [Section 118]
Books of account. [Section128]
Register of Directors/ key managerial personnel. [Section 170(1)]
Register of investments in securities not held in company’s name. [Section 187 and Rule 14 of Companies (Meetings and its Board Powers) Rules, 2014]
Register of loans, guarantees given and security provided or making acquisition of securities [Section 186(9) and (Rule 12 Companies Meetings of Boards and its Powers) Rules2014]
Register of contracts with companies/firms in which directors are interested. [Section 189(5) and Rule 16 of Companies (Meetings of Boards and its Powers) Rules,2014]
An overview of Corporate Reorganisation
Section 230(1) states that when a compromise or arrangement is proposed—
between a company and its creditors or any class of them; or
between a company and its members or any class of them,
the Tribunal may, on the application of the (i) company, or (ii) of any creditor or (iii) member of the company, or (iv) in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs.
Section 230(6) states that when at a meeting held in pursuance of sub-section (1), majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator and the contributories of the company.
Section 230(8) states that the order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order. Section 232(1) states that when an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal—
that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of the company or companies involving merger or the amalgamation of any two or more companies; and
that under the scheme, the whole or any part of the undertaking, property or liabilities of any company (hereinafter referred to as the transferor company) is required to be transferred to another company (hereinafter referred to as the transferee company), or is proposed to be divided among and transferred to two or more companies, the Tribunal may on such application, order a meeting of the creditors or class of creditors or the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal may direct and the provisions of sub-sections (3) to (6) of section 230 shall apply mutatis mutandis.
Section 233 prescribes simplified procedure for Merger or amalgamation of
two or more small companies or
between a holding company and its wholly-owned subsidiary company, or
such other class or classes of companies as may be prescribed
Section 234(2) states that subject to the provisions of any other law for the time being in force, a foreign company, may with the prior approval of the Reserve Bank of India, merge into a company registered under this Act or vice versa and the terms and conditions of the scheme of merger may provide, among other things, for the payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up for the purpose.
Section 237(1) states that when the Central Government is satisfied that it is essential in the public interest that two or more companies should amalgamate, the Central Government may, by order notified in the Official Gazette, provide for the amalgamation of those companies into a single company with such constitution, with such property, powers, rights, interests, authorities and privileges, and with such liabilities, duties and obligations, as may be specified in the order.
An Introduction to MCA 21 and filing in XBRL
Filling and filing of forms is an important part of the secretarial function of a company secretary .Normally, where company appoints a company secretary, he is designated as the officer responsible for compliance under the Companies Act and other allied legislations. Therefore, for any lapse in complying with the various provisions of the Companies Act or such other legislations, for the compliance of which the company secretary has been made responsible, he becomes liable as “officer in default”
Professionals are responsible for submitting/certifying documents (to be signed digitally by them) and system would accept most of these documents online without approval by Registrar of Companies or other officers of the Ministry. If a professional gives a false certificate or omits any material information knowingly, he is liable to punishment under section 447 and 448 of the Companies Act, 2013 besides disciplinary action by the Institute which issued the Certificate of Practice.
An existing company registered under section 8 seeks to convert itself into a company of any other kind shall make an application to the Regional Director for conversion of its status. Once the approval is given by the Regional Director, the company shall cease to enjoy all the privileges/ concessions obtained by it on account of being a Section 8 company.
Whenever a company makes any allotment of shares or securities, it is required to file a return of allotment in e Form PAS-3 to Registrar within thirty days of such allotment including the complete list of allotees to whom the securities have been issued.
In case the appointment of a key managerial personnel is made within the specified parameters (in accordance of schedule V of the Companies Act, 2013) then a return has to be filed in e Form MR-1 with RoC within 60 days from the date of such appointment.
Any partnership firm, limited liability partnership, cooperative society, society or any other business entity formed under any other law for the time being in force consisting of seven or more members, may at any time register itself under Companies Act, 2013 as a Part I Company. For this purpose, e Form URC-1 shall be filed along with.
A foreign company file the particulars of the principal place of business in eform FC-1 within 30 days of establishment of place of business in India along with the required documents to RoC, Delhi. The Registrar of the corresponding state shall have access to these documents filed with the RoC, Delhi.
