Arpita Tulsyan Volume | 9326962521 APPOINTMENT ¢& QUALIFICATIONS OF DIRECTORS (Section 149 — Section 172) ~ IMPORTAN ERMS : 1. Director (2 (34)) : As per clause 34 of section 2, ‘director’ means a director appointed to the Board of a company, 2. Executive directors : Directors, who are in employment of company are called as Executive Directors. Eg: WTD, MD. 3. Non ~ executive directors : Directors, who are not in employment of company are called as non-executive directors. Eg : Part ~ time Directors, Professional __directors, Nominee directors, COMP: T A IF DI ECTION 149) : Refer Qi, Qe, Q7(ii), QR(i i), QU 13, Q3: 137, 38, Q34, Q4 41, Q4: 8, 501) 57()) o' 178) + BOD shall consist of individuals only. _| + Therefore no body corporate, association, firm or LLP shall be appointed as director, C@outube Commerce Edoworld 204 ‘wuow.arpitatulsyan.comArpita Tulsyan Volome| 93269625) ion 149 (1): Minimum & imum No. of Every company shall have directors as.follows : 149 (1) (a) 149 (1) (b) Minimom Directors Maximum Directors wae tN 1 Public Co. Private Co, OPC 158 3) 2 1 1* Proviso: A company may appoint >15 directors after passing a 7 Note : A Government company ¢ Section’ & company, may have > 15 directors «sithout passing SR, provided such company has noticommitted any défavt in filing its FS with ROC v/s 137 or filing annual retorns v/s 92. 2" Proviso: WOMEN DIRECTOR: The following class of companies shall appoint atleast 1 women director — Every listed company : PUSC*of= OR Turnover* of = Rs.100 crore (R8.300 crore These companies shall comply with the provisions within 6 months from the date Vac ANCY : Any vacancy in the office of women director, shall be filled by BOD at the ‘earliest, but not later than: whichever is later - , *PUSC # Turnover shall be taken as on last date of latest audited FS. |BVoulube Commerce Edvworld 210 wuow.arpitatulsyan.gomArpita Tulsyan Volume | 9326962521 Example: Sneha was occupying the office of woman director in.a company but due " to her sudden death on 17th March, 2020, the intermittent vacancy so occurred was required to be filled-up at the earliest because she was the only woman © director on the board, The immediate Board meeting was held on 25th Jone, _ 2020. The vacancy of the women director must be filled-vp latest by 2Sth June, - 2020 if not filled-vp earlier i.e. within three months till th June, 2020 from the date of arsing of the intermittent vacancy. Section 149 (2) : Every company existing on or before the date of comeencenent __of this Act, shall within 1 year from such commencement, comply with the requirements of Section 149 (1), ie. on or before 31/3/2015. _ Section 144 (3): Resident Director: , Every company shall have atleast’? Director who stays in India for a total period of = 182 days doring the financial year. __ Provided that in case of aineuly incorporated co, the requirement onder this Section 149 (3), shall apply proportionately at the end of FY in which it is incorporated. ©@outube Commerce Edvworld am «ovow arpitatulsyan.comArpita Tulsyan Volome | 932696252} INDEPENDENT DIRECTORS : (ID) Section 1494) : Following companies shall have ID : Ever Al Every Listed Poblic Co, : Ua of the total no. of directors (Any Fraction after 1/3rd shall be rounded off as) B) Such other class or classes of Public Cos. (As covered in Role 4(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 ) which has: + PUSC of Rs110 crore OR oe - + T/O of 3Rs100 crore OR 2 + total O/s loans / debentures / deposits of >Rs.S0 crore hall have irect (Such Unlisted Public co. as given in Role 4, excludes: Joint Ventore, Wholly owned Subsidiary Co. Dormant Co) Note: PUSC / Turnover / Outstanding Loans etc to be checked on last date of Proviso to Rule 4: - Incase a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit) committee, such higher number of independent directors shall be applicable to it. (Eg : As per Section 177 (to be studied later), Audit committee shall consist of atleast 3 directors with ID forming majority. So, if a company has 6 directors in Audit Committee, then 4 must be Independent (ie. majority). However, as per the provisions studied, company must have atleast 2 such directors. Therefore here, the company is now required to appoint 4 instead of 2 1D) (©BouTube Commerce Edoworld 212 cow arpitatulsyan.cgmnArpita Tulsyan Volume | 9326962521 \ Any intermittent vacancy of an ID shall be filled-vp by the Board at the earliest but not later than immediate next Board meeting or sreernbiiths | from the date of such vacancy, whichever is later, Same Os ees Mreckon - Where a company ceases to fulfil any of three conditions laid down in sub-rule (0) for 3 consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions. Section 149 (5) : Every company existing on or before the date of commencement _ of this Act, shall within 1 year of such commencement or from date of rules notification, comply with requirement of Section 149 (4). walification of. independent Director : (Section 149. An Independent Director, in relation to a company, means a director other than a. MD or WTD or a nominee director — (a) who, in the opinion of Board, is a person of integrity and possesses relevant expertise t experience. (b) () who is or was not a promoters of the company or its holding, subsidiary or associate company; _ (ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company. (c) who has or had no pecuniary relationship, other than remuneration as such director or having transaction < 10% of his total income or such amount as may be prescribed with the company its holding subsidiary or associate company or their promoters, or directors, during 2 immediately preceding FY or during corrent FY, ©Woutube Commerce Edoworld 23 www arpitatulsyan.com_ immediately preceding FY or doring current FY; Arpita Tulsyan $ Volume | , 932696252) __@ None of whose relatives- (i) is holding any security of / interest jn the company / its holding, subsidiary or associate co. during 2 immediately preceding FY or during the current FY. Provided that relative may hold security / interest in the company of face value not exceeding Rs.50,00,000 or 2% of PUSC of its company, its holding subsidiary or associate company or such higher sum as may be prescribed; (i) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors for an amount of Rs. 50,00,000 doring 2 (i) has given a guarantee or provided any security in connection