Gray

Company law CS Executive
GAME
CHANGER
NEW
ADDITION
CS SHUBHAM ABAD
SR.NO PART ONE COMPANY LAW, PRINCIPLES
& CONCEPTS.
1. INTRODUCTION.
2. SHARE CAPITAL.
3. MEMBERS & SHAREHOLDERS.
4. DEBT INSTRUMENT.
5. CHARGES.
6. DISTRICBUTION OF PROFIT.
7. CSR.
8. ACCOUNTS & AUDIT.
9. TRANSPARENY & DISCLOSURE.
10. OVERVIEW IN INTER-CORPORATE LOANS ETC.
11. REGISTER & RECORDS.
12. OVERVEIW OF CORPORATE REORGANIZATION.
13. MCA-21 & FILLING OF XBRL.
14 GLOBAL TRENDS.
SR.NO PART TWO COMPANY ADMINISTRATION & MEETING/

LAW & PRACTICES.
15. BOARD CONSTITUTION & ITS POWER.
16. DIRECTORS.
17. KMP.
18. MEETINGS OF BOARD.
19. GENERAL MEETING.
20. VIRTUAL MEETING.
SR. PART THREE CS AS A PROFESSION SECRETARIES.

NO
21. LEGAL FRAME WORK GOVERNING CS
22. SECRETARIAL STANDARDS BOARD.
23. MEGA FIRMS.
MOMENTS OF PLEASURE.
DEDICATED TO MY PARENTS SHRI RIKHABCHAND

& PUSHPA ABAD.
SPECIAL THANKS TO;-
1) ASHISH & SIMPLE PARIKH FOR YOUR
SUPPORT.
2) UNIQUE ACADEMY TO GIVE ME THIS
PLATFORM.
3) MODI SIR FOR A MORAL SUPPORT .&
YOU ARE MY STRENGTH.
4) CHANCHAL SAKHRANI FOR GIVING BEAUTY
TO THE BOOK WITHOUT YOUR
SUPPORT THIS COULD BE POSSIBLE.
5) COMPETITORS FOR MAKING ME STRONG.
6) STUDENTS FOR WHICH EVERY THING IS.
LOVE YOU ALL 3000.
LAW*LOGIC*LOVE INTRODUCTION.
1. Introduction
A pplicability
A) Company
B) Banking companies
C)Insurance companies
D)Electricity companies
E) Corporations establish under special act
F) Body corporate.
T he word ‘companies’ is derived from the LATIN word ‘com & Panis’ com
means
w ith or Panis -bread. Company means association of person who
took their m eal together
C ompany 2(20):- company means a company registered under
companies Act 2 013 and any other previous company law.
E FFECTS OF INCORPORATION; SECTION-9
 T-Transferability of shares.
The ownership is represented by shares and shareholder can transfer the
shares of the company.
 O-Ownership &management both are separate.

Shareholder are the owners of the company where company is
managed by BOD
 P-Perpetual succession.
Member, promoter, may come and go but company will remain
forever. Death of member, promoter does not affect the company.
 C- Contractual capacity
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Company can enter into contract on its

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own. Common seal.

UNIQUE ACADEMY CS SHUBHAM ABAD-
8007916622/33
Official signature of the company Optional- signed by 2 director and CS if

any.
 L-Limited liability.
Liability is limited up to unpaid amount on shares
 A- Artificial legal person.
Company is created by human but creation will be judicial.
 S-Separate legal entity ( Saloman vs. Saloman co.
Ltd) Company and its member both are different.
Company have its own identity distinct from
member.
 S-Separate property ( Macaura vs. northern insurance co. Ltd)
Company have its own identity and can own property on its own
property of company and member are separate.
Can sue& can be sued. Company can sue to third party and third party
can also file case against company.
B ody corporate 2(11)

Means a company and it includes foreign company and any
corporation establish under special Act however it exclude
- Registered co-operative society
- Body corporate- specified by central government.
‘E very company is a body corporate but everybody corporate is not a company’.
Company is not a citizen because citizenship can only granted to natural

person. Company has residential status which depends upon place of
incorporation/place where governing body meets place of control. In general
company cannot claim
fundamental right because it is given to citizen however few fundamental
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rights which is available to any person, company can claim such rights.
8007916622/33
I llegal association 464

Any unregistered association or partnership having more than 50 person
working for acquisition of gain shall be treated as illegal association. It
does not include Hindu undivided family or partnership formed by professional
who are governed by special Act. If partnership formed by HUF having more
than 50 major member shall be treated as illegal association.
E FFECTS of illegal association
 Cannot enter into a contract.
 Cannot wound up.
 Disregard the entity.
 Taxable.
 Cannot sue to any member/creditor.
 Cannot be sued by
members/creditors. L ifting of corporate
veil.
Where the fraudulent intension to misuse the veil for benefit of their own or
conducting illegal act, such person will not get the benefit of acting behind
veil.
In simple words if any person committing fraud or illegal activity
inside the company then such person shall held personally liable.
To prevent dishonest practice court can lift corporate veil and look
behind the corporate face.
I n following cases court can lift corporate veil.
 F-Fraudulent application for removal of name.

Company fraudulently file the application to remove the name of the
company so that creditors cannot claim in such situation court can lift
the corporate veil.
 C-Criminal activity.
If company is carrying any criminal activity under the corporate name
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then court can lift the veil.

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8007916622/33
 S-Acquisition of SSI.
Company is formed to avail the benefit available to SSI.
 C-Conflict of public policy religious sentiments.

Company is carrying such activities which is against the public policy or
which hurt the religious sentiments.
 A-Avoidance of welfare legislation.

Where the sole purpose of the company was to use it as a device to
reduce the amount to be paid by way of bonus to workmen, the
corporate veil should be pierced to look at the real transaction.
 S-Submission of false information.

Company is incorporated by submitting the false information
 P-Prevention of fraud.
The formation of the company is to do fraud then court can lift the
corporate veil
 D-Determination of enemy character.

To determine the enemy character of the company court can break
the corporate veil.
 P-Protection of revenue.
Formation of the company is to evade the taxes then court can lift the veil.
S ELF NOTES.
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LAW*LOGIC*LOVEShare capital.
2 . Share capital
T ypes of capital
1. A uthorized capital is the maximum share capital issued by company.
2. I ssued capital means company issues for the time being for
public subscription and allotment.
3. S ubscribed capital is that portion of the issued capital at face value
which has been subscribed for or taken up by the subscribers.
4. C alled up capital is that portion of the subscribed capital which
has been called up or, demanded on the shares by the company.
5. P aid up capital means the portion of called up capital which has been
paid by shareholder.
I ssue & allotment.
P rospectus2 (70)
Prospectus means any document issued as a prospectus.
 It includes red herring prospectus 32
 Shelf prospectus 31
 And notice, circulars, advertisements which
 Invite public
 To purchase/subscribe the securities of a body corporate.
R ed herring prospectus Sec 32

 RHP is issued in case of book building method
 It does not include price and quantum.
 It includes price band i.e. Lower price and upper price
 RHP shall file with ROC at least 3 days prior to issue opening date.
S helf prospectus (31)

- Shelf prospectus means a prospect issued for one or more issues
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over a certain period without the issue of a further prospectus.

- Validity is one year from the date of opening of first issue.
- Single prospectus for multiple issue
UNIQUE ACADEMY CS SBHUBHAM ABAD-8007916622/33
LAW*LOGIC*LOVE Share capital.
- In case of material change file information memorandum in f orm no
(PAS-2)
- Material changes means it includes new charges created, change in
financial information and other material information.
- Application may withdraw their application.
- Refund within 15 days with interest @15%p. a
A bridged prospectus 2(1) (Chotu).

 Summarized form of prospectus
 It contains silent features of prospectus
 Issued along with the application form
 No need to issue if shares offers to underwriters and securities not
offer to public & further issue of offer of same class.
P remium (sec 52)

- Anything above the face value is known as premium.
- It is transferred to security premium account.
- It is a capital profit.
- Cannot utilized for payment of dividend.
 M inimum application money=5% according to the company act- 25% as
per
SEBI.
 O ffer period-Minimum 3 days maximum 10 days in case of public issue
min/ 15 days max. 30 days in case of right issue.
 M inimum subscription-90% of issued capital and it should be
received
within 30 days from the issue of prospectus.
 If failed received then refund within 15 days from closure of issue.
 Failed to pay within 15 days then penalty @ 15%p.a.
 The money received from the public is kept in a separate A/c.
Known as escrow A/c
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 File return on allotment in f orm PAS-3 within 30 days to ROC.

D eemed prospectus (25)
 Inviting public to purchase or subscribe the security through
intermediary.
 Document issued on behalf of the company to subscribe the
security (deemed prospectus).
 Condition to be fulfilled for deemed prospectus;
I. . O ffer for sale within 6 months after the allotment
O r.
II. . W hole consideration is not received by the company at the time
of
o ffer.
Additional disclosure in deemed prospectus: -
1) Net consideration received or to be received.
2) Time and place for inspection of contract
3) It should signed by 2 director or in case of firm by not less than ½
of the partner.
C riminal and civil liability for misstatement in prospectus

Every person who authorised the issue of prospectus which contain
untrue statement or omission of any material information shall be
liable u/s 447 i.e. Liability of fraud
S hare certificate.
Share certificate is a documentary evidence of title.
F orm no SH-1
- Pass board resolution to issue share certificate and it should be
issued within specified time.
- I n case of incorporation – 2 months
- I n case of allotment – 2 months
- I n case of transfer – 1 month
S ealing and signing:-

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a) Sign by 2 directors and CS if any and common seal.

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b) In absence of common seal sign by 2 directors or director and CS if

any.
I ssue of renewed or duplicate share certificate:-

Company shall not issue any duplicate share certificate in lieu of those
lost or destroyed without the board approval.
Duplicate share certificate shall be issued within 45 days in case of
listed company and within 3 months in case of unlisted company.
L egal effect of share certificate.

E stoppel as to title: Share certificate is a declaration by the company to
the
entire world that the person in whose name the certificate is made out
and to whom it is given is a shareholder in theIncompany
other words the company
e stopped from denying his title to the shares.is
E stoppel as to payment: If the certificate states that on each of the
shares full amount has been paid, the company is estopped as against
a bona fide
purchaser of the shares, from alleging that they are not fully paid.
S hare and share capital
I ssue of differential voting rights (DVR) 43
 Authorised by AOA.
 GM-OR
 In case of listed company resolution by postal ballot.
 M aximum-26% of post issue paid up equity share capital.
 Distributable dividend for past 3 years (profitable company).
 No default in filling financial statement & annual returns in preceding
last 3 years.
 No default in payment of interest on debenture other deposits.
 No default in redemption of preference shares or debentures.
 No default in payment of dividend on preference shares.
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 Not penalise under SEBI, RBI, depository, SCRA act

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 No conversation is allowed from DVR to EVR and EVR to DVR.

 File return on allotment in P AS -3 within 30 days to ROC.
I ssue of preference shares (55)
 GM-SR GT - 14 – 30 days to ROC)

(M
 No existing default in case of payment of dividend and redemption of
PF shares.
 Maximum period 20 years
 I n case of infrastructure company – 30 years
 From 21st year redemption 10% every year.
 P AS-3 – 30 days – ROC.
R edemption of preference shares (55(2))

• By two ways
A) Proceeds of fresh issue
B) Surplus profit.
• Fully paid up shares can be redeemed.
• Out of profit some equal amount shall be transfer to
CRR (Capital redemption reserve).
• CRR is used to issue fully paid up bonus shares.
• Notice of redemption given to ROC in S H-7
I nability to redeem preference shares.

• Company is not in position to redeem preference shares
• Obtain 3/4th consent of preference shares and
• Approval from NCLT.
• Issue fresh preference shares equal to the amount due on
redemption including dividend it shall be considered the deemed
redemption.
R ight issue / pre-emption right:

• Shares issued to existing shareholder.
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• Power to BOD – BR
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• Bod approve letter of offer (LOO)

• Send letter of offer (LOO) at least 3 days prior to issue opening
date to existing share holder.
• Issue open for min 15 days & max 30 days
• P rivate company – Obtain approval from 90% of shareholder - may be
open
for less than 15 days.
Offer
Offer.
A R ENUNCIATION
CCEPTANCE REJECTION.
ALLOTMENT T ransfer to b od
a llot to other other
may p
t he interest Person
erson in
. of The
c ompany.
E xceptions:
Right issue not applies in the following cases
1. Conversation of convertible debentures or pf shares.
2. Conversion of government loan as per the direction given by
the government.
E mployee’s stock option scheme (ESOP)

It is an option given to the directors, employees or officers of
company or its holding company or subsidiary company which gives
right to purchase or subscribe shares at future date at pre-determined
price.
* Eligibility:-
D irector: - Whole time director (WTD) or other directors except
independent
director.
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E mployee: - Permanent employee working in or outside India
*Employee or director of the company its subsidiary company in India
or outside India or holding company in India
N on-eligibility
 Employee cum promoter or belonging to promoter group
 a director who either himself or through his relative or through
anybody corporate, holds more than ten percent of the outstanding
equity shares of the company
C onditions
 P ublic company pass SR
• P rivate company pass OR
• Vesting period – minimum 1 year
• T ill exercise – no voting right & dividend

•If failed to subscribe or exercise the option then the amount paid
shall be forfeited.
• Freedom to specify the locking period
S tatus of ESOP
D eath disable resignation

Given to its heir or vesting on the forfeited/ option
expire nominee same day.
* Disclosure in board report
I ssue of shares on preferential basis
(62) C onditions:-
1.)Offer given to selected group of
persons. 2.)Authorised by AOA.
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3.)Pass SR GT-14 -30 days -ROC.)

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(M
4.)Completion of preferential allotment within 12 months from passing
SR 5.) Failed to complete the procedure within 12 months pass
another SR.

6.)Valuation of shares is done by registered
value. 7.)Follow section 42 (private
placement).
P rivate placement. (Sec-42)

 Issue private placement offer document (PPOD) ( PAS-4) along with
application form.
 PPOD is given to selected person whom the offer is made.
 Issue PPOD within 30 days from recording the names.
 Issued to 200 persons in the financial year.
 At a time issued to max.50 persons which exclude qualified institutional
buyers and employee under ESOP.
 The above restriction is considered individually (200 equity shares,
200 debentures, 200 pf shares).
 Minimum investment size (20,000 face value)
 Fund through normal banking channel and not in cash.
 Fund kept in separate account till allotment and return of allotment is filed.
 Allotment within 60 days from receipt of application.
 Failed to allot within 60 days refund within 15 days
 Failed to refund within 15 days pay interest @12% pa from 61st. Day
 Return of allotment (PAS 3) file to ROC within 15 days.
B onus issue (sec-63).

 Known as capitalisation of profit.
 Free shares given to existing shareholders (fully paid up)
 Sources *profit
*free reserve
* Security premium.
* CRR
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 Recommended by BOD and approval by shareholder by passing OR

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 RR (revaluation reserves) cannot be utilized for issue of bonus shares.

 No default in payment of interest or principle amount on fixed deposit or
other debt security.
 No default in payment of statutory dues
 No bonus in lieu of dividend
 File P AS 3 within 30 days to ROC.
S weat equity shares. (Sec-54)

- Issued to directors or employees (permanent) at discount or
consideration other than cash for providing technical knowhow or
intellectual property
rights. (IPR).
- Employee means:-
- A) a permanent employee of the company who has been working in
India or outside India, for at least last one year;
- (b) A director of the company, whether a whole time director or not,
- (c) An employee or a director of a subsidiary, in India or outside India,
or of a holding company.
- SR carries.
*no. Of shares issued
*total consideration.
*class of director/employee
*current market price
 SR is valid for 12 months.
 L imit:-
F inancial year: - 15% of paid up equity share capital or issue
value of 5 cr whichever is higher.
A ggregate limit of life time: - 25% of paid up equity share capital.
 Price is determined by registered value
 Lock in period – 3 years
 Treated as a part of managerial remuneration if issued to directors
or manager and issued for consideration other than cash
 Disclosure in directors report
a) Class of directors or employee
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b) No. Of shares issued

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c) Terms and conditions

d) Justification of the issue

e) Class of shares
 Authenticated by CS
 No need to obtain approval from NCLT
 Maintain registrar form no. ( Sh-3).
B uy back and reduction.

 B uy back.
B uy back means purchase of its own shares by company
O bjectives of buy back
1. To return the surplus cash to shareholders
2. Increase the current market price
3. To avoid takeover bid
Sec.67 – prohibition on buy back
A) Company shall not directly or indirectly buy back its own shares or
give loan, guarantee, security, to any person for purchase of its own
shares or shares in its holding company
S ec.68 buy back subject to certain conditions
S ources;-
a. Free reserve
b. Security premium
c. Proceeds of specified securities .(other than same kind of securities)
M ethods:-
1. Existing shareholders
2. Open market – stock exchange
3. Employee where shares issued under ESOP or sweat equity shares.
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L imit: - BOD-BR:-up to 10% of paid up equity share capital +free reserve+

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security premium.

G m-SR: - 25% of paid up share capital + free reserve + security premium
 Before buy back and after buy back share capital should remain constant
 Only fully paid up shares can buy back
 Debt equity ratio shall not exceed 2:1.
 Before buy back file letter of offers (loo) to ROC
( Form SH-8)
 Dispatch to all shareholders within 21 days from filing with ROC
 Issue shall remain open for min 15 days and max 30 days
 Completion within 12 months from passing SR/ BR
 No buy back within 1 year from closing of previous buy back
 File declaration of solvency with ROC & SEBI in form ( SH-9) sign by 2
director one of whom must be MD if any
 Extinguish and destroy the shares physically within 7 days from
completion of buy back
 No further issue of same kind of security in next 6 months except by
way of bonus issue
 File return of buy back within 30 days to ROC which is signed by 2
director including MD.
 Maintain register of buy back
T ransfer to CRR (69)
In case of buy back out of free reserve and security premium a/c
sum equal amount shall be transfer to CRR.
S ec.70 prohibition of buy back;-

 No buy back through subsidiary company including its own subsidiary.
 No buy back through Investment Company.
 No buyback if default in
A. Repayment of deposit.
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B.Redemption of preference shares and debenture.

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C.Payment interest on debt security.

D.Repayment on loan.
E.Payment of declared
dividend. No default in;-
a) Filing annul return.
b) Filing financial statement
c) Declaration of dividend.
d) Distribution of dividend.
R eduction of share capital. (66)
 Reduction of share capital means reduction in issued, subscribe and

paid up share capital.
 Following transaction results in reduction of share capital
1) By way of conversion of party paid up shares into fully paid up.
2) Cancellation of paid up share capital which is lost.
3) Pay off the excess amount.
* Procedure for reduction of share capital.
1.) Pass SR.