It is increasingly being recognized that the framework for regulation of corporate entities must facilitate companies to operate in a national and global context, encourage good corporate governance and enable protection of interests of investors, employees, creditors as well as boost economy as a whole. In the competitive and technology driven business environment, while corporates require greater autonomy of operation and opportunity for self-regulation with optimum compliance costs, there also is a need to bring about transparency through better disclosures and greater responsibility on the part of corporates and managements for improved compliance.
In recognition of the fact that the primary purpose of any law is to facilitate the public and bearing in mind the current international style of legal drafting, an ideal law for the corporate sector should be clear, concise and comprehensible. It is desirable that the law is a “core company law” i.e. regulating the “entity” (irrespective of its corporate structure and size) rather than its “activity” and providing the basic principles governing all aspects of the operation of corporate entities within a single, comprehensive framework.
It is in this context that countries across the world are modernizing and harmonizing their company law with global standards
Board Constitution and its Powers
Every Listed Company and such other company as may be prescribed shall form Audit Committee comprised of minimum 3 directors with majority of the Independent Directors and majority of members of committee shall be person with ability to read and understand financial statement.
Vigil mechanism to be established in the prescribed manner by every listed company or such class or classes of companies, as may be prescribed.
Every listed company and prescribed class or classes of companies, shall constitute the Nomination and Remuneration Committee consisting of three or more non-executive directors out of which not less than one half shall be independent directors
Applicability of Corporate Social Responsibility Net worth > 500 Crore INR or Turnover > 1000 Crore INR or Net profit > 5 Crore INR.
To attain the objectives prescribed in Memorandum of Association of the company, company depends on Board of Directors. Directors of a company are its eyes, ears, brain, hands and other essential limbs.
Every public company shall have at least 3 directors and every private company shall have at least 2 directors and every one person company shall have atleast 1 director as per section 149.
Directors are trustees for the company i.e. the directors are persons selected to manage the affairs of the company for the benefit of the shareholders.
Section 164 lays down disqualifications of directors. Also individually only can be a director under section 152 of the Act.
Maximum Number of Director is 15, which can be increased by passing a special Resolution.
Certain prescribed class or classes of companies is required to have at least one woman director. This is a mandatory provision.
Every company including one person company shall have at least on director who stays in India for a period of not less than 180 days in the previous calendar year.
Maximum limit on total number of directorship has been fixed at 20 companies including sub limit of 10 for public companies.
The members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as director.
A director may be removed from the office by giving a special notice.
A director may resign his office in the manner provided by the articles.
Any officer or employee of a company shall be punishable with the fine on the complaint of the company or any creditor or contributory thereof, if he wrongfully obtains, possess or withholds any property of the company.
Under Section 2(51) a Key Managerial Personnel is defined as the Chief executive officer or managing director or the manager or, a company secretary or the whole time director and the chief financial officer in relation to a company
Every listed Company having a paid up share capital of ` 10 crore or more is compulsorily required to have a key managerial personnel.
The whole time key managerial personnel is to be appointed by the Board and shall not hold office in more than one company however he is permitted to hold such other office with the permission of Board of the company.
Every director or the key managerial personnel who is in default shall be punishable with a fine which may extend to 50,000 rupees and a further fine which may be extended to 1,000 rupees for every day during which the default continues.
Key Managerial Personnel
The Company secretary has been covered under the same section of KMP i.e. section 203
Every company secretary is expected to adhere not only to the letter of the law but also ensure that the spirit of the law is followed.
A Company Secretary exercises supervisory and checking role so as to prevent any chance of negligence in implementing various laws applicable to a particular company.
Companies Act, through its various sections cast upon company secretary various duties and liabilities called statutory duties and statutory liabilities.
Role of company secretary is three-fold, namely, as a statutory officer, as a coordinator, and as an administrative officer.
Meetings of Board and its Committees
Director can participate in the Board meeting through video conferencing or other audio visual mode as may be prescribed
Notice of not less than seven days in writing is required to call a board meeting and notice of meeting to all directors shall be given, whether he is in India or outside India by hand delivery or by post or by electronic means.
The participation of director at Board meeting through video conferencing or by other electronic means shall be counted for the purpose of Quorum
Section 173 provides the participation of directors in a meeting may be either in person or through video conferencing or other audio visual means, which are capable of recording and recognizing the participation of the directors and of recording and storing the proceedings of such meetings along with date and time.