with the indebtness of any 3% person to the company, its holding, subsidiary or associate ~ company or their promoters, or directors of such holding company y for an amount of Rs. 50,00,000 doring 2 immediately preceding FY's or during the current FY or (iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to 2% or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (), (ii) or (ii). (e) who, neither himself nor any of his relatives — (i) holds or has held the position of KMP or is or has been employee of the company or its holding, subsidiary or associates company in any of the 3 FYs immediately preceding the FY in which he is proposed to be appointed. Provided that in case of a relative, who is an employee, the restriction under this clause shall not apply for his employment doring preceding 3FY's (@BouTube Commerce Edoworld 24 wuw.arpitatulsyan.camArpita Tulsyan Volume | 9326962521 (i) is or has been an employee or proprietor ora partner, in any of 3 FYs. immediately preceding the FY in which he is proposed to be appointed, of — (a) firm of auditors or CS in practice or Cost Auditors of the company or its holding, subsidiary or associate company including JV. or (b) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to > 10% of gross turnover of such firm. or (i) is a Chief Execotive or director of any NPO that receives > 25% of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate co. or that holds > 2% of total voting power of the company or. (f who possess such other qualifications as may be prescribed : He shall possess appropriate skills, experience ¢ knowledge in 1 or more fields of finance, law, management, sales, marketing etc. related to company's business. A declaration must be submitted by such director : yO at" Board meeting thereafter at 1* Whenever there is a change where he participates ¢ Boardmeetingin ¢ _ situation which can affect 4s a Director every FY ___the status of such director. siving a declaration that he meets the criteria of independence as provided in Section 144 (6) [©@outube Commerce Edoworld 205 ouow arpitatulsyan.comArpita Tulsyan , Votome ' : 932696253) Section 149 (8) : The company ¢ ID shall abide by the provisions of Schedole 1y (ie. Guidelines of professional conduct, Roles + Functions, Duties, manner of appointment, Re-appointment , Resignation, Removal, Meetings etc.) ection 14 B ration of ID: yO Y Allowed Not Allowed yO + Sitting fees Reimbursement Profit related Stock v/s197(5) __ of Expenses for commission as Option _ participation in approved by (ESOP). Board / Other members meetings Provided that if a company has no profits or its profits are inadequate, an _ independent director may receive remuneration, exclusive of any fees payable u/s 197(5), in accordance with the provisions of Schedule V. ction 149 (10) ¢ Section 149 (11): Tenore - __ Subject to Section 152, an ID shall hold office for a term upto 5 consecutive years on the Board, but shall be eligible for re-appointment on passing of SR by the company + diSélosing such appointment in the Board's report. Sobject to above, no ID shall hold office for more than 2 consecutive terms, but such ID shall be eligible for appointment after expiration of 31Years of ceasing to become an |D. (ie. cooling period) Proviso — During these 3 years, ID shall not be appointed in or bevassociated with the company in any other capacity, either directly or indirectly. Eadoutube Commerce Edoworld 216 w@ww.arpitatulsyan.comArpita Tulsyan (J An ID & > portant Exceptions ~ Volume | 9326962521 (i A non- executive director, not being a promoter or KMP, shall be held liable for only such acts of commission or omission by a company, which had occurred with hisjknowledge, attribotable through Board process, + with hisjconsent’ or connivance or where he hadnot acted diligently.» Section 149 (13): Provisions of Section 152 (6) + 152 (7), in respect of retirement of directors by rotation, shall not be applicable to appointment of ID. | Section 8 Company, Specified IFSC Public | Co. | Sob-sections (), (5)(6), (7), (8), @), (10), (M), Clause (i) of sub-section (12) (Liability of {D)and Sub-section (13) of Section 144 shall 132 Government Company In Section 144(6Xa), for the word "Board’, the words "Ministry or Department of the CG which is administratively in charge of the company, or, as the case may be, the SG" shall be substituted Specified IFSC ~ Public ¢ Private Co. Clayse (c) of Sub-section (6) shall not apply Proviso to Sect : Inrespect of financial years other than the first financial year from the date of its incorporation @iYouTube Commerce Edoworld 27 wuw.arpitatulsyan.comArpita Tulsyan Volume | 9326962521 | EC FID + El Cl B ECTION 150): ‘Section 150 (i) Section 1502) Section 150(3) Section 15014) > Such appointment of 10 DB shall create} CG may prescri, shall be approved by} and maintain data | the — manner oy, company in GM and| as per) prescribed | procedure =: ystatement | roles selection of 1D wis fam to the notice of fulfils te GM, shall indicate the qualification nj willing to act as ID of requirements v/s 143, appointment of such ID. DB shall be maintained by any Body, Institotion | tated OG oe and this DB shall be put on their website for use of the company. Proviso: Selecting a person from such DB ie. dve { shall lie with to be appointed as an Comoli. required by a person eligible independent director: (Role @) (1) Every individual — (a) who has been appointed as an ID in a company, on the date of commencement of the Companies (Appointment and Qualification of Directors) Fifth Amendment Roles, 201, shall within a period of 13 months from such commencement; or (b) who intends to get appointed as an independent director in a company after such commencement, shall before such appointment, apply online to the institute for inclusion of his name in the data bank for a period of 1 year or 5 years or for his life-time, and from time to time take steps as specified in sub-rule (2), till he continues to hold the office of an independent _ director in any company: xYouTube Commerce Edoworld 218 coww arpitatulsyan.comArpita Tulsyar Volume | 9326962521 Provided that any individual, including an individval_not having DIN, may voluntarily apply to the institute for inclusion of his name in the data. bank. (2) Every individual whose name has been so included in the data bank shall file an application for renewal for a further