2.) Application to the NCLT.
3) NCLT forward the application to central government, ROC, SEBI
and creditors.
4) Can raise objection within 3 months.
5) Obtain consent from creditors or discharge the debt.
6) NCLT will confirm the reduction.
7) Order shall be published by the company as directed by NCLT.
8) Order file with ROC within 30 days.
9) After reduction liability of member is reduced.
10)add to its name the word ‘and reduced’.
11)Registrar issued certificate of reduction which is conclusive
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evidence.
D iminution of share capital is not a reduction of capital.

Diminution of capital is the cancellation of the unsubscribed part of the
issued capital.
It can be effected by an ordinary resolution.
It does not need any confirmation of the tribunal under section 66.
(a)Redemption of redeemable preference shares.
(b) Purchase of shares of a member by the company on order of the tribunal
(c)buy-back of its own securities.
Diminution of share capital is not to be treated as reduction of the capital:
(i) Where the company cancels shares which have not been taken.
(ii) Where redeemable preference shares are redeemed
(iii) Where any shares are forfeited.
(iv) Where the company buys-back its own shares.
S hares and share capital.
T ransfer
 Private company.
 Restriction on transfer of shares i.e. Right given to existing shareholders
at a price determined by director or auditor.
 Director may refuse the transfer.
P ublic company.2 (71)

 The shares of public company are freely transferable.
 Two parties – transferor and transferee.
 Execution of transfer document ( SH-4).
 The instrument shall be duly stamped, dated and properly executed.
 Deliver transfer document to company within 60 days from the
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execution. If the share are partly paid up then company send notice
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to transferee and transferee shall give no objection from receipt of

notice within 2 weeks.
Delivery of share certificate within 1 month from the date of receipt of
SH-4.
* Lost of transfer document.
 If the transfer document is lost, transferee submit the indemnity bond

 If BOD think fit may register the transfer.
 0.25% stamp duty is payable by transferee on the share value
B etween the periods of transfer and register.

a. The company demands call money from transferor and transferor may
recover it from transferee.
b. The company pay dividend to transferor.
c. The transferor will vote but with the pre- direction of transferee.
T ransferor‘s death
Company has no notice company has notice of

his death.
Of this death.
Company will register not to register

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until legal

The transfer. Representative
referred to.
T ransferee’s death.
Company has no notice of his Company has notice of his

death. death.
Register the transfer. Shares cannot be registered.
- Consent of transferor and
legal
representative is required.
A ppeal against refusal.
* If company refuse transfer then appeal against such refusa
Private company. Public company -

1.) Appeal to NCLT within 30 Appeal to NCLT within 60 days -
days from receipt of notice from receipt of notice of refusal. -
of refusal. -
2.) No notice send by No notice send by company. -
company. -
3.) Within 60 days from Within 90 days.
-
the deposit of share
transfer
T ransmission.
- Operation by law
- D eath – legal representative or nominee.
- I nsolvency – official assigns or receiver.
- M erger or amalgamation—resulting company.
- L unatic – legal representatives or nominee.
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B lank transfer

 Transfer without the name of the transferee
 It is the transfer by mere delivery.
 Objective of blank
transfer;- a.) Avoidance of
stamp duty.
b.)Concealment of indemnity of real
owner c.) Evasion of taxes.
d.)Until registration transferor will be the owner.
Forged transfer.
1. Signature of the transferor is forged

2. Forged transfer are null and void.
3. To avoid forged transfer company intimate to transferor
about the lodgement of instrument ( SH-4).
E ffects of forged transfer.
 Null and void and the original owner continues to be owner and
company will restore his name.
 No denial of transfer of shares in favour of buyer
 Company is liable against the innocent buyer if his name is removed.
T ransposition of name;-
- Alteration or arrangement of name or wants to hold shares individual.

- Request to BOD.
- No need to execute transfer deed.
- No stamp duty.
S ELF NOTES.
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LAW#LOGIC#LOVE Member &
shareholders
3.Members and shareholders
M ember2 (55)
A)Subscribers to memorandum of association (deemed member)
N ote-subscribers cannot rescind the contract even on the ground of

f raud by promoter.
B)Agreement in writing with the company.

 By way of application and allotment.
 Transfer of shares
 By transmission of shares.
 By acquiescence or estoppel
C)Beneficial owner
In the record of depository.
>W
ho can become a Member?
C ompany- Legal entity can be a member.

Subsidiary company cannot become a member in a holding company.
P artnership firm—Cannot be a member. However in case of
sec 8 company firm may become a company.
L LP—legal entity can be a member.
S ection 8 company— Can become a member unless
prohibited by AOA/MOA.
F oreigner—Foreigner can be a member (follow FEMA.)
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800716622/33
shareholders
M inor:-
1. Cannot be a member.
2. If shares are transferred to minor transferor is liable for all
future calls till he attains majority.
3. Company may refuse the transfer if company knows of his minority.
4. Minor can hold fully paid up shares through guardian.
5. Minor after attaining majority, if he does not want to be a
member he must repudiate his liability on the shares on
ground of minority
I nsolvent:-
1. He is a member as long as his name is entered in register of

member.
2. Having voting power.
3. Dividend to official assignee or receiver.
4. No corporate benefit.
P awnee- Pawnee cannot be treated as member. He never
has the absolute ownership
R eceiver- Cannot exercise any of his rights till his name is entered in
register of members.
Person taking share in fictitious share -Criminal liability for

commission of fraud. He is a member.
Trade union- Registered trade union can hold the share.
A DR/GDR holder
 Cannot be treated as member.

 ADR/GDR— not a member till conversion.
J oint member.
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800716622/33
shareholders
 Two or more person applying for shares

 Joint holder treated separately except in case of private company
for the purpose of counting the member.
 In case of notice, dividend, voting rights treated as single member
 Max.4 member can hold one share jointly.
R estrictions on number of members
O pc-1
P vt. Company- min 2 and max 200.
P ublic company- min 7 and max unlimited
If number is reduced below the minimum number then the

liability becomes unlimited or NCLT can order the winding
up
C essation of members.
 Cessation means cancellation of membership

 Occurs in the following situation.
A) Transfer of shares
B) Transmission.
C)I nsolvent -Official assignee disclaims
D)Redemption of preference share
E) Surrender of shares
F) Winding up of the company
R egister 88
1) Register of members separately for each class

2) Register of debenture holder
3) Register of other securities
1
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800716622/33
shareholders
4) If there are more than 50 members then maintain index

5) Register of beneficial owner maintained by depository shall
be treated as register of member.
6) Register of foreign members
In register of members entry is made within 7 days from the
allotment o r transfer. Registers shall keep at register office of
the company or
s uch place as may be decided by passing SR
 At any place within same city town village where register

office is situated
 The place in India where more than 10% of the total
members resides.
 In case of any changes due to bonus, ESOP, right issue is made
within 7 days from approval of board.
 Authentication by CS of by authorised person.
Inspection.
 Member’s debenture holder’s security holders are beneficial

owners without any fees can inspect.
 Any other person wants to inspect may inspect by paying fees
not exceeding Rs 50.
 Inspection during the business hours.
C opies.
 Any person can obtain copies by paying fees not extending RS.10
per page.
 Company shall serve the copies within 7 days deposit of fees.
F oreign register.

1
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800716622/33
shareholders
 Companies may keep foreign registers of members or debenture-

holders, other security holders or beneficial owners residing
outside India.
 If authorised by its articles, company may keep foreign register
in any country outside India.
E vidence.
C ontent true n ame entered in ROM
Treated as deemed member
U nless proved contrary.
P reservation of register
o Register of member-maintain permanently.

o Index of member is preserved permanently. Register
of debenture holder is preserved for 8 years from
redemption.
o A nnual return and financial statement-Preserved for 8 years from
filing with the ROC.
o Foreign register is preserved permanently.
Book closure 91
i. A company may close the register for any period or periods

not exceeding in the aggregate forty-five days in a
year,
ii. Max 30 days at a time Give 7 days prior
notice R ecord date
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800716622/33
shareholders
 Date on which records of company are closed advance 7

days’ notice.
S ELF NOTES;-

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shareholders

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800716622/33
LAW#LOGIC#LOVEDEBT INSTRUMENT.
4. Debt capital
B orrowing Power (180)

Director can borrow upto 100% of PSC + FR except temporary loans.
GM-SR if borrowing exceed 100% of PSC+FR
N ot applicable to private company.
Temporary loans means repayable within 6 months.
U ltra wires borrowing.

 Borrowing beyond the authority given in AOA is known as ultra
vires borrowing.
 Such contract is void and lender cannot sue the company
for repayment of the loan.
 Securities given for such ultra-borrowings are also void.
R emedies to the lender.

 Lender can obtain an injunction order from court and recover
any property which company has bought.
 Lender can sue to director for breach of warranty of
authority if director intentionally misrepresented their
authority.
 U ltra wires borrowing is used to pay intra vires debt then lenders
s ubstitute the position of creditors.
U ltra vires to BOD but intra vires to company.

 Company will liable for such borrowing if the borrowing is
within the ostensible authority and lender acted in good faith
or transaction
was ratified by the company.
 Company would be liable, particularly if the money has been
used for the benefit of the company.
 If MD borrow large sum of money and misappropriated it and if
such borrowing is within limit then company will be liable if
1 Page
lender acted in good faith.

UNIQUE ACADEMY CS SHUBHAM ABAD-8007916622
LAW#LOGIC#LOVE DEBT
INSTRUMENT.
D ebenture:-
 Debenture includes debenture stock, bonds, or any other
instrument of a company evidencing a debt, whether
constituting a charge or
not.
 It exclude instrument such as derivatives and money
market instrument.
F eatures of debenture:-
A) It is in the form of certificate.
B) Acknowledge by the company of its indebtedness to a holder.
C)Fixed rate of interest
D)Company may issue perpetual or irredeemable debenture with
no undertaking to pay.
E) Usually contain a charge
F) No voting rights
G)Fixed deposit is not debenture.
Issue of debenture: -.
 Can be issued in same manner as shares in a company.
 Can be issued at discount or at premium.
 No ceiling, maximum, minimum limit for the rate of interest.
 Debentures are issued at pari passu clause which implies
that no difference will be made between the old and new
debenture.
P rovision of companies Act for issue of debenture.

A)Pass SR
B)Company may issue convertible debenture.
C)Max term-10 years.
1
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LAW#LOGIC#LOVE DEBT
INSTRUMENT.
D)F ollowing company may issue debenture for max term of

30 y ears.
1) Company engaged in setting up of infrastructure projects or
2) Infrastructure finance company or
3) Infrastructure debt fund non banking finance company or
4) Other companies specified by RBI/national housing
board, ministry of CG.
E) Create a charge on the assets of the company in case of
secured debenture.
F) Appoint debenture trustee before issue of prospectus to
public or members exceeding 500 and within 60 days
from allotment
execute trust deed.
G)Name of trustee must be stated in offer document.
H)Obtain written consent before appointment.
I) Create the charge in favor of debenture trustee on specific
immovable property or movable property (not being in the
nature of pledge)
J) Creation of DRR
1) DRR created out of profit available for payment of dividend.

2) No DRR is required to
A) All India financial institution and banking company for
both publicly as well as privately placed debenture.
B) Listed NBFC registered under RBI and national housing
company registered with national housing board for
both publicly as well as privately placed debenture.
C)Other listed company for privately placed debenture.
D)Unlisted NBFC registered with RBI and housing
finance company registered with national housing
board for
privately placed debenture.
3) Other unlisted company, the DRR should be maintained at least
1
10% of the value of outstanding debenture.

Page
LAW#LOGIC#LOVE DEBT
INSTRUMENT.
4) Every company required to create DRR shall deposit or invest at

least 15% of debenture maturing during the current financial year
ending 31st March
5) Deposit in schedule commercial bank or investment in
unencumbered securities of government/ trust securities.
6) Amount invested shall use for the redemption of debenture.
7) In case of partly convertible debenture create DRR for
non- convertible options.
D isqualification of debenture trustee
A person shall not be appointed as a debenture trustee, if he-
(i) Beneficially holds shares in the company;
(ii) Is a promoter/ director/ KMP/officer/
employee of the company/holding/subsidiary
or associate company;
(iii) Entitled to moneys which are to be paid by the company
otherwise than as remuneration.
(iv) Is indebted to
the
company/subsidiary/holding/associate/subsidiary of such holding
company;
(v) Has furnished any guarantee in respect of the principal
debts secured by the debentures or interest thereon;
(vi) Has any pecuniary relationship with the company amounting
to two per cent Or more of its gross turnover or total income
or fifty lakh whichever is lower, during the two immediately
preceding financial years or during the current financial year;
(vii) Is relative of any promoter or any person who is in the
employment of the company as a director or key managerial
personnel
1
Page
LAW#LOGIC#LOVE DEBT
INSTRUMENT.
(d) The Board may fill any casual vacancy provided that in case of
r esignation the vacancy shall only be filled with the written
consent o f the majority of the debenture holders.
(e) Any debenture trustee may be removed holders of not less
than three fourth in value of the debentures outstanding, at
their meeting.
D uties of debenture trustee

(a) Ensure letter of offer does not contain any matter which is
inconsistent with the terms of the issue of debentures or with
the trust deed;
(b) Condition in the trust deed are not prejudicial to the interest
of the debenture holders;
(c) Call for periodical status or performance reports from the
company.
(e) Appoint a nominee director on the Board of the company
in the event of-
(i) Two consecutive defaults in payment of interest to
the debenture holders; or
(ii) Default in creation of security for debentures; or
(iii) Default in redemption of debentures.
(g) Inform the debenture holders immediately of any breach of
the terms of issue of debentures or covenants of the trust
deed;
(i) Ensure that the assets of the company issuing debentures and
of the guarantors, if any, are sufficient to discharge the interest
and principal amount at all times and that such assets are free
from any other encumbrances except those which are specifically
1
agreed to by the debenture holders;

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LAW#LOGIC#LOVE DEBT
INSTRUMENT.
(4) The meeting of all the debenture holders shall be

convened by the debenture trustee on-
(a) Requisition by debenture holders holding at least one-tenth
in value of the outstanding debentures.
(b) The happening of any event, which affects the interest of
the debenture holders.
D EPOSIT
Deposits
D efinition of deposit
Receipt of money by way of deposit or loan or in any other
form but does not include
A) Any amount received by CG/SG/local
authority/statutory authority or repayment is
guaranteed by CG/SG.
B) Any amount received by foreign Govt/bank/multilateral
financial institution/collaborators/bodies corporate/citizens.
C)Received as a loan or facility from any banking company or
from SBI.
D)Received as a loan or financial assistance from public
financial institution, regional financial institution,
schedule banks.
E) Amount received against issue of commercial paper or
other instrument issued accordance with RBI.
F) Amount received from other company.
G)Application money or advance received towards allotment if
securities not allotted within 60 days and failed to refund
within 15 days after expiry of 60 days.
H)Amount received from director/relative of director of
private company if such fund is not borrowed by director
from others.
I) Interest free security deposit from employee not
1
exceeding annual salary.

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LAW#LOGIC#LOVE DEBT
INSTRUMENT.
J) Security deposit for the performance of the contract for

supply of goods or services.
K) Amount brought by promoter (unsecured loan)
L) Amount received under collective investment scheme.
M) Amount received by chit fund company/Nidhi company.
N)Amount of 25L or more received by startups, by
way of a convertible note (conversion within 5
years)
O) Amount received from alternate investment fund,
domestic venture capital fund, infrastructure investment
trust.
A cceptance of deposits from public

A) E ligible public company(non govt)
1) Total Deposit from member shall not exceed 10% of
aggregate PSC+FR+SP
2) Total Deposit from public shall not exceed 25% of PSC+FR+SP.
B) E ligible public company(government)

1) Total deposit from member as well as public shall not
exceed 35% of PSC+FR+SP.
C) C ondition-
1) Obtain credit rating agency(required only if deposit
accepted from public)
2) In case of secured deposit create charge within 30 days
from acceptance.
3) File circular to ROC within 30days before the date of issue
of the circular.
4) Issue circular to its member with financial statement.
1
Page
LAW#LOGIC#LOVE DEBT
INSTRUMENT.
5) Deposit on or before 30th April at least 20% of

deposits maturing in following year known as
deposit repayment reserve account.
6) N o default in repayment of deposit or company made good the
default and a period of 5 years had lapsed since making
good the default.
D eposit from member

D) P ublic company other than eligible public company
1) Can accept deposit from member up to 35% of PSC+FR+SP
after fulfillment of condition.
E) Deposit by IFSC public company.
1) Can accept deposit from member up to 100% of PSC+FR+SP

from member after fulfillment of condition
F) Deposit by other private company
1) Can accept deposit from member up to 100% of PSC-FR+SP

without compliances of condition.
G) Deposit by start up private company.
1) Can accept deposit without limit from members

without compliances of condition.
H)P rivate company which satisfy the 3 condition mention below.

A)Which is not an associate or subsidiary company.
B)Borrowing is less than twice of PSC or fifty crore
whichever is lower.
C)No default in repayment of such borrowing.
:
1
T erms of deposit (both from public and member

Page
A) T erm- Minimum 6 month and maximum 36 months.

LAW#LOGIC#LOVE DEBT
INSTRUMENT.
B) Can accept deposit for less than 6 month such d eposit

shall n ot exceed 10% of PSC+FR+SP and r epayable
not earlier
t han 3 months.
C)Deposits may be accepted in joint names not
exceeding three
D)Rate of interest as prescribe by the RBI for NBFC
E) In case of premature deposit company c an reduce the
rate o f interest by 1%.
F) R egister of deposit
1) Every company shall maintain register of deposit at
the register office
2) Entries in the register within 7 days from the
issuance of deposit.
3) Entries authenticated by a director or secretary
4) The register shall preserve for 8 years from FY in
which the latest entry made
G)File return of deposit on or before 30th of June of every year

i n form DPT-3
H) Where a company fails to repay the deposit or

interest, the depositor concerned may apply to the T
ribunal for an order directing the company to pay the
sum due or for any loss or damage incurred by him
and for such other orders as
the T ribunal may deem fit.
I) When company failed to pay deposit or interest or

deposited has been accepted for fraudulent purpose
then company and office in default is liable for
penalty under section 447.
1Page
LAW#LOGIC#LOVE DEBT
INSTRUMENT.
P unishment for Fraud.

