Appointment of Company Secretary

Whole-time Company Secretary

As per Companies Act 2013 every company should appoint a whole time company secretary whose paid up share capital is not less than Rs. 5.00 Crores.

A whole time Company secretary of a company can be appointed as a non executive Director of another company. However a Company secretary can not be appointed as whole-time company secretary of another company.

A whole time Company secretary can be appointed as a non-executive director of the same company provided there are more than two directors in the company.

Secretarial Audit Report

As per sub-section (1) of section 204 of the Companies Act 2013 every company that attracts the below listed criteria should carry out a Secretarial Audit and submit the Secretarial Audit Report in form No.MR.3

1. Every public company having a paid-up share capital of not less than Rs.50 crores or
2. Every public company having a turnover of not less than Rs.250 Crores

Inter-corporate Loans and Investments, Loans to employees

Companies Act 2013

section 186 of Companies Act 2013 governs loans, investments and guarantees by a company. Section 186 provides that a company may give loans or provide security/guarantee up to 60% of its (paid up capital + free reserves + securities premium) or 100% of (free reserves + securities premium), whichever is higher. For transactions exceeding these limits, approval of members is required to be sought by way of a special resolution.
on 10th March 2015, Ministry of Corporate Affairs clarified that loans and/or advances made by the companies to their employees, other than the Managing or Whole time directors (which is governed by section 185) are not governed by the requirements of section 186 of the Companies Act, 2013, if it is in accordance with the condition of services to all employees and are also in accordance with the remuneration policy, in cases where such policy is required to be formulated. Due to this clarification now a Company is not required to maintain a register of loans given to its employees in the format MBP2 and does not disclose the details of loans given to its employees in the Directors report as specified u/s 186(9)

Companies Act 1956
The new provisions of section 372A (1956) is applicable only to Public Limited Companies and provide for a combined limit of sixty percent of the paid up share capital and free reserves (which term includes reserves free for distribution as dividend including the amount in the securities premium account) or one hundred percent of free reserves whichever is higher, for grant of loan (which term includes debentures) to any other body corporate, giving of any guarantee or provision of security in respect of a loan to or by any body corporate and acquisition of securities (which term includes shares, debentures, bonds and other marketable securities, etc.) of any other body corporate by way of subscription, purchase or otherwise. These powers are given to the board of a company by the statute .The scope of section 372A is much larger than the erstwhile section 372. Needless to say that there must a basic provision in the memorandum/articles of a company authorizing the board to make inter-corporate loans and investments.However, in exceptional circumstances, the board may provide guarantee without the previous authorization of shareholders. The Board needs to take approval of shareholders in the immediately succeeding meeting of members.

Conditions

1. No loan, provision of guarantee or security or investment can be made unless the resolution sanctioning the same is passed at a meeting of the board with the consent of all the directors present at the meeting and with the prior approval of the public financial institution where any term loan is subsisting. However, prior approval of the financial institution is not required, if the aggregate of the investments made, loan granted, guarantees given or security provided together with the proposals in this regard does not exceed 60% of the limit referred to above, provided there is no default in repayment of loan or interest thereon.
2. No loan can be given to any body corporate at a rate of interest lower than the prevailing bank rate.
3. If a company has defaulted in the matter of public deposits under section 58A of the Act, such a company is prohibited from availing of the provision in section 372A of the Act. This is a temporary restriction, as the prohibition does not apply when the default under section 58A is made good.

EXCEPTIONS

The regulatory provisions of section 372A are not applicable in the following cases : -

1. to any loan made, any guarantee given or any security provided or any investment made by a banking or insurance company or a housing finance company in the ordinary course of their business or to a company established with the object of financing industrial enterprises or of providing infrastructural facilities;
2. to a company whose principal business is the acquisition of shares, stock, debentures or other securities;
3. to a private company unless it is a subsidiary of a public company;
4. to any investment made in rights issue;
5. to any loan made, any guarantee given or security provided to or acquisition of shares by a holding company in its wholly owned subsidiary.

(c) 2015, Shreerang Ketkar, All rights reserved.

Director Identification Number [DIN]

Director identification Number [DIN] is a unique identification number allotted to an individual. Once allotted the DIN will remain valid during the life time of the individual. Provisional DIN can be used for e-filing until the DIN is approved and activated by the MCA - DIN cell. Provisions pertaining to DIN are specified u/s 153 to 159 of the companies Act 2013.