period of 1 year or S years or for his life— time, within a period of 30 days from the date of expiry of the period upto which the name of the individval was applied for inclusion in the data bank, failing which, the name of such individval shall stand removed from the data bank of the institute: Provided that no application for renewal shall be filed by ani fividual who has paid life-time fees for inclusion of his name in the data bank. Contd oF ndagenctanie a ry rir reboot tn 08 (3) Every independent director shall submit aesannti of compliance of sub- rule (1) and sub-role (2) to the Board, each time he submits the declaration _ required under sub-section (7) of section 149 of the Act. (4) Every individoal whose name is So included in the data bank under sub-rule (1) shallipass an online’ proficiency self-assessment test conducted by the institute ithin a period of 2 years from the date of inclusion of his name in the data bank, failing wohich, his name shall stand removed from the databank of the institute: Provided that an individual shall not be required to.pass the online proficiency self-assessment test when he has served for a total period of not less than ‘thie Years as onthe date of inclusion of his name in the data bank,~ (A) as a'director or key managerial personnel, as on the date of inclusion of his name in the databank, in one or more of the following, namely:— (a) listed public company; or ©dyoiTube Commerce Edoworld 24 wuu.arpitatulsyan.comArpita Tulsyan : Volume 932696252) * (b) onlisted public company having, a paid=up Share capital of Rs. 10 crore o- more; or - (c) body corporate listed on any recognized stock exchange or in a country which is a member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of Securities Commissions; or (d) bodies corporate incorporated outside India having a paid-up share capital of “US$ 2nillion or more; or (e), statutory corporations set up under an Act of Parliament or any State Legislature carrying on commercial activities; or (8) in the pay scale of Director or equivalent or above in any Ministry or _ Department, of the Central Government or any State Government, and having evperience in handling, — (i) the matters relating to commerce, corporate affairs, finance, industry or public enterprises; or (ji) the affairs related to Government companies or statutory corporations set vp onder an Act of Parliament or any State Act and carrying on commercial activities. or (C) in the pay scale of Chief General Manager of above in the SEB! or the RE! or the Insurance Regulatory and Exchange Board or the RBI or the IRDA of India or the Pension Fond Rebolatory and Development Authority and having experience in handling the matters relating to corporate laws or securities laws or economic laws: ©dVouilube Commerce Edoworld 220 www arpitatulsyan.com 2Arpita Tulsyan Volume | 9326962521 Provided further that for the purpose of calculation of the period of 3 years referred to in the first proviso, any period during which an individual was acting as a director or as a KMP in 2 or more compani lies corporate or statutory corporations at the same time shall be counted only once. Explanation: For the purposes of this rule,— (a) the expression “institute” means the ‘Indian Institute of Corporate Affairs at Manesar’ notified under sub-section (1) of section 150 of the Companies Act, 2013 as the institute for the creation and maintenance of data bank of Independent Directors; = Zool (6) an individual who has obtained a score of not less than fifty percent in aggregate in the online proficiency self-assessment test shall be deemed to have passed such test; (c) there shall be no limit on the number of attempts an individual may take for passing the online proficiency self-assessment test, Provided also that the following individuals, who are or have been, for at least (tenyeors:= 19 yoos (A) on advocate of a court; or _ (2) in ptéctice as a chartered accountant; or (C) in practice as a cost accountant; or (0) in practice as a company secretary, shall notibe required to pass the online proficiency self-assessment test.] Note : Entire Section, 150, not applicable to Section 8 Company (provided no default of Section 42 or Section 137. © ouTube Commerce Edoworld 22) «owow arpitatulsyan.comArpita Tulsyan Volume 932696252 FDI ELECTED HH, D EC 151): rv Q14, Q17, O36, 16, 53, Q! 164) () A listed company may have 1 director elected by such small SHS as per prescribed manner, Reason: This provision enables the small shareholders to place their representative on the Board of Directors of a listed company so that their voice is also listened effectively, "Small SHS" means a SHS holding shares of Nominalvalve of = RS!20000 or any other sum prescribed. Prescribed Manner — As per Roles :— () Listed Co. may upon notice of $1000 small SHS _ _ - Or (whichever is lower) “ANO™ of Total no. of Small SHS have a small SHS director elected by small SHS. Proviso : Listed co. maySvo=moto appoint small SHS director. (2) Small SHS, who intend to propose a person as candidate shall leave anotice of intention with the company atleast 14 days before the meeting, duly signed, with the name, addresses, share held, folio no, of the proposed avididate ¥ of the small SHS who are proposing. Proviso : If the candidate does not hold any shares in the co., then such details need not be specified. (EaYoiTbe Commerce Edoworld 222 www .arpitatulsyan.gpmArpita Tulsyan Volume | 9326962521 (3) Notice shall _be accompanied by a statement signed by the person (ie, candidate) stating his DIN, that he is not disqualified ¢ his\consent to act as a director. @) Soch director shall be considered as an independent director. . Therefore, he | should meet the eligibility criteria pertaining to independent director as given onder section 144(6) and shovld give a declaration of his independence in accordance with section 149 (7) of the Act. (5) Appointment of small SHS director (SSD) shall be subject to Section 152__ except that : re «he shall not be liable to'retire by rotation + SSD's tenure shall not exceed atermof3yearst Mar % (ans —_ on expiry of tenure, he shall not be eligible for re= appointment: x cay (@1A person shall not be appointed as SSD, if he i not eligible fa o/s 164. he incurs disqualification _ Office of the Director cease to meet the o/s director becomes _ Independence criteria _ vacant o/s167__v/s149(6) (8) He can