447. Any person who is found to be guilty of fraud involving an
amount of at least ten lakh rupees or one per cent Of the
turnover of the company, whichever is lower, shall be punishable
with imprisonment for a term which shall not be less than six
months but which may extend to ten years and shall also be
liable to fine which shall not be less than the amount involved
in the fraud, but which may extend to three times the amount
involved in the fraud:
P rovided that where the fraud in question involves public
interest, the t erm of imprisonment shall not be less than
three years.
Provided further that where the fraud involves an amount less
than ten lakh rupees or one per cent. Of the turnover of the
company, whichever is lower, and does not involve public
interest, any person guilty of such fraud shall be punishable with
imprisonment for a term which may extend to five years or with
fine which may extend to fifty lakh rupees or with both.
S ELFNOTES-
1
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LAW#LOGIC#LOVECHARGES
5 . Charge
. In order to secure the loan

. Charge is created on the assets of the c ompany (in or outside India)
. Assets may be movable, immovable Tangible, I ntangible
T ypes of charge.
# Fixed charge or specific charge.

1) It cover assets which are ascertained or are capable of being
ascertained and defined.
2) Generally created on fixed assets.
3) Cannot deal in that property which has been charged.
# Floating charge / general charge

 It covers those assets which are not capable to ascertained
and defined.
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8007916622/33
LAW#LOGIC#LOVE CHARGES
 Generally it is created on current assets. It is created on

such class of assets which changing from time to time
in the
ordinary course of business.
 Company may freely deal in the property which has been
charged. Company may sell, mortgage, or lease such
charged property.
C rystallization of floating charge.
Conversion of floating charge into fixed charge by

order. E- Enforce security by creditor debenture holder
(default.) C- Cease to carry out the business.
L- Liquidation.
Any other happening on such other events.
# Effects of crystallization.
A) Priority over any subsequent equitable charge and other
and unsecured creditors
B) However, preferential creditors like government, employee
dues gets priority over the floating charge.
P ostponement of floating charge.

F loating charge leaves the company free to create equitable
mortgage o n the same property until crystallized. Where such
mortgage has
priority over the floating charge which gets postponed.
2
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 Situations where floating charges gets postponed

8007916622/33
a) Landlord who restrain from rent

b) Creditor who obtain a garnishee order
c) Judgement creditor who attach and sold the property
d) Employee or other preferential creditors
e) Supplier under the hire purchase agreement under goods
are remain the property of seller.
f) Persons who take mortgage without notice of floating charge
has priority over floating charge.
g) Floating charge created within 12 months immediately
preceding the winding up shall be invalid unless it is proved
that the
company was solvent after the creation of charge.
D ifference between mortgage and charge
M ortgage C harge
1 ) Transfer of 1) ) Security for securing
interest 2 ) Act of the l oan
the parties 2) ) Act of parties
or o peration
3) ) Registration by law
is c
ompulsory 3) ) Charge created by
o peration by law does
not r equire
4) ) Fixed term registration.
5) ) Carries personal 4) ) May be for perpetuity

2
Page
liability
8007916622/33
5 ) No personal liability u nless default.
# Registration of charge section 77.
1) Company shall register the charge within 30 days from creation.

2) Particulars of charge signed by company and charge holder.
3) Submit C HG. 1 for other than debenture and C HG. 9 for
debenture along with instrument creating charge.
4) Extension- can be granted by ROC.
A)C harge created before commencement of companies act 2019

!) Can be register within 300 days from creation of charge
!) Company shall register within 6 months from
commencement of amendment (2019) act by paying
additional fees.
B)C harge created after commencement of

companies a mendment act (2019)
!) Register within 30 days from creation if not
!) Can be register within 60 days from creation by
paying additional fees
!) Further extension of 60 days after payment of ad
valorem duty
5) ROC issue certificate of registration of charge in f orm no.CHG. 2
6) Section not applicable to charge specified by CG after
consultation with RBI.
C onsequences of non-registration.
A) Liquidator can ignore the charge and treat them as
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an unsecured creditors.

8007916622/33
C) If subsequent charge is created and registered on the

same property than later charge would get priority.
A pplication for registration by charge holder.
 *Company failed to register within 30 days from creation

 *Charge holder may apply to ROC for registration
*ROC issue 14 days’ notice to company for registration of charge.
 If company failed to register the charge even after notice
given by ROC then ROC shall register the charge.
 Fees paid by charge holder can be recover from company.
S atisfaction of charges
A)Company intimate to ROC within 30 days from satisfaction
( CHG. 4).
B)Extension can be granted by ROC for a period of 300
days after payment of additional fees.
C)ROC shall give 14 days’ notice to charge holder.
D)If no objection is received within 14 days then ROC
shall register the satisfaction of charge and issue
certificate of registration for satisfaction in form
CHG. 5.
R egister of charge.
C ompany’s register of charge.

Keep register of charge i n form CHG. 7 containing particulars of
charge.
Register of charge shall be kept at register office
2
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of the company and preserved permanently.

8007916622/33
Instrument creating charge shall preserve for 8 years

from s atisfaction.
Register of charge can be inspected by member, creditors
(free of cost) and other person (fees) during business
hour.
R egistrar’s register of charge

w ww.mca.gov.in shall be deemed to be register of charge.
A pplication to central government condonation of delay section 87.
Company fails to register with specified time then company may

apply to central government for extension of time (CHG. 8) CG
may grant
extension if satisfied that
A) Non-registration was accidental

B) Inadvertence or some other sufficient reason
C) Not of a nature to prejudice the position of creditors
D) Just and equitable grounds.
Order of CG shall be filed with ROC in form no. INC. 28
along with the fees.
S ELF NOTES-

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8007916622/33
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8007916622/33
LAW#LOGIC#LOVE Distribution of
profit
6. Distribution of profit
I ntroduction
A)Part of net profit distributed to shareholder

B)It is not obligatory but once declared it becomes debt(
except p reference dividend)
C)Return on the paid up share capital
D)It also include interim dividend.
E) Until and unless dividend is declared, the shareholder has no
claim against the dividend.
F) Distribution of dividend coupons shall not treated as
deemed dividend.
T ypes of dividend
1) ) Final dividend:-
A)Dividend declared at AGM
B)Once declared it becomes debt
C)Recommended by BOD and d eclared by shareholder by passing
OR
D)Mentioned amount of dividend in board report
2) ) Interim dividend
A) Declared between two AGM
B) Declared by BOD
C)BOD may declare during current financial year or between
closing of financial to date of AGM.
UNIQUE ACADEMY 1 CS SHUBHAM ABAD-

8 007916622/33
profit
D)In case loss in current FY up to end of previous quarter in
which dividend is declared then rate shall not exceed
average of three i mmediately preceding financial year.
E) All provision relating to payment of dividend shall apply to
interim dividend.
F) Interim dividend once declared by BOD cannot revoked except
with the consent of shareholder or if it is declared illegally.
D eclaration of dividend (123)
A) Authorized by AOA
B) Out of current year or previous year profit or both or out of
fund provided by CG/SG in pursuance of guarantee.
C)F irst set off previous year losses and depreciation (schedule 2).
D)While computing profit e xclude notional
gain/unrealized g ain/revaluation profit.
E) Company may transfer such amount to reserve before declaration.
D ividend in case of loss or inadequacy of profit
A)May declared out of previous year’s accumulated profit.

B)Rate shall not exceed average rate of 3 immediately
preceding financial year (not apply if company has not
declared dividend in each preceding 3 year.)
C) Withdrawal from accumulated profit shall not exceed 10% of PSC
and FR as per latest financial statement.

D)B alance in reserve shall be at least 15% of PSC.
E) Before declaration f irst set off the loss incurred in FY.
F) No dividend from other reserve except free reserve.

8 007916622/33
profit
P rocess for approval and payment of dividend
A)Recommendation by BOD and approved/declared by

shareholder in AGM by passing BR
B)Interim dividend can be declared by BOD
C)Deposit in a schedule bank within 5 days and payment within
30 days from declaration.
D)If dividend has not paid within 30 days then t ransfer to unpaid
d ividend account within 7 days and kept for 7 years. Company shall
p repare the list of unpaid dividend account and placed on the
w ebsite within 90 days from transfer to unpaid dividend account
E) If failed to transfer within 7 days than liable to pay interest @ 12%
on remaining unpaid amount.
F) After 7 years it should t ransfer to investor education protection fund
account(IEPF)
G)Shareholder and their legal heirs can claim his dividend or
shares from IEPF.
I nvestor education protection fund
A) Established by CG
B) To educate the investor and protect the interest of investor.
C)Amount credited to the fund
! Unpaid dividend
! Unclaimed application money
! Unclaimed matured deposit.
! Unclaimed matured debenture
! Interest thereon
! Grant given by CG/SG/BC/Institution
! Interest or other income received,
UNIQUE ACADEMY3CS SHUBHAM ABAD-
8 007916622/33
profit
U tilization of investor education protection fund
A) Refund in respect of unclaimed dividend/matured

deposit/debenture/application money/interest thereon.
B) Promotion of investor education
C)Distribution amongst shareholder/debenture holder/deposit
holder/ who suffered the losses if ordered by court.
D)Reimbursement of legal expenses in pursuing to class action suit.
D ividend during registration of transfer of share.
A) Instrument of transfer has been delivered to company but not

registered then transfer such amount to unpaid dividend
account unless registered holder authorized to pay to
transferee.
B) Any right issue/bonus issue shall keep in abeyance.
A Punishment for failure to distribute dividend
A)Every Director in default shall be punishable with imprisonment up

to 2 years and fine shall not less than 1000 per day of
default.
B)Company shall liable to pay interest @
18% C ) Exception
! Dividend could not paid because of operation of law.

! If direction is given by shareholder and such direction
cannot be c omplied by company
! Dispute regarding the right to receive dividend.
! Dividend is lawfully adjusted against the sum due from member.
! Dividend warrant is post within with in period

8 007916622/33
profit
S ELF NOTES-

8 007916622/33
L AW*LOGIC*LOVECSR
8. Corporate social responsibility
A pplicability:-
Company fulfills any of the following criteria during
immediately preceding financial year. It applies to every
company including its
holding, subsidiary and a foreign company having its branch
office or project office in India.
A) ) N et worth 500 Crore or more

B) ) T urnover 1000 Crore or more
C) ) N et profit 5 Crore or more
H owever if company does not satisfy the criteria for 3

consecutive
f inancial year then no need to follow CSR provision
C omposition of CSR committee
A) L isted director out of one shall be ID

company- 3
B) U nlisted public or private company- a t least 2 director if
p rovision of ID not applies to such company.
C)F oreign person out of one person should be person
company- 2
r esident in
India.
D)CSR committee shall formulate CSR policy and
amount of expenditure recommend to BOD.
E) CSR shall monitor the implementation of the CSR policy
from time to time.
C SR activity

8 007916622/33
L AW*LOGIC*LOVECSR
A) B y charity- money donate to various charitable trust, society,

and NGO etc.
B) B y contract- contract with NGO to carry out the CSR
activity on behalf of company.
C)B y it self- Company can create its own trust for CSR activity.
E ligible social activities
Social welfare work like eradicating poverty, health care,

sanitation, making available safe drinking water.
A) Promotion of education including special education

and employment enhancing vocational skills
B) Promoter of gender equality, empowering women, setting
up homes and hostels for women
C)Environment protection, ecological balance, animal
welfare, conservation of natural resources etc.
D)Protection of national heritage, art, and culture.
E) contribution to the prime minister’s national relief fund set
up by CG/SG
F) Contribution towards combating HIV-AIDS, or other
maternal diseases.
A ctivities not consider as CSR
A ctivities undertaken outside India

Activities that benefit only the employee and their families
of the c ompany.
A) Contribution to any political party. Event such
as marathon/awards/sponsorship of TV
programed

8 007916622/33
L AW*LOGIC*LOVECSR
B) Expenses incurred to fulfillment of any ACT/statue.

C)Expenditure incurred in normal course of business.
F ormulation of CSR policy
A) CSR committee shall prepare CSR policy and recommend

to the board.
B) BOD shall ensure activities formulate by CSR are duly
complied by company.
C)Company shall spend at least 2% of average net profit
of 3 I mmediately preceding financial year.
) Where the company has not completed three

f inancial years then average profit of preceding financial y ears shall be consider.
) Net profit shall be calculated as per section 198 of the Act. C ) Give preference to local area.
F ailed to spend CSR amount then give reasons in Board
.
report
S ELF NOTES-

8 007916622/33
L AW*LOGIC*LOVECSR

8 007916622/33
LAW#LOGIC#LOVE ACCOUNTS &
AUDIT
8 . Accounts and audit.
B ooks of accounts.
 Maintain on accrual basis which shows true and fair view
and includes.
A) All some received and expended
B)Income and expenditure
C)Assets and liabilities
 Books of account shall keep at registered office or other
place decided by BOD.
 In case of change in place file notice within 7 days to ROC in
form A OC-5.
 Books of account of branch office may be kept at that
office however send summarized account at regular
interval not more than 3 month.
 Preserve for at least 8 years immediately preceding
the Current year.
F inancial statement
 Trading and profit and loss account or income or
expenditure account.
 Balance sheet
 Cash flow statement
 Statement showing changes in equity if applicable
 Explanatory notes forming part of financial statement.
 It includes consolidated financial statement.
(financial statement of subsidiary and associate
company)
 Financial statement shall laid before AGM
 For OPC, small, and dormant company, financial
2
statement exclude cash flow statement.

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AUDIT
 Attach along with financial statement a statement

containing salient feature of financial statement of
subsidiary company.
R esponsible person for keeping books of accounts.

 Managing director or manager
 Whole time director
 CFO
 Other such person authorised by the board
* Inspection of books of accounts.

 Director or his agent or representative during business
hours. ROC, SEBI, CG, or person appointed by such
authority.
 Members if authorised by board of company in GM.
 Auditor has the right to access at all time books of
account of company account.
A pproval and signing of financial statement.

A) Financial statement shall be approved by BOD
before signing.
B) It should be signed by:
1) Chairperson if authorised by BOD
or
2) Two director one should be MD if any
and
3) CEO (if he is director) CFO and CS if any.
C)One person company- Signed by only one director

2
before submitting to the auditor.

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AUDIT
D)Auditor report and board report shall be attached to

the financial statement
R ight to get copies of audited financial statement.

 Send copies of the audited financial statement at least 21
days (14 days in case of the section 8 company)
before general meeting to members and debenture
trustee and other person who are so entitled.
 S horter period than 21 days is sufficient if:
A) Company having share capital-approval from
majority in number and holding at least 95% of the
PSC having voting power
B) Company not having share capital- 95% of member
holding voting power.
 Listed company deemed to complied this section
A) If copies made available for inspection at RO at
least 21 days before meeting and
B) Statement containing the salient features of
financial statement is sent at least 21 days
before meeting.
C)However send full copy if requested by any member.
 L isted company and other public company having Net
worth more than 1 crore and turnover of more than 10
crore can send financial in following manner
A) Electronic form to Demat account holder whose email id
is registered
B) Members who hold shares in physical form but consented
in writing to receive in electronic form.
C)In physical form to other member.
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AUDIT
R e-opening of accounts if ordered by court or tribunal

 Company can reopen after order of competent court
and NCLT.
 Application can be made by
A) CG/income tax authorities/SEBI/Regulatory
Body/competent court.
G round for re-opening
A)Accounts are prepared in a fraudulent manner.

B)Affairs of the company were mismanaged.
C)Doubt on the reliability of the financial statement.
Books of account of past 8 financial year can b e re-

opened If CG gives direction period of 8 years can be
extended.
V oluntary revision of financial statement or board’s

report
A) BOD can prepare revised financial statement or
board’s report of any of the t hree past year after
obtaining
approval of the tribunal if:
1) Financial statement do not comply with 129
2) Board report do not comply with 134.
A nnual compliances of financial statement(private and

public
c ompany )
File a dopted or un-adopted financial statement with ROC within 30

days from the date of AGM to ROC in form A
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OC-4

AUDIT
If AGM not held file financial statement along with the reasons
of not holding AGM within 30 days from last of meeting to
ROC.
A nnual compliances for OPC
A) File adopted financial statement within 180 days from

closure of FY
A udit and auditors
Q ualification of statutory auditor
A)Charted accountant or a firm where majority of

partner practicing in India
B)However in case of LLP only CA partner shall be
authorised to act and sign.
D isqualifications of auditors section 141(3)
 Body corporate under than LLP.

 Officer or employee of company.
 Partner/employee of such officer or employees of
the company.
 Persons/ partner /relative hold security or interest in the
company/ holding /subsidiary/ associate company however
relative can hold upto Rs 1 lakh (face value) corrective action
w ithin 60 days.
 Person whose partner/relative indebted to company
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/holding/subsidiary / associate/subsidiary of such

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holding company in excess of rupees 5 lac.

AUDIT
 Person /partner/ relative has given guarantee or security in

excess of Rs. 1 lac to company.
 Person or firm has business relationship with the
company except professional services and commercial
transaction as a customer engaged in the business
of
telecommunication, airlines, hospitals, hotels at arm's
length price.
 Relative is a director or in employment as a director or KMP.
 Full time employment elsewhere or appointed as an auditor
or more than 20 companies exclude one person company
small
company/dormant company/ private having share capital
less than 100 cr.
 Convicted by court offence including fraud and the 10
years has not elapsed from such conviction.
 Cannot render certain services under section 144.
 Account and bookkeeping
 Internal audit
 Design and implementation of any financial
information system
 Actuarial services
 Investment advisory services
 Investment banking services
 Rendering of outsourced financial services
 Management services.
N ote:- If auditor incurs any disqualification then he
shall
v acant his office and it would result into casual
A ppointment of 1st auditor other than govt company
A) First director shall be appointed within 30 days of registration
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by BOD
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AUDIT
B) Hold office till the conclusion of first AGM.

C)BOD failed to appoint then member shall appoint within 90
days from incorporation.
D)Inform to ROC in form ADT-1 within 15 days from appointment.
S ubsequent auditor other than govt company

A) Appointment at first AGM
B) Individual or firm who shall hold office till the c
onclusion of S ixth AGM.
C)No need to ratify the appointment.
A ppointment of auditor in govt company.

A)First auditor shall be appointed by C&AG within 60
days from incorporation.
B)C&AG failed to appoint then BOD shall appoint within
next 30 days.
C)If BOD failed then members shall appoint within next
60 days at EGM.
D)Hold office till the conclusion of AGM.
S ubsequent auditor in govt company.