Form DIN - 1

Form towards application of DIN is DIN - 1 (u/s 153). The fees is Rs.100. Provisional DIN will be valid only for the period of 60 days. The Central government shall within one month from the receipt of the application allot DIN to the applicant. (Section 154)

No person who already has a Director identification Number shall apply for another DIN. (Section 155)

Form DIN-2
Within 1 month from the date of receiving the DIN every director should intimate the details about the DIN to Company with the help of form DIN-2 (Section 156).

Form DIN-3

within one week 15 days from the receipt of intimation from a Director vide DIN-2 the Company must file form DIN-3 by paying applicable fees. Every company, within fifteen days of the receipt of intimation from the director, shall furnish the Director Identification Number to the registrar. 

If a company fail to furnish Director identification within a period specified under Section 403, the company shall be punishable with fine which shall not be less than Rs.25,000/- but which may extend to Rs.1,00,000/- and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs.25,000/- but which may extend to Rs. 1,00,000/- (Section 157)

Penalties

If any individual or director of a company, contravenes any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to Rs.50,000/- and where the contravention is a continuing one, with a further fine which may extend to Rs.5,000/- for every day after the first day during which the contravention continues. (Section 159)

Limited Liability Partnership

The Limited Liability Partnership (abbreviated as LLP) has elements of partnerships and corporations. It is a partnership in which all partners are limited partners. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of a limited partnership. In an LLP, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly. As opposed to that, corporate shareholders have to elect a board of directors under the laws of various state charters. The board organizes itself (also under the laws of the various state charters) and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability than a corporation.

 

Limited liability partnerships are distinct from limited partnerships, in that limited liability is granted to all partners, not to a subset of non-managing "limited partners." As a result the LLP is more suited for businesses where all investors wish to take an active role in management.

 

The Limited Liability Partnership Act 2008 has been notified in the official Gazette of India on Januay 9, 2009. ^] But the relevant rules have not been notified as yet and are in preparation so the Act has not been fully implemented. The Minister of Corporate Affairs is striving hard to get the first LLP in India be incorporated on 1st April 2009. The Parliament of India has passed the Limited Liability Partnership (LLP) Bill 2008. Lok Sabha (Lower House) granted its assent to the Bill on December 12, 2008 which was earlier passed by the Rajya Sabha (Upper House). The salient features of the LLP Act, 2008 are as under:-

 

1. The LLP has an alternative corporate business vehicle that would give the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on an agreement.

 

2. The LLP Act does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act.

 

3. While the LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

 

4. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners can not exceed 20.

 

5. The taxation of LLPs shall be addressed in the Income Tax Act, 1961 which regulates taxation of all form of entities.

 

6. Provisions have been made for corporate actions like mergers, amalgamations etc.

 

7. While enabling provisions in respect of winding up and dissolutions of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act.

 

8. The Act also provides for conversion of existing partnership firm, private limited company and unlisted public company into a LLP.

 

9. Nothing Contained in the Partnership Act 1932 shall effect an LLP.

 

10. The Registrar of Companies (Roc) shall register and control LLPs also.

 

11. The governance of LLPs shall be in electronic mode in the successful model of the present

(Extracted from Ministry of Corporate Affairs Portal)

Reappointment of Additional Dirctor as Director

Draft Resolution to be passed by the members in the General Meeting to Reappoint an Additional Director as Director.

"RESOLVED THAT Mr. ......... who was appointed as an additional Director of the Company on __/__/__ pursuant to the provisions of section 260 of the Companies Act, 1956 read with the Articles of Association of the Company who would vacate his office at ensuing Annual General Meeting and in respect of whom the Company has received a notice under section 257 of the Companies Act 1956 along with necessary deposit from a shareholder proposing his the candidature, as a director of the Company be and is hereby appointed as a Director of the Company, whose office shall be liable to retirement by rotation."

(c) 2007, Shreerang Ketkar, All rights reserved.

Foreign currency convertible bonds (FCCBs)

Primarily FCCBs have a fixed tenure, they are convertible on the
option of the issuer or investor, as the case may be and are either
interest-bearing or in case they are interest-free or low rate, a
premium on redemption is payable if not converted. Its a debatable issue whether the FCCBs are to classified as Debentures or not.