be a SSD in maximum 2 companies at the same time. (2 company in hich he is appointed shall not be in aléonflicting / competing business as that of ¥ company) (4) SSD shall not be appointed in or be associated with such company in other Copacity, either directly or indirectly, for 3) years from the date on which he cease to hold office as a SSD. Youtube Commerce Edoworld 223 ‘www arpitatulsyan.comAvpitaTulsyan Volume | 93269625), { Section 152 (1) : First Directors y IFAOA aa the method : IF AOA does not specify : Then as per AOA First Directors Incase i OPC i Such individoal member (ontil duly appointed) (until duly appt. by member) Section 152 (2) : Subsequent directors, shall be appointed by the company inGM, onless otherwise provided. Section 152 (3) : No person shall be appointed as director of a company, unless he has been allotted a DIN v/s 154 or any other number prescribed u/s 153. Section 152 (4) : Every person proposed to be appointed as director, shall or any other number prescribed u/s 153 + a declaration that he is not disqualified to become a director. Section 152 (5) : A person appointed as director, shall not act as a director, onless he gives his consent to hold office as director ¢ such consent has been filed with ROC within 30 days of his appointment. In Form DIR - 2. —* Director shall file his consent with the company (onor ‘before the appointment) in Form DIR=12. —* Company shall within'30 days of appt. file consent with I 2 ROC (with fees) Proviso : In case of appointment of 1D, explanatory statement to the ynotice of wy GM, shall be annexed, giving the justification (as studied before) Y |B outute Commerce Edoworld 24 www arpitatolsyan.comArpita Tulsyan Volume | 9326962521 EM! 1 1 (q) Unless the article provide for retirement of all directors at every AGM, atleast 2/3" of total number of directors (any decimal, shall be rounded off aSi)of a (PUBLICSCOMPANY shall: () be persons whose period of office is liable to determination by retirement of directors by rotation ¢ : (ii) be appointed by the company inGM. (b) Remaining Directors, shall also be appointed by the companyinGM. (At 1 AGM of public co. held next after the date of GM in which 1* directors directors who are liable to retire by rotation. (In case of fraction, number nearest to1/3™ shall retire) (d) The directors at retire by rotation at every ry AGM M shall be those who ee beentongest in the office since their last appointment. If between persons, who became directors on the same day, ¢ eligible to retire, siul decide either byagreement: between themselves or by draw oF lots. (e) At AGM, at which the director retires as above, Company may fill\up the vacancy by appointing the retiring director or came aati Note 1 in total no. of Directors, independent Directors + shall not be included. Crchidest Pls Note : Any person appointed as a nominee director being nominated by any institution in pursuance of the provisions of any law or any agreement cannot be considered as a director liable to retire by rotation (like when a financial institution that has been created by an Act of Parliament nominates a person as its nominee director on the Board of a company which has availed financial assistance from such institution). ©@outbe Commerce Edoworld 225 cow arpitatolsyan.comAvpita Tulsyan Volume | 932696253) Eg : Director appointed as nominee of LIC (governed by LIC of India Act) shal not be included. However directors appointed as nominee of ICICI Bank Ltd, (governed by Companies Act | Licensed as Bank) shallbe included. Note 2 :/Additional/direstors are directors appointed by Board of Directors , they are therefore Non'= Rotational Directors. However, they will be counted while calculating ‘total no. of directors’. Note 3 A MD may be a rotational’/ non-rotational director, depending on terms ¢ conditions, Similar is the case for WTD. Irrespective of this fact, they will be included in the ‘total no, of directors’. Example :~ Total no. of directors = 4 Independent directors = 3 Therefore, Total no. of directors as per 152 (6) = (4-3)=@ Therefore, Rotational Directors = 6X 2/3" = 4 Therefore Directors liable to actually retire = 4 X 1/3 = 1.33 ie. 1 Therefore out of total 4, 1 rotational director shall retire. WaYouTube Commerce Edoworld 226 www arpitatolsyar.comArpita Tulsyan Volume | 9326962521 := Exceptions : - i mpany (Provided no | Proviso to 152 (6), shall not apply. default of Sec. 92 or Sec .137) ‘Government Company (Provided no | Section 152 (5) shall not apply , where appointment of deiult of Sec. 92 or See 137) such director is done by the Central Government or State Government, as the case may be (@Unlisted Government co,, in Section 12(@) 7152(7) shall not apply | which 2 51% of PUSC is held by CG/SG/Both; (Provided no default of Sec. 42 or Sec .137 for both (a) +(0) | (6) asubsidiary of a Government | company, referred to in (a) above IFSC Poblic Co. in Section 152 (), instead of 30 days’ vse GO days’. Section 152 (6) + 152 (7) shall not apply. VACANCY EC’ 1522): : ee (1) If vacancy of retiring | director is not so filled-vp ¢ meeting has not expressly resolved not to fill the vacancy, meeting shall stand adjourned till the same day in vt QE SE gor succeeding day in case the adjourned day is a national holiday. (2) If at adjourned meeting also, the vacancy of retiring director is not filled up ¢ that meeting also has not expressly resolved, not to fill the vacancy, then the retiring director shall be deemed to have been\re=appointed) at adjourned meeting, ORIESS : a) A Resolution for Re-appointment of such director has been put to meeting + (OST (either at that meeting or previous meeting) YouTube Commerce Edoworld 227 coww.arpitatulsyan.comArpita Tulsyan 5 Volume | 93269625) b)_ The retiring director has expressed his unwillingness for Re-Appointmen, (By Notice to Company or BOD, the retiring director has expressed hic onwillingness for Re-Appointment (By Notice to Company orfBOD) c) He is notiqualfied or isdisqualified for Appointment d) A\Resolutionis required for Appointment or Re-Appointment e) Section 162s applicable to the case. EBVouTlube Commerce Edoworld 28 wwuw.arpitatulsyan.cpmArpita Tulsyan Volume | 9326962521 Et 153 — SE 159) : 165, aa Section 153 : Application for Allotment of DIN: Every individval, interesting to be appointed as director of a company, shall make an application to,CG (+) fees for allotment of