A)Appointment within 180 days from the commencement
of financial year by C&AG.
B)T erm- till the conclusion of next AGM.
M anner of appointment of auditor
A)BOD consider the qualification of auditor and recommend to

the member.
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B)If company constitute audit committee

AUDIT
1) Audit committee consider the qualification of auditor

and recommend to BOD
2) If BOD agrees with the recommendation then BOD
further proposed the name in AGM
3) If BOD disagrees then BOD shall refer back to audit committee.
4) Audit committee shall reconsider the decision and if
BOD agrees then they proposed the name at AGM
5) If audit committee does not reconsider, then BOD shall send
its own recommendation to the AGM
6) Members will appoint auditor at AGM by passing
OR. R e-appointment of retiring auditor
Retiring auditor cannot be reappointed if
A) If he is disqualified
B) He shows unwillingness to be re-appointed.
C)Sr has been passed that somebody else is appointed or
retiring director shall not be appointed
D)If auditor is not appointed or re-appointed than existing
auditor shall continue to be auditor.
R otation of auditor
Applicability
A)Listed company
B)Unlisted public company having PSC 10 Crore or more.
C)Private company having PSC 50 Crore or more.
D)Any company having public borrowing and public deposit
of Rs 50 crore or more.
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AUDIT
P rovision of rotation
A)I ndividual- 1 tem of 5 consecutive years
B)F irm- 2 terms of 5 consecutive years.
C)C ooling period - 5 continuous years.
D)Member may make voluntary provision in article.
* Appointment of auditor other than retiring auditor
 Special notice by member at least 14 days before the meeting.

 Special notice is not required if provision of cooling period applies.
 Company forward a copy to retiring auditor.
 Auditor may make a representation in writing.
a) State the facts of representation in the notice.
b) Send the copy of representation to all the members.
c) If copy of representation is not sent the same shall
file to ROC.
* Auditor may require the company to read out the
representation in the meeting if not notified to member.
 Hold GM pass OR.
* Removal of auditor ;-
 Hold BM-BR
 Application to CG within 30 days from passing BR in form
DT-2
no A
 Within 60 days pass SR from the date of receipt of
order
 Opportunity of being heard shall be given before
removal.
R esignation of auditor
 Auditor may resign from office by giving notice to
company in writing.
 Non-government company
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AUDIT
 Within 30 days from resignation file reasons of resignation

to company and ROC
 Government company –
 Within 30 days from resignation file statement to the company
roc , C&AG
 File DT-3 to ROC indicating the reasons of resignation.
A
C asual vacancy
Non govt company

A) BOD within 30 days except in case of resignation.
B) In case of resignation appointed by BOD and approved
by member within 3 months.
C)T erm- till the conclusion of next AGM
Govt company
A) C&AG within 30 days from vacancy.
B) If C&AG failed than BOD shall appoint within next 30 days.
C)T erm- till the conclusion of next AGM
 P ower of NCLT to remove the auditor

 NCLT many remove any auditor Suo moto or an application by
CG. Or other concern person
 Removal if director acted in fraudulent manner.
 NCLT pass the order within 15 days from application
 If application made by CG then CG shall appoint new auditor
 Once removed further disqualified for further 5 years
 Penalty under section 447(fraud)
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I mprisonment: For 6 months to 10 years.

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AUDIT
Fine: Upto 3 times of amount of fraud.
P owers and duties of auditors.

A)Access the books of account.
B)Inquiry about the loans and advances/assets.
C)Verify the assets
D)Charging of personal expenses to revenue account.
A udit report
A)Auditor shall make a report to the member on

financial statement.
B)Audit report shall consider the provision of
companies act/accounting and auditing standard.
C)Audit report shall state that to the best of his information
and knowledge
D)Auditor shall sign the audit report.
E) Adverse opinion of auditor shall read out in the general meeting.
F) It should remain open for inspection.
Branch audit
Branch audit can be performed by–
 Auditor of the company or
 Any other qualified person
 Foreign branch-company’s auditor/ other competent person
under foreign laws.
 Branch auditor shall submit his report to the company’s auditor.
 Follow auditing standard.
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AUDIT
R eport on fraud by auditor

*Amount involved is 1 crore or more than he shall report to CG
Report to BOD or audit committee within 2 days of his
knowledge. BOD should reply within 45 days
Auditor shall forward his report to CG along with his comment
within 15 days.
If BOD failed to reply within 45 days than auditor shall
forward his report to CG.
*If amount of fraud involved is less than Rs 1 crore.

Auditor shall report to BOD or audit committee within 2 days
from his knowledge of the fraud.
Disclose in directors report
* I nternal audit sec ( 138)

 Applicable to all listed company.
 Every unlisted public company having
 O utstanding deposit- of Rs 25 Cr or more
 P SC- 50 Cr or more
 O utstanding loan- 100 Cr or more
 T urnover-200 Cr or more.
* Every private company having

O utstanding loan- 100 crore or more or
T urnover -200 crore or more.
*Internal auditor may or may not be a CA
*Employee of the company can act as an internal auditor.
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*Statutory auditor cannot act as an internal auditor.

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AUDIT
*Internal auditor should have knowledge of legal and

regulatory framework, accounting.
*C ost audit Sec(148).

 Conducted by cost accountant.
 Cost audit report submitted to BOD
 Company within 30 days from the receipt of cost audit report
shall furnish to CG
 Maintain cost record in form no (C RA-1)
 Appoint cost auditor within 180 days from commencement of FY
 Q ualification of cost audit report along with his observation or
suggestion in from CRA-3
 CG may direct the cost audit of certain class of company
eg. Manufacturing drugs telecommunication fertilizers
etc.
S ecretarial audit(204)
A)Secretarial audit is also known as compliances report.
B)It is part of total compliances management.
C)Conducted by PCS
D)Secretarial auditor is appointed by BOD.
E) Secretarial report will form part of board report.
A pplicability
1) Listed company
2) U nlisted public company having P SC of Rs 50 crore or more or
3) T urnover of Rs 250 crore or more.
O bjective of secretarial audit
1) Check & report on compliances of applicable laws and SS.

2
2) Point out non compliances

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AUDIT
3) Protect the interest of various stakeholders.

4) Avoid the unwarranted legal
action. S ELF NOTES-
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LAW#LOGIC#LOVE TRANSPARENCY & DISCLOSURE.
9 . Transparency and d isclosure
 Annual report
 Comprehensive report issued by the company to its
shareholders About the financial and other aspects
 Disclosure file within 21 days meeting to stock exchange
C ontent of annual report
 Audited financial statement

 Consolidated financial statement
 Cash flow statement
 Directors report
 Management discussion and analysis report listed company
 Business responsibility report top 500 listed company.
A dditional disclosure in annual report.
Related party disclosure

Management and discussion
analysis Industry structure and
development Opportunities and
threats
Segment wise or product wise
performance Risk and concern
Internal control system and their adequacy
Discussion of financial performance with operational performance.
C orporate governance report
Code of governance
Details of BOD and board
meeting Details of AC and
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meeting.
Details of NRC and SRC committee and meeting.
8 149221250
Remuneration to
directors. Details of
General Meeting.
Declaration by so about code of
conduct. Compliance certificate from
auditor or PCS.
D istribution of annual report to the stakeholders.
Listed entities send annual report to all stakeholders at least 21

days before the Annual General Meeting.
Annual report may be in soft copy if the email ID is
registered. If the email is not registered then submit
hard copy of report. If requested for full annual report
then provide full copy.
B oards report
Report attached to financial statement laid before any

General Meeting
It includes.
Extract of annual return GT 4
in M Number of board
meetings Director’s
responsibility,
Report declaration by ID
Policy on appointment and remuneration of
directors Particulars of low investment guarantee
Related party
transaction Material
changes if any
Conservation of energy Technology
D irector’s responsibility statement
Statement about setting standards have been

complied. Books of account shows true and fair
view.
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Proper and sufficient care for the maintenance of
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adequate accounting record.
8 149221250
Annual accounts on a Going

Concern. Internal financial control
are adequate.
Independent director should hold office for 5 consecutive years
past SR for further reappointment of 5 years.
S IGNING and dating of boards report.
If authorised by board of directors what are who should

be a Managing Director if any fore by one director
where the one director.
Signed copy of financial statement including consolidated
financial statement along with.
Notes and next to financial
statement. Auditor's report.
Board report.
Issue
circulated.
File with ROC within 30 days from AGM.
A nnual return mgt 7.
File with RAC within 60 days from Annual General Meeting or

date of AGM.
Sign by director and CS.
OBC and small company signed by CS.
A bridged annual return.
Government may prescribe abridge format annual return for

small company and prescribed company.
C ertification of annual return.
Listed company.
1
Company having p aid up share capital 100 cr or more or t urnover

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than 50 cr or more.
8 149221250
Certified by PCS stating compliances with all the provisions of

this act.
Whistle blower policy.
Accept deposit from public borrowed money bank in excess of 50
CR.
D isclosure under sexual harassment of women.
Applicable to all companies having more than 10 women

employee.
It was also disclose the
following. Complaints received
in a year.
Complaints disposed of during the
year. Complain pending for more than
90 days.
Number of workshop against sexual harassment carried out.
Number of action taken by the employer or district officer
discuss in board meeting.
Liability For statement section
448. Liable under Section 447 if
Report certificate prospectus file.
Any material know is to be false or women’s any material
facts to it is to be material.
Penalty for section 447.
I mprisonment for 6 months to 10 years.
F ine upto three times of the amount of fraud.
S ELF NOTES-
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8 149221250
LAW#LOGIC#LOVE LOANS.
1 0. Loan and Investment By C ompany (186)
C ONDITION-
 Investment through not more than two layers of investment company.
 Exclude wholly owned subsidiary.
 However, acquisition of company incorporated outside India having more
than two layers of subsidiary is allowed.
 Subsidiary company is required to have further layer of subsidiary for
meeting the requirements of law
 No company shall directly or indirectly give loan, guarantee
security, investment to any person
 Any person does not include employee of the company.
L IMIT-
 BOD by passing UR can invest or give loan, or guarantee or security
to any person e xcept employee up to
A) 60% of PSC + free reserve+ security premium or
B) 100% of free reserve and security premium
C) Pass SR if existing and proposed investment +loan +guarantee +security
exceeds such limit
Investment means subscription, purchase of securities of a body corporate.
Exemption if I+ L + G+ S provided to wholly owned subsidiary, joint

venture Company.
 Approval from public financial institution if default in repayment of

loan and interest thereon and the existing and proposed loan,
investment, guarantee, security, exceeds the limit of 60% of
PSC+FR+SP or 100% of FR+SP.
 Rate of interest on such loan shall be at least the yield return 1 year
3 year 5 year 10 year of government security.
 No default in deposit and interest.
 Disclosure the details in financial statement.
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 1 86 shall not apply to.

Banking company
Insurance company
Housing finance company
Business of financing industrial enterprises or infrastructure facility.
B . Investment made by
Investment company in right issue.
NBFC in business of acquiring securities.
E xemptions.
> Government Company engaged in defence produce.
> Government unlisted company with the approval of central government.
I nvestment in the name of the Company (187) -

a) All investment shall be made and held by the company on its own name.
b) Company may hold any shares in its subsidiary in the of any
nominee if it is necessary to do so.
c) Any share or securities not held by it in own name, then
company shall maintain a register which contain the particular of
such investment and kept open for inspection during business
hours.
R elated party transaction section 188.
R elated party 2(76)

 Director or his relative.
 KMP or his relative.
 A firm in which director, manager or his relative is a partner
 Private Company in which director, manager or his relative is a
director or member.
 Public company in which director or manager is a director and holds
more than 2% of his paid up share capital along with his
relatives.
 Body corporate whose board, MD or manager is accustomed to act as per
the directions given by the director or manager.
1
 Any person on whose advice or director or manager is a customised to act.

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 Any body corporate which is holding, subsidiary, associate company of

such company.
 Body corporate which is a subsidiary company of a holding company to
which it is also a subsidiary company.
 Any body corporate which is an investment company or the venture
of the company.
T he investing company or the venture of a company” means a body
c orporate whose investment in the company would result in the
c ompany becoming an associate company of the body corporate.]
R elative :-
( i) They are members of a Hindu undivided family;
( ii) they are husband and wife; or
F ollowing person as may be prescribed

A person shall be deemed to be the relative of another, if he or she is
related to another in the following manner, namely:-
(1) Father: (includes step-father)
(2) Mother (includes the step-mother)
(3) Son: (includes the step-son.)
(4) Son’s wife.
(5) Daughter.
(6) Daughter’s husband.
(7) Brother: (includes the step-brother)
(8) Sister: (includes the step-sister)
Related party transaction with the approval of BOD.

A) Contract regarding goods and services
B) Contract of immovable property
C) Leasing of property of any kind
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D) Availing or rendering of any services

E) Appointment of any agent for the purchase or sale of goods,

material, services or property
F) Appointment of any related party as employee (holding place of
profit) of the company, its subsidiary, or associate company
G)Underwriting for any securities or derivatives of the company.
Related party transaction by passing OR if the value exceeding
the lower of following limit.
A)S ale/supply/purchase of goods – 10% of turnover or Rs. 100 cr.

B) S elling/disposing/buying any property- 10% of net
worth or Rs.100 cr.
C)L easing of property - 10% of net worth or Rs.100 cr.
D) Availing or rendering of services- 10% of turnover or Rs. 50 cr.
E) Any regarding appointment at office or place of profit- Rs 2.5 lacs
per month.
F) Underwriter where remuneration to underwriter- 1% of net
worth.
Note :- Transaction shall be considered individually or

cumulatively for entire FY.
Turnover or net worth shall be based on audited financial

statement of preceding year.
Section 188 shall not apply retrospectively i.e. Person

becomes related party after entering into contract.
E xceptions :
 Transaction in ordinary course of business at an arms length price

 Transaction between holding or wholly owned subsidiary company.
1
 Transactions between government companies.

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 Unlisted Government Company with the related party,

approval from central or state government.
E mergency contract.
 Directors on employees enter into related party transaction
without approval
 Can be rectified within 3 months by passing BR or OR as the
case may be.
 Such contract shall be voidable at the option of the BOD or
company as the case may be.
 Director shall indemnify such contract.
Interested member
a. Interested member shall not vote at the meeting, such
restrictions shall not apply if 90% or more members are relative
of promoter or related party.
I nterested director.
Interested director shall not participate in such resolution,
not be counted for quorum and shall not vote on such
resolution.
R ole of audit committee.

*All RTP shall require prior approval of the audit committee.
*Audit committee can grant omnibus approval.
S ELFNOTES-
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LAW#LOGIC#LOVE REGISTER & RECORDS.
1 1. Register and records
S tatutory books/register
A) Register of charges
B) Register of member
C)Register of debenture holder
D)Register of security holder
E) Register of deposit
F) Register postal ballot
G)Register of KMP
H)Register of buy back.
1 ) R egister of charges
- Every company shall keep register of charges at its
register office i n CHG-7.
- It includes particular of all charges including floating charges.
- Entries shall made after creation, modification or satisfaction
of charges.
- All entries shall be authenticated by a director or CS or
other authorised person.
- Preserve permanently.
2 ) R egister of member
Every company shall maintain following register along
with index
1
- Register of member for each class separately.

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- Register of debenture holder
UNIQUE ACADEMY CS SHUBHAM

ABAD.
- Register of other security holder

- Foreign register of member and debenture holder.
3) ) P lace of keeping books of account.

- Prepare and keep at its registered office.
- However books of account may be kept at such other
place approved by BOD
- In case of c hange in place give OC within 7 days.
notice to R
4 )M
aintenance of books of account in electronic form
- Books can be maintain in electronic form
- It remains accessible in India.
- It should retained in the format in which they were
originally generated.
- Information received from branch office shall not be altered
- Electronic record of the document shall be capable of
being displayed in legible form.
5 )R
ight to inspect the register of director & KMP.
- Member can inspect and take extract within 30 days
from request to company.
- Kept open for inspection at every AGM.
- If any inspection is refused or failed to send copies within 30
days then ROC on application can order to company to
provide the same.
1
- N on applicability- 100% Govt. company

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S ELFNOTES-
ABAD.
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ABAD.
LAW#LOGIC#LOVE C,
A&A
12. Corporate reorganization
I ntroduction-
Corporate restructuring is a comprehensive process by which
company can consolidate its business operation and strengthen
its position for achieving long term and short term objective.
M erger
Fusion and absorption of one or more company by another.
A malgamation-
Two or more companies are joined together to form a new
entity or one or more companies are to be absorb or blended
with another.
C ompromise or arrangement with member or creditors. (230)
A)BM-BR
B)Application t o NCLT by following person
- Company
- Member and creditors
- Liquidator(before or after wound up)
C)Applicant should provide affidavit containing
- All material facts
- Latest financial position.
- Reduction of share capital shall be included in scheme
- Scheme shall a pproved by at least 75% of the secured creditors
in value.
- Creditors responsibility report
- Valuation report
D)Tribunal may give direction for holding the meeting
E) Notice of the meeting
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- Notice send to all creditors, member and debenture holder.

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U NIQUE ACADEMYCS SHUBHAM ABAD-8007916622/33
LAW#LOGIC#LOVE C,
A&A
- Notice send shall be accompanied by the complete details

of the scheme, copy of valuation report, effect of the
scheme.
- Notice shall also be placed on the website of the company.
F) Notice send to all regulators
- Notice send to CG, Income tax authorities, SEBI, CCI,
Stock exchange or other regulatory authorities.
- Such authorities can make representation within 30 days
from the receipt of the notice.
G)Approval of the scheme
- Scheme shall be a pproved by majority in number
representing the 3/4th in value of the creditor or member
presented and voted.
- Scheme once approved shall be binding on the company,
creditors, members, liquidator and contributaries as the
case may be.
H)File certificate by the auditor that proposed scheme
is in conformity with the AS.
I) Objection-
- Person who holds at least 10% of the shareholding or

- Person having outstanding debt amounting to not less
than 5% of total debt
M erger and amalgamation of companies (sec. 232)

A) Tribunal’s power to call meeting
- If compromise or arrangement involve merger and
amalgamation of any two companies than on application
tribunal may order the meeting of member/creditors as
the case may be.
B) Circulation of documents
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LAW#LOGIC#LOVE C,
A&A
- Draft of proposed schemed, statement showing effects

of merger, report of expert shall be circulated to all
members or creditors as the case may be
- Draft scheme shall be filed with ROC.
C)Approval from shareholder and member.
- Scheme shall be approved by majority in number
representing the 3/4th in value of the creditor or member
presented and voted.
D)Sanctioning of scheme by tribunal
- Tribunal after satisfying confirm the compromise and
make provision for the following
A) Transfer of whole or part or undertaking,
property, or liabilities
B) Allotment of share, debenture by transferee company
C)Continuation of legal action against the transferee company.
D)Dissolution without winding up of the transferor company.
E) Provision for dissented shareholder.
F) If the transferor company is listed company and the
transferee company is unlisted company the transferee
company remains unlisted until it becomes a listed company.
G)Transferee Company cannot hold shares in its own name
or under any trust as a result of merger.
E) Auditor’s certificate
- File certificate by the auditor that proposed scheme
is in conformity with the AS
F) Transfer of property or liabilities.
- By virtue of the order of tribunal, all the properties and
liabilities of the transferor company shall be transferred to
the transferee company.
G)Certified copy of order shall be filed with ROC for registration.
H)Effective date
1 Page
- Scheme shall clearly indicate an appointed date.