The Chairman may adjourn a Meeting with the consent of the Members and shall adjourn a Meeting if so decided by the Members. The Meeting may, however, be adjourned at any time. It may be adjourned after some items of business have been transacted and the remaining items can be transacted at the adjourned Meeting.
An annual general meeting is required to be held every year by every company whether public or private,limited by shares or by guarantee, with or without share capital or unlimited company.
In case of default is made in holding the annual general meeting of a company under section 96, the Tribunal may call or direct the calling of an annual general meeting.
For a General Meeting to be valid, it must be duly convened, properly constituted and the business must be validly transacted.
In case of public company the quorum shall depend on number of members as on the date of meeting
If members not more than 1000—quorum shall be 5
If members more than 1000 but less than 5000- quorum shall be 15
If members more than 5000- quorum shall be 30
In case of private company 2 members personally present shall be the quorum of the meeting.
The central government is vested with the power to prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy.
Chairman plays a very important role in a meeting as he is responsible for successful conduct of a meeting
A motion becomes a resolution only after the requisite majority of members have adopted it.
Various methods which may be adopted for taking votes on a motion properly placed before a meeting are by show of hands, by poll, by postal ballot and by electronic voting.
There are three kinds of resolutions under the Act (a) Ordinary Resolution(S. 114), (b) Special Resolution (S. 114) (c) Resolution requiring special notice (S. 115)
In accordance with Section 117 of the Act, certain resolutions are required to be filed with the Registrar for its recording within 30 days of its passing at the meeting.
Every company is required to keep minutes of the proceedings of general meetings and of the meetings of Board of Directors and its Committees.
A virtual meeting is when people around the world, regardless of their location, use video, audio, and text to link up online.
virtual meeting is a “room” set up online through a website host that allows people from anywhere to “meet” with each other to share information and network in real-time.
Directors shall not participate through Electronic Mode in the discussion on certain restricted items. (Rule 4)
The Director may intimate his intention of participation through Electronic Mode at the beginning of the Calendar Year also, which shall be valid for such Calendar Year.
Directors participating through Electronic mode are counted for quorum unless prohibited as per law. The chairperson shall ensure that the required quorum is present throughout the meeting.
Legal Framework Governing Company Secretaries
The members of the Institute shall be divided into two classes designated respectively as Associates and Fellows.
The member of the Institute is subject to the Disciplinary mechanism provided for under Chapter V of the Company Secretaries Act, 1980 (the Act).
Professional misconduct in relation to members of the Institute is broadly structured under Schedule I and Schedule II of the Act.
On receipt of any information or complaint along with the prescribed fee, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.
Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule, the matter shall be placed before the Board of Discipline.
Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, the matter shall be placed the Disciplinary Committee.
Secretarial Standards Board
The scope of SSB is to identify the areas in which Secretarial Standards need to be issued by the Council of ICSI and to formulate such Standards.
• SSB formulates Secretarial Standards taking into consideration the applicable laws, business environment, practical applicability and the best secretarial practices prevalent.
Secretarial Standards are developed in a transparent manner after extensive deliberations, analysis, research and after considering the views of corporates, regulators and the public at large.
The exposure draft is circulated to all Council Members, Regional Council/Chapters, Professional Bodies (ICAI/ICoAI), Chambers of Commerce/Industry Associations, MCA/SEBI/RBI and such other bodies/ organisations as may be decided by SSB, all members of the Institute through bulk email/website link etc.
The Council will consider the final draft of the proposed Secretarial Standard and finalise the same in consultation with SSB. The Secretarial Standard on the relevant subject will then be issued under the authority of the Council.
PCS is his own master, he generates employment, has flexibility of working hours, has reasonable assurance of sustained earnings in long run, no fear of loosing employment at advanced age.
The process of formation of MDF shall be an outcome of conscious and sincere decision and it is essential that the like minded professional should deliberate and take this decision.
Partners must enter into a partnership agreement defining inter alia the process of decision making, allocation of duties, responsibilities, delegation of authorities, revenue sharing and exit route.
The mega firm requires effective management skills including skills for handling finance, dealing with human resources and day to day administration of the office.
In a MDF Partners may adopt simple revenue sharing model to share profits and losses equally.