DIN (Director Identification Nomber) in FormiDIR= 3) (If applicant, who intends to be appointed as director of an existing co., may apply in Form DIRS 3) (in case of new company, proposed directors, not having DIN, the particular of max. 3 directors shall be mentioned in Form INC~ 32 ¢ DIN may be allotted to these 3 directors) Applicant shall download form DIR -3, Verify ¢ sign it, attach necessary copies of following document, scan ¢ fileit electronically : Form DIR-3 shall be signed + submitted electronically by applicant using own ‘OSC (Digital Signature Certificate) + shall be verified digitally by a\CS in full tineremiploYinent|oRithe company or by MD! / (Director / CEO / CFO of company in which he is going to be appointed. In cose, a name_of a person does Mot have a\lastiname, then (father's or ‘Grandfather's surname shall be mentioned in last name along with declaration in Form No. DIREI3AY Proviso to Section 153 : CG may prescribe any identification number to be treated as DIN for this Act ¢ if individual has such no. then Section 153 shall not__ apply, Youtube Commerce Edoworld 2249 www.arpitatulsyan.com4 @ ArpitaTulsyan ; Volume - 932696257; ion 154 : CG, shall within 1 month from rea of application v/s 153, allot a DIN to an applicant. Procedore : 4 Form DIR -3 Application * CG shall process tdecide (+) fees is — __homiber shall be — on approval or rejection + Submitted generated shall communicate within : ‘Tmonth from receipt CG may: : an Approve Find the application defective or incomplete, in _ | any respect - _____DIN shallbe allotted + _ Intimate the applicant to rectify such be ‘intimated to the applicant defects within 1S days of email, a > = Ifnot rectified fully____If rectified or partially + ‘ DIN shall be allotted - Application shall get rejected £ + Intimated to Applicant Shall be informed to applicant + Fees paid shall lapse Section 155 : Prohibition to obtain more than 1 DIN : {tis prohibited. ©BYoutube Commerce Edoworld 230 www.arpitatulsyan.com |Arpita Tulsyan Volume | 9326962521 ection ‘or to Every existing drecor, shall, within Ymonth of receipt of DIN from CG, intimate his DIN to the company or all companies wherein he is a director os per Form DIR-38. Section 157 : Company to Inform DIN to ROC : () Every company shall, within 15 days of receipt of intimation o/s 156, furnish DIN of all its directors to ROC with fees as prescribed or with such additional fees as prescribed ¢ every such intimation shall be furnished in such form / manner as prescribed (2) If any company fails to furnish DIN under (1) above, such company shall be liable: ; Penalty on company ~ Rs, 25000 ¢ in case of continuing failure, further penalty of Rs.100 / day, max — upto Rs\100000 + Penalty on defaulting officer — Min — Rs. 25,000 ¢ in in case of continuing failure, forther penalty of Rs.100 / day, Max. upto Rs.100000. Every person ov company, while furn! ing any return, info, particulars, shall mention DIN in that, if it 'relates to director or contains any reference of any director. — pxppcisent Cas 00 tek ho ob Aiaeto A \ Ow 7 whonote PUNISHMENT. FoR_geNTRAVENT ( }: Company If any individual or director of & company any defaott in ing with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to Rs. 50,000 and where the default is a continuing one, with a further penalty which may extend to Rs. S00 for each day after the first during which such default continues, @WouTube Commerce Edoworld 231 wuw.arpitatulsyan.comt eo Arpita Tulsyan Volume 932696257) En, 12, 1 ANIE: le 11: Cancellation or Sure IN-5) or ivation (1) CG or Regional Director (Northern Region), Noida, upon being satisfied on verification of particular / proof attached with application (+) fees from any person, cancel or de-activate the DIN if: ‘ 7 ¥ v v (0) (b) (o) (d) (e) IFDIN is foond DIN was in case of he has been _ he has been to be duplicated obtained in ‘death of declared of adjudicated as Getnof toh. _qgmmmafal _sch ‘onsound mind _an insolvent individual () on an application made in Form DIR=5 by the DIN holder to surrender his or her DIN along with declaration that he has never been appointed as director in any company and the said DIN has never been used for filing of any document with any authority, the Central Government may deactivate such DIN: Provided that before deactivation of any DIN in such case, the Central Government shall verify e=records. (2) CG shall deactivate the DIN, if director does not intimate his particulars in E-form DIR - 3 -KYC or the web scrvice DIR-3-KYC=WEB as the case may be within stipvlated time in accordance with rule 12A: a) (3) It shall be re-activated only after thi ©doulube Commerce Edvworld 232 ww arpitatulsyan.comArpita Tulsyan Volume | 9326962521 (1) Any change, be intimated to CGwithin'30 days of such change in FormDIR=6: + along with necessary proof ¢ + form shall be digitally signed by CAvin practice / CS in practice or a cost: aceoontant in practice, — 5 a (2) CG, on being satisfied, after verification, inform the applicant, confirming the change Cae be (3) DIN cell of MCA, sholl intimate to respective ROC. (4) Such individual director, must also intimate to companies, where he is a director, about such change within 15 days of such change. ule 12A : Directors KYC : £5¥ary individoal who holds Director identification Nomber_ (DIN) on 31° March of a FY as per these roles, shall submit e=formDIR=3=KYC to CG on or before 30" September of immediate next FY. Provided that every individual, who has already been allotted a DIN os on 31/3/2018, shall submit e~form DIR-3-KYC on or before 5/10/2018. Provided further that, where an individoal who has alfeady'submitted e-form DIR-3-KYC for previous FY, submits web=formDIR=3 KYC=WEB throvgh web service in relation to any subsequent FY, it’ shall be deemed as compliance for the said FY. Also if an individual desires to opdate his personalymobile no + s, it can be done by submitting e-form DIR-3-KYC only. Fees shall be payable for both DIR-3-KYC / DIR-3-KYC-WEB. Note : For FY ending on 31/3/2014, any of the above forms must be submitted by 14/Oct/2019. 