LAW#LOGIC#LOVE C,
A&A
I) Every company shall file annual statement duly certified

by CA/CS/CWA in practice until the completion of the
scheme indicating scheme is being complied with the
accordance with the order of tribunal.
M erger and amalgamation of certain

companies (233) # Simplified procedure for
M&A
- 2 or more small companies or
- Between holding and its wholly owned subsidiary or
- Such other class of companies specified by CG
P rocedure
A)Issue of notice to ROC and official liquidator of
respective company or person affected by the
scheme
B) O bjection within 30 days from receipt of notice
C)Objection shall be considered by the company
D)Schemed s hall be approved by at least 90% of the total
number of shares
E) Each companies shall file declaration of solvency with ROC
F) A pproval from 90% of the creditor(value)
G)Transferee company shall file a copy of the scheme
so approved with the CS/ROC/official liquidator
H)CG shall i ssue the confirmation if no objection is received
from ROC/official liquidator within 30 days.
I) CG if received the objection or if the scheme is not in
public interest than CG may a pply to NCLT within a period
of 60 days from receipt of observation.
J) On receipt of an application tribunal may modify or confirm
the scheme
K)Copy of order confirming the scheme shall be filed with ROC
1
by the transferee company.

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LAW#LOGIC#LOVE C,
A&A
L) Transferee company shall file an application indicating

the revised authorized capital with the ROC
C ross border merger
A) Foreign company with the RBI approval merge with into
Indian company
B) Consideration may be in the form of cash/ depository receipt.
M erger and amalgamation of companies in public interest

A)If CG may by notification can pass the amalgamation order
of two or more companies if it is in public interest
B)Companies can make s uggestion or modification
within 2 months from the date of receipt of draft
copy of scheme
C)Right of member, debenture holder, creditor shall
nearly remain the same after amalgamation
D)Any aggrieved party may appeal to tribunal within 30 days
from the date of order.
E) Condition of the order
- Send draft copy of the scheme to each companies concerned.
- Appeal shall be disposed off by the CG
- Copies of the order to be laid before each house of parliament.
S ELFNOTES
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LAW#LOGIC#LOVE C,
A&A
1
Page

L AW#LOGICMCA-21 & XBRL.
13. An introduction to MCA 21

& filling in XBRL.
I NTRODUCTION.
 MCA-21 has made things easier by connecting
the companies with ROCs, RDs & even MCA.
 It has saved the time of the representative &
helped them to focus on other tasks.
B enefits.
 Enables to register documents quickly & easily.
 Gives easy access of public documents.
 Faster & effective resolution of public grievance.
 Registration & verification of charges only.
 Ensures proactive & effective compliance.
 Enables the MCA employees to deliver best of
breed services.
S ERVICES OFFERED.
 Obtain digital signature certificate-The
information technology act 2000 has permitted
to use Digital
Signature on the documents submitted in
electronic form to ensure the security &
authenticity of the
documents filed electronically.
 L LP Services for business User- A business can
enter or update partner details of an LLP. I n
form 3 or
form 3 & 4.
 C omplaints-User can raise service-related
complaints, track thee complaints created & can
also give feedback or suggestion to MCA-21.
 Fee & Payment services – User can avail services
through enquire fees, pay later, link NEFT
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payment etc.

8 149221250
 Investor services-User can upload investor

details& confirm uploaded files.
C ENTRAL REGISTRATION CENTRE (CRC).

 CRS is an initiative of MCA with specific objective
of providing speedy incorporation related
services.
C ORPORATE IDENTITY NUMBER (CIN).

 Every company get a Corporate identity number (CIN).
 CIN is found from MCA-21 based on the following; -
 ROC Registration no.
 Existing company name.
 Old name of company
 Inactive CIN.
 All Indian company gets a unique 21-digit CIN.
 This is required to be quoted on all e-form.
 The CIN given to the company indicates listing
status, economic activity& state, year of
incorporation,
ownership& sequential number assigned by ROC.
F OREIGN COMPANY REGISTRATION NUMBER(FCRN).

 Every foreign company is allotted with FCRN.
 Every Indian company is allotted with CIN.
D IRECTOR IDENTIFICATION NUMBER. (DIN).

 DIN is mandatory for directors of Indian
companies who are not citizen of India.
 DIN is not mandatory for directors of foreign
company having branch office in India.
 DIN no. once obtained is valid for life time of a director.
 A single DIN is only required irrespective of the
no. of directorship.
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8 149221250
R UN FACILITY.
 Reserve Unique Name is a way of reserving a name
for a company or for a change of name of the
company.
 Only MCA portal user can use this facility
 In case of change of name of a company (CIN)
should be submitted at the time of application
through RUN process.
I NTREGATED PROCESS OF NAME

RESERVATION, C OMPANY INCORPORATION,
DIN TAN THROUGH S PICE(FORM INC-32) BY
MCA-21.
 An INTREGATED PROCESS OF NAME RESERVATION,
COMPANY INCORPORATION, DIN TAN THROUGH form
INC- 32(SPICE).
 After filling the form & making the payment user is
required to visit MCA portal & submit application
for PAN & TAN.
 Download form 49A (PAN) &49B (TAN).upload
them along with DSC.
 He has to fill the form within 2 days. Or it
would be invalid.
 As soon as the e-form is found complete,
company would be registered & CIN would be
given
 DIN gets issued to the proposed directors who
do not have a valid din.
 MAX.3 DIN is allowed. For the filling of form SPICe-32.
 On approval a COI is issued with PAN as allotted
by income tax department.
 In case of non-receivable of PAN. Track the status on
w ww.TINNSDL.COM.
D IGITAL SIGNATURE CERTIFICATE. (DSC).

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8 149221250
a. E-forms are required to be authenticated by

the authorized signatories using digital
signatures as
defined under the Information technology act, 2000
b. It is duly issued by a certifying authority.
c. It is equivalent of a written signature.
 The following are 4 types of users which
are identified as users of digital
signatures.
 MCA (govt.) employees
 Professionals.
 Authorized signatory of the company.
 Representative of bank & financial institutes.
 Foreign directors are required to obtain
digital signature certificate from an Indian
company.
I MPORTANT TERMS USED IN E-FILLING.

 P RE-FILL- It is used for filling automatically the
repeated question in e-form.
 A TTACHMENT-A document which needs to be sent

along with the form in adobe PDF format. & my
MCA portal has a facility to convert a document it
into pdf. (Not more than 2.6 MB).
M
ODIFY-After selecting check form you cannot do any
editing on it. If any modify is to be done click on
modify n edit the form.
 R ADIO BUTTON- This is used most while filling

the e- form. It helps select the option of the two.
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8 149221250
 C HECK B OX- Applicable check box is required to

tick out of the two or more boxes wherever it
appears in the
form.
 D ROP-A drop down appears n gives you the option to
select the required highlight.
 T EXT B OX- It provides detail information of the

person. Space given I enough for the info to be
written. If space is less continuing in annexure
given.
 C OUNTRY CODE-Sometimes this is to be filled

as per the info given.
 S TOCK EXCHANGE CODE-All stock exchange is

required to select their respective stock exchange
code from the given options (A OR B).
 C HECK F ORM- By clicking on this user will

come to know of mandatory details not filled.
Or size of the document is not proper.
 P RE- SCRUTINY-This is an option where

checking of core aspects has been filled or not
& pdf is attached properly. Also allows to affix
sign digitally
 S UBMIT- E-form can be submitted after it is

digitally signed. the submission is given below; -
 Log in into MCA-21 portal & uses e-form
7
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upload services.
8 149221250
 Browses the e-form & click on ‘submit’.

 Errors will be shown if any.
 If successfully filled n submit user will be takin to
fee payment page.
 A digital certification will be provided to ensure
that certificate has not expired or suspended.
S ERVICE REQUEST NUMBER- Each transaction gets a

unique service request number. After filling e form a e-
character alpha numeric string starting with Alphabets
(A- Z), called a SRN.
 User can track the status by SRN number.
D igital signature certificate

- E-form shall be digitally verified by
authorised signatory by using DSC
- it is equivalent to written signature
- user of DSC
1) MCA employee
2) Professionals
3) Authorised signatory of the company
including MD/director/manager/secretary
4) Representative of bank and financial institution
- Authority can issue DSC for one or two year
however registration is one time activity.
- Foreign director are required to obtain DSC from
an Indian certifying authority.
X BRL.
 XBRL stand for extensible business Reporting language.
 XBRL is a language for the electronic communication.
7
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8 149221250
 The most common language for

transmitting information via internet is
XBRL
 It was made to communicate between business
and other users
 XBRL provides a common electronic format for
business reporting
 XBRL is a worldwide standard
B ENEFITS OF XBRL.
 It offers major benefits to business
 The benefits are automation, cost saving faster
more reliable and more accurate in handling of
data and in better quality of decision making
 All types of organisation can use XBRL to save cost
and improve efficiency.
 It is extensible and flexible.
S ELFNOTES
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8 149221250
LAW#LOGIC#LOVE GLOBAL TREND
14. GLOBAL TREND.
Q.1 .1 Discuss director’s remuneration report in the light of

Companies A ct, 2006 of the United Kingdom.
A nswer:-
Duty to prepare director’s remuneration report under

UK Companies Act, 2006 (Section 420 & 422)
The directors of a quoted company shall for each

financial prepare a director’s remuneration report which shall
contain the information specified in the schedule to act and
comply with any
requirement to that schedule as to how the information is to be
set out in the report. The director’s remuneration report shall be
approved by the Board of Directors and signed on behalf of the
Board by a director or the secretary of the company. Every copy
of said report which is laid before the company in General Meeting
or which otherwise circulated,
published or issued, shall state the name of the person who
signed it on the behalf of the Board. The copy of the directors’
remuneration report which is delivered to the registrar shall be
signed on behalf of the Board by a Director or the Secretary of
the Company.
Q.2 .2 State the requirement for audit of the financial accounting

s tatements under the UK Companies Act, 2006.
A nswer:-
Requirement for audited accounts (Section 475 of the

9
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UK Companies Act, 2006)

UNIQUEACADEMY CS SHUBHAM ABAD-8149221250
A company’s financial statements for a financial year must be

audited in accordance with this part unless the company-
a) It is exempt from audit under Section 477 (small companies)

or Section 480 (Dormant Companies) or,
b) It is exempt from the requirements of this part under
Section 482 (Non Profit making companies subject to public
sector audit)
A company is not entitled to any such exemption unless its
balance sheet contains a statement by the directors to that effect.
A company is not entitled to exemption under any
of the provisions mentioned in Sub-Section (1) (a)
unless
Its balance sheet contains a statement by the directors
to that effect that-
a) The members have not required the company to obtain an
audit of its accounts for the year in question in
accordance with Section 476, and
b) The directors acknowledge their responsibilities for
complying with the requirements of this Act with respect
to accounting
records and the preparation of accounts.
Q.3 .3 During a period of about past one and a half decades a

number of
c ountries in the world have engaged themselves in modernizing
their r espective company laws. Can you identify the
motivating factors
u nderlying this efforts ? Mention Indian scene in particular-
A nswer:-
9
Page
A various no. of countries such as India, Australia, Canada,

Hong Kong and U.K. have initiated comprehensive effort to
modernize their respective company laws. The need to become
more:-
a) More competitive
b) Simple to understand
c) Interpret to facilitate greater compliance
d) Economic to operate
e) Attractive as a worthwhile investment destination to
accelerate economic growth’
f) Corporate Social responsibility and,
g) Better regulation and greater transparency in
corporate governance.
In India, the process has started to evolve the modern the

modern, transparent, investor friendly, well governed
company law i.e.
company bill 2009. Modernization of corporate regulation
governing setting up and running of enterprises, governance and
accountability to the investor and other stake holders. By
putting in place, a best legal frame work would unable the
Indian Corporate Sector to
operate in an environment of best international practices in a
global competitive market.
Q.4 .4 Account for the significance of Hong Kong as a vibrant

business
C entre, having some special advantage. Name the law that
governs c ompanies in Hong Kong ?
9
A nswer:-
Page
Hong Kong is an international city with advanced

information, and the free harbor for trading in the world. It is a
wonderful business situations for entrepreneurs and business
men. The advantage for setting up Hong Kong Company are as
follows.
i. Free to choose the name of the company:-

The Hong Kong government allows to choose the
name of the company to include the words such an
international, chamber of commerce, united group,
foundation, association for promotion; etc.
ii. Little Restriction of the Business Areas:-
Jewelry, Treasury, Shipment, Transportation, Import &
Export, House Estate, Website, Research Institution and other
hi- tech industry. All these can be business.
iii. Great Development in Low Taxation
Environment:- The Taxation in Hong Kong
is very low.
iv. Easy to get International Credit:-
Hong Kong is economic and financial center in Asia,
every street of which has banks. Credit is the basis to
develop international business and is easily available.
v. Doing Best to get the Inhabitant Right in Hong Kong:-
If your enterprises have done contributions to Hong
Kong. You can apply to the people’s inbound affairs office of
the Hong Kong to arrange the advice for Doing Business. If
people have inhabitanted in Hong Kong for 7 years, they
can get the eternal inhabitation right in Hong Kong.
Q.5 .5 a) Mention the provisions of the Singapore Companies Act

9
r elating to formation of companies

Page
b ) “The Provision of the Hong Kong Companies Ordinance

relating to f ormation of an incorporated company are broadly
similar to the p rovisions of the Companies Act, 2013”
A nswer:
A.) Formation of the Companies under the provisions of

Singapore Companies Act. Any person may, whether alone
or together with another person, by subscribing his name or
their names to a
memorandum and complying with the requirements as to
registration from an incorporated company.
A company may be:
a) A company limited by share
b) A company limited by guarantee on unlimited company.
P rovisions:-
A company must have at least one members- the first

consideration is to decide on the right business entity that will
meet the business needs. The most common three business
entities available in Singapore are:-
a) Sole Proprietorship
b) Limited Liability Partnership
c) Private Limited Company
a) Sole Proprietorship: The following requirements are given below:-

9
 Minimum one owner

Page
 A Singapore registered office-address

 For foreign individual and companies only : one manager
who must be a Singapore resident
Following documents are needed for registration of a

sole proprietorship
 Proposed sole proprietorship name

 Copies of NRIC
 Brief description of business activities
 Registered office address for the sole proprietorship
Limited Liability Partnership:- A LLP gives owner the flexibility

of operating as a partnership while having a separate legal
entity in Singapore. It has a separate legal entity from its
shareholders and directors, who have limited liability for the
debt and losses of the company. It usually has the words
Pvt. Ltd. as parts as its name.
Q.6 .6 a) Explain the salient features of the Australian

C orporations Act, 2001 relating to appointment of auditors.
A nswer:-
The following may be appointed as auditor of a

company for the purposes of the Australian Corporations Act,
2001
(a) An individual
(b) A firm
(c) A Company
9
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1. In case Proprietary Company, the directors may appoint

an auditor for the company.
2. The company may have more than one auditor. The
appointment of a firm as auditor of a company is taken to be
an appointment of all persons who, at the date of the
appointment, are
a) Members of the firm; and
b) Registered company auditors. This is so weather or not
those persons are resident in Australia.
3. The directors of a public company must appoint an auditor
of the company within one month after the day on which a
company is
registered as a company unless the company at a general
meeting has appointed an auditor.
4. A public company must appoint an auditor of the company
at its first AGM and appoint an auditor of the company to
fill any vacancy in the office of auditor at each subsequent
AGM.
Q.7 .7 What are the special features of the Corporations Act,

2001 of A ustralia, which are distinct and different from the
provisions of
t he Companies Act, 2013 in India?
A nswer:-
Corporations Act, 2001 and the Corporate Regulations,

2001 framed under the Corporations Act, 2001 govern the
functioning of
the companies in Australia. Following are the special and distinct
features of the corporate laws in Australia as compared to the
Indian Companies Act, 2013:

1. The Australian Corporations Act imposes duties on directors

and officers of incorporated bodies. Breach of statutory duties
draws penalties under the act which range upto $ 2,20,000.
Defaulting officers or directors may also be required to pay
compensation or to account for profits. In some cases,
directors may also be
disqualified from office.
2. It distinguishes proprietary company and public company.
A public company must have at least 3 directors out of
whom at least 2 directors must ordinarily reside in
Australia.
3. Australian securities and Investment Commission (ASIC)
controls and regulates the affairs of companies. A person
who is not
disqualified from managing corporations may only be
appointed as director of company if the appointment is
made with
permission granted by Australian Securities and
Investments Commission under the leave granted by
the Tribunal.
4. A person who is the only director and only shareholder of a
proprietary company can exercise all the powers of the company.
5. A company secretary’s obligations may continue even after
the company has been deregistered.
6. The company secretary must notify ASIC about changes:-
i.) To the identities, names and addresses of the
company’s directors and company secretaries; and
ii.) To the register of members;
and iii.) To any ultimate holding
company;
Q.8 .8 The concept of treasury shares in United Kingdom is same
as
9
b uy-back of shares in India. Examine.
Page
A nswer:-
Section 124 read with chapter 6 of U.K Companies Act,

2006 deals with treasury shares. Treasury shares are
purchased by the
company out of the distributable profits of the company
and the company is allowed to hold such shares. The
aggregate nominal
value of shares held as treasury shares must not exceed 10
percent of nominal value of issued share capital.
In India, the section 68 of companies Act, 2013, provides

that the buyback of its own shares but does not allow a
company to hold shares. Bought back shares are to be
cancelled within seven days, thus in India, bought back shares
cannot exceed 25% of total paid capital in any Financial
year.
Q.9 What types of companies can be formed in Singapore as

per Singapore Companies’ act? (Dec 2019)
S ELF NOTES-
9
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LAW#LOGIC#LOVEBOARD & ITS POWERS
15.Board Constitution and Its Powers.
Section 179 powers of board.