2 YouTube Commerce Edoworld 233 aww. arpitatulsyan.com.Arpita Tulsyar Volume | 932696252) (1) Where a co, is governed by Role 250 of Companies (Incorporation) Roles, 2014, fails to file this form within specified period, the DIN allotted to its existing directors shall be marked as’ Director of ACTIVE non-compliant company’ (2) Where DIN has been marked as above, such director shall take all Steps to ensore that all companies governed by Role 25A, where such director has been so appointed, file this form. (3) After all companies referred above, fills the form, DIN of such director shall be marked as " F (@BouTube Commerce Edoworld 234 www.arpitatulsyan.comAvpita Tulsyan Volume | 9326962521 (0) Alperson who is not a retiring director as per Section 152, shall be eligible for appointment to the office of a director at any GM, if he, or some member intending to propose him as director, has - not less than 14 days before the meeting ; - left at RO of the company; ; - aidtice intasriting under his hand; - signifying his Candidatore as a directo ~ along with deposit of Rs.7,00,000 Rs. 10,000 in in case of aNidhi company) or such higher amount as prescribed. This amount shall be refunded back to such p person if, the person proposed : gets elected as director or gets >25% of total valid votes cast (either on poll or show of hands) Proviso — The above deposit/shall not apply in case of appointment of ID or director recommended by:NRC, if any or a director recommended by BOD of company (where there is no. NRC) (2) The company shall informits members of the candidature of person for the office of director under sub-section (1) in prescribed manner = The company shall, at least 7 days before the general meeting, inform its members of the candidature of a person for the office of a director or the intention of a member to propose such person as a candidate for that office- (1) by serving individoal notices, on the members through electronic mode to such members who have provided their email addresses to the company for communication purposes, and in writing to all other members; (2) by placing notice of such candidature or intention on the website of the company, if any: © Youtube Commerce Edvworld 235 www arpitatulsyan.comArpitaTulsyan : Voom) 932696252) Provided that it shall not be necessary for the company to serve individua, notices upon the members os aforesaid, if the company advertises such candidature or intention, not less than’? days before the meeting at least once in 1a vernacolar newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district. XCEL Section 160 is Not Applicable to following 3 companies ] (Provided no default of Sec. 42 or Sec. 137): | > Section ® companies whose articles provide for election of directors by ballot. [al A Government company in which the @ntire PUSC is held by the CG/SG/Both; (6) A sobsidiary of a Government company, referred to in (a) above, in which the entire | PUSC is held by the Government company. Note: In case of Section’ companies, their Board of Directors shall decide as to whether the deposit of Rs. 1,00,000 is to be forfeited or refunded if the person proposed as director fails to secure more than 25% of the valid votes. EBYoulube Commerce Edoworld 236 www.arpitatulsyan.comArpitaTulsyan Volume | 9326962521 EI DI ECT Ef E Cc £ EE | TION 161): (Refer 3, 24, ARKIN), 15, 21, 32, Q34, Q45, Q52, QS7Ki), AGO, Q62, AE?, AEE, 71, 75) section 161 (1) : ional Director : ercoghoros Gon Bee @e AOA may confer powers on ‘BOD, 65 cppont any person (other than who fails-to get appointed in GM ) as an Additional Director at any time, who shall hold office upto : - Date of nextiAGM or ~ Last date on which AGM should have beemheldi, (whichever is earlier) If there is any defautt in holding AGM, he shall vacate his office on the last day on which AGM, should have been held. Pls note : . ~ Additional director may may be appointed by passing ‘aresototion at Board meeting (BM) or by passing resolution by circulation: ~ This section applies tovallcompanies, - Since his tenure is upto next AGM, he does not retire at next AGM ¢ therefore he is not @'retiring director’ as per Section 152 ¢ 160. compliance of Section 160. ‘©BYoulube Commerce Edoworld 237 wuww.arpitatulsyan.comArpita Tulsyan Volome 932696252) tion 161 (2) : Al irector = - BOD of company may, if so authorised by AOA ot by a resolution passed by company in GM, appoint a person to act as an alternate director for a director doring his absence for =>3 months from India. Such person shall not hold any alternate directorship for any other director in the company nor holding directorship in the same company. + Proviso : Alternate director for an ID, should be qualified to be an ID 2" Proviso : An alternate director shall not hold office longer than that permissible to the original director ¢ shall vacate the office if + when the original director returns to India 3 Proviso : If the term of office of original director is determined before he so returns to India, any provisions for automatic re-appointment. of _ retiring directors shall apply to original director ¢ notto the alternate director, __ Note: - An alternate director will have only one vote as he can hold alternate directorship for one director only in the same company. - [f Alternate director attends the meeting ohusically Original_Director attends through Video Conferencing: An alternate director may continue to hold office even if the original director joins the meeting by video conferencing, but the original director will be deemed to have joined only as a invitee and the attendance of the alternate director shall be counted for the purpose of the Board Meeting. This is specific only wart. matters which shall not be deat with through video conferencing, In such matters where video conferencing is allowed, voting of ©douube Commerce Edvworld 238 oww arpitatulsyan.comAypita Tulsyan Volume | 9326962521 jon 161 inee subject ‘pill of the company, BOD may | appoin any. 0% nominated by any institution as per provisions of. any law or of any agreement or py CG/'SG by virtve of its shareholding in a Govt. co. proviso : The above Section 161 (3) is also applicable to specified IFSC companies (however AOA authorization not mandatory) if the office of any director, aogontiiext by the company ny iW) is vacated before his term of office expires in normal course, the resulting casval vacancy, nay be filled in Following way: If specified in AOA AOA is si t Then as per AOA “approved by members in immediate next GM. Note : fill a casval vacancy in the office of director, only if he — the Company inGMa f Therefore If casual vacancy filled by BOD is again vacated, t ‘canniot be filled by