 A-amalgamation and reconstruction.
 B-buyback or borrow money.
 C-calls on shares for contribution to political party.
 D-debenture security issued in or outside india.
 E-investment.
 F-financial statement and board report.
 G-grant loan guarantee or security.
 H-holding or acquisition of substantial stake.
 I-internal auditor and secretarial auditor
 Board made delegate powers to any committee, managing

director manager or principal officer.
 Banking company is not covered under this section.
 In case of section 8 company following matters may be decided
by circulation.
A. Borrow company.
B.Investment.
C.Grant loan guarantee or security.
Restriction on powers of board section 180.
 Board can exercise following powers by passing sr only.
 Sale of whole undertaking or substantially the whole
undertaking. (undertaking means investment in such unit
exceeds 20% of net worth or it generate 20% or more of the
total income , substantially whole undertaking means 20% or
more value of the undertaking) borrowing power.
1
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UNIQUE ACADEMY CS SHUBHAM ABAD -8149221250

LAW#LOGIC#LOVE BOARD & ITS
POWERS
 Money already +proposed borrowing –(if exceeds psc+fr+sp)

Borrowed (excluding temporary
loan)
. (upto 6 months.)
 To invest compensation received due to merger for
amalgamation except specified security of trust act.
 To remit or give time for the repayment of any debt due
from director.
 Section 180 is not applicable to private company.
Charitable contribution section 181.

Pass or to contribute in excess of 5% of average net profit for
last three immediately preceding years.
Political contribution section 182.
 Non government company which has been existence from not
less than three financial year can contribute without any limit
by passing br
 Disclosure in p&l account.
 Contribution through normal banking channel or through
any instrument notified by law.
 It includes direct or indirect contribution.
Defence contribution section 183.
 Board can contribute without any limit if fund is approved by
central government.
 Disclosure in profit and loss account.
 Audit committee section

177. Applicability.
 Listed company
 Unlisted public company having paid up share capital 10 cr or more
2
 Turnover hundred crore or more

Page

POWERS
 Outstanding loan, deposit, borrowings, debenture 50 crore more.

 Not applicable to unlisted public company which is
A) Joint venture
B) Dormant company
C)Wholly owned subsidiary.
No. Of directors
Listed company Unlisted company.
A. Chairman shall Chairman shall be
be independent person.
independent
director.
B. All members shall Chairman shall be
be financially financially literate.
literate.
C. Atleast 4 board meeting -
gap shall not exclude -120
days b/w
two audit committee meeting.
a. Quorum 2 directors or 1/3 Quorum min no. Of
of meeting may be decided
total director which ever by bod.
is higher (min-2-id)
b. Cs shall act as a -
secretary. c. Minimum 3 Minimum 3 director-
director out of 2/3rd shall be majority shall be
independent independent director.
Function of audit committee.

A)Recommendation the appointment, terms and remuneration
of auditor except in case of govt company.
B)Review auditor’s performance
C)Approving and modify related party transaction.
D)Scrutinise the inter-corporate loan and investment.
E) Approve and modify the transaction with related party
1) make omnibus approval for related party transaction.
3
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POWERS
2) in other transaction which is not approved by audit

committee shall make its recommendation to the board.
3 ) any transaction not exceeding 1 crore is entered by

director or office without approval and is not rectified within 3
month by audit committee shall be voidable at the option of
audit committee and transaction is with related party to any
director or is authorised by any director then the concerned
director shall indemnify the company against any loss
incurred by it.
4 Not applicable in case of transaction between holding

company and wholly owned subsidiary company.
F) Evaluation of inter-corporate loans and investments.
G)Oversee the vigil mechanism
Audit committee and vigil mechanism.
*applicable to every listed company.
*companies which accept deposits from public.
* companies who borrow money from bank and financial
institute in excess of 50 crore.
*audit committee shall oversee the vigil mechanism.
*in case of repeated complaints filed by director or employee
audit committee may take suitable action.
*details of vigil mechanism to be disclosed on the website and board
report.
Audit committee shall mandatory review the following info.

*management decision and analysis of financial condition.
*statement of significant related party transaction.
4
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POWERS
*internal audit report.

*appointment removal and terms of internal auditor.
Nomination and remuneration committee
* applicability to listed company.

*other public company.
A .paid up share capital 10 crore or more.
B. Turnover 100 crore more.
C. Aggregate loan, borrowing, deposits, debenture 50 crore more.
Non applicability.
Unlisted public company.

A. Joint venture.
B.Wholly owned subsidiary company.
C.Dormant company.
D.Section 8 company.
Minimum 3 or more non executive
directors. Majority independent director.
Chairman shall be independent director.
Chairperson of the company shall not be chairman of the
such committee.
Main function is to identify the person qualified to become director
of the company.
Nrc shall recommend appointment and removal.
Quorum
*One third of the total members or two members which ever higher.
*Minimum one independent director.
*Meeting once in a year.
5
*Chairman of the committee may be present at the AGM

Page

POWERS
stakeholders relationship.
*more than 1000 shareholder, or 1000 debenture holder, or 1000 any
other security holder during the financial year .
*chairperson shall be non executive director.
*main function is to resolve the complaint of stakeholder.

*chairman of search committee shall attend the AGM authorised
person.
*listed company having less than 1000 stakeholder shall required to
constituted src
risk management committee.
*applicable to top 500 listed
company. Based on market
capitalisation.
Csr committee
1. every company shall constitutes csr committee having net
worth 500 cr more or turn over 100 cr or more or net profit 5cr or
more.
2. It shall consists of three directors one shall be independent director.
Selfnotes-
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6

L AW#LOGIC#LOVEDIRECTORS
1 6. Directors.
N umber of directors
O PC-Minimum one director
P ublic company-Minimum 3 director
P rivate company-Minimum 2 director
Maximum 15 director and max limit can be extended by GM-SR,

F or govt co. by passing OR
T op 500 listed company shall have one woman
independent director.
B OD of top 1000 listed company shall have at least 6 directors
on the board
N umber of directorship
1) M aximum 20 directorship(max 10 public company) including
alternate directorship
2) Holding or subsidiary company of public company is treated
as public company
3) Directorship in dormant company and section 8 co. shall not
be included.
4) The number of directorship can be reduce by passing SR.
D irector identification number
Every director shall mandatory hold DIN
Central government may prescribe any other identification

number which can be used as a DIN
20
DIN is valid for life time

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U NIQUE ACADEMY CS SHUBHAM ABAD- 8148221250

P
rocedure.
Obtain
DSC
Application in f orm DIR 3.
Sign by applicant using own DSC and digitally verified by
CS/MD/Director/CEO/CFO of the company in which such applicant
is to be appointed as a director.
Within one month CG shall approve or reject the application
and communicate to concern person
Within one month intimate DIN to all companies where he is a

director. Company shall within 15 days shall intimate to ROC
regarding the DIN.
C hange in particulars of directors.

File D IR 6 within 30 days from such changes.
Attach copy of the proof.
Pre certification from CA/CS/CWA in
practice. CG confirms the change and
imitates to director.
Directors shall intimate to company within 15 days of such change.
C ancellation of DIN
DIN is found to be duplicate.
DIN obtained in wrongful manner.
Death/insolvency/insanity of director
Before cancellation opportunity of being heard shall be given.
20
A ppointment of first directors 152.

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Name mention in AOA or follow the procedure given in the articles.

If AOA does not provide a manner, all subscribers who

are individuals shall be the first directors.
On or before his appointment obtain consent i n DIR-2
Company shall file consent to ROC within 30 days in f orm DIR-12.
(60 days in case of IFSC)
D isqualifications of director.
* Individual disqualification section 164(1)
1. Unsound mind.
2. Undercharged insolvent.
3. Applied to be insolvent adjudicated as an insolvent and
his application is pending.
4. Convicted by court and s entenced for 6 years has
months and 5
n ot elapsed from expiry of such sentence. If sentenced for 7
years and more, he becomes ineligible for lifetime.
5. Disqualified by NCLT or court and order is in force.
6. Convicted under related party transaction during last 5
preceding years.
7. Not paid call money for a period of 6 months from due date.
8. Not got the DIN.
Default in last three points will be continue even the appeal is filed.
C ompany Disqualification164(2)
1) Not filed financial statements or annual reports for
continuous 3 years.
2) Fail to pay deposit, declared dividend, debentures and
20
interest thereon and such failure to pay continues for one

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year or more
3) All directors of such company shall not be eligible to be

reappointed as a director of the company or appointed in other
company for a period of next 5 years from such failure.
4) Continue in the defaulting company until the compliances is done.
5) All director shall vacant the office in all the companies

expect for defaulting companies.
6) If a person is appointed as a director of a defaulting company shall

not incur such disqualification until a period of 6 months from the
date of his appointment.
7) Directors information to company before appointment for

reappointment about his company disqualification i n DIR-8
company is in default u/s 164(2) s hall inform to ROC in DIR-9
V acation of office section 167.

A) Disqualified under section 164
Disqualified u/s 164 (2) (company disqualification) vacation from

all companies except company in default.
B)Absent from all board meeting during 12 months with or

without notice
C)Convicted under section 184 – voting on such resolution in
which he is interested
D)Failed to disclose interest.
E)Disqualified by order court or tribunal.
F)Converted by court and sentenced for not less than 6 months.
20
G)Removal of director u/s 169 or by CG/NCLT.

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H)Cease to hold such employment by virtue of which was

appointed as director
.Note- office shall not vacated under clause (e) and (f) above;-
F or 30 days from such order
And if appeal or further appeal is filed u ntil the expiry of 7 days from
disposal of such appeal or further appeal as the case may be.
In case of vacation of all director then promoter or in absence of
promoter, CG shall appoint required no. of directors who shall hold
the office till the directors are appointed by company in general
meeting.
Appointment of subsequent director section 160.(other than
retiring d irector)
1. Appointment of director other than for retired director
2. Candidate or any member shall give 14 days’ advance notice

to the company at registered office with fees of Rs.1,00,000.
R efund of deposit.
A. In case of appointment of such director or
B.Who got more than 25% of total votes.
Provided that no need to deposit Rs. One lakh in case of
1. Independent director
2. Director recommended by nomination and remuneration (NRC)

committee, or director recommended by bod if no need to
constitute NRC.
3. Company shall inform to all members at least 7 days before
the meeting by way of individual notice or through email, or
by
20
advertisement in newspaper one in English and one in regional.

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4. Forward copy to stock exchange in case of listed company.

5. Obtain consent of director in f orm no. DIR-2.

6. Company shall file DIR-12 within 30 days ROC
N on applicability:-
A) Private company
B) 100% govt company or
C)Wholly owned subsidiary of govt company
R otational or non rotational director section 152(6)(7).
1. Minimum two third of total number of directors are liable to
retire by rotation.
2. Maximum one third can be non- rotational directors.
3. Article may provide higher number of rotational director.
4. One third of rotational director shall compulsory retire at
each AGM. Who have been longest in the office.
6. Appointment on same day then they shall retire by
mutual agreement and if there is no agreement then by
lot system.
7. Retiring director shall be eligible for reappointment.
N ote- Retiring director shall not include proportional representational

director, nominee director appointed by CG/NCLT/bank/FI/BIFR,
small shareholder director, additional director, nominee director of
BOD and independent director
8. Company may reappoint the same director or appoint new

director on the place of retired director or pass the resolution not
to full fill the vacancy.
9. If vacancy is not filled and meeting has not resolved, for not
20
filing the vacancy the meeting shall be adjourned to same day,

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same time, same place in the next week.

10. In adjourned meeting also vacancy is not filled and resolution for

not filing the vacancy is not passed then retiring director

shall get automatically appointed unless,
A. Resolution put and lost.
B.Director express his unwillingness.
C.Disqualified section 164.
D.Separate resolution required for appointment.
E.Original appointment in contravention of section 162.

If vacancy is not filled by automatic reappointment then it
result into casual vacancy (filled out by board).
N ote- If AGM is not held then retiring director shall vacant office on
the last date of AGM.
If MD/WTD are rotational then they shall vacant office as per the
provision of 152(6) ax 3 years. However, on reappointment they
i.e. M
c an continue their remaining term as MD/WTD i.e. For 2 years
N on applicability.
Unlisted government company.
Subsidiary of such govt. Company.

Private company.
Small shareholder director section 151.

1. Listed company may have one small shareholder director by
20
passing OR
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2. Small shareholders (equity as well as preference) means holding

shares up to Rs. 20000 nominal value.
3. Application is by 1,000 small shareholders or one tenth of
total small shareholders whichever is lower.
4. 14 days advance notice along with consent to act as a director,
DIR 2. And showing he is qualified.
5. Fulfill condition of ID.
6. Term three consecutive years.
7. Not eligible for reappointment for next 3 years.
8. N ot liable to retire by rotation.
9. Serve the post of SSD in maximum 2 company.
10. Second company shall not be in competitive business.
11. Shall not associate with company for next 3 years.
12. SSD should be qualified to be independent director and also

give such declaration in such regard.
13. V acation of SSD.
Ceases to be small
shareholder. Disqualified.
Vacation u/s 167.
Ceases to meet the criteria of independent director.
A ppointment by system of proportional representation section 163.

Representative of minority shareholder.
Article may provide minimum two third of total directors in

20
accordance with the principle of proportional representation.

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Proportional representation can also be adopted in case of CG order

appointments can be single transferable voting or cumulative voting
or any other method.
T erm- 3 years
Not eligible for retire by rotation.
I ndependent director section 149.

A pplicability
*All listed companies shall appoint at least one third of the
total directors.
*Other public company having
A) P aid up share capital of rupees 10 cr or more.

B) T urnover rupees 100 crore or more
C) Aggregate outstanding loan, debentures, deposits of Rs. 50 crore or
more.
Shall appoint at least two independent director.
N on applicability.
1. Unlisted company which is joint venture, wholly
owned subsidiary company or dormant company.
2. Vacancy fill up by the board of directors within 3 months
or immediate next board meeting whichever is later.
3. Cease to fulfil the above three conditions for three
consecutive years no need to appoint ID
4. Due to audit committee if higher id needed appoint such
20
higher number of ID.

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I ndependent director definition.
C onditions.
*Other and managing director WTD or nominee director.
*Does not have any material or pecuniary relationship
with the company or its director.
*He is a non-executive director.
C onditions.
A.Person of integrity, ability and relevant expertise.
B.Shall not be a promoter or related with the promoter of the
company holding, subsidiary, associate company.
C.Does not have any material or pecuniary relation during the
two immediately preceding financial year and during current
financial year with the company promoter director holding
subsidiary and associate amounting to more than 10% of his
total income except by way of
remuneration.
D.Relative of such person shall not hold any security or interest
in the company, holding, subsidiary, associate company during
two immediately preceding financial year or current financial year
however relative may hold up to 2% of the paid up share capital
or 50 lacs face value whichever is lower.
E.None of his relative indebted to the company, holding,
subsidiary associate company or promoter or director of the
company
none of the relatives has given guarantee or provide security in
connection with the indebtedness of any third person to
company holding, subsidiary, associate, promoter, director of
20
the company.
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D.None of is relative has any pecuniary transaction amounting to

2%
or more of the gross turnover or total income in the individually or

combination with the above transaction.
E.He or his relative shall not be a KMP or employee of the
company its holding, subsidiary, associate company in preceeding 3
financial years. Who himself or his relatives cannot be employee,
proprietor, partner in the firm of a CA, CS, CMA which provide
services to the company
holding, subsidiary, associate in any of three preceding financial
years or employee, promoter, partner in legal from whose
income from the company, holding, subsidiary, associate
company constitute 10% or more of the gross turnover of
such firm.
F.He or his relative or together holds 2% or more of the total
voting power of the company
g. He or his relative is a chief executive or director of any
non profit organization that receives 25% or more receipt from
the company
holding, subsidiary, associate company or from promoter or director
of the company or his 2% or more voting powers of the
company.
D eclaration of independent director.

At the first board meeting appointed by independent
director. First board meeting of every financial year.
First board meeting after the changes in the status of
independent director.
R emuneration of independent director.
Not eligible for stock option or sweat equity
shares. Remuneration by way of sitting fees.
20
Reimbursement of expenses and profit related commission.

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T erm of independent director.

Five consecutive years.

Reappointment for the 5 years by passing SR

After completion of 2 terms cooling period of 3 years and
shall not associate with the company directly or indirectly.
Appointment for less than 5 years treated as one term.
Not liable to retire by rotation.
Hold at least one meeting of independent director only.
Independent director shall review the performance of the
non- independent directors.
D irector appointed by board of director.
A dditional director. Section 161(1)

If authorized by AOA BOD can appoint additional director.
If AOA is silent then appointment by passing OR

To reduce the workload additional director is appointed by
bod board of directors by passing BR can appoint additional
director.
Additional director shall continue till the conclusion of AGM or
last date of AGM whichever is earlier.
Person fail to appoint as a director in general meeting, board of
director cannot appoint such person as additional director.
Appointment within maximum limit fixed by AOA.
AD can be appointed as MD or WTD and shall hold office till the AGM.
20
Can be appointed by resolution by circulation.

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Director f ile DIR 2 and company shall f ile DIR 12.

A lternate directors section 161(2)

*Appointed by the board of directors if authorised by
articles of association or pass Ordinary resolution.
*Original directors absent himself from India for at least three
months but not more than 12 months with notice, an alternate
director in his place shall be appointed.
* One person cannot act as alternate director for more
than one director.
An existing director cannot act as an alternate director.

*If original director is ID then alternate director shall
satisfy the condition of ID.
*Can be appointed by passing a resolution by circulation.
*T erm:- Original director returns to India or expiry of the term of the
original director hichever is earlier.
w
*Provision of automatic reappointment applies to original director.
*Alternate directorship is counted to determine the total number
of directorship.
Rights and liability of alternate director are same as original director.
Can act as an alternate director for the same person for two or
more different companies.
File D IR 2 by director IR 12 by company.

and D
N ominee director section 161(3).

20
*Subject to provision in AOA.

Page
*Board may appoint a person nominated by bank, financial

institute, Private equity partners, CG or SG.
*Nominee director appointed to protect the interest of the
bank financial institution.
*Nomination cannot be rejected by board of
director. CG/SG by virtue of holding shares in
the co.
Even third party can appoint nominee director as per the

agreement with co.
C asual vacancy director section 161(4)

*Casual vacancy director can be appointed by bod in the
following cases.
A)If original director(OD) is on leave for more than 12 month

B)Od resign u/s 168
C)OD’s office is vacated by casualty.
Appointment shall be subject to the approval at next AGM by
passing OR.
T erm:- Remaining term of original director.
C VD cannot be appointed by resolution by circulation.
D uties of directors section 166.

1. Acts as per AOA.
20
2. Acts in good faith.

Page
3. Avoid conflict of interest.

4. Shall not achieve any undue gain or advantages.
5. Shall not assign his office.
6. Exercise due care
7. Protect the interest of members.
R esignation of director section 168.

*May resign by giving notice to the company.
*Company within 30 days from the date of notice IR 12 and post
file D on its website.
*Director within 30 days from his resignation may IR 11 along
file D with the reasons.
*E ffective date:- On which notice is received by company or the
date specified in the notice whichever is later.
*All directors resign due to 167 director shall be appointed by
promoter or central government.
*Place the facts of resignation in next general meeting.
R emoval of director section 169.