BOD. Therefore in such a case, BOD may appoint an additional director: * It is motymandatory to fill the vacancy ie. BOD may resolve to keep the vacancy unfilled, + Director, who was appointed in GM, if he a Vaconeyarises. sna |Woitube Commerce Edvworld 23a wu arpitatulsyan.com lala- “g Arpita Tulsyan Volume 932696257; Proviso — Any person so appointed shall hold office only-upto the date upto. which the director in whose place he is appointed would have held office, if t had not been vacated, Note : Director filling the casual vacancy holds office till the expiry of term of initial director i.e. he does not retire at an AGM, Therefore he is not a'retiring director’ as per Section 152 + 160 ¢ therefore his appointment as a regular director will be done as per Section 160. APPOINTMENT OF DIRECTORS TO _BE__VOTED l ID! 162 ): (Refer Q23, Q24) () At a general meeting of a company, a motion for appointment of 2 or more persons as directors of the company by singleresolution shall not be moved onless a proposal to move such a motion has first agreed to at the meeting _cithout ony vote being cast agoinst it. _Unanwnour aercfatioon Note : Here the requirement is, no votes must be cast against the resolution therefore if some members, abstain from voting, it is not treated as votes cast against it. (2) Resolution moved in contravention of above, shall be Void (whether or not any objection was taken when it was moved) Exception: Section 162 is Not Applicable to following 3 companies TTa) A Government company in which the éntir@ PUSC is held by the CG/SG/Both; (b) ASobsidiary of a Government company, referred to in (a) above, in which the entire | PUSC is held by the Government company. (Provided no default of Sec. 92 or Sec. 137) privateCompany (Provided no default of Sec. 42 or Sec. 137) ae LE Specified IFSC Public Company EBoulube Commerce Edoworld 240 wow.arpitatulsyan.comArpita Tulsyan Volume | 9326962521 ION Ti CIPLE TI ENTATION Fi E IF 163): (Refer Q25) Notwithstanding anything contained in this Act, ‘ACA may provide for appointment of 2/3" of total number of directors of a company as per the principle of proportional representation, whether by t! vote or by a system of cumulative voting + such appointment may be “made once in ¢ casval vacancy shall be filled as per section 161 (4). Section not applicable to such Govt, companies as mentioned in Sec. 162 EonOL paich Up Tour coy Note : Appointment by way of proportional representation is a “method which enables a minority of respectable strength to elect its representatives (+) the mojority SHS retain their right to appoint directors in proportion to their voting strength. : TION 164) : (Important Answer ) (Refer Q5, Q26, G27, Q47, Q59, Q66, 20, 073, 77) Section 164 (1) : A person shall not be eligible for appointment as a director of a company, if — (a) he is of unsound mind (declared by acompetent court) (b) he is an undischarged insolvent (c) he has applied to be adjudicated as an insolvent ¢ his application is pending. (@ he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, + sentenced to imprisonment for 2 Gimonths ¢ a period of Sears has not elapsed from date of © Youtube Commerce Edoworld 2H) www arpitatulsyan.comArpita Tulsyan Volume | 932696257) Provided that, if a person has been convicted of any offence + sentenced jn respect of this offence, to an imprisonrent for'=7 years, he shall not be eligible to be appointed as a director in any company (for life) i (e) an order disqualifying him for appointment as a director, has been passed by Coort / Tribunal (A) he has not paid any calls for shares of the co. held by him (alone / jointly with others) + @ months have elapsed from last day fixed for payment of the call, (g) he has been convicted of offence dealing with related party transactions v/s 188 at anytime, doring the last preceding Siyears: (h) he has not complied with Section 152 (3) (DIN Requirement) (i) he has not complied with Section 165 (1)_ (No. of directorship) Section 164 (2) : No person who is or has been a director of a company which = (a) has not filed FS'or Annual Retorns for any continuous period of 3FY's or (b) has failed to repay the deposits accepted by it or pay interestithereon or to redeem any debentores on the due date or pay interest:due thereon or pay any dividend:declared and such failure to pay or redeem continuous for?) year or ‘more, S44 shall be eligible to be re-appointed as a director of that‘company or appointed in other company for a period of 5 Years from the date on which the said company fails to do so. ©Boutlube Commerce Edoworld 242, wuw.arpitatulsyan.comArpita Tulsyan Volume | 9326962521 provided that, where a. person is appointed as a director of a company which is in default of (a) or (b), he shall not incur the disqualification foneimonths from the date of his appointment, Section 164 (3) : A private co. may by its AOA, provide for any disqualification for appt. as a director in addition to Sub- Section (1) ¢ (2). Provided that disqualifications onder 164 (1) (d), 164 (1) (e) + 164 (0) (g) shall continue to apply even ifiappeal'or/petition has been filed against the order of conviction or disqualification. lote : Section 164 (2) i (Provided no default of Sec. 92 or Sec. 137) Note: Also, if after disqualification u/s 164 tracted, the defaultiisimade ‘Good by the company, the directors shall continua to remain disqualified. Disqualification as prescribed by Section 217 (élil: Section 217 relates to a company which is under investigation. In case any director of such a company has been convicted of an offence under Section 217, the director shall be deemed to ‘have vacated his office on and from ¥ he is so convicted. On such vacation of office, he shall be disqualified from holding an office in any ~ youtube Commerce Edoworld 243 ww .arpitatulsyan.com| “T Arpita Tulsyan Voto me | 93269625), MBER IRE EC 165): (Refer 228, O44, 51, G64) () No person shall hold office as a director, including any alternate directorshjy in more than 20 companies at the same time : Provided that maximom number of Public companies in which a person can be appointed as a director shallinotexceed 10. Explanation : i. For calcolating limit of public cos. In which a person can be appointed as director, directorship in private cos, which are either holding or subsidiary co. of a public co. shall be included. ii, For calculating, the limit of directorship of 20 companies, directorship in « Dormant company + Section 8 company (provided no default of Sec. 42 or Sec 137) shall not be included. Note : Foteignco. shall also beexoluded from the said limit. (2) Subject to above, the members of company may by SR, specify any lesser no of companies in which a director of the company, may act as directors. (3) If a person accepts any appointment in contravention to 165 (), he shall be liable to penalty of Rs. (2000/day after the first doring which such contravention continues, subject to maximum of Rs: 2,00,000: WBVoulube Commerce Edoworld 244 arpl ey ee aAvpita Tulsyor Volume | 932696252) () To act as per AOA (2) To act in good faith in order to promote the objects of the company for benefit of its members as a whole ¢ in best interests of company, employees, SHS, community ¢ for protection of environment. (3) Exercise his duties with due ¢ reasonable care, skill ¢ diligence ¢ shall exercise independent judgement. (4) He shall not involve in a situation, in which he may have a direct / indirect interest that conflicts / may conflict, with interest ofthe co. a (5) He shall not achieve / attempt to achieve any undue gains / advantage, either to himself, relatives, partners, associates, ¢ if he is found guilty of this he shall be liable to pay an amount equal to that gain. (@) He shall not assign his office ¢ any such assignment, s shall be void. (7) If he contravenes the provisions of this Act, such director shall be punishable with fine: Min : Rs}O0;000"- VACATION OF OFFICE OF DIRECTOR (SECTION 167): fer Qnii Q72) (1) Office of a director shall become vacant in case - _ (a) he incurs any of disqualifications v/s 164 _ Provided that, where he incurs disqualifi ication v/s 164 (2), the office of director shal become vacant in all the: companies other than the company whichis in default under that sub — section. (b) he absent himself from all the BM held doring a period of AZimonths (with /without seeking leave of absence of BOD) (Youtube Commerce Edoworld 245 wuww.arpitatulsyan.comArpita Tulsyan Volume | 932696252) (c) he acts in Contravention of provisions of Section 184 relating to entering into contracts or arrangements in which he is directly / indirectly interested, (@) he foils to discloseshis"interest in above contract / arrangement, in contravention of Section 184. (e) he becomes disqualified by Court'/ Tribunal order. (A) he is convicted by a Court for any offence (involving moral turpitude or otherwise) ¢ sentenced to imprisonment for > @ months. Provided that office shall not be vacated by director in case of orders referred in (e)e(f) - 30-5 a ——9 dapowtl 6 (i) for 30 days from date of conviction or order of disqualification; (ii) where an appeal / petition is preferred within 30 days as aforesaid against the conviction resulting in sentence or order, until expiry of 7 days from the date on which such appeal or petition is disposed of or (iii) where any further appeal or petition is preferred against order / sentence within 7 days, until such further appeal or petition is disposed of. (g) he is removed as per provisions of the Act (h) he, having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary or associate company, ceases to hol’ such office or other employment in that company, (2) If a person, functions as a director, even when he knows, that the office of director held by him, has become vacant on account of any disqualifications under (1), he shall be punishable with Fine : Min =)RS11/00,000 ; Max, 2IRsi'5j00,000 ©doutube Commerce Edoworld 246 coww arpitatulsyan.opm iArpita Tulsyan Volume | 9326962521 (3) Where all the directors of a company, vacate their offices, under any disqualifications specified in (1), the promoter or in his absence, the CG shall appoint the required no. of directors who shall hold the office till directors are appointed in GM. (4) A private company, may, by AQA‘or otherwise provide any other grounds for vacation of office of a director in addition to those given in (1). RESIGNATI Ol OR (SECTION 168) : (peter anti Q30) (0A director may resign from his office by giving a notice in writing to the _on receipt, take note of the same ¢ the company shall intimate 2OC in Form DIR= 12 within 30 days ¢ shall also place this fact in the ‘report of directors Laid in immediately following Provide that aidirector ql detailed reasons to ROC within 30 days of resignation in Form DIR=N (+) fees. (2) Effective date of resignation = Date on which the notice is received by company or date specified in notice, whichever is later. Provided that, such director, after resignation, shall be liable even after his resignation for offences done doring his tenure (3) Where all the directors of a company resign from their offices or vacate v/s 16?, the promoter or, in his absence, the CG shall appoint required no. of directors who shall hold office till directors are appointed by company in GM. © Yoiuhe Commerce Edoworld 247 «ow arpitatulsyan.comArpitaTulsyan Volume | 932696252) EC 169) : (Refer 3 () A company may, by ordinary resolution, remove a director, not being a director appointed by Tribunal v/s 242, before expiry of his period, after giving him a Provided that an ID re-appointed for 2™ term under 149 (10) shall be removed by company only by passing SR¢ givirig ROBH. Provided further that, section 169 (1) shall not apply to those directors who were appointed as per Section 163 —>Prroposroacd qepweniction (2) A Special notice of any resolution, shall be required, to remove a director v/s 164, or, to appoint somebody in place of a director so removed, at the meeting at which he was removed. (3) On receipt of notice of resolution for removal, company shall send a copy to the director concerned ¢ he shall be entitled to be heard on the resolution at the (4) If such director makes representation in writing to the company ¢ request its notification to members the company shall — (if the time permits it to do so) (0) state the fact that representation has been made, in any notice given to members ¢ (b) send a copy of representation to members of the company to whom notice is sent ¢ if copy of representation is not sent (due to insufficient time or company’s default) then, the director may without prejudice to his right to be heard orally, require that, it may be read out atthe meeting. — |aYouTube Commerce Edoworld 248 coun arpitatulsyan.com