1. Special notice given by members as per section 115 (1% of
total voting power or Rs. 5 lakh paid up having voting
power)
2. Company send copy of notice to concern director.
3. Company send notice of general meeting to all members along
with the representation made by the director.
4. If representation is received to late it shall be read out
20
at the meeting.
Page
5. Representation used to secure needless publicity, on application by

the company the tribunal shall confiscate such right and demand
the cost incurred by the company.
6. Company by passing OR can remove the director.
7. Following director cannot be reappointed by member
A) Director appointed by tribunal
B)Proportional representational director.
C)Nominee director appointed by FI/bank
8) If ID is appointed for second term, can be removed by passing SR

company f ile DIR 12 within 30 days from the removal.
9. General notice in newspaper.
10. Appointment of director in place of removed director,

process u/s 160 shall be followed and this director shall hold
office till the completion of remaining period of removed
director.
11. If company failed to fill vacancy then such vacancy can be

filed by BOD u/s 161(4) (CVD)
12. Removed director shall receive the compensation as per the

terms of agreement or the terms of appointment.
D isclosure of interest by director(184)

*Disclosure of interest at first board meeting in which he participate
as director.
*First meeting of the board in every financial year.
20
*In case of changes in interest, first BM after such changes.

Page
*If director becomes interested after the contract then disclose his

interest when he becomes interested or at the first board meeting

after the contract.
*Director shall disclose interest in any company body corporate form
in
form number BP 1.
M
*Director is interested in
A. Any body corporate in which director or directors holds more
than 2% of shareholding or he is a promoter, manager, CEO
of that
company.
B .Firm/entity in which such director is partner, owner, member.
Interested director shall not participate in such meeting and he

is not counted as for quorum.
C. If disinterested director fall below than required quorum then
remaining disinterested director shall form the quorum only if
they are 2 or above,
D. If disinterested director fall below 2 then resolution
automatically becomes void.
C. 1 84 shall not apply if.

Contract is between two company or between one or more
company and one or more body corporate where any of the
directors
(individually or jointly) of the company hold not more than 2%
of paid up share capital.
N otes:- Contract entered in contravention shall be voidable at

the
option of company.
20
Interested director of private company can participate in

Page
meeting after disclosure and counted for the quorum as well
as can vote.

L oans to directors (185)
*No company shall directly or indirectly advance any loan or

give guarantee or provide security (Prohibited category)
A) Director of the company and its holding company
B) Partner or relative of such director
C)Firm in which such director or relative is partner
 Restricted category
- Company may advance loan or can give guarantee or
provide security to any person in which director is interested
- C ondition – Pass SR and such loans are utilised
by the borrowing company for its principal
business activity.
- Any person in whom any of the director of the
company is interested means
A) Private company of which any such director is a
director or member
B)Any body corporate in which 25% or more voting
power is controlled by director or directors.
C)Any body corporate, BOD, MD, manager is accustomed
to act in accordance with the direction given by
director or
directors of the lending company.
P ermitted category.
S ection 185 does not apply to following categories
A) Loan to MD, WTD

- Loan is given as part of the condition of services extended to
20
all its employees

Page
- Such scheme is approved by SR.

B) Loan/guarantee/security in ordinary course of business

and interest rate shall not be less than the rate of
prevailing yield of one year, three year, or ten year
government security.
C)Loan/guarantee/security to wholly owned subsidiary for
its principal business activities.
D) Guarantee/security provided to subsidiary company in
respect loan provided by bank or financial institution however
such loan shall be utilise for the purpose of principal
business activities.
N ote – If company sells flat to one of its director on receipt of 50%
cash and 50% agrees to receive by instalment does not amount
to loan.
M embers right to inspect register of director or KMP(171)
- Member can inspect register of director or KMP

during business hours and member can take
extract
- Company shall provide copies within 30 days(free of cost)
- Registers shall kept open for inspection at every AGM
- If inspection during business hours is refused or copies
not send within 30 days than on request the registrar
shall on an application made to him order immediate
inspection and supply of copies.
S elfnotes-
20
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20
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LAW#LOGIC#LOVE KMP
17. Key Managerial Personnel
K ey managerial personnel 2(51)

 CEO/MD/manager
 CS
 WTD
 CFO.
 Any person who is in whole time employment and not more
than one level below the rank of director.
 Such officer as may be prescribed.
M D 2(54)
A. Director who is by virtue of AOA or

B. Agreement with the company or
C. Resolution passed in GM or BOD
D. Entrusted with substantial power and include the
director occupying the position of MD
M anager
 An individual
 Who manage whole or substantially whole affairs of the Company.
 Includes any person holding such position.
A ppointment of MD/ whole time director/ manager (section 196).
 MD or manager.
 Term cannot exceed 5 years reappointment not earlier than
one year before the expiry of term.(last year)
 Age 21 years to 70 years if a fter 70 years pass SR/OR +
1
Page
CG a pproval

LAW#LOGIC#LOVE KMP
 Not insolvent
 Not suspended the payment of creditor
 Not convicted by court and sentenced for more than 6 months.
 Appointment by passing ordinary resolution
 If appointed by passing BR then rectify by passing OR
 If disapproved by member then any act done before
disapproval shall be valid. (Act between BR and OR)
 F ile MR-1 within 60 days from appointment
F ile DIR. 2 by director and DIR. 12 by company.
S chedule v part 1 in addition to section 196.
 He had not been sentence for any period and or to a fine

exceeding rupees 1000 under 19 act.
 Shall not be detained under conservation of foreign exchange
and preservation of smuggling activity act 1974.
 Age 21 years to 70 years above 70 pass special resolution.
 Resident in India.
A. Staying in India for continuous period of 12 months
before his appointment.
B.Who comes to stay in India for taking unemployment or
carrying business in India (this condition not apply to SEZ).
E xemptions to specified company.
P rivate company.
- No need to ratify the appointment in general meeting.
- Can pay remuneration above limits
G overnment Company.
1
- The provision relating to term of MD/manager.

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LAW#LOGIC#LOVE KMP
- No need to rectify the appointment in general meeting
I FSC International finance service centre company)

- No need to ratify the appointment in general meeting.
- Can pay remuneration above limits
M anagerial remuneration adequate profit section 197.
Adequate profit.
 Total remuneration by public company shall not exceed 11%

of the net profit to all its directors.(executive as well as
NED)
 Remuneration to any one executive director shall not exceed 5%
of the net profit.
 Remuneration to all executive director shall not exceed 10% of
net profit.
 Remuneration to all NED shall not exceed 1% of net profit if
there is ED.
 Remuneration to all NED shall not exceed 3% if there is no ED.
 Above such limit pass SR.
 Default in repayment to any bank, public financial institution and
non-convertible debenture holder or secured creditors then
obtain prior approval before passing resolution.
 Remuneration for services rendered in professional capacity and
having equal qualification shall be excluded from above
mentioned limit.
 Sitting fees may be paid for board meeting or committee
meeting subject to maximum of rupees 100000 per director
per meeting even in case of loss, company can pay sitting
1
fees.
Page
 Equal sitting fees to independent director and women director.

LAW#LOGIC#LOVE KMP
 Remuneration either by way of monthly payment or

specified percentage of net profit or combination.
 If director withdraws excess remuneration without approval
the same shall be refunded to the company within 2 years
or lesser period specified by the articles till that hold it in
trust.
 Company shall not waive the recovery unless SR is passed
and obtain approval from bank financial institution non-
convertible debentures or secured creditors in case of
default.
 Premium paid on insurance taken by company on behalf of
MD/manager/CFO/CEO/CS for indemnify the company
against liability in respect of negligence, fraud shall not
treated as part of managerial remuneration unless if the
person proved guilty.
 Auditor shall make statement whether remuneration paid
to director is in accordance of section 198.
M anagerial remuneration in two companies.
Managerial person may draw total remuneration up to the

maximum limit of 5% from any one of the companies in
which he is a managerial person. However director can
receive
remuneration from holding and subsidiary company.
N on applicability
 Private company
 Government company
 IFSC company individual limit shall not apply.
1
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LAW#LOGIC#LOVE KMP
I nadequate profit follow schedule V part II
A):
(1) (2)
Limit of yearly remuneration
Where the effective capital is
payable shall not exceed
(Rupees)
(I) Negative or less than 5 cores 60 Lakhs
(ii) 5 cores and above but less
84 Lakhs
than
100 cores
(iii) 100 cores and above but
120 Lakhs
less
than 250 cores
120 lakhs plus 0.01% of
(iv) 250 cores and above the
effective capital in excess of Rs.
250 cores:
A T he above limit can be exceeded by Passing SR

Period less than one year, the limits shall be pro-rated and
E ffective capital: - PSC+FR+SP+ Long term loan and deposit+
debenture- i nvestment- preliminary expense-
accumulated losses.
(B) ) In case of a managerial person who is

functioning in a p rofessional capacity and
 Not having any interest in the capital of the company or its

holding c ompany or any of its subsidiaries company and
 Not having any, direct or indirect interest or related to the directors
or promoters of the company or its holding company or any of
1
its subsidiaries at any time during the last two years before or
Page
aonfter
orthe date of appointment and
LAW#LOGIC#LOVE KMP
 Possesses graduate level qualification with expertise and

s pecialised knowledge in the field in which the company
operates:
 Provided that any employee can hold up to 0.5% of its paid up
s hare capital under Employees Stock Option Plan or by way of
q ualification shares shall be deemed to be a person not
having any i nterest in the capital of the company;
 Remuneration shall be approved by NRC committee and there is

no default on payment of debenture, debt, deposits, and
interest for
30 days in preceding FY of appointment.
 The OR/SR shall be valid for 3 years.
 Newly incorporated company for a period of 7 years, or sick

company whom a scheme of revival has been ordered by board
for industrial and financial reconstruction or NCLT may pay
any
remuneration without any limit.
P erquisite not included in managerial remuneration
A) ) Contribution to provident fund, superannuation

fund or a nnuity fund
B) ) Gratuity payable at a rate not exceeding half a month’s
salary f or each completed year of service; and
encashment of leave at the end of the tenure.
C) ) Children’s education allowance
D) ) Holiday passage for children studying outside India.
C ompensation for loss of office of managing director whole
time d irector manager section 202.
1
Page
LAW#LOGIC#LOVE KMP
a) Company may pay compensation for loss of office to

managing director or whole time director manager.
b) R emuneration not exceed: - Remuneration which he could
earn if he had been in the office for the remaining term or 3
years whichever is lower.
c) Salary calculated as average remuneration during past 3 years
N o payment shall be made if he.

A) He resigns due to the reconstruction and he is appointed
as a manager director whole time director manager of
resulting
company.
B)Resign otherwise than amalgamation.
C)Vacation under section 167.
D)Winding up of the company due to negligence or
default of such director
e) Director has been guilty of fraud or mismanagement
the affairs of the company its holding, subsidiary
company.
 Termination of office.
 No remuneration if commencement of winding up before or
at the time of within 12 months from the date of which he
cease to hold office.
A ppointment of KMP section 203.
Applicability.
Every listed company.
Other public company having paid up share capital of RS.
10cr or more.
Conditions.
1
Company shall appoint the following

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LAW#LOGIC#LOVE KMP
A) MD or manager or CEO and in their absence, WTD.

B) CS
C)CFO
MD or CEO shall not be appointed as chairman of the
company unless
A) Authorised BY AOA
B) Company does not have multiple business
C)In case of multiple business, only company having different
CEO for each business
Public company having PSC 1 00cr or more and turnover 1000cr or
m ore that are engaged in multiple business can appoint different
C EO for each business.
Appointment by passing board resolution.

1) Whole time KMP shall not hold office in more than
one company except subsidiary company, however
can hold directorship with the permission of the
board.
2) Company may appoint managing director if he is
managing director or manager of not more than one
other company if unanimous resolution is passed in
board meeting.
3) Casual vacancy filled out by the board within 6 month
S ecretarial audit (204)
A pplicability.
 Listed company
 Every public company having paid up share capital of 50
crore or more
 T urn over 250 crore or more.
 Secretarial audit reports inform n umber MR-3.
1
 Secretarial audit report attached to board report.

Page

LAW#LOGIC#LOVE KMP
 Board of directors explain in full any qualification mark by PCS.
A ppointment of a company secretary section 205.
 Company having P SC 5 crore or more, appoint whole time CS

(Rule 8A)
 CS shall report to board of director about compliances.
 Ensure that the company complies with the applicable standard.
O ther duties.
 Guidance to director with regard to duties, responsibilities,

and Power.
 Facilitate the convening the meeting and attend board
meeting, committee meeting and GM
 Obtain approval from board, shareholders, government as
required under the act.
 Give representation before various regulatory authority.
A ppointment of cs.
BM-BR
File D IR-12 within 30 days to ROC.
File M GT-14 within 30 days to ROC.
Entry in register of KMP.
Inform stock exchange in case of listed company.
R emoval of company secretary.

Can be removed like any other employee.
BM-BR.
File D IR-12 GT-14 within 30 days to ROC.
and M
Entries in the register of KMP.
1
Page
Inform stock exchange in case of listed company.

LAW#LOGIC#LOVE KMP
S ELFNOTES-
1
Page

LAW#LOGIC#LOVE Board
meeting
18. Board meeting
*F irst board meeting within 30 days from the incorporation.

*Subsequent f our board meetings in financial year in
addition to first board meeting
 Gap between two BM should not be more than 120 days.
 1 meeting in each quarter-SS 1.
Gap shall n ot exceed 120 days.
I n case of OPC/small Company/dormant company /start
up p rivate company /section 8 company/IFSC
company
One meeting in half calendar year.
 Gap minimum 90 days.
OPC having single director- no need to hold board meeting.
N otice 173.
 At least seven clear days’ notice to all director before
the meeting.
Exclude day on which notice is served and date of
board meeting.
 Notice given to all directors including alternate director
and interesting director at their registered address.
 Give notice by hand delivery or post or electronic mode.
 Shorter notice is allowed if one ID is present in the
meeting or decision taken in the meeting is ratified by at
least one ID.
M ode of participation in BM
a. In person
5
b. Video conferencing
Page
c. Audio visual means

ABAD-
8 149221250
meeting
I mp note:-
I f meeting is called within 120 days but adjourned due to

lack of q uorum, it would still be considered in counting
the number of
m eeting to be held in a year.
N otice to a director staying aboard shall be given at his

foreign a ddress, it can also be given by electronic
mode.
W here adjourned meeting will be held as per AOA or at

the same t ime, place in the next week of original
meeting, no notice is
r equired.
I f notice is not sent to even one director, the meeting shall be

c onsidered invalid however if director attends the meeting
then t he meeting is valid.
Q uorum section 174.
 Quorum should be present throughout the meeting.

 Director should present themselves by permissible mode.
 No quorum no meeting.
 Q uorum:-One third of total director or two director
whichever
i s higher.
 Interested director cannot be counted for the
5
purpose of quorum
Page
 If more than 2/3rd director are interested then

remaining director shall form the quorum, provided they
are at least 2 in number.
8 149221250
meeting
 If disinterested director is less than 2 then resolution shall be

void.
 When quorum is not sufficient then continuing director
can act to bring the quorum to requisite number or
summon a GM and appoint director to meet the quorum.
 L ack of quorum: - Adjournment of meeting on the same day,
time, and place in next week which is not a national
holiday or if such day is national holiday then till the
succeeding day
which is not a national holiday.
 V ideo conference, audio visual mode shall be counted for
quorum.
A ttendance register.
*Maintain separate register.

*Loose leaf and serial number bound periodically.
*Maintain at registered office or other approval
place by director.
*May be taken to any place where board meeting is held.
*Open for inspection by the director even after ceased to
be a director if meeting is held during the period of his
directorship.
*Preserve for 8 financial years from last entry.
C hairman of the meeting.

A. Chairman of the meeting shall be the chairman of the board.
B.Company does not have chairman BOD shall elect
one of themselves as chairman.
5 Page
R esolution passed by circulation:-

ABAD-
8 149221250
meeting
Resolution paper circulated to all the directors as well

as committee members in India.
 Send draft resolution by following means
 Speed post /Courier /Electronic mode
 Resolution must be passed by majority of directors.
 If r equest by one third of director that the resolution
must be decided at the meeting chairman shall put the
resolution at meeting.
 Resolution passed by circulation shall be part of
subsequent meeting and made part of the minutes of
such meeting.
 Respond within 7 days from the circulation of draft
 Effective date (last date for signing or assent has been
received or date on which assent is received by requisite
majority.)
Whichever is earlier?
M
inutes.
Prepare within 30 days from meeting.

 Shall prepare sign and keep minutes of meeting.
 Circulated among all the directors within 15 days from
date of board meeting in writing or electronic mode.
 Every director who attend the meeting shall confirm or
give comment about accuracy within 7 days after
receipt of draft minutes.
 E ntry in minutes book and signed by chairperson
within 30 days from conclusion of board meeting.
 S igned by chairman of the meeting or chairman of
5
Page
the next meeting.

 All pages initiated and last page to be signed and dated.
 Preservation permanently.
8 149221250
meeting
S ELF NOTES-
5
Page

ABAD- 8 149221250
LAW#LOGIC#LOVE GENERAL MEETING.
1 9. General meeting
A)A GM (96)- Compulsory, ordinary as well as special business
B) E GM (100) - voluntary, only special business.
A GM: - First AGM.
1. Within 9 months from closing of financial year.
2. No extension by any authority.
3. Financial year- Incorporation before 31st December- Next year.
4. Financial year- Incorporation between 1st Jan to 31st March-

Subsequent year.
5. No need to call annual general meeting in the year of incorporation.
S ubsequent AGM.
 Once in a calendar year within 6 months from closing of

financial year
 Extension for a period not exceeding 3 months by ROC on
special ground. (like natural calamities, registered office is
locked or books seized by authority)
 G ap between 2 AGM shall not exceed 15 months.
D ay- Any day except national holiday Or other day specified by central
government as a national holiday, however if company has
already send notice of the meeting then such day declared by CG
shall not be treated as national holiday for that particular
company.
16
T ime: - During business hours i.e. 9 to 6 may continue

Page
even after business hours.

P lace: - a) Registered office, or any place within city, town, village

where RO is M of unlisted company- Any place in India with
situated. G
prior approval of all members. (Approval in writing or by
electronic means)
C) A GM of govt company- Any place with the approval of CG
B usiness: -Ordinary as well as special business
A GM by NCLT (97)
A) Any default is made in holding AGM or

B) Application is made by any member
C)The tribunal may call AGM
D)Tribunal may give such ancillary direction as may be necessary.
E) Direction include any single member by person or proxy may
hold valid meeting.
F) AGM held by NCLT shall deemed to be AGM of the company
E GM by NCLT (98)
A) Impractical to hold EGM

B) Application is made by any member(having voting power)
or director
C)Tribunal may suo moto call EGM if necessary
D)The tribunal may call EGM
E) Tribunal may give such ancillary direction as may be necessary.
F) Direction include any single member by person or proxy may
hold valid meeting.
16Page
D efault in complying section 96 to 98 (99)

A)O
ne time default- Rs 100000
B) C ontinuing default- Rs 5000 per day for the defaulting period.
E GM (100)
EGM may be called by following methods.
A) BOD
B) Requisition
C)Member
D)NCLT.
E GM by BOD:-
BOD by passing BR may call EGM to transact special business.
A)E GM by requisition
1) Requisition by 1/10th of paid up share capital having
voting power in case c ompany having share capital.
2) 1/10th of total voting power if company not having
share c apital.
3) Deposit reacquisition at registered office of the company.
4) Board of directors shall proceed within 21 days and shall
hold meeting within 45 days from the date deposit of
requisition.
5) If BOD failed to call meeting then member may call meeting
within 3 months from date of deposit of requisition
6) Reimbursement of expenses to requisitions by company.
7) F ails to call meeting if company-
*Fails to proceed within 21 days.
*Hold meeting after 45 days.
16
*Part of business is pending.

Page

 D ay- Any day including national holiday.

T ime- Any time even after business hours.
P lace- Any place in India.
 M eeting called by the acquisition- Registered office or such other
place within city town, village where registered office is situated.
 M eeting of wholly owned subsidiary of a company incorporated
o utside India- Any place in or outside India.
O ne person company
>No need to hold general meeting.
>Resolution is communicated to company and recorded in
minutes book.
>Class meeting. Can hold if required.
N otice (101)
Clear 21 days’ notice.
1) Either in writing or electronic mode.
2) Exclude the day on which notice is served and date of meeting.
(Exclude 2 days)
3) If notice is send by post then it deemed to be served after the
expiry of 48 hours from post.(exclude total 4 days to count 21
clear days)
4) Omission to send notice on mistaken ground that he is not
member will not be considered as accident omission.
S horter notice-
 AGM- Approval from not less than Ninety-five per cent of

16
the members entitled to vote thereat; and

Page

 EGM (Company having share capital) - Majority in number

of members entitled to vote and who represent not less
than ninety-five per cent. Of such part of the paid-up share
capital of the company as gives a right to vote at the
meeting; or
 EGM (Company not having share capital) -Not less than
ninety- five per cent. Of the total voting power
exercisable at that meeting:
1 01(2) Content of the notice.

# Specified day, date, time, place, proxy form,
agenda. # Member by person or proxy can attend
GM.
1 01(3) Entitlement of notice.

# M- Member or his legal representative (equity and
preference) # A- Auditor statutory.
# D- Directors.
S S- 2
Additional entitlement of notice give to.
-Secretarial auditor.
-Debenture trustee.
-Other specified member.
M o de of notice.
-Writing, by hand, ordinary post, registered post, speed post, and fax.
- S ection 102 explanatory statement.

-In case of special business attach explanatory with notice.
- It includes the nature of interest in respect of each item of
16
every director, manager, KMP and relatives of such person.

Page
O rdinary business: -
A)Adoption of financial statement

B)Declaration of dividend
C)Appointment of retiring director
D)Appointment of, and the fixing if the remuneration of auditor.
S pecial business: -
Any business other than ordinary business.
S ection 103 quorum.
1. Minimum number of members required to be present

in the general
2. Meeting to constitute valid general meeting.
3. No quorum no meeting.
4. P rivate company: - Two members personally present
5. Proxy are not counted for the purpose of quorum.
6. P ublic company: -
U p to 1000 members -Minimum five members.
1001 to 5000 member- Minimum 15 members
M ember exceeding 5000- Minimum 30 member
7. Representative of governor, president, or body
corporate treated as member.
8. Joint shareholders are counted separately for purpose of quorum.
9. Interested members are counted for the purpose of
quorum but cannot vote on that particular business.
10. One person can be representative of more than one
body corporate he will be counted separately if one more
individual present at the meeting.
16
A djournment of meeting: -
Page
If the quorum is not presented within half an hour then

A) Meeting shall stand adjourned to the same day, time, place in

the next week or such other place, time, date decided by
BOD
B) Meeting shall stand cancelled if called by requisitions.
N otice of adjourned meeting.
In case of any changes in time, day, place by BOD then the

company shall give notice of not less than 3 days either
individually or by way of advertisement in newspaper.
Q uorum in case of adjourned meeting.

a) If adjournment is because of lack of quorum- the
presented member shall form the valid quorum. (at
least 2)
b) If meeting is adjourned because of other reasons- original
quorum is required
c) Resolution is passed at an adjourned meeting shall be treated
as passed on the day it was actually pass and not on any
earlier date.
d) Even a single member by person and proxy can hold valid
meeting if directed by NCLT.
C hairperson (104).
- The name of chairman or procedure to appoint chairperson
is mentioned in article of association.
- If AOA is silent then member shall be elected by members
by show of hand.
- Generally members elect the chairperson but if articles of
association provide then directors can elect the chairperson.
- If poll is demanded taken immediately.
- The chairman elected on a show of hands shall continue to
16
be the chairman of the meeting.

Page
- Poll can be demanded by members or proxy.

- If chairman is not present within 15 minutes, one of the

director can act as a chairperson.
- Directors are unwillingness to act as a chairman then select
one of the members as a chairman of the general meeting.
P roxy section—105.
 Proxy means a person appointed by member to attend the

general meeting.
 Proxy need not be member accept section 8 company
 Company not having share capital cannot appoint proxy accept
AOA permit.
 Proxy is not counted for the purpose of quorum.
 Not allowed to speak and vote unless poll is demanded.
 Deposit proxy form at least 48 hours before the meeting
at the registered office of the company
A rticle cannot prescribe longer period than 48 hours.
A person can act as a proxy on behalf of maximum 50 member

and holding 10% of total share capital.
I f a single member holds 10% or more capital than proxy can

act on b ehalf of such member only.
Proxy must be in writing and signed by member his duly

authorized. If appointer is body corporate affix a common seal.
16Page

Company cannot send invitation to appoint proxy at company’s

expenses, however if a member has requested in writing then
company can send the invitation.
R evocation of proxy;-
 Person himself attend the meeting and voted.

 Deposit of new proxy form within specified time.
 Written notice has been given before commencement
or adjournment of meeting.
 Notice of revocation signed by a member who signed the
proxy form.
I nspection of proxy.
 Inspection by members entitled to vote.
 3 days advance notice should be given to the company.
 Inspection between 24 hours before the commencement
of meeting till the conclusion of meeting. Inspection
between business hours.
R estriction on voting rights 106.

The holder of partly paid up shares cannot vote.
S ection 107 voting by show of hands.

 Voting firstly taken by show of hands.
 Count the hands raised in favour or against the motion.
 Chairman announces the resolution whether it is carried or
lost and entered in minute book.
 One member one vote.
16
V oting through electronic mode section 108.

Page

A pplicability.
Listed company. (Equity shares are listed)
Company having more than 1000 or more members.
N on applicability
whether debenture/ preference shares are only
listed. Listed on SME platform.
Listed on institutional trading platform.
Nidhi Company.
 N otice is send to all members, auditors, directors

 N otice shall specify the details about the e voting
 N facility. otice also post on the website.
 A lso published in newspaper at least 21 days before gm one in
e nglish and one regional language.
 E-voting shall remain open for minimum 3 days and close at
5 pm on the day preceding the general meeting.
 Members can physically attend general meeting but can
vote through one mode only.
 Once voted cannot change subsequently.
 BOD shall appoint scrutinizer who is not in employment.
 Scrutinizer shall declare result within 3 days from the
conclusion of meeting.
 Result should be displayed at register office, head office,
corporate office and website of the company.
16Page
V oting by poll (109)

Poll can be demanded before or on the declaration of the

result by show of hands.
Poll can be demanded by member or proxy or
chairperson. A poll demanded may be withdrawn at
any time.
W ho can demand poll:-
C ompany having share capital:-Member by person or proxy having

10% of the total voting power or aggregate holding not less
5,00,000
Company not having share capital: - Member or proxy having

10% of total voting power.
T ime of poll:-
A)A djournment of meeting and appointment of chairman- Taken
immediately.
B) O ther cases- Within 48 hours
 Poll paper shall be given to all members having voting rights.
 Chairman will appoint the scrutinizers, person other than
in employment.
Scrutinizer will submit the report to chairman.
Chairman declared the result. Result of the poll shall be
deemed to be the decision of the meeting.
Voting by postal ballot (110)
Business compulsory transacted by postal ballot
A) Alteration of object clause, alteration of AOA to determine

16
private company.
Page
B) Buy back
C)Change in the register office outside local limits.

D)Demerger/ merger/takeover/acquisition
E) Election of small shareholder director
F) For selling whole or substantially whole of the undertaking.
G)Giving loan or extending guarantee or provide security in
excess of the limit
H)Variation of right attached to shareholder and debenture holder.
B usiness compulsory transacted at general meeting.
A) Ordinary business
B) Transaction where director or auditor have right to be heard.
P rocedure.
1) Optional for OPC and other company having up to 200
members.
1) Send notice to all member along with draft resolution.
2) Notice shall be send by registered post, speed post,
through electronic mode, courier service.
3) Advertisement in newspaper one in English and one in
regional language.
4) Notice shall also post on the website of the company.
5) Members shall give assent or dissent within 30 days
from dispatch of notice.
6) Vote received after 30 days shall not be consider.
7) BOD shall appoint one scrutinisers who is not in employment.
8) Scrutinisers shall submit report within 7 days from last
date of voting or last ballot paper received, whichever is
earlier.
9) The result shall be declared by posting on the website
of the company.
16
10) Business transacted by postal ballot, may be transacted

Page
by electronic means under section 108.

C irculation of member’s resolution: -

A)Requisition made in writing by 1/10th of paid up equity
share capital in case c ompany having share capital
B)I f company not having share capital then requisition by
1/10th of total voting power.
C)Notice shall be deposited at least 6 weeks before the
meeting in case requisition proposing the resolution.
D)However, meeting is called within 6 weeks then the notice
shall deem to be deposited within time.
E) Notice shall be deposited at least 2 weeks before the
meeting if requisition wants to circulate any statement with
respect to
proposed resolution.
F) The company shall circulate the notice to all member.
G)However, company is not bound to circulate any statement if
CG is satisfied that member wants to secure needless
publicity.
 M inutes section 118.

 Recorded within 30 days.
 Serially number.
 Fair and correct summary of proceeding.
 All appointments made shall be included in minutes.
 In case of board meeting includes name of the
directors present at the meeting
 And the names of directors who descended the resolution.
 Distinct minutes book for different meeting.
 Can be in loose leaf form but bound periodically.
16
 Can kept at registered office or such other place approved

Page
by board.
Preserved permanently with the custody of CS.

 Can be in physical or electronic mode.
 Signed by chairperson of the meeting or duly
authorised director.
 CS can never sign the minutes of the company.
R eport on annual general meeting section

121 Applicable to every listed company.
Prepare a report on each annual general meeting and filed
with the ROC within 30 days from conclusion of annual general
meeting in
f orm MGT 15.
Signed by chairman of the meeting or by two directors one of
whom shall be a managing director.
It contains for and correct summary of the proceedings.
R esolution requiring special notice section 115.

1) S pecial notice is required to move resolution.
2) Notice shall be signed individually or collectively.
3) Members holding not less than one percent of total voting power
or
4) Aggregate sum of not less than rupees 500000 paid up.
5) Notice not earlier than 3 months but at least before 14 days
before meeting.
6) Company shall send notice to members at least 7 days
before the meeting.
7) If it is not practicable to give notice then published in
newspaper one in English and one in vernacular language at
least 7 days before the meeting.
16
( 114) Types of resolution

UNIQUE ACADEMYCS SHUBHAM ABAD-8149221250
Page
Ordinary resolution- Vote casted in favor is more than voted

casted against the motion. (Simple majority)
Special resolution- Vote casted in favor is three times more then

vote casted against the motion. (75% or more).
S elf notes
16Page

16Page

LAW#LOGIC#LOVE VIRTUAL MEETING.
2 0. VIRTUAL MEETING.
 R equirement of virtual meeting.

I. Meeting room
II. Software
III.High quality, mike system.
IV. Hardware equipment like monitor LED screen
V. Projector
VI. Leased lines
VII. High speed wireless internet.
 V irtual board meeting.

I. Any director may participate through electronic mode.
II. Notice of meeting shall be send to all directors. & inform
the directors about the option of video conferencing.
III.Director shall prior intimate to chairperson or
company secretory.
IV. Chairman or CS shall make suitable arrangements
V. Director may intimate at the start of the calendar year,
which shall be valid for such calendar year.
VI. Counted for the purpose of the quorum.
VII. Attendance register shall be deemed to be signed.
 M atters not to be dealt with in a meeting in video conference.

I. Approval of annual financial statement.
II. Approval of boards report.
III.Audit committee meeting for consideration of
financial statement.
IV. Demerger, merger acquisition & takeover.
V. Approval of prospectus.
1Page
UNIQUE ACADEMY CS SHUBHAM ABAD.

 V
irtual general meeting(Advantages).
I. Increase shareholders participation in meeting.
II. Save time on travel & cost.
III.Encourages more participation by investors across the world.
IV.Reduce the cost of conducting & holding shareholders
meeting.
V. Save time of company’s personal.
 D ifficulties in holding virtual GM.

I. Security of the system used
II. Streaming with quality without interruption.
III.Providing with secure login id.
IV. Customised instant result & detailed audit reporting
V. Data security.
 R ole of chairperson & CS

I. Safeguard the integrity of the meeting
II. Record proceeding& prepare minutes.
III.To store safekeeping marketing the tape
recording. IV.Ensure no unauthorized access
V. Other necessary measures.
S ELF NOTES-
1 Page
1 Page

Scanned by CamScanner
LAW*LOGIC*LOVE. SECRETARIAL BOARD.
2 2.
SECRETARIAL B
OARD
C omposition of SSB. (SS board.)

 Representatives from major industries.
 Federation of Indian chambers of commerce & industries.
 Confederation of Indian industries.
 The association of chambers & commerce & industry of India.
 PHD chamber of commerce & industry
 Representative of regulatory authority such as MCA, SEBI,
RBI, SIX, BSE, NSE, ICAI, ICSI, ICWAI.
F unction of SSB
 Formulate secretarial standard.
 Clarifying issues arising out of SS
 Issuing guidance notes &
 Reviewing & updating the SS
 Note- SS do not substitute any existing law or rules but
only supplementary of such act rules.
 In case if the SS is inconsistent with any law the provision
of the said law shall prevail.
P rocedure for formulation and issue of SS.
 SSB in consultation with Council determine the areas of
Need and priority
 SSB main constituent working group to formulate draught
of proposed standard.
 Draft Circulated among the members of working group
for discuss and shall be modified appropriately.
 Draft also circulated to regulatory authorities for their views.
 Prepare and publish in the chartered secretary the journal
of ICSI and placed on the website of ICSI.
1
Page
 SSB shall finalize & submit to council

UNIQUE ACADEMY. CS SHUBHAM
ABAD-
8 007916622/33.
LAW*LOGIC*LOVE. SECRETARIAL BOARD.
 Council will consider the final draught an issue

SS S S issued by ICSI (complementary)
(compulsory.)
S S1—
BM S S2
—GM
S S3—DIVIDEND
S S4--- REGISTER & RECORD.
Meeting
C lass meeting.
1. Meeting of separate class is known as class meeting.

2. In case of variation of the right attached to class Holder
Company shall hold separate meeting and obtain consent of
class holders (SR).
3. Quorum-Two persons are representing by proxy one third of
issued capital
S ELF NOTES.
1 Page
UNIQUE ACADEMY. CS SHUBHAM
ABAD- 8 007916622/33.

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Company law CS Executive

SR.NO PART TWO COMPANY ADMINISTRATION & MEETING/

SR. PART THREE CS AS A PROFESSION SECRETARIES.

DEDICATED TO MY PARENTS SHRI RIKHABCHAND

 O-Ownership &management both are separate.

Company can enter into contract on its

own. Common seal.

Official signature of the company Optional- signed by 2 director and CS if

B ody corporate 2(11)

‘E very company is a body corporate but everybody corporate is not a company’.

Company is not a citizen because citizenship can only granted to natural

I llegal association 464

I n following cases court can lift corporate veil.

 F-Fraudulent application for removal of name.

then court can lift the veil.

 C-Conflict of public policy religious sentiments.

 A-Avoidance of welfare legislation.

 S-Submission of false information.

 D-Determination of enemy character.

UNIQUE ACADEMY CS SHUBHAM ABAD-

UNIQUE ACADEMY CS SHUBHAM ABAD-

R ed herring prospectus Sec 32

S helf prospectus (31)

over a certain period without the issue of a further prospectus.

A bridged prospectus 2(1) (Chotu).

P remium (sec 52)

 File return on allotment in f orm PAS-3 within 30 days to ROC.

C riminal and civil liability for misstatement in prospectus

S ealing and signing:-

a) Sign by 2 directors and CS if any and common seal.

b) In absence of common seal sign by 2 directors or director and CS if

I ssue of renewed or duplicate share certificate:-

L egal effect of share certificate.

 Not penalise under SEBI, RBI, depository, SCRA act

 No conversation is allowed from DVR to EVR and EVR to DVR.

I ssue of preference shares (55)

 GM-SR GT - 14 – 30 days to ROC)

R edemption of preference shares (55(2))

I nability to redeem preference shares.

R ight issue / pre-emption right:

• Bod approve letter of offer (LOO)

E mployee’s stock option scheme (ESOP)

• T ill exercise – no voting right & dividend

D eath disable resignation

3.)Pass SR GT-14 -30 days -ROC.)

UNIQUE ACADEMY CS SBHUBHAM ABAD-8007916622/33

P rivate placement. (Sec-42)

B onus issue (sec-63).

 Recommended by BOD and approval by shareholder by passing OR

 RR (revaluation reserves) cannot be utilized for issue of bonus shares.

S weat equity shares. (Sec-54)

b) No. Of shares issued

c) Terms and conditions

UNIQUE ACADEMY CS SBHUBHAM ABAD-8007916622/33

B uy back and reduction.

L imit: - BOD-BR:-up to 10% of paid up equity share capital +free reserve+

UNIQUE ACADEMY CS SBHUBHAM ABAD-8007916622/33

S ec.70 prohibition of buy back;-

B.Redemption of preference shares and debenture.

C.Payment interest on debt security.

 Reduction of share capital means reduction in issued, subscribe and

* Procedure for reduction of share capital.

1